Budget Review Required, BQK: Kosovo Economy Feels Crisis With Price Growth

The Kosovo Central Bank(BQK) is assessing that Kosovo's economy is expected to feel the crisis through the price increase channel as a result of the war in Ukraine.

While the economics professor is asking the Government, reviewing the 2022 budget and adopting the economic package to subsidise the country's economy and citizens, the former trade minister says it is not time for the Government to collect taxes, but must distribute them.

Days ago Trust officials confirmed for Kosova Prees, that the crisis in international markets caused the investment value in return to decline about 90m euros. Meanwhile, now in addition to increasing inflation, the CEC, as endangered, is also seeing the Pension-Trus Savings Fund, which is invested about 80 per cent in international markets.

In view of the fact that Kosovo's economy has high volume of imports from EU countries and that the war between Ukraine and the Russian Federation will, especially in the energy sector, we expect Kosovo's economy to be affected through the price channel. Also, such developments affect capital markets, therefore, in the performance of Trust assets, but these are the effects of the short-term nature as a result of market fluctuations, and in medium-term terms it is expected to recover”, says Kosovas Preiss, BQ spokesman Kujat Ahmeti.

And citizens do not have to feel worried about their deposits in Kosovo commercial banks because of the war in Ukraine, as according to Ahmeti, banks have no exposure to Eastern European markets and the rate of transactions is low.

Other segments of the country's economy have no exposure to Eastern European markets, and the rate of transactions is relatively low. Consequently, for 2022 we expect a high contribution of the developing local banking system to the local economy and financing economic activity in general”, he says.

Because of the war in Ukraine, former Trade and Industry Minister Hykmete Bajrami, in addition to rising prices, expresses fears for lack of essential goods, wheat, flour, oil and sugar.

Bajrami: We're likely to be left without products

“We are facing a new wave of inflation, which is most likely not only inflation, but in the coming days to face the lack of products, which I believe will be more problematic and will be a huge concern for the overall functioning of industry, but also the state institutions... there are two flats on which the government, which unfortunately is standing as a spectator, we have not seen concrete actions”, she says.

Following the ban on goods from several neighbouring countries, MP Bajrami is seeking government supplies with key articles from Kosovo's friendly countries.

Bajrami: Government provides more reserves from friendly countries

We consider that the government should be more active, even in the protection of citizens, but also in the increased reserves, because the Russia-Ukraine crisis, it's true that it's shaking and having compact impacts on the global market, as the two states are among the largest producers of grain and oils... Kosovo as a country has faced years of budgetary shortages. State reserves have not been large, we know that the government has allocated a total of 10m euros, but we consider that much is not enough. What we consider is that in the main articles, the government should engage with the friendly states of Kosovo to secure reservations for a certain period of”, she says.

Economic faculty professor Nagip Skkiner says that at this time of crisis of great expensive, the government should urgently make reviewing the 2022 budget, in order to adopt an economic package for the support of citizens and the economy in the country.

Sperry: Review the 2022 budget at this time of crisis

“In this time of crisis to re-enact budget and projects that have been planned for projects that are expected or secondary, to subsonic agriculture, the economy and generally protect the social welfare of citizens, because there are categories that are with fixed salaries, especially pensioners, former fighters, but other categories of the public and private sector at this time need stronger support on the part of the state, or the Intervent <1x>, the Kosovo Professor says.

He adds that the government is not prepared to cope with the crisis caused in our country as a result of Russian aggression in Ukraine.

Sperry: Government unprepared to Cope With Crisis

Kosovo is also facing a crisis, as a result of the war between Russia and Ukraine. Unfortunately, it is an economic crisis to say imported because almost all the goods we have for citizens in Kosovo are imported. It is not that directly it depends on these two states, but the consequences are indirect and reflect on Kosovo's economy as well. In the actual case, there are oil, wheat, flour and its products, oil and sugar, which are of strategic importance to the consumer basket, which have only begun to rise and are affordable to the consumer. In this context we cannot say that we have been unprepared in terms of knowledge and knowledge that this crisis would come about, but perhaps unprepared was the government and institutions, as well as businesses that were not previously provided with larger amounts of these strategic products”, he says.

Former Finance Minister Hykmete Bajrami has also said that the lives of citizens are unaffordable and now it is not time for the Government to collect taxes, but to come to the aid of citizens.

Bajrami: It is not time to collect taxes from citizens and preserve them

“Life is becoming unaffordable, on the other side of the crisis, and all of the indicators are showing that we're going to have continuity. We're not seeing any end to the Russia-Ukraine war, so we don't know how long we'll be facing this. But we consider that the government does not have the time now to collect taxes from citizens and preserve them in the state account, so we consider that it is time to be more active and to distribute these means so as to ease their difficulties”, it stresses.

Meanwhile, according to the recent report of the Kosovo Statistics Agency, inflation continues and the overall harmonised index of consumer prices is higher at an average of 7.5 percent in February 2022, compared to February 2021.

This is largely explained with the rise of consumer prices for bread and cereal 15.7%, meat 8.6%, milk, cheese and eggs 11.1%, oil and food fat 32.1%, vegetables 13.8%, sugar at 11.3 per cent and fuels 28.2.