Kosovo Governments Budget Reserves


The annual budget of the Kosovo Government includes a number of budget reserve lines: unforeseen expenditures, recurrent reserves, contingencies, and emergency liquidity reserves. These reserves are important and serve as financial buffers in times of crisis. Despite the nature of this category of expenditures and its legal definition, over the years these funds were often used for non-emergency reasons, or cases where prior planning could have taken place. Moreover, in recent years, contingencies allocated by the Government were at a higher level than suggested by literature (3% of budget expenditures).

GAP Institute has analyzed the categories of reserves over the years, their trends and usage, the legal basis, as well their advantages and weaknesses. In 2023 alone, around 279 million EUR, or 8.7% of total budget expenditures, have been budgeted for all reserve lines. For the category of unforeseen expenses, in the period 2017-2022, the budgeted annual average was around 6.3 million EUR.  The highest planned value was in 2017, with 8.9 million EUR, and the lowest in 2021, with 3.8 million EUR. For recurrent reserves, in the period 2017–2023, the annual average allocation was 15.4 million EUR. On average, around 55% are allocated to the local level, and 45% to the central level.

In the category of contingencies, significantly higher budgeted amounts have observed in recent years, with an annual average of 130 million EUR. A total of 220.7 million EUR have been planned for contingencies in 2023, of which around 75 million EUR allocated for energy, 65 million EUR for wages and salaries (to cover the financial impact of the new wage law), around 40 million EUR allocated for subsidies and transfers, and 20 million EUR for capital expenditures.

The funds allocated to these categories are justifiable in cases of emergencies; however, it is believed that the amounts allocated in recent years are high, which may be an indication of inadequate planning, as the funds are blocked, there is a high opportunity cost, and there is significant room for spending partisan basis.  

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