The International Monetary Fund (IMF) expressed concern on August 9 that the temporary measures imposed by the US and EU on Kosovo could potentially impede foreign direct investment and overall economic development if they continue for an extended period.

These measures were introduced at the end of June in direct response to the EU's evaluation that Kosovo had not undertaken the required actions to ease tensions in its northern region.

The tension escalation was particularly evident in late May when Kosovan Serbs obstructed newly elected Albanian mayors from assuming their roles in three Serbian-majority communities, after the Serb List, the main political party representing the Serbian population in Kosovo, opted to boycott local elections held in April.

The statement was issued after an IMF team, led by Gabriel Di Bella, visited Pristina from July 31 to August 4, 2023.

The IMF said that while the short-term outlook might remain relatively unaffected if the measures are reversed promptly, a prolonged imposition could obstruct FDI and broader economic progress.

During this visit, the team assessed the macroeconomic environment and policy developments. The team took note of positive growth, declining inflation, and a narrowing current account deficit. It acknowledged the progress made in meeting commitments under Fund-supported programs, such as the Stand-By Arrangement (SBA) and the Resilience and Sustainability Facility (RSF).

The IMF said that fiscal revenues are continuing their robust expansion, the execution of the public investment program has gained momentum, and fiscal buffers have been maintained at suitable levels.

"However elevated global volatility and tensions in northern Kosovo remain risks to the outlook that if materialised could add to policy challenges,” the IMF concluded.