OREANDA-NEWS. April 07, 2016. An International Monetary Fund (IMF) mission visited Pristina during March 23–April 5 to conduct the second review of Kosovo’s economic program supported by a Stand-By Arrangement (SBA). At the conclusion of the visit, Jacques Miniane, mission chief for Kosovo, made the following statement:

“The mission held constructive discussions with the authorities on policies to complete the second review under the SBA. Understandings were reached on most issues. However, as the authorities need additional time to fully flesh out their policy intentions in some areas, discussions will continue in the coming weeks.

“Performance under the program continues to be strong in many areas. The authorities achieved a substantial fiscal adjustment in 2015, with the fiscal deficit and government bank balances significantly over-performing program targets and current spending contained. Banks remain in good health and last year’s increase in credit growth continues. Progress is being made on measures to reduce structural barriers to bank lending, enhance bank supervision, and establish a macro-prudential policy framework. The public procurement system has been strengthened. Going forward, widespread use of the new system will be important to make procurement more transparent and public spending more efficient.

“However, despite these achievements, the rapid expansion in spending related to various schemes, particularly war-related benefits, is putting increasing pressure on the budget and undermining the authorities’ efforts to preserve fiscal sustainability while creating space for growth-inducing capital projects and other priority spending. Recognizing this risk, the authorities, in consultation with Fund staff, are preparing a package of measures aimed at better designing and calibrating these schemes, while containing related spending to 1 to 1.25 percent of GDP per year. This will ensure that the 2016 fiscal program targets remain within reach and that the 2017 budget, to be drafted later this year, will be in line with the fiscal rule.

“Discussions with the authorities will continue, including during the Spring Meetings in Washington later this month.”