Kosovo economy is rocked by pandemic, damage also suffered from closed-down businesses

The International Monetary Fund, in a report published late, says the most disturbing situation is expected to be in developing markets and developing economies.

The IMF report notes that, despite the international community's efforts to ease these obstacles, these states will have to focus spending on the health sector and, at the same time, protecting major public services: transportation, energy, communications and social protection.

“The countries will try to deal with pandemic and isolation to end, fiscal incentives, coordinated depending on the financial limitations of countries, will become a more effective tool to promote economic recovery”.

When the crisis with the virus is over and people start to get back to work, a broad fiscal incentive becomes even more effective. Depending on access to markets and availability of fiscal spaces, such broad-based fiscal incentives can facilitate recovery”, the IMF report says.

Kosovo too is expected to experience economic shock after the end of the pandemic caused by the Coronavirus.

So far there is no precise indication of how much Kosovo's economy has been affected by the measures the government has taken to prevent the spread of the choreography, but by the forecasts made by institutions and experts, it is about serious damage.

Major economic losses will require adequate recovery strategies, field experts say.

The chairman of the Kosovo Economic House, Berat Rukiqi, referring to a research done by this association, tells Radio Free Europe that problems caused by the government's measures have affected almost all businesses even those that have not been closed.

Most businesses, he adds, have suffered financial losses, loss of production capacities, as well as a lack of liquidity.

“We are in a very unknown phase, we cannot give exact assessments, but what we need is an exit strategy, an economic opening plan, in particular starting at the beginning of May, when a review of these measures is expected. And then, conforming that plan to reopen the economy, take other measures that stimulate the economy and keep the economy in a dynamic that guarantees employment maintenance, consumer maintenance and maintenance of business functionality”, Rukiqi says.

The second step to be taken, Rukiqi adds, is that once a normal situation is created, with a check on the pandemic, any real - harm sector is seen and then a plan for transformation of the economy is drafted.

Public debt opportunities to save the economy

Former Economy and Finance Minister Haki Shatri, in a statement to Radio Free Europe, says a professional programme is needed for the economy to recover faster after the pandemic.

The most real possibility of this, according to Schatri, is public debt; otherwise, he adds, there will be big problems.

“2 percent of the public debt at 7 billion is close to 3 billion. We, so far, have 1.2 billion euros in public debt, which means we have access to 2 billion, without damaging development processes and risking macro-economic and economic stability”, says Shatri.

According to Kosovo Central Bank data, Kosovo maintains the country's position with the lowest degree of public debt, compared to countries in the region.

Public debt, according to these data, has reached 1.2 billion euros in 2019.

Of this value, more than 721m euros are estimated in domestic debt, while 409m euros are international debt.

In the Law on Public Debt in Kosovo, it is said that in no case the unpaid total debt should exceed 40 per cent of the gross domestic product.

General debt is defined as “the total of state debt and municipal debt, taken on behalf of central government institutions, which the Republic of Kosovo is obliged to pay”.

To open the possibility of public debt, former Economy Minister Haki Shatri says that initially enough data is needed to determine the state of the economy.

But prior to that, it takes serious professional preparation for all the actions that need to be done, what has been given to you, in which part to invest, in what conditions and what we want to aim at with restructuring the economy. Priorities must be given to production, improved trade balance with abroad, to affect increased employment and poverty reduction”, says Shatri.

Under the legislation in effect in Kosovo, to borrow international loans, approval from the Kosovo Assembly is necessary.

Kosovo's incumbent Prime Minister, Albin Kurti, has said that in addition to the emergency package, which has already been approved and has the value of around 180m euros, there will be another package, which will be only for economic recovery, after the pandemic.

The incumbent's “government is planning the second package, the economic recovery package, which will be much larger than the emergency package and will have much longer”, Kurti said.

Kosovo's ongoing economy has faced lower growth rates.

The year 2019 has concluded with a 4.2 percent economic growth estimated to have been insufficient to address the unemployment problem facing young people.

Unemployment in Kosovo is about 30 per cent and mainly affects young people.

The annual trade deficit in Kosovo has reached more than 3 billion euros.