October 3, 2019 Opinion No Comments

Author: Alban Nevzati

From the declaration of independence in 2008 until 2017, in Kosovo, according to official figures there have been received over 6 billion euros through remittances. This figure is three times the budget of Kosovo for 2019. However, the real figure of remittances, which is not included in the statistics of the Central Bank of Kosovo (CBK) should be up to three times higher than that reported. Compared to the official figure, this also includes the money that our emigrants bring in cash to Kosovo. This is also due to the relatively high costs for money transfers in Kosovo through financial institutions.

In the social context, remittances continue to maintain the social balance within Kosovo, and are a ‘survival tool’ for the unemployed. A study of UNDP in 2014, stated that “One in three families in Kosovo has at least one member abroad, and one in 4 families receives remittances”.

Remittances in large quantities are used for consumption of goods, mainly imported in Kosovo. Only a small figure enters capital investments or local services. Therefore, channeling a significant part of remittances to a development fund, which would invest in strategic projects of economic and social development of Kosovo, would be more useful in the medium and long term for migrants, as well as for the local population in Kosovo.

The legislation of the Republic of Kosovo should create the legal framework for the establishment of such a fund, which should be fully managed by experts in the field.

I think that the Kosovo Development Fund should:

  • be politically independent
  • report to the parliament of Kosovo
  • create return on investment
  • dedicated to the strategic development of the Republic of Kosovo
  • attract financial experts from around the world to engage in staffing
  • have the surplus be returned to the budget of the Republic of Kosovo

Through the creation of a development fund: 

  • Municipalities would be provided with easier access to capital for projects in the service of its residents;
  • Producers in Kosovo would have easier access to capital on favorable terms;
  • Local and diaspora investors would be offered a new opportunity to diversify their investment portfolio;
  • The surplus of earning the fund would be returned to the Kosovo budget (or reinvested in the fund);
  • In the medium and long term, the need for direct remittances would decrease, as a result of the development of the country's economy and the strengthening of the welfare state.

Alban Nevzati, economist and expert on the banking sector

Written by InvestInVushtrri