BB's withdrawal from the “New Kosovo”, eventual discouragement for foreign inventory

The World Bank's pullout from support for the construction of the “thermal power plant, New Kosovo,”, has created a new situation on the Kosovo market, say experts on economic issues. However, they see in different ways the issue of the impact of the World Bank's decision on the eventual discouragement of foreign investors.

The World Bank has announced last week that it will not support the thermal power plant “New Kosovo”, built by coal, but company officials “Contour Global” and Kosovo Government have said this thermal power plant will be built even without World Bank support.

Muhamet Mustafa, senior adviser at the Riinvest Institute, in a conversation for Radio Free Europe, says the World Bank's withdrawal from the “New Kosovo “project is surprising at this stage, and this, according to him, could have negative effects on foreign investors.

One of the effects the World Bank may lack of financial support for the winning company, according to Mustaf, is the possibility of increasing the price of electricity, as the winning company must find other options for financing at higher interest rates.

The increase in the energy price, he underlines, could affect the development of business activity, whether domestic or international.

The World Bank's “Pulling will open other issues, which will be discussed. But whether it will negatively affect other investors, of course, is not a positive situation, but rather will affect attracting business investments rather than attracting the World Bank. The impact on investors cannot be ignored”, Mustafa said.

On the other hand, Leke Musa, former chief executive of the American Economic Ode in Kosovo, told Radio Free Europe, that the World Bank's withdrawal from support for thermal power plant “Kosova e Re” should not have an impact on foreign investors, since, according to him, the withdrawal has occurred because of the bank, rather than the winning company or Kosovo Government.

The entire project, but also the procrastination of starting construction, Musa points out, has been implemented according to World Bank requirements.

“will not influence, since the World Bank's withdrawal has not been made for any reason of the Kosovo business climate or corrupt relatives and other issues, but the withdrawal is due to the World Bank's strategy not to enter into projects that coal exploitation is fuelled by”, Musa said.

Foreign direct investment is constantly valued as necessary for Kosovo's economic development, but these investments have seen decline in recent years.

In 2008, foreign investment was 355m euros last year, according to the Central Bank of Kosovo, foreign investment was about 290 million, or 30 percent more than in 2016. And in the January-May period of this year, the value of investments realised is 76m euros, or 34 per cent less compared to the same period in 2017.