Officials from Kosovo and the European Union convened a digital meeting on 21 September 2022 to discuss developments over the past year, when the subcommittee last met, in the areas of economic and financial issues, and statistics. The discussion was held in the framework of the Stabilisation and Association Agreement (SAA), which entered into force in April 2016.
During the meeting, officials exchanged views on various areas, including the economic development, budgetary and fiscal policies, the business environment, and public internal finance control. In all areas, the European Union and Kosovo agreed on the importance of implementing the relevant priorities of the Economic Reform Programme and the recommendations from the Commission’s Reports.
In the area of economic and fiscal policies, key and major economic developments were discussed including GDP growth, inflation, labour market, and external competitiveness; as well as the current and expected fiscal and economic outcomes of the Economic Revival Programme. Whilst Kosovo's economic growth surged in 2021, with real GDP growing by 10.75%, the economic outlook is deteriorating, and growth slowed to 2.1% in the second
quarter of 2022, due to the impact of the global economic crisis.
The Government presented the outlook for fiscal policies, reflecting the projections of the Medium Term Expenditure Framework (MTEF), and recent measures concerning energy efficiency and support for households and businesses to deal with rapidly rising energy prices.
The EU underlined the importance of adhering to the agreed Economic Reform Programme policy guidance, notably as regards rising current spending and new social spending announced in the Economic Revival Programme, as well as pre-existing increasing fiscal risks. The EU recalled the need to preserve macro-fiscal stability by respecting the spending and deficit limits prescribed by fiscal rules, taking into account the temporary flexibility in
response to the impact of the pandemic. Discussions also took place on the latest developments in the banking and insurance sectors.
Discussion took place on key structural reforms in sectors such as business environment, energy, and privatisation, including the need to review all existing pension and social schemes to assess their long-term fiscal implications. The legislative developments and management of Publicly-Owned Enterprises (POEs) were also discussed.
Progress on other structural reforms was also assessed. It was agreed that fostering private sector development, foreign direct investment, strengthening productivity, fostering entrepreneurship, increasing female labour participation rates, and overall job creation should guide Kosovo’s reform agenda.
In the area of statistics, the importance of the Kosovo Agency of Statistics ensuring the implementation of the Law on Statistics was discussed, as well as the need to strengthen the Agency’s administrative capacity. The strengthening of national accounts, including business statistics and contributions to European databases was also raised. The importance of the timely preparation of 2023 census, including the necessary funding and methodology, was
emphasized.
In the area of Financial Control, recent developments in Public Internal Financial Control were discussed, particularly the importance of ensuring comprehensive Public Internal Financial Control and Public Finance Management and Public Administration Reforms. The need for stronger Parliament and Government oversight and implementation of external audit recommendations was also discussed.
The meeting was co-chaired by the Department of Economic Criteria and Internal Market at the Office of the Prime Minister; and the European Commission Directorates-General for Economic and Financial Affairs and for Neighbourhood and Enlargement Negotiations.
Background information
◦ The Stabilisation and Association Agreement is the framework for the EU and the Kosovo administration to regularly discuss technical and policy issues in relation to the European agenda.
◦ SA Committee and Sub-Committee meetings are co-chaired by the European Commission and Kosovo. Each meeting results in jointly agreed follow-up actions to be taken by the Kosovo authorities. The conclusions from the meetings are available on the website of the EU Office in Kosovo (https://eeas.europa.eu/delegations/kosovo_en and www. https://www.mei-ks.net.).
There are seven areas covered through sectorial meetings of sub-Committees, on 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. Two Special Groups cover the reform of the public administration and normalisation of relations with Serbia.
◦ Each sub-Committee meeting monitors and accompanies Kosovo’s delivery on reforms and identifies how the EU can assist in this process. The meetings also provide direct input into the European Commission’s annual reports.
