IMF against stroke of RRUST and cancellation of energy tariff decision

“also, these withdrawals would be translated into major compression of local capital markets, seriously compromising budget financing and debt sustainability”, the IMF communiqué said. The IMF staff voiced strong opposition to additional withdrawals from the private pension savings fund (TKPK) since these would constitute severe shocks in the sustainability of the pension system and would significantly reduce the real value of future pensions. Also, these withdrawals would be translated into major compression of local capital markets, seriously compromising budget financing and debt sustainability”, the IMF communiqué said.

The IMF also opposes cancelling the increase in the fee would lead to greater current account deficits and constitute serious budget burdens.

The growth of electricity tariffs in February to reflect the largest electricity import bill, along with the implementation of electricity subsidies for about 20 percent of the family economies, were also appropriate policy movements. The planned budget revision for 2022 should describe how support programmes are reaching the most vulnerable, as well as how the adequate functioning of the electricity value chain is being maintained in terms of current electricity subsidies”, the communiqué reports.

Otherwise International Monetary Fund Mission (FMN), led by Mr. Gabriel Di Bella has completed staff visit to Kosovo in the period 1013 and 20 May, where the latest economic developments, prospects and policies were discussed. Mr. Di Bella issued the following statement at the end of the visit:

The war in Ukraine presents severe shock for Kosovo. While direct trade and financial channels with conflicted countries are negligible, the impact of international food and energy prices on Kosovo imports could be as high as 5.5 percent of BPV. While the dynamic from last year's recovery is still strong, the shock will inevitably affect demand and economic activity in 2022. Although pandemic and war pose serious challenges, they have also promoted investors' interest in moving to Europe. Maintaining sound macroeconomic policies and financial stability, as well as advancing with the implementation of reforms, will be essential for attracting foreign direct investment to Kosovo”, the communique says.

According to the IMF, the highest edition, which as a result of increased import prices, is expected to reach more than 10 percent in 2022, requires targeted and temporary support to help vulnerable families. Authorities have responded quickly with subsidies for agricultural inputs, salaries bonuses and temporary pension increases and social transfers. At the same time, authorities have refrained from tax cuts, from which, unproportionally, they benefit people in better economic situation and are expensive and difficult to restore.

In view of the huge reduction of the real value of minimum wage, the staff agreed with the proposal for its growth for about 50 percent, and agreed with authorities for the need to cut off this growth and other budgetary transfers with the minimum wage.

The IMF reports press communiquettes at the conclusion of the mission include statements by IMF staff teams conveying preliminary findings after the visit to the country and that thoughts expressed in this statement are of IMF staff and do not necessarily represent the thoughts of the IMF Executive Board. “This mission will not result in panel discussions”, says the IMF communiqué

Otherwise, the weekend has had political debates over attracting RRUST's means and electricity tariffs. To withdraw the trust tool in the country is a law that has been proposed by the opposition, while how much of Court Appeals' tickets has been decided to postpone execution.

Two investigative commissions have been established for the energy issue in the Kosovo Assembly.