COMMISSION STAFF WORKING DOCUMENT Kosovo* 2016 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 2016 Communication on EU Enlargement Policy
Date: 2016-11-09
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Kosovo, accession criteria, accession negotiations, pre-accession strategy

*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. 

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 9.11.2016  SWD(2016) 363 final   COMMISSION STAFF WORKING DOCUMENT Kosovo* 2016 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 2016 Communication on EU Enlargement Policy {COM(2016) 715 final}  
 
 
 
 
 
 
 
 
 
 
 
 
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 ........................................................................................................... 13 
2.4.Human rights and the protection of minorities .................................................... 22 
2.5.Regional issues and international obligations ...................................................... 30 

3.  

4.  

NORMALISATION OF RELATIONS BETWEEN KOSOVO AND SERBIA ...... 32 

ECONOMIC CRITERIA ........................................................................................... 33 

4.1.The existence of a functioning market economy ................................................. 34 
4.2.The capacity to cope with competitive pressure and market forces within the  
Union .......................................................................................................................... 39 

5.  

EUROPEAN STANDARDS ..................................................................................... 42 

5.1. Internal Market .................................................................................................... 42 
5.1.1. Free movement of goods ........................................................................... 42 
5.1.2. Movement of persons, services and right of establishment ...................... 44 
5.1.3. Free movement of capital .......................................................................... 45 
5.1.4. Customs and taxation ................................................................................ 45 
5.1.5. Competition ............................................................................................... 46 
5.1.6. Public procurement ................................................................................... 48 
5.1.7. Intellectual property law ........................................................................... 50 
5.1.8. Employment and social policies, public health policy .............................. 50 
5.1.9. Education and research ............................................................................. 52 
5.1.10.World Trade Organisation issues ............................................................. 54 
5.2. Sectoral policies .................................................................................................. 54 
5.2.1. Industry and SMEs .................................................................................... 54 
5.2.2. Agriculture and fisheries ........................................................................... 54 
5.2.3. Environment and climate change .............................................................. 56 
5.2.4. Transport policy ........................................................................................ 58 
5.2.5. Energy ....................................................................................................... 59 
5.2.6. Information society and media .................................................................. 61 
5.2.7. Financial control ....................................................................................... 62 
5.2.8. Statistics .................................................................................................... 64 
5.3. Justice, freedom and security .............................................................................. 65 
5.3.1. Visa, border management, asylum and migration..................................... 66 
5.3.2. Money laundering ..................................................................................... 68 
5.3.3. Drugs ......................................................................................................... 68 
5.3.4. Police ......................................................................................................... 69 
5.3.5. Fight against organised crime ................................................................... 69 
5.3.6. Fight against terrorism .............................................................................. 70 
5.3.7. Judicial cooperation in civil and criminal matters .................................... 72 

Annex I – Relations between the EU and Kosovo ................................................................... 73 

2 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annex II – Statistical Annex .................................................................................................... 74 

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1. 

INTRODUCTION1 

1.1.  Context 

On  1  April  2016,  the  EU-Kosovo  Stabilisation  and  Association  Agreement  (SAA)  entered 
into  force.  This  is  the  first  contractual  relationship  between  the  EU  and  Kosovo, 
a comprehensive framework for closer political dialogue and economic relations.  

Kosovo has faced serious domestic challenges, which have hampered EU-related reforms in 
some areas. It should now focus on implementing the SAA, guided by the European Reform 
Agenda, to further strengthen its rule of law and reform its economy. 

Kosovo has delivered on wide-ranging rule of law reforms, allowing the Commission to issue 
a formal proposal in May 2016 to transfer Kosovo to the Schengen visa-free list. This is now 
in  the  hands  of  the  European  Parliament  and  Council,  pending  Kosovo's  fulfilment  of  the 
remaining two requirements. Kosovo remains committed to the normalisation of its relations 
with  Serbia.  It  has  met  its  remaining  obligations  on  the  establishment  of  the  Specialist 
Chambers  and  has  extended  the  mandate  of  the  European  Union  Rule  of  Law  Mission 
(EULEX).  

1.2.  Summary of the report 

As  concerns  the  political  criteria,  the  polarisation  between  government  and  opposition 
continued. Normal parliamentary functioning was prevented for parts of the reporting period, 
including  through  the  use  of  violent  means  by  opposition  members.  All  political  parties 
should  show  responsibility  and  re-engage  in  a  constructive  dialogue,  with  parliament  as  the 
key  forum  for  political  debate.  The  recent  return  of  opposition  members  to  parliamentary 
activities is a welcome step.  

Kosovo institutions fulfilled the remaining obligations on the establishment of the Specialist 
Chambers and Specialist Prosecution Office to investigate allegations of international crimes 
committed during and after the 1999 conflict. The procedures on the bilateral agreement with 
the host country of the Specialist Chambers (the Netherlands) were finalised. The mandate of 
EULEX was extended until June 2018. 

The  assembly  completed  most  of  the  outstanding  appointments  to  independent  institutions 
and  agencies.  However,  appointments  were  often  subject  to  political  influence.  This 
undermines  the  independent  functioning  and  effective  management  of  these  bodies.  Greater 
efforts are needed to ensure that appointments are based on merit. 

There is some level of preparation in the area of public administration reform. Good progress 
included  the  adoption  of  a  comprehensive  public  financial  management  strategy  and  of  the 
law  on  general  administrative  procedures.  The  continued  politicisation  of  the  public 
administration,  however,  remains  a  serious  concern.  The  organisation  of  the  state 
administration  is  fragmented  and  does  not  ensure  effective  lines  of  accountability,  and  the 
overlap  of  responsibilities  of  government  agencies  needs  to  be  addressed.  Parliamentary 
oversight  of  government  activities  should  increase.  The  recommendations  of  oversight 
institutions should be followed, to ensure improved governance and accountability. 

Kosovo's judicial system is at an early stage. Important positive steps have been taken during 
the reporting period with the adoption of amendments to the constitution and most secondary 

1  This  report  covers  the  period  from  October  2015  to  September  2016.  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 

 
 
 
 
 
                                                            
 
legislation necessary to implement the 2015 justice package laws. Kosovo has also appointed 
most  members  of  key  institutions  and  continued  to  increase  its  clearance  rate  of  cases. 
However,  administration  of  justice  is  slow  and  inefficient,  and  there  is  insufficient 
accountability of judicial officials. The judiciary is still vulnerable to undue political influence 
and rule of law institutions suffer from lack of funding and human resources. 

Kosovo  is  at  an  early  stage/has  some  level  of  preparation  in  the  fight  against  corruption. 
Kosovo  has  strengthened  its  institutional  capacities  to  fight corruption and  organised  crime, 
with  the  establishment  of  multi-disciplinary  investigative  teams,  the  set-up  of  a  tracking 
mechanism  for  high  level  corruption  and  organised  crime  cases,  as  well  as  the  fostering  of 
serious crime department of basic courts. This has led to an increased number of high-level 
cases  being  investigated  and  prosecuted.  However,  corruption  remains  prevalent  in  many 
areas  and  continues  to  be  a  very  serious  problem.  A  stronger  political  will  to  tackle  this  in 
a comprehensive manner is necessary. 

Kosovo is at an early stage in the fight against organised crime. The number of investigations 
and final convictions remains low. Gaps in the legislation remain and enforcement needs to be 
improved in particular for money laundering, confiscation and seizure of assets, and financial 
investigation.  Undue  influence  over  investigations  and  the  lack  of  strategic  political 
commitment hamper the fight against organised crime. Kosovo continued its efforts to fight 
terrorism, but still faces challenges in this area. 

Some progress was made in the area of human rights, with steps taken to implement the 2015 
package  of  human  rights  laws  and  declarations  of  support  for  the  rights  of  LGBTI  persons. 
However,  implementation  continues  to  be  hindered  by  a  lack  of  resources  and  political 
commitment,  in  particular  at  local  level.  More  needs  to  be  done  to  effectively  guarantee 
property  rights  and  address  the  issues  of  return  and  reintegration  of  displaced  persons, 
protection of cultural heritage and against gender-based violence. The protection of the rights 
of  persons  belonging  to  minorities  and  persons  with  disabilities  need  to  be  significantly 
strengthened.  Kosovo  has  some  level  of  preparation  in  the  area  of  freedom  of  expression. 
There have been worrying developments during the reporting period, including a number of 
threats against journalists. The assembly shows limited commitment to finding a solution for 
sustainable funding of the public broadcaster, leaving it vulnerable to political pressure. There 
were no legislative developments on the regulation of media ownership and transparency.  

Regarding the  normalisation  of  relations  with  Serbia,  Kosovo  remained  committed  to  the 
implementation  of  the  agreements  reached  in  the  EU-facilitated  dialogue.  Progress  was 
limited,  also  due  to  the  electoral  process  in  Serbia  and  the  domestic  situation  in  Kosovo. 
However,  momentum  was  regained  in  August  2016  with  the  start  of  the  work  on  the 
Mitrovica/Mitrovicë  bridge  and  freedom  of  movement.  Continued  efforts  are  needed  to 
implement  the  agreements  already  reached.  The  steps  taken  should  have  a  positive  and 
concrete impact on the everyday life of citizens in both Kosovo and Serbia. 

As  regards  the  economic  criteria,  Kosovo  is  at  an  early  stage  in  developing  a  functioning 
market  economy.  Some  progress  was  made,  particularly  on  supporting  export-oriented 
businesses, improving contract enforcement, especially within the financial sector, and access 
to finance. However, the fiscally unsustainable decisions related to war-veterans' benefits may 
have  a  negative  effect  on  the  macroeconomic  stability  of  Kosovo  and  its  relations  with 
international financial institutions. The persistent trade deficit reflects a weak production base 
and poor international competitiveness. Reliance on remittances and the widespread informal 
economy  additionally  decrease  employment  incentives,  resulting  in  low  labour  force 
participation,  especially  among  women,  and  high  unemployment  rates,  in  particular  among 
young and unskilled workers.  

5 

 
Kosovo  is  at  an early  stage  in  building  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. 

Kosovo  is  at  an  early  stage  of  alignment  with  European  standards.  Legislative  alignment 
has continued in some areas but implementation is weak. Some progress was made in the area 
of  public  procurement  and  competition.  Good  progress  was  made  in  the  area  of  customs, 
especially in fighting corruption, collecting revenue and reducing the administrative costs of 
exports, but Kosovo should step up the fight against the informal economy and tax evasion. 
The  energy  sector  continues  to  face  problems,  with  no  progress  having  been  made  on 
decommissioning  the  Kosovo  A  power  plant  or  refurbishing  Kosovo  B,  and  very  little 
progress made on renewable energy. 

2.  

POLITICAL CRITERIA 

2.1.  Democracy  

Since 2008, Kosovo has consolidated the functioning of its democratic institutions. However, 
the  past  year  brought  serious  challenges  due  to  the  ongoing  deep  polarisation  between  the 
government  and  the  opposition.  Divisions  over  issues  such  as  the  border  demarcation 
agreement  with  Montenegro  and  the  Dialogue  with  Serbia,  dominated  Kosovo's  political 
agenda, leading to a protracted political stalemate. Greater efforts by all actors are needed to 
build consensus across the political spectrum to advance Kosovo on key EU-related issues.  

Despite the difficult circumstances, EU-Kosovo relations have strengthened. The Stabilisation 
and Association Agreement entered into force on 1 April 2016, establishing a first contractual 
relationship between the EU and Kosovo. Kosovo has delivered on wide-ranging rule of law 
reforms, allowing the Commission to issue a formal proposal in May 2016 to transfer Kosovo 
to the Schengen visa-free list.   

The situation in the north of Kosovo has remained largely calm and communication between 
mayors  in  the  north  and  central  institutions  improved.  Construction  work  on  the  Mitrovica 
bridge, a highly symbolic issue, started in the summer with the aim of opening the bridge for 
all  traffic  in  January  2017.  Kosovo  met  the  remaining  obligations  in  relation  to  the 
establishment  of  the  Specialist  Chambers  and  Specialist  Prosecution  Office  to  investigate 
allegations of international crimes committed during and after the 1999 conflict. The mandate 
of EULEX was extended until June 2018. 

Elections 

Kosovo's electoral framework is mostly in line with international standards, however electoral 
reform,  guided  by  advice  from  the  Venice  Commission,  remains  necessary.  Independent 
audits of political party financing and party electoral campaigns, as provided for in the law on 
financing of political parties, have not been conducted for the last three years. This should be 
done,  by  the  latest,  in  advance  of  the  next  elections.  The  assembly  needs  to  start  an 
institutional debate, involving all political  parties,  with  a view to  ensuring  transparency  and 
accountability of political parties’ finances and campaign contributions. 

6 

 
 
 
 
 
 
 
 
Parliament 

The assembly must play a key role in guaranteeing proper checks and balances necessary in a 
parliamentary  democracy.  It  is  the  responsibility  of  all  parliamentarians  to  ensure  that  the 
assembly can fulfil this role.  Boycotts and continuous violent obstructions of parliamentary 
work  have  adversely  affected  parliamentary  activities  during  parts  of  the  reporting  period. 
Breaches of parliamentary procedures continue to be a concern.  

Normal parliamentary functioning was prevented for parts of the reporting period by violent 
means, including teargas, by some opposition members. This has led to tensions and the arrest 
of  a  number  of  opposition  parliamentarians  at  the  assembly’s  premises.  All  political  parties 
should show responsibility and re-engage in a constructive dialogue, with the assembly as the 
key  forum  for  political  debate.  The  recent  return  of  opposition  members  to  parliamentary 
activities is a welcome step.  

Despite the serious political polarisation, the European agenda remained a unifying element 
across  the  political  spectrum.  In  November,  the  assembly  ratified  the  Stabilisation  and 
Association Agreement (SAA) with the EU. In May 2016, the first meeting of the EU-Kosovo 
Stabilisation  Association  parliamentary  committee  took  place,  in  which  members  of  the 
opposition  took  part.  The  assembly  elected  two  Constitutional  Court  judges  in  November 
2015 and appointed the Auditor General in March 2016.  

During the reporting period, the assembly completed most of the outstanding appointments to 
independent institutions and agencies. However, appointments were often subject to political 
influence.  Appointments  should  be  made  on  the  basis  of  merit-based  and  more  transparent 
selection procedures to ensure the independent functioning and effective management of these 
bodies.  The  assembly  failed  to  properly  supervise  independent  institutions,  regulatory 
authorities  and  agencies,  whose  reports  were  often  adopted  without,  or  without  fully 
considering  the  results  of,  debates.  The  absence  of  clear  mandates,  suitable  reporting  and 
accountability  mechanisms,  as  well  as  institutional  fragmentation,  continue  to  present  a 
problem for oversight and effective reform. 

Several important laws were enacted using the fast-track procedure. Breaches of the rules of 
procedure  occurred  frequently.  The  absence  of  parliamentarians  often  led  to  the  lack  of  a 
quorum and irregular plenary and committee sessions. The sessions that were held had very 
heavy agendas. Such practices are not conducive to comprehensive parliamentary debate and 
risk diminishing the assembly’s oversight role. 

The  regulatory  framework  for  the  assembly  should  be  improved.  Parliamentary  checks  and 
balances  and  budgetary  control  need  to  be  strengthened  and  there  is  still  no  mechanism  to 
ensure  that  recommendations  by  the  public  finance  oversight  committee  are  implemented. 
The  assembly  needs  to  strengthen  consultations  with  civil  society,  especially  on  important 
laws. The assembly should take a stronger role in ensuring that reports and recommendations 
of the Office of the Auditor General and Ombudsman are followed up by the government. 

Assembly  committees  continued  their  work  on  monitoring  the  implementation  of  laws  and 
held  regular  public  hearings  with  ministers.  The  capacity  of  the  EU  Integration  Committee 
should be increased to reflect its key role in advancing EU-related reforms. Better screening 
of draft legislation is needed to ensure alignment with the acquis. 

In  March  2016,  the  assembly  presidency  adopted  a  strategic  plan  2016-2020  that  contains 
concrete objectives to boost the assembly’s ability to fulfil its constitutional role. 

7 

 
 
Governance 
The  ongoing  political  polarisation  between  the  government2  and  the  opposition3  strained 
governance  in  Kosovo.  There  were  also  increased  tensions  in  the  governing  coalition. 
Challenges in strategic planning at the centre of government hindered delivery on EU-related 
reforms  and  key  areas  of  governance.  Greater  prioritisation,  particularly  in  the  context  of 
implementing the SAA, should help focus reform efforts.  

Polarisation  across  the  political  spectrum  in  Kosovo  has  presented  serious  challenges  to 
governance. Following the election of Hashim Thaçi as President on 26 February, there was a 
change in the government with the appointment of a new Deputy Prime Minister and Foreign 
and Justice Ministers.  

In  December  2015, the  government adopted an ambitious  legislative agenda  and  an annual 
work plan for 2016. It also produced both a National Development Strategy 2016-2021 and an 
Economic  Reform  Programme.  In  December  2015,  the  government  adopted  a  National 
Programme for the Implementation of the Stabilisation and Association Agreement, outlining 
short  and  medium-term  priorities.  The  adoption  of  these  documents  is  a  welcome  step  and 
they  should guide  Kosovo  in  its  socioeconomic  structural  reforms.  However,  weak  political 
focus and lack of cooperation between ruling parties remain obstacles to making progress on 
much-needed  reforms.  The  government  continues  to  face  difficulties  meeting  deadlines  set 
out in its strategies and work plans. Ad hoc decisions with significant budgetary impact have 
undermined  financial  sustainability  and  reduced  the  government’s  ability  to  focus  on  real 
priorities. A strong focus on key priorities, especially on the European Reform Agenda, and 
strong inter-ministerial coordination are crucial in this regard. 

The pre-selection of candidates for appointments to various boards made by the government, 
and  nominations  to  independent  agencies,  are  often  based  on  political  affiliation  and  not 
sufficiently on professional criteria. Selection and appointment procedures need to be clearly 
regulated  and  made  more  transparent.  The  recent  allegations  of  political  interference  in 
recruitment  to  and  decision-making  processes  in  public  bodies,  based  on  leaked  telephone 
intercepts,  raise  concern  and  should  be  fully  investigated.  Ministers’  non-attendance  at 
plenary  sessions  and  failure  to  answer  parliamentary  questions  undermines  transparency, 
accountability and communication with  the assembly,  in  particular with the opposition.  The 
government  should  consistently  follow  up  on  recommendations  contained  in  assembly 
reports. 

Care should be taken to ensure that laws are in line with European standards and meet SAA 
obligations.  Ministers  need  to  follow  up  on  each  piece  of  legislation  until  it  is  adopted  and 
should provide timely explanations to the assembly. The legislative agenda remains subject to 
frequent changes. The practice of repeated amendment of the laws undermines the stability of 
the  legislation  and  reveals  shortcomings  in  planning  and  coordination  at  the  heart  of 
government which weaken parliamentary oversight. 

Progress has been made on local government, particularly on relations between central and 
local  government,  including  northern  Serb-majority  municipalities.  There  has  been  further 
improvement in municipal compliance with the law on local self-government. The Ministry of 
Local Self-Governance has spearheaded the drafting and implementation of municipal plans 
concerning  EU-related  obligations  for  the  38  municipalities.  Adoption  of  the  law  on  the 

2 Governing coalition: Democratic Party of Kosovo (PDK), Democratic League of Kosovo (LDK), Serb Citizen's 
Initiative 'Srpska' and non-Serb minority group '6+'. 
3  Opposition  parties:  Vetëvendosje  (VV),  Alliance  for  the  Future  of  Kosovo  (AAK)  and  Initiative  for  Kosovo 
(NISMA). 

8 

 
                                                            
census for northern Serb-majority municipalities has been postponed due to lack of support at 
the central and local levels. 

Municipalities’  legislative  and  executive  bodies  need  to  continue  to  increase  their 
transparency and their public accountability, and the municipal assemblies need to strengthen 
their oversight role. With 38 municipalities, a large number given the size of Kosovo, steps 
should  be  taken  to  rationalise  local  governance,  with  the  aim  of  encouraging  efficient  and 
democratic service delivery and strengthening responsible governance. 

During 2015, six municipalities, including the four northern municipalities, failed to approve 
their  2016  budgets  within  the  ceilings  set  by  the  Ministry  of  Finance.  Instead,  the 
municipalities  in  the  north  adopted  their  budgets  in  line  with  the  legal  framework  only  in 
February  2016,  once  they  received  assurances  for  an  increase  during  the  mid-year  budget 
review 2016. 

The Ombudsman began implementing the 2015 law on the Ombudsman, with increased and 
improved reporting, thereby strengthening the institution. Secondary legislation still needs to 
be  adopted.  In  2015,  the  Ombudsman  received  1 995  cases,  10  %  less  than  in  2014.  While 
follow-up  to  the  Ombudsman’s  recommendations  has  increased,  central  and  local  level 
institutions need to do so more consistently. The government provided adequate premises for 
the Ombudsman Institution in August 2016. The assembly and government need to ensure the 
financial,  functional  and  organisational  independence  of  the  Ombudsman  Institution,  in  line 
with international standards on national human rights institutions. The Ombudsman still needs 
to appoint deputies. 

Civil society 

Some  progress  was  made  in  improving  cooperation  between  government  and  civil  society. 
Minimum standards for public consultations were adopted and now need to be implemented 
across all levels of government. Lack of political will means the participation of civil society 
in policy-making remains uneven. The lack of transparency in public funding for civil society 
remains a concern. 

An empowered civil society is a crucial component of any democratic system and should be 
recognised  and  treated as  such  by  institutions  in  Kosovo. Civil society  needs  to  continue  to 
play  a  crucial  role  in  the  democratic  debate  and  in  participating  in  the  design  and 
implementation of public policy. 

Under the current legal framework, the possibility of unwarranted interference in the internal 
governance and activities of NGOs, including suspensions, remains an issue. Care should be 
taken to ensure that decisions on suspension by an administrative body can be appealed in a 
court  of  law  in  a  timely  and  transparent  manner.  The  government  and  assembly  did  not 
adequately  consult  civil  society  with  a  view  to  ensuring  that  restrictive  provisions  affecting 
money laundering and anti-terrorism legislation do not unduly inhibit NGOs’ effective ability 
to operate. 

Progress  has  been  made  with  the  adoption  in  April  of  minimum  standards  for  public 
consultations,  which  were  designed  in  an  inclusive  and  transparent  manner.  The  lack  of 
engagement  by  many  ministries  and  insufficient  capacity  and  budgetary  resources  undercut 
efforts to implement the strategy on cooperation with civil society and continues to cast doubt 
on the underlying political will. The capacity of civil society in Kosovo to effectively engage 
remains uneven.     

A  regulated  model  to  ensure  transparent  mechanisms  for  distribution  for  public  funding  for 
civil  society  organisations  has  been  identified.  Information  on  all  public  funds  disbursed  to 

9 

 
civil  society  organisations  should  be  made  easily  accessible  to  the  public.  Legislation  and 
administrative instructions covering all relevant levels of government should be adopted. The 
legal framework on tax deductions for donations remains ambiguous.  

Civilian oversight of the security forces 

Due to the political impasse and the boycotts in parliament, there has been limited progress in 
the work of the parliamentary committee on internal affairs, security and supervision of both 
the Kosovo Security Forces and the oversight committee for Kosovo’s Intelligence Agency. 
The  parliamentary  committee  organised  hearings  on  the  laws  pertaining  to  police  and  civil 
registry  but  did  not  exercise  any  oversight  on  expenditure,  including  expenditure  by  the 
Kosovo  Security  Forces.  Close  ties  between  individual  parliamentarians  of  the  relevant 
committees and the leadership of the Kosovo Security Forces continue to hinder independent 
oversight. The vetting process continued to improve, but is still carried out by the Intelligence 
Agency  rather  than  a  separate  body.  In  June  2016,  the  Security  Forces  published  integrity 
plans. 

The  Kosovo  Security  Council  met  with  increased  regularity;  its  secretariat  coordinates  the 
implementation  of  Kosovo’s  strategy  on  the  prevention  of  violent  extremism  and 
radicalisation leading to terrorism for 2015-2020. 

2.2.  Public administration reform 

Kosovo  has  some  level  of  preparation  in  the  reform  of  its  public  administration.  Some 
progress  was  made  with  the  adoption  of  a  comprehensive  public  financial  management 
strategy  and  of  the  law  on  general  administrative  procedures.  However,  Kosovo  did  not 
address  the  Commission’s  recommendations  in  the  area  of  accountability.  Non-merit-based 
recruitment  continues 
to  adversely  affect  effectiveness,  efficiency  and  professional 
independence of public administration. The first monitoring reports on implementation of the 
public  administration  reform  package  indicate  considerable  delays.  There  are  also  serious 
concerns about the financial sustainability of the reforms. Given Kosovo’s ambitious reform 
agenda,  continued  strong  political  commitment  is  essential  to  ensure  its  implementation.  In 
the coming year, Kosovo should in particular: 

  review  all  independent  bodies  and  start  implementation  of  the  recommendations  of  the 
review in order to enhance accountability, eliminate overlapping competencies and ensure a 
more streamlined public administration;   

  ensure  that  the  planned  legislative  package  covering  civil  service,  salaries  and 
organisation  of  state  administration  is  prepared  in  a  coordinated  way  in  an  inclusive  and 
evidence-based process on the basis of concept notes agreed at the government level;  

  address  the  issue  of  the  growing  backlog  of  administrative  cases  in  the  Basic  Court  of 
Pristina, by ensuring funding to increase the number of judges and by improving the working 
conditions  of  the  Court  (e.g.  facilitating  implementation  of  the  electronic  case  management 
system).  

Policy development and coordination 

The  legal  basis  and  institutional  structures  for  coherent  and  coordinated  policy-making 
system,  including  for  European  integration,  are  largely  in  place.  Kosovo  has  adopted  a 
National Development Strategy and National Programme for the Implementation of the SAA, 
but  the  latter  is  only  partially  aligned  with  the  government’s  annual  work  plan.  Policy 
planning is inconsistent and is not given priority at central level. Sector strategies lack quality 
control, are rarely aligned with the mid-term expenditure framework and are thus financially 
unsustainable.  Although  all  strategies  and  policies  should  contain  budget  impact  analyses, 

10 

 
 
they  are  not  always  carried  out.  Their  scope  is  limited  to  assessing  whether  expenditure  is 
within budget, not whether proposals are cost-effective.  

Some  aspects  of  inclusive  and  evidence-based  policy  and  legislative  development  are  in 
place.  Regulatory  and  budget  impact  assessments  differ  in  quality  and  are  not  yet  used 
consistently.  Internal  and  external  consultations  are  regulated,  and  progress  was  made  with 
the  adoption  in  April  2016  of  minimum  standards  for  public  consultations.  Effective  and 
systematic  implementation  is  needed,  especially  because  short  timelines  for  public 
consultations hinder effective civil society input. Limited consultations on laws and strategies 
of specific political or economic interest remains a concern (see civil society). 

A lack of detailed reporting on the implementation of the government’s annual work plan and 
sector  strategies  hinders  effective  public  scrutiny  of  government  work.  Parliamentary 
scrutiny of the government is also insufficient. 

Public financial management  

In  June  2016,  Kosovo  adopted  a  2016-2020  public  financial  management  (PFM)  reform 
strategy. It is one of four strategies that form a ‘strategic package’ for public administration 
reform.  It  is  also  complemented  by  the  public  internal  financial  control  and  public 
procurement  strategies.  The  PFM  system  supports  aggregate  fiscal  discipline,  but 
macroeconomic  and  revenue  forecasting  has  to  be  improved.  Public  debt  is  comparatively 
low,  although  domestic  and  international  borrowing  has  been  increasing  and  budget 
commitments  need  to  be  controlled  to  limit  arrears.  One  of  the  main  challenges  for  PFM 
reform will be merging the tax and customs administrations. Improvements to the quality of 
medium-term  budgeting,  budget  preparation  and  capital  investment  information  are  being 
given priority to boost the credibility of the budget (see financial control). 

Budget  transparency  is  limited  but  improving.  Budget  information  (the  budget  document, 
monthly statements, quarterly reports, the mid-year report and the annual financial report) is 
available  to the  public  on  the  Ministry  of  Finance  website.  The  2015  budget  document  was 
difficult to understand for the general public. Budget information needs to be more accessible 
and comprehensive to strengthen accountability. Budget documents are often not comparable, 
as budget itemisation is not consistent. Scrutiny of public finances is the responsibility of the 
Office of the Auditor General. Its reports are published regularly and there is a mechanism for 
assuring  implementation  of  audit  recommendations,  but  it  does  not  work  properly.  A  key 
weakness in transparency is that there are frequent changes to the budget during the calendar 
year without transparent disclosure or explanation of these variations. 

Public service and human resource management 

The  law  on  the  civil  service  establishes  a  single,  unitary system  of  public  service  at central 
government  and  municipal  levels.  The  current  law  formally  provides  for  merit-based 
recruitment, promotions and dismissals based on objective criteria but loopholes in the law 
allow  contradictory  practices,  notably  on  the  conversion  of  temporary  staff  into  permanent 
civil  servants  without  public  competition.  The  Ministry  of  Public  Administration  does  not 
have  sufficient  capacity  to  actively  supervise  recruitment  procedures,  which  are  done  on  a 
decentralised  basis.  Political  influence  over  appointments  and  dismissals  continues  to  be  a 
serious concern, especially on the selection of senior management. Non-majority communities 
are still not adequately represented in central public institutions. 

The  Independent  Oversight  Board  is  not  sufficiently  used  to  monitor  implementation  of  the 
civil service law, and does not have sufficient capacity. Around 75 % of its recommendations 
and  rulings  are  implemented.  Administrative  judges  are  overburdened,  which  often  leads  to 
delays in decisions.  

11 

 
The  Ministry  of  Public  Administration  is  responsible  for  central  coordination  of  human 
resources  management,  but  its  resources  are  very  limited.  A  job  classification  system  is 
being rolled out since January 2016 and is expected to lead to a more uniform application of 
legislation  and  principles.  Progress  has  been  made  in  extending  the  human  resource 
management information system to all institutions, but the system is not up-to-date and does 
not  perform  all  the  mandatory  tasks  set  out  in  the  legislation.  There  is  generally  a  lack  of 
professional human resource management due to politicisation and limited capacity. 

The  remuneration  system  does  not  ensure  equal  pay  for  equal  work.  Different  salary 
coefficients  are  applied  to  similar  positions.  This  undermines  parity  and  does  not  provide 
incentives for retaining and recruiting professional staff. However, the suspension in 2016 of 
the  salary  top-ups  system  is  a  step  towards  fair  and  transparent  remuneration.  Professional 
development  of  public  servants  has  progressed,  but  training  does  not  reach  all  of  them. 
Performance  appraisals are  still  not  systematically  implemented,  and  they  have  little  impact 
on career development.  

Kosovo has adopted measures and mechanisms to prevent corruption and promote  integrity 
in  the  public  service.  Little  progress  was  made  in  setting  up  an  information  system  on 
disciplinary measures and in monitoring implementation of the code of ethics. 

Accountability of the administration 

The  state  administration  is  organised  in  a  fragmented  way  which  does  not  ensure  effective 
lines of accountability. The law on state administration has allowed 46 government agencies 
to  be  set  up,  some  of  which  have  overlapping  responsibilities.  Furthermore,  over  30 
non-constitutional  institutions  report  directly  to  the  assembly,  which  lacks  the  powers  and 
capacity to effectively supervise them. Many of these institutions and government agencies do 
not  comply  with  the civil service law, therefore contributing to  further fragmentation of the 
administration. Lines of accountability within many institutions are weak and there is no clear 
delegation of responsibilities to middle management (see financial control). The government 
has  committed  itself  to  developing  the  law  on  organisation  of  state  administration  in 
conjunction with the law on civil service and the law on salaries, in order to ensure a more 
accountable and depoliticised public administration. 

Citizens’ right to good administration is being addressed by oversight institutions such as 
the  Auditor  General  and  the  Ombudsman.  Their  recommendations  are  not  systematically 
implemented  by  all  institutions,  although  there  has  been  some  improvement  during  the 
reporting period. The right to access public information is regulated in the law on access to 
public documents. Over the past two years the number of requests unanswered or refused was 
low.  The  new  law  on  general  administrative  procedures,  adopted  in  May  2016,  aims  to 
improve  the  right  to  administrative  justice,  together  with  the  planned  new  law  on 
administrative  disputes.  The  increasing  backlog  in  resolving  administrative  disputes  is 
damaging public confidence in the court system. The backlog stood at 5 380 unresolved cases 
at the end of 2015, an increase of 1 341 from 2014. The right to seek compensation is not 
yet  secure  because  the  legislation  is  fragmented  and  there  is  no  specific  law  on  public 
liability. 

Service delivery to citizens and businesses 

The  government  is  committed  to  user-oriented  administration.  However,  coherent 
policy-making is often undermined by a lack of coordination and common vision between the 
ministries  responsible.  The  development  of  e-services  is  slow  for  want  of  an  appropriate 
interoperability framework. Legislation on equal access to services exists, but applying it is a 
challenge, particularly for persons with disabilities. Good progress has been achieved with the 

12 

 
simplification  of  administrative  procedures  thanks  to  the  adoption  of  the  new  law  on 
general  administrative  procedures.  However,  implementing  the  law  requires  a  parallel 
inventory of special administrative procedures, which need to be either abolished or brought 
into line with the law. 

Strategic framework for public administration reform 

The public administration reform strategy framework, under the umbrella of the National 
Development Strategy 2015-2020, consists of strategies on better regulation, policy planning 
and  coordination,  modernisation  of  administration  and  public  financial  management.  The 
2015  annual  monitoring  reports  on  the  first  three  strategies  indicate  either  over-ambitious 
targets  or  lack  of  appropriate  indicators,  which  explain  delays  in  implementation.  The 
government has agreed to address these shortcomings by the end of 2016. Political support 
for public administration reform and effective steering by the Ministerial Council continues to 
be necessary to ensure an effective implementation.  Financial sustainability of the reforms 
needs to be ensured in the 2017 budget and in the medium-term expenditure framework. 

2.3.  Rule of law 

Functioning of the judiciary 

Kosovo is at an early stage in developing a well-functioning judicial system. Good progress 
has  been  achieved  over  the  past  year  by  adopting  amendments  to  the  constitution  and  most 
secondary legislation necessary to implement the 2015 justice package laws. Kosovo has also 
appointed  most  members  of  key  institutions  and  continued  to  increase  its  clearance  rate  of 
cases,  thus  partly  meeting  two  of  the  2015  recommendations.  However,  administration  of 
justice is slow and inefficient, and there is insufficient accountability of judicial officials. The 
judiciary is still vulnerable to undue political influence and rule of law institutions suffer from 
lack of funding and human resources. In addressing the shortcomings outlined below, Kosovo 
should therefore in the coming year: 

  continue to implement the justice package, including adoption of the remaining secondary 
legislation; 

  strengthen  financial  resources  for  the  judicial  sector  and  continue  to  strengthen  the 
capacity of judges, prosecutors and support staff, to ensure proper functioning of the judicial 
system and the administration of courts; 

  replace current provisions included in the laws on the Judicial and Prosecutorial Councils 
by adopting the law on the Office of the Disciplinary Counsel to strengthen accountability; 

  step  up  efforts  to  reduce  the  backlog  of  cases,  including  by  using  alternative  dispute 
resolution tools. 

Strategic documents 

The implementation of the 2014-2019 strategic plan for Kosovo’s judiciary, the 2014-2019 
communication strategy and the strategy for reducing the backlog of cases continues, with the 
aim  of  improving  the  overall  functioning  of  the  judiciary.  The  strategic  plan  of  the  Kosovo 
Prosecutorial Council for 2016-2018 was adopted in February 2016. 

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.  In  February,  following  Venice  Commission  and  European  Commission 
recommendations,  the  assembly  adopted  a  constitutional  amendment  on  the  composition  of 

13 

 
 
the Kosovo Judicial Council, whereby the majority of its members are to be elected by their 
peers – 7 out of 13 members now being appointed by judges, and the other 6 by the assembly. 
The amendment strengthens judicial independence from political influence, a welcome step. 
Out  of  the  6  members  appointed  by  the  assembly,  2  shall  be  from  the  Kosovo/Serbian 
community and 2 from the other minority communities. One of the 6 non-judicial members is 
still to be appointed. Following amendments to the law on the Kosovo Prosecutorial Council 
in  December  2015,  10  out  of  13  members  of  the  Prosecutorial  Council  were  appointed  by 
prosecutors, while the other 3 still remain to be elected by the assembly. As of January, the 
Prosecutorial Council controls its own budgetary resources. The Judicial Council submits its 
budget  directly to  the assembly.  Meetings  of both  Councils continue to  be open to  both  the 
media  and  the  public.  Both  Councils  draw  up  and  approve annual reports and  publish them 
online,  but  their  reporting  mechanisms  still  need  to  be  improved.  The KJC  issued its report 
with a significant delay, while the KPC report has yet to be presented.  

In  line  with  the  agreement  between  Belgrade  and  Pristina,  the  KJC  and  KPC  published  a 
second vacancy notice in March 2016, and are recruiting 14 Kosovo Serb judges, 115 support 
staff, 6 prosecutors, and 34 prosecution support staff. This is a major step forward. 

The Judicial and Prosecutorial Councils continue to approve strategic documents, regulations, 
decisions  and  other  acts,  with  significant  delays.  They  still  need  to  approve  9  out  of  35 
regulations and instructions, required under the July 2015 justice package laws. The Councils 
still lack capacity to draft regulations and take decisions in compliance with the hierarchy of 
normative acts. They also lack capacity to monitor the implementation of their decisions. 

The  mandate  of  the  current  international  judges  of  the  Constitutional  Court  remains 
unchanged within the framework of EULEX mandate. 

Independence and impartiality 

Legal  safeguards  on  the  independence  and  impartiality  of  judges  and  prosecutors  are 
enshrined in the constitution, the law on courts and the legislation governing the Judicial and 
Prosecutorial Councils. Strong concerns remain with regard to public comments by high-level 
officials on ongoing court proceedings that are tantamount to interference with the judiciary. 
There  are  many  corruption-related  offences  involving  members  of  the  judiciary  and 
prosecution service.  

Court Presidents are responsible for the management and operation of their courts. Under the 
March  2016  amendments  to  the  law  on  the  Kosovo  Judicial  Council  judges  can  be 
transferred  to  other  courts  by  the  KJC  with  the  approval  of  the  Court  President,  for  a 
reasonable  period  of  time,  in  order  to  ensure  the  efficient  functioning  of  the  courts  and  in 
other  extraordinary  circumstances.  They  may  appeal  a  transfer  before  the  Supreme  Court. 
This allowed the understaffed serious crime departments in the Basic Courts to be reinforced. 
The  transferred  judges  received  a  pay  rise.  A  sustainable  solution,  by  allocating  the 
appropriate numbers of judges to each Court, needs to be found. 

Case  allocation  is  managed  by  drawing  lots.  Urgent  cases  are  allocated  by  the  Courts' 
Presidents. Sensitive cases are allocated, but not always dealt with.  

The KJC and KPC are  responsible for taking  action if judges or  prosecutors are threatened. 
They should continue to  raise awareness of existing protection mechanisms and procedures, 
in close cooperation with the police. 

14 

 
 
 
Accountability 

Implementation of codes of ethics for judges, prosecutors and attorneys is weak. Disciplinary 
procedures  are  in  place.  The  Judicial  and  Prosecutorial  Councils  are  responsible  for  these 
procedures,  while  the  Office  of  the  Disciplinary  Counsel  (ODC)  conducts  preliminary 
disciplinary proceedings and submits appropriate motions to the Councils. Certain procedural 
aspects of the status and operations of the Office of the Disciplinary Counsel still need to be 
clarified.  Procedures  for  appointing  and  dismissing  judges  and  prosecutors  comply  with 
international  standards.  Judges  and  prosecutors  may  be  dismissed  by  the  President  on  a 
proposal  by  the  KJC/KPC  for  a  number  of  criminal  and  disciplinary  offences,  and  they  are 
entitled to appeal. 

The law on the Office  of the Disciplinary  Counsel,  replacing current  provisions included in 
laws on the Judicial and Prosecutorial Councils, is yet to be adopted. The performance of the 
ODC  needs  to  improve.  From  September  2015  to  April  2016,  it  managed  to  process  and 
submit  only  5  cases  against  judges  and  10  cases  against  prosecutors  to  the  relevant 
Disciplinary Committees of the Judicial and Prosecutorial Councils. So far, out of these cases, 
none  of  the  judges  and  prosecutors  or  their  judicial  officers  has  been  dismissed.  No  judges 
and 2 out of 4 prosecutors were suspended by the Councils following allegations of bribery. 
The overall number of judges and prosecutors under investigation by the ODC in 2015 was 
high,  exceeding  250.  The  Prosecutorial  Council  has  terminated  7  cases  and  the  Judicial 
Council  terminated  6  cases  on  the  basis  of  expiration  of  statutory  limitations.  Judges  and 
prosecutors are obliged by law to declare their assets and gifts received, as well as report any 
possible conflict of interest  to  the Anti-Corruption Agency.  In  2015, all Kosovo judges  and 
prosecutors timely submitted their assets declarations. 

Professionalism and competence 

The  President  of  Kosovo  appoints  judges  and  prosecutors  for  an  initial  three-year  term, 
following  a  proposal  from  the  KJC  or  the  KPC  respectively.  The  recruitment  process  and 
entry  exams  for  judges  and  prosecutors  are  organised  by  the  Judicial  and  the  Prosecutorial 
Councils respectively and are merit-based. The authority taking decisions on the selection of 
judges should be independent of the executive and the legislative powers.  

The Prosecutorial Council is required to carry out performance evaluations for prosecutors 
with a permanent mandate every third year, but this has again experienced significant delays. 
The  Judicial  Council  failed  to  adopt  the  regulation  on  performance  evaluation  of  judges. 
Judges continue to be evaluated by the Judges’ Performance Assessment Committee. To date, 
most judges and prosecutors have passed the evaluation; 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, are in place since 
2015 to ensure professionalism. The level of professionalism and competence, especially of 
prosecutors, is still a matter of concern; some are inadequately trained and some are unwilling 
to  apply  the  training  received  and  to  take  full  responsibility  for  their  cases.  Training  needs 
should be assessed as part of an in-depth annual evaluation of judges and prosecutors. 

Quality of justice 

The  Kosovo  Judicial  Institute  (KJI)  is  responsible  for  delivering  initial  and  continuous 
training for judges and prosecutors based on the annual training curricula jointly prepared by 
the  KJC,  KPC  and  KJI  following  a  comprehensive  needs  assessment.  Trainings  are  funded 
from  Judicial  Institute's  own  budget  and  by  international  donors.  The  new  justice  package 
laws  provide  for  an  obligatory  initial  12-month  training  period  for  both  judges  and 
prosecutors after they have been appointed. Both Councils have yet to conduct such training. 

15 

 
The curricula, which are divided into training modules according to the responsibilities of the 
departments  of  courts  and  prosecutors’  offices,  specify  the  areas  to  be  covered  by  training, 
including  training  on  EU  law.  If  relevant,  the  KJI  includes  staff  from  other  ministries  and 
agencies in specific training courses (e.g. Ministry of Interior and Customs Service on issues 
concerning money laundering). The KJI also prepared an orientation training programme for 
the judges and prosecutors from the Serbian community. To further strengthen the capacity of 
judges, as well as prosecutors and support staff, training is needed, in particular in specialised 
areas such as economic crimes and public procurement. 

Kosovo currently has 19.5 judges per 100 000 inhabitants. In total, there are 350 local judges 
and 39 EULEX judges.  

The  budget  for  Kosovo’s  prosecution  service  and  court  system  for  2016  is  around 
EUR 30 million, excluding some other services such as mediation and legal aid. Compared to 
2015, the total budget  allocated to  the justice system has  increased to  2.38 %  of the overall 
national budget. A comprehensive overview of public finances allocated to the judicial system 
was made publically available in December. 

A  centralised  criminal  records  registry,  which  is  crucial  for  the  quality  of  justice,  is  not  in 
place.  There  is  no  official  court  monitoring  system  in  place.  E-justice  tools  remain 
underdeveloped. However, the Judicial Institute set up an online database of legislation with 
jurisprudence and legal commentaries to assist judges and prosecutors in their everyday work. 
This  is  particularly  relevant  for  the  publication  of  Supreme  Court  decisions.  The  database 
needs continuous updating and promotion among legal practitioners.  

A mediation system has been operational since 2008, with 7 regional mediation centres and 
163  active  mediators  licensed  by  the  Ministry  of  Justice.  In  April  2016,  21  candidates  for 
mediator positions (17 from the Kosovo Serb community) passed the necessary training and 
are awaiting certification. Public awareness and familiarity with alternative dispute resolution 
tools  remains  low,  but  the  number  of  cases  are  continuously  increasing:  between  2012  and 
July  2015,  2 598  cases  were  dealt  with  through  mediation.  While  notaries  deal  with  more 
cases,  their professional skills  need to  be improved.  Both the  mediation and notary systems 
require further strengthening. 

Efficiency 

Kosovo still needs to improve its efficiency in dealing with the backlog of cases. According 
to  the  Judicial  Council’s  Department  of  Statistics,  at  the  beginning  of  2016,  the  number  of 
pending  cases  at  court  level  was  440  627,  the  number  of  cases  received  was  400  982  and 
cases  solved was 397 059.   The clearance  rate is increasing and Kosovo courts  now have  a 
clearance rate of 99.02 % of cases received and resolved within a year. 

There  are  no  figures  on  the  disposition  time  (i.e.  the  average  time  taken  from  filing 
indictment to a judgment) in Kosovo’s courts. 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.  There  is  no  working  electronic  case 
management system. A positive exception is the tracking mechanism for high-level corruption 
and organised crime cases set up recently (see fight against corruption). 

The  efficiency  of  the  judiciary  is  seriously  hampered  by  the  shortcomings  of  criminal 
legislation;  many  provisions  in  the  Criminal  Procedure  Code  are  too  cumbersome  and 
formalistic to permit robust and successful investigation and prosecution. Due to insufficient 
capacity and staffing and limited financial resources, as well as a heavy backlog of cases, the 
judicial  system  is  slow  in  delivering  justice.  Kosovo's  size  and  social  structure  makes  the 
efficiency of the judiciary vulnerable to influence.  

16 

 
Fight against corruption 

Kosovo  is  at  an  early  stage/has  some  level  of  preparation  in  the  fight  against  corruption. 
Good  progress  has  been  achieved  over  the  past  year.  With  the  establishment  of  a 
multi-disciplinary  investigative  team,  headed  by  the  Special  Prosecution  Office  and  the 
introduction of a tracking mechanism for high-profile corruption and organised crime cases, 
Kosovo has fulfilled two of last year's recommendations. This has led to an increased number 
of  high-level  cases  being  investigated  and  prosecuted.  However,  Kosovo  must  continue  to 
strengthen  its  track  record  in  the  fight  against  corruption  and  organised  crime.  Corruption 
remains  prevalent  in  many  areas  and  continues  to  be  a  very  serious  problem.    The  political 
will  to  tackle  this  in  a  comprehensive  and  strategic  manner  needs  to  be  improved.  The 
efficiency  of  investigations  continues  to  be  hampered  by  political  influence.  In  the  coming 
year, Kosovo should in particular: 

  amend  the  legal  framework  on  conflict  of  interest  bringing  it  in  line  with  European 
standards, including clear definitions of categories of officials and regulating compatibilities 
of functions during and after office;  

  review and adopt legislation governing public officials charged or convicted for serious or 
corruption-related crimes; 

  carry  out  independent  audits  of  political  party  finances  for  2013-2016  and  ensure  the 
financial reports of political parties are published as required by law; 

  increase  the  number  of  prosecutors  in  the  Special  Prosecution  Office  investigating  and 
prosecuting  high-level  corruption  cases,  and  provide  training  to  strengthen  their  capacity  to 
conduct  financial  investigation,  confiscate  assets  and  effectively  protect  witnesses,  with  a 
view to delivering results on the track record. 

Track record 

In December 2015, Kosovo established an advanced IT tracking mechanism of all stages of 
the  criminal  proceedings  for  high-level  corruption  cases  and  high-profile  serious 
organised  crime,  including  asset  seizure  and  confiscation  cases.  A  multidisciplinary  team 
was  established  to  effectively  coordinate  efforts  to  deal  with  these  cases.  Out  of  the  33 
high-level  cases  currently  in  the  system,  there  have  been  21  indictments  (17  for  corruption 
and  4  for  organised  crime)  involving  150  defendants  (including  a  number  of  political  and 
senior  public  officials).There  have  been  convictions  in  three  cases  for  corruption-related 
offenses,  including  a  case  against  a  prosecutor.  The  Anti-Corruption  Agency  (ACA) 
continued 
investigations,  checking  asset 
declarations, monitoring conflicts of interest and public procurement activities and improving 
awareness.  Since  it  was  established  the  Agency  has  sent  677  cases  to  the  prosecution.  The 
prosecution  offices  have  filed  indictments  on  87  cases,  based  on  the  ACA  referrals.  The 
quality of the reports that the ACA submits to the prosecution needs to be improved, as does 
the prosecutors' capacity and willingness to pursue cases. The ACA lacks tools to check assets 
declarations.  These  checks  would  require  closer  cooperation  with  the  police,  the  tax 
administration, the Financial Intelligence Unit, the land registry and municipal authorities. 

in  conducting  administrative 

to  be  active 

Undue  influence  and  limited  capacity  still  hamper  the  conduct  of  effective  financial 
investigations.  Financial  investigations  are  not  yet  systematically  launched  in  cases  of 
corruption and organised crime. There are too  few specialised prosecutors, especially in the 
Special  Prosecution  Office,  with  the  required  level  of  training  and  competence  to  deal  with 
financial cases, including procurement cases. Asset freezing and seizures have increased but 
final confiscations remain low. In 2015, the estimated total value of frozen, sequestrated and 

17 

 
confiscated  assets  was  EUR  20.6  million.  The  value  of  permanent  confiscations  increased 
from  EUR  130 000  in  2014  to  EUR  450 000  in  2015.  From  January  to  June  2016  the  total 
estimated value of temporary sequestered assets was EUR 1 million, whereas the total value 
of  permanent  confiscations  was  EUR  236  000  (totalling  EUR  1.2  million).  There  were  also 
pending requests for final court confiscation in the amount of EUR 25 744.  

Kosovo  law  does  not  lay  down  any  mechanism  for  automatic  suspension  or  removal  from 
office  of  officials  charged  with  and  convicted  of  corruption,  with  the  exception  of  a  newly 
amended law on public procurement and the law on the civil service.  

Lack  of  trust  hampers  effective  implementation  of  witness  protection  mechanisms,  in 
addition  regional  and  international  cooperation  needs  to  be  improved.  The  current  law  on 
informants  is  not  in  line  with  international  standards  as  it  does  not  meet  minimum 
whistle-blowing mechanisms or protection requirements. 

Independent audits of political parties finances have not been carried out since 2013. In 2016, 
the assembly failed again to conduct an audit of the financing of political parties and most 
political parties do not publish their financial reports as required by law. The Central Election 
Commission  also  did  not  ensure  that  reports  on  political  party  finances  were  published  on 
time. Transparency and accountability of funding for political parties and campaign financing 
remains to be ensured. 

Kosovo  should  also  consider  measures  allowing  effective  investigation  of  inexplicable 
wealth, i.e. by allowing the burden of proof to be reversed for asset confiscation, separating 
the money laundering offence from the predicate offence, prohibiting the transfer of criminal 
assets  to  third  persons,  and  providing  the  Anti-Corruption  Agency  with  more  effective 
inspection powers to audit asset declarations. 

Officials from the north of Kosovo do not meet their obligations regarding the submission of 
asset  declarations  to  the  ACA.  Corruption  in  the  north  of  Kosovo  is  not  being  tackled 
properly by law enforcement agencies. 

In 2015, out of 4 200 officials obliged to submit annual assets declarations, 57 failed to do 
so,  which  represents  only  1.4  %.  Twenty-six  cases  against  184  persons  were  sent  for 
prosecution by the Anti-Corruption Agency. Most concerned non-reporting or false reporting 
of  assets,  abuse  of  official  position  or  authority,  or  accepting  bribes.  In  2015,  the  Agency 
handled 306 cases of conflicts of interest, of which 4 were submitted for the minor offences 
procedure and 3 were sent to the prosecution service for criminal investigation. In 160 cases, 
the  conflict  of  interest  was  prevented  and  in  49  cases  the  Agency  gave  an  opinion  to  the 
institutions  responsible.  Most  cases  dealt  with 
local  governmental  officials.  The 
Anti-Corruption  Agency  found  1  552  officials  holding  two  or  more  positions,  thus  creating 
the  situation  of  a  potential  conflict  of  interest.  In  2015,  the  Agency  handled  112  cases  on 
prevention of corruption in public procurement and issued 81 opinions, of which only 7 were 
not considered. 

Institutional framework 

Anti-corruption  work  is  fragmented  in  Kosovo  and  the  main  anti-corruption  bodies  are  not 
well  integrated,  their  remits  overlap  and  the  division  of  tasks  is  unclear.  Kosovo  needs  to 
strengthen inter-institutional coordination mechanism and bodies. 

On  the  preventive  side,  the  main  body  remains  the  independent  and  specialised 
Anti-Corruption Agency. Other bodies with controlling and auditing powers are: the Auditor 
General, who carries out financial audits of all public institutions at central and local level; the 
tax  authorities,  which  gather  and  check  financial  information  from  individuals  and  various 

18 

 
collective  bodies;  and  the  customs  authorities,  which  check  on  customs  procedures.  The 
Financial  Intelligence  Unit  in  the  Ministry  of  Finance  gathers  and  analyses  information  on 
and flags up suspicious financial transactions carried out for the purpose of money laundering 
or  terrorism  financing.  All  these  bodies  appear  to  lack  a  proactive  role  in  the  fight  against 
corruption.  Access  to  public  information  is  guaranteed  by  the  law  on  access  to  public 
documents  adopted  in  2010.  Corruption  risk  assessments  in  the  health,  education,  judiciary, 
energy, and mining sectors were published in 2015. These areas remain particularly prone to 
corruption  and  conducting  risk  assessments  in  a  more  systematic  manner  is  a  first  positive 
step  that  should  lead  to  further  measures  to  effectively  address  corruption.  There  is  no 
particular  public  policy  to  prevent  corruption  in  the  private  sector.  In  case  of  alleged 
corruption instances, citizens in general report to police as most perceive this institution as the 
first responder. 

In  law  enforcement,  there  are  bodies  specialised  in  fighting  corruption:  the  anti-corruption 
coordinator  nominated  by  the  Chief  State  Prosecutor,  and  the  Police  Directorate  for  the 
Investigation  of  Economic  Crimes  and  Corruption,  which  maintains  anti-corruption  units  at 
both  police stations and at headquarters. These units conduct preliminary  investigations and 
cooperate  on  a  daily  basis  with  the  prosecutors.  Each  basic  prosecution  office  has  an  anti-
corruption prosecutor and two prosecutors are appointed by the Special Prosecutor to handle 
high-level corruption cases. Considering the continuous increase in workload and EULEX’s 
downsizing, the number of prosecutors in Special Prosecution Office dealing with corruption 
needs  to  be  increased.  High-level  corruption  cases  are  dealt  with  by  the  serious  crimes 
departments of the Kosovo Basic Courts, which have recently been allocated more judges and 
support staff. 

The  appointment  of  a  National  Coordinator  against  Economic  Crime  in  November  2015 
helped improve coordination and cooperation between law enforcement agencies. 

Legal framework 

Criminal  law  provisions  on  corruption,  mainly  in  the  criminal  code  and  criminal  procedure 
code,  are  generally  in  line  with  relevant  European  standards.  However,  there  are  areas  that 
require  urgent  rectification  such  as  the  confiscation  provisions,  which  are  too  cumbersome 
and  complex  to  use,  and  the  unreasonably  short  deadlines  for  investigations.  The  legal 
framework  has  been  further  aligned  with  the  acquis  with  amendments  to  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. 

Regulation  of  political  party  and  campaign  finances  is  hampered  by  the  lack  of  effective 
regulatory oversight and the lack of political will to enforce the legal framework. Reviewing 
the  legislation  could  help  to  increase  transparency,  accountability  and  effective  auditing  of 
political party and campaign finances control.  

The  law  on  conflict  of  interest  needs  to  be  amended  to  bring  it  in  line  with  European 
standards. Categories of public officials covered by the law are currently not clearly defined, 
neither  measures  nor  procedures  to  prevent  and  sanction  situations  of  conflict  of  interest. 
Compatibilities  and  incompatibilities  of  functions  during  and  after  office  are  not  regulated. 
Suspension  and  removal  of  public  officials  indicted  and  convicted  for  serious  or 
corruption-related crimes is not foreseen.  

The law on public procurement was amended in March 2016, further aligning it with the EU 
acquis (see 5.1.6 – public procurement).  

19 

 
 
Strategic framework 

Kosovo is implementing its 2013-2017 anti-corruption strategy and action plan, monitored by 
the Anti-Corruption Agency. Most of the expected results have not been achieved. A revised 
anti-corruption  action  plan  for  the  prosecution  service  and  its  role  in  combating  corruption 
was  adopted  in  December  2015.  Inadequate  financing  and  a  lack  of  any  measurable  impact 
indicators are seriously undermining prospects of achieving the expected 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 has begun 
smoothly. Action plans are in place to fight corruption in vulnerable sectors such as customs, 
the  police,  and  the  tax  administration.  Civil  society  is  being  involved  in  drafting 
anti-corruption  policies.  Regular  and  transparent  consultations  should  be  held  to  monitor 
implementation. 

Fight against organised crime 

Kosovo  is  at  an  early  stage  in  the  fight  against  organised  crime.  Good  progress  has  been 
made  in  the  past  year,  notably  with  strengthening  institutional  specialisation  and  cases 
tracking  mechanism  (cf.  same  as  under  box  fight  against  corruption)  and  due  to  improved 
coordination. This has led to an increased number of high-level cases being investigated and 
prosecuted.  The  number  of  final  convictions,  financial  investigations  and  final  asset 
confiscations remains low, while asset freezing and seizures have increased. Organised crime 
goes  unpunished  in  the  north  of  Kosovo.  Overall,  there  has  been  little  progress  in  the 
fulfilment  of  the  recommendations  identified  last  year.  Kosovo  has  stepped  up  its efforts  to 
fight  terrorism,  including  measures  to  tackle  radicalisation  and  prevent  Kosovo  terrorist 
fighters joining conflicts abroad.  

In the coming year, Kosovo should in particular: 

  revise the Criminal Procedure Code and the law on extended powers for confiscation of 
proceeds of crime with a view to making them effective tools to combat organised crime; 

  increase  the  number  of  prosecutors  in  the  Special  Prosecution  Office  investigating  and 
prosecuting  high-profile  organised  crime  cases,  and  provide  them  with  robust  training  to 
strengthen their capacity to conduct financial investigations, confiscate assets and effectively 
protect witnesses, with a view to delivering results on the track record; 

  develop  an  intelligence-led  policing  approach  and  strengthen  capacity  to  collect 
harmonise, analyse and use relevant criminal statistics, including through better inter-agency 
cooperation. 

Track record 

Organised crime in Kosovo is mainly human and drug trafficking, financial crime and money 
laundering, and terrorism-related activities. The main factors facilitating organised crime are 
primarily Kosovo's geographic location on the ‘Balkan route’, high unemployment and other 
economic  factors,  and  specific  social  and  family  structures.  The  IT  tracking  mechanism  for 
high-profile  cases,  including  organised  crime  is  operational  (see  fight  against  corruption). 
However, a tracking mechanism for all criminal cases still needs to be developed in order to 
increase  inter-institutional  cooperation  and  information  exchange  between  all  rule  of  law 
actors in Kosovo.   

The success rate for investigations, prosecution and final convictions in organised crime cases 
including human trafficking, drug trafficking, terrorism, money laundering and other forms of 
financial  crime  remains  very  low.  Financial  investigations  are  not  effective.  While,  overall, 

20 

 
the  estimated  value  of  frozen  and  temporarily  confiscated  assets  has  increased,  the  rates  of 
confiscation and final sequestration of criminal assets remain low. 

Large-scale usurpation of socially-owned properties is endemic in Kosovo, providing a huge 
source of illegal wealth. In April 2016, a Kosovo Police operation, assisted by EULEX, was 
launched, during which 47 premises were searched and 8 suspects were arrested in relation to 
organised crime usurpation scheme, including an assembly member.   

The  witness  protection  system,  while  having  appropriate  capacity,  does  not  have  currently 
any  witnesses  under  protection,  due  to  lack  of  trust  in  the  system.  Implementation  and 
international cooperation needs to be strengthened. 

The  involvement  of  armed  groups in  organised  criminal  activities, such  as  arms  smuggling, 
and  the  apparent  impunity  with  which  they  are  able  to  operate  across  borders  is  of  serious 
concern.  The  Kosovo  police  have  been  involved  in  several  cross-border  operations 
supported by Europol at the request of Member States leading investigations into such groups. 
The government, law enforcement agencies and the judicial system need to take swift action 
to dismantle these groups. 

Since  September  2015,  there  been  no  new  reported  cases  of  Kosovars  joining  the  war  in 
Syria.  Over  the  past  year,  the  police  have  arrested  an  increasing  number  of  people  joining 
terrorist groups in conflicts abroad or intending do so. 

Institutional framework 

The main institutions involved in the fight against organised crime in Kosovo are the national 
coordinator, the Ministry of Internal Affairs, the Ministry of Finance (customs, the Financial 
Intelligence  Unit,  the  tax  administration),  the  Ministry  of  Justice,  the  Kosovo  police,  the 
prosecution  service,  and  the  courts.  The  National  Coordinator  on  Organised  Crime 
monitors the implementation of the strategy and action plan against organised crime. 

An  organised  crime  directorate  in  the  police  headquarters  is  complemented  by  specialised 
units to  combat  drugs and  human  trafficking  at  regional  level,  assisted  by  forensic  units.  In 
the  prosecution  service,  the  main  role  in  fighting  organised  crime  lies  with  the  Special 
Prosecution  Office,  which  is  staffed  with  prosecutors  specialised  in  investigating  and 
prosecuting this type of criminality. It needs both training and staff reinforcements.   

The  customs,  the  Financial  Intelligence  Unit  (FIU)  and  the  tax  administration  are 
responsible  for  monitoring  and  controlling  the  internal  and  cross-border  flow  of  goods, 
materials  and  capital  aimed  at  activities  related  to  all  forms  of  organised  crime.  The  FIU 
specifically  assists  with  analysing  and  disseminating  information  on  money  laundering  and 
terrorism financing, exchanging information with all law enforcement institutions. It also has 
the capacity to freeze suspicious financial transactions. 

Cooperation  and  coordination  among  all  these  institutions  in  day-to-day  handling  of 
corruption  and  organised  crime  cases  depends  more  on  the  individual  capacity  and 
commitment of the officials responsible than the system as such, with the prosecution service 
being the weakest link. 

Intelligence-led policing remains weakly implemented. The new analytical tool assisting in 
exposing and investigating organised crime, the Kosovo Police Information System, is not yet 
fully utilised. Kosovo regularly exchanges information with Europol and Interpol via EULEX 
or UNMIK. Kosovo applied to join Interpol in April 2016. 

The  Kosovo  Forensics  Agency  and  its  laboratories  have  technical  equipment  capable  of 
conducting the relevant forensic analyses. The Agency’s staff requires in-service training and 

21 

 
assistance from EULEX. Its ability to ensure adequate forensic pathology remains very weak. 
Continuous funding of the Agency must be secured. 

Legal framework 

Criminal  code  and  criminal  procedure  code  provisions  for  combating  organised  crime  are 
mostly  in  line  with  European  standards.  Nonetheless,  some  need  to  be  revised,  such  as  the 
provisions on confiscation and on investigation deadlines, the provisions responsible for the 
imbalance  between  the  defence  and  prosecution  at  trial,  the  provision  for  a  multitude  of 
appeal  possibilities,  the  unclear  provisions  on  admissibility  of  evidence,  and  the  search  and 
seizure provisions. The newly amended law on money laundering and terrorism financing is 
not fully in line with EU and international standards. The main flaws are the unclear system 
of FIU and central bank supervision of the financial sector; extensive reporting requirements 
for  NGOs;  the  lack  of  provision  allowing  the  prosecutor  or  court  to  continue  freezing  of  a 
suspicious  transaction  in  line  with  FIU  orders;  and  the  narrower  scope  of  the  definitions 
compared with those required by Financial Action Task Force recommendations. 

Strategic framework 

The 2012-2017 national strategy and action plan against organised crime is the main strategic 
document  in  place.  Additional  strategies  and  action  plans  are  in  place  on  prevention  and 
combating  of  the  informal  economy,  money  laundering,  terrorism,  radicalisation  and 
extremism, terrorism financing, human trafficking, cybersecurity and narcotics trafficking.  

Fight against terrorism 

Kosovo authorities stepped up efforts to counter violent extremism and radicalisation, by 
implementing  the  law  on  foreign  terrorist  fighters,  and  the  strategy  and  action  plan  on 
prevention of violent extremism and radicalisation. The number of Kosovo citizens engaged 
in  the  Syria/Iraq  conflict  is  decreasing.  Nonetheless,  challenges  remain  with  the  lack  of 
programmes for de-radicalisation  and reintegration,  considering the high number  of Kosovo 
citizens returned from the conflict zones. The phenomenon of foreign terrorist fighters needs a 
dedicated  approach  by  the  intelligence  and  law  enforcement  community  and  a  coherent 
judicial  policy  on  offenders  together  with  social,  community-based  responses  aimed  in 
particular  at  marginalised  young  people.  Improved  cooperation  among  intelligence  services, 
especially between countries in the Western Balkans, could also help to counter the threat of 
extremism and radicalisation. 

Specialised training on investigation techniques for prosecutors and police is needed. Kosovo 
law enforcement agencies also lack expertise and equipment to investigate complex terrorism 
cases. 

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,  for  instance  on  data 
protection  and  high-level  political  support  for  the  rights  of  LGBTI  persons.  However,  the 
limited progress on the effective guarantee of property rights and the return and reintegration 
of  displaced  persons  remain  a  concern,  as  is  the  protection  of  cultural  heritage. 
Implementation of human rights continues to be hindered by a lack of resources and political 
commitment, including at local level. Some steps are being taken to implement the package of 
human rights laws adopted last year but important challenges remain. 

Shortcomings particularly affect the following areas: 

22 

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

  Strategies  and  legislation  on  the  rights  of  persons  belonging  to  minorities  and  their 

protection throughout Kosovo are not sufficiently implemented.  

  The protection of cultural heritage, including cooperation between the Serbian Orthodox 
Church  and  Kosovo  authorities,  remains  a  challenge.  Legislation  to  address  illegal 
construction needs to be fully implemented and enforced. 

International human rights instruments form an integral part of Kosovo’s legal framework 
and  are  directly  applicable,  as  provided  for  in  the  constitution.  Kosovo  continued  to  align 
legislation with these instruments and maintained its practice of ad hoc reporting. 

On promotion and enforcement of human rights, progress needs to be made on effective 
implementation  of  human  rights  legislation.  Further  efforts  are  needed  in  particular  on 
establishing  a  track  record  of  taking  discrimination  cases  to  court.  The  Advisory  Office  for 
Good  Governance,  under  the  Prime  Minister’s  Office,  lacks  the  necessary  human  resources 
and  capacity  to  manage  its  workload  effectively.  It  needs  to  focus  on  coordination  and 
monitoring  of  policy  commitments;  line  ministries  should  assume  responsibility  for 
implementation.  The  establishment  of  the  Inter-Ministerial  Coordination  Group  for  Human 
Rights in  May  2016  is  a  first  step  in  establishing  high-level  coordination  to  devise  an 
overarching  human  rights  strategy  and  to  steer  its  implementation  effectively.  The 
Ombudsman  should  play  an  important  role  in  designing,  monitoring  and  advising  on  this 
work. Strong political leadership is required to ensure that the Group delivers on its mandate. 
Increased  financial  commitment  to  human  rights  protection  at  all  levels  is  needed,  while 
donor dependency should be reduced. 

As  regards  prevention  of  torture  and  ill  treatment,  there  were  no  reports  of  violations  of 
internationally  recognised  human  rights  standards.  In  January  2016,  in  compliance  with  the 
Optional  Protocol  to  the  Convention  against  Torture,  a  National  Preventive  Mechanism 
against  Torture  was  established.  This  is  a  separate  body  within  the  Ombudsman  Institution 
responsible for inspecting all places in which persons are deprived of their full liberty.  

In the prison system, compliance with the UN Standard Minimum Rules for the Treatment of 
Prisoners  and  European  Prison  Rules  has  continued.  There  is  an  urgent  need  to  provide 
inmates  with  meaningful  activities  and  work  opportunities.  The  issue  of  housing  detainees 
awaiting  trial  and  those  convicted  of  minor  offences  together  with  long-term  prisoners  is  a 
concern. There is a need to establish separate accommodation serving the north of Kosovo to 
ensure  a  long-term  solution.  No  progress  has  been  made  concerning  setting  up  a  prison 
complex  in  North  Mitrovica.  Recommendations  stemming  from  the  inspections  of  Kosovo 
Correctional Service  facilities by the Internal  Inspectorate of the Ministry  of Justice are not 
systematically  addressed.  Serious  concerns  remain  over  privileges  for  certain  high-profile 
detainees In August, all cases  of suspensions  of sentence on  medical grounds were revoked 
resulting  in  all  8  prisoners,  including  3  high-profile,  returning  to  the  prison.  Inadequate 
staffing  levels,  in  particular  at  recently  constructed  facilities,  remain  a  concern.  The 
authorities  will  need  to  address  the  forthcoming  recommendations  of  the  European 
Committee  for  the  Prevention  of  Torture  and  Inhuman  or  Degrading  Treatment  or 
Punishment. 

Some  progress  has  been  made  on  data  protection.  Public  awareness  of  the  right  to  the 
protection of personal data has improved, resulting in an increase in the number of complaints 

23 

 
received  by  the  National  Agency  for  the  Protection  of  Personal  Data.  Additionally,  the 
Agency  has  performed  more  inspections.  The  Agency  needs  to  prepare  for  challenges  in 
implementing  and  enforcing  the  data  protection  rules  as  a  result  of  the  Stabilisation  and 
Association Agreement. It needs more financial resources and strengthened human capacity, 
including  the  re-appointment  of  its  supervisor,  to  deal  with  the  increasing  number  of 
complaints.  Amendments  to  the  laws  on  data  protection  and  access  to  information  are 
necessary and the institutional framework is not yet clarified.  

Legal  provisions  on  freedom  of  thought,  conscience  and  religion  are  in  place  and 
interaction among religious leaders of all faiths continues. However, the draft law on freedom 
of religion needs to be adopted and include the Venice Commission’s recommendations. The 
Orthodox seminary in Prizren continues to function well. The Ministry of Culture is engaging 
with  the  Serbian  Orthodox  Church  on  ways  to  support  the  reconstruction  of  its  sites  left 
unfinished by the Reconstruction Implementation Commission. However, modalities need to 
be  clarified  to  ensure  the  Serbian  Orthodox  Church  can  exercise  full  discretion  in  the 
management of its properties, while following legal procedures. Kosovo should demonstrate 
that  it  respects  this  right  in  practice.  In  May  2016  the  Constitutional  Court  issued  a  final 
judgement on the land dispute case involving the Visoki Dečani monastery in Deçan / Dečane 
municipality confirming legal ownership of the land by the monastery. While the judgement 
brings  closure  to  this  long-standing  case,  its  implementation  remains  a  challenge  and  local 
resistance,  including  overt  defiance  by  municipal  officials,  raises  concerns.  There  were  no 
reports of 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, including swift investigations into 
the incident involving the placement of explosive materials at the mosque in Drenas/Glogovac 
and  the  burning  of  a  mausoleum  in  Pejë/Peć.  Municipal  authorities  in  Pristina  should 
demonstrate full respect for the rights of religious communities as stipulated by law, and need 
to allocate land for a graveyard for members of the Protestant community. 

Freedom of expression 

Kosovo has some level of preparation in the area of freedom of expression. There has been 
no progress in this area. Threats and attacks against journalists have increased. The assembly 
shows  limited  commitment  to  finding  a  solution  for  sustainable  funding  of  the  public 
broadcaster, leaving it vulnerable to political pressure and influence. There were no legislative 
developments  on  the  regulation  of  media  ownership  and  transparency.  Implementation  of 
legislation remains a challenge, in particular with regard to the law on the public broadcaster. 
The majority of last year’s recommendations have not been addressed.  

In the coming year, Kosovo should, in particular: 

  continue  to  ensure  that  cases  of  physical  attacks  against  journalists  and  other  forms  of 
pressure are promptly investigated and adjudicated; 

  ensure a sustainable financial solution for the public broadcaster; 

  implement measures to provide for transparent information on media ownership. 

Intimidation of journalists 

During  the  reporting  period,  12  incidents  were  reported  to  the  police.  Incidents  involved  a 
physical  attack  on  a  journalist  from  South  Mitrovicë  /  Mitrovica,  the  police  deleting 
recordings  of  journalistic  material  without  a  judge’s  decision  and  journalists  being  expelled 
from court hearings, involving high-profile cases. In August 2016, a bomb exploded near the 
public broadcaster Radio Television of Kosovo (RTK) premises and another one at the house 

24 

 
of  the  RTK  Director  General.  Both  attacks  were  condemned  by  the  government  and  all 
political parties.  

Investigations  into  these  cases  are  slow  and  there  were  very  few  final  convictions.  A  more 
systematic  response,  including  prompt  investigation  and  timely  adjudication  is  needed  to 
strengthen the protection of journalists.   

Legislative environment 

Freedom of expression and the media are constitutionally guaranteed, and legislation on libel, 
hate  speech  and  defamation  is  in  line  with  the  European  Court  of  Human  Rights  case-law. 
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.  Police,  prosecutors  and  judges  need  proper  training  on  the  standards 
established  by  the  Council  of  Europe  and  the  European  Court  of  Human  Rights  for  dealing 
with  sources  and  journalistic  materials.  The  right  of  access  to  public  information  is 
undermined by the authorities’ fragmented and unclear approach. 

Implementation of legislation/institutions 

Effective  implementation  of  legislation  and  ethical  standards  remains  a  challenge,  with  the 
law  on  the  public  broadcaster  presenting  the  biggest  challenge.  The  Independent  Media 
Commission failed to make preparations for the digital switchover. It systematically monitors 
the content of audiovisual media but lags behind in initiating cases and implementing fines for 
legal  breaches.  As  a  result  of  budget  cuts,  it  is  facing  difficulties  in  meeting  its  financial 
obligations, including capital investment. 

Freedom of expression online is not monitored by either the Independent Media Commission 
or the Press Council of Kosovo. Although this creates an unhindered environment for online 
media,  it  also  undermines  the  privacy  of  individuals,  leading  to  many  cases  of  alleged  hate 
speech,  libel  and  defamation.  Such  cases  need  to  be  thoroughly  followed  up  (see  5.2.6  – 
information society and media). 

Public service broadcaster 

RTK  is  directly  state  funded,  which  undermines  its  independence,  weakens  its  long-term 
sustainability  and  leaves  it  prone  to  political  influence.  The  assembly  has  yet  to  find  a 
sustainable  financing  solution  for  the  RTK,  with  the  legal  deadline  having  expired  in  April 
2015. The tendency of the assembly to make state funding a permanent solution contrary to 
the law is a concern. A solution for the premises of the public broadcaster is yet to be found. 
In May, the Privatisation Agency requested the RTK to pay for the public premises it is using 
or  face  eviction.  No  such  requests  have  been  made  to  other  media  that  use  public  premises 
under similar conditions. 

The RTK Board is complete but its performance needs to be improved, as pointed out in last 
year's  performance  audit  of  the  public  broadcaster,  carried  out  by  the  Office  of  the  Auditor 
General at the assembly’s request.  

The appointment of a new director of the Serbian language RTK channel in May 2016 was 
later annulled because it breached relevant legal provisions. 

Economic factors 

The  media  are  generally  not  economically  sustainable.  Information  on  media  ownership 
structures, in particular for online media, remains unclear and often fictitious, as most media 
do not provide information on their finances or real ownership. The lack of a strong private 

25 

 
advertising  industry  makes  private  broadcasters  dependent  on  other  sources  of  funding  and 
few are able to operate without strong links to political and business interest groups. 

Professional organisations/professional conditions 

There  are  several  associations  and  unions  for  journalists,  divided  along  ethnic  lines.  They 
generally do not enjoy wide support across the journalistic spectrum. Journalists often work 
without  contracts  and  they  are  vulnerable  to  corruption  as  well  as  prone  to  self-censorship. 
Protection  of  professional  standards  in  journalism  is  governed  by  codes  of  ethics  but 
implementation  is  weak.  Neither  the  Independent  Media  Commission  nor  the  Press  Council 
has brought any cases against the media for breach of the codes of ethics. 

Freedom  of  assembly  and  association  is  guaranteed  by  the  constitution  and  citizens  have 
been  making  ample  use  of  their  right,  including  by  staging  demonstrations  and  protests 
against various levels of government. The law enforcement authorities have handled violent 
protests professionally. 

Responsibility for overall coordination of property rights lies with the Ministry of Justice. A 
strategy for property rights is being developed. The law on the establishment of the Kosovo 
Property Comparison and Verification Agency, the successor to the Kosovo Property Agency, 
adopted  in  June,  is  now  being  challenged  before  the  Constitutional  Court.  Lack  of  funds 
continues to hinder the implementation of the Property Agency’s decision to demolish illegal 
private  property  constructions.  There  are  currently  29  cases  pending  and  the  total  cost 
involved  is  around  EUR  50 000.  This  also  seriously  affects  the  rights  of  displaced  persons. 
Following  the  identification  of  over  350  000  constructions  built  without  permit,  the 
Government is revising its policy and the law on treatment of constructions without permit. 
Illegal re-occupation of properties, on which the Property Agency has already ruled, continues 
to be a concern. The strategy on legalising informal settlements has not yet been adopted. The 
government has not allocated the funds to set up a compensation scheme related to socially 
owned  residential  property.  There  has  been  limited  progress  in  the  adoption  of  a  three-year 
social  housing  plan  by municipal  authorities  which  in  turn  prevents  central  authorities  from 
concluding a Kosovo-wide strategy on social housing. 

As  regards  non-discrimination,  legislation  to  implement  the  law  on  protection  from 
Discrimination  has  not  been  adopted.  In  the  reporting  period,  the  Ombudsman  Institution 
received complaints in similar numbers to previous years and more than doubled the number 
of  ex  officio  investigations  on  discrimination  grounds.  The  Kosovo  Prosecutorial  Council’s 
tracking  mechanism still needs to  be extended to cover cases of all kinds of discrimination, 
not  only  those  based  on  ethnicity.  The  performance  of  institutions  in  processing  and 
investigating  discrimination  cases  remains  poor.  Following  the  example  of  the  Police 
Academy,  which  already  has  a  specific  anti-discrimination  module  in  its  training  for  newly 
recruited  police  officers,  the  government  should  take  forward  the  Training  of  Trainers 
programme and involve licensed anti-discrimination trainers from key institutions such as the 
judiciary,  the  prosecution  service,  the  police,  the  public  administration  and  the  education 
ministry. 

Kosovo’s  legal  framework  for  equality  between  women  and  men  is  broadly  in  line  with 
international standards. Efforts to align existing legislation by drafting a unified civil code are 
an opportunity to bring it fully into line with European standards. Implementation of the law 
on gender equality is slow and secondary legislation has yet to be adopted. The fact that the 
vacancy  for  the  Head  of  the  Agency  of  Gender  Equality  has  not  been  filled  has  hampered 
implementation  of  the  action  plan  to  implement  UN  Security  Council  Resolution  1325  on 
women,  peace  and  security,  and  the  Agency’s  role  in  policy-making  needs  to  be  further 
strengthened. 

26 

 
Gender-based violence, including domestic violence, is a challenge with severe limitations in 
protection  systems  for  victims  of  domestic  violence  highlighted  by  the  tragic  death  of  a 
woman in Suharekë/Suvareka in October 2015. A positive development is the anti-trafficking 
and domestic-violence helpline which is now also providing assistance to Serbian speakers in 
the  north.  The  new  Strategy  and  Action  plan  2016-2020  on  Protection  from  Domestic 
Violence  needs  to  be  adopted.  The  lack  of  a  system  of  regular  data  collection  across 
institutions  undermines  the  ability  to  cross-track  and  monitor  cases  in  investigation  and 
judiciary  proceedings.  Units  for  gender-based  violence  need  to  be  set  up  in  the  northern 
municipalities.  Authorities  need  to  improve  reintegration  programmes  for  survivors  of 
domestic violence. The Commission dealing with survivors of sexual violence during the war 
needs  to  start  verifying  the  status  of  survivors  to  enable  and  ensure  access  to  individual 
benefits.  In  March  2016,  measures  were  adopted  to  regulate  the  registration  of  joint 
immovable  property  in  the  name  of  both  spouses,  thereby  strengthening  legal  protection  of 
women’s  right  to  inheritance.  In  practice,  implementation  remains  limited,  which  directly 
undermines women’s economic empowerment. 

On  the  rights  of  the  child,  Kosovo’s  legal  framework  is  largely  in  line  with  international 
requirements  but  implementation  remains  a  challenge.  Authorities  must  ensure  an  adequate 
budget  for  the  new  draft  law  on  child  protection  to  be  effective,  once  adopted.  Data  and 
monitoring mechanisms to assess progress in implementing child rights need to be improved. 
While  Child  Rights  Officers  have  been  appointed  in  most  municipalities,  their  impact  is 
limited.  The  Ministry  of  Labour  and  Social  Welfare  must  ensure  adequate  financing  for 
shelters  housing  children  who  are  victims  of  violence  and  trafficking.  The  Ombudsman 
Institution should further engage in promoting the rights of children. 

The  Juvenile  Justice  Code  is  guided  by  the  principle  of  the  ‘best  interests  of  the  child’ 
enshrined in the UN Convention on the Rights of Child. The foundations of a justice system 
for  children  are  in  place  and  juvenile  departments  have  been  set  up  in  all  Basic  Courts  and 
prosecutor offices. As regards children’s access to justice, little progress has been achieved in 
legal  and  capacity  development  for  proper  implementation  of  child-friendly  proceedings  in 
civil  and  administrative  cases.  Good  progress  has  been  made  through  a  referral  protocol  to 
ensure  free  legal  and  professional  services  for  child  victims  and  witnesses.  While  current 
provisions in the Juvenile Justice Code are not in line with the UN Committee on the Rights 
of the Child concerning pre-trial detention (12 months instead of 6), in practice in the last 2 
years no juvenile has been detained for more than 6 months. As a result, deprivation of full 
liberty has become a measure of last resort and is used for the shortest appropriate time. 

On  the  rights  of  persons  with  disabilities,  implementation  of  the  strategy  for  2013-2023 
remains limited and the government now needs to draft a new action plan for 2017-2019. The 
Ministry of Labour and Social Welfare still needs to find a solution to address the situation of 
the more than 1 000 members of the deaf community who were removed from the disability 
pension scheme in 2013. The law on paraplegic and tetraplegic persons was adopted in May 
2016.  The  National  Disability  Council  appointed  the  President  of  the  Kosovo  Disability 
Forum  as  its  Co-chair,  making  the  Council  more  inclusive  and  transparent.  It  should  meet 
regularly and take a more proactive role to improve the wellbeing and promote the rights of 
persons  with  disabilities.  The  authorities  need  to  improve  the  inclusion  of  children  with 
disabilities  in  the  education  system  by  increasing  the  number  of  professional  staff  and 
personal assistants. Access to public buildings and public transport remains problematic. 

There  has  been  some  progress  on  the  rights  of  lesbian,  gay,  bisexual,  transgender  and 
intersex  (LGBTI)  persons.  On  17 May,  for  the  third  year  in  a  row,  a  peaceful  march  was 
organised  in  Pristina  to  mark  the  international  day  against  homophobia,  transphobia  and 

27 

 
biphobia  with  senior  politicians  in  attendance,  including  the  President.  Cases  of  verbal  and 
physical assaults against members of the LGBTI community should be properly investigated. 
The advisory and coordinating group for the rights  of LGBTI persons needs to take a more 
proactive role by providing concrete advice and recommendations to relevant institutions.  

Issues of labour and trade union rights are covered in section 4.1.8.  

Regarding procedural rights, persons suspected or accused or victims of crime have the right 
to  solid  protection  under  the  Criminal  Procedure  Code,  the  law  on  police,  the  law  on  the 
Kosovo Police Inspectorate, the law on crime victim compensation and the law on free legal 
aid. They have the right to interpretation and translation, the right to information about their 
rights,  the  right  to  legal  advice  before  and  during  trials  and  to  legal  aid,  and  the  right  to 
communicate  with  family  members,  employers  and  consular  authorities.  There  is  strong 
political  will  to  apply  these  rules,  but  financial  resources  and  more  training  is  needed.  In 
April,  the  Kosovo  police,  the  Judicial  and  Prosecutorial  Councils  and  the  Kosovo  Bar 
Association signed a memorandum of understanding to create a coordination mechanism for 
providing criminal defence free of charge.  

Implementation  of  the  legal  framework  on  minorities  continued  to  be  challenging.  The 
institutional  set-up  and  mechanisms  for  protecting  minority  communities  are  in  place  at 
central  and  local  level.  In  the  north,  Municipal  Offices  for  Communities  and  Return  and 
Community  Committees  have  been  established  and  have  started  to  work.  Municipal  Safety 
Councils,  introduced  in  2009  to  improve  community  safety  and  stability,  also  need  to  be 
established in the north to further strengthen the protection of minority communities. Kosovo 
institutions  must  assume  ownership  and  focus  more  on  implementation  by  increasing 
interaction between the Kosovo central and local institutions and minority communities. The 
Office  of  Community  Affairs  needs  to  be  fully  involved  in  developing  and  taking  forward 
policy-making on the protection of national minorities. 

In  May  2016,  a  technical  working  group  published  a  report  on  the  implementation  of 
recommendations  of  the  Council  of  Europe’s  Advisory  Committee  on  the  Framework 
Convention  for  the  Protection  of  National  Minorities.  The  report  is  incomplete,  data  is 
limited, and indicators for monitoring progress are lacking.  

In  March  2016  the  second  round  of  an  internship  programme  for  minority  communities  in 
public  institutions  was  implemented.  However,  the  employment  of  members  of  minority 
communities  in  the  civil  service  and  public  enterprises  remains  very  challenging.  Progress 
was  made  with  a  regulation  enabling  graduates  of  the  University  of  Mitrovicë/Mitrovica  to 
have  their  diplomas  certified  for  the  purposes  of  employment,  professional  licensing  and 
admission to professional exams in  Kosovo institutions. As a result of affirmative measures 
and  quotas,  more  students  from  minority  communities  were  able  to  enrol  in  public 
universities.  This  represents  a  positive  step  towards  effective  inclusion  of  minority 
communities in Kosovo.  

Stronger  commitment  and  support  by  government  institutions  in  mainstreaming  language 
policies  is  needed.  Implementation  of  the  law  on  official  languages  remains  low. 
Kosovo/Serbian language interpretation and translation, including translation of laws, is often 
substandard.  The  Office  of  the  Language  Commissioner  continues  to  work  in  a  satisfactory 
manner  and  is  now  also  starting  to  work  in  the  northern  municipalities.  However,  it  needs 
political and financial support. 

The  Consultative  Council  for  Communities  has  further  strengthened  its  role  and  has  seen 
increased  interest  in  participation  from  the  Serbian  community.  To  put  this  body  on  a  firm 

28 

 
footing, increased budget is needed and its recommendations need to be taken into account by 
ministries. 

The overall security situation for minority communities remains relatively stable and largely 
unchanged.  However,  there  are  recurring  incidents  of  property  theft,  damage  and  related 
crimes  targeting  Kosovo  Serb  returnees  and  other  members  of  minority  communities.  Such 
incidents increase the feeling of insecurity, negatively impact on their livelihood and society 
as  a  whole,  and  deter  other  potential  returnees.  Law  enforcement  and  judicial  authorities 
should  make  every  effort  to  bring  the  perpetrators  to  justice  and  counter  a  perception  of 
impunity in order to restore confidence among victims and in society as a whole. Hate crimes 
targeting  minority  communities  need  to  be  more  resolutely  dealt  with.  Further  work  is 
required  to  take  account  of  Article  147  and  74  §  2.12  of  the  Criminal  Code.  Additional 
recruitment of police officers from minority communities in affected areas, in particular in the 
west of Kosovo, is needed. 
The  situation  of  the  Roma,  Ashkali  and  Egyptian  communities4  remains  challenging. 
Following  up  on  the  2009-2015 strategy,  the  government  aims  at  finalising  the  new  policy 
commitments,  focused  on  the  inclusion  of  these  communities  in  society,  before  the  end  of 
2016.  While  the  consultation  process  was  inclusive,  only  some  recommendations  by  civil 
society and international organisations were taken on board. Municipalities are encouraged to 
renew,  approve  and  implement  Local  Action  Plans.  Recommendations  from  the  November 
seminar on Roma, Ashkali and Egyptian Communities need to be implemented. 

Learning centres continue to play an important role in reducing the significantly high number 
of school dropouts and in allowing for the Roma, Ashkali and Egyptian communities’ further 
integration  in  the  education  system.  The  government  continues  to  provide  free  textbooks  in 
the  Romani  language.  The  Roma,  Ashkali  and  Egyptian  communities  continue  to  enjoy  the 
same access to healthcare services as other citizens. Budget for housing needs to be allocated. 
Some  municipalities  have  continued  to  allocate  land  to  these  communities.  Kosovo  has 
continued  to  take  affirmative  measures  with  Montenegro  and  with  the  former  Yugoslav 
Republic of Macedonia to ensure access to civil registration for displaced Roma, Ashkali and 
Egyptian communities. Active measures to include these communities are needed to combat 
exclusion  in  the  labour  market.  Child  marriages  and  child  labour  continue  to  be  prevalent. 
Kosovo should take full ownership of the measures needed to support the Roma, Ashkali and 
Egyptians communities with a view to reducing donor dependency. 

The pace of the return and reintegration of refugees and internally displaced persons (IDPs) 
is  slow  and  returns  are  decreasing  year  on  year.  Return  figures  for  this  year  are  the  lowest 
figures  to  date. Sustained  efforts  are  needed  to  collect  and  maintain  data  on  numbers  and 
locations of IDPs and returnees. Usurpation of properties belonging to displaced populations, 
coupled  with  illegal  construction  on  their  land  and  the  non-execution  of  the  Constitutional 
Court decision from April 2014 related to these matters, is hindering the return process. In the 
absence of an effective response by municipal authorities on this issue, stronger central level 
supervision and inter-ministerial cooperation is required.                        

On cultural rights, relations  between Kosovo authorities and the Serbian Orthodox Church 
were  strained  during the  reporting  period,  notably  due  to  Kosovo’s  failed  bid  for UNESCO 
membership.  The  church  withdrew  from  regular  cooperation  with  the  Implementation  and 
Monitoring  Council  (IMC).  On  several  occasions  the  authorities  called  for  cooperation  to 
recommence and, following a 10-month period of inactivity, a meeting was held in April. It is 
important that the IMC is used to resolve difficulties in co-operation between the Ministry of 

4  All  these  groups  are  considered  under  the  wider  "Roma"  umbrella  term  under  the  EU  framework  for  National  Roma 
Integration Strategies. 

29 

 
                                                            
Culture  and  the  Serbian  Orthodox  Church.  The  government  should  increase  its  efforts  to 
ensure  the  sustainable  functioning  of  the  IMC's  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.  Improving  communication  with  the 
resident Serbian Orthodox clergy remains a challenge.  

Kosovo authorities have begun to take steps to adopt legislation to reinstate all the substantive 
provisions  included  in  Annex  V  of  the  Comprehensive  Status  Settlement  Proposal  (CSP), 
regarding  the  management  and  protection  of  Serbian  religious  and  cultural  heritage  in 
Kosovo.  The  government  proactively  liaised  with  the  EU  in  drafting  the  National  Cultural 
Heritage  Strategy  and  the  same  is  expected  for  the  drafting  of  the  law  on  amending  and 
supplementing  the  law  on  cultural  heritage,  which  should  take  place  without  delay  and 
accurately reflect all of Kosovo's commitments under Annex V of the CSP.  

The  Village  Council  of  Velika  Hoča  /  Hoçë  e  Madhe  is  functioning  in  accordance  with  the 
law.  The  Cultural  Heritage  Council  in  Prizren  has  been  integrated  into  municipal  structures 
and  is  functioning  in  accordance  with  the  law  on  the  historic  centre  of  Prizren.  The 
government  increased  its  cooperation  with  civil  society  on  the  management  of  cultural 
heritage. In June 2016 Prizren municipality assigned two additional inspectors for the Historic 
Centre  of  Prizren.  Incidents  of  illegal  demolition  of  cultural  heritage  have  continued  and 
sanctions against perpetrators have not been enforced. The systematic degradation of heritage, 
particularly in Prizren, is of great concern and poses an increasing risk to public safety. The 
task force set up in 2014 to deal with illegal construction in Prizren has had minimal impact. 
Intensified  efforts  to  ensure  adequate  protection  and  management  of  cultural  heritage 
throughout Kosovo are needed.  

2.5.  Regional issues and international obligations 

Kosovo  continued  working  to  fulfil  the  remaining  obligations  related  to  following  up  on 
allegations of  international crimes committed during and after the conflict in Kosovo, laid 
out  in  the  2011  Council  of  Europe  Parliamentary  Assembly  report.  The  constitutional  and 
legislative amendments needed to create the conditions for the establishment of the Specialist 
Chambers and Specialist Prosecution Office have been adopted. The Chambers are subject to 
Kosovo  law,  but  are  located  outside  Kosovo.  In  February,  the  President  finalised  the 
procedure related to the bilateral agreement allowing the Specialist Chambers to be hosted in 
the Netherlands, thus completing Kosovo’s obligations. 

Kosovo has set up a war crimes department within its Special Prosecution Office. However, 
the  department  has  only  two  local  prosecutors  for  a  workload  which  will  further  increase 
when more EULEX cases are handed over. The Kosovo police war crimes investigation unit 
has  received  additional  staff,  vehicles  and  computers.  However,  the  limited  experience,  and 
the lack of investigators with an ethnic Serb background, criminal intelligence analysis staff 
and  language  and  translation  capacity,  has  an  impact  on  the  work  of  the  unit.  EULEX  is 
supporting  Kosovo  in  building  up  the  capacity  to  effectively  take  over  war  crimes 
investigations and prosecution. In cases where the suspects are ethnic Serbs, residing mainly 
in Serbia, mutual legal cooperation with Serbia is effectively non-existent. There is an overall 
concern  about  capacity  and  willingness  to  handle  war  crimes  cases  involving  former  KLA 
members. 

The  unresolved  fate  of  missing  persons  from  the  1990s  conflict  remains  a  humanitarian 
concern,  the  resolution  of  which  is  vital  for  reconciliation  and  stability  in  the  region.  As  of 
July, a total of 10 593 persons were still missing according to the International Committee of 
the  Red  Cross  (ICRC).  Of  these,  1 665  relate  to  the  1999  conflict.  The  appointment  of  the 
head  of  the  Pristina  delegation  to  the  ICRC-led  working  group  on  missing  persons  is  a 

30 

 
 
positive  step.  The  working  group  faced  serious  challenges,  with  only  four  cases  solved  in 
2015, the lowest number since the end of the conflict. The government needs to appoint a file 
holder for the issue of missing persons and show greater political commitment and renewed 
efforts.  Lack  of  information  on  gravesites  yet  to  be  uncovered  remains  an  obstacle  to 
resolving the issue. Kosovo needs to engage more proactively and provide information from 
its own sources. Politicisation of the process, including unhelpful statements in the media and 
a further weakening of the process due to interinstitutional disputes, needs to be avoided. 

The Kosovo Institute of Forensic Medicine continues to have insufficient capacity to meet the 
required  standards  for  sustainable  forensic  practice,  including  forensic  anthropology  and 
archaeology.  The  authorities  need  to  address  this  issue  urgently.  Coordination  and 
cooperation  with  the  government’s  commission  on  missing  persons  remains  limited.  Both 
need  to  allocate  resources  and  resume  data  entry  in  the  central  register  of  missing  persons, 
which  stopped  in  August  2014.  The  lack  of  progress  on  this  issue  prevents  the  government 
from  assuming  its  obligation  to  establish  and  manage  the  list  of  missing  persons.  The 
authorities need to adopt secondary legislation on the establishment of a central register, and 
on  the  closure  of  cases,  to  support  the  implementation  of  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.  When  developing  a  strategy  for 
dealing  with  the  past,  the  inter-ministerial  working  group  on  dealing  with  the  past  needs  to 
conduct  a  gender-  and  victim-sensitive  and  transparent  transitional  justice  consultation 
process, which would include all communities and marginalised groups. The process requires 
increased  active  engagement  by  the  Ministry  of  Justice  as  well  as  a  financial  contribution 
from the government. 

Regional  cooperation  and good neighbourly  relations form an  essential part of Kosovo’s 
process of moving towards the EU. They contribute to stability, reconciliation and a climate 
conducive to addressing open bilateral issues and the legacies of the past. Kosovo applied for 
Interpol membership and applied for, but failed to achieve, membership in UNESCO. Kosovo 
took a more active role in several regional organisations, notably in the Regional Cooperation 
Council. Kosovo is still not represented in all regional organisations that fall within the scope 
of  the  agreement  on  the  arrangements  on  regional  representation  and  cooperation  as  agreed 
with Belgrade in 2012. 

The impetus given through the Berlin process and the Western Balkan Six initiative, notably 
regarding  the  connectivity  agenda,  has  continued  to  foster  increased  regional  cooperation. 
Building on the results of previous Summits the June 2016 Paris summit saw further advances 
on  the  connectivity  agenda  but  also  opened  co-operation  in  new  areas,  notably  through  the 
establishment of the Regional Youth Cooperation office (RYCO) to be established in Tirana. 
Kosovo  has  participated  actively.  The  pending  measures  in  the  area  of  transport  include 
improvement  of  the  implementation  of  the  IBM  guidelines  and  mutual  recognition  of  train 
driver licenses among others. On energy, Kosovo should phase out price regulations, finalise 
discussions with Albania to link with its power exchange, finalise the technical procedure to 
establish a functioning and balanced market and adopt a compatible energy law, which will 
allow progress on a number of other measures. Kosovo's Electricity Transmission Company is 
not in a position to take full advantage of the regional electricity market as agreed in Paris.  

Kosovo  remained  constructively  committed  to  bilateral  relations  with  other  enlargement 
countries and neighbouring EU Member States.  

Kosovo has continued to deepen its relations with Albania. In May, the Ministry of Trade and 
Industry  signed  a  bilateral  agreement  with  the  Albanian  counterpart  on  enhancing  and 
protecting investment, to intensify economic cooperation and create favourable conditions for 

31 

 
investment.  In  June  2016,  the  two  governments  signed  cooperation  agreements  on 
environment,  energy,  transport,  public  administration  reform,  customs,  taxation  and  joint 
training. 

There  are  no  official  relations  between  Kosovo  and  Bosnia  and  Herzegovina  as  the  latter 
does not recognise Kosovo’s independence. A reciprocal visa regime continues to be in place. 

Relations  with  the  former  Yugoslav  Republic  of  Macedonia  continued  to  develop.  In 
February  2016,  a  Partnership  Agreement  on  the  management  of  technical  assistance  was 
signed, as was an agreement on cooperation on EU integration. An agreement on the use of 
personal  identification  documents  for  citizens  crossing  the  joint  border  became  effective  in 
April 2016. Some tensions resulted from politicians’ statements about participation of people 
from Kosovo in the Kumanovo incident in 2015. 

Relations  between  Montenegro  and  Kosovo  remained  good.  In  September  2015,  the 
agreement on police cooperation entered into force. The Agreement on cooperation  between 
the  two  parties'  Commissions  for  Missing  Persons  was  signed  in  October.  There  were  no 
developments  concerning  the  constitutional  recognition  of  the  Montenegrin  minority  in 
Kosovo.  The  border  demarcation  agreement  with  Montenegro  was  ratified  by  Podgorica  in 
December 2015, but is facing resistance in the Kosovo Assembly. 

Kosovo has maintained friendly relations with Turkey. A readmission agreement was signed 
in December 2015, in the context of visa liberalisation for Kosovo. 

3.   NORMALISATION  OF  RELATIONS  BETWEEN  KOSOVO  AND 
SERBIA  

Work  under  the  EU-facilitated  dialogue  has  continued  throughout  the  reporting  period. 
Overall progress in the implementation of the 25 August 2015 agreement has been slow. This 
is partly due to respective internal circumstances, with parliamentary elections followed by a 
lengthy government formation process in Serbia and the domestic situation in Kosovo. During 
the  last  high-level  dialogue  in  January  2016,  both  sides  had  asked  for  political  space  to 
operate  in,  address  these  domestic  challenges  and  consolidate  government  and  governance. 
EU  frequent  bilateral  contacts  and  discussions  with  both  sides  helped  maintain  the  political 
engagement at highest level, and re-engage both sides to resume work on the implementation 
of past agreements.  

Since the formation of the Serbian government in August, both sides engaged in acceleration 
of the implementation of the 25 August 2015 Agreements. Implementation of the agreement 
on  the  Mitrovicë/Mitrovica  Bridge  commenced  in  August  and  works  on  and  around  the 
bridge,  including  turning  the  North  Mitrovica  municipality's  main  street  (King  Petar  Street) 
into a pedestrian zone, are to be completed by January 2017. Progress has been made when it 
telecoms,  while  final 
comes 
implementation 
the 
Association/Community  of  Serb  majority  municipalities  in  Kosovo.  After  the  official 
appointment of the management team, a mandate needs to be given to it by Kosovo to draft 
the statute of the Association/Community. Serbia needs to register and license the two Serbian 
energy companies to be established in Kosovo to allow progress in the field of Energy.     

  Little  progress  has  been  made  on 

to  bridging  different  views  on 

is  still  outstanding. 

the  arrangement  on 

Further progress has been made on the implementation of the April 2013 ‘First agreement of 
principles  governing  the  normalisation  of  relations’.  Kosovo  Serb  police  and  civil 
protection personnel are now fully integrated into the Kosovo system. The dismantling of the 

32 

 
 
 
Serbian structures on justice continues as scheduled and all former Serbian judicial personnel 
are  expected  to  be  into  the  Kosovo  system  by  autumn  2016.  In  the  context  of  the  liaison 
arrangements,  official  visits  are  directly  arranged  by  Liaison  Officers  in  line  with  the 
relevant agreement. 

Most  agreements  from  the  Technical  Dialogue  (2011-2012)  are  now  implemented  and 
functioning.  In  the  field  of  cadastre,  the  scanning  of  documents  pertaining  to  Kosovo  was 
completed in June, as scheduled but the documents have not been delivered to the EU Special 
representative in Kosovo, in line with the agreement on cadastre. Both sides agreed on new 
modalities  for  the  implementation  of  the  University  Diploma  agreement  in  April.  An 
agreement  was  reached  in  September  on  the  implementation  of  the  licence  plate  related 
remaining elements of the agreement on freedom of movement. Requests for  Mutual Legal 
Assistance  are  being  processed.  Serbia  needs  to  remain  committed  to  the  continued 
implementation  of  the  agreement  on  representation  and  participation  of  Kosovo  in  regional 
forums. Serbian official statements have at times interfered with the judicial process led by 
EULEX.  Serbia  has  yet  to  address  the  issue  of  re-located  Serbian  administrative  customs 
structures  with  Kosovo  denomination  that  operate  from  within  Serbia,  and  to  cease  the 
issuance  of  documentation  or  affixing  of  stamps  with  denomination  that  contravenes  to  the 
related agreement. On IBM, while the interim crossing points are fully operational, there has 
been no progress in establishing the three permanent crossing points to be hosted by Serbia. 
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 close illegal crossings.  

Overall, Kosovo has remained engaged in the dialogue and committed to the implementation 
of the agreements reached. However, Kosovo needs to make further efforts and contribute to 
the  establishment  of  circumstances  conducive  to  the  normalisation  of  relations  with  Serbia. 
Further progress in this area remains essential for advancing the European future of Kosovo. 

4.   ECONOMIC CRITERIA 

Key economic figures 

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

GDP growth (%) 

2014 

N/A 

1.2 

2015 

N/A 

4.0* 

Unemployment rate (female; male) (%) 

35.3 (41.6; 33.1)  32.9 (36.6; 31.8) 

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

47.7 (24.2; 71.4)  42.8 (20.4; 65.1) 

Current account balance (% of GDP)* 

Net Foreign direct investment (FDI) (% of GDP)* 

-7.9 

2.2 

-9.3 

5.1 

* Based on aggregated quarterly GDP data 
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. 

33 

 
 
 
The  monitoring  of  these  economic  criteria  should  also  be  seen  in  the  context  of  the  central 
importance  of  economic  governance  in  the  enlargement  process.  Each  enlargement  country 
prepares  an  Economic  Reform  Programme  (ERP)  annually,  which  sets  out  a  medium-term 
macro-fiscal  policy  framework  and  a  structural  reform  agenda  aimed  at  ensuring 
competitiveness  and  inclusive  growth.  The  ERPs  are  the  basis  for  country-specific  policy 
guidance jointly adopted by the EU and the Western Balkans and Turkey at ministerial level 
in May each year. 

 4.1.  The existence of a functioning market economy 

Kosovo  is  at  an  early  stage  in  developing  a  functioning  market  economy.  Some  progress 
was  made,  particularly  on  supporting  export-oriented  businesses,  improving  contract 
enforcement,  especially  within  the  financial  sector,  and  access  to  finance.  The  pursuit  of 
economic  reforms  is  ongoing,  but  decisions  related  to  war-veterans'  benefits  can  challenge 
fiscal sustainability and affect Kosovo's relations with international financial institutions. The 
persistent trade deficit reflects a weak production base and poor international competitiveness. 
Reliance  on  remittances  and  the  widespread  informal  economy  additionally  decrease 
employment incentives resulting in low labour force participation, especially among women, 
and high unemployment rates in particular among young and unskilled workers.  

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

  ensuring  fiscal  sustainability,  especially  by  establishing  an  independent  fiscal  body  and 
strengthening independent forecasting; 

  improving the efficiency of capital spending, particularly through improvements in project 
preparation and management capacities at central and local government levels; 

  improving bankruptcy and insolvency procedures. 

Economic governance 

and 

slow 

(ERP)  and 

The  government’s  strategic  documents  show  a  strengthened  commitment  to  pursuing 
economic  reforms.  However,  Kosovo's 
economic policy is characterised by ad hoc 
decision  making 
policy 
implementation.  The  Economic  Reform 
the  National 
Programme 
Development  Strategy  both 
reflect  a 
commitment to pursue a stable fiscal policy 
and  structural  reforms.  However,  the  ERP 
policy  guidance  from  12  May  2015  has 
only been partially implemented. The second Interntional Monteray Fund (IMF) disbursement 
has  been  delayed  due  to  the  underestimated  costs  stemming  from  the  introduction  of  new 
benefits for war veterans, which represent a significant risk for Kosovo's fiscal stability. The 
Stabilisation  and  Association  Agreement  between  Kosovo  and  the  European  Union  entered 
into force and establishes a permanent free trade arrangement with the EU. If complemented 
by specific reforms, it will facilitate economic development in Kosovo. 

ERP  policy  guidance:  To  improve  forecast 
accuracy  enhance  technical  capacities  of  the 
services preparing the macro fiscal framework, 
strengthen  parliamentary  oversight  capacities 
in evaluating budget planning and execution as 
well as fiscal risks and take first steps towards 
establishing an independent fiscal body.  

34 

 
 
 
 
 
 
Macroeconomic stability 

9,0

6,0

8,0

4,0

7,0

5,0

P
D
G

f
o
%

show 

GDP growth

gap  with 

Figure 1 Kosovo GDP growth 

Kosovo’s  economy  is  showing  signs  of  recovery,  albeit  insufficient  to  close  the 
the 
development 
countries  in  the  region  and  to 
increase the level of employment. 
that 
data 
Preliminary 
economic growth picked up to 4 % 
of GDP in 2015 which is above the 
average annual growth of 3 % over 
the  last  five  years.  Consumption 
and 
largest 
the 
contributors 
to  growth,  while 
exports  remained  weak.  Stronger 
private consumption was fuelled by 
higher 
higher 
remittances, 
consumer  lending,  and  increased 
pensions  and  wages  in  the  public 
sector.  The  recovery  of  investments  was  supported  by  the  on-going  construction  of  the 
highway  to  Skopje  and  doubled  foreign  direct  investment  (FDI)  inflows.  Kosovo's  growth 
model still mainly relies on consumption and investments in infrastructure as other production 
capacities are underdeveloped. Growth remained strong in the first quarter of 2016, at around 
3.8 %.  

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

investment  are 

0,0

1,0

2,0

3,0

External imbalances worsened in 2015, despite a slight improvement in the trade deficit. 
The current account deficit increased to 9.1 % of GDP in 2015, the highest since 2011. A fast 
growing inflow of remittances (13 % of GDP in 2015) and a slightly decreasing trade deficit 
(30.4 % of GDP in 2015) were not enough to offset the large outflow of FDI-related profits 
and a continuation in the decline of transfers to the government. However, FDI inflows more 
than doubled, amounting to 5.6 % of GDP, after recording a historic low of 2.7 % in 2014. 
Almost 60 % of all FDI went into real estate and only 7.1 % to the manufacturing sector. The 
real  estate,  financial  intermediation  and  construction  sectors  attract  most  FDI,  reflecting  a 
weak  business  environment  and  few  'greenfield'  investment  opportunities.  Kosovo's  gross 
external  debt  remained  relatively low  at  33.4  %5  of  GDP,  and  is  not  a  cause  for  immediate 
concern.   

As  a  small  open  economy,  price  developments  are  dependent  on  import  prices, 
specifically food and energy prices. The consumer price inflation in Kosovo has been on a 
downward trend since 2011, resulting in deflation of 0.5 % in 2015. Inflation stabilised in the 
first  half  of  2016  at  around  0  %,  despite  a  slow  pick  up  in  core  inflation.  Import  prices 
decreased 1.2 % in 2015 and further by 4.2 % in the first half of 2016. 

The fiscal situation improved in 2015 but 
ad-hoc  decision  making  still  affects 
finances  negatively.  Budget 
public 
revenues  rose  8.9  %  in  2015  driven  by 
strong  growth  in  tax  revenues.  Both  VAT 
and  corporate  income  tax  increased  due  to 
turnover  and  profitability  of 
higher 

ERP  policy  guidance:  To  improve  forecast 
accuracy  enhance  technical  capacities  of  the 
services preparing the macro fiscal framework, 
strengthen  parliamentary  oversight  capacities 
in evaluating budget planning and execution as 
well as fiscal risks and take first steps towards 
establishing an independent fiscal body. 

5 Central Bank of Kosovo data 

35 

 
 
                                                            
 
 
 
 
Kosovo's 10 largest companies.  

and 

freezes 

Expenditure 
cuts  were 
complemented with the VAT rate increase 
to  18  %  and  the  introduction  of  a  new 
lower rate of 8 % for some essential goods. 
Furthermore VAT exceptions for imported 
capital goods were introduced to stimulate 
domestic production.  

ERP  policy  guidance:  Identify  offsetting 
measures  for  recent  increases  in  categorical 
benefits  while  preserving  the  share  of  capital 
spending and address persistent under spending 
of  the  capital  budget  by  improving  project 
preparation  and  management  capacities  at 
central and local administration levels. 

Figure 2 Kosovo fiscal developments 

14

12

10

P
D
G

f
o
%

8

6

4

2

0

3,5

3

2,5

2

1,5

1

0,5

0

P
D
G

f
o
%

2010 2011 2012 2013 2014 2015

Public debt (LHS)

Budget deficit (RHS)

The  overall  budget  deficit  amounted  to 
2 %  of  GDP  (or  1.5  %  of  GDP  when 
adjusted  by  the  provisions  in  the  fiscal 
rule,  well  below  the  2  %  limit).  Capital 
expenditure  was  utilised  at  95  %  of  the 
planned  amount,  but  mainly  due  to  the 
advanced payments for construction of the 
Route 6 highway.  

The  execution  of  the  2016  budget  is 
characterised  by  higher  than  expected 
revenue, but it could be jeopardised by a 
substantial 
the 
expenditure on war veterans' benefits.  

increase  concerning 

Stronger economic growth, the effect of a full year VAT and excise changes, and improved 
collection  of  tax  arrears  substantially  increased  budget  revenue.  While  most  of  the 
expenditure items stayed in line with the budget expectations, reflecting increases due to the 
implementation  of  the  collective  agreement  for  public  sector  employees,  increase  in  social 
assistance, implementation of the law on state-financed pension schemes, and maintenance of 
higher subsidies for agriculture, the expected significant increase of war-related benefits is a 
cause  for  serious  concern.  This  increase  also  reflects  poor  budget  planning  and  a  lack  of 
budget  impact  assessment.  The  2016  budget  aims  at  a  fiscal  deficit  of  1.6  %  of  GDP,  well 
within the fiscal rule limit. 

Kosovo  has  a  relatively  low  level  of  public  debt.  Total  public  debt  continued  to  increase, 
reaching  13.5  %6  in  2015,  with  an  increasing  share  of  domestically  issued  treasury  bills. 
Prudent fiscal policy is crucial given Kosovo’s reliance on short-term domestic financing and 
loans from international financing institutions, and its inability to issue international debt in 
the absence of a credit rating.  

Fiscal  rule  enforcement  and  monitoring  mechanisms  need  to  be  strengthened.  Ad  hoc 
fiscal  decision-making  is  the  main  risk  to  public  finance.  Budget  planning  procedures  have 
not  been  transparent,  and  budget  spending  programmes  are  not  joined  up  with  identified 
policy priorities. The newly adopted wage rule aligning salary increases in the public sector 
from  2018  with  the  nominal  GDP  growth  rate  will  provide  some  stability  to  the  current 
expenditure.  A  new  exemption  to  the  fiscal  rule  was  adopted  increasing  fiscal  space  for 
capital investment projects financed by international institutions.  

Due  to  Kosovo's  unilateral  adoption  of  the  euro,  the  available  policy  mix  comprises  only 
fiscal policy and structural reforms. Kosovo's economy has been continuously growing since 

6  Public  debt  figure  does  not  include  Kosovo's  share  of  the  Paris  and  London  Clubs  debt  of  the  former 
Yugoslavia. 

36 

 
                                                            
 
 
 
 
 
 
 
2003,  but  it  is  difficult  to  establish  any  causal  relation  between  growth  and  fiscal  policy. 
Fiscal policy has been dominated by non-transparent, ad-hoc decision-making, with little long 
term  planning.  This  has  resulted  in  continuous  increases  in  current  spending.  Nevertheless, 
budget deficit and public debt remain low. Implementation of structural reforms is currently at 
an early stage. 

Functioning of product markets 

Business environment  

ERP  policy  guidance:  Implement  the  action 
plan  of  the  strategy  for  the  fight  against  the 
informal  economy.  In  particular,  speed  up  the 
risk  assessments  focusing  on  the  sectors  and 
branches  most  vulnerable  to  informalities  in 
order 
identify  and  apply  appropriate 
corrective measures. 

Some  progress  was  made  in  simplifying 
business  registration  and 
insolvency 
procedures.  The  establishment  of  29 
time 
one-stop  shops  has  reduced 
needed  to  register  a  company  to  3  days. 
The  announced  online  registration  has, 
however,  still  not  been  fully  implemented.  The  main  obstacles  include  a  weak  and 
unaccountable  administration,  underdeveloped 
infrastructure  (especially  an  unreliable 
electricity  supply),  weak  rule  of  law,  corruption;  a  widespread  informal  economy  and  poor 
education  outcomes.  There  was  an  increase  of  4.6  %  in  the  number  of  newly  established 
enterprises mainly in the agricultural sector. A newly adopted law on bankruptcy is expected 
to improve market exit and speed up payments to creditors. 

the 

to 

Despite  some  progress  made  on  the  legal  rules  governing  businesses,  they  are  still 
insufficiently  implemented.  The  very  weak  institutional  capacity  to  enforce  the  law, 
combined  with  widespread  corruption,  continues 
the  business 
environment.  The  judicial  system  suffers  from  poor  accessibility,  inefficiency  and  delays. 
Little progress was recorded in terms of clearing court backlogs of unresolved cases (400 000 
in July 2015). The adopted changes to the law on enforcement procedures should contribute 
to  the  efficiency  of  commercial  cases  and  improve  contract  enforcement  and  collections. 
Further work is needed on reviewing the civil code on business lawsuits and practices and on 
developing property (cadastre) databases.  The Office  of the Auditor General's annual report 
identifies numerous legal violations in ministries, municipalities and other public institutions 
but those responsible are rarely prosecuted.  

to  negatively  affect 

State influence on product markets 

There  was  no  progress  on  developing  institutional  capacity  to  control  state  aid  and 
subsidies  are  still  being  provided  without  a  proper  strategy  and  evaluation.  Among 
centrally-managed  enterprises,  only  two,  the  Kosovo  Energy  Corporation  and  Post  and 
Telecommunications Kosovo, continued to generate a profit in 2015. Appointment procedures 
of  publicly-owned  enterprises  management  are  often  subject  to  political  influence. 
Merit-based  management  selection  procedures  and  anti-corruption  mechanisms  need  to  be 
strengthened.  The  government  continued  providing  EUR  46  million  worth  of  subsidies  and 
investment grants  to  the  agricultural  sector  but  the  link  to productivity  gains remains  weak. 
Tax and customs exemptions continued for certain sectors (raw materials, IT), However these 
had  a  limited  impact  on  investments  and  exports  in  2015.  The  assembly  adopted  a  law  on 
strategic  investment  with  the  aim  of  facilitating  decision  making  regarding  private  sector 
projects  deemed  strategic  by  the  government.  Financial  support  to  the  economic  zones  and 
industrial parks continued, but without a clear plan or a transparent impact and gap analysis. 
Government  influence  on  price  controls  for  utilities  and  postal  and  telecommunications 
services continued. 

Privatisation and restructuring 

37 

 
Overall,  very  limited  progress  was  achieved  in  the  privatisation  and  liquidation  of 
socially-owned  enterprises  and  in  the  restructuring  of  publicly-owned  enterprises. 
Although  the  board  of  the  Privatisation  Agency  was  appointed  in  December  2015,  the 
privatisation  agenda  was  put  on  hold  and  no  new  privatisations  took  place.  With  the 
appointment  of  a  new  management  board  some  progress  has  been  made  in  the 
functionalisation  of  the  Agency,  but  undue  interference  adversely  affects  institutional 
credibility  and  efficiency.  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. 

Functioning of the financial market 

Financial stability 

sector 

stability 

legal  and 

Financial 
was 
maintained.    The  banking  sector  is  sound 
with  robust  capital  and  liquidity  buffers. 
Regulatory  capital  to  risk-weighted  assets 
stood at 18.1 % in August 2016, above the 
regulatory  minimum.  Credit  risks  are  low, 
as the proportion of non-performing loans, 
which 
covered  by  bank 
provisions, is the lowest in the region and fell to 5.1 % by August 2016, due in part to private 
loan enforcement agents' activities.  

ERP  policy  guidance:  Further  address  the 
underlying 
factors 
responsible  for  both  high  cost  of  credit  and 
difficulties  in  access  to  finance  so  as  to 
the 
increase 
economy, while establishing a reliable measure 
of private sector inflation expectations so as to 
better gauge price developments. 

intermediation 

institutional 

financial 

fully 

are 

in 

Access to finance 

Kosovo’s  financial  markets  rely  on  traditional  bank  lending,  while  other  sources  of 
financing remain underdeveloped. Kosovo’s financial system is dominated by the banking 
sector which takes up 69.0 % of the total financial sector assets. The banking sector remains 
largely foreign-owned (89.9 %). Total assets in the financial system grew by 8.1 %, standing 
at 86.0 %  of GDP in  2015 and lending  activities accelerated compared to the previous  year 
(7.3  %  growth  in  total  loans).  Although  total  lending  grew,  the  low  loan-to-deposit  ratio 
increased  only  slightly  to  74.8  %  from  74.2  %  in  2014  showing  ample  room  for  stronger 
banking activity. The average interest rate on loans decreased in 2015 to 7.7 % from 9.3 % in 
2014 but remains above the regional average. 

The  insurance  sector  is  dominated  by  non-life  insurance  companies  and  the  industry 
continues  to  generate  losses.  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.  A  new  law  on  insurance  was  adopted  in 
December  2015,  but  supervision  in  this  sector  is  still  weak.  Transparency  needs  to  be 
improved  by  publishing  annual  reports,  improving  the  reliability  of  audits  of  qualified 
financial statements, and by applying strict standards for licencing new companies. 

 Functioning of the labour market  

Employment is extremely low and efforts 
to  improve  labour  market  conditions  so 
far  have  been  limited  and  ineffective  so 
far.  Moderate  economic  growth  over 
recent  years  has  not  translated  into  better 
labour  market. 
the 
performance 
According to the 2015 labour force survey, 
remains 
the 

labour  participation 

rate 

in 

ERP  policy  guidance:  Set  up  an  action  plan 
for  tackling  youth  unemployment  based  on  an 
assessment of the challenges and focussing on 
including 
improving  education  outcomes 
through 
and 
supporting  school-to-work  transitions.    Ensure 
that  the  Employment  Agency  has  sufficient 
capacity.  Take  measures  to  increase  labour 
market participation of women. 

improved 

training 

teacher 

38 

 
exceptionally low at 37.6 %.  

Figure  3  Unemployment  in  Kosovo  (%  of  Active 
population) 

Figure  4  Participation  rates  in  Kosovo  (%  of 
Labour Force) 

80,0

70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Unemployment rate

Youth unemployment rate

*  Figures  for  2010  and  2011  are  not 
available 

80,0

70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Women

Men

Unemployment decreased to  32.9 %, and remains among the highest in Europe.  The labour 
market  outcomes  for  women  are  particularly  weak  (only  18.1  %  of  women  are  active  and 
36.6 % of these are unemployed). The share of unskilled workers among the total unemployed 
(57.1  %)  and  high  youth  unemployment  (57.7  %),  demonstrate  the  urgent  need  for  more 
active labour market policies, prequalification schemes and vocational training programmes. 
The  narrow  production  base  offers  limited  employment  opportunities,  especially  in 
combination with poor education results mismatched with the demands of the labour market. 
On  the  other  hand,  Kosovo  does  not  have  a  problem  with  labour  protection  legislation, 
taxation  or  a  social  welfare  system  disincentivising  work.  There  is,  however,  evidence  that 
a high reliance on remittances discourages employment.  

Funding  for  employment  services  and  vocational  training  remains  insufficient  and  is  also 
fragmented across several entities. The announced plan to merge them under the new Agency 
for  Employment  has  yet  to  be  implemented.  Statistics  regarding  the  labour  market  are 
inadequate and outdated, hampering a sound analysis of the labour market.  

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

Kosovo is at an early stage in building 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 years Kosovo should pay particular attention to: 

  securing  a  stable  energy  supply,  reducing  distribution  losses  and  improving  energy 
efficiency measures; 

 closing the skills gap in the labour market; 

  implementing  the  action  plan  of  the  national  strategy  for  the  fight  against  the  informal 
economy; 

  setting  up  an  action  plan  for  tackling  youth  unemployment  and  focusing  on  improving 
education outcomes. 

39 

 
 
 
 
Education and innovation  

Education,  research  and  development  are  hampered  by  insufficient  public  spending, 
poor  cooperation  between  vocational  schools  and  enterprises,  as  well  as  delays  in  the 
implementation  of  policies  to  bridge  the  skills  gap.  In  2015,  total  public  spending  on 
education declined to 3.9 % of GDP, from 4.1 % of GDP in 2014, which is broadly in line 
with  middle  income  countries  with  similar  age  profiles.  However,  considering  the  large 
number of students,  Kosovo spends considerably less than some neighbouring countries per 
student  in  primary  and  secondary  education.  Furthermore,  75  %  of  overall  spending  on 
education  is  for  salaries  and  increases  in  education  spending  are  used  almost  entirely  for 
salary increases rather than education quality improvement (only 0.2 % of education spending 
was appropriated for training of teachers). The attendance rates in pre-school and pre-primary 
education  are  still  very  low  (3.7 %  and  74 %  respectively)  undermining  efforts  to  create  a 
level  playing  field  for  the  beginning  of  primary  school.  Kosovo  participated  in  the  PISA7 
assessment  for  the  first  time  in  2015,  but  results  will  only  be  available  at  the  end  of  2016. 
Public spending on research and innovation amounted to only 0.05 % of GDP out of which 
only one fifth was allocated to scientific research and grants.  

Attempts  to  address  the  evident  skills  mismatch  in  the  labour  market  have  so  far  not 
been effective in producing results. The implementation of the adopted 2016-2020 strategy 
for  quality  assurance  in  pre-university  education  in  Kosovo  will  depend  on  stable  and 
adequate  financial  and  committed  human  resources.  Some  40  %  of  graduates  with  a 
vocational diploma and 35 % of graduates with a university degree do not have the necessary 
skills  demanded  by  the  labour  market.  Vocational  education  and  training  programmes  are 
poorly  coordinated,  lack  appropriate  strategies and  priorities,  and  do  not  reinforce Kosovo's 
economic development strategies. 

Physical capital and quality of infrastructure 

ERP  policy  guidance: 
Increase  energy 
security  by  reinforcing  the  planned  energy 
efficiency  measures  to  include  incentives  for 
the  private  sector  and  households  and  by 
adopting  a  plan  for  the  gradual  adjustment  of 
energy tariffs to reflect actual costs. 

in 
some  progress 
Kosovo  made 
improving 
its  physical  capital,  but 
bottlenecks  in  the  energy  sector  remain 
unaddressed. In 2015, Kosovo established 
the  National  Investment  Committee  and 
prepared a Single Project Pipeline (SPP) to 
prioritise 
infrastructure 
projects.  The  SPP  should  become  a  key  planning  tool  for  Kosovo's  public  investments.  In 
2015, the share of investment spending in the budget continued to decrease, reaching 25.8 %, 
down  from  38.2  %  in  2011.  Most  capital  spending  was  on  roads,  with  the  Route  6  project 
taking  up  35.1  %.  The  weak  implementation  of  donor  financed  projects  highlights 
institutional deficiencies and capacity constraints at both central and local government level. 

future  major 

Kosovo's unreliable energy supply is the biggest obstacle for development. High distribution 
losses in the electricity network and low energy efficiency further undermine energy security. 
Although  investments  in  the  electricity  network  have  improved  its  stability  and  reduced 
technical  losses  to  some  extent,  they  lag  behind  initial  plans.  The  construction  of  the  new 
400kV  transmission  interconnector  with  Albania  was  finalised  on  the  Kosovo  side. 
Negotiations for the construction of the new lignite power plant are still on-going. 

The  railway  sector  is  plagued  by  the  weak  administrative  capacity  of  regulatory  institutions 
and  the  poor  state  of  infrastructure.  The  project  to  rehabilitate  the  railway  from  Pristina  to 

7 OECD's Programme for International Student Assessment 

40 

 
                                                            
Mitrovica  has  now  been  confirmed.  Investments  in  large  highways  to  Tirana  and  Skopje 
deprived  local  roads  of  funding  needed  for  proper  maintenance  and  improving  safety 
standards.  This  could  cause  infrastructure  to  deteriorate  faster,  and  generate  higher 
maintenance costs in the future.  The planned EUR 409  million investment in the Brezovica 
ski  resort  failed  due  to  the  inability  of  the  investment  consortium  to  secure  the  required 
investment funds. The digitalisation of the economy is slowly advancing: internet penetration 
per  household  reached  75.5  %  and  internet  penetration  per  user  increased  to  12.35  % 
compared to 10.51 % in 2014. 

Sectoral and enterprise structures  

There  was  no  progress  in  addressing  the  structural  weaknesses  of  Kosovo’s  private 
sector,  which  continues  to  be  fragmented  and  unable  to  improve  its  efficiency.  There 
have been no significant structural changes in Kosovo's economy since 2008. The agriculture 
sector contributes 13.5 % of the gross value added (GVA) (compared to 17.5 % in 2008), is 
responsible  for  26.7  %  of  total  employment  and  provides  about  12  %  of  the  total  value  of 
exported  goods.  Productivity  gains  in  agriculture  are  limited  by  the  relatively  small  size  of 
land plots, poor access to broader markets and a lack of investment in new technologies. The 
share of mining, manufacturing and construction sectors is stable at around 28 % of GVA, but 
exports  are  dominated  by  low  value-added  basic  processed  metal  products  and  scrap  metal. 
The share of the services sector rose to 59 % of GVA (compared with 55 % in 2008), centred 
around the trade, finance and IT sectors. However, compared with the average of developed 
countries Kosovo's economy is still lagging in terms of sector diversification.  

Micro, as well as small- and medium-sized enterprises (SMEs) continue to account for 99 % 
of total employment. The largest number of enterprises operate in the trade sector (29.9 %), 
followed by accommodation, food services and industry. In January 2016, the new law on the 
Credit  Guarantee  Fund  entered  into  force  with  the  aim  of  improving  access  to  finance  for 
SMEs. A  credit guarantee scheme was launched in  April  2016 with  a contribution from the 
Kosovo budget of EUR 3 million. 

Economic integration with the EU and price competitiveness  

The  recent  adoption  of  the  SAA  will  substantially  improve  Kosovo's  trade  and 
investment  integration  with  the  EU.  Kosovo's  economy  is  still  relatively  unintegrated  in 
global trade flows, with a trade openness of 71.4 % of GDP. The majority of Kosovo's exports 
consist of raw materials, basic metal products and scrap metal.  The EU is Kosovo’s biggest 
trade  partner  with  41.9  %  of  overall  trade  in  2015,  followed  by  the  Central  European  Free 
Trade  Agreement  -  CEFTA  (30.2  %).  In  spite  of  the  increase,  Kosovo’s  total  trade  volume 
with the EU remains very limited, reflecting the low competitiveness of its products and poor 
access to bigger markets. The implementation 

n  of  the  SAA  offers  significant  opportunities  to  improve  access  and  competitiveness  of 
Kosovo's firms in the EU single market. EU Member States are the biggest foreign investors 
in  Kosovo  (50.9 %  of  overall  FDI  since  2007).  Most  of  the  FDI  coming  from  the  EU  is 
concentrated in the financial, trade and real estate sectors.  

41 

 
Figure 5 Kosovo trade integration with the EU 

60,0

50,0

40,0

30,0

20,0

10,0

0,0

160

140

120

100

80

60

40

20

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Share of Imports from EU

Share of exports to EU

Trade with the EU (2008=100) (RHS)

5.   EUROPEAN STANDARDS 

5.1.   Internal Market 

5.1.1.  

Free movement of goods 

Kosovo is at an early stage/has some level of preparation for the free movement of goods. It 
made  some  progress  in  further  aligning  with  the  EU  acquis  during  the  reporting  period; 
however, capacity and resources also need to be reinforced to ensure implementation. 

In the coming year, Kosovo should in particular: 

  ensure  alignment  with  the  EU  acquis,  and  start  implementing  it,  on  accreditation, 
standardisation, metrology and market surveillance as well as the amendments to the law on 
technical requirements for products and conformity assessment; 

  reinforce  the  capacity  of  the  National  Standardisation  Body,  the  National  Metrology 
Institute and the National Accreditation Body; 

  strengthen  market  surveillance  and  improve  the  inter-institutional  coordination  to  ensure 
that legislation is enforced. 

General principles 

Regarding  general  principles,  the  framework  for  the  free  movement  of  goods  needs  to  be 
further aligned. The March 2016 National Programme for Implementing the SAA also covers 
the acquis on the free movement of goods. 

Non-harmonised area 

Kosovo has adopted legislation with the aim of aligning it with Articles 34-36 of the Treaty 
on  the  Functioning  of  the  European  Union.  A  strategy,  with  an  action  plan  for  the 
non-harmonised  areas,  is  still  needed.  The  obligation  to  notify  regulations  is  not  fully 
operational. 

Harmonised area: Quality infrastructure 

The  legal  basis  for  technical  regulations,  standards,  conformity  assessment,  accreditation, 
metrology,  and  market  surveillance  needs  to  be  further  aligned  and  the  administrative 
structure further strengthened. A strategy and action plan (2016-2020) envisaging alignment 

42 

 
 
 
 
 
 
with the EU acquis in this area exist, but some of the deadlines for full alignment have not yet 
been  met.  Moreover,  most  of  the  relevant  quality  infrastructure  bodies  have  insufficient 
capacity to properly implement it. 

Kosovo is not a member of the International Organisation for Standardisation (ISO) nor of the 
European  Committee 
for  Electro-technical 
for  Standardisation/European  Committee 
Standardisation  (CEN/CENELEC).  Kosovo  has  one  associate  member  in  the  European 
Telecommunications  Standards  Institute  (ETSI).  Kosovo's  standardisation  agency  is  in 
place,  but  lacks  staff  and  adequate  resources.  The  Agency  is  not  fully  able  to  implement 
European  and  international  standards.  It  needs  further  institutional  development  and  more 
resources, particularly if the new law creates the legal basis for it to expand its activities and 
services.  Obstacles  for  the  expansion  of  the  online  sale  of  standards  (e-commerce  function) 
need to be addressed by the banking sector. In 2015, approximately 1 400 European Standards 
were adopted as standard references. The standards are adopted by the cover page method (by 
adding a cover page in the official languages of Kosovo).  

There  are  currently  39  accredited  conformity  assessment  bodies  in  Kosovo:  30  test 
laboratories,  1  calibration  laboratory  and  8  inspection  bodies.  Three  more  bodies  are  in  the 
process of being accredited but their capacity needs to be strengthened. On accreditation, a 
policy and strategy is in place, but the limited resources and capacity of these bodies and the 
General Directorate of Accreditation put implementation at risk. 

The  Kosovo  Agency  for  Metrology  became  an  associate  member  of  the  European 
Cooperation in Legal Metrology (WELMEC) in May 2016 but still faces challenges such as a 
lack  of  qualified  staff  and  necessary  equipment.  Kosovo  has  adopted  legislation  with  the 
aim  of  aligning  it  with  the  Directive  on  Non-Automatic  Weighing  Instruments.  The 
alignment with the Measuring Instruments Directive needs to be completed. Laboratories for 
time, frequency, length and forces are not fully operational due to lack of equipment and staff. 

On market surveillance, Kosovo’s legal framework for enforcing the safety and compliance 
of  products  is  largely  provided  by  the  law  on  technical  requirements  for  products  and 
conformity assessment, which lays down the cross-cutting framework for market surveillance. 
Market  surveillance  faces  problems  in  enforcement  due  to  lack  of  resources  and 
competencies.  Market  inspectorates  in  Kosovo  are  currently  established  at  municipality  and 
central  level,  which  continues  to  lead  to  coordination  challenges.  In  May  2016,  the  Market 
Oversight Coordination Body was established by the Ministry of Trade and Industry to ensure 
the safety of products on the market. 

In  2015,  273  product  safety  inspections  were  performed  in  Kosovo,  a  20  %  increase  from 
2014. These inspections identified 3 dangerous types of product, and as a result, 255 products 
were permanently taken off the market. 

Harmonised area: Sectoral legislation 

For the ‘New and Global Approach’ product legislation, several new regulations have been 
drafted designed to increase the level of alignment with the EU acquis in these fields, but to 
date only the regulation on low-voltage equipment has been adopted. Construction represents 
a large business sector in Kosovo, but alignment with the EU Construction Regulation is still 
needed.  The  quality  infrastructure  capacity  issues  mentioned  above  also  mean  that  the 
complete implementation of aligned legislation is not yet in place. 

There has been no progress on alignment to the ‘Old Approach’ acquis including with regard 
to  the  Registration,  Evaluation,  Authorisation  and  Restriction  of  Chemicals  (REACH) 
Regulation. Kosovo should continue to work on strengthening its administrative capacities to 
ensure an effective implementation of REACH. 

43 

 
Procedural measures on footwear and three by-laws on textiles have been adopted in order 
to further align with the EU acquis, but they have not been systematically implemented. 

5.1.2.  

Movement of persons, services and right of establishment 

Kosovo is at an early stage of preparation for the free movement of persons and services and 
the right  of establishment. Notwithstanding some alignment with  the  acquis, particularly on 
postal services, overall no progress was made in this area during the reporting period. In the 
coming year, Kosovo should in particular: 

 further align with the EU Directives on services and professional qualifications; 

 ensure progress towards fulfilling requirements under the EU Services Directive, such as 
simplifying administrative procedures and preparing to establish the point of single contact; 

  align  its  rules  with  international  and  EU  accounting,  auditing  and  financial  reporting 
standards and best practices. 

On  movement  of  persons,  in  February  2016  the  Ministry  of  Labour  and  Social  Welfare 
signed  a  pilot  agreement  with  the  Swiss  Federal  Agency  for  Social  Insurance  which,  if 
implemented  successfully,  would  facilitate  the  opening  of  negotiations  for  a  bilateral 
agreement. No new agreement on the movement of workers was concluded.  

As regards the  freedom to provide services, alignment with the EU Services Directive has 
begun but is at a very early stage. The Ministry of Trade and Industry’s database on trade in 
services has been further improved. 

On  postal  services,  the  legal  framework  is  gradually  being  aligned  with  the  EU  acquis.  In 
2016  Kosovo  lowered  the  weight  limits  for  the  reserved  services  market,  but  this  has  had 
limited impact on the market so far. Further reductions to less than 20 grams per letter are still 
required, since 80 % of postal volume is below this threshold. International postal services are 
provided by all postal administrations except Serbia. 

Regarding  the  mutual  recognition  of  professional  qualifications,  only  four  professions 
(accountants, architects, engineers and lawyers) are currently regulated by the law. Alignment 
with  the  acquis  in  the  area  of  recognition  of  professional  qualifications  and  professional 
training programmes is at an early stage. Minimum training requirements based on Directive 
200/36/EC  for  regulated  professions  aimed  at  automatic  recognition  and  a  roadmap  for 
harmonising professional qualifications legislation with the EU acquis, are still needed. 

In  the  area  of  financial  services,  the  Central  Bank  continued  to  review  existing  financial 
services legislation. The financial services market and the supervision of the insurance sector 
are still at  an early  stage  of development. The  standardised approach  for credit risk and the 
basic indicator and standardized approach for operational risk according to Pillar I of Basel II 
standards are in force. The legal requirement for core capital ratio is 12 % but the actual ratio 
is  around  16  %.  Capital  requirements  for  market  risk  according  with  the  standardised 
approach  and  harmonise  the  capital  definition  with  Basel  III  still  need  to  be  introduced. 
Transparency  in  the  insurance  sector  needs  to  be  improved  by  publishing  annual  reports, 
improving the reliability of audits  of qualified  financial statements, and by applying stricter 
standards for granting licences to new companies. Additional vehicle insurance continues to 
be  required  for  foreign-registered  vehicles  entering  Kosovo  and  for  vehicles  with  Kosovo 
registration  plates  leaving  Kosovo,  except  in  the  case  of  countries  with  which  Kosovo  has 
bilateral vehicle insurance arrangements. Kosovo is still not part of the ‘green card’ system. 

On  company  law,  the  law  outlining  the  role  and  responsibilities  of  the  Kosovo  Business 
Registration Agency has yet to be adopted. As regards corporate accounting and auditing, 

44 

 
 
amendments  to  the  draft  law  on  accounting,  financial  reporting  and  audit  must  be  adopted. 
The  capacity  of  the  institutional  audit  oversight  structures  needs  to  be  strengthened 
considerably.  Kosovo  still  needs  to  align  its  rules  with  international  and  EU  accounting, 
auditing and financial reporting standards and best practices. 

5.1.3.  

Free movement of capital 

There is some level of preparation for 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. Some progress can 
be noted, especially in the supervision of payment systems and infrastructure for domestic and 
international payments. In the coming period, Kosovo needs to: 

 increase the regulatory body’s focus on the insurance sector, to promote fair competition 
practices and a level playing field; 

 increase efforts to fight economic and financial crime; 

 ensure equal treatment for EU nationals acquiring real estate in Kosovo, in line with the 
SAA provisions. 

Movement of capital remains largely free in Kosovo. The law on general insurance, covering 
issues such as minimum capital, solvency and proper risk-based supervision requirements for 
insurance  companies,  was  adopted  in  December  2015.  The  new  law  requires  insurance 
companies to publish their annual reports, which is a positive development. Nevertheless, the 
supervision of insurance companies by the Central Bank needs to be increased, specifically on 
transparency and the quality of annual reports. 

The law on the prevention of money laundering and terrorist financing, adopted in May 2016, 
is  still  not  fully  in  compliance  with  the  acquis  and  the  Financial  Action  Task  Force 
recommendations. Increased efforts are needed to improve inter-institutional cooperation and 
achieve concrete results in the fight against economic and financial crime. (see 5.3.2 – money 
laundering) 

There was no progress on the acquisition of real estate by foreign citizens. Provisions in the 
relevant  laws,  implementing  acts  and  administrative  practices  continue  to  be  an  obstacle  to 
equal treatment. 

On  the  payment  system,  several  regulations  including  on  the  bank  account  standards 
numbering system and international payments were approved. The Central Bank continued to 
strengthen the supervision of payment systems and to improve the SWIFT infrastructure for 
international  payments  as  well  as  IBAN  for  international  and  domestic  payments. 
Implementation of IBAN for domestic payments was completed in June 2016. Further efforts 
are still needed to continue alignment with the acquis on payment services.  

5.1.4.  

Customs and taxation 

Kosovo  is  moderately  prepared  in  the  area  of  customs  and  is  at  an  early  stage  of 
preparation on taxation. There has been good progress, especially in fighting corruption in 
customs,  collecting  customs  revenue  and  reducing  the  administrative  costs  of  exports.  On 
taxation,  measures  have  been  taken  to  introduce  electronic  services.  Initial  steps  have 
continued  with  a  view  to  merging  the  customs  and  tax  administrations.  This  should  be 
planned  and  handled  carefully  to  preserve  budgetary  stability.  The  customs  legislation  is 
largely  compliant  with  the  EU’s  customs  code.  In  the  coming  year,  Kosovo  should  in 
particular: 

45 

 
 
 
 implement customs legislation in line with EU practice; 

 strengthen the 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  undue 
influence on the work of the customs and tax administrations. 

The customs service has further improved its legislative and organisational capacity. Despite 
an  overall  fall  in  imports,  revenue  collection  in  2015  increased  by  9.2 %  on  2014.  Kosovo 
Customs collected more revenue (+27 % until March 2016) than in the same period in 2015. 
The  increase  is  mainly  attributed  to  the  fight  against  corruption  and  to  organisational  and 
procedural reforms. Kosovo Customs operate throughout Kosovo, although to a limited extent 
in the north. In March 2016, a simplified procedure for exports was introduced, significantly 
reducing  the  cost  and  time  of  administrative  procedures.  A  number  of  e-services  have  been 
introduced  to  facilitate  and  simplify  administrative  procedures  for  businesses.  The  fight 
against the smuggling of narcotics and hazardous materials has intensified.   

Kosovo  is  not  a  member  of  the  Common  Transit  Convention.  It  exchanges  automated 
pre-arrival  information  with  its  neighbours.  Regular  joint  cross-border  operations  with 
Montenegro against illegal cross-border activities have been conducted. 

Inconsistencies between the customs and excise code and the criminal code continue to hinder 
the  fight  against  customs-related  crime.  The  informal  economy  and  smuggling  continue  to 
harm the economy. 

On  taxation,  there  was  some  progress  in  implementing  the  2014-2018  strategy  and  action 
plan  for  preventing  and  combating  the  informal  economy,  money  laundering  and  the 
financing  of  terrorism.  The  strategic  plan  for  tax  administration  was  approved  in  January 
2016. In September 2015, with the aim to increase revenue and legal certainty for tax payers, 
Kosovo adopted a new law on Value Added Tax, which is largely in line with the acquis and 
two laws on income tax, based on OECD principles. 

Progress  has  been  made  in  introducing  electronic  services  including  online  tax  returns,  a 
verification and payment system and business registration centres (one-stop shop). However, 
tax evasion and the high level of informality continue to hamper the economy. No progress 
was made in modernising the administration’s internal IT platform and the capacity to enforce 
tax  collection  in  northern  Kosovo.  Rates  of  collection  remain  very  low.  There  is  a  growing 
backlog  of  complaints  against  the  customs  and  tax  administrations.  A  double  taxation 
agreement with Austria has been signed. 

Some preparations have been undertaken on a planned merger between the customs and tax 
administrations. The law on the new tax and customs administration was approved and the tax 
administration adopted a new organisational structure to reflect the merger. The appointment 
of senior management in the new agency should be merit-based and free of political influence. 

5.1.5.  

Competition 

Kosovo is at an early stage in the area of competition. There was some progress in this field 
as the members of the Kosovo Competition Commission (KCC), a decision-making body of 
the  Kosovo  Competition  Authority  (KCA),  have  finally  been  appointed.  However,  both  the 
KCA  and  the  KCC  face  substantial  challenges  to  their  respective  investigative  and 
decision-making capacity. Significant efforts are needed to improve legislative alignment and 
enforcement in the area of state aid and competition. 

In the coming year, Kosovo should in particular: 

46 

 
 
 ensure the law on competition is enforced effectively; 

 adopt the new law on state aid and align the secondary legislation; 

  ensure  the  operational  independence  of  the  State  Aid  Commission  and  improve  the 
effectiveness of its control on state aid at all levels. 

Antitrust and merger 

The  legislative  framework  is  broadly  in  line  with  the  acquis.  The  law  on  competition  is 
largely  aligned  with  Article  101  of  the  Treaty  on  the  Functioning  of  the  European  Union 
(TFEU) on restrictive agreements and with Article 102 on abuse of a dominant position. The 
legal  framework  which  provides  a  basis  for  the  KCA  to  control  mergers  is  in  place.  The 
secondary legislation still needs to be further aligned with the EU acquis.   

On the institutional framework, the KCA is responsible for the implementation of the legal 
framework. The KCA is governed by the KCC, a collegial decision-making body appointed 
by the assembly. Formally, the KCA is an operationally independent authority with powers to 
initiate  investigations,  conduct  on-site  inspections,  impose  fines  and  remedies  and  prohibit 
anticompetitive  mergers.  After  almost  three  years,  in  which  the  KCC  had  not  been  able  to 
fulfil its mandate due to the lack of a quorum, its five board members were finally appointed 
by  the  assembly  in  June  2016.  The  appointments  were  made,  however,  against  the 
recommendation of the relevant assembly committee. 

On enforcement capacity, the KCC has 13 staff, but their expertise is very limited. The KCA 
has finally been allocated new premises, but its operational budget has decreased and it still 
lacks internal procedures and the capacity to conduct investigations. Furthermore, judges and 
staff  of  national  courts,  dealing  with  competition  cases  and  merger  control,  lack  adequate 
competences in this field. 

Regarding implementation, due to the failure to nominate its members from 2013-2016, the 
KCC was not able to take any decisions and its activities were very limited, focusing mainly 
on  judicial  representation  of  previous  cases.  Advocacy  activities  need  to  be  significantly 
strengthened. 

State aid 

The legislative framework is partially in line with the acquis, but it still needs to be aligned 
with the EU secondary legislation on state aid control. The existing law on state aid, in place 
since  2012,  broadly  reflects  Articles  107  and  108  TFEU  and  is  in  the  process  of  being 
amended. 

As regards the institutional framework, the State Aid Commission (SAC) is responsible for 
the  implementation  of  the  law  on  state  aid.  According  to  the  law,  the  SAC  is  a  decision-
making  body,  consisting  of  five  members,  who  are  independent  experts  in  the  field  of  state 
aid.  It  is  assisted  by  a  State  Aid  Office  (SAO),  which  is  part  of  the  Kosovo  Competition 
Authority and has the powers to control notified aid measures, prohibit aid, carry out ex post 
control of aid and the recovery of incompatible aid.  

The SAC's enforcement capacity is insufficient, with only one staff member employed out of 
the six planned for its secretariat. As a result, the effectiveness of the implementation of the 
law on state aid remains to be demonstrated. So far the activities of the State Aid Office have 
been  limited  to  distributing  notification  forms  to  potential  aid  granters.  It  does  not  have  the 
capacity  to  screen  existing  aid  schemes  as  required  by  the  SAA.  A  certain  number  of  aid 
measures, granted at central or local level, in particular to large companies in different sectors 
such as telecommunications, are not notified or properly investigated. Awareness of state aid 

47 

 
rules  among  aid  grantors  is  very  weak  and  advocacy  must  be  significantly  increased.  No 
decisions issued on state aid have been issued in the last three years.  

Liberalisation 

The  law  on  competition  and  the  law  on  state  aid  are  applicable  to  public  undertakings  in 
Kosovo. The rules on financing services of general economic interest are partially in line with 
the acquis. 

There are no monopolies of a commercial character within the meaning of Article 37 of the 
TFEU. 

5.1.6.  

Public procurement 

Kosovo  has  some  level  of  preparation  in  the  area  of  public  procurement.  Some  progress 
was achieved in this area, with further approximation with the EU acquis and elimination of 
preferential  treatment  for  domestic  bidders,  adoption  of  first  steps  towards  an  electronic 
procurement  platform  and  further  expansion  of  centralised  procurement.  The  Procurement 
Review  Board  is  also  finally  operational  following  the  appointment  of  the  board  members. 
However,  effective  implementation  remains  a  major  challenge  and  procurement  remains 
vulnerable to corruption. 

In the coming year, Kosovo should in particular: 

  improve  transparency  at  all  stages  of  public procurement,  in  particular  by  systematically 
monitoring  the  implementation  of  public  procurement  tenders,  strengthening  the  remedy 
system and ensuring e-procurement functions properly; 

 address the capacity limitations of the Central Procurement Agency; 

  increase  the  professionalism  and  accountability  of  public  procurement  institutions  and 
ensure adequate training and certification for procurement officers. 

Institutional set-up and legal alignment 

Kosovo’s legal framework is largely in line with the acquis. The law on public procurement 
was  amended  in  March  2016,  further  aligning  it  with  the  EU  Directives  on  classical 
procurement  and  to  some  extent  on  utilities.  In  line  with  the  SAA,  the  law  eliminates 
preferential treatment of  domestic bidders and includes  provisions for defence and sensitive 
security procurement.  However, further alignment on these issues is still needed. The price 
quotation procedure has become more transparent by making publication of contract notices 
mandatory. Secondary legislation still needs to be updated to reflect the recent changes. The 
law on concessions and public-private partnerships is partially aligned with EU legislation but 
requires further adaptations to incorporate the provisions of the new Concessions Directive. 

The  strategy  (2016-2021)  and  action  plan  (2016-2018)  for  strengthening  the  public 
procurement system still need to be adopted. 

The public procurement administration is in place and consists of three main bodies. The 
Public  Procurement  Regulatory  Commission  is  responsible  for  the  overall  operation  and 
supervision of the public procurement system and training. The Central Procurement Agency 
is  in  charge  of  central  and  coordinated  purchases.  The  Procurement  Review  Body  (PRB) 
examines all allegations of breaches of the public procurement law. In March 2016, the new 
members and the chairman of the PRB Board were appointed, making it formally operational 
at  last.  However,  public  procurement  bodies  still  face  major  challenges  to  exercise  their 
functions and duties effectively and efficiently. 

48 

 
 
 
Implementation and enforcement capacity 

In  2015,  10 895  contracts  with  a  total  value  of  almost  EUR  401  million  were  awarded 
(around 7 % of GDP).  Of these, almost 76 % were awarded using an open procedure, a 3 % 
increase  from  2014.  High-value  contracts  account  for  57 %  of  all  contracts  and  the  average 
number of bids  per tender fell to  5.8 in  2015 from 6.1 in  2014. The cancelation of contract 
notices in 2015 substantially decreased to just under 14 %, from 30 % the previous year.  

On  central  procurement,  a  new  list  of  common  items  to  be  procured  centrally,  including 
seven categories for the local level and three categories for the central level, was approved in 
March  2016.  However,  the  transition  between  the  old  and  new  public  procurement  laws 
caused  significant  delays  in  the  signing  and  implementation  of  the  three  awarded  contracts 
totalling  more  than  EUR  14  million.  The  capacity  limitations  of  the  Central  Procurement 
Agency to address increasing central procurement needs, are of concern. 

In March 2016 the government introduced mandatory electronic procurement for all budget 
organisations  as  of January 2017 and the  necessary platform has  been  developed.  However, 
the actual implementation of electronic procurement faces delays because of weak oversight, 
as  well  as  weak  human  and  technical  capacities  of  the  responsible  government  agencies. 
Adequate resources need to be ensured to support the implementation and maintenance of e-
procurement, including the recruitment and training of the necessary technical/IT experts. In 
this  context,  six  additional  staff  were  recently  approved  for  the  Public  Procurement 
Regulatory Commission. 

Risks and shortcomings continue to exist at all stages of public procurement. The plethora of 
entities (174 contracting authorities) brings an increased risk of corruption. In addition to an 
overall  weak  planning, 
implementation  and  enforcement  remain  major  challenges. 
Contracting  authorities  should  base  the  award  of  public  contracts  also  on  the  most 
economically advantageous tender. 

In  2015,  ex  ante  monitoring  of  public  procurement  was  extended  to  all  contract  notices, 
which should reduce irregularities. However, ex post monitoring has been reduced to ad hoc 
cases  where  specifically  requested  by  either  the  contracting  authorities  or  the  economic 
operators.  Systematic  monitoring  and  auditing  throughout  the  public  procurement  contract 
implementation process would further improve protection against corruption. 

Regarding  the  authorities’  capacity  to  manage  public  procurement,  the  law  provides  for 
obligatory training for public procurement officers. However, the certification system and the 
capacity to manage public procurement still need  to  improve. Additional funds are required 
for  the  Kosovo  Institute  for  Public  Administration  to  complete  the  retraining  and 
recertification of all public procurement officers by the end of 2016, as envisaged in the law. 

The recently amended law on public procurement puts new mechanisms in place which aim to 
strengthen  integrity  in  the  public  procurement  system.  Nevertheless,  the  perception  of 
corruption  in  public  procurement  remains  prevalent  and  the  enforcement  of  integrity  rules 
remains insufficient. As in 2014, budgetary institutions are failing to take into consideration 
the opinions of the Kosovo Anti-Corruption Agency and the National Audit Office.   

Cooperation between the Kosovo Police and the Prosecutor’s office is satisfactory. However, 
the  number  of  properly  skilled  prosecutors  and  police  officers  is  insufficient.  The  lack  of 
harmonised IT infrastructure remains a challenge. 

Efficient remedies system 

The right to legal remedy is set out in the laws on public procurement and concessions. On 
remedies, in 2015 the Procurement Review Body received 592 appeals and reviewed 567 of 

49 

 
them. Of these, 196 cases were returned for re-evaluation, while in 129 cases the review panel 
decided to cancel the procurement contract awarded. The highest proportion of irregularities 
continues to be in the eligibility and award criteria of the tender dossiers and the evaluation of 
bids. The new law introduced a two-instance procedure for filing complaints and endorsed a 
new fee system. There are some concerns however that this could limit the access of SMEs to 
the  review  process.  A  contentious  decision  of  the  Procurement  Review  Body  to  limit  the 
reviews of complaints to the two highest bidders, has been withdrawn. Cooperation between 
public  procurement,  anti-corruption,  audit  and  other  law  enforcement  bodies  needs  to  be 
improved  further.  It  remains  essential  to  focus  on  increasing  the  quality  of  services  and  the 
transparency of the Procurement Review Body's activities relating to economic operators and 
the public. 

5.1.7.  

Intellectual property law 

Kosovo has some level of preparation in this area and some progress was made in further 
approximation  with  the  EU  acquis.  However,  significant  efforts  are  needed  to  increase 
implementation,  including  effective  means  of  enforcing  intellectual  property  rights,  in  line 
with SAA obligations. In the coming year, Kosovo should in particular: 

 amend the secondary legislation in line with the new intellectual property-related laws; 

  ensure  customs  enforcement  of  intellectual  property  rights  by  strengthening  the  market 
inspectorate, increasing the capacity building of all relevant stakeholders and securing a more 
active role for the State Intellectual Property Council; 

 address the remaining backlog of applications at the Industrial Property Agency, not least 
by ensuring it receives sufficient resources. 

On  copyright  and  neighbouring  rights,  the  law  amending  and  supplementing  the  law  on 
copyright  and  related  rights  was  adopted  in  October  2016.  Implementing  provisions  on 
private copy schemes and digital piracy, essential for enforcement, are still to be developed. 
Mechanisms  for  determining  the  fees  for  usage  of  copyrighted  material  between  collective 
management organisations and broadcasters must be determined without any further delay. 

On industrial property rights, secondary legislation still needs to be amended in line with 
the  2015  changes  to  the  laws  on  patents,  trademarks,  industrial  design  and  geographical 
indications and design of origin. The director of the Industrial Property Agency was appointed 
in  early  2016.  Despite  progress  in  addressing  the  backlog  of  intellectual  property  rights 
applications, the Agency continues to face many challenges, such as insufficient capacity and 
resources.  Cooperation  between  institutions  and  law  enforcement  agencies  remains  weak. 
Awareness-raising among holders and users of intellectual property rights should increase. 

As  regards  enforcement,  in  2015,  Kosovo  Customs  carried  out  230  operations  targeting 
goods that breach intellectual property rights; 212 of these interventions followed requests for 
action by rights holders. The value of the goods seized was EUR 1,3 million. However, the 
capacity of the market inspectorate remains limited. A specialised police unit for intellectual 
property rights is still needed. The legal framework on customs measures remains unaligned 
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  some  progress  in 
employment,  social  and  health  policies.  As  most  of  last  year’s  recommendations  have  not 
been addressed, in the coming year, Kosovo should in particular: 

 implement the 2015-2020 employment sector strategy, monitor the results and ensure that 

50 

 
 
 
the new employment agency is operational; 

  amend  and  enforce  the  law  on  labour  and  legislation  on  health  and  safety  at  work,  and 
implement inspection legislation with the aim of reducing the number of accidents at work; 

  put  in  place  sustainable  financial  provisions  to  reform  the  public  health  sector  with 
adequate primary health care services and mandatory health insurance; 

 adopt the amended law on the Economic and Social Council. 

On  employment  policy,  the  2015-2020  employment  sector  strategy  and  the  2017-18  action 
plan need to be adopted and implemented, focusing on youth unemployment and active labour 
market  measures.  The  Public  Employment  Services  currently  comprising  municipal 
employment  offices  have  improved  their  performance,  but  efforts  are  still  needed  to  ensure 
that the Employment Agency becomes fully operational.  

Though still at a very high level, unemployment decreased to 32.9 % in 2015. It continues to 
be  higher  among  women  at  36.6  %,  compared  to  31.8  %  for  men.  The  overall  employment 
rate is 25.2 %, but only 11.5 % of women are in formal employment, against 38.7 % of men. 
Only 28.4 % of the employed have permanent work contracts, whereas 71.6 % work on short-
term  contracts.  Unemployment  is  most  prevalent  among  young  people  (15-24  years),  with 
57.7 % unemployed (down from 61 % in 2014). Although two-thirds of the population are of 
working age (15-64 years), labour force participation is very low at 41.6 %.  

As  regards  labour  related  legislation,  Kosovo  still  needs  to  amend  the  labour  law  to  align 
with the acquis, and to improve its implementation. Child labour is a concern, with 10.7 % of 
children involved in work while 6.8 % work in hazardous conditions. 

The  implementation  of  the  law  on  health  and  safety  at  work  is  ineffective.  In  2015,  56 
workplace accidents were reported, of which 9 were fatal. The Labour Inspectorate needs to 
target the informal part of the construction sector more effectively and to be given adequate 
resources  to  fulfil  its  mandate  without  further  delay,  above  all  by  increasing  the  number  of 
inspectors, at least from the 47 currently registered, to the 65 allowed.  

On  social  dialogue,  the  implementation  of  the  General  Collective  Agreement,  which  is 
fundamental  to  lay  down  the  rights  and  obligations  of  employers  and  employees,  is  still 
pending  since  2014.  Collective  bargaining  takes  place  mainly  at  two  levels:  at  the  central 
level, through the Social and Economic Council and at sectoral level. The law on the Social 
and Economic Council needs to be amended to strengthen the capacity of the Council and to 
improve  the  quality  of  social  dialogue.  Trade  Unions'  representation  is  limited  due  to 
fragmentation  of  trade  unions  and  minimal  representation  of  the  private  sector,  which 
represents  a  big  challenge  to  a  meaningful  social  dialogue  bargaining  at  the  central  level. 
Trade unions are free to form and register, and a number did so during the reporting period. 

As  regards  social  inclusion,  Kosovo  needs  to  ensure  that  municipalities  have  sufficient 
resources to deliver the social services under their responsibility. Municipalities do not have 
accurate  data  on  the  population  number  disaggregated  into  gender,  age  groups,  ethnicity, 
ability  or  vulnerability,  which  has  a  negative  impact  on  planning  and  implementation  of 
activities.  There  was  no  advancement  in  the  inclusion  of  Roma,  Egyptian  and  Ashkali 
children  and  families. Regarding  persons  with  disabilities,  Kosovo  needs  to  ensure  that 
children  with  disabilities  go  to  public  school and  learn  alongside  their  peers.  On  social 
protection, Kosovo needs to implement the necessary changes in the law on local finance to 
ensure  the  transfer  of  competencies  for  management  and  the  delivery  of  social  and  family 
services to the municipalities. A lack of clarity among municipalities in relation to the local 
budget available for social services resulted in a considerable variation in the levels of support 

51 

 
to social service delivery. Therefore, the specific funding of social services from the general 
grant should be included in the upcoming draft law on local finance. Budget constraints have 
delayed the introduction of the new pension scheme.  

As  regards  non-discrimination,  secondary  legislation  for  the  implementation  of  the  law  on 
the  protection  from  discrimination  has  not  been  adopted.  The  authorities  must  address 
discrimination against women, especially during hiring processes in private sector. During the 
reporting period, the Ombudsman Institution received a similar amount of cases as in previous 
years and initiated more than double the number of ex-officio investigations on discrimination 
grounds. The Kosovo Prosecutorial Council’s tracking mechanism still needs to be extended 
to  cover  cases  of  all  kinds  of  discrimination,  not  only  those  based  on  ethnicity.  The 
performance  of  institutions  in  processing  and  investigating  cases  related  to  discrimination 
remains poor. 

On equality between  women and men, Kosovo should consider a reform of the system of 
maternity and parental  leave,  which in  its current form  presents an obstacle to  the hiring  of 
women. Limited access to child care and to flexible work arrangements are also found to be 
related barriers to women’s employment, as  formal options for care beyond maternity leave 
are limited, and family-friendly schedules are often not available. 

On  public  health  policy,  Kosovo  adopted  the  law  on  mental  health  and  the  law  on 
breastfeeding.  The  new  health  sector  strategy  and  action  plan  2015-2020  has  not  yet  been 
approved by the government. 

Low public spending on health remains a concern. Public health spending is heavily focused 
on  capital  investment  and  hospital  care;  spending  on  primary  care  and  goods  and  services 
needs  to  be  increased.  As  a  result,  overall  utilisation  rates  of  both  public  primary  care 
facilities and hospitals remain low. 

Preparations  to  implement  mandatory  health  insurance  have  been  slow.  Plans  to  introduce 
outpatient  medicinal  product  benefits  are  considerably  behind  schedule  and  will  not  be  in 
operation by the proposed start of premium collection in January 2017.  

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.  

The  nutrition  action  plan  2015-2020  to  support  implementation  and  addressing  nutrition 
issues has been finalised but still needs to be endorsed by the government.  

5.1.9.  

Education and research  

Preparations  in  education  and  research  are  at  an  early  stage.  During  the  reporting  period, 
there  has  been  no  progress  in  the  area  of  education  and  some  progress  in  the  area  of 
research.  The  quality  of  education  still  needs  to  be  considerably  improved.  As  last  year’s 
recommendations  have  not  been  addressed,  in  the  coming  year  Kosovo  should,  again,  in 
particular: 

 improve the quality of education at all levels and improve access to quality education for 
marginalised  groups,  especially  children  with  disabilities  and  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  the  reform  of  higher  education 
institutions and increased investment in research, both in the public and private sectors. 

52 

 
 
On  education,  implementation  of  the  core  curriculum  is  continuing,  with  92  schools 
participating in its pilot implementation. However, implementation was hampered by outdated 
textbooks  and  learning  materials,  lack  of  necessary  skills  among  teachers  and  an 
underdeveloped  student  assessment  system.  A  teacher  training  system  for  improving  the 
quality of pre- and in-service education is in place but has yet to bear results. The draft law on 
inspectorate of education was adopted by the government in July 2016 in line with European 
legislation and international standards, but efforts are needed to improve its implementation, 
as well as to monitor and support teacher performance.   

Expenditure per student is declining and infrastructure in schools is still poor. 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 3.7 % of children attend pre-school 
education  (age  0-5)  and  74 %  of  children  aged  5-6  attend  pre-primary  education,  both  rates 
are increasing but well below the 95 % EU benchmark for 2020. 

The  government  continued  implementing  measures  to  lower  early  school  ‘dropout’  rates, 
particularly for children from the Roma, Ashkali and Egyptian communities. More efforts are 
needed to provide access to quality education for children with disabilities, and more teachers 
and  assistants  need  to  be  trained.  The  Ministry  of  Education  and  Science  adopted  an 
administrative instruction on measures and quotas for the enrolment of students from minority 
communities in public universities. After the first round of admissions, 96 minority students 
who  have  successfully  completed  the  admission  exams  were  enrolled  in  six  public 
universities, which is higher than in the previous school year.  

Around half of all students in upper secondary choose vocational education and Kosovo has 
received  EU  support  to  reform  this  sector.  However  progress  remains  slow,  the  link  to  the 
labour market remains weak and programmes lack practical and applied courses with only a 
few  being  accredited  by  the  National  Qualifications  Authority.  The  role  and  future  of  the 
Agency  for  Vocational  Education  and  Training  and  Adult  Education  remain  unclear.  The 
government needs to ensure the implementation of the quality assurance strategy and establish 
quality assurance mechanisms at the municipal level.  

The  Accreditation  Agency  for  Higher  Education  has  revised  its  criteria,  taking  into  account 
EU  standards.  This  resulted  in  the  reduction  in  the  number  of  higher  education  institutions 
and  accredited  study  programs,  which  gives  a  clear  message  of  the  importance  of  quality. 
However,  the  accreditation  of  higher  education  institutions  and  study  programmes  is  only 
starting.  

Kosovo  needs  to  improve  transparency  in  the  operation  of  higher  education  institutions  to 
address  politicised  recruitment.  A  database  containing  all  academic  staff  and  their 
appointments  could  prevent  the  practice  of  university  teachers  holding  multiple  full  time 
positions.  There  has  been  some  progress  in  implementing  the  2011  agreement  on  diploma 
recognition between Belgrade and Pristina and the parties agreed to extend the scope of the 
agreement  to  pre-university  education.  Education  remains  a  high  risk  sector  for  corruption 
and political influence, especially in higher education. 

Kosovo has taken limited action to develop its research and innovation capacity. The quality 
of post-graduate programmes is very limited. The budget for research remains insufficient and 
is  still  below  0.2 %  of  GDP.  The  law  on  scientific  research  activities  is  not  being  properly 
implemented  due  to  lack  of  funding.  Kosovo  should  also  strengthen  its  administrative 
capacity  on  research  and  innovation.  Concerning  participation  in  the  EU  research  and 
innovation  programme  Horizon  2020,  Kosovo  bodies  were  involved  in  more  than  50 
proposals,  of  which  9  have  been  retained  for  funding.  This  is  a  positive  development 
compared to previous years. 

53 

 
5.1.10.     World Trade Organisation issues 

Kosovo’s  preparations remain at an  early stage.  No progress  was made in this area  during 
the reporting period. 

Kosovo is not a member of the WTO and has not yet taken any formal steps to join. 

5.2.   Sectoral policies 

5.2.1.  

Industry and SMEs 

Kosovo  has  some  level  of  preparation  on  industry  and  SMEs  policy.  Some  progress  was 
made in this field, notably with the creation of a credit guarantee scheme to support SMEs. As 
already recommended last year, Kosovo should in particular: 

→ follow up on the recommendations from the EU’s ‘Small Business Act’ assessment; 

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

As  regards  industrial  policy  and  SMEs,  implementation  of  Kosovo’s  2013-2017  private 
sector development strategy is progressing slowly, while the industrial strategy still needs to 
be  finalised.  Both  have  to  be  aligned  with  the  2016-2020  national  development  strategy 
adopted in January 2016. There has been no follow-up since last year’s country report for the 
EU’s ‘Small Business Act’ assessment. Recommendations such as the expansion of collection 
of  SME  statistics,  communication  and  coordination  between  the  Kosovo  Investment  and 
Enterprise  Support  Agency  (KIESA)  and  relevant  ministries  have  seen  no  improvement.  In 
March 2016 the Ministry of Trade and Industry, with support from several donors established 
a Credit Guarantee Scheme, which will provide partial coverage for collateral requirements on 
SME loan portfolios of banks participating in the scheme. 

The lack of regulatory impact assessments, including SME tests remains a key factor in the 
administrative burden impacting SMEs, while the failure to monitor and time strategies and 
action plans undermines Kosovo’s ability to achieve real progress. KIESA's capacity needs to 
be enhanced to be able to implement its mission and objectives. Special attention should be 
given  to  professionalising  the  institution  and  applying  merit-based  hiring  procedures.  The 
development  of  an  export  promotion  strategy  and  aftercare  programme  for  foreign 
investments needs to be prioritised. The silence-is-consent principle for business registration 
and  online  company  registration  have  not  yet  been  introduced.  The  main  obstacles  to  SME 
development and further growth remain limited access to finance, weak legal enforcement of 
contracts  and  business  regulations,  administrative  barriers,  unfair  competition  from  the 
informal sector, an 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. Concerning fisheries, the preparation is at an early 
stage. With the increase in  budget  allocation to the agricultural  sector, there has  been  some 
progress.  However,  as  most  of  last  year's  recommendations  were  not  implemented,  in  the 
coming year, Kosovo should in particular: 

  improve  and  extend  the  area  covered  by  land  consolidation  schemes  and  prepare  and 
implement an action plan to tackle illegal changes of agricultural land use; 

 increase the capacity and staff of the Agriculture Development Agency, set up payments, 
accounting functions and its internal audit unit; 

54 

 
 
 
 
 
  transfer  inspection  responsibilities  to  the  Kosovo  Food  and  Veterinary  Agency,  thereby 
making possible an integrated food control system as provided for by the food law; 

 establish a fish inventory.  

On  agriculture  and  rural  development  policy,  the  government  has  continued  to  increase 
spending on agriculture. In 2016, the budget allocated  to agricultural investment grants rose 
from EUR 20 million to EUR 23 million whereas the amount for direct payments  remained at 
a similar level (EUR 23 million). However, staff shortages continue to undermine the proper 
processing of applications and the monitoring of grants, subsidies and execution of payments. 
In  addition,  the  Agriculture  Development  Agency  still  lacks  payments  and  accounting 
functions and an internal audit unit. Overall, transparency and planning of agricultural support 
should be improved. 

Illegal  changes  in  agricultural  land  use  remain  an  obstacle  to  developing  the  agricultural 
sector and undermine the effective implementation of the law on spatial planning. There is no 
information on how much agricultural land Kosovo loses on an annual basis, nor is there any 
strategy or action plan to address these illegal changes. Little is being done to implement land 
consolidation  schemes  to  help  ensure  the  economic  viability  of  agricultural  holdings  and  to 
create  conditions  for  farmers  education  as  one  of  the  pre-requisites  for  sustainable 
development in the agriculture sector. An irrigation plan is still missing. 

The  2015  agricultural  census  confirmed  the  previously  identified  structural  problems  of  a 
large  number  of  small  subsistence  and  semi-subsistence  farmers.  Kosovo  should  use  the 
agricultural census data to ensure evidence-based policy development. Discrepancies between 
Eurostat and Kosovo's statistics remain. Kosovo should increase its efforts to establish a fully 
functional  agricultural market, in  particular by stepping  up support  for producer groups and 
marketing of agricultural products. 

Implementation  of  the  law  on  organic  production  is  weak.  A  supervisory  authority  and  a 
commission  on  organic  production  were  established,  but  there  is  very  little  evidence  of 
activity.  In  the  forestry  sector  the  volume  of  illegal  logging  is  still  too  high  for  sustainable 
forest management. 

In  the  food  safety  and  veterinary  sectors,  further  efforts  are  required  to  establish  the 
conditions  for  proper  management  of  the  rendering  plant  and  collection  system  for  animal 
by-products.  The  revision  of  the  laws  on  food  and  veterinary  control  are  not  finalised.  The 
Kosovo Food and Veterinary Agency should ensure that annual and multiannual control plans 
are prepared and implemented. 

Kosovo lacks minimum standards and cross-compliance measures in the areas of food safety, 
animal health and welfare, and environment. The Food and Veterinary Agency should step up 
its efforts by identifying and proposing basic cross compliance measures to be introduced in 
the  2017  agriculture  support  programme.  Transfer  of  responsibility  for  inspections  from 
municipalities  to  the  Agency  is  overdue  for  many  years  therefore  hampering  the 
implementation  of  an  integrated  food  control  system.  The  continued  lack  of  reliable  and 
systematised  data  management  for  animal  identification,  movement  and  registration 
undermines  evidence-based  policy-making.  Without  sufficient  surveillance  of  livestock 
markets  and  slaughter,  current  data  remains  unreliable.  Illegal  trade,  particularly  in  animals 
from  Serbia,  continues  to  be  a  problem.  The  process  of  upgrading  food  processing 
establishments to EU standards should continue. Capacity to deal with communicable animal 
diseases is quite weak. 

55 

 
In the phytosanitary sector, the plant disease surveillance programme is still lacking, as is a 
data  recording  system  and  an  early  warning  system  for  quarantine  plant  diseases.  The 
Ministry  of  Agriculture,  Forestry  and  Rural  Development  and  the  Food  and  Veterinary 
Agency need to develop their capacity as well as plans to prevent the entry and/or spread of 
plant pests and plant diseases. 

5.2.3.  

Environment and climate change 

Kosovo is at an early stage of preparation in this area. Some progress has been achieved, 
with  the  planning  of  infrastructure  projects  in  the  environment  sector.  However,  significant 
efforts are needed to implement and enforce legislation in all environment and climate change 
areas. 

Since  most  of  last  year’s  recommendations  were  not  implemented,  in  the  coming  year, 
Kosovo should pay particular attention to: 

 ensure real-time measurement and reporting of air quality; 

  ensure  the  establishment  of  a  river  basin  management  authority  and  preparation  of  river 
basin  management  plans  and  completing  the  water  resources  monitoring  network,  including 
ground water monitoring; 

  implement  the  Climate  Change  Adaptation  and  Low  Emissions  Development  Strategy, 
consistent with the EU 2030 framework for climate and energy policies. 

Environment 

Regarding  horizontal  legislation,  the  strategy  on  environment  is  in  place  but  needs  to  be 
updated and implemented. Implementation of priority measures at the central and local levels 
needs  to  be  secured  through  sufficient  funding  and  administrative  and  technical  skills. 
Implementation of environmental impact assessments needs to be strengthened considerably, 
especially for plans, programmes and projects in all industrial sectors with significant effects 
on the environment including meaningful involvement of the public and civil society. More 
work  is  needed  on  effective  public  participation  and  consultation  in  the  decision-making 
process, particularly at local level. Further progress is needed to align with and implement the 
remaining cross-cutting environmental directives. 

The national strategy for air quality and the law on ambient air quality were adopted but need 
to be enforced. However, uncontrolled pollution from traffic, incineration of waste and other 
toxic materials remains a serious problem. The air quality monitoring system equipment is in 
place  but  still  not  fully  operational.  Kosovo  institutions  need  to  undertake  immediate 
measures  to  improve  air  quality  assessments,  particularly  in  affected  areas.  Financial 
resources and the capacity to support the maintenance and calibration of equipment need to be 
ensured,  as  does  support  for  the  automatic  air  quality  monitoring  network.  Real-time 
measurement  of  air  pollution  needs  to  become  operational  so  that  immediate  action  can  be 
taken to reduce emissions if limits are exceeded. Air quality plans for zones where the levels 
of  pollutants  exceed  limit  values  by  a  wide  margin,  especially  in  winter,  still  need  to  be 
prepared and adopted. 

On waste management, the legal framework is partially aligned but waste remains one of the 
most  visible  problems  in  Kosovo.  The  draft  master  plan  has  been  finalised,  defining  the 
concept of prevention, reuse and recycling of waste. However, the Ministry of Environment 
and Spatial Planning should begin implementation 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, 

56 

 
 
limiting  opportunities  for  private  sector  involvement.  The  high  number  of  illegal  landfills 
needs to be addressed urgently. Most existing landfills are at the end of their storage capacity 
and 
risk,  especially  groundwater 
long-term  environmental 
contamination. 

faced  by  considerable 

In the area of water quality, the level of alignment is limited. A strategy and action plan on 
water  protection  have  not  yet  been  adopted  and  urgent  efforts  should  be  given  to  the 
establishment of the river management authority in  order  to start much-needed work on  the 
preparation of river basin  management plans. Untreated sewage remains the main source  of 
pollution  and  a  serious  threat  to  groundwater.  Work  needs  to  begin  on  identifying 
groundwater resources and establishing  the groundwater monitoring  system. The system for 
monitoring  surface  water  quality  and  quantity  needs  to  be  reinstated.  Identification  of 
agglomerations and the definition of sensitive areas are required, in line with the Urban Waste 
Water  Treatment  Directive.  There  have  been  some  improvements  in  bill  collection  and 
reductions in technical water losses, but more efforts need to be done. 

Alignment  with  the  acquis  on  nature  protection,  in  particular  the  Habitats  and  Birds 
Directives,  has  only  begun.  In  February  2016,  the  assembly  passed  an  amendment  on 
international trade in endangered species of flora and fauna. However, effective protection for 
designated protected areas is  not  in place.  Combating  illegal  construction in  protected areas 
needs  to  be  enforced  effectively.  Planning  of  investments  in  infrastructure  such  as 
hydropower  plants,  tourism  and  the  industry  sector  need  to  ensure  that  nature  protection 
obligations are respected. This applies especially to protected areas and areas of high natural 
value that could potentially become protected Natura 2000 sites. 

On  industrial  pollution  and  risk  management,  alignment  with  most  of  the  relevant  EU 
directives  and regulations (IED, Seveso  III) is at an early stage. Insufficient enforcement of 
legislation  is  hampering  progress  in  preventing  industrial  and  chemical  accidents.  The 
procedures to nominate an operator for management of hazardous waste have been launched.   

On chemicals, the alignment with the acquis is at an early stage.  

The prospective steps towards achieving full transposition and the implementation plan of the 
Directive on the use of animals for scientific purposes have not been provided yet. 

Kosovo  is  not  party  to  the  Stockholm  Convention  and  there  is  no  progress  towards  the 
implementation of the Persistent Organic Pollutants Regulation, by developing concrete plans 
for establishing a legislative framework governing persistent organic pollutants. 

Kosovo is not party to the Rotterdam Convention, but a regulatory framework on export and 
import of hazardous chemicals was provided by the Administrative Instruction No. 23/2015, 
which now needs to be implemented. 

The new law on noise still needs to be adopted. The strategic noise maps and action plans still 
need to be developed, as well as effective action to implement the law. 

Kosovo  continues  to  participate  actively  in  the  EU  Civil  Protection  Mechanism  and  in 
several regional projects aimed at strengthening cooperation. It launched a disaster inventory 
management  system  and  approved  the  regulation  for  assessing  post-disaster  damage. 
However, significant progress is needed in important areas such as flood protection.  

Climate change 

The  level  of  alignment  is  limited.  The  strategy  on  climate  change  has  been  finalised  but 
remains to be adopted. Its implementation should be consistent with the EU 2030 framework 
of  climate  and  energy  policies  and  well  integrated  into  all  relevant  sectors.  In  addition  to 

57 

 
mitigation,  efforts  need  to  be  made  to  adapt  to  climate  change.  The  National  Council  for 
Environment and Climate Change should take more concrete measures to mainstream climate 
action.  Although  Kosovo  is  not  a  signatory  to  the  UN  Framework  Convention  on  Climate 
Change and therefore has not prepared an Intended Nationally Determined Contribution to the 
2015 Paris Agreement, full implementation of its climate change strategy would help Kosovo 
reach  the  low  emissions  and  climate-resilient  objectives  of  the  agreement.  Regarding  the 
transparency of climate action, responsibility for compiling greenhouse gas (GHG) inventory 
reports lies with the Kosovo Environment Protection Agency. The GHG report for 2012-2013 
has  been  submitted  to  the  European  Environment  Agency.  Partial  alignment  with  the 
Monitoring  Mechanism  Regulation  has  been  achieved  through  two  by-laws.  Legislation  has 
yet  to  be  drafted  and  adopted  on  GHG  emissions  monitoring,  reporting  and  verification  in 
order to align with the EU Emissions Trading System. Urgent actions should be taken in the 
field  of  emission  standards  and  control  of  pollution  from  transport,  on  enforcing  the 
legislation  on  technical  control  of  vehicles,  on  fuel  quality,  as  well  as  on  ozone  depleting 
substances  and  fluorinated  gases.  Administrative  capacity  and  awareness-raising  activities 
need to be considerably strengthened.  

5.2.4.  

Transport policy 

Kosovo  is  at  an  early  stage/has  some  level  of  preparation  in  transport  policy.  Some 
progress  has  been  achieved  especially  in  the  area  of  aviation  and  railways  during  the 
reporting period but more work is needed to strengthen administrative capacity in all sectors. 
With  the  entry  into  force  of  the  new  law  on  road  traffic  provisions,  Kosovo  has  partially 
fulfilled one of last year's recommendations. 

In the coming year, Kosovo should in particular: 

 implement and enforce road safety legislation, in order to reduce fatalities; 

  strengthen  the  capacity  of  the  railway  regulator  and  ensure  its  financial  and  operational 
independence; 

  make  further  efforts  towards  mutual  recognition  of  train  driver  licences  and  to  review 
technical rules and safety rules in rail transport. 

As regards the general transport acquis, the key strategic documents for the transport sector 
and  its  sub-sectors  have  been  adopted,  but  the  legislation  is  not  aligned  with  the  acquis  on 
summertime  arrangements  or  on  public  service  obligations.  There  is  a  need  to  strengthen 
administrative capacity for all modes of transport. The legislation on air and railway accident 
investigations  has  been  adopted  but  not  implemented  yet,  while  the  accident  investigation 
body is not yet fully staffed. 

On  road  transport,  legislation  on  inland  (road  and  rail)  transport  of  dangerous  goods  is 
partially aligned. Access to the market for goods and passenger transport for both national and 
international operators needs further alignment, as do the criteria for access to the occupation 
of  road  transport  operator.  To  reduce  fatalities,  Kosovo  needs  to  continue  aligning  with  the 
social  and  safety  acquis  in  this  area  and  to  monitor  enforcement  capacity.  Maintenance  of 
road  infrastructure  is  still  insufficient.  Regarding  the  enforcement  of  social  legislation, 
improvements  are  needed  in  the  area  of  roadside  checks.  Legislation  on  clean  and 
energy-efficient road transport vehicles and on the deployment of alternative fuels should be 
gradually aligned with the acquis. 

Regarding rail transport, Kosovo has made some progress in implementing the 'Connectivity 
reform measures'. More specifically, Kosovo's Railway Regulatory Authority has licensed the 

58 

 
 
first  private  operator  in  December  2015,  the  safety  certificate  pending.  Railway  safety 
legislation  has  been  adopted  but  efforts should be  made  to  implement  it.  Further  efforts  are 
needed  on  railway  safety  and  interoperability.  The  capacity  of  the  Railways  of  Kosovo 
(INFRAKOS)  needs  to  be  strengthened  in  view  of  the  upcoming  significant  investments  in 
the sector.  The regulator’s  independence in  enforcing the regulatory  framework needs to  be 
ensured and its financial independence upheld. Merit-based appointments in accordance with 
the law to the board of railways regulator need to be ensured. With a view to establishing fair 
and  transparent  access  conditions  to  rail  services  facilities,  Kosovo  should  proceed  to 
transpose and implement Directive 2012/34 on a Single European Railway Area. Upgrading 
the railway infrastructure is at an early stage of implementation. 

On aviation, Kosovo has made substantial progress in aligning with the EU  acquis and has 
implemented  nearly  all  the  requirements  under  the  first  transitional  phase  of  the  European 
Civil  Aviation  Agreement  (ECAA),  with  the  exception  of  a  few  provisions  in  the  area  of 
economic regulation. On 'single European sky' (SES) legislation, Kosovo has completed the 
alignment and implementation of the SES I legislation and made progress on SES II. Working 
arrangements with the European Aviation Safety Agency are not established yet. There was 
some  progress  on  implementing  the  law  on  the  Air  Navigation  Services  Agency.  However 
implementing  legislation  still  needs  to  be  completed  including  the  criteria  for  management 
positions. The air navigation service provider has been certified. 

There is no national legislation yet on combined transport. 

5.2.5.  

Energy 

Kosovo made some progress in legislative alignment with the adoption of the Third Energy 
Package but remains  at an  early stage of implementation  in many areas. Since most  of last 
year’s  recommendations  were  not  implemented,  in  the  coming  year,  Kosovo  should  in 
particular: 

  start  implementing  the  acquis  on  security  of  supply  and  make  a  final  decision  on  new 
generation  capacity,  decommissioning 
the  Kosovo  A  power  plant,  and  ownership 
arrangements for Kosovo B; 

  strengthen  institutional  capacity  for  the  energy  market,  in  particular  by  ensuring  the 
regulator’s full independence and financial stability and by setting up transparent mechanisms 
to adjust energy prices; 

 include a cluster for temporary storage of radioactive waste in the construction of the EU 
funded hazardous waste storage while work continues to find a permanent site; 

 implement energy-related 'Connectivity reform measures';  

  adopt  the  law  and  by-laws  transposing  the  directive  on  the  energy  performance  of 
buildings. 

The energy sector continues to face problems even if progress was made in  specific areas, in 
particular  with  the  adoption  of  legislation  transposing  the  Third  Energy  Package.  Electricity 
cuts  are  infrequent,  although  they  continue  to  disrupt  people's  daily  lives  and  the  regular 
operations  of  businesses.  Kosovo  is  still  lagging  behind  in  implementing  commitments  made 
within the connectivity agenda. 

On security of supply, investment and maintenance continue to improve the reliability of the 
power  transmission  system.  In  November  2015  Kosovo  completed  the  construction  of  its 
section  of  the  400kV  transmission  line  with  Albania.  While  distribution  losses  are  slowly 
dropping,  the  speed  of  investment  in  the  distribution  network  is  not  satisfactory.  Combined 

59 

 
 
commercial and technical losses in 2015 were still high at 31.8 %. There was no progress in 
aligning  the  legislation  in  the  area  of  compulsory  oil  stocks  and  obligatory  petroleum 
reserves. Current oil stocks are estimated to last only four days. There is no progress in the 
Energy  Community’s  dispute  settlement  procedure  about  customs  duties  on  imports  of 
petroleum products.  The import of two petroleum products (lubricants and petrol coke) is still 
subject to customs duties of 10 %. 

Kosovo  did  not  sign  the  ‘Western  Balkans  6’  memorandum  of  understanding  on  regional 
electricity  market  development  and  on  establishing  a  framework  for  future  collaboration, 
which  was  signed  by  all  other  parties  in  April  2016.  The  parallel  management  that  Serbia 
installed  at  the  Gazivode/Ujmani  hydropower  plant  continues  to  interfere  in  its  operation, 
with a risk to water management. 

As regards the internal energy market, four laws on energy, electricity, the energy regulator 
and natural gas, aimed at aligning Kosovo's legislation with the Third Energy Package, were 
adopted  in  June  2016.  These  laws  remain  to  be  implemented.  Negotiations  with  the  single 
bidder  for  building  the  new  lignite  power  plant  are  ongoing  and  the  contract  has  not  been 
signed.  No  progress  was  made  on  decommissioning  Kosovo  A  or  refurbishing  Kosovo  B. 
Kosovo  needs  to  decide  urgently  on  the  ownership  arrangements  for  the  latter  in  order  to 
prepare the investment plan needed for its refurbishment. Kosovo has submitted its emissions 
reduction plan to the Energy Community in time, but it is highly unlikely it will meet its air 
quality  obligations.  No  request  for  an  extension  of  operating  hours  for  either  Kosovo  A  or 
Kosovo B has been submitted.   

In  terms  of  energy  prices,  Kosovo  remains  the  most  regulated  market  in  the  region.  No 
progress  has  been  made  in  deregulating  the  generation  price  or  phasing  out  cross-subsidies 
between  different  categories  of  customers.  While  market  opening  is  envisaged  in  the 
legislation,  it  is  not  implemented  in  practice  and  customers  do  not  have  the  possibility  to 
switch  between  different  suppliers. The  three  remaining  members  of  the  Energy  Regulatory 
Office  Board  were  appointed  in  November  2015,  but  there  are  serious  concerns  over  their 
independence and expertise.  Important decisions for the electricity market have been delayed 
for a long time already, including the approval of licenses for suppliers wishing to compete 
with  the  incumbent,  or  the  adoption  of  switching  and  imbalance  rules.  The  capacity  and 
independence  of 
low 
the  Office  have  been  undermined  by  political 
administrative capacity and lack of human resources. 

interference, 

There  was  very  little  progress  in  the  renewable  energy  sector.  Alignment  with  the  2009 
Renewables  Directive  was  targeted  with  amendments  to  the  laws  on  energy,  electricity  and 
the energy regulator adopted in June 2016. While Kosovo’s renewable and energy efficiency 
action plan for 2013-2020 envisages a very ambitious 29.47 % renewables share by 2020, it 
has  now  become  very  unlikely  that  Kosovo  will  meet  even  the  mandatory  target  of  a  25 % 
share.  This  is  in  particular  due  to  years  of  neglect  in  the  sector,  the  inefficient  regulatory 
framework  (in  particular  lengthy  administrative  procedures  in  issuing  different  permits  and 
licences)  and  poor  administrative  capacity  in  managing  renewables.  No  progress  has  been 
made  on  building  the  Zhur  hydropower  plant,  which  is  instrumental  in  reaching  the  2020 
mandatory  target.  Any  further  development  of  hydropower  should  be  in  line  with  EU 
environmental  legislation.  Poor  capacity  of  the  grid  to  manage  inputs  from  renewables 
contributes even further to the likelihood of failing to respect these commitments. There was 
no  progress  in  meeting  the  requirements  for  the  use  of  biofuels  in  transport.  Sustainable 
criteria have still not been implemented. 

The  law  on  energy  efficiency  needs  to  be  amended  in  order  to  align  the  legislation  with  the 
acquis. Kosovo has not yet adopted the law on the energy performance of buildings. While the 

60 

 
2010-2018 energy efficiency action plan envisages an energy savings target of 9 %, Kosovo is 
now in the process of preparing its third energy efficiency action plan. Kosovo has not yet set 
up its own energy efficiency fund. It is important to do so as soon as possible to ensure more 
investment  in  energy  efficiency  measures,  ideally  combined  with  other  environmental 
measures,  in  the  public  as  well  as  the  residential  sector.  The  Kosovo  Agency  for  Energy 
Efficiency  is  understaffed  and  has  low  capacity  to  monitor,  evaluate  and  verify  progress 
towards targets. 

Kosovo is at an early stage of preparing the legal and regulatory framework in nuclear safety 
and radiation protection. The law on radiation protection and nuclear safety still needs to be 
adopted.  While  staffing  at  the  regulatory  agency  has  increased  in  recent  years  and  the  new 
CEO  was  appointed  in  2015,  the  agency’s  licensing  and  inspection  capacity  remains  weak. 
Funding for the agency is insufficient for it to implement its mandate. There is no radiation 
monitoring  (for  example  of  depleted  uranium),  no  control  of  radioactive  waste  and  no 
radiological emergency plan. The procedures to nominate an operator for the management of 
all  hazardous  waste  have  been  launched  in  August  this  year.  The  construction  of  the  EU 
funded hazardous waste storage should include a cluster for temporary storage of radioactive 
waste while efforts to find a permanent site need to stepped-up.  

5.2.6.  

Information society and media 

Kosovo  has  some  level  of  preparation in  this  area.  The legislative  framework  is  mostly  in 
place  but  there  was  no  progress.  In  particular,  the  assembly  failed  to  ensure  the  financial 
independence of the public broadcaster and the Independent Media Commission did not move 
forward  with  the  process  of  digital  switchover.  Some  progress  was  made  in  the  area  of 
electronic  communications.  However,  efforts  are  still  needed  to  complete  the  legal 
framework.  As  last  year’s  recommendations  have  not  been  followed  up,  in  the  next  year 
Kosovo should in particular: 

 ensure telecoms and media regulators are given adequate capacity and resources and enjoy 
independence; 

 urgently implement the digital switchover; 

 develop a solution for sustainable funding of the public service broadcaster. 

In  electronic  communications  and  information  and  communication  technologies,  the 
assembly  appointed  a  new  board  to  the  Regulatory  Authority  of  Electronic  and  Postal 
Communications  (RAEPC),  but  there  has  been  no  improvement  in  its  financial  and 
organisational  independence.  The  Authority  has  allocated  additional  frequencies  to  the  two 
incumbent  mobile  operators,  PTK  and  IPKO  Telecommunications,  for  better  quality  4G 
services. Mobile telephone penetration has reached 97 % of active users. Internet penetration 
per  household  has  increased  to  75.5 %  whereas  internet  penetration  per  user  increased  to 
12.35 %. Although the national computer emergency response team was set up in 2014, it still 
lacks  sufficient  and  trained  staff.  Plans  to  introduce  the  European  emergency  number  112, 
presented in previous years, have not been implemented.  

The action plan agreed between Kosovo and Serbia to implement the 2013 Brussels telecom 
arrangements, including arrangements for the allocation of a 3-digit dialling code for Kosovo 
by the International Telecommunications Union, has not yet been implemented. 

On  the  information  society,  the  national  cybersecurity  strategy  and  action  plan  for  2016-
2019  was  approved  in  January  2016  but  adequate  budgetary  resources  need  to  be  made 
available to implement this and the e-government strategy. 

61 

 
 
in 

implementing 

On  audiovisual  policy,  the  Independent  Media  Commission  failed  to  make  any  substantial 
progress 
International 
the  digital  switchover,  even 
Telecommunications  Union  deadline  expired  in  June  2015.  The  Independent  Media 
Commission,  state-funded  since  2009,  has  yet  to  finalise  the  by-laws  needed  for  the 
digitalisation process to take place. No funds have been allocated or identified to implement 
the  process.  Kosovo  needs  to  accelerate  its  efforts  and  ensure  that  the  digital  switchover  is 
carried out in full transparency and in line with EU standards. 

though 

the 

The public service broadcaster RTK remains dependent on state financing, which undermines 
its editorial independence. The assembly’s failure to act on the financial dependency of RTK 
is  particularly  worrying,  as  this  weakens  its  long-term  sustainability  and  diminishes  its 
capacity to carry out its public service remit. 

5.2.7.  

Financial control 

Kosovo  is  at  an  early  stage  in  this  area.  Some  progress  was  made  during  the  reporting 
period, especially in the area of external audit with the appointment of the National Auditor 
and  adoption  of  the  law  on  national  audit.  However  implementation  of  the  public  internal 
financial  control  (PIFC)  strategy  and  action  plan  is  lagging  behind.  The  Commission’s 
recommendations  from  last  year  on  PIFC  have  not  been  addressed.  Significant  efforts  are 
needed  to  implement  PIFC  at  all  levels  of  the  administration  and  in  publicly  owned 
enterprises. In the coming year, Kosovo should: 

 intensify implementation of the activities set out in the 2015-2017 PIFC strategy; 

 adopt the new PIFC law and related implementing legislation; 

 ensure more systematic follow-up to external audit recommendations by the assembly and 
auditees. 

Public internal financial control 

Kosovo  is  implementing  its  2015-2019  PIFC  strategy  and  action  plan,  which  are 
complemented  by  the  2016-2020  public  financial  management  reform  strategy  and  action 
plan.  However,  only  half  of  the  activities  planned  for  2015  have  actually  been  completed. 
This is mainly caused by delays in finalising the new PIFC law. In addition the PIFC Council, 
which is intended to monitor and report on implementation of the strategy, has not been set 
up.  The  strategy  envisages  a  wide  range  of  actions  on  managerial  accountability  and  risk 
management. 

The Central Harmonisation Unit (CHU) continues to organise training for financial officers 
and  internal  auditors,  but  methodological  guidance  on  internal  control  is  still  weak.  For  the 
first time,  the  2015  annual report  on  implementation  of  PIFC  was  based  on internal  control 
benchmarks.  The  report  was  also  reviewed  by  the  assembly  Committee  for  Oversight  of 
Public Finances, which issued recommendations to the CHU. However recommendations for 
individual budget users were lacking.  

The  current  legal  framework  on  financial  management  and  control  is  largely  in  line  with 
the  internal  control  framework  of  the  Committee  of  Sponsoring  Organisations  and  the 
guidelines  of  the  International  Organisation  of  Supreme  Audit  Institutions  (INTOSAI).  The 
planned new PIFC law  aims to  ensure full compliance. Implementation within budget users 
continues to lag behind. Administrative budget classification and the subordination of entities 
and officers makes implementation of managerial accountability and delegation very difficult. 
Budget  users  do  not  fully  understand  the  practical  application  of  internal  control  and 
managerial accountability. The focus is mainly on financial compliance of the annual budget 

62 

 
 
execution, and not sufficiently on strategic financial management. Risk management is rarely 
applied and generally not used as a management tool. Many budget reallocations also occur 
outside the budget review process. 

The legislation on internal audit is partially compliant with the international standards. Only 
72 % of the organisations required by law to set up an internal audit function have done so. Of 
these,  32 %  have  only  one  auditor.  A  scheme  for  certification  of  internal  auditors  has  been 
established,  with  100  civil  servants  to  undertake  the  new  certification  programme  in  the 
coming  year.  So  far  70  out  of  115  auditors  have  international  certification.  The 
implementation of internal audit still faces challenges, as findings and recommendations are 
not systematically implemented. 

External audit 

A  new  law  on  the  National  Audit  Office  (NAO)  was  adopted  in  May  2016.  It  defines  the 
functional,  operational  and  financial  independence  of  the  NAO  in  line  with  the  INTOSAI 
standards. The role of the NAO is recognised in the constitution. 

A new National Auditor General, for the first time a Kosovo citizen, was appointed in April 
2016.  Concerning  institutional  capacity,  the  NAO  is  fully  staffed  with  146  staff,  of  which 
120  are  auditors.  Training  is  provided  systematically,  both  on  the  job  and  externally. 
Regarding  the  quality  of  audit  work,  the  NAO  continued  to  implement  the  certification 
programme  for  regularity  audit  and  to  undertake  audits  in  line  with  the  financial  and 
performance audit manuals, which are regularly updated. Quality management of audit work 
is carried out by an audit support department with six staff. They conduct quality assessments 
and quality control as 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 the assembly 
does not ensure systematic parliamentary follow-up of the audit report. Budgetary institutions 
should follow up on SAI recommendations. The NAO makes all its reports available online 
and proactively informs the media about important reports. 

Protection of the EU’s financial interests 

Alignment with the acquis is limited. Protection of the EU’s financial interests requires case 
by case cooperation with Kosovo authorities. 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 have an anti-fraud coordination service or related network, but the Special 
Prosecution  Office  has  supported  the  European  Commission  during  investigations.  Policy 
documents,  such  as  a  strategy  and  action  plan  to  prevent  and  combat  fraud  have  yet  to  be 
developed.  Cooperation  with  the  European  Commission  is  limited  to  ad  hoc  cooperation 
with  Commission  investigators  during  their  on-the-spot  missions.  There  are  still  no  basic 
procedures  for  risk  assessment,  reporting  of  irregularities  and  suspected  fraud  cases.  An 
irregularity management system still 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. 

63 

 
The analysis is carried out in line with the international standards. The Central Bank does not 
do technical analysis, but it provides guidance to the financial institutions on what to do with 
suspected  counterfeit  money.  There  are  no  formal  cooperation  agreements  with  the 
European  Commission  and  the  European  Central  Bank. Kosovo  participates  in  the  Pericles 
2020 programme and the Balkan Network for Euro Protection initiative. 

5.2.8.  

Statistics 

Kosovo  is  at  an  early  stage/has  some  level  of  preparation  in  the  area  of  statistics.  Some 
progress was made, most notably with the application of the European standards in producing 
and  publishing  agricultural  census  results  in  November  2015.  The  Kosovo  Agency  of 
Statistics (KAS) continues, however, to suffer from poor administrative capacity which often 
results  in  publication  delays  and  lack  of  accuracy  in  some  statistics.  Significant  efforts  are 
needed  especially  to  ensure  the  alignment  of  macro-economic  and  business  statistics  with 
European standards. In the coming year, Kosovo should in particular: 

 adopt the amendment of the law on statistics;   

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

 ensure sufficient human and financial resources as well as the professional capacity of staff  
to allow KAS to fulfil its mandate. 

On  statistical  infrastructure,  the  legal  framework  is  broadly  in  line  with  the  European 
statistics Code of Practice. The law on statistics needs to be amended as a priority to further 
enhance  the  professional  independence  of  KAS  and  ensure  timely  access  to  administrative 
data. Nevertheless, the capacity of KAS to carry out surveys and data analysis independently 
continues to be limited  and its weak  administrative and professional capacity  as well as the 
lack of financial resources hamper  the timely production of statistics.  The shortcomings  are 
particularly visible in the area of national accounts. All KAS's staff need additional training, 
both  on  quality  issues  and  on  statistical  methods.  The  current  premises  of  KAS  are 
inadequate. Data  transmission to  Eurostat  has  improved, and KAS improved its web-based 
dissemination  by  upgrading  the  website  for  disseminating  statistics.  The  European 
classification  of  economic  activities  (NACE  Rev.2)  is  now  applied  in  all  relevant  statistical 
areas. The statistical business register was improved by introducing an electronic platform for 
an automatic updating of the register and local units were introduced. Enterprise Groups are 
not yet introduced. 

On  macroeconomic  statistics,  further  alignment  with  the  European  System  of  Accounts 
2010  is  ongoing  2016.  KAS  currently  compiles  annual  and  quarterly  national  accounts. 
However,  shortening  of  the  production  period  for  national  accounts  and  improvements  in 
quarterly accounts are remaining challenges. A framework for producing supply and use is in 
place,  but  data  for  2013  and  2014  are  not  yet  published.  While  preparations  for  producing 
annual  sector  accounts  started,  fiscal  notifications  are  not  yet  available.  Monthly  trade  in 
goods  statistics  are  submitted  to  Eurostat.  Balance  of  payments  data  are  compiled  by  the 
Central  Bank  and  are  broadly  in  line  with  the  EU  acquis;  annual  and  quarterly  data  are 
submitted to Eurostat. Government finance statistics are published annually. In January 2016 
the  Harmonised  Index  of  Consumer  Prices  was  published  based  on  the  European 
Classification of Individual Consumption, with 2015 as base year. 

Structural business statistics and some short-term statistics are partially in line with the EU 
acquis,  but  the  availability  of  short  term  statistics  is  limited.  Industry  and  construction 
statistics  are  produced  broadly  in  line  with  the  relevant  regulation,  while  statistics  on  the 

64 

 
 
service  sector  need  to  be  developed.  No  short-term  statistics  are  produced  on  construction 
activities as the Agency does not have access to information on building permits. PRODCOM 
(list of products of the European Union) statistics was introduced in 2015. Tourism statistics 
and  transport  statistics  are  not  yet  compliant  with  the  EU  acquis.  Statistics  on  research  and 
development, innovation, and use of information and communication technology statistics are 
not produced on a regular basis. 

In  the  area  of  social  statistics,  only  demographic  statistics  are  broadly  in  line  with  the  EU 
acquis. The population census in the four northern municipalities, planned for 2016, was not 
carried out. A regular  survey on income and living  conditions was launched  in  2016. Some 
social protection statistics are produced, but those on the unemployment scheme still need to 
be added and the quality of data needs to be improved. In July 2016, KAS and the Ministry of 
Education,  Science  and  Technology  jointly  published  education  statistics  based  on 
international  education  classification  standards  (ISCED),  but  not  yet  according  to  ISCED 
2011.  An  annual  Labour  Force  Survey  (LFS)  is  carried  out  but  the  2015  results  were 
published  with  delay.  Preparations  for  a  quarterly  LFS  started  in  2015.  Furthermore,  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 EU  acquis. There is  a need  to 
co-ordinate and harmonise  social statistics between KAS, line ministries and municipalities. 
In addition, KAS should consider permanent interviewers for key surveys in this sector, such 
as the LFS. 

In  agricultural  statistics,  the  agriculture  census  results  were  published  in  November  2015, 
although without participation of four northern municipalities. Agricultural price indices and 
economic  accounts  for  agriculture  are  produced  on  a  regular  basis.  Pilot  surveys  on  milk, 
dairy  and  slaughter  statistics  were  launched  in  2016.  The  results  of  the  crop  and  livestock 
survey carried out in December 2015 have not yet been published. Supply balance sheets and 
the agriculture labour index are not yet produced. 

Energy and environment statistics are partially in line with the acquis. Some annual energy 
data  and  energy  prices  are  provided  to  Eurostat  but  further  improvements  are  needed. 
Monthly data and the monthly share of renewables are not provided to Eurostat. The lack of 
energy efficiency indicators continues to be an obstacle to reporting on energy savings. Waste 
and water statistics are produced, whereas greenhouse gas emission statistics were introduced 
in 2016 but have not yet been published. Environmental accounts are not produced. 

5.3. 

 Justice, freedom and security 

Kosovo is at an early stage/has some level of preparation in this area, but has made good 
progress  over the reporting  period. Investigations  into money laundering, drugs and human 
trafficking,  terrorism  and  cybercrime  have  been  initiated;  however,  resulting  in  few  final 
convictions and limited final confiscation of assets. Prosecution services are understaffed and 
lack  training.  The  investigative  capacity  of  the  police  is  generally  good  but  the  use  of 
intelligence-led  joint  investigations  remains  limited.  Kosovo  is  actively  cooperating  in 
international and regional police investigations, although its formal cooperation is limited for 
status-related  reasons.  Legislation  on  migration,  asylum  and  border/boundary  management 
matters  is  largely  in  line  with  EU  acquis,  however  further  efforts  is  needed  on  sound 
enforcement. 

In the coming year, Kosovo should in particular: 

  implement  the  intelligence-led  policing  approach  and  making  full  use  of  the  potential  of 
the National Centre for Border Management; 

65 

 
 
  revise  the  Criminal  Procedure  Code  and  the  law  on  extended  powers  for  confiscation  of 
proceeds of crime with a view to making them effective tools to combat organised crime; 

  strengthen  inter-institutional  cooperation  by  increasing  the  capacity  of  the  existing  IT 
system to all organised crime and corruption cases towards building an initial track record of 
proactive investigation, prosecution, final convictions and criminal assets confiscations, with 
a view to delivering results on the track record. 

5.3.1.  

Visa, border management, asylum and migration 

Legal and irregular migration 

Institutional set-up and legal alignment 

The legal framework is largely in line with the acquis. Amendments to the law on foreigners, 
aiming  at  alignment  with  the  latest  EU  directives  on  the  employment  of  third  country 
nationals and family reunification are pending.  

The  national  strategy  and  action  plan  on  migration  for  2013-2018  is  being  implemented 
smoothly.  In  January  2016,  the  government  appointed  a  national  coordinator  on  migration 
responsible for monitoring and reporting on its implementation. His role and resources need 
to  be  strengthened.  The  2014  country  migration  profile  was  finalised  in  December  2015.  It 
contains an extensive analysis of migration data and of ‘push’ and ‘pull’ factors, together with 
recommendations  and  policy  guidance  which  need  now  to  be  taken  into  consideration  in 
practice. The Department of Citizenship, Asylum and Migration (DCAM) in the Ministry of 
Interior is in charge of overall coordination of migration policy. The Directorate for Migration 
and Foreigners in the border police deals with irregular migrants. 

Implementation and enforcement capacity 

There  are  some  gaps  in  enforcement,  in  particular  due  to  lack  of  coordination  between 
government  agencies.  The  staffing  level  of  DCAM  remains  inadequate  in  particular  for 
divisions  and  centres  facing  a  larger  workload.  Over  the  reporting  period,  specialisation  of 
staff has been strengthened with training courses on migration management, procedures and 
standards  for  the  treatment  of  unaccompanied  minors,  special  interviewing  techniques, 
identification and referral of asylum seekers with special needs, and on rights of applicants in 
need  of  international  protection.  Kosovo  has  a  reception  facility  for  irregular  migrants  in 
Vranidoll/Vrani  Do,  which  can  host  70  persons,  including  appropriate  accommodation  of 
vulnerable groups. Legal provisions ensuring the fundamental rights of irregular migrants or 
foreigners  hosted  in  the  centre  are  in  place;  however,  adequate  and  specialised  supervisory 
resources  are lacking to ensure basic rights and needs. Measures are in place to  prevent the 
infiltration of people-smugglers in the centre and there are no reported cases of attempts. In 
2015, 12 people were arrested on charges of migrant smuggling and irregular migrants were 
intercepted,  mostly  from  Albania.  The  overall  number  of  irregular  migrants  detained  in  the 
reception  centre  between  September  2015  and  August  2016  is  99.  Out  of  99,  83  were 
returned to their country of origin (78 forcibly, 5 voluntarily, 15 persons applied for asylum, 
1 is in the process of being returned). Most of the irregular migrants detained in the reception 
centre were returned within a reasonable period of time. In December 2015, Kosovo signed a 
readmission  agreement  with  Turkey,  bringing  the  number  of  such  agreements  to  23.  An 
agreement  with  the  former  Republic  of  Macedonia  is  under  finalisation.  The  readmission 
agreements  with  EU  Member  States  and  Schengen  Associated  countries  are  being 
implemented smoothly. The overall number of Kosovo nationals readmitted from September 
2015 to end of July 2016 is 13,671 (6,747 forced and 6,924 voluntarily returned). 

66 

 
 
The  number  of  asylum  requests  by  Kosovo  citizens  in  both  EU  and  Schengen  Associated 
countries has fallen from 73 215 in 2015, to 6 655 in the first half of 2016. The regulation on 
reintegration has been amended in March 2016, allowing all the returned Kosovo citizens to 
benefit  from  the  assistance  for  self-employment,  financing  of  business  plans  and  housing. 
During  the  period  September  2015  –  26  August  2016,  1  506  persons  have  benefitted  from 
sustainable  assistance  services  provided  by  the  Reintegration  Fund.  This  is  a  considerable 
increase compared to 336 persons in 2015 and 628 persons in 2014. 

Asylum 

Institutional set-up and legal alignment 

The  legal  framework  on  asylum  is  largely  in  line  with  the  acquis.  The  law  on  asylum  is 
under  revision  to  further  align  it  with  the  acquis  on  asylum  procedures  and  reception 
conditions. The Department for Citizenship, Asylum and Migration is the first-instance body 
in the Ministry of Interior. The National Commission for Refugees reviews appeals. A final 
judicial appeal can be lodged with the Supreme Court. After rejection of request for asylum or 
cessation of procedure, the Department’s Division for Return and Readmission is responsible 
for enforcing the decision. Intention to apply for asylum may be requested at the borders. 

Implementation and enforcement capacity 

As regards asylum procedures, the competent authorities’ capacity to evaluate asylum claims 
based  on  the  merits  of  the  application  is  still  weak  and  more  training  is  required.  Staffing 
levels  are  inadequate  given  the  increasing  number  of  asylum  requests.  In  2015,  70  people 
lodged asylum requests, while between January and August 2016, 154 people lodged asylum 
requests. Kosovo is still a transit country. Most applicants disappear without completing the 
procedure.  The  Centre  for  Asylum  Seekers  in  charge  of  the  reception,  registration, 
accommodation,  and  movement  of  asylum  seekers  within  and  outside  the  centre,  is 
understaffed.  The  competent  authorities,  with  the  support  of  relevant 
international 
organisations, drafted a contingency plan in case of an influx of migrants/refugees to Kosovo. 

There have been  no reported cases of  refoulement at  the borders. Although provided by the 
by-law on admission and initial treatment of asylum seekers, a referral system at the border, 
including access to legal aid, is not yet in place.  

Visa policy 

Kosovo  has  yet  to  align  its  legislation  with  the  EU  visa  positive  and  negative  lists.  The 
number of Kosovo consulates issuing visas increased to 14, leading to a fall in the number of 
visas issued at borders (only six during the first half of 2016). 

Schengen and borders 

Institutional set-up and legal alignment 

The legislative framework for the management of the borders/boundary of Kosovo is largely 
in line with the acquis and international standards. Draft legislative amendments to the law on 
the state control and surveillance aiming at further aligning the legal framework with the EU 
acquis,  in  particular  Regulation  2016/399,  are  under  preparation.  The  National  Centre  for 
Border  Management  has  a  joint  intelligence  risk  and  threat  analysis  unit  in  charge  of 
collecting  data  and  information  from  the  Integrated  Border  Management  (IBM)  agencies 
(police,  customs  and  the  food  and  veterinary  agency).  The  IBM  2013-2018  strategy  and 
action plan are aligned with the 2006 EU concept on IBM and implementation resumed with 
the appointment of a new coordinator for IBM matters. 

67 

 
Implementation and enforcement capacity 

The infrastructure of border crossing points remains poor; however equipment and databases 
access is relatively good. The Border Department of the Kosovo Police is well staffed, with a 
total of 1 318 officers and receives continuous trainings. The border police receive in-service 
training  on  border  management.  Inter-agency  cooperation  is  good  but  should  be  further 
improved  at  local  level.  A  border  police  anti-corruption  strategy  is  in  place  but  no  cases  of 
corruption at the borders have so far been detected. 

On  cooperation  in  the  region,  Kosovo  has  concluded  23  Integrated  Border  Management 
agreements. Ratification of the border/boundary agreement with Montenegro is pending in the 
Kosovo Parliament. Infrastructures of the trilateral joint centre between Montenegro, Albania 
and  Kosovo  have  been  finalised,  however,  the  operational  protocol  is  pending  signature.  In 
May 2016, Kosovo signed a working arrangement for setting up operational cooperation with 
Frontex  which  also  covers  irregular  migration.  Exit  checks  were  reintroduced  at  the  border 
with  Albania, both  countries agreeing to  undertake joint  border controls, with  one Albanian 
and one Kosovo border police officer sharing one booth. 

Interim IBM crossing points with Serbia continue to be fully operational. However, there has 
been  no  progress  in  establishing  the  permanent  IBM  crossing  points  with  Serbia,  and  in 
establishing the additional interim common crossing points in Kapi and Izvor. 

5.3.2.  

Money laundering 

The  2014-2018  action  plan  for  the  national  risk  assessment  on  money  laundering  and 
combating  financing  of  terrorism  continued  to  be  implemented  without  issue.  The  law  on 
money laundering and terrorism financing is in place, and was amended in 2016 but is still 
not fully compliant with the EU acquis or Financial Action Task Force recommendations (see 
section 4.1.3. – free movement of capital). Certain gaps in the system remain, including a lack 
of proper checks on senior public officials’ asset declarations, the weak and patchy reporting 
systems  of  entities  covered  by  the  Financial  Intelligence  Unit  (FIU),  and  inefficient  seizure 
and  confiscation  mechanisms,  unclear  system  of  supervision  of  the  financial  sector,  lack  of 
provisions concerning the steps to be taken in case of freezing of financial transactions by the 
FIU, insufficient regulation on international co-operation and excessive sanctioning powers of 
the  FIU.  Cooperation  between  the  FIU  and  the  law  enforcement  authorities  needs  to  be 
further  improved,  particularly  in  the  area  of  handling  suspicious  financial  transactions.  The 
number  of  prosecutors  in  the  Special  Prosecution  Office  dealing  with  economic  crimes, 
including  money  laundering,  should  be  increased.  In  addition,  in-service  training  should  be 
provided, especially in view of EULEX’s downsizing. The number of suspicious transactions 
reports  from  controlling  and  reporting  entities  remains  low.  In  2015,  there  were  39  cases 
(against 110 defendants) registered for money-laundering (9 new cases in 2015 and 30 cases 
anterior to 2015). These cases resulted in 6 indictments, compared to 18 in 2014. In 2015, one 
person was convicted for money laundering compared to zero in 2014. 

5.3.3.  

Drugs 

The  police  directorate  for  investigating  trafficking  in  narcotics  continued  to  focus  on 
prevention  and  supply  reduction.  The  2012-2017  strategy  and  action  plan  against  illicit 
narcotics continued to be implemented and several criminal groups were dismantled. Further 
implementation  of  intelligence-led  policing  remains  necessary.  Compared  with  police 
services,  the  prosecution  remains  understaffed  and  not  sufficiently  trained  to  prosecute 
drug-related offences efficiently. The lack of secure storage for seized drugs and precursors 
prior to destruction is an issue of concern. An appropriate process for handling, storing and 
destroying precursors has yet to be set up.  

68 

 
 
 
Kosovo cooperates with the European Monitoring Centre for Drugs and Drugs Addiction. A 
national focal point has been nominated. Special attention needs to be paid to raising public 
awareness on the consequences of drug abuse. Training for police community safety officers 
and  selected  teachers  on  the  dangers  of  drug  abuse  continues.  Addiction  treatment  and 
methadone therapy is being offered, strengthening drug abuse prevention and harm reduction 
strategies. Kosovo continues to be a storage and transit country for heroin and cannabis, but 
seizures  remain  low.  Kosovo  needs  to  intensify  its  fight  against  drug  cultivation  and 
trafficking. 

5.3.4.  

Police 

The  Kosovo  police  is  perceived  as  the  most  trusted  rule  of  law  institution.  It  has  grown 
steadily to 9 500 in 2016, of whom approximately 84 % are Kosovo Albanians and 15 % are 
Kosovo  Serbs,  with  the  remainder  coming  from  other  communities.  There  are  530  police 
officers per 100 000 inhabitants, a similar ratio to other countries in the region. 

The police are relatively well trained and equipped. The police force has several specialised 
units both at central (e.g. the anti-corruption task force) and regional levels (e.g. the drugs and 
human trafficking units). Clearly defined career paths and evaluation systems are in place for 
its  members.  The  Kosovo  Academy  for  Public  Safety  provided  a  good  level  of  initial  and 
continuous  trainings  to  police  and  public  security  bodies  such  as  correctional  or  customs 
services.  

In  November  2015,  its  code  of  ethics  was  improved.  Nevertheless,  police  is  still  subject  to 
corruption  and  political  pressure  hindering  investigation  on  organised  crime.  Cooperation 
between  the  Independent  Police  Inspectorate  (PIK)  and  Kosovo  Police  is  good;  however, 
cooperation with the prosecution is hampered by prosecutor's reluctance to open cases against 
high-ranking police officers. In 2015, PIK opened 3 regional complaints offices and received 
an increasing number of complaints, 1 237 in total, of which 161 were sent to the prosecution 
service, which resulted in 108 indictments and 4 verdicts. 

Despite  being  properly  staffed  and  financed,  there  are  no  witnesses  under  the  witness 
protection programme, as citizens have little trust in the locally run protection system.   

Cooperation  between  the  police  and  Europol  is  currently  facilitated  by  EULEX.  The  police 
have  already  contributed  to  successful  joint  investigations  supported  by  Europol,  including 
the large-scale dismantling of a Europe-wide migrant smuggling network in early 2016. 

The  community  policing  strategy  and  action  plan  for  2012-2016  and  the  community  safety 
strategy  and  action  plan  for  2011-2016  are  coming  to  an  end,  with  successful  results.  The 
police  still  need  to  make  progress  on  linking  intelligence-led  policing  with  the  concept  of 
community  policing  and  they  also  need  to  improve  communication  and  set  up  official 
municipal safety forums in the north. 

5.3.5.  

Fight against organised crime 

Institutional set-up and legal alignment 

Some progress has  been  made  and Kosovo has  established the key components of the legal 
framework  necessary  for  the  fight  against  organised  crime.  The  criminal  code  and  criminal 
procedure code are mostly in line with relevant European standards. Nonetheless, a number of 
provisions in the criminal procedure code and the law on extended powers for confiscation of 
assets  seriously  impede  effective  investigation  and  prosecution,  such  as  complex  and 
cumbersome provisions on confiscation, the short investigation deadlines set, the multitude of 
appeal possibilities, and the unclear provisions on the admissibility of evidence and on search 
and seizure. A law on the interception of telecommunications was adopted in May 2015. 

69 

 
 
 
A  new  strategy  against  human  trafficking  (2014-2019)  was  adopted  in  May  2015,  but  the 
action  plan  has  yet  to  be  developed  and  inter-institutional  coordination  has  not  yet  been 
strengthened. 

Implementation of the 2012-2017 strategy and action plan against organised crime continues. 
79 % of the activities were reported as fully implemented, 13 % as partially implemented and 
8 % as not implemented. In January 2016, the Ministry of Interior presented a cyber-security 
strategy  and  action  plan  2016-2019  addressing  issues  such  as  critical  IT  infrastructure 
protection,  institutional  development  and  capacity  building,  public-private  partnership, 
incident  response  and  international  cooperation.  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  and  equipment.  The 
Kosovo  police  also  developed  a  human  resources  strategy 2016-2020  to  enable  an effective 
and  efficient  response  to  criminal  trends.  A  new  central  coordinator  against  trafficking  in 
narcotics should be appointed.  

Implementation and enforcement capacity 

Kosovo’s  prosecution  service  conducted  17  organised  crime  cases  against  170  defendants 
from the beginning of 2015 to September 2016. These investigations have not yet resulted in 
convictions.  Kosovo  has  made  progress  in  sequestering  assets,  but  this  has  resulted  in  few 
final  asset  confiscations.  The  number  of  financial  investigations  increased  and  nine 
anti-organised crime financial experts were trained and certified to further increase capacity in 
conducting investigations. During 2015, 9.3 kg of heroin, 21.1 kg of cocaine and 722.8 kg of 
marijuana were seized, with 17 criminal gangs being identified and having their illicit actions 
disrupted.  The  rate  of  convictions  in  cases  against  human  trafficking  remains  low,  despite 
Kosovo being a source, transit and destination for trafficked women and children. 

Kosovo  put  an  advanced  IT  tracking  mechanism  into  operation  for  high-profile  organised 
crime  and  corruption  cases,  including  confiscation  and  sequestration  of  assets  and  final 
conviction of perpetrators (see 2.3 – fight against corruption). Police capacity for combating 
organised  crime  is  good,  whereas  prosecution  capacity  remain  weak.  Training  focused  on 
investigation techniques continued. Kosovo needs to further increase the level of expertise to 
tackle complex criminal investigations, such as financial crime and procurement fraud, as this 
is  essential  to  countering  organised  crime  and  corruption  effectively.  Specialised  training 
sessions and international cooperation need to be increased. 

The existence of armed groups and their involvement in organised criminal activities such as 
arms smuggling and the apparent impunity with which they are able to operate across borders 
is  of  serious  concern.  Kosovo  police  have  been  involved  in  several  cross-border  operations 
supported by Europol at the request of EU Member States leading investigations against such 
groups. The government, law enforcement agencies and the judicial system need to take swift 
action to dismantle these networks. 

Kosovo  institutions  need  to  have  a  zero-tolerance  approach  in  the  fight  against  organised 
crime  and  corruption;  both  in  practice  and  in  all  decision-making  processes.  Fighting 
organised crime and corruption remains fundamental to countering criminal infiltration of the 
political, legal and economic systems. 

5.3.6.  

Fight against terrorism 

Kosovo  has  been  affected  by  radicalisation  and  foreign  terrorist  fighters  with  around  300 
nationals  reported  as  active  fighters  in  conflict  zones  in  the  Middle  East.  However,  the 
numbers are decreasing and since September 2015 there have been no new reported cases. 

70 

 
 
Institutional set-up and legal alignment 

Kosovo’s  legal  framework  is  in  line  with  the  EU  acquis  and  international  instruments  on 
anti-terrorism.  Kosovo  has  legislation  criminalising  the  phenomenon  of  foreign  terrorist 
fighters in line with UN Security Council Resolution 2178 (2014). The offence of terrorism 
financing is included in the law on combating money laundering and financing of terrorism. 
The  legal  framework  for  seizure  and  confiscation  of  assets  lacks  specific  provisions  on 
terrorism  financing,  but  these  assets  are  confiscated  like  any  other  criminal  assets  under 
general  confiscation  rules.  There  is  no  mechanism  for  seizure  and  confiscation  of  terrorist-
related  funds  or  other  assets  without  delay  on  the  basis  of  the  relevant  UN  resolutions. 
Consistent  efforts  are  needed  to  identify,  prevent  and  disrupt  the  flow  of  foreign  terrorist 
fighters travelling to conflict areas such as Iraq and Syria. 

Kosovo’s  anti-terrorism  strategy  and  action  plan  are  not  yet  in  line  with  the  EU 
counter-terrorism strategy, as they do not provide enough focus on prevention. To date, 57 % 
of  the  action  plan  activities  have  been  fully  implemented,  33 %  have  been  partially 
implemented and 10 % have not been implemented at all. 

The  main  institutions  involved  in  combating  terrorism  are  the  Ministry  of  Interior,  the 
Ministry of Justice, the Ministry of Foreign Affairs, the intelligence services, the police and 
the  prosecution  service.  An  anti-terrorism  coordinator  was  appointed  within  the  Prime 
Minister’s Office and is in charge of developing policies and strategies to combat terrorism, 
evaluating  strategic  intelligence  and  ensuring  coordination.  Since  2010,  a  counterterrorism 
high-level inter-ministerial coordination body has overseen counter-terrorism activities. 

Implementation and enforcement capacity 

In September 2015, a strategy for 2015-2020 and an action plan on the prevention of violent 
extremism  and  radicalisation  were  adopted.  The  strategy  was  developed  in  close 
cooperation with religious communities, social and frontline workers, educational authorities 
and  youth  organisations.  Challenges  remain  with  the  lack  of  programmes  on  prevention, 
de-radicalisation and reintegration, considering the high number of returned foreign fighters 
from conflict zones. 

Improved  cooperation  among  intelligence  services,  especially  between  countries  in  the 
Western  Balkans,  could  help  counter  the  threat  of  violent  extremism  and  radicalisation. 
Europol, Interpol and Frontex should be used more as facilitators for this cooperation. 

Kosovo law enforcement and judicial institutions continue their robust response to terrorism. 
The police have arrested a substantial number of people who joined terrorist groups involved 
in conflicts abroad or intended to do so. In 2015-2016, preliminary investigations against 78 
suspects  were  launched;  formal  investigations  against  50  defendants  were  carried  out, 
judgments were issued against 36 defendants and 33 defendants are currently on trial. In May, 
an imam was sentenced to 10 years in prison for recruiting for a terrorist organisation (ISIS) 
and  inciting  religious  hatred.  In  July,  5  defendants  were  convicted  of  planning  to  shoot  a 
video declaring their allegiance to  ISIS. They  were  sentenced  to  between 4 and 13 years in 
prison.  

The  Financial  Intelligence  Unit  (FIU)  is  a  crucial  element  of  the  system  of  combating 
terrorism  financing.  However,  it  lacks  the  staff  and  resources  to  effectively  tackle  this 
phenomenon. Kosovo’s expertise in tackling complex financial investigations is still limited 
and more coordination and cooperation between the law enforcement bodies involved in day-
to-day  case  handling  is  needed.  The  FIU  lacks  the  staff  resources  to  effectively  tackle 
terrorism  financing.  More  training  is  needed  for  prosecutors  and  police  on  specific 
investigation methods (including financial analysis) in relation to extremist religious groups. 

71 

 
Kosovo  lacks  expertise  and  cutting-edge  technology  to  perform  IT  investigations  and 
expertise, both of which are vital in countering terrorism. 

5.3.7.  

Judicial cooperation in civil and criminal matters 

While  Kosovo  is  not  party  to  most  multilateral  treaties  governing  judicial  cooperation  in 
criminal  and  civil  matters,  it  does  unilaterally  apply  internationally  recognised  treaty 
standards. With regard to the 1980 Hague Conventions on the Civil Aspects of International 
Child  Abduction, the relevant cases are dealt with  by the Ministry of Justice. In  June 2016, 
Kosovo  acceded  to  the  1961  Hague  Convention  on  Abolishing  the  Requirement  of 
Legalisation for Foreign Public Documents.  

Judicial  cooperation  in  criminal  matters  is  governed  by  the  2013  law  on  international  legal 
cooperation in criminal matters, and 19 bilateral agreements with other countries. In March, 
Kosovo  concluded  a  bilateral  extradition  agreement  with  the  US.  A  legal  framework  for 
judicial cooperation in civil matters would help clarify rules and procedures. Cooperation is 
based  on  the  principle  of  reciprocity  with  countries  with  which  Kosovo  does  not  have  a 
bilateral  agreement  in  place.  The  2015  Procedures  on  Mutual  Legal  Cooperation  agreed 
between  Belgrade  and  Pristina  form  the  basis  for  judicial  cooperation  between  judicial 
authorities  in  Kosovo  and  Serbia.  Other  non-recognising  countries  voluntarily  accepted  the 
EU’s facilitating role. 

72 

 
 
 
 
ANNEX I – RELATIONS BETWEEN THE EU AND KOSOVO 

On 1 April 2016, the EU-Kosovo Stabilisation and Association Agreement (SAA) entered 
into force. The SAA constitutes the first contractual relationship between the EU and Kosovo. 
It 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.  The inaugural meeting 
of  the  first  Stabilisation  and  Association  Council  will  take  place  in  late  2016  and  the  first 
cycle  of  subcommittee  meetings  will  start,  replacing  meetings  of  the  Stabilisation  and 
Association Process Dialogue. 

To guide reforms under the implementation of the SAA, the Commission and Kosovo started 
work on a  European  Reform Agenda for Kosovo. The Agenda outlines priority actions in 
the  fields  of  good  governance  and  the  rule  of  law,  competitiveness  and  investment  climate, 
and employment and education.   

Kosovo has continued to address the priorities set out in last year's Report. In particular, it has 
implemented wide-ranging rule of law reforms to fulfil the remaining requirements of the visa 
liberalisation  dialogue.  Since  2012,  the  Commission  has  issued  four  reports  on  Kosovo's 
progress towards  visa liberalisation (the most  recent in  December 2015 and May 2016)  and 
submitted a legislative  proposal to  lift visa requirements for  Kosovo citizens  to  the Council 
and European Parliament on 4 May 2016. The proposal is currently being considered by the 
European Parliament and the Council, pending fulfilment of the two remaining requirements 
by Kosovo.  

As  regards  financial  assistance,  the  IPA  2015  programme,  under  the  IPA  II  financial 
framework,  was  approved  by  the  IPA  Committee  on  25  November  2015  with  an  EU 
contribution of EUR 78 million, complemented by co-financing from Kosovo for an overall 
budget  of  EUR  81  million.  In  2015,  the  EU  Office  signed  111  contracts  for  projects  in 
Kosovo for a total of EUR 55.29 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  2016  IPA  programme  for  Kosovo  is  being 
prepared.  

The Commission’s 2013 proposal about the participation of Kosovo in Union programmes is 
under discussion in Council. 

Kosovo  institutions  fulfilled  the  remaining  obligations  relating  to  the  establishment  of  the 
Specialist  Chambers  and  Specialist  Prosecution  Office  to  investigate  allegations  of 
international crimes committed during and after the 1999 conflict. In February 2016, the legal 
framework  was  completed  by  ratification  of  the  bilateral  agreement  with  the  Netherlands, 
allowing for the Specialist Chambers to be located in The Hague.  

To  date,  according  to  the  government,  Kosovo  has  been  recognised  by  110  UN  Member 
States, 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 congratulated Kosovo 
on  the  signing  of  the  SAA  agreement.  He  expressed  concern  for  the  polarisation  of  the 
political landscape and called for strong leadership by the authorities in Pristina and Belgrade 
for  the  implementation  of  the  EU-facilitated  dialogue  agreements,  in  particular  on  the 
establishment of the Association/Community of Serb majority municipalities.  

The  NATO-led  Kosovo  Force  (KFOR)  has  continued  to  help  ensure  a  safe  and  secure 
environment in Kosovo. During the reporting period, it had approximately 4 600 personnel. 

73 

 
 
ANNEX II – STATISTICAL ANNEX 

STATISTICAL DATA (as of 5.10.2016) 
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 (%) 
Employment growth (national accounts data), relative 
to the previous year (%) 
Labour productivity growth: growth in GDP (constant 
prices) per person employed, relative to the previous 
year (%) 
Unit labour cost growth, relative to the previous year 
(%) 
**3 year change (T/T-3) in the nominal unit labour 
cost growth index (2005 = 100) 
Labour productivity per person employed: GDP (in 
PPS) per person employed relative to EU average 
(EU-27 = 100) 
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 (%) 
Gross fixed capital formation by the general 
government sector, as a percentage of 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) 

Note 
1) 

Note 

2003 
1 985 
10 887 

2011 
1 799b 
10 887 

2012 
1 816 
10 887 

2013 
1 821e 
10 887 

2014 
1 805e 
10 887 

2015 
1 772p 
: 

2003 
: 
: 
: 

: 

: 

: 

: 

: 

: 

: 

: 
: 
: 
: 
: 

: 
: 
: 
: 
: 

2011 
4 815 
2 700 
: 

: 

4.4 

: 

: 

: 

: 

: 

15.6 
19.7 
9.2 
55.5 
103.4 

30.7 
3.3 
19.6 
56.8 
: 

2012 
5 059 
2 800 
: 

: 

2.8 

: 

: 

: 

: 

: 

14.8 
19.9 
8.2 
57.1 
105.2 

26.0 
2.9 
18.2 
52.4 
: 

2013 
5 327 
2 900 
: 

: 

3.4 

: 

: 

: 

: 

: 

14.4 
20.3 
7.9 
57.4 
104.0 

24.8 
2.8 
17.4 
49.0 
: 

2014 
5 568 
3 100 
: 

: 

1.2 

: 

: 

: 

: 

: 

14.3 
19.4 
7.3 
59.0 
105.2 

23.2 
2.6 
19.6 
50.6 
: 

2015 
: 
: 
: 

: 

: 

: 

: 

: 

: 

: 

: 
: 
: 
: 
: 

: 
: 
: 
: 
: 

Note 

2003 
: 
: 
: 

2011 
: 
35 897 
12.7 

2012 
: 
36 886 
9.4 

2013 
: 
34 235 
8.5 

2014 
: 
34 962 
9.0 

2015 
: 
39 815 
11.7 

4.7 

5.5 

4.4 

6.6 

: 

64.2 

65.1 

65.9 

67.6 

67.8 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

74 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inflation rate and house prices 
Consumer price index (CPI), change relative to the 
previous year (%) 
**Annual change in the deflated house price index 
(2010 = 100) 

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 (%) 
**Five year change in share of world exports of 
goods and services (%) 
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) 
**Annual change in financial sector liabilities (%) 

Note 
2) 

2003 
1.3 

2011 
7.3 

2012 
2.5 

2013 
1.8 

2014 
0.4 

2015 
-0.5 

: 

: 

: 

: 

: 

: 

Note 
3) 

2003 
-204 

2011 
-658 

2012 
-380 

2013 
-339 

2014 
-437 

2015 
-528 

-941 

-2 047 

-2 050 

-1 996 

-2 059 

-2 109 

3) 

3) 

3) 

3) 

3) 
3) 4) 

3) 

3) 
3) 

3) 

3) 

3) 

3) 

-14 

152 

599 

490 
: 

: 

: 

: 
: 

: 

: 

: 

: 

256 

111 

324 

154 

312 

122 

336 

114 

354 

78 

1021 

1193 

1222 

1172 

1149 

329 
12.0 

: 

402 
11.4 

: 

342 
9.5 

: 

292 
7.3 

: 

203 
7.2e 

: 

387.0 

213.3 

250.2 

123.8 

287.3 

5.0 
0.0 

15.8 
5.2 

30.0 
21.5 

27.3 
10.1 

37.1 
11.2 

392.0 

229.1 

280.2 

151.2 

324.4 

205.3 

123.2 

172.2 

92.5 

112.5 

2.9 

0.1 

Note 

2003 
2.2e 

2011 
: 

5) 

0.0 

5.3e 

Note 

: 

: 

2003 
: 

: 

891 

1 111 

: 

27.1 

28.8 

2011 
29.7 

: 

: 

: 

: 

5.0 

3.6 

2012 
: 

8.3e 

30.4 

29.0 

2012 
30.0 

: 

: 

: 

: 

7.0 

2.5 

2013 
: 

9.0e 

26.8 

28.2 

2013 
30.2 

: 

: 

: 

: 

5.5 

2.8p 

11.7 

8.5 

2014 
: 

10.5 

26.3 

27.1 

2014 
32.3 

: 

: 

: 

: 

2015 
: 

12.8 

29.6 

28.0 

2015 
: 

: 

: 

: 

: 

233 

1 841 

1 841 

1 878 

1 957 

2 153 

: 

: 

: 

: 

: 

: 

75 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
**Private credit flow, consolidated, relative to GDP 
(%) 
**Private debt, consolidated, relative to GDP (%) 
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 (2010 
= 100) 
**3 year change (T/T-3) in the trade-weighted 
effective exchange rate index, 42 countries (2005 = 
100) 
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 (%) 

6) 
6) 

Note 

: 

: 
: 
: 
: 
1 

: 

: 

: 

: 

: 

: 

: 

: 
: 
14.14 
3.49 
1 

: 

: 

: 
: 
13.42 
3.57 
1 

: 

: 

: 
: 
12.36 
3.39 
1 

: 

: 

: 
: 
10.70 
1.07 
1 

: 

: 

: 

: 
: 
: 
: 
1 

: 

: 

491 

760 

724 

746 

861 

2003 
: 
: 
: 
: 

: 

: 

2011 
2 437 
306 
-2 131 
97 

45.5 

41.5 

2012 
2 462 
267 
-2 195 
87 

41.1 

42.6 

2013 
2 421 
272 
-2 148 
97 

43.5 

44.7 

2014 
2 538 
325 
-2 214 
107 

2015 
2 635 
325 
-2 309 
107 

30.2 

32.6 

42.6 

42.2 

Note 

2003 
12.8 

2011 
11.4b 

2012 
11.3 

2013 
: 

2014 
13.2e 

2015 
12.4be 

15.1 

13.1 

11.4 

: 
: 

: 
: 

: 
: 

: 

: 
: 

: 

: 
: 

: 

: 
: 

Note 

2003 
: 

2011 
: 

2012 
42.5 

2013 
46.4 

2014 
47.7 

2015 
42.8 

: 

: 
: 

: 

: 
: 
: 
: 
: 

: 

: 

: 
: 

29.7 

33.0 

31.3 

29.1 

46.6 
12.4 

25.8 

4.6 
19.0 
9.5 
65.0 
35.0 

65.0 

30.9 

28.1 
40.0 

51.5 
14.9 

30.8 

5.9 
16.8 
11.4 
64.1 
31.5 

48.4 
14.5 

29.8 

2.6 
17.7 
10.9 
67.2 
31.4s 

44.9 
13.2 

27.2 

2.3 
18.7 
9.5 
68.3 
32.6 

68.5 

68.6s 

67.4 

30.0 

26.9 
38.8 

35.3 

33.1 
41.6 

32.9 

31.8 
36.6 

: 

: 
: 

20.1 

17.3 
15.4 
11.3 
56.0 
: 

: 

49.7 

40.3 
71.9 

76 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 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 
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) 
Mobile broadband penetration (per 100 inhabitants) 
Fixed broadband penetration (per 100 inhabitants) 

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 (%) 
Government budget appropriations or outlays on 
R&D (GBAORD), as a percentage of GDP (%) 
Percentage of households who have internet access 
at home (%) 

Environment 
*Index of greenhouse gas emissions,  CO2 
equivalent (1990 = 100) 
Energy intensity of the economy (kg of oil equivalent 
per 1 000 euro GDP at 2010 constant prices) 
Electricity generated from renewable sources relative 
to gross electricity consumption (%) 
Road share of inland freight transport (based on 
tonne-km) (%) 

74.9 

21.2 

: 

: 

: 

: 

: 

: 

55.3 

18.5 

55.9 

20.7 

61.0 

26.1 

57.7 

23.8 

43.9 

37.3 

44.0 

45.5 

12.8 

13.4 

17.1 

17.4 

Note 

2003 
: 

2011 
: 

2012 
: 

2013 
: 

2014 
: 

2015 
: 

: 

: 
: 
: 

: 

: 
: 
: 

: 

: 
: 
: 

: 

: 
: 
: 

: 

: 
: 
: 

: 

: 
: 
: 

Note 

2003 
: 

2011 
111.2 

2012 
111.3 

2013 
124.7 

2014 
160.1 

2015 
193.0 

158.7 

543.7 

532.5 

: 
: 

: 
: 

: 
: 

: 

: 
: 

487.8 

464.3 

: 
: 

: 
: 

Note 

2003 
: 

2011 
30.6 

2012 
30.6 

2013 
30.6 

2014 
30.6 

2015 
30.6 

0 

38 

60 

80 

80 

80 

Note 

2003 
: 
: 

: 

: 

2011 
4.1 
: 

: 

57 

2012 
4.0 
: 

: 

: 

2013 
: 
: 

: 

: 

2014 
4.4 
: 

: 

: 

2015 
: 
: 

: 

: 

Note 

2003 
: 

2011 
: 

2012 
: 

2013 
: 

2014 
: 

2015 
: 

: 

: 

: 

2003 
1 407 

: 
1 236 

553.2 

504.7 

473.5 

432.2 

: 

: 

2011 
1 795 

: 
1 545 

: 

: 

2012 
1 749 

: 
1 496 

: 

: 

2013 
1 792 

: 
1 532 

: 

: 

2014 
1 605 

: 
1 342 

: 

: 

: 

2015 
: 

: 
: 

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) 

Note 

77 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 

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 

7) 8) 
8) 

8) 

8) 

8) 

8) 

: 
534 
1 998 
3.2 

2003 
: 

: 
: 

: 

: 

: 

: 

: 

: 

: 
700 
2 542 
5.7 

2011 
: 

243e 
362e 

51e 

247e 

: 

: 
650 
2 384 
5.9 

2012 
: 

276 
314 

56 

123 

: 

: 
506 
2 314 
6.2 

2013 
: 

295 
321 

49 

160 

: 

: 
523 
2 138 
5.3 

2014 
: 

414be 
270e 

: 
: 
: 
5.9 

2015 
: 

421p 
259 

44e 

41 

233e 

218 

: 

: 

435e 

442 

540 

464e 

444 

: 

: 

: 

0 

: 

247e 

117 

185 

202e 

146 

: = not available 
b = break in series 
e = estimate 
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)  Since January 2015 consumer price indices (CPI) are harmonised and are published as harmonised indices of consumer 

prices (HICP).  

3)  2011–15: based on balance of payments manual edition 6 (BPM6). 
4)  2015: estimated for the first nine months of  2015. 
5)  2011–15: the value of GDP is obtained from the Medium Term Expenditure Framework. 
6) 
Includes disbursement fee charged by banks. 
7)  2014 and 2015: including agriculture common land. 
8)  2014: source of data is the 2014 agriculture census done in 34 (of 38) municipalities in Kosovo; data for the four non-

participating municipalities in the north of Kosovo are estimated. 

78