Kosovo is a lower-middle-income country which has experienced solid economic growth over the last decade. Kosovo is one of only four countries in Europe to experience growth in every year since the onset of the global financial crisis in 2008.
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Other countries in the Western Balkans have been similarly at risk, and not just from floods. Too little water in summer months has also had hefty consequences for other countries: the 2012 drought in... Show More + Albania reduced the country’s hydropower supply, exacerbating fiscal deficits to cover emergency power imports. Droughts and heat waves have resulted in severe agricultural production losses in FYR Macedonia in 2007-08 and 2011-12.Western Balkan countries are not well-prepared for such disasters, and scientists are warning us that climate change will only make matters worse. These countries need to think now about how to create more resilient societies going forward.With global warming of close to 1.5ᵒC above pre-industrial times already locked in, and a 40 percent chance to exceed 4ᵒC before 2100 if no further action is taken, the recent World Bank report, Turn Down the Heat: Confronting the New Climate Normal, finds that weather extremes considered as occurring every 100 years at most m Show Less -
Even if pouched in complex, quantitative studies, “risk” remains a complex, multi-dimensional, and highly subjective concept that reflects an analyst’s lack of confidence and sense of uncertainty. In this,... Show More + financial markets are not different from other sectors in the economy. Decision-making processes—especially if they relate to large-scale investments to be realised over a medium- to long-term horizon—are facilitated by an environment, in which the underlying “risk components” can be objectivised, quantified, and tracked over time. This is where functioning markets play such an important role, aggregating individual risk assessments, perceptions, and resultant actions and “translating” them into (accurate) price signals, which will help to increase the effectiveness of economic decisions made in the economy as a whole. In the financial sector, this price signal is the interest rate. Even though reported figures tend to be averages spanning over a wide range of individually relevant p Show Less -
Kosova Sot: What happens if the budget does not get approved this year?Jan-Peter Olters: There are emergency provisions in Kosovo's legislation that give the authorities a little extra time to finance... Show More + current -- but not capital -- expenditures, in function of the previous year's budget. But even this contains a number of important implications and risks. First, by having to delay public investments until a new budget will have been approved by a Parliament that was able to constitute itself will reduce overall growth rates in the economy -- beyond the amounts not spent by Government. The uncertainty alone will have the private sector delay its own decisions on large expenditures as well. Second, without the mid-year budget review for the current budget, the ability to accommodate the salary increases within existing line-item constraints risks the Government's ability to pay (all) public sector salaries by year's end and rectify any arrears situation early in 2015. If the January Show Less -
Reporter Reisen: Mr. Olters, is it correct to say that the project of a new coal-fired power plant in Kosovo has become the most controversial one within the World Bank?Jan-Peter Olters: It is at... Show More + least one that everyone knows. It is one of the most controversial.RR: The World Bank has announced to reduce investments in new coal-fired power plants. Why does Kosovo need a new coal power station?Olters: The issue is not a new, additional power station but the ability to decommission “Kosovo A” as quickly as possible and replace it with a modern power plant. “Kosovo A” is an ancient, fragile, and very inefficient power plant, which—even with the new filters—causes significant pollution.RR: Would it not be more sustainable to rely on alternatives to reduce the country’s dependency on coal energy?Olters: We did ask ourselves: are there options to close “Kosovo A” without replacing it with another coal-fired power plant, while ensuring that, at the same time, energy security is assured ( Show Less -
Koha Ditore: Since 2008, the Government of Kosovo had road construction as a priority, including here the three next years that will swallow 33% of capital investments. Has this concentration only on roads... Show More + been a mistake? Would investments in other sectors lead to more jobs and sustainable growth?Olters: Especially as a small, landlocked country, a transport network that guarantees secure access to seaports and the most important trading partners is an important priority. It still holds true that the only route to markets in central Europe, such as Germany or Switzerland, that does not cross a country that has not yet recognized Kosovo’s independence is via Albania and Italy. There is no doubt that Route 7—if well maintained—will continue to generate important economic benefits. Any discussion on whether the money spent on the motorway to Albania has maximized the development impact, relative to the same amount of money that could have been spent on alternative projects, has become pur Show Less -