31 Oct 14
While Kosovo remains stuck in political deadlock, economists warn that the failure to form a government that can approve the budget risks pushing Kosovo into a fiscal limbo.

Nektar Zogjani
BIRN
Pristina

Ibrahim Rexhepi, an economic expert, said the five-month political deadlock in Kosovo on forming a new government following the general elections had damaged the economy - and worse is to come. “The crisis will be more obvious in the first months of next year,” he predicted.

According to him, central institutions must be elected and approve a budget, or the beginning of the next year will see Kosovo in a budgetary blockade.

“Problems with the budget will be present starting from January. Initially, there will be restrictions in salaries, but by February the state will not be able to make any payments if a budget has not been approved in the assembly,” he told Balkan Insight.

Five months on from parliamentary elections, Kosovo has yet to elect new governing institutions amid a bitter struggle for power between two major political blocs.

The deadlock began when MPs were unable to elect a parliamentary speaker, and therefore a new government also could not be elected.

The biggest parliamentary group, gathered round the Democratic Party of Kosovo, PDK - the only party with the right to nominate the speaker - does not have enough seats in the assembly to do so.

Courts in July threw out the election of an opposition speaker, Isa Mustafa, ruling that the PDK had the sole right to nominate a candidate. However, the court did not specify how the assembly should proceed if the biggest parliamentary group failed to elect the speaker. If the situation continues, Kosovo may face new elections.

The President of Kosovo has since held meetings with the leaders of the rival parties, but so far none is willing to compromise on the important post of speaker.

Rexhepi said a budgetary crisis could be avoided if the budget was approved in the coming weeks, but the political situation in Kosovo created since the elections will continue to negatively impact on the economy next year.

“For over a year we have not seen any important economic decisions that would accelerate economic development. Economic growth next year will be lower than government officials expect,” he concluded.