Report: Kosovo waiting for funds

Report: Kosovo waiting for funds

“The entire schedule set down by EU planners early this year has been abandoned because the United Nations Security Council failed to agree on granting Kosovo independence.”

Donor funds of EUR 600mn to EUR 1bn for state institutions, external debt relief, economic aid and infrastructure investment must therefore wait for the province’s status to be resolved another way, EU planners say.

“Most of the [preparatory] work is not wasted,” said Renzo Daviddi, head of the European Commission liaison office, the embryonic EU embassy in Kosovo.

“However, the EU and the World Bank worked under the assumption of implementing the Ahtisaari plan,” he added.

Nonetheless, Kosovo’s finance minister Haki Shatri played down Kosovo’s reliance on foreign technical aid still thought to account for more than 20 percent of gross domestic product.

“Remittances sent by expatriate workers officially account for about 15 percent of gross domestic product, with larger amounts probably unrecorded. In one heartening indicator, last year’s three percent economic growth came—for the first time—more from private-sector growth than from donor activities,” he said.

Even so, last year’s GDP, at EUR 2.6bn, was only a little higher than the total aid disbursed since the 1999 conflict.

“Kosovo’s leaders focus too heavily on donor money while neglecting healthier ways to raise revenue, such as privatizing the local mobile phone network,” said Etrur Rrustemaj, chief executive at the Post and Telecommunications of Kosovo.

He added that competition over patronage among local politicians had made Kosovo a more difficult place to invest in recent months. “They’re driving away good FDI [foreign direct investment],” he says.

According to the newspaper, Kosovo’s prospects could be poor if regional tensions remain unresolved.

“A Serbian trade embargo in reaction to Kosovo’s independence would deter many investors,” Andrew Howell, a Citigroup vice-president for equity research in emerging markets, told the Financial Times.

Some EU-based investment firms already say Kosovo is best avoided, simply because Serbia—the largest ex-Yugoslav market, with 8m people —is more valuable, the daily concluded.