financial stability report - Banka Qendrore e Republikës së Kosovës

Number 3
Financial Stability Report
below 4 percent (4.5 percent in 2011). In nominal terms, the GDP is expected to exceed a
total amount of euro 4.9 billion.
Continuous expansion of lending by the banking system in Kosovo represents an important
source of finance for domestic economy. By June 2012, loans issued by the banking system
recorded an annual growth of 9.3 percent, reaching a value of euro 1.8 billion. Loans issued
to enterprises recorded an annual growth of 6.3 percent, while loans to households recorded
an annual growth of 13.0 percent. The main source of finance for banks in Kosovo remain
deposits collected in the country, which also continued to increase and up to June amounted
to euro 2.1 billion (annual increase of 7.7 percent). Kosovo’s banking system has continued
to maintain a high level of stability, characterized by high degree of capitalization, good
quality of loan portfolio and satisfactory liquidity position.
Positive developments during this period have been recorded also in the fiscal sector. The
total value of budget expenditures by the end of June 2012 amounted to euro 625.6 million,
which represents an annual increase of 18.5 percent. Despite the increased budget
expenditures, Kosovo’s budget until June 2012 recorded a surplus of euro 24.2 million. This
is also due to the growth of revenues by 12.2 percent which reached the amount of euro
649.8 million. Public investments in the referred period had a very important contribution
to economic growth when considering the capital investment projects which are
continuously increasing. Government expenditures on capital investments up to June 2012
recorded an annual growth rate of
Figure 12. Current account balance, in milions of
32.4 percent. Capital outlays
euro
represent the main category within 600
budget expenditures, with a share 400
of 35.9 percent of total 200
expenditures (euro 224.8 million).
0
-200
Also, until June, government
-400
expenditures on goods and services
-600
and expenditures on wages and
-800
salaries recorded an annual
-1,000
Current account Goods and services Income Current transfers
increase of 33.5 and 13.7 percent,
reaching 78.5 and 169.1 million
June 2009 June 2010 June 2011 June 2012
euro, respectively.
Source: CBK (2012)
The GDP of Kosovo continues to be
negatively affected by the trade balance, which is continuously characterized by high rate of
deficit (Figure 12). In the first half of 2012, the trade deficit in Kosovo amounted to euro
988.5 million, representing an annual growth of 6.4 percent. Trade deficit increase is
attributed to the imports growth of 2.6 percent and to the exports decline of 18.4 percent.
This has made the level of coverage of imports by exports to decrease from 15.0 percent, as
it was in the first half of 2011, to 11.9 percent in the first half of 2012.
The high level of trade deficit makes Kosovo’s economy to be characterized by a high rate of
current account deficit. In June 2012, the current account deficit deepened for 5.4 percent
compared with the same period of the previous year amounting to euro 216.5 million. The
component with the largest share in the current account continues to be the goods account,
which is consistently characterized by fairly large discrepancy between the value of imports
and exports. Meanwhile, another category with a very large weight on the current account
is the account of current transfers, which is dominated by remittances.
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