Mr. Brajshori described many of the challenges in Kosovo including a majority of population under 30 and high unemployment. Remittances to Kosovo is expected to reduce because of the global crisis.
The Government of Kosovo has changed new tax rates in response to the financial crisis. Income and business taxes have been reduced. VAT and tobacco excise taxes have been increased.
Despite the difficulties in the international financial market, the Kosovo financial system continues normal operations. The banking sector which represents the largest share of the financial market in Kosovo is characterized with a significant growth in terms of financial intermediation. Deposits and loans in banks in Kosovo have increased since 2005. The financial sector in Kosovo continues to grow, increasing its contribution to the economic development as well as the range and quality of products offered to clients.
Mr. Brajshori described the recent PEFA assessment and comparing 2009 with 2007. "A", "B" and "B+" indicators have improved. 12 indicators have improved. He concluded that Kosovo has improved government financial management.
The recent financial crisis in the international financial market is having an impact in the real sector in economies more exposed to the crisis. Mr. Brajshori says that the Kosovo economy is an open economy and may absorb some impacts of the potential recession in the region and EU.
A very important instrument for stimulating the consumption and investments in Kosovo is prudent fiscal expansion, according to Mr. Brajshori.
Measures taken by the Government of Kosovo because of the financial crisis includes:
- Budget reserve increase -200.mill euro for 2009.
- Fiscal policies reform (cut in personal income tax ,profit tax rates etc.)
- Strengthening transparency and accountability in using the public revenues.
- Enhancing sound regulations,
- Promoting integrity in financial market.
- Strengthening the regional cooperation and development of trade market.
- Through privatization, increasing the investments especially FDI (Foreign Direct Investment) and than consumption.
- Reduction of government expenditures.
Challenges remain for economic development, unemployment, investment growth and European integration.