IMF Completes Second Review under Stand-By Arrangement with Kosovo and Approves €40.66 Million Disbursement

Press Release No. 12 /501
December 20, 2012

The Executive Board of the International Monetary Fund (IMF) today completed the second review of Kosovo’s economic performance under a program supported by a 20-month Stand-By Arrangement (SBA). The completion of the review enables the disbursement of SDR 34.857 million (about €40.66 million, or US$53.86 million), bringing total disbursements under the arrangement to SDR 78.216 million (about €91.24 million, or US$120.86 million).

In completing the review, the Executive Board approved the rephasing of the remaining disbursements under the SBA to align program reviews with the authorities’ budgetary calendar. The Board also approved the authorities’ request for the modification of the performance criterion on the end-December 2012 bank balance of the general government.

The SBA with Kosovo was approved on April 27, 2012 (see Press Release No. 12/154) in a total amount of SDR 90.968 million (about €106.12 million, or US$140.57 million).

Following the Executive Board's discussion, Ms. Minouche Shafik, Deputy Managing Director and Acting Chair, said:

“Macroeconomic and financial policies are on track, notwithstanding a slowdown in economic growth that has complicated the meeting of fiscal targets. The authorities’ intend to treat the arrangement as precautionary in 2013, provided the return of the government’s bank balance to a fully adequate level is ensured.

“The 2013 budget brings Kosovo close to a fully sustainable fiscal stance. An allocation for starting construction for a new highway R6 to Macedonia will be executed only once the government bank balance is close to a fully adequate level, and a feasibility study confirming viability of the project has been completed. Careful preparation and costing of spending initiatives remain critical to avoid that unfunded expenditure commitments put fiscal sustainability at risk. Legislation is in preparation for a rules-based fiscal framework that would anchor fiscal policy from 2014.

“Important steps have been taken to establish a comprehensive financial safety net. Continued supervisory vigilance is needed to enforce prudential rules and safeguard high standards of corporate governments in the financial system. In this regard, it is critical to preserve the independence of the central bank and the high degree of professionalism and integrity of its staff.

“Continued strong ownership of policies under the Fund-supported program, especially in light of possible upcoming elections, will be necessary to preserve the gains thus far, address the challenges ahead, strengthen macroeconomic management, and foster robust and balanced growth.”


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