Kosovo lost billions of euros from pandemic, unemployment marked growth

In the Kosovo Government's emergency package worth about 180m euros, businesses enjoyed financial support of over 60m euros.

With these tools, coverage of monthly wage expenses of employees worth 170 euros per 2 months was envisioned, rent subsidies of up to 50 percent of value and others.

Meanwhile, the Government of Kosovo's Fund for Economic Recovery, which totals more than 350m euros, allocated 60m euros for businesses on the list of workers.

Of this, about 360,000 businesses, with more than 200,000 employees, benefited. Businesses have benefited from 290 euros for each employed employee.

Economic Loss That Were Not Compensated

But compared with the help the state has given for business, losses are many times greater.

Only, according to the recent Kosovo Tax Administration data, businesses in Kosovo have had close to 1 billion euros less circulation during the pandemic period compared to last year.

Gastronomous representatives, during a protest against restrictive measures, had handed the “keys to their” businesses to the Government of Kosovo.

Incomes of economic activities that were mostly affected by the COVID -19 pandemic, according to a research conducted by the Institute for Advanced GAP Research is the construction industry, followed by trade, transport, accommodation and gastronomial.

The unfavourable developments in the economy have also been reflected in budget revenues, where according to the Ministry of Finance in the Government of Kosovo by the end of 2020, there will be about 300m euros less in revenues for Kosovo's budget.

Help for Survival

The losses of businesses in Kosovo began since the establishment of the first measures for preventing the spread of coronary on March 13th, when the first cases of coronary in Kosovo were also marked.

For these eight months businesses have declared large losses.

Representatives of the Kosovo Chamber of Economics, the American Economics, the Kosovar Business Alliance, the Afarisation Oda, and many other economic organisations sought government assistance for businesses, but the aid the state shared was estimated not enough.

In addition to the assistance, which was insufficient, Kosovo authorities also failed to adopt the Economic Recovery Bill, aimed at helping businesses that have suffered losses from the pandemic COVID-19.

This bill, following six failures for approval in the Kosovo Assembly, has managed to be adopted only in the first reading on 13 July.

In this bill, it is envisioned that Kosovo's “Crendi Crennare Guaranteer, (FKGK) is authorised to issue credit guarantees with percentages of cover from 50 to 80 percent”. Also, contributors can attract 10 per cent of pension savings to the Kosovo Pension Savings Fund.

The business community warned the financial crisis in businesses to their bankruptcy, unless this law is adopted and businesses are not assisted by the state.

Pandemia closed businesses

During the February period October, according to data from the Kosovo Business Recording Agency, 761 businesses have been closed, which have had 1,316 workers.

The largest number of officially closed businesses have worked in the majority and retail trade sector, followed by processing industry, hotels and accommodation. Business records also reveal businesses in the field of construction, information and communication and other sectors.

But, the number of closed businesses was considered to be higher than the Kosovo Afarism Oda. According to data from this organisation, not all businesses that have eliminated their activity during the pandemic have begun closing procedures.

The number of businesses that are not operating today is thousands of”, Free Europe Radio, director of this Skender Krasniqi association, said.

Unemployment Marked Growth

The unemployment rate has increased during the pandemic period. Coronervirus prevention measures influenced many businesses to reduce the number of employees.

The exact number of people who have lost their jobs is unknown, but the Kosovo Oda and Economics and Afarism have said it is about 30,000 employees who may have lost their jobs during the pandemic.

The number of registered citizens as unemployed in the Employment Agency marked increases in this period. According to APK data, the total number of registered people as unemployed by July is over 180 thousand.

According to Kosovo Central Bank projections, the country's economy this year is expected to mark a decline of around 7.2 per cent as a result of measures to prevent the spread of COVID-19, which negatively affected almost all economic activities in the country.

Meanwhile, BEC reports point out that Kosovo's banking system is quite well capitalised and liquid.

Commercial banks in Kosovo, according to CEC data, continue to lend Kosovo's economy.

A total of loans in August 2020, according to the CEC, are in the amount of 3.02 billion euros, continuing the growth trend even this year, with an annual increase of 7.6 per cent.

GAP: Banks to reduce loan delivery

The GAP Institute in its research says continued lending is necessary in order to enable consumption of household economies and private sector investments.

However, according to GAP, in the following months, when it is expected that the state of the private sector will be exacerbated further, the fact that commercial banks are liquid and highly capital may be insufficient to continue lending.

Banks can assess that there is a dangerous environment for offering new loans and as a result of reducing new loans even more.

In this situation, GAP suggests that the Kosovar Fund for Cremed Constance could play a key role in taking over a part of the risk and enable continued credit. Similar funds were shown effective in many countries of the world during the global financial crisis. / REL/