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"The COVID-19 pandemic and the measures taken to control it have severely weakened Kosovo's economic prospects. The economy is expected to shrink by 5 percent in 2020 as revenues from tourism, remittances, exports of goods and FDI will decline as a result of travel restrictions and the effect of COVID-19 on trade partners and the countries of the diaspora where remittances come from. "The deteriorating economic outlook is expected to result in external and fiscal funding gaps," the IMF said in a statement.
Therefore, in order to help Kosovo, the IMF has approved a loan of 51.6 million euros in assistance under the Rapid Financing Instrument (RFI).
Tao Zhang, Deputy Managing Director and Acting Chairman of the IMF Executive Board said that the authorities in Kosovo reacted quickly to the pandemic, but as a result of economic measures, the budget deficit is expected to expand.
"As a result of these measures, the budget deficit is expected to expand and the debt is likely to increase. However, the authorities continue to be committed to macroeconomic stability, as long as these measures are temporary and the fiscal rule is restored after the withdrawal of the pandemic, public debt is expected to remain stable. The IMF is ready to support Kosovo in the fight against the pandemic and to help rebuild its economy," Zhang was quoted as saying.
The Government of Kosovo has decided to approve the initiative for negotiating the package of agreements with international financial institutions, in order to cope with the situation created by COVID-19. The total limit of the authorization granted under this decision, for financial loan agreements is 250 million euros or equivalent, with a repayment period of up to 15 years and with an interest rate of no higher than 3 percent.