Republic of Kosovo: 2024 Article IV Consultation and Third Reviews Under the Stand-By Arrangement and the Arrangement Under the Resilience and Sustainability Facility-Press Release; and Staff Report

This paper presents Republic of Kosovo’s 2024 Article IV Consultation and Third Reviews under the Stand-By Arrangement (SBA) and the Arrangement under the Resilience and Sustainability Facility (RSF). Kosovo’s economic performance has been strong, with growth accelerating in 2024 and inflation falling sharply. The near-term outlook is favorable despite some downside risks. The authorities continue to show strong performance under both programs. All quantitative targets and structural conditions for the completion of the Third Review under the SBA were met. Most RSF Reform Measures have been completed. Fiscal policy should continue to balance sustainability and development objectives and be framed within a solid, rules-based fiscal framework. The 2025 budget envisages a fiscal impulse with full-year implementation of spending measures announced in 2024, a proposed increase in public wages, and the expected improvement in public investment execution. Structural reforms are urgently needed to raise potential growth. Priority should be given to further advancing green reforms and decarbonization, implementing policies to boost female labor-force participation, attracting foreign capital—including from the diaspora—into productive sectors of the economy, and accelerating digitalization.