COMMISSION STAFF WORKING DOCUMENT Kosovo* 2018 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 2018 Communication on EU Enlargement Policy
Date: 2018-04-17
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  Strasbourg, 17.4.2018  SWD(2018) 156 final  COMMISSION STAFF WORKING DOCUMENT Kosovo* 2018 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 2018 Communication on EU Enlargement Policy {COM(2018) 450 final}  
 
 
 
 
 
 
 
 
 
 
 
 
* 

Table of Contents 

1. INTRODUCTION ....................................................................................................................... 3 

1.1. Context ............................................................................................................................ 3 

1.2 Summary of the Report ..................................................................................................... 3 

2.  FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW ..................................... 5 

2.1 Functioning of democratic institutions and Public Administration Reform ..................... 5 

2.1.1 Democracy .................................................................................................................. 5 

2.1.2 Public Administration Reform .................................................................................... 9 

2.2 Rule of Law and fundamental rights ............................................................................... 13 

2.2.1 Judiciary and fundamental rights .............................................................................. 13 

2.2.2 Justice, freedom and security .................................................................................... 28 

Implementation and enforcement capacity ........................................................................ 37 

3. FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT & COMPETITIVENESS ....................... 38 

3.1 The existence of a functioning market economy ........................................................ 38 

3.2 The capacity to cope with competitive pressures and market forces within the Union

43 

4. REGIONAL ISSUES AND INTERNATIONAL OBLIGATIONS ...................................................... 46 

5. NORMALISATION OF RELATIONS BETWEEN KOSOVO AND SERBIA ..................................... 48 

6. EUROPEAN STANDARDS ........................................................................................................ 49 

6.1.  Free movement of goods ............................................................................................ 49 

6.2.  Movement of persons, services and right of establishment ........................................ 51 

6.3.  Free movement of capital ........................................................................................... 52 

6.4.  Financial services ....................................................................................................... 52 

6.5.  Customs ...................................................................................................................... 53 

6.6.  Taxation ...................................................................................................................... 54 

6.7.  Competition ................................................................................................................ 55 

6.8.  Public Procurement .................................................................................................... 56 

6.9.  Company law .............................................................................................................. 58 

6.10.  Intellectual property law ............................................................................................. 58 

6.11.  Social policy and employment ................................................................................... 59 

6.12.  Consumer and Health Protection ................................................................................ 60 

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6.13.  Education and culture ................................................................................................. 62 

6.14.  Science and research .................................................................................................. 64 

6.15.  Trade issues ................................................................................................................ 64 

6.16.  Enterprise and industrial policy .................................................................................. 65 

6.17.  Agriculture .................................................................................................................. 66 

6.18.  Food safety, veterinary and phytosanitary policy ...................................................... 67 

6.19.  Fisheries ...................................................................................................................... 67 

6.20.  Environment and climate change ............................................................................... 68 

6.21.  Transport policy ......................................................................................................... 70 

6.22.  Energy ........................................................................................................................ 71 

6.23.  Trans-European Networks .......................................................................................... 73 

6.24.  Information society and media ................................................................................... 73 

6.25.  Financial control ......................................................................................................... 74 

6.26.  Statistics ...................................................................................................................... 76 

ANNEX I – RELATIONS BETWEEN THE EU AND KOSOVO ............................................................ 78 

ANNEX II – STATISTICAL ANNEX................................................................................................ 80 

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1. INTRODUCTION  

1.1. Context  

The EU-Kosovo Stabilisation and Association Agreement (SAA) has been in force since April 
2016.  In  order  to  define  reform  priorities,  the  Kosovo  government  together  with  the  European 
Commission  launched  in  November  2016  the  European  Reform  Agenda  (ERA).  The  new 
government appointed in September 2017 committed itself to the implementation of EU related 
reforms, however progress to date has been slow. The border/boundary demarcation agreement 
with Montenegro was ratified by the Kosovo Assembly in March 2018, constituting an important 
achievement and the fulfilment of one of the key criteria for Kosovo's visa liberalisation.  
1.2 Summary of the Report1  

As concerns the political criteria, Kosovo held early elections in June 2017. A new Assembly 
and  government  took  office  in  September.  So  far,  however,  the  new  ruling  coalition  has  had 
limited success in bringing forward EU related reforms and building consensus on key strategic 
issues  for  Kosovo.  The  continuing  political  fragmentation  and  polarisation  have  adversely 
affected  the  role  of  the  Assembly  and  have  impacted  the  effectiveness  of  the  government. 
Obstructive behaviour by some parliamentarians, including the use of teargas, has hindered the 
work  of  the  Assembly.  The  ratification  of  the  border/boundary  demarcation  agreement  with 
Montenegro in March 2018 was an important breakthrough. 

Parliamentary  and  municipal  elections,  held  in  2017,  were  generally  competitive  and 
well-administered  in  most  places  in  Kosovo.  However,  patterns  of  intimidation  within  many 
Kosovo  Serb  communities,  targeting  particularly  candidates  not  belonging  to  the  Srpska  Lista 
party, raised concerns.  

The context in the north of Kosovo poses particular challenges. The investigation of the murder 
of Kosovo Serb politician Oliver Ivanović in January 2018 continues. 

Attempts  by  members  of  the  Kosovo  Assembly  in  December  2017  to  abrogate  the  Law  on 
Specialist  Chambers  and  Specialist Prosecutor's  Office  have  raised  serious  concerns.  It  will  be 
essential  for  Kosovo  to  fully  comply  with  its  international  obligations  regarding  the  Specialist 
Chambers and Specialist Prosecutor's Office and show full and unequivocal commitment to these 
institutions. 

There is some level of preparation in the area of public administration reform. Some progress 
has  been  made  especially  with  the  review  of  agencies  and  (semi)independent  bodies.  The 
continued politicisation of the public administration remains a concern, and adversely affects the 
efficiency and professional independence of the public administration.  

Kosovo's judicial system is at an early stage. Some progress has been achieved in implementing 
the 2015 justice package laws. The integration of Kosovo Serb judges and prosecutors and their 
support staff across Kosovo into the Kosovo judicial system was a big achievement of 2017. The 
judiciary  is  still  vulnerable  to  undue  political  influence  and  rule  of  law  institutions  need 
sustained  efforts  to  build  up  their  capacities.  The  administration  of  justice  remains  slow  and 
inefficient. 

Kosovo  is  at  an  early  stage/has  some  level  of  preparation  in  the  fight  against  corruption. 
Kosovo has made some progress as regards the track record on the investigation and prosecution 

1 This report covers the period from October 2016 to February 2018. 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.  

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for  high  level  corruption  and  organised  crime  cases,  including  final  convictions.  Progress  was 
also  made  on  preliminary  confiscation  of  assets  although  final  confiscations  remain  low. 
Corruption is widespread and remains an issue of concern. Concerted efforts are needed to tackle 
this problem in a comprehensive and strategic manner.  

Kosovo is at an early stage in the fight against organised crime. Some progress was made with 
the  track  record  on  high  level  corruption  and  organised  crime  cases.  While  there  is  more 
preliminary  confiscation  of  assets,  there  are  still  few  final  convictions,  financial  investigations 
and  final  confiscations  of  assets.  Law  enforcement  agencies  struggle  to  effectively  fight 
organised crime in the north of Kosovo. Some progress was made in the fight against terrorism, 
including  through  measures  to  tackle  violent  extremism  and  radicalisation  and  in  preventing 
citizens from joining conflicts abroad. The Kosovo authorities need to be more effective in their 
efforts to fight money laundering and the relevant law should be brought in line with EU acquis 
and international standards. 

The  legal  framework  broadly  guarantees  the  protection  of  human  and  fundamental  rights  in 
line  with  European  standards.  However,  additional  efforts  are  needed  regarding  enforcement. 
Implementation  of  human  rights  strategies  and  legislation  is  often  undermined  by  inadequate 
financial and other resources, particularly at local level, limited political prioritisation and lack of 
coordination. More needs to be done to effectively guarantee the rights of persons belonging to 
minorities,  including  Roma  and  Ashkali2  and  displaced  persons,  to  ensure  gender  equality  in 
practice, to set up an integrated child protection system and to advance the protection of cultural 
heritage. Kosovo has some level of preparation in the area of freedom of expression, which is 
enshrined in the constitution. Kosovo benefits from a pluralistic and lively media environment. 
However, threats and attacks against journalists have continued. The Assembly showed limited 
commitment  to  finding  a  solution  for  sustainable  funding  of  the  public  broadcaster,  leaving  it 
vulnerable to political pressure.  

As regards the  economic criteria, Kosovo has  made  good progress and is  at an early  stage of 
developing  a  functioning  market  economy.  The  business  environment  has  improved  and  the 
government adhered to the fiscal rule on budget deficit; however, war veterans' benefits continue 
to pose a challenge for public finances. The informal economy remains widespread. The increase 
in  the  labour  force  participation  rate  was  not  matched  by  gains  in  employment  so  the 
unemployment  rate  increased  further.  It  particularly  affected  women  and  young  and  unskilled 
workers. Despite strong export growth the high trade deficit reflects a weak production base. 

Kosovo  has  made  some  progress  and  is  at  an  early  stage  in  terms  of  capacity  to  cope  with 
competitive pressure and market forces within the EU. No progress was made on improving the 
quality  of  education  and  addressing  skills  gaps  in  the  labour  market.  Kosovo  made  some 
progress in improving road infrastructure but large infrastructure gaps in the railway and energy 
sectors  remain.  Structural  changes  in  the  economy  are  slow  as  it  remains  reliant  on  the  retail 
trade sector. Integration with the EU is hampered by the slow implementation of the SAA. 

Kosovo  continued  its  efforts  to  maintain  good  and  constructive  bilateral  relations  with  other 
enlargement countries. Kosovo is represented in most regional organisations that fall within the 
scope  of  the  Arrangements  on  Regional  Representation  and  Cooperation  agreed  between 
Belgrade and Pristina in 2012. 

Regarding  the  normalisation  of  relations  with  Serbia,  Kosovo  has  remained  engaged  in  the 
dialogue. However, Kosovo needs to make further substantial efforts on the implementation of 

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

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existing  agreements  and  contribute  to  the  establishment  of  circumstances  conducive  to  the  full 
normalisation of relations with Serbia, to be defined in a legally binding agreement.  

As  regards  alignment  with  European  standards,  Kosovo  is  at  an  early  stage.  Legislative 
alignment has continued in some areas but implementation is weak. Some progress was made in 
the area of free movement of goods and services, public procurement and competition as well as 
in improving the business environment. In the area of taxation and customs, some progress was 
also made  in  collecting revenue  and simplifying administrative procedures, but  Kosovo should 
step up the fight against the informal economy and tax evasion. The energy sector continues to 
face serious challenges. No progress has been achieved to address environmental issues. Overall, 
Kosovo  needs  to  improve  its  administrative  capacity  and  coordination,  across  all  sectors,  to 
ensure effective implementation of the acquis.  

Authorities  have  made  progress  in  managing  regular  and  irregular  migration.  These  efforts 
should  be  continued  and  built  on.  In  this  context,  Kosovo  needs  to  put  in  place  a  return 
mechanism for irregular migrants in line with EU standards and practices.  

2. 

FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW  

2.1 Functioning of democratic institutions and Public Administration Reform 

2.1.1 Democracy 

Following  early  elections  in  June  2017,  a  new  Assembly  and  government  took  office  in 
September. So far, however, the new ruling coalition has had limited success in bringing forward 
EU-related  reforms  and  building  consensus  on  key  strategic  issues  for  Kosovo.  Continuing 
political fragmentation and polarisation has adversely affected the Assembly's role and impacted 
the  effectiveness  of  the  government.  The  ratification  of  the  border/boundary  agreement  with 
Montenegro in March 2018 was an important breakthrough. 

Attempts  to  abrogate  the  Law  on  Specialist  Chambers  and  Specialist  Prosecutor's  Office, 
established to address certain allegations of international crimes committed in the context of the 
Kosovo  conflict,  raised  serious  concerns  about  Kosovo's  political  leaders’  commitment  to 
prosecute and judge these crimes and honour Kosovo’s related international obligations.  

Elections 

Parliamentary  and  municipal  elections,  held  in  2017,  were  generally  competitive  and 
well-administered  in  most  places  in  Kosovo.  However,  patterns  of  intimidation  within  many 
Kosovo  Serb  communities,  targeting  particularly  candidates  not  belonging  to  the  Sprska  Lista 
party,  raised  concerns.  A  number  of  long-standing  weaknesses,  in  particular  political  party 
financing,  women  participation,  electoral  dispute  mechanisms,  inaccurate  voter  lists  and  a 
largely  defective  voting  system  for  Kosovo  citizens  resident  abroad  remain  to  be  addressed. 
These  challenges,  guided  by  the  recommendations  of  the  EU  election  observation  missions, 
should be tackled as a matter of priority. 

Following  a  motion  of  no  confidence  in  the  Assembly  on  10  May  2017,  early  parliamentary 
elections  took  place  on  11  June.  The  120  members  of  parliament  were  elected  for  a  four-year 
term  through  a  proportional representation  system  with  preference  voting  and  guaranteed  seats 
for non-majority communities.  

Elections  were  held  within  the  short  timeframe  of  30  days.  Voter  turnout  was  low  at  41.3  % 
(42.6  %  in 2014).  The "PAN coalition" (consisting mainly of the Democratic Party of Kosovo 
(PDK),  the  Alliance  for  the  Future  of  Kosovo  (AAK)  and  the  Social  Democratic  Initiative 
(Nisma)) obtained 33.7 % (39 seats), Vetëvendosje (VV) 27.5 % (32 seats), the "LAA coalition" 

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(consisting of the Democratic League of Kosovo (LDK), the New Kosovo Alliance (AKR) and 
Alternativa) 25.5 % (29 seats), and Srpska Lista 6.1 % (9 seats). While women caucuses exist in 
some  political  parties,  this  has  not  resulted  in  an  increased  participation  of  women  in  the 
electoral  process.  Out  of  120  elected  members  of  parliament,  39  are  women.  Discrepancies 
between  the  electoral  legal  framework  and  the  equal  representation  provision  of  the  Law  on 
Gender Equality persist. Women candidates did not receive equal financial or logistical support 
from  their  political  entities  for  their  campaigns,  and  women  candidates  rarely  spoke  at  rallies. 
The media gave priority coverage to male candidates.  

Regular  municipal and mayoral  elections  took place  on 22 October 2017 with  the runoff  for 
the  mayoral  elections  on  19  November.  These  were  the  second  local  elections  held  in  all 
municipalities throughout Kosovo. Out of 204 mayoral candidates only 8 were women. Of the 38 
municipalities, LDK won  mayoral posts in  8, AAK in  7, PDK in  5 and VV in  3.  Srpska Lista 
won  in  all  10  Kosovo  Serb-majority  municipalities.  AKR,  NISMA  and  the  Kosovo  Turkish 
Democratic Party each won 1 municipality. Two independent candidates won mayoral posts. Out 
of 38 elected mayors, none are women.  

The  EU  deployed  fully-fledged  observation  missions  for  both  parliamentary  and  municipal 
elections.  Elections  in  the  north  of  Kosovo  were  technically  assisted  by  the  Organisation  for 
Security and Co-operation in Europe (OSCE). Overall both elections were competitive and well-
administered  in  most  of  Kosovo.  Within  many  Kosovo  Serb  communities,  however,  the 
campaign  environment  was  marred  by  a  pattern  of  intimidation  targeting  in  particular  non-
Srpska Lista political entities and their candidates. Instances of violence from within the Kosovo 
Serb  community  and  an  insufficient  response  from  the  law  enforcement  authorities  were 
reported. The EU election observation mission noted that during the campaign, senior officials in 
Belgrade repeatedly urged voters to vote for Srpska Lista. All this raises deep concerns over the 
state of democracy in Kosovo Serb communities.   

Political  will  across  the  political  spectrum  is  needed  to  undertake  necessary  electoral  reforms 
well ahead of the next round of general elections. The Assembly needs to urgently address long-
standing  weaknesses,  guided  by  the  recommendations  of  the  EU  election  observation  mission. 
Allegations  of  intimidation  should  be  promptly  and  thoroughly  investigated.  Inaccurate  voter 
lists, susceptible to fraud, need to be cleaned and the largely defective voting system for Kosovo 
citizens resident abroad revised. Affirmative action needs to be taken to overcome the obstacles 
that prevent women from participating in politics and being elected. The regulation of political 
party  financing  and  campaigning  is  made  ineffective  by  the  absence  of  systematic  monitoring 
and  control.  Electoral  dispute  mechanisms  need  to  be  conducted  in  a  more  transparent  and 
trustful manner.  

Parliament  

The  Assembly  needs  to  substantially  improve  its  performance  as  a  forum  for  constructive 
political  dialogue  and  representation,  as  well  as  guarantee  proper  checks  and  balances.  The 
frequent absence of parliamentarians from plenary sessions and continued political polarisation 
hampered  legislative  activity  during  the  reporting  period.  Obstructive  behaviour  by  some 
parliamentarians,  including  the  use  of  teargas,  has  hindered  the  work  of  the  Assembly.  Cross-
party  work  on  long  overdue  reforms  is  urgently  needed.  Both  the  ruling  coalition  and  the 
opposition should intensify their parliamentary work and seek consensus on EU-related reform 
priorities.  The  Assembly's  ratification  of  the  border/boundary  demarcation  agreement  with 
Montenegro  in  March  2018  was  an  important  achievement.  Overall,  the  Assembly's  effective 
oversight of the executive and the transparency and quality of law-making need to be improved, 
and the use of urgent procedures limited.  

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Following the early elections on 11 June, it took about two months to constitute the Assembly 
and appoint the government. With 61 out of 120 votes, the ruling coalition (consisting of PDK, 
AAK, NISMA, AKR and Srpksa Lista as well as other minority parties) led by Prime Minister 
Haradinaj  has  a  slim  majority.  For  the  first  time,  the  opposition  party  VV  became  the  single 
strongest party in parliament (32 seats).  

The  parliamentary  elections  and  formation  of  the  government  during  the  summer  and  the 
municipal  elections  in  the  autumn  delayed  parliamentary  work  and  seriously  slowed  down 
Kosovo's  EU  related  reforms.  The  reporting  period  was  marked  by  political  polarisation  and 
dysfunction  in  both  the  previous  and  current  Assembly.  All  political  parties  need  to  show 
responsibility and re-engage in a constructive dialogue, with the Assembly as the key forum for 
political debate. 

The Assembly continued holding irregular plenary sessions. The frequent absence of Assembly 
members, including its leadership, often resulted in a lack of quorum for decision-making. As a 
consequence, agenda items were delayed from session to session. Weaknesses and loopholes in 
the rules of procedures need to be addressed. The fast-track procedure was frequently used (22 
out  of  115  laws  were  adopted  in  this  way).  This  resulted  in  legislation  being  adopted  without 
substantive debate or stakeholder consultation, including legislation of vital importance such as 
the budget. The Assembly needs to establish an ambitious  work plan to address the increasing 
workload  and  to  make  up  for  lost  time.  The  Assembly  should  plan  its  work  in  advance  by 
presenting  agendas  every  6  months  with  dates  of  regular  weekly  plenary  sessions  to  enable 
proactive oversight and ensure checks and balances.  

Parliamentary  oversight  of  the  executive  remains  weak.  Parliamentary  committees  continued 
consultations with relevant stakeholders, but improvements are required on early notification and 
follow-up. Furthermore, the Assembly lacks the powers and capacity to effectively supervise the 
32  agencies  /  bodies  which  report  directly  to  it.  The  government  and  the  Assembly  should 
implement the recommendations that came out of the review of the independent agencies, which 
was carried out to rationalise the number of agencies reporting to the Assembly. (see 2.3 Public 
Administration Reform). The Assembly failed to appoint, in a timely manner or on the basis of 
merit,  professional  board  members  for  several  independent  institutions.  The  Assembly  should 
use  the  annual  report  of  the  Office  of  Auditor  General  to  scrutinise  government  work.  The 
Assembly's Committee of Public Finance, which prepares recommendations for adoption by the 
Assembly, should also hold hearings of ministers and mayors.  

The  parliamentary  oversight  of  the  Kosovo  Security  Forces  and  Kosovo's  Intelligence  Agency 
continues to be insufficient. 

The Ombudsperson has continued to strengthen its capacity to review cases and has become the 
most  trusted  institution  in  Kosovo.  The  Assembly  has  appointed  5  deputies  to  the 
Ombudsperson,  although  with  much  delay.  There  is  a  need  for  the  Assembly  to  review  its 
internal regulations on this.  

Some progress was made in improving the transparency in and public access to the work of the 
Assembly. In November 2017, the Assembly launched an electronic tracking system, providing 
public access to all information and documents on draft laws under its review.  

Political parties’ finances and campaign funding and expenditure continue to lack transparency 
and  related  legislation  remains  largely  unenforced.  This  undermines  public  trust  in  political 
parties  and  continues  to  expose  the  democratic  process  to  significant  risks  of  corruption  and 
undue  influence.  A  positive  step  has  been  taken  with  the  publication  of  external  audits  of 
political  party  finances  for  the  first  time  since  2013.  However,  these  audits  have  confirmed 
serious  violations  of  political  party  finance  legislation  and  severe  weaknesses  in  internal 

7 

 
 
 
financial control by political entities. The legal provisions need to be urgently enforced and the 
overall legal framework effectively strengthened. 

Governance 

The strong polarisation between political parties undermined effective governance during large 
parts  of  the  reporting  period.  The  new  government,  appointed  in  September  2017,  expressed 
commitment  to  the  implementation  of  EU  related  reforms,  notably  the  European  Reform 
Agenda.  Greater  focus  should  be  put  on  building  consensus  on  key  EU-related  reforms.  The 
government is over-sized, which erodes coherent policy-making.  

The  government  of  Prime  Minister  Mustafa  was  dismissed  following  a  no-confidence  vote  in 
the Assembly in May 2017. Even before, the government's cohesiveness had already eroded, and 
virtually  no  significant  reforms  were  made  during  the  first  half  of  2017.  A  new  government 
under  Prime  Minister  Haradinaj  took  office  in  September  2017.  The  government  coalition  is 
made  up  of  the  PDK,  AAK,  NISMA,  AKR  parties,  Srpksa  Lista  and  includes  other  minority 
representatives. With political attention on elections for most of the reporting period, the former 
and current governments have been unable to pursue a coherent and substantive policy agenda. 

There  is  a  trend  of  appointing  an  excessive  number  of  government  members,  such  as  the 
appointment  of  70  deputy  ministers  in  the  current  government  and  45  in  the  previous  one, 
sometimes without clear attributions. The authorities should consider imposing a cap on the size 
of the government to prevent such a practice. There are only 2 women ministers. Five ministerial 
posts are held by minority representatives, 3 of whom represent the Kosovo Serb community, 1 
the Turkish community and 1 the Bosniak community. 

In November 2016, the Kosovo government together with the European Commission launched 
the  European  Reform  Agenda  (ERA),  a  tool  to  prioritise  the  implementation  of  the 
Stabilisation  and  Association  Agreement  (SAA).  The  ERA  action  plan  was  adopted  by  the 
Assembly;  however  its  implementation  has  lagged  behind.  Kosovo's  updated  2018-2022 
programme for the implementation of the Stabilisation and Association Agreement serves as the 
main tool for planning, coordinating and monitoring EU related reforms. Implementation of the 
SAA is proceeding but much of the programme is lagging behind. The new government updated 
the  short  and  medium-term  measures  in  the  programme,  to  make  it  more  realistic,  costed  and 
better aligned with the annual work programme.  

The Assembly, after several attempts, ratified the border/boundary demarcation agreement with 
Montenegro in March 2018, thus fulfilling one of the key criteria for visa liberalisation.  

Ministerial attention to legislation in the  Assembly, from  proposals until adoption, needs to be 
improved.  Ministers'  failure  to  attend  plenary  sessions  and  failure  to  answer  parliamentary 
questions  continue  to  undermine  transparency,  accountability  and  communication  with  the 
Assembly.  

The dialogue between government institutions and the Ombudsperson has improved. Follow-up 
and  implementation  of  the  Ombudsperson's  recommendations  have  further  increased  overall. 
However, the government, particularly the Prime Minister's Office on Good Governance and the 
Assembly,  should  be  more  active  in  ensuring  proper  follow  up  to  the  recommendations  of  the 
Ombudsperson.  They  should  also  develop  effective  monitoring  systems  for  follow-up  to 
recommendations of bodies and agencies which report to them.  

Efforts to further improve the capacity of local government have continued. Following the local 
elections in October and November 2017, most new municipal assemblies were constituted in a 
timely manner. Women remain underrepresented in local decision-making positions. While local 
municipalities  have  been  given  more  powers,  their  human  and  financial  resources  are  often 

8 

 
 
 
 
insufficient. The Law on Local Government Finance should be amended by including a specific 
grant for social services to ensure transparency in the budget and a minimum level of support to 
social services at municipal level. 

Municipalities in northern Kosovo continued to improve their relations with central government 
institutions. The 4 northern municipalities complied with legislation on the adoption of the 2017 
municipal  budgets.  However,  due  to  continued  inconsistencies  in  population  figures,  a  census 
should be conducted in all 4 municipalities. 

Civil society 

Some  progress  was  made  in  improving  cooperation  between  civil  society  and  the  central 
government. Further efforts are needed to ensure meaningful involvement and cooperation also 
at 
level.  The  publication  of  a  first  government  report  on  public  funding  of 
non-governmental organisations resulted in more transparency.  

local 

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 
an  important  role  in  the  democratic  debate  and  in  the  design  and  implementation  of  public 
policy.  The  rules  setting  up,  registering,  operating,  suspending,  terminating,  and  de-registering 
Non-Governmental  Organisations  (NGOs)  still  need  to  be  clarified.  The  new  draft  law  on 
freedom  of  association  of  NGOs,  prepared  in  consultation  with  civil  society,  has  yet  to  be 
adopted.  

Money  laundering  and  anti-terrorism  legislation  remains  restrictive  for  the  NGO  sector.  In 
September  2017,  a  sectoral  risk-assessment  on  NGOs  was  initiated  by  Kosovo's  Financial 
Intelligence Unit to identify to what extent the NGO sector is at risk of terrorist financing. 

The entry into force of two regulations setting standards for public consultation and laying down 
criteria  and  procedures  for  the  public  funding  of  NGOs  has  paved  the  way  for  improved 
governance  and  a  more  transparent  use  of  public  funds.  This  is  part  of  Kosovo's 
government-civil 
several  ministries  and 
municipalities  are  still  not  ready  to  fulfil  the  obligations  under  the  new  regulations.  They  also 
lack  technical  capacities  to  effectively  execute  the  assigned  budget  in  accordance  with  new 
regulations and procedures.  

strategy.  Nevertheless, 

society  cooperation 

In March 2017, the government published the first ever report on public funding. This represents 
a positive step towards greater transparency of public funding. However the type of information 
provided does not yet allow for a meaningful analysis of budget execution.  

The legal framework for tax deductions for donations remains ambiguous. 

2.1.2 Public Administration Reform 

Kosovo has achieved some level of preparation in the reform of its public administration. Some 
progress has been made especially with the review of agencies and (semi) independent bodies, 
as  recommended  by  the  Commission  in  2016.  However,  the  action  plan  to  implement  the 
recommendations of the review is still under preparation. There remain concerns over non-merit-
based  recruitments  which  affect  the  efficiency  and  professional  independence  of  the  public 
administration. In the coming year, Kosovo should in particular: 

→ adopt the legislative package covering laws on the civil service, salaries and the organisation 
and functioning of public administration in an inclusive and evidence-based process; 

→ adopt and start to  implement the action plan to  rationalise  agencies and (semi) independent 
bodies, as agreed by the Assembly and the government;  

9 

 
 
 
→ improve legal predictability for citizens and businesses by gradually amending the identified 
special  laws  and  implementing  regulations  that  contradict  the  new  Law  on  General 
Administrative Procedures and address the current backlog of administrative cases. 

Policy development and coordination 

The  legal  basis  and  institutional  structures  for  a  coherent  and  coordinated  policy-making 
system, including  for  EU  related  reforms,  are  largely  in  place.  Public  administration  reform  is 
included  as  a  priority  area  in  the  government  programme  for  2015-2018,  the  National 
Development Strategy and the National Programme for Implementation of the Stabilisation and 
Association  Agreement.  The  key  weakness  with  policy  development  and  coordination  is  that 
there are too many planning documents and planning is persistently over-ambitious. There is a 
legal  requirement  to  prepare  sector  strategies,  including  costing  and  sources  of  funding. 
However, due to a lack of centralised quality control, sector strategies are rarely aligned with the 
mid-term expenditure framework and are often financially unsustainable. 

Some aspects of inclusive and evidence-based policy and legislative development are in place, 
but in practice problem analysis and justification for government intervention are often missing. 
While  requirements  for  budget  impact  assessments  have  been  made,  more  specific  regulatory 
impact assessments are rarely of sufficient quality. Inter-ministerial and public consultations are 
regulated,  and  progress  has  been  made  in  implementing  the  minimum  standards  for  public 
consultations. These standards came into force in January 2017 and were followed in February 
2017 by the launch of a web portal for both inter-ministerial and public consultations. In 2016, 
only 21 % of the primary policy documents and draft laws were published for consultation. The 
response rate from civil society and the public is still low.  

Effective public scrutiny of government work is undermined by the lack of clear requirements 
for  both  reporting  on  the  implementation  of  the  government’s  annual  work  plan  and  sector 
strategies  and  publishing  such  reports.  Parliamentary  scrutiny  of  the  government  remains 
insufficient. 

Public financial management 

Kosovo is implementing the public financial management (PFM) reform strategy for 2016-
2020. It addresses fiscal discipline, allocation and operational efficiency and cross-cutting issues. 
The  strategy,  which  is  up  for  review  in  2018,  is  complemented  by  the  public  procurement 
strategy adopted in 2017 and the public internal financial control strategy adopted in 2015. The 
first annual report on the PFM reform strategy was approved in 2017. Progress in implementing 
the PFM reform strategy has been satisfactory so far. 

The fiscal rule on debt-to-GDP ratio and the budget balance has been complied with. However, 
inclusion  of  an  ‘investment  clause’  in  the  Law  on  Public  Financial  Management  and 
Accountability has made this rule less transparent. Annual tax collection has slightly improved, 
and  revenue  forecasting,  commitment  control  and  effective  in-year  allocation  of  expenditure 
have increased budget credibility at the aggregate level. While the overall public debt level as a 
share of GDP has increased from 14.3 % to 16.8 % of GDP, debt servicing costs have doubled in 
the past 2 years. The latest assessment with a reference year of 2015 shows a decrease in the grey 
economy,  but  the  tax  and  customs  administration  needs  further  strengthening  to  reduce 
informality and broaden the tax base. 

Kosovo  is  committed  to  improving  budget  transparency.  Reporting  on  public  finances  has 
become more detailed, comprehensive and systematic. The Ministry of Finance has also started 
publishing comparative financial data on a monthly basis on its website. This is a step towards 
meeting the standards of the IMF’s Government Financial Statistics Manual 2014. The Kosovo 
Office of the Auditor General, which audits the government’s financial management, has started 

10 

 
 
 
to engage more proactively with civil society. However, implementation of the recommendations 
in the National Audit Office’s Annual Audit Report is modest and needs to improve (see section 
on Financial control). 

Public service and human resource management 

Work continued at government level with the drafting of a new law on civil service. This draft 
law is part of a legislative package with  a law on salaries and the law on the organisation and 
functioning of public administration. The concept documents of the law on civil service and of 
the  law  on  organisation  and  functioning  of  public  administration  have  been  adopted  in  May 
2017, whereas the concept document for the law on salaries has been adopted in March 2018.  

The current Law on Civil Service formally  provides for merit-based recruitment, promotion 
and dismissal based on objective criteria. However, the loopholes in the law have allowed for 
contradictory practices, including the conversion of temporary staff into permanent civil servants 
without a public competition. Political influence over appointments and dismissals continues to 
be a serious concern, especially for senior management. The Ministry of Public Administration 
still does not have sufficient capacity to actively supervise recruitment procedures. Non-majority 
communities remain underrepresented in central public institutions. 

The  independent  Civil  Service  Oversight  Board  lacks  sufficient  professional  capacity.  Around 
87%  of  its  recommendations  and  rulings  have  been  implemented.  Administrative  judges  are 
increasingly  overburdened,  leading  to  delays  in  rulings,  and  the  further  reduction  in  their 
numbers at the Basic Court of Pristina is of concern. 

The  Ministry  of  Public  Administration  is  responsible  for  central  coordination  of  human 
resources  management,  although  the  current  Law  on  Civil  Service  law  does  not  explicitly 
assign  such coordination role and it does  not  oblige ministries to  report to  the Ministry.  A job 
classification system, which has been rolled out since January 2016, covers now approximately 
80%  of  civil  servants.  Their  positions  are  harmonised  with  the  job  catalogue,  which  will  be 
aligned to the package of new laws upon their adoption. Although there has been progress with 
the human resources management information system, which now covers nearly all institutions, 
it is only partially developed and it is not being used for management and monitoring purposes. 
This makes it difficult to apply adequate, coherent standards.   

Kosovo urgently needs high-quality, coherent legislation to regulate remuneration in the public 
sector to avoid unfair salary structures, abuse of allowances and discretionary decision making in 
this  area.  The  current  system  does  not  provide  incentives  for  retaining  and  recruiting  key 
professional  staff.  The  government’s  decision  in December 2017  to  increase  the  salaries  of  the 
government  cabinet,  ministers,  deputy  ministers  and  some  civil  servants  in  the  office  of  the 
Prime  Minister  was  suspended  at  the  end  of  January  2018,  pending  the  opinion  of  the 
Constitutional  Court.  The  government's  decision  triggered  wide  public  criticism  and  was 
identified by the Anti-Corruption Agency as a case of concern for potential conflict of interest.   

Progress  has  been  made  in  civil servants’  professional  development, but  the  Kosovo  Institute 
for Public Administration has a very limited training budget to provide training for staff across 
all institutions. The use of performance appraisals has increased, but they continue to have little 
impact on career development. 

Measures  and  mechanisms  to  prevent  corruption  and  promote  integrity  in  the  public  service 
are in place. Good initial progress has been made with the publication in December 2017 of an 
annual report on disciplinary measures against civil servants. These measures are taken either by 
the administration or the court for violation of ethics and anti-corruption clauses. In line with the 
European  Reform  Agenda,  the  government  should  adopt  legislative  amendments  necessary  to 
enable,  on  the  basis  of  a  court  decision,  the  suspension  of  the  public  officials  indicted  for 

11 

 
 
 
corruption-related  criminal  offences  and  the  removal  of  the  public  officials  convicted  for 
corruption-related criminal offences (see section on Fight against corruption). 

Accountability of the administration 

The public administration is fragmented and does not ensure effective  lines of accountability; 
neither  between  many  administration  bodies  nor  within  institutions,  where  there  is  no  clear 
delegation  of  responsibilities  to  middle  management.  The  current  law  regulating  the 
administration has allowed 46 (semi) independent government agencies to be set up, many with 
overlapping responsibilities with their parent ministries. Many of these institutions and agencies 
do not comply with the Law on Civil Service and have more favourable salary conditions than 
civil servants in ministries doing equivalent jobs (See section on Financial control). 

During the reporting period the government and the Assembly have not demonstrated sufficient 
will  to  jointly  address  these  shortcomings.  A  comprehensive  review  of  the  (semi)  independent 
agencies  was  published  in  December  2016.  The  recommendations  of  this  review  will  be 
implemented  as  part of an action plan that is being developed. The action plan should  provide 
that  the  government  will  reduce the  overall  number  of  such  agencies  and  change  the  reporting 
lines of several bodies from the Assembly to the government. The aim is more efficiency, better 
lines of accountability and greater oversight. 

Citizens' right to good administration is being addressed by independent oversight institutions 
such  as  the  Auditor  General  and  the  Ombudsperson.  Although  there  has  been  marked 
improvement during the reporting period, not all institutions systematically followed up on their 
recommendations. The Law on Access to Public Documents aims to ensure the right to access 
public information, but implementation remains uneven. The Law requires a thorough revision 
to address the challenging and fragmented implementation. Kosovo should adopt a new law on 
administrative disputes to further strengthen citizens' right to administrative justice. The Basic 
Court  of  Pristina  has  a  substantial  backlog  of  administrative  cases,  which  they  should 
continuously address. This backlog is unlikely to be reduced, especially since the new Law on 
Minor  Offences,  which  came  into  effect  in  January  2017,  risks  substantially  adding  to  the 
backlog of the court. The right to seek compensation and the liability of public authorities in 
cases  of  wrongdoing  are  affected  by  fragmented  legislation.  No  data  is  collected  to  monitor 
actual implementation. 

Service delivery to citizens and businesses 

The government promotes a user-oriented administration, but lack of clear vision, leadership 
and  coordination  hamper  reform  efforts.  Many  institutions  have  therefore  started to  implement 
their  own  solutions  outside  the  central  electronic  identification  (eID)  tools  that  are  being 
developed.  Central  tools  to  collect  public  and  business  feedback  on  service  delivery  are  at  an 
early  stage  of  development.  Technical  solutions  for  interoperability  are  yet  to  be  developed. 
Legislation  on  equal  access  to  services  exists,  but  applying  it  is  a  challenge,  particularly  as 
regards persons with reduced mobility. 

Simplification  of  administrative  procedures  has  moved  forward  with  the  entry  into  force  of 
the  Law  on  General  Administrative  Procedures  in  June  2017.  The  government  has  made  an 
inventory  of  laws  that  contain  special  administrative  procedures.  These  laws  now  need  to  be 
amended  to  avoid  contradictions  with  the  new  law.  Considerable  efforts  are  needed  to  inform 
and educate the Kosovo administration and public on obligations and rights under the new law. 

Strategic framework for public administration reform 

The strategic framework for public administration  reform consists of 4 strategies on better 
regulation, policy planning and coordination, modernisation of public administration and public 

12 

 
 
 
financial  management.  Implementation  has  been  weak,  mainly  due  to  over-ambitious  planning 
and  lack  of  resources.  Two  of  these  strategies  were  revised  in  2017  and  1  is  being  revised  to 
improve  targets  and  indicators  and  to  ensure  more  realistic  planning.  Public  administration 
reform  has  so  far  enjoyed  strong  political  support.  The  Ministerial  Council,  led  by  the  Prime 
Minister,  has  steered  the  reform  process.  The  financial  sustainability  of  the  reforms  is  of 
concern,  as  implementation  of  the  strategies  relies  heavily  on  the  support  of  external  donors. 
Despite  government  commitments,  the  actual  annual  budget  allocations  and  provisions  in  the 
medium-term expenditure framework are lower than planned in the strategic documents.  

2.2 Rule of Law and fundamental rights 

2.2.1 Judiciary and fundamental rights 

Kosovo  is  at  an  early  stage/has  some  level  of  preparation  to  apply the  acquis  and  European 
standards in this area. Some progress has been made, particularly with the integration of Kosovo 
Serb judges and prosecutors and their support staff across Kosovo in the unified Kosovo judicial 
system,  with  the  investigation  and  prosecution  of  some  high-level  corruption  cases  and  the 
launch  of  the  application  process  for  recognition  and  verification  of  the  status  of  victims  of 
sexual  violence  during  the  conflict.  As  regards  fundamental  rights,  implementation  of  the 
relevant  laws  and  strategies  is  often  undermined  by  inadequate  financial  and  other  resources, 
limited political prioritisation and lack of coordination. The arrest and subsequent deportation of 
six  Turkish  nationals  legally  residing  in  Kosovo  in  March  2018  raised  questions  about  the 
respect of the due process of law. In the coming year, Kosovo should in particular: 

  take concrete measures to maximise the independence, accountability, professionalism and 
efficiency of the judiciary; 

  continue  to  strengthen the  track  record  on  the  fight  against  corruption,  including  final 
judgments and confiscations, and amend the relevant criminal legislation. Expand the existing IT 
tracking system to all high-level corruption cases; 

  give higher political priority to the protection of human and fundamental rights and ensure 
adequate  capacity  and  budgetary  resources  for  their  implementation,  enforcement  and 
promotion, including for key services and assistance to vulnerable groups. 

Functioning of the judiciary 

Kosovo  is  at  an  early  stage  in  developing  a  well-functioning  judicial  system.  Some  progress 
was achieved in 2017 in implementing the 2015 justice package laws. The integration of Kosovo 
Serb  judges  and  prosecutors  and  their  support  staff  across  Kosovo  into  the  Kosovo  judicial 
system  was  a  major  achievement  in  2017.  The  judiciary  is  still  vulnerable  to  undue  political 
influence  and  rule  of  law  institutions  need  sustained  efforts  to  build  up  their  capacities.  The 
administration of justice remains slow and inefficient. 

As the recommendations of the 2016 report have only partly been addressed, they remain valid. 
In the coming year, Kosovo should in particular:  

  continue to strengthen the capacity of judges, prosecutors and support staff and improve the 
court  administration  in  particular  through  a  functioning  case  management  system  that  should 
also  perform  random  allocation  of  cases  and  provide  reliable  statistical  data  in  line  with  the 
European Commission for the Efficiency of Justice (CEPEJ) methodology; 

  adopt a new law on the disciplinary liability of judges and prosecutors in line with European 
standards to strengthen accountability; 

13 

 
 
 
  continue  efforts  to  reduce  the  backlog  of  cases,  including  by  using  alternative  dispute 
resolution tools, the use of which shall be properly financed and promoted. 

Strategic documents 

Overall,  there  is  slow  progress  in  implementing  the  Kosovo  Judicial  Council's  (KJC) 
2014-2019 strategic plan, the 2014-2019 communication strategy and the strategy for reducing 
the backlog of cases. The Kosovo Prosecutorial Council (KPC) has demonstrated more progress 
in the implementation of its strategic plan for 2016-2018 but it is also lagging behind. Kosovo 
lacks a comprehensive strategy for the justice sector reforms and a proper mechanism for inter-
institutional coordination. There is insufficient coordination of donors by the Kosovo authorities. 
This  leads  to  inefficiencies,  incoherence  and  duplication  of  efforts.  In  November  2016,  the 
government  adopted  a  decision  to  conduct  a  functional  review  of  the  rule  of  law  sector. 
However, there have been no significant further developments since its launch.     

Management bodies 

Under  the  Kosovo  Constitution,  the  Kosovo  Judicial  Council  and  the  Kosovo  Prosecutorial 
Council  are  responsible  for  ensuring  the  independence  and  impartiality  of  the  judiciary.  Their 
composition and appointment procedures are broadly in line with European standards. 

The  Law  on  the  Kosovo  Judicial  Council  still  needs  to  be  aligned  with  the  constitutional 
amendment of 2016 whereby the majority of its members are to be elected by their peers. While 
the Prosecutorial Council adopted all internal regulations, the Judicial Council lacks the capacity 
to create the conditions for implementing the laws of the July 2015 justice package. The budget 
allocated to both Councils was increased in the reporting period. Meetings of both Councils are 
open  to  both  the  media  and  the  public.  Both  Councils  publish  annual  reports  online,  but  their 
reporting mechanisms still need to be improved.   

In line with the 2015 justice agreement between Belgrade and Pristina, the President  appointed 
40 Kosovo Serb judges, 13 prosecutors and their respective support staff by decree in October 
2017. They began working shortly after this. Prosecutors were assigned to the Basic Prosecution 
Office in Mitrovica and the judges to the Mitrovica Basic Court,  as well as the division of the 
Court  of  Appeals.  This  concludes  the  process  of  integration  of  Kosovo  Serb  judges  and 
prosecutors  into  the  Kosovo  judicial  system.  Further  efforts  are  required  to  ensure  access  to 
judicial  proceedings  in  the  Albanian  and  Serbian  languages  across  Kosovo  and  use  of  both 
languages in the work of judicial bodies. 

The  Constitutional  Court  operates  on  the  verge  of  the  quorum  with  1  judicial  seat  remaining 
vacant for months and 3 more posts to be vacated in 2018. 

Independence and impartiality 

Legal  safeguards  on  independence  and  impartiality  are  enshrined  in  the  Constitution  and  the 
legal  framework.  Judges  cannot  be  transferred  without  their  consent.  The  Councils  should 
establish  a  mechanism  to  react  more  efficiently  and  actively  in  cases  of  alleged  political 
interference in the judiciary. 

The system of case allocation works properly and is managed by drawing lots. Urgent cases are 
allocated by the courts' presidents. High-profile and sensitive cases are not always processed in a 
timely manner by the judges assigned to judge them. 

The Judicial and Prosecutorial Councils are responsible for taking protective measures, to secure 
the  safety  of  judges  and  prosecutors.  The  technical  aspects  of  protection  are  dealt  with  by  the 
police.  During  the  reporting  period,  3  prosecutors  have  been  granted  close  protection  due  to 
threats they received for cases they were investigating. 

14 

 
 
 
Accountability 

Codes  of  ethics  are  in  place  for  judges,  prosecutors  and  attorneys  but  their  effective 
implementation remains weak. Disciplinary procedures are in place, but experience long delays 
and  have  proven  inefficient.  A  new  law  on  the  disciplinary  liability  of  judges  and  prosecutors 
providing for more robust disciplinary mechanisms with rigorous deadlines and clear division of 
powers and responsibilities is yet to be adopted. Judges and prosecutors may be dismissed by the 
President on a proposal by the Judicial and Prosecutorial Councils for a number of criminal and 
disciplinary offences. They are entitled to appeal.  

In 2017, 7 cases against judges and 9 cases against prosecutors were submitted by the Office of 
the  Disciplinary  Counsel  to  the  Judicial  and  Prosecutorial  Councils.  The  Councils  imposed  a 
number of disciplinary measures. There were no dismissals of judges or prosecutors.   

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  2017,  all  Kosovo 
judges and prosecutors submitted their assets declarations on time. 

Professionalism and competence 

The  President  of  Kosovo  appoints  judges  and  prosecutors  for  an  initial  three-year  term, 
following a proposal from the Kosovo Judicial and Kosovo Prosecutorial Councils respectively. 
The  recruitment  process  and  entry  exams  for  judges  and  prosecutors  are  organised  by  the 
Judicial and the Prosecutorial Councils respectively and are formally merit-based. However, the 
recruitment of judges in the reporting period raised doubts about the fairness of the process as 
the rules were altered in the middle of the selection process. Following criticism the process was 
cancelled and repeated. The recent selection process for presidents of the Supreme Court and the 
Court  of  Appeals  also  raised  concerns  in  this  regard.  Following  two  decisions  by  the 
Constitutional Court, the Judicial Council amended the regulation on selecting court presidents 
in  July  2017  to  comply  with  the  principles  of  meritocracy  and  transparency.  The  subsequent 
process  for  selecting  supervisory  judges  of  court  branches  showed  improvements.  The 
recruitment  system  has  to  become  fully  transparent  and  merit-based.  The  evaluation  and 
verification unit of the Judicial Council operates without a clear legal basis. This is in particular a 
concern as the unit has a profound impact on the selection processes and heavily interferes with 
the private life of judges.  

Merit-based  performance  criteria  and  an  evaluation  system  are  in  place.  The  Judicial  Council 
adopted  the  regulation  on  performance  evaluation  of  judges  in  April  2017.  The  Councils  are 
required  to  carry  out  performance  evaluations  for  prosecutors  and  judges  with  a  permanent 
mandate  every  third  year,  but  this  has  experienced  delays  in  the  Judicial  Council.  The 
Prosecutorial Council evaluated 81 prosecutors and the Judicial Council 66 judges in 2017. To 
date, most judges and prosecutors have passed the evaluation. 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. A system has yet to be implemented where judges and prosecutors undergo an effective 
and  systematic  evaluation  based  on  clear  criteria  and  with  the  results  feeding  into  their  career 
paths. 

Quality of justice 

In  February  2017,  the  Academy  of  Justice  succeeded  the  Kosovo  Judicial  Institute.  It  is 
responsible  for  delivering  initial  and  continuous  training  for  judges  and  prosecutors  and  their 
legal  and  administrative  staff.  The  training  is  based  on  the  annual  training  curricula  jointly 
prepared  by 
the  Academy  following  a 
comprehensive  needs  assessment.  The  Academy  also  prepared  an  orientation  training 

the  Judicial  and  Prosecutorial  Councils  and 

15 

 
 
 
programme for the recently appointed Kosovo Serb judges and prosecutors. There is an initial 12 
months training that both judges and prosecutors must take after they have been appointed.  

The  budget  allocated  to  the  Academy  of  Justice  increased  by  16  %  from  2016  to  2017.  
Continuous  training  remains  necessary,  in  particular  in  specialised  areas  such  as  economic 
crimes,  confiscation,  public  procurement  and  gender-based  violence, 
including  sexual 
harassment. Judicial education needs to play a more prominent role in the evaluation process. 

In 2017 Kosovo recruited 52 new judges bringing the overall number to 403, following a number 
of  resignations,  retirements  and  limited  recruitments  in  previous  years.  Twenty-one  new 
prosecutors were decreed in January 2018 bringing the overall number to 198.  There are 22.6 
judges and 11.1 prosecutors per 100 000 inhabitants. According to CEPEJ the European average 
is 21 judges/11 prosecutors per 100 000 inhabitants. 

The overall budget for the judiciary was EUR 46.4 million in 2017 (EUR 42.7 million in 2016) 
or 2.32 % of the general budget (2.38 % in 2016). 

E-justice  tools  remain  underdeveloped  and  new  IT  systems  in  the  different  justice  sector 
institutions  are  developed  in  a  fragmented  manner  without  any  overall  strategy  or  coordinated 
monitoring. The IT strategy of the Kosovo Judicial Council expired in 2017. There is a tracking 
mechanism  for  high-level  corruption  and  organised  crime  cases  which  currently  includes  42 
cases  and  should  be  expanded  to  include  all  high-level  corruption  and  organised  crime  cases. 
Preparations  to  establish  a  case  management  information  system  have  continued,  albeit  with 
delays. Greater commitment is needed to ensure the system's timely implementation in all courts 
and  prosecution  offices.  Work  on  a  central  criminal  records  registry  has  recently  started  and 
should  be  completed  as  soon  as  possible.  More  efforts  should  be  made  to  introduce  reliable 
statistical systems for the judiciary based on CEPEJ standard indicators. 

Measures  to  ensure  consistency  of  jurisprudence  are  limited  and  need  to  be  strengthened. 
Verdicts  are  often  not  electronically  accessible.  The  online  database  of  legislation  with 
jurisprudence  and  legal  commentaries  to  assist  judges  and  prosecutors  set  up  by  the  Kosovo 
Judicial Institute is still accessible via its website. However, the Institute has been succeeded by 
the Academy of Justice and the database has not been updated. It needs to be easily accessible 
and  continuously  updated  and  promoted  among  legal  practitioners.  This  remains  particularly 
relevant for the publication of Supreme Court decisions.  

A  mediation  system  has  been  operational  since  2008.  However,  it  suffers  from  low 
remuneration and a lack of funding which resulted in the closure of 3 of the 7 regional mediation 
centres. Public awareness or familiarity with alternative dispute resolution tools remains low, 
but  the  number  of  referred  and  solved  cases  has  increased  to  about  1600  in  2017.  Both  the 
mediation and notary systems need further strengthening.  

Efficiency 

Kosovo still needs to be more efficient in dealing with the backlog of cases. Courts face a high 
number of incoming criminal cases most of which are minor offence cases. This risks courts not 
being  able  to  dedicate  the  necessary  attention  to  high-profile  and  serious  cases.  The  judicial 
system needs to ensure proper follow-up of all high-profile cases, including cases handed over 
by the European Union Rule of Law Mission in Kosovo (EULEX). 

The  efficiency  of  the  judiciary  is  seriously  hampered  by  shortcomings  in  criminal  legislation. 
Many provisions in the Criminal Procedure Code are too cumbersome and formalistic to permit 
robust and successful investigation and prosecution. They should be amended (for example the 
time prescribed by law to investigate cases). Additionally, the low capacity and commitment of 
some judges to manage court proceedings, to sanction the parties causing delays and to ensure 

16 

 
 
 
the  presence  of  all  parties  at  sessions  leads  to  numerous  postponements  of  hearings  and 
unreasonably protracted criminal proceedings. These aspects and the tendency by the Appellate 
Court to send cases for retrial to the basic courts contribute to a lengthy average disposition time 
(i.e. the average time taken from filing indictment to a judgment). These delays in proceedings, 
in  combination  with  the  preference  for  detention  over  other  restrictive  measures,  have  led  to 
cases of overly long detention.  

The  organisation  of  courts  and resource allocation  rests  with  the  court presidents  and heads of 
prosecution offices. When necessary, judges and prosecutors can be temporarily transferred. This 
has  proven  to  be  an  effective  tool  to  bolster  understaffed  courts  and  prosecution  offices.  The 
number of legal staff directly assisting judges and prosecutors is considered insufficient. 

Domestic handling of war crimes 

The war crimes department within Kosovo's Special Prosecution Office continues its work but 
challenges persist. The Office's workload has increased significantly due to the downsizing and 
handover of EULEX cases to local prosecutors. There is an acute need for more training, more 
staff  and  more  translation  capacity.  Also,  the  lack  of  completed  war  crime  case  files,  the  low 
number  of  prosecutors  (two)  working  on  war  crimes,  and  insufficient  cooperation  between 
Kosovo's  and  Serbia's  prosecution  offices  are  jeopardising  access  to  justice,  including  for 
survivors  of  conflict  related  sexual  violence.  In  cases  where  the  suspects  are  ethnic  Serbs, 
residing mainly in Serbia, mutual legal cooperation with Serbia remains effectively non-existent. 
This  applies  to  cases  the  Kosovo  prosecution  tries  to  investigate  and  cases  the  Serbian 
prosecution tries to investigate. Significant concerns remain about the willingness to investigate, 
prosecute  and  judge  war  crimes  cases  involving  former  Kosovo  Liberation  Army  (KLA) 
members.  The  ongoing  preferential  treatment  of  convicted  war  criminals  in  Kosovo’s  prisons 
risks  affecting  witnesses'  willingness  to  cooperate  in  investigations.  The  recent  pardoning  of 
three ex-KLA members by the President also raised serious concerns. 

The Kosovo Specialist Chambers, aimed to judge allegations of international crimes committed 
during and after the conflict in Kosovo as laid out in the 2011 Council of Europe Parliamentary 
Assembly  report,  have  been  set  up.  In  December  2017,  43  Members  of  the  Assembly  mostly 
belonging  to  the  government  coalition  launched  an  initiative  to  abrogate  the  Law  on  the 
Specialist  Chambers  and  the  Specialist  Prosecutor’s  Office.  This  initiative,  which  triggered 
immediate,  strong  and  negative  reactions  from  both  the  international  community  and  Kosovo 
media and civil society, raised serious concerns about Kosovo political leaders' commitment to 
prosecute  and  judge  the  aforementioned  crimes  and  honour  Kosovo's  related  international 
obligations. 

In November 2017, the government established the secretariat of the Government Commission 
on  Recognition  and  Verification  of  the  Status  of  Sexual  Violence  Victims  during  the  Conflict 
and allocated budgetary resources for victim's pensions. Since February 2018 victims can apply 
for recognition and verification to receive individual benefits. The timeframe of the relevant law 
excludes those who suffered conflict-related sexual violence after 20 June 1999.  

The Inter-Ministerial Working Group on Dealing with the Past and Reconciliation, established to 
deal with gross violations of human rights and international humanitarian law during Kosovo's 
conflict, has failed to develop the strategy on transitional justice and has effectively stopped its 
work.  The  President  of  Kosovo  has  initiated  the  establishment  of  a  Truth  and  Reconciliation 
Commission. The authorities need to develop a comprehensive approach to dealing with the past 
linking  the  work  on  the  Truth  and  Reconciliation  Commission  with  the  government's 
commitment  for  a  strategy  on  dealing  with  the  past  and  other  transitional  justice  initiatives. 
These processes need to be locally and nationally owned, as well as inclusive, gender, and victim 
sensitive. 

17 

 
 
 
Fight against corruption 

Kosovo is at an early stage/has some level of preparation in the fight against corruption. In the 
reporting  period,  some  progress  has  been  made  on  a  track  record  for  the  investigation  and 
prosecution  of  high-level  cases,  including  final  convictions.  Progress  was  also  made  on  the 
preliminary  confiscation  of  assets  although  final  confiscations  remain  low.  Corruption  is 
widespread and remains an issue of concern. Concerted efforts are needed to tackle this problem 
in a comprehensive and strategic manner. As the recommendations in the 2016 report have only 
been partly addressed, they remain valid. In the coming year, Kosovo should in particular: 

  with a view to continue progress on the track record, 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 investigations, confiscate assets 
and effectively protect witnesses; 

  amend the legal framework (on the suspension and removal of public officials indicted for 
and convicted of corruption,  on declarations of assets and on whistle-blowers) bringing it in line 
with European standards; 

  ensure  that  the  financial  reports  and  campaign  disclosure  reports  of  political  parties  are 
consistently published and audited, and sanctions applied for violations of relevant laws. Amend 
the legal framework governing political party and campaign financing on the basis of an opinion 
of the Venice Commission to ensure effective enforcement, accountability and transparency. 

Track record 

Following the establishment in 2015 of a multidisciplinary team to effectively coordinate efforts 
to  deal  with  high-level  corruption  cases  and  high-profile  serious  and  organised  crime,  42 
investigations  resulted  in  31  indictments  out  of  which  24  for  corruption  and  7  for  organised 
crime, including a number of political and senior public officials. There have been 7 convictions 
for corruption-related offenses. The IT tracking mechanism should be extended to all high-level 
corruption  and  organised  crime  cases  in  order  to  build  a  universal  track  record  for  proactive 
investigation, prosecution, final convictions and confiscations of criminal assets. 

Asset  confiscations  have  increased  but  final  confiscations  remain  low.  During  the  reporting 
period 26 835 assets with a value of close to EUR 11 million were frozen and seized, while 25 
assets were finally confiscated, with an approximated value of close to EUR 1.9 million.  

Since  it  was  set  up,  the  Anti-Corruption  Agency  has  sent  more  than  700  cases  to  the 
prosecution.  Based  on  more  than  80  referrals  in  2017,  the  prosecution has  filed  indictments  in 
less than 30 cases. The reports that the Agency submits to the prosecution need to be of better 
quality, and the prosecution needs to improve its capacity and willingness to pursue cases.  

In 2017, of 4 498 officials obliged to submit annual  declarations of assets, only 77 (less than 
2 %)  failed  to  do  so.  The  Anti-Corruption  Agency  sent  50  cases  against  50  people  for 
prosecution. Most concerned non-reporting or false reporting of assets, movable property higher 
than  EUR  3  000  and  possession  of  shares  in  commercial  companies  and  income.  The  Agency 
still  lacks  tools  and  resources  to  verify  asset  declarations.  These  checks  would  require  closer 
cooperation  and  the  exchange  of  data  with  the  police,  the  tax  administration,  the  Financial 
Intelligence Unit, the land registry and municipal authorities. 

In 2017, the Agency handled more than 150 cases of conflicts of interest, of which fewer than 5 
cases were submitted for the minor offences procedure and fewer than 5 cases were sent to the 
prosecution  service  for  criminal  investigation.  In  more  than  100  cases,  the  conflict  of  interest 
was  prevented  or  the  Agency  gave  an  opinion  to  the  institutions  responsible.  Most  cases  dealt 
with local government officials.  

18 

 
 
 
In  2017,  the  Agency  handled  more  than  40  cases  on  prevention  of  corruption  in  public 
procurement and issued more than 20 opinions, of which around 20 % were not considered.  

Officials from the north of Kosovo did not meet their obligations regarding the submission of 
asset  declarations  to  the  Anti-Corruption  Agency.  The  situation  in  the  north  of  Kosovo  with 
regards to corruption poses particular challenges for law enforcement agencies.  

Transparency and accountability of funding for political parties and campaign financing need to 
be strengthened. Reports of political parties' finances are still not consistently and fully published 
and  parliamentary  and  local  elections  campaigns  were  conducted  without  any  meaningful 
financial disclosures by the parties. Independent audits of the political parties’ finances from 
2013  to  2016  were  carried  out  -  with  much  delay  -  during  the  reporting  period.    The  auditors 
found that the political parties had significant amounts of unverifiable income and expenditures, 
persistent violation of financial accounting, internal control and reporting standards and showed 
instances  of  being  in  violation  of  the  tax  laws  and  the  Law  on  the  Prevention  of  Money 
Laundering. The Central Election Commission and competent authorities should investigate and 
ensure that legal requirements are effectively enforced and that these audit reports are properly 
followed up in line with the provisions and sanctions of the law. Political parties should submit 
their financial reports for 2017 by the legal deadline, which should then be audited properly and 
in due time.  

Further  to  the  assessments  carried  out  to  determine  the  risk  of  corruption  –  which  assess 
weaknesses of the legal/institutional set-up of various sectors – in the health, education, energy, 
and  mining  sectors,  corruption  risk  assessments  of  the  public  procurement,  judicial  and 
prosecution systems were carried out. Steps need to be taken to effectively address corruption in 
these  particularly  prone  sectors.  There  is  still  no  policy  to  prevent  corruption  in  the  private 
sector. 

Institutional framework 

The  anti-corruption institutions  in  Kosovo  are  not  well  integrated, their  remits  overlap  and  the 
division of tasks needs to be clarified. Kosovo needs to strengthen inter-institutional coordination 
mechanisms  and  bodies  and  ensure  that  the  institutions  have  access  to  the  relevant  databases 
(e.g. e-procurement). 

Prevention measures 

The  main  body  for  prevention  remains  the  independent  and  specialised  Anti-Corruption 
Agency. It is tasked to conduct administrative investigations, check asset declarations, monitor 
conflicts of interest and public procurement activities and improve awareness. Other bodies with 
inspecting  and  auditing  powers  are  the  Auditor  General,  the  tax  authorities  the  customs 
authorities and the Financial Intelligence Unit.   

Law enforcement 

Kosovo  has  specialised  institutions  for  fighting  corruption:  the  National  Coordinator  against 
Economic Crime, the Anti-Corruption Coordinator appointed by the Chief State Prosecutor and 
the  Police  Directorate  for  the  Investigation  of  Economic  Crimes  and  Corruption,  which 
maintains anti-corruption units at police stations and headquarters. Each basic prosecution office 
has an anti-corruption prosecutor, and two prosecutors are appointed by the Special Prosecutor to 
handle high-level corruption cases. These cases are dealt with by the serious crime departments 
of the Kosovo Basic Courts. 

Investigations and indictments need to be of higher quality, and cases need to be better presented 
before the courts.  The Special Prosecution Office does not have enough specialised staff with 
the required level of training and competence to deal with financial cases, including procurement 

19 

 
 
 
cases.  In  order  to  increase  the  number  of  prosecutors  in  the  Special  Prosecution  Office 
investigating and prosecuting high-level corruption cases, the amended Law on State Prosecutor 
was  adopted.  Financial  investigations  are  still  not  systematically  launched  in  cases  of 
corruption and organised crime. Kosovo needs to apply the concept of financial investigations in 
line with Financial Action Task Force (FATF) standards. Police, prosecutors and judges need to 
continue receiving specialised training in the fight against corruption, including confiscation of 
assets and money laundering.  

Legal framework  

Criminal law provisions on corruption are generally in line with relevant European standards, the 
exception being provisions on confiscation of proceeds from crime, which are too cumbersome 
and complex to use, and contain unreasonably short deadlines for investigations.  The  Law on 
Prevention of Conflict of Interest was revised, to bring it more in line with European standards. 
Legislation making the suspension and removal of public officials respectively indicted and 
convicted for corruption mandatory has still not been adopted.  

A  comprehensive  review  of  the  current  legislation  on  political  party  financing  should  be 
carried  out  on  the  basis  of  wide  public  consultations  and  in  accordance  with  international  best 
practices and standards, particularly those of the Venice Commission. Such a review should aim 
at ensuring transparency, accountability and effective enforcement and should define sanctions.  

Kosovo should also implement measures allowing effective investigation of unjustified wealth. 
There  is  still  no  efficient  system  in  place  for  the  declaration,  origin  and  control  of  the 
property  of  senior  public  officials  and  the  declaration,  origin  and  control  of  gifts  for  all 
official  persons.  The  amendments  to  both  laws  should  be  finalised  in  order  to  give  the  Anti-
Corruption Agency more robust powers to verify asset declarations and to make the declaration 
system more effective in tackling graft.  Amending legislation is needed to allow the burden of 
proof  to  be  reversed  for  asset  confiscation,  separating  the  money  laundering  offence  from  the 
predicate  offence  (the  underlying  criminal  activity  which  generated  the  money  laundered)  and 
prohibiting the transfer of criminal assets to third persons. 

The current Law on Protection of Informants has still not been brought in line with international 
standards. Whistle-blowing mechanisms and protection requirements need to be strengthened in 
law and in practice. 

Strategic framework 

Inadequate  financing  seriously  hampered  implementation  of  the  2013-2017  anti-corruption 
strategy  and  the  revised  anti-corruption  action  plan  for  the  prosecution  service.  They  lacked 
measurable  impact  indicators.  Although  action  plans  were  put  in  place  to  fight  corruption  in 
vulnerable  sectors  such  as  customs,  the  police,  and  the  tax  administration,  little  has  been 
achieved in practice.   

The  anti-corruption  strategy  and  action  plan  for  2018-2022  were  drafted  after  a  consultation 
process  and  adopted  in  March  2018.  The  government  still  needs  to  demonstrate  genuine 
leadership,  the  ability  to  practice  advance  planning  and  a  willingness  to  allocate  adequate 
resources to the fight against corruption. Their credibility will depend on the resources allocated 
to  implementing  them.  A  monitoring  mechanism  should  be  established  to  regularly  assess  the 
impact of the strategy and action plan. 

Fundamental rights 

The legal framework broadly guarantees the protection of human and fundamental rights in line 
with European standards. However, additional efforts are needed to enforce it. Implementation of 

20 

 
 
 
human  rights  strategies  and  legislation  is  often  undermined  by  inadequate  financial  and  other 
resources, particularly at local level, limited political prioritisation and lack of coordination.  

In the coming year, Kosovo should in particular: 

  reinvigorate  the  Inter-Ministerial  Coordination  Group  for  Human  Rights  as  main 
coordinating  body  for  human  rights  and  reinvigorate  the  Inter-Ministerial  Commission  for 
Return  and  Community  Affairs  to  improve  the  implementation  of  human  rights  legislation, 
including the rights of persons belonging to minorities and displaced persons;  

  strengthen  the  implementation  of  the  Law  on  Gender  Equality  and  the  strategy  and  action 
plan on protection against domestic violence; 

  ensure that the legal framework on the rights of the child is duly implemented; for the draft 
Law  on  Child  Protection,  envisage  a  budget  line,  ensure  proper  accountability  of  relevant 
institutions and actors, and integration of the child protection systems at both central and local 
level; 

  advance the protection of cultural heritage by fully implementing and enforcing legislation 
addressing illegal construction. Adopt the Laws on Cultural Heritage and Religious Freedom and 
ensure the active functioning of the Implementation and Monitoring Council; 

  ensure  the  implementation  of  the  strategy  and  action  plan  for  the  inclusion  of  Roma  and 
Askhali  including the allocated funding. 

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

On  the  promotion  and  enforcement  of  human  rights,  effective  implementation  of  human 
rights  legislation  remains  a  challenge.  The  Advisory  Office  for  Good  Governance  lacks  the 
necessary  resources  and  capacity  to  manage  its  workload  effectively.  As  a  result,  it  has  been 
unable to  perform  monitoring  and  coordination duties  for  a number  of  important  human  rights 
strategies,  and  it  has  not  been  able  to  monitor  the  implementation  of  recommendations  by  the 
Office  of  the  Ombudsperson.  The  authorities  should  assess  the  institutional  capacities  of  the 
Advisory Office and evaluate how it can meet the requirements to fulfil its mandate. The Inter-
Ministerial  Coordination  Group  for  Human  Rights,  established  in  May  2016  as  the  main 
coordinating body for human rights, held its first and only meeting in February 2017. Stronger 
political  leadership  and  commitment  are  required  to  ensure  that  the  Group  delivers  on  its 
mandate.  There  has  been  no  significant  progress  in  the  development  of  an  overarching  human 
rights strategy incorporating the twelve human rights-related strategies.  

On the prevention of torture and ill treatment, the situation remains broadly satisfactory and 
there  is  a  sustained  commitment  by  the  Kosovo  authorities  to  prevent  such  practices  in  all 
circumstances. However, there have been a number of complaints and allegations about incorrect 
treatment  of  prisoners  by  correctional  staff.  Following  the  establishment  of  the  National 
Preventive  Mechanism  against  Torture  in  2016,  the  relevant  staff  in  the  Ombudsperson 
Institution  has  been  extensively  trained  and  has  started  to  review  and  investigate  complaints 
received.  Kosovo  should  further  strengthen  ongoing  efforts  to  provide  adequate  medical  and 
psychological  support  and  rehabilitation  to  all  victims  of  torture  and  other  ill-treatment  in 
Kosovo.  There  are  ongoing  efforts  to  address  recommendations  issued  by  the  European 
Committee  for  the  Prevention  of  Torture and  Inhuman  or  Degrading Treatment  or  Punishment 
(see prison system). 

21 

 
 
 
In the prison system, compliance has continued with the UN Standard Minimum Rules for the 
Treatment of Prisoners and European Prison Rules. Material conditions vary widely among the 
different  establishments  of  the  Kosovo  Correctional  Service.  Overcrowding  is  generally  not  a 
problem.  However,  inadequate  staffing  levels  remain  a  concern.  There is  a  lack  of  meaningful 
activities  for  inmates,  such  as  work  and  other  rehabilitative  programmes.  Efforts  to  establish  a 
prisoner-centred  integrated  sentence  management  system  should  continue.  There  has  been  no 
progress in addressing concerns with housing detainees with convicted prisoners at the Mitrovica 
Detention  Centre.  Work  has  begun  on  revising  the  Law  on  Disciplinary  Procedures  and 
Measures  for  Inmates  in  compliance  with  international  prison  standards.  Visible  progress  has 
been  noted  on  the  transfer  of  prison  healthcare  from  the  Ministry  of  Justice  to  the  Health 
Ministry.  Political  pressure and interference continue to affect the decision-making  process for 
the  categorisation  of  prisoners.  This  allows  for  preferential  treatment  and  makes  it  easier  to 
suspend  sentences  for  high-profile  prisoners.  The  authorities  need  to  ensure  merit-based 
recruitment for high-level positions within the Correctional Service. 

No  progress  has  been  made  during  the  reporting  period  on  data  protection.    The  National 
Agency on the Protection of Personal Data continues to be run provisionally. Since 2016, when 
the mandate of all five data protection supervisors expired, the activities of the Agency remain 
limited.  This  concerns  inter  alia  monitoring  the  compliance  with  the  data  protection  law,  and 
carrying  out  inspections.  The  law  on  data  protection  needs  to  be  amended  to  address 
shortcomings in the system and to further align it with the new EU data protection framework. 

Legal  provisions  on  freedom  of  thought,  conscience  and  religion  are  in  place  and  religious 
leaders of all faiths continue to interact. However, the draft law on amending and supplementing 
the  Law  on  Religious  Freedom  needs  to  be  adopted  and  include  the  recommendation  by  the 
Venice  Commission.  The  Serbian  Orthodox  seminary  in  Prizren  continues  to  function  well.  In 
May 2016, the Constitutional Court issued a final judgement on the land dispute case involving 
the  Visoki Dečani  monastery  and Deçan  /  Dečane  municipality  and  confirmed  the  monastery's 
legal  ownership  of  the  land.  However,  the  judgement  remains  unimplemented  and  local 
resistance,  including  overt  defiance  by  municipal  officials,  continues  to  raise  concerns.  In 
September 2017, the Appellate Court upheld the dismissal by Pristina Basic Court in 2015 of the 
lawsuit brought by the University of Pristina in 2012, requesting the demolition of the unfinished 
church  of  Christ  the  Saviour  and  the  transfer  of  the  land  back  to  the  university.  Municipal 
authorities in Pristina allocated land for a graveyard for members of the Protestant community. 
They  should  continue  to  demonstrate  full  respect  for  the  rights  of  religious  communities  as 
stipulated by the law.  

Freedom of expression  

Kosovo has some level of preparation in the area of freedom of expression. There has been no 
progress  in  this  area  over  the  reporting  period.  Freedom  of  expression  is  enshrined  in  the 
Constitution  and  Kosovo  benefits  from  a  pluralistic  and  lively  media  environment.  However, 
threats  and  attacks  against  journalists  have  continued  and  developments  on  other  issues  have 
mainly  stagnated.  The  Assembly  showed  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.  Media  started  publishing  the  impressum  (publisher  data).  The  implementation  of 
legislation remains a challenge, in particular the law on the public broadcaster. Kosovo has done 
little to address the 2016 recommendations.  

As the recommendations of the 2016 report have not been addressed, they remain valid. In the 
coming year Kosovo should in particular:  

22 

 
 
 
→  ensure  that  cases  of  physical  attacks  against  journalists  and  other  forms  of  pressure  are 
promptly investigated and ruled on by a judge;  

→ ensure a sustainable financial solution for the public broadcaster;  

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

Intimidation of journalists  

The number of threats and attacks against journalists has increased. According to the Association 
of Journalists of Kosovo, in 2017 alone 24 incidents were reported, twice the number compared 
to the previous reporting period. Among the cases, 2 editors-in-chief have received death threats 
and a journalist who was physically attacked was on a later occasion threatened by a member of 
parliament.  Authorities  have  opened  investigations  into  all  these  cases  but  in  general,  these 
investigations  are  slow  and  there  were  only  2  final  convictions  in  2017  regarding  threats  and 
attacks  in  previous  years.  A  more  systematic  response,  including  prompt  investigation  and  a 
timely  judgment,  is  needed  to  strengthen  the  protection  of  journalists.  There  must  be  zero 
tolerance for threats or attacks against media.  

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. 
However,  the  legislative  and  institutional  framework  in  this  area  remains  fragmented  and 
ineffective. The right of journalists to conscientious objection and the public’s right to reply and 
correction  remain  unregulated.  Police,  prosecutors  and  judges  need  proper  training  in  the 
standards  established  by  the  Council  of  Europe  and  the  European  Court  of  Human  Rights  for 
dealing  with  journalistic  sources  and  materials.  The  right  of  access  to  public  information  is 
undermined by the authorities’ fragmented implementation of relevant legislation.  

Implementation of legislation/institutions  

Effective  implementation  of  legislation  remains  a  challenge,  notably  the  law  on  the  public 
broadcaster.  Ensuring  ethical  standards  is  also  proving  difficult.  The  Independent  Media 
Commission has still not started to make preparations for the digital switchover. It monitors the 
content of audio-visual media but lags behind in initiating cases and implementing fines for legal 
breaches.  It  is  facing  difficulties  in  meeting  its  financial  obligations,  including  capital 
investment.  

Neither the Independent Media Commission nor the Press Council of Kosovo monitors freedom 
of expression online. 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. 

Public service broadcaster  

The public broadcaster, Radio Television of Kosovo (RTK), remains directly state-funded.  This 
continues  to  undermine  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.  In  October  2017,  the  Assembly 
indicated its intention to adopt a completely new law on the RTK, following a European model, 
though plans remain unclear. A solution for the premises of the public broadcaster is yet to be 
found. The RTK Board is complete, but its performance needs to be improved. The number of 
employees has increased through the years, with recruitment procedures being criticised by the 
trade unions as non-transparent.  

23 

 
 
 
 
 
Economic factors  

Media  outlets  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  fact  that  media  started 
publishing the impressum (publisher data) in early 2017 is nevertheless a positive development. 
The lack of a strong private 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  

Associations  of  journalists  in  Kosovo  have  been  active  in  condemning  incidents  and  threats 
against  journalists.  They  have  also  increased  cooperation  with  the  Kosovo  Police  and 
Prosecution services on following up on these cases. Their involvement in discussing legislative 
initiatives  on  media  issues  remains  limited.  The  journalist  associations  largely  remain  divided 
along  ethnic  lines  and  are  considered  weak.  Journalists  often  work  without  contracts,  which 
makes  them  vulnerable  to  corruption  and  prone  to  self-censorship.  Protection  of  professional 
standards  in  journalism  is  governed  by  codes  of  ethics,  but  neither  the  Independent  Media 
Commission nor the Press Council has brought any cases for breach of the code. 

Freedom of assembly and association is guaranteed by the Constitution and citizens have been 
making  use  of  their  rights  by  demonstrating  and  protesting  against  the  different  levels  of 
government. Individuals and legal entities have the right to establish an association without the 
need  to  register  the  organisation,  but  most  organisations  decide  to  register  to  gain  legal 
personality.   

On property rights, in November 2016, the former Kosovo Property Agency, mandated to deal 
with the resolution of conflict-related property claims, was transformed into the Kosovo Property 
Comparison  and Verification  Agency (KPCVA). A strategy for property rights  was adopted in 
January  2017,  but  implementation  remains  inadequate.    Concerns  remain  about  the  lack  of 
implementation  of  the  compensation  scheme  for  owners  of  former  socially  owned  residential 
property  affected  by  the  conflict.  Another  challenging  issue  is  the  illegal  re-occupation  of 
properties, as the Property Agency has no authority to act on re-occupation following a second 
eviction. The Ombudsperson has recommended amending the Law on the KPCVA to ensure its 
compliance  with  the  Kosovo  Constitution,  European  and  international  human  rights  standards 
and  to  allow  for  multiple  evictions  to  be  carried  out  by  the  Agency.  There  are  also  concerns 
about  fraudulent  property  transactions  and  illegal  transfers  of  ownership  of  properties  mainly 
belonging to displaced persons. Following the discovery of 350 000 constructions built without a 
permit,  the  government  is  revising  its  policy  and  the  Law  on  the  Treatment  of  Constructions 
without  Permit.  The  long-awaited  strategy  on  legalising  informal  settlements  has  not  yet  been 
adopted. Municipal authorities have made limited progress in adopting three-year social housing 
plans,  thus  preventing  thus  the  central  authorities  from  concluding  a  Kosovo-wide  strategy  on 
social housing. 

On non-discrimination, some progress has been noted, given that in 2017 Kosovo adopted the 
Regulation on Institutional Mechanisms for Protection from Discrimination in Government and 
Municipalities. This Regulation aims to define the duties and responsibilities of the relevant staff 
at central and municipal level and define their coordination, reporting and cooperation with other 
institutional  mechanisms  for  protection  from  discrimination.  The  tracking  mechanism  of  the 
Prosecutorial Council still needs to be extended to cover cases of all forms of discrimination, not 
only those based on ethnicity.  

24 

 
 
 
Kosovo’s  legal  framework  for  equality  between  women  and  men  is  broadly  in  line  with 
international  standards.  However,  women  often  face  gender-based  violence  and  high 
discrimination  in  the  labour  market,  the  judiciary  and  the  police.  Women  are  severely 
underrepresented  in  decision-making  in  both  the  central  government  and  the  municipalities. 
Women  also  continue  to  face  challenges  with  property  ownership  and  inheritance.  During  the 
reporting period, the government adopted two remaining secondary laws stemming from the Law 
on Gender Equality. However, effective implementation of the Law is lagging behind. The 2016-
2020 strategy and action plan on protection against domestic violence were adopted in December 
2016  but  their  implementation  is  weak.  The  National  Coordinator  for  the  Protection  from 
Domestic Violence was appointed in January 2018. The role of the Agency for Gender Equality 
and the role of gender equality officers in ministries and municipalities in policy-making need to 
be  strengthened.  Gender-disaggregated  data  is  lacking,  and  gender  mainstreaming  in  laws  and 
policies remains poor. On gender-based violence, further efforts are needed to address the weak 
coordination  between  the  police,  prosecutors  and  other  players  and  to  address  the  inadequate 
monitoring  by  the  police  and  the  courts  of  protection  orders  in  cases  of  domestic  violence.  A 
legal definition of domestic violence and sexual harassment should be introduced in the Criminal 
Code.  It  is  also  imperative  to  ensure  that  shelters  for  victims  of  gender-based  violence  and 
trafficking in human beings are sustainably funded and that measures are taken for the effective 
reintegration of victims.  

On  the  rights  of  the  child,  Kosovo’s  legal  framework  is  largely  in  line  with  international 
standards, but implementation remains limited. A child protection law is currently being drafted. 
Authorities  must  ensure  that  the  law  is  followed  up  with  an  adequate  budget  and  institutional 
ownership.  Data  collection  and  management  remain  a  challenge  for  many  child-related  issues. 
Child labour continues to be a concern. Efforts to prevent all forms of violence against children 
are insufficient, and the legal framework does not explicitly prohibit corporal punishment. Foster 
care  must  be  extended  in  all  the  municipalities.  The  new  Educational  Correctional  Facility 
inaugurated  in  September  2017  should  help  provide  further  opportunities  for  juveniles  in 
detention. Children with disabilities face several limitations of their rights, especially access to 
education  and  access  to  adequate  intervention  services.  Institutions  should  increase  financial 
support to day-care rehabilitation centres and make more efforts to effectively integrate children 
with disabilities into educational institutions. 

Little progress has been made on the rights of persons with disabilities and their integration in 
society  remains  a  challenge  due  to  limited  support,  inadequate  health  services,  and  poor 
accessibility  to  existing  services.  Physical  access  to  public  buildings  and  transport  remains 
limited  for  persons  with  disabilities.  Inclusive  planning  and  budgeting  for  appropriate 
interventions and service delivery are undermined by the lack of accurate data on persons with 
disabilities.  The  legal  framework  on  mental  health  is  also  incomplete.  Implementation  of  the 
Law on Blind Persons and the Law on the Status of the Rights of Persons with Paraplegia and 
Tetraplegia is limited. The same applies for the 2013-2023 strategy on the rights of persons with 
disabilities. In December 2017, the government adopted the 2018-2020 action plan for the rights 
of persons with disabilities. The Kosovo Disability Forum became operational in January 2017. 
The National Disability Council continues to underperform. It should meet regularly and take a 
more proactive role to improve the wellbeing and promote the right of persons with disabilities.  

On the rights of lesbian, gay, bisexual, transgender and intersex (LGBTI) persons,  Kosovo's 
Constitution  protects  against  discrimination  based  on  sexual  orientation,  and  a  2015  anti-
discrimination law covers both sexual orientation and gender identity. However, further efforts 
are  necessary  to  ensure  their  adequate  implementation,  including  through  the  second  LGBTI 
action plan. In October 2017, the first ever official LGBTI Pride parade was organised in Pristina 
and  was  attended  by  senior  representatives  of  the  authorities.  Despite  these  positive 

25 

 
 
 
developments, prejudice and stereotyping remain widespread in society and in the media. More 
efforts  are  needed  to  counter  intolerance  towards  LGBTI  persons,  as  many  remain  at  risk  of 
discrimination  and  abuse.  Cases  of  hate  crime  against  LGBTI  persons  need  to  be  properly 
investigated  and  brought  to  court.  The  legal  framework  for  legal  gender  recognition  should  be 
improved. 

Issues of labour and trade union rights are covered in section Social policy and employment. 

On  procedural  rights,  persons  suspected,  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.  The  Law  on  Crime  Victim  Compensation  is 
broadly  aligned  with  the  EU  Directive  on  Compensation  for  Crime  Victims.  A  crime  victim 
compensation  programme  was  established  in  2016.  The  commission  verifying  requests  for 
compensation has so far received seven requests of which two were approved, two were rejected 
and three are still being processed. 

Kosovo  has  an  adequate  institutional  and  legal  framework  for  the  rights  and  protection  of 
minorities, including strategies and action plans. However, implementation is weak and there is 
a  large  dependency  on  international  donors  for  support  to  minority  communities.  The 
institutional  set-up  and  mechanisms  for  protecting  minority  communities  are  in  place  but  lack 
coordination.  The  Municipal  Communities'  Safety  Councils  still  need  to  be  established  in  the 
north  of  Kosovo  to  further  strengthen  the  protection  of  minority  communities.  The  technical 
working  group,  set  up  to  implement  recommendations  of  the  Council  of  Europe's  Framework 
Convention for National Minorities did not convene during the reporting period. Representation 
of  minority  communities  in  the  public  administration  has  slightly  improved,  but  the  minimum 
threshold required by the Law on Civil Service has yet to be fully achieved. In October 2017, the 
new head of the Office of Community Affairs was appointed. It is important that this Office is 
fully involved in policy-making on the protection of minorities.  

Stronger  support  by  the  government  to  mainstream  language  policies  is  still  needed. 
Implementation  of  the  Law  on  Languages  is  still  inadequate  despite  the  efforts  made  by  the 
Office  of  the  Language  Commissioner.  The  government  has  not  yet  approved  the  strategy  to 
promote  and  protect  language  rights.  A  more  integrated  and  inclusive  education  system  with 
opportunities  to  attend classes  both  in the Albanian and Serbian  languages  as  well as  minority 
languages, where relevant, could contribute to better understanding between communities. 

The overall security situation for minority communities remains relatively stable. However, there 
are  recurring  incidents  of  property  theft  and  burglary,  which  frequently  affect  Kosovo  Serb 
returnees  in  western  Kosovo  and  other  minority  communities  in  other  municipalities.  The 
insufficient follow-up by judicial authorities increases insecurity and hampers the return process. 
Law enforcement and  judicial  authorities should take urgent  action to bring the perpetrators to 
justice. Overall, continued efforts are required to properly and consistently address incitement to 
hatred  and  hate  crimes  against  minorities.  Increased  recruitment  of  minority  police  officers 
would contribute to an enhanced sense of security among the affected communities. 

The  pace  of  return  and  reintegration  of  refugees  and  displaced  persons  continues  to  slacken, 
with  498  individuals  returning  in  2017.  The  non-settlement  of  property  claims  by  displaced 
persons  is  an  important  factor  explaining  why  there  is  no  enabling  environment  for  returning. 
The  Kosovo  Property  Comparison  and  Verification  Agency  and  the  Ministry  for  Communities 
and  Return  have  to  improve  their  cooperation  to  facilitate  property  restitution  for  the  return 

26 

 
 
 
process. The Constitutional Court decisions on property cases must be fully observed and swiftly 
implemented.  

The situation of Roma and Ashkali communities remains difficult. The new strategy and action 
plan for 2017-2021 for their inclusion in Kosovo society was not adopted until April 2017, 16 
months  after  the  previous  strategy  expired.  Just  before  its  adoption  by  the  government,  the 
strategy  was  amended  to  exclude  from  its  scope  the  Egyptian  community.  The  European 
Commission  and  civil  society  organisations  have  expressed  concern  that  this  could  lead  to  a 
further marginalisation of Egyptian community members. Coordination mechanisms at all levels 
as foreseen in the strategy need to be fully operational and politically supported.   

Low  completion  rates  of  compulsory  education  are  frequent  for  Roma  and  Ashkali  children. 
Enrolment in pre-primary education has increased. The number of students attending college or 
university remains very low. Learning centres continue to play an important role in reducing the 
number  of  drop-outs.  The  sustainability  of  additional  educational  support  for  vulnerable 
communities  needs  to  be  ensured.  Continued  efforts  are  needed  to  train,  accredit  and  integrate 
teaching staff from these communities into the education system. Access to public health is free 
of charge; however, it covers only very basic needs. A budget needs to be allocated in order to 
meet the housing needs of the communities, and measures to include them into the labour market 
need  to  be  taken.  Kosovo  has  one  of  the  highest  rates  in  the  region  of  Roma  informal  work. 
Efforts need to be undertaken to prevent widespread child marriage affecting especially girls and 
to  prevent  child  labour.  There  are  still  persons  who  face  difficulties  with  civil  documentation 
often linked to return or repatriation.  

On cultural rights, relations between the Kosovo authorities and the Serbian Orthodox Church 
were strained during the reporting period. Cooperation with the Implementation and Monitoring 
Council  ceased,  although  a  recent  initiative  to  revitalise  it  is  promising.  The  government 
established the IMC secretariat. The Religious and Cultural Heritage Unit of the Kosovo Police 
fulfils its mandate in four regions to protect Serbian religious and cultural heritage sites. Some 
minor incidents of petty theft and vandalism at cultural and religious sites were reported. 

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,  the  terms  of  this  support  need  to  be  clarified  to  ensure  that  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.  

Kosovo authorities have committed to reinstate all the substantive provisions included in Annex 
V of the Comprehensive Status Settlement Proposal regarding Serbian heritage in Kosovo. The 
government  proactively  liaised  with  the  EU  in  drafting  the  cultural  heritage  strategy  for  2017-
2027  and  adopted  it  in  December  2016.  The  same  is  expected  for  the  drafting  of  the  law  on 
amending and supplementing the Law on Cultural Heritage, which should accurately reflect all 
of Kosovo's commitments under Annex V of the Proposal. 

The  Village  Council  of  Velika  Hoča  /  Hoçë  e  Madhe  and  the  Cultural  Heritage  Council  in 
Prizren are operating in accordance with the law. The government is  cooperating more closely 
with  civil  society  in  managing  of  cultural  heritage.  Incidents  of  cultural  heritage  being 
demolished illegally continued, and sanctions against perpetrators have not been enforced. The 
task force set up in 2014 to deal with illegal construction in Prizren has not met for over a year. 
However, in 2017 the Ministry of Culture initiated interventions to preserve monuments at risk. 
More effort is still needed to ensure cultural heritage throughout Kosovo is adequately protected 
and managed. 

27 

 
 
 
2.2.2 Justice, freedom and security 

Kosovo  is  at  an  early  stage/some  level  of  preparation  in  this  area.  Some  progress  has  been 
made,  especially  in  the fight  against  terrorism,  including  measures to  tackle  violent  extremism 
and radicalisation and in preventing terrorist fighters from joining conflicts abroad. In the fight 
against  organised  crime,  there  is  more  preliminary  confiscation  of  assets.  However,  final 
confiscations  of  assets  remain  low.  Authorities  have  made  progress  in  managing  regular  and 
irregular migration. Further efforts are needed.  

Kosovo has  only  partly fulfilled the recommendations  of the 2016 report, namely those on the 
intelligence-led policing approach and the results on the track record. The recommendations on 
confiscation-related  legislation  and  the  expanding  of  the  tracking  mechanism  to  all  organised 
crime cases have yet to be addressed.  

In the following year, Kosovo should in particular: 

financial 

  develop a strategic approach towards financial investigations, including by (i) adopting the 
financial 
FATF  concept  on 
investigations  when  dealing  with  organised  crime,  terrorism,  money  laundering  and  serious 
corruption  cases;  (iii)  starting  financial  investigations  from  the  very  start  of  the  criminal 
investigation;  and  (iv)  applying  a  multidisciplinary  and  proactive  approach  to  financial 
investigations; 

(ii)  automatically 

investigations; 

implementing 

  continue to strengthen the track record in the fight against organised crime, including final 
judgements  and  confiscations,  and  amend  the  legislation  on  the  confiscation  of  assets.  Expand 
the existing IT tracking system to all organised crime cases; 

  step-up efforts to develop programmes on de-radicalisation, rehabilitation and reintegration 
of returned fighters, including those in prisons, and their spouses and children;   

  strengthen the inter-institutional cooperation on and coordination in the field of migration. 

Fight against organised crime 

Kosovo is at an early stage in the fight against organised crime. Some progress has been made 
in  the  reporting  period  in  investigating  and  prosecuting  high-level  cases.    While  there  is  more 
preliminary  confiscation  of  assets,  there  are  still  few  final  convictions,  financial  investigations 
and  final  confiscations  of  assets.  Measures  are  needed  to  strictly  ensure  there  is  no  political 
interference  with  operational  activities  of  law  enforcement  bodies  and  the  prosecution.  The 
situation in the north of Kosovo with regards to organised crime poses particular challenges for 
law  enforcement  agencies.  Kosovo  has  only  partly  fulfilled  the  recommendations  of  the  2016 
report,  namely  on  the  track  record,  training  of  prosecutors  and  the  intelligence-led  policing 
approach. Therefore, the recommendations remain valid. In the coming year, Kosovo should in 
particular:  

  revise the Criminal Code, the Criminal Procedure Code and the law on extended powers for 
confiscating the proceeds from crime to make them effective tools to combat organised crime; 

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

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

28 

 
 
 
Institutional set-up and legal alignment 

Provisions  in  the  Criminal  Code  and  in  the  Criminal  Procedure  Code  for  combating 
organised  crime  are  broadly  in  line  with  European  standards.  Nonetheless,  some  need  to  be 
urgently  revised,  such  as  those  on  search  and  confiscation,  on  admissibility  of  evidence,  the 
provisions  responsible  for  the  imbalance  between  the  defence  and  prosecution  at  trial  and  the 
provision  allowing  for  a  multitude  of  appeal  possibilities.  Of  particular  concern  is  the  period 
prescribed  by the Criminal  Procedure Code for investigations which is unrealistically short  for 
cases  of  organised  crime  and  corruption.  This  should  be  addressed  in  the  amendments  to  the 
Criminal Procedure Code. The Law on Money Laundering and Terrorism Financing is not fully 
in line with EU acquis and international standards. The main flaws remain (i) the unclear system 
of supervision of the financial sector by the Financial Intelligence Unit (FIU) and central bank; 
(ii)  extensive  reporting  requirements  for  NGOs;  (iii)  the  lack  of  provision  allowing  the 
prosecutor or court to continue freezing a suspicious transaction in line with FIU orders; (iv) and 
the  scope  of  the  definitions  which  is  narrower  than  the  scope  in  the  recommendations  of  the 
Financial  Action  Task Force.  The  Law  on  the  Interception  of  Telecommunications,  adopted  in 
May 2015, is still not fully implemented. 

The Kosovo Police remain the most trusted institution upholding the rule of law. There are    8 
742  police  officers  in  Kosovo,  or  440  officers  per  100  000  inhabitants,  compared  to  the  EU 
average  of  211  in  2015.  They  are  relatively  well  trained  and  equipped.  The  police  force  has 
several  specialised  units  both  at  central  level  (e.g.  the  anti-corruption  task  force)  and  regional 
level  (e.g.  the  drugs  and  trafficking  in  human  beings  units).  The  Kosovo  Academy  for  Public 
Safety  provides  a  good  level  of  initial  and  continuous  training  to  police  and  public  security 
bodies such as correctional or customs services. In November 2016, the Kosovo Police published 
a  Serious  and  Organised  Crime  Threat  Assessment  based  on  Europol's  methodology.  It  is 
important  that  the  threats  identified  are  translated  into  operational  priorities  backed  up  with 
adequate resources. 

The  2012-2017  strategy  and  action  plan  against  organised  crime  remain  the  main  strategic 
documents.  The  new  strategy  for  2018-2022  is  being  drafted.  Additional  strategies  and  action 
plans are in place on the prevention of and fight against informal economy, money laundering, 
terrorist  financing  and  financial  crimes;  the  prevention  of  violent  extremism  and  radicalisation 
leading to terrorism; against terrorism against trafficking in human beings; on cybersecurity and 
against narcotics. The Deputy Minister of Internal Affairs coordinates the implementation of the 
strategy  and  action  plan  against  organised  crime.  An  organised  crime  directorate  in  police 
headquarters  is  complemented  by  specialised  units  to  combat  drugs  and  human  trafficking  at 
regional level, assisted by forensic units. The main player fighting organised crime is the Special 
Prosecution Office, which is staffed with prosecutors specialised in investigating and prosecuting 
this type of criminality.  

Legislation on cybercrime is in general in line with the EU acquis. Alongside planned changes 
to the Criminal Code, the authorities should ensure a proper conclusion to the ongoing revision 
of the Law on Prevention and Fight of Cybercrime, taking into account the available expertise of 
the  international  community.  This  will  enable  the  authorities  to  better  respond  to  the  fast 
changing landscape of cybercrime. The police department responsible for investigating organised 
crime has set up a sector for cybercrime investigations and staff has received specialised training 
and equipment. 

The 2015-2019 strategy and action plan against  trafficking in  human beings is in place,  with 
the  priority  on  preventing  trafficking  in  persons,  protecting  and  supporting  victims  and 
witnesses, investigating and prosecuting trafficking crimes and protecting children. Legislation is 
broadly aligned with the EU Directive on preventing and combating trafficking in human beings 

29 

 
 
 
and  victim  protection,  although  implementation  could  be  improved.  Kosovo  is  a  country  of 
origin,  transit  and  destination  of  victims  of  trafficking  in  human  beings,  notably  for  sexual 
exploitation. In 2017, 32 victims of trafficking were identified, of which 25 were from Kosovo.   

Organised  crime  cases  are  dealt  with  by  the  Special  Prosecution  Office  and the serious  crimes 
departments of the Kosovo Basic Courts. Customs, the Financial Intelligence Unit (FIU) and 
the  tax  administration  are  responsible  for  monitoring  and  controlling  the  internal  and  cross-
border/boundary  flow  of  goods,  materials  and  capital  that  might  be  involved  in  any  form  of 
organised  crime.  The  FIU  specifically  assists  with  analysing  and  disseminating  information  on 
money laundering and terrorism financing and exchanges information with all law enforcement 
institutions. It also has the capacity to freeze suspicious financial transactions. Kosovo is in the 
process  of  establishing  an  asset  recovery  office.  This  process  should  be  sped  up,  so  that  a 
centralised Asset Recovery Office, in charge of the identification and tracking of criminal assets, 
can  enhance  the  effectiveness  of  the  asset  recovery  system  and  facilitate  the  operational 
cooperation with Asset Recovery Offices in the Member States. 

There needs for better cooperation and coordination between all the existing institutions.  The 
Special Prosecution Office remains the weakest link. 

Implementation and enforcement capacity 

On  the  track  record,  the  IT  tracking  mechanism  for  high-profile  cases,  including  organised 
crime,  is  operational  (see  fight  against  corruption)  but  needs  to  be  expanded  to  cover  all 
organised crime cases. This will lead to more inter-institutional cooperation and enable all those 
working  to  uphold  rule  of  law  in  Kosovo  to  share  more  information.  While  there  is  more 
preliminary  confiscation  of  assets,  there  are  still  few  final  convictions,  financial  investigations 
and final confiscations of assets. Out of the 42 cases in the track record, 10 deal with organised 
crime, with 4 cases before the courts, 3 indictments handed out and 3 cases under investigation. 
For  organised  crime-related  cases  not  included  in  the  track  record,  regarding  trafficking  in 
human beings, an indictment was filled for 40 persons and 11 persons were found guilty during 
the reporting period. For arms trafficking, 6 were indicted and 5 persons were found guilty. For 
money laundering, 3 persons were indicted and 1 case terminated with an acquittal. 

The  fight  against  money  laundering  is  not  efficient  enough  to  produce  convincing  results. 
Money  laundering  is  often  not  prosecuted  as  a  standalone  crime  but  in  connection  with  other 
criminal offences, which hampers progress in this area. Financial investigations are not effective 
and  not  conducted  systematically  in  parallel  with  the  criminal  procedure  in  corruption  and 
organised crime cases. While the estimated value of preliminary confiscated assets has notably 
increased  overall,  the  rate  of  final  confiscation  of  criminal  assets  remains  relatively  low. 
Confiscation of criminal assets should become a strategic priority in the fight against organised 
crime, terrorism and high-level corruption in Kosovo. Criminal groups engage in an increasingly 
wide range of profitable illegal activities and reinvest substantial profits in Kosovo's economy. 
Today, Kosovo's tools for freezing, managing and confiscating criminal assets are not effective 
enough.  Kosovo  should  therefore  develop  and  implement  a  more  comprehensive  and  coherent 
legal framework for confiscating the proceeds from crime.  Kosovo  should particularly: (i) focus 
on adopting/implementing rules on the confiscation of assets which are not directly linked to a 
specific  crime  but  which  clearly  result  from  similar  criminal  activities  committed  by  the 
convicted  person  (extended  confiscation);  (ii)  focus  on  adopting/implementing  rules  on 
confiscating criminal assets that were intentionally transferred from the suspect to a third party 
(third-party confiscation); (iii) allow confiscation of criminal assets where a criminal conviction 
is  not  possible,  in  particular  because  the  suspect  is  deceased,  permanently  ill  or  has  fled  (non-
conviction  based  confiscation);  and  (iv)  ensure 
the  competent  authorities  more 
systematically    put  at  temporary  freeze  on  assets  that  risk  disappearing  if  no  action  is  taken, 

that 

30 

 
 
 
knowing that a court has to confirm this as soon as possible (precautionary freezing). In addition, 
it is crucial that financial investigation of a person's assets be allowed to continue for years after 
a criminal conviction in order to fully execute a previously issued confiscation order (effective 
execution). Finally, Kosovo should urgently step up its capacity to manage frozen or confiscated 
assets so that they do not lose economic value (asset management). 

Police capacity for combating organised crime is good. However, the police are still subject to 
corruption  and  political  pressure,  which  hinder  the  investigation  of  organised  crime. 
Intelligence-led policing remains weakly implemented. The new analytical tool to help expose 
and investigate organised crime, the Kosovo Police Information System, is not yet fully utilised. 
There  is  need  for  more  specialised  training  sessions  for  all  institutions  involved  in  fighting  - 
more  complex  -  organised  crime  and  a  need  for  closer  international  cooperation.  The  Special 
Prosecution  Office  needs  to  be  strengthened  (see  functioning  of  the  judiciary  and  the  fight 
against corruption). 

Kosovo  regularly  exchanges  information  with  Europol  and  Interpol  via  EULEX  or  the  United 
Nations  Interim  Administration  Mission  in  Kosovo  (UNMIK).  In  September  2017,  Kosovo 
asked that its application to join Interpol be postponed to the next General Assembly meeting in 
November 2018. In  December 2017, the Europol  Management Board  adopted a priority list  of 
partners  for  strategic  cooperation,  including  Kosovo.  The  Kosovo  Financial  Intelligence  Unit 
became  part  of  the  Egmont  Group  in  February  2017.  The  Kosovo  Academy  for  Public  Safety 
signed a working arrangement with the EU Police Academy (CEPOL) in March 2017.  

The  public's  lack  of  trust  in  the  authorities  continues  to  hamper  effective  implementation  of 
witness  protection  mechanisms.  Regional  and  international  cooperation  need  to  be  further 
improved  with  more  agreements  on  allocating  witnesses  abroad  and  sharing  information. 
Prosecutors and judges need more training on how to effectively protect witnesses.  

Regarding  arms trafficking,  Kosovo  has  approved,  and is  implementing,  its  strategy  on  small 
arms,  light  weapons  and  explosive  control  2017–2021.  The  Ministry  of  Internal  Affairs  has  a 
database  in  which  it  registers  all  arms  imported  to  Kosovo,  whereby  they  are  marked  upon 
arrival. The Law on Legalisation of Weapons and Surrender of Small Arms and Light Weapons, 
Ammunition and Explosive Materials was approved in March 2017. Kosovo is participating in 
the implementation of the Action Plan on illicit trafficking in firearms between the EU and the 
South East Europe region (2015-2019). The involvement of armed groups in organised criminal 
activities, such as arms smuggling is of serious concern. Kosovo has improved significantly in 
the  fight  against  firearms  trafficking,  not  only  through  normal  investigation,  but  also  through 
forensic work.  

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

Fight against terrorism 

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. This law is, 
however,  still  not  fully  in  line  with  EU  and  international  standards.  The  2018-2022  strategy 
against terrorism and its action plan were adopted in March 2018. The strategy is based on the 
four  pillars  of  prevention,  pursuit,  protection  and  reaction  and  is  in  line  with  the  EU's 
counterterrorism  strategy.  A  strategy  and  action  plan  to  prevent  violent  extremism  and 
radicalisation has been in place since 2015. 

31 

 
 
 
The main institutions involved in combating terrorism are the Ministry of Internal Affairs, the 
Ministry  of  Justice,  the  Ministry  of  Foreign  Affairs,  the  Police,  the  intelligence  agency,  the 
Financial  Intelligence  Unit,  and  the  prosecution  service,  including  the  Special  Prosecution 
Office.  As  the  anti-terrorism  coordinator,  the  Minister  of  Internal  Affairs  is  in  charge  of 
developing  policies  and  strategies  to  combat  terrorism,  evaluating  strategic  intelligence  and 
ensuring  coordination.  The  government  and  Technical  Working  Group  for  the  Prevention  of 
Violent  Extremism  meet  on  regular  basis  thus  ensuring  cooperation  between  authorities  and 
other actors, including civil society and religious communities. 

The  Financial  Intelligence  Unit  (FIU)  is  a  crucial  part  of  the  system  of  combating  terrorism 
financing. However, it lacks the staff and resources to effectively tackle this phenomenon.   

Implementation and enforcement capacity 

Kosovo  has  stepped  up  its  efforts  to  fight  terrorism,  including  measures  to  prevent  violent 
extremism  and  domestic  terrorist  fighters  joining  conflicts  abroad.  The  number  of  Kosovo 
citizens  who  have  engaged  in  the  conflicts  in  Syria/Iraq  has  been  steadily  decreasing,  and  in 
2017  there  were  no  new  reported  cases.  Between  2012  and  2016,  an  estimated  359  Kosovo 
citizens (255 men, 49 women and 55 children) left for conflict zones in the Middle East, mostly 
as  foreign  terrorist  fighters.  Also,  41  children  were  born  in  the  conflict  zone,  133  Kosovo 
citizens have returned, 74 died and 195 remained in theatre (59 men, 41 women and 95).  

In 2017, 61 % of the activities in the action plan to prevent violent extremism and radicalisation 
leading to terrorism were implemented; 14% of the activities were partially implemented and 25 
% were not implemented. Kosovo law enforcement and judicial institutions continue to respond 
robustly  to  terrorism.  The  police  have  arrested  a  substantial  number  of  people  who  joined 
terrorist groups involved in conflicts abroad or who intended to do so. A significant number of 
cases ended in convictions. These were cases with charges ranging from recruiting for terrorism, 
organising  and  participating  in  a  terrorist  group,  inciting  national,  racial,  religious  or  ethnic 
hatred,  discord  or  intolerance,  inciting  others  to  commit  a  terrorist  offence,  violating  the 
provisions  of  the  Law  on  the  Prohibition  of  Joining  Armed  Conflicts  outside  Kosovo.  In 
November 2016, Kosovo Police arrested 18 persons suspected of terrorism. They were allegedly 
planning  to  conduct  coordinated  terrorist  attacks  in  Albania,  the  former  Yugoslav  Republic  of 
Macedonia  and  Kosovo.  During  the  whole  reporting  period,  the  Directorate  against  terrorism 
initiated 27 new cases for criminal offences related to terrorism, resulting in the arrest of seven 
suspects. 20 persons were convicted for criminal offences related to terrorism.  

Despite  these  efforts,  the  authorities  continue  to  be  faced  with  the  challenge  of  violent 
extremism  and  radicalisation.  This  is  assisted  in  part  by  funding  from  foreign  organisations 
that  preach  extremist  ideologies.  Violent  extremist  groups  also  actively  use  social  media  to 
spread  propaganda  and  recruit  followers.  Kosovo  should  increase  its  efforts  to  counter  these 
external  influences.  Kosovo  also  faces  the  challenge  of  returned  fighters  and  their  family 
members  from  the  conflict  zone.  There  are  no  comprehensive  programmes  on  prevention,  de-
radicalisation, rehabilitation and reintegration of returned fighters including those in prisons, and 
their  families,  in  particular  for  women  and  minors.  The  intelligence  and  law  enforcement 
community  needs  to  adopt  a  dedicated  approach  to  the  phenomenon  of  violent  extremism  and 
radicalisation.  There  has  to  be  a  coherent  judicial  policy  on  offenders  combined  with  social, 
community-based  responses  aimed  in  particular  at  marginalised  young  people.  Improved 
cooperation  among  law  enforcement  and  intelligence  services,  especially  between  countries  in 
the  Western  Balkans,  could  help  to  counter  the  threat.  Monitoring  and  preventive  activities 
should  be  stepped  up  in  the  south  of  Kosovo,  especially  near  the  border  with  the  former 
Yugoslav Republic of Macedonia. Kosovo should exchange more data on counterterrorism with 
Europol.  The  link  between  organised  crime  and  terrorism  should  be  assessed.  Prosecutors  and 

32 

 
 
 
police need additional specialised training in investigation techniques. Kosovo law enforcement 
agencies  also  lack  expertise  and  equipment  to  investigate  complex  cases  of  terrorism.  Kosovo 
should  focus  on  an  inclusive  educational  system  to  counter  the  risk  of  radicalisation  of 
vulnerable young people.  

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 
to align it with the latest EU Directives on the employment of nationals from non-EU countries, 
and alignment with the Visa Information System Regulation (VIS Regulation) on the exchange 
of data on short-stay visas were adopted by the Assembly. 

The Department of Citizenship, Asylum and Migration in the Ministry of Internal Affairs is in 
charge of implementation of migration policy. The Directorate for Migration and Foreigners in 
the  Kosovo  Border  Police  deals  with  irregular  migrants.  The  strategy  and  action  plan  on 
migration for 2013-2018 are being implemented. However, closer inter-institutional cooperation 
and  coordination  are  needed.  The  next  five-year  strategy  needs  to  be  prepared  with  full 
engagement  of  all  the  relevant  line  ministries  drawing  on  past  lessons  and  a  comprehensive 
assessment  of  the  implementation  challenges.  The  2016  migration  profile  was  adopted  in 
November  2017.  It  contains  an  extensive  analysis  of  migration  data  and  of  ‘push’  and  ‘pull’ 
factors,  together  with  recommendations  and  policy  guidance  which  now  need  to  be  taken  into 
consideration in practice. It was developed by the Government Authority on Migration, an inter-
institutional  body  comprised  of  15  different  government  institutions.  This  body  is  well 
positioned to take a more proactive leadership role. Its mandate should be strengthened.  

Implementation and enforcement capacity 

There  are  some  gaps  in  enforcement,  in  particular  due  to  lack  of  coordination  between 
government  agencies.  Some  of  the  divisions  of  the  Department  of  Citizenship,  Asylum  and 
Migration of the Ministry of Internal Affairs remain understaffed, despite some staff increases. 
The Directorate for Migration and Foreigners of the Kosovo Police and the Asylum (Reception) 
Centre and Detention Centre for Foreigners also face staff shortages. Over the reporting period, 
staff  have  become  more  specialised  thanks  to  a  number  of  training  courses  ranging  from 
migration management and special interviewing techniques to procedures and standards for the 
treatment  of  unaccompanied  minors,  identification  and  referral  of  asylum  seekers  with  special 
needs, and 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,  and  provide  appropriate  accommodation  for  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 staff is lacking to ensure basic rights and 
needs.  Providing  proper  care  for  the  most  vulnerable  groups  of  migrants  remains  a  challenge. 
Measures  are in  place to prevent  people-smugglers from infiltrating the centre.  However, it is 
believed  that  the  movement  of  migrants  between  Kosovo  and  its  neighbouring  countries  is 
facilitated  by  individual  smugglers  or  networks,  as  they  are  able  to  move  on  without  going 
through any of the check-points at the borders or at the border/boundary with Serbia. Smuggling 
networks  from  Kosovo  facilitate  secondary  movements  of  irregular  migrants  from  entry  points 
along the Balkan route. Between September 2016 and January 2018, Kosovo Police investigated 
23 cases of migrant smuggling. It has also undertaken 7 police operations in which 15 suspects 
were arrested. 

Overall,  there  were  63  irregular  migrants  sheltered  in  the  reception  centre  between  September 
2016 and January 2018. All 63 persons were returned to their country of origin, most of them 

33 

 
 
 
within  a  reasonable  period  of  time  (average  waiting  time  is  25  days).  Kosovo  needs  to  put  in 
place a return mechanism for irregular migrants in line with EU standards and practices.  

Challenges remain with the communication between officials and irregular migrants but progress 
was made in 2017 with an agreement to share interpreters among countries of the region through 
the Migration, Asylum and Refugee Regional Initiative. 

Kosovo has signed readmission agreements with 24 countries, 20 of which are with EU Member 
States  and  countries  of  the  Schengen  area.  Most  recently,  an  agreement  with  the  former 
Yugoslav Republic of Macedonia was signed in December 2017. No readmission agreement has 
been  signed  with  the  EU.  The  number  of  asylum  requests  by  Kosovo  citizens  in  both  EU  and 
Schengen  Associated  countries  has  fallen  from  73  235  in  2015,  to  11  965  in  2016  and  an 
estimated  7  575  in  2017.  The  readmission  agreements  with  EU  Member  States  and  Schengen 
Associated countries  are being implemented smoothly.  Mirroring  the trend in  asylum requests, 
the overall number of Kosovo citizens readmitted has reduced from 18 789 in 2015 and 11 030 
in 2016 to 4 509 (2 623 forced and 1 886 voluntary) in 2017. Kosovo achieved a return rate of 96 
% of Kosovo citizens ordered to leave EU territory in 2016. The new reintegration strategy and 
action plan (2018-2022) were  adopted by the government. The regulation on reintegration was 
amended  in  August  2017  following  a  broad  consultation  with  relevant  stakeholders.  The  main 
objective  was  to  develop  a  more  sustainable  reintegration  process  through  progressive  de-
centralisation  to  the  municipal  level  where  public  services  should  be  provided.  This  process  is 
ongoing,  and  the  system  is  not  yet  fully  operational.  As  of  January  2018,  2,890  persons  have 
benefitted  from  sustainable  assistance  services  provided  by  the  Reintegration  Fund.  Further 
efforts  are  still  needed  to  put  in  place  an  operational  system  that  reaches  more  returnees  and 
focuses  more  on  sustainable  assistance  services  like  income  generation.  This  requires  the 
cooperation of various ministries.  

Asylum 

Institutional set-up and legal alignment 

The legal framework on asylum is largely in line with the acquis. The Law on Asylum has been 
revised  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 
Internal Affairs. The National Commission for Refugees reviews appeals. A final judicial appeal 
can  be  lodged  with  the Supreme  Court.  After  rejection  of  a  request  for asylum  or  cessation  of 
procedure,  the  Department’s  Division  for  Return  and  Readmission  is  responsible  for  enforcing 
the decision.  

Implementation and enforcement capacity 

For  asylum  procedures,  the  competent  authorities  have  improved  their  capacity  to  evaluate 
asylum claims based on the merits of the application but further training is required. The number 
of asylum requests fell from 307 in 2016 to 147 in 2017. Kosovo is still a transit country. Most 
asylum  requests  are  suspended  as  applicants  disappear  without  completing  the  procedure.  In 
2017, 2 applicants received a positive answer in the form of subsidiary protection.  

Staffing levels are generally adequate for the number of asylum requests. However, the Centre 
for Asylum Seekers in charge of the reception, registration, accommodation and movement 
of  asylum  seekers  within  and  outside  the  centre  is  understaffed.  There  is  also  a  lack  of 
psychosocial  and  legal  support,  assistance  with  child  development  and  support  from  social 
services. Although provided by the by-law on admission and initial treatment of asylum seekers, 
a  referral  system  at  the  border/boundary,  including  access  to  legal  aid,  is  not  yet  in  place. 
Moreover, interviewing techniques remain of concern and are often complicated by the lack of 
adequate interpretation. However, although fully effective and protection-sensitive entry systems 

34 

 
 
 
are not in place, no documented instances of refoulement or forced returns have been identified 
in recent years.  In 2017, the competent authorities updated their contingency plan in case of an 
influx  of  migrants/refugees  to  Kosovo.  There  is,  nonetheless,  a  considerable  gap  between  the 
currently available capacity (50 places) and the foreseen capacity at the accommodation facilities 
in  the  contingency  plan  (5,000  places).  The  European  Asylum  Support  Office  is  supporting 
Kosovo  authorities  in  harmonising  practices  by  implementing  the  Common  European  Asylum 
System and coordinating with the European Networks for Receptions. 

Visa policy 

Kosovo has yet to align its legislation with the EU lists of countries whose citizens are required 
to have a visa and those exempted from the visa obligation when travelling to the EU. Based on a 
government decision from 29 November 2013, Kosovo imposes visa requirements on nationals 
of 88 countries. The number of Kosovo consulates issuing visas increased to 16, leading to a fall 
in the number of visas issued at borders (only 6 during the reporting period) with a validity of 15 
calendar  days.  The  visa  issuing  authorities  have  the  capacity  to  digitally  collect  biometric 
identifiers  from  visa  applicants,  although  the  equipment  would  need  updating.  The  online 
connection between the visa issuing authorities and the Foreign Ministry is enabled through the 
Kosovo  Visa  Information  System.  All  granted  and  rejected  visas  are  registered  in  this 
information system. 

The citizens of Kosovo remain the only citizens from the Western Balkans that have to apply for 
and obtain a visa to travel to the Schengen Area. A visa liberalisation dialogue has been ongoing 
since  2012.  In  May  2016,  the  Commission  issued  its  proposal  for  visa  liberalisation,  on  the 
understanding  that  by  the  day  of  its  adoption  by  the  European  Parliament  and  the  Council, 
Kosovo will have ratified the border/boundary agreement with Montenegro and strengthened its 
track record in the fight against organised crime and corruption. The Kosovo Assembly ratified 
the border/boundary demarcation agreement with Montenegro in March 2018. 

Schengen and borders 

Institutional set-up and legal alignment 

The legislative framework for managing Kosovo's borders/boundary is largely in line with the 
acquis  and  international  standards.  The  Assembly  adopted  amendments  to  the  Law  on  State 
Border  Control  and  Surveillance  to  further  align  the  legal  framework  with  the  EU  acquis,  in 
particular  Regulation  2016/399.  The  National  Centre  for  Border  Management  (NCBM)  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  NCBM  is  seen  as  one  of  the  most  important  elements  of  Kosovo’s  capacity  to 
effectively manage the security of its border/boundary. Further efforts are needed to ensure that 
it operates to its full potential.  The 2013-2018 IBM strategy and action plan are aligned with the 
2006  EU  concept  on  IBM.  In  July  2017,  a  revised  and  re-evaluated  IBM  action  plan  was 
approved. 

Implementation and enforcement capacity 

The  Border  Department  of  Kosovo  Police  is  well  staffed,  with  a  total  of  1,300  officers  and  is 
generally  meeting  minimum  EU  standards  for  border  controls.  The  infrastructure  of  border 
crossing points  (BCP)  has  improved and the Border Management System has  been  completely 
upgraded.  However,  its  effectiveness  remains  limited  by  the  lack  of  connection  to  important 
international  networks  such  as  Europol's  SIENA  and  Interpol's  I  24/7,  due  to  status-related 
issues.  Inter-agency  cooperation  is  good  but  can  be  improved  at  the  highest  level  as  well  as 
especially regarding information exchange and joint risk analysis. Progress has been made in the 
fight against corruption, with several new action plans, reforms and regulations both within the 

35 

 
 
 
Border Police and the customs agency. A border police anti-corruption strategy is in place but no 
cases of corruption at the border/boundary have so far been detected. 

On  cooperation  in  the  region,  Kosovo  has  concluded  23  Integrated  Border  Management 
agreements. The Kosovo Assembly ratified the border/boundary agreement with Montenegro in 
March  2018.  Kosovo  and  Albania  undertake  joint  border  controls,  with  one  Albanian  and  one 
Kosovo border police officer sharing one booth. Some very positive steps have been made with 
the  establishment  of  two  common  cross-border  police  cooperation  centres,  one  with  Albania 
(BCP Vermica) and one with the former Yugoslav Republic of Macedonia (BCP Hani I Elezit). 
Also, a common trilateral cross-border police cooperation centre between Montenegro, Albania 
and Kosovo was established in May 2017. Interim IBM crossing points with Serbia continue to 
be fully operational. There has been some progress in establishing the permanent IBM crossing 
points  with  Serbia  in  Merdarë/Merdare  and  Mutivodë/Mutivode,  and  in  establishing  the 
additional interim common crossing points in Kapi/Kapija Vrapce and Rajetici/Izvor. Additional 
measures need to be taken to prevent illegal crossings and criminal activities. 

Kosovo has a working arrangement with the European Border and Coast Guard Agency which 
enables  close  cooperation  on  irregular  migration,  border  crimes,  border  security  and  overall 
border management.  

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 unilaterally applies internationally recognised treaty standards. For the 1980 
Hague Convention on the Civil Aspects of International Child Abduction, the relevant cases are 
dealt  with  by  the  Ministry  of  Justice.  Kosovo  unilaterally  aligned  with  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  20  bilateral  agreements  with  other  countries.  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  countries  which  do  not  recognise  Kosovo's 
independence  voluntarily  accepted  the  EU’s  facilitating  role.  Due  to  status-related  issues, 
Eurojust cases can currently only be opened towards EULEX and UNMIK. Since 2015 no cases 
were opened towards these entities. 

Cooperation in the field of drugs 

Institutional set-up and legal alignment 

The Law on Narcotic Drugs, Psychotropic Substances and Precursors is the main legislative act 
governing  drugs.  Drug-related  offences  are  primarily  covered  by  the  Criminal  Code.  Kosovo’s 
legal framework is in line with European best practices in the fight against drugs. The 2012-2017 
strategy  and  action  plan  against  illicit  narcotics  continued  to  be  implemented  and  several 
criminal groups were dismantled. The new strategy and action plan for 2018-2022 remain to be 
approved.  A  coordination  mechanism  to  prevent  and  fight  drug  trafficking  and  abuse  of 
precursors  is  led  by  the  Deputy  Minister  of  Internal  Affairs,  who  coordinates  all  relevant  line 
ministries. Kosovo should formally establish an Early Warning System to follow-up on the two 
contact  points  already  in  place,  and  finalise  the  agreement  on  a  National  Monitoring  Centre. 
Sustainable and routine data collection should be ensured. 

36 

 
 
 
 
 
Implementation and enforcement capacity 

Kosovo continues to  be a storage and transit country for heroin  and cannabis. Seizures  remain 
very low, especially for heroin and cocaine, despite increased staffing levels in the Directorate 
for  the  Investigation  of  Narcotics  Trafficking.  Organised  crime  groups  (mainly  Albanian-
speaking) continue to play a predominant role in large-scale heroin trafficking and its subsequent 
distribution  in  the  EU.  Kosovo  needs  to  intensify  its  fight  against  drug  trafficking.  Further 
implementation of intelligence-led policing and the strengthening of regional police cooperation 
remain necessary. The prosecution remains understaffed and not sufficiently trained to prosecute 
drug-related  offences  efficiently.  However,  there  was  a  notable  increase  in  the  number  of 
judgements compared to the previous report. In this reporting period, the prosecution dealt with 
3  670  cases  involving  drugs  (concerning  5  150  persons),  with  971  cases  (concerning  1  369 
persons)  having  a  judgement.  344  persons  were  found  guilty  by  the  courts.  Secure  storage  for 
seized drugs and precursors prior to destruction has been set up. 

Special attention needs to be paid to raising public awareness of the consequences of drug abuse. 
The police, community safety officers and teachers continue to receive training on the dangers of 
drug  abuse.  Addiction  treatment  and  methadone  therapy  is  being  offered,  strengthening  drug 
abuse prevention.  

Kosovo  continues  to  cooperate  with  the  European  Monitoring  Centre  for  Drugs  and  Drug 
Addiction. Although not a full member, it is a beneficiary of a regional IPA project implemented 
by the centre and also provides regular reports to the agency through its designated focal point. 

Customs cooperation 

Kosovo Customs has established the Law Enforcement Information System for registering and 
managing all cases of customs offences, including but not limited to registration of counterfeited 
goods  in  line  with  the  acquis  in  this  area.  The  customs  administration  has  an  integrated  IT 
system for data processing.  

Kosovo  customs  has  established  liaison  units  with  the  Kosovo  Police  and  the  Financial 
Intelligence Unit. Cooperation between all border authorities should be further increased. 

Measures to ensure the integrity of the customs officers include a code of conduct, code of ethics 
and disciplinary procedures.  

Counterfeiting of the euro (criminal law aspects) 

Kosovo  is  broadly  in  line  with  the  acquis  on  the  suppression  of  counterfeit  currency  and  the 
competent  authorities  and  procedures  for  dealing  with  counterfeit  money  are  established. 
Technical  analysis,  in  line  with  international  standards,  of  counterfeit  money,  including  euro 
banknotes and coins, is mainly performed by the forensic agency within the Ministry of Internal 
Affairs. (see also section on Financial control) 

37 

 
 
 
 
 
 
 
 
3. FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT & COMPETITIVENESS 

Key economic figures 

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

GDP growth (%) 

Unemployment rate (female; male) (%) 

2015 

N/A 

4.1 

2016 

N/A 

4.1 

2017 

N/A 

3.9* 

32.9 (36.6; 
31.8) 

27.5 (31.8; 
26.2) 

30.4* (36.4*; 
28.6*) 

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

42.8 
(20.4;65.1) 

44.0 

N/A 

Current account balance (% of GDP) 

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

* Based on aggregated Q1-Q3 GDP data 

Source: Eurostat, ASK 

-8.6 

4.7 

-9.1 

2.9 

-5.9 

3.9 

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

The  monitoring  of  these  economic  criteria  should  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. 

3.1 The existence of a functioning market economy 

Kosovo  has  made  good  progress  and  is  at  an  early  state  of  developing  a  functioning  market 
economy. The business environment has improved and the government adhered to the fiscal rule 
on  budget  deficit;  however,  war  veterans'  benefits  continue  to  pose  a  challenge  for  public 
finances.  The  informal  economy  remains  widespread.  The  increase  in  the  labour  force 
participation rate was not matched by gains in employment so the unemployment rate increased 
further. It particularly affected women and young and unskilled workers. Despite strong export 
growth the high trade deficit reflects a weak production base.  

In order to support long-term growth, Kosovo should pay particular attention to:  

→ enhancing fiscal stability and improving the efficiency of public spending; 

→  addressing  the  underlying  legal  and  institutional  factors  hampering  access  to  finance  for 
businesses; 

→ enhancing labour market participation and employment, in particular for women and youth. 

38 

 
 
 
 
 
 
Economic Governance 

f
o
%

P
D
G

5,0
4,5
4,0
3,5
3,0
2,5
2,0
1,5
1,0
0,5
0,0

Figure 1 Kosovo GDP growth 

the  new  government  committed 

The  government's  strategic  documents  give 
priority  to  fiscal  stability  and  a  broad  reform 
agenda,  but  reform  implementation  remains  a 
concern. After the parliamentary elections in June 
2017, 
to 
improving  economic  growth  and  promoting 
development,  with  a  focus  in  particular  on 
manufacturing, 
services. 
processing 
Nevertheless,  the  high  costs  of  the  war  veterans' 
scheme  have  not  been  properly 
pension 
addressed, leading to budget overruns. As a result, 
the otherwise successful 24-month IMF Stand-by 
Arrangement  (SBA)  expired  in  August  2017 
without  completion  of  the  fourth  review  and 
tranche.  Low 
disbursement  of 
implementation of the commitments under the Stabilisation and Association Agreement (SAA) 
prevented  Kosovo  from  fully  benefiting  from  the  increased  trade  access  made  possible  by  the 
SAA. The policy guidance jointly adopted in May 2017 has been partially implemented, while 
measures agreed under the European reform agenda have been delayed.  

Source: Eurostat, Kosovo sources 

GDP growth (rhs)

final 

and 

the 

2015

2014

2016

2017

2013

2012

Macroeconomic Stability  

Despite  GDP  growth  of  more  than  4  %  in  the  last  3  years,  Kosovo  remains  the  poorest 
economy  in  the  region.  Kosovo’s  GDP  per  capita  was  estimated  to  be  around  EUR  3  200  in 
nominal  terms in  2017. Real  growth remained strong, 3.9 %  in the first  three quarters of 2017 
compared to 4.1 % in 2016, on account of strong road building and FDI financed investments. 
Net  exports  provided  a  positive  contribution  to  growth,  given  that  the  largest  metals  exporter, 
Ferronikeli,  regained  lost  Far  East  export  markets  and  services  exports  rose  sharply.  Unlike  in 
previous  years,  quarterly  data  shows  private  consumption  contracting  by  2.5  %,  despite  strong 
consumer lending, a high inflow of remittances, and a strong retail turnover, pointing to possible 
data inconsistencies. The supply side of GDP shows encouraging broad-based growth driven by 
construction,  trade  and  the  financial  sector,  while  the  public  administration  and  other  services 
activities  decreased  sharply.  Overall  Kosovo  production  capacities  remain  underdeveloped  and 
the economy remains reliant on consumption, investment in infrastructure and remittances.  

Stronger exports of services helped to narrow the external imbalances. The current account 
deficit shrank to 5.9 % of GDP in 2017, compared to 9.1 % of GDP in 2016. This was mainly 
due  to  the  strong  growth  in  services  exports.  Methodological  changes  in  accounting  for  the 
economic  activity  of  Kosovo's  periodically  returning  diaspora  could  explain  such  a  strong 
adjustment  and  the  drop  in  private  consumption  mentioned  above.  The  goods  trade  deficit 
increased  by  1  percentage  point  to  38.9  %  of  GDP.  An  important  source  of  revenue  for  many 
Kosovo households, remittances increased to 12 % of GDP in 2017. Net FDI increased to 3.9 % 
of GDP compared to 2.9 % of GDP in 2016). FDI inflows were even more concentrated in 2017, 
given  that  the  share  of  real  estate,  construction  and  the  financial  sector  FDI  rose  to  97.1  %. 
Inflow  to  the  production  sectors  was  negative.  This  reflects  a  weak  business  environment  and 
few 'greenfield' investment opportunities.  

As  a  small  economy  with  low  domestic  production,  price  developments  in  Kosovo  are 
mainly driven by import prices of food and energy. Average consumer price inflation in 2017 
rose to  1.5 %,  compared  with  0.3 %  in  2016. Average  import price inflation was 4.4 %  in the 
first three quarters of 2017. Both price developments reflect movements in global food and fuel 

39 

 
 
 
 
 
 
 
prices while core inflation remains low. On the other hand, producer price inflation was only 0.3 
% in the same period mainly due to low wage growth. 

Figure 2 Kosovo fiscal developments 

18

0,0

4

0

2

16

14

-2,0

-0,5

-2,5

-3,0

-1,5

-3,5

-1,0

2012

2017

2016

2015

12
P
D
10
G
f
8
o
%
6

Budget balance (RHS)

2014
2013
Public debt (LHS)

Sources: Eurostat, Kosovo sources 

Fiscal  stability  was  preserved  in  2016  and  2017 
despite  the  lack  of  implementation  of  some 
important fiscal reforms. Strong economic growth 
and  better  revenue  collection  led  to  significant 
revenue  growth  of  9.4  %  and  5.3  %  in  2016  and 
2017  respectively.  Total  expenditure  also  rose  by 
6.9 % and 4.9 % in the same period while the share 
of capital spending remained unchanged (26.9 % of 
overall spending in 2017. Capital spending was still 
under-executed  due  to  overestimation  of  financing 
available  from  international  financial  institutions 
(IFI) and the Privatisation Agency. Furthermore, the 
weak collection of municipal revenue which is tied 
to execution of some small-scale capital projects delayed investments at the local level. Budget 
allocations for war veteran benefits were surpassed both in 2016 and 2017, due to the number of 
eligible  recipients  which  was  double  the  figure  expected.  To  limit  the  cost  of  the  war  veteran 
pension scheme, a spending limit of 0.7 % of GDP was introduced. However it is to be applied 
only  after  a  special  commission  reclassifies all  eligible recipients  according  to  the  new  stricter 
criteria.  Due  to  the  delays  in  the  reclassification  process,  the  IMF  SBA  expired  without 
disbursement  of  the  final  tranche.  In  the  2017  budget  revision  an  additional  EUR  26.2  million 
were allocated to the war veteran pension, bringing the overall amount to 1 % of GDP.  
Kosovo's  public  debt  remained  relatively  low  at  16.4  %  of  GDP3  in  2017  but  is  increasing. 
The  average  weighted  interest  rate  continued  declining  to  1.92%  owing  to  the  large  share  of 
concessional loans from IFIs. The average maturity of domestic debt (20.2 months) is likely to 
continue  increasing  after  Kosovo  issued  for  the  first  time  a  bond  with  seven  year  maturity  in 
August 2017. Government deposits increased in the last two years to 5.3 % of GDP, above the 
regulatory requirement. 

The  2018  budget  projects  stable  public  finances  but  significant  adjustments  might  be 
necessary  in  the  midterm  review.  Forecasted  total  revenue  growth  (8.3  %  compared  to  the 
2017 preliminary results) will rely on significant broadening of tax base resulting from the fight 
against informality as no new revenue measures are planned in 2018. Starting in 2018 the wage 
bill  growth will be  limited to  the growth rate of the last  available nominal GDP (currently 4.3 
%).  Therefore  the  public  wages  will  be  increased  by  4  %  while  the  rest  will  be  spend  on  new 
hiring.  The  amount  allocated  for  various  war  veteran  benefit  programmes  is  likely  to  be 
insufficient  unless  the  reclassification  process  also  re-examines  the  certificates  of  existing 
recipients. The cost of the war veteran disability scheme could also increase beyond the budget 
allocation, as more than 3 000 new applicants await certification. The growth of capital spending 
(37.1 %) seems overly ambitious. Kosovo's capacity to absorb funds would have to significantly 
increase to reach the estimates of the IFI disbursement under the 'investment clause'. The deficit, 
according to the fiscal rule, is expected to be 1.7 % of GDP But the midterm review may very 
well transfer funds from the capital budget to finance increased social expenditures.    

3 Not including Kosovo's share of the London and Paris club debt of the former Yugoslavia, currently estimated at 
around 6% of GDP. 

40 

 
 
 
                                                            
 
 
 
 
Fiscal governance has made some progress but still faces significant challenges. While fiscal 
data  is  available,  it  is  still  not  reliable,  nor  available  on  a  timely  basis.  The  capacity  to  make 
credible  macroeconomic  and  budgetary  forecasts  remains  low  and  they  largely  rely  on  IMF 
forecasts. However, the credibility of both the Medium Term Expenditure Framework (MTEF) 
projections and the budget estimates has improved. Partly as a result of increased realism in the 
projection  of  revenues,  improved  commitment  controls  and  effective  use  of  in-year  budget 
reallocations,  the  deviations  between  forward-looking  estimates  and  real  revenues  and 
expenditure  were  significantly  reduced.  Initial  attempts  have  been  made  to  involve  the  Budget 
and Finance Committee in discussions, but this practice is not yet systematic. Kosovo operates 
and  complies  with  its  own  system  of  fiscal  rules  which  aims  to  balance  fiscal  discipline  and 
investment  needs.  The  public  accounting  systems  are  covering  most  areas  of  income  and 
expenditure and they are subject to internal control and independent audits. 

Kosovo’s unilateral euroisation makes maintaining macroeconomic and financial stability 
particularly relevant.  Kosovo does not have standard monetary policy tools at its disposal, as it 
uses the euro as legal tender, leaving fiscal policy as the main macroeconomic policy instrument. 
Public debt is still low while current levels of international reserves are adequate and provide a 
buffer against external and liquidity shocks.  

Functioning of product markets  

Business environment  

Significant progress was made in improving the business environment. An online system for 
filing  and  paying  VAT  and  social  security  contributions  was  introduced,  facilitating  tax 
payments  for  businesses.  The  time  it  took  to  export  and  the  cost  of  regulatory  compliance  in 
order to export were reduced as a result of the improved automated customs data management 
system, the streamlining of customs clearance processes and the implementation of the Albania-
Kosovo  transit  corridor.  Starting  a  business  was  made  easier  thanks  to  a  web-based  business 
registration  system  and  a  simplified  process  for  registering  employees.  Access  to  credit  was 
made  easier  with  the  adoption  of  clear  priority  rules  in  bankruptcy  procedures  for  secured 
creditors. Resolving insolvency was made easier with the introduction of a legal framework for 
corporate  insolvency.  The  new  Law  on  Business  Organisation  will  further  simplify  business 
registration procedures and introduce changes to the corporate governance. 

Despite  progress  on  the  legal  rules  governing  businesses  many  obstacles  remain.  In  2017 
Kosovo  was  one  of  the  top  10  reformers  according  to  the  World  Bank  Doing  Business  report. 
Nevertheless,  the  main  obstacles  to  doing  business  still  include  a  weak  and  unaccountable 
administration,  weak  rule  of  law,  corruption  and  a  widespread  informal  economy.  Although 
informality remains high, around 30 % of GDP, different studies point to its continued decrease 
between  2013  and  2015  due  to  the  improved  effectiveness  of  tax  administration  practices. 
However,  the  black  economy  increased  in  absolute  terms.  The  construction  and  trade  sectors 
experienced  the  largest  losses  in  revenue  due  to  informality.  The  judicial  system  suffers  from 
poor  accessibility,  inefficiency  and  delays.  Little  progress  was  recorded  in  clearing  court 
backlogs of unresolved cases. 

State influence on product markets  

State  aid  and  subsidies  are  still  administered  without  a  comprehensive  strategy  or  a  cost 
benefit evaluation. Public enterprises continue to receive government subsidies and grants with 
little impact on their profitability. Management appointment procedures continued to be subject 
to partisan political influence leading to prevalent mismanagement and delays in appointments. 
Tax exemptions for certain sectors were expanded but have had limited impact so far on exports 
and  investment.  The  government  continued  to  provide  agricultural  subsidies  but  the  land 

41 

 
 
 
consolidation process is not being implemented leading to low productivity gains for the sector. 
The Law on Strategic Investment has not yet had an impact on attracting investments. Financial 
support  to  the  economic  zones  and  industrial  parks  continued  without  a  clear  plan  or  a 
transparent  impact  or  gap  analysis.  Government  influence  on  price  controls  for  utilities  and 
postal and telecommunications services continued. The Public Procurement Review Body (PRB) 
could  lose  its  quorum  and  become  dysfunctional  as  two  board  members  are  facing  corruption 
charges.  Furthermore,  the  reported  intimidation  of  members  of  the  PRB  undermines  this 
important  complaint  mechanism  reducing  the  transparency  and  credibility  of  the  entire 
procurement process. 

Privatisation and restructuring 

The unresolved status of property rights and the lengthy legal proceedings in dealing with 
financial  claims  on  privatised  assets  hinder  the  privatisation  process.  The  government 
decided in November 2017 to temporary suspend the privatisation of socially owned lands. The 
feasibility  study  for  the  Trepça  mining  complex  has  been  prepared.  However  the  change  in 
ownership structure to a shareholding company, as required by the law, has not been made due to 
government inaction and problems appointing the supervisory board. After not materialising in 
2017,  the  disbursement  of  EUR  86  million  from  the  Privatisation  Agency  has  again  been 
earmarked in the 2018 budget. 

Functioning of the financial market  

Financial stability  

The financial sector remained well capitalised and with ample liquidity buffers. Regulatory 
capital to risk-weighted assets in the banking sector stood at 18 % in December 2017, above the 
regulatory minimum of  12 %.  Credit risks are low, as  the proportion of non-performing  loans, 
which are fully covered by bank provisions, is the lowest in the region and fell further to 3.1 % 
by December 2017. This was due to stronger  credit  growth, strong economic performance and 
improvements  in  bankruptcy  and  insolvency  procedures.  The  financial  sector  recorded  high 
profitability in 2017. Return on average equity was 21.3 %, 17.6 % and 17.7 % for the banking 
sector,  micro-financial  institutions  and  the  insurance  sector  respectively.  The  Central  Bank  of 
Kosovo  has  recently  entered  into  a  memorandum  of  cooperation  with  the  European  Banking 
Authority and with the European Insurance and Occupational Pensions Authority establishing a 
framework  of  cooperation  and  information  exchange  to  strengthen  the  banking  regulation  and 
supervision of banks operating in the EU and in the south-eastern European countries. 

Access to finance  

Kosovo's financial sector still shows ample room for stronger banking activity. The largely 
foreign-owned  Banking  sector  in  Kosovo  takes  up  65.7  %  of  the  total  assets  of  the  financial 
sector followed by the pension funds (28 %). Total assets in the banking sector had grown by 6.6 
% in 2017, standing at 61.3 % of GDP. Lending activities accelerated compared to the previous 
year (11.5 % growth in total loans) supported by strong lending to households (12.7% growth). 
The loan-to-deposit ratio increased to 80.4 % from 76.9 % in 2016. The average interest rate on 
loans  decreased  in  2017  to  6.8  %  from  7.5  %  in  2016  but  still  remains  above  the  regional 
average.  

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

42 

 
 
 
 
 
Functioning of the Labour market 

Stable economic growth over recent years has only marginally been able to improve labour 
market  conditions.  Since  2016,  the  Kosovo  Statistics  Agency  has  been  producing  quarterly 
labour  force  survey  (LFS)  data.  However,  questions  about  the  comparability  of  quarterly  and 
annual  series  remain.  According  to  the  LFS,  the  labour  participation  rate  and  the  employment 
rate increased in the first nine months of 2017 to 42.7 % and 29.7 % respectively, compared to 
38.7  %  and  28  %  in  2016.  At  the  same  time,  the  unemployment  rate  increased  to  30.4  % 
compared  to  27.5  %  in  2016  and  Kosovo  still  has  the  highest  unemployment  and  the  lowest 
participation rate in Europe. The labour market outcomes for women are particularly weak (only 
20.2 % of women participated in the labour market and 38 % of these were unemployed in the 
first 9 months of 2017). High youth unemployment (51.6 %) demonstrates a clear misalignment 
between education system outcomes and labour market needs (i.e. a mismatch between students' 
qualifications and skills and what is needed in the job market). This calls for more active labour 
market  policies,  pre-qualification  schemes  and  vocational  training  programmes.  By  contrast, 
Kosovo  does  not  have  a  problem  with  labour  protection  legislation,  high  taxation  or  a  social 
welfare system which would disincentivise work, with the exception of untargeted war veteran 
transfers.  Funding  for  employment  services  and  vocational  training  remains  insufficient  and  is 
fragmented across several entities. According to the Enterprise Structural Survey conducted by 
the Kosovo Agency of Statistics, the average monthly private sector wage in 2016 was around 
EUR 359, 1.4 % higher than in 2015.   

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

80,0

70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Unemployment rate

Youth unemployment rate

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Women

Men

Source: Eurostat, Kosovo sources 

3.2 The capacity to cope with competitive pressures and market forces within the Union 

Kosovo has made some progress and is at an early stage in terms of capacity to cope with 
competitive pressure and market forces within the EU. No progress was made on improving 
the quality of education and addressing skills gaps in the labour market. Kosovo made some 
progress  in  improving  road  infrastructure  but  large  infrastructure  gaps  in  the  railway  and 
energy sectors remain. Structural changes in the economy are slow as it remains reliant on the 
trade sector. Integration with the EU is hampered by the slow implementation of the SAA.   

In the forthcoming period, Kosovo should pay particular attention to:  

→ addressing the mismatch between education outcomes and labour market needs leading to 
high youth unemployment; 

→ improving the capacity of central and local government to prepare and manage investment 
projects; 

43 

 
 
 
 
 
 
→ securing a stable energy supply, reducing distribution losses in the electricity network and 
improving energy efficiency.  

Education and innovation  

The  education  sector  is  not  properly  aligned  with  labour  market  needs,  resulting  in  low 
employability  of  graduates  and  a  significant  skills  premium.  Public  spending  on  education 
remained  unchanged  at  4.6  %  of  GDP  in  2016,  which  is  broadly  in  line  with  middle  income 
countries with similar age profiles. However, considering the relatively large number of students, 
Kosovo spends considerably less than some neighbouring countries per student in primary and 
secondary education. Furthermore, spending on education is dominated by the wage bill. Early 
childcare and pre-schooling enrolment rates are very low at 4.4 % and 33.9 % respectively, still 
well below the EU target of 95 % by 2020. In contrast there are relatively high enrolment rates in 
primary and secondary education, 96 % and 88.1 %, respectively. Enrolment at tertiary level is 
very  high  with  120,000  students  in  both  public  and  private  higher  education  institutions. 
However,  low  PISA  scores  and  a  high  unemployment  rate  among  higher  education  graduates 
(26.7 % in Q3 2017) indicate the poor quality of education in general and its misalignment with 
labour market needs. Given this situation Kosovo should work on developing closer cooperation 
between the education system and the private sector.  

Spending  on  research  is  virtually  non-existent.  Kosovo  needs  to  considerably  increase 
investment  in  research  and  innovation  (currently  only  0.1  %  of  GDP),  and  establish  links 
between  academic  institutions  and  the  private  sector.  In  September  2017,  a  new  Ministry  of 
Innovation  and  Entrepreneurship  was  established  and  tasked  with  supporting  entrepreneurship 
and private initiatives through innovation, with a focus on the development of manufacturing and 
service SMEs.  

Physical capital and quality of infrastructure  

Kosovo  made  some  progress  in  improving  its  physical  capital,  mainly  for  public  road 
infrastructure  investments.  However,  Kosovo's  transport  system  is  plagued  by  the  weak 
administrative capacity of regulatory institutions and the poor state of infrastructure. Investments 
in  road  infrastructure  are  mainly  focused  on  road  repairs  and  the  building  of  highways.  In 
addition,  investments  in  irrigation  systems,  the  treatment  of  waste  water,  water  projects,  the 
upgrading health facilities, municipal public transport and the upgrading of the railway sector are 
being  supported  by  donors.  Rehabilitation  of  railway  line  10,  a  key  priority  for  the  National 
Investment  Committee,  is  the  first  project  that  will  be  implemented  in  line  with  the  regional 
connectivity agenda.  

The lack of regional connectivity in transport and energy security remains a bottleneck for 
the  economy.  An  unreliable  supply  of  energy  remains  one  of  the  key  obstacles  to  economic 
development. The inter-connection line between Albania and Kosovo – completed in 2016 – was 
still  not  functional  late  2017  due  to  political  disagreements  with  Serbia.  Agreement  on  the 
construction  of  a  new  500-megawatt  lignite  power  plant  has  been  reached  and  construction  is 
expected  to  start  in  early  2019.  The  EUR  1.3  billion  project  will  be  financed  entirely  by  the 
investor  and  should  help  to  maintain  a  more  reliable  supply  of  electricity.  High  distribution 
losses  in  the  electricity  network  and  low  energy  efficiency  further  undermine  energy  security. 
The issue can be addressed by expanding energy efficiency incentives to the private sector and 
households.  Since  April  2017,  energy  producers  are  obliged  to  deliver  all  the  electricity 
generated  at  deregulated  prices,  thus  helping  to  open  the  electricity  market.  Electricity 
production from renewable sources is at a very low level despite attested potential for solar and 
wind energy exploitation.  

44 

 
 
 
The  digitalisation  of  the  economy  has  not  progressed  much  over  the  past  year.  Kosovo  is 
gradually aligning national legislation with the acquis, but implementation is lagging behind. An 
increased  number  of  businesses  are  conducting  e-commerce.  However,  exact  data  is  yet  to  be 
published. The penetration rate of fixed broadband internet is expanding gradually from year to 
year,  reaching  86.7  %  during  the  first  quarter  of  2017  compared  to  75.5  %  a  year  before.  In 
addition, the number of mobile phone users has increased to 112.14 % compared to 97.08 % a 
year  before.  The  number  of  employees  and  the  share  of  gross  value  added  (GVA)  of  the  ICT 
industry  have  gradually  increased  since  2008  but  still  remain  low  despite  ample  potential  for 
stronger development. 

Sectoral and Enterprise Structure 

There  have  been  no  significant  structural  changes  in  Kosovo's  economy.  Kosovo’s  private 
sector continues to be fragmented and unable to exploit economies of scale as micro enterprises 
dominate  the  economy.  According  to  the  Enterprise  Structural  Survey  for  2016,  the  largest 
number  of  enterprises  in  Kosovo  belongs  to  the  trade  sector  (47.7  %),  followed  by  business 
services and other services (13.6 %) and the processing industry (13.5 %). The total number of 
people employed in the private sector was 156 504, out of which: the trade sector accounts for 
34.9 %; the processing industry 15.6 % and business services 11.8 %. The largest share of total 
business turnover was in the trade sector with 57.5%, followed by the processing industry 11.9 
%  and  construction  with  10.5  %.  The  structure  of  the  GVA  in  Kosovo  has  not  significantly 
changed over the recent years except for a noticeable downward trend in the share of agriculture, 
which  continued  in  2016,  (to  13  %).  The  shares  of  mining,  manufacturing,  construction  and 
services, continue hovering around their long term averages.  

The Kosovo Credit Guarantee Fund meant to provide credit guarantees for private investment is 
fully operational. The Fund has granted 785 of loans for local businesses with an approved loan 
amount of EUR 29.5 million. The government has committed to providing additional funding in 
2018 to strengthen the Fund’s capacity to guarantee credit. 

45 

 
 
 
 
Economic Integration with the EU and price competitiveness  

180

160

140

120

100

60,0

50,0

40,0

30,0

to 

increasing 

Figure  5  Kosovo  trade  integration  with  the 
EU 

The  Stabilisation  Association  Agreement's 
contribution 
trade  was 
hampered  by  the  slow  implementation  of 
necessary reforms. Kosovo's economy is still 
relatively  unintegrated  in  global  trade  flows, 
with  a  trade  openness  of  74.5  %  of  GDP 
despite  a  10.6  %  rise  in  total  trade  of  goods 
and  services  in  2017.  Most  of  Kosovo's 
exports still consist of basic raw materials and 
limited 
mineral 
the  Kosovo  production 
diversification  of 
there  was  a 
in  2017 
sector.  However, 
significant 
of 
exports 
in 
manufactured goods, agriculture products and 
processed  food.  The  EU  continued  to  be 
Kosovo's biggest trading partner with 41 % of 
the  overall  trade  in  2017,  followed  by  the 
CEFTA4  countries  with  30.3  %.  Despite  a 
30.1% growth in exports to the EU, Kosovo's 
trade  deficit  with  the  EU  further  widened  in 
2017.  The  development  of  a  Regional 
Economic Area based on EU rules and standards, to which all Western Balkan economies have 
committed,  has  the  potential  to  generate  so  far  untapped  growth.  The  EU  remains  the  main 
investor in Kosovo with 46.4 % of the overall inflow of FDI in 2017.  

Share of Imports from EU
Share of exports to EU
Trade with the EU (2008=100) (RHS)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

reflecting 

products, 

increase 

10,0

20,0

0,0

80

20

60

40

0

4. REGIONAL ISSUES AND INTERNATIONAL OBLIGATIONS 

The  unresolved  fate  of  missing  persons  from  the  1990s  conflicts  remains  a  humanitarian 
concern in the Western Balkans. As of February 2018, a total of 10 332 persons are still missing 
across the region according to the International Committee of the Red Cross (ICRC). Of these, 1 
652  relate  to  the  conflict  in  Kosovo,  and  its  aftermath.  Two  sessions  of  the  Belgrade-Pristina 
Working Group on Missing Persons, chaired by the International Committee of the Red Cross, 
were held in 2017. The appointment of the head of the Pristina delegation to this working group 
has  brought  positive  developments.  However,  the  lack  of  new  information  on  yet-to-be 
uncovered  gravesites  remains  the  main  obstacle  to  solving  cases  and  only  eleven  cases  were 
solved in 2017.  

The process to resolve the fate of missing persons continues to be undermined by politicisation 
and inter-institutional disputes. Recurring attempts by some politicians to amend the timeframe 
covered by the Law on Missing Persons, effectively excluding many non-Albanian victims, are 
not  acceptable.  A  positive  development  is  the  appointment  of  the  file  holder  for  the  issue  of 
missing persons and the fact that the Deputy Head of the Government Commission on Missing 
Persons  belongs  to  a  non-majority  community.  Better  inter-institutional  coordination  and 
cooperation between this Commission and the Kosovo Institute of Forensic Medicine is needed, 
including  to  facilitate  data  entry in  the  central  register  of  missing  persons.  The  authorities  still 
need to adopt secondary legislation on the establishment of a central register, and on the closure 

4 The Central European Free Trade Agreement 

46 

 
 
 
 
                                                            
 
of  cases,  to  support  implementation  of  the  Law  on  Missing  Persons.  While  the  Institute  of 
Forensic  Medicine  has  made  some  progress  in  developing  capacities,  it  still  does  not  meet  the 
required  standards  for  sustainable  forensic  practices,  including  forensic  anthropology  and 
archaeology. More needs to be done to build such capacity and to ensure continuous funding of 
the Institute. Hundreds of human remains stored at the Pristina morgue, for which forensic action 
has exhausted, remain unidentified. 

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 is represented 
in most 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,  notably  for  the  connectivity  agenda,  has 
continued to foster increased regional cooperation among Western Balkan countries. Building on 
the  results  of  previous  summits,  the  July  2017  Trieste  Summit  saw  further  advances  on  the 
connectivity agenda and also opened co-operation in new areas, notably on a Regional Economic 
Area  (REA), where  Kosovo subsequently  nominated a designated focal point within the Prime 
Minister's Office. After the establishment of the Regional Youth Cooperation Office (RYCO) in 
Tirana,  Kosovo  opened  a  local  branch  of  that  Office  in  Pristina  in  October  2017.  Further, 
Kosovo signed the Transport Community Treaty, but its ratification by the Assembly is pending. 
The  pending  transport  measures  include  improvement  of  the  implementation  of  the  IBM 
guidelines. Connectivity projects in the railway sector are being planned, and work is expected to 
start  in  mid-2018.  On  energy,  the  Kosovo  Energy  regulator  has  deregulated  generation  prices. 
The  government  has  taken  steps  to  join  the  Albanian  Power  Exchange.  Kosovo  should  further 
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  at  the  2016  Western  Balkans  Summit  in  Paris.  This  is  due  to  a 
dispute with Serbia, which needs to be solved as soon as possible through the Belgrade-Pristina 
Dialogue.  There  is  a  need  to  ensure  affordable  broadband  access.  This  includes  using  existing 
fibre optics such as those provided through electricity transmission grids.  

Kosovo  continued  its  efforts  to  maintain  good and  constructive  bilateral  relations  with  other 
enlargement countries. 

Kosovo has continued to develop closer relations with Albania, with several new agreements in 
key  areas  of  cooperation  signed  the  fourth  governments'  meeting  in  November  2017  and 
announced  readiness  to  host  a  Custom  Office  of  Kosovo  in  Albania’s  Port  of  Durres.  A 
framework  Memorandum  on  cooperation  with  the  diaspora  was  signed  as  well  as  a 
Memorandum  of  Understanding  between  the  governments  to  open  joint  consulates,  with 
common consular offices opening in Munich and Milan.    

There has been no change in Kosovo's relations with Bosnia and Herzegovina as the latter does 
not recognise Kosovo’s independence. A reciprocal visa regime continues to be in place.  

There  was  further  progress  in  relations  with  the  former  Yugoslav  Republic  of  Macedonia.  In 
August  2017,  the  two  signed  an  implementation  protocol  to  open  the  new  crossing  point  at 
Stancic – Belanoc. Both agreed to hold joint governmental meetings on an annual basis. Prime 
Minister Zaev visited Pristina in December 2017. Some tensions arose as a result of the verdicts 
on the participation of Kosovo citizens' in the 2015 Kumanovo events. 

Kosovo has good relations with Montenegro. The agreement on border/boundary demarcation, 
already ratified in Podgorica, was ratified by the Kosovo Assembly in March 2018. In February 

47 

 
 
 
2018  both  Presidents  signed  a  common  statement  in  which  they  agreed  that  once  the 
border/boundary  demarcation  agreement  enters  into  force,  a  bilateral  working  group  will  be 
established to identify and address potential disputes on the marking of the border/boundary in 
specific sectors. In February 2017, Kosovo adopted a strategy for the affirmation and integration 
of the Montenegrin minority.   

Kosovo  has  maintained  good  relations  with  Turkey.  Reciprocal  high  level  visits  took  place, 
during which both countries expressed their commitment to increase economic cooperation and 
trade.  

5. NORMALISATION OF RELATIONS BETWEEN KOSOVO AND SERBIA  

Work  under  the  EU-facilitated  dialogue  has  continued  throughout  the  reporting  period.  Four 
official high-level meetings took place under the facilitation of HRVP Mogherini in July, August 
and September 2017, as well as in March 2018. Presidents Thaçi and Vučić agreed to work on a 
new  phase  of  the  dialogue  with  a  view  to  a  comprehensive  normalisation  of  relations  between 
Kosovo  and  Serbia.  This  work  is  currently  ongoing  and  needs  to  be  accelerated.  Meetings  at 
technical level resumed early 2018.  

January 2017 saw an attempt to send a train, emblazoned with Serbian nationalist slogans, from 
Belgrade to the north of Kosovo. Following heavy pressure from the EU and other international 
partners, the train did not enter northern Kosovo. 

Implementation  of  the  25  August  2015  Agreements  has  overall  been  slow.  Progress  has  been 
made on the Association/Community of Serb majority municipalities in Kosovo. On 4 April 
2018, Kosovo has given a mandate to the Management Team to start drafting the statute of the 
Association/Community.  The  energy  agreement  between  Serbia  and  Kosovo  must  be 
implemented  without  further  delay  in  order  to  avoid  that  this  longstanding  dispute  has  further 
consequences  for  energy  stability  and  security  in  Serbia,  Kosovo  and  countries  across  Europe.  
These  consequences  have  become  more  acute  and  visible  in  recent  months.  Serbia  needs  to 
register and license the two Serbian energy companies to be established in Kosovo as a matter of 
urgency. A wall in North Mitrovica alongside the bridge was illegally constructed in December 
2016.  It  has  since  been  dismantled.  The  Mitrovica  bridge,  on  which  works  have  started  in 
August 2016, should be opened without further delay or obstructions. The telecoms agreement is 
now fully implemented. Kosovo has been allocated a dialling code for its use and operation in 
November  2016.  Serbia  established  a  telecommunications  company  as  subsidiary  of  Serbija 
Telekom under the Kosovo legal and regulatory framework.  

Further progress has been made on the implementation of the  April 2013 ‘First agreement of 
principles  governing  the  normalisation  of  relations’.  The  justice  agreement  is  now  fully 
implemented.  In  October  2017,  Kosovo  President  Thaçi  decreed  40  Kosovo  Serb  judges,  13 
prosecutors  and  their  respective  support  staff,  thus  finalising  the  recruitment  process  of  the 
judicial  personnel for the north. All former Serbian judicial personnel are now fully integrated 
into  the  Kosovo  system,  as  are  Kosovo  Serb  police  and  civil  protection  personnel.  In  the 
context  of  the  liaison  arrangements,  official  visits  are  directly  arranged  by  liaison  officers  in 
line with the relevant agreement but on occasions the agreement is not fully respected. Events in 
March 2018 surrounding the entry procedures and the treatment of Serbian government official 
Marko Djuric heightened tensions. 

Some  of  the  Technical  Dialogue  Agreements  (2011-2012)  are  not  being  implemented.  Both 
sides  need  to  remain  committed  to  the  continued  implementation  of  the  agreement  on 
representation  and  participation  of  Kosovo  in  regional  forums.  The  issue  of  university 
diplomas  recognition  is  yet  to  be  solved  as  are  the  licence  plate  related  elements  of  the 

48 

 
 
 
 
agreement  on  freedom  of  movement.  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,  Serbia  has  obstructed  progress  in  constructing  four  out  of  six  permanent  common 
crossing  points in  Tabavije/Bërnjak,  Jarinje/Jarinjë,  Konculj/Konqul  and  Mucibabe/Muçibabë. 
Additional measures need to be taken by Serbia to close illegal crossings. Requests for mutual 
legal  assistance  are  being  processed.  Serbia  provides  support  for  the  judicial  process  led  by 
EULEX.  

Overall, Kosovo has remained engaged in the dialogue. However, Kosovo needs to make further 
substantial  efforts  and  contribute  to  the  establishment  of  circumstances  conducive  to  a 
comprehensive normalisation of relations with Serbia. A legally binding agreement is urgent and 
crucial so that Serbia and Kosovo can advance on their respective European paths.  

6. EUROPEAN STANDARDS 

6.1. 

Free movement of goods 

Kosovo  is  at  an  early  stage  of  preparation/has  some  level  of  preparation  for  the  free 
movement  of  goods.  It  made  some  progress  during  the  reporting  period.  However,  out  of  the 
three recommendations of the 2016 report, Kosovo only fulfilled partly the recommendation on 
further  aligning  with  the  EU  acquis.  The  recommendations  on  developing  more  capacity, 
increasing resources and interinstitutional  coordination to enable law enforcement, in  line with 
the SAA requirements, have yet to be addressed to ensure proper implementation. 

In the coming year, Kosovo should in particular: 

  ensure the proper implementation of the recently adopted  Law on Standardisation, Law on 
Metrology,  Law  on  Accreditation  and  Law  on  Technical  Requirements  for  Products  and 
Conformity Assessment, including through the adoption of all relevant secondary legislation; 

  further  improve  interinstitutional  coordination  to  enable  proper  enforcement  of  legislation 
and  strengthen  the  capacity  of  the  Kosovo  Standardisation  Agency,  the  Kosovo  Metrology 
Agency, and the General Accreditation Directorate; 

  make progress on alignment with the Registration, Evaluation, Authorisation and Restriction 
of Chemicals (REACH) Regulation. 

General principles 

On  general  principles,  the  framework  for  the  production,  distribution  and  marketing  of 
industrial  products  has  been  further  aligned  with  the  acquis.  This  is  notably  the  case  for  the 
Law  on  Metrology,  the  Law  on  Standardisation  and  the  Law  on  Technical  Requirements  for 
Product  and  Conformity  Assessment  adopted  in  2018,  and  the  Law  on  Accreditation.  The 
National Programme for implementation of the Stabilisation and Association Agreement sets out 
the planning for gradual approximation with the acquis and its implementation. 

Non-harmonised area 

Kosovo's legislation needs to be aligned with Articles 34-36 of the Treaty on the Functioning of 
the European Union (TFEU). However, it has not yet developed an action plan to ensure this.  

The Ministry of Trade and Industry is the competent authority to ensure the obligation to notify 
on  technical  regulations  at  the  draft  stage,  following  the  applicable  EU  requirements  and 
international agreements. 

49 

 
 
 
 
Harmonised area: quality infrastructure 

The legal  basis for technical regulations,  standards, conformity assessment and accreditation is 
partly  aligned  with  the  acquis,  particularly  on  metrology;  however,  further  work  is  needed  on 
market surveillance legislation. The quality assessment, standards and accreditation bodies have 
limited staff and financial resources, which prevents them from fully implementing the acquis. 

The  new  Law  on  Standardisation  was  further  aligned  with  the  acquis;  it  establishes  the 
framework for the standardisation and development of goods and the functioning of the Kosovo 
Standardisation  Agency.  Though  Kosovo  is  not  a  member  of  the  European  Committee  for 
Standardisation/European Committee for Electro-technical Standardisation (CEN/CENELEC), in 
2017  the  CEN/CENELEC  agreed  to  allow  the  Agency  direct  access  to  EU  standards.  The 
Agency adopted 647 European standards in the reporting period. However, obstacles limiting the 
online sale of standards need to be addressed.  

The  new  Law  on  Accreditation,  adopted  in  January  2017,  upgraded  the  Kosovo  General 
Accreditation  Directorate  to  an  administration  body  under  the  Ministry  of  Trade  and  Industry. 
This was considered one of the pre-conditions for Kosovo to sign the Multilateral Agreement of 
the European Cooperation for Accreditation. A 2016-2020 accreditation policy and strategy for 
the Directorate was adopted, but the limited resources and the absence of a director general since 
mid-2016 has put its implementation at risk.  

There are currently 39 accredited  conformity assessment bodies in Kosovo and 4 more are in 
the  process  of  being  accredited.  However,  their  capacity  and  performance  needs  to  be 
strengthened.  

On metrology, Kosovo adopted the legislation designed to align with the Measuring Instrument 
Directive  in  2016  but  secondary  legislation  still  needs  to  be  aligned  with  the  Non-Automatic 
Weighing  Instruments  Directive.  Also,  the  lack  of  qualified  staff  and  fully  operational 
laboratories in the Kosovo Metrology Agency undermines the implementation of both Directives 
in several sectors.   

On market surveillance the legal basis is the Law on General Product Safety, designed to align 
with the acquis. However, the market surveillance body faces difficulties enforcing the Law due 
to  lack  of  staff  and  financing.  Interinstitutional  coordination  has  improved  since  the 
establishment  of  the  Market  Oversight  Coordination  Body.  Currently  no  inspections  can  be 
conducted in the north of Kosovo due to a lack of premises, following a bomb attack in 2017 

In  2017,  266  product  safety  inspections  were  conducted  in  Kosovo,  which  identified  249 
dangerous types of product and as a result, all harmful products were permanently taken off the 
market. 

Harmonised area: sectoral legislation 

On  the  New  and  Global  Approach  product  legislation,  Kosovo  adopted  legislation  to 
increase its level of alignment with the EU  acquis on toy safety, electromagnetic compatibility 
and safety of lifts. Lack of capacity within the quality infrastructure prevents full implementation 
of its newly adopted legislation.  

There has been no progress on alignment with the acquis on Old Approach product legislation 
or  on  procedural  measures.  Kosovo  should  increase  its  level  of  alignment  and  further 
strengthen  its  administrative  capacities  to  ensure  effective  implementation  of  the  Registration, 
Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation.  

Kosovo is partly aligned with the acquis on Crystal Glass Products.  

50 

 
 
 
 
 
 6.2.  Movement of persons, services and right of establishment 

Kosovo is moderately prepared for the free movement of persons and services and the right of 
establishment. Some progress was made on alignment with the Services Directive by adopting 
the Law on Services. However, more still needs to be done to improve effectiveness in this area.  

Over the coming year, Kosovo should in particular:  

→ remove the identified barriers to the free movement of services; 
→ align with the acquis on mutual recognition of professional qualifications;  

→ adopt the draft Law on Postal Services and further open the postal market. 

On  movement  of  persons,  regarding  access  to  the  labour  market,  the  Ministry  of  Labour  and 
Social Welfare has issued 105 labour certificates for periods of 90 days to foreign citizens over 
the reporting period. On the coordination of social security systems, the Ministry of Labour and 
Social  Welfare  signed  a  Social  Security  Agreement  with  Belgium  in  February  2018  and  is 
currently negotiating a social security agreement with Switzerland. Kosovo has well-functioning 
agreements with Montenegro and the former Yugoslav Republic of Macedonia on confirmation 
of social security periods.  

On the freedom to provide services, the new Law on Services adopted in March 2017 is only 
partly  compliant  with  the  Services  Directive.  The  Law  is  not  aligned  with  the  provisions  on 
cross-border  services  and  administrative  cooperation,  and  several  of  its  provisions  enter  into 
force  only  several  years  after  publication.  The  Ministry  of  Trade  and  Industry,  in  charge  of 
supervising the law's implementation, screened the existing legislation for alignment with the EU 
Services  Directive.  Based  on  this  screening,  25  laws  and  29  bylaws  need  to  be  amended  for 
Kosovo  to  fully  align  with  the  EU  Services  Directive  by  2022.  The  government  approved  the 
administrative instruction on the procedure of notification and assessment of compliance of draft 
normative acts with the Law on Services. It obliges competent authorities to seek a positive legal 
opinion for any future draft legislation falling under the scope of the new law.  

On  the  right  of  establishment,  general  registration  in  the  Kosovo  Business  Registry  is 
obligatory  for  any  individual  or  business  wishing  to  do  business.  In  a  number  of  regulated 
professions such as law and auditing, there is a need to enrol in a separate registry or association, 
specific to the service sector. Foreign service providers are only allowed to provide services in 
Kosovo  through  establishment,  which  means  that  legislation  does  not  enable  free  cross-border 
services on a temporary basis.  

The  government  approved  the  administrative  instruction  on  operation  of  the  Point  of  Single 
Contact.  The  instruction  is  intended  to  facilitate  access  to  services  for  their  providers  and 
beneficiaries.  The  instruction  also  regulates  the  responsibility  of  the  competent  bodies  for  the 
Point  of  Single  Contact.  Kosovo  continued  to  gradually  align  its  legal  framework  on  postal 
services with the acquis. In 2017, a new Law on Postal Services was being prepared, with plans 
for  adoption  in  2018.  In  parallel,  secondary  legislation  should  be  developed  for  the  technical 
implementation of the Law and a timetable established for moving forward with the legislative 
process. Universal postal service is still not provided in 30 % of the territory. The weight limit 
for the reserved area needs to be further reduced to fully liberalise the postal market.   

On  the  mutual  recognition  of  professional  qualifications,  the  Law  on  the  Regulated 
Professions in Kosovo, adopted in October 2016, is largely aligned with the EU acquis. The Law 
defines  16  professions,  as  so-called  regulated  sectoral  professions  (i.e.  doctors,  dentists, 
pharmacists,  veterinary  surgeons,  midwifes,  nurses  and  architects),  for  which  the  Directive  on 
the  recognition  of  professional  qualifications  requires  a  minimum  harmonised  training  and  it 
further determines some generic criteria for access to the regulated professions The Ministry for 

51 

 
 
 
Education  together  with  the  National  Centre  for  Academic  Recognition  and  Information  of 
Kosovo  are  the  competent  authorities  with  regulatory  and  authorising  powers.  Moreover,  two 
decision  making  bodies,  the  State  Examination  Agency  and  State  Council  for  the  Regulated 
Professions are provided for in the Law, but have not yet been established.  

Despite progress made, Kosovo needs to develop the necessary structures and the rules for the 
recognition  for  professional  qualifications  obtained  in  other  countries,  in  order  to  facilitate  the 
cross-border movement of professionals and services. 

6.3. 

Free movement of capital  

Kosovo has some level of preparation for this area. Some progress was made on payment 
services.  However,  the  last  report's  recommendation  to  both  ensure  equal  treatment  of  EU 
nationals  acquiring  real  estate  in  Kosovo  and  to  increase  efforts  to  fight  economic  and 
financial crime have not been addressed.  

In the coming year, Kosovo should in particular:  

→  take  steps  to  grant  national  treatment  to  EU  nationals  acquiring  real  estate  in  Kosovo 
within 5 years from the entry into force of the SAA (by 2021);  

→ increase efforts to fight economic and financial crime and align the Law on the Prevention 
of Money Laundering and Terrorist Financing with the EU acquis. 

On  capital  movements  and  payments,  the  movement  of  capital  remains  largely  free  in 
Kosovo,  with  no  restrictions  on  foreign  ownership  or  on  investment  in  the  financial  sector. 
Good  progress  was  made  with  the  mandatory  introduction  of  IBAN  for  both  domestic  and 
cross-border payments. The execution of payment transactions is limited to banking and non-
banking  financial  institutions,  which  are  licensed  by  the  Central  Bank  to  perform  these 
activities (payments and money transfers).  

Foreign citizens are still not allowed to acquire real estate in Kosovo. No progress was made 
to  align  the  provisions  in  the  relevant  laws,  implementing  acts  and  administrative  practices 
that continue to be an obstacle to equal treatment.  

The  Law  on  the  prevention  of  money  laundering  and  terrorist  financing  is  only  partially  in 
compliance  with 
the  acquis  and  Financial  Action  Task  Force  recommendations. 
Interinstitutional  cooperation  on  the  fight  against  economic  and  financial  crime  must  be 
guaranteed to ensure proper investigation and prosecution of offences. 

6.4. 

Financial services  

Kosovo  is  moderately  prepared  in  the  area  of  financial  services.  Some  progress  was  made 
during the reporting period in banking and credit institution supervision.  

In the coming year, Kosovo should, in particular:  

→ fully implement and enforce Solvency I measures; 

→  adopt  amendments  to  Kosovo's  legal  framework  on  microfinance  institutions  and  non-bank 
financial institutions to bring it into line with the EU acquis; 

→ adopt the law on accounting, financial reporting and auditing. 

On  banks  and  financial  conglomerates,  some  progress  has  been  made  in  implementing  the 
legislation  on  banking  supervision,  which  aims  to  strengthen  corporate  governance  and  the 
management of credit risk. The Central Bank needs to ensure adequate protection of consumers 
and  the  prevention  of  unfair  banking  practices.  Kosovo  needs  to  establish  an  independent 
recovery and resolution authority. On the harmonisation of the regulatory framework with Basel 

52 

 
 
 
II and EU standards, the Chapter on Risk-Weighted Exposure Amounts for Credit Risk has yet to 
be adopted. In March 2017, the Central Bank signed a memorandum of understanding with the 
European  Banking  Authority,  establishing  a  framework  for  cooperation  and  information 
exchange  and  on  the  European  Single  Supervisory  Mechanism.  This  last  one  still  needs  to  be 
signed  with  the  European  Central  Bank.  The  legislation  on  microfinance  institutions  and  non-
bank financial institutions is not yet in line with the EU acquis. The law on accounting, financial 
reporting and auditing has not been adopted. 

On insurance and occupational pensions, Solvency I measures need to be fully implemented 
and enforced. Preparations have not yet begun to introduce measures aligned with the Solvency 
II Directive. The insurance law is aligned with the EU acquis on the exercise and pursuit of the 
business  of  insurance,  reinsurance  and  insurance  mediation.  The  oversight  and  supervision  of 
occupational  pension  funds  needs  to  be  improved.  Some  progress  was  made  on  improving  the 
transparency  of  insurance  services,  namely  by  publishing  annual  audit  reports  online,  but 
additional  efforts  are  still  needed  to  increase  the  conditions  for  granting  licences  to  new 
insurance companies. Stronger inter-institutional coordination is required to address the issue of 
non-insured,  non-registered  vehicles.  Due  to  Kosovo’s  inability  to  partake  in  the  ‘green  card’ 
system,  vehicle  insurance  continues  to  be  required  for  foreign-registered  vehicles  entering 
Kosovo and for vehicles with Kosovo registration plates leaving Kosovo. This is not the case for 
countries with which Kosovo has bilateral vehicle insurance arrangements.  

On  securities  markets  and  investment  services,  the  Central  Bank  auctions  government 
securities and maintains records, which are stored and processed electronically.  

6.5.  Customs  

Kosovo  is  moderately  prepared  in  the  area  of  customs.  There  has  been  some  progress, 
notably in implementing paper-less declarations and simplifying administrative procedures.  

In the coming year, Kosovo should in particular: 

→ further align customs  legislation, including the customs and excise code, with the Union 
customs code and the excise acquis;  

→  step  up  coordination  between  Kosovo  Customs,  law  enforcement  agencies  and  other 
relevant institutions on fighting the informal economy and customs fraud. 

In the area of customs legislation, the customs and excise code is largely aligned with the Union 
customs  code,  but  further  alignment  is  still  needed.  Kosovo  is  not  a  member  of  the  Common 
Transit Convention. It has also not ratified the Regional Convention on Pan-Euro-Mediterranean 
(PEM) preferential rules of origin, but applies its provisions. Kosovo Customs participates in the 
System  for  Exchange  of  Excise  Data  providing  for  systematic  electronic  exchange  of  data 
between  Western  Balkan  countries.  The  legislation  on  drug  precursors,  on  customs  measures 
governing  intellectual  property  rights  and  on  export  control  for  cultural  goods  is  still  not  fully 
aligned with the EU acquis. Further harmonisation is also needed on customs security aspects. 
Moreover, in January 2018, customs exemptions were introduced for the import of raw materials 
and semi-manufactured products used in production, production machinery lines and information 
technology  equipment,  which  are  not  foreseen  for  duty  relief  in  the  Union  customs  code. 
Customs inland terminals are located in privately owned facilities and charge a fee to every truck 
entering the terminal to discharge customs obligations. Such fees are not in line with the acquis.  

The customs administration continued to  maintain  reasonable  administrative and operational 
capacity;  customs  revenues  increased  by  6.6  %  in  2017.  However  there  needs  to  be  more 
coordination with other relevant institutions and law enforcement bodies on fighting against the 
informal economy. The planned merger of tax and customs administrations has been limited to 

53 

 
 
 
certain  management  and  administrative  services  and  will  not  affect  the  core  business  of  each 
administration. The ‘paperless concept’ and the e-payment introduced by Kosovo Customs have 
helped  to  eliminate  procedures  and  bureaucratic  administrative  barriers,  leading  to  an 
acceleration of customs clearance procedures.  

Customs performance in the fight against illegal cross-border activities, including smuggling of 
goods, such as narcotics and hazardous materials, continues to show progress. Further efforts are 
needed  to  better  address  corruption,  including  by  conducting  more  investigations  and 
strengthening    checks  on  asset  declarations  filed  by  customs  officials.  The  capacity  of  the 
customs department dealing with intellectual property rights is insufficient. The growing backlog 
of  unresolved  complaints  against  the  customs  administration  at  the  fiscal  division  of  the  Basic 
Court  of  Pristina  must  be  addressed.  In  January  2017,  Kosovo’s  application  to  the  World 
Customs Organisation (WCO) was accepted by the depositary, which triggered discussions and a 
difference of views at the WCO Council. 

6.6.  Taxation  

Kosovo is at an early stage in the area of taxation. There was some progress in collecting tax 
revenues,  reducing  the  grey  economy,  further  aligning  secondary  tax  legislation,  and 
concluding additional double-taxation agreements with other countries.  

Last  year’s  recommendations  were  only  partially  implemented  and  in  the  coming  year, 
Kosovo should in particular:  

→  step  up  field  inspections  to  further  combat  the  informal  economy,  recover  unpaid  tax 
liabilities and detect unregistered taxpayers and ensure that cases of tax evasion and fraud are 
properly investigated and adjudicated; 

→  ensure  merit-based  appointments  in  the  tax  administration,  free  from  undue  political 
influence, and the implementation of the Independent Oversight Board decisions; 

→  reduce  the  backlog  of  unresolved  complaints  against  the  tax  administration  at  the  fiscal 
division of the basic court of Pristina. 

On indirect taxation, the value-added tax (VAT) is broadly in line with the EU acquis. Kosovo 
applies a standard rate of 18 % and a reduced rate of 8 % in line with the rules on  rates set out in 
the EU Directive on the Common System of VAT, although the reduced rather than the standard 
rate  is  applied  to  supplies  and  imports  of  IT  equipment.  The  VAT  reimbursement  for  goods 
contained in the personal luggage of travellers residing outside Kosovo is  not aligned with the 
EU  Directives.  On  direct  taxation,  the  transfer  pricing  between  enterprises  under  common 
ownership or control is addressed within the Law on Corporate Income Tax, in line with OECD 
guidelines for agreements on the elimination of double taxation. Twelve such agreements have 
been concluded so far, seven of them with EU Member States. Financial intermediaries are only 
required to inform the tax authority about recipients of savings income upon request.  

Kosovo should further strengthen administrative cooperation and mutual legal assistance on 
tax  matters,  including  those  enshrined  in  the  OECD/Council  of  Europe  Convention  on  Mutual 
Administrative Assistance in Tax Matters.  

On  operational  capacity  and  computerisation,  the  planned  merger  of  the  tax  and  customs 
administrations has been limited to certain management and administrative services and will not 
affect the core business of each administration. The process of modernising the tax authorities’ 
internal  IT  platform  has  started  and  should  continue.  Electronic  services,  including  online  tax 
returns,  the  verification  and  payment  system,  and  business  registration  centres  (one-stop  shop) 
introduced in 2016 are now operational. Overall tax revenue collection in 2017 increased by 7 % 
compared  to  2016.  However,  tax  evasion  and  informality  continue  to  hamper  the  economy. 

54 

 
 
 
There has been some progress in reducing the informal grey economy, but this continues to be 
very high and further efforts need to be done to combat it. In this regard, the tax administration 
needs to enhance field inspections, detect unpaid tax liabilities and unregistered taxpayers. The 
tax  administration  has  recruited  additional  staff,  but  it  must  strengthen  its  administrative  and 
professional  capacity,  ensuring  merit-based  appointments  and  full  implementation  of  the 
Independent  Oversight  Board  decisions.  Allegations  of  serious  tax  fraud  need  to  be  properly 
investigated. The growing backlog of unresolved complaints against the tax administration at the 
fiscal division of the Basic Court of Pristina continues to grow and needs to be addressed. 

6.7.  Competition 

Kosovo is at an early stage on competition. Some progress was made by adopting the Law 
on State Aid and by adopting secondary legislation in competition law. However, as most of 
last  year's  recommendations  have  not  been  addressed,  they  remain  valid.  The  agencies 
responsible for competition and state aid face substantial challenges to their investigative and 
decision-making capacity. Significant efforts are needed to improve legislative alignment and 
enforcement.  

Kosovo should pay particular attention in the coming year to:  

→ strengthen the enforcement of competition and state aid law; 

→ complete the alignment of implementing legislation on competition and state aid;  

→ ensure the functional capacity and operational independence of the competition and state 
aid institutions in charge of development and enforcement at all levels. 

Antitrust and mergers 

The  legislative  framework  is  broadly  aligned  with  Article  101  (restrictive  agreements)  and 
Article  102  (abuse  of  a  dominant  position)  of  the  Treaty  on  the  Functioning  of  the  European 
Union (TFEU). The legal framework for the Kosovo Competition Authority to control mergers is 
in place. Some progress was made in adopting related implementing legislation. Following the 
European Reform Agenda, the Competition Authority adopted sub-legal acts that are largely in 
line with the acquis. 

On  the  institutional  framework,  the  Competition  Authority  is  responsible  for  implementing 
competition law. The Authority is governed by the Kosovo Competition Commission, a collegial 
decision-making  body  appointed  by  the  Assembly.  Formally,  the  Authority  is  operationally 
independent with powers to initiate investigations, conduct on-site inspections, impose fines and 
remedies and prohibit anti-competitive mergers.  

On its capacity to enforce legislation, the Authority has 13 staff but with limited expertise. The 
team lacks appropriate training on competition and mergers. Its operational budget has remained 
stable but insufficient. The Authority still lacks internal procedures and the capacity to conduct 
investigations.  Furthermore,  judges  and  court  staff  dealing  with  competition  cases  and  merger 
control still lack adequate expertise in this field.  

Following  the  appointment  of  the  Kosovo  Competition  Commission,  some  progress  was  made 
on  implementation  notably  of  decisions  on  anti-competitive  agreements,  abuse  of  dominant 
position and mergers. However, awareness-raising activities need to increase significantly.  

State aid 

The legislative framework is largely in line with the EU acquis. Some progress was made with 
the adoption of the new Law on state aid in December 2016, which broadly reflects Articles 107 
and 108 of the TFEU. However, related implementing legislation still needs to be aligned with 
the new laws. 

55 

 
 
 
As regards the institutional framework, the five-Member State Aid Commission is responsible 
for implementing the Law on State Aid, but has not yet been appointed. In accordance with the 
new  law,  the  staff,  assets  and  budget  were  transferred  from  the  Competition  Authority  to  the 
Ministry of Finance, where the new State Aid Department has been set up. Formally, it has the 
power  to  verify  notified  aid  measures,  prohibit  aid,  carry  out  ex  post  audit  of  aid  and  recover 
incompatible  aid.  However,  with  only  one  staff  member  and  a  director,  the  State  Aid 
Department's  capacity  to  enforce  the  law  remains  very  limited.  As  a  result,  the  effective 
implementation of the Law on State Aid has yet to be demonstrated. So far, its activities have 
been  limited  to  distributing  notification  forms  to  potential  aid  granters.  The  State  Aid 
Department does not have the capacity to screen existing aid schemes, as required by the SAA. 
A 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  rules  among  aid  grantors  is  very  weak  and  must  be  significantly 
increased. No decisions on state aid have been issued in the last 4 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 nature within the meaning of Article 37 of the TFEU. 

6.8. 

Public Procurement 

Kosovo  has  some  level  of  preparation  for  public  procurement.  Some  progress  was  achieved 
with the adoption of the public procurement strategy and with the introduction of the electronic 
procurement platform. However, more needs to be done to prevent irregularities and corruption 
during the procurement cycle. Kosovo needs to address the weak capacity of public procurement 
institutions  to  administer  public  procurement,  the  insufficient  monitoring  and  enforcement  of 
contracts and the weak remedy systems, all of them vulnerable to corruption in the case of public 
procurement.  

In the coming year, Kosovo should in particular:  

 further align its legislation with the European acquis on public procurement and ensure proper 
implementation of the Law on Public Procurement;  

 increase the capacity of all public procurement institutions to administer public procurement 
and strengthen the full tender cycles oversight and monitoring;  

 ensure full functionality of the e-procurement system. 

Institutional set up and legal alignment  

Kosovo's  legal  framework  on  public  procurement  is  broadly  in  line  with  the  EU  acquis.  The 
Law  on  Public  Procurement  ensures  the  possibility  of  using  the  competitive  negotiated 
procedure. However, the best price-quality ratio and full product life-cycle costs introduced by 
the  EU  directives  on  public  procurement  in  2014  are  not  considered.  Also  the  rules  on 
shortlisting candidates in the restricted procedure and the grounds for exclusion do not comply 
with the acquis. The EU Defence Procurement Directive has not been aligned.                               

The  strategy  (2017-2021)  and  action  plan  (2017-2019)  to  improve  the  public  procurement 
system were adopted in 2017, the aim being, better coordination and more consistent activities 
by central public procurement institutions.  

56 

 
 
 
The  public  procurement  institutions  consist  of  three  main  bodies.  The  Public  Procurement 
Regulatory Commission is responsible for the overall coordination 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  examines  all  allegations  of  breaches  of 
the public procurement law. However, these institutions still face major challenges in exercising 
their functions and duties effectively and efficiently. 

Implementation and enforcement capacity 

In  2017,  the  public  procurement  share  of  GDP  amounted  to  7.35  %  at  a  value  of  EUR  459.7 
million.  Of  these,  87  %  were  awarded  using  an  open  procedure.  However,  98  %  of  public 
contracts  were  awarded  according  to  the  lowest-price  criterion  in  2017,  rather  than  best 
price-quality  ratio.  Major  price  differences  are  identified  for  the  same  items  between  various 
contracting authorities.  

Since January 2017, the use of e-procurement became mandatory for all contracting authorities, 
while  still  allowing  for  a  parallel  hard  copy  system.  However,  at  present  only  3  out  of  12 
modules of the e-procurement system are in place. For e-procurement to be fully implemented, 
steps have to be taken to build the capacity of both, bidders (especially small and medium-sized 
enterprises)  and  buyers  to  use  it.  Other  significant  issues  such  as  contract  oversight  and 
monitoring of contract management have not yet been sufficiently implemented. 

Centralised procurement is mandatory for all subject matters included on the list issued by the 
Ministry  of  Finance  and  applies  to  agencies  accountable  to  the  Assembly  with  fewer  than  50 
employees.   However, this year's expansion of the list of jointly purchased goods, needs to be 
backed up by a significant increase in the central procurement agency's staff and other resources. 
Monitoring the central purchasing activities is especially important due to their high value and 
complexity. There are significant delays in the procurements performed by the agency,  as only 
one has been completed this year and the second one, ready to be contracted, is still in the appeal 
stage. This significantly hampers the implementation of centralised procurements.  

Efficient remedies system  

The  regulatory  framework  and  the  institutional  set-up  for  review  of  public  procurement, 
including  public-private  partnerships,  are  in  place.  The  provisions  of  the  Law  on  public 
procurement  on  the  scope  of  the  review  and  remedies  systems,  the  time  limits  for  challenging 
decisions, the effects of filing a complaint and the mechanism for ensuring the effectiveness of 
contracts, are to a large extent in line with the acquis.  

In 2017, the Procurement Review Body received and reviewed 541 complaints and reviewed 459 
appeals.  Of  the  decisions,  159  were  sent  for  re-evaluation,  and  in  91  cases  the  decision  of  the 
contracting authority was upheld. All decisions by the Procurement Review Body are published 
on  its  webpage,  but  the  database  needs  to  be  made  more  user-friendly  with  improved  search 
functions.  

Economic  operators  have  the  right  to  submit  a  request  to  the  Procurement  Review  Body  to 
review their complaints. In case of non-compliance with its decisions the Body has the power to 
impose fines on contracting authorities. 4 such penalties were imposed in 2017.  

The automatic suspension clause introduced in the new Law on Public Procurement, was used in 
June 2017, when two members of the board of the Procurement Review Body were suspended 
because of their indictment in a corruption case. 

The decisions of the Procurement Review Body should include a more developed rationale and 
the execution of its decisions should be improved. 

57 

 
 
 
6.9.  Company law  

Kosovo is at an early stage of preparation on company law. Some progress was made on 
online business registration and disclosure of company information.  

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

→ adopt the draft Law on Business Organisations; 

→ ensure  the  proper  implementation  of  the  recently  adopted  Law  on  Accounting,  Financial 
Reporting and Audit. 

On  company  law,  the  draft  law  on  business  organisations,  aimed  at  acquis  alignment  on  a 
number of issues, including domestic mergers and divisions as well as cross border mergers, still 
needs to be adopted. A corporate governance code is to be developed after adoption of this law. 
Company takeovers are not regulated. The Kosovo Business Registration Agency is responsible 
for  online  business  registrations  and  publications,  including  company  financial  statements. 
Business registration can be submitted electronically.  

On corporate accounting and auditing, a new law on accounting, financial reporting and audit 
was adopted. Large entities must apply International Financial Reporting Standards (IFRS/IAS) 
which are fully and directly transposed into domestic standards. Small and medium entities must 
apply  the  IFRS  for  SMEs  standard;  Kosovo  needs  to  take  account  of  the  simpler  regime 
applicable for small companies under the EU Accounting Directive. The insufficient funding and 
resources of the institutional audit oversight structures need to be addressed.  

6.10.  Intellectual property law 

Kosovo has some level of preparation in this area. Some progress was made in harmonising 
legislation  with  the  EU  acquis.  However,  the  State  Intellectual  Property  Agency  and 
Industrial Property Agency still need more funding, staff and training. Significant efforts are 
still  needed  to  ensure  implementation,  including  effective  means  of  enforcing  intellectual 
property rights, in line with SAA obligations.  

In the coming year, Kosovo should in particular:  

→  further  strengthen  the  capacity  and  coordination  of  law  enforcement  agencies  to  enforce   
intellectual, industrial and commercial property rights;  

→  address  the  lack  of  resources  of  the  Industrial  Property  Agency  and  cope  with  the 
remaining backlog applications for intellectual property rights.  

On copyright and related rights, no progress was made in implementing relevant legislation on 
private copy schemes and digital piracy. Mechanisms are still needed to determine the fees for 
usage of copyrighted material between collective management organisations and broadcasters. 

On  industrial  property  rights,  the  legislative  framework  needs  to  be  further  aligned  with  the 
EU  acquis,  including  on  trade  secrets.  Despite  the  progress  made  in  reducing  some  of  the 
backlog of applications for intellectual property rights, the Industrial Property Agency continues 
to  be  affected  by  understaffing  and  insufficient  funding.  Cooperation  between  policy  making 
institutions  and  law  enforcement  agencies  remains  weak.  There  is  a  need  for  government 
strategy on intellectual property rights and for more awareness-raising among holders and users 
of these rights.    

On  enforcement,  Kosovo  Customs  carried  out  272  operations  targeting  goods  that  breach 
intellectual property rights in 2017, 222 of which followed requests for action by rights holders, 
while  the remaining  50  cases  of actions were  undertaken proactively by the Customs officials. 
The  value  of  the  goods  seized  was  EUR  1.6  million.  Overall,  the  customs  department  dealing 

58 

 
 
 
with intellectual property rights needs to be strengthened – having only two members of staff is 
insufficient to ensure enforcement. The administrative requirement to obtain police authorisation 
to  conduct  market  investigations  undermines  the  effectiveness  of  the  market  inspectorate. 
Moreover,  the  legal  framework  on  customs  measures  governing  intellectual  property  rights 
remains non-aligned with the EU acquis. 

6.11.  Social policy and employment 

Kosovo is at an  early stage of preparation on social policy and employment. There has been 
some progress during the reporting period.  The Employment Agency is now functional, public 
employment services have been improved and further alignment on health and safety at work has 
been  achieved.  At  the  same  time,  fatal  incidents  at  work  are  increasing  and  the  General 
Collective Agreement is still not implemented.  

As none of the 2016 recommendations have been implemented, Kosovo should in particular: 

  implement  the  action  plan  for  tackling  youth  unemployment,  implement  the  2018-2022 
strategy for employment and social welfare, and monitor their results;  

 amend and enforce the Law on Labour and legislation on health and safety at work, and adopt 
and implement legislation on inspections to reduce the number of accidents at work; 

 amend and adopt the Law on the Economic and Social Council. 

Kosovo  still  needs  to  amend  the  Law  on  Labour  and  to  improve  its  implementation. 
Amendments should inter alia better address equal and non-discriminatory treatment of women. 
Implementation  of  the  Law  is  undermined  by  the  low  number  of  inspectors  and  lengthy  court 
procedures.  Implementation  is  most  problematic  in  the  private  sector.  Child  labour  remains  a 
serious concern, with around 11% of children involved in work, with the percentage being higher 
among  communities  of  Roma  and  Ashkali  where  this  percentage  increases  to  17%.  This 
involvement  of  children  often  leads  to  their  exposure  to  various  forms  of  violence.  However 
quality data are lacking. The Labour Inspectorate has, during the reporting period, identified and 
dealt with only one case of a minor engaged in work.  

On health and safety at work there have been new regulations issued, but the implementation is 
ineffective. In 2017, there was an increase in workplace accidents, of which 14 out of 50 were 
fatal, mainly in the construction and services sector. 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. This has to be done above all by increasing the number 
of inspectors, at least from the current 49 to the 65 planned. 

On  social  dialogue,  the  2014  General  Collective  Agreement,  which  is  fundamental  in  laying 
down  the  rights  and  obligations  for  employers  and  employees,  is  not  being  implemented. 
Collective  bargaining  takes  place  mainly  at  the  central  level  through  the  Social  and  Economic 
Council and at the sectoral level, however is mostly covering the public sector. The amendments 
to  the  Law  on  the  Social  and  Economic  Council  have  not  yet  been  approved.  Trade  union 
membership of workers in the private sector is very low.  

On  employment  policy,  the  government  adopted  the  2018-2022  sector  strategy.  Also,  in  line 
with  commitments  under  the  European  Reform  Agenda,  the  government  developed  an  action 
plan  to  tackle  youth  unemployment.  The  budget  earmarked  for  active  labour  market  measures 
remains  insufficient.  The  public  employment  services  have  improved  their  performance  in 
matching employers to employees. The Employment Agency is now operational. 

High  inactivity  and  low  employment  remain  among  key  challenges.  The  overall  activity  rate 
stood at 37.6 % in 2015 and the employment rate was extremely low at 25 %. In addition to that, 

59 

 
 
 
the unemployment rate is still very high at 31 % in 2017. It continues to be higher for women (37 
%) than for men (29 %). The overall employment rate is 30 %, but only 13 % of women are in 
formal  employment,  compared  to  47  %  of  men.  Only  29  %  of  the  employed  have  permanent 
work  contracts,  whereas  71  %  work  on  short-term  contracts.  Unemployment  is  most  prevalent 
among young people (15-24 years), with 51 % unemployed. The rates of unemployment are even 
higher in the Roma and Ashkali communities. The members of these communities usually work 
in the informal sector, holding unsecured, unqualified and low status jobs. Only a small number 
is registered as unemployed. 

As regards the preparations for the use of the European Social Fund (ESF), there were no new 
developments.   

On social inclusion and protection, Kosovo needs to ensure that municipalities have sufficient 
resources to deliver the social services that fall under their responsibility. There is little progress 
on the social inclusion of Roma and Ashkali children and families. Kosovo needs to ensure that 
children  with  disabilities  are  able  to  attend  public  schools  alongside  their  peers.  On  social 
protection,  since  2009,  social  welfare  funds  have  been  allocated  through  the  general  grant 
without any earmarking in relation to the local budget available for social services. This lack of 
clarity resulted in a considerable variation in levels of support by municipalities to social service 
delivery.  A  provision  earmarking  specific  funding  from  the  general  grant  for  social  services 
should  be  included  in  the  upcoming  draft  Law  on  Local  Finance.  The  share  of  Kosovo’s 
population living below the poverty line has been decreasing, but it is still high at 17.6 %. The 
General Council for Social and Family Policy, in charge of licensing providers of social services 
including  foster  care  has  not  been  functional.  There  has  been  no  progress  in  licensing  new 
providers of foster care for children in need. 

On  non-discrimination  in  employment  and  social  policy,  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 as regards hiring procedures 
in the private sector. During the reporting period, the Ombudsperson received a similar amount 
of  cases  as  in  previous  years,  but  the  number  of  ex  officio  investigations  on  discrimination 
grounds  has  doubled.  Institutions  continue  to  perform  poorly  in  processing  and  investigating 
cases of discrimination. 

On  equality  between  women  and  men,  women  continue  to  be  exposed  to  various  forms  of 
gender discrimination. Kosovo should reform the system of maternity and parental leave, which 
presents an obstacle to the hiring of women, particularly in the private sector. 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. 

6.12.  Consumer and Health Protection 

Kosovo  is  at  an  early  stage  of  preparation  in  this  area.  There  has  been  no  progress  in 
consumer and health protection.   

Kosovo should in particular: 

  increase  the  involvement  of  civil  society  on  consumer  protection  and  consumer  rights  and 
ensure adequate numbers of inspectors and market surveillance;  

 increase the financial resources to allow for the implementation of the health sector reforms, 
including further roll-out of the electronic Health Information System.  

On  consumer  protection,  a  new  Law  on  Consumer  Protection  needs  to  be  adopted.  The 
institutional and administrative capacities as well as the coordination of all regulators in the field 

60 

 
 
 
of  consumer  protection  need  to  be  strengthened.  Enforcement  of  consumer  protection  is  very 
limited and consumer organisations are very weak. The new Law does not provide explicit legal 
competencies for civil society organisations to offer advice on consumer protection, information 
and  education  of  consumers.  The  consumer  protection  programme  for  2016-2020  has  been 
adopted  but  lack  of  human  and  financial  resources  in  the  Ministry  of  Trade  and  Industry 
continues to hamper effective policy implementation and coordination of the programme. 

With  regard  to  product  safety-related  issues,  the  Ministry  of  Trade  and  Industry  approved  a 
regulation  on  the  system  for  rapid  exchange  of  information  on  products  posing  a  risk  to  the 
health  and  safety  of  consumers.  The  dangerous  product  database  has  been  operational  since 
December  2016.  On  non-safety  related  issues,  the  Law  on  Inspectorate  and  Supervision  of 
Markets is partly aligned with the acquis, however the insufficient number of inspectors hamper 
the capacity to protect the economic interests of consumers.  

On  public  health  policy,  Kosovo  adopted  several  administrative 
instructions  and  a 
communication  strategy  in  support  of  the  Law  on  Health  Insurance,  but  its  implementation 
remains slow and has been further delayed as the start of premium collection has been postponed 
until the end of 2018. 

The  new  health  sector  strategy  2017-2021  and  its  action  plan  began  in  February  2017.  The 
strategy  clearly  indicates  several  shortcomings  in  the  health  sector  including  low  levels  of 
productivity  of  health  institutions,  and  lack  of  reliable  data,  however  due  to  institutional  and 
monitoring  mechanisms  the  strategy  is  not  being  implemented.  Around  30  %  of  Kosovo’s 
population is unable to obtain health services due to extreme poverty.  

Low public spending on health remains a concern. In 2016, it was estimated that only 40 % of 
the total annual needs for public healthcare were covered. The allocated funds are mainly used to 
cover fixed costs (approximately 68 %) leaving only about 32 % for direct patient costs related 
to  diagnosis,  treatment,  and  prevention.  Health  financing  is  predominantly  based  on  historical 
expenditure.  Institutional  accountability  is  low  and  there  are  no  clear  incentives  to  improve 
productivity, efficiency and quality in the health sector. Private (out-of-pocket) expenses remain 
high and are estimated at 40 % of total medical costs. 

Kosovo has a comprehensive Law on Tobacco Control, however the level of its enforcement has 
continued  to  fall,  due  to  a  lack  of  political  will  and  the  poor  performance  of  implementing 
authorities. 

On blood, tissues, cells and organs, the 2014 law on transplantation of tissues and cells, which 
is partly aligned with the acquis, is not being fully implemented. The law on blood transfusion 
still  needs  to  be  adopted.  Full  alignment  of  both  laws  with  the  acquis  requires  necessary 
resources, administrative and monitoring capacities to be put in place. 

In  the  field  of  serious  cross-border  health  threats,  including  communicable  diseases, 
legislation is not aligned with the acquis. Immunization coverage in 2017 is lower than in 2016. 
There is also a decrease in the vaccination of school-age children. Kosovo does not yet have an 
updated antimicrobial resistance (AMR) action plan. Prescription of antibiotics needs to be more 
strictly controlled to prevent anti-microbial resistance. 

With regard to patients’ rights in cross-border healthcare, Kosovo's legislation is not aligned 
with  the  acquis. Kosovo is  developing  an  electronic  Health  Information  System (eHIS)  based 
on  the  European  Core Health Indicators  which captures  data  on  patient  admissions,  discharges 
and  transfers,  though  it  currently  only  covers  around  30  %  of  public  health  facilities.  Strong 
commitment  is  needed  to  ensure  full  roll-out  of  eHIS  across  all  health  institutions.  Additional 
functionalities  (pharmacy,  pathology,  radiology,  blood  transfusion,  vaccination  and  other 

61 

 
 
 
interventions  etc.)  need  to  be  added  and  coverage  expanded  to  support  evidence-based  health 
care policy. 

Kosovo's legislation concerning medicines for human and veterinary use is not aligned with 
the acquis.  

Health promotion regarding non-communicable diseases remains weak. Kosovo does not have 
a strategy or an action plan on this. Kosovo is currently planning to implement a Comprehensive 
Survey on the Risk Factors on Non-communicable Diseases which will support the development 
of  an  evidence-based  strategy  and  action  plan.  With  regard  to  cancer  screening  there  is  no 
strategy  for  cancer  control  in  place.  During  2017  a  pilot  cervical  cancer  screening  programme 
was launched in Pristina.  

Mental health legislation is not aligned with the acquis. 

On nutrition and physical activity, there is no legislation in place. 

On  health  inequalities,  Kosovo  currently  does  not  provide  universal  health  insurance  and 
therefore out-of-pocket spending for health services remains high.  It is estimated that almost a 
third  of  the  population  does  not  have  easy  access  to  health  care  services  or  have  only  limited 
access due to lack of funds and that 18 % of the population, due to economic reasons, does not 
seek medical services in case of illness. Coverage of Roma, and Ashkali communities remain a 
concern regarding immunisation with only three in ten children being fully immunised. Lack of 
information  about  the  services  offered  by  public  institutions  and  cases  of  discrimination,  have 
also have negative effect on the access to health services.   

6.13.  Education and culture 

Kosovo is at an early stage of preparation for education and culture. There was no progress in 
the past year and the quality of education still needs to be considerably improved.  

As  previous  report’s  recommendations  have  not  been  addressed,  in  the  coming  year  Kosovo 
should in particular: 

→  adopt  a  new  law  on  higher  education  with  a  view  to  a  reform  based  on  the  best  standards, 
including ensuring the autonomy and independent operation of higher education institutions and 
quality assurance mechanisms;  

→  step  up  efforts  on  curricular  reform  in  pre-university  education  (including  vocational 
education and training programmes), focused on competency-based learning; 

→ improve access to quality education for pre-school enrolment and disadvantaged groups. 

On education and training, the level of public spending on education, at 4.7% of GDP, is not 
managed efficiently enough to provide quality education for the comparatively large number of 
young people.  

Enrolment rates in  primary and lower secondary educations are almost universal, and upper 
secondary gross enrolments stand at 85 %. However, only 18 % of children aged 0-5 years attend 
licensed  pre-school  institutions.  Low  enrolment  of  children  in  the  preschool  level  remains  a 
concern  and  Kosovo  needs  to  increase  the  provision  of  childcare  facilities.  The  number  of 
students in higher education is nearly double the EU average compared to population. However, 
the completion rate is low and there is high unemployment rate among university degree holders 
(25 %), suggesting a mismatch between higher education programmes and labour market needs. 
The  criteria  of  the  Accreditation  Agency  for  Higher  Education  (KAA)  take  into  account  EU 
standards.  However,  the  government’s  decision  in  2017  to  dismiss  the  entire  board  and  acting 
director  of  the  Agency  has  undermined  the  autonomy  of  the  agency  and  has  led  to  its  the 

62 

 
 
 
exclusion  from  the  European  Quality  Assurance  Register  for  Higher  Education  (EQAR). 
Kosovo's  qualifications  framework  is  referenced  to  the  European  Qualifications  Framework. 
Education remains a high risk sector for corruption and political influence, especially in higher 
education. The government also decided to dismiss the members of the Presiding Board of the 
University of Pristina, which deprives the institution from having a stable management able to 
carry out their duties and reforms. 

The 2017-2021 Kosovo Education Strategic Plan and its Action Plan were adopted in July 2017. 
The  strategy  covers  participation  and  inclusion,  management  of  education  system,  quality 
assurance,  teacher  development,  early  and  preschool  education,  vocational  education  and 
training,  adult  education,  and  higher  education.  The  strategy  and  action  plan  now  need  to  be 
implemented  and  the  necessary  resources  allocated.  A  law  on  occupational  standards  was 
adopted in November 2016. The government needs to ensure the implementation of the quality 
assurance  strategy  and  establish  quality  assurance  mechanisms  at  the  municipal  level.  The 
implementation  of  the  curricula  reform  is  undermined  by  a  lack  of  qualified  teaching  staff, 
teaching  material  and  supplies  and  an  underdeveloped  student  assessment  system.  A  teacher 
training system to improve the quality of pre- and in-service education is in place but has yet to 
bear results. In January 2018, the Ministry in January 2018 has announced its plans to introduce 
teacher profiling for grades 1-5, without proper baseline assessment. This would complicate and 
delay further the implementation of the reform. 

The quality of education continues to be a challenge at all levels. According to the 2015 OECD 
Programme  for  International  Student  Assessment  (PISA)  assessment  Kosovo  ranks  third  from 
the bottom of the list of over 70 systems tested. Kosovo has committed to participate in the 2018 
PISA assessment as well.  

Around  half  of  all  students  in  upper  secondary  education  choose  vocational  education. 
Vocational  education  and  training  (VET)  programmes  lack  practical  and  applied  courses,  with 
only  a  few  being  accredited  by  the  National  Qualifications  Authority.  Overall,  the  link  to  the 
labour  market  remains weak.  The  role  and  future  of  the  Agency  for  Vocational  Education  and 
Training  and  Adult  Education  remains  unclear.  Kosovo  should  increase  the  quality  of  VET 
programmes  and  qualifications  to  encourage  employers  to  hire  a  greater  number  of  VET 
graduates, by finishing the catalogue of qualifications on VET sectors.  

More efforts are needed to provide access to quality education for children with disabilities, and 
more  teachers  and  assistants  need  to  be  trained.  Measures  should  be  taken  to  address  the  high 
dropout rate of Roma and Ashkali children. Increasing their preschool participation, and that of 
other vulnerable groups, would significantly improve their continued participation and success in 
later schooling. 

As  of  January  2018,  Kosovo  can  participate  in  all  of  Erasmus+  and  can  join  platforms  and 
networks.  So  far,  more  than  2  000  students  and  staff  have  been  involved  in  the  International 
Credit Mobility strand, out of which two-thirds are from Kosovo and one third went to Kosovo. 
Institutions  from  Kosovo  participated  in  14  Capacity  Building  in  Higher  Education  projects, 
three of them as coordinating partners.  

On Youth, the local antenna of the Regional Cooperation Office (RYCO) was inaugurated. More 
than 800 young participants benefited from one of the three Youth mobility actions since 2014 
(mobility of youth workers, youth exchanges and the European Voluntary Service).  

On culture, Kosovo needs to continue to work towards meeting the standards set out in the 2005 
UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions 
and  develop  a  track  record  demonstrating  good  practice.  In  2018,  Kosovo  will  join  Creative 
Europe as a partner to the programme (culture sub-programme).  

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6.14.  Science and research 

Kosovo is at an early stage of preparation for science and research. No progress was made in 
the past year.  

In the coming year, Kosovo should in particular: 

→ increase government spending on research and seek to stimulate investment from the private 
sector by preparing and using the findings of a smart specialisation strategy that should be soon 
developed; 

→ focus efforts on increasing participation in the EU’s Horizon 2020 Programme and ensuring 
greater coordination of the contact points for Horizon 2020. 

Kosovo  has  done  little  to  develop  its  research  and  innovation  policy.  The  Law  on  Scientific 
Research  Activities  is  not  being  properly  implemented  due  to  lack  of  funding.  Government 
spending on research has decreased to 0.1 % of GDP. Kosovo has a poor record in using even 
that  budget,  often  barely  managing  to  spend  half  of  it.  In  higher  education,  the  quality  of 
post-graduate programmes preparing for the career of researcher are of weak quality, with both 
private and public higher education institutions having very uneven criteria for promotion based 
on  scientific  research  and  publications.  The  opening  of  the  Office  for  Sponsored  Programmes 
and Research at the University of Pristina is a small but positive step in the right direction. The 
new Ministry of Innovation and Entrepreneurship should build up its administrative capacity and 
adopt an innovation strategy in close coordination with the other ministries.  

There has been no progress on integration in the European Research Area.  

On  framework  programmes,  Kosovo  participates  in  the  EU  Horizon  2020  research  and 
innovation  programme  (H2020)  as  a  third  party.  Kosovo  has  participated  10  times  H2020 
projects (2 new ones in 2016 and 1 new in 2017). This is a slight increase compared to previous 
years, but this level of participation remains below Kosovo’s potential. Promotional and training 
measures  should  be  taken  to  improve  this.  The  first  experienced  researcher  from  Kosovo  was 
funded through the Marie Skłodowska-Curie Actions last year, a cooperation which needs to be 
further increased in the coming years. 

6.15.  Trade issues  

Kosovo is at an early stage of preparation in this area, with some progress over the past year. 

In the coming year, Kosovo should in particular: 

→  continue implementing trade liberalisation under the SAA; 

→  implement actions under the multi-annual action plan for a Regional Economic Area; 

→  strengthen the administrative capacity of the Ministry of Trade, in particular in view of the  
regional commitments in the trade area.  

Kosovo is at an early stage of preparation for applying for WTO observer status, with the first 
step being the Memorandum on Foreign Trade Regime which has been prepared for the adoption 
by  Kosovo's  authorities.  Kosovo  continued  to  coordinate  its  positions  with  the  EU  on  the 
common commercial policy. 

Some progress was achieved with regards to the free trade area with the EU, but opportunities 
for Kosovo exporters could be further maximised by taking full advantage of trade advantages 
granted  in  the  SAA.  Kosovo  abolished  customs  duties  on  a  number  of  tariff  lines,  including 
industrial, agricultural and fishery products. Remaining duties will be reduced progressively until 

64 

 
 
 
2025. Despite a slight improvement in the export of services in 2017, the trade deficit with the 
EU continued to grow. 

Kosovo took important commitments on the occasion of the Western Balkans Summit in Trieste 
in  July  2017  to  implement  a  multi-annual  action  plan  for  the  development  of  a  Regional 
Economic  Area  (REA)  in  the Western Balkans. The implementation  of the plan will allow the 
deepening  and  widening  of  economic  integration  within  the  region,  based  on  EU  rules  and 
standards.  Kosovo  continues  to  play  an  active  role  in  the  Central  European  Free  Trade 
Agreement (CEFTA) and took over its presidency in 2018. 

6.16.  Enterprise and industrial policy  

Kosovo  is  moderately  prepared  in  this  area.  Some  progress  was  made  by  introducing 
measures to improve the business environment. There is a need to further build up administrative 
capacity and ensure stronger inter-ministerial coordination.  

The  recommendations  from  the  2016  report  were  not  fully  implemented.  In  the  coming  year, 
Kosovo should in particular:  

→  introduce  regulatory  impact  assessments  to  reduce  the  administrative  burden  on  Small  and 
Medium Enterprises; 

→ continue implementing the recommendations included in the EU ‘Small Business Act’ (SBA) 
assessment; 

→ ensure the alignment of the Law on Economic Zones with the EU acquis. 

On  enterprise  and  industrial  policy  principles,  the  2017-2021  private  sector  development 
strategy  incorporating  industrial  policy  has  yet  to  be  adopted.  The  draft  strategy  is,  however, 
limited  to  sectors  under  the  responsibility  of  Ministry  of  Trade  and  Industry,  and  adequate 
synergies need to be ensured with other relevant policies such as energy, education, research and 
development.  A  new  Ministry  of  Innovation  and  Entrepreneurship  has  been  created.  However, 
there  is  a  need  to  build  up  its  administrative  capacity,  ensure  stronger  inter-ministerial 
coordination and adopt an innovation strategy. 

The  Law  on  Interest  Rights  in  Trade  Transactions  is  in  line  with  Directive  2011/7/EU  on 
combating late payment in commercial transactions. 

On  enterprise  and  industrial  policy  instruments,  the  National  Council  for  Economic 
Development  has  been  reactivated  and  provides  a  forum  for  public-private  dialogue.  Positive 
steps were taken in the business environment. In particular, measures were adopted to ease the 
process  of  starting  a  business,  accessing  credit  and  resolving  insolvency.  This  led  Kosovo  to 
move  up  20  positions  in  the  2017 World  Bank  ‘Doing  Business’  report.  There  are 8  industrial 
parks  in  differing  stages  of  completion  and  1  fully  operational  Business  Park.  But  the  Law  on 
Economic  Zones,  which  regulates  the  establishment  and  financing  of  economic  zones,  is  not 
aligned  with  the  EU  acquis.  There  are  no  specific  programmes  for  restructuring,  neither  for 
sector-specific development nor for sector-independent modernisation of industry.  

Some progress has been made to diversify and ease the access to finance for small and medium 
enterprises, with additional funding allocated to the Kosovo Credit Guarantee Fund. In January 
2017,  the  Small  Business  Act  (SBA)  National  Coordination  Group  was  established,  with  the 
Kosovo Investment and Enterprise Support Agency (KIESA) in the lead. However, KIESA still 
needs to strengthen its capacity. The recommendations of the Small Business Act assessment are 
yet to be implemented. 

In December 2017, an agreement was signed on Kosovo’s participation in the EU programme for 
competitiveness of enterprises and small and medium-sized enterprises (COSME). Kosovo will 

65 

 
 
 
be able to access COSME funding once internal procedures for the approval of the agreement are 
complete.  Kosovo  should  start  developing  measures  to  raise  awareness  among  business 
stakeholders and ensure their active participation in the programme.  

6.17.  Agriculture  

Kosovo  has  some  level  of  preparation  on  agriculture  and  rural  development.  Some  progress 
has been made in implementing the agriculture and rural development programme. 

In the coming year, Kosovo should in particular: 

→  improve  the  evaluation  and  monitoring  of  grants  and  direct  payments  provided  under  its 
agriculture and rural development programme; 

→  revise  and  update  the  agriculture  and  rural  development  programme  so  that  investments  in 
this sector are more efficient. 

On  horizontal  issues,  the  budget  of  EUR  46  million  allocated  to  the  agricultural  sector  has 
remained  stable,  for both direct payments and investment grants.  However, staff shortages and 
inadequate  monitoring,  evaluation,  accounting  and  internal  auditing  at  the  Agency  for 
Agriculture  Development  continue  to  undermine  the  proper  processing  of  applications  and 
execution of payments. A strategy and programme for agriculture and rural development (2014-
2020)  are  in  place.  However,  following  the  2015  agriculture  census  and  in  line  with 
developments in the sector, planned measures in this programme need to be revised and updated 
to make the best use and achieve maximum impact of funds for agriculture, increase income for 
farmers and improve the livelihood of the rural population.  

On  direct  payments,  a  significant  amount  of  support  to  agriculture  other  than  investments  is 
made  through  the  use  of  direct  payments.  Such  support  remains  mostly  coupled  to  production 
and linkage to cross-compliance still needs to be implemented. 

Kosovo has established a simplified Land Parcel Identification System, a farm register and an 
animal identification and registration system. Some progress has been made towards establishing 
an Integrated Administration and Control System. A Farm Accountancy Data Network is 
in place. 

No  progress  has  been  made  with  regards  to  establishing  a  common  market  organisation. 
Kosovo should undertake steps to draw up a legal basis for their establishment and functioning. 

In the area of rural development, measures mostly address the modernisation of farms and food 
processing facilities.  However the level of funding and efficiency of current rural development 
measures  remains  weak,  in  particular  in  regards  to  investments  into  farms,  primary  food 
processing, job creation in rural areas, building up and empowering local communities as well as 
land consolidation, access to irrigation and farmer education update. 

On quality policy and on organic farming, the legislation remains to be implemented. 

Kosovo lacks a clear strategy in that  regard.  An  organic  certification  systems  compatible  with 
the  acquis  requirements  remains  to  be  developed.  Kosovo  should  increase  capacities  to 
implement the Law on Organic Farming. Legislation in the sector is not designed to be aligned 
with the acquis.  

Legal  changes  in  agricultural  land  use  continue  to  affect  already  limited  availability  of  arable 
land and the productivity of the farms. There is no information on how much agricultural land 
Kosovo  loses  on  an  annual  basis  and  no  strategy  or  action  plan  to  address  this  issue.  The 
Ministry  of  Agriculture  in  cooperation  with  Ministry  of  Environment  and  Spatial  Planning 

66 

 
 
 
should  undertake  urgent  measures  to  stop  further  losses  of  agriculture  land  and  to  implement 
legislation governing spatial planning.  

6.18.  Food safety, veterinary and phytosanitary policy 

Kosovo has some level of preparation in the area of food safety, veterinary and phytosanitary 
policy. Some progress was made in this area.  

In the coming year, Kosovo should in particular: 

→  implement  an  integrated  food  control  system,  including  by  transferring  inspection 
responsibilities to the Food and Veterinary Agency; 

→ complete and launch the system of collection and disposal of animal by-products; 

→ complete registration and categorisation of food and feed processing establishments. 

In  the  area of  food  safety,  further  efforts  are  needed  to  complete  the  legislation  governing  the 
area of food and feed safety Registration and categorisation of food and feed establishments is 
ongoing. The Agency continues to perform regular checks on import and export of live animals, 
animal products, plants and plant products. Import permissions for EU registered establishments 
are no longer required. Work on establishing a plan for drug and residue monitoring is ongoing. 
The  Food  and  Veterinary  Agency  has  yet  to  prepare  a  multi-annual  control  plan  for  food  and 
feed safety and increase capacities in this regard.    

Inspection  responsibilities  have  still  not  been  transferred  from  municipalities  to  the  Agency, 
posing a continuous challenge to the implementation of an integrated food control system.  

On veterinary policy, the Kosovo Food and Veterinary Agency is currently upgrading its own 
system for border inspection. TRACES is used for exports only. 

In  the  area  of  animal  health,  some  progress  has  been  made.  The  multi-annual  disease  control 
and surveillance programme for animal diseases is in place. However, full implementation of the 
programme will require sufficient allocation of funds and capacities for the Agency. As part of 
regional  efforts  to  control  and  eradicate  rabies,  the  Agency  is  working  to  resume  vaccination 
campaigns. The vaccination programme for lumpy skin disease is ongoing. That being said, the 
Agency's capacities for emergency response in case of disease outbreaks remain insufficient.  

Concerning  management  of  animal  by-products,  progress  has  been  made  in  building  and 
equipping a Category I rendering plant. Further efforts are needed to ensure proper management 
and collection system for animal by-products.  

With regards to animal identification and registration, the under-reporting of animal movements 
remains a problem. Measures to enforce the regulation on animal identification and registration 
at the level of livestock markets, slaughterhouses and livestock transport are yet to be adopted by 
the Agency. 

Identification of basic cross-compliance measures in the areas of food safety, animal health and 
welfare remains a priority for the Agency, with a view to including them in the 2018 agriculture 
programme. 

In the phytosanitary sector, no progress has been made. Further efforts are needed to strengthen 
the  implementation  and  operational  capacity  of  the  institutions  responsible  for  plant  health  in 
Kosovo, in order to ensure an effective plant disease control system. 

6.19.  Fisheries 

Kosovo is at an early stage of preparation in the area of fisheries. No progress was made. 

In the coming year, Kosovo should:  

67 

 
 
 
  further align its market policy with the acquis; 

  establish an inventory of fish species in Kosovo. 

The  acquis  on  catch  quotas,  managing  fleet  capacity,  inspection  and  control  is  of  limited 
applicability as the fisheries sector is based on commercial lake fishing and aquaculture. Kosovo 
should prepare a market policy and carry out inspections in line with the EU acquis.  

6.20.  Environment and climate change  

Kosovo is at an  early stage of preparation on environment and climate change.  No progress 
has been achieved and serious environmental problems continue to impact people's livelihoods 
and  health.  Environmental  protection  and  climate  change  requires  considerably  more  political 
willingness to tackle the growing challenges.  

Since most of last report’s recommendations were not implemented, in the coming year Kosovo 
should: 

  establish  a  real-time  air  quality  and  effective  water  and  groundwater  monitoring  systems, 
publish the data and undertake urgent measures to reduce air and water pollution; 

  increase  the  collection  coverage  of  household  waste  in  order  to  address  the  issue  of  illegal 
dumpsites; 

  enforce  legal  provisions  on  environmental  liability,  damage  and  crime;  implement  the 
polluter pays principle and raise public awareness on environmental protection; 

  implement  the  strategy  on  climate  change  adaptation  and  low  emissions  development, 
consistent with the EU 2030 framework for climate and energy policies. 

Environment 

legislation,  further  progress 

the  remaining  cross-cutting  environmental  directives.  The 

is  needed  for  full  alignment  and 
Regarding  horizontal 
implementation  of 
lack  of 
enforcement of Environmental Liability Directive undermines the effectiveness of environmental 
protection. Environmental inspectorates lack staff and capacity and are unable to ensure effective 
enforcement although some efforts have been made for alignment with the Environmental Crime 
Directive.  The  strategy  on  environment  still  needs  to  be  updated  and  implemented. 
Implementation  of  priority  measures  is  undermined  by  insufficient  funding,  a  lack  of 
administrative  capacity  and  technical  skills.  The  use  of  environmental  and  strategic  impact 
assessments needs to be improved considerably, especially in industrial sectors with significant 
effects on the environment such as energy and transport. Meaningful involvement of the public 
and civil society is necessary.  

Measures to improve air quality still need to be adopted. Air quality, particularly in urban areas, 
continues to pose a major threat to public health. Kosovo's strategy for air quality and the law on 
ambient air quality continue not to be enforced. Uncontrolled pollution from the energy sector – 
particularly  from  the  Kosovo  B  power  plant  and  household  heating  –  but  also  from  industrial 
complexes,  road  traffic,  incineration  of  waste  and  other  toxic  materials  remains  a  serious 
problem. Air quality plans for zones where the levels of pollutants visibly exceed limit values by 
a  wide  margin,  especially  in  winter,  have  still  not  been  prepared  and  adopted.  The  air  quality 
monitoring system still needs to provide real-time data to the public. There is a lack of sufficient 
financial  resources  and  capacity  to  maintain  and  calibrate  the  monitoring  equipment.  Urgent 
measures are needed to reduce household reliance on lignite heating.  

The current solid waste management system in Kosovo is environmentally unsustainable. The 
legal framework is partially aligned but waste remains one of the most  significant problems in 

68 

 
 
 
Kosovo. Most waste streams end up in legal and illegal landfills. Collection coverage needs to 
further increase. The strategy and master plan for waste management 2013-2022 are only partly 
reflected  in  municipal  plans  for  solid  waste.  The  responsible  authorities  should  take  steps 
towards a circular economy approach, by introducing separation of waste at the source, recycling 
and  recovery  of  waste  streams.  The  high  number  of  dumpsites  needs  to  be  urgently  and 
sustainably  addressed.  Most  existing  landfills  are  at  the  end  of  their  storage  capacity  and  pose 
considerable  long-term  environmental  risk,  especially  groundwater  contamination.  This  is 
particularly the case at the Mirash landfill in Obiliq/Obilić. 

In  the  area  of  water  quality,  the  level  of  alignment  is  limited.  A  strategy  and  action  plan  on 
water  protection  have  still  not  been  adopted  and  urgent  efforts  are  required  to  ensure  the 
functioning  of  the  river  basin  authority,  established  in  July  2017,  including  preparation  of  its 
management  plan.  Untreated  sewage  and  discharge  remain  the  main  source  of  pollution.  The 
groundwater monitoring network is at an early stage. The system for monitoring surface water is 
not yet operational. A report on drinking water quality has been published. The identification of 
agglomerations  and  the  definition  of  sensitive  areas  is  required,  in  line  with  the  Urban  Waste 
Water Treatment Directive. Budget funding needs to be secured for priority projects in this area. 
Tariff-rate collection needs to be improved and technical water losses reduced.  

On nature  protection, there has  been  no progress on the alignment with  the  acquis.  Effective 
protection for designated protected areas is  not in  place.  Illegal construction  in  protected  areas 
needs  to  be  combatted  effectively.  Infrastructure  plans  need  to  ensure  that  nature  protection 
obligations  are  respected,  particularly  in  areas  that  could  potentially  become  protected  Natura 
2000 sites. The process of Natura 2000 designation is still at the very beginning due to a lack of 
technical and staff capacities in relevant institutions. However steps have been taken to start the 
inventory and mapping of natural habitats types and of biodiversity. 

On  industrial  pollution  and  risk  management,  alignment  remains  at  an  early  stage. 
Insufficient  enforcement  of  legislation  and  polluter  accountability  is  hampering  progress  in 
setting up a system for preventing industrial and chemical accidents. Hazardous mine waste, and 
industrial  dumpsites  continue  to  pose  a  serious  risk  to  soil  and  water.  Mechanisms  should  be 
established to ensure sustainability of the operational costs of collection and transport of waste. 
An operator still needs to be nominated for the future hazardous waste storage facility. 

On chemicals, alignment with the acquis remains at an early stage. Kosovo is not party to the 
Rotterdam  Convention  on  the  Prior  Informed  Consent  Procedure  for  Certain  Hazardous 
Chemicals  and  Pesticides  in  International  Trade  and  the  regulatory  framework  on  export  and 
import of hazardous chemicals still needs to be implemented. 

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

Kosovo  is  not  part  of  EU  Civil  Protection  Mechanism  but  is  a  beneficiary  of  the  IPA  Civil 
Protection  Cooperation  programme  since  2010.  Significant  progress  is  still  necessary  in 
important areas such as flood protection.  

Climate change 

The  level  of  alignment  remains  limited.  Regarding  the  strategic  framework,  the  Strategy  and 
Action Plan on Climate Change has still not been adopted. The Strategy also contains component 
on  adaption  to  climate  change.  The  National  Council  for  Environment  and  Climate  Change 
failed  to  take  concrete  measures  to  mainstream  climate  action  and  to  raise  awareness  in  the 
public.  There  is  still  no  evidence  of  mainstreaming  climate  change  in  any  of  the  government 
projects. This is particularly lacking in energy and transport sectors.  

69 

 
 
 
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 should 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  2014 
inventory was submitted and the 2015 is currently being prepared. Kosovo still has to align with 
the  EU  Emissions  Trading  System.  Further  efforts  should  be  made  in  the  field  of  emission 
standards  for  new  cars  and  vans,  consumer  information,  fuel  quality  as  well  as  effort  sharing, 
geological  storage  of  CO2,  land  use,  land-use  change  and  forestry,  ozone  depleting  substances 
and fluorinated gases. Administrative capacity and particularly awareness-raising activities need 
to be considerably strengthened. 

6.21.  Transport policy 

Kosovo is at an early stage/has some level of preparation in the area of transport policy. Some 
progress  has  been  achieved  on  implementing  connectivity  reform,  however  further  efforts  are 
needed on regional connectivity. More work is needed to strengthen the administrative capacity 
for all modes of transport. 

Since most of the 2016 recommendations are not yet implemented, in the coming year, Kosovo 
should in particular:  

→  improve  road  safety  by  targeting  the  reduction  of  fatalities;  and  establish  a  system  for 
continues road crash data collection; 

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

→ adopt the legislation on the Intelligent Transport System (ITS), define the strategic framework 
for  the  implementation  of  the  ITS  on  the  Core  networks  ensuring  sufficient  capacity  and 
resources for its implementation; 

→ pursue efforts to comply with the requirements under the first transitional phase of the ECAA 
Agreement; 

→ continue efforts to implement the EU passenger rights legislation in all modes of transport. 

As  regards  the  general  transport  acquis,  legislation  is  not  aligned  with  the  acquis  on 
summertime  arrangements.  Further  efforts  should  be  made  to  complete  alignment  with  the 
acquis on public services obligations, including transposing the acquis on procedures and criteria 
for the award of public service contracts in the field of road transport. Administrative capacity 
for  all  modes  of  transport  remains  insufficient.  Further efforts  are  needed  to  transpose  the ITS 
Directive and rail interoperability Directive. 

On road transport, the legal framework on dangerous goods is not yet aligned with the acquis. 
Access to the market for goods and passenger transport as well as the criteria for access to the 
occupation  of  road  transport  operator  also  requires  further  alignment.  Further  harmonisation  is 
also needed on inter-operability of toll systems. Alignment with acquis on social legislation and 
road  safety  is  incomplete,  yet  necessary  to  reduce  fatalities.  To  reduce  fatalities  requires  also 
information, education, training as well as effective enforcement of traffic rules. Regarding the 
enforcement  of  social  legislation,  improvements  are  needed  on  roadside  checks,  on  enhancing 
the  legal  competence  and  capacity  of  inspection  officers,  and  on  adopting  and  implementing 
rules on penalties for infringement of the European Agreement concerning the Work of Crews of 
Vehicles  engaged  in  International  Road  Transport  (AETR).  Legislation  on  clean  and  energy-

70 

 
 
 
efficient road transport vehicles and on the deployment of alternative fuels infrastructure has not 
been aligned yet. There is no legislation or regulatory framework in place for the implementation 
of Intelligent Transport Systems (ITS). 

Regarding rail transport, a private operator is licensed and has received a safety certificate for 
providing  freight  transport  services.  There  is  some  progress  with  railway  safety  legislation  but 
efforts  should  be  made  to  meet  the  requirements  for  its  implementation.  Further  efforts  are 
needed to align with the acquis on interoperability. Rehabilitation of Rail Route 10 (connection 
from the border/boundary with Serbia to that with the former Yugoslav Republic of Macedonia) 
will require an increase in capacities of Infrakos, the railway infrastructure company. 

On  aviation,  Kosovo  has  made  progress  in  aligning  with  the  EU  acquis  and  has  implemented 
nearly all the requirements under the first transitional phase of the European Common Aviation 
Area  (ECAA)  Agreement,  with  the  exception  of  few  provisions  in  the  area  of  economic 
regulation relating notably to labour law. Kosovo has made some progress on alignment with the 
Single European Skies II framework and on implementation of the Law on the Air Navigation 
Services  Agency,  for  which  further  efforts  are  needed  for  its  full  application.  There  is  no 
legislation on  combined transport. The opportunities for developing  combined transport  need 
to be further enhanced. 

6.22.  Energy 

Kosovo remains at an early stage  in the field of energy. There is  some progress in this area, 
including  further  implemention  of  the  third  energy  package,  especially  on  the  internal  energy 
market and on the abolition of tarrifs on petroleum products.  

Since most of last report’s recommendations were not implemented, in the coming year Kosovo 
should: 

→ adopt the action plan for energy strategy 2017-2026; 

→ implement the acquis on security of supply, decommissioning the Kosovo A power plant and 
ensure settlement of new generation capacity;  

→  complete  the  appointment  of  members  of  the  Board  of  the  Energy  Regulatory  Office  and 
strengthen its independence and financial stability; 

→ revise its action plan to reach the mandatory renewable energy target of 25% in 2020; 

→ adopt the law on energy efficiency and establish the Energy Efficiency Fund. 

Kosovo needs to approve the action plan for the Energy Strategy 2017-2026 to make operational 
the  policy  orientations  developed  in  the  already  adopted  energy  strategy.    Even  if  this  should 
address  some  of  the  energy  and  environment  problems  in  the  medium  term,  Kosovo  currently 
continues  to  rely  nearly  exclusively  on  lignite  as  a  source  of  energy  and  on  two  obsolete  and 
polluting  coal  power  plants.  As  a  result,  Kosovo  is  continuing  to  face  heavy  air  pollution 
problems and electricity supply shortages.  

On  security  of  supply,  investment  and  maintenance  continue  to  improve  the  reliability  of  the 
power  transmission  system.  However,  the  new  transmission  line  to  Albania  remains  non-
functional because of lack of implementation of the connection agreement between the European 
Network  of  Transmission  System  Operators  for  Electricity  and  the  Kosovo  Transmissions 
System Operator. (cfr.  section Trans-European networks). While distribution losses are slowly 
dropping,  the  speed  of  investment  in  the  distribution  network  is  not  satisfactory.  Combined 
commercial  (not  paid  bills)  and  technical  losses  in  2016  were  high  at  30%.  There  was  no 
progress  in  aligning  legislation  in  the  area  of  compulsory  oil  stocks  and  obligatory  petroleum 

71 

 
 
 
reserves  with  the  acquis.  Current  oil  stocks  are  estimated  to  last  only  four  days.  Tariffs  on 
petroleum products (lubricants and petrol coke) have been abolished. 

As  regards  the  internal  energy  market,  there  has  been  some  progress  in  implementing 
legislation transposing the Third Energy Package. The regulatory authority began moves towards 
market opening by adopting the switching rules and by issuing licenses to two new suppliers to 
operate on the Kosovo market. An EU-based trader was admitted without requiring an additional 
license. 

As regards new power generation capacity, the commercial agreement for the new power plant 
with the bidder has been signed in December 2017, but its potential impact on public finances, 
tariffs and environment still needs to be assessed. Environmental measures are urgently required 
at the Kosovo B power plant to reduce the level of ash dump in the air and to comply with the 
emissions reduction plan. According to the Energy Community Secretariat, the postponement of 
the  emissions  reduction  plan  to  January  2022  is  in  breach  of  Energy  Community  Treaty 
provisions. 

Kosovo has  made some progress in partially deregulating the generation price and phasing out 
cross-subsidies between different categories of customers. But electricity consumption (non paid 
bills)  in  the  north  of  Kosovo  continues  to  be  treated  as  a  commercial  loss,  which  is  recovered 
under  the  retail  tariffs.  The  Board  of  the  Energy  Regulatory  Office  is  now  functional,  but  the 
capacity  and  independence  of  the  Office  have  been  undermined  by  political  interference,  low 
administrative capacity and lack of human resources. 

There was very little progress in the renewable energy sources sector. While the legislation is 
partially  aligned  with  the  acquis,  a  new  electricity  market  design  should  be  put  in  place  to 
facilitate integration of renewable energy generation. The auction market for producers remains 
non-existent. Legislation still needs to be developed in line with connectivity measures.  

Kosovo should revise its action plan to get on track to reach the renewable energy target of 25 % 
in  2020.  The  level  of  investment  remains  minimal  despite  the  existing  legal  framework  for 
support  schemes  for  energy  produced  from  renewable  sources.  Kosovo  needs  to  introduce  a 
market-based  approach  for  cost-effective  promotion  of  renewable  energy  and  integration  of 
renewable  energy  into  the  market.  Connection  and  access  to  the  transmission  and  distribution 
grids  remain  the  main  barriers  for  renewable  energy  producers  due  to  the  inability  of  the  grid 
operators  to  deal  with  intermittent  electricity  production.  There  is  no  regulation  for  minimum 
requirements  for  renewable  energy  in  buildings.  There  was  no  progress  in  meeting  the 
requirements for the use of biofuels in transport.  

There was some progress on alignment with the energy efficiency acquis, with the adoption in 
2017 of a law on energy performance of buildings. However, the new law – linked with the draft 
Law on the Energy Efficiency Fund – on energy efficiency still need to be adopted. The 2010-
2018  energy  efficiency  action  plan  envisages  an  energy  savings  target  of  9  %,  which  seems 
unlikely. Kosovo has approved its third energy efficiency action plan. The establishment of the 
Energy  Efficiency  Fund  remains  crucial  to  ensure  more  investment  in  energy  efficiency 
measures  in  public  and  residential  sectors.  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 on  nuclear safety 
and  radiation  protection.  The  Law  on  Radiation  Protection  and  Nuclear  Safety  was  adopted. 
The  capacity  of  the  Nuclear  Safety  and  Radiation  Protection  Agency  for  licensing  and 
inspections remains weak and its funding is insufficient to implement its mandate. There is no 
radiation monitoring (for example of depleted uranium), no control of radioactive waste and no 
radiological emergency plan. A solution for permanent storage of radioactive waste still needs to 

72 

 
 
 
be found. Kosovo is not party to the Convention on Nuclear Safety or the Joint Convention on 
the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management. 

6.23.  Trans-European Networks  

In  the  area  of  trans-European  Networks,  Kosovo  has  some  level  of  preparation  and  some 
progress has been achieved on road transport during the reporting period. More needs to be done 
on energy and telecommunications.  

In the coming year, Kosovo should in particular: 

→ proceed with the harmonisation of the legal framework with the EU  acquis and TEN-T and 
TEN-E regulations and with the implementation of connectivity reform measures; 

→ strengthen the institutional framework and administrative capacities for the development and 
monitoring of Trans-European networks;  

 reinforce the capacity of the Regulatory Authority of Electronic and Postal Communications 
to enforce telecommunications market regulations. 

On  transport  networks,  the  strategic  framework  for  the  development  of  the  trans-European 
Transport network is covered by the sectorial and multimodal transport strategy (STMTS) 2015-
2025  including  a  5-year  action  plan.  SMTS  should  be  reviewed  and  updated  annually.  The 
completion  of  the  internal  procedures  for  the  approval  of  the  Transport  Community  Treaty 
signed in June 2017 is pending. 

Experience  with  the  implementation  of  the  Route  6  and  Route  7  highway  projects  has 
demonstrated  the  shown  institutional  capacity  to  implement  strategic  projects.  However,  this 
capacity needs to further strengthen and maintained, especially where direct engagement on the 
development  of  the  Trans-European  Networks  is  concerned.  Priority  projects  in  core  and 
comprehensive networks still need to be completed. The five-year adoption of maintenance plans 
for entire Core network is still at an early stage, further efforts are needed. 

On  energy  networks,  the  Kosovo  transmission  system  is  interconnected  with  South-East 
European  transmission  systems.  The  new  400kV  transmission  line  and  the  load  frequency 
control  with  Albania  are  not  operational  because  of  the  non-implementation  of  the  connection 
agreement between the European Network of Transmission System Operators for Electricity and 
the  Kosovo  Transmissions  System  Operator.  Kosovo  has  no  domestic  gas  infrastructure.  An 
ongoing  pre-feasibility  study  will  explore  the  possibility  of  connecting Kosovo  and  Albania  to 
the Trans Adriatic Pipeline (TAP) project.  

On  telecommunication  networks,  the  Regulatory  Authority  of  Electronic  and  Postal 
Communications is the central regulatory authority in the field of electronic communications and 
postal services. The Authority plays a key role in supporting digital infrastructure development. 
Its capacity to design and enforce regulations should be further strengthened. 

6.24.  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 on implementation. In particular, the Assembly has still not ensured 
the  financial  independence  of  the  public  broadcaster.  As  in  previous  years,  the  Independent 
Media Commission did not move forward with the process of switching from analogue to digital 
television.  

As last report’s recommendations have not been followed up, in the coming year Kosovo should 
in particular: 

73 

 
 
 
  ensure telecoms and media regulators are given adequate resources to fulfil their  mandates  
independently and develop a solution for sustainable funding of the public service broadcaster; 

  ensure full implementation of the European emergency number 112; 

  urgently implement the digital switchover. 

On electronic communications and information and communication technologies, there has 
been  no  improvement  in  the  financial  and  organisational  independence  of  the  Regulatory 
Authority  of  Electronic  and  Postal  Communications.  The  Kosovo  Agency  of  Statistics  has  for 
the first time published data on the use of ICT. According to the survey, 88.8 % of households 
had access to internet of which 83.6 % accessed internet through fixed connections whereas 24.6 
%  through mobile  connections. Data from the regulatory  authority show that  mobile telephone 
penetration has reached over 112 % whereas fixed telephony line penetration per household is 23 
%.  Although  the  Computer  Security  and  Incident  Response  Team  was  set  up  in  2014,  it  still 
lacks  sufficient  and  trained  staff.  Kosovo  has  started  to  introduce  the  European  emergency 
number  112,  and  the  regulatory  authority  cooperates  with  all  stakeholders  responsible  for 
operating it. In February 2017, the regulator provided geographic data of mobile stations (2G, 3G 
and 4G) to the Emergency Management Agency. 

Kosovo  was  assigned  the  383  dialling  code  in  December  2016,  in  accordance  with  the  action 
plan agreed in the Belgrade-Pristina Dialogue. The previous calling codes will cease working in 
June 2018. 

On  the  information  society,  adequate  budgetary  resources  need  to  be  made  available  to 
implement Kosovo's cybersecurity strategy and action plan for 2016-2019.   

in 

the  digital 

implementing 

switchover,  even 

On audiovisual policy, the Independent Media Commission again failed to make any substantial 
International 
progress 
Telecommunications  Union  deadline  expired  in  June  2015.  No  funds  have  been  allocated  or 
identified  to  implement  the  process.  As  media  regulator,  the  Media  Commission  needs  to  be 
given  adequate  staffing  and  funding  to  operate  independently.  Kosovo  needs  to  speed  up  its 
efforts and ensure that the digital switchover is carried out in full transparency and in line with 
EU  standards.  The  public  service  broadcaster  RTK  remains  directly  state-funded,  which 
undermines  its  editorial  independence.  The  Assembly’s  failure  to  act  on  RTK’s  financial 
dependency is particularly worrying, as this weakens its long-term sustainability and diminishes 
its capacity to carry out its public service remit. 

though 

the 

6.25.  Financial control 

Kosovo is at an early stage in the area of financial control. Some progress was made in the area 
of external audit with further expansion of performance audit work. Implementation of the public 
internal financial control (PIFC) strategy and its action plan is lagging behind. Further efforts are 
needed to embed managerial accountability in the administrative culture and implement PIFC at 
all levels of the administration and in publicly owned enterprises.  

As the Commission 2016 recommendations have not been followed up, in the next year Kosovo 
should in particular:  

→  adopt the implementing legislation under the new PIFC law;  

→  start  to  implement  internal  control  reviews  in  public  institutions  as  a  follow-up  to  self-
assessment questionnaires;  

→  start  to  take  effective  measures  to  ensure  higher  level  of  implementation  of  internal  and 
external audit recommendations, including awareness-raising with managers. 

74 

 
 
 
Public internal financial control 

As regards the strategic framework, implementation of the 2015-2019 public internal financial 
control strategy and action plan is slow, mainly because of the delays in adopting the new public 
internal financial control law. A PIFC Council is foreseen in the law to monitor and report on the 
implementation of the strategy. A review of the PIFC strategy and the action plan, including its 
indicators,  is  necessary,  to  ensure  consistency  with  the  public  financial  management  reform 
strategy  and  the  public  administration  modernisation  strategy.  A  mechanism  for  effective 
the  public  administration,  public  financial 
coordination,  monitoring  and  reporting  of 
management and PIFC reforms still need to be put in place. 

Managerial  accountability  is  not  well  embedded  in  the  administrative  culture  of  the  public 
sector.  There  are  a  high  number  of  (semi)  independent  agencies  that  report  directly  to  the 
government  and  the  Assembly  rather  than  their  natural  parent  ministry.  Performance 
management is still at an early stage. While there seems to be increased alignment between the 
delegation  of  budget  and  management  structures  within  budget  organisations,  delegated 
decision-making is still not widely used. (See Public Administration Reform) 

The  current  legal  framework  on  internal  control  implementation  is  not  fully  in  line  with  the 
internal  control  framework  of  the  Committee  of  Sponsoring  Organisations  (COSO)  and  the 
guidelines of the International Organisation of Supreme Audit Institutions (INTOSAI). Practical 
application  of  internal  control  needs  to  be  further  developed.  The  focus  is  mainly  on  financial 
compliance  of  the  annual  budget  execution,  and  not  sufficiently  on  strategic  financial 
management. Risk management and reporting on irregularities are rarely applied. Many budget 
reallocations also occur outside the budget review process 

Internal  audit  practice  is  limited  in  Kosovo.  Legal  requirements  for  organisation  of  internal 
audit are not fully complied with. Capacity is very low, and around 40% of internal audit units 
have only one auditor. Most internal audit units however comply with the requirement to submit 
strategic  and  annual  audit  plans.  Implementation  of  internal  audit  recommendations,  which 
mostly focus on compliance of existing rules and procedures, remains low. 

The  Central  Harmonisation  Unit  (CHU)  in  the  Ministry  of  Finance  is  responsible  for 
methodological guidance and coordination of internal control and internal audit development in 
the  public  sector.  The  CHU  prepares  an  annual  PIFC  report  on  the  basis  of  self-assessment 
questionnaires,  and  in  2017,  the  government  requested  for  the  third  year  in  a  row  follow-up 
measures  by  the  CHU  and  budget  organisations.  The  CHU  has  implemented  internal  audit 
reviews on a sample basis but has not yet implemented internal control reviews.  

External audit     

The constitutional and legal framework regarding the Auditor General and the National Audit 
Office  are  largely in  line  with  INTOSAI  standards,  ensuring  the  functional,  organisational  and 
financial independence. However, the protection of independence by the Constitutional Court or 
the Supreme Court is not specifically mentioned.   

Concerning institutional capacity, the Office has 155 staff, of which 129 are auditors. Training 
is provided systematically. The number of staff has increased every year due to the expansion of 
the audit mandate to also cover audits of publicly owned enterprises (nine such audits have been 
performed in 2017). The Office is implementing its Corporate Development Strategy 2015-2020.    

To increase the quality of audit work, the Office has introduced quality control and assurance 
procedures.  The  Office  continued  to  implement  the  certification  programme  and  to  undertake 
audits  in  line  with  the  financial  and  performance  audit  manuals  which  are  regularly  updated. 
Performance audit and IT audit work is increasing.  

75 

 
 
 
The  impact  of  audit  work  is  limited.  The  impact  of  audit  work  is  limited.  Implementation  of 
audit  recommendations  needs  to  improve,  especially  at  municipal  levels.  Only  26  %  of  the 
recommendations issued in 2015 were fully implemented, 37 % partially and 38 % not at all. All 
audit reports are publicly available and the Office has also taken the initiative to strengthen its 
communication with civil society through a consultative forum.  

Protection of the EU’s financial interests  

Alignment  with  the  acquis  is  limited.  Kosovo  does  not  have  an  anti-fraud  coordination 
service  (AFCOS)  or  an  anti-fraud  strategy  on  the  protection  of  the  EU's  financial  interests. 
Implementation of the whistle-blower policy or procedures to report irregularities, as an internal 
control  measure,  is  not  widespread.  Cooperation  with  the  European  Commission  is  ensured 
through an Administrative Cooperation Arrangement signed with the Kosovo Police in February 
2017. It aims at timely transmission of information and cooperation in cases relating to alleged 
fraud and other illegal activities affecting the financial interests of the EU.  

Protection of the euro against counterfeiting 

Alignment with the acquis still needs to be assessed, but Kosovo has established the competent 
authorities  and  procedures  for  dealing  with  counterfeit  money.  The  Law  on  the  Central  Bank 
regulates the circulation of counterfeit money. The Central Bank has also issued a regulation on 
cash  operations  with  the  focus  on  strengthening  regulations  and  procedures  for  financial 
institutions  operating  in  Kosovo.  Kosovo  takes  part  in  the  actions  of  the  Pericles  2020 
programme. 

6.26.  Statistics 

Kosovo  has  some  level  of  preparation  in  the  area  of  statistics.  Some  progress  was  made, 
notably in improving national accounts. However, the Kosovo Agency of Statistics continues to 
suffer  from  insufficient  resources  and  capacities,  which  often  result  in  publication  delays  and 
lack of quality statistics. Significant efforts are still needed especially to ensure the alignment of 
macro-economic and business statistics with European standards.  

Few of the recommendations in the previous Kosovo report have been implemented, and in the 
coming year, Kosovo should in particular: 

 amend the law on statistics and ensure the professional independence of the Kosovo Agency 
of Statistics; 

  ensure  adequate  follow-up  of  Eurostat’s  peer  review  of  the  Kosovo  Statistical  System  and 
adopt an action plan to implement its recommendations; 

  make  necessary  preparations  for  the  next  population  census  in  2020/2021  ensuring  full 
coverage of the territory.  

On statistical infrastructure, the legal framework is broadly in line with the European statistics 
code of practice. The amendments to the law on statistics still need to be adopted as a priority to 
further  enhance  the  professional  independence  and  the  management  continuity  of  the  Kosovo 
Agency  for  Statistics  to  improve  governance  in  the  sector  and  to  ensure  timely  access  to 
administrative  data.  The  lack  of  resources,  both  financial  and  human,  hinders  the  timely 
production  of  statistics.  The  Agency  needs  a  stronger  coordination  role  within  Kosovo's 
statistical system. It should be able to use and have an influence over administrative data that can 
be  sources  for  official  statistics.  In  order  to  increase  the  amount  and  quality  of  statistics 
produced,  the  Agency  should  be  given  adequate  resources.  It  also  needs  to  improve  its  cost-
effectiveness and develop a quality management system and new data collection methods. The 
current premises remain inadequate. Data transmission to Eurostat has improved. Since October 

76 

 
 
 
2017, the Agency has further improved its web-based dissemination of statistics, but additional 
efforts  are  needed  to  strengthen  relations  with  data  users  and  academia.  The  European 
classification  of  economic  activities  (NACE  Rev.2)  continues  to  be  applied  in  all  relevant 
statistical  areas.  The  statistical  business  register  was  improved  and  is  more  aligned  with  the 
reality of economic activities in Kosovo. Enterprise Groups have still not been introduced.  

On macroeconomic statistics, further alignment with the European System of Accounts 2010 is 
ongoing.  The  Agency  currently  compiles  annual  and  quarterly  national  accounts  and  has 
managed to shorten the production period. In 2017, it has for the first time started the production 
of capital government account and will continue to develop other institutional sectors. Monthly 
statistics for trade in goods are submitted to Eurostat. Data on balance of payments 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  have  been  transmitted  to  Eurostat  for  the 
first  time.  The  harmonised  index  of  consumer  prices  is  published  in  accordance  with  EU 
standards (ECOICOP classification). 

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.  The  construction  cost  index  is 
produced on a quarterly basis. Industry statistics (PRODCOM list of products of the European 
Union) for 2016 were published at the end of 2017. 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 2017 the Agency for the first time conducted a survey of household's usage of information and 
communication technologies.  

For  social  statistics,  only  demographic  statistics  are  broadly  in  line  with  the  EU  acquis.  The 
Agency should, as a matter of priority, start preparing for the forthcoming 2020/2021 population 
census, ensuring proper methodology, resources and full coverage of the territory. Some social 
protection statistics are produced, but reliable unemployment statistics are still lacking, and the 
quality  of  data  needs  to  be  improved.  Education  statistics  are  still  not  produced  in  accordance 
with  international  education  classification  standards  (ISCED  2011).  An  annual  labour  force 
survey is carried out, but speedier publication should be ensured. The labour cost index, structure 
of  earnings  data  and  job  vacancy  statistics  are  also  still  not  produced.  Public  health  and  crime 
statistics are not yet in line with EU standards. 

For  agricultural  statistics,  the  Agency  published  data  on  annual  agricultural  crops,  livestock 
production  and  orchard  statistics.  The  agricultural  holding  survey  is  regularly  produced  and 
aligned  with  acquis  standards.  The  publication  of  a  farm  structure  survey  is  planned  for  2019. 
Agricultural price indices and economic accounts for agriculture are produced on a regular basis. 
Supply balance sheets and the agriculture labour index are not yet produced. 

Energy  and  environment  statistics  are  partially  in  line  with  the  acquis.  In  2017,  the  Agency 
shortened  the  deadlines  for  publishing  energy  balance  results  and  has  increased  the  number  of 
statistical  products  sent  to  Eurostat.  However,  further  improvements  are  needed  in  this  field. 
Statistics on the energy consumption of the residential sector in Kosovo were produced, but the 
results  are  yet  to  be  published.  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  regularly.  Environmental 
statistics  on  air  emissions,  environmentally  related  taxes,  protection  expenditure  and  material 
flow accounts are not yet produced. 

77 

 
 
 
 
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 
cooperation  in  a  wide  variety  of  sectors,  including  justice  and  home  affairs,  trade,  education, 
employment,  energy,  environment  and  a  range  of  other  policy  areas.  Two  Stabilisation  and 
Association Council meetings, and two cycles of subcommittee meetings took place in 2016 and 
2017.  

To guide reforms under the implementation of the SAA, the Commission and Kosovo adopted in 
November  2016  the  European  Reform  Agenda  (ERA)  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. The implementation of the ERA is ongoing. 

Kosovo  has  continued  to  address  the  priorities  set  out  in  the  2016  Report.  Since  2012,  the 
Commission has issued four reports on Kosovo's progress towards visa liberalisation (the most 
recent  in  December  2015  and  May  2016).  On  4  May  2016,  the  Commission  submitted  a 
legislative  proposal  to  lift  visa  requirements  for  Kosovo  citizens,  on  the  understanding  that  by 
the day of its adoption by the European Parliament and the Council, Kosovo will have ratified 
the border/boundary demarcation agreement with Montenegro and strengthened its track record 
in  the  fight  against  organised  crime  and  corruption.  The  Kosovo  Assembly  ratified  the 
border/boundary demarcation agreement with Montenegro in March 2018. 

As  regards  financial  assistance,  the  Instrument  for  Pre-Accession  (IPA)  2016  programme  for 
Kosovo was approved with an EU contribution totalling EUR 70.5 million, including a EUR 25 
million  sector  budget  support  programme  for  public  administration  reform,  complemented  by 
co-financing from Kosovo for an overall budget of EUR 71.1 million. The 2017 IPA programme 
contains  a  total  EU  contribution  of  EUR  73  million,  including  EUR  25  million  sector  budget 
support  programme  for  public  financial  management,  complemented  by  co-financing  from 
Kosovo for an overall budget of EUR 74.5 million. In 2016, the EU Office signed 95 contracts 
for a total of EUR 54 million. In 2017, the EU Office signed 120 contracts for a total of EUR 82 
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 2018 IPA programme for Kosovo is under preparation.  

On 17 July 2017, the Council approved the Framework Agreement between the European Union 
and  Kosovo  on  the  general  principles  for  the  participation  of  Kosovo  in  Union  programmes. 
Kosovo will join the Erasmus+, COSME, Europe for Citizens and Creative Europe Programmes. 

The  legal  basis  for  the  Kosovo  Specialist  Chambers  and  Specialist  Prosecution  Office, 
established to investigate allegations of international crimes committed during and after the 1999 
conflict, was completed with the entry into force in January 2017 of the bilateral agreement with 
the Netherlands, allowing for the Specialist Chambers to conduct proceedings in this country. In 
February  2017,  19  judges  were  appointed  to  the  Roster  of  International  Judges.  The  Rules  of 
Procedure  and  Evidence  entered  into  force  on  5  July  2017,  marking  the  date  from  which  the 
Specialist Chambers became fully judicially operational and able to receive filings.  

Since  2008,  the  European  Rule  of  Law  Mission  in  Kosovo  (EULEX)  has  been  monitoring, 
mentoring and advising Kosovo on the rule of law. It also has some executive responsibilities. 

To date, according to the government, Kosovo has been recognised by 114 countries, including 
23 EU Member States.  

78 

 
 
 
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  raised  concern  about  the 
institutional  vacuum  that  came  about  as  a  result  of  the  political  polarisation  in  Kosovo,  the 
holding of general elections in June 2017 and municipal elections in October 2017 and ensuing 
negotiations  for  the  formation  of  a  government.  He  stressed  the  fact  that  as  a  result  important 
economic  and  social  opportunities  were  missed  during  that  period.  He  continued  to  be  an 
advocate  for  the  importance  of  the  EU-facilitated  dialogue  and  called  upon  authorities  in  both 
Belgrade  and  Pristina  to  demonstrate  strong  leadership  and  to  pursue  fair,  difficult  and  often 
painful  compromises.  He  noted  that  political  reconciliation  must  be  accompanied  by  societal 
reconciliation. 

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 4 000 personnel. 

79 

 
 
 
 
 
ANNEX II – STATISTICAL ANNEX 

STATISTICAL DATA (as of 16.02.2018) 
Kosovo 

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

Note 

2005 
2 041 
10 908 

2012 
1 799b 
10 908 

2013 
1 816 
10 908 

2014 
1 821e 
10 908 

2015 
1 805b 
10 908 

2016 
1 772 
10 908 

National accounts 
Gross domestic product (GDP) (million 
euro) 
GDP (euro per capita) 
GDP per capita (in purchasing power 
standards (PPS)) 
GDP per capita (in PPS), 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 
(in volume) 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 (2010 = 100) 
Labour productivity per person employed: 
GDP (in PPS) per person employed relative 
to EU average (EU-28 = 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 (%) 

Note 

2005 
: 

2012 
5 059 

2013 
5 327 

2 934 
: 

: 

3.4 

2014 
5 568 

3 085 
: 

: 

1.2 

2015 
5 807 

3 278 
: 

: 

4.1 

2016 
5 985 

3 304 
: 

: 

3.4p 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 
: 

: 

2.8 

: 

: 

: 

: 

: 

14.8 
19.9 
8.2 
57.1 
105.2 

14.4 
20.3 
7.9 
57.4 
104.0 

14.3 
19.4 
7.3 
59.0 
105.2 

12.6 
20.8 
8.4 
58.2 
102.7 

13.4p 
21.1p 
8.2p 
57.3p 
101.3p 

26.0 

24.8 

23.2 

25.8 

26.0p 

2.9 

18.2 

52.4 

: 

2.8 

17.4 

49.0 

: 

2.6 

19.6 

50.6 

: 

1.8 

1.6p 

19.3 

22.5p 

49.5 

51.3p 

: 

: 

: 
: 

: 

: 

: 

: 

: 

: 

: 

: 
: 
: 
: 
: 

: 

: 

: 

: 

: 

Note 

2005 
: 

2012 
: 

2013 
: 

2014 
: 

2015 
: 

2016 
: 

: 
: 

36 886 
9.4 

30 803 
8.5 

31 420 
9.0 

35 472 
11.7 

33 274 
9.2 

80 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Death rate: number of enterprise deaths in 
the reference period (t) divided by the 
number of enterprises active in t (%) 
People employed in SMEs as a share of all 
persons employed (within the non-financial 
business economy) (%) 
Value added by SMEs (in the non-financial 
business economy) (EUR million) 
Total value added (in the non-financial 
business economy) (EUR million) 

Inflation rate and house prices 
Harmonised consumer price index (HICP), 
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 
balance for primary income (million euro) 
Balance of payments current account: net 
balance for secondary income (million euro) 
Net balance for primary and secondary 
income: 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 balance (inward - outward) of 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 (%) 

: 

: 

: 

: 

5.5 

4.4 

5.3 

8.3p 

: 

: 

: 

: 

74.8 

76.6 

78.3 

78.5 

: 

: 

: 

: 

: 

: 

: 

: 

Note 
1) 

2005 
-1.4 

2012 
2.5 

2013 
1.7 

2014 
0.4 

2015 
-0.5 

2016 
0.3 

: 

: 

: 

: 

: 

: 

Note 

2005 
-247 

2012 
-293 

2013 
-179 

2014 
-385 

2015 
-497 

2016 
-503 

-1 080 

-2 050 

-1 996 

-2 059 

-2 109 

-2 291 

-7 

139 

700 

348 

: 

: 

500 

154 

520 

122 

460 

114 

457 

93 

614 

77 

1 104 

1 175 

1 100 

1 062 

1 096 

402 

370 

292 

203 

207 

-10.1 

-7.3 

-5.4 

-6.3 

-8.0p 

: 

: 

: 

: 

: 

107.6 

213.3 

250.2 

123.8 

271.8 

177.2 

: 

: 

15.8 

5.6 

30.0 

67.0 

27.3 

28.4 

37.1 

89.1 

42.7 

25.7 

107.6 

229.1 

280.2 

151.2 

308.8 

220.0 

: 

: 

: 

84.2 

88.5 

38.5 

100.2 

41.2 

2.7 

: 

2012 
: 

8.3e 

30.4 

4.8 

: 

2013 
: 

9.0e 

26.8 

3.5 

: 

2014 
: 

10.5 

26.3 

-0.8 

-1.3 

: 

: 

2015 
: 

12.8 

29.6 

2016 
: 

: 

: 

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

Note 

2) 

2005 
1.1e 

0.0 

: 

81 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total government expenditure, as a 
percentage of GDP (%) 

Financial indicators 
Gross external debt of the whole economy, 
relative to GDP (%) 
Gross external 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 (%) 
**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, 42 countries (2005 = 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) 

: 

29.0 

28.2 

27.1 

28.0 

: 

2012 
30.0 

2013 
30.2 

2014 
31.2 

2015 
33.3 

2016 
33.7p 

Note 

2005 
: 

: 

572 

1 092 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

514 

1 841 

1 878 

1 957 

2 153 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

3) 

3) 

14.40 

13.42 

11.82 

10.61 

8.32 

2.90 

3.57 

3.43 

1.11 

0.90 

1 

: 

: 

1 

101 

-0.5 

1 

102 

1.3 

1 

102 

0.9 

1 

102 

0.4 

: 

: 

: 

: 

: 

: 

: 

: 

: 

7.47 

1.01 

1 

102 

0.1 

267 

783 

746 

695 

706 

605 

Note 

2005 
1 180 

2012 
2 508 

2013 
2 449 

2014 
2 538 

2015 
2 635 

2016 
2 789 

49 

276 

294 

325 

325 

310 

-1 131 

-2 232 

-2 155 

-2 214 

-2 309 

-2 480 

: 

87 

38.8 

39.9 

40.5 

41.9 

97 

40.1 

44.2 

107 

30.2 

42.6 

107 

32.6 

42.2 

101 

22.6 

43.1 

Note 

2005 
14.5 

2012 
11.3b 

2013 
: 

2014 
13.2be 

2015 
9.2p 

2016 
: 

82 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 

9.6 

11.4 

: 
: 

: 
: 

: 

: 
: 

: 

: 
: 

: 

: 
: 

: 

: 
: 

Labour market 
Economic activity rate for persons aged 20–
64: proportion of the population aged 20–64 
that is economically active (%) 
*Employment rate for persons aged 20–64: 
proportion of the population aged 20–64 that 
are in employment (%) 
Male employment rate for persons aged 20–
64 (%) 
Female employment rate for persons aged 
20–64 (%) 
Employment rate for persons aged 55–64: 
proportion of the population aged 55–64 that 
are in employment (%) 
Employment by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
People employed in the public sector as a 
share of total employment, persons aged 20–
64 (%) 
People employed in the private sector as a 
share of total employment, persons aged 20–
64 (%) 
Unemployment rate: proportion of the labour 
force that is unemployed (%) 
Male unemployment rate (%) 
Female unemployment rate (%) 
Youth unemployment rate: proportion of the 
labour force aged 15–24 that is unemployed 
(%) 
Long-term unemployment rate: proportion of 
the labour force that has been unemployed 
for 12 months or more (%) 
Unemployment rate for persons (aged 25–
64) having completed at most lower 
secondary education (ISCED levels 0-2) (%) 
Unemployment rate for persons (aged 25–
64) having completed tertiary education 
(ISCED levels 5-8) (%) 

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) (2010 = 100) 
GINI coefficient 
Poverty gap 

Note 

2005 
: 

2012 
42.5 

2013 
46.4 

2014 
47.7 

2015 
42.8 

2016 
44.0 

29.7 

33.0 

31.3 

29.1 

32.3 

: 

: 

: 

46.6 

12.4 

25.2 

25.8 

18.8 
14.4 
7.9 
: 
: 

4.6 
19.0 
9.5 
66.9 
35.0 

51.5 

14.9 

30.8 

5.9 
16.8 
11.4 
65.9 
31.5 

48.4 

14.5 

29.8 

2.6 
17.7 
10.9 
68.8 
31.4 

44.9 

13.2 

27.2 

2.3 
18.7 
9.5 
69.5 
32.6 

49.9 

14.6 

29.6 

4.2 
18.0 
11.5 
66.3 
30.8 

: 

65.0 

68.5 

68.6 

67.4 

69.2 

41.4 

30.9 

32.9 
60.5 
70.5 

28.1 
40.0 
55.3 

30.0 

26.9 
38.8 
55.9 

35.3 

33.1 
41.6 
61.0 

32.9 

31.8 
36.6 
57.7 

27.5 

26.2 
31.7 
52.4 

14.4 

18.5 

20.7 

26.1 

23.8 

18.0 

: 

: 

43.9 

37.3 

44.0 

45.5 

29.6 

12.8 

13.4 

17.1 

17.4 

15.6 

Note 

2005 
: 

2012 
: 

2013 
: 

2014 
: 

2015 
: 

2016 
: 

: 

: 
: 

: 

: 
: 

: 

: 
: 

: 

: 
: 

: 

: 
: 

: 

: 
: 

83 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*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) (%) 

Energy 
Primary production of all energy products 
(thousand TOE) 
Primary production of crude oil (thousand 
TOE) 
Primary production of solid fuels (thousand 
TOE) 
Primary production of gas (thousand TOE) 
Net imports of all energy products (thousand 
TOE) 
Gross inland energy consumption (thousand 
TOE) 
Gross electricity generation (GWh) 

: 

18.4 

18.4 

16.5 

14.5 

12.7 

Note 

2005 
50.1 

2012 
112.3 

2013 
125.0 

2014 
158.7 

2015 
189.5 

2016 
: 

: 

: 

: 

532.5 

: 

: 

: 

: 

: 

464.3 

487.8 

545 

: 

: 

: 

: 

: 

: 

Note 

2005 
: 

2012 
30.9 

2013 
30.9 

2014 
30.9 

2015 
30.9 

2016 
30.9 

0 

60 

78 

78 

80 

98 

Note 

2005 
: 

2012 
3.9 

2013 
3.8 

2014 
3.7 

2015 
4.5 

2016 
4.7p 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Note 

2005 
: 

2012 
: 

2013 
: 

2014 
: 

2015 
: 

2016 
: 

: 

: 

: 

504.7 

473.5 

448.3 

490.4 

507.8p 

1.8 

: 

3.7 

: 

4.0 

: 

3.6 

: 

6.2 

: 

Note 

2005 
1 398 

2012 
1 749 

2013 
1 792 

2014 
1 605 

2015 
1 804 

2016 
2 016 

: 

: 

: 

: 

: 

: 

1 221 

1 496 

1 532 

1 342 

1 536 

1 640 

: 
550 

: 
650 

: 
506 

: 
603 

0 
697 

0 
639 

1 950 

2 384 

2 314 

2 218 

2 525 

2 704 

4 458 

5 943 

6 525 

5 436 

6 119 

5 981 

84 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agriculture 
Agricultural production volume index of 
goods and services (at producer prices) 
(2010 = 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) 
Raw milk available on farms (thousand 
tonnes) 
Harvested crop production: cereals 
(including rice) (thousand tonnes) 
Harvested crop production: sugar beet 
(thousand tonnes) 
Harvested crop production: vegetables 
(thousand tonnes) 

Note 

2005 
106.3 

2012 
95.4 

2013 
117.6 

2014 
93.3 

2015 
103.7 

2016 
: 

5) 6) 
6) 

6) 

6) 

416 
352 

47 

426 
314 

56 

152 

123 

: 

: 

442 
321 

49 

160 

: 

416e 
270e 

46e 

234 

3 

411 
259 

44 

224 

5 

417 
265 

42 

212 

5 

6) 7) 

441 

439 

540 

465e 

444 

563 

0 

0 

0 

0 

: 

: 

6) 

124 

109 

158 

170e 

145 

186 

: = not available 
b = break in series 
e = estimate 
p = provisional 
* = 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)  2005, 2012-2014: consumer price index. 
2)  2012-2015: the value of GDP is obtained from the Medium Term Expenditure Frameworks 2014-2016 and 

2016-2018. 
Includes disbursement fee charged by banks. 
Including agricultural common land. 

3) 
5) 
6)  2014: data from the 2014 agriculture census. 2014-2016: results for four municipalities in the north of Kosovo 

which did not participate in the census/surveys are estimated. 

7)  Excluding rice. 

85