Kosova is not the only country that is going through an economic crisis effected by COVID-19 Pandemic, this situation is present all over the world. In particular, this crisis is affecting micro, small and medium-sized enterprises (SMEs), which are facing huge losses.
In every country, economic experts are discussing the strategic importance that micro, small and medium enterprises (SMEs) have in the economies of their respective countries but also globally. These businesses cover about 90% of economic activity and more than 50% of global employment, and contribute to more than 40% of GDP in developed countries, and this number could increase even more if the informal sector were added to this percentage.
Considering that in Kosova a high percentage of enterprises are categorized as micro, small and medium enterprises (SMEs), a special political emphasis of the policy makers and the government of Kosova should be on SMEs. It is because these enterprises are being harmed the most by the measures taken to prevent the spread of the COVID-19 pandemic. It is time for the Government to review the entire economic development strategy for faster and more sustainable recovery.
In this regard, the Government of Kosova has taken concrete steps, both, in terms of protecting public health and financial support of businesses and citizens through the emergency fiscal package. However, while temporary support is being provided, we need to work on developing a medium-term strategy as well as finding a method of recovery.
As a professional society, we are convinced that all the proposed measures will not only help the economy of Kosova but will also provide a strategic direction for economic development in Kosova.
Recommendations for immediate action towards economic recovery:
1. The government should form a task force composed of independent professionals from different sectors of the economy, engaged full time for a certain period, who will work to assess the current situation of the economy and develop a plan for economic recovery.
2. The public sector wages be revised to suit current circumstances. The government should start implementing IMF recommendations for restructuring public administration.
3. The CBK (Central Bank of Kosova) to take a decision on granting a grace period of 6 months for all businesses that have active loans in all financial institutions in Kosova and ensure that it will not cause new interest calculations by financial institutions.
4. To prepare analyzes for industries that have a short-term impact on the recovery of the economy in Kosova (production, agriculture, information technology, energy production), so that financial support is oriented towards them.
5. It is proposed to speed up the process of debt repayment that Government and Public Enterprises have toward businesses in order to contribute to increasing their liquidity. Also: (i) to speed up the processes of direct and indirect tax refunds to businesses, and (ii) as a temporary measure for the next two years, VAT to be declared and paid on a quarterly basis so that businesses have higher liquidity in this period.
6. Every municipality to analyze the capacity of land that can be used for agriculture. To seek financial assistance or loans from strategic partners, to support programs and investment packages for SMEs, which can help save jobs in these sectors, give a boost to economic activities with which they can return to operation, as well as, to reduce the consequences that this crisis is imposing on them.
7. To change the Government's approach from a policy of “non-intervention” in investment decisions, in an advisory approach. This should not be a centralized intervention, but well-informed advices using access to information to help the local production sector. The starting point should be the analysis of which sectors could replace exports at a lower possible cost as well as the approximate quality. In terms of financial assistance, these enterprises, which would be filtered and entered into MEETIESI (Ministry of Economy, Employment, Trade, Industry, Entrepreneurship and Strategic Investment) database, should be supported without reservation by the government.
8. Other assistance for the production sector: exemption from profit tax for a period of 10 years, and to continue the existing policy of exemption from all fiscal obligations for raw materials.
9. It is recommended to create a relevant investment fund which would consist of funds intended for non-productive capital investments (infrastructure/roads) or even by a part of the funds from the privatization of public enterprises. Such fund allocated by the Government could also stimulate interest from other donors in supporting the fund.
10. Professional training should be a priority, also a part of the fund should be oriented towards the approximation of workforce skills with the needs of enterprises in the production and agriculture sector.
11. To consider the increase of issuance of treasury bills by the Republic of Kosova as an instrument of budget financing. Since the level of public debt is low in relation to GDP compared to countries in the region, it can be considered that measures to support the economy should be implemented from this source of funding. Also, the Kosova Pension Trust can be a potential investor in these government securities, since such a thing is provided by law (up to 30% right in investment in Kosova).
Society of Certified Accountants and Auditors of Kosova