Kosovo deeply in debt

According to the report “The three-month data on the General Debt, the fourth quarter 2017”, presented by the Ministry of Finance, until the end of this period, public debt has reached 996.42m euros from 852.74m euros as it was in the same period last year. Expressed by percentage, this debt has reached 16.63 percent of the Bruto (PBB) internal product.

International debt at the end of 2017 amounted to 422.15m euros, where 365.18m euros are used by the government for central-level needs, while 56.97m euros is under-sheathed debt.

Mostly international debt Kosovo for 2017 has the International Monetary Fund in the amount of 160.77m euros, followed by the International Bank for Reconstruction and Development worth 158.32m euros, while the rest made up KfW at 54.81m euros, the International Development Agency at 41.12m euros and UniCredit at 7.04m euros.
Otherwise, under the Law on Public Debts, in no case the unpaid total debt should exceed 40 percent of GDP.

If the debt exceeds that percentage, then the government should present the Parliament the strategy to return the total debt below the 40 percent threshold.
Even University Economics Professor Sejdiu Rexhepi considers that the amount of the current debt is not high, but can prove problematic if in time safe resources are not provided for their return.

Kosovo's “Public Editor is still within legal limits, but even as such, problems can be presented if in time safe resources are not provided for their return. Therefore, the government should be very careful with the lending of funds, regardless of the chemical scale”, he told Telegragraphy.

Rexhepi warns that the timetable of debt returns should be well designed so that their return is not associated with problems that could lead up to the state's inability to meet its obligations.

“Although Kosovo needs long-term financial borrowing for promotion and economic development, the return time structure must be well designed so that their return is not associated with problems that can lead up to the state's inability to meet its obligations to others, known as state bankers, as it has been with many countries”, he said.

According to Rexhepi before deciding to enter a debt, the central or local government must well define development strategy and define programmes and projects of primary importance which require additional funds.

The once defined priorities should be sustainable, and the eventary changes should be made only to improve them, respectively, to update them in line with new circumstances. Any unreasonable change in the fundamental priorities once approved is due to developmental deadlock and the possibility of unreasonable orientation of the funds”

Finance Ministry spokesman Muharrem Sahini has said that increasing state debt is in full compliance with budgetary needs and that debt indicators are at relatively low and stable levels.

“The debt level in the future will continue to move in the same direction and mass as the Government's needs for financing. The growth of the state debt of the Republic of Kosovo is in full accordance with budgetary needs and development plans of the Government presented in the medium-term period of spending (KASH). Debt indicators are at relatively low and stable levels”
The funds borrowed according to him are destined in the right sectors.

“The funds borrowed from international institutions are pledged primarily for the water sector and sewage treatment, road and railway infrastructure, as well as energy. Considering that the senior sectors cited are priorities of the Government, we consider that these funds are destined in proper sectors”, Sahin said.
He has said borrowing does not burden Kosovo's budget and that these flow deficit and development plans.

The budget framework will be proportional to loans that will be realised in the future by the Government of Kosovo. This will directly depend on the needs for borrowing, which stem from deficit and development plans”, Sahin said.
Even though the debt has increased over 143m euros in 2017, the total debt rate makes Kosovo the lowest rate of public debt in the region, which is above 55 percent of GDP in Southeast European countries.