Kosovo to Lose 120 Million Donation

In the 2008 Donors’ Conference for Kosovo, held in Brussels, some 500 million euro was promised to the young country from European Union institutions.

Of this, 150 million euro macro-economic support from the Commission, available for between 2009 and 2011, was contingent on Kosovo securing a stand-by agreement with the IMF.

Following the signing of the deal in September last year, the EC agreed to release 30 million euro of the first 50 million euro tranche.

But, the EC has now told Balkan Insight that the late signing of the IMF deal and Kosovo’s subsequent breach of the terms of the agreement, following massive wage increases to civil servants, meant that 20 million euro was already lost and a further 100 million euro was almost certainly to be dropped.

Kjartan Björnsson | Photo by: BIRN

“More importantly, according to the IMF, Kosovo is not respecting the agreement, so there is very little or no appetite in the EU to start discussing the hundred million," Bjornsson said.

"The hundred million is far away and will not be reopened any time soon, if at all,” Kjartan Bjornsson, head of Operations at ECLO told Balkan Insight.

“This is a consequence of the failure to respect the agreement with the IMF.”

Kosovo’s Assembly risked a rift with the IMF on March 31, when parliament adopted a budget that included big salary hikes for teachers and civil servants of 50 and 30 per cent respectively in defiance of the deal between the two.

The IMF delegation in March criticised the planned substantial increases in the government's wage bill.

"This increase is not in line with the program objectives under the SBA," the IMF said, referring to the Stand-By Arrangement.

The draft budget will take the cost of state salaries to 383 million euros, up from 311 million euros in 2010. Kosovo’s budget for 2011 is 1.264 million euros.