Government pays 1m euros in punishment, didn't withdraw money from international banks

The Kosovo government had signed credit agreements with international financial institutions worth about 300m euros for financing of 10 capital projects, but the pledged means have not been withdrawn because the projects have not been ready for financing, officials from the National Audition Office say.

In a report published by this office, it is said that as a result of this, for the pledged and untapped means, the Government is obliged to pay additional payments (a commitment card).

Kerkkin Morina, assistant to the general audience, tells Radio Free Europe that as a result of the decoupling of the time dynamic between credit access and project implementation, the price paid for loan fees extended to borrowers is 890 thousand euros.

“According to audit results, the Government of Kosovo has not been ready to withdraw external debts, in the amount of 295m euros. And for any delay in withdrawing these loans, the government pays a commitment fee, which in 2017 totals 890 thousand euros. It means, although funds have been available, of 295m euros, only five million euros have been withdrawn, while more than 97 percent of the funds are untapped”, Morina said.

The amount of 890 thousand euros has been confirmed by finance ministry officials. In an e-mail response, it is said that “the amount of 880,000 euros included the sums paid on behalf of the pledge fee for projects that are under way. It means that the debt fee is accompanied even when they are implemented according to the delivery plan, until the latest amount of that loan is obtained”, the Finance Ministry for Radio Free Europe says.

In contrast, according to the National Audition Office report, the government has become indebted mainly to financing road, energy, rehabilitation of railway lines and improving the education and health system, projects that have failed to realise.

Such delays, Morina says, are the result of a poor feasibility study of projects, as well as shortcomings in creating the necessary preconditions for eliminating all infrastructure and legal barriers to the implementation of these projects, for which the Government should have additional supervision.

Otherwise, Kosovo's overall debt value this year has reached over one billion euros, which is for 9.1 per cent higher compared to the same period last year.

According to the National Audition Office report, Kosovo's international and internal debt has an increased trend. In 2009, the total debt was 6.12 percent of Bruto Product, and in 2017 it reached over 16 percent.

Even experts on economic issues consider that the Kosovo government should do detailed analysis and planning before the process of borrowing whether international or domestic.

Berat Rukiqi, from Kosovo's Economic Oda, tells Radio Free Europe that in the past three years the debt entry has not met the required criteria. Loan funds, he says, should be used in time and efficiently to generate in overall economic development.

“Borgi makes no sense unless it is invested in projects which have an economic return, impact overall economic development and does not jeopardise financial stability”, Rukiqi says.

Even Burim Ramosaj, professor at Pristina University, stresses that budgetary agencies should first identify projects and then enter debt.

The start of a project implementation process starts with the idea part, whether the project is reasonable in terms of implementation, but also from the possibility of funding the project. Consider the amount of localized monetary means available to the government, but no doubt their structure. Because there are times when tool structure does not guarantee the financing of specific projects”, Ramosaj says.

The Kosovo government in the budget Law consistently under the years plans projects meant to be implemented through financing from foreign borrowing.

“The audience has come to the conclusion that the analysis of projects planned to be financed through borrowing is not enough. A number of capital projects for which the government has entered international loan agreements have not been realised at all”.

“As a result, other tariff or payment fees have begun to be paid for untapped tools”, reported in the report, while government programmes are still at the low implementation level.