Publication: Kosovo Public Expenditure Review
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Date
2023-06-29
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2023-06-29
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Kosovo has gained a creditable reputation for prudent macro-fiscal management; yet necessary structural reforms and related fiscal pressures lie ahead. The country’s track record includes consistently high output growth rates, prudent fiscal deficits supported by fiscal rules, and one of the lowest public debt levels among peers. The Government was able to successfully weather the COVID-19 crisis and mitigate the impact of the ongoing inflationary crisis caused by the Russian invasion of Ukraine thanks to its healthy fiscal accounts and stable financial sectors. At the same time, however, the overlapping external shocks have highlighted the inherent volatility that mirrors Kosovo’s structural limitations - especially in health, energy, and education - and accentuates gaps in both human and physical capital. The objective of this Public Expenditure Review (PER) is to help the government identify means for improving the structure and quality of public services, enhance the equity of government spending, and take a holistic view of policies that will affect financing needs over time. To do so, the PER has analyzed fiscal issues that have not been explicitly detailed in, or are in the process of being incorporated into, the medium-term expenditure framework and the economic reform program. The most notable issues include the urgently needed energy investments, the ramifications of the new law on public salaries on the budget, the sustainability of the untargeted social protection system, and possible pathways of the cost of pensions in light of expected changes to eligibility criteria, and the health spending and health financing conundrum. The PER also looks back at past World Bank PER recommendations and their implementation record, in the attempt to shine a light on measures that remain valid and could still be implemented.
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“World Bank. 2023. Kosovo Public Expenditure Review. © World Bank. http://hdl.handle.net/10986/39944 License: CC BY-NC 3.0 IGO.”
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Publication Kosovo - Public Expenditure Review(World Bank, 2010-06-03)During most of the 2000s, Kosovo has pursued a highly conservative fiscal policy, restraining expenditures as revenues continued to climb. The Government has now shifted toward an expansionary expenditure policy. In the short term, the Government intends to finance the resulting budget deficits from accumulated savings and borrowing, as well as through the sale of assets and donor budget support. Neither solution is sustainable. In principle, there is room to increase revenues Kosovo's tax burden is low by regional standards. But the weakness of domestic tax instruments makes this difficult. Restraint on the expenditure side will be required. Given the well-documented shortcomings of public services in Kosovo, this will require an improvement in the quality of public expenditure an improvement in the efficiency of public service delivery rather than a reduction in the quantity or quality of services. This report looks for such opportunities in the major programs of Government expenditure. Overall, Kosovo is in a position to maintain a sustainable fiscal stance while continuing to improve the quality of public services. The public sector is small, relative to gross domestic product (GDP), and does not bear a crushing burden of long term obligations to pensioners, to veterans, to creditors that threaten the finances of neighboring countries.Publication Kosovo, FR Yugoslavia : Medium-Term Public Expenditure Priorities(Washington, DC, 2002-10-16)Given the tight overall resource constraints in Kosovo, and in the face of declining donor support and limited access to external finance, difficult choices and trade-offs on spending decisions will need to be made. The main challenge will be to develop expenditure policies which will preserve macro-stability and ensure that public services are sustainable, comprehensive, and efficiently provided. Public spending policies need to lay the basis for broad-based equitable economic growth, and target the most needy, in an effective and efficient fashion. Through introducing the Medium Term Expenditure Framework (MTEF) approach in 2002, the United Nations Interim Administration in Kosovo (UNMIK) and the Provisional Institutions of Self Government (PISG) have started to make progress in adding a medium-term context to budget policy. This report identifies the several important expediture measures that require action. First, spending has to be reallocated across sectors, so reduce subsidies, reassess public sector employment, and provide finance for investment needs. Second, improve the efficiency of existing spending in the health, education, and social protection sectors. Third, increase the budget spending on health to provide a greater range of services and target educational finance to reduce inequality. Fourth, strengthen the effectiveness of the budget as a policy tool. Fifth, further improve transparency and accountability.Publication Kosovo Public Finance Review : Fiscal Policies for a Young Nation(Washington, DC, 2014-06)Kosovo is Europe s youngest country, both in terms of history and demographics. As part of the former Yugoslavia, Kosovo became a separate territory under United Nations administration in 1999, and declared its independence in 2008. By February 2014 it had been recognized by 106 UN member states including 23 out of 28 EU members. Kosovo is a potential candidate for European Union (EU) membership and is currently negotiating a Stabilization and Association Agreement (SAA) with the European Commission. From 1999 Kosovo has been using the Deutsche Mark and, since 2002, its successor currency, the Euro, as legal tender. Kosovo is a landlocked country in South East Europe (SEE) with about 1.8 million inhabitants and a large migrant population based mainly in Western European countries. Kosovo has taken great strides to rebuild an economy destroyed by the collapse of Yugoslavia and the 1998-99 war, with sound fiscal numbers and budgets focused on capital expenditure. In general, Kosovo s headline macroeconomic indicators are also relatively sound. Growth has averaged over 4 percent since 2000 and remained positive after 2008 during the global crisis years. Household survey evidence for 2006-11 suggests that economic growth benefitted all sections of society but the poorest 40 percent of the population saw consumption rise faster than wealthier groups. Public and private investments have made large contributions toward economic growth over the last five years as efforts to rebuild the economy continued.Publication Mongolia - Public Expenditure and Financial Management Review : Bridging the Public Expenditure Management Gap(Washington, DC, 2002-06)Mongolia has realized important progress toward more efficient and sustainable public finances over the last decade. However, weaknesses in the institutional and structural reform agenda threaten Mongolia's fiscal balances. The government proposes to grow at 6 percent. This report discusses policy measures needed to ensure success of government programs. Following the introduction, chapter 2 discusses past performance and provides a brief discussion of recent economic and social developments. Chapter 3 discusses future challenges, analyzes the main sources of fiscal pressure on Mongolia's budget, and proposes a sustainable macroeconomic reform path. Chapter 4 evaluates budget execution processes. Chapter 5 discusses the impact of intergovernmental fiscal relations on fiscal balances, and service delivery. Chapter 6 discusses governance. Chapter 7 analyzes budget formulation and policy coordination processes. Chapter 8 discuses public sector resource allocations, with particular emphasis on education, health, and the environment sectors. The report concludes by discussing the importance of putting into place measures to bridge the gap between existing public expenditure management practices and those needed to improve the overall performance of the Mongolian public sector, and proposes a framework within which this can be achieved.Publication United Republic of Tanzania Public Expenditure Review FY03 : Managing Public Expenditures for Poverty Reduction - Report on Fiscal Developments and Public Expenditure Management Issues(Washington, DC, 2003-06-30)In line with the Poverty Reduction Strategy (PRS) context, this external evaluation looks at budgetary developments, primarily through the lens of the PRS, thus with important implications for the Public Expenditure Review (PER) process, which has evolved into the principal analytic instrument to support the translation of PRS objectives and strategies, into budgets. Overall fiscal policy remained very conservative in FY02, and FY03. Tanzania continues to use a cash budget system that strictly constrains spending, and commitment levels to short term availability of cash. While the system was clearly useful, improvements in budget and aid management put the continued use of a cash budget system into question; thus it is advisable to revisit options for relaxing the stringency of the cash budget. Nevertheless, the revenue to gross domestic product (GDP) ratio, fell marginally to 12.1 percent in FY02, but is projected to reach 12.5 percent in FY03, therefore, with respect to new tax policy measures, it will be important to pay attention to the impact of such measures on poverty and growth. However, given that foreign assistance increased in FY02 to 5.9 percent of GDP, and is projected to increase to 7.9 percent in FY03, there is the need to pursue policies that would support Tanzania's international competitiveness, and minimize the potential "Dutch disease" effects of aid. Upon review of the micro-aspects of development assistance, it would be useful to improve the scope of the information, and in turn, the Ministry of Finance ( MoF) should routinely obtain this information, so as to incorporate/synchronize it with current aid flow data bases. Further recommendations address functional allocation of resources and distribution, requirements concerning auditing, and reporting standards, and, the inclusion of participatory monitoring and evaluation, as an important feedback mechanism into the PER process.
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