World Bank Supports Fiscal Policy, Investment Climate and Green Growth Reforms in Kosovo

WASHINGTON — The World Bank’s Board of Executive Directors approved today the Kosovo First Fiscal Policy, Competitiveness and Green Growth Development Policy Loan (DPL), which aims to enhance the effectiveness of fiscal policy, strengthen the investment climate, and lay the foundations for greener growth in Kosovo.

“The new operation is part of a programmatic series of two contributing to job creation, better welfare and cleaner environment for the people of Kosovo by supporting the country’s efforts to tackle some of the longstanding structural bottlenecks that impede higher, more inclusive and sustainable growth”, said Massimiliano Paolucci, World Bank Country Manager for Kosovo, and North Macedonia.

Steady economic progress since independence in 2008, spurred by the ambition to integrate into the European economy, allowed Kosovo to transition to upper-middle-income status in 2018. However, to sustain growth and accelerate poverty reduction, the country needs to shift to a more competitive growth model that creates more and higher quality jobs, supports firm growth and is driven by higher productivity. The recent crises reaffirmed the urgency of structural reforms to enhance the effectiveness of fiscal policy to mitigate the impact of shocks.

The DPL supports a reform program that strengthens domestic revenue mobilization, improves public financial management. and investment climate through enhancing trade facilitation systems and legal framework for land administration. It also supports measures that aim at increasing protection for vulnerable consumers in the electricity sector, while strengthening the framework for renewable energy generation, improving energy performance, and reducing usage of lightweight plastic carrier bags.

The financial support approved for this first DPL is EUR 90.3 million (US$100 million equivalent), a concessional credit from the International Development Association (IDA), part of the World Bank. The credit repayment period for this operation is 12 years, including a 6-year grace period, and no interest or service charge.

Following the approval by the Board of Executive Directors, the Government of Kosovo and the World Bank will sign a project financing agreement to be ratified by the Parliament of Kosovo for the DPL funds to become available for disbursement for the benefit of the citizens of Kosovo.