IMF Executive Board Approves US$56.5 Million in Emergency Support to the Republic of Kosovo to Address the COVID-19 Pandemic
April 10, 2020
- The COVID-19 pandemic will hit hard on Kosovo’s economy, which is projected to contract by 5 percent in 2020.
- To address Kosovo’s urgent balance of payments need, the IMF approved US$56.5 million (Euro 51.6 million) financial assistance under the Rapid Financial Instrument.
- The immediate challenge is to respond effectively to COVID-19 by strengthening health care and mitigating the effects on the sectors and households most affected by the crisis.
– The Executive Board of the International
Monetary Fund (IMF) today approved SDR 41.3 million (around US$ 56.5 million or
Euro 51.6 million, 50 percent of quota) in emergency support for the
Republic of Kosovo under the
Rapid Financing Instrument
(RFI) to meet urgent balance of payment needs stemming from the outbreak of
the COVID-19 pandemic.
The RFI provides rapid and low-access financial assistance to member
countries facing an urgent balance of payments need, without the need for a
full-fledged economic program or reviews. It can provide support to meet a
broad range of urgent needs, including those arising from commodity price
shocks, natural disasters, conflict and post-conflict situations. Financial
assistance under the RFI is provided in the form of outright purchases.
The COVID-19 pandemic and the associated containment measures have severely
weakened Kosovo’s economic outlook. The economy is expected to contract by
5 percent in 2020 as tourism receipts, remittances, exports of goods, and
FDI will decrease due to travel restrictions and the effect of COVID-19 in
trading partners and remittance-originating countries. The deteriorated
economic outlook is expected to result in external and fiscal financing
The authorities’ policy response to the shocks has been timely and
appropriate, with a temporary loosening of fiscal and financial policies.
Fiscal actions so far target the sectors most affected by the shock and aim
at supporting social and health spending.
Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing
Director and Acting Chair, issued the following statement:
“The global COVID-19 pandemic has adversely affected Kosovo, creating an
urgent balance of payments need. Externally, travel restrictions and the
global recession have imposed a heavy toll on tourism, export of goods,
remittances, and FDI. Domestically, heightened uncertainty and movement
restrictions have disrupted supply and further constrained demand.
“In response to the COVID-19 pandemic, the authorities reacted quickly and
put in place strict containment and mitigation measures to provide relief
to the most impacted businesses and households, as well as created room in
the budget for increased health spending. The Central Bank of Kosovo
suspended loan repayments through end-April for sectors and individuals
most affected by the crisis.
“As a result of these measures, the budget deficit is expected to widen and
the debt likely to increase. The authorities, however, remain committed to
macroeconomic stability; as long as these measures are temporary and the
fiscal rule reinstated once the pandemic recedes, it is expected that the
public debt will remain sustainable.
“The Fund stands ready to support Kosovo to combat the pandemic and help
the economy to recover. “
IMF Communications Department
PRESS OFFICER: Gediminas Vilkas
Phone: +1 202 623-7100Email: MEDIA@IMF.org