COMMISSION STAFF WORKING DOCUMENT KOSOVO* 2015 REPORT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS EU Enlargement Strategy
Date: 2015-11-10
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Kosovo, accession criteria, accession negotiations, pre-accession strategy

EUROPEAN 
COMMISSION 

Brussels, 10.11.2015  
SWD(2015) 215 final 

COMMISSION STAFF WORKING DOCUMENT 

KOSOVO* 
2015 REPORT  

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

EU Enlargement Strategy 

{COM(2015) 611 final} 
{SWD(2015) 210 final} 
{SWD(2015) 211 final} 
{SWD(2015) 212 final} 
{SWD(2015) 213 final} 
{SWD(2015) 214 final} 
{SWD(2015) 216 final} 

EN 

   EN 

 
 
 
 
  
 
 
This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and 
the ICJ Opinion on the Kosovo declaration of independence

 
 
 
Table of Contents 

1.  

INTRODUCTION....................................................................................................... 4 

1.1.   Context  ............................................................................................................. 4 
1.2.  Summary of the report....................................................................................... 4 

2 

POLITICAL CRITERIA............................................................................................. 6 

2.1.  Democracy ........................................................................................................ 6 
2.2.  Public administration reform........................................................................... 10 
2.3.  Rule of Law ..................................................................................................... 12 
2.4.  Human rights and the protection of minorities................................................ 20 
2.5.  Regional issues and international obligations ................................................. 27 

3  NORMALISATION OF RELATIONS BETWEEN KOSOVO AND SERBIA...... 29 

4.  ECONOMIC CRITERIA .......................................................................................... 30 

4.1.  The existence of a functioning market economy............................................. 30 
4.2.  The  capacity  to  cope  with  competitive  pressure  and  market  forces  within 

the Union ......................................................................................................... 35 

5.   EUROPEAN STANDARDS..................................................................................... 37 

5.1. 

Internal market ................................................................................................ 37 
5.1.1.  Free movement of goods ................................................................... 37 
5.1.2.   Movement of persons, services and right of establishment............... 38 
5.1.3.  Free movement of capital .................................................................. 39 
5.1.4.  Customs and taxation ........................................................................ 40 
5.1.5.   Competition ....................................................................................... 41 
5.1.6.  Public procurement............................................................................ 41 
5.1.7. 
Intellectual property law.................................................................... 43 
5.1.8.  Employment and social policies, public health policy ...................... 44 
5.1.9.  Education and research...................................................................... 45 
5.1.10.  World Trade Organisation (WTO) issues ......................................... 46 
5.2.   Sector policies ................................................................................................. 47 
Industry and SMEs ............................................................................ 47 
5.2.1.  
5.2.2.  Agriculture and fisheries ................................................................... 47 
5.2.3.   Environment and climate change ...................................................... 48 
5.2.4.   Transport policy ................................................................................ 49 
5.2.5.  Energy ............................................................................................... 50 
5.2.6.  
Information society and media .......................................................... 51 
5.2.7.   Financial control................................................................................ 52 
5.2.8. Statistics ................................................................................................ 54 
5.3.  Justice, freedom and security .......................................................................... 56 
5.3.1. Visa policy, border controls, asylum and migration ............................. 56 
5.3.2.   Money laundering.............................................................................. 58 

2 

 
 
 
 
5.3.3.   Drugs ................................................................................................. 58 
5.3.4.   Police ................................................................................................. 58 
5.3.5.   Fighting organised crime and terrorism ............................................ 59 
Judicial cooperation in civil and criminal matters............................. 60 
5.3.6. 

Annex I – Relations between the EU and Kosovo ............................................................ 61 

Annex II – Statistical Annex ............................................................................................. 63 

3 

 
 
 
 
 
1.  

INTRODUCTION1  

1.1.   Context 

On 27 October 2015, the EU signed a Stabilisation and Association Agreement (SAA) with 
Kosovo.  This  is  a  milestone  on  Kosovo's  path  towards  a  European  future.  The  SAA 
constitutes  the  first  contractual  relationship  between  the  EU  and  Kosovo.  It  completes  the 
map  of  SAAs  with  all  Western  Balkan  countries.  The  SAA  provides  a  comprehensive 
framework for closer political dialogue and economic relations between Kosovo and the EU, 
including opening EU markets to Kosovo products. 

Kosovo  has  demonstrated  its  commitment  to  the  normalisation  of  relations  with  Serbia  by 
reaching a number of key agreements in August. Important decisions have also been taken to 
pave the way towards the establishment of the Specialist Chambers. The new government has 
also underlined its commitment to its goal of meeting all requirements for visa liberalisation. 

1.2. 

Summary of the report 

As  concerns  the  political  criteria,  the  six-month  political  stalemate  following  elections  in 
June 2014 delayed key reforms. It ended in December, when the Democratic Party of Kosovo 
(PDK)  formed  a  coalition  with  the  Democratic  League  of  Kosovo  (LDK)  and  minority 
parties.  In  August,  the  Kosovo  Assembly  voted  in  favour  of  constitutional  amendments  to 
establish the Specialist Chambers and a Specialist Prosecution Office, which are to prosecute 
cases of grave trans-boundary and international crimes committed during and in the aftermath 
of  the  conflict  in  Kosovo.  The  government  also  reached  key  agreements  with  Belgrade  in 
August. Both decisions required strong political commitment from the government.  

There  has  been  increased  polarisation  between  government  and  opposition.  Members  of  the 
opposition have been involved in incidents of violence against the government, criticising it 
for its recent decision on the Specialist Chambers, the dialogue agreement with Belgrade, and 
the border demarcation agreement with Montenegro.  

Many  independent  institutions  and  regulatory  authorities  are  currently  not  operational  or  are 
negatively affected by delayed appointments of board members. Both the government and the 
Assembly  need  to  urgently  select  board  members  for  these  institutions  and  determine 
mechanisms  for  their  accountability.  Appointments  need  to  be  made  on  the  basis  of 
professional  qualifications  and  merit,  not  political  patronage.  The  recent  election  of  the 
Ombudsperson was a positive development in this regard.   

The  government  has  increased  its  focus  on  reform  of  the  public  administration,  which  has 
reached  some  level  of  preparation.  Good  progress  was  made  in  advancing  the  legal  and 
strategic framework. The continued politicisation of the public administration, however, is a 
major  concern.  Accountability  needs  to  improve  across  the  administration  through  proper 
oversight.  Any  overlap  of  responsibilities  of  government  agencies  should  be  avoided. 
Parliamentary  oversight  of  budget  implementation  should  become  more  reliable  and 
transparent. Sound financial management across public institutions should be ensured.  

Kosovo's judicial system is at an early stage of preparation. A package of amendments to four 
core  laws  was  adopted,  taking  a  step  towards  the  modernisation  of  the  justice  system. 

1  This  report  covers  the  period  from  October  2014  to  September  2015.  It  is  based  on  input  from  a  variety  of 
sources, including contributions from the government of Kosovo, the EU Member States, European Parliament 
reports and information from various international and non-governmental organisations. As a rule, legislation or 
measures which are under preparation or awaiting parliamentary approval have not been taken into account. 

4 

 
 
 
 
 
                                                            
However, the judiciary remains prone to political interference. Further efforts are required to 
ensure  independence  in  law  and  in  practice,  to  prevent  and  fight  corruption  within  the 
judiciary, to recruit and train more qualified staff and to allocate adequate resources.  

Kosovo is at an early stage of preparations in the fight against corruption. A comprehensive 
and strategic approach is necessary to ensure real results in fighting the endemic corruption in 
Kosovo. A track record of successful prosecution and convictions remains to be established. 
The rare investigations into high-level corruption have so far not resulted in final convictions.  

Kosovo  is  at  an  early  stage  of  preparations  in  the  fight  against  organised  crime.  Some 
progress  has  been  made  in  inter-institutional  cooperation  and  information  exchange  among 
law enforcement agencies on investigations. However, the number of investigations and final 
convictions  remain  low.  Asset  confiscation  is  rarely  applied.  The  focus  on  strategies  and 
action plans should not obscure the need for real results in fighting endemic organised crime 
in  Kosovo.  Kosovo  has  stepped  up  its  efforts  to  fight  terrorism,  but  continues  to  face 
challenges related to radicalisation. 

The  adoption  of  the  human  rights  law  package  strengthened  the  institutional  set-up  and 
clarifies the roles of various institutions. Increased political attention is needed, however, to 
ensure proper implementation and addressing the lack of resources. In the area of freedom of 
expression, Kosovo has some level of preparation. The legislative and institutional framework 
remains  fragmented  and  partly  ineffective.  The  public  broadcaster  is  vulnerable  to  political 
pressure and lacks sustainable funding. Violence against women and women’s limited access 
to property ownership hamper the full exercise of their rights. The protection of persons with 
disabilities and persons belonging to minorities, in particular the Roma, Ashkali and Egyptian 
communities, needs to be significantly strengthened.  

Regarding the  normalisation  of  relations  with  Serbia,  Kosovo  remained  committed  to  the 
implementation of the April 2013 'First agreement of principles governing the normalisation 
of  relations'  and  other  agreements  reached  in  the  EU-facilitated  dialogue.  Key  agreements 
were finalised in August on energy, telecoms, establishment of the Association/Community of 
Serb  majority  municipalities  as  well  as  the  bridge  in  Mitrovicë/Mitrovica.  The  dialogue 
achieved  further  concrete  results  in  the  fields  of  justice,  civil  protection  integration,  vehicle 
insurance, customs collection and IBM. There were also constructive discussions to improve 
cooperation in tackling migratory flows from Kosovo. The steps taken gave fresh momentum 
to  the  normalisation  of  relations  and  should  have  a  positive  and  concrete  impact  on  the 
everyday life of citizens in both Serbia and Kosovo. 

As  regards  the  economic  criteria,  Kosovo  is  at  an  early  stage  in  developing  a  functioning 
market  economy.  The  persistent  trade  deficit  reflects  a  weak  production  base  and  lack  of 
international  competitiveness.  Reliance  on  remittances  and  widespread  informal  economy 
decrease employment incentives contributing to already low labour market participation and 
high  unemployment,  which  stands  at  35.3%,  rising  to  61%  among  youth.  Inefficient  public 
administration  and  an  ad  hoc  approach  to  fiscal  policy  constitute  significant  fiscal  risks. 
Kosovo  should  strengthen  the  medium-term  fiscal  framework,  improve  the  transparency  of 
public  finance  and  shift  budget  expenditure  towards  growth.  Kosovo  should  also  speed  up 
privatisation  and  restructuring  of  public  enterprises  and  improve  bankruptcy  and  insolvency 
procedures, as well as reduce reliance on customs duties by broadening domestic tax base and 
modernising revenue collection. 

Kosovo is at an early stage in achieving the capacity to cope with competitive pressures and 
market  forces  within  the  Union.  Major  reforms  are  still  needed  to  secure  a  stable  energy 
supply and reducing distribution losses, close the skills gap in the labour market, and channel 
foreign direct investment and remittances into productive sectors. 

5 

 
 
 
 
Kosovo is at an early stage of alignment with European standards, including in the areas of 
public  procurement,  statistics  and  financial  control.  Legislative  alignment  in  some  areas  is 
high but implementation is weak. Some progress was made in the area of public procurement, 
especially  as  regards  the  enforcement  of  a  centralised  public  procurement  system,  but 
concerns  about  corruption  persist.  As  regards  financial  control,  some  progress  was  made, 
especially  in  external  audit.  However,  significant  efforts  are  needed  to  implement  public 
internal financial control throughout the administration and in state-owned enterprises.  

2 

POLITICAL CRITERIA 

2.1.  Democracy 

Kosovo continued to consolidate the functioning of its democratic institutions. Following the 
elections  of  June  2014,  a  new  Assembly  was  formed  and  a  new  government  took  office  in 
December. The European Union's Special Representative in Kosovo and the European Union 
Rule  of  Law  Mission  (EULEX)  continue  to  implement  their  mandates.  EULEX'  current 
mandate  runs  out  in  June  2016.  In  comparison  to  other  years,  the  situation  in  the  north  of 
Kosovo, inhabited  predominantly  by Kosovo Serbs, has improved during 2015.  Kosovo has 
made  progress  on  integrating  police  and  justice  structures  in  the  north  and  in  August  2015 
agreed,  within  the  framework  of  the  EU-facilitated  dialogue  with  Serbia,  to  establish  an 
Association/Community of Serb majority municipalities. The Assembly successfully adopted 
the  constitutional  amendments  and  legislation  required  for  the  establishment  of  Specialist 
Chambers  and  a  Specialist  Prosecution  Office  to  investigate  allegations  of  international 
crimes committed during and after the 1999 conflict. 

Elections 

The Kosovo Assembly has yet to undertake overdue electoral reforms. Kosovo's membership 
of  the  Venice  Commission  can  help  in  this  regard.  The  Assembly  also  needs  to  initiate  an 
independent audit of political party financing and party electoral campaigning, as provided for 
in  the  law  on  financing  of  political  parties.  In  January  2015,  well-managed  municipal 
elections were held, without incident, in Gračanica/Graçanicë, a Serb-majority municipality in 
central Kosovo. 

Parliament 

The  delay  in  establishing  a  new  Assembly  following  the  2014  elections  slowed  down 
Kosovo's reform process. Violent obstructions of recent plenary sessions by members of the 
opposition have adversely affected the functioning of the Assembly. Such actions go against 
European values. The Assembly needs to become more efficient and to comply with its own 
rules  of  procedure.  It  should  urgently  appoint  competent  members  to  regulatory  and 
supervisory bodies to ensure the proper functioning of the state administration, on the basis of 
merit based, transparent and non-political selection processes.  

Six months after the parliamentary elections of June 2014, a new Assembly was formed on 8 
December. The Democratic Party of Kosovo PDK (35 seats) and the Democratic League of 
Kosovo LDK (33 seats) are in a governing coalition with the Serb Citizen’s Initiative 'Srpska' 
(11 seats) and the non-Serb minority group '6+' (6 seats). With 85 out of 120 seats, the ruling 
coalition  has  a  comfortable  majority.  The  ‘Vetëvendosje’  self-determination  movement  and 
political party (16 seats) is the core of a small, but vocal, opposition. 

Parliamentary  work  was  effectively  suspended  from  June  until  December  2014.  However, 
following  the  agreement  on  the  new  government,  the  Speaker  was  appointed  and  the 

6 

 
 
 
 
 
Assembly  began  its  work.  It  confirmed  the  new  government  and  passed  the  2015  budget  in 
December. It adopted its annual work plan in February. Several important laws, including on 
the  judiciary  and  human  rights,  were  enacted,  all  of  which  was  adopted  under  fast-track 
procedure. This limited the possibility for parliamentary debate, which is a matter of concern. 

Many  of  the  Assembly's  deliberations  were  marked  by  a  polarised  atmosphere  between  the 
ruling  coalition  and  the  opposition,  in  particular  on  politically  sensitive  issues  such  as  the 
Specialist Chambers and dialogue with Serbia. Recent disruptions of plenary sessions by the 
opposition,  including  by  violent  means,  have  adversely  affected  the  functioning  of  the 
Assembly and have undermined confidence in the willingness of the opposition to partake in 
democratic  debate.  The  Assembly  is  a  key  democratic  institution  and  all  parliamentary 
members must allow it to fulfil its duties.  

Parliamentary debate was further affected by the lack of regular plenary sessions and frequent 
exceeding  of  time  limits  set  under  the  rules  of  procedure.  This  was  to  the  detriment  of  the 
quality of parliamentary review. There were also violations of the rules of procedure by the 
government  arbitrarily  withdrawing  draft  laws  submitted  to  the  Assembly.  The  regulatory 
framework  for  the  Assembly  should  be  improved.  The  new  Assembly  should  strengthen  its 
oversight  of  the  executive  and  the  legislative  process  and  implement  standards  for 
consultations  with  civil  society.  Parliamentary  checks  and  balances  over  budgetary  control 
needs  to  improve.  The  Assembly  should  ensure  follow-up  on  reports  by  the  Office  of  the 
Auditor General and the Ombudsperson. A mechanism should be put in place to ensure that 
recommendations by the public finance oversight committee are implemented.  

The Assembly should supervise independent institutions, regulatory authorities and agencies 
more  closely,  based  on  a  clear  mandate  and  with  suitable  reporting  and  accountability 
mechanisms.  It  should  urgently  address  delays  in  the  selection  of  board  members  for  these 
institutions and authorities, and determine mechanisms for their accountability. Appointments 
need to be made on the basis of professional qualifications and merit, not political patronage. 

The  EU  integration  committee  should  be  further  strengthened  to  reflect  its  key  role  in 
Kosovo’s  efforts  to  advance  on  its  European  reform  agenda.  Better  screening  of  draft 
legislation is needed to ensure alignment with the acquis. The Assembly administration needs 
to strengthen its technical capacity to support effective policy-making and improve scrutiny of 
draft legislation.  

Governance 

The  new  government  continued  to  implement  EU-related  reform  priorities  and  delivered  on 
two major international commitments in August. The executive should ensure that legislation 
and policies are implemented in practice. Good communication with the Assembly, including 
regular replies to parliamentary questions and strong inter-ministerial coordination, are crucial 
in  this  regard.  While  legislation  on  the  Ombudsperson  was  improved,  the  government 
undermined its effective functioning through continued failure to provide suitable premises. 

The  new  government  of  Prime  Minister  Isa  Mustafa  (LDK)  took  office  in  December.  The 
formation of the coalition followed a prolonged stand-off between the PDK and an alliance of 
parties led by the LDK. The break-up of this alliance enabled the PDK and LDK to reach a 
power-sharing  agreement  and  form  a  grand  coalition  supported  by  minority  parties.  The 
government has 23 members, including the Prime Minister and three deputy prime ministers. 
There  are  only  two  women  in  the  government.  Five  ministerial  posts  are  held  by  minority 
representatives,  three  of  which  represent  the  Serb,  one  the  Turkish  and  one  the  Bosnian 
communities.  

7 

 
 
 
 
The  new  government  continued  to  implement  EU-related  reform  priorities  and  remained 
committed to the EU-facilitated dialogue with Serbia. The government programme focuses on 
economic  development,  the  rule  of  law,  EU-related  reform,  education,  science  and  culture, 
and healthcare. With its agreements on the establishment of the Specialist Chambers and the 
Association/Community  of  Serb  majority  municipalities,  the  government  delivered  on  two 
key international commitments in August 2015.  

The government has faced significant challenges, including a spike in irregular migration by a 
considerable  number  of  Kosovo  citizens  early  in  2015,  a  number  of  violent  protests  and 
strikes,  as  well  as  violent  attacks  by  the  opposition  in  September  and  October  2015.  The 
dismissal  of  the  Minister  for  Communities  and  Return  as  a  result  of  statements  made  in 
Gjakova/Djakovica  led  to  a  three-month  boycott  of  the  institutions  by  the  Serb  'Srpska' 
coalition partner. The appointment of a new Kosovo Serb Minister allowed for the return of 
the 'Srpska' list to the government and the Assembly. 

Limited  cooperation  between  PDK-  and  LDK-led  ministries  has  in  some  cases  hindered 
efficiency  in  making  progress  in  key  areas  of  governance.  The  government  needs  to  meet 
deadlines  set  out  in  its  various  strategies  and  work  plans,  with  better  coordination  and 
improved communication among coalition partners.  

The  government  continued  to  implement  European  integration  priorities.  To  support  this 
process  and  in  anticipation  of  the  Stabilisation  and  Association  Agreement,  the  Kosovo 
institutions have been involved in drafting the first National Programme for Adoption of the 
EU  Acquis.  Kosovo  has  also  been  working  on  a  monitoring  and  reporting  system.  The 
National  Council  on  European  Integration  has  continued  to  meet  and  discuss  the  main 
objectives  and  policy  obligations  of  further  integration  with  the  EU.  The  executive 
commissions in charge of the coordination and implementation of SAP Dialogue conclusions 
continued to meet.  

Efforts to further improve the capacity of local government have continued. The Ministry of 
Public Administration is currently streamlining the number of job titles from around 8000 to 
800.  While  these  initiatives  could  bring  about  efficiency  gains,  their  purpose  and 
implementation  should  be  communicated  better.  There  has  been  improvement  in  municipal 
compliance  with  the  law  on  local  self-government.  Municipal  efforts  need  to  continue  to 
increase transparency in decision-making and strengthen municipal assemblies' oversight. 

The Serb-majority municipalities in the south submitted their budgets, which were approved 
in line with those of other municipalities. They also took part in the agricultural census, which 
the  northern  municipalities  boycotted.  Some  southern  Serb-majority  municipalities  face 
budgetary  difficulties,  partly  due  to  inaccurate  population  figures  and  political  deadlock.  In 
April 2015, municipalities in the north adopted their budgets in line with Kosovo legislation, 
which also included the numbers of employees in the health and education sectors. 

On  3  August,  the  Kosovo  Assembly  adopted  constitutional  amendments  allowing  for  the 
establishment  of  the  Specialist  Chambers  and  the  Specialist  Prosecution  Office.  The 
Constitution  needs  to  be  changed  to  ensure  that  the  majority  of  Kosovo  Judicial  Council 
members  are  elected  by  their  peers,  in  line  with  Venice  Commission  recommendations. 
Following Kosovo's membership  of  the Venice Commission (June  2014), two judges of the 
Constitutional  Court  were  appointed  as  Kosovo’s  representatives.  The  Constitutional  Court 
operates with a quorum of seven judges; however, two appointments are currently pending. 

The Assembly elected a new Ombudsperson in July 2015. The Assembly also adopted a 
new Law on the Ombudsperson in May 2015, marking a significant step towards clarifying 
the legal framework and strengthening the independence and impartiality of the institution. In 

8 

 
 
 
 
practice, however, the government has undermined the capacity of the institution to carry out 
its  duties  due  to  the  failure  to  provide  it  with  suitable  premises.  In  2014,  the 
Ombudsperson received 2 224 cases, 8.6 % more than in 2013. The Kosovo authorities 
at  central  and  local  level  have  not  committed  themselves  to  consistently  following  up 
on  the  Ombudsperson's  recommendations. The Assembly's  committee  on  human  rights 
and  the  Office  for  Good  Governance  under  the  Prime  Minister's  Office  should  re-
confirm and implement their commitment to do so.  

Civil society 

Some progress was made in improving cooperation between the government and civil society. 
However,  input  from  civil  society  needs  to  be  systematically  sought  and  followed  up.  The 
government’s  strategy  for  cooperation  with  civil  society  needs  to  be  fully  implemented  and 
monitored  effectively.  Additional  measures  should  be  taken  to  ensure  that  civil  society 
organisations  are  properly  included  in  public  consultations.  Public  funding  for  civil  society 
organisations has to be provided in a transparent way using clearly defined criteria. 

An empowered civil society is a crucial component of any democratic system and should be 
recognised  and  treated  as  such  by  institutions  in  Kosovo.  The  implementation  of  the 
government's  strategy  for  cooperation  with  civil  society  is  monitored  by  the  Council  on  the 
Implementation of the Government Strategy for Cooperation with Civil Society. To date, the 
Council has only managed to draw up its own work plan and set up four working groups. The 
lack  of  appropriate  participation  by  relevant  ministries,  insufficient  resources  and  capacity 
and  an  overreliance  on  donor-funding  illustrate  the  absence  of  political  will  to  genuinely 
engage with civil society. More work is required to ensure consistent implementation of the 
existing legal framework for cooperation with civil society. Consultation needs to be timely 
and the selection of civil society representatives needs to be transparent.  

The  manner  in  which  public  funding  is  provided  to  civil  society  is  non-transparent  and 
unregulated.  The  government  should  set  standards  and  criteria  governing  public  funding  of 
civil  society  organisations  so  as  to  instil  transparency,  accountability  and  credibility  in  the 
process.  Tax  relief  for  private  donations  has  been  increased  from  5  to  10  %,  but  the  legal 
framework  for  tax  deductions  remains  ambiguous  and  is  not  harmonised  with  provisions  in 
the law on freedom of association.  

Recent  amendments  to  money  laundering  and  anti-terrorism  legislation  have  led  to  the 
suspension of 14 NGOs, allowing for arbitrary decisions on suspensions.  

While meetings of the Assembly presidency have been made accessible to civil society, the 
Assembly’s  declaration  on  partnership  between  it  and  civil  society  has  yet  to  produce  any 
concrete results.  

Civilian oversight of the security forces  

There  has  been  limited  progress  in  the  work  of  the  parliamentary  committee  on  internal 
affairs, security and supervision of the Kosovo security forces. The administrative staff of the 
committee  ensured  continuity  in  the  oversight  of  the  security  sector  during  consecutive 
assembly  mandates,  but  the  committee  has  yet  to  exercise  proper  parliamentary  control  and 
oversight of expenditure. Close ties between individual parliamentarians and former Kosovo 
Liberation  Army  members  and  Kosovo  Protection  Corps  have  hindered  independent 
assessments.  

Amendments to the law on classified information and security clearance have improved the 
vetting process. However, vetting is still done by the Intelligence Agency instead of a separate 

9 

 
 
 
 
dedicated  body.  The  Kosovo  Security  Council,  which  should  have  an  advisory  role  on  all 
security matters, does not hold the regular meetings provided for by its mandate.  

2.2. 

Public administration reform 

Kosovo  has  some  level  of  preparation  in  the  reform  of  its  public  administration.  Good 
progress  was  made  on  developing  a  comprehensive  strategic  framework  for  public 
administration  reform  (PAR)  and  on  improving  legislation.  For  the  first  time,  public 
administration  reform  has  received  high-level  political  support  and  commitment.  Given 
Kosovo's  ambitious  reform  agenda,  continued  strong  political  commitment  is  essential  to 
ensure implementation of reforms. In the coming year Kosovo should in particular: 

→  effectively monitor implementation of the PAR strategic framework under the umbrella of 
the  wider  development  strategy,  ensuring  a  clear  link  between  PAR  and  economic 
development;  

→  improve accountability through a thorough review of all agencies and improve access to 

administrative justice by addressing the backlog of administrative cases;    

→  adopt a comprehensive public financial management reform programme. 

Public service and human resource management 

The law on the civil service governs the employment conditions of civil servants at the central 
government and municipal levels. Merit-based recruitment and promotion are enshrined in 
law in line with the principles of public administration, but not systematically implemented. 
This is particularly so for senior civil servant positions and appointments to boards of public 
entities,  where  political  influence  over  appointments  is  a  matter  of  concern.  Non-majority 
communities are still not adequately represented in public institutions. A major hindrance in 
this  regard  is  the  continued  non-recognition  of  diplomas  issued  by  the  University  in 
Mitrovicë/Mitrovica,  which  is  the  university  attended  by  many  students  from  non-majority 
communities. 

The civil service law also regulates uniform criteria for dismissals. It provides for disciplinary 
measures, including appeal possibilities. Few recommendations of the independent oversight 
board  are  implemented  –  rulings  are  not  followed  up.  Administrative  judges  are 
overburdened,  often  leading  to  delays  in  decisions.  Many  Ombudsperson  recommendations 
are not implemented, often without explanation.  

The  Ministry  of  Public  Administration  is  responsible  for  central  coordination  of  human 
resources  management.  Resources  within  the  ministry  are  very  limited,  preventing  it  from 
effectively promoting the uniform  application of  legislation and principles across the public 
administration. Professional human resources management is lacking due to politicisation and 
limited capacity. The human resource management information system is not up-to-date. The 
government should ensure that the system works properly. 

The remuneration system of public servants does not ensure equal pay for equal work, even 
though  a  standardised  job  classification  has  been  in  place  since  2010.  In  practice,  different 
salary coefficients are applied to similar positions. Fairer remuneration is being held back by 
the  delay  in  job  classification  reform.  However,  the  recently  approved  job  catalogue  should 
help. A positive step was the temporary suspension of top-ups on salaries in September 2015, 
to ensure a more regulated and merit-based approach.   

Professional development for public servants is insufficient. Systematic training is hampered 
by lack of resources and suitable facilities of the Kosovo Institute for Public Administration. 
Performance appraisals are provided for by law but in practice are treated as a formality. 

10 

 
 
 
 
Kosovo has adopted measures and mechanisms to prevent corruption and promote integrity 
in the public service. The approval of the Code of Ethics for civil servants in March 2015 is a 
positive development and now needs to show practical impact. Public trust in institutions is 
often undermined by corruption.  

Policy development and coordination 

The legal basis and institutional structures, including for European integration, are largely in 
place  to  ensure  a  consistent  policy-making  system,  but  in  practice  policy  planning  is 
fragmented  and  lacks  prioritisation  at  government  level.  Sector  strategies  have  rarely  been 
financially  sustainable.  As  of  June  2015,  all  strategies  and  policies  have  to  contain  a  fiscal 
impact analysis. 

Some  aspects  of  inclusive  and  evidence-based  policy  and  legislative  development  are  in 
place. There have been major improvements in policy development, although policy-making 
and  legal  drafting  capacities,  including  capacity  for  alignment  with  the  acquis,  are  still 
insufficient. Inter-ministerial and public consultations are regulated, but timelines have often 
been  too  short  to  allow  for  effective  civil  society  input.  The  government  should  implement 
minimum standards for effective public consultation. Regulatory impact assessments are not 
used consistently, other than in a number of pilot areas. 

Public  scrutiny  of  government  work  is  in  theory  possible,  since  the  government  reports 
annually on implementation of the key government strategic documents. The focus is however 
on achievement of outputs rather than on the impact of government policies. No reporting is 
done on the implementation of sector strategies. Parliamentary scrutiny of government work 
is undermined by frequent changes in the government's legislative plan.  

Accountability of the administration 

The overall organisation of the state administration is not conducive to ensuring the lines of 
accountability. The weak legal framework has resulted in over 70 government agencies with 
overlapping  responsibilities  and  a  large  number  of  non-constitutional  institutions  reporting 
directly  to  the  Assembly.  The  Assembly  often  lacks  the  powers  and  capacity  to  effectively 
supervise their activities. Lines of accountability within institutions are weak and there is no 
clear  delegation  of  powers  to  middle  management.  Managerial  accountability  is  not  yet 
ingrained in the administrative culture. (See Financial control) 

Internal  and  external  mechanisms  have  been  set  up  to  protect  the  citizens’  right  to  good 
administration. However, scrutiny by oversight institutions such as the Auditor General and 
the  Ombudsperson  is  severely  limited  by  the  state  administration  paying  little  heed  to  their 
recommendations. The right to access public information is regulated in the law on access 
to public documents. Over the past two years, the number of refused or unanswered requests 
was low (only 5 % of the nearly 2 000 requests made each year).  

No  progress  has  been  made  on  the  right  to  administrative  justice,  as  the  law  on  general 
administrative  procedures  is  not  yet  adopted.  The  increasing  backlog  in  resolving 
administrative disputes is damaging public confidence in the court system. The right to seek 
compensation  is  not  yet  effectively  ensured  due  to  fragmented  legislation  and  lack  of  a 
specific law on public liability.  

Public financial management 

Kosovo  has  so  far  focused  on  improving  its  public  finances  by  addressing  specific  public 
finance areas separately, without explicitly linking them and sequencing reforms under a more 
comprehensive  public  financial  management  reform  programme.  However,  following  a 
public  expenditure  and  financial  accountability  assessment  and  other  relevant  assessments, 

11 

 
 
 
 
Kosovo  is  now  preparing  a  comprehensive  strategy  and  action  plan,  to  be  adopted  in  early 
2016.  This  should  take  into  account  the  new  public  internal  financial  control  strategy  from 
April 2015 and the new public procurement strategy, which is yet to be adopted.  

The annual budgeting process is based on the ‘line-item’ approach. Public debt is still low and 
sustainable,  although  domestic  and  international  borrowing  has  been  increasing.  Budget 
transparency is insufficient. In particular, budget information needs to be more reliable and 
comprehensive to strengthen accountability. The presentation of key budgetary information in 
an accessible way would generate trust with the general public and contribute to an improved 
citizen-state relationship. 

Service delivery to citizens and businesses 

The government is committed to a user-oriented administration. However, the development 
of  a  coherent  policy  is  often  undermined  by  a  lack  of  coordination  and  common  vision 
between  the  responsible  ministries.  Development  of  e-services  is  slow  due  to  lack  of  an 
appropriate  interoperability  framework.  Legislation  on  equal  access  to  services  exists,  but 
implementation  is  a  challenge,  particularly  for  citizens  with  disabilities.  Simplification  of 
administrative procedures is yet to be ensured, pending the adoption of the law on general 
administrative procedures.   

Strategic framework for public administration reform 

A  new  public  administration  reform  strategy  framework  has  been  set  up  under  the 
umbrella  of  the  2015-2020  development  strategy.  It  includes  the  2015-2020  public 
administration  reform  modernisation  strategy  and  accompanying  2015-2017  action  plan, 
adopted  in  September.  The  strategy  sets  targets  and  measurable  indicators,  including  fiscal 
impact  analysis,  which  is  a  clear  step  forward.  The  Ministry  of  Public  Administration  will 
need sufficient human resources to ensure coordination and monitoring of its implementation. 
The new framework also includes a strategy adopted in June 2015 on an integrated planning 
system, coordinated by the Prime Minister's Office, and the new public financial management 
reform strategy, which is under preparation.  

Political support and commitment has visibly increased in recent months, and the Ministerial 
Council chaired by the Prime Minister is providing the necessary steer and coordination. The 
monitoring  and  reporting  framework  is  in  place,  but  remains  to  be  implemented.  Sufficient 
resources need to be allocated especially in the Ministry of Public Administration. Financial 
sustainability  needs  to  be  ensured  in  the  2016  budget  and  in  the  medium-term  expenditure 
framework.  

2.3.  Rule of law 

Functioning of the judiciary 

Kosovo's judicial system is at an early stage of developing a well-functioning justice system. 
Some  progress  has  been  achieved  over  the  past  year  by  adopting  the  package  of  four  laws 
(Law on Kosovo Judicial Council, Law Kosovo Prosecutorial Council, Law on Courts, Law 
on State Prosecutor). 

However,  the  administration  of  justice  is  slow  and  there  is  insufficient  accountability  of 
judicial officials. Judicial structures are still prone to political interference. There are concerns 
that  disputed  appointments  and  unclear  mandates  have  undermined  the  activities  of  key 
institutions such as the Kosovo Judicial Council, Kosovo Prosecution Offices, and the Office 
of the Chief State Prosecutor. Rule of law institutions suffer from a consistent lack of funding.   

In addressing the shortcomings outlined below, Kosovo should in the coming year: 

12 

 
 
 
 
→  implement the justice package, including timely adoption of any secondary legislation;  

→  step  up  financial  and  human  resources  to  the  judicial  sector  to  ensure  the  proper 

functioning of the judicial system; 

→  ensure lawful and timely appointments in critical institutions, such as the Kosovo Judicial 

Council and the Kosovo Prosecutorial Council; 

→  further reduce the backlog of cases. 

Strategic documents 

The 2014-2019 strategic plan for Kosovo’s judiciary, the 2014-2019 communication strategy 
and the national strategy for reducing the backlog of cases are being implemented, addressing 
substantial shortcomings in the judiciary.  

Management bodies 

Under the Constitution, the Kosovo Judicial Council (KJC) and the Kosovo Prosecutorial 
Council  (KPC)  are  responsible  for  ensuring  the  independence  and  impartiality  of  the 
judiciary. Both councils have a mixed composition. In the KJC, five out of 13 members are 
elected  by  the  members  of  Kosovo’s  judiciary  and  eight  members  are  appointed  by  the 
Kosovo  Assembly.  This  results  in  strong  political  interference  and  jeopardises  the 
independence  of  the  judiciary.  This  has  not  changed  with  the  new  law  as  it  would  require 
amending  the  Constitution.  At  the  KPC,  five  out  of  nine  members  were  elected  by 
prosecutors, whilst the other three were non-prosecutors elected by the Council itself, and one 
member  was  ex  officio  –  the  Minister  of  Justice.  The  new  law  sets  out  a  new  composition, 
raising the number of members from nine to 13, ten of whom are to be elected by their peers 
and three by the Assembly. Also under the new law, from 1 January 2016, the KPC will be 
able to control its own budgetary resources. All meetings of the KJC and the KPC are open to 
the media and the public. Both councils draw up and approve annual reports on their work, as 
provided for by law, but their internal reporting mechanisms still need to be improved. 

Applications  have  been  received  following  vacancy  notices  published  by  the  KJC  and  the 
KPC in March 2015 for Kosovo Serb judges and prosecutors, both for courts in the south and 
north of Kosovo, in accordance with the political agreement between Belgrade and Pristina. 
Some  positions  were  filled  in  July  2015,  a  significant  step  forward  in  the  integration  of  the 
judiciary in the north. 

The  KJC  and  the  KPC  experienced  significant  delays  in  approving  strategic  documents, 
regulations and other decisions or acts. There is still not enough capacity to draft regulations 
and take decisions in full compliance with the hierarchy of normative acts. There is a lack of 
capacity within the KJC and the KPC to monitor the implementation of their decisions. 

Independence and impartiality 

Court Presidents are responsible for the management and operations of their courts. Both the 
Constitution and laws still allow political influence over the judiciary, in particular over the 
KJC  and  related  to  human  resources  matters.  The  activities  of  KJC  and  the  KPC  were 
hampered by the post-electoral political crisis, notably the political pressure on the long and 
drawn  out  process  of  nominating  the  Chief  State  Prosecutor.  Amendments  to  the  new  laws, 
adopted  in  May  2015  are  in  line  with  most  EU  recommendations.  Additional  amendments 
including transitional clauses are needed. 

There is no functional electronic case management system. Allocation of cases to judges is 
regulated and carried out by the drawing of lots. Urgent cases are allocated to the presiding 
judge. Sensitive cases are being allocated, but not  always dealt  with. The number of judges 

13 

 
 
 
 
                
dealing with serious crimes remains low.  The KJC, as the competent body to act in case of 
threats to judges, should raise awareness among judges of existing protection mechanisms to 
protect them.   

Accountability 

A code of ethics for judges, prosecutors and attorneys is in place. The KJC and the KPC are 
responsible  for  disciplinary  proceedings.  Further  provisions  on  disciplinary  proceedings 
need  to  be  adopted,  such  as  a  law  on  the  Office  of  the  Disciplinary  Counsel/Prosecutor 
(ODC/ODP)  and  provisions  on  the  judicial  review  of  disciplinary  decisions  taken  by  the 
Councils.  The  ODC/ODP  initiated  around  40  cases  against  prosecutors  on  disciplinary  and 
ethical grounds. The President of Kosovo, based on recommendations made by the KJC and 
the  KPC,  dismissed  from  office  one  judge  and  one  prosecutor.  Five  judicial  administration 
officers under suspicion of abuse of power were suspended and later dismissed. In addition, 
one judge was suspended  by  the  ODC due to allegations of taking  bribes. Under applicable 
laws, judges and prosecutors are obliged to declare their assets and gifts received, and report 
any possible conflicts of interest. 

Professionalism and competence 

Under  Kosovo’s  Constitution, the  President  of  Kosovo  appoints  judges  and  prosecutors  for 
an  initial  three-year  term,  at  the  proposal  of  the  KJC  and  the  KPC  respectively.  The  entry 
exam for judges and prosecutors is based on merit. The new laws foresee an obligatory initial 
training  for  both  judges  and  prosecutors  after  they  have  been  appointed.  The  performance 
evaluation of prosecutors with a permanent mandate should be carried out by the KPC every 
third year, but has experienced significant delays. The evaluation of judges is carried out by 
the Commission for Evaluation of Judges and has proceeded as planned. To date, most judges 
and  prosecutors  that  were  evaluated  have  passed;  only  one  judge  was  not  proposed  for 
permanent appointment. Merit-based performance criteria and an evaluation system within the 
initial term of appointment, including at the end of the initial training, need to be adopted to 
ensure professionalism. 

Quality of justice 

The  Kosovo  Judicial  Institute  (KJI)  is  responsible  for  initial  and  continuous  training. 
However,  the  new  laws  give  the  KJC  and  KPC  more  responsibilities  with  regard  to  policy 
planning and organisation of the training courses. Out of 29 candidates who graduated from 
the initial legal education programme in May, 17 have been appointed as judges. The KJI, the 
KJC and the  KPC jointly  prepare  annual training curricula on  the basis of a  comprehensive 
needs  assessment.  The  curricula,  which  are  divided  into  training  modules  according  to 
responsibilities  of  departments  of  courts  and  prosecutors’  offices,  specify  the  areas  to  be 
covered by training, including training on EU law. A new curriculum for court administrators 
has been approved and relevant staff is being trained. Kosovo currently has 19.5 judges per 
100 000 inhabitants. In total, there are 350 local judges and 33 EULEX judges.  

The budget for Kosovo’s  prosecution  service  and court system for  2015 is  around  EUR  28 
million,  excluding  some  other  services,  such  as  mediation  and  legal  aid.  The  total  budget 
allocated  to  the  justice  system  has  increased  to  1.7  %  of  the  overall  Kosovo  budget.  A 
comprehensive overview of public finances allocated to the entire judicial system is however 
still not publically available. 

The Palace of Justice was inaugurated in March 2015, providing the necessary infrastructure 
to allow for the administration of justice under the appropriate conditions. To date, the Palace 
of  Justice  houses  the  Supreme  Court,  the  Basic  Court  of  Pristina,  the  Appellate  Court,  the 
Appellate Prosecution and the Basic Prosecution of Pristina .  

14 

 
 
 
 
There  is  no  official  court  monitoring  system  in  place.  E-Justice  tools  remain  under 
developed. 

Since 2008, a mediation system is operational, with seven regional mediation centres and 701 
mediators licensed by the Ministry of Justice, 163 of which are active. The number of cases 
has constantly increased – between 2012 and July 2015 the mediation system dealt with 2 598 
cases.  While  notaries  are  dealing  with  more  cases,  their  professional  skills  need  to  be 
improved. Both the mediation and notary systems require further strengthening.  

Efficiency 

According to the Annual Report of the State Prosecutor, at the beginning of 2015, the State 
Prosecutor  had  120  706  cases  pending.  Correspondingly,  according  to  the  Department  of 
Statistics  of  KJC,  at  the  beginning  of  2015  the  number  of  unsolved  cases  was  91  545. 
Concerning the backlog (cases filed before 31 December 2011), 16 090 cases were completed 
at the end of 2014 out of a total of 41 038. The number of backlog cases at the beginning of 
2015  was  24  948,  out  of  which  approximately  3  000  cases  were  completed  during  the  first 
half of 2015. 

Kosovo's courts now have a clearance rate of 84 % (up from 71 %) of cases resolved within 
a year. There are no figures on the disposition time (i.e. the average time from filing the case 
to  a  decision)  in  Kosovo’s  courts.  The  success  of  Kosovo's  judiciary  continues  to  be 
hampered  by  a  high  level  of  latent  corruption  and  intimidation  present  in  rule  of  law  and 
related public institutions. The time prescribed by law to investigate cases of organised crime 
and corruption is too short resulting in courts not having sufficient information to come to an 
informed decision.  

Fight against corruption 

Kosovo is at an early stage in the fight against corruption. Some progress has been achieved 
over the past year, notably in improved cooperation between the Anti-corruption Agency and 
the  prosecution,  and  in  requiring  officials  to  declare  property  and  gifts.  However,  overall 
progress  has  been  limited  and  strong  political  will  and  commitment  is  needed  to  tackle  this 
phenomenon  properly.  A  comprehensive  and  strategic  approach  is  necessary  to  ensure  real 
results  in  fighting  endemic  corruption  in  Kosovo.  A  track  record  of  successful  prosecution 
and convictions would represent real progress. In addressing the shortcomings outlined below, 
the government of Kosovo should pay particular attention in the coming year to: 

→  prioritising handling of high-level corruption cases, especially in public procurement, with 

a view to securing final convictions;  

→  strengthening the cooperation between police and prosecution through joint investigation 

teams on high-level corruption cases; 

→  concluding  the  development  of  an  efficient  system  to  monitor  the  track  record  of  case 

handling from investigation to final court rulings;  

→  revising  the  conflict  of  interest  law  and  all  related  laws  and  regulations  to  bring  in  line 
with  European  standards.  In  particular,  categories  of  public  officials  should  be  clearly 
defined  and  measures  on  preventing  and  sanctioning  conflicts  of  interest  and  regulating 
"revolving doors" need to be adopted.       

Track record 

Kosovo  has  not  yet  established  a  track  record  of  investigations,  prosecutions  and 
convictions 
the  Anti-corruption  Agency  conducted 
administrative procedures in a total of 304 cases, of which 56 were carried over from previous 

in  corruption  cases.  In  2014, 

15 

 
 
 
 
years  and  248  were  new.  The  rare  investigations  into  high-level  corruption  have  so  far  not 
resulted in final convictions.  

limited  capacity.  Kosovo’s  expertise 

The failure to conduct effective financial investigations is closely linked to undue political 
tackling  complex  financial 
influence  and 
investigations  and  to  effectively  confiscate  criminal  assets  is  still  limited.  Undue  political 
influence  on  law  enforcement  and  judicial  bodies  continues.  Political  authorities  should 
ensure  that  law  enforcement  bodies  are  fully  empowered  to  act  effectively  and  impartially 
when investigating corruption allegations.     

in 

Ten  political  parties  failed  to  submit  their  party  financing  and  electoral  campaign 
financing reports during the local elections, but all parties did so for the general elections in 
2014.  So  far,  no  irregularities  have  been  detected.  Auditors  at  the  Central  Election 
Commission  are  not  independent  as  they  are  selected  by  the  Assembly.  In  order  to  prevent 
conflicts  of  interest,  such  auditing  should  be  external.  Whistle-blowing  and  witness 
protection  need  to  be  properly  implemented,  including  better  regional  and  international 
cooperation. 

Declarations  of  assets  by  senior  officials  are  made  public  on  the  Anti-corruption  Agency's 
website  and  98.3  %  of  senior  public  officials  have  reported  their  assets  in  2015.  Criminal 
charges were raised against the 71 senior public officials, who did not declare their assets. In 
2015  the  Anti-corruption  Agency  selected  20  %  of  officials  for  a  review  of  their  property 
ownership.  This  is  a  positive  development  but  could  be  further  improved  by  prioritising 
corruption-prone positions. 

Kosovo should consider measures allowing it to effectively investigate inexplicable wealth. 

Institutional framework 

The  four  main  institutions  involved  in  the  fight  against  corruption  in  Kosovo  are  the  Anti-
corruption  Agency,  an  independent  and  specialised  agency;  the  National  Anti-corruption 
Council, a consultative body chaired by the President of Kosovo; the National Anti-corruption 
Coordinator,  who  is  assigned  by  the  Chief  State  Prosecutor;  and  the  Directorate  for 
Investigation  of  Economic  Crimes  and  Corruption  within  the  Kosovo  police.  The  Anti-
corruption Agency does not have full investigative powers: rather its role is in prevention and 
preliminary  administrative  investigations,  in  line  with  international  standards.  There  is  a 
general disconnect and lack of integration between the main anti-corruption bodies in Kosovo, 
which suffer from overlapping mandates and an unclear division of tasks.  

On prevention, the Anti-corruption Agency launched an anti-corruption awareness campaign 
in December 2014. Citizens have been encouraged to report corrupt behaviour to rule of law 
agencies,  but  more  remains  to  be  done.  While  civil  society  is  involved  in  developing  and 
monitoring  anti-corruption  policy,  consultation  needs  to  be  improved  through  regular, 
transparent and constructive communication.  

Public procurement bodies have largely failed to ensure systematic monitoring and review of 
procurement  decisions.  It  is  essential  that  new  competent  board  members  are  appointed  to 
professionalise and de-politicise the procurement system.  

On  law  enforcement,  a  prosecutor  was  assigned  to  each  basic  court  prosecutor’s  office  to 
increase  coordination  and  communication  between  the  State  Prosecutor  and  the  Anti-
corruption  Agency.  Over  70  %  of  cases  for  which  the  Agency  conducted  preliminary 
investigations  were  dropped,  mainly  because  prosecutors  did  not  find  sufficient  grounds  to 
continue  investigations.  The  Agency's  investigators  need  to  increase  the  quality  of  their 

16 

 
 
 
 
reporting,  while  prosecutors  need  to  demonstrate  the  necessary  capacity  and  willingness  to 
pursue cases.  

More  structured  cooperation  between  law  enforcement  agencies  was  achieved  with  the 
appointment  of  a  National  Coordinator  against  Economic  Crime.  The  anti-corruption  task 
force  with  30  investigators,  eight  prosecutors  and  five  experts  focusing  on  high-level 
corruption and financial crime cases, should be further strengthened to improve inter-agency 
co-operation.  A  positive  step  was  the  adoption  of  the  standard  operating  procedure  on 
prioritising  serious  crime  cases  in  2014,  which  resulted  in  nine  serious  crime  cases  being 
currently treated as priority, including on corruption and money laundering charges. Two of 
these cases have been sent to court.   

Legal framework 

The  legal  anti-corruption  framework  has  been  consolidated  with  amendments  to  the  law  on 
the  financing  of  political  parties  and  the  law  on  the  declaration,  origin  and  control  of  the 
property  of  senior  public  officials  and  the  declaration,  origin  and  control  of  gifts  for  all 
official persons. The latter extended the list of persons obliged to declare their property and 
lowered  the  threshold  for  the  value  of  movable property to be declared  from  EUR  5  000  to 
EUR 3 000 and has led to an increased number of declarations of properties and gifts. These 
laws  are  in  line  with  the  relevant  provisions  of  the  criminal  code,  ensuring  that  corruption-
related offences are criminalised. In this way, Kosovo has aligned itself with the acquis.  

Kosovo’s law on conflicts of interest has yet to be revised. The scope of the law should not 
exclude  certain  categories  of  public  officials  such  as  political  advisers,  but  instead  define 
public  officials  in  line  with  European  standards.  Equally,  the  law  should  indicate  exact 
circumstances 
take  on  additional  employment  and 
appointments. Clear procedures to identify, manage and resolve conflicts of interest should be 
established in the law. Relevant legislation needs to be harmonised accordingly, in particular 
on the sanctioning regime, including disciplinary measures.  

in  which  public  officials  may 

The  regulatory  framework  for  political  party  financing  has  undergone  many  changes.  The 
closing of various loopholes has improved the process. However, major challenges remain in 
this area, namely shortcomings in the way rules are implemented, a lack of monitoring and the 
absence of regulatory bodies. In general, the financing of political parties lacks proper control 
mechanisms, which would improve transparency and limit misconduct by political parties. 

Strategic framework 

Kosovo  is  implementing  its  2013-2017  anti-corruption  strategy  and  action  plan,  under  the 
monitoring of the Anti-corruption Agency. However, inadequate financing and a lack of any 
measurable impact indicators are seriously undermining results. Implementation of the 2014-
2018  strategy  and  action  plan  for  preventing  and  combating  the  informal  economy,  money 
laundering,  terrorist  financing  and  other  financial  crimes  is  on  schedule.  In  addition,  sector 
action plans are in place to fight corruption in particularly vulnerable areas (customs, police, 
tax  administration  etc.).  A  corruption  risk  assessment  of  the  health,  education,  judiciary, 
energy, and mining sectors was published in 2015.  

17 

 
 
 
 
 
 
 
 
 
Fight against organised crime 

Kosovo  is  at  an  early  stage  in  the  fight  against  organised  crime.  Some  progress  has  been 
made  over  the  past  year  in  inter-institutional  cooperation  and  information  exchange  among 
law  enforcement  agencies  on  investigations.  Kosovo  has  also  stepped  up  its  efforts  to  fight 
terrorism and the phenomenon of foreign fighters. Overall, the focus on strategies and action 
plans should not obscure the need for real results in fighting endemic organised crime. 

The  number  of  final  convictions  and  financial  investigations  remains  low.  Confiscations  of 
assets  are  rarely  applied.  In  addressing  the  shortcomings  outlined  below,  the  government 
should pay particular attention in the coming year to: 

→  pursuing organised crime-related investigations with the aim of securing final convictions, 

thus beginning to dismantle criminal groups active in Kosovo;  

→  systematically applying tools for financial investigations and asset confiscations in order 
to increase the number of permanent confiscations, and building up expertise at all levels; 

→  fully  developing  an  intelligence-led  policing  approach  and  collecting,  harmonising, 
analysing  and  using  relevant  criminal  statistics,  including  through  better  inter-agency 
cooperation. 

Track record 

The  rate  of  convictions  in  cases  against  human  trafficking  remains  low,  despite  Kosovo 
being  a  source  and  transit  country  for  trafficked  women  and  children.  Kosovo  has  worked 
closely with Europol on the dismantling of migrant smuggling networks.  

On  drug  trafficking,  drug  seizures  and  conviction  rates  remain  low.  A  number  of 
investigations and arrests have been made as part of efforts to fight and prevent the spread of 
terrorism  in  Kosovo.  Implementation  of  applicable  laws,  secondary  legislation  and 
regulations on  money  laundering  and  financial  crime  is  still  insufficient,  despite  progress 
on  putting  appropriate  systems  in  place.  There  is  a  policy  of  systematic  serious  financial 
investigations,  but  results  are  lacking.  The  rate  of  confiscation  and  sequestration  of 
criminal  assets  remains  low.  Statistics  on  sequestration  and  confiscation  are  still  not 
sufficiently  harmonised  between  Prosecutorial  and  Judicial  Council,  the  Agency  for 
Managing  the  Sequestrated  and  Confiscated  Assets  and  other  agencies.  While  the  overall 
estimated value of frozen and temporarily confiscated assets has increased, final court rulings 
are necessary to make sure that illicit assets are confiscated permanently. 

Events in Kumanovo (the former Yugoslav Republic of Macedonia) and the involvement of 
Kosovo citizens in armed violence highlight the continued existence of armed groups in the 
region,  threatening  regional  inter-ethnic  stability.  With  military-grade  weaponry,  military 
training and command structures, such groups have the capacity to undermine stability. Their 
involvement  in  organised  criminal  activities,  such  as  arms  smuggling,  and  the  apparent 
impunity  with  which  they  are  able  to  operate  across  borders  are  serious  concerns.  The 
government,  law  enforcement  agencies  and  the  judicial  system  need  to  take  swift  action  to 
dismantle these networks. 

Institutional and operational capacity 

Kosovo’s  police  has  around  9  000  staff,  which  makes  an  overall  of  approximately  500 
policemen per 100 000 inhabitants. Approximately 83 % of police staff are ethnic Albanians 
and 13 % ethnic Serbs, with the remainder coming from other communities. Kosovo’s police 
force is structured in a way that provides for a career path and evaluation mechanism and has 
also adopted a code of ethics. The Kosovo Academy for Public Safety is responsible for basic 

18 

 
 
 
 
and  specialised  training  and  offers  a  bachelor’s  programme  in  public  safety.  The  Kosovo 
police has specialised units dealing with the various aspects of organised crime. The police 
inspectorate  is  responsible  for  the  prevention,  detection,  documentation  and  investigation  of 
criminal offences of police officers regardless of position or rank.  

12 out of 15 positions for local prosecutors in Kosovo’s Special Prosecution Office have been 
filled. However, the Special Prosecution Office does not have the required human resources to 
cope  with  the  expected  workload  in  view  of  the  planned  handover  of  cases  from  EULEX. 
Local  prosecutors  are  dedicated  but  often  do  not  have  the  necessary  technical  expertise, 
especially as concerns investigations of war crimes. Cooperation between local and EULEX 
prosecutors has improved.  

Intelligence-led policing should be strengthened further, including with human resources and 
managerial  guidance.  The  new  Kosovo  police  information  system  has  yet  to  be  used  by  all 
levels  of  the  Kosovo  police,  which  would  allow  for  improved  risk  analysis  and  proactive 
operations. Kosovo is not a member of Interpol, though it applied in April 2015. It currently 
participates  in  Interpol  structures  through  UN  intermediaries.  Kosovo  does  not  have  a 
cooperation agreement with Europol. Kosovo’s police has been involved, upon request of the 
leading Member States, in three cross-border operations supported by Europol.  

The  Kosovo  Forensic  Agency  and  its  DNA  and  serology  laboratory  have  all  the  necessary 
equipment and instruments to carry out DNA analysis, maintained and calibrated according to 
international standards. The Kosovo Forensic Agency has an internationally accessible DNA 
database, which enables research and electronic comparison of DNA profiles. 

In December  2014,  Kosovo’s police, custom authorities, Financial Intelligence Unit and the 
Kosovo Prosecutorial Council signed a Memorandum of Understanding, agreeing on how to 
improve  cooperation  and  the  exchange  of  data.  Kosovo  signed  agreements  with  Albania  on 
cross-border cooperation and hot pursuit, while similar agreements have also been signed with 
the former Yugoslav Republic of Macedonia.  

Legal framework 

There  has  not  yet  been  any  assessment  of  the  alignment  of  Kosovo's  criminal  code  with 
European standards. An appropriate legal framework for witness protection is in place in the 
form  of  the  law  on  witness  protection  and  the  accompanying  administrative  instructions. 
Legislation  on  the  confiscation  of  proceeds  of  crime  is  mostly  in  line  with  the  acquis,  but 
implementation  remains  poor.  The  law  on  the  interception  of  telecommunications  was 
adopted  in  May  2015,  setting  out  appropriate  investigation  measures  to  help  identify  and 
prosecute suspects involved in serious criminal offences, with due respect for relevant human 
rights. In January 2015, the Kosovo Assembly approved the law criminalising the joining of 
armed conflicts outside of Kosovo, in line with the relevant UN Resolution.   

Strategic framework 

Kosovo's strategies and action plans to combat organised crime are largely aligned with EU 
best  practices.  Kosovo  produced  a  strategic  organised  crime threat  assessment  in  2013.  The 
assessment does not fully follow Europol's SOCTA methodology, but does provide the basis 
for  strategic  decision-making  and  law  enforcement.  Training  has  been  provided  in  2015  on 
the Europol SOCTA methodology. 

To date Kosovo has implemented some 80 % of the action plan to accompany its 2012-2017 
national strategy against organised crime. Additional national strategies and action plans are 
in place on the prevention and combat of the informal economy, money laundering, terrorism, 

19 

 
 
 
 
radicalisation  and  extremism,  and  terrorist  financing,  human  trafficking,  cybersecurity  and 
narcotics trafficking.  

Fight against terrorism 

Kosovo has been affected by the phenomenon of foreign terrorist fighters and radicalisation. 
Kosovo has stepped up its efforts in the fight against terrorism. As well as the law on foreign 
terrorist fighters, it also adopted a strategy and action plan on prevention of violent extremism 
and  radicalisation  that  may  lead  to  terrorism.  The  phenomenon  of  foreign  terrorist  fighters 
needs  a  dedicated  approach  by  the  intelligence  and  law  enforcement  community  and  a 
coherent judicial policy towards offenders.  

2.4.  Human rights and the protection of minorities 

The  legal  framework  broadly  guarantees  the  protection  of  human  and  fundamental  rights  in 
line  with  European  standards.  Some  progress  was  made  in  this  area,  notably  with  the 
incorporation  of  international  standards  into  the  legal  framework,  although  Kosovo  cannot 
currently  formally  associate 
instruments  or 
institutions. Implementation of  human  rights is hindered by a lack of resources and political 
commitment,  including  at  local  level.  The  adoption  of  the  package  of  human  rights  laws 
strengthened the institutional set-up and clarified the roles of various institutions.   

international  human  rights 

itself  with 

Shortcomings particularly affect the following areas: 

•   Gender-based  violence  and  women’s  limited  access  to  property  ownership  significantly 
hamper  their  full  enjoyment  of  rights.  Similarly,  the  rights  of  persons  with  disabilities 
continue to be hindered by inadequate institutional support and health services, and poor 
accessibility.  

•   Cases  of  verbal  and  physical  assaults  against  lesbian,  gay,  bisexual,  transgender  and 

intersex (LGBTI) persons are rarely investigated. This needs to change. 

•   Legislation  and  strategies  on  the  rights  of  persons  belonging  to  minorities  and  their 

protection throughout Kosovo need to be rigorously implemented. 

•   Protection  of  cultural  heritage,  including  cooperation  between  the  Serbian  Orthodox 
Church  and  Kosovo  authorities,  remains  problematic  and  legislation  to  address  illegal 
construction needs to be implemented and enforced.  

Kosovo’s Constitution provides for the direct applicability in Kosovo of many international 
human  rights  instruments,  which  form  an  integral  part  of  its  legal  framework.  Progress 
continues to be made in aligning legislation with such instruments and Kosovo continues its 
practice of ad hoc reporting. 

On  the  promotion  and  enforcement  of  human  rights,  some  progress  has  been  made  with 
the  adoption  of  the  package  of  human  rights  laws  (the  laws  on  the  Ombudsperson,  gender 
equality  and  protection  from  discrimination).  This  strengthened  the  institutional  set-up  and 
clarified the roles of various civil and public institutions (e.g. the Ombudsperson's Office and 
the Agency for Gender Equality). Proper implementation of these laws, including training and 
establishing  a  judicial  track  record  of  discrimination  cases,  is  crucial  for  the  effective 
promotion  and  enforcement  of  human  rights  throughout  Kosovo.  The  human  rights  strategy 
needs to be updated. Human rights issues need increased political and financial commitment 
at  all  levels.  Continued  donor  dependency  of  the  government  in  this  sector  undermines 
ownership and effective delivery.  

20 

 
 
 
 
As  regards  the  prevention  of  torture  and  ill  treatment,  no  violations  of  internationally 
recognised human rights standards have been formally identified during the reporting period. 
Through amending the law on the Ombudsperson, Kosovo has aligned with the requirements 
of  the  Optional  Protocol  to  the  Convention  Against  Torture,  establishing  the  role  of  the 
Ombudsperson as the National Preventive Mechanism, thereby strengthening its institutional 
framework with regard to the human rights of detainees. 

together  with 

Within the prison system, there is overall good compliance with the UN Standard Minimum 
Rules  for  the  Treatment  of  Prisoners  and  European  Prison  Rules,  while  further  efforts  are 
necessary to ensure adequate treatment of prisoners in solitary confinement and with regards 
to aligning with these standards. The housing of prisoners awaiting trial and those convicted 
remains  a  concern.  The 
for  minor  offences 
Mitrovicë/Mitrovica Detention Centre which should only hold pre-trial detainees, still houses 
convicted  prisoners.  Recommendations  stemming  from  inspections  at  Kosovo  Correctional 
Service facilities by the Internal Inspectorate of the Ministry of Justice are not systematically 
addressed.  Serious  concerns  remain  over  corruption  and  contraband  goods  in  detention 
centres and some correctional centres, as well as on privileges afforded to certain high-profile 
detainees.  The  government  needs  to  urgently  address  this.  Inadequate  staffing  levels,  in 
particular  at  the  high  security  prison,  remain  a  concern.  There  is  also  concern  over  the 
politicisation of appointments to the prison service.  

long-term  prisoners 

The  development  of  protection  of  personal  data  is  at  an  early  stage.  Kosovo  has  an 
independent  data  protection  authority  –  the  National  Agency  for  the  Protection  of  Personal 
Data  (NAPPD)  –  that  contributes  to  the  implementation  of  EU  standards  in  the  area. 
However, further strengthening of its capabilities including with qualified staff and financial 
resources is necessary. The institutional and legal framework for data protection and access to 
public  information  has  to  be  established  and  regularised.  Out  of  38  municipalities,  35  now 
have  data  protection  officers.  The  NAPPD  carried  out  an  increasing  number  of  inspections 
and repeat inspections. A significant increase in the number of complaints from members of 
the public suggests increased awareness. 

Legal  provisions  are  in  place  in  the  field  of freedom  of  thought,  conscience  and  religion. 
The  Orthodox  seminary  in  Prizren  has  expanded  its  membership  and  continues  to  function 
well. Modalities on how to support the reconstruction of Serbian Orthodox Church sites, left 
unfinished  by  the  Reconstruction  Implementation  Commission,  need  to  be  agreed  upon. 
Interaction  among  religious  leaders  of  all  faiths  has  become  more  regular.  Following  the 
recent decision by the Appellate Panel of the Special Chamber of the Supreme Court, there is 
a need for intensified and renewed efforts to find a solution to the longstanding land dispute 
between  the  municipality  of  Deçan/Dečane  and  the  Visoki  Dečani  Monastery,  to  reduce 
continuous  tensions  between  the  monastery,  municipality  and  local  community.  There  were 
no  reports  of  any  serious  incidents  linked  to  the  protection  of  historical  and  religious  sites 
under  the  responsibility  of  the  Kosovo  police.  Continuing  incidents  of  petty  theft  and 
vandalism at religious heritage sites need to be followed up effectively. The authorities have 
as a rule responded appropriately to such incidents, although a statement after an incident of 
graffiti at the Visoki Dečani Monastery aggravated inter-communal tensions. 

21 

 
 
 
 
 
 
 
 
 
 
Freedom of Expression 

Kosovo has some level of preparation on the right to freedom of expression; over the past 
year there has been no progress in this area. There were no legislative developments on the 
regulation of media ownership and transparency. No solution was reached on the sustainable 
funding  of  the  public  broadcaster,  leaving  it  vulnerable  to  political  pressure  and  influence. 
Implementation remains a serious challenge. The overall environment is not conducive to the 
full exercise of freedom of expression. In addressing the shortcomings outlined below, in the 
coming year, Kosovo should in particular: 

→  ensure  that  cases  of  physical  attacks  against  journalists  and  other  forms  of  pressure  are 

thoroughly investigated; 

→  ensure  a  sustainable  financial  solution  for  the  public  broadcaster  and  provide  for 

transparent information on media ownership. 

Intimidation of journalists 

Three  serious  physical  assaults  against  journalists  took  place  during  the  reporting  period.  A 
total of 26 cases of attacks, threats and  obstruction of journalists are under investigation. In 
one  case,  the  editor  of  a  newspaper  and  chair  of  the  Association  of  the  Journalists  were 
physically  attacked  by  the  newspaper  owner  following  the  disclosure  of  non-payment  of 
newspaper  staff’s  salaries.  In  another  case,  a  bomb  was  thrown  at  the  premises  of  a  Serb 
online  portal  in  Mitrovicë/Mitrovica  North.  A  more  systematic  response,  including  public 
denouncement, prompt investigation and timely adjudication, would strengthen the protection 
of  journalists.  Investigations  are  slow  and  the  record  of  final  convictions  low,  with  no 
convictions in 2014.  

Legislative environment 

While  freedom  of  media  and  expression  are  constitutionally  guaranteed,  and  legislation  on 
libel, hate speech and defamation are in line with European Court of Human Rights case law, 
effective implementation remains a challenge. The legislative and institutional framework in 
this area remains fragmented and ineffective. Journalists’ right to conscientious objection and 
the public’s right to reply and correction remain unregulated. 

Implementation of legislation/institutions 

Two  members  of  non-majority  communities  were  appointed,  completing  the  board  of  the 
Independent Media Commission (IMC). The IMC still failed to take decisions in good time, 
undermining  its  targets  for  2014,  including  timely  preparation  for  the  process  of  the  digital 
switchover. The IMC needs to complete secondary legislation in line with EU Directives and 
more  systematically  monitor  the  content  of  audio-visual  media.  As  a  result  of  government 
cuts  across  the  board,  the  IMC  is  facing  difficulties  in  meeting  its  financial  obligations, 
including for capital investment.  

Freedom  of  expression  online  is  not  monitored  by  either  the  IMC  or  the  Press  Council. 
Although this creates an ideal environment for online media, it also detracts from the privacy 
of individuals, leading to many cases of alleged hate speech, libel and defamation. 

Public service broadcaster 

The  public  service  broadcaster,  Radio  Television  of  Kosovo  (RTK),  is  directly  publicly 
financed.  The  April  2015  deadline  for  adopting  legislation  to  solve  the  funding  issue  was 
missed.  In  the  autumn  of  2014,  several  protests  were  organised  by  the  public  broadcaster's 
union,  which  accused  the  RTK  of  mismanagement,  nepotism  and  corruption.  In  April,  the 
Assembly  called  on  the  Auditor  General  to  carry  out  a  detailed  financial  and  performance 

22 

 
 
 
 
audit of the public broadcaster. In July, the Assembly appointed four out of five members to 
the RTK Board, amid concerns that they do not meet the required professional criteria. 

Economic factors 

The  economic  sustainability  of  the  media  is  not  ensured.  Media  ownership  structures,  in 
particular for print and online media, remain unclear. The lack of a strong private advertising 
industry makes private broadcasters dependent on international donors and very few are able 
to operate without political party support. Many Serbian-language media outlets risk closure 
because their advertising market is too small to be economically viable.  

Professional organisations / professional conditions 

The Association of Journalists of Kosovo, representing most journalists, has been very active 
in condemning pressures and in advocating for rights. Journalists tend to have low wages and 
often  work  without  contracts,  vulnerable  to  corruption  and  prone  to  self-censorship.  The 
independence  of  journalists  and  editors  and  the  protection  of  professional  standards  in 
journalism remain unregulated. Editorial codes of conduct at individual media outlets would 
be helpful. 

Freedom  of  assembly  and  association  is  guaranteed  by  the  Constitution  and  citizens  have 
been exercising it freely, including by staging protests against various levels of government.  

There  was  no  progress  on  property  rights.  The  government’s  Property  Rights  Coordinator 
position has been vacant since January 2015. A strategy on property rights is being developed 
which,  once  approved,  may  remove  the  need  for  a  coordinator.  The  implementation  of  the 
Law  on  Treatment  of  Construction  without  a  Permit  faces  a  number  of  problems  whereby 
documents  required  by  law  do  not  require  proof  of  ownership  over  the  land  parcel  when 
submitting  an  application  for  legalisation  nor  is  the  relevant  Ministry  obliged  to  check  land 
registry records in the process of legalisation. Residents (in particular minority communities 
and displaced persons) were not informed in time about the process of legalisation. Concerns 
remain with regard to treatment of unpermitted constructions belonging to displaced persons 
who have failed to apply, since such properties will be included in the demolition list.    

Decisions  by  the  Kosovo  Property  Agency  (KPA)  on  applications  to  demolish  illegal 
constructions  in  private  property  have  not  been  implemented  due  to  a  lack  of  financial 
resources, seriously affecting the rights of internally displaced persons. There has been some 
improvement on complying with legal obligations during expropriations. However, concerns 
remain over language compliance and notification of vulnerable groups in the expropriation 
process. 

Kosovo  needs  to  solve  all  conflict-related  property  claims.  The  Law  on  the  Property 
Comparison  and  Verification  Agency  is  still  pending.  The  Property  Claims  Commission  of 
the KPA has reached a decision in all cases, albeit with technical inconsistencies in some of 
them. The KPA continues to clear illegally occupied properties south of the Ibër/Ibar river. 

The  strategy  to  regularise  informal  settlements  is  still  pending.  Some  relatively  limited 
progress has been noted in addressing issues of social housing. Provision of social housing is 
hampered  by  the  failure  of  institutions  at  central  level  to  adopt  a  three-year  Kosovo-wide 
strategy.  

As regards non-discrimination, the adoption in May 2015 of the Law on the Protection from 
Discrimination is a major step forward. The Ombudsperson now has a mandate to act as an 
equality body. Hate crimes are proscribed in Art. 147 of the criminal code. The performance 
of Kosovo institutions in processing and investigating cases of hate speech, targeting mainly 
members  of  the  LGBTI  community  and  ethnic  minorities,  remains  poor.  The  Kosovo 

23 

 
 
 
 
Prosecutorial Council’s tracking mechanism needs to be extended to cover cases of all kinds 
of discrimination, not only those based on ethnicity.  

Kosovo's  legal  framework  on  equality  between  women  and  men  improved  through  the 
adoption in May of the Law on Gender Equality in accordance with international standards. 
However,  significant  structural  challenges  remain  and  implementation  will  require  serious 
effort.  The  impact  of  the  inter-institutional  secretariat  monitoring  implementation  of  the 
action plan on UN Security Council Resolution 1325 has until now been limited. The role of 
the  Agency  for  Gender  Equality  in  policy-making  needs  to  be  enhanced.  Women  remain 
under-represented  in  decision-making  positions,  including  at  municipal  level.  At  national 
level, the situation worsened, as only two ministers out of 22 are women and only two out of 
14 chairs of parliamentary committees.  

Every  police  station  has  a  unit  responsible  for  gender-based  violence.  Despite  the  recent 
appointment of a national coordinator for domestic violence, no progress has been made on 
combating  domestic  and  gender-based  violence.  The  absence  of  a  system  of  regular  data 
collection  across  institutions  undermines  the  ability  to  cross-track  and  monitor  cases  in 
investigation and judiciary proceedings. Kosovo needs to evaluate the implementation of the 
2011–2014 strategy and action plan against domestic violence before drafting a new one. The 
anti-trafficking  and  domestic  violence  help-line  should  provide  assistance  to  non-Albanian-
speaking  victims,  including  ensuring  similar  services  for  residents  in  the  northern 
municipalities.  The  mandate  of  the  National  Council  for  the  survivors  of  sexual  violence 
during  the  war  was  extended  to  address  the  need  for  comprehensive  support  for  surviving 
victims.  Effective  implementation  of  women’s  rights  to  inheritance  remains  limited,  despite 
the  existence  of  legal  provisions  governing  this  issue.  Further  efforts  need  to  be  made  by 
cadastral  and  registration  officers  on  registration  of  all  co-owners  of  property,  including 
women, in order to strengthen the protection of their rights. 

On the rights of the child, the legal framework is in place but implementation is weak at both 
national and local level. An assessment of the implementation of the 2009-2013 strategy and 
action  plan  on  children's  rights  needs  to  be  carried  out  and  results  taken  into  consideration 
when  developing  a  new  strategy.  The  successful  development  of  policies  depends  on  the 
availability  of  sex  and  age-disaggregated  data.  A  law  on  child  protection  should  avoid 
duplication of existing legislation on children's rights. Municipal Child Rights Co-ordinators 
need capacity building and sufficient budget. Awareness-raising and training on rights of the 
child need to continue and the Ombudsperson’s Office needs to increase its activities in this 
field.  Physical  or  any  other  form  of  humiliating  punishment  in  educational  and  training 
institutions  is  prohibited  by  law  but  not  in  other  settings  such  as  public  spaces  or  family. 
Increased awareness among judges and prosecutors led to a systematic reduction of pre-trial 
detention  periods  for  juveniles.  However,  the  legal  framework  needs  to  be  revised  to 
accommodate  the  UN  Committee  on  the  Rights  of  the  Child  recommendations  on  reducing 
pre-trial detention to six months.  

to 

the 

integration  of  persons  with  disabilities,  Kosovo  needs 

On 
the 
implementation  of  the  2013-2023  strategy  for  the  rights  of  persons  with  disabilities  and  its 
2013-2015  action  plan.  Health  services  and  support  for  the  rehabilitation  of  persons  with 
disabilities remain insufficient and physical access to public institutions remains a challenge. 
The  unsubstantiated  removal  of  more  than  1  000  members  of  the  deaf  community  from  the 
disability  pension  scheme  is  a  concern.  The  availability  of  personal  assistants  for  children 
with  disabilities  needs  to  be  ensured.  The  National  Disability  Council  has  so  far  failed  to 
promote  the  rights  of  persons  with  disabilities  and  needs  stronger  support  from  the 
government's  Office  for  Good  Governance  to  enable  it  to  exercise  its  coordinating  role  in 
implementing the strategy and action plan. 

improve 

24 

 
 
 
 
On  the  rights  of  lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons,  the 
package  of  human  rights  laws  has  addressed  gaps  in  legislation  on  the  protection  of  sexual 
orientation  and/or  gender  identity.  Cases  of  verbal  and  physical  assaults  against  the  LGBTI 
community are rarely addressed adequately by the authorities. Despite meeting regularly, the 
advisory and coordinating group for the rights of the LGBTI community has yet to produce 
concrete results. The government has started awareness-raising training for civil servants, law 
enforcement  officials,  the  judiciary,  media  and  teachers.  A  pride  walk  to  mark  the 
international day against homophobia took place for the second time in Pristina on 17 May, 
with  no  incidents.  However,  Kosovo’s  political  leaders  need  to  do  more  to  raise  awareness 
and promote tolerance. 

On labour and trade union rights, the General Collective Agreement signed in March 2014 
is  still  not  implemented  due  to  lack  of  budget.  This  triggered  a  wave  of  protests  across 
different sectors. Implementation of the law on strikes remains unsatisfactory, due to a lack of 
communication  between  strike  organisers  and  the  authorities.  Representation  of  employees 
within the Social and Economic Council is still challenged by the majority of trade unions and 
amendments  to  the  law  on  the  Social  and  Economic  Council  need  to  clarify  criteria  and 
procedures. (See also 4.1.8 — Employment and social policies, public health policy) 

On procedural rights, the suspected, accused persons and victims of crime in Kosovo enjoy 
solid protection under the legislation (the Criminal Procedure Code, Law on Police, Law on 
the Kosovo Police Inspectorate, Law on Crime Victim Compensation as well as the Law on 
Free Legal Aid). They have the right to interpretation and translation, the right to information 
about rights, the right to legal advice before and at trial and to legal aid, and the right for the 
detained  person  to  communicate  with  family  members,  employers  and  consular  authorities. 
There  is  a  strong  political  will  for  fair  implementation  of  these  rules  but  more  training  is 
needed to secure Kosovo citizen's procedural rights in practice. 

Kosovo's  legal  framework  for  safeguarding  and  protecting  minorities  is  comprehensive, 
although implementation remains a challenge. The political impasse following the dismissal 
of the Minister for Communities and Return in early February 2015 affected the functioning 
of  the  ministry.  Appointment  of  a  new  minister  in  April  led  to  renewed  commitment  to 
identifying a durable solution for the issue of Kosovo displaced persons in the region, notably 
through an Inter-ministerial Commission on Returns.  The Technical  Working  Group  for the 
Framework Convention on National Minorities was established but has only met once in June 
2015.  The  Office  of  Community  Affairs  needs  to  take  on  a  more  robust  role  on  minority 
policy,  including  on  matters  dealt  with  by  the  technical  working  group  and  the  post-2015 
policy  for  Roma,  Ashkali  and  Egyptians.  The  Consultative  Council  for  Communities  met 
regularly and set up five sector-based working groups, but urgently needs increased funding 
and support to function effectively and have its recommendations taken into account.     

Kosovo needs to continue improving the employment of non-majority communities within the 
Kosovo civil service and public enterprises. A permanent solution to the issue of acceptance 
of diplomas of the University in Mitrovicë/Mitrovica must be found to enable members of the 
non-majority  communities  to better integrate, including through employment in government 
institutions. Significant challenges remain in access to  services  in official languages both at 
the  central  and  municipal  level,  including  languages  used  by  minority  communities.  The 
Office  of  the  Language  Commissioner  continued  to  carry  out  its  duties  in  a  satisfactory 
manner  in  spite  of  limited  financial  and  human  resources,  including  through  increased 
cooperation  with  other  institutions.  The  Office  has  yet  to  establish  relations  with  the  four 
northern municipalities. 

25 

 
 
 
 
Incidents at a football match between Serbia and Albania in October 2014 led to a short but 
sharp increase in inter-ethnic incidents. While the overall security situation for non-majority 
communities remains relatively stable, an increasing trend of incidents occurred targeting the 
Kosovo  Serb  community  residing  in  western  Kosovo,  with  frequent  thefts  from  homes 
causing a heightened sense of insecurity within the affected community. Kosovo’s police and 
judicial  authorities  need  to  develop  a  better  understanding  of  what  constitutes  an  inter-
ethnically motivated incident. Efforts are still needed to further stabilise and normalise inter-
ethnic  relations.  Incidents  and  crimes  targeting  members  of  minorities  and  their  property 
should be investigated and prosecuted thoroughly and promptly. 

As  regards  the  Roma,  Ashkali  and  Egyptian  communities,  the  2009-2015  strategy  and 
action plan for the integration of Roma, Ashkali and Egyptian communities continued to be 
implemented.  The  government  must  demonstrate  commitment  in  practice  to  continue 
developing and drafting credible, realistic and measurable post-2015 policy commitments. All 
relevant  stakeholders,  including  civil  society  and  members  of  parliament  representing  the 
three communities need to be involved and recommendations incorporated. 12 municipalities 
adopted local action plans on the integration of the three communities. The learning centres 
have  played  a  positive  role  in  reducing  the  school  drop-out  rates.  The  Roma,  Ashkali  and 
Egyptian  communities  have  the  same  access  to  healthcare  services  as  other  citizens  and  the 
Ministry  of  Community  and  Returns  sets  aside  budget  for  housing.  Members  of  these 
communities  continue  to  face  difficult  living  conditions,  social  exclusion  and  frequent 
discrimination,  while  child  labour  and  early  marriages  continue  to  be  prevalent.  Access  to 
labour market is difficult and informal employment prevails. Active measures to include these 
communities  in  the  job  market  need  to  be  pursued.  Progress  has  been  made  with  regard  to 
solving registration problems for children and the government extended its assistance to the 
registration  process  to  over  600  displaced  Roma,  Ashkali  and  Egyptians  currently  in 
Montenegro. In the absence of identity documents, Kosovo has yet to produce reliable data on 
its Roma, Ashkali and Egyptian communities.  

Authorities at local and central level did not do enough to facilitate return and reintegration of 
refugees  and  internally  displaced  persons  (IDPs).  Illegal  occupation  of  residential, 
agricultural  and  commercial  property  continues  to  affect  the  property  rights  of  IDPs  and 
hinders returns. Municipalities are still not taking the initiative to collect and maintain data on 
numbers and locations of IDPs and returnees. Greater commitment at local level is urgently 
needed.  Figures  from  the  reporting  period  show  some  of  the  lowest  number  of  voluntary 
returns  (around  800)  since  2000.  A  lack  of  government  commitment  and  funding,  together 
with poor economic prospects, create an environment less conducive to returns.  

On  cultural  rights,  cooperation  between  the  Kosovo  authorities  and  the  Serbian  Orthodox 
Church  within  the  Implementation  and  Monitoring  Council  (IMC)  continues,  although 
meetings have become less regular and the Ministry of Culture has become less involved. In 
the interest of sustainability, the government should plan for and allocate necessary funds for 
the  functioning  of  the  IMC  secretariat.  The  Religious  and  Cultural  Heritage  Unit  of  the 
Kosovo  police  fulfils  its  mandate,  in  four  regions,  to  protect  Serbian  religious  and  cultural 
heritage sites with 205 officers. Ongoing challenges include improving communication with 
the resident Orthodox clergy and the provision of sufficient equipment.  

The  Village  Council  of  Velika  Hoča/Hoçë  e  Madhe  was  established  and  a  budget  was 
allocated,  marking  the  first  step  of  the  implementation  of  the  law.  With  limited  municipal 
capacity, central-level guidance continues to be needed to ensure full implementation of these 
laws. There has been progress in implementing the Law on the Historic Centre of Prizren with 
equipment and premises provided for the Cultural Heritage Council, although funds have yet 
to be allocated. Incidents of illegal demolition of cultural heritage have continued. The task 

26 

 
 
 
 
force set up last year to deal with illegal construction in Prizren, has been reinvigorated but 
has to date not delivered concrete action. More efforts are needed to investigate violations and 
sanction  perpetrators.  Concrete  results  in  countering  illegal  construction,  demolition  and 
adverse development are needed to demonstrate the Government's commitment to protecting 
cultural heritage 

Of  particular  concern  was  an  attempt,  through  the  introduction  of  a  draft  law  on  cultural 
heritage,  to  undermine  legislation  deriving  from  the  Comprehensive  Settlement  Proposal 
(CSP),  which  establishes  specific  rights  and  privileges  for  the  Serbian  Orthodox  Church 
(SOC). The draft was quickly withdrawn but is expected to be soon introduced again. Kosovo 
needs to demonstrate its commitment to respect legal provisions deriving from the CSP and 
offer assurances to the SOC that its rights, privileges and identity will not be challenged.  

2.5.  Regional issues and international obligations 

In  August  2015,  the  Kosovo  Assembly  adopted  constitutional  amendments  and  passed  the 
necessary legislation creating the conditions for the establishment of the Specialist Chambers 
and Specialist Prosecution Office to follow up on allegations of grave trans-boundary and 
international crimes committed during and after the conflict in Kosovo, as relating to those 
reported in the 2011 Council of Europe Parliamentary Assembly  report. The Chambers will 
be  subject  to  Kosovo  law,  but  will  be  located  outside  of  Kosovo.  The  Kosovo  authorities 
should now work on completing the regulatory framework.  

Kosovo has set up a war crimes department within its Special Prosecution Office. However, 
the department does not have enough prosecutors to carry out its current tasks, which would 
increase  when  EULEX  investigations  and  cases  are  handed  over.  The  Kosovo  police  war 
crimes investigation unit has received additional staff. However, the lack of investigators with 
an ethnic Serb background, limited criminal intelligence analysis staff, a lack of language and 
translation capacity and a lack of basic equipment such as vehicles and computers mean that 
the unit cannot function properly. EULEX is supporting Kosovo in building up the capacity to 
effectively take over war crimes investigations and prosecution. In most pending war crimes 
cases, the suspects are ethnic Serbs residing mainly in Serbia. Given the political climate, the 
local unit will not be able to deal with these cases independently. In the rest of the cases (166) 
the  suspects  are  ethnic  Albanians  and  usually  ex-KLA  members.  There  is  concern  over  the 
capacity and willingness to investigate these cases. 

The  unresolved  fate  of  missing  persons  from  the  conflicts  of  the  1990s  remains  a 
humanitarian  concern.  As  of  August  2015,  a  total  of  10  814  persons  were  still  missing 
according to the International Committee of the Red Cross. Of these, 1 670 cases relate to the 
conflict  in  Kosovo.  Ascertaining  the  fate  of  missing  persons  remains  vital  for  regional 
reconciliation  and  stability.  The  inter-ministerial  working  group  on  dealing  with  the  past, 
tasked with drafting the strategy on this issue, needs to be more active and produce concrete 
results, with a special emphasis on victims groups and transitional justice. The governmental 
commission  on  missing  persons  appointed  municipal  focal  points.  Pristina's  dialogue  with 
Belgrade,  through  the  working  group  on  missing  persons,  chaired  by  the  International 
Committee of the Red Cross, has not made significant progress. The Pristina delegation to the 
working group is currently incomplete and the new head needs to be appointed. Kosovo needs 
to  engage  more  pro-actively  and  provide  information  from  its  own  sources.  High-level 
political  support  is  needed  to  address  the  issue  of  the  fate  and  whereabouts  of  missing 
persons.  Following  the  completion  of  the  exhumation  process  at  the  gravesite  located  in 
Rudnica, Raška (Serbia), human remains were identified and transferred to Kosovo.  

27 

 
 
 
 
Kosovo’s Department of Forensic Medicine (DFM) does not, despite some progress, have the 
capacity to meet the standards required for sustainable forensic practice, including in forensic 
anthropology  and  toxicology.  Coordination  and  cooperation  between  the  governmental 
commission  on  missing  persons  and  the  DFM  needs  to  improve.  Capacity  needs  to  be 
strengthened and staff from non-ethnic Albanian communities integrated.  

The Commission and the DFM need to find a sustainable solution and allocate resources to 
continue  data  entry  in  the  ante-mortem/post-mortem  database.  The  lack  of  progress  on  this 
issue  prevents  the  government  from  assuming  its  responsibility  to  establish,  maintain  and 
manage  the  list  of  missing  persons,  in  compliance  with  the  law  on  missing  persons.  No 
progress  has  been  made  regarding  the  unidentified  human  remains  stored  at  the  Pristina 
morgue for which forensic action has been exhausted. 

Regional cooperation and good neighbourly relations form an essential part of Kosovo's 
process  of  moving  towards  the  EU.  Kosovo  participates  in  several  regional  organisations, 
further to arrangements on regional representation and cooperation agreed with Belgrade in 
February  2012.  However,  despite  government  efforts,  Kosovo  is  still  not  represented  in  all 
regional organisations, for instance the Southeast European Law Enforcement Centre.  

A fresh impetus has been given to regional cooperation through the 'Berlin process' and the 
Western Balkan six initiative, intensifying cooperation among the Western Balkan countries 
and with the EU, notably regarding the connectivity agenda. In April, the Western Balkan 
six  countries  reached  an  agreement  on  the  core  transport  network  and  in  June  2015  on 
extending three Trans-European Transport Networks core corridors to the Western Balkans. 
They also identified the priority projects along sections of these corridors to be implemented 
by  2020.  To  ensure  sustainability  and  achieve  short  term  results,  the  countries  agreed  to 
implement before the next summit in Paris a number of 'soft' measures such as aligning and 
simplifying border crossing procedures, road safety and maintenance schemes. 

Kosovo has further improved its relations with Albania. An agreement on mutual cooperation 
was  signed  during  Prime  Minister  Mustafa’s  visit  to  Tirana  in  March  2015.  The  agreement 
includes a wide range of protocols and memoranda on regional and cross-border cooperation 
in a variety of sectors. 

There are no official relations with Bosnia and Herzegovina as the latter does not recognise 
Kosovo's independence. A reciprocal visa regime is in place.  

Relations with the former Yugoslav Republic of Macedonia have remained constructive. A 
memorandum of cooperation between the public prosecutors of both countries in combating 
cross-border  crime  and  terrorism  was  signed  in  late  December.  An  agreement  on  the 
encouragement and reciprocal protection of investments and a protocol on cooperation in the 
field  of  diplomatic  education  were  signed  in  Skopje  in  January.  Following  allegations  of 
involvement  of  Kosovo  citizens  in  the  attack  on  the  border  police  station  in  Goshince 
(21 April)  and  in  the  incidents  in  Kumanovo  (9-10 May),  the  government  of  Kosovo 
condemned the violence and called for territorial integrity to be respected. The government 
also called for the full implementation of the Ohrid Framework Agreement. 

A  joint  commission  on  border  demarcation  with  Montenegro  concluded  its  work  in  June 
2015 and Ministers signed the border agreement during the August Western Balkans Summit 
(Vienna),  now  pending  parliamentary  approval  by  both.  There  were  no  developments 
concerning the constitutional recognition of the Montenegrin minority in Kosovo. 

Kosovo  has  maintained  very  close  relations  with  Turkey.  Negotiations  on  a  readmission 
agreement are ongoing with a view to concluding it by the end of the year.  

28 

 
 
 
 
3 

NORMALISATION OF RELATIONS BETWEEN KOSOVO AND SERBIA 

Kosovo and Serbia have remained engaged in the implementation of the agreements reached 
in  the  dialogue,  in  particular  the  April  2013  ‘First  agreement  of  principles  governing  the 
normalisation of relations’. Work under the EU-facilitated dialogue has continued at technical 
level throughout the reporting period. The high-level dialogue resumed in February 2015, and 
four meetings attended by Prime Ministers Mustafa and Vučić were held in April, June and 
August. 

Key agreements were finalised on 25 August 2015. General principles/main elements on the 
establishment of the Association/Community of Serb majority municipalities in Kosovo 
through the adoption of its Statute were agreed. The text defines the legal framework of the 
Association/Community,  its  objectives,  organisational  structure,  relations  with  central 
authorities,  legal capacity, budget  and financial support. It also provides the modalities/next 
steps  for  its  establishment.  In  the  field  of  energy,  two  new  Serbian  energy  companies  (one 
dealing with import, export and transit; the other with supply and distribution services) were 
established  in  Kosovo.  These  companies  are  proceeding  with  their  internal  organisation 
before being able to apply for licenses. An action plan detailing the implementation steps of 
the telecoms arrangement was also approved. Kosovo and Serbia agreed to ask the European 
Union  to  revitalise  the  Mitrovicë/Mitrovica  bridge  and  its  surroundings  so  that  it  can  be 
reopened to all traffic by summer/not later than June 2016. In line with the same timetable, it 
was also agreed that the North Mitrovicë/Mitrovica municipality will revitalise its main street 
(King Peter Street) by turning it into a pedestrian zone.  

Progress has been made in other important areas. Following an agreement in February 2015, 
the  dismantling  of  the  Serbian  structures  on  justice  is  well-advanced.  Serbia  facilitated 
applications  of  Kosovo  Serb  judges  and  prosecutors  in  the  Kosovo  judiciary.  The  proper 
handling of cases in the Mitrovicë/Mitrovica Basic Court, where Serbian  official statements 
have  at  times  interfered  with  the  proceedings,  requires  a  dispassionate  environment. 
Integration of Kosovo Serb police and civil protection personnel is nearing completion. An 
agreement on vehicle insurance of June 2015, providing for the recognition in each other's 
jurisdiction  of  Serbia  and  Kosovo's  respective  vehicle  insurance,  is  being  implemented.  On 
customs, agreements were reached on the import of controlled goods into Kosovo, including 
for  medicines.  In  the  context  of  the  liaison  arrangements,  and  following  an  agreement 
reached  in  November  2014,  all  official  visits  are  directly  arranged  by  Liaison  Officers. 
Progress  was  also  reached  in  the  field  of  cadastre:  a  new  archives  building  was  opened  in 
Belgrade, where the scanning of documents pertaining to Kosovo is to be completed by June 
2016. Following the Serbian Constitutional Court's rulings adjudicating that the form in which 
some dialogue agreements have been transposed was unconstitutional, Serbia has adjusted its 
regulatory  framework  related  to  these  agreements,  with  the  exception  of  freedom  of 
movement. The Constitutional Court's rulings on the energy and telecoms agreements are still 
pending.  Serbia  needs  to  find  legal  solutions  for  the  implementation  of  agreements  that  are 
sustainable and can withstand legal challenges. 

Implementation of other agreements has continued, albeit at a slower pace. On IBM, further to 
the  six  interim  facilities,  two  additional  permanent  crossing  points  were  agreed,  for  which 
Serbia  has  initiated  the  expropriation  process  on  its  territory.  However,  illegal  crossing 
roads/by-passes, in particular in the north of Kosovo, continue to be regularly used to smuggle 
substantial amounts of goods. Additional measures need to be taken by Serbia to stop illegal 
crossings.  The  processing  of  cases  in  the  framework  of  the  2013  general  modalities  for 
Mutual Legal Assistance has been suspended between October 2014 and August 2015 by the 
Serbian authorities. The handling of over 600 pending cases has resumed in September 2015. 
On regional cooperation, Kosovo became a permanent participant in RACVIAC (the Centre 

29 

 
 
 
 
for  Security  Cooperation)  and  joined  MARRI  (Migration,  Asylum,  Refugees  Regional 
Initiative).  However,  Serbia  needs  to  remain  committed  to  the  continued  implementation  of 
the agreement on representation and participation of Kosovo in regional forums.  

Serbia  and  Kosovo  also  participated  in  constructive  discussions  to  improve  cooperation  in 
tackling migratory flows from Kosovo early this year. 

Overall,  Serbia  and  Kosovo  have  remained  engaged  in  the  dialogue  and  committed  to  the 
implementation of the April 2013 'First agreement of principles governing the normalisation 
of  relations'  and  other  agreements  reached  in  the  dialogue.  The  steps  taken  gave  fresh 
momentum in the normalisation of relations and should have a positive and concrete impact 
on  the  everyday  life  of  citizens  in  both  Kosovo  and  Serbia.  Further  progress  in  this  area 
remains essential for advancing the European future of both Serbia and Kosovo. 

4. 

ECONOMIC CRITERIA 

Key economic figures 

Gross domestic product per capita (% of EU28 in PPS) 

GDP growth (%) 

2013 

N/A 

3.4 

2014 

N/A 

0.9 

Unemployment rate (female; male) (%) 

30 (38.8; 26.9) 

35.3 (41.6; 33.1) 

Economic  activity  rate 
proportion  of  the  population  aged  20–64  that 
economically active (female; male) (%) 

for  persons  aged  20–64: 
is 

46.4 (23.7; 69.5) 

47.7 (24.2; 71.4) 

Current account balance (% of GDP) 

Foreign direct investment (FDI) (% of GDP) 

-6.4 

4.5 

-8 

2.3 

Source: Eurostat 

In  line  with  the  conclusions  of  the  European  Council  in  Copenhagen  in  June  1993,  EU 
accession  requires  the  existence  of  a  functioning  market  economy  and  the  capacity  to  cope 
with competitive pressure and market forces within the Union. 

The  monitoring  of  these  economic  criteria  should  be  seen  in  the  context  of  the  increased 
importance  of  economic  governance  in  the  enlargement  process.  In  order  to  improve  their 
economic  governance,  in  2015  the  enlargement  countries  were  asked  to  prepare  Economic 
Reform  Programmes  (ERPs),  which  set  out  a  medium-term  macro-fiscal  policy  framework 
together  with  key  structural  reforms  aimed  at  supporting  the  framework  and  boosting 
competitiveness.  The  ERPs  were  the  basis  for  country-specific  recommendations  jointly 
adopted  by  the  EU  and  the  Western  Balkans  and  Turkey  in  the  Economic  and  Financial 
Dialogue meeting on 12 May 2015. 

4.1.  The existence of a functioning market economy 

Kosovo is at an early stage in developing a functioning market economy. The pursuit of 
economic reforms received a new momentum after the post-election impasse. Some progress 
was  made,  particularly  on  facilitating  business  creation,  improving  the  legal  system  and  on 
financial sector stability. The persistent trade deficit reflects a weak production base and lack 
of  international  competitiveness.  An  inefficient  public  sector  and  ad  hoc  fiscal  policy 

30 

 
 
 
 
 
 
decision-making  constitute  significant  fiscal  risks.  Reliance  on  remittances  and  widespread 
informal economy additionally decrease employment incentives resulting in low labour force 
participation, especially among women, high unemployment rates, in particular among young 
and  unskilled  workers.  Kosovo  should  reduce  reliance  on  customs  duties  by  broadening 
domestic tax base and modernising revenue collection. 

In  line  with  the  ERP  recommendations  and  in  order  to  support  long-term  growth,  in  the 
coming year Kosovo should pay particular attention to: 

→ ensuring fiscal sustainability; 

→ speeding up the privatisation and restructuring of publicly owned enterprises; 

→ improving bankruptcy and insolvency procedures.  

Economic policy essentials  

The  government's  strategic  documents  show  a  strengthened  commitment  to  pursuing 
economic reforms. This should be translated into determined policy implementation and 
an  avoidance  of  ad  hoc  decision-making  in  economic  policy.  The  2014  post-election 
political  impasse  delayed  the  pursuit  of  sound  economic  policies,  including  the  adoption  of 
the 2015 government budget.  

1: 

its 

stable 

(ERP) 

"Sustain 

recommendation 

to  fiscal  discipline  and 

first  Economic 
Kosovo  submitted 
Reform  Programme 
the 
to 
Commission  in  January  2015.  Together 
with  the  new  government  programme,  the 
ERP  reflects  a  clear  commitment 
to 
pursuing  a 
fiscal  policy  and 
structural reforms to boost competitiveness. 
Following  the  joint  adoption  of  the  ERP 
recommendations,  the  Kosovo  government 
has  started  launching  ERP-based  reforms. 
A  new  EUR  184  million  22-month  stand-
by  programme  with  the  IMF  has  been 
approved  in  July  2015.  The  programme 
aims  at  strengthening  the  credibility  of 
line  with  ERP 
in 
public 
recommendation  1,  further  enhancing  financial  stability  and  boosting  competiveness  and 
productive capacity.  

the 
ERP 
commitment 
improve 
transparency  of  public  finances  by  considering 
establishing an independent fiscal council, or fiscal 
agency,  with  a  clear  mandate 
to  preserve 
sustainability of public finances, and reduce deficit 
bias, 
coordination  between 
government  and  parliamentary  bodies  responsible 
for  budgetary  processes.  Improve 
the  budget 
process  by  legislatively  strengthening  the  role  of 
the  Medium  Term  Expenditure  Framework  and 
enshrine  principles  of  cost-benefit  analysis  as  the 
basis of the policy planning process. Take steps to 
increase  government  deposits  to  the  threshold 
implied  by  the  fiscal  rule  (4.5  %  of  GDP)  to 
provide additional financing buffer." 

and  by  better 

finances, 

Macroeconomic stability 

31 

 
 
 
 
in 

The  macroeconomic  situation  remained 
stable  but  challenging,  having  been  hit  by 
the  political  uncertainties 
2014. 
Preliminary data shows that economic growth 
in 2014 dropped to 0.9 %, below the ten-year 
average  of  3.5  %,  as  a  result  of  political 
impasse  which  caused  delays 
in  capital 
investments.  Economic  growth  was  mainly 
driven  by  private 
(1.2pp 
contribution  to  growth)  resulting  from  higher 
remittances and increased pensions and wages 
in  the  public  sector.  Net  exports  continued  to 
weigh  on  GDP  growth  (-1  pp).  Production 
capacity is poorly developed. Trade and real estate activities continued to positively influence 
growth  while  construction  contracted.  Preliminary  results  for  Q1  2015  show  further  growth 
slowdown, possibly influenced by the migration outflows at the beginning of the year.  

consumption 

External  imbalances  worsened  slightly  in 
2014,  despite 
the  continued  economic 
recovery in Kosovo's main trading partners 
and  diaspora  countries.  In  2014  the  current 
account deficit increased to 8 % of GDP, after 
increase 
having  fallen  since  2011.  This 
resulted 
the 
to 
transfers 
from  weaker 
government  from  abroad  caused  by  delays  in 
ongoing projects due to the political impasse. 
Growing  remittances  (12.6  %  of  GDP  in 
2014)  continued  to  offset  the  traditionally 
high  trade  deficit  (31.6  %  of  GDP  in  2014). 
The inflow of foreign direct investment (FDI) 
amounted to 2.6 % of GDP, the lowest in the 
last ten years, which averaged 6.7 % of GDP. The bulk of financial inflows was informal and 
unrecorded (5 % of GDP). Kosovo's external debt remained relatively low at 31.6 % of GDP 
in 2014 and is not a cause for immediate concern.  

Employment  is  extremely  low  and  efforts  to  improve  labour  market  conditions  have 
been  limited.  Moderate  economic  growth  over  recent  years  has  not  translated  into  a  better 
performance  by  the  labour market. Kosovo has the lowest employment and activity rates in 
Europe  (26.9  %  and  41.6  %  respectively);  this  is  due  to  a  weak  production  base  and  low 
competitiveness in human capital and labour costs.  Reliance on remittances and widespread 
informal economy additionally decrease employment incentives.  

The  unemployment  rate  increased  to  35.3  %  in  2014  from  30  %  in  2013.  Labour  market 
conditions are especially difficult for women. Only one in five women of working age were 
active in the labour market and only one in eight were employed. Limited job opportunities, 
especially for young people (61 % youth unemployment), are also putting a strain on social 
cohesion  and  encouraging  emigration.  Financing  for  active  labour  market  policies  remains 
fragmented  and  insufficient.  Labour  market  statistics  have  remained  inadequate  and  more 
harmonised data is needed in order for Kosovo to be able to make informed policy choices. 

ERP  Recommendation  2:  "Address  immediate 
fiscal  risks  with  necessary  measures  aimed  at 

32 

 
 
 
 
Inflation is mainly dependent  on import 
prices,  specifically  food  and  energy 
prices. The consumer price index inflation 
in  Kosovo  has  been  on  a  downward  trend 
since  2011,  reaching  0.4  %  on  average  in 
2014  and  declining  further  to  -0.7  %  by 
July 2015.  

legal 

enhancing 

framework 

reducing  unsustainably  high  current  expenditures 
capital 
while  preserving  growth 
spending.  Develop  a 
for 
maintaining  a  sustainable  public  wage  bill  and 
strengthen targeting and means testing of transfers. 
Ensure  planned  increases  in  agricultural  subsidies 
are  directed  exclusively  at  productivity  increasing 
initiatives.  Advance  public  administration  reform 
with  special  attention  on  improving  productivity 
further  steps 
and 
in 
strengthening 
finance  management 
practices." 

public 

reducing  costs.  Take 

The  execution  of  the  2014  budget  was 
characterised  by 
lower-than-expected 
revenues  and  ad  hoc  pre-election 
spending increases. The 2014 budget was 
the  first  budget  to  be  subject  to  the  new  2 
%  of  GDP  deficit  fiscal  rule.  As  a  result  of the April 2014 government increase in salaries, 
pensions  and  benefits,  current  expenditures  accounted  for  a  higher  proportion  of  total 
spending  at  71.3  %  in  2014  compared  with  63.5  %  in  2013.  In  addition,  the  caretaker 
government committed roughly 32 % of the overall capital spending in the next four years to 
highway  construction,  thus  further  limiting  fiscal  space  in  the  following  years.  Overall 
expenditure underperformed by 11 % compared to the plan. This decrease was due to delays 
in public investments.  

collection 

Budget  revenues  underperformed  by  12  %;  this 
is  due  to  lower-than-expected  growth  and  the 
postponement of some one-off transfers. Kosovo 
needs  to  take  further  measures  to  improve 
revenue 
line  with  ERP 
in 
recommendation  3.  The  overall  fiscal  deficit 
stood  at  2.5  %  of  GDP,  higher  than  the  fiscal 
rule threshold of 2 %. Considering however the 
exceptions allowed by the rule, the 2014 budget 
can  be  considered  to  be  in  conformity  with  it. 
The  breach  of  fiscal  rule  was  in  any  case  only 
avoided  due  to  under  execution  of  capital 
spending. 

low 

Total  public  debt  continued  to  increase, 
reaching  10.6  %  in  2014.  An  increasing 
proportion of this comes from domestically 
treasury  bills.  Kosovo  has  a 
issued 
relatively 
level  of  public  debt. 
However,  given  its  reliance  on  short-term 
domestic 
from 
international  financing  institutions  and  its 
inability,  in  the  absence  of  a  credit  rating, 
to  issue  international  debt,  prudent  fiscal 
policy  is  crucial  for  Kosovo.  Government 
deposits, maintained as an emergency source of financing, fell steadily to 1.8 % of GDP at the 
end of 2014, substantially below the 4.5 % threshold suggested by the fiscal rule. 

ERP  Recommendation  3:  "Modernize  revenue 
collection to reduce reliance on customs receipts by 
improving 
and 
strengthening the legal framework for collection of 
tax  and  municipal 
local 
government  grant  financing  scheme  to  incentivise 
better  collection  of  municipal  revenues.  Further 
broaden  tax  base  by  introducing  the  planned 
mandatory health sector contributions, and reassess 
planned tax exemptions."   

tax  arrears.  Revisit 

financing 

collection 

property 

loans 

and 

tax 

Due to the post-electoral political deadlock, the 2015 budget was adopted only in December 
2014  and  it  was  based  on  overly  optimistic  revenue  projections  (18.3  %  rise  compared  to 
2014 budget execution). In the July mid-term budgetary review both revenue and expenditure 
targets  were  adjusted,  now  standing,  still  ambitiously,  14.1  %  and  11.5  %  higher  than  the 

33 

 
 
 
 
2014 budget execution. By July 2015, revenues grew by 9.3 % compared to the same period 
in  2014  thus  lagging  behind  the  plan.  To  increase  revenue,  the  government  has  introduced 
changes to excise duties and the VAT system applicable from 1 September 2015. 

Successful  reforms  in  the  customs  administration  directed  at  better  goods  evaluation  and 
fighting smuggling yielded a 7.4 % increase in border revenues compared to the first seven 
months  in  2014.  Spending  is  also  lagging  behind  the  budget  plan,  again  mainly  due  to 
underperformance of capital spending. Without further improvements in revenue collection or 
additional expenditure cuts, satisfying both the fiscal rule deficit and capital spending targets 
will be difficult. 

The  fiscal  rule  and  the  law  on  public  finance  form  the  backbone  of  public  finance 
management in Kosovo. However, their enforcement and monitoring mechanisms need to be 
improved. Repeated ad hoc fiscal decision-making, with a large fiscal impact is the main risk 
to fiscal sustainability. Budget planning procedures have not been transparent and coordinated 
so far, and budget spending programmes are not joined up with the government's long term 
priorities.  The  launch  of  a  central  procurement  system  and  better  checks  on  contracting 
procedures  at  the  local  level  are  welcome  steps,  but  more  needs  to  be  done  to  meet  ERP 
recommendation 2. 

Interplay of market forces  

in 

publicly 

limited  progress  was 
Overall,  very 
the  privatisation  and 
achieved 
owned 
of 
liquidation 
enterprises.  No  new  privatisations  took 
place.  The  privatisation  agency  remained 
dysfunctional and its credibility was further 
tarnished  amid  political  controversy  and 
corruption  allegations.  The  privatisation 
agency still does not have a new, credible, 
independent  and  functioning  board;  its 
merit-based  management  selection  procedures  and  anti-corruption  mechanisms  need  to  be 
strengthened  in  line  with  ERP  recommendation  4.  The  unresolved  status  of  property  rights 
and lengthy legal proceedings in dealing with financial claims on privatised assets hinder the 
privatisation process and delay disbursement of privatisation revenue held at the central bank. 

ERP Recommendation 4: "Advance restructuring 
the  privatisation  of  non-essential 
and  restart 
Publicly Owned Enterprises (POEs). Take steps to 
improve the efficiency and corporate governance of 
strategic POEs. Address the lack of quorum of the 
board  of  Privatisation  Agency  of  Kosovo  (PAK) 
and  accelerate  privatisation  of  Socially  Owned 
Enterprises still in PAK's portfolio." 

Among  centrally-managed  enterprises,  only  two,  the  Kosovo  Energy  Corporation  and  Post 
and  Telecommunications  Kosovo,  continued  to  generate  a  profit  in  2014.  Government 
influence  on  price  controls  for  utilities  and  postal  and  telecommunications  services  has 
continued. 

Market entry and exit   

5: 

"Address 

Some  progress  was  made  in  simplifying 
business  registration,  but 
insolvency 
procedures still present an obstacle. The 
establishment  of  one-stop  shops  in  2014 
has  reduced  the  time  needed  for  company 
registration  down  to  three  days.  However, 
the  announced  online  registration  has  still 
not  been  fully  implemented.  Numerous  obstacles  to  market  entry  remain:  a  weak  and 
unaccountable administration; insufficient access to finance; an underdeveloped infrastructure 
(especially  in  electricity  supply);  a  deficient  rule  of  law;  extortion  practices;  a  widespread 

the 
ERP  Recommendation 
underlying  causes  for  high  costs  of  bank-based 
the  duration  and  cost  of 
financing, 
insolvency  procedures  by  adopting 
the  new 
improve  contract 
bankruptcy 
enforcement  with  a  view  to  increase  overall 
financial intermediation in the economy." 

law  and  further 

reduce 

34 

 
 
 
 
informal  economy;  and  insufficient  academic  and  professional/vocational  education.  Weak 
insolvency procedures still hinder market exit and delay payments to creditors. A draft law on 
bankruptcy needs to be approved in line with ERP recommendation 5. 

Legal system 

Despite some progress made on the legal rules governing business, their implementation 
has remained insufficient. Very weak institutional capacity for legal enforcement combined 
with widespread corruption continued to hinder the business environment. The judicial system 
suffers  from  poor  accessibility,  inefficiency,  delays  and  a  growing  backlog  of  unresolved 
cases  (400  000  in  July  2015).  The  politically  influenced  appointments  of  judges  and 
prosecutors  limit  the  independence  of  the  judiciary.  More  work  is  needed  on  reviewing  the 
civil code on business lawsuits and practices and on developing register (cadastre) databases, 
in line with ERP recommendation 8. 

Financial sector development 

Financial sector stability was maintained and credit growth picked up pace. The steady 
credit growth in Kosovo's banking sector rebounded in 2014 (4.2 % increase) and continued 
to grow in 2015. Kosovo's financial system remains dominated by the banking sector (69.5 % 
of the total financial sector assets). The stability of the banking sector was strengthened, with 
the  proportion  of  non-performing  loans  fully  covered  by  bank  provisions  falling  to  7.1  % 
(July 2015). Private loan enforcement agents established at end 2014 contributed to the NPL 
decline.  The  improved  profitability  of  banks  in  2014  (131.1  %  rise  in  profits)  further 
strengthened  their  capital  buffers  to  19  %,  which  is  substantially  above  regulatory 
requirements.  Although  total  lending  grew,  a  still  relatively  low  loan-to-deposits  ratio  (74.3 
%) means that there is ample room for stronger banking activity. Average loan interest rates 
fell below 10 % for the first time, but have remained above the regional average.  

The insurance sector is dominated by non-life insurance companies. The cost of car insurance 
is artificially high, due in part to Kosovo not being a member of the 'green card' system, but 
also to it not having fully liberalised third party liability insurance prices.  

The Central Bank of Kosovo continued to improve the SWIFT infrastructure for international 
payments which is accessible and used by all banks. Since February 2015, banks in Kosovo 
have been using IBAN for international payments. 

4.2.  The capacity to cope with competitive pressure and market forces within the 
Union 

Kosovo is at an early stage in achieving the capacity to cope with competitive pressures 
and market forces within the Union. No progress was made on improving the quality of 
education, which is a key driver for improving long-term growth and competitiveness.  

In  line  with  the  ERP  recommendations  and  in  order  to  support  long-term  growth,  in  the 
coming year Kosovo should pay particular attention to: 

→ securing a stable energy supply and reducing distribution losses; 

→ closing the skills gap in the labour market;  

→ channelling foreign direct investments and remittances into productive sectors.  

Human and physical capital 

35 

 
 
 
 
to  roll  out 

No progress was made in improving the quality of education. Increases in public spending 
on education (up to 4.4 % of GDP in 2014 
with  4.6  %  planned  for  2015)  have  so  far 
been  used  almost  entirely  to  cover  salary 
increases. More funding should be directed 
to  other  aspects  of  education  reform,  as 
referenced in ERP recommendation 7. The 
establishment of the Agency for Vocational 
Education 
and  Adult 
and  Training 
Education  (VET)  should  help  to  address 
the  evident  skills  mismatch  in  the  labour 
market. 

ERP Recommendation 7: "Improve the quality of 
teacher 
education  by  continuing 
licencing and training as well as improving quality 
assurance  and  strengthening  related  incentives; 
improve  access  to  pre-primary  and  primary  school 
education;  accelerate  modernisation  of  vocational 
education,  continue  improve  quality  of  higher 
education  and  improve  focus  on  aligning  the 
education system so as to make it more responsive 
timely 
to 
operationalisation of the recently established Public 
Employment  Service  and 
in 
lowering the high unemployment rate." 

Nevertheless, 
among  vocational  graduates 
low 
Insufficient 
cooperation between vocational schools and  businesses and delays in implementing policies 
remain major concerns.  

rate 
is  71 %. 
level  of 

labour  market.  Assure 

the  unemployment 

its  effectiveness 

funding,  a 

the 

the 

Kosovo made some progress on improving physical capital, but road investments clearly 
dominate  over  energy  efficiency  and  water  distribution.  In  2014,  total  investment 
continued to fall, reaching 26.2 % of GDP. Government capital spending agenda is dominated 
with  road  building,  namely  the  construction  of  the  Route  6  highway  to  Skopje.  ERP 
recommendation  6  deals  with  ways  of  improving  the  assessment  of  major  infrastructure 
projects. 

the  biggest  obstacles 
in 

Lack of reliable energy supply is still seen 
to 
as  one  of 
investment  growth.  Investments 
the 
electricity network have improved network 
stability  and  reduced 
losses. 
Construction has started on the new 400kV 
transmission interconnector to Albania and 
the district heating project at the Kosovo B 
power  plant.  Negotiations  with  the  only 
bidder  for  the  construction  of  the  new 
modern power plant are stalled. 

technical 

6: 

Recommendation 

"Strengthen 
ERP 
government  oversight  and  consider  setting  up  an 
advisory  body  to  contribute  to  the  assessment  of 
future major infrastructure projects, including their 
fiscal  impact  and  make  sure  they  align  with  the 
regional  agenda  on  connectivity  (core  network). 
Advance towards securing a reliable energy supply 
while  ensuring 
the  EU 
the  production  of 
environmental  standards 
energy." 

the  compliance  with 
in 

Almost  all  incoming  foreign  direct  investment  went  to  the  non-tradable  sector,  in  particular 
real estate and financial intermediation. However, a EUR 409 million contract for investment 
in the Brezovica ski resort was signed in April. Work is due to start in the following months 
and is expected to provide around 3 000 new jobs. 

Sectoral and enterprise structure  

ERP  Recommendation  8:  "Continue  to  improve 
the  business  environment  and  continue  with  the 
clearing of court backlogs, strengthening capacities 
of 
judicial  system,  and  developing  cadastre 
databases.  Advance  measures  to  tackle  informality 
in line with the strategy for the prevention and fight 
against  informal  economy,  including  incentives  to 
reduce undeclared work. Reduce the administrative 

36 

 
 
 
 
Kosovo’s  private  sector  continues  to  be 
fragmented  and  unable  to  benefit  from 
efficiency  gains,  as  micro-,  small-  and 
medium-sized  enterprises  account  for 
99 % of total employment. Although still 
above  its  regional  peers,  the  share  of 
agriculture 
to 
11.4 %,  compared  with  14.1 %  in  2009, 
while the share of services rose from 47 % 
to  49.2 %  of  GDP.  Shifts  in  the  employment  structure  away  from  agriculture  and  towards 
services are evident. This is in line with expected developments as part of Kosovo’s transition 
towards a modern services-oriented economy. 

burden  for  business  by  implementing  the  Better 
Regulation  Strategy  and  the  Law  on  Permits  and 
Licences.  Develop  measures  to  provide  targeted 
support  for  SMEs  and  to  widen  their  access  to 
finance.  Step  up  the  fight  against  corruption  and 
improve  public  procurement,  by 
efforts 
enhancing  administrative  capacity, 
increasing 
efficiency  and  effectiveness  of  the  Public  Review 
Board, and implementing central procurement." 

in  Kosovo’s  GDP  fell 

to 

The structure of operating enterprises is dominated by trade (29.9 % of operating enterprises), 
followed by accommodation and food services (11 %) and industry (10.4 %, up from 5.2 % in 
2013).  Productivity  gains  are  limited  by  poor  access  to  broader  markets  and  a  lack  of 
investments  in  new  technologies.  Kosovo  should  improve  its  business  environment,  in  line 
with ERP recommendation 8. 

State influence on competitiveness  

There  was  no  progress  on  developing  institutional  capacity  to  check  state  aid  and 
subsidies  are  still  being  provided  without  a  proper  strategy  and  evaluation.  Publicly 
owned enterprises in the energy, transport and waste/water sectors continued to be subsidised. 
New  subsidies  and  direct  payments  to  agriculture  were  introduced.  These  need  to  be  more 
closely  linked  to  increasing  productivity.  Tax  and  customs  exemptions  were  introduced  for 
certain sectors (agriculture, IT), but without a clear impact assessment. 

The authorities continued to establish economic zones and industrial parks. However, this was 
done  without  a  national  plan  (which  was  a  legal  requirement)  and  without  transparent 
disclosure of tax and customs incentives approved to companies. 

Economic integration with the EU 

The  EU  is  Kosovo’s  biggest  trade  and  investment  partner.  However,  Kosovo’s  export 
capacity remains limited. Kosovo’s  economy is still relatively unintegrated in global trade 
flows, with a trade openness of 71.1 % of GDP. However, the value of Kosovo’s goods trade 
with the EU has been rising continuously since 2008, standing at 41.2 % of overall trade in 
2014. 

In spite of that increase, Kosovo’s total trade volume with the EU remains very limited (EUR 
98.08  million  in  exports  and  EUR  1.08  billion  in  imports  in  2014),  reflecting  the  low 
competitiveness  of  its  products  and  other  structural  obstacles  hindering  this  potential.  The 
Central  European  Free  Trade  Agreement  (CEFTA)  countries  remained  Kosovo’s  second 
largest trade partner (29.6 % of total trade). 

ERP  Recommendation  9:  "Facilitate  trade  by 
amending  the  Customs  Code  and  adopting  new 
legislation on customs enforcement of IPR." 

ERP  Recommendation  10:  "Adopt  a  holistic 
approach to Foreign Direct Investment that anchors 

37 

 
 
 
 
 
 
the  biggest  foreign 
EU  countries  are 
investors  in  Kosovo  (35 %  of  overall 
investment).  The  planned  entry  into  force 
of  Kosovo’s  Stabilisation  and  Association 
Agreement  with  the  EU  is  expected  to 
further  incentivise  economic  ties  with  the 
EU countries. Kosovo will, however, need to continue with reforms in order to facilitate trade 
and foreign direct investment, in line with ERP recommendations 9 and 10. 

supportive  policies  in  a  strategic  framework  and 
focus  on  removing  existing  obstacles.  Increase 
investor protection by developing an investor after-
care  program  and  establish  an  investor  grievance 
mechanism." 

5.  

EUROPEAN STANDARDS 

5.1. 

Internal market 

5.1.1.  Free movement of goods 

Kosovo  is  at  an  early  stage  of  preparation  in  the  area  of  free  movement  of  goods.  Some 
progress was made in the last year. In the coming year, Kosovo should in particular: 

→ improve inter-institutional coordination to ensure that legislation is enforced; 

→ further improve quality infrastructure, strengthen market surveillance capacity and increase 
consumers’ awareness of their rights. 

The  Ministry  of  Trade  and  Industry  (MTI)  has  made  gradual  progress  in  implementing  the 
strategy on free movement of goods that it adopted in February 2013. 

On  horizontal measures, as regards  standardisation, 1 064  European  standards have  been 
adopted as a standard reference in the reporting period. The cooperation agreement concluded 
with  the  Albanian  Standards  Body  is  the  way  for  Kosovo  to  adopt  European  standards. 
Kosovo’s Standards Agency needs to be consolidated as an institution, and expand the online 
sales of standards (e-Commerce function). 

In 2014 Kosovo adopted several regulations and administrative instructions, to put in place a 
system  of  conformity  assessment.  The  MTI  also  authorised  several  conformity  assessment 
bodies. Harmonisation with EU rules and the use and enforcement of conformity assessment 
needs to be strengthened. 

As regards accreditation, in November 2014 the General Accreditation Directorate was the 
subject of a full European Cooperation for Accreditation peer evaluation. This is a crucial step 
towards  the  signing  of  the  European  multilateral  agreement  for  accreditation  of  test 
laboratories. The recommendations are being implemented. 

On  metrology,  the  Agency  for  Metrology  still  lacks  capacity.  The  laboratories  for  time, 
frequency,  length  and  force  are  not  operational  due  to  lack  of  equipment.  Kosovo  is  fully 
aligned with the Directive on Non-Automatic Weighing Instruments. Since 2014, laboratory 
activities  have  increased  in  the  areas  of  mass,  flow  and  volume,  electrical  measurement, 
precious  metals  and  thermometry.  The  quality  system  imposed  by  the  applicable  ISO 
standards must be implemented and awareness-raising improved. In general, the laboratories’ 
operational capacity needs to increase to meet the necessary quality standards. 

On market surveillance, market inspectorates carried out 1622 inspections resulting in 145 
corrective  measures  (fines  and  confiscations).  A  Regulation  on  Establishment  and 
Functioning of the Rapid Exchange of Information System on Dangerous Products is at a very 
early stage of implementation. Communication and coordination mechanisms between those 
responsible for market surveillance need to be improved and enforcement strengthened. 

38 

 
 
 
 
 
 
As regards consumer protection, further efforts are needed. While a number of awareness-
raising  activities  have  been  carried  out,  people  are  not  sufficiently  aware  of  their  rights  as 
consumers.  Between  September  2014  and  September  2015  307  consumer  complaints  were 
submitted  to  the  Department  of  Consumer  Protection;  125  were  resolved  in  favour  of  the 
consumer, 110 were found ungrounded and 72 have not yet been reviewed.  

Some administrative instructions were adopted on the classification, labelling and packaging 
of  chemicals.  There  is  no  evidence  on  alignment  with  the  Registration,  Evaluation, 
Authorisation and Restriction of Chemicals (REACH) Regulation yet. 

5.1.2.   Movement of persons, services and right of establishment 

Kosovo is at an early stage of preparation in the free movement of persons, services and the 
right of establishment. Some progress was made, particularly on financial services. Thorough 
and transparent auditing and accounting are crucial for the development of a sound financial 
services  market  and  the  economy  at  large,  especially  small  and  medium-sized  enterprises 
(SMEs). In the coming year, Kosovo should in particular: 

→ further align the law with the EU services and professional qualifications directives; 

→ further harmonise existing regulations and procedures with EU practice, particularly in the 
area of corporate accounting and auditing. 

As regards the movement of persons, no new agreements were concluded on the movement 
of workers and the coordination of social security systems.   

On freedom to provide services, Kosovo is at an early stage of alignment with the services 
directive. A database on trade in services has been set up in the MTI to support ongoing trade 
negotiations on services liberalisation within the Central European Free Trade Area. 

On  postal  services,  Kosovo  has  to  a  large  extent  aligned  its  legislation  with  the  acquis. 
However,  universal  service  delivery  is  hindered  by  political  difficulties  in  Serb-majority 
municipalities.  In  spite  of  some  reductions  in  the  weight  limit  for  reserved  services  in 
previous  years,  these  are  still  not  in  line  with  the  acquis.  International  postal  services  are 
provided to all postal administrations except Serbia, due to lack of an agreement. 

On  mutual  recognition  of  professional  qualifications,  alignment  with  the  acquis  is  at  an 
early  stage.  A  Kosovo-wide  framework  on  regulated  professions  still  needs  to  be  adopted. 
Kosovo  should  step  up  its  efforts  to  align  legislation  with  the  services  directive  and  the 
professional  qualifications  directive.  To  do  this,  Kosovo  should  draft  a  list  of  minimum 
training requirements for regulated professions to be included in its legislation and an action 
plan for harmonising professional qualifications legislation with the acquis. 

The  Central  Bank  of  Kosovo  continued  to  review  existing  financial  services  legislation, 
including laws on insurance, micro-finance institutions and non-banking financial institutions. 
Alignment of these laws with the acquis needs to be ensured. Kosovo is still not part of the 
‘green  card’  system  so  additional  vehicle  insurance  is  required  for  most  foreign  vehicles 
entering Kosovo. Under the future Stabilisation and Association Agreement (SAA), Kosovo 
must  ensure  development  of  the  insurance  sector  based  on  fair  competition  practices  and  a 
level playing field. Amendments to the current banking regulations on mortgage loans, on real 
estate appraisal and on capital adequacy were adopted in February 2015, further but not fully 
aligning with the acquis. The standardised approach to credit risk and the basic indicator and 
standardised  approach  for  operational  risk  according  to  Pillar  I  of  the  Basel  II  Regulatory 
Framework  are  in  force.  The  central  bank  is  working  on  further  adoption  of  Basel  capital 
standards  and  the  capital  requirements  directive  and  capital  requirements  regulation.  The 
financial services market remains at an early stage of development. 

39 

 
 
 
 
On company law, some administrative measures were adopted in July 2015, providing a basis 
for the reduction of business registration fees. The law outlining the role and responsibilities 
of the Kosovo Business Registration Agency has still not been adopted.  

As  regards  corporate  accounting  and  auditing,  an  amendment  to  the  draft  law  on 
accounting,  financial  reporting  and  audit  still  needs  to  be  adopted.  The  capacity  of  the 
institutional  audit  oversight  structures  needs  to  be  strengthened  considerably;  enforcement 
remains  weak  and  substantial  efforts  are  needed  to  ensure  the  development  of  reliable  and 
efficient financial reporting, in line with EU practice. Kosovo still needs to align its rules with 
international accounting and financial reporting standards. 

5.1.3.  Free movement of capital 

There is some level of preparation in this area. Some progress was made on free movement 
of capital. Capital movements remain largely free, with no restrictions on foreign ownership 
or investment  in  the financial sector, and the central bank’s capacity to supervise the sector 
remains sufficient.  

Movement  of  capital  remains  largely  free  in  Kosovo.  The  draft  law  on  general  insurance, 
covering  such  issues  as  minimum  capital  requirements,  solvency  requirements  and  other 
issues  related  to  proper  risk-based  supervision  requirements  for  insurance  companies  still 
needs  to  be  adopted.  Increased  efforts  are  needed  to  achieve  tangible  results  in  the  fight 
against economic and financial crime. 

There was limited progress on the issue of acquisition of real estate, including the purchase of 
land,  by  foreign  citizens.  Provisions  in  the  relevant  laws,  implementing  acts  and 
administrative  practices  are  still  an  obstacle  to  equal  treatment.  Other  difficulties,  e.g.  in 
registering property, need to be addressed. 

As  regards  the  payment  system,  regulations  on  issues  including  payment  instrument 
statistics,  the  bank  account  standards  numbering  system  and  international  payments  were 
approved in 2014. The Central Bank of Kosovo continued to reinforce supervision of payment 
systems  and  improve  the  SWIFT  infrastructure  for  international  payments,  following  its 
connection to SWIFT in December 2013. In February, Kosovo started using the International 
Bank Account Number (IBAN) system for international payments. Further efforts are needed 
to continue alignment with the acquis in payment services. 

5.1.4.  Customs and taxation 

Kosovo is moderately prepared in the area of customs and at an early stage in taxation, with 
some  progress  made  in  both  areas.  It  took  some  initial  steps  towards  merging  the  customs 
and  tax  administrations  and  upgrading  internal  controls.  Customs  legislation  is  largely 
compliant with the EU’s customs code. In the coming year, Kosovo should in particular: 

→ implement customs legislation in line with EU practice; 

→ strengthen the Kosovo tax administration’s internal  IT  platform,  its internal  performance 
controls and the fight against corruption; 

→  step  up  the  fight  against  the  informal  economy  and  tax  evasion  and  prevent  any  undue 
influence on the work of their institutions. 

The  customs  service  has  further  improved  its  legislative,  administrative  and  organisational 
capacity.  The  first  steps  towards  merging  the  customs  and  tax  administrations  into  a  single 
revenue agency have been taken. Despite an overall fall in imports, the 2014 reorganisation of 
the  customs  administration  resulted  in  an  increase  of  3.9 %  in  the  collection  of  revenues 
compared  with  2013  and  new  systems  reduced  the  scope  for  corruption.  The  merger  of 

40 

 
 
 
 
investigation units also brought positive results. Kosovo Customs operate throughout Kosovo, 
although to a limited extent in the north. In 2015, Kosovo applied to join the Common Transit 
Convention  and  signed  bilateral  agreements  with  Albania  on  trade  facilitation,  including 
common  transit,  and  on  cooperation  in  criminal  customs  matters  with  the  United  Kingdom. 
The  exchange  of  pre-arrival  electronic  information  with  regional  customs  administrations  is 
working  well.  Nevertheless,  inconsistencies  between  the  customs  and  excise  code  and  the 
criminal code continue to hinder the fight against customs crime. The informal economy and 
smuggling  across  the  border/boundary  lines  continue  to  harm  the  economy.  Following  an 
agreement  in  the  Pristina-Belgrade  dialogue,  two  new  co-located  crossing  points  have  been 
agreed. 

In  taxation,  Kosovo  has  started  to  implement  the  2014-2018  strategy  and  action  plan  for 
preventing  and  combating  the  informal  economy,  money  laundering  and  financing  of 
terrorism.  The  tax  administration  has  continued  to  improve  its  human  and  administrative 
capacity.  Progress  has  been  made  in  introducing  electronic  services  including  online  tax 
returns,  verification  and  payment  system  and  business  registration  centres  (one-stop  shop). 
There  was  no  progress  in  modernising  the  administration’s  internal  IT  platform  and  its 
procedures.  The  capacity  to  enforce  tax  collection  in  northern  Kosovo  remains  extremely 
limited. The existing backlog of complaints against the customs and tax administrations was 
finally dealt with and, as a result, the Independent Review Board dealing with such cases was 
abolished in December 2014. 

5.1.5.   Competition 

Kosovo is at an early stage in the area of competition. There was no progress in this field as 
the Kosovo Competition Authority (KCA) faced substantial challenges to its investigative and 
decision-making capacity. In the coming year, Kosovo should in particular: 

→  ensure  that  pending  appointments  are  made  to  the  Kosovo  Competition  Commission 
(KCC), that staffing, facilities and training for the KCA are appropriate, and that enforcement 
restarts as soon as possible; 

→ approve the amendments to state aid legislation and start to enforce it without delay. 

As regards antitrust and mergers policy, secondary legislation to implement changes to the 
February 2014 law on the protection of competition is still lacking. 

The  KCA  is  still  not  operational,  lacking  a  quorum  since  November  2013  due  to  delays  in 
replacing five members of the KCC whose terms of office had ended. The KCA has thus not 
been able to carry out its duties as new investigations have to be approved by the KCC board, 
and  very  little  enforcement  is  taking  place.  Instead,  it  has  concentrated  on  advocacy  and 
providing opinions on other bodies’ initiatives. Although the budget has been approved, the 
KCA  still  lacks  staff  and  adequate  premises,  internal  controls  and  information  systems. 
Cooperation between the KCA and other regulatory authorities needs to be strengthened. 

The current law on state aid requires further amendment to bring it into line with European 
standards,  in  particular  to  ensure  the  independence  and  impartiality  of  the  State  Aid 
Commission.  The  activities  of  the  State  Aid  Office  were  limited  to  the  distribution  of 
notification forms to potential aid granters. The Office, currently established as a department 
of the KCA, is understaffed and does not have the capacity to screen existing aid schemes. 

5.1.6.  Public procurement 

Kosovo is at an early stage in this area. Effective implementation remains a major challenge 
and  procurement  is  particularly  vulnerable  to  corruption.  Some  progress  was  achieved, 
especially in enforcement of a centralised public procurement system. However, considerable 

41 

 
 
 
 
efforts  are  still  needed  to  use  public  procurement  efficiently.  It  remains  essential  to 
professionalise  and  de-politicise  the  system  and  make  it  transparent  and  accountable, 
including  the  appointment  of  senior  management.  In  the  coming  year,  Kosovo  should  pay 
particular attention to: 

→  strengthening  the  capacity  and  ensuring  the  proper  functioning  of  public  procurement 
bodies, in particular through the timely appointment of competent members of boards; 

→ further aligning public procurement legislation with the acquis; 

→  improving  implementation  of  public  procurement  processes  through  enhanced  use  of 
competitive tender procedures, centralised purchasing, and development of e-procurement. 

Institutional set-up and legal alignment 

Kosovo’s  legal  framework  is  largely  in  line  with  the  acquis  and  other  public  procurement 
principles,  but  does  not  cover  all  areas.  The  law  on  public  procurement  is  broadly  aligned 
with  the  directives  on  classical  procurement  and  to  some  extent  on  utilities.  The  law  on 
concessions  and  public-private  partnerships  is  largely  compatible  with  EU  legislation. 
However, rules on defence and sensitive security procurement have yet to be drafted and the 
law on public procurement still gives preference to domestic bidders.  

In  2014,  Kosovo  developed  a  strategy  and  action  plan  for  the  years  2015-2020  for  the 
development  of  the  public  procurement  system  which  has  not  yet  been  approved  by  the 
government. 

The  public  procurement  administration  in  Kosovo  is  in  place  and  consists  of  three  main 
bodies: the Public Procurement Regulatory Commission (PPRC), responsible for the overall 
development,  operation  and  supervision  of  the  public  procurement  system;  the  Procurement 
Review Body (PRB), an independent administrative review body examining all allegations of 
breaches  of  the  public  procurement  law;  and  the  Central  Procurement  Agency  (CPA),  in 
charge  of  central  and  coordinated  purchases.  Concerns  remain  about  capacity  limitations, 
corruption investigations and the process of appointments to the board of the PRB. Only three 
of  the  five  members  of  the  PRB  board  are  in  place,  which  seriously  restricts  its  activities, 
including reviews of high value and complex procurement. Implementation capacity needs to 
be strengthened at all levels to ensure enforcement.   

Implementation and enforcement capacity 

The public procurement market stood at 8.9 % of gross domestic product (GDP) in 2014, a 
slight decline over the last three years. In 2014, 11 362 contracts for a total value of close to 
EUR  389  million  were  awarded.  Of  these,  almost  73 %  were  awarded  using  an  open 
procedure, a significant 17 % decrease. High value contracts account for 63 % of all contracts 
and the average number of bids per tender increased to 6.1 in 2014, compared with 5.2. 

Effective implementation and enforcement is a major challenge, largely due to weak planning 
and corruption. Almost 30 % of contract notices were cancelled, pointing to a need to improve 
procurement planning. Risks and shortcomings exist at all stages of public procurement. The 
legal provisions on evaluating contract performance, the effectiveness and efficiency of public 
procurement proceedings, and contract management are in place, but implementation capacity 
needs  to  be  reinforced.  Ways  and  means  to  increase  value  for  money  should  be  explored. 
Some  important  steps  have  been  taken  to  enforce  a  centralised  system  of  procurement.  In 
February  2015,  a  list  of  common  items,  including  six  categories  that  must  be  procured 
centrally, was approved for the first time since the CPA’s establishment. 

42 

 
 
 
 
Monitoring of public procurement is insufficient. The ex post monitoring performed by the 
PPRC  is  still  confined  to  non-systematic,  occasional  checks  of  completed  procurement 
contracts. Only a small share of concluded procurement contracts is monitored. Last year, the 
PPRC  started  ex  ante  monitoring  of  contract  notices  sent  by  contracting  authorities  for 
publication, a positive contribution to preventing irregularities which should be expanded. 

A  central  public  procurement  portal  is  in  place.  To  increase  transparency  and  promote 
efficiency in public procurement, the websites of all public procurement institutions need to 
be improved and the procurement plans of public bodies could be published. Kosovo plans to 
introduce  e-procurement  and  is  currently  developing  information  and  communications 
technology  infrastructure  and  a  contract  management  information  system,  with  support  by 
international donors. Appropriate sequencing of the steps, including the necessary legislative 
amendments and capacity building, needs to be determined and implemented.  

As  regards  the  authorities’  capacity  to  manage  public  procurement,  the  law  provides  for 
obligatory training for public procurement officers. Training courses and exams are offered by 
the Kosovo Institute of Public Administration with the involvement of the PPRC. However, 
the certification system and capacity to manage public procurement still needs to improve. 

There  is  a  lack  of  rules  on  integrity  and  conflicts  of  interest,  insufficient  enforcement  to 
identify and address corrupt and fraudulent practices, and lack of a risk indicator system. The 
perception  of  corruption  in  public  procurement  remains  prevalent  in  Kosovo.  There  are 
statutory  disciplinary  procedures  but  concerns  about  their  implementation  remain.  The 
integrity of and cooperation between all public procurement bodies need to be strengthened. 

Efficient remedies system 

The right to legal remedy is stipulated in the laws on public procurement and concessions. 
The public procurement law is in line with the acquis provisions on contract annulment and 
penalties,  although  in  practice  this  is  not  frequently  used.  On  remedies,  in  2014,  the  PRB 
received  and  processed  537  appeals.  Of  these,  161  cases  were  returned  for  re-evaluation, 
while in 104 cases the review panel decided to cancel procurement. The highest proportion of 
irregularities continues to be in the evaluation of bids and irregularities in tender dossiers. 

On implementation capacity, the PRB is understaffed and the quality and transparency of its 
decisions  leaves  room  for  improvement.  Discrepancies  between  expert  review  assessments 
and  actual  decisions  undermine  stakeholders’  trust  in  the  system.  Cooperation  between 
different institutions in this field, notably between public procurement, anti-corruption, audit 
and other law enforcement bodies needs to be enhanced. 

5.1.7.  Intellectual property law 

Kosovo has some level of preparation in this area. Some progress was made in the area of 
intellectual property rights. In the coming year, Kosovo should in particular:  

→ develop a legislative framework to implement obligations under the future SAA; 

→ step up efforts to ensure the enforcement of intellectual property rights; 

→  appoint  the  director  and  address  the  existing  backlog  of  applications  at  the  Industrial 
Property Agency. 

On  copyright  and  neighbouring  rights,  the  Law  on  Copyright  and  Related  Rights  was 
amended  and  further  aligned  with  the  acquis.  It  now  requires  implementing  provisions  on 
private copy schemes and digital piracy, which are essential for enforcement. The task force 
against  piracy  and  counterfeiting  set  up  by  the  government  has  continued  with  awareness-
raising.  It  seized  several  thousand  counterfeit  goods  and  brought  several  criminal  cases  to 

43 

 
 
 
 
court.  The  process  for  negotiating  fees  between  collective  management  organisations  and 
broadcasters was re-launched in 2015 but no agreement has been reached yet. 

On  industrial  property  rights,  amendments  to  the  laws  on  patents  and  trademarks  were 
adopted  in  August  2015,  further  aligning  them  with  the  acquis.  The  Industrial  Property 
Agency’s  administrative  capacity  was  strengthened  by  allocating  and  training  some 
permanent  and  temporary  staff.  However,  the  director  of  the  agency  still  needs  to  be 
appointed. There is still a backlog of industrial property rights applications although there has 
been progress in the processing thereof. The Intellectual Property Council met in March 2015, 
but cooperation between institutions and law enforcement still needs to improve. Kosovo also 
needs to increase awareness among holders and users of intellectual property rights. 

As  regards  enforcement,  Kosovo  Customs  has  carried  out  operations  against  goods  that 
breach  intellectual  property  rights,  many  in  response  to  requests  by  rights  holders.  In  2014, 
the  total  number  of  interventions  by  Kosovo  Customs  stood  at  304,  and  the  value  of  goods 
seized at EUR 4.7 million; 280 of these interventions were based on responses to requests for 
action by rights holders. However, greater efforts are needed to ensure enforcement, including 
accessible and effective legal measures that can be undertaken by rights holders and greater 
administrative coordination between the institutions involved. The police still do not have a 
unit specialised in intellectual property rights. The draft law on customs measures still needs 
to be adopted and aligned with the relevant EU regulation. 

5.1.8.  Employment and social policies, public health policy 

Kosovo  is  at  an  early  stage  of  preparation  in  this  area.  There  has  been  no  progress  in 
employment, social and health policies. In the coming year, Kosovo should in particular: 

→ implement the 2014-2020 employment sector strategy, monitor the results and ensure that 
the new employment agency becomes operational; 

→  enforce  the  law  on  labour  and  legislation  on  health  and  safety  at  work.  Implement 
inspection legislation and provide the Labour inspectorate with appropriate resources to fulfil 
its mandate. 

On  employment  policy,  the  2014-2020  employment  sector  strategy  is  in  place,  but 
implementation is lagging, pending adoption of the action plan and the allocation of funding. 

Data  from  the  labour  force  survey  for  2014  show  that  unemployment  increased  to  35.5 % 
compared to 30 % in 2013. Labour market participation has seen a slight increase but remains 
very  low  at  41.6 %  (40.5 %  in  2013).  Labour  force  participation  and  employment  rates  for 
women  remained  unchanged  between  2013  and  2014  at  around  21 %  and  12.5 %.  Informal 
employment  remains  high.  There  was  also  an  increase  in  the  number  of  long-term 
unemployed, from 68.9 % in 2013 to 73.8 % in 2014. Youth  unemployment  increased from 
55.9 % to 61.0 %. The share of young people (between 15-24), who are not employed, not in 
education and not in training, fell from 35.3 % in 2013 to 30.2 % in 2014. 

The  Public  Employment  Service  helped  to  find  jobs  for  3 %  of  registered  jobseekers  and 
organised training for 2.5 % of registered jobseekers, of which 38 % were women. The budget 
allocated for active labour market measures for 2015 has increased by 224 %. However, the 
funding  for  employment  services  and  training  and  re-training  remains  insufficient  and 
fragmented  across  several  entities.  The  lack  of  funding  prevents  the  implementation  of  the 
announced plan to merge services in the new employment agency. 

On  social  policies,  Kosovo  still  needs  to  amend  the  labour  law  to  align  it  with  the  acquis 
(e.g. employment contracts, working hours) and implementation remains unsatisfactory.  

44 

 
 
 
 
Effective implementation of the law on health and safety at work is still needed as concerns 
labour  inspectors,  to  prevent  deaths  and  injuries.  In  2014,  63  workplace  accidents  were 
reported, of which nine were fatal (during the first six months of 2015, 26 accidents with five 
fatalities)  but  incidents  are  under-reported.  The  Labour  Inspectorate  needs  to  target  the 
informal  part  of  the  construction  sector  more  efficiently.  The  number  of  inspectors  should 
increase as only 50 cover implementation of laws on labour and on health and safety at work. 

On  social  dialogue,  the  implementation  of  the  General  Collective  Agreement,  which  lays 
down the rights and obligations of employers and employees, is still pending. Amendments to 
the  law  on  the  Social  and  Economic  Council,  still  being  drafted,  need  to  provide  clear 
membership selection criteria and procedures. The council needs to strengthen its capacity to 
improve the quality of social dialogue.  Bi-partite social dialogue hardly exists. 

As  regards  social  inclusion,  Kosovo  needs  to  ensure  that  municipalities  have  sufficient 
resources to deliver the social services under their responsibility.  

On  social  protection,  the  first  round  of  licensing  of  individual  social  and  family  service 
providers  has  been  completed  and  the  second  phase  of  licensing  legal  entities/organisations 
has  started.  In  2014,  four  new  minimum  standards  for  social  and  family  services  were 
adopted, increasing the number to 16. However the decentralisation of social services has still 
not been implemented by municipalities and allocation of funding from the central budget is 
still  needed  to  ensure  effective  decentralisation.  Budget  constraints  have  delayed  the 
introduction of the new pension scheme. 

On equal opportunities, the law on gender equality has been adopted but implementation and 
enforcement  of  legislation  needs  to  be  improved  to  address  high  unemployment  among 
women  and  under-representation  of  women  at  all  levels  of  decision-making.  Insufficient 
maternity  leave  provisions  undermine  efforts  to  tackle  discrimination  against  women  in  the 
workplace, especially in the private sector. The Agency for Gender Equality has not assessed 
the implementation of the programme for gender equality (2008-2013). 

On  public  health  policy,  the  first  phase  of  the  Health  Information  System  (HIS)  has  been 
completed  and  continued  to  be  implemented.  However,  public  health  spending  remains 
among  the  lowest  in  the  region.  This  hinders  implementation  and  enforcement  of  sector 
reforms and policies. For example, the 2014-2020 action plan to implement the health sector 
strategy  still  needs  to  be  adopted,  the  law  on  health  insurance  needs  to  be  implemented, 
implementation of the HIS needs to be completed to allow reliable collection of health data, 
the health insurance fund needs to be set up and the 2013-2015 rare diseases action plan needs 
to be implemented. Out-of-pocket payments continue to impede access to healthcare for all, 
including vulnerable groups. Child mortality remains among the highest in Europe. The health 
law needs to be amended following the adoption of the law on the health insurance fund. 

The law on tobacco control needs to be enforced. The communicable diseases infrastructure 
and reporting system need to be further developed. On blood, tissues, cells and organs, the 
law  on  transplantation  of  tissues  and  cells  needs  to  be  implemented.  Concerning  patients’ 
rights 
in  cross-border  healthcare,  pharmaceutical,  mental  health,  drug  abuse 
prevention, health inequalities and cancer screening, no progress was made.   

Insufficient  funding  for  the  health  sector  still  hampers  its  ability  to  meet  basic  needs  for 
maternal and child health, public health and nutrition, with a risk of stunting among children. 

45 

 
 
 
 
5.1.9.  Education and research 

Preparations in education and research are at an early stage. There has been no progress in 
this area over the last year. The quality of education needs to be considerably improved. In the 
coming year, Kosovo should in particular: 

→  improve  quality  of  education  at  all  levels  and  improve  access  to  quality  education  for 
marginalised  groups,  especially  children  with  disabilities,  Roma,  Ashkali  and  Egyptian 
children; 

→ ensure the autonomy and independent operation of higher education institutions and adopt 
a new law for higher education based on international standards; 

→  strengthen  research  and  innovation  capacity  through  reform  of  higher  education 
institutions and increase investment in research, both in the public and private sectors. 

On  education,  the  Kosovo  curriculum  framework  and  core  curriculum  need  to  be 
implemented.  The  National  Teacher  Licensing  Council  developed  a  professional  teacher 
development  system  with  performance  evaluation  mechanisms  but  the  decision  to  allow  an 
across-the-board  salary  increase  for  all  teachers  is  not  in  line  with  the  reform  principles 
approved  by  the  Ministry  of  Education  and  undermines  the  performance-based  approach  to 
teacher policy. In April 2014, Kosovo participated in the Programme for International Student 
Assessment  (PISA)  for  the  first  time  and  results  will  be  published  in  December  2016. 
According to government data, total public spending on education is 4.4 % of GDP.  

Rates of school enrolment are comparable with countries in the region, with the exception of 
access  to  pre-school  education  or  early  childhood  education.  Only  4.5 %  of  children  attend 
pre-school education (age 0-5). 74% of children aged 5-6 attend pre-primary education.  

The  government  continued  actions  to  prevent  early  school  leaving,  particularly  for  children 
from the Roma, Ashkali and Egyptian communities. However, implementation of legislation 
on  responding  to  non-enrolment  and  early  school  leaving  needs  to  be  further  improved. 
Kosovo  continued  work  to  provide  access  to  quality  education  for  children  with  disabilities 
but the current rate of training is insufficient to meet the target of reaching all teachers within 
a reasonable timeframe.  

The  current  Vocational  Education  and  Training  (VET)  system  is  not  in  tune  with  labour 
market needs. A few VET programmes possess the required standards to receive accreditation 
by  the  National  Qualifications  Authority.  The VET  school  network  needs  to  be  rationalised 
and the VET provision needs to be revisited.  

The higher education system in Kosovo has been affected by the lack of a clear strategic plan, 
which would be needed to avoid duplication and ensure the added value of study programmes. 
The  operation  of  higher  education  institutions  in  Kosovo  is  not  transparent,  particularly  as 
regards to recruitment procedures, which are weak and very vulnerable to politicisation at all 
levels and sectors of education. The education sector remains a high-risk area for corruption.  

Although  the  Kosovo  Accreditation  Agency  has  become  a  full  member  of  the  European 
Network  for  Quality  Assurance  in  Higher  Education,  its  reputation  has  been  significantly 
tarnished both inside and outside Kosovo after key members of its senior management were 
arrested on suspicion of corruption.  

Difficulties  in  the  implementation  of  the  Pristina-Belgrade  dialogue  agreement  on  higher 
education diplomas need to be overcome for full implementation in 2016. 

46 

 
 
 
 
Kosovo  continues  to  participate  in  the  Erasmus+  programme  for  cooperation  in  higher 
education and youth sectors. Cooperation is important to help enhance competences and skills 
in staff and students, as well as employability of youth. 

Kosovo  has  taken  limited  action  to  develop  its  research  and  innovation  capacity.  The 
capacity  of  universities  in  Kosovo  to  undertake  research  work  is  extremely  limited,  which 
negatively  affects  the  quality  of  post-graduate  programmes  and  innovation.  The  budget  for 
research  remains  insufficient  as  the  level  of  investment  in  research  is  still  below  0.2  %  of 
GDP.  The  law  on  scientific  research  activities  is  not  being  implemented  due  to  a  lack  of 
funding. The link between research and business remains weak. Kosovo participates in the EU 
research  and  innovation  programme  'Horizon  2020'  but  the  number  of  projects  evaluated 
successfully and receiving funding is very small.  

5.1.10. World Trade Organisation (WTO) issues 

Kosovo’s preparations remain at an early stage and no progress was made in this area. 

Kosovo is not a member of WTO and has taken no formal steps to join. 

5.2.   Sector policies 

5.2.1.   Industry and SMEs 

Kosovo has some level of preparation on industry and SMEs. Some progress was made in 
this field. In the coming year, Kosovo should in particular: 

→ follow up on the recommendations of the ‘Small Business Act’ assessment; 

→ introduce regulatory impact assessments to reduce the administrative burden on SMEs. 

As regards industrial policy and SMEs, the implementation of Kosovo’s 2013-2017 private 
sector  development  strategy  and  the  EU’s  ‘Small  Business  Act’  are  advancing  slowly. 
Communication  between  ministries  and  executive  agencies  needs  to  improve.  To  reduce 
administrative  burden  on  SMEs,  the  government  needs  to  introduce  regulatory  impact 
assessments.  Strategies  and  action  plans  in  this  field  need  to  be  timed  and  monitored.  The 
Kosovo  Investment  and  Enterprise  Support  Agency  is  operational  and  but  not  yet  fully 
staffed,  so  its  impact  is  still  limited.  Although  full  online  company  registration  has  not  yet 
been introduced, the process for registering individual businesses and companies is quick (1-3 
days). Nevertheless, the main obstacles to SME development and further growth are access to 
finance, weak legal enforcement of contracts and business regulations, administrative barriers, 
unfair competition from the informal sector, inefficient judiciary and corruption. 

5.2.2.  Agriculture and fisheries 

Kosovo  has  some  level  of  preparation  in  agriculture  and  rural  development  and  in  food 
safety,  veterinary  and  phytosanitary  policy.  Some  progress  was  made  by  further 
strengthening  the  institutions  responsible  and  increasing  the  budget.  In  the  coming  year, 
Kosovo should in particular: 

→ improve land consolidation; 

→ transfer inspection responsibilities to the Kosovo Food and Veterinary Agency; 

→ set up the internal audit unit in the Agriculture Development Agency. 

47 

 
 
 
 
 
 
On  agriculture  and  rural  development  policy,  the  government  has  continued  to  increase 
spending  on  agriculture.  The  volume  of  direct  payments  has  almost  doubled  compared  to 
2014  and  now  stands  at  EUR  23  million.  Similarly,  the  amount  allocated  to  agricultural 
investment  grants  stands  at  EUR 20  million.  However,  there  are  insufficient  staff  to  ensure 
proper  monitoring  and  prompt  payment.  The  Agriculture  Development  Agency’s  Internal 
Audit Unit has not been set up. 

Further efforts are needed to tackle illegal changes of agricultural land use, which continue to 
be  an  obstacle  to  implementing  the  law  on  spatial  planning.  Not  enough  is  being  done  to 
implement  land  consolidation  to  rationalise  land  holdings,  establish  a  transparent  market  in 
land and enforce sanctions. 

Reliable  agricultural data are a  basic requirement for sound policy decisions. There  are still 
discrepancies  between  Eurostat’s  and  national  statistics.  The  first  agricultural  census  was 
finalised in 2015.  

Implementation  of  the  law  on  organic  production  is  weak,  and  the  establishment  of  a 
functioning  supervisory  authority  and  a  commission  on  organic  production  is  still  pending. 
Kosovo lacks minimum standards and cross-compliance measures in the areas of food safety, 
animal health and welfare and the environment. The volume of illegal logging is still too high 
for sustainable forest management. 

As  regards  food  safety  and  veterinary  sectors,  progress  has  been  made  in  securing  co-
financing  and  a  location  for  a  rendering  plant  for  processing  and  disposing  of  animal  by-
products. However, a package of laws (the food law, veterinary law, sanitary inspection law 
and livestock law) has not yet been finalised. The annual inspection plan has been approved, 
but the multiannual inspection plan for animal diseases is out of date. 

Responsibility for inspection, which should have taken place by 1 January 2015 (already three 
years  late)  has  still  not  been  transferred  from  municipalities  to  the  Kosovo  Food  and 
Veterinary Agency. There have been few developments in improving and systematising data 
management for animal identification, movement and registration. 

Illegal trade, particularly in animals from Serbia, continues to be a problem. The process of 
upgrading food processing establishments to EU standards should continue.    

In  the  phytosanitary  sector,  although  the  law  on  plant  protection  was  amended,  the  plant 
disease surveillance programme has not yet been set up. Further updates are needed to the list 
of plants and plant products.   

5.2.3.   Environment and climate change 

Kosovo remains at an early stage of harmonisation with the acquis. No progress was made 
on environment and climate change and in the coming year, Kosovo should in particular: 

→ set up an environmental monitoring network for air and water; 

→ establish systematic strategic planning on climate action. 

Legislation to address increasing environmental challenges in Kosovo has not yet been fully 
legislation, 
harmonised  with 
environmental impact assessments and strategic environmental assessments need to be better 
implemented, especially locally. Public participation and consultation need strengthening. 

implemented.  As  regards  horizontal 

the  acquis  or 

The air quality monitoring system is equipped, but still not fully operational. Although there 
are  advanced  analytical  laboratories,  the  lack  of  regular  maintenance  and  calibration  of  the 
monitoring equipment jeopardises the accuracy of monitoring. Data collection and processing 

48 

 
 
 
 
is manual, with no automatic system to inform the public in real time. In addition, the Kosovo 
Environmental  Protection  Agency’s  air  quality  reports  contain  no  inventory  of  air  polluters 
and  pollution  from  the  main  sources  is  not  adequately  measured  (in  particular  from  the 
Kosovo A power plant). Air quality plans for the biggest urban agglomerations are needed. 

On  waste  management,  the  Ministry  of  Environment  and  Spatial  Planning  should  step  up 
efforts  to  finalise  a  master  plan  for  waste  management  and  increase  opportunities  for 
investment in this sector. Basic waste management definitions and concepts such as recycling 
and recovery of different waste streams are not sufficiently supported by current legislation, 
limiting  opportunities  for  private  sector  involvement.  Both  investment  funding  and  the 
capacity of municipalities and operators to implement the 2012 law on waste remain very low. 
The high number of illegal landfills needs to be addressed urgently. 

On water management, an inter-ministerial water council chaired by the Prime Minister was 
set up in early 2015. Kosovo lacks a water policy strategy, investment plan and strategy, and a 
disaster risk reduction strategy. There is no progress in setting up river basin authorities or an 
independent water management authority. The water resource monitoring and record system 
remains  incomplete  for  underground,  surface,  drinking  and  bathing  water.  Maintenance  or 
stolen and vandalised measuring equipment is an issue. Monitoring of the quality of drinking 
water  has  improved  but  further  quality  control  measures  compliant  with  EU  standards  are 
needed. A quality control system for bottled water has not been set up. On infrastructure, the 
need for investment to improve efficiency is considerable  (leakages are estimated at around 
75 %  of  piped  water).  The  recommendations  from  a  dam  safety  study  have  yet  to  be 
implemented. As a result of the introduction of checks, revenue collection has improved but is 
still  low.  Recent  droughts  have  highlighted  the  need  to  urgently  reduce  free  water  supplies 
and  develop  alternative  water  resources.  Regional  water  companies  need  to  improve  water 
resource management and prepare drought management plans. 

On  nature  protection,  there  has  been  very  little  progress  in  implementing  the  acquis.  The 
management  plan  for  the  "Sharri"  park  has  been  prepared  but  measures  to  combat  illegal 
construction activities in this park have stalled. There is very little progress in starting to set 
up  the  Natura  2000  network  of  protected  areas.  Institutions  in  this  area  remain  weak.  Any 
further development of hydropower should take place in conformity with EU legislation. 

On  industrial  pollution  and  risk  management,  two  integrated  permits  have  been  issued, 
while three applications are currently under review from the total of 30 operators found to fall 
under the industrial emissions Directive. 

No  progress  was  made  on  civil  protection  (floods,  draughts,  forest  fires  and  other 
environmental disasters).  

A  draft  framework  strategy  on  climate  change,  comprising  a  low  emissions  development 
strategy and an adaptation strategy, has yet to be adopted. It should be made consistent with 
the EU 2030 framework. Significant efforts are also needed to integrate climate action into all 
relevant  sector  policies  and  strategies.  Kosovo  is  at  an  early  stage  of  transposing  and 
implementing  the  climate  acquis.  Even  if  there  was  some  progress  in  the  preparation  of  a 
country-wide  greenhouse  gases  (GHG)  inventory  report  for  2013,  significant  efforts  are 
needed  to  align  Kosovo  with  the  EU  monitoring  mechanism  regulation,  and  ensure  that 
Kosovo's  capacity  is  enhanced.  By-laws  on  substances  that  deplete  the  ozone  layer,  on 
fluorinated greenhouse gases and on consumer information and CO2 emissions from new cars 
were  adopted  but  no  practical  measures  are  being  implemented.  An  ad  hoc  decision  by  the 
government  to  allow  the  import  of  second  hand  vehicles  (over  10  years  old)  will  have  an 
adverse impact on carbon dioxide emissions and air quality.  

49 

 
 
 
 
Administrative  capacity  in  the  environment  and  climate  sectors  remains  weak.  The 
government  adopted  a  decision  to  establish  the  National  Council  on  Climate  Change  in 
August 2015. Effective inter-ministerial co-operation to enable adoption and implementation 
of low-carbon growth policies is further needed. Significant further efforts are needed to raise 
awareness on environmental issues. 

5.2.4.   Transport policy 

Kosovo is at an early stage of preparation in transport policy. Some progress was made in 
with the adoption of the 2015-2025 multimodal transport sector strategy. In the coming year, 
Kosovo should in particular: 

→ strengthen its regulatory institutions and ensure their independence; 

→ continue reforms in the railway sector; 

→ step up efforts to improve road safety. 

Kosovo  agreed  to  a  priority  list  of  'soft  measures'  in  transport  presented  at  the  Western 
Balkans 6 Vienna Summit and will ensure that they are all fully implemented before the WB6 
Summit  in  June  2016.  On  trans-European  transport  networks,  Kosovo  continued  to 
participate  in  the  South  East  Europe  Transport  Observatory  (SEETO).  Kosovo  played  an 
active role in the Western Balkans 6 connectivity agenda by endorsing the agreement on the 
regional core transport network in Brussels in April, the agreement in Riga in June on the core 
network  corridors  and  on  the  list  of  projects  to  be  implemented  by  2020  at  the  Western 
Balkans 6 Summit in Vienna and by establishing the National Investment Council. 

On  road  transport,  the  strategy  and  action  plan  for  road  traffic  safety  was  adopted  in 
September 2015. However, the law on road traffic safety still needs to be approved.   Kosovo 
has  still  not  aligned  its  legislation  with  the  acquis  on  market  access,  the  profession  of  road 
transport  operators  and  digital  tachographs.  The  maintenance  budget  for  motorways  is  still 
insufficient to ensure regular maintenance. 

On rail transport, the Rail Regulatory Authority is operational, but there was no progress on 
strengthening  its  capacity.  The  regulator’s  independence  needs  to  be  ensured  as  regards  the 
licensing  process  and  market  regulation.  There  has  been  no  new  entrant  in  the  railway 
transport  market  during  the  reporting  period.  The  decision  of  the  regulator  to  revoke  the 
licence issued in March 2014 to a private operator was found unlawful by the Basic Court in 
Pristina.  The  civil  aviation  and  railway  accident  and  incident  investigation  body  is  not 
operational. Upgrading the railway infrastructure is at an early stage of implementation. 

On air transport, the incorporation of the first-phase requirements for the European Common 
Aviation Area Agreement into domestic legislation is nearly complete, pending alignment of 
the labour law with the acquis on working time. The Kosovo Civil Aviation Authority is still 
not part of the Safety Assessment of Foreign Aircraft programme as no board members have 
been appointed since September 2013. There was no progress on implementing the law on the 
air  navigation  services  agency.  Implementing  legislation  still  needs  to  be  adopted  to  ensure 
professional air  navigation and safety services. The air navigation service provider does not 
meet the safety and financial criteria required for certification.  

As regards intermodal transport, the 2015-2025 multimodal transport sector strategy and its 5 
year action plan have been approved by the government in October 2015. 

5.2.5.  Energy 

Kosovo remains at an early stage of legislative alignment with the acquis but there was some 
progress in the energy area. In the coming year, Kosovo should in particular: 

50 

 
 
 
 
→ start implementing the acquis on security of supply and make a final decision as regards 
new generation capacity and decommissioning the Kosovo A power plant; 

→  continue  to  strengthen  institutional  capacity  for  the  energy  market,  in  particular 
safeguarding  the  regulator’s  independence,  appointing  its  full  board,  ensuring  its  financial 
stability, and setting up transparent mechanisms to adjust energy prices. 

→  strengthen  the  capacity  of  the  Nuclear  Safety  and  Radiation  Protection  Agency,  and 
identify a temporary storage facility for radioactive waste. 

The  energy  sector  continues  to  face  problems,  even  if  some  progress  was  made.  Power 
stability improved and cuts are now infrequent, although the situation deteriorated due to last 
year’s explosion in the hydrogen laboratory of the Kosovo A power plant. Those units which 
were severely damaged by the explosion are now operational. 

On security of supply, investment and maintenance continue to improve the reliability of the 
power  transmission  system  and  reduce  transmission  losses.  Whilst  distribution  losses 
dropped, combined commercial and technical losses are high at 28.46 %. Two laws regulating 
the oil sector, including on obligatory petroleum reserves have still not been adopted. Current 
oil stocks are estimated to be only four days. There is no progress in the Energy Community’s 
dispute settlement procedure about customs duties on imports of petroleum products. 

While there was substantial progress with Serbia in terms of relations between transmission 
companies,  little  progress  was  made,  until  the  August  2015  agreement,  on  the  parts  of  the 
2013 agreement that provide for the establishment of a Serbian power supply company in the 
north.  The  parallel  management  that  Serbia  installed  at  the  Gazivode/Ujmani  hydropower 
plant continues to interfere in its operation, with a risk of flooding. 

As regards the internal energy market, the third energy package has not yet been transposed. 
Negotiations with the single bidder for building the new lignite power plant are ongoing and 
the offer still needs to be evaluated. No progress was made on decommissioning Kosovo A or 
refurbishing Kosovo B. Kosovo is highly unlikely to meet its Energy Community Treaty air 
quality obligations, and has not prepared the necessary emissions plan. 

There  was  no  progress  either  as  regards  account  unbundling  or  phasing-out  cross-subsidies 
between different categories of customers. In January, the power company Kosovo Electricity 
Distribution and Supply Company (KEDS) and the public supplier Kosovo Electricity Supply 
Company (KESCO) were legally unbundled. No progress was made on market opening and 
customer switching a legal obligation as a member of the Energy Community from 1 January 
2015.  The  operability  and  independence  of  the  Energy  Regulatory  Office  (ERO)  have  long 
been  undermined  by  political  interference,  low  administrative  capacity,  a  lack  of  human 
resources and a 17 % budget cut. The ERO board currently has only two out of five members, 
meaning that it cannot legally assume many of its responsibilities. The government has not yet 
designed a mechanism to support vulnerable customers. 

The existing renewable energy policy framework, authorising and licensing procedures have 
yet to produce results or even remotely approach Kosovo’s renewable energy target of 25 % 
by 2020. Kosovo is still not in line with the 2009 renewables directive and has no mechanism 
to  monitor  progress  in  reaching  its  2020  targets.  Any  further  development  of  hydropower 
should  respect  EU  environmental  legislation.  There  was  no  progress  in  meeting  the 
requirements for the use of biofuels in transport.  

The  law  on  energy  efficiency  is  not  aligned  with  the  acquis.  The  directive  on  energy 
performance of buildings is not being implemented. Kosovo still has not set up its own energy 
efficiency  fund.  The  combined  heat  and  power project  at  the  Kosovo  B  power  plant  started 

51 

 
 
 
 
operating  in  November,  resulting  in  lower  costs  to  households,  reduced  environmental 
pollution  and  a  more  secure  supply  for  Pristina  residents.  The  Kosovo  Agency  for  Energy 
Efficiency  is  understaffed  and  has  no  capacity  to  monitor,  evaluate  and  verify  progress 
towards  targets.  There  was  progress  in  municipal  energy  efficiency  planning,  but  local 
capacity needs strengthening. 

In  nuclear  safety  and  radiation  protection,  the  law  on  protection  from  ionising  and  non-
ionising radiation has still not been adopted. The staff of the regulatory agency has increased 
but its licensing and inspection capacity remains poor. Funding for the agency is insufficient 
for it to implement its mandate, in particular licensing, public health and safety aspects. There 
is  no  radiation  monitoring  (for  example  of  potential  depleted  uranium  sites).  There  is  no 
control  of  radioactive  waste  and  no  radiological  emergency  plan.  Kosovo  should  identify  a 
temporary radioactive waste storage facility while work continues to find a permanent site.  

5.2.6.   Information society and media 

Kosovo has some level of preparation in this area. Some progress was made, in particular in 
electronic  communication  and  information  and  communication  technologies.  However, 
Kosovo  needs  to  continue  efforts  to  complete  the  legal  framework.  In  the  coming  year, 
Kosovo should in particular: 

→ ensure appropriate capacity, resources and independence of telecoms and media regulators; 

→  implement,  as  a  matter  of  urgency,  the  digital  switchover  and  develop  a  solution  for 
sustainable funding of the public service broadcaster. 

In  electronic  communications  and  information  and  communication  technologies,  the 
Regulatory Authority of Electronic and Postal Communications (RAEPC) has completed the 
secondary  legislation  based  on  the  2012  law  on  electronic  communications.  Kosovo  has 
continued  efforts  to  use  excess  infrastructure  capacity  of  the  public  service  operators 
(railways,  energy  and  road  infrastructure)  for  electronic  communications.  The  three  mobile 
operators launched 4G services in December 2014. Mobile telephony penetration reached 95 
% of active users. Overall internet penetration increased from 9.18 % in 2013 to 10.51 % in 
2014. 

RAEPC has not seen any improvements in its financial and organisational independence. This 
year  the  regulator  has  auctioned  a  new  frequency  band  for  the  use  of  telecommunications 
operators. It is in the final stage of reviewing offers. A national computer emergency response 
team, set up in 2014, still lacks trained staff.  

At the end of August 2015, Kosovo and Serbia agreed the Action Plan to implement the 2013 
Brussels  telecom  arrangements,  including  arrangements  for  the  allocation  of  a  3  digit  dial 
code for Kosovo by the International Telecommunications Union (ITU).  

On  information  society  services,  Kosovo  adopted  a  new  IT  strategy.  The  Information 
Society Agency is now fully operational and serving as the central government entity for e-
government services and infrastructure.  

On audiovisual policy, Kosovo failed to meet the internationally agreed June 2015 deadline 
for the digital switchover, on which the law was adopted only in July. The Independent Media 
Commission  was  very  late  in  adopting  a  strategy  for  digitalisation  which  leaves  important 
issues  undefined.  Consequently,  the  preparation  of  necessary  implementing  legislation  will 
also be delayed. Technical preparations are still at an early stage. Kosovo needs to ensure that 
the digital switchover process is carried out in full transparency. 

52 

 
 
 
 
Since Kosovo is not a member of the ITU, its frequencies are under the authority of Serbia. 
The public service broadcaster RTK remains dependent on state financing from the Kosovo 
budget, which undermines its editorial independence. In 2014, the public broadcaster’s union 
organised a string of protests accusing management of nepotism, corruption and bias in favour 
of one political party. RTK’s management responded by dismissing two leaders of the union, 
who were reinstated by a decision by the Labour Inspectorate. Kosovo has failed to meet its 
legal obligation to ensure RTK’s financial independence within the required timeframe. 

5.2.7.   Financial control 

Kosovo is at an early stage of preparation in this area. Some progress was made in the past 
year, especially with the adoption of the strategy and action plan for public internal financial 
control (PIFC) and in relation to external audit. However, lack of systematic implementation 
of managerial accountability and delegation of responsibilities within organisations hampers 
further development of PIFC. Significant efforts are needed to implement PIFC at all levels of 
the  administration  and  in  publicly  owned  enterprises.  In  addition  to  addressing  the 
shortcomings outlined below, in the coming year Kosovo should in particular: 

→  start  implementing  the  activities  set  out  in  the  2015-2017  PIFC  strategy  and  adopt  the 
revised implementing legislation for PIFC; 

→ ensure systematic follow-up to external audit findings and recommendations. 

Public internal financial control 

The  government  adopted  a  public  internal  financial  control  strategy  and  action  plan  for 
2015-2019  in  April  2015.  The  strategy  provides  for  the  setting  up  of  a  PIFC  Council  to 
monitor and report on the implementation of the strategy on an annual basis. 

The Central Harmonisation Unit (CHU) is carrying out its duties as provided for in the law 
on  public  finance  management  and  accountability.  It  needs  to  strengthen  its  capacity  for 
training and capacity building among its 13 existing staff. The CHU provides an annual report 
to  the  government  on  progress  on  the  introduction  of  PIFC,  based  on  responses  to  self-
assessment  questionnaires,  which  is  also  considered  by  the  Assembly  Committee  on 
Oversight  of  the  Public  Finances.  It  is,  however,  not  followed  up  by  conclusions  or 
recommendations, neither by the government nor the Assembly. 

The legal framework regulating financial management and control is largely in line with the 
model  of  the  Committee  of  Sponsoring  Organisations  (COSO)  Internal  Control  Framework 
and  the  guidelines  of  the  International  Organisation  of  Supreme  Audit  Institutions 
(INTOSAI).  Further  amendments  to  the  law  on  public  financial  management  and 
accountability  and  its  implementing  legislation  are  foreseen.  Managerial  accountability  and 
the  delegation  of  responsibilities  within  organisations  is  neither  well  regulated  nor 
implemented  coherently.  Risk  management  is  misunderstood  to  be  a  compliance  exercise 
rather than a management tool and is rarely applied. Neither financial commitments nor use of 
financial resources are systematically kept within budget. The centralised budget inspection 
function still needs to be regulated in line with PIFC requirements. 

The  law  on  internal  audit  is  partially  compliant  with  international  standards  for  the 
professional practice of internal auditing. 85 (out of 96) organisations required by law to set 
up an internal audit function have done so. A national scheme for the certification of internal 
auditors is in place. All auditors have undergone training for international certification and 67 
(out of 149) have been certified with EU financial support. In order to ensure sustainability, 
Kosovo  needs  to  allocate  sufficient  funds  for  certification  and  continuous  professional 

53 

 
 
 
 
 
training.  All  institutions  with  an  audit  function  have  an  audit  charter  and  perform  audits 
according  to  strategic  and  annual  audit  plans.  The  implementation  of  audit  findings  and 
recommendations varies, however, depending on the skills of auditors and their management. 

External audit 

On  the  constitutional  and  legal  framework,  the  National  Audit  Office's  (NAO)  role  is 
recognised by the Constitution. A new law on the NAO is being drafted which should define 
more clearly the functional, operational and financial independence of the General Auditor, in 
line with the INTOSAI standards. 

On  institutional  capacity,  the  NAO  is  led  by  an  acting  Auditor  General  since  November 
2014.  A  candidate  selected  by  the  President  was  not  approved  by  the  Assembly  and  the 
President has not yet restarted the process. The NAO office is fully staffed with 146 posts, of 
which 120 are audit posts. Training is provided systematically, both on the job and externally. 
A  certification  programme  for  regularity  audit  is  in  place  and  implemented  based  on  the 
international standards of supreme audit institutions (ISSAI). 

The NAO has improved the quality of audit work  by adopting a financial audit manual in 
line with INTOSAI standards over the past year. It continues to annually update its regularity 
audit and performance audit manuals in line with the ISSAI standards. A quality management 
framework is in place. A specific audit support department with six staff carries out quality 
assessments in addition to the quality control, which his part of the audit processes. 

The  impact  of  audit  work  needs  to  be  further  improved.  The  annual  activity  report  is 
discussed by the Assembly Committee for Oversight of the Public Finances, but there is no 
systematic  parliamentary  follow-up  to  the  audit  report.  The  NAO  makes  all  its  reports 
available online and proactively informs the media about important reports. 

Protection of the EU’s financial interests 

As  regards  acquis  alignment,  protect  of  the  EU’s  financial  interests  remains  weak.  Under 
Kosovo’s criminal code, fraud relating to EU funding is a crime. The Ministry of Finance is 
responsible  for  supporting  anti-fraud  and  anti-corruption  activities  in  public  administration 
institutions and for raising awareness of fraud in general. A special regulation is in place that 
sets out the responsibilities and duties of ministries in this regard. 

Kosovo does not yet have an anti-fraud coordination service (AFCOS) or AFCOS network. 
No regular reporting system or risk assessment tools have been developed. Policy documents, 
such as a strategy and action plan to prevent and combat fraud for the protection of the EU’s 
financial interests, have yet to be developed. 

With regard to cooperation with the European Commission, Kosovo has taken initial steps 
to cooperate with Commission investigators during their on-the-spot missions in the past year. 
There  are  still  no  clearly  determined  basic  procedures  for  reporting  irregularities  and 
suspected fraud cases, and an irregularity management system needs to be set up. 

Protection of the euro against counterfeiting 

Concerning  acquis  alignment,  the  legislation  establishes  the  competent  authorities  and 
procedures for dealing with counterfeit money. Medals and tokens similar to euro coins have 
not  yet  been  regulated.  Technical  analysis  of  counterfeit  money,  including  euro  banknotes 
and coins, is mainly performed by the forensic agency within the Ministry of Internal Affairs. 
The Central Bank of Kosovo does not have a specific department devoted to this analysis but 
provides guidance on what to do about counterfeit money to the financial institutions licensed 

54 

 
 
 
 
by it.  There are no formal cooperation agreements with the European Commission and the 
European Central Bank. 

5.2.8. Statistics 

Kosovo is at an early stage of aligning its statistics with European standards in some sectors, 
whereas  in  other  sectors  some  level  of  preparations  is  visible.  However,  Kosovo  faces 
difficulties in implementing its own legislation in the area. Good progress was made in a few 
areas,  most  notably  in  the  implementation  of  the  agricultural  census.  Nevertheless,  the 
Agency of Statistics (KAS) faces substantial shortages in terms of administrative capacity that 
prevent  it  from  producing  on-time,  accurate  statistics  relevant  for  evidence-based  policy-
making. The production of essential macro-economic and business statistics remains limited. 
In addition to addressing the shortcomings outlined below, in the coming year Kosovo should 
in particular: 

→  ensure  sufficient  human  and  financial  resources  in  the  budget  to  allow  the  statistical 
agency to fulfil its mandate; 

→ make more sector statistics available: e.g. macroeconomic and business statistics, statistics 
on energy and income and living conditions. 

On  statistical  infrastructure,  the  legal  framework  is  broadly  in  line  with  the  European 
Statistics Code of Practice. The law on official statistics still needs to be amended and the 
implementation of the existing provisions requires improvement. KAS is the main producer 
and coordinator of statistics and in 2015 it introduced a web-based dissemination database, 
thereby improving the accessibility of data. However, its administrative capacity and lack of 
financial  resources  hampers  the  timely  production  of  statistics  and  it  prevents  the  agency 
from  taking  full  advantage  of  international  support.  All  agency  staff,  but  especially  newly 
recruited staff, need additional training, both on quality issues and on statistical methods and 
tools.  The  current  premises  of  KAS  do  not  allow  for  optimal  work  and  use  of  modern 
technology.  Data  transmission  to  Eurostat  should  be  improved.  As  regards  classifications 
and  registers,  not  all  the  latest  versions  of  different  classifications  are  in  place.  While  the 
introduction  of  the  European  classification  of  economic  activities  (NACE  Rev.2)  in  the 
business  register  has  been  completed,  consistency  problems  have  been  encountered.  The 
statistical business register needs to be updated and the quality of the data improved. 

On macroeconomic statistics partial implementation of the European System of Accounts 
2010  started  in  2014.  The  KAS  currently  compiles  annual  national  accounts  and  started 
publishing quarterly national accounts in December 2014, but further development of short-
term  statistics  is  necessary  to  improve  quarterly  accounts.  Supply-use  tables  and  input-
output tables, are not produced nor are regional and sector accounts or fiscal notifications. 
Statistics on the balance of payments are compiled by the Central Bank of Kosovo and are 
broadly in line with the acquis. Government finance statistics are published annually. KAS 
started  publishing  the  Harmonised  Index  of  Consumer  Prices  in  January  2015  and  further 
work is required to increase compliance with EU standards. 

Structural business statistics (SBS) and some short-term statistics are partially in line with 
the  acquis,  but  the  availability  of  short  term  statistics  is  limited.  Industry  and  construction 
statistics are broadly in line with the SBS Regulation, while statistics on the service sector 
need to be developed. No data is produced on construction activities as the KAS has no data 
on  building  permits  and  more  staff  is  required  to  provide  additional  quality  short-term 
statistics. PRODCOM (list of products of the European Union) statistics have not yet been 
introduced.  Tourism  statistics  are  partially  compliant  with  the  acquis.  Research  and 

55 

 
 
 
 
development,  innovation  and  information  and  communication  technology  statistics  are  not 
produced on a regular basis.   

Most social statistics other than demographic statistics still need to be produced, in line with 
the  acquis.  A  pilot  survey  on  income  and  living  conditions  (SILC)  is  being  conducted. 
Resources should be provided for SILC to become a regular survey. Some social protection 
statistics are produced but the unemployment scheme needs to be added and the quality of 
administrative data needs to be improved. An annual labour force survey is carried out but 
the  labour  cost  index,  structure  of  earnings  data  and  job  vacancy  statistics  are  still  not 
produced. Public health and crime statistics are not yet in line with the acquis.   

In agricultural statistics an agriculture census was held in November 2014, albeit without 
the participation of the four northern municipalities. The preliminary results were published 
in February and final results are not yet available. Agricultural price indices and economic 
accounts for agriculture are produced on a regular basis, while milk and dairy and slaughter 
statistics  are  still  not.  The  farm  structure  survey  was  carried  out  as  part  of  the  2014 
agriculture census and the 2013 agriculture household survey. Supply balance sheets and the 
agriculture labour index are not yet produced. 

Energy statistics cover parts of the regulation on energy statistics. Some annual energy data 
and energy prices are provided to Eurostat but further improvements are needed. The lack of 
energy efficiency statistics continues to be an obstacle to reporting on energy savings.  

On  environment  statistics,  waste  and  water  statistics  are  already  collected  but  statistics  on 
environmental protection expenditure, material flow balances and air emissions accounts are 
not yet produced. 

5.3. 

Justice, freedom and security 

Kosovo is at an early stage in the area of justice, freedom and security, but has made some 
progress over the past year. The authorities managed to successfully address and bring down 
the  significant  rise  in  migration  flows  seen  earlier  this  year.  However,  strong  political 
commitment is needed to tackle the underlying push factors of irregular migration. 

Despite some operational improvements, final convictions resulting in permanent confiscation 
of  assets  obtained  through  crime  are  still  rare.  The  number  of  arrests,  seizures  and  court 
verdicts for drug trafficking remains low. The investigative capacity of the police is generally 
good,  but  the  implementation  of  intelligence-led  policing  concepts  needs  to  be  further 
improved.  Kosovo  is  actively  involved  in  international  and  regional  police  investigations; 
however, its formal cooperation is limited due to status-related reasons. 

In the coming year, Kosovo should pay particular attention to: 

→ fully implementing the intelligence-led policing approach, including by making full use of 
the potential of the National Centre for Border Management; 

→ systematically applying tools for financial investigation and asset confiscation, enhancing 
the capacity and expertise of police, prosecution and judges; 

→ pursuing organised crime-related investigations with the aim of securing final convictions, 
especially  in  the  fight  against  drug  trafficking  and  human  trafficking,  and  in  dismantling 
migrant smuggling groups. 

5.3.1. Visa policy, border controls, asylum and migration 

As  regards  visa  policy,  in  line  with  the  European  Union  Schengen  Visa  Code  and  with  the 
expansion of consular missions, Kosovo managed to decrease the number of visas issued at 

56 

 
 
 
 
border crossing points. A total of 943 visas were issued from September 2014 to July 2015, of 
which only six were issued at border crossing points. Citizens of 88 countries currently need a 
visa to enter Kosovo.  

An improved version of the Civil Status Registration System (CSRS) was launched in July, in 
line with the adopted revised legislation. Civil status certificates are issued after checking the 
CSRS  data  against  the  civil  registry  books.  In  August  2015,  Kosovo  started  digitalising  the 
civil registry books returned from Serbia in order to electronically link and match them with 
CSRS data. The process should be completed by mid-2016.   

There  was  little  action  on  the  development  plan  for  the  National  Centre  for  Border 
Management  (NCBM).  Based  on  the  new  law  on  inter-agency  cooperation,  a  joint 
intelligence,  risk  and  threat  analysis  unit  was  set  up  in  the  NCBM  and  a  strategic  threat 
assessment  for  integrated  border  management  (IBM)  produced.  Within  the  new  structure, 
clearer  communication  is  needed  on  intelligence  requirements,  from  central  to  regional  and 
local level. 

Joint patrols were carried out with Albania, the former Yugoslav Republic of Macedonia and 
Montenegro.  A  joint  cooperation  centre  was  opened  in  January  with  the  former  Yugoslav 
Republic of Macedonia. The technical work on delineating the remaining nine kilometres of 
the  border  with  Montenegro  was  completed  and  Ministers  signed  the  agreement  in  August 
2015,  which  now  needs  parliamentary  ratification  by  2/3  majority.  All  six  interim  IBM 
crossing points with Serbia are operational and two more were agreed in principle. Technical 
agreements  on  the  exact  location  and  construction  of  permanent  IBM  crossing  points  were 
reached.  There  have  been  improvements  in  checks  on  documents.  The  detection  rate  of 
offences at the borders has increased across the three IBM agencies (Kosovo police, Kosovo 
Customs  and  the  Kosovo  Veterinary  and  Food  Agency)  due  to  improved  risk  analysis  and 
subsequent  operational  actions.  The  Kosovo  police  has  not  yet  put  in  place  a  maintenance 
contract for the EU-funded border management IT system; this hinders progress on effective 
border control. 

Since  June  2014  Kosovo  has  been  a  full  member  of  the  Migration,  Asylum,  Refugees 
Regional Initiative to further promote security, stability and regional cooperation in this field. 

Unlike some of its neighbours, Kosovo has not been seriously affected by the refugee crisis. 
Though it has increased, the number of asylum claims filed in Kosovo is still limited. Kosovo 
received  98  asylum  claims  in  2014  and  53  from  January  to  August  2015.  The  majority  of 
asylum applicants came from Syria. Asylum-seekers are referred to the asylum centre for the 
duration  of  the  procedure,  where  they  enjoy  freedom  of  movement  and  have  access  to  all 
basic services. Most asylum-seekers  choose to continue  their  journey before their  claim has 
been decided. So far Kosovo authorities granted subsidiary protection to only one person in 
2015 (one in 2014, three in 2013). The detention centre for foreigners was made operational 
in  June  2015,  providing  for  a  more  effective  return  policy.  The  accommodation  centre  at 
Pristina airport is also operational.  

Kosovo has aligned most of its legislation with the acquis and international standards in this 
area. Availability of interpreters has been ensured. However, effective mechanisms to identify 
countries  of  origin  and  profiles  of  people  in  need  of  international  protection  need  to  be 
implemented.  

December 2014 to March 2015 saw a significant increase in irregular migration from Kosovo 
via Serbia into the EU. This was mirrored in a corresponding increase of asylum seekers from 
Kosovo. The number of asylum applications lodged by Kosovo citizens increased to 37 905 in 
2014 (from 20 215 in 2013). From January to June 2015, 62 860 Kosovo citizens applied for 

57 

 
 
 
 
asylum  in  the  EU.  This  number  has  decreased  significantly  since  May  2015.  Still,  Kosovo 
must  address  the  high  number  of  manifestly  unfounded  asylum  applications  lodged  by  its 
citizens  in  the  EU.  Kosovo  undertook  some  effective  short-term  measures  to  curb  irregular 
migration early in 2015. Reinforced checks on buses in Kosovo, stringent checks of licenses 
of bus companies, awareness-raising and Serbian border control measures at the border with 
Hungary resulted in a significant decline in irregular migration. The EU-sponsored dialogue 
with  Serbia  on  irregular  migration  led  to  closer  cooperation  with  Belgrade  in  this  area. 
Kosovo  must  ensure  effective  long-term  policies  to  prevent  further  spikes  in  irregular 
migration.  Measures  are  also  needed  to  tackle  the  underlying  causes  of  emigration,  in 
particular high unemployment, especially among young people. The 2013 migration profile, 
providing analysis and data for policy guidance on migration, was adopted in March 2015; the 
2014 profile is expected to be approved by end-2015. 

Many of the migrants who left Kosovo have since been returned. A functioning readmission 
process  is  in  place  and  the  acceptance  rate  from  Kosovo  is  high  (97  %  in  the  first  half  of 
2015).  Kosovo  readmitted  4 610  people  in  2014,  of  whom  3 352  were  forced  and  1 258 
voluntary  returnees.  In  the  first  half  of  2015  Kosovo  readmitted  12 330  people,  of  whom  a 
majority (6 834) were voluntary returnees and 5 496 forced. Kosovo has signed readmission 
agreements  with  22  countries.  Further  readmission  agreements,  including  with  Turkey,  are 
currently being negotiated and Kosovo should encourage their swift conclusion.   

The  regulation  governing  the  reintegration  fund  has  been  amended,  providing  for  broader 
access  of  returnees,  who  are  economically  particularly  disadvantaged,  to  reintegration 
services.  Central  processing  of  repatriated  people  is  largely  efficient  and  emergency 
assistance  is  provided  to  those  in  need.  The  Reintegration  Case  Management  System  has 
improved.  An  increased  number  of  returnees  has  benefited  from  employment  schemes  and 
start-ups  of  businesses.  Agreements  with  local  companies  have  been  reached  to  further 
increase  this  number.  The  long-term  integration  of  returnees,  through  access  to  education, 
employment and healthcare, remains a challenge. Kosovo needs to ensure that the budget of 
the  reintegration  fund  is  spent,  making  full  use  of  the  resources  available  to  support 
reintegration. The capacity of municipalities to efficiently manage reintegration at local level 
should be further increased.  

5.3.2.   Money laundering 

The action plan for the national risk assessment on money laundering and combating financial 
terrorism  was  mostly  implemented  on  time.  With  regard  to  the  criminal  offence  of  money 
laundering, Kosovo’s legal framework is largely in compliance with the Vienna and Palermo 
Conventions. However, certain gaps, for instance on the declaration of assets by senior public 
officials and on market manipulation, remain.   

Cooperation  between  the  Financial  Intelligence  Unit  in  the  Ministry  of  Finance  and  key 
bodies in the anti-money laundering chain needs to be further enhanced. Better co-operation 
and  interaction  with  in  particular  police  and  prosecution  is  vital.  The  anti-corruption 
department  within  the  Kosovo  Special  Prosecution  Office  should  be  strengthened  to  tackle 
more  anti-money  laundering  cases,  in  cooperation  with  the  EU  Rule  of  Law  Mission, 
EULEX. There has been an increase in the number of anti-money laundering cases forwarded 
to  the  prosecution.  Nevertheless,  there  have  been  few  convictions  to  date.  Cooperation 
between the prosecution and police should be strengthened. Kosovo should make an effort to 
align its legislation and practices to the FATF recommendations. 

58 

 
 
 
 
5.3.3.   Drugs 

The  Kosovo  police  directorate  for  investigating  trafficking  in  narcotics  has  paid  some 
attention  to  prevention  and  supply  reduction  in  implementing  the  strategy  and  action  plan 
against narcotics. Operations, including house raids, led to the dismantling of some criminal 
groups. Further implementation of intelligence-led policing is nevertheless necessary.   

Kosovo cooperates with the European Monitoring Centre for Drugs and Drugs Addiction, but 
has yet to appoint a national focal point or an operational drug observatory. Special attention 
needs  to  be  paid  to  raising  public  awareness  of  the  consequences  of  drug  abuse.  A  new 
training  programme  on  the  dangers  of  drug  abuse  has  been  developed  for  Kosovo  police 
community safety officers and selected teachers. Addiction treatment services and methadone 
therapy  services  were  set  up  in  five  hospitals  and  two  prisons,  strengthening  drug  abuse 
prevention and harm reduction strategies. Kosovo continues to be used mainly for transit and 
storage of heroin and cannabis (skunk), but drug seizures remain low.  

5.3.4.   Police  

The  Kosovo  police  continues  to  be  perceived  as  the  most  trusted  rule  of  law  institution  in 
Kosovo.  Cooperation  between  the  Kosovo  police  and  Europol  is  currently  facilitated  by  an 
EU  Member  State  official  working  within  EULEX.  The  Kosovo  police  has  already 
contributed to successful joint investigations supported by Europol, including the large-scale 
destruction  of  a  Europe-wide  migrant  smuggling  network  in  March.  Kosovo  applied  to  join 
Interpol in April. 

Cooperation  between  the  independent  police  inspectorate  (PIK)  and  the  Kosovo  police 
Professional  Standards  Directorate  continue  to  be  good.  In  2014,  the  PIK  received  1 304 
complaints  and  information,  on  the  basis  of  which  132  cases  were  sent  to  the  prosecution 
service.  Criminal  indictments  were  filed  against  28  suspects  and  are  being  processed  in  the 
competent courts.  

The  integration  of  former  Serbian  Ministry  of  Internal  Affairs  Units  officers  into  the  police 
led to unrest when others who had not been integrated into the police protested against their 
non-selection. Additional staff were allocated to war crimes investigations within the police, 
but  investigations  remain  largely  non-operational.  Continued  efforts  remain  necessary  on 
witness protection.  

5.3.5.   Fighting organised crime and terrorism 

Track record 

Kosovo needs to build a track record of fighting organised crime, including confiscation and 
sequestration of assets and final conviction of perpetrators, but there is little concrete evidence 
of this so far. In 2014, the estimated value of frozen and temporarily confiscated assets was 
more  than  EUR  30  million,  while  the  value  of  permanently  confiscated  assets,  managed  by 
the Agency for Managing the Sequestrated and Confiscated Assets, was a total of EUR 128 
298, covering 29 assets.  

The police arrested a substantial number of people who had either joined terrorist groups in 
conflicts  abroad  or  intended  to  do  so.  During  2014,  the  directorate  against  terrorism 
investigated  and  filed  charges  in  several  terrorism-related  cases  and  conducted  two 
operational plans and 484 raids in different regions. 

During  2014,  9.3 kg  of  heroin,  21.1 kg  of  cocaine  and  722.8 kg  of  marijuana  were 
confiscated, and 17 criminal gangs were identified and disrupted. 

Institutional and operational capacity 

59 

 
 
 
 
To  boost  the  police’s  capacity  to  effectively  tackle  organised  crime,  police  officers  were 
trained on advanced investigation techniques for hate crime, airport security check points and 
strategic assessment and tactical tasking and coordination.  More financial investigations were 
conducted compared to previous years and nine financial experts were trained and certified to 
further  step  up  the  capacity  to  conduct  financial  investigations.  Kosovo  needs  to  further 
increase  the  level  of  expertise  to  tackle  complex  criminal  investigations,  such  as  financial 
crime  and  procurement  fraud,  essential  to  dealing  with  corruption  effectively.  Kosovo 
institutions  have  to  commit  themselves  to  a  zero-tolerance  approach  in  the  fight  against 
organised  crime  and  corruption  in  practice  and  in  all  decision-making  processes.  A  new 
national coordinator against trafficking in narcotics should be appointed. 

Legal framework 

Some  progress  has  been  made  and  Kosovo  has established the key components  of the legal 
framework  necessary  for  the  fight  against  organised  crime.  Based  on  the  law  on  preventing 
and combating cybercrime, the police department for investigating organised crime set up a 
sector for cybercrime investigations and staff received specialised training. 

In  January  a  law  was  adopted  criminalising  the  phenomenon  of  foreign  terrorist  fighters  in 
line with UN Security Council Resolution 2178 (2014). The criminal code does not provide a 
sufficient  legal  base  for  tackling  the  financing  of  terrorism  and  the  terminology  used  is 
inconsistent.  Kosovo’s  legislative  framework  for  seizure  and  confiscation  lacks  specific 
provisions to enable the authorities to take the necessary preventive and punitive measures to 
freeze  and,  if  appropriate,  seize  terrorist-related  funds  or  other  assets  without  delay,  in 
accordance with the relevant UN Resolutions. Efforts need to be enhanced to identify, prevent 
and  disrupt  the  flow  of  foreign  terrorist  fighters  traveling  to  conflict  areas  such  as  Iraq  and 
Syria. 

The parliament adopted the law on the interception of telecommunications in May 2015. 

Strategic framework 

The  implementation  of  the  2012-2017  strategy  and  action  plan  against  organised  crime  is 
ongoing. In November 2014, the third annual review of the 2012-2017 strategies and action 
plans against organised crime, narcotics and terrorism took place. The assessment covered the 
practical  implementation  of  the  activities  in  the  2013-2014  action  plans.  A  new  strategy 
against trafficking in human beings (2014-2019) was adopted in May 2015.  

In September 2015 Kosovo adopted the 2015-2020 strategy and action plan on prevention of 
violent extremism and radicalisation that may lead to terrorism. The strategy is the result of 
close  cooperation  with  religious  communities,  social  and  frontline  workers,  the  education 
system and youth organisations.  

Fighting  organised  crime  and  corruption  remains  fundamental  to  countering  criminal 
infiltration of the political, legal and economic systems. 

5.3.6.  Judicial cooperation in civil and criminal matters 

With  regard  to  the  Hague  Conventions,  in  particular  the  1980  Convention  on  international 
child  abduction,  the  Department  for  International  Legal  Cooperation  within  the  Ministry  of 
Justice only deals, albeit professionally, with the civil aspects of international child abduction 
cases. Kosovo needs to enhance its capacity to become an effective partner in the context of 
mutual legal assistance. No new bilateral agreements on judicial cooperation were concluded. 

60 

 
 
 
 
 
 
61 

 
 
 
 
 
 
 
 
 
 
 
 
 
Annex I – Relations between the EU and Kosovo 

On  27  October  2015,  the  European  Union  signed  a  Stabilisation  and  Association 
Agreement  (SAA)  with  Kosovo.  The  SAA  constitutes  the  first  contractual  relationship 
between  the  EU  and  Kosovo.  The  SAA  is  a  comprehensive  agreement  that  provides  a 
framework  for  political  dialogue  and  covers  co-operation  in  a  wide  variety  of  sectors, 
including justice and home affairs, trade, education, employment, energy, environment and a 
range of other policy areas.  

Kosovo has continued to address the priorities set out in last year’s Progress Report and in the 
Commission's feasibility study for a Stabilisation and Association Agreement issued in 2012. 
In  particular,  progress  has  been  made  on  the  EU-facilitated  dialogue  with  Serbia  and 
requirements of the visa liberalisation dialogue. However, the political deadlock following the 
June  2014  elections  only  ended  in  November  2014  with  the  formation  of  a  new  coalition 
government. This has caused delays in a number of areas.  

Kosovo’s  commitment  to  its  EU-facilitated  dialogue  with  Serbia  and  the  normalisation  of 
their  relations  has  been  instrumental  to  the  fulfilment  of  its  European  ambitions.  Kosovo 
needs  to  continue  to  focus  on  the  implementation  of  agreements  reached  with  Serbia  and 
continue negotiating new ones. 

Kosovo has remained engaged in the Stabilisation and Association Process Dialogue. Visa 
liberalisation continues to be one of Kosovo's key priorities. The Commission has issued two 
reports  on  Kosovo's  progress  towards  visa  liberalisation  (February  2013  and  July  2014). 
Following Kosovo's report in June, expert missions took place in July 2015.  

As  regards  financial  assistance,  during  2014  the  EU  Office  in  Kosovo  continued  to  work 
closely with the Ministry of European Integration in the preparation of the 2014 programme 
under  the  IPA  II  financial  framework.  The IPA  2014  programme  was  approved  by  the  IPA 
Committee  on  27  November  2014  with  an  EU  contribution  of  EUR  66.05  million, 
complemented  with  co-financing  from  Kosovo for an  overall budget  of EUR 75.38 million. 
The  Framework  Agreement  between  Kosovo  and  the  European  Commission  on  the 
arrangements  for  the  implementation  of  union  financial  assistance  to  Kosovo  under  the 
Instrument  for  Pre-accession  Assistance  (IPA  II)  was  signed  in  April  2015.  The  Financing 
Agreement  for  IPA  2014  entered  into  force  on  14  September  2015. In  2014,  the  EU  Office 
signed 212 contracts for projects in Kosovo for a total of EUR 79.3 million. It continued to 
ensure the co-ordination of donors active in Kosovo by organising – together with the Kosovo 
Ministry of European Integration – regular donor co-ordination meetings. 

The Commission submitted its proposal to sign and conclude the framework agreement on the 
participation  of  Kosovo  in  EU  programmes  in  April  2013.  This  proposal  is  still  pending 
Council approval. 

Following the extension of the mandate of the EU Rule of Law Mission EULEX until June 
2016,  a  new  Head  of  Mission  took  office  in  October  2014.  In  response  to  allegations  of 
corruption within the mission, the HRVP in November 2014 appointed an independent legal 
expert to review EULEX's handling of these allegations. The expert issued his final report in 
April  2015.  Throughout  the  reporting  period,  Kosovo  institutions  maintained  good  co-
operation with EULEX. 

In  August  2015  the  Kosovo  Assembly  adopted  the  constitutional  amendments  and  the  law 
allowing  for  the  establishment  of  the  Specialist  Chambers  and  a  Specialist  Prosecution 

62 

 
 
 
 
 
Office,  which  are  to  prosecute  cases  of  grave  trans-boundary  and  international  crimes 
committed during and in the aftermath of the conflict in Kosovo. 

To  date,  Kosovo  has  been  recognised  by  110  UN  member  countries,  including  23  EU 
Member States. 

During the reporting period, the UN Secretary-General continued to provide regular updates 
on  the  implementation  of  the  UN’s  mission  in  Kosovo  (UNMIK).  He  urged  the  Kosovo 
Assembly  to  adopt  the  legislation  concerning  the  establishment  of  the  Specialist  Chambers 
swiftly. He also called for full engagement by Belgrade and Pristina in the establishment of 
the  Association/Community  of  Serb  majority  municipalities.  He  expressed  concern  at  the 
population outflows from Kosovo in late 2014 and early 2015. 

The  NATO-led  Kosovo  Force  (KFOR)  has  continued  to  help  ensure  a  safe  and  secure 
environment in Kosovo. During the reporting period, it had some 4 500 personnel.  

63 

 
 
 
 
Annex II – Statistical Annex 

STATISTICAL DATA (as of 7.09.2015) 
Kosovo 

Basic data 
Population (thousand) 
Total area of the country (km²) 

National accounts 
Gross domestic product (GDP) (million euro) 
GDP (euro per capita) 
GDP (in Purchasing Power Standards (PPS) per 
capita) 
GDP (in Purchasing Power Standards (PPS) per 
capita), relative to the EU average (EU-28 = 
100) 
Real GDP growth rate: change on previous year 
of GDP volume (%) 
Gross value added by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
Final consumption expenditure, as a share of 
GDP (%) 
Gross fixed capital formation, as a share of GDP 
(%) 
Changes in inventories, as a share of GDP (%) 
Exports of goods and services, relative to GDP 
(%) 
Imports of goods and services, relative to GDP 
(%) 

Business 
Industrial production volume index (2010 = 100) 
Number of active enterprises (number) 
Birth rate: number of enterprise births in the 
reference period (t) divided by the number of 
enterprises active in t (%) 
Death rate: number of enterprise deaths in the 
reference period (t) divided by the number of 
enterprises active in t (%) 
People employed in SMEs as a share of all 
persons employed (within the non-financial 
business economy) (%) 
Value added by SMEs (in the non-financial 
business economy) (EUR million) 
Total value added (in the non-financial business 
economy) (EUR million) 

Inflation rate 
Consumer price index (CPI), change relative to 
the previous year (%) 

Note 
1) 

Note 

2) 

2002 
: 
10 887 

2010 
2 208p 
10 887 

2002 
: 
: 
: 

2010 
4 402 
2 480 
: 

2011 
1 799b 
10 887 

2011 
4 814 
2 672 
: 

2012 
1 816 
10 887 

2012 
5 059 
2 799 
: 

2013 
1 821e 
10 887 

2014 
1 805e 
10 887 

2013 
5 327 
2 935 
: 

2014 
: 
: 
: 

: 

: 

: 
: 
: 
: 
: 

: 

: 
: 

: 

: 

: 

: 

: 

3.3 

4.4 

2.8 

3.4 

16.2 
20.7 
7.7 
55.4 
102.6 

15.6 
19.7 
9.2 
55.6 
103.3 

14.8 
19.9 
8.2 
57.1 
105.2 

14.4 
20.3 
7.9 
57.4 
104.0 

29.6 

30.7 

26.0 

24.8 

3.4 
19.9 

3.3 
19.6 

2.9 
18.2 

2.8 
17.4 

55.5 

56.8 

52.4 

49.0 

: 

: 

: 
: 
: 
: 
: 

: 

: 
: 

: 

Note 

2002 
: 
: 
: 

2010 
: 
: 
16.1 

2011 
: 
: 
13.6 

2012 
: 
: 
16.8 

2013 
: 
32 651 
12.4 

2014 
: 
33 937 
13.7 

: 

: 

: 

: 

13.8 

12.9 

12.3 

8.6 

: 

73.7 

72.1 

74.2 

74.5 

74.1 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Note 

2002 
-1.0 

2010 
3.5 

2011 
7.3 

2012 
2.5 

2013 
1.8 

2014 
0.4 

64 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance of payments 
Balance of payments: current account total 
(million euro) 
Balance of payments current account: trade 
balance (million euro) 
Balance of payments current account: net 
services (million euro) 
Balance of payments current account: net 
income (million euro) 
Balance of payments current account: net 
current transfers (million euro) 
of which government transfers (million euro) 
**3 year backward moving average of the current 
account balance relative to GDP (%) 
Net inward foreign direct investment (FDI) 
(million euro) 
Foreign direct investment (FDI) abroad (million 
euro) 
of which FDI of the reporting economy in the EU-
28 countries (million euro) 
Foreign direct investment (FDI) in the reporting 
economy (million euro) 
of which FDI of the EU-28 countries in the 
reporting economy (million euro) 
**Net international investment position, relative 
to GDP (%) 
Year on year rate of change in gross inflow of 
remittances (in national currency) from migrant 
workers (%) 

Public finance 
***General government deficit / surplus, relative 
to GDP (%) 
***General government gross debt relative to 
GDP (%) 
Total government revenues, as a percentage of 
GDP (%) 
Total government expenditure, as a percentage 
of GDP (%) 

Financial indicators 
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) 
Money supply: M2 (M1 plus deposits with 
maturity up to two years, million euro) 
Money supply: M3 (M2 plus marketable 
instruments, million euro) 
Total credit by monetary financial institutions to 
residents (consolidated) (million euro) 
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) 
Trade-weighted effective exchange rate index 
(2005 = 100) 

Note 
3) 

2002 
-104 

2010 
-516 

2011 
-658 

2012 
-380 

2013 
-339 

2014 
-437 

3) 

3) 

3) 

3) 

3) 
3) 

3) 

3) 

3) 

3) 

3) 

3) 

3) 

-890 

-1 742 

-2 047 

-2 050 

-1 996 

-2 059 

-23 

176 

154 

67 

256 

111 

324 

154 

312 

122 

336 

114 

655 

982 

1 021 

1 193 

1 222 

1 172 

661 
: 

370 
11.4 

329 
12.0 

402 
11.4 

342 
9.5 

292 
7.4 

: 

: 

: 

: 

: 

: 

: 

331.1 

387.0 

213.3 

250.2 

123.8 

37.4 

1.0 

5.0 

0.0 

15.8 

30.0 

27.3 

5.2 

21.5 

10.1 

368.5 

392 

229.1 

280.2 

151.2 

217.9 

205.3 

123.2 

172.2 

92.5 

10.2 

-0.2 

2.9 

0.1 

5.0 

3.6 

7.0 

2.5 

5.5 

11.7 

Note 

2002 
6.2p 

2010 
: 

2011 
: 

2012 
: 

2013 
: 

2014 
: 

4) 

0.0 

6.1e 

5.3e 

8.3e 

9.0e 

26.8 

27.1 

30.4 

26.8 

28.9 

28.8 

29.0 

28.2 

: 

: 

: 

: 

: 

2002 
: 

: 

998 

1 126 

: 

Note 

5) 
5) 

2010 
31.2 

2011 
29.7 

2012 
30.0 

2013 
30.2 

2014 
32.3 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

86 

1 459 

1 698 

1 763 

1 806 

1 882 

: 

: 

: 

: 

: 

14.63 
3.70 
1 

14.14 
3.49 
1 

13.42 
3.57 
1 

12.36 
3.39 
1 

10.70 
1.07 
1 

: 

: 

: 

: 

: 

: 

: 
: 
1 

: 

65 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Value of reserve assets (including gold) (million 
euro) 
External trade in goods 
Value of imports: all goods, all partners (million 
euro) 
Value of exports: all goods, all partners (million 
euro) 
Trade balance: all goods, all partners (million 
euro) 
Terms of trade (export price index / import price 
index * 100) (number) 
Share of exports to EU-28 countries in value of 
total exports (%) 
Share of imports from EU-28 countries in value 
of total imports (%) 

Demography 
Crude rate of natural change of population 
(natural growth rate): number of births minus 
deaths (per thousand inhabitants) 
Infant mortality rate deaths of children under one 
year of age (per thousand live births) 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

Labour market 
Economic activity rate for persons aged 20–64: 
proportion of the population aged 20–64 that is 
economically active (%) 
*Employment rate for persons aged 20–64: 
proportion of the population aged 20–64 that are 
in employment (%) 
Male employment rate for persons aged 20–64 
(%) 
Female employment rate for persons aged 20–
64 (%) 
Employment rate for persons aged 55–64: 
proportion of the population aged 55–64 that are 
in employment (%) 
Employment by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
People employed in the public sector as a share 
of total employment, persons aged 20–64 (%) 
People employed in the private sector as a 
share of total employment, persons aged 20–64 
(%) 
Unemployment rate: proportion of the labour 
force that is unemployed (%) 
Male unemployment rate (%) 
Female unemployment rate (%) 
Youth unemployment rate: proportion of the 
labour force aged 15–24 that is unemployed (%) 
Long-term unemployment rate: proportion of the 
labour force that has been unemployed for 12 
months or more (%) 
Unemployment rate for persons (aged 25–64) 
having completed at most lower secondary 
education (ISCED 0–2) (%) 
Unemployment rate for persons (aged 25–64) 

: 

585 

491 

760 

724 

746 

Note 

2002 
: 

2010 
2 158 

2011 
2 437 

2012 
2 462 

2013 
2 421 

2014 
2 538 

: 

: 

: 

: 

: 

296 

306 

267 

272 

325 

-1 862 

-2 131 

-2 195 

-2 148 

-2 214 

125 

97 

87 

97 

107 

45.5 

45.5 

41.1 

43.5 

30.2 

41.0 

41.5 

42.6 

44.7 

42.6 

Note 

2002 
: 

2010 
: 

2011 
11.4p 

2012 
11.3 

2013 
11.9 

2014 
13.3 

11.2 

8.8 

12.1e 

11.4 

5.5 

6.6 

: 
: 

: 
: 

Note 

2002 
: 

2010 
: 

68.0e 
71.9e 

2011 
: 

74.1 
79.4 

2012 
42.5 

74.2 
79.4 

2013 
46.4 

74.2 
79.5 

2014 
47.7 

: 

: 

: 

: 

: 
: 
: 
: 
: 

: 

: 

: 
: 
: 

: 

: 

: 

29.7 

33.0 

31.3 

46.6 

51.5 

48.4 

12.4 

14.9 

14.5 

25.8 

30.8 

29.8 

4.6 
19.0 
9.5 
65.0 
: 

5.9 
16.8 
11.4 
64.1 
: 

2.6 
17.7 
10.9 
67.2 
31.4s 

: 

: 

68.6s 

30.9 

30.0 

35.3 

28.1 
40.0 
55.3 

26.9 
38.8 
55.9 

33.1 
41.6 
61.0 

18.5 

20.7 

26.1 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 
: 
: 
: 
: 

: 

: 

: 
: 
: 

: 

: 

: 

: 

: 

: 

18.4 

10.3 
17.2 
11.2 
61.3 
: 

: 

55.0 

45.2 
74.5 
77.7 

26.0 

: 

: 

66 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
having completed tertiary education (ISCED 5 & 
6) (%) 
Social cohesion 
Average nominal monthly wages and salaries 
(national currency) 
Index of real wages and salaries (index of 
nominal wages and salaries divided by the 
inflation index) (2000 = 100) 
GINI coefficient — see definitions 
Poverty gap 
*Early leavers from education and training: 
proportion of the population aged 18–24 with at 
most lower secondary education who are not in 
further education or training (%) 

Standard of living 
Number of passenger cars relative to population 
size (number per thousand population) 
Number of mobile phone subscriptions relative 
to population size (number per thousand 
population) 

Infrastructure 
Density of railway network (lines in operation per 
thousand km²) 
Length of motorways (kilometres) 

Innovation and research 
Public expenditure on education relative to GDP 
(%) 
*Gross domestic expenditure on R&D relative to 
GDP (%) 
Percentage of households who have internet 
access at home (%) 

Environment 
Energy intensity of the economy (kg of oil 
equivalent per 1 000 euro GDP at 2005 constant 
prices) 
Electricity generated from renewable sources 
relative to gross electricity consumption (%) 
Road share of inland freight transport (based on 
tonne-km) (%) 

Energy 
Primary production of all energy products 
(thousand TOE) 
Primary production of crude oil (thousand TOE) 
Primary production of hard coal and lignite 
(thousand TOE) 
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) 

Note 

2002 
: 

2010 
: 

2011 
: 

2012 
: 

2013 
: 

2014 
: 

: 

: 
: 
: 

: 

: 
: 
: 

: 

: 
: 
: 

: 

: 
: 
: 

: 

: 
: 
: 

: 

: 
: 
: 

Note 

2002 
: 

2010 
90.6p 

2011 
111.2e 

2012 
111.3 

2013 
125.0 

2014 
158.0 

: 

442.3 

543.7 

532.5 

: 

487.8 

Note 

2002 
: 

2010 
30.3 

2011 
30.6 

2012 
30.6 

2013 
31.0 

2014 
31.0 

0 

0 

38 

60 

80 

80 

Note 

2002 
: 

2010 
3.8 

2011 
4.1 

2012 
4.0 

2013 
: 

2014 
4.4 

: 

: 

: 

: 

: 

57 

: 

: 

: 

: 

: 

: 

Note 

2002 
: 

2010 
: 

2011 
: 

2012 
: 

2013 
: 

2014 
: 

: 

: 

: 

: 

Note 

6) 

2002 
: 

: 
5 528 

2010 
: 

: 
7 960 

: 

: 

: 

: 

: 

: 

: 

: 

2011 
: 

: 
8 212 

: 

: 

: 

: 

: 

2012 
: 

: 
8 028 

: 

: 

: 

: 

: 

2013 
: 

: 
8 219 

: 

: 

: 

: 

: 

2014 
: 

: 
7 204 

: 

: 

: 

3.2 

5.5 

5.7 

5.9 

6.2 

5.3 

67 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agriculture 
Agricultural production volume index of goods 
and services (at producer prices) (previous year 
= 100) 
Utilised agricultural area (thousand hectares) 
Livestock numbers: live bovine animals 
(thousand heads, end of period) 
Livestock numbers: live swine (thousand heads, 
end of period) 
Livestock numbers: live sheep and live goats 
(thousand heads, end of period) 
Production and utilisation of milk on the farm 
(total whole milk) (thousand tonnes) 
Harvested crop production: cereals (including 
rice) (thousand tonnes) 
Harvested crop production: sugar beet 
(thousand tonnes) 
Harvested crop production: vegetables 
(thousand tonnes) 

Note 

2002 
: 

2010 
: 

: 
319 

242e 
357e 

2011 
: 

243e 
362e 

110 

51e 

51e 

2012 
: 

2013 
: 

276 
314 

56 

295 
321 

49 

2014 
: 

258p 
235p 

: 

116 

229e 

247e 

123 

160 

199p 

: 

: 

: 

: 

: 

396 

431e 

435e 

442 

540 

: 

: 

: 

: 

: 

135 

239e 

247e 

117 

185 

: 

: 

: 

: 

: = not available 
b = break in series 
e = estimated value 
p = provisional 
s = Eurostat estimate 
* = Europe 2020 indicator 
** = Macroeconomic Imbalance Procedure (MIP) indicator 
*** = The government deficit and debt data of enlargement countries are published on an "as is" basis and without any 
assurance as regards their quality and adherence to ESA rules. 

Footnotes: 

1)  2011: data are based on 2011 census data and estimates that the Kosovo agency of statistics (KAS) have for 3 northern 
municipalities who did not participate in the census and natural growth for the period April 15–31 December 2011. 

2)  Population figures were revised after GDP publication. These changes will be included in the annual publication of GDP (in 

November 2015). 

3)  2010–14: based on balance of payments manual edition 6 (BPM6). 
4)  2010–13: the value of GDP is obtained from the Medium Term Expenditure Framework 2014–2016 (April 2013). 
5) 
6)  Thousand tonnes. 

Includes disbursement fee charged by banks. 

68