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Executive Overview
The Government of Kosovo has achieved remarkable results in Public Financial Management
(PFM) reform. This post-conflict country once managed through a United Nations mandate
has sequenced legal reform, improved governance, and achieved international PFM standards
under difficult conditions.
Sequencing PFM reform is considered a good government practice, although “it is impossible
to prescribe a sequence of reforms which is appropriate in all circumstances (DFID 2001).”
There are numerous lessons in the Kosovo experience linking reform to context that can be
leveraged by governments around the world.
Economic
Kosovo has experienced dire
macroeconomic conditions during and after
the breakup of the Yugoslav federation.
The economy “was essentially decimated
x Highest unemployment
by the Kosovo War (Tang 2010).”
“Kosovo is one of the poorest countries in
Europe (World Bank 2009).” Improved
economic development is critical to
country stability (Bytyci 2009).
Important Developments
Improving PFM has cross-cutting effects. Many challenges remain in Kosovo because of the
historical and macro-economic situation. Nevertheless, there have been improved economic
development, financial management, transparency and civil service capacity building.
Economic Developments
x “Kosovo and Albania were the only two countries in the Western Balkans that experienced
positive economic growth in 2009 (Tang 2010).”
x “Amidst signs that the worldwide recession is easing, the slowdown in Kosovo’s economic growth
has remained orderly (IMF 2009/09).”
Financial Management and Transparency
x “Kosovo has made significant progress in establishing a workable public financial management
system, including a sound legal framework (World Bank 2009).”
x “The greatest strength of the Kosovo PFM is its treasury system; not because of its sophistication in
terms of functionality or its classification system, but simply because it is comprehensive and is able
to produce timely and reasonable analytical reports (PEFA 2007).”
x “Treasury Department external audits show zero (or near-zero) errors. (Smith 2009-EMSG)”
x “In the broad sense of the term, the internal control structure has been established in Kosovo. The
basic legal framework is sound, with clear structures of accountability (SIGMA 2008).”
x “Other strengths are found in the areas of internal audit and control and external audit where
the process is in place and capacity is being built up for effective implementation (PEFA, 2009)
x “Good fiscal reports are produced based on the information extracted from the treasury system and
the reports from the Auditor General are available on the Internet (PEFA 2007).”
x “Information about budget execution is produced monthly, quarterly and annually (SIGMA 2006-
PEM)”
x “Improvement in reports by structure of the budget and present fund balance commitment for each
economic category and budgetary organization. All reports are presented in compliance with IPSAS.
Conclusions
Road to Good Governance
Kosovo Good Governance Regional Comparisons
Globalization has created a x Kosovo needs to improve governance
competitive environment for
countries. Risk and opportunity
are key drivers for businesses.
Good governance creates country
stability and encourages business
investment to fuel economic
growth. Improving governance is
a strategic objective for the
Government of Kosovo “to
create an effective
administration, professional,
transparent in accordance with democratic principles and oriented towards providing the best
possible services to citizens (MTEF 2010).
Government Resource Planning Modernization Scorecard
The scope of reform and modernization differs among governments based on the country
context. Government Resource Planning functionality in the Government of Kosovo is
comprehensive and decentralized. Further modernization of automation is part of the PFM
Reform Action Plan.
Functionality Decentralization Modernization
Bibliography
Brajshori, Behxhet (2007) Achievements and Challenges in the Management of the Public
Finances in Kosovo, International Consortium on Governmental Financial Management,
http://www.icgfm.org/documents/Brajshori_kosovoEng.ppt
Brajshori, Behxhet (2009) Brajshori. Economic and Financial Developments in Kosovo and
the global crisis, International Consortium on Governmental Financial Management
http://www.slideshare.net/icgfmconference/country-responses-to-the-financial-crisis-kosovo
Bytyci, Fatos (2009) After billions in aid, Kosovo still poor and idle, Reuters
http://www.reuters.com/article/idUSBYT832920._CH_.2400
Department for International Development (2001) UK, Understanding and reforming public
expenditure management
http://webarchive.nationalarchives.gov.uk/+/http://www.dfid.gov.uk/documents/publications/
pfma-pem.pdf