The seven-year loan aims to support Kosovo in its efforts to improve energy efficiency and environmental protection, the embassy said in a statement.
Raiffeisen Bank Kosovo will use the loan to finance replacement of boilers, energy-efficient lighting, insulation of buildings and refurbishment of heating systems, the statement said.
In September KfW and Kosovo's biggest lender in terms of assets, ProCredit Bank Kosovo, signed a similar deal for the same amount.
Raiffeisen Bank Kosovo reported a 39.2% rise in net profit to 12.6 million euro in the first nine months of 2008.
($=0.732 euro)