Republika e Kosovës Republika Kosova – Republic of Kosovo Qeveria – Vlada – Government Ministria e Financave - Ministarstvo za Finansija - Ministry of Finance Thesari i Kosovës – Trezor Kosova - Treasury of Kosova ______________________________________________________________________________ Nine-month financial report Budget of the Republic of Kosovo For the period 1 January – 30 September 2019 Address: Government Building, 10th floor , Str. ”Nëna Terezë”- 10000 Prishtina-Kosovo Telephone/Fax: +383 38 200 34 026/+383 38 212 362 www.rks-gov.net Contents 1. Introduction....... ....................................................................................................................3 2. Revenues and payments for January – September 2019 and comparisons with previous years………………………... ........................................................... Error! Bookmark not defined. 3. Revenues collected by Customs ........................................................................................... 7 4. Revenues collected by the Tax Administration of Kosovo ................................................... 9 5. Municipalities’ own source revenues ................................................................................. 10 6. Expenditures........................................................................................................................11 Annex 1: Data on transfers from reserve fund ................................................................... 15 Annex 2: Employment data .................................................................................................... 17 Annex 3: Budget and Payments according to Budget Organisations ..................................... 19 Annex 4: Expenditure from the fund transferred for January-September 2019 (KFMIS- Fund 22) ………………………………………………………………………………………………………………………..28 Annex 5: Expenditures of PAK and ANSA from dedicated fund for period January–June 2019 (KFMIS- Fund 23) ......................................................................................................................28 Annex 6: Payments of court decision and payments under Article 39 (2) of LPFMA ............. 29 Annex 7: Subsidies for public enterprises for January – June 2019 ........................................ 30 Annex 8: Expenditures in capital projects for the period January – June 2019 ...................... 31 2 1. Introduction This report contains a summary of main trends of budget revenues and expenditures during the nine-month period of 2019. The report contains summarising analyses for the relevant period, presentation of revenues by collecting institutions at the central and local level, details on revenues by type of taxations, as well as comparisons with the previous periods and budget projections. 1.1. Revenue Performance Total revenues – during the nine-month, revenues amounted € 1,676.33 million and represent 68% of total projected annual revenues, whereas compared to the generation of the nine-month from the previous year there is an increase of 11%. Budget revenues amounted to € 1,379.34 million, marking an increase of 7%, corresponding to € 89.43 million more, compared to the nine-month period of the previous year. This amount of revenues represents 71% of the annual projection, while the increase in relation to the same period of the previous year is mainly as a result of regular tax and non-tax revenues. This good trend of tax and non-tax revenues is estimated to have come as a result of the performance of private sector, constant improvement of the environment of making business, as well as additional activities from revenue collecting agencies. Tax revenues collected from Kosovo Customs have reached the gross amount € 864.14 million, or 70% of the budget plan for 2019, marking an increase of 21.17 million, or 3% more compared to the same period of the previous year. Tax revenues collected by the Tax Administration of Kosovo have reached the gross amount of € 372.35 million, or 72% of the budget plan for 2019, marking an increase of € 35.62 million, or 11% more compared to the same period of the previous year. Non-tax revenues had a generation of € 157.31 million, or an increase of 14% compared to the previous year, as a result of the increase in non-tax revenues from the central and local level to about € 14.57 million and royalty for about € 2.84 million. Revenues from borrowing amounted to € 132.91 million, including revenues from sub- borrowings, or 40% of the annual plan. Compared with the same period of the previous year, generation is higher for € 30.05 million, while internal borrowings are higher for € 21 million during the reporting period. Total funding increased for € 77.23 million due to the receipt of one-off financing from PAK (€ 150.00 million). 1.2. Expenditure performance 3 Total expenditures – during the nine-months, payments amounted to € 1,406.88 million and represent 57% of the annual expenditure plan, while compared to generation of the nine- month period of the previous year, there is an increase of € 77.05 million or 6%. Budget expenditures during this reporting period amounted to € 1,365.08 million (including interest payments), thus marking an increase of 4.1%, corresponding to € 53.58 million more compared to the previous nine-months. o Expenditures for wages and salaries marked an amount of € 457.32 million during this nine-month period, reaching the executive rate of 73% compared to the total annual amount budgeted for this category. Expenditures for salaries during the reporting period marked an increase of 4.1% or over € 18.06 million more compared to the salary expenditures of the same period in 2018. o Expenditures for goods and services (including utilities) market the amount of € 183.40 million, marking an increase of € 25.27 million, thus reaching the execution rate of 53% compared to the total annual amount budgeted for this category (including € 17.18 million of utilities), or an increase of 4% compared to the same period in 2018. o Expenditures for subsidies and transfers amounted to € 445.61 million (of which € 361.37 million were social transfers), marking an increase of € 44.05 million, thus reaching the execution rate of 73% compared to the total budgeted amount for this category or 11% more compared to the same period in 2018. This increase as a result of social transfers of 13% (old-age pensions, contributory pensions and Trepca pensions) as well as subsidies of 5% in the reporting period. o Capital expenditures amounted to € 259.36 million, which represents a low execution rate, compared to the total annual amount budgeted for this category or the same previous period, as a result of late adoption of the Law on Budget Appropriations for 2019 and a low interest of budget execution from budget organizations. In terms of financial sources during the reporting period, means for capital expenses, mainly, come from the regular budget at 66% followed by PAK liquidation fund revenues at 19%; own source revenues at about 10%, as well as the remainder funded by the external loan at about 3% and funding from the development trust fund at about 1%. o Expenditures of state borrowing (interest and principal payments, including returns from sub-borrowings) marked an amount of € 57.09 million (of which € 19.38 million were the interest of public debt), thus achieving the execution rate at 73% compared to the total budgeted amount for this category, thus marking an increase of 91% compared with payments for this category during the same period of the previous year 2018. 1.3. Balance of funds on 30 June 2019 4 The gross balance of the funds on 30 June 2019 was € 657.82 million. The initial balance of the funds of the Budget of the Republic of Kosovo on 1 January 2019 was € 387.87 million. As a result of more revenues than payments (increase in tax revenues) for the period January -September 2019, the balance of funds has increased by € 269.45 million, unlike the same period of 2018, when the increase was € 179.84 million Explanatory details about revenue and expenditures are presented in the following tables of this nine-month report for 2019. 5 2. Revenues and payments for January – September 2019 and comparisons with previous years 2017 2018 2019 Difference Description in EUR million (2019/2018) 1. TOTAL RECEIPTS 1,418.13 1,509.67 1,676.33 11 % 1.1 Budget revenues 1,230.29 1,289.91 1,379.34 7% 1.1.1 Tax revenues 1,090.39 1,152.07 1,222.04 6% 1.1.1.1 Direct taxes 179.42 197.66 219.91 11% Corporate Income Tax 58.02 63.21 72.71 15% Personal Income Tax 101.49 113.63 122.73 8% Property Tax 17.67 18.14 21.14 17% Other direct taxes 2.24 2.68 3.33 24% 1.1.1.2 Indirect taxes 953.79 991.33 1,034.73 4% Value Added Tax VAT 545.51 585.44 614.53 5% Customs Duty 90.17 88.58 95.16 7% Excise 317.70 316.65 322.37 2% Other indirect taxes 0.41 0.66 2.66 303% 1.1.1.3 Tax returns (42.82) (36.92) (32.59) 12% 1.1.2 Non-tax returns 139.90 137.85 157.31 14% Taxes, charges and others by BOs of Central Government 75.75 79.07 89.48 13% Taxes, charges and others by BOs of Local Government 32.28 31.95 36.10 13% Concession Fee 6.44 6.62 8.43 27% Royalties 23.95 19.17 22.02 15% Interest revenues (return of loans from Public Enterprises) 1.47 1.04 1.27 22% 1.2 Receipts from financing 187.84 219.76 296.99 35% Borrowing 165.95 102.86 132.91 29% External borrowing 110.50 13.55 22.60 67% of which sub-borrowings from the POE 4.26 4.20 4.00 -5% Internal borrowing 55.45 89.31 110.31 24% Return of loans (principal) from Public Enterprises 6.72 5.44