The Kosovo Government and European Commission discuss the economy, statistics and financial control

In the area of economic and fiscal policies, the key economic aggregates were discussed including GDP growth, inflation, the labour market and the balance of payments. While Kosovo successfully maintained economic stability, signs of an economic slowdown were visible in the last year, reflected also in the lower than forecasted growth, around 2.5.%.

As concerns budgetary policy, Kosovo demonstrated its commitment to a prudent fiscal stance in the recent years, reflected also in the budget deficit of 2.7% of GDP in 2012.  The Commission welcomes this fiscal discipline which is a prerequisite for a stable macro economic environment. The Commission in particular welcomed the planned introduction of a fiscal rule as of 2014. To this end, amendments to the law on public finance management and accountability are expected to be adopted still this month.

The authorities presented the state of play of structural reforms in key sectors such as health, public administration and privatisation policy. As in the past years, the Commission recommended a strong prioritisation of expenditures among the vast and pressing needs. The Commission noted that the Government adopted a private sector strategy and intends to develop economic zones.

As regards statistics, the Commission services welcomed the restructuring process of the Agency of Statistics, in line with the Law of official statistics. However, the capacity of Kosovo Agency of Statistics needs to be strengthened, and further efforts are needed, in particular for business and macroeconomic statistics.  Reliable and up to date economic statistics should be considered as a precondition for evidence-based decision making and strategic policy making.

Finally, on Internal Public Financial Control, the Commission pointed out the policy area is still at an early stage of development. While the most relevant regulatory framework and key institutions are in place, the general understanding and implementation of relevant concepts such as for example managerial accountability, needs to be enforced accross the budgetary institutions.

The meeting was co-chaired by the Ministry for European Integration and the European Commission Directorates-General for Economic and Financial Affairs, and Enlargement.

Background information

The SAP Dialogue is a framework under which the European Commission and the Kosovo administration regularly discuss technical and policy issues in relation to the European agenda.  The SAP Dialogue monitors and accompanies Kosovo’s delivery on reforms, and identifies how the EU can assist in this process. Sectoral and plenary SAP Dialogue meetings are co-chaired by the European Commission and the government. Each meeting results in jointly agreed follow-up actions to be taken by the Kosovo authorities.

There are seven areas covered in sectoral meetings and they follow closely the format of the dialogue that the EU has with other candidates and potential candidates. These seven sectors are:

– Justice, Freedom and Security
– Innovation, Information Society, Social Policy, Education and Culture
– Trade, Industry, Customs and Taxation
– Internal Market, Competition, Consumer and Health Protection
– Agriculture, Fisheries, Forestry, Food Safety
– Transport, Environment, Energy, Regional Development
– Economic and Financial Issues, Statistics

The time between the meetings allows for the implementation of the recommendations and agreed follow-up actions. A plenary meeting, where the reform priorities will be discussed, is expected to take place in July