BQK: Future Government Focus Must Have Economy

The new government, which is expected to be formed after tomorrow's elections, should focus on the economy, especially addressing the challenges Kosovo has over the years, unemployment, trade deficit and economic damages caused by the COVID-19 pandemic.

These suggestions for the new executive have been addressed by the governor of Kosovo Central Bank (BQK) Fehmi Mehmeti, who says the banking sector has had and continues to take its role in economic recovery.

Governor Mehmeti in an interview for Kosovo Press has said the BEC expects the country to have an economic growth of 4 per cent for 2021, always if the pandemic situation moves towards improvement.

“Our suggestions as the Central Bank, the BQC, and by law, are that the future government should focus on the economy in order to have as much economic growth as possible. A steady economic growth and simultaneously an increase that only addresses the challenges Kosovo has experienced over the years, which is unemployment, a high trade deficit, also poses the economic damage caused by the pandemic”, Mehmeti stressed.

The BEC governor believes that if pandemic is brought under control through the vaccine until the first six months, this year there is expected to be a return to economic growth.

Mehmet also says that economic contraction of -7.2 percent for the next year has caused serious damage to the loss of thousands of jobs, reduced consumption, investment, and lack of money in the market.

The extenuating “is the fact that the vaccine has been discovered and expectations are to close the pandemic as soon as possible. Our predictions are that in this year we have an economic growth approximately 4 percent, but it always depends on pandemic. We expect that in the first six months, always according to recommendations from the National Institute of Public Health and the Ministry of Health, but if the first six-month issue of pandemic closes, surely the second six-month will reflect with an economic growth”, Mehmeti says.

Mehmeti, pointing to the flow of revenues from the diaspora, has said that in spite of the remittances, remittances have continued the growth trend, according to him during 2020 the remittances were about 1 billion euros.

The Kosovo government's limited measures to prevent the spread of pandemic has contributed to the weakening of the revenue capacity of all citizens and businesses, at the same time impacting the decline of investments. The diaspora's visit to Kosovo represents a very important resource for the country's economy, only the non-resident expenditures that we consider to be largely realised by our countrymen, we have a drop of around 52.9 per cent compared to 2019 -- that is, the non-resident expenditures realised in Kosovo that have amounted to 589.7m euros. Meanwhile, a year ago it was 1.2 billion euros. When we are in connection with Kosovo's economy, expenditures or remittances have continued growing, despite the situation that has caused the pandemic in other countries as well. Remititions in Kosovo, in 2020, marked 977.3m euros, or with a 14.8 per cent increase of”, Mehmeti says.

As for other macroeconomic indicators, Mehmet has also said that foreign trade, with a decline in imports, has affected the improvement of the trade deficit because of pandemic.

“Export of services, even though it has marked decline, if we take it as a total we have an export of approximately 1.2 billion euros, including export of goods and services. On the other hand, we have an import somewhere for approximately 3.7 billion and which is somewhere around a total deficit of about 1.5 billion”, he says.

Mehmeti shows that the banking sector has high stability, is liquid, well capitalised. Non-forming credits according to the CEC are at a very low level, even during the pandemic have been 2.7 per cent. / KP