The meeting resulted in the joint agreement of six specific economic policy guidance points to be implemented by Western Balkans partners and Türkiye in the coming year. The meeting focused on the major socio-economic challenges created from Russia’s war against Ukraine, and the humanitarian crisis in Türkiye created following the earthquake of 6 February 2023. Representatives reinstated the importance of the joint policy dialogue on economic and financial matters and agreed to take appropriate and well-targeted policy measures if needed to mitigate the potential further impact of Russia’s war against Ukraine, while preserving fiscal sustainability.

This year’s meeting reviewed the Kosovo Economic Reform Programme 2023-2025. In the context of economic performance, it was noted that Kosovo’s economic rebound moderated in 2022 at around 3.5% due to decline in investment and a deceleration of household consumption growth because of inflationary pressures stemming from Russia’s war against Ukraine. However, the economic activity was supported by the substantial temporary government support to mitigate the impact of the crisis, meanwhile the banking sector remained sound and resilient. Kosovo was invited to carefully account for emerging downside economic risks in the context of Russia’s invasion of Ukraine, particularly related to the food and energy prices and the trade dynamics with its main trading partners. Discussions focused on the effective implementation of structural reforms to foster sustained recovery, whilst underpinning sustainable macroeconomic and fiscal policy. In the context of fiscal policy, representatives noted improvements in increasing tax collection as a result of high inflation and measures that were taken to tackle informal economy, while the need to reform the social security system was also emphasized. 

In terms of fostering economic resilience and boosting inclusive growth, Kosovo should reform energy sector to improve energy security and sustainability and transition towards renewables. It should continue to tackle informality in the economy and improve the business environment and the competitiveness of the private sector. Kosovo committed to implementing the Youth Guarantee and further efforts are needed to improve the quality and relevance of the education system to increase employment and mitigate skills mismatches.

For more information

The adopted Joint Conclusions: https://data.consilium.europa.eu/doc/document/ST-9478-2023-INIT/en/pdf

European Commission Assessment of Kosovo ERP 2023-2025: https://neighbourhood-enlargement.ec.europa.eu/enlargement-policy/policy-highlights/economic-governance_en

Kosovo ERP 2023-2025:  https://mf.rks-gov.net/desk/inc/media/1619B453-0328-4C3D-889F-CF262574AA11.pdf