The Executive Board of the World Bank approved the First Development Policy Loan (DPL) for Fiscal, Competitiveness, and Green Growth Policy of Kosovo, which aims to increase the effectiveness of fiscal policy, strengthen the investment climate, and lay the foundations for greener economic growth in Kosovo.
In the media release, it is stated that the approved financial support for this first DPL is €90.3 million (equivalent to $100 million), a concessional credit from the International Development Association (IDA), part of the World Bank.
The repayment period for this loan operation is 12 years, including a 6-year grace period, and it is interest-free or service charge-free.
Following approval by the Executive Board, the government of Kosovo and the World Bank will sign an agreement for project financing that needs to be ratified by the Kosovo Assembly to enable the DPL funds to be made available for disbursement for the benefit of Kosovo citizens.
“The new operation is part of a two-part program series that contributes to job creation, improved well-being, and a cleaner environment for the people of Kosovo, supporting the country’s efforts to address some of the long-term structural constraints hindering higher, more inclusive, and sustainable economic growth,” said Massimiliano Paolucci, World Bank Manager for Kosovo and North Macedonia.
The announcement further states that the continued economic progress since independence in 2008, driven by ambitions to integrate into the European economy, allowed Kosovo to transition in 2018 to the status of upper middle-income countries.
“However, to support economic growth and accelerate poverty reduction, the country needs to transition to a more competitive growth model that creates more high-quality jobs, supports firm growth, and is driven by higher productivity. Recent crises have reaffirmed the urgency of structural reforms to enhance the effectiveness of fiscal policy to then mitigate the impact of crises.”
The DPL supports a reform program that strengthens domestic revenue mobilization, improves public finance management, and enhances the investment climate through improving trade facilitation systems and the legal framework for land administration.
The credit also supports measures aimed at increasing protection for vulnerable consumers in the electricity sector, while simultaneously strengthening the framework for renewable energy production, improving energy performance, and reducing the use of lightweight plastic carrier bags.
