EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 5.11.2008 
SEC(2008) 2697 
  
COMMISSION STAFF WORKING DOCUMENT 
 
KOSOVO (UNDER UNSCR 1244/ 99) 2008 PROGRESS REPORT  
 
  
accompanying the 
 
COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
Enlargement Strategy and Main Challenges 2008-2009
 
{COM(2008) 674} 
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 4 
1.1. Preface................................................................................................................... ....... 4 
1.2. Context ................................................................................................................... ...... 4 
1.3. Relations between the EU and Kosovo (under UNSCR 1244).................................... 6 2. Political criteria .......................................................................................................... .. 7 
2.1. Democracy and the rule of law .................................................................................... 8 2.2. Human rights and the protection of minorities .......................................................... 16 2.3. Regional issues and international obligations............................................................ 26 3. Economic criteria ....................................................................................................... 27 3.1. The existence of a functioning market economy ....................................................... 27 3.2. The capacity to cope with competitive pre ssure and market forces within the Union
............................................................................................................................... ..... 31 
4. European standards .................................................................................................... 33 4.1. Internal market ........................................................................................................... 33 
4.1.1. Free movement of goods............................................................................................ 34 4.1.2. Movement of persons, services and right of establishement...................................... 35 
4.1.3. Free movement of capital........................................................................................... 35 4.1.4. Customs and taxation ................................................................................................. 35 4.1.5. Competition............................................................................................................. ... 37 
4.1.6. Public procurement .................................................................................................... 37  
4.1.7. Intellectual property law ............................................................................................ 38 4.1.8. Employment and social policies................................................................................. 38 4.1.9. Education and research .............................................................................................. 40 4.1.10. WTO issues ............................................................................................................. ... 41 
4.2. Sectoral Policies......................................................................................................... 41 
4.2.1. Industry and SMEs..................................................................................................... 41  
4.2.2. Agriculture and fisheries............................................................................................ 42 4.2.3. Environment............................................................................................................. .. 43 
4.2.4. Transport policy ........................................................................................................ . 44 
4.2.5. Energy .................................................................................................................. ...... 46 
EN 3   EN 4.2.6. Information society and media................................................................................... 48 
4.2.7. Financial control....................................................................................................... .. 50 
4.2.8. Statistics .............................................................................................................. ....... 50 
4.3. Justice, freedom and security ..................................................................................... 51 4.3.1. Visa, border, control, asylum and migration.............................................................. 51 4.3.2. Money laundering ...................................................................................................... 52  
4.3.3. Drugs................................................................................................................... ....... 52 
4.3.4. Police.................................................................................................................. ........ 53 
4.3.5. Fighting organised crime and terrorism ..................................................................... 53 4.3.6. Protection of personal data......................................................................................... 54 
EN 4   EN COMMISSION STAFF WORKING DOCUMENT 
Kosovo (under UNSCR 1244) 2008 Progress Report 
1. INTRODUCTION  
1.1. Preface 
Since March 2002, the Commission has reported regularly to th e Council and the Parliament 
on progress made by the countries of the Western Balkans region. 
This report largely follows the same struct ure as in previous years. The report: 
– briefly describes the relations between Kosovo1and the Union; 
– analyses the political situation in Kosovo in terms of democrac y, the rule of law, 
human rights, protection of minorities, and regional issues; 
– analyses the economic situation in Kosovo; 
– reviews Kosovo's capacity to implement Eur opean standards, that is, to gradually 
approximate its legislation and policies with  those of the "acquis", in line with the 
European Partnership priorities. 
The period covered by this  report is 1 October 2007 to early October 2008. Progress is 
measured on the basis of decisions taken, legisl ation adopted and measures implemented. As a 
rule, legislation or measures which are under preparation or awaiting Parliamentary approval 
have not been taken into account. This approach  ensures equal treatmen t across all reports and 
permits an objective assessment. 
The report is based on information gathered  and analysed by the Commission. Many other 
sources have also been used, including cont ributions from the Kosovo authorities, the 
Member States, European Parliament reports2 and information from various international and 
non-governmental organisations. 
The Commission draws detailed conclusions regarding Kosovo in its separate communication 
on enlargement3, based on the technical analysis  contained in this report. 
1.2. Context 
United Nations Security Council Resolu tion 1244/99 (UNSCR 124 4/99) provides the 
international legal framework for Kosovo. It prov ides for the deployment of international civil 
and military presences in Kosovo, under UN auspices . It authorises the Secretary General of 
the United Nations (UNSG) to establish an inte rnational civil presence to provide an interim 
administration for Kosovo. 
                                                 
1 Under UNSCR 1244/1999. 
2 The rapporteur for Kosovo is Mr Joost Lagendijk MEP. 
3 Enlargement Strategy and Main Challenges 2008-2009. 
EN 5   EN KFOR, the NATO-led internationa l military presence in Kosovo, continues to be responsible 
for overall security. 
The legal system in Kosovo is a combination of  legislation adopted by the Kosovo authorities, 
regulations and administrative directions of the United Nati ons Interim Administration in 
Kosovo (UNMIK), and Yugoslav laws in place before 22 March 1989. 
In March 2007, the UNSG forwarded the Comp rehensive Proposal for the Kosovo Status 
Settlement (CSP) prepared by his special en voy, Martti Ahtisaari, to the United Nations 
Security Council (UNSC). The CSP envisaged an international civilian representative (ICR) 
with a dual mandate as EU Special Representa tive and an ESDP rule of law mission. The 
UNSG fully supported Mr Ahtisaari's recomme ndation for the supervised independence of 
Kosovo. 
In August 2007, and in the absence of UNSC agreement on the CSP, the UNSG endorsed a 
new initiative to determine Kosovo's future st atus. He proposed direct negotiations, to be 
mediated by an EU-US-Russia troika. Direct ta lks between Priština/Prishtinë and Belgrade 
started in New York in September 2007. On  10 December 2007, the UNSG forwarded the 
troika report to the UNSC, confirming that the two parties had been  unable to reach an 
agreement. It confirmed that the ne gotiating process had been exhausted. 
On 17 February 2008, the assembly of Ko sovo declared Kosovo an independent and 
sovereign state. To date, Kosovo's independence has been recognized by a total of 51 countries, of which 22 are EU Member States. The assembly also adopted a flag and an 
anthem. Following the declaration, the security situati on remained relatively calm, with the 
exception of two serious incidents in norther n Kosovo. In February, two border posts in 
northern Kosovo were destroyed, and the stormi ng of the court house in  Mitrovica/Mitrovicë 
in March resulted in the death of an UNMIK  policeman and several serious injuries.  
On 9 April, the assembly adopted the Constitu tion of the Republic of Kosovo, which entered 
into force on 15 June 2008. The constitution is based on the CSP and envisages a significant 
role of the European Union in Kosovo. It al so provides for the in ternational civilian 
representative as ultimate supervisor y authority as set out in the CSP. 
In his June report to the UNSC, the UNSG acknowledged that the declaration of 
independence and the entry into force of the c onstitution had created a new reality in Kosovo. 
This reality posed significant challenges to UNM IK's ability to exercise its administrative 
authority and perform the majority of its task s, and necessitated the reconfiguration of the 
international civil presence in Kosovo. In Ju ly, the UNSG instructed UNMIK to cooperate 
with the EU in order for it to assume an enhan ced operational role in Ko sovo in the area of the 
rule of law under a 'UN umbrella'. 
On 8 October, the UN General Assembly passed a resolution requesting the advisory opinion 
of the International Court of Justice on the le gality of the declara tion of independence of 
Kosovo. 
The process of dismantling the Kosovo Protection Corps and establishing a new Kosovo 
Security Force (KSF) provided for in the constitution started in June. The KSF should 
comprise some 2,500 lightly armed personnel, whos e first tasks will incl ude crisis response, 
explosives disposal and civil protection. Th e process takes place under NATO supervision in 
close coordination with other international stakeholders. 
EN 6   EN Parallel structures prevent the Kosovo governme nt from executing parts of its authority in 
many Serb majority areas thr oughout Kosovo. UNMIK declared th e local Serb elections held 
in Kosovo in May 2008 null and void. 
Kosovo continues to be open to th e discussion of issues of pr actical interest with Serbia. 
Following the declaration of independence, th e government made considerable efforts to 
reach out and reassure Kosovo Serb citizens. C onstructive cooperation with Serbia is a key 
priority in the European Partnership for Kosovo. 
1.3. Relations between the EU and Kosovo (under UNSCR 1244) 
Following the troika report to the UNSG, th e European Council of December 2007 stressed 
the need to move forward towards a Kosovo se ttlement, underlining that resolving the status 
of Kosovo constituted a sui generis case that did not set a precedent. The Council confirmed 
that the EU stood ready to play a leading role in  strengthening stability in the region and in 
implementing a settlement defining Kosovo's fu ture status. It confir med that the EU was 
ready to assist economic and political developm ent through a clear Europ ean perspective, in 
line with the European perspective of the region. 
In February 2008, the General Affairs and Exte rnal Relations Council agreed to a Joint 
Action4 to establish an ESDP rule of law missi on, known as "EULEX", in Kosovo. The main 
task of the mission is to mentor, monitor and advise. EULEX also has some executive functions. The Council also agreed to a Joint Action
5 appointing an EU Special 
Representative (EUSR) in Kosovo. The EUSR ad vises and supports the political process and 
ensures the consistency of EU action in Kosovo. In his other role as ICR, he supervises the 
implementation of the CSP. The EUSR reports to  the High Representative for CFSP. As ICR, 
he reports to the Internati onal Steering Group (ISG) on Ko sovo, which consists of 25 
countries6 that have recognised its independence . 
In June 2008, the European Council reconfirmed that the EU remained committed to playing a 
leading role in ensuring the stability of  Kosovo, including through EULEX Kosovo, EUSR 
and its contribution to an international civilian office as part of the international presence. It 
also recalled its willingness to assist the eco nomic and political development of Kosovo 
through a clear European perspective, in line with the European perspective of the region. 
Kosovo has continued to work with the Counc il planning teams to prepare the EU mission, 
and is cooperating fully with  EULEX and the EUSR/ICR. Th e deployment of EULEX is 
ongoing. EULEX is to be operational throughout Kosovo. 
Kosovo continues to participate in the Stabilisation and Association Process . Plenary 
meetings of the Stabilisation and Association Process Tracking Mechanism (STM)  were 
held in November 2007 and May 2008. In the fr amework of the enhanced STM structures 
established in March 2007, sectoral STM meeti ngs were held in the areas of Innovation, 
Internal Market, Good Governan ce, Economy and Infrastructure. 
                                                 
4 Council Joint Action 2008/124/CFSP of 4 February 2008 on the European Union Rule of Law Mission 
in Kosovo, EULEX KOSOVO. 
5 Council Joint Action 2008/123/CFSP of 4 February 2008 appointing a European Union Special 
Representative in Kosovo. 
6 Austria, Belgium, Bulgaria, Cr oatia, Czech Republic, Denmark, Esto nia, Finland, France, Germany, 
Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Netherlands, Norway, Poland, Slovenia, 
Switzerland, Sweden, Turkey, United Kingdom, United States of America. 
EN 7   EN The EU sets out reform prioriti es for the authorities through the European Partnership . The 
Council adopted a revised European Part nership for Kosovo in February 2008. The 
government approved its European Partne rship Action Plan (EPAP) in July 2008 . 
In April 2008, the government adopted the Pl an for European Integration 2008 – 2010, which 
aims to improve inter-governmental coor dination and communication. The relevant 
institutional structures were set up in September. 
On 11 July, the European Commission organi sed a Donors' Conference for Kosovo, which 
was held in Brussels. Participants pledged a total of € 1,236 million. The combined pledge made by the Commission
7and the EU Member States amounted to nearly € 800 million. 
Kosovo continues to benefit from the Instru ment for Pre-accession (IPA), Macro-Financial 
Assistance (MFA), CARDS, the Instrument for St ability and others. Further to the decision to 
phase out the European Agency for Reconstr uction (EAR) by the end of 2008, the European 
Commission's Liaison Office (E CLO) in Kosovo took over re sponsibility for projects 
financed under the CARDS programme from the EAR in July. Ongoing EU assistance to 
Kosovo under the CARDS instrument amounts to some € 170 million and involves over 80 
projects. 
The IPA 2008 Annual Programme for Kosovo focu ses on the objectives  identified in the 
Multi-Annual Planning Document (MIPD) 2008-2010. In 2008, EU IPA assistance to Kosovo 
amounts to € 122.7 million8, which is managed directly by th e ECLO, plus a contribution of € 
2 million under the IPA Multi-Ben eficiary Programme. Programming for IPA 2008 started in 
October 2007. All beneficiary institutions were closely involved in th e programming process. 
Key priorities for funding include the strengthen ing of administrative ca pacity at all levels, 
enhancing the rule of law, human rights and good governance, improving socio-economic 
conditions for all communities, and developing regional co-operation. Preparations for the 
IPA programme took place in close co-ordinat ion with the Council's planning teams (EUPT 
and EUSR/ICO) to ensure complementarity w ith the activities of the ESDP mission in 
Kosovo and the EUSR. Member States, the donor  community and representatives of civil 
society were also consulted. The Financi ng Agreement for the IPA 2008 Annual Programme 
for Kosovo was signed in October. 
The ECLO implements IPA programmes in Kosovo under deconcen trated centralised 
management. Some projects are implemented under joint management with international 
organisations (such as the Council of Europe).  Kosovo has to establish a roadmap for the 
decentralisation of the manage ment of EU funds without ex ante  controls by the Commission. 
Kosovo is at a very early stage in this process. 
Kosovo has yet to appoint its Na tional IPA Coordinator (NIPAC). 
2. POLITICAL CRITERIA  
This section examines the progress made by Kosovo towards meeting the Copenhagen 
political criteria, which require stability of institutions guaranteeing democracy, the rule of 
law, human rights and respect for and protectio n of minorities. It also monitors regional  co-
                                                 
7 Part of the Commission's pledge is subject to approval by the Budgetary Authority. 
8 An additional allocation of € 60 million has been transferred from the MFA line to IPA in 2008. 
EN 8   EN operation, good neighbourly relatio ns with enlargement countries and Member States, and 
respect for international obligations, such as co-operation with the UN International Criminal 
Tribunal for the former Yugoslavia. 
2.1. Democracy and the rule of law 
Constitution On 9 April, the assembly of Kosovo adopted the Constitution of  the Republic of Kosovo. This 
followed preparations by a constitutional work ing group, public discussi ons, certification of 
the draft constitution by the ICR and approval by the president of Kosovo. The constitution entered into force on 15 June 2008. 
The constitution is based on the Comprehensiv e Proposal for the Kosovo Status Settlement 
(CSP) prepared by UNSG special envoy, Martti Ahtisaari. The consti tution explicitly 
confirms that the provisions of the CSP take  precedence over all other legal provisions in 
Kosovo. It also confirms the CSP as the key reference to verify compliance of the constitution itself and other laws and legal acts. It confirms the ICR as the final authority in Kosovo 
regarding the interpretation of the civilian aspects of the CSP. The constitution does not 
include references to the UN or UNMIK other th an in the context of the termination of its 
mission in Kosovo. 
The constitution provides for the protection of  human rights and comm unities according to 
international and European standa rds. It respects democratic pr inciples of subsidiarity and 
local governance. It includes basi c provisions associated with statehood. It also confirms 
fundamental rights and freedoms, and the righ ts of communities and their members. It 
provides for a detailed description of the State institutions, their respective competences and powers, including an assembly, a president and the government. It delineates the principles 
and structure of the justice system, including the role of a constitutional court. The constitution includes detailed provisions for local government and the security sector. It also 
confirms the role and competences of indepe ndent institutions, including an ombudsperson, 
an auditor general, a centra l election commission, a central bank and an independent media 
commission. 
The transitional provisions of the constitution confirm the arrangements for the supervised 
independence of Kosovo envisaged by the CSP. 
The Kosovo Serb community did not formally part icipate in the constitutional process.. Other 
minority communities, such as Roma, complained they were not or insufficiently involved and consulted.  
The constitution is in line with European stan dards, which require stability of institutions 
guaranteeing democracy, the rule of law, hu man rights and respect for and protection of 
minorities. Ensuring the full respect for the rule of law, human rights and the protection of minorities is a key priority in the European Partnership for Kosovo. 
Parliament 
The assembly was reconstituted following the general elections of November 2007, which 
were held in a fair and efficient manner. Th e Democratic Party of Kosovo (PDK) received 
34% of the vote, the Democratic League of Kosovo (LDK) 23%, the Kosovo New Alliance 
(AKR) 12% and the Alliance for the Future of  Kosovo (AAK), the Democratic League of 
EN 9   EN Dardania (LDD) each received 10%, the Reformis t Party (ORA) 4% and the Party of Justice 
(PD) 2%. A total of thirteen minority part ies received a total of 5% of the vote. 
The Central Election Commission (CEC) is  responsible for the organisation and 
implementation of elections in Kosovo. The chai rmanship of the CEC has been transferred 
from the mission of the OSCE in Kosovo to the Kosovo authorities. 
The assembly formally elected the President and Prime Minister, approved the declaration of 
independence and the constitution and adopted  a total of 41 laws directly related to 
independence and the constitution by an accelerated procedure. 
After a boycott following the declaration of i ndependence, the Kosovo Serb members rejoined 
the assembly. 
In March, the assembly presidency adopted the rules of procedure on the work of the 
presidency and rules on its political staff. Th ree new committees were  set up: the Committee 
on European Integration, the Committee on Huma n Rights, Gender Issues, Missing Persons 
and Petitions, and the Committee on Mandates and Immunities. The committees organised a number of public hearings. 
The assembly carried out its ex ante responsibilities as regards the budget.  It intervened to 
safeguard the funding allocated to the independe nt institutions, and reviewed reports on their 
expenditure ex post. The assembly increased its role in providing oversight to the security 
sector. Its Committee on Internal  Affairs and Security is re sponsible for monitoring the 
implementation of securi ty-related legislation. 
However, there is little or no interaction between the governme nt and the assembly once the 
former has forwarded legislation to the latt er. The government participates in assembly 
committee deliberations on request. Asse mbly committees often submit their 
recommendations on draft legislation well after the relevant deadlines, causing delays in its adoption. The assembly does not conduct regular assessments of draft legislation for human 
rights compliance. It does not always assess the budgetary impact of draft legislation. The 
assembly lacks sufficient expertise to allow effective scrutiny, and lacks the capacity to 
ensure effective monitoring of the implementa tion of laws. Assembly members have weak 
links with their constituencies and there is a lack  of effective civil society participation in the 
legislative process. 
The implementation of the assembly's annual work programme for 2007 was interrupted by 
the electoral campaign. An annual work plan for 2008 has yet to be adopted. 
In September, the Assembly decided to post pone the appointment of the Ombudsperson for a 
third time. 
At the administrative level, th ere is a lack of qualified sta ff and a shortage of minority 
community representatives. Persistent vacancies hamper the work of key administrative units, 
including the unit that is mon itoring EU standardisation. The a ssembly still does not have an 
autonomous IT system. Voting records of onl y one plenary session have been published on 
the web site. The Committee for European In tegration lacks administrative support and 
expertise in EU matters. 
The Central Election Commission furt her relies on OSCE support. 
EN 10   EN Overall, the assembly made some progress in a number of areas and partially managed to 
fulfil its role over the reporting period, whic h was characterised by a heavy focus on the 
adoption of the constitution and related legislation. However, challenges and shortcomings 
remain to be addressed, notably a lack of capac ity to scrutinise draft legislation and monitor 
its implementation after adoption. 
Government 
On 9 January 2008, a coalition government of PDK (Democratic Party of Kosovo) and LDK 
(Democratic League of Kosovo) under Prime Minister Hashim Thaçi was formed. The 
government includes a Prime Minister, two De puty Prime Ministers and 17 ministers.  
The new government focused on independence and th e constitution. Politi cal parties respected 
their commitment to remain united throughout  the period between the declaration of 
independence and the coming into force of the c onstitution. Their attention started to shift to 
other areas following the pres entation of the government's strategy for 2008-2011 in April. 
Opposition parties have adopted a more cr itical attitude towards the government.  
The government set up a Commission on the Mon itoring of the Implementation of Laws, 
which is chaired by a Deputy Prime Minister.  
In April, the Prime Minister presented a re port on the first 100 days  and the government's 
programme for 2008-2011 to the assembly. 
The government started issuing Kosovo passports in July. In September, the President and the Prime Mi nister agreed on the a ppointment of Kosovo's 
first ten diplomatic envoys to a selected number of countries recognising its declaration of 
independence.  
The government continued to build  its capacity to address EU matters. In July, it approved 
new structures to better monitor EU integrati on matters within the framework of its European 
Partnership Action Plan. The government reports  to the assembly's Committee for European 
Integration every three months. The Agency for European Integration (A EI) continues to be 
the central agency coordinating Kosovo's Europ ean approximation efforts. The AEI started to 
have more structured contacts with the asse mbly, in particular as regards legislative 
compliance verification, and attends the week ly sessions of the assembly's Committee on 
European Integration. In October, the AE I was renamed Centre for Coordination of 
Development and European Integration (CCDEI) so  as to reflect its restructuring and merging 
with the Donors Coordination Centre  following the Donors' Conference.
 
Local government has been strengthened. Ne w legislation on administrative municipal 
boundaries, local self-government, and local go vernment finance and decentralisation came 
into force in June. Advancing the reform of self-government and increasing administrative 
capacity to facilitate decentralisation are key priorities in the European Partnership for 
Kosovo. 
The legal acts or laws passed by the assembly are published in the Official Gazette. The 
Gazette is published in the two official languages  of Kosovo. It is also published in Bosnian, 
Turkish and English on the Gazette's own website . The Gazette is disseminated to ministries, 
municipalities, the courts and educational institutions. 
EN 11   EN However, the government's focus on independence-re lated issues has kept it from addressing 
other matters. The government has encounte red some difficultie s in presenting and 
coordinating its strategic priorities. The assemb ly, including members of  the ruling coalition, 
contested the government's programme for 2008-2011. The government sent its legislative 
strategy to the assembly without a timetabl e for the submission of draft legislation. 
The government did not manage to reach its targets for minority community representation . 
Further progress in this area was prevented by political developments following the declaration of independence. 
In some Serb-majority areas the government ha s limited authority over th e police, the courts, 
customs, transport, boundaries and Serbian patr imony. Parallel administrative structures at 
local level have consolidated a nd continue to operate in most Serb majority municipalities, 
even if they are not operational in some areas  south of the Ibar river. Municipalities in 
northern Kosovo have started to implement Serbian legislation on local governance. A 
number of Kosovo citizens contin ue to rely on these services , e.g. for travel documents, 
education. In June, the government decided to extend the mandates of the mayors in 
Leposaviq/Leposavi ć, Zveçan/Zve čan, Zubin Potok and Štrpce /Shtërpcë, confirming 
UNMIK's earlier decision not to validate the results of the Serbian local elections of May 2008 in Kosovo.  
The gradual nature of UNMIK's reconfiguration ha s led to uncertainty in some areas as to the 
actual competences of the government (e.g. take-over of the Kosovo Trust Agency). 
The rationalisation of working methods continue s to be a challenge. The responsibilities of 
the Office for Good Governance overlap with those of the Ag ency for Gender Equality and 
the Anti-Corruption Agency. It is not clear how the Office for Commun ities will cooperate 
with the Ministry for Communities and Retu rns. Communication and coordination between 
the central and local administrations dealing wi th human and minority ri ghts are not effective. 
The effectiveness of the government's particip ation in regional and international fora is 
limited by the fact that its legitimacy is  contested by non-recognising countries. 
Allegations of political interference in the se lection and appointment of a number of key 
positions (e.g. board of public-owned enterprise s) have affected the credibility of the 
government.  The premature announcement of a population census and the untimely 
submission of the mid-year budget review to the assembly ran counter to the provisions of the 
constitution.  
High staff turnover at the Agency for European Integration and a lack of strategic guidance 
risk undermining its efficiency. The department responsible for verifying legal compliance in 
particular is understaffed.  
Overall, some progress was made in consolid ating government in a vo latile and uncertain 
environment. The basic working tools for an efficient government are in place, but they need to be enhanced and fully and properly appl ied. Ensuring democratic governance is a key 
priority in the European Partnership for Kosovo. 
EN 12   EN Public Administration 
The inter-institutional working group and the sect oral working groups tasked with monitoring 
the implementation of the Public Administra tion Reform Strategy a nd Action Plan (covering 
the period 2006-2011) meet regularly.  
In February, the Independent Oversight Board (I OB), previously advising the SRSG on public 
administration reform, was transformed into an autonomous body reporting directly to the 
assembly. In 2007, the IOB resolved 386 cases of grievance by employees of ministries, 
municipalities and executive agencies. The IOB also monitored 37 selection procedures for 
civil servants in the ministries  and municipalities, and dealt with 71 complaints. To date, the 
IOB resolved 222 appeals out of a total of 282 appeals received so far in 2008. 
The Ministry of Public Services  (MPS) issued implementing laws relating to the civil service 
and the management of public administration. Th ese regulate the repres entative expenditure 
of the governmental institutions, define the sala ries, rights and duties of  political appointees, 
procedures for the Senior Public Appointme nts Committee, and the rules for communication 
with citizens. 
The government approved an administrative instru ction to strengthen the existing legal offices 
in line ministries . A commission to monitor the implementation of laws was set up in 
February. A working group to rationalise and streamline legisl ation has also been set up. 
The functional review of the public administration started in April. The review aims to reduce 
overlapping competences between institutions and to increase the effectiveness of the public 
administration. A vertical institutional review is also being considered for the purpose of 
identifying tasks that can be delegated to the lo cal level or entrusted to the private sector. An 
inter-ministerial commission and technical wo rking groups were esta blished to steer the 
process. Membership includes a Deputy Prime Minister, the Minist ry of Justice, Ministry of 
Economy and Finance, and the Ministry of P ublic Services. A project aimed to develop 
software for improved information and human resources management in the Kosovo civil 
service has started9  
However, the Law on the Ci vil Service, the Law on the Kosovo Institute for Public 
Administration, and the Law on Public Administra tion have yet to be adopted. Civil servants 
continue to be vulnerable to pol itical interference, corruption a nd nepotism. More than a year 
after their adoption, the results of the Public Administration Re form Strategy and Action Plan 
and the way these are measured are still uncle ar. Since mid-September, four out of seven 
positions on the Independent Oversight Board are vacant preventing it from making decisions. 
The Senior Public Appointments Committee is no t fully functional and its secretariat should 
be further strengthened by a dditional staff and training. 
Some ministries and local aut horities still refuse to provid e information, respond to requests 
or follow up the recommendations by the office of the Ombudsperson. Staff numbers in the 
Ombudsperson’s office have been reduced from 56 to 45.  
Overall, despite some progress related to the a doption of an action plan  and some legislation, 
public administration reform still needs to be  implemented. The most important legal acts 
                                                 
9 It is expected that the project will be completed by the end of the year. 
EN 13   EN remain to be adopted. Public administration a nd the coordination capacity of public bodies in 
Kosovo continue to be weak. Ensuring the deliv ery of public services to all people in Kosovo 
and establishing a professional, accountable, accessible and representative public administration is a key priority in the European Partnership for Kosovo. 
Judicial system 
The Ministry of Justice continues to reinforce its administrative capa city. It has drafted a 
considerable number of new legislative acts in line with its legal reform programme. The 
Coordination Council for Rule of Law establis hed in October 2007 has started to operate. It 
brings together ministries and agencies from  the area of freedom, security and justice. 
The Judicial Investigation Unit (JIU) under th e responsibility of UNMIK continued to 
examine complaints of misconduct by Kosovo j udges and prosecutors. A total of 164 cases 
were received in 2008, leading to the launc h of 73 new investigations. The JIU found 
misconduct in 87 cases and forwarded these to the Kosovo Judicial Council (KJC). 
In January 2008, the Statute of the Kosovo Judicial Institute  (KJI) was approved. In March, 
the KJI adopted a three-year Strategic Plan.   
The assembly approved the following laws  between March and May 2008: the Law on 
Jurisdiction, Case Selection and Case Allocation of EULEX Judges and Prosecutors in 
Kosovo; the Law on Special Prosecution of Kosovo; the Law Supplementing and Amending 
the Provisional Criminal Code of Kosovo; the Law Amending and Supplementing the Law on 
Execution of Penal Sanctions; the Law Amendi ng and Supplementing the Kosovo Provisional 
Code of Criminal Procedure and the Law on the Out Contentious Procedure. 
Kosovo is cooperating well within the fram ework of the EULEX Joint Rule of Law 
Coordination Board and particip ates in its monthly meetings. 
However, the weakness of the judi ciary persists. The Ministry of Justice still has very limited 
technical and human resources. There is a lo w level of trust in the judiciary among the 
population. The absence of a constit utional court and inconsistent availability of the Official 
Gazette across the judicial system  continue to hamper legal certainty in Kosovo. This problem 
is exacerbated by the continuing existence of three parallel source s of legislation (ex-
Yugoslav law, UNMIK regulations and Kosovo law adopted following the declaration of 
independence). There is no compilation of judici al decisions and no judi cial commentary in 
Kosovo. 
The review of the March 2004 ri ots cases revealed continui ng shortcomings involving 
prosecutors, courts and witne sses. The justice system faile d to send a clear and strong 
message that ethnic violence would not be to lerated in Kosovo. The vigorous prosecution of 
all inter-ethnic cr ime is a key priority in the European Partnership for Kosovo. 
Witness protection continues to be weak, if not  absent, especially as concerns war crimes. 
War crimes cases are handled exclusively by a declining number of international judges and 
prosecutors. Many war crimes-related cases have not been forwarded to the prosecution. One 
conviction on war crimes was secured in May 2008. Seven war crimes trials involving 
fourteen defendants are underway  and 51 other cases are under preliminary investigation. Due 
to Kosovo’s size, close-knit social fabric and the limited possibilities fo r relocating witnesses 
outside Kosovo, few witnesses are willing to partic ipate in sensitive cases, such as cases on 
EN 14   EN war crimes. There is still no specific legisl ation on witness protection that establishes 
procedures for witness relocation in  the most serious criminal cases. 
The Law on the Kosovo Judicial Council (KJC)  is still to be adopted . Constitutional 
provisions entitling the assembly to appoint eigh t out of the thirteen members of the KJC are 
not fully in line with the European standards on the independence of the judiciary from the 
legislative and executive powers.  The KJC's disciplinary system is slow and decision-making 
does not always stand up to scrutiny. To date, 57 disciplinary cases are waiting to be processed by the two KJC Disciplinary Committees. 
The backlog of cases continues to be a seri ous problem, especially in civil proceedings. 
Available data do not provide a clear picture of the backl og. There is confusion between 
backlog and pending cases. At the beginning of October, the total of unsolved civil cases 
pending before the municipal courts of Ko sovo stood at 160,477. There is no operational 
system for the execution of civil judgments. Furthermore, over 36,000 criminal cases are pending. Alternative dispute reso lution, such as mediation, has not yet been implemented. 
Municipal courts, along with the police, lack the capacity to address,  prevent and sanction 
illegal occupation, use and construction of property in an impartial manner. 
The legislative framework is still incomplete . There are no laws in the following areas: 
notaries, executive procedure, prosecuti on, courts, constitutional court and Kosovo 
Prosecutorial Council. The strate gy for the reform of the judi cial system does not include a 
comprehensive plan to streamline the three sources of legislation and create legal certainty. Parallel courts applying Serb ian law continue to operate. 
The establishment of the Magist rate's School and the vetting pr ocess in the judicial system 
have provided an opening for young lawyers to  become judges and prosecutors. However,  
new appointments in the judicial system remain limited.  
The court system  faces serious challenges from a hu man resources and organisational 
perspective. Transfer of judges from courts with a modest work load to those with an overload 
rarely takes place. The number of judges is still insufficient. The salaries in the judiciary have 
not increased since 2002. Judges are not covere d by insurance or social security schemes . 
There is no legislation that specifies criteria for professional advancement. The average age of 
judges is high. Since 2001, almost  no new judges or prosecut ors have been recruited. 
Vacancies have only been filled through reloca tion. A system of appointment, dismissal and 
career promotion for judges and prosecutors in line with Eur opean standards and free from 
political interference has yet to  be introduced and implemented. 
Data collection in courts is unreliable. Th e new Case Management Information System 
(CMIS) needs to become more effective. C ourts and prosecution offices have no budgetary 
competence for the procurement of small office items, which hinders routine activities. There 
is no clear division between j udges dealing with penal or civil matters. Judges frequently 
switch between the two. There is no specialised administrative justice. The criteria for assignment of cases between the municipal and dist rict level contribute to the overload of the 
district courts. Within the courts, case as signment does not follow objective and transparent 
criteria. Implementation of th e Code of Ethics is weak. 
The capacity of the prosecution to lead investig ations in compliance with the principles of 
autonomy and impartiality is limited.  Currently, only six out of the ten prosecutors due to be 
engaged in the Kosovo Special Prosecutors Offi ce (KSPO) are working; this figure has been 
EN 15   EN unchanged since 2007. Prosecution o ffices are understaffed and lack  interrogation facilities. 
Detainees have to wait on average 1-1.5 years be fore their trial starts  and conditions of 
detention of pre-trial detainees are not sati sfactory. The absence of  specialisation among 
prosecutors is a serious obstacle in the figh t against organised crime, such as money 
laundering or the trafficking of human beings, which is a key priority in the European 
Partnership for Kosovo. Cooperation between police and public prosecution is poor and 
inefficient. 
The Supreme Court is the only specialised lega l institution for the review of administrative 
acts. However, it has only two judges, and ove r 2,000 cases are pending. Concerns remain as 
to the possibility of calling for a judi cial review of administrative acts.  
Overall, the judicial system remains weak at all levels. There has b een little progress during 
the reporting period. 
Anti-corruption policy 
Corruption is still widespread and remains a major problem in Kosovo. This is due to 
insufficient legislative and implementing meas ures and a lack of determination and the 
weakness of the judicial system. An anti-corrup tion strategy and action plan remain to be 
adopted. The pursuit of a policy of zero toleran ce against corruption is a key priority in the 
European Partnership for Kosovo. 
The Law on the Prevention of Conflict of Interests entered into force. The assembly approved 
the Law on the Declaration and Origin of th e Property of Public Se nior Officials. The 
assembly has yet to approve the final draft Law on the Declaration of Assets. 
In March 2008, the Kosovo Anti-Corruption Agency  (KAA) submitted its first annual report 
to the assembly. By the end of September, the KAA had submitted 35  cases to the 
prosecution, which initiated seven criminal proceedings. 
In the area of conflict of inte rests, the KAA intervened in nine  cases from January to June 
2008, and in a further four from July to September. In April 2008, the agency published a list 
of officials who had not declared their assets . In August, the agency asked the institutions 
employing 17 officials who had still not declared their assets to start dismissal procedures. 
KAA maintains confidentiality of denouncements.  
However, corruption is still widespread a nd undermines the proper functioning of the 
institutions. A recent report from the office of  the Auditor General (AG) showed unexplained 
losses to the Kosovo budget of €0.5-5 million per mi nistry per year. More attention needs to 
be devoted to the implementation of the existing legal framework. Officials who have not declared their assets need to be sanctioned in accordance with the law. 
The institutional framework to tackle corruption is still unclear. The inter-ministerial Working 
Group on Anti-Corruption is not yet operational. The mandate of the Anti-Corruption Council 
and its role vis-à-vis the KAA remain unclear , and its composition (nine staff, including a 
representative from the Prime Minister's of fice and a representative from the President's 
office) does not sufficiently guara ntee its political impartiality . 
The delineation of resp onsibilities between the KAA and the Office of Good Governance, 
whose head is deputy head of the Anti-Corru ption Council, has led to friction. Cooperation 
EN 16   EN with the office of the Ombudsperson remains weak. The training provided to ministries' 
procurement offices is uneven. 
The legal framework needs to be further improved  to remedy differences in the definition of 
corruption between the current an ti-corruption law and the provisi onal penal code. There is no 
law on the management of sequestrated and confiscated assets. The implementation of the law on access to official documents needs to be im proved. The development of a sectoral action 
plan to fight corruption and increase awarene ss of corruption within the public administration 
and in civil society is overdue.  
Overall, despite some progress, corruption rema ins widespread and constitutes a very serious 
problem. 
2.2. Human rights and the protection of minorities 
Observance of international human rights law The constitution of Kosovo guarantees human ri ghts and fundamental freedoms and lists the 
main international agreements and instrument s directly applicable in Kosovo. In case of 
conflict, the latter take precedence over local laws. 
The assembly established a Committee on Huma n Rights, Gender Equality, Missing Persons 
and Petitions to review draft legislation and a lign it with EU and international legislation on 
human rights. 
Human rights units have been established in  the municipalities to ensure human rights 
monitoring and compliance at local level. Th ey complement the human rights units at 
ministerial level. However, tr aining for relevant staff has to  be intensified to improve 
coordination. Monitoring mechan isms are not effective yet. 
Some Kosovo judges have received training on th e case law of the European Court for Human 
Rights and have star ted referring to it. 
The Human Rights Advisory Panel established to address the lacunae in the jurisdiction of the  
European Court of Human Rights (ECtHR)  and examine claims of human rights violations by 
UNMIK held its inaugural session  in November 2007. Its rules of  procedure were adopted in 
February 2008. The panel is currently examining a number of cases, some of which have been 
referred to the SRSG in accordance with the provisions of Regulation 2006/12. In March 
2008, the panel launched a public information campa ign to promote awareness of its mandate. 
However, pending Kosovo's CoE membership, citizen s do not have the po ssibility to lodge a 
complaint to the ECtHR as a last resort.  
As regards promotion and enforcement of human rights , the monitoring capacities in 
Parliament, government and civil society are ve ry limited, particular ly as regards positive 
rights such as education, health and employ ment. By way of remedy, Kosovo citizens refer 
matters to the office of the Ombudsperson. However, amendments to the Law on the 
Ombudsperson aimed at strengthening his ability to monitor potential human rights' breaches 
of court decisions have not been approved yet. Most of the recommendations of the office of 
the Ombudsperson to the government  are not taken into account. 
The government's Strategy and Action Plan on Human Rights have yet to be approved. 
EN 17   EN Overall, despite some institutional and legislative progress, there is still a lack of capacity to 
implement and upgrade human rights standards in Kosovo. 
Civil and political rights 
As regards the prevention of  torture and ill treatment and the  fight against impunity , the 
2007 report of the Council of Euro pe's Committee for the Prevention of Torture has not been 
made public. 
The 2007 Police Inspectorate report underlined the need to reform the legal framework for the 
use of force by the police and the shortcomings related to the follow-up of complaints against 
the police. The legal framework has been significan tly improved through the adoption of the 
Law on the Police Inspectorate of Kosovo. Prof essional standards units examine alleged 
procedural and minor offences by Kosovo Police (KP) headquarters and the regional 
headquarters. In northern Kosovo this is don e under the supervision of UNMIK. The police 
inspectorate, which is independent but reports to  the Minister of Interior, is responsible for 
complaints about major offences, including thos e occurring in police detention centres. Pre-
trial detention of juveniles can in practice take more than one year. The Ministry of Justice's 
human resources department is the main body dealing with complaints of misconduct in 
prisons and detention centres. 
The Commission on Missing Persons continued processing cases. Be tween October 2007 and 
September 2008, 46 exhumations were initiate d by the Office on Missing Persons (OMPF) 
and 62 remains were found and transferred fo r autopsy and identifi cation. Since October 
2007, the Commission received 150 positive report s of DNA concerning 102 individuals and 
returned the remains of 118 identified persons  to their families. The Kosovo delegation on 
missing persons continued its regular coordinati ng activities with the Serbian delegation and 
the missing persons' relatives. Developments as regards missing persons are slow, due to both 
a lack of transparency from the authorities regarding the burial sites and difficulties in the identification of remains. The total numb er of missing persons stands at 1,940.  
The Victim, Advocacy and Assistance Division within the Ministry of Justice provided 
assistance in 464 cases involving domestic violen ce and in 25 cases of trafficking of human 
beings. On the basis of Regul ation 2003/12 on the fight agai nst domestic violence, 30 
protection orders were issued. In May 2008, th e Kosovo Special Prosecutor’s Office (KSPO) 
charged five defendants with trafficking in  people, money laundering, and tax evasion and 
involvement in an organised group involve d in recruiting and sh eltering women from 
Moldova by means of coercion, including fraud, deception and threat, in order to exploit them 
as sex workers. Four defendants were convicted and sentenced to between five and six years' 
imprisonment and the payment of fines. There ar e currently nine further trafficking cases at 
the pre-trial and preliminar y investigation stages invol ving 31 defendants/suspects. 
Overall, the prevention of torture and ill-treatm ent and the fight against impunity have made 
limited progress. 
In the area of access to justice , the legal aid system is now operational; it comprises the Legal 
Aid Commission, which has been fully opera tional since September 2007, the Legal Aid 
Coordination Office and five Di strict Legal Aid Offices with a total of 21 staff, including 
thirteen lawyers and three sta ff from non-majority communities. 
Between January and June 2008, the District Le gal Aid Commissions helped 534 people with 
legal aid, including 256 involvi ng administrative law cases, 214 civil cases and 64 criminal 
EN 18   EN cases. 9% of applications were received from members of minority communities and 37% 
from females. Applicants are either provided w ith in-house legal aid by legal officers from the 
district offices or referred to solicitors for cases requiring court representation in civil and 
administrative matters. Responsibility for court representation of applicants in criminal matters remains with the courts. The Bar Asso ciation has established a training programme 
for lawyers involved in legal aid. 
However, the offices are usually located far away  from the courthouses and in remote areas of 
the relevant towns, which make s access to justice for all citizen s difficult. Their existence is 
little known among the population and judges. 
Performance of lawyers and their conduct in  courts do not always meet the minimum 
standards. The Bar Associati on does not receive sufficient in stitutional attention. Lawyers 
frequently decline requests for legal assistance,  thus violating their own Code of Ethics. 
Kosovo Serbs do not work in the Legal Aid Co mmission. The Ministry of  Justice has yet to 
appoint a director for its civil rights depart ment. The handling of mu tual legal assistance 
requests in criminal matters and in extradition requests do not meet international standards. 
Overall, some progress was achieved. The legal ai d system is operational but requires further 
backing from all communities to im prove access to justice for all. 
As regards the  prison system , the Kosovo Correctional Servic e (KCS) is operational, with 
UNMIK retaining a right to intervene in the case of a major incident. 
The ratio between prisoners and prison staff is adequate. The living conditions for sentenced 
people, their health care and thei r treatment by the KCS are correct. 
However, security in some correctional and detention centres is weak. This is especially true 
of the high security prison in Dubrava. Despite the issuing of  a report on the escape from 
Dubrava prison in August 2007, follow-up to address deficiencies has been limited. 
The reintegration needs of the prison populatio n are not taken into consideration. There are 
too few specialised facilities for juveniles or for mentally disabled prisoners. Correctional 
facilities for juveniles do not adequately prioritise education, vocational training and after-
care for released juveniles. 
There is no plan for internationa l cooperation to facilitate the transfer of Kosovan detainees 
from EU countries. 
Minority representation in th e KCS staff has decreased fo llowing resignations after the 
declaration of independence. All Kosovo Serb convicts are serving their sentences in the 
Mitrovica/Mitrovicë de tention centre, which is not su itable for long-term detention. 
Overall, the penitentiary system in Kosovo is  operational, but serious  challenges remain as 
regards strategic planning and security standards. 
In the area of freedom of expression,  no hate speech was detected in the print and electronic 
media during the reporting period. The inde pendent Press Council for print media is 
functioning properly. 
However, defamation remains a criminal offe nce under the Provisional Criminal Code, which 
is still valid.  
EN 19   EN There is political pressure on the media. Journalists from minority communities complain of 
difficult access to Kosovo institutions, which hampers their work. 
The Independent Media Commission (IMC) for television and radio still faces severe 
budgetary limits, which hinder its basic functioni ng and efficiency and the recruitment of 
qualified staff. The IMC is not systematically consulted on issues relevant to its mandate. 
Overall, freedom of expression remains fragile. The relevant institutional framework is not 
fully operational. The media continue to  be vulnerable to political intimidation. 
The Law on Freedom of Association  in a Non-Governmental Organisation has not been 
promulgated yet . The assembly has not reviewed the Law on Public Gatherings and the law 
has not been promulgated.  
The freedom of association and gathering is  guaranteed under the c onstitution, but the 
relevant legal framework does not exist. 
More than 4,600 civil society organisations  are registered with th e Ministry of Public 
Services (MPS), the vast majority of which are local. 529 registered NGOs are active in the 
area of minority rights and seventeen of th ese have multi-ethnic staff. The MPS NGO 
registration and liaison unit is  monitoring 280 civil society or ganisations that have public 
benefit status and are entitle d to financial support from the Kosovo consolidated budget. 
Some NGOs continue to be ac tive in bridge building between communities. Significant efforts 
are being made to transfer expertise from  international to local NGOs by means of 
partnerships and direct s upport to the establishment and functioning of local NGOs. 
However, most civil society  organisations are small and depe nd on short-term funding from 
mainly foreign single donors. This means that th e civil society agenda is largely donor-driven. 
The government does not have a strategic appro ach for its interaction with civil society 
organisations. 
Overall, civil soci ety remains weak. 
The Office for Good Governance (OGG) and the hu man rights units within municipalities are 
mandated to monitor the implementation of the Law on Freedom of Religion , which is a key 
priority in the European Partnership for Ko sovo. The OGG has prepared a manual on the law, 
which was published in five languages in Se ptember 2008. A Roman Cat holic cathedral is 
being built in the centre of Priština/Prishtin ë. Police HQ drafted an operational directive 
entitled ‘The Safety of the Cultural and Reli gious Heritage Sites’. The majority of cases 
involving incidents with  regard to cultural and religious  heritage between  November 2007 and 
March 2008 have been solved. 
However, the construction and use of places  of worship has caused tension. The Law on 
Freedom of Religion  contradicts some provisions of th e Law on Education and has led to 
complaints regarding freedom of religion in  schools. Ecumenical meetings between the 
religious communities in Kosovo have not been held during the past two years. Some religious leaders openly s upported extremist parties duri ng electoral campaigns. The 
prosecution of the destruction of  religious sites in March 2004 has continued, but there have 
been delays, and sentencing did not always reflect ethnic motive as an aggravating factor. 
Overall, the freedom of religion is assured in  Kosovo, but more has to be done to advance 
reconciliation. 
EN 20   EN Economic and social rights 
In the area of women's rights , the government approved th e Framework Programme for 
Gender Equality 2008-2013, which id entifies objectives, policies an d institutions involved in 
implementing the Law for Gender Equality. In June, the government submitted a report on the Gender Profile of Kosovo to the Convention on Elimination of all Forms of Discrimination 
against Women (UN CEDAW) covering th e period 1999-2007. The Agency for Gender 
Equality (AGE) increased its capacity and its coor dination work at the central level with the 
office of the Ombudsperson and the gender equality officers within ministries. 
However, violation of women's rights is freque nt. Kosovo remains a source, transit point and 
destination for trafficking in hu man beings. It is also affected  by internal trafficking. There 
are no strategy documents or legislative mechan isms to address domestic  violence. Shelters 
lack resources and need to be made suitable fo r longer-term stays of victims. The overlapping 
mandates of AGE and the OGG prevent a clear de lineation of responsibilities and the efficient 
use of scarce resources, and undermine the inte nded outcomes of gender policies. The chief 
executive officer of AGE has yet to be appointed . AGE has neither database nor resource 
centre. The gender equality officers in line minist ries and in municipalities are not always 
operative . There is no coordination of the bodies d ealing with gender equality and no public 
promotion of gender equality. Equa l representation remains a challenge at all levels; the target 
of a minimum of 40% of either gender  set in the Law on Gender E quality has not been met .  
Overall, the implementation of the Law on Gende r Equality and the treatment of domestic 
violence require additional resources. 
In the field of children's rights , a National Plan on the Rights of the Child is being prepared. 
The Ministry of Education, Science and T echnology (MEST) has completed the Health 
Promoting School Strategy for 2008-2017. Th ree hundred Roma, Ashkali and Egyptian 
children were enrolled for the first time in ten pilot schools  in seven municipalities through 
parental involvement and the implementation of municipal action plans for their integration in 
the local education system . A Mother and Child Health Office has been established as part of 
the Ministry of Health to improve access and quality of health care services for children. Peri-natal mortality is declining. At municipal leve l, children's rights coordinators have been 
appointed. In the justice sector , a Steering Committee on Juvenile Justice has been established 
and the guidelines and standards for juvenile justice were developed and disseminated to 
develop the skills of ju dges and prosecutors. 
However, child protection remains weak; budgeta ry allocations for ed ucation, protection and 
overall development of children are low. Ther e is no monitoring of the special protection 
measures in the Juvenile Justice Code, and the imprecise reporting mechanism on the respect 
of the Convention on the Rights of th e Child undermines accountability . The inter-ministerial 
Committee for Children's Rights created in Ma y 2007 has not met. The National Plan for 
Children's Rights has not been finalized. The in clusion of the most marginalised children, 
including children with disabilitie s, remains a considerable challenge for the local institutions. 
Significant numbers of children lack birth re gistration documents, especially among Roma, 
Ashkali and Egyptian communities. Child traffi cking and child labour persist. Children's 
awareness of the existing social services is low. The coordination and allocation of 
responsibilities for social services between th e municipalities and centr al institutions do not 
allow for the adequate implementation of children' s rights. The lack of investment into early 
childhood development results in one of the lowe st rates of pre-school attendance in the 
EN 21   EN region. The integration of children with spec ial needs into school s is insufficient. 
Uncontrolled urban developmen t threatens children's safety. 
In the area of the socially vulnerable and/or persons with disabilities, there is still no 
strategy for persons with disabilities. Reliable st atistical data on the mentally and physically 
disabled do not exist.  
The National Council for Persons wi th Disabilities is not operat ional. Consultations with the 
Organisation of People with Disabilities in Kosovo have been partia l and fragmented. The 
two centres for physical rehabili tation are not managed by the Mi nistry of Health. People with 
disabilities have to pay for the rehabilitation servi ces they receive. There is a lack of facilities 
for the mentally ill, drug addicts and alcoholics.  There is a shortage of wheelchairs, crutches, 
sanitary devices and hearing aids. 
Overall, little progress has been made in this area. The integration and protection of socially 
vulnerable groups and people with  disabilities is not ensured. (See also Employment and 
Social Policies) 
The human rights units in the line ministries r eceived further training and they organised 
information sessions on the Law on  Anti-Discrimination . The creation of a society free from 
discrimination is a key priori ty in the European Partners hip for Kosovo. Confirming the 
provisions of the law, the cons titution and also the anti-dis crimination law protects people 
from discrimination based on sexual orienta tion. Police treatment of homophobic motivated 
harassment has improved after the training of  municipal police officers on lesbian, gay, 
bisexual and transgender (LGBT) issues. Ther e is no inter-ethnic tension among the LGBT 
community.  
However, there is little progre ss to report on the implementation of the law. The capacity of 
human rights units at central a nd municipal level is low. Coop eration between the government 
and the office of the Ombudsperson has to be  improved. Communication between central and 
local bodies is too rare to effectively follow up on possible breaches of the law. People living 
in rural areas and the lesbian, gay, bisexual and transgender community are not informed 
about the law. Homophobia is still widespread  in the public and the media. The sentences 
passed for homophobic harassment do not specify harassment as motive.  
Overall, little progress can be reported in  the implementation of anti-discrimination 
legislation. 
As regards  property rights,  which are a key priority in th e European Partnership for Kosovo, 
the assembly adopted the Law on the Treatment  of Illegal Construction. The Kosovo Property 
Claims Commission started its work under the auspices of the Kosovo Property Agency. The 
Kosovo Property Agency (KPA) registered 39,683 claims. In May 2008, UNMIK issued a 
directive which exempts property right holders from payment of utility bills accrued during 
periods of illegal occupancy of properties under KPA administration or  where a tenant under 
the rental scheme failed to pay such bills. The scheme for rental of abandoned property in 
Kosovo allows the property rights holder to receive a fixed income from the property by 
authorizing the KPA to rent it out during a de fined period. New members of the Supervisory 
Board of the KPA have been a ppointed. The board needs to fi nalise the procedure for the 
calculation and provision of compensati on for successful property claims. 
EN 22   EN In June, a law was adopted to amend a re gulation on property clai ms, transferring the 
competence of UNMIK for the KPA to the Kosovo authorities and the International Civilian 
Representative.  
However, many displaced persons are awaiting the restitution of residen tial, agricultural or 
commercial property. The Law on Expropriation and the Law on Arbitration approved in 
2007 have not been promulgated by the SRSG. Th e draft Law on Sales of Apartments Where 
Tenure Rights Exist passed its first reading in  February 2008, but needs to be amended to 
prevent unlawful dispossession. The Supreme Cour t panel, which is su pposed to decide on 
Kosovo Property Claims Commi ssion (KPCC)-related appeals, has yet to be appointed. 
UNMIK's directive of May 2008 doe s not affect all property ri ghts holders. Following the 
adoption of the law in June, the government of Serbia decided to suspend the offices of the 
KPA in Belgrade, Kragujevac a nd Niš. This puts the resolution of property claims filed by 
Kosovo Serbs at risk. 
The implementation of the rental scheme is  still unsatisfactory. Out of 4,338 properties 
managed by the KPA, more than 2,500 were incl uded in the rental scheme. Rental agreements 
for more than 940 properties have so far been si gned, but little rent is actually collected. There 
are currently 706 cases pending eviction for re nt-related reasons, and approximately 40 
evictions are carried out each week. There is sti ll confusion about the transfer of cases by the 
KPA to local courts. 
Widespread ignorance of building permits and urban planning systems also affects property 
rights. Expropriation measures undertaken by municipalities to allow for the construction of 
public infrastructure rarely comply with the o fficial procedures, and m unicipalities often fail 
to inform and compensate property owners. 
The municipal authorities in Mitrovica/Mitrovicë consider two former residential areas within 
the ‘Roma Mahala’ as public property , which is delaying the re gularisation and return 
process. Cadastre departments of Kosovo's municipalities lack property documentation, and 
archives have not been harmonised, which resu lts in complications for the verification of 
property rights of displaced people and Kos ovo Albanians. NGOs working on return-related 
projects manage to obtain documents from Serbia  and re-register the property in the cadastres 
in Kosovo, but this cannot be done by  individuals wit hout assistance. 
The Action Plan on Informal Settlements has not brought substantive results.Housing 
conditions remain critical and endanger life in some areas. 
Overall, little progress has been achieved in  the area of property rights. Delays in 
implementing legislation and obstruction have le d to violations of ri ghts and tension among 
communities. 
Minority rights, cultural rights and the protection of minorities 
The government continued to work  on the legal and institutiona l framework for the protection 
of religious and cultural heri tage. The assembly adopted the Law on Special Protective Zones 
to protect in particular the Serbian ort hodox sites in Kosovo. Amendments to ensure 
compatibility of the Law on Spatial Planning w ith the law on Special Protective Zones were 
also adopted. Seven implementi ng regulations allowing for the effective application of the 
Law on Cultural Heritage have been approved.  Close to 3,000 sites an d objects have been 
identified for possible inclusion on the cultural  heritage list. An inter-ministerial Working 
Group on Religious and Cultural Her itage (RCH) was formally set up. 
EN 23   EN After repeated attacks against religious and cu ltural sites – in particular Serbian Orthodox 
sites – earlier in the year, security of RCH s ites is now generally assured. A private security 
company was contracted to protect the most vulnerable sites and complement the work done 
by the police. The Kosovo Police Operational Or der for the protection of Serbian Orthodox 
sites was finalized. It now needs to be implemented. Law enforcement improved. The Peja/Pec district court convicted the person resp onsible for a rocket-propelled grenade attack 
against the Deçan/De čani monastery in 2007. The trial has begun of the person suspected of 
stealing construction material from a Serb ian Orthodox Church in Prizren. An MoU was 
signed between the customs service, the Mini stry of Culture and the border and boundary 
police to improve law enforcement and set up c ooperation to control th e borders and protect 
movable cultural heritage. 
Significant reconstruction work was carried out  on eleven sites through the Reconstruction 
Implementation Commission (RIC) for Serbian Orthodox religious sites damaged during the 
March 2004 events. Several of these sites, incl uding the Episcopal residence in Prizren, were 
handed over to the Serbian Orthodox church. The c hurch is planning to re-inhabit these sites. 
However, the adoption of legislation now needs to be followed by implementation. The 
Council for Cultural Heritage for wh ich provision is made  in the relevant law has yet to be set 
up. The inter-ministerial Working group on Religi ous and Cultural Heritage has not yet begun 
to hold regular meetings. The three laws on sp atial planning, cultural heritage and special 
protective zones are compatible  but their harmonised implementation needs to be ensured. 
Construction activities in the direct proximity  of religious and cultural sites pose the main 
threat to the historical and natural environment as  well as monastic life. Unregulated 
economic development presents a potential risk  for the future of religious and cultural 
heritage. 
The decision of the municipali ty of Gjakovë/Ðakovica to build a park on a piece of land that 
is the property of the Serbian Orthodox church, and thereby cover the fo undations of a chapel 
destroyed in March 2004, is a matter of concern. 
Kosovo's cultural heritage-related bodies sti ll require institutional reform and adequate 
resources. Continued awareness-raising is need ed to ensure a growing consciousness of the 
richness of cultural heritage  in Kosovo. Communication between  the Kosovo institutions and 
the Serbian Orthodox church needs to improve. 
Overall, against the background of a volatile political situat ion and difficult challenges, 
progress has been made on the protec tion of cultural heritage in Kosovo. 
In the area of education, recent laws on education at municipal level and on decentralisation 
increase the role of municipalities, includi ng the possibility to choose the Serbian language 
curriculum. Turkish and Bosniak children are inte grated into the Kosovo education system at 
elementary and secondary level; lessons are he ld in the Turkish and Bosnian languages and 
follow the Kosovo curriculum. Serbian student s and the majority of Roma and Gorani 
students follow the Serb curriculum in schools and faculties und er the jurisdic tion of the 
Serbian government. 
However, the absence of a Kosovo curriculum in  Serbian created tensions with the Gorani 
community, the majority of whom opt for Se rbian-language education. There are no text 
books in Turkish and Bosnian for secondary school pupils. Radio Television Kosovo (RTK) 
broadcasts in the Serbian, Bosnian, Turkis h and Roma languages, in line with legal 
EN 24   EN provisions. RTK covers 78% of  Kosovo territory. The remaini ng territory is not covered by 
the RTK signal due to a poor distribution networ k and includes most Bosniaks, Turks, Gorani 
and Serbs living in Kosovo. This is an obsta cle to minorities' rights to information. 
The implementation of the 2006 Law on the Use of  Official Languages at  central and local 
level is hampered by the abse nce of municipal regulations and appropriate resources. The 
Language Commission and focal poin ts are not working effectivel y. The Ministry of Public 
Services and the Ministry fo r Local Government have not carried out public awareness 
activities. Members of minority communities are not informed of the provisions of the law, 
especially in rural areas. The Roma language  continues to be ignored in educational 
establishments and in local administration. 
Overall, cultural rights legi slation has been improved, but its implementation is poor. 
Efforts have been made to upgrade the institu tional and legislative set-up in the area of 
protection of minorities. The Office for Communiti es within the Prime Minister's Office was 
set up in September 2008. The constitution sti pulates the rights of the communities, the 
establishment of a Consultative Council for Communities, and their representation in local government. The assembly adopted the La w on the Rights of Communities and their 
Members in March. In September, the Presiden t's Office established the Consultative Council 
for Communities by decree.  
Minority communities continue to show confid ence in the institution of the Ombudsperson. In 
2007, 27% of the requests received by the Ombudsperson came from representatives of minority communities. No major ethnically mo tivated incident took place following the 
declaration of independence. So me progress can be reported in  the field of security and 
freedom of movement for minority communities. 
However, the living conditions of the most vulnerable communities have not improved. At 
central and municipal levels, the institu tional framework responsible for minority 
communities has difficulty coping with their sp read and variety. The proper implementation 
of legislation and its monitoring are not ensu red. There is no strategy for reconciliation and 
inter-community dialogue. 
Overall, improvement of the living conditions of minority communities depends on the 
streamlining of the institutional framework and the dissemination of information. The lack of 
constructive cooperation between Priština/Prishtin ë and Belgrade complicates this process. 
There are some 20,000 internally displaced persons (IDPs) in Kosovo, 206,000 inhabitants of 
Kosovo displaced in Serbia, and some 16,000 in Montenegro. The creation of a climate conducive to the return of displaced persons is a key priority in the European Partnership for Kosovo. In May 2008, a network of IDP associations in Serbia signed an MoU with the Kosovo Ministry for Communities and Returns to encourage the return of 60 families in Laplje Selo (a place different  to their place of origin). 
The UNHCR and the Ministry for Communities and Returns signed an MoU to strengthen the 
capacity of central and local institutions invo lved in managing returns. The majority of 
municipalities have endorsed thei r municipal returns strategies. 
The Sustainable Partnerships for Assistan ce to Minority Returns to Kosovo (Spark 
Programme) implemented by the UNDP provides a framework for assisted voluntary returns. 
At the central level, the Central Review M echanism (CRM) is to ensure consistency. The 
EN 25   EN chair of the CRM, which reviews all voluntary re turn projects endorsed by municipal working 
groups, was transferred to the Minist ry for Communities and Returns in 2007. 
The government approved a Reintegration Stra tegy for Repatriated Persons to Kosovo in 
October 2007. The strategy seeks to  ensure sustainable and lasti ng solutions for the needs of 
repatriated persons from abroad in the areas  of health, education, employment, legal 
reintegration, social welfare, housing and propert y related issues. It al so addresses the needs 
of vulnerable sections of society and mi nority communities. An action plan for the 
implementation of the reintegration strategy was finalised in April 2008. 
Despite some incidents targeting returnees, the overall security situation in Kosovo during the 
reporting period remained relatively calm. 
However, the pace of the returns process is very low and slowed down further following the 
declaration of independence. Since October 2007, about 700 i ndividuals returned voluntarily, 
and about 2000 individuals were forcibly repa triated from asylum countries. Additionally, 
since January 2008, host countries request ed Kosovo to readmit 2,900 persons. The 
reintegration strategy for repatriated persons is yet to be implemented. 'Go and Inform' visits 
and 'Go and See' visits, which aim to establis h links between majority communities in Kosovo 
and the displaced were temporarily suspended, and resumed following an agreement in April between international organisations and IDP re presentatives. Structur es created in 2005 to 
encourage a direct dialogue between Priština/P rishtinë and Belgrade on the return process are 
no longer operational. The last techni cal group on returns was held in 2007. 
In some municipalities, IDPs stopped participating in the muni cipal working groups after the 
declaration of independence. Kosovo Serb muni cipalities generally do not participate in the 
relevant institutional mechanisms. 
At the central level, administ rative capacity and budge tary resources are insufficient, even 
though the 2008 budget for return increased by 35% (€7.14 million) compared to 2007. The 
Ministry of Communities and Returns has been confronted by a wide range of irregularities 
and management problems and has taken some  measures to address them. Following the 
resignation of the incumbent minister, a new mi nister was appointed in September. At the 
local level, municipal teams are not properly equipped to implement return policies. 
The Ministry for Communities and Returns still has no database on IDPs, which leads to 
confusion and uncertainty. 
Overall, the return process has slowed dow n during the reporting pe riod and remains a key 
challenge for Kosovo authorities. 
Members of the Roma, Ashkali and Egyptian co mmunities remain marginalised. The strategy 
to improve the education of children in Sept ember 2007 is not influe ncing school attendance 
by Roma, Ashkali and Egyptian ch ildren, which remains very low, especially for girls. The 
level of employment of these communities is stil l much lower than the average. The majority 
does not benefit from social welf are and has only lim ited access to health care. Up to 40% of 
the estimated 34,000-strong community are not re gistered as reside nts of Kosovo, which 
prevents them from benefiting from administ rative and social services. The strategy and 
action plan for their integration have not been  adopted yet. Informal settlements remain a 
problem and living conditions are extremely precarious. Inhabita nts of some camps for Roma 
IDPs suffer significant lead contamination, in  particular in northern Kosovo where the 
relevant authorities failed to provide trea tment and relocate the endangered population. 
EN 26   EN Security remains a concern and incidents cont inue to go unreported. The conditions set to 
receive Kosovo citizenship are difficult to meet for members of the Roma, Ashkali and 
Egyptian communities. 
Overall, the situation of Roma, Ashkali a nd Egyptians in Kosovo remains worrying and 
requires the full attention of  the Kosovo authorities. 
2.3. Regional issues and international obligations 
Full cooperation with the International Criminal Tribunal for the former Yugoslavia  
(ICTY) is a key priority in the European Partnership for Kosovo. 
Co-operation between the government, UNMIK and the ICTY continued. In April 2008, the 
ICTY handed down its judgment in  the case of Haradinaj et al . Prosecutors had been seeking 
a 25-year sentence for the accused. Ramush Hara dinaj was acquitted on  all counts. While a 
former leader of the "Black Eagles" (a special unit of the KLA) was also acquitted on all counts, another leader was found guilty on two counts (cruel treatment and torture) and 
sentenced to 6 years' imprisonment 
In May 2008, the ICTY's prosecutor lodged an app eal to overturn the Court's verdict, arguing 
the trial had not been fair given the prevaili ng circumstances of intimidation and fear. The 
original judgement referred to the Trial Chamber having encountered significant difficulties in securing testimony from a large nu mber of witnesses. It also sp ecified that it had gained a 
strong impression that the trial had been held in an atmosphere where witnesses felt unsafe. 
The Kosovo authorities have not investigated a llegations of the trafficking of organs taken 
from Serb prisoners after th e war of the late 1990s. The Parliamentary Assembly of the 
Council of Europe (PACE) has started work on a report on the inhumane treatment of people 
and illicit trafficking in human organs in Kosovo. 
UNMIK has been the signatory on  behalf of Kosovo enabling its participation in a number of 
international organisations and agreements (Energy Community, Eur opean Common Aviation 
Area Agreement, South East Europe Transpor t Observatory, CEFTA). The constitution of 
Kosovo envisages the Kosovo authorities en suring its regional  and international 
representation. However, the Kosovo authorities  are not accepted as su ccessor of UNMIK by 
some parties to these agreements. The ongoi ng reconfiguration of  UNMIK foresees it 
facilitating, where necessary an d possible, arrangements for Kosovo's continued engagement 
in international ag reements. It is essential that Kosovo' s representation and participation in 
multilateral fora be ensured, and that all partie s demonstrate a constructive attitude towards 
this aim. 
Kosovo continues to participate in regional coop eration initiatives. It was involved in work on 
the Stability Pact and th e process of its transition to a mo re regionally owned framework with 
the South East European Cooperation Pro cess (SEECP) and the Regional Cooperation 
Council (RCC). The government has yet to nominate a representative to the RCC. 
UNMIK regularly attends the joint committee and sub-committee meetings of the Central 
European Free Trade Area Agreement (CEFTA).  The government has yet to nominate a 
representative to  those meetings. 
UNMIK took over the Presidency of the Energy Community Treaty from 1 January until 30 
June 2008 on behalf of Kosovo. 
EN 27   EN Kosovo continues to implement the provisio ns of the European Common Aviation Area 
(ECAA). All transposition instruments for ECAA Ph ase 1 are in the process of being finalised 
and adopted. 
Kosovo, through UNMIK, continues to attend meeting of the EU Charter for Small 
Enterprises. However, the government has no t yet appointed the fo cal point within the 
Ministry of Trade and Industry. 
Kosovo takes part in the South East Europe Transport Observatory (SEETO). In December 
2007, UNMIK signed the Addendum on Railways to the SEETO MoU. 
Kosovo participates in the Investment Compact initiative designed to improve the investment 
climate and encourage private se ctor development in the region. 
Overall, Kosovo's participation in regional initiatives10 needs to be pro-active and 
constructive. Continuity and sust ainability should be ensured. 
As regards bilateral relations  with enlargement countries and neighbouring member states, 
Albania, Turkey, Montenegro and the former Yugoslav Republic of Macedonia have recognized Kosovo's independence. In June 2008, the establishment of the three-border 
junction point at Serupa marked the start of th e process of demarcation of the border between 
Kosovo and the former Yugoslav Republic of Macedonia. Under the mediation and chairmanship of the International Civilian O ffice (ICO), a working group was set up between 
Kosovo and the former Yugoslav Republic of M acedonia and its first t echnical meeting was 
held in April 2008. 
3. E
CONOMIC CRITERIA  
In examining the economic developments in  Kosovo, the Commission's approach was guided 
by the conclusions of the Eur opean Council in Copenhagen in June 1993, which stated that 
membership of the Union requires the existe nce of a functioning market economy and the 
capacity to cope with competitive pressure  and market forces within the Union. 
3.1. The existence of a functioning market economy 
Economic policy essentials 
The government of Kosovo presented an enhanc ed Medium Term Expenditure Framework for 
2009-2011 (MTEF) which sets policy priorities , including economic growth and good 
governance11. However, the consistency and reliability of the policies remain fragile. This was 
illustrated by the revised budget proposed in the mid-year budgetary review in July 2008, which deviated substantially from the MTEF, revealing an ad-hoc  approach to fiscal policy. 
In addition, persistent lack of coordination between line ministries, failure to follow 
procedures established in releva nt laws and weak governance of State enterprises continue to 
damage the overall economic environment.  The economy and economic policy formulation 
were affected by the general elections in N ovember 2007, by the declaration of independence 
                                                
 
10 Kosovo also participates in the Broadband Southeast Europe Initiative bSEE, Electronic Southeast 
Europe Initiative eSEE, Regional School for Public  Administration, and the Southeast European 
Cooperative Initiative SECI. 
11 The MTEF served as guidance for the international donors' conference in Brussels on 11 July 2008. 
EN 28   EN in February 2008 and by the lack  of clarity about the magn itude and sequencing of the 
international presence during the transition. On  10 July 2008, Kosovo formally applied for 
membership of the International Monetary  Fund and, subsequently, of the World Bank.  
Overall, political consensus on the fundamental s of market-oriented economic policies has 
been maintained, but the strategic medium-term approach has yet to be  incorporated into 
government action. 
Macroeconomic stability 
Shortcomings in statistics continue to ha mper comprehensive assessment of the economic 
situation in Kosovo. Real GDP grew by an es timated 4.4% in 2007 after an increase by 3.9% 
in 200612. Consumption by private households incr eased by almost 10% in nominal terms. 
Public consumption showed a different pict ure, as government wages grew by 2.5% and 
public consumption of goods and services by 1.4%. Genera l government investment 
expenditure fell by almost 10% in 2007, as only 71% of budgeted investment was actually 
spent13. Donor-financed investment shrank by 7.7%, taking its share of total investment down 
to 4% from 5.5% in 2006. Total investment itself stood at 27% of GDP in 2007, up from 23% 
in 2006. Economic activity is increasingly determ ined by domestic factors and private sector 
dynamism, albeit remaining at a moderate level.  Together with weak implementation of the 
capital budget, the unrelia ble energy supplies continued to be  a major drag on investment and 
growth. According to IMF estimates, GDP pe r capita in 2007 stood at roughly €1,600 which 
is around 5,5% of the EU-27 average14. Overall, growth is slowly picking up from a moderate 
level while the unreliable ener gy supply, with seve ral and lengthy power cuts a day, remains 
the single most serious restraint on growth.   
The coverage ratio of exported to imported goods is still very low, reflecting the lack of 
export capacity and competitiveness, despite an  increase in the 12-month moving average 
from 8.5% in 2006 to 10.9% in July 2008. The trade deficit widened furthe r to 41% of GDP in 
2007, compared with 37% in 2006. This trend c ontinued into 2008, though at a slower pace. 
In the first seven months of 2008, exports of goods increased by 63%  and imports by 27% 
compared to the same period a year earlier, bringing the trade defi cit (goods only) to an 
estimated 42% of GDP. The current account defic it – including foreign assistance – increased 
from 12.2% of GDP in 2006 to 17.4% in 2007. It  was mainly financed by foreign direct 
investment (FDI) inflows. On the back of acceler ated privatisation activity and investments in 
the second mobile operator (IPKO) and the banking sector  throughout 2007, FDI rose to 
12.6% of GDP after 8% in 2006. However, a si gnificant part of the financing remained 
unexplained15, pointing to a large proportion of unr ecorded financial flows. Workers' 
remittances stood at 12.9% of GDP in 2007 after 11.6% in 2006. The fall of net foreign assets 
of the commercial banking sector by 16% during the first half of 2008 indicates decreasing 
capital inflows to Kosovo. Overall, the exte rnal accounts of Kosovo remain precarious.  
The poor availability and reliabil ity of official empl oyment data make it difficult to analyse 
labour market developments. At  the end of 2007, the number of registered unemployed had 
increased by 2.6% compared with 2006 and.. 60 % of the unemployed are unskilled, 47% are 
female and the share of long-term unemployed remains extremely high (93%). After a slight 
                                                 
12 May 2008 IMF estimates.  
13 These figures do not include capital subsidies to publicly owned enterprises. 
14 Based on market exchange rates, because data  for a PPP-based comparison are not available. 
15 This is summarised in the net errors and omissions component in the balance of payments. 
EN 29   EN increase during the first months of 2008, the officially recorded number of unemployed 
almost returned to its end-2007 level over the summer months. In July it stood at 335,920 
persons, up 0.4% compared to December 2007 a nd 0.9% compared to July 2007. The results 
of the Labour Force Survey 2007 revealed an unemployment rate of 43.6% (male 38.5%, 
female 55.2%), an activity rate of 46.5% (male 65.2%, female 28.3%) and an employment 
rate of 26.2% (male 40.1%, female 12.7%). Some 30,000 young people enter the labour market every year. At current growth rates,  the economy cannot absorb this additional young 
and growing labour force. Also, the fact that  the economy is starting from a weak productive 
base, the ongoing structural cha nges, partly linked to the priv atisation process, and poorly 
defined and administered eligibility criteria fo r social transfers conservational contribute to 
sustaining the existing level of unemployment. Ho wever, partly due to the significant size of 
the informal economy, changes in registered unemployment may not correctly reflect the 
actual dynamics of the economy. Overall, registered unemployment remains very high. 
Average yearly consumer price inflation rose  to 4.4% in 2007 after 0.6% in 2006 and rose to 
12.4% in the first eight months of 2008. Inflati on picked up strongly in the second half of 
2007, with year-on-year rates consistently above  10% since October 2007 and rising to 14% 
between May and July 2008. This development was primarily driven by food prices, which 
make up almost half of the consumer basket, a nd transport. Mostly due to a base effect, the 
annual inflation rate came down to 7.8% in A ugust 2008. Inflationary pressures decreased due 
to the relaxation in interna tional energy and food price deve lopments. In 2007, broad money 
widened by 23.3% and the stock of  outstanding loans to the pr ivate sector by 40%. To sum 
up, after years of low inflati on, price tensions resurfaced, triggered by commodity price 
increases, even though they have eased recently.  
Kosovo has started to earmark funds for notional debt servicing and to set up a liquidity and 
stabilisation reserve in its  medium-term budget planning.
 In 2007, budget volatili ty increased, 
with revenue strongly exceeding and capital sp ending falling short of budgeted figures. This 
resulted in accumulation of substantial cash reserves and an unfavourable policy mix. 
Implementation of the 2007 budget produced (i) one-off revenue of €75 million from the sale of a mobile telephone licence; ( ii) higher than planned revenue collection, thanks mostly to 
buoyant border tax receipts; and (iii) low capital spending. T ogether, these factors led to 
unintended strong fiscal tighten ing in 2007, with a surplus of  7.2% of GDP, reflecting the 
poor quality of budget planning and implemen tation. The 2008 budget is expansionary and 
diverges from the fiscal rule that real curre nt primary expenditure should rise by not more 
than 0.5% year-on-year. Instead, it is set to rise by probably mo re than 10% over last year's 
outturn. Budgeted capital expend iture is almost triple the 2007 outcome and the trend was 
accentuated in the July 2008 mid-year budge tary review, while the MTEF already 
acknowledges that actual outcome will probabl y fall short of this figure by some 30%. 
Current budget execution figures suggest an even higher shortf all, as capital expenditures 
continue to underperform, reaching only 20% of the annual plan in September, while revenues 
performed roughly as expected. Ov erall, the budget is not an e fficient instrument of fiscal 
policy and does not contribute to the predictabi lity of economic devel opments. Instead, it just 
responds to ad-hoc spending pressures.  
Kosovo continues to rely on the euro as its curre ncy in use. In the ab sence of an autonomous 
monetary policy, this leaves the budget as the core tool for macroeconomic policy in Kosovo. 
However, due to the poor budgetary planni ng and implementation, as displayed by the 
unintendedly strong fiscal conso lidation in 2007, followed by an  expansionary budget plan in 
2008, the overall policy mix remains inadequa te and budget volatility has increased.  
EN 30   EN Interplay of market forces 
In 2007, the private sector's share of overall consumption, investment and imports increased 
further. Private investment rose by an  estimated 37% in 2007, up from 26% in 2006. 
Privatisation continued at a brisk pace until late 2007, when it came to a sudden standstill 
after a ruling by the Special Chamber of the Kosovo Supreme Court called into question the 
method of privatisation. These concerns have  been partly addressed in a new Law on the 
Privatisation Agency of Kosovo (PAK) and the pr ivatisation process slow ly resumed after the 
summer. However, further legal issues remain to be resolved and the agency has yet to come into operation. All publicly owne d enterprises were incorporat ed by the end of 2007 and new 
legislation allows their privatisation
16. Overall, the expansion of the private sector continued 
in 2007, but entered an uncertain phase in 2008, ma rked by the standstill in the privatisation 
process in the first half of the year. 
Market entry and exit 
The number of registered businesses in Ko sovo stood at approximately 86,000 in June 2008. 
However, a substantial share of these are not active. Improvements have been made in the 
"one-stop shop" facilities for bus iness registration, but fixed costs for doing business, such as 
work and construction permits, remain high. The unreliable energy supply, limited access to 
finance, corruption and poorly defined property rights hinder market entry and exit. With the 
aim of facilitating exits, the Law on bankruptcy has been approved. Overall, difficult and costly enforcement of contracts aggravates acce ss to finance and is continuing seriously to 
hamper the business environment.  
Legal system 
In June 2008, the Kosovo Property Agency (KPA) started to deliver the first decisions taken 
by the Kosovo Property Claims Commission (KPCC) to claimants. The KPCC has 
adjudicated 8,329 out of 39,589 property claims subm itted to the KPA. However, in June the 
government of Serbia subsequent ly decided to suspend the offices of the KPA in Belgrade, 
Kragujevac and Niš, stating that  the KPA had failed to protect the rights of Serb citizens 
whose property in Kosovo had been illegally occ upied by third parties. Corruption, criminal 
activities and uncertainty ove r property rights remain major impediments to economic 
development. In general, use of courts for enforcement of contracts remains underdeveloped, 
while at the same time courts continue to face a heavy backlog of pending cases.  
Financial Sector development 
The financial sector in Kosovo is continui ng to grow. Seven commercial banks, nine 
insurance companies and two pension funds ar e operating in Kosovo. Four new banks entered 
the market in 2007 and 2008. So far, the internati onal financial crisis ha s not had a material 
impact on the financial sector in Kosovo, as lo cal banks have no direct  exposure to sub-prime 
first-wave effects and are in a favourable li quidity position. However, currently unwinding 
second-wave effects may have an impact via th e mostly foreign mother companies of local 
banks. In May 2008, the Central Bank of Kos ovo signed Memoranda of  Understanding with 
                                                
 
16 This included clean opening balance sheets which in turn would facilitate eventual future privatisations. 
EN 31   EN the Turkish and Croatian financial sector supervisory authorities , adding to similar 
frameworks in place with the respective instit utions of other countri es from the region.  
The banking sector holds 88% of financial sect or assets and is dominated by foreign banks 
and remains highly concentrated, with the three largest banks holding 83% of the total assets. 
Its profits rose by 68% in 2007. The degree of financial intermediation in Kosovo increased 
further, though from a still modest level. Th e share of banking sector assets in GDP grew 
from 37% in 2006 to 43% in 2007. The volume of loans increased from 21% of GDP in 2006 
to 27% in 2007. Loans grew by 40% year-on-year , mainly financed from the increase in 
deposits. In the first half of 2008, the loans to deposit rate increased to 85%. This high rate 
signals rising liquidity problems in the econom y. Additionally, loans are predominantly long-
term, while deposits are short-term, revealing a maturity mismatch. The quality of the loan 
portfolio in Kosovo's banking sector is showi ng some signs of deterioration: non-performing 
loans accounted for 4.1% of th e total loan portfolio (0.4 percentage points up from 2006). 
However, profitability and liquidity indicators for the first half of 2008 remain favourable, 
even though they are slightly deteriorating. Th e interest rate spread between deposits and 
loans is very wide and shows only a slow downward trend (decreasing to 11.3 percentage 
points in 2007 from 11.8 in the previous year).  Sectors do not enjoy equal access to finance: 
The vast majority of loans goes to trade (57.6%  in the first half of 2008, down from 61% in 
the same period 2007), followed by services ( 17.6%, up from 14.9%) and industry and energy 
(13.4%, up from 11.8%). The ineffective enforcemen t of creditor rights and of contracts in 
Kosovo pushes up costs for financial institutions  and undermines the value of collateral.  
The insurance market is also dominated by fo reign companies and is still very small with 
assets accounting for only 2% of GDP in 20 07. A set of risk-based capital and reserves 
requirements for the insurance sector was devi sed by the central bank to strengthen the 
capacity of the industry. Also, a legal framew ork has been established for life insurance 
products and for liberalisation of tariffs. Overal l, the financial sector  remains profitable and 
financial intermediation has deepened further, th ough at a low level. Acce ss to finance is still 
uneven and hindered by weak enforcement of  contracts and high borrowing costs.  
3.2. The capacity to cope wi th competitive pressure and market forces within the 
Union 
Existence of a functioning market economy In general, Kosovo has develope d an appropriate legislative a nd institutional framework for a 
functioning market economy. However, implemen tation and enforcement of this framework 
remain weak. One prominent issue is electri city, where theft and non-payment of bills 
continue to be tolerated and c ontribute to inefficient use of a scarce resource. Energy supplies 
also suffer from a poor governance structure an d weak management of the energy provider 
(KEK) combined with underinvestment, despite  constant high subsidies from the budget, 
vested interests and weak political will to change the situation. Additional factors, such as the wide-spread tax evasion and corru ption together with extensive use of undeclared labour, lead 
to a price system where several prices for the same goods or service co-exist, with negative 
consequences for overall market efficiency and transparency. Growth in 2007 is considered to 
be due entirely to the private sector's resilien ce in an environment of  low public investment 
and further declining donor support. Overall, un certain property rights and poor enforcement 
of contracts, corruption and insufficient energy supply as a result of weak governance of the 
EN 32   EN provider KEK and infrastructure continue to weigh down the competitiveness of Kosovan 
businesses, the business climate and the relia bility of market allocation mechanisms.  
Human and physical capital  
Kosovo remains affected by lack of adequate education facilities and poor-quality teaching. 
The overall enrolment rate in educ ation has shown no significant incr ease in recent years. It is 
especially low in secondary and higher education, and drop-out levels are high . The share of 
education in overall budget ex penditure increased to 17.3% in  the first half  of 2008. Active 
labour market policies such as vocational training  continue to face severe capacity constraints. 
For lack of physical facilities and trainers, only a small fraction of  the annual age cohort 
arriving on the labour market be nefit from such measures. To address these constraints, a 
regional centre for professional qualifications has been built  in Priština/Prishtinë.  
The transport infrastructure (roads and railways)  in Kosovo is limited in scope and condition. 
It is not well connected with regional netw orks, and maintenance expenditures have been 
inadequate even though some upgrading of th e road infrastructure has started in the 
Priština/Prishtinë area and concerning the regi onal connections to Skopje and Peja. Road 
density stands at only 3.3 km per 1,000 inhabitants and rail c onnections with Serbia have been 
difficult after Kosovo's declaration of independence.  
Mobile telephone penetration has increased ra pidly and had reached an estimated 50% by 
mid-2008. Partly due to the entry of the sec ond mobile telephone operator, the high-speed 
telecommunications infrastructure  is improving, the range of pr oducts is widening and prices 
are falling. Overall, the weak technology base (combined with lack of  price competitiveness), 
the weak state of physical infrastructure and the small pool of qualified human capital remain 
major impediments to a well-functioning and competitive market economy. 
Sectoral and enterprise structure 
Regulatory authorities have been  set up for all major network and commodity industries, but 
their capacity remains weak. In several in stances, the potential positive effects of 
liberalisation have not been able to materialis e due to weak corporate governance or, in the 
case of the mining sector, continued social unr est. Kosovo cannot yet trade energy on a level 
playing field with its neighbours due to unfinishe d integration into regi onal electricity trade 
agreements. Generation and distribution of el ectricity are still bundled in the poorly 
performing energy provider KEK. There have been  few changes in the enterprise structure, 
which remains dominated by micro-enterprises. Ho wever, development of the financial sector 
has helped to increase the share and dynamism of the services sector. Trade data for 2008 
point to some structural improvement in th e food processing sector, in terms of import 
substitution of processed foodstuffs. The informal  sector remains large. Overall, there has 
been little change in the s ectoral structure of the economy. 
EN 33   EN State influence on competitiveness 
In 2007, cash subsidies to public entities remained stable at the 2006level. But in 2008 this 
level had already been reached  during the first six months17. Although the government did not 
intervene as bluntly as in 2007, inaction agains t wide-spread electricity theft remains a huge 
indirect subsidy in addition to subsidies paid  from the budget, and it  continues to undermine 
the credibility of the independent electricity regu lator. The inaction of the authorities is also 
eroding competitiveness, especia lly of medium-sized to large producers. These cannot resort 
to the informal economy to the same extent as micro-enterprises and small businesses which 
mainly operate in the service and the trade s ector. Consequently, the weak administration and 
rule of law are contributing to a rigid business st ructure which in turn makes it difficult for the 
private sector to achieve important economies of scope and/or scale. Overall, continued direct 
and indirect State subsidies, combined with a poor level and quality of public services, are 
hampering private-sector competitiveness. 
Economic integration and c onvergence with the EU  
The openness of the economy, measured by the va lue of imports plus exports in goods and 
services as a percentage of GDP, increas ed to 62% in 2007, up from 56% in 200618. Base 
metals and base metal products continued to acco unt for almost half of  goods exports in 2007 
and their share increased further to 66% in th e first seven months of 2008. Exports of goods 
during this period were up 63% co mpared with the same period in 2007, with exports to the 
EU almost doubling. Imports of goods increa sed by 21% in 2007 and by 27% in the first 
seven months of 2008. Mineral pro ducts (mainly oil) remain the largest import category (21% 
of total imports during the fi rst seven months of 2008).  
The CEFTA and EU Member States continue to be the two main trading partners for Kosovo 
with equal shares of 37.5% of total trade in the first half of 2008. The share of exports bound 
for the EU increased from 38% in 2006 to 42% in 2007 and further to 50% in the first seven months of 2008. The EU's share of total im ports remained at around 35-36%. The real 
effective exchange rate based on the consumer pr ice index started to in crease steadily in mid-
2007, after a modest depreciation in 2006 by 2.8%
19. Clearly, the recorded export 
performance was not spurred by increasing price competitiveness. Overall, economic 
integration with the EU has increased. 
4. EUROPEAN STANDARDS  
4.1. Internal market 
This section examines Kosovo’s capacity to grad ually approximate its le gislation and policies 
with those of the acquis  related to the internal market, sect oral policies and justice, freedom 
and security, in line with the Stabilisati on and Association Process and the European 
Partnership priorities. It also analyses Kosovo’s administrative  capacity. In each sector, the 
                                                 
17 Partly due to a strike at the Office of the Auditor-General in May and June 2008, the audit report on the 
2007 budget was not available at the time of drafting the progress report. The audit report is the most relevant source on subsidies to State-owned enterprises.  
18 These figures are significantly lower than in last year's report, due to an upward revision of GDP. 
19 IMF estimates. 
EN 34   EN Commission's assessment covers progress ac hieved during the reporting period, and 
summarises Kosovo's overall level of preparation. 
4.1.1.  Free movement of goods 
There has been some progress in the area of standardisation . The Kosovo Standardisation 
Agency (KSA), which is responsible for both st andardisation and accreditation, has increased 
its staff from five to eight employees. 
The KSA is not a member of any European and international standardisation organisation. In 
the absence of membership, the KSA is able, under the terms of a Memorandum of 
Understanding (MoU) with the Ministry for Econo my, Trade and Energy of Albania, to adopt 
and distribute European standards within Ko sovo. CEN and CENELEC have agreed to this 
MoU. In 2008, 665 European standards (ENs) were adopted as Kosovo standards. One new technical committee was established in th e field of electrotechnical standards. 
Kosovo adopted legislation on machinery, textiles /fibres and cableways (s ki lifts), aimed to 
ensure alignment with European standards. 
The Professional Standardisation Council (PSC) and 
five technical committees on standards have been es tablished in the areas of construction, oil and 
gas products, transport and postal services, qua lity, management, and electrotechnical devices.  
There is no progress to report on conformity assessment . At present no conformity 
assessment bodies have been accredited or de signated in Kosovo. Accreditation is not 
mandatory for designating conformity assessment  bodies. 
Limited progress was made on accreditation . An Accreditation Board has been established 
and new procedures have been adopted for the accreditation of both testing and calibration laboratories, and inspection bodies. A memorandum of understa nding on accreditation was 
signed with Albania.  
There has been some progress on metrology . The Law on Metrology stre ngthens the role of 
the metrology department as an executive agency  within the Ministry of Trade and Industry 
(MTI), which has eleven staff. In additi on, the MTI has set up a Council for Metrology. The 
members of the Council include representatives of the ministry, univers ities, national health 
institutions and private business. Its task  is to make recomme ndations and advise on 
metrology -related issues. The assembly adopted thr ee new pieces of implementing legislation 
on metrology, all in the ar ea of precious metals. 
Market surveillance is at a preliminary stage and much  remains to be done to ensure a 
market surveillance system that is acquis  compliant. 
No progress can be noted in the area of consumer protection . 
Overall, preparations to establish the necessa ry horizontal infrastructure needed for the acquis 
on free movement of goods are at an early stage. Considerable efforts are still needed in order 
to develop this infrastructure and to upgrade the relevant administrative capacity to ensure 
adequate alignment with European standards and implementation. Compliance with European 
standards in the area of free movement of goods is affected  by a lack of administrative 
capacity and financial resources. 
EN 35   EN 4.1.2.  Movement of persons, services  and right of establishment 
Limited alignment has taken place on the free  movement of persons . The movement of 
persons within Kosovo itself is hampered by th e political situation, and by real and perceived 
security threats, in particul ar between the North and the re st of Kosovo. Overall alignment 
remains very limited. 
Limited progress can be noted with regard to the freedom to provide services . The legal 
framework for the freedom to provide services and the right of establishment  is still very 
fragmentary. Alignment with European standards  is limited. 
There are no developments to report in the area of company law . 
Overall, little progress can be  reported in this area. 
4.1.3. Free movement of capital 
There has been some progress conc erning free movement of capital. 
With regard to capital movements, the Central Banking Authority of Kosovo (CBAK) 
adopted a more flexible policy on capital equiva lence deposits, facilitating access by branches 
of foreign banks to their paid-in capital at the CBAK. Following the entry into force of the constitution, the CBAK was transformed into the Central Bank of Kosovo. It took over the 
authority to license, supervise a nd regulate financial institutions. 
The regulation and supervision of banks need to develop significantly . The banking sector 
should be able to effectively support the economy by providing modern services and long 
term financing. 
No development can be reported on payment systems. No progress took place concerning legisla tion on money laundering. Overall, the basic 
institutions that are in ch arge of money laundering co-ope rate with each other. The 
government launched an action plan on the fight against money launderin g. However, the lack 
of expertise of the judiciar y and law enforcement in inve stigating and judging complex 
economic crime remains problematic. The Kosovo Special Prosecution Office still lacks local 
and specialised prosecutors. The fight agai nst money laundering remains a challenge.  
Overall, the legislation on circulation of capita l movements is partially aligned with European 
standards, and there has been some progress as regards administra tive capacity. However, 
substantial efforts are still n ecessary, as regards both legislation and implementation capacity. 
4.1.4. Customs and taxation 
There was some progress in the area of customs . 
The Customs Service received the new EU bluepr ints on customs, laying down clear criteria 
based on EU best practice against which to m easure its own operational capacity and establish 
plans for future customs reform, and to prepar e for compliance with international rules and 
standards. 
EN 36   EN In June 2008, a new regulation entered into force, which establishes customs procedures to 
enable customs to take action against count erfeit goods, pirated goods and goods infringing 
certain intellectua l property rights. 
Integrated Tariff of Kosovo (TARIK) informati on is timely and fully adapted to the most 
recent updates of the Harmonised System (HS) a nd the (2008) Combined Nomenclature; also 
TARIK is operational in the two official  languages of Kosovo, and in English.  
Since the destruction of the two border pos ts in northern Kosovo in February, smuggling 
activities have increased. Both Kosovo and Serb ia continue to suffer substantial losses in 
revenue. KFOR has been checking the papers of  lorries passing through, but it does not carry 
out regular customs checks. Lorries are being dire cted to the Mitrovica/Mitrovicë terminal for 
customs clearance. Anti-smuggling units of the KC S have started patrol s on all roads coming 
from northern Kosovo. Following the declara tion of independence, most Kosovo Serb 
customs officials resigned. 
Almost 75% of all tax revenue is collected at the border. Despite the la ck of regular customs 
checks at the two border points in northern Kosovo, overall revenue collect ed by the KCS for 
January – September 2008 was 12% higher than revenue collected for the same period in 
2007. 
The capacity of customs has increased, in part icular with the procurement of one mobile 
scanner for goods which is located at the larg est crossing point with the former Yugoslav 
Republic of Macedonia and of three scanners for baggage checks, one of which is assigned to 
the anti-smuggling unit. Co -operation with neighbouring countries has improved. 
Administrative instructions on disciplinary procedures and the declaration of property are in 
place to complement the Code of Disciplinary Procedures and raise professional standards. 
However, the capacity of the customs service to enforce customs legislation needs to be 
strengthened further, in term s of training, equipment risk an alysis, post-clearance controls, 
and IT support. Substantial effo rts are still needed to ensure the effective implementation of 
customs legislation, in particular as regard s counterfeit goods. The issue of extending customs 
controls to northern Kosovo remains open.  
Overall, Kosovo's customs legislation is in line  with European standards. Significant efforts 
are needed to ensure the effective implementa tion of the legislation on the ground, given that 
customs provide a significant po rtion of overall public revenue. Particular efforts are needed 
to enforce legislation to combat  counterfeit goods and smuggling. 
There has been no progress in the area of taxation.  
The Tax Administration of Kosovo (TAK) improved its performance. Overall TAK revenue 
was some 12% higher in the first seven months  of 2008 compared to the same period in 2007, 
reversing the negative trend of the last few years. The review  of Kosovo's legislation with 
regard to its compliance with  the Code of Conduct on Busi ness Taxation has just started. 
Tax compliance needs to be increased for both personal and corporate income tax, as well as 
VAT. 
The capacity of the TAK remains weak. Its Management Information System is not yet 
operational. Major efforts are needed to improve services to taxpayers. Kosovo's tax 
legislation is only partially alig ned with European standards. Fu rther alignment is needed, as 
EN 37   EN well as significant efforts to ensure its effective enforcement. Tax collection remains 
extremely weak and the informal economy is widespread, as controls are limited. 
4.1.5. Competition 
No progress can be reported. 
The Competition Commission (CC) is  not yet operational. The assembly has yet to appoint 
the candidates selected for this commission. Kos ovo needs to finalise the establishment of the 
CC, including the allocation of th e necessary resources. The law on State aid , the purpose of 
which is to establish an Office for State Aid w ithin the Ministry of Economy and Finance, has 
not yet been adopted.  
Overall, the Kosovan provisions fo r competition are not yet in place. 
4.1.6. Public procurement 
The Public Procurement Law (PPL, amended in 2007) is the central piece of  legislation in this 
area. It is broadly in line with European st andards, although a number of provisions of the 
directives adopted in 2004 have not been implemented. The same applies to the more flexible 
regime devised for the utilities sector . Discrepancies between diffe rent language versions of 
the legislation have been reported, which must be  corrected to ensure legal certainty. The PPL 
defines the procurement procedures in detail  and focuses much more on the procedural 
requirements than is common in most EU coun tries, where these are usually included in 
implementing legislation.  
The PPL provides the legal basis for the Pub lic Procurement Regulat ory Commission (PPRC), 
the Public Procurement Review Board (PPRB), and the Public Procurement Agency (PPA). 
The PPA currently has 13 employees. Its main fu nction is central purchas ing. It also performs 
some technical and regulatory functions in  cases where procurement procedures are 
implemented by contracting author ities directly. It has develope d a database to record and 
monitor procurement.  This tool makes a significant contribution to the effectiveness of 
statistics and management of public procurement. 
The PPRC is an agency responsible for the overa ll development, monitoring and review of the 
procurement system. It consists of five me mbers nominated by the government and appointed 
by the assembly for five years. At least three members should ha ve the same qualifications as 
those required for judges. The PPRC has 18 s upport staff. The new Procurement Review 
Body (PRB) provided for in the amendment of the PPL was set up in July and is a quasi-
judicial body. Its role is to review administra tive decisions issued by central procurement 
institutions  and appeals and complaints from tendere rs. The success of the new PRB depends 
on the allocation of sufficient resources and its building on an authoritative track record of 
review decisions. 
Training and certificat ion of procurement officers in co ntracting authorities has been 
suspended because of a lack of cooperation between the Kosovo Institute for Public 
Administration and the PPRC. The certification of procurement of ficers is valid for one year 
only. 
Overall, some progress can be reported in this  sector. The PPL is in line with European 
standards, including the review procedures but the implementing provisions are still not in 
EN 38   EN place and the responsible administration is not yet sufficiently operational. Commitment from 
all stakeholders is needed so as to consolidate the progress made to date. 
4.1.7. Intellectual property law 
On the subject of intellectual property, there is only limited progress to report.  
No progress can be reported concer ning copyright and related rights. 
Concerning industrial propert y, the assembly adopted the Law on Customs Measures in 
Respect of Intellectual Property Rights (Regul ation 2008/22). Implementation began in June 
2008. The law enables the customs to take acti on against piracy, coun terfeiting and other 
infringements of intellectual property rights.  
The Office of Industrial Property (OIP) is an independent agency responsible for the 
implementation of the laws on patents, trademar ks and industrial design. It is fully operational 
and began receiving and registering applications  in November 2007. It has four staff and has 
received some 1,300 applicati ons to date. The Ministry for Trade and Industry (MTI) 
approved two administrative instructions: one con cerns fees for registering industrial property 
rights, the other concerns the revalidation of industrial property rights originating from the 
Yugoslav era. 
Overall enforcement remains very weak. High le vels of counterfeiting and piracy persist. 
Kosovo is not yet able to implement and enfor ce its national legislatio n and its international 
obligations in this field. The administrative cap acity to implement inte llectual and industrial 
property rights is insufficient and im plementing provisions are still needed. 
Overall, Kosovo's preparations in  the field of intell ectual and industrial pr operty remain at a 
preliminary stage. Implementing capacity is limited. 
4.1.8. Employment and social policies 
The Ministry of Labour presented the 2007 Labour and Employment Annual Report for 
Kosovo in April 2008. However, high costs associ ated with the Kosovo Employment Strategy 
(2008–2013) have prevented its adoption. 
Registered unemployment in Kosovo accounts for 43% of the economically active population. 
A total of 334,595 persons (compared to 327,262 persons in 2006) were registered 
unemployed by the Kosovan public employment se rvices by end 2007; 93% of all registered 
job seekers have been register ed for more than 12 months. 
Among the long-term unemployed, the most  disadvantaged groups are women, Roma, 
Ashkali, Egyptians and persons with disabilities. The current disability be nefits system acts as 
a disincentive to persons with disabilities who wi sh to seek work; disability benefits are only 
available to those who do not work or  participate in vo cational training.  
An area of concern is female employment . Young women experience higher unemployment 
rates than men and are more often in lo w quality, part-time and fixed-term jobs. 
Youth unemployment is particularly high in Kos ovo, at almost five times the EU average. The 
Kosovo Youth Employment Action Plan has yet to be implemented.  
EN 39   EN The Ministry of Labour and Social Welfare ha s little administrative capacity. The current 
ratio of Public Employment Service officials to support job seekers is 1:1,600. As a result, 
there are no clear arrangements or procedures  to develop, manage, monitor and evaluate 
policies and their implementation. Employment pol icies are also being developed without the 
involvement of the private sector, an asp ect which undermines their effectiveness. 
Overall, very little progress can be reported in the employment sector. The absence of a 
strategic and legislative framework and a lack of  administrative capacity are obstacles to the 
development of adequate em ployment policies in Kosovo. 
As concerns social policies, there are no specialised labour courts in Kosovo.  
Little progress can be noted in the area of health and safety at  work. The lack of adequate 
legislation and political commitment is preven ting further achievements in the sector. The 
Labour Inspectorate, which is re sponsible for the enforcement of  employment legislation, and 
in particular the provisions of the Law on Occupational Safety, Health and the Working 
Environment, lacks the capacity to  carry out its tasks effectively. 
Very limited progress can be repo rted in the area of social dialogue. There are currently 28 
sectoral trade unions registered in Kosovo. However, social partne rs are weak and their role in 
decision-making is marginal. The Tripartite Advi sory Council is not operational. The National 
Collective Agreement, concluded in 2004, has ne ver been implemented owing to financial 
constraints. Kosovo still lacks a trad e union law and a law on strike action. 
In the area of social inclusion, home care serv ices for mental and psychiatric disorders are 
provided. Some community mental health cen tres and residential housing have been 
established under the authority of  the Ministry of Health.  
However, Kosovo has no action plan on disabilitie s. Kosovo lacks rehab ilitation facilities for 
the social reintegration of di sabled people. Rehabilitation a nd re-socialising of people with 
physical disabilities is managed by non-government al organisations only. Access to secondary 
schools of people with special needs is not ensured. 
In the area of anti-discrimination policies, the government declared September 2008 "anti-
discrimination month", and organi sed several public events and training sessions to provide 
civil servants and the genera l public with more informati on on Kosovo's anti-discrimination 
policies. 
Social protection covers four broad areas; (i) pension progra mmes to support the elderly and 
the disabled; (ii) social assi stance programmes to support those particularly in need; (iii) 
veterans’ programmes for those injured during the war and for families of those killed or missing, and (iv) assistance to find jobs so as to  be able to support their families. The social 
protection system is financia lly unsustainable and not orga nised efficiently. Some 325,000 
people are covered by a social  scheme. 45% of the Kosovo  population live in poverty and 
18% in extreme poverty. Tackling fraud in this ar ea continues to be a ch allenge. The Ministry 
of Labour and Social Welfare ha s limited capacity in this rega rd. There is no adequate IT 
mechanism for monitoring. The government has submitted amendments to the Social Assistance Law to simplify its implementation and introduce some flexibility as regards 
eligibility. In the area of social services a nd institutional care, ther e is no adequate updated 
legislation. The social services system remain s centrally managed. Dece ntralisation is being 
hampered by financial constraints and limite d capacity at municipal level. There are no 
professional social workers in Kosovo with  adequate experience and competence. The 
EN 40   EN pension scheme has been change d to increase benefits to thos e who have contributed to the 
old Yugoslav pension fund for more than 15 years. Some 132,421 people are currently 
receiving benefits under th e basic pension scheme.  
The social security system remains cash-base d. Kosovo does not have a health insurance fund. 
In the area of public health  policy, the assembly adopted the Law on Public Health in 
February 2008. Reliable health statistics are not available, which makes an analysis of this 
sector difficult. Infant and mate rnal mortality remain the high est in the region. The incidence 
of communicable diseases is alarming and on the increase. H ealth-related infrastructure, 
including medical equipment and ho spital capacity, is under-developed. 
In general, the health sector is very poor a nd requires increased at tention by the government. 
Overall, employment and social policies remain weak. 
4.1.9. Education and research 
The government has identified education  as a priority for its social and economic 
development. It is committed to expand inter- ministerial cooperation and to invest more 
resources in this sector (some € 170 million for the period 2009-2011) . The assembly adopted 
the National Qualifications Framework Law in  May, institutionalisi ng the qualification and 
certification procedures through the establishm ent of a National Qualifications Authority. 
The assembly adopted the Law on Education in the Municipalities, which was promulgated in 
June. The law aims to regulate the organisati on of public educational institutions and the 
provision of public education at the pre-primary, primary, lo wer secondary, upper secondary 
and higher education levels in the municipa lities. The law defines the competences and 
responsibilities of central government and municipalities in th e area of education. 
The Council of Vocational Education a nd Training became operational in 2008. 
A feasibility study for a 'Sector-Wide Approach in Education' was carried out under the 
auspices of the Ministry of Education, Science and Technology (MEST) with the participation 
of a broad range of stakeholders, including ci vil society. It identifies ways for donors to 
contribute more efficiently to  education reform. As a follo w-up, working groups and a donors' 
coordination unit have been established. 
The MEST stepped up its efforts to improve the quality of both teaching and learning. The 
government's ambitious school building progra mme focuses on the densely-populated urban 
areas. The Head of the Kosovo Accreditation Ag ency was appointed in March. The ministry 
is developing higher education curricula that are complementar y to labour demands. Kosovo 
has consolidated its participat ion in the European Tempus and Erasmus Mundus programmes. 
The Tempus structure has been strengthened and broadened to include the Serbian-speaking 
public university. Following the conclusions of a Bologna-compatible evaluation, Kosovo 
suspended enrolment in all but one of the privat e higher education provid ers; the extension of 
their licence to operate is subject to a future accreditation process run by the Kosovo Accreditation Agency starting 1 October. The MEST  is in the process of  revising the curricula 
in Vocational and Educational Training (VET) for 51 profiles. 
However, Kosovo's education system continue s to be affected by resource and budgetary 
constraints, a lack of adequate facilities and poor quality of teaching. Teachers' motivation is 
EN 41   EN seriously hampered by low salaries and th e inadequate career system. The cooperation 
between the ministry, social part ners and the private sector is  underdeveloped, schools are still 
working in shifts and the government has no t made any investment in early childhood 
development. In addition, not all children r eceived free textbooks as guaranteed by law. 
Participation in post-compulsory education a nd training is among the lo west in Europe. The 
Kosovo Accreditation Agency is not yet operati onal. Quality assurance is not in place and 
there is no monitoring mechanism .  
In addition, parallel and ethnic- based structures using different  curricula and textbooks are a 
source of segregation. There has been no prog ress as regards the in clusion of the Roma, 
Ashkali and Egyptian communities into the main stream education system. The relevant 
legislation and strategy are poo rly implemented and teachers with  minority language skills are 
in short supply. VET is separate from genera l secondary education a nd not aligned with the 
emerging needs of a market economy. Kosovo has no alternative provision for post-secondary 
education and training. The l ack of accreditation of VET provi ders undermines confidence in 
the VET certification scheme. Re spective co-ordination with th e Ministry of Labour is not 
efficient . 
As far as research is concerned, the MEST and public un iversities have demonstrated an 
interest in research activities. Discussions were held to consider a more effective participation 
by Kosovo under the Seventh EC Framework Progr amme for Research. Th e ministry has set 
up a Department of Science and Technology a nd established three new bodies devoted to 
research: the National Council for Science, th e Centre for Innovations and Transfer of 
Technology, and the Centre for International Co -operation in the field of Higher Education, 
Science and Technology. 
However, the ministry has taken no steps to de velop the research and development capacity of 
universities in partnership with  industry. Initiatives by the hi gher education providers remain 
very limited. 
Overall, the efforts observed to reform the education system deserve sustained support in 
order to entrench tangible quality impr ovement. Some progress can be reported in 
approximating to EU standards. 
As concerns research, some progress was made  but no overall research policy was adopted or 
specific measures taken to improve research cooperation and integratio n into the European 
Research Area.   
4.1.10. WTO issues 
The government considers WTO accession a priority. It has yet to submit a formal 
application. 
4.2. Sectoral Policies 
4.2.1. Industry and SMEs Limited progress has been made in the area of industry and SMEs.  As regards the business 
environment, one-stop shop facilities have been improved, thereby reducing the number of administrative steps required to start and ru n a business. On-line registration with the 
Business Registration Agency has been made available. 
EN 42   EN Kosovo is gradually developi ng a more comprehensive set of business support services, 
including business parks and incubators. Busi ness consultancy services are supported by 
several donors. There have also  been positive developments as regards the availability of 
micro-credit and donor finance. Howeve r, proper coordination is lacking. 
The Ministry of Trade and Industry's SME Su pport Agency is responsible for facilitating 
SME development. Its administrative capacity remains insufficient; on-line applications and tools are not fully operational. Meetings of the Consultative Council on SMEs representing 
governmental and non-governmental institutions have been suspended. The Investment Promotion Agency, which offers free services to attract foreign inve stment, continued its 
activities. It still has only one office abroad, in Austria.
 
There is no progress on the development of regulatory impact assessments (RIA). 
Kosovo has participated in the implementation of  the European Charter for Small Enterprises 
and remains committed to it. Kosovo needs to appoint a new co-ordinator for the Charter 
process and to strengthen the SME Agency to enable it to take over from UNMIK technical 
assistance. 
Kosovo has adopted an entrepreneurship learni ng strategy, whic h introduces entrepreneurship 
in the secondary education curriculum.  Implementation is pending. 
Overall, preparations in the field of industry a nd SME remain at an early stage. Obstacles to 
running SMEs remain high and access to finance is difficult. Improved coordination of numerous donors' support to SME should incr ease SME aid and policy effectiveness. 
4.2.2. Agriculture and fisheries 
There are few developments to report as regards alignment with European standards. Laws on 
organic agriculture and apicu lture were promulgated by th e SRSG in January 2008. The 
assembly has not yet adopted the food law. Th is continues to delay the development and 
enforcement of related implementing legislation and the establishment of a single Food Safety Agency. Adoption of the law is required to clarif y the division of responsi bilities in the area 
of food safety, in particular between the Minist ry of Agriculture and th e Ministry of Health. 
There is no clear separation of responsibilit ies between the different services in the 
agricultural sector (including the veterinary and phytosanitary administration) and definition 
of relations between central, local and municipal levels. 
Government spending on the agricultural sect or in the 2008 Kosovo Consolidated Budget 
(KCB) increased by 32% compared to 2007, albe it from a low base. There is increased 
funding, both from the KCB and donors, incl uding for substantial projects for land 
consolidation and advisory services. The agri cultural sector in Kosovo is facing strong 
competition from imports and needs investment in order to modernise the sector. Farms are 
too small and lack modern tec hnologies to improve their ability  to compete in the domestic 
and international market.  
The Vinery and Agricultural Institution was es tablished in March 2007. Action to regulate the 
wine sector and implement the La w on Wine in accordance with the acquis  is still pending. 
A start has been made on implementing aspects of the Agricultural and Rural Development  
Plan (ARDP) for 2007-2013, which was adopte d in 2007, in partic ular concerning land 
EN 43   EN consolidation. An updated ARDP action plan is due to be appr oved later this year , which will 
include concrete and detailed measures for a number of agricultural sub-sectors. The updated 
plan needs to be brought gradually into line wi th the EU approach to wards rural development 
in potential candidate countries. However, fina ncial resources for the implementation of the 
plan are limited. The legal framework for the implementation of the ARDP and the 
establishment of the implementing institutions of the ARDP are still at a very preliminary 
stage. Without the legal basis, even the current limited financ ial resources cannot be spent. 
With assistance from an EU-funded project the first Local Action Gro ups were established 
and their Local Development Strategies based on the LEADER+ approach were developed for 
five municipalities (Klina/Klinë,  Štimlje/Shtime, Suva Reka/S uharekë, Srbica/Skënderaj and 
Gnjilane/Gjilan). 
Some progress has been made in the developmen t of a policy and a regu latory framework to 
support viable land reform and protect agricultural land against unplanned urban 
development. However, illegal logging, huntin g and construction on agricultural land are 
continuing. Despite the decentralisation of the Kosovo Forest Agency to Regional Forestry 
Directorates, there is no sustaina ble forest management system. 
In the veterinary and phytosanitary  area, plans to upgrade agri -food establishments are only 
at a preparatory stage. The Kosovo Vete rinary and Food Agency has licensed 32 
slaughterhouses. There are no facilities for processing an imal by-products in Kosovo. 
The legislation and infrastructure is in place fo r carrying out efficient animal identification, 
registration and movement control although th is is not properly enforced. The animal 
identification, registration and movement control system for cattle is in place but its fully 
operational character is questionable and still ne eds to be confirmed. Veterinary legislation on 
the control of animal diseases and phytosanit ary matters, aiming to comply with European 
standards, is being implemented. 
There have been no developments as regards fisheries . 
Overall, there has been some legislative progre ss in the areas of agriculture, veterinary and 
phytosanitary matters, although further efforts ar e required to implement and enforce this, 
particularly in veterinary  and phytosanitary matters. 
4.2.3. Environment 
The Ministry for Environment and Spatial Planning (MESP) has taken steps towards 
developing an integrated framework fo r environmental legislation. The Kosovo 
Environmental Action Plan is connected to a tota l of 16 sectoral plans. However, only four of 
the 52 projects envisaged for the period 2007- 2010 have been implemented so far. Local 
environmental action plans for five  municipalities have been signed. 
Some progress can be reported in the area of horizontal legislation.  Following the adoption 
of provisions on Environmenta l Impact Assessment (EIA) through the Law on Environmental 
Protection, implementation is be ginning. Some efforts have been made to increase public 
awareness and civil society partic ipation in environmental matters. 
There are no developments to  report in the area of air quality . Relevant legislation is still 
lacking, and Kosovo still has no air quality monitoring network. 
EN 44   EN Little progress has been  made in the area of waste management . Three municipal dumpsites, 
in Đakovica/Gjakovë, Ka čanik/ Kaçanik  and Prizren, have been rehabilitated. The Kosovo 
Trust Agency (KTA) has incorporated all 17 water, waste and irrigation enterprises. The low level of waste bill collection remain s a problem for the waste utilities. 
There is little progress to repor t in the area of water quality. One water permit was issued. An 
administrative instruction on criteria for defini ng protected drinking water zones and water 
resources was adopted. The Wa ter Law provides for the establishment of a River Basin 
Authority, which will be responsible for water resource management in the territory of the 
river basins. The budgetary implications and the accountability of this institution still have to be addressed. The future responsibilities for the operation and maintenance of publicly owned 
enterprises and assets in the water sector, which will be transferred to the municipalities, need to be determined. The management responsibil ities for urban wastewat er treatment and flood 
control will also need to be defined. Wa ter management forms a key element in the 
Environment Action Plan, given th e growing scarcity of water in Kosovo and the region. The 
low level of collection of water rates remains a problem for water utilities.  
No progress has been made in the field of nature protection.  Transposition of the Wild Birds 
Directive and the Habitats Directive is still pending. 
No progress has been made on industrial pollution control and  risk management.   
There has been little progress in the area of chemicals. The law on chemicals has been 
promulgated. 
There is no progress to report in the area of genetically modified organisms (GMOs) . A law 
on the protection against noise  entered into force in March 2008. 
As regards administrative capacity , the Environmental Protection Agency is now fully 
staffed and operational. However, the human a nd financial resources of  the MESP and related 
institutions (both at national and at local level) are still far from  sufficient to address Kosovo’s 
environmental challenges. The Environmenta l Protection Advisory  Board is not yet 
established. Both vertical and horizontal coordination between all institutions involved in 
environmental issues need to  be significantly improved. I nvestments in environmental 
infrastructure will need to be substantiall y increased, in particular through support from 
international donors. The responsibility of the m unicipalities is currentl y limited due to lack 
of capacity in both personnel and funding. 
Overall, there is limited progress to report in the field of environment, in particular as regards 
horizontal legislation. Further e fforts are still required in most  sectors for the transposition, 
implementation and enforcement of legislation.  The lack of human and financial resources, 
both at national and at municipal level, remain s a problem; the same applies to a lack of 
appropriate coordination mechanisms between a ll institutions dealing with environmental 
protection. 
4.2.4. Transport policy 
There has been some progress in the area of trans-European transport networks . Kosovo 
continues to participate actively in the Core  Regional Transport Network and in the South-
East European Transport Observatory (SEETO ). It is updating and implementing the multi-
annual plan 2008-2012. Continued cooperation with in SEETO is required. Both projects - 
Route 7, linking Nis to Priština/ Prishtinë and Albania, and R oute 6 linking Montenegro to 
EN 45   EN Priština/Prishtinë and Skopje - are incl uded in the multi-annual plan 2008-2012 as 
government priorities in the Medium Term Expenditure Framework. The contract for 
constructing a section of the R7  (around 20 km from the border with  Albania) is currently in 
the bidding process. A Trans port Planning Unit within the Ministry of Transport and 
Telecommunications (MTT) has been establishe d; it lacks the resources and political support 
to carry out its mandate. However, transport infrastructures remain poor and under-developed 
in Kosovo. Institutional and administrative capacity  needs to be significantly strengthened, as 
well as the legal framework for Publ ic-Private Partnerships (PPPs). 
In the area of road transport,  some progress can be report ed. The Law on Road Safety 
entered into force and eight administrative in structions on the creation of a Road Safety 
Council in co-operation with other relevant li ne ministries have been adopted. A roads 
database is now operational. A substantial allocation of funds under the KCB (€93 million 
overall) has now been devoted to  ensuring adequate and higher quality road maintenance and 
road rehabilitation. Several administrative inst ructions on driving licences and technical 
inspection of vehicles have been issued. The criteria for licensing publ ic transport operators 
need strengthening to improve the regul ation of Kosovo’s public transport. 
Very little progress can be reported in the rail transport  sector. The Law on Kosovo 
Railways entered into force in June 2008 a nd provides the legal basis for the future 
establishment of a Railway Regulatory Author ity, (RAA) independent from the MTT. The 
RAA has not yet been established, pending th e nomination of its board members. UNMIK 
signed the "Addendum to the Memorandum of Understanding on the Development of the 
South East Europe Core Regi onal Transport Network for a S outh East European Railway 
Transport Area" in December 2007. Kosovo is a member of the Rail Working Group established under the SEETO framework. 
Railway transport is not a government priority. Railways infrastructure and rolling stock, as 
well as the level of railway services, remain at a very low level. Compensation offered to 
railways for the provision of public passenger service does not cover costs. 
No progress can be reported in the area of combined transport . Kosovo still needs to adopt a 
multi-modal transport strategy and implement it. 
In the area of air transport , there has been some progress. The Law on Civil Aviation 
entered into force in June 2008 , superseding previous UNMIK regulations on CARO (the 
Civil Aviation Regulatory Authority). In Sept ember 2008, the Director of the Civil Aviation 
Authority (CAA) to succeed CARO was appoi nted, but the government still has not 
nominated the CAA Board Member s. Kosovo continues to implement the provisions relating 
to the European Common Aviation Agreemen t. All transposition instruments for ECAA 
Phase 1, including some legal provisions from ECAA Phase 2, have been drafted but not yet 
adopted. Alignment of standards should be accelerated. A number of investments in 
Priština/Prishtinë Airport have been made as part of the preparatio ns for ICAA Standard 
Aerodrome Certification. 
Overall, some progress can be reported in the fiel d of transport, particul arly in aviation. There 
have been few developments in the railway and combined transport sectors. Kosovo has 
increased investments in the transport infrastructure in 2008 , especially road building and 
EN 46   EN maintenance . However, implementation capacity rema ins weak, especially in the railway 
sector.20 
4.2.5. Energy 
The energy sector continues to face severe problems. The electricity utility’s financial 
situation is extremely precarious, mainly due to  the extremely low level of power billing and 
collection. As a result, electri city supply remains uncertain  and unreliable in Kosovo, 
especially in remote areas. Power cuts are still frequent. 
The government's programme for 2008-2011 identif ies the development of the energy sector 
as one of its main priorities. The programme  puts particular emphasis on the continued 
restructuring and liberalisation of the sector and the use of Kosovo's lignite reserves for 
electricity production and export. In September,  the government adopted a formal decision to 
privatise KEK. The government also is planning a major increase in public investment to the 
sector, mainly to strengthen the transmission a nd distribution network a nd to continue work 
on the new mine at Sibovc . 
There has been no progress as regards oil stocks  and nuclear safety/radiation protection . In 
the area of nuclear safety/rad iation protection, basic rules need  to be implemented and an 
appropriate and operational regulatory body need s to be set up. Important radiological issues 
include the management of sealed radioac tive sources, environmental monitoring and 
radiation protection in the cont ext of medical and industrial a pplications. Atte ntion needs to 
be paid to preventing and combating illicit tr afficking of nuclear and other radioactive 
materials within Kosovo. 
As far as the internal energy market  and the implementation of the Energy Community 
Treaty (ECT) are concerned, results have been  mixed. The Ministry of Energy and Mining 
(MEM) adopted rules on energy efficiency. Th e network distribution code was approved by 
the Energy Regulatory Office (ERO) as required  by the ECT. This sets out the terms and 
conditions for connection to low/medium voltage networks and for use of the network system. 
The ERO also approved the metering code and the methodology for transmission connection 
charges. The government did not meet th e ECT requirement to introduce unbundled 
accounting between the coal mines division, power generation, network distribution and 
supply by mid-2008. The aim of this requirement is to create conditions for the future 
privatisation of assets of the Kosovo Electric ity Corporation (KEK). Due to disagreements 
between the government and the regulator, th e requirement to adopt the authorisation 
procedure for new generation ca pacities was not met. There has been limited progress as 
regards the unbundling of KEK di stribution and supply functions . The same applies to the 
establishment of a Distribution System Operat or (DSO) as prescribed  by the ECT. Kosovo 
needs to make further progress in establishi ng and implementing the legal framework of the 
ECT. The institutional and legislative capacity  of both the MEM and the ERO needs further 
strengthening. Attracting qualified staff remains a problem. 
KEK's revenue billing and collection remains poor. Non-payment of el ectricity consumed -
whether through lack of billing, non-payment of b ills, or electricity theft - represents a major 
challenge for KEK and is the main reason for its insolvency and th e ongoing unsustainable 
inflation of demand for power. Despite a slight improvement during 2007 (which has 
                                                 
20 DG TREN made extensive comments to the conclusions of the energy and transport chapters, with few 
suggestions for the body of the text. 
EN 47   EN continued during 2008), technical a nd financial losses in the electr icity sector continue to be 
high. In 2007, technical losses accounted for 16.2% of demand; theft 22.4%; and other 
commercial losses 21.4%. In short,  fully 60% of demand is not paid for and KEK lost some 
€99 million last year. Vigorous and increased e fforts (involving police and judiciary) are 
needed to increase electricity billing and collection rates. 
Kosovo's electricity transmission system operator (KOSST) is a member of the South East 
Europe Transmission Systems Operators (SETS O). However, it con tinues to encounter 
difficulties at the level of SETSO's techni cal working groups on inter-transmission 
compensation and cross-border trade mechanisms . KOSST is not remunerated by the Serbian 
transmission system operator for the electricity transiting through its grid. 
Progress has been achieved in the gradual introduction of electric ity prices that reflect cost. 
The Energy Regulatory Office (ERO) tariff me thodology provides for a gradual introduction 
of cost-reflecting tariffs through annua l increases, to avoi d the bills becoming 
disproportionately high for vulnera ble social groups. At the same  time it provides a lifeline 
tariff for low-income costumers. ERO launched th e second electricity price review in October 
2007. The ERO published a consultation paper in  March 2008 with its comments and views 
on the 2008 transmission and retail tariffs. The new tariffs are on average 5% higher than in 
2007. The ERO board approved these tariffs once its new members were appointed, and the 
tariffs became effective on 1 July . According to the social sche me of the Ministry of Labour 
and Social Welfare, some 40,000 customers recei ve electricity (500 kW h) paid for by the 
Kosovo budget (€4.5 million).  
Preparations for the development of the new Kosovo C power plant (Lignite Power 
Development Project) slowed down in 2008, as the government d ecided to review the entire 
project. The project envisage s constructing up to 2,000 MW of new capacity, supported by the 
expansion of lignite-mining operations at the Si bovc field with major a ssets to be given in 
concession to private investor s (including elements of the Ko sovo A and B power plants). An 
international transaction adviso r had reviewed and approved th e pre-qualification and started 
a structured dialogue with the four short-listed bidders to develop the bidding package. In the 
autumn, the transaction advisor in tends to finalise the request for proposals to be issued to the 
short-listed bidders. Final bids ar e expected by the end of May 2009 . According to the most 
optimistic timetable, and subjec t to legal matters being resolved, fina ncial closure should 
follow within a year, i.e. by end 2009.  
However, the timing of the Kosovo C package doe s not tie in well with the need to begin 
developing the new Sibovc SW Mine. Existing lignite sources  at Bardh and Mirash are 
expected to run out by 2010, wher eas Sibovc is unlikely to begin yielding lignite before 2012, 
having experienced from delays in the proces s for the procurement of overburden removal 
systems such as excavators, conveyors and sp readers. The government has provided funds for 
opening an additional mine (Sitnica mine) adjace nt to Mirash, which will partially cover the 
coal demand until 2012. To bridge the gap, KEK intends to use some existing equipment without refurbishment to start digging overburden in Sibovc SW . All these efforts are aimed 
at reducing the risk of having to purchase costly  power imports at continuously rising market 
prices. 
The financial viability of the Kosovo C project in the longer term and its impact on the 
environment continue to give a cause for concer n. Kosovo will have to comply fully with the 
provisions of the ECT as regards the EU acquis for new power generation projects (i.e. in the 
areas of energy, environment and competition). In addition, full compliance (according to the 
EN 48   EN ECT) with the Large Combustion Plant Direct ive by 2017 will result in the closure of the 
remaining operational units of Kosovo A. 
In addition, the government is committed to making substantial efforts to address commercial 
losses and electricity theft, including through improved cooperati on with the judiciary and the 
police. It also places a stronge r emphasis on the promotion of renewable energy  sources, 
including hydro power plants, and on energy efficiency  measures, although government 
funding for both is limited. An EU funded pre- feasibility study to a ssess the potential of 
renewable energy sources (excluding hydro poten tial, which was assessed in a separate 
study), which was completed in early July, found th at there is considerab le potential for solar 
and biomass, whereas wind and geothermal po tential is very low. The study recommends 
demonstration projects to install water-heatin g solar panels in individual and collective 
dwellings, given that about 20% of electricity consumption is used for heating tap water. 
Overall, there has been some progress in the area of energy, particularly in building up the 
institutional capacity of the Ministry, Regulat or and Transmission System Operator (KOSTT). 
The Kosovo C thermal power plant project is progressing well. However, there are major 
problems to be solved, which include improving th e financial viability of the power utility (by 
reducing commercial and non-techni cal losses), increasing the stab ility of supply and halting 
the unsustainable inflation of demand, upgrad ing infrastructure and resolving Kosovo’s 
impending lignite shortfall. There is no progress to report with regard to nuclear safety and 
radiation protection. 
4.2.6. Information society and media 
Some progress can be reported as regards electronic communications . In the mobile 
telephony sector, the second mob ile operator has become active on the market. After adopting 
the regulatory framework for introducing mo bile virtual network operators (MVNOs) in 
Kosovo - enabling further liberalisation and competition between mob ile services - the 
Telecommunications Regulatory authority (TRA) issued two MVNO licences in 2008. 
In June, the assembly adopted amendments to the telecommunications law, aimed at 
strengthening the independence of  the TRA. It also transferre d all functions in respect of 
spectrum allocation and management to the TRA. The Telecommunications Regulatory 
Authority (TRA) and the Independent Media Co mmission (IMC) cooperat e on the review of 
frequency management plans. 
The TRA adopted a Regulation on ways of reso lving conflicts between telecommunications 
service providers in November 2007. 
The implementation of the sector policy (adopt ed in May 2008) has been delayed, due to a 
lack of cooperation between the relevant authori ties. There is no progress to report as regards 
increasing competition in the fixed telephony market. Kosovo is at an early stage of liberalisation; none of the competitive safegua rds, such as carrier selection, carrier pre-
selection, number portability and local loop unbundling, have been decided on. Kosovo still 
does not have its own international phone code. 
Administrative capacity in the Ministry of Transport and Telecommunications (MTT) and in 
the TRA is insufficient. The levels of huma n resources and expertise do not enable it to 
function adequately. According to the Teleco mmunications Law, the TRA should be funded 
through licence fees. 
EN 49   EN There are no developments  to report as regards information society services . 
Regarding audiovisual policy , the work of the Independe nt Media Commission (IMC) is 
affected by the lack of sufficient human and fina ncial resources. Re-licensing broadcasters in 
Kosovo requires substantial tec hnical and legal assistance, whic h is beyond the IMC’s current 
capacity. 
With 22 staff , the IMC lacks human resources and cont inues to be confr onted by financial 
constraints. It employs two minority staff members . The assembly appoi nted the last two 
members of the IMC Council in March. 
The IMC Council issues licences, d ecides on their renewal, and grants rights of broadcast 
frequency usage to authorised entities. The IMC is not systematically consulted by other 
institutions. Attributing responsibilities for frequency spectrum allocation to the TRA has 
deprived the IMC of revenue. 
The Minority Media Fund, which awards grants to media for minorities, multi-ethnic groups 
and the disadvantaged, has effectively been suspended. It distributed no grants in 2007, 
despite RTK transferring €176,000 to the Fund. Th e draft Law on the Management of the 
Minority Fund has not been finalised. 
Out of a total of 113 licensed broadcasters in Kosovo, 43 are from minority communities. 
The programme scheme of the State broadcaster (RTK) is in line with Article 6 of the Law on 
RTK. Some 16% of its programmi ng is in minority languages. 
Kosovo’s Press Council and the Kosovo Media In stitute are functioning properly. However, 
there remains a legal inconsistency between the Law on Defamation and Insult and the penal 
code. Although the Law on Defamation and Insu lt decriminalised de famation in 2007, under 
the existing UNMIK penal code defamation remains a criminal offence. 
The Kosovo Media Institute (KMI) is a non-profit organisation, with a managing board 
comprising ten members who represent diff erent Kosovo media. The KMI started in 
December 2006, with the primary aim of becoming a training and capacity building centre for 
local journalists. It serves the electronic press, and nationa l, local and minority media. 
The Law on Access to Information provides for the appointment of an Information 
Commissioner, which is still pending. The La w on Copyright still has to be implemented. 
The funding of the RTK continues to be probl ematic. The RTK law allows the IMC to set 
advertising thresholds (of up to 20%) year on ye ar. Setting thresholds annually, which usually 
match the variations in licence fees, hampers th e RTK’s capacity to plan for investment or 
expansion. Ministry of Finance treasury gui delines for the RTK law are too stringent. 
There are no developments to report as rega rds the adoption of relevant legislation 
implementing the Law on Advertising Thresholds. 
Little progress was made in the area of freedom of expre ssion and media regulation. The 
Press Council and the Media Inst itution are functioning properly, in spite of difficulties in 
attracting and retaining qualified staff. Market liberalisation pr ogressed slightly as a second 
mobile telephony operator started to offer its se rvices. However, the various regulatory bodies 
face budgetary restrictions and outside pressure  
EN 50   EN 4.2.7. Financial control 
The assembly adopted a new Law on Public Financial Management and Accountability 
(LPFMA). The LPFMA provides for the establishm ent of a central unit for the harmonisation 
of financial control, whose role  is to develop financial contro l rules for the public sector and 
to regulate the financial ma nagement and accounting system. 
The government is reviewing the Internal A udit Law. The operational independence of 
internal audit and the harmonisati on with EU standards are due to  receive particular attention. 
In November 2007, the central ha rmonisation unit for internal a udit became operational. This 
unit develops standards, trains internal auditors, monitors internal audit developments, and 
provides quality assurance on internal audit work. 
Most organisations with budgetary responsibilitie s, including municipali ties, have acquired a 
minimum level of audit capacity. However, overall audit capacity needs to be reinforced. Managerial accountability, in  particular, needs to be  strengthened further. 
As regards external audit , the assembly adopted a new Law on the Auditor General (OAG). 
The law regulates the transfer of external audit competences from UNMIK to the Kosovo 
authorities. The OAG is to remain an independe nt institution, reporting to the assembly.  
Overall, there has been some progress in the field of financial control. 
4.2.8. Statistics 
There has been only limited progress in the area of statistics. 
The statistical infrastructure  is weak. The lack of independe nce of the Statistical Office of 
Kosovo (SOK) is an area of concern. The resour ces for the work of the Statistical Office are 
inadequate and the coordination of the statistical system has been weak. Several ministries 
have been collecting statistics, which fall within the remit of SOK. 
In the area of classifications  and registers, there is no progre ss to report. Compliance with EU 
and international classifications was very limited. The area needs substantial further 
development. 
As regards sectoral statistics, there has been minor progress in the area of economic, business 
and agriculture statistic s. Pilot surveys have been conducted for producer price indices and 
business statistics. The findings were used as  sources for the nationa l accounts. Initiatives 
were taken to develop tourism statistics. In the area of macro-economic statistics, the development of national accounts conti nues. In March 2008, the SOK adopted a new 
methodology to estimate household consumption. 
The preparations for the popula tion and housing census have been  the main issue as regards 
demographic and social statistics. Preparatory te chnical work has been carried out and will be 
tested by means of a small-scale pilot census. 
Overall, limited progress can be reported in the field of statistics. SOK is not an independent 
producer of official statistics. The SOK ha s insufficient administrative and coordination 
capacity. Progress made is generally confined to  the areas where assistance has been given. 
EN 51   EN 4.3. Justice, freedom and security 
4.3.1. Visa, border, control, asylum and migration Kosovo has no visa regime. The Kosovo Police (KP) has only a limited degree of control on 
the movement of persons into and out of Kosovo. 
The Law on Foreigners was adopted  in February and promulgated in June. It includes detailed 
provisions for the naturalisati on of foreigners in Kosovo. 
In February 2008, a Law on Travel Documents was adopted. In May 2008, the Ministry of the 
Interior (MoI) started to produ ce Kosovo passports. The distributi on of these passports started 
in July. The passports are machine readable, but do not carry biometric features. Their security features include UV-print, fingerpri nt imagery and black and white silhouette. 
As regards border and boundary issues , the assembly adopted the Law on Integrated Border 
Management and Border Security in May. Th e government approved its Integrated Border 
Management Strategy in November 2007, but ha s yet to issue the corresponding action plan. 
The Border and Boundary Police (BBP) services of Kosovo have started to cooperate with 
their counterparts in Albania, the former Yugoslav Republic of Macedonia and Montenegro. 
The structural set-up of the Ministry of Inte rior allows for overlap and does not lay down a 
clear distribution of tasks. The capacity of th e Directorate for borders , asylum and migration 
within the Ministry of Interior remains in sufficient. The range and combination of its 
responsibilities are a ca use for concern. The number of re presentatives of the Kosovo Serb 
community in the BBP has decreased substantia lly following the declaration of independence. 
The BBP has no control over some crossing points.  Responsibility for the control of the green 
border remains with UNMIK. The BBP carries out some joint patrols with KFOR. 
The demarcation process for the border with  the former Yugoslav Republic of Macedonia 
started in June. Sixty-nine out  of the 70 planned main border pillars have been placed. The 
boundary with Serbia is not demarcated. The border with Montenegro  is not demarcated 
either, and the border with Albania is only partly  marked. There are a nu mber of unofficial or 
seasonal border crossings that are not controll ed or controlled only in part by the Kosovo 
authorities. There are still no formal integrated  border management (IBM) agreements with 
neighbouring countries. 
The BBP has neither appropriate communication systems to collect and exchange data on exit 
and entry, nor access to crimin al records of people wanting to  enter or exit Kosovo. The IT 
system used at the three main border crossings is not compatible with equipment used in the 
EU. There is no exchange of intelligence with other parts of the Kosovo police. 
Cooperation between the different Kosovo agenci es involved in IBM is improving. However, 
there are no formal agreements on operational cooperation between the va rious actors. Further 
efforts are needed with regard to staffing leve ls and training for the officers involved in border 
management.  
The assembly adopted a Law on Asylum  in May. The MoI department for borders, asylum 
and migration has continued to build up its ma nagement capacity. However, the department 
has limited capacity to handle asylum cases. Th ere is no reception centre for asylum seekers 
or involuntary retu rnees. Kosovo receives very few applications for asylum. 
EN 52   EN There has been little progress on migration . In January 2008, the directorate for borders, 
asylum and migration took over responsibility for the handling of returnees from third 
countries. There is still no Law on Migration. 
Overall, there is little progress to report in  the field of border control and asylum. The 
capacity of the Border and Boundary Police to carry out effective border and boundary 
control, in particular in northern Kosovo and on  the green borders, remains to be significantly 
improved.  
4.3.2. Money laundering 
The fight against financial crime is a key prio rity in the European Partnership for Kosovo. 
An action plan on money laundering was adopted in August. The Financial Intelligence Centre (FIC) is the supervising entity for non-financial institutions. 
The Central Banking Authority of Kosovo (CBA K) supervises the financial institutions. 
There is good cooperation between the FIC, the CBAK and customs. Cooperation with the 
judiciary and law enforcement bodies has imp roved, as recent high-profile cases have 
demonstrated. Training courses have been organised by the Kosovo Police (KP) to enhance 
the financial investigation capacity with in the organised cr ime directorate.  
However, the lack of expertise of the judici ary and law enforcement in investigating and 
judging complex economic crime remains probl ematic. The Kosovo Special Prosecution 
Office has a shortage of local and specialised  prosecutors. There are no facilities for the 
proper storage of evidence. Communication between the Kosovo Police (KP) economic 
crimes and corruption investigation section and the regional units dealing with financial crime 
remains poor, and there is still no common databa se. Observance of re porting obligations by 
non-banking institutions is insufficient. Coope ration with the Kosovo tax administration is 
lacking. The Law against Money Laundering is not adequate and there is insufficient follow-
up of reports of suspicious transactions. There is virtually no oversight  of the real estate 
sector. Combating money laundering is characte rised by a division of competences between 
various local and in ternational bodies.  
Overall, progress in combating money launderi ng has been insufficient. Money laundering 
continues to be a very serious problem. 
4.3.3. Drugs 
Kosovo is located on the Southern Balkans' heroin trafficking route. Heroin shipments from 
Turkey enter via the border between the former Yugoslav Republic of Macedonia and 
Kosovo, which is difficult to control. Shipment s continue towards Serbia and Hungary or 
towards Albania. The Kosovo Police (KP) carrie d out some investigations and confiscations 
during the reporting period. 
The absence of reliable relevant statistics and a lack of intelligence have prevented the 
drafting of an action plan or a strategy to  combat drugs. The KP lacks the skills and 
equipment (e.g. phone tapping, sniffe r dogs) to effectively tackle drug trafficking. There is 
insufficient inter-agency and international c ooperation in the fight ag ainst drug trafficking. 
Domestic drug consumption is not yet ac knowledged as a majo r concern in Kosovo. 
However, drug abuse has increased. Cases of death through overdose have been reported. 
EN 53   EN Overall, there has been no progress to report.  Drug trafficking continues to be a serious 
problem in Kosovo. 
4.3.4. Police 
The performance of the Kosovo Police (KP) as regards the maintenance of public order and 
combating minor crime in the majority-populate d areas is satisfactory. Laws on the Police and 
on the Police Inspectorate were adopted in February 2008. The Kosovo Centre for Public 
Security, Education and Developm ent was converted into an execu tive agency of the Ministry 
of Interior in March 2008. 
Following the declaration of independence, many police officers from the Kosovo Serb 
community left the service. In some non-majority areas, the functioning of the multi-ethnic police force is not fully effective. 
There has been no  improvement in the exchange of intelligence between different KP 
structures. Relations with the publ ic prosecution service continue to be difficult. There are no 
obvious signs of either a significant improve ment of the investigative capacities or the 
strategic use of intelligence for police purposes. Salary levels for the police are low. Police detention facilities still do not meet international standards. KP's investigative and internal 
control capacities need to be further strength ened. A crime reduction st rategy has not yet been 
implemented. There is no strategy for the collec tion of weapons. Legislation on small arms is 
incomplete and its enforcement is ineffective. There is still no law on forensics and autopsy. The KP makes insufficient use of crime statistics as a management tool. 
The number and availability of small arms, li ght weapons and explosives, as well as the 
continuing presence of unexploded ammunition circulating in Kosovo, constitute a very serious problem. The absence of  a proper legislative framewor k leads to unregulated arms 
circulation, which is affecting crime rates and public s ecurity in Kosovo. 
Overall, some progress can be reported in the field of policing, but  high-level crime and 
strategic deficiencies re main serious concerns. 
4.3.5. Fighting organised crime and terrorism 
There is neither a strategy nor an action plan to combat organised crime . There is no legal 
basis for the management of c onfiscated assets, which results in significant losses to the 
Kosovo budget. The absence of a reliable land regi ster is a serious obsta cle to the confiscation 
of real estate assets. Combating organised crime is a key priority in th e European Partnership 
for Kosovo. 
The determination and capacity re quired to effectivel y tackle organised cr ime is lacking. The 
police tend to focus on maintaining orde r rather than on organised crime. 
The judiciary lacks the capacity to tackle or ganised crime seriously. The motivation of public 
prosecutors and judges to tackle organised crime is fu rther undermined by the lack of 
adequate working conditions, sa laries and social protection. 
Kosovo remains an area of origin, tr ansit and destination of victims of trafficking in human 
beings (THB). Victims of trafficking (almost exclusively for sexual exploitation) are mainly 
from Moldova, Russia and Ukraine. A growing number of Kosovo Alba nian minors are being 
recruited from among the most vulne rable and disadvantaged families. 
EN 54   EN The legislation on THB and organise d crime is generally in line with international standards. 
The Deputy Minister of Interi or was nominated National Coor dinator for Anti-Trafficking. A 
strategy and an action plan for comb ating THB were adopted in July.  
However, prosecutors and judges are poorly pr epared for dealing with victims of THB. 
Prosecutors are not pro-active and rely mostly on victims' declarations . Some provisions of 
the criminal procedural code on THB are not ade quate. The lack of a visa regime facilitates 
trafficking to and via Kosovo. THB victims who make victims' declarations expose 
themselves to charges of illegal  immigration and other offences. 
Cooperation among the central and the regional KP  units dealing with THB continues to give 
cause for concern. The regional units lack su pport from the central le vel, especially on 
logistics. The absence of a central database hamp ers the use of intelligence for targeted action 
against this type of crime. Regional THB units do not have  unmarked vehicles and lack 
technical equipment. The social reintegration of victims of THB remains problematic. There 
are few safe houses. A multi-agency approach, based on joint training and cooperation of 
different state actors in the fight against THB,  is necessary. Implementation of the strategy 
and an action plan for combating THB is inadequate. 
As regards the fight against terrorism , the counter terrorism unit c ontinued its activity with 
staff from the KP Crime Directorate, but it is  still under the direct responsibility of UNMIK. 
Some specific training activities took place and a plan for further staffing is being developed. 
The preparations in this field ar e still in their initial stage. 
Overall, very little progress has been made in the area of fighting organised crime. Organised 
crime continues to be a serious problem. Very  limited progress has been made in the fight 
against trafficking in human beings. 
4.3.6. Protection of personal data 
There are no developments to report. There is still no general legislati on in place transposing 
the Data Protection Directive and no independent  data protection supervisory authority has 
been set up. This remains a matter of concern. 
 
EN 55   EN STATISTICAL ANNEX  
STATISTICAL DATA (as of 29 September 2008)            
Kosovo under United Nations Security Council Resolution 1244/99            
            
Basic data Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Population (thousand) 1) : : : : 1 985 2 016 2 041 2 070 2 100 2 127 
Total area of the country (km²)  10 887 10 887 10 887 10 887 10 887 10 887 10 887 10 887 10 887 : 
            
National accounts Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Gross domestic product (GDP) (million national currency)  : : : : : : : : : : 
GDP (million euro) 2) 3) : : : 1 624 1 735p 1 797p 3 007p b 3 068p 3 192p : 
GDP (euro per capita)  : : : : : 905p 1 473p b 1 482p 1 520p : 
GDP (in Purchasing Power Standards (PPS)  per capita)  : : : : : : : : : : 
SI: GDP (in PPS per capita, EU-25=100)  : : : : : : : : : : 
SI: Growth rate of GDP (national currency, at constant prices, % change on previous year)  : : : : 1.2p 3.1p : : : : 
SI: Employment growth (national accounts, % change on previous year)  : : : : : : : : : : 
Labour productivity growth: GDP growth per person employ ed (% change on previous year)  : : : : : : : : : : 
SI: Unit labour cost growth (national accounts, % change on previous year)  : : : : : : : : : : 
SI: Labour productivity (GDP in PPS per person employed, EU-25=100)  : : : : : : : : : : 
Gross value added by main sectors (%)                      
Agriculture  : : : : : : : : : : 
Industry  : : : : : : : : : : 
Construction  : : : : : : : : : : 
Services  : : : : : : : : : : 
Final consumption expenditure, as  a share of GDP (%)  : : : 163.1 151.6 147.5 109.7p b 111.9p 111.5p : 
Households and NPISH, as a share of GDP (%)  : : : 101.3 96.9p 96.2p 85.3p b 89.0p 90.6p : 
General government, as a share of GDP (%) 4) : : : 61.8 54.6p 51.4p 24.5p b 23.0p 21.0p : 
Gross fixed capital formation, as a share of GDP (%) 5) : : : 40.7 34.5 29.3 19.4p b 19.3p 20.6p : 
Changes in inventories, as a share of GDP (%)  : : : : : : 3.9 b 4.2 4.4 : 
Exports of goods and services, relative to GDP (%)  : : : 16.6 12.5p 10.4p 7.1p b 7.0p 8.9p : 
Imports of goods and services, relative to GDP (%)  : : : 120.4 98.6p 87.1p 40.1p b 42.5p 45.5p : 
            
Industry Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Industrial production volume index (2000=100)  : : : : : : : : : : 
            
Inflation rate Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Consumer price index (CPI), (tot al, % change on previous year)  : : : : -1.0 0.3 -0.8 -2.1 -1.5 2.8 
            
Balance of payments Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Balance of payments: current account total (m illion euro)  : : : -140 -201 -284 -317 -380 -389 -536 
Balance of payments current account: trade balance (milli on euro)  : : : -962 -871 -856 -971 -1 044 -1 141 -1 360 
 
EN 56   EN Balance of payments current account: exports of goods (million euro)  : : : 269 217 186 57 56 111 147 
Balance of payments current account: imports of goods (million euro)  : : : 1 231 1 088 1 042 1 028 1 100 1 252 1 506 
Balance of payments current account: net services (million euro)  : : : -725 -622 -523 -9 -36 -15 -18 
Balance of payments current account: net income (million euro)  : : : 185 149 123 17 24 29 50 
Balance of payments current account: net current tr ansfers (million euro)  : : : 1 361 1 143 973 646 675 738 792 
of which government transfers (million euro)  : : : 1 144 902 732 432 395 389 389 
Foreign Direct Investment (FDI) in the reporting economy (million euro)  : : : : : : 19 80 250 422 
            
Public finance Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
General government deficit/surplus, relative  to GDP (%)  : : : : 8.4 2.2 2.7 : : : 
SI: General government debt, relative to GDP (%)  : : : : : : : : : : 
            
Financial indicators Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Gross foreign debt of the whole economy, relative to GDP (%)  : : : : : : : : : : 
Gross foreign debt of the whole economy, relative to total exports (%)  : : : : : : : : : : 
Money supply: M1 (banknotes, coins, overnight deposits, million euro)  : : 761 971 998 891 713 572 : : 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro)  : : 761 1 096 1 126 1 111 1 128 1 092 : : 
Money supply: M3 (M2 plus marketable instruments, million euro)  : : : : : : : : : : 
Total credit by monetary financial institutions to resi dents (consolidated) (million euro)  : : 3 26 87 233 374 514 637 891 
Interest rates: day-to-day money rate, per annum (%)  : : : : : : : : : : 
Lending interest rate (one year), per annum (%)  : : : : : : : : : : 
Deposit interest rate (one year), per annum (%)  : : : : : : : : : : 
euro exchange rates: average of period - 1 euro = … national  currency 3) : 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 : 
Effective exchange rate index (2000=100)  : : : : : : : : : : 
Value of reserve assets (including gol d) (million euro)  : : 25 200 58 77 79 107 102 167 
            
External trade Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Trade balance: all goods, all partners (million euro)  : : : : : : -1 007 -1 101 -1 195 -1 411 
Value of exports: all goods, all partners (million euro)  : : : : : : 57 56 111 165 
Value of imports: all goods, all partners (million euro)  : : : : : : 1 063 1 157 1 306 1 576 
Terms of trade (export price index / impor t price index)  : : : : : : : : : : 
Share of exports to EU-27 countries in value of total exports (%)  : : : : : : 29.4 38.4 38.0 42.0 
Share of imports from EU-27 countries in value of total imports (%)  : : : : : : 39.5 37.3 34.4 36.3 
            
Demography Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Natural growth rate: natural change (births minus deaths ) (per 1000 inhabitants) 1) : : : : : 12.8 14.1 14.6 12.8 12.4 
Net migration rate: immigrants minus emigrant s (per 1000 inhabitants)  : : : : : : : : : : 
Infant mortality rate: deaths of children under one year of age per 1000 live births  : : : : 11.2 15.1 11.8 9.6 12.0 11.1 
Life expectancy at birth: male (years)  : : : : : 67.0 : : : : 
Life expectancy at birth: female (years)  : : : : : 71.0 : : : : 
 
EN 57   EN             
Labour market Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Economic activity rate (15-64): share of  population aged 15-64 that is economically active (%)  : : : 45.6 52.8 50.3 46.2 49.2 52.3 46.8 
SI: Employment rate (15-64): share of population aged 15-64 that is in employment (%)  : : : 19.6 23.8 25.3 27.7 28.5 28.7 26.2  
Share of male population aged 15-64 that is in employment (%)  : : : 31.1 39.4 42.8 46.4 45.8 46.1 40.1 
Share of female population aged 15-64 that is in employment (%)  : : : 8.1 8.8 8.3 9.9 11.7 11.8 12.7 
SI: Employment rate of older workers (55-64): share of population aged 55-64 that is in 
employment (%)  : : : 16.7 18.4 20.1 23.9 25.2 26.3 24.6 
Employment by main sectors (%)                      
Agriculture  : : : 6.2 10.3 17.3 24.7 18.8 21.4 16.9 
Industry  : : : 16.9 17.2 15.4 14.0 14.4 12.4 14.1 
Construction  : : : 8.6 11.2 11.3 8.0 7.9 8.1 10.4 
Services  : : : 68.3 61.3 56.0 53.4 58.9 58.2 58.3 
SI: Unemployment rate: share of labour force that is unemployed (%)  : : : 57.1 55.0 49.7 39.7 41.4 44.9 43.6 
Share of male labour force that is unemployed (%)  : : : 51.8 45.2 40.3 31.5 32.9 34.6 38.5 
Share of female labour force that is unemployed (%)  : : : 69.9 74.5 71.9 60.7 60.5 61.6 55.2 
Unemployment rate of persons < 25 years: shar e of labour force aged <25 that is unemployed 
(%)  : : : 80.0 77.7 74.9 66.5 70.5 75.5 70.0 
SI: Long-term unemployment rate: share of labour force that is  long-term unemployed (%)  : : : 47.6 47.3 42.7 34.9 34.7 41.1 37 .1 
            
Social cohesion Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Average nominal monthly wages and salaries ( national currency)  : : : : : : : : : : 
Index of real wages and salaries (index of nom inal wages and salaries divided by the CPI) 
(2000=100)  : : : : : : : : : : 
SI: Early school-leavers: share of popul ation aged 18-24 having not completed upper 
secondary education and not currently in education or training (%)  : : : : : : : : : : 
            
Standard of living Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Number of passenger cars per 1000 population  : : : : : : : 49.4 69.9 68.7 
Number of subscriptions to cellular mobile telephon e services per 1000 population  : : : : : 156.3 167.4 : : : 
            
Infrastructure Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Density of railway network (lines in operation, per 1000 km²)  : : : : : : 39.5 : : : 
Length of motorways (thousand km)  : : : : : : : 0.0 0.0 0.0 
            
Innovation and research Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Spending on human resources (public expenditure on education) relative to GDP (%)  : : : : : : : : : : 
SI: Gross domestic expenditure on research & development, relative to GDP (%)  : : : : : : : : : : 
SI: Percentage of households who have Internet access at home (%)  : : : : : : : : : : 
            
Environment Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Total greenhouse gases emissions, CO2 equi valent (tons, 1990=100)  : : : : : : : : : : 
SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP)  : : : : : : : : : : 
SI: Share of renewable energy in electric ity consumption (%)  : : : : : : : : : : 
SI: Road freight transport as a share of total in land freight transport (modal split of freight 
transport) (%)  : : : : : : : : : : 
 
EN 58   EN SI: Structural Indicator  
e: estimate  
f: forecast  
p: provisional  b: break in series  1. Source: Eurostat. 
2. Source: SOK provisional data for 2004-2006 (at current prices). 
3. No official national currency exis ts. Euro is the currency in use. 
4. Including donor sector. Donor sector  includes UNMIK, donor grants (DDGs). 
5. Investment: including donor sector, general government, private investment (Housing and Other). 
6. Production of coal in 1 000 tones; data collected from t he Kosovo (under UNSCR 1244) Energy Corporation (KEK).             
Energy Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Primary production of all energy products (thousand TOE)  : : : : : : : : : : 
Primary production of crude oil (thousand TOE)  : : : : : : : : : : 
Primary production of hard coal and lignite (thous and TOE) 6) : : : : 5 528 6 466 5 658 6 391 6 532 6 715 
Primary production of natural gas (thousand TOE)  : : : : : : : : : : 
Net imports of all energy products (thousand TOE)  : : : : : : : : : : 
Gross inland energy consumption (thousand TOE)  : : : : : : : : : : 
Electricity generation (thousand GWh)  : : : : 3.2 3.2 3.5 4.0 4.0 4.3 
            
Agriculture Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Agricultural production volume index of goods  and services (produc er prices, previous 
year=100)  : : : : : : : : : : 
Total utilised agricultural area (thousand hectare)  : : : 539 : : : : : : 
Livestock: cattle (thousand heads, end of period)  : : 289 347 319 : 335 352 392 : 
Livestock: pigs (thousand heads, end of period)  : : 59 75 110 : 55 47 68 : 
Livestock: sheep and goats (thousand heads, end of period)  : : 193 230 116 : 106 152 113 : 
Production and utilisation of milk on the farm (total  whole milk, thousand tonnes)  : : : : : : : : : : 
Crop production: cereals (including rice) (thousand tonnes, harvested production)  : : : 459 396 : 408 441 392 : 
Crop production: sugar beet (thousand tonnes, har vested production)  : : : : : : : : : : 
Crop production: vegetables (thou sand tonnes, harvested production)  : : : 169 135 : 150 289 172 :