Who will benefit from public debt clearance?

In February 2015, Kosovo’s Government initiated the procedures for public debt clearance for citizens and businesses for the outstanding debts until December 31, 2008. In July, the Assembly approved the Law on Debt Forgiveness.  

GAP Institute has supported that decision. In order to provide more information for the public regarding to who will benefit from debt forgiveness and in order to aid public institutions in this process, GAP has sent requests for data from all public enterprises, municipalities, Ministry of Finance, customs and TAK since February 2015. From all the sent requests, the most completed responses were received from the public enterprises. Municipalities suggested that information on debt should be gathered from the Ministry, whereas the Ministry suggested that these data should be gathered from the municipalities.

This study’s findings have been presented by Agron Demi (GAP). According to this analysis, public institutions have not been careful to hold an accurate register of all debtors. Likewise, institutions have not followed regularly legal procedures to sue citizens and businesses that have accumulated debt. As such, this analysis concludes that for the most part, the debt the Government intends to forgive is in fact lost debt.

According to the statements of the Ministry of Finance, the total amount of debt to be forgiven is 670 billion euro. From this amount, 465 billion euro (69%) is owed to public enterprises, 148 billion euro (22%) is owed to TAK from active businesses and 57 billion euro (9%) is owed to Kosovo’s Customs.

From public enterprises, the largest portion of the debt is owed to KEK, specifically, 346.3 billion euro. The largest debtors towards KEK are households, with approximately 84% of the debt. The next largest debtors are businesses and institutions (12%), large industrial customers (3%), other (1%) and public lighting (0.08%). This implies that households will benefit the most from debt forgiveness in KEK.

However, according to KEK, from 346 billion euro of debt, legal charges have been raised only for 60 billion euro. As such, the study by GAP Institute indicates that the rest of the debt is either way considered as lost, as per the Law on Obligational Relationships.

The debt owed to regional water supply companies (RWSC) is approximately 48 billion euro. Whereas, the debt owed to regional waste companies (RWC) is around 23.4 billion euro. The enterprise with the highest level of debt is RWC Prishtina because of the high amount of costumers. The total amount of debt owed to ATK up to the end of 2008 is 168.6 billion euro. The largest amount of this debt (88%) comes from active businesses.

You can read the full analysis by clicking HERE.