“Blocking wages, pensions...”, what if Kosovo does not approve next year's budget in time?

The challenge at the Assembly's institution, successive complaints to the Constitutional Court, the government in office with limited competence, and the risk of foreign funds worth hundreds of millions of euros.

When the worst goes the worst, the state budget issue for next year comes up which, according to the Ministry of Finance projections, is expected to be around 3.5 billion euros.

For former Economy Minister Haki Shatri, the current situation is very disturbing.

“Budget is the material basis for functioning of the state. If this base is destroyed, the state goes bankrupt, it can't function”, he tells Free Europe Radio.

To fail to do so, the budget must pass through several phases so that it can enter into force on January 1, 2026.

Budget approval stages

The budget for next year begins to be prepared as early as March, in several budgetary circuits, and then distributed for review of all the institutions that are financed by the budget.

Under ideal conditions, the Government carried out all preparations and, under the Law for Public Finance Management, the last date for budget approval has October 30th.

Thus, MPs have two months, from November 1st to December 31st, to examine the document on two readings, on commissions, and to make needed changes.

But the first problem now is that Kosovo has a government in office with limited competencies.

The government law does not mention the term Government in office, but the Government in the resignation, defined as the government that functions after the distribution of the Assembly until the election of the new government.

The law envisions that such a government cannot adopt new laws, but can propose the adoption of the state budget.

It's quite nice up here. But Kosovo also has the second problem, as it is awaiting a Constitutional Court decision to understand whether the Assembly is constitutionalised in accordance with laws and regulations, and depending on the decision, the budget approval process can be stalled.

“Intentically, if we remain without [form] the Government and without the Parliament, it is at risk that as of January 1st, there will be no budget, and no payment procedure can occur without a decision from the Parliament”, says Shatri.

Among the payments blocked are salaries, pensions, those for police and military fuels, or even those for provision of institutions' saving materials.

“Practically, the state lock is”, Shatri estimates.

Speaking of budget approval deadlines, incumbent Finance Minister Iron Murati said days earlier that Government “would do its best, in the best interests of the republic, for institutions to function consistently as we have done so far”.

Second option

There is another possibility to avoid the blockade.

If the government approves the budget, and MPs are delayed to complete the necessary procedures, then the executive can make proposals for meeting/changing the current Law on the Budget, so that it does not expire on December 31st, but allow the following expenses for January or February, with the monthly average of the previous year, or as the 1/12 rule is otherwise known.

Shatri recalls that something like that happened to Kosovo two-way from declaring independence.

What law can be proposed if deadlines are reached?

Kosovo's incumbent Prime Minister, Albin Kurti, has yet a few days left to present the new government composition before the Assembly, and to see if it gets the necessary votes.

Even if he or anyone else can form Government, and starts with budget proceedings, Shatri does not believe that document will be very well thought out, given the situation the country has gone through so far.

Why? Because, according to him, there was no almighty minister who could draw up adequate development policies for next year, and therefore, the next budget could be a copy of that preliminary budget.

Other Economic Harms

The chairman of the Kosovo Economic Ode, Lulzim Rafuna, says Kosovo is suffering very economically the lack of powerful institutions.

“Business wants predictability, to understand what fiscal policy there will be, what investments in capital projects are, so that public investments can then attract private investment”.

He says the focus on budgetary divisions for next year should be, among other things, on reforms in fiscal policies, on increasing the budget for capital investments and improving the state image, opening the doors to foreign investments.

Shatri also cites the need to use credit opportunities and public loans to ensure a country's dynamic development space.

According to a World Bank report, growth decreases from 3.6 percent to 2024 to 3 percent in 2025, for Western Balkan countries. The biggest decline is projected to have Serbia and Kosovo, which, however, remains slightly above the average of the region, REL reports, Periscopi broadcasts