Interview of Minister Avdullah Hoti for the Newspaper “Epoka e re”

The economy is put back on development track

- I invite the opposition to be constructive with criticisms and suggestions for government policies in the interest of citizens - Brezovica project is expected to give new incentive to the development of tourism in Kosovo

The Minister of Finance, Avdullah Hoti said that Mustafa government is working with the right dynamics to implement the promises made in these four years of governance. He says that this coalition (PDK - LDK) started its governance with a clear mandate and detailed programme. Hoti stated that they are working on national development strategy, which, according to him, will be much more specific in terms of the measures and activities to be undertaken in order to achieve government objectives. According to him, fiscal policies undertaken by the Government this year will provide effects on investments and employment. Hoti said that the signing of loan agreements with financial institutions will open an opportunity for faster economic development of Kosovo, the rapid employment growth and integration into the regional and European markets

Afet Bela

Prishtina, September 13 - The Minister of Finance, Avdullah Hoti said that Mustafa government is on track to set prerequisites for greater and sustainable economic development. In this interview for the “Epoka e re”, Hoti stated that this year there have been positive developments in terms of economic development in the country. He said that fiscal policies undertaken by the Government this year will have impacts on investment and, consequently, employment and income in the coming years. Hoti said that it is early to talk about the achievements of this Government in the sector of the economy, but he stated that there have been concrete steps to secure better results in the economy, employment, competitiveness of local businesses, increase of local production and other aspects. Minister Hoti says he is not satisfied with the dynamics of several changes that should have been made. “There are internal bureaucracies in government institutions that should be eliminated. There is discretion of government officials in various institutions, which should be regulated by relevant laws. We need to have performance indicators to key governmental institutions, some publicly owned enterprises and independent agencies, since the effectiveness of their work depends on the performance of the Government in some respects, especially in terms of attracting foreign investments and promoting domestic production and reducing the cost of public services provided by publicly owned enterprises” he said. Hoti added that this Government created a new spirit in terms of doing business and indicated that 2016 will give the results on policies undertaken during the year. “We have developed several scenarios of economic development for 2016, depending on the dynamics of some projects expected to begin. Brezovica project is expected to give new incentive to the development of tourism in Kosovo. Depending on the progress made in the project “Kosova e re” we might have positive effects for years in a row when it comes to investment and employment. There are also several other projects in progress and which secure sustained growth for 2016 and the coming years, “said Hoti. The Minister of Finance stated that the signing of the agreement for the largest loan so far with the EBRD in the amount of 39.9 million euros and signing loan agreements with other financial institutions will open up opportunities for a more rapid economic development of Kosovo, rapid employment growth and integration into the regional and European markets. Hoti also spoke about new fiscal package, which entered into force on 1st of September. According to him, this package is widely accepted by businesses and chambers of commerce as a reform that will produce positive effects for people with average and low income, as well as investment promotion. Speaking for opposition criticism against the Government in terms of economic development, Hoti said he is open to receive suggestions from the opposition. “I will continue to carefully listen to their suggestions and criticisms for new policies being developed in the field of doing business. I invite the opposition to be constructive in criticism and suggestions for government policies in the interest of citizens,” he said. Hoti said that Mustafa government is working with the right dynamics to implement the promises made in these four years of government. “We started the governance with a clear mandate and detailed programme, which is discussed in the Assembly. Now, we are working on the national development strategy, which will be much more specific in terms of data on concrete activities and measures to be undertaken to achieve government objectives” said Hoti.

“Epoka e re”: Minister, how do you assess the current economic situation in the country? Hoti: There are positive developments during this year, which gives hope that economic growth will be within the expected development rate. Certainly, this increase that we have is not enough to absorb the large number of unemployed people in Kosovo and the large number of those who graduate from universities every day.

“Epoka e re”: to what extent has Mustafa government manage to bring the development of the country's economy to tracks? Hoti: I think we are on track to set prerequisites for greater and sustainable economic development. Fiscal policies that we have undertaken this year, I believe will have impacts on investment and, consequently, employment and income in the coming years. We are working in other directions, such as simplifying procedures for doing business, unifying licenses and permits in a single law, unifying the VAT number with the business number, simplifying export and import procedures. We are also working on other changes.

“Epoka e re”: Are you satisfied with the achievements of the new government? Hoti: Certainly, it is early to talk about achievement, but we can talk about concrete steps that we have undertaken securing better results in the economy, employment, competitiveness of local businesses, increase of domestic production and other aspects. I am not satisfied with the dynamics of several changes that should have been made. There are internal bureaucracies in government institutions which should be eliminated. There is discretion of government officials in various institutions, which should be regulated by relevant laws. We need to have performance indicators within key governmental institutions, some publicly owned enterprises and independent agencies, since the effectiveness of their work depends on the performance of the Government in some respects, especially in terms of attracting foreign investments and promoting domestic production and reducing the cost of public services provided by publicly owned enterprises.

“Epoka e re”: Howmuch do you expect to be economic growth by the end of this year and in this context, what do you expect in 2016?

Hoti: We expect to have the first projections of the developments during the year. Expectations are positive, since the prerequisites are in place and a new spirit is created in terms of doing business. 2016 will give the results of the policies that we have undertaken this year. We have developed several scenarios of economic development for 2016, depending on the dynamics of some projects expected to begin. Brezovica project is expected to give new incentive to the development of tourism in Kosovo. Depending on the progress made in the project “Kosova e re” we might have positive effects for years in a row when it comes to investment and employment. There are also several other projects under development securing sustainable growth for 2016 and subsequent years.

“Epoka e re”: Kosovo has signed an agreement with the IMF. Will you look for options to get loans for the fact that in the coming years Kosovo should build new infrastructure? Hoti: the Agreement with IMF opens a new chapter in Kosovo’s economic development. Investment clause which is part of the programme and expected to be adopted soon in the Assembly creates the opportunity to get international loans to finance development projects. One of these projects is the loan with EBRD that we signed in London on 4th of September. We will not enter into loans only for infrastructure projects, but also for other projects in agriculture, education and health.

“ Epoka e re” how much is the loan with the EBRD favourable, which is taken for the reconstruction of the railway?

Hoti: Kosovo with the EBRD signed the largest loan so far in the amount of 39.9 million euros for the rehabilitation of the railway from the border with Macedonia in Hani i Elezit to Leshak in border with Serbia, a length of 148 km, a total cost of 195.5 million euros. After several months, we will sign a loan with the European Investment Bank in the amount of 41.4 million euros. Further on, the European Commission will support this project with a grant of EUR 79.8 million, and the grant of 1.1 million euros from EBRD and 5.5 million from WBIF. The rest is the contribution of the Government. The loan is with very favourable conditions of 1% interest rate plus six-month average Euribor, with four-year grace period and 11 years of repayment term, which is easily affordable for the budget of Kosovo. This loan and other future projects will open up opportunities for a more rapid economic development of Kosovo, rapid employment growth and integration into the regional and European markets. It is now necessary to establish the technical and managerial capacity of the Public Company “Infrakos” to implement the project successfully and contribute to repay the loan by generating revenues.

“ Epoka e re”: What can Kosovo benefit from regional plans, namely Berlin and Vienna Summit? Hoti: European Union funds for supporting the development of the Western Balkans and the integration of this region into the European Union are a good opportunity for Kosovo to invest in projects of regional character, strengthening the position of Kosovo and better integrate the our country's economy into regional markets and beyond. This is an opportunity not to be missed. I expect that ministries are ready with concrete projects to compete for financing.

“Epoka e re”: recently, the new fiscal package entered into force. What do you expect from this package? Hoti: the new fiscal package, which entered into force on 1st of September, is widely accepted by businesses and chambers of commerce as a reform that will produce positive effects for citizens with both average and low income, as well as for promotion investment. The halving of VAT for products and essential services as specified in the Law on VAT, then complete removal of VAT on import of all manufacturing machinery, raw materials used in production and information technology, tax cuts on new investments that will take place soon are just some of the main changes. I would like to thank the businesses and chambers of commerce for their role in developing the fiscal package and the support given to clarify it for the business community. In the coming weeks I will be on the field to visit different businesses, regional offices of the Tax Administration of Kosovo and a few checkpoints of Kosovo Customs to see how fiscal package is being implemented. In this case, we will identify where further interventions are needed through administrative instructions and other decisions to facilitate the full implementation of the fiscal package. I invite businesses to report any ambiguity that they might have regarding this package.

“Epoka e re”: Who benefits the most from this package, citizens or businesses? Hoti: the greatest benefits are for citizens with low income and businesses making investment and productive businesses. This is made possible by halving the rate of VAT at 8% for basic products. Similarly, the abolition of VAT on imports of manufacturing machinery, raw materials and equipment of information technology promotes investment and domestic production. This course will give results towards increasing domestic production and reducing imports in the coming years.

“Epoka e re”: The opposition has criticized the government's plans and promises that you made as the ruling coalition?

Hoti: I have been very open when it comes to accepting the suggestions of the opposition during the fiscal package laws. I will continue to listen carefully to their suggestions and criticisms in new policies being developed in the field of doing business. I invite the opposition to be constructive in terms of criticisms and suggestions for government policies in the interest of citizens.

“ Epoka e re”: Will you manage to keep some of the promises that you gave as a ruling coalition? Hoti: I think we are working with the right dynamics to implement the promises made in these four years of governance. We have started governing with a clear mandate and the detailed programme, which is discussed in the Assembly. Now we are working in the national development strategy, which will be much more specific in terms of data on concrete activities and measures to be undertaken to achieve government objectives.