IBNA Special Report/ Experts on economic affairs say that the government of Kosovo is risking putting the country into a public debt crisis, similar to that in Greece. They call for caution to be shown with investment funds and loans which according to them, do not generate investments. IBNA hears from professor and expert of economic affairs, Vebi Rama, head of STRAS, Ibrahim Rexhepi and Bedri Zymeri, head of the Department of Statistics in the Central Bank of Kosovo
Pristina, April 8, 2014/Independent Balkan News Agency
By Elton Tota
A public debt crisis is knocking on Kosovo’s doors and this crisis is similar to the Greek crisis, say experts of economic affairs in Pristina. They say that the debts that are accumulated do not turn into a source of investments. According to them, the significant increase in salaries and pensions recently made in Kosovo, but also the promises for investments, are not in line with the level of economic development.
Professor and expert of economic affairs, Vebi Rama says for IBNA that salary increases and the promises of the prime minister for such investments and funds are not in line with the economic development and may cause a crisis similar to that of Greece.
According to him, in these cases, to escape bankruptcy and to cover the budget deficit, Kosovo must borrow from different international banks.
“The state must only borrow for strategic projects which secure economic development. Practices which lead to financial difficulties must not be allowed in the future”, declared Rama.
The executive director of the Center for Strategic and Social Studies (STRAS), Ibrahim Rexhepi told IBNA that the government of Kosovo has started to increase public debt and according to him, this is a problem.
Rexhepi mentions the treasury bills which are being paid with the taxpayers’ money. “If the public debt reaches a level which makes its payment difficult, then confidence on the government’s bills falls. If someone accepts this crisis, then he will demand higher interest rates. Thus increases public debt even more”, says Rexhepi.
IMF and Kosovo have agreed on a 14% increase of salaries only for the public administration, which employs over 80 thousand people. The agreement doesn’t mention any other increase. The government increased salaries by 25%. Experts of economic affairs told IBNA that the new increase of salaries and pensions will need another 100 million Euros for the next 9 months of 2014 and around 130 million Euros for next year. The government has never declared where this money will come from.
Until the end of last September, public debt of Kosovo has amounted to 324.6 million Euros or 6.6% of GDP.
Bedri Zymeri, head of the Department of Statistics at the Central Bank of Kosovo, says that this debt is attributed to the payment of the loan issued by the World Bank and International Monetary Fund.
“Debt toward International Monetary Fund amounts to 110.2 million Euros and debt toward the World Bank amounts to 203.7 million Euros. Debt toward International Development Agency amounts to 10.8 million Euros and these are the official figures until September 30, 2013”, says Zymeri.
According to the law on Public Debts, the total amount of general debt must never exceed 40% of GDP.
In case the general debt exceeds this percentage, then the government must present to parliament its strategy to bring back general debt below the threshold of 40%. /ibna/