Inflation hit the economy, experts say government did little for citizens, private sector

The opposition was constantly seeking from the Kosovo government to come to the aid of citizens and businesses. The opposition even proposed raising wages or reducing excises and TVS, for oil and basic products.

However, the executive did not do as the business community requested, but he issued two packages for separation of direct means for citizens.

The government in April had approved the Economic Resurrection Pact, where it had allocated about 100m euros for citizens' support and which benefited about 800 thousand citizens. While, on September 3rd, the government introduced the new Pakon for confronting Inflation with about 150m euros, where it was not included in direct support only private sector workers.

Under this package, the executive introduced the measure to subsidise businesses by 50 percent of the private sector workers' salary growth for the first three months. Business representatives rejected the measure, for which they have even sought support without conditions.

In addition to packaged with the government's proposal, the Assembly adopted the draft bill for setting ceiling prices, but the LDK sent it to the Constitutional Court.

For the serious economic situation in the country caused by price hikes, in June 2022 was initiated by opposition MP Bekim Haxhiu, the Bill for the withdrawal of 10 to 30 percent of the means from the Trust, but did not receive the support of most MPs in the Kosovo Assembly. After that, there was another initiative by citizens to withdraw vehicles from the Trust, but that this bill is expected to be discussed at a next session, without the Commission's support for Buzhet.

Kosovo as the only state in the region, during the past year, was challenged by the energy crisis, which was particularly affected during the summer with severe electricity reductions.

During this year, the country also faced strikes. For more than a month, from August 25 to October 3 B SPK and SBASK organised strikes and no instruction took place in most schools.

The union's request was to raise wages until the payment bill is adopted. While, in December with the Government's proposal, Kosovo's Assembly adopted two bills -- both for salaries and for public officials. The wage law is expected to take effect in February 2023. The Law for Public Officials, on the other hand, was sent to Constitutional by the opposition.

University professor Muhamet Sadiku has said that the year 2022 was a difficult economic year, both for the international states and for Kosovo.

The economics acquaintance Sadiku has said that in addition to the economy, inflation hit citizens the most.

Even this year, we have an extremely negative impact on the global power crisis, and all these international challenges have reflected on the rise of inflation in all countries. This rising inflation has also affected Kosovo and is estimated that during this... we have had about 18 percent, which is a major blow to the standard of life of Kosovo citizens. This has mostly hit the social structure, unemployment rate, pensioners and in general the basket of a Kosovo family... The government's memory must also be taken into account to intervene in easing inflation, because the Kosovo government does not have the capacity to fight international inflation, but must fight in reforging the negative impact of inflation on the Kosovo population. Kosovo's population, especially some social categories, have had once-a-year support and that is far from what is said to have systematic support... The private sector is an economic growth generator and the more developed this sector, the possibilities for fighting inflation are huge. Therefore, even Kosovo has failed to empower social cohesion, and thus remains a country with extremely fragile social cohesion, and this is truly distressing to society”, notes Professor Sadiku for Kosovapress.

Kosovo Chamber of Commerce and Industry Chairman Skender Krasniqi has expressed disappointment with the Government of Kosovo for not supporting private sector businesses and workers.

Krasniqi believes that next year will be with positive changes, especially in the economic aspect.

“Viti 2022 has been with many challenges, which have been unexpected, but we are hoping that the year 2023 will have positive changes because in the next year, we are faced only with COVID pandemics, even a serious event with Russian aggression in Ukraine, which affected us indirectly in Kosovo, with a lack of products and an increase of enormable prices. Also, during this year, businesses faced major financial problems that are still continuing, which unfortunately the Government of Kosovo did not achieve enough to help businesses, nor private sector workers, who have expected greater support from the state. We've been waiting to have support both for business and bank loans. Like the Chamber of Commerce and Industry, we've constantly sought support... We have expected to have even better co-operation with central institutions, both at the level of prime ministers, but these have been missing... We have also been disappointed with September's decision by the government for Pacon to face inflation. Where this private sector was hit by the state, especially private sector workers who hold the state because the situation of workers in the private sector is much heavier than in the public sector”, he says.

Even the chairman of the Kosovo Economic Ode, Lulzim Rafuna, has said high inflation hit citizens and the country's economy.

“Viti 2022 is characterized with many challenges especially for business, there has been an uncertainty all the time due to economic instability, especially the inflation share. So no business has been able to predict it in certain periods of inflation. Inflation for 2022 has reached a high rate, two-sided or highest since the declaration of independence until now. This has been a big business challenge. The second has been a challenge, when businesses were unable to recover after the pandemic period because the supply chain during pandemic was disturbed. As a year after the pandemic began a positive movement, there was a war between Ukraine and Russia that indirectly affected our businesses, because our firms were directly involved with European businesses. Energy uncertainty and another challenge followed was the question of a lack of labor force”, he stressed.

According to the World Bank report on our country, inflation marked growth of up to 19.2 percent. This year there was a slowdown in economic growth, and expectations are that Bruto Product rate (BPV) for 2022 will be between 3 and 4 percent, until 2021, this increase has been 10.7 percent.