Kosovo, FR Yugoslavia : Medium-Term Public Expenditure Priorities

Abstract

Given the tight overall resource
 constraints in Kosovo, and in the face of declining donor
 support and limited access to external finance, difficult
 choices and trade-offs on spending decisions will need to be
 made. The main challenge will be to develop expenditure
 policies which will preserve macro-stability and ensure that
 public services are sustainable, comprehensive, and
 efficiently provided. Public spending policies need to lay
 the basis for broad-based equitable economic growth, and
 target the most needy, in an effective and efficient
 fashion. Through introducing the Medium Term Expenditure
 Framework (MTEF) approach in 2002, the United Nations
 Interim Administration in Kosovo (UNMIK) and the Provisional
 Institutions of Self Government (PISG) have started to make
 progress in adding a medium-term context to budget policy.
 This report identifies the several important expediture
 measures that require action. First, spending has to be
 reallocated across sectors, so reduce subsidies, reassess
 public sector employment, and provide finance for investment
 needs. Second, improve the efficiency of existing spending
 in the health, education, and social protection sectors.
 Third, increase the budget spending on health to provide a
 greater range of services and target educational finance to
 reduce inequality. Fourth, strengthen the effectiveness of
 the budget as a policy tool. Fifth, further improve
 transparency and accountability.