The International Monetary Fund’s Executive Board concluded its Article IV consultation with the Republic of Kosovo and released its assessment of recent economic developments and policy priorities, with the authorities consenting to publication of the staff report. The Board noted that growth has moderated after a prolonged political deadlock while inflation pressures have intensified, and it framed the outlook as positive but exposed to material downside risks, including political uncertainty, weaker external conditions, and spillovers from the conflict in the Middle East. Real GDP growth slowed to 3.6% in 2025 from 4.6% in 2024, while headline inflation rose to 5¾% in January 2026, driven mainly by food prices. The current account deficit widened to 9.2% of GDP in 2025, and growth is projected at 3.3% in 2026 with inflation at 5.9% before gradually declining toward the European Central Bank’s 2% target by mid-2028; the current account deficit is projected to widen further in 2026, including due to a temporary shutdown of a coal-fired power plant for rehabilitation and filter installation. Directors emphasized recalibrating fiscal policy as the deficit widens, including containing current spending, scaling up high-quality public investment, and enhancing revenue, alongside reforms to social spending efficiency, transparency, and public financial and fiscal risk management. With the banking sector assessed as sound, they called for continued strengthening of oversight and crisis management, close monitoring of credit growth, lending standards and real estate exposures, timely use of targeted borrower-based macroprudential measures if credit re-accelerates, safeguarding liquidity buffers, and further AML/CFT alignment with European Union and Financial Action Task Force standards. The IMF indicated the staff report will be published shortly on its Kosovo country page.
International Monetary Fund 2026-04-01
International Monetary Fund completes Kosovo Article IV consultation and calls for fiscal recalibration and stronger financial sector safeguards
The IMF Executive Board concluded its Article IV consultation with Kosovo, noting moderating growth, rising inflation, and a positive but risk-laden outlook amid political uncertainty, weaker external conditions, and spillovers from the Middle East conflict. Directors called for recalibrating fiscal policy as the deficit and current account imbalance widen, including containing current spending, scaling up quality public investment, enhancing revenue, and improving social spending efficiency and fiscal risk management. They deemed the banking sector sound but urged stronger oversight, close monitoring of credit and real estate exposures, readiness to deploy targeted macroprudential measures, safeguarding liquidity buffers, and further AML/CFT alignment with EU and FATF standards.