7 hours agoIMF Chief: Rising pension schemes leads Kosovo into fiscal crisis
Periskopi(8 years ago)
(8 years ago)Kosovo's “Budget cannot afford such a rapid increase in spending on social schemes. Not to mention the other pension schemes that are under consideration. If they were implemented, expenditures would increase to unstable degrees”, says among other things in an interview for Radio [...]
Kosovo's “Budget cannot afford such a rapid increase in spending on social schemes. Not to mention the other pension schemes that are under consideration. If they were implemented, expenditures would increase to unstable degrees”, Ruud Vermeulen, chief of the Monetary Fund for Kosovo, says in an interview for Radio Free Europe.
It sounds very alarming to talk about a crisis at this point. However, if we look at increasing trends and pressure to implement new classical social schemes -- whether for teachers, policemen, Trepca miners, and so on Kosovo could be on the path to creating a fiscal crisis. This is obviously something we would like to avoid.
Last year, Kosovo spent about 383m euros on social schemes, 30 percent more than in 2015. Two thirds of this increase has come only because of a scheme for war veterans' pensions, until 13,300 war veterans have started to receive pensions in the latter part of 2015 (more than 12,000 who were envisioned in the beginning) and that number then went to 36,000 at the end of last year.
This year, it is estimated that spending on social schemes will amount to over 400m euros - an increase of more than 10 percent compared to last year. About a third of this increase comes again because of a scheme for war veterans since over 2,000 new beneficiaries have been added this year.
If we look forward, Kosovo's budget cannot afford such a rapid increase in spending on social schemes. Not to mention the other pension schemes that are under consideration. If they were implemented, expenditures would increase to unstable rates.
Let me stress that this is not only disturbing because of fiscal costs and the change in taxpayers' money that would be available for more productive spending on education, health and infrastructure, but it is also disturbing because of the impact on the labour market.
Regenerative pension schemes and they can be compared to minimum and medium wages and require that beneficiaries be out of working relations can put out a huge number of Kosovars who are able to work and can also discourage earners from finding jobs (in this way in so-called book wages) . This hurts Kosovo's competitiveness and economic growth”.
