BEC: Kosovo challenged by circulation of Serbian dinar

The challenge for the country remains the circulation of Serbian currency, the dinar in several Serb majority Kosovo municipalities. While good for the country remains the continued increase in revenues from the diaspora, remittances, which have reached about 1 billion euros in just ten months of 2022.

In an interview for Kosovo Press, Governor Mehmeti has confirmed that he has entered the race to continue to lead the CEC for yet another 5-year term.

Our projections are that we will have 3-4 percent economic growth (for 2022). And next year (2023) as seen at the global level as a result of Russian aggression in Ukraine will be challenging. However, we as the CEC predict that by the second half of the 2023 year, we will have a full consolidation at the level of Kosovo and global, which then this will affect our forecasts for next year to have an approximately 4 percent increase in economic growth in Kosovo. This may be considered a consolidation and economic growth that will then be influenced by many factors. It is also meant to have a reduction in inflation in next year. Our predictions are that this inflation rate will decrease by up to 6 per cent. And this decrease would positively affect citizens' taxpayers' ability, affecting both consumer growth as the main category, which would impact economic growth”, Mehmet points out.

The governor says 5.5 per cent have marked remittances in the January-October period. While foreign direct investments have reached 567m euros, where investments in real estate dominate.

Until October, there were 1.48 billion euros in non-resident expenditures that are largely implemented by diaspora money in Kosovo. We also have increased remittances, totaling about 1 billion euros, and foreign direct investments have reached 395m euros to 567m euros, this is a significant increase, which is also achieved mainly by the diaspora. As we are in foreign direct investment, over 67% of foreign investment is in real estate, which is realised by the diaspora”, he says.

This year we mark the 15th anniversary of citizenship, but Serbia's currency -- the dinar -- is circulated as a means of payment in Serbian settlements, across the territory of Kosovo, especially in four northern municipalities. Kosova Preiss learns there is circulation of the dinar for payment and even at “Exchange”.

To that end, Governor Mehmet emphasises that on every occasion police report to fight this unconstitutional phenomenon.

We've had cases and information when even commercial banks have been operating illegally, which have made circulation of the dinar. What belongs to us as the CEC, which is by law the authority to regulate all financial institutions, starting with licensing, monitoring, regulation and so on. While we have received information like this about their operation, our job as BQK has been to inform the Kosovo Police. And we've had times when we called the police up three times. There have been times when actions have been taken, like the case in Gracanica and then other actions. So we have acted together with the Kosovo Police every time they are required. However, the operational plan is built by the Kosovo Police. Our job of ever facing such cases is to inform the Kosovo Police that it happened in the past. This year (2022) we haven't reported it to the police, but years ago yes to”, he says.

The country and the world were affected by price hikes, and commercial banks also raised interest rates in Kosovo. This expensive, Governor Mehmet reasons.

The interest rate for credit continues to remain the same, 6.2% is an increase in interest rate, while in October last year it has been 6%. Due to high inflation, the European Central Bank for the third time has raised interest rates. Despite that, the banking sector in Kosovo continues to maintain the level of interest rates on credit. The cost in general has increased as a result of increasing interest rates made by the European Central Bank, but on the basis of banks' plans, we have not seen any growth in interest rates planned against that in the developed countries of the European Union, but in America, there is an increase in that rating. Meanwhile, we do not have an increase in interest rate planned for us in the coming year”, he says.

Governor Mehmeti has indicated that he is in the race for a 5-year term in the CEC, for what it shows.

“The process is open, the possibility of competition is for each individual, who meets the previous conditions. Given the results, we have been able to maintain a financial system at the most difficult time, which has been the pandemic. We have managed to contribute to economic recovery in the country. Now the international arbitration recently confirmed that the decisions we've made as BEC are legitimate... In view of all this, I think we will, we will enter the race another term for governor of BQ”, Mehmet points out.

Even Emmanuel Bajra, who lives in London, made the race for governor public days ago.

Meanwhile, the Kosovo Central Bank a month ago has opened competition for completing the position of BEC governor/EC, after current Governor Fehmi Mehmet expires the mandate in March of next year. The deadline for application in this competition has been December 16th, 2022.