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22 Apr 11

Kosovo’s Economic Plan Unrealistic, Experts Warn

Local economic experts say the Kosovo government's newly launched plan for economic development, which aims to increase growth by cutting red-tape and reforming the business sector, is unrealistic.

Petrit Collaku

On April 18, the government approved the plan for 2011-2014, which foresees economic growth from seven to eight per cent and hopes to reduce the unemployment rate by eight to ten per cent, but it has been met with sceptism by some analysts.

The plan aims to fight the informal economy, create a sole agency for tax and customs revenues, improve fiscal policies, and revitalise agriculture.

It also addresses the business sector, loooking to reduce barriers for firms through a comprehensive reform of the permits system that would eliminating 50 per cent of required licenses.

The country hopes that such efforts will rank it as one of the World Bank's top-reformers for business in 2012 and 2013.

The government’s strategy also aims to declare the winner for privatization of the country's telecom company in October and close the financial aspects of the sale in December 2011.

It said it would privatise the distribution and supply of power during the coming year as well.

Musa Limani, head of Economic League of Kosovo, said he was sceptical of the government’s plan for economic development that was revised in Bulgaria last week.

Professor Limani told Balkan Insight that given Kosovo’s current situation, the target of seven to eight percent economic growth is not attainable.

“To reach economic growth of seven to eight per cent in Kosovo means that we need an annual accumulative investment of four to five billion euros,” Limani explained.

He said that the plan is purely political, with the aim of showing the people of Kosovo that the government has an economic strategy in place.

“It’s a political plan because such strategies existed before but never succeeded,” he said.

“There was a strategy for the economy for 2004-2008 that failed totally,” he said.

Agron Demi from the think-tank GAP, meanwhile, says the new economic development plan is incomplete and only presents priorities.

“The government’s objectives presented in the plan are not more or less then what we heard during the election campaign or the existing plans,” Demi told Balkan Insight.

He said that the government has taken a reactive stance to addressing challenges which are discussed in public debates.

He added that such an reactive attitude was seen at the beginning of 2010 when Kosovo’s government approved a strategy for the north of the country.

“But, more then a year has gone and no results have been seen from that strategy,” Demi said.

Demi stated that the government's economic plan does not explain how the economic growth and unemployment reduction will be achieved.

“Even those two objectives do not come across because there is a need for greater growth than 7 to 8 per cent in order to have the unemployment drop by eight to ten per cent,” Demi said.

He said that the economic growth in the last three years has come only through public expenditures and not from the development of the private sector.

“The same thing will happen during the period 2011-2014 with this plan,” he said. “For the last three years, economic growth was six per cent but unemployment remained the same at around 45-47 per cent.”

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