The International Monetary Fund (IMF) said that its executive board completed the second and third reviews of Kosovo’s economic performance under the stand-by arrangement (SBA) on March 13. The completion of the reviews makes possible the disbursement of SDR79.2mn (around €100mn), which would bring the total disbursements under the SBA to SDR135.4mn (€172mn).

At end-2016, Kosovo’s public debt stood at €852.7mn, equal to 14.5% of GDP. It included €373.8mn in international debt, €114mn of which is owed to the IMF.

On July 29, 2015, the IMF approved a 22-month SBA for Kosovo worth SDR147.5mn. On March 13, the fund’s board approved a request of the authorities for extending the SBA to August 4, 2017 to “facilitate policy continuity and allow sufficient time for ongoing structural reforms to progress”.

The SBA backs the government’s economic programme intended to boost the country’s economic potential by creating fiscal space for growth-enhancing expenditure. Other programme goals include preserving low debt, upgrading key infrastructure by catalysing donor resources, and raising competitiveness – by realigning labour costs, removing structural obstacles to credit, and improving the business environment.

The executive board’s deputy managing director and acting chair Mitsuhiro Furusawa assessed that Kosovo has performed strongly under the programme and stronger public finances have been key to the success.

“The economic recovery continues, led by robust domestic demand growth. Policy implementation has been laudable. Maintaining this momentum through the end of the program will help to lock in these gains in macroeconomic and financial stability,” the official said.

Furusawa noted that the authorities have remained well within their fiscal deficit limit and have improved budget composition. The budget’s focus was shifted away from unproductive current spending and more space was created for much-needed, growth-enhancing capital investments.

In addition, the authorities have significantly increased their fiscal buffers, “critical to macroeconomic stability in a unilaterally euroised country”. This year’s budget is in line with the programme’s objectives and will continue to support healthy public finances, a further move toward capital investment and other growth supporting measures.

Furusawa also noted that Kosovo’s authorities have taken important steps to strengthen the country’s financial safety net and create more competitive business environment.