April 25 (SeeNews) - The successful completion of Kosovo's IMF-backed economic programme depends on the implementation of the legislative amendments regarding veterans and invalids from the Kosovo war, IMF resident representative, Ruud Vermeulen, said on Tuesday.
War veterans have to be reclassified by end-May based on the length of their service and the law on war invalids should be amended by mid-May, aligning criteria for war disability to those for civilian disability, Ruud Vermeulen said in a statement following discussions with the Kosovo authorities in the framework of the 2017 Spring Meetings of the IMF and the World Bank held in Washington last week.
"These measures will ensure that spending on war-related benefit schemes remains sustainable, thereby freeing up space for higher spending on priority areas such as education, health, and infrastructure," Vermeulen said.
Timely actions are required, as there are only few months until the programme expires, he added.
Kosovo's overall performance under the IMF-backed programme is strong, Vermeulen said. Fiscal targets for end-March have been met, 2017 budget deficit is expected to remain within the agreed limits, the banking system is sound, and structural reforms in public procurement are ongoing, he added.
According to the already amended law on veterans, public spending on benefit schemes is capped at 0.7% of Kosovo's gross domestic product (GDP). The changes in the law were approved by Kosovo's parliament in December. The amended law envisages a three-level reclassification of the former fighters from the Kosovo Liberation Army (KLA) according to the time of their mobilization and service. 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.
In March, the executive board of the International Monetary Fund (IMF) approved the disbursement of 79.2 million Special Drawing Rights (SDRs), equivalent to about 100 million euro (106.4 million), to Kosovo under the country's stand-by arrangement (SBA) with the Fund. The new tranche brought the total disbursements under the SBA to SDR 135.4 million, or about 172 million euro.
The IMF's executive board approved a 22-month SDR 147.5 million SBA for Kosovo in July 2015 supporting the government's economic programme which seeks to increase Kosovo's economic potential by creating fiscal space for growth-enhancing expenditure, to preserve low debt, to upgrade key infrastructure, and to boost competitiveness.