The World Bank Group’s Board of Executive Directors today discussed the new Country Partnership Framework (CPF) for Kosovo for FY2023-2027, to support the country in accelerating its competitiveness for higher job creation and living standards. The new strategy for Kosovo outlines priorities for World Bank Group (WBG) engagement in the country over the next five years, which will contribute to greater public service efficiency and quality, more formal private sector jobs, and increased environmental resilience.
The CPF aims at delivering a comprehensive WBG program of lending operations and advisory services and analytics. The International Development Association (IDA) lending projects in the pipeline will support investments in early childhood development, health sector strengthening, greening and cleaning contaminated sites along with fiscal policy, competitiveness, and green growth reforms. The indicative resource envelope during the first three years of the CPF period amounts to US$127 million in IDA 20 financing and is provided on concessional terms, with zero or very low interest charges and long repayment periods. The overall CPF program also includes a portfolio of 11 active IDA and Trust Fund-financed projects totaling US$365 million. During the CPF period, the World Bank’s private sector arm, the International Financial Corporation (IFC), will leverage conventional and innovative lending and advisory instruments to support the financial sector, build resilience, and help develop an export-oriented manufacturing sector. IFC’s committed portfolio in Kosovo stands at US$13.6 million as of March 31, 2023. MIGA will continue to provide political risk insurance to facilitate cross-border investments in strategic sectors such as the financial sector.
Kosovo has experienced steady economic progress over the past decade, with a nearly 50 percent increase in per-capita income and a 35 percent reduction in the poverty rate. It has successfully transitioned away from a growth model based on high dependence on foreign aid inflows, outperforming peer countries of similar per-capita income thanks to a steady expansion in consumption and investment, with a strong impetus from diaspora inflows, public investment in infrastructure, and financial deepening, amid a stable fiscal stance and an environment of low inflation. However, despite a decade of progress, unemployment and poverty remain high.
“Kosovo can benefit from reorienting the economy toward production and exports, while increasing better quality employment for all and ensuring sustainable development that protects the environment for future generations,” says Xiaoqing Yu, World Bank Country Director for the Western Balkans. “The World Bank Group’s new strategy supports Kosovo’s aspiration to achieve this transformation and fully integrate within regional, European, and international institutions.”
The support for greater public service efficiency and quality, outlined in the CPF, aims to improve human development outcomes as well as economic sustainability and resilience through more efficient public spending and increased domestic revenue mobilization. The CPF program will also accompany the ongoing reforms in the business-enabling environment, access to credit, and financial market development by supporting innovative and green financing, and land titling, with a focus on promoting the inclusion of women, youth, and marginalized groups. Another part of the CPF program focuses on the support for increased environmental resilience, which seeks to support Kosovo’s transition toward a future that safeguards the sustainability of economic growth and citizens’ quality of life.
The 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.