Kosovo Gets No-Interest Loan from Islamic Bank

Kosovo's Deputy finance minister, Ramadan Avdiu, said the loan from the Islamic Bank was part of a loan promised back in 2000, part of which was put on hold.

“At that time, the UN mission in Kosovo, UNMIK, advised the bank not to allocate the whole sum due to insufficient security,” Avdiu told Balkan Insight.

He described the loan as part of the bank’s strategy of helping non-members of the Organisation of the Islamic Conference, and the money will be spent on projects to do with education, health and possibly infrastructure.

Avdiu said he had participated at an Islamic banking conference at Jeddah, Saudi Arabia, at the end of June, meeting top bank officials.

“This time we convinced them that there were security guarantees from the Republic of Kosovo,” Avdiu said.

The loan agreement will be finalised by the end of August, by which time the government will have completed its project targets for education and health.

Kosovo will start to return the money only after ten years.

The loan is highly favourable because Islamic banks do not apply interest rates on loans because usury is prohibited by the Islamic faith.

“Certainly those kinds of loans are more welcome for countries than the ones that come with interest,” Avdiu said.

Since Kosovo declared independence in 2008, its relations with the Islamic world have been uneven. The country has won only 20 recognitions from Arab and Islamic countries. By contrast, all but five of the EU's 27 members have recognised the former province of Serbia.

Avdiu said the government was continuing to lobby the OIK for independence recognitions but denied to specify whether Kosovo planned to join the Islamic organisation. About 90 per cent of Kosovo's population is Muslim.