January 24 (SeeNews) - Veterans from Kosovo's war of independence from Serbia will benefit from new legislation that pegs spending on benefits to veterans to economic growth rate, finance minister Avdullah Hoti has said.
Taking into account that Kosovo's annual economic growth rate is projected at 4 to 5 percent in the coming years, budget spending on benefits to war veterans will increase by the year, Hoti said in an interview with local TV broadcaster Tribuna Channel aired on Monday.
The amendments are important for the functioning of the state, as they aim to secure the stability of the state budget, Hoti said.
Public spending on benefit schemes is capped at 0.7% of Kosovo's gross domestic product (GDP) in changes to the law on war veterans from the Kosovo Liberation Army (KLA) approved by parliament on December 30. The new legislation, which has drawn fire from opposition in parliament, also envisages re-classification of already certified war veterans according to their contribution in order to contain spending at affordable levels.
The restructuring is a requirement set by the International Monetary Fund as condition for Kosovo to gain access to a further tranche of some 100 million euro ($107.3 million) under a 184 million euro two-year stand-by funding arrangement with the global lender agreed in 2015. The country has so far drawn 71 million euro under the deal.
Opposition forces in parliament filed a complaint in Kosovo's Constitutional Court on January 10, seeking reversal of the changes to the law. The amendments can only take effect if the court upholds them.
In addition to capping budget spending on benefits to war veterans, the amendments set some additional eligibility criteria. According to the amendments, a KLA fighter who had not been not active in Kosovo during the war, has no right to receive a pension. KLA veterans who are presently not living in Kosovo, are also ineligible for benefits. KLA was a paramilitary force active before and during the Kosovo war (1998-99).
In addition, a three-level categorization of war veterans was introduced, according to the time of mobilization and service in KLA. Benefits depend on the category: 120 euro per month at the lowest level, 170 euro at the second level and 250 euro at the top level.
Kosovo's GDP increased by a real 3.8% year-on-year in the third quarter of 2016, after growing by 3.3% in the second quarter, the office of national statistics announced last month.
Kosovo's economy expanded by 4.1% in 2015 driven by strong remittances, accelerating bank credit growth and ongoing large infrastructure projects. A similar GDP growth rate is projected in 2016 and 2017 but the economy continues to face challenges such as persistently high trade gap, the IMF said in November following a review of Kosovo performance under the stand-by arrangement.
($=0.93169 euro)