Kosovo heads for ruin – „fiscally irresponsible“

Posted on Mai 31, 2014 von

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Two Gangster: Barosso – Hashim Thaci

José Manuel Barroso and Hashim Thaci

The president of the European commission, José Manuel Barroso (left), with Kosovo’s prime minister, Hashim Thaçi, in the Kosovan capital Pristina. Photograph:

Kosovo heads for ruin

MoneyPRISTINA, Kosovo — In a contribution for the guardian, the former Head of the ICO Economics unit in Kosovo, Andrea Capussela, reports that the Government of Kosovo acts fiscally irresponsible and is on the way to „mess up its IMF programme“.  According to Capussela „the IMF is expected to make an announcement later today in which it declares Kosovo’s programme to be off-track. This would be a rare event,“ Capussela states: „Both money and credibility look to be lost. … The irresponsibility of its government is leading Kosovo towards a fiscal crisis“, which is said to be due to its extensively increased budget spending. Kosovo’s „incompetent … elite is free from accoun- tability“, Capussela writes. Read the full article of Andrea Capussela.

 

These differences are highlighted by the episode that felled the IMF programme. On the eve of national elections the government promised civil servants a pay rise of 30% to 50% (by way of comparison, a week into the protests that brought him down, Egypt’s president Mubarak promised a 15% salary increase). This fundamentally wrong measure opens a large gap in a budget already strained by the construction of an expensive and relatively unnecessary highway (this controversial tender was won by US’s Bechtel, in consortium with a smaller Turkish company; the contract, unusually negotiated after the tender, uses a cost-plus formula which could push the final price well above current estimates, which exceed 20% of GDP: in Albania, the final price of a highway built by the same consortium with a similar contract was more than twice the initial estimate).

The European commission, the IMF and others sharply criticised the pay rise. Alone, the US defended it. With US support, and (astonishingly) the praise of the ICO’s head, the government implemented it. In the following weeks the elite gladly allowed the US ambassador to micromanage the formation of a new government and the election of two consecutive presidents (one election was illegal).

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