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Kosovar Government Faces Severe Budget Deficit

Kosovo Prime Minister Hashim Thaci in parliament in February
Kosovo Prime Minister Hashim Thaci in parliament in February
PRISTINA -- The Kosovo government has submitted to parliament a draft budget for 2011 that has a deficit of some 370 million euro ($518 million), RFE/RL's Balkan Service reports.

Parliament deputy and former Finance Minister Haki Shatri told RFE/RL on February 28 that the lack of finances could bring Kosovo state institutions close to collapse.

Shatri said Kosovo's government was counting on its budget having the proceeds from the privatization of Post Telecom, which it is selling for 300 million euro. But due to procedural delays in the tender process, he said the company is "unlikely to be sold this year."

Shatri added that "the Kosovar government had counted on a 70 million euro ($98 million) loan from international financial institutions. But since the government has violated an agreement with the International Monetary Fund [not to have a budget deficit], this money will not be disbursed."

New Kosovar Deputy Prime Minister Mimoza Kusari Lila acknowledged that there is lack of finances in the 2011 draft budget. But she told RFE/RL there are still possibilities to get the IMF loan and to increase income from taxes and custom duties.

In December, Kosovar Prime Minister Hashim Thaci signed an agreement with trade unions to increase the salaries of several groups of state workers. The agreement was opposed by international financial institutions due to Kosovo's budget limitations.

Kosovar political parties also denounced the move as grandstanding because it was signed just days before the December 12 parliamentary elections.

The 2011 budget has been delayed by the government crisis that began in September and led to the early elections in December.

The government's collapse caused the previous parliament to cease work, while the new parliament only held its first session on February 21.

Kosovo is subsisting on a month-to-month budget, while March is the constitutional deadline for a new budget to be passed.

Kosovo's expenditures for 2011 are projected to be some 1.3 billion euro with nearly 1 billion in revenue.

Kosovo, which declared its independence in 2009, is one of the poorest countries in Europe with an average annual per capita income of some $2,500. It also has an unemployment rate of some 40 percent.