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Washington, May 24, 2017
—The new World Bank Group (WBG) Country Partnership Framework (CPF) for Kosovo for 2017-21 aims to assist the country in moving toward more sustainable, export-oriented, and inclusive growth, so its citizens are provided more opportunities for a better life.
“The strategy discussed today by the World Bank Group’s Board of Executive Directors supports Kosovo’s development agenda by focusing on three areas - accelerating private sector growth and job creation, improving public service delivery, and promoting reliable energy,” says Ellen Goldstein, World Bank Director for Western Balkans. “With this new strategy, the World Bank is supporting projects and reforms that will accelerate growth and promote employment - particularly for young people and women.”
Kosovo has enjoyed stable and inclusive economic growth in recent years. However, this growth has primarily been driven by consumption - fueled by remittances and foreign aid - and has done little to generate employment in the country. To maintain fast and steady growth that can create jobs, a gradual rebalancing toward higher productivity at home and greater competitiveness abroad is needed.
The WBG program has contributed to notable improvements in the business-enabling environment in Kosovo in recent years. These improvements helped the country move from the 117th position in the Doing Business ranking in 2012 to 60th place in 2016, driven by improvements in business registration and cadastral and land registration systems. Kosovo’s financial system was also strengthened and has demonstrated greater financial stability.
Under the new CPF, the WBG will continue to support the reduction of the administrative burden for businesses, as well as promote investment policy reforms that can attract private investment and higher quality Foreign Direct Investment to the country. Through the recently approved Competitiveness and Export Readiness Project, the World Bank will also help Kosovo strengthen product certification for export markets and develop the export-readiness of businesses. It will also support productivity and competitiveness in agriculture, a sector with good export and job-creation potential.
To address the constraints limiting greater private sector contribution to growth, the International Finance Corporation (IFC), a member of the WBG that promotes private sector development in developing countries, will continue supporting the private sector through investments and advisory work to encourage economic growth and job creation.
"IFC will be engaged in efforts to improve the business environment and corporate governance, attract private sector participation in infrastructure and energy projects, and help improve access to finance for companies engaged in manufacturing and services, as well as agricultural producers,” said Thomas Lubeck, IFC Regional Manager for the Western Balkans.
The WBG will also support the Kosovo authorities in their efforts to improve financial management, public administration, and public service delivery. It will seek to promote efficiency and prioritization of public spending to ensure the best use of scarce public resources. WBG’s support will focus on cross-cutting management of public resources, complemented by targeted interventions to enhance the quality of, and access to, education and health services. The goal is to help Kosovo capture its demographic dividend by creating jobs and economic opportunities for young people.
The WBG will also continue to support Kosovo in alleviating the country's unreliable energy supply, the most binding constraint to accelerating growth, reducing poverty, and creating jobs.
“The World Bank, along with other development partners, is committed to helping Kosovo resolve its energy shortages through a comprehensive strategy that includes increased energy efficiency, development of renewable sources of energy, integration into regional power markets, and support for new power generation that is both reliable and affordable for citizens,” says Marco Mantovanelli, World Bank Country Manager for Kosovo.
The CPF will build on the substantial progress that has been made, through support from WBG programs, on renewable development, energy efficiency, and environmental cleanup initiatives in the energy sector. For example, the Bank helped end the 50-year old practice in power generation of the open dumping of dry-coal ash, replacing this polluting system with a new, closed wet-ash handling system. The WBG is also currently supporting the rehabilitation of public buildings to improve energy efficiency, as well as the development of renewable energy projects for private sector investment.
IFC has advised the Government of Kosovo during the privatization of the supply and distribution business of Kosovo's electricity company, which, so far, has generated EUR 148 million through tariffs and reductions in distribution losses.
World Bank Group financing to Kosovo during the CPF period is estimated to range between $210 - $280 million. Kosovo is eligible for financing from the International Development Association (IDA) of the World Bank Group, which is the fund for the countries with the greatest development needs. IDA credits are provided on concessional terms, with zero or very low interest charges and long repayment periods. The World Bank has an on-going portfolio of six projects, for a total of $124 million. The IFC expects to support the private sector in Kosovo with up to US$60 million during the CPF implementation period. IFC currently has three projects, totaling $7.5 million.
This CPF was informed by a series of consultations with a broad spectrum of stakeholders—government, parliament, civil society, think-tanks and academia, private sector, and international development partners.
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