Kosovo Public Finances and Sustainable Growth Development Policy Financing

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The development objectives of the Public Finances and Sustainable Growth Development Policy Financing in Kosovo support the Republic of Kosovo’s efforts to improve fiscal transparency, to enhance private sector development, and to strengthen environmental sustainability in the wake of the COVID-19 crisis. The operation supports the government’s efforts to tackle longstanding structural bottlenecks that impede higher and more inclusive growth in Kosovo, as well as helps to chart a sustainable and inclusive recovery path from the pandemic. The operation is organized around three interrelated pillars with a total of seven prior actions. Through its first pillar, the operation aims to improve fiscal transparency, with a view to strengthening fiscal sustainability in the medium term. It supports reforms that: (i) strengthen debt management by improving the transparency of debt management operations and oversight of the Executive; and (ii) improve the evidence base for fiscal policy initiatives through improved costing of social protection initiatives. Through its second pillar, the operation supports reforms to enable private sector development by: (i) improving the legal framework for business inspections; (ii) simplifying licensing and permit requirements in the agriculture and agribusiness sectors; and (iii) setting up a regulatory framework for e-IDs to facilitate digitalization. Through its third pillar, the operation supports reforms to strengthen environmental sustainability by: (i) improving waste management with a view to moving toward a circular economy; and (ii) establishing a legal framework for the transition to market-based support mechanisms in the renewable power generation sector to improve the energy mix. Importantly, reforms in the third pillar will contribute to climate mitigation efforts by reducing greenhouse gas emissions over the medium term.