WASHINGTON, May 23, 2017 — The newest World Bank strategy for Kosovo aims to assist the country in moving on a path toward more sustainable, export-oriented, and inclusive growth, so its citizens are provided more opportunities for a better life. The Country Partnership Framework (CPF) for 2017-2021, approved today by the World Bank Group’s Board of Executive Directors, selectively supports Kosovo’s development agenda by focusing on three pillars: accelerating private sector growth and job creation; promoting reliable energy; and improving public service delivery.
“The World Bank remains committed to help Kosovo achieve its long term goal of European Union accession and building a prosperous country” says Ellen Goldstein, World Bank Director for Western Balkans. “With this new strategy, the World Bank is supporting reforms that will accelerate growth and promote employment - particularly for young people and women.”
Kosovo has enjoyed stable economic growth in recent years, but an economic model where growth is driven by consumption, fueled by foreign aid and remittances, has also done little to improve employment in the country. To maintain fast and steady growth, a gradual rebalancing of growth is needed toward higher productivity at home and greater competitiveness abroad.
The WBG program so far has contributed to notable improvements in the business-enabling environment in Kosovo. These improvements helped the country move from 117th position in the Doing Business ranking in 2012 to 60th place in 2016. The business registration process has been streamlined, a functioning cadastral system was established, property registration was simplified, and land tenure security was strengthened. Kosovo’s financial system was also strengthened and demonstrated greater financial stability.
The World Bank Group will continue to support reduction of administrative burden for businesses, tax transparency, improved corporate governance and financial reporting, and simplification of trade logistics as well as, overall, the investment policy reforms to attract private investments and higher quality FDI to the country. Through a recently approved operation, the World Bank will also help Kosovo enhance the business environment by supporting product certification for export markets. It is also supporting increased productivity of farmers and agro-processors. The CPF will support private sector job creation also through continued focus on reform of education and skills.
To address some of these constraints limiting greater private sector contribution to growth, the World Bank and the IFC, will join efforts to build capacity in the country.
"IFC will continue supporting the private sector through investments and advisory work to encourage economic growth and job creation in Kosovo,” said Thomas Lubeck, IFC Regional Manager for the Western Balkans. "IFC will be engaged in efforts to improve the business environment and corporate governance, attract private sector participation in infrastructure and energy projects and help to improve access to finance for companies engaged in manufacturing and services, as well as agricultural producers.”
The WBG will continue to support Kosovo to alleviate unreliable energy supply, this most binding constraint to acceleration of growth, reduction of poverty and creation of jobs.
“The World Bank, along with other development partners, is committed to helping Kosovo resolve its energy shortages through a comprehensive strategy that includes increased energy efficiency, development of renewable sources of energy, integration into regional power markets, and support for new power generation that is both reliable and affordable for citizens”, says Marco Mantovanelli, World Bank Country Manager for Kosovo.
The CPF will build on substantial progress to date on renewable development, energy efficiency and environmental cleanup in energy sector. Through support provided by the World Bank financed Kosovo Energy Efficiency and Renewable Energy Project, 24 renewable energy projects were prepared for private sector investment. It also provided technical assistance to a newly created Energy Efficiency Agency for a fund to support energy efficiency rehabilitation in public buildings.
IFC advised the Government of Kosovo in the privatization of the supply and distribution business of the Kosovo electricity company, which, so far, resulted in positive tariff impact of over EUR148 million, including reduction of distribution losses. The Bank helped to end the 50-year old practice in power generation of open dumping of dry coal ash and replaced the polluting open handling system of dry ash with a new closed wet ash handling system.
More than 85% of the ash dump created by 50 years of coal-fired power plant operation has been rehabilitated, and 70% of the total overburden area created from past mining operations has been reclaimed. More than 7,000 tons of toxic, high organic content materials have been removed from the country and treated in licensed facilities in the EU; 15,000 tons of low level organic content materials have been successfully treated locally.
WBG will also support the Kosovo authorities in their efforts to improve financial management and public administration. It will seek to promote efficiency and prioritization of public spending to improve competitiveness and crowd-in the private sector while protecting the poor and vulnerable. Support will focus on cross-cutting management of public resources coupled with targeted interventions to enhance the quality of, and access to, education and health services. WBG’s goal is to help Kosovo capture its demographic dividend by creating jobs and economic opportunities for youth.
World Bank Group financing to Kosovo during the CPF period is estimated between $207 - $277 million. Kosovo is eligible for financing from the International Development Association (IDA) of the World Bank Group, which is the fund for the countries with the greatest development needs. IDA credits are provided on concessional terms, with zero or very low interest charges and long repayment periods. The World Bank has an on-going portfolio of six projects, for a total of $124 million. The International Financial Corporation (IFC) - the private sector arm of the World Bank Group - expects to support the private sector in Kosovo with up to US$60 million during the CPF implementation period. IFC currently has three projects, totaling $7.5 million.
The CPF was informed by a series of consultations with a broad spectrum of stakeholders—government, parliament, civil society, think-tanks and academia, private sector, and international development partners. Key issues recognized across the groups of stakeholder include the challenges of high unemployment and unsustainable growth, the need for increased domestic productivity, and more exports.
Investments in energy, agriculture, natural resources, and access to finance to promote growth and productivity emerged as strong recommendations for the World Bank Group during the consultation process. The issue of high unemployment among young people and women was also highlighted, as was the need to invest in education and skills.
For more information on the World Bank’s work in Kosovo, please visit:
https://www.worldbank.org/en/country/kosovo or World Bank Kosovo Facebook Page
For more information about IFC’s work in Kosovo, please visit: www.ifc.org/eca
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