For more than ten years, Kosovo has engaged with the World Bank Group and has succeeded in overcoming considerable challenges en route from the postwar reconstruction to a functioning and competitive market economy that provides its citizens and the enterprises operating therein an economic perspective.
Kosovo increased its latest ranking by 28 ranks to 98 in the Doing Business 2013 survey. This is the result of work undertaken by the high-level Task Force established at a ministerial level by an order of the Prime Minister, charged with improving Kosovo’s Doing Business ratings. A legislative package of related reforms was approved in the Assembly in June 2011, embedded by World Bank-financed projects and programs, in particular the Business Environment Technical Assistance (BETA) project and the Sustainable Employment Development Policy Program (SEDPP). Both operations closed in mid-2012. BETA has supported the streamlining of regulations, while encouraging business development, including through the establishment of 26 municipal business centers where citizens can obtain permits and business registrations, pay taxes and customs fees—as well as receive advice. SEDPP has supported the country in maintaining a stable macro-fiscal framework and improving the conditions for sustainable employment. Through the various SEDPP-inspired reforms, the government has increased the transparency, accountability, and management of public expenditures, while laying necessary institutional and legislative foundations that Kosovo needs to generate sustainable employment and growth. The first SEDPP operation, in the amount of US$34 million, was disbursed in December 2011, while the second SEDPP tranche, a US$49-million grant, was paid out in June 2012.
Critical reforms, many of which supported by the World Bank, are ongoing.
Public Administration: Despite considerable progress achieved in the past few years, Kosovo still needs to improve public financial management and further utilize information technology to make efficient use of scare public resources. The capacity of the civil service to attract, motivate, and retain qualified staff is also a pressing constraint to the effectiveness of government institutions. As part of its engagement in the sphere of public administration, the World Bank is working with the Government of Kosovo to implement the Public Sector Modernization Project, which aims at (i) strengthening the performance of key budget organizations in budget formulation, budget execution, and public procurement; (ii) establishing the foundations for fiscally sustainable payroll management and effective human resource management in the core civil service; and (iii) creating conditions for the further automation of Government work processes and for the development of e-government applications
Agriculture: Kosovo is a country endowed with good quality agriculture land and has been largely food self-sufficient in the past. The agriculture sector currently contributes about 12 percent to the country’s GDP and accounts for approximately 35 percent of total employment in Kosovo. The country has competitive potential in the production of fruits and vegetables and in the livestock sub-sector, with domestic demand for horticulture and livestock products expected to grow as purchasing power increases in the country. This sector faces many challenges—including outdated technology and management practices, unfavorable farm structures, weak rural infrastructure, suboptimal use of inputs, and limited access to credit and investment capital. Agriculture is a priority sector for development and the Government of Kosovo has developed an Agriculture and Rural Development Plan (ARDP) to address this sector. As part of these efforts, The World Bank Group is implementing the Agriculture and Rural Development Project, aimed at helping the Government of Kosovo promote competitiveness and growth in the livestock and horticulture subsectors over the next decade.
Education: Although the net primary enrollment rate in Kosovo reaches 96 percent, the country’s higher education enrollment lags behind other countries in the region. The education infrastructure in the country is insufficient, with more than half of the schools operating on double shifts, and about five percent on triple shifts. The education system remains poorly regulated, resulting in low quality of services and weak linkages with labor demand. As a result, the Government is placing high priority on strengthening the education system and has prepared a multi-year strategy for developing both general and higher education in Kosovo. The Government in Kosovo is working with The World Bank Group to implement the Institutional Development for Education Project, which helps to (i) develop the organization and financing of the education system in Kosovo; (ii) build institutions and management capacities to promote quality improvements in primary and secondary education; (iii) create conditions to introduce efficient and appropriate designs and reduce multiple shifts in Kosovo’s schools; and (iv) strengthen the management capacity at the system and institutional levels for higher education.
Energy: A major obstacle to Kosovo's economic growth and development is inadequate and unreliable electricity, with frequent power outages disrupting manufacturing, education, and health services. Kosovo's electricity supply options are constrained by limited availability of renewable resources, ageing and unreliable power generation plants, supply shortages in the Balkans that limit Kosovo's ability to import electricity, and an absence of any natural gas resources or pipeline to import gas. The Country Assistance Strategy for Kosovo includes several initiatives to address these problems, including an the Energy Sector Cleanup and Land Reclamation Project and a Partial Risk Guarantee (PRG) for private sector investments in, and financing of, the proposed new investments in the Kosovo Power Project that would comply with European Union environmental standards and enable the closure of the Kosovo A Power Plant.
Finance and Competiveness: The financial system in Kosovo is dominated by foreign-owned banks and is primarily funded from large—relatively stable—flows of remittances. Although Kosovo has proven to be relatively resilient to the global financial crisis, it suffers from structural financial sector vulnerabilities that need to be addressed. The government is working with The World Bank Group, in the context of the Financial Sector Strengthening and Market Infrastructure Project, to create a strong regulatory and supervisory framework, strengthen financial system supervision, and improve access to affordable financial services, especially outside of the capital city and for small enterprises.