Kosovo must boost private sector growth through business climate reforms - EBRD

“The Kosovo authorities should step up the fight against informality and tax evasion, as well as facilitate access to finance for small and medium-sized enterprises (SMEs) by addressing the underlying legal and institutional constraints that discourage formal activities,” the EBRD said its 2019-2020 transition report.

Corruption and the inefficient judiciary are among the key obstacles to doing business, according to the lender. "Although business registration is simple and fast, with “one-stop shops” in place, businesses are burdened with a large number of licences and permits, cumbersome administrative procedures and frequent, uncoordinated and costly inspections.

Kosovo also needs to address problems in state-owned enterprises (SOEs) and step up the privatisation of non-strategic SOEs, according to the EBRD.

“Financial oversight, corporate governance, accountability and efficiency of SOEs are areas that need improvement,” it commented.

According to the report, the country should urgently take measures to decrease its reliance on lignite as a source of electricity and increase the share of renewables in power generation.

“Also, a broader green agenda is needed, including steps to improve energy efficiency at the residential, private sector and municipal level, and the construction of new wastewater treatment plants,” it noted.

Economic growth in 2019 and 2020 is expected at 4.0% annually, with domestic demand continuing to be the main growth driver.

“Inflation in 2018 remained subdued for the year as a whole, at around 1.0%, but it has risen since the second half of the year, averaging 3.0% year-on-year in the first nine months of 2019,” the bank said, adding that the surge in inflation has been possibly related to the imposition in November 2018 of 100% taxes on goods imported from Serbia and Bosnia and Herzegovina.