Kosovo public debt up

But according to Kosovo Central Bank data in 2016, the total state debt was 852.7m euros, while in 2015 it was about 750m euros.

Kosovo owes foreign debt mostly to the International Monetary Fund over 233m euros, the World Bank, about 200m euros.

Despite the increase in debt, it is estimated the lowest in the region. Expressed at percentage points, Kosovo's debt represents 15.8 percent of Bruto Product.

Serbia and Albania rank first in the highest debt share of Bruto Local Product, followed by Montenegro by over 60 percent, and Bosnia and Herzegovina by over 40 percent.

The overall debt is the total of state and municipal debt. This debt is taken on behalf of central government institutions, which the Republic of Kosovo is obliged to pay.

That Kosovo has a low level of debt, members of the Commission for Business and Finance in the Kosovo Assembly say. Safette Hadergjina, deputy chairman of the commission, tells Radio Free Europe, that the current debt does not bring any potential risks, and still Kosovo is far from allowing debt to enter.

“We need to be careful in steps further so that we don't go on an uncontrolled increase in public debt, so that we can cross the limits set in relation to Bruto Local Product. At the moment, we are not at risk because we have a low level of public debt”, says Hadrcerj street.

According to economic experts, public debt has its positive side when it is used for the right destination, but it can have devastating effects on a country's economy when debt is exploited in wrong projects.

Flamur Keqa, an expert on financial issues, tells Radio Free Europe, that the debt level is not high, but, according to him, caution should be taken, because year after year it is seeing a significant increase in debt.

“However, this debt is primarily serving to cover the budget deficit, which may have a negative aspect, because a state when it goes into debt should be good, for debt tools to be designated for investments, which generate state tools”, Keqa says.

Even Menderes Ibra, an expert on economic issues, estimates that Kosovo stands well on the overall debt level. According to Ibra, more important than the debt level, is the way he spends it.

“How effective is public debt spending? And if Kosovo's public debt is used for important projects, which affect job generation and economic growth, then it's normal not to be worrying”, Ibra estimates.

Even in the latest European Commission Progress Report, it has been said that Kosovo has a relatively low level of public debt and no cause for concern is presented.

On the other hand, experts on economic issues say Kosovo has room for borrowing, but say competent authorities should have projects that generate material means.

Flamur Keqa, says debts should be spent on projects generating new jobs:

It is the Government's task and responsibility to find modalities, forms or projects that are more accessible that can generate new jobs”.

Meanwhile, Menderes Ibra hopes investment from public debt will affect economic development.

The last “I've been informed that several international financial agreements for capital investments have been ratified, which are expected to have an impact on economic development”.

In contrast, according to the Ministry of Finance, projects funded by international borrowing belong to different sectors, and mainly to government priority projects such as infrastructure projects, sewage, water supply, health, agriculture, etc.

“While the means from domestic borrowing are dedicated to budgetary support towards covering the budget deficit”, Muharrem Sahini, director of the Public Communication Office at the Ministry of Finance, has said.

Under the Law on Public Debt, in no case the unpaid total debt should exceed 40 percent of Bruto Product (BPV).

If the overall debt exceeds this percentage of the local Bruto Product, then the government should present the Parliament the strategy to return the total debt below the 40 percent threshold.