IMF国际货币组织全球-Republic-of-Kosovo_Request-for-Purchase-Under-the-Rapid-Financing-Instrument_30页_733kb

IMF Country Report Summary: Republic of Kosovo

Core Content

The IMF Executive Board approved US$56.5 million (SDR 41.3 million or Euro 51.6 million) in emergency financial assistance for the Republic of Kosovo under the Rapid Financing Instrument (RFI) to address the urgent balance of payments needs caused by the COVID-19 pandemic.

Main Points

Economic Impact of the Pandemic

• Real GDP growth for 2020 is projected to contract by 5.0% due to the pandemic's impact on tourism, remittances, exports, and FDI.
• Tourism receipts are expected to fall by 20%, while exports of goods will decrease by 17%.
• Remittances are forecast to decline by 10%, and compensation for Kosovans abroad is expected to drop by 19%.
• Bank credit to the private sector is projected to decrease by 2.4%, and private sector deposits by 4.2%.
• The current account deficit is projected to widen to 7.4% of GDP in 2020, while financial and FDI inflows are expected to fall by 50%.

Fiscal Measures

• The government has implemented targeted fiscal measures to support businesses and households affected by the pandemic, with an estimated cost of 2.5–3.5% of GDP.
• Key measures include:
  • Transfers to SMEs and other affected sectors.
  • Advancing social assistance payments by one month.
  • Extra allocations to the health ministry for medical equipment.
  • Deferrals of corporate and personal income taxes and VAT.
  • Temporary removal of VAT on wheat and flour imports.
  • Deferral of public utilities payments until the end of April.
• These measures are expected to widen the fiscal deficit to 4.8% of GDP, although the fiscal rule deficit is projected at 3.4% of GDP.

Central Bank Actions

• The Central Bank of Kosovo (CBK) suspended loan repayments for affected sectors and individuals from March 16 to April 30.
• Staff emphasized the importance of not weakening provisioning or capital standards and urged the CBK to implement capital restoration plans for banks that may face capital shortfalls.
• The banking system remains resilient with low non-performing loans (NPLs) and adequate liquidity and capital buffers.

Debt Sustainability

• The debt sustainability analysis (Annex 1) indicates that public debt will rise to 28% of GDP by 2025, but it is expected to remain sustainable.
• The fiscal rule is expected to be reinstated from 2022 onwards, ensuring macroeconomic stability.
• The capacity to repay the IMF is considered adequate, with IMF credit outstanding after RFI at 114% of quota.

Outlook and Risks

• The economic outlook is deteriorating rapidly due to the pandemic's impact on remittance-originating countries and containment measures.
• Downside risks are significant, including a potential further reduction in GDP growth by 6 percentage points.
• Political instability and disagreements with Serbia pose additional risks to economic recovery.
• The absence of a lender of last resort and uncertain secondary market liquidity for government securities could affect bank stability.

Key Information

• IMF RFI Financing: Covers 51% of the financing gap (SDR 41.3 million).
• Additional EU Grants and WB Loans: Cover 16% and 8% of the gap, respectively.
• Balance of Payments Gap: Expected to be 4.1% of GDP in 2020.
• IMF's Role: The Fund is prepared to assist in addressing both immediate and medium-term policy challenges and supporting a sustainable recovery.

Staff Appraisal

• The staff supports the request for RFI financing due to the severe economic shock from the pandemic.
• They recommend fiscal consolidation to rebuild fiscal buffers and bank-specific capital restoration plans to maintain financial stability.
• The fiscal and debt sustainability of Kosovo is considered vital for future economic resilience.

Conclusion

The IMF's emergency support to Kosovo is a critical response to the pandemic-induced economic downturn, ensuring short-term balance of payments stability and supporting recovery efforts. The staff's appraisal is positive, highlighting the timely and appropriate policy response, while also urging caution to avoid long-term fiscal and financial risks.