Financial Stability Report No1 20 December 2010 - Banka Qendrore ...

Number 1Financial Stability ReportDoing Business (2011) provides a picture on the enforcement of law in Kosovo byconsidering the number of days it takes to enforce a simple debt contract. As shown inTable 17, Kosovo compares well with other transition economies when it comes to enforcingcontracts. It outperforms most of SEE countries and, on average, even OECD countries. Ittakes 420 days to enforce a simple debt contract in Kosovo, while the SEE average is 506days, the CEE average 547 days, the CIS average 301 days and the OECD average 518days. The average number of days for the enforcement of a contract in Kosovo in 2010substantially increased compared to year 2005 (Table 17). This can be attributed to thecredit growth during this period while the number of cases sent to courts continuouslyincreased.The enforcement of contracts in Kosovo, however, may be impeded by the high cost ofcontract enforcement, which is higher than in all transition economies and OECDcountries. According to Doing Business (2011), the cost of enforcing a contract in Kosovo, onaverage, accounts for 61 percent of the debt, while the average for SEE countries is 34percent, for CEE countries 28 percent, for CIS countries 24 percent and for OECD countries20 percent.Table 17. Contract Enforcement Days, Cost of Enforcement and Rule of LawIndexContract Enforcement Days Cost (% of debt) Rule of Law Index2005 2010 2005 2010 2005 2009Kosovo 153 420 … 61 -0.9 ‐0.5Albania 390 390 39 39 -0.8 ‐0.5Bosnia and Herzegovina 330 595 38 40 -0.6 ‐0.4Bulgaria 440 564 24 24 -0.1 ‐0.1Croatia 415 561 14 14 0.2 0.2Macedonia 335 370 33 33 -0.3 ‐0.2Romania 509 512 20 29 -0.1 0.1Serbia 1028 635 33 29 -0.9 ‐0.4SEE (average) 450 506 29 34 -0.4 ‐0.2CEE (average) 442 547 24 28 0.6 0.4CIS (average) 331 301 24 24 -0.9 ‐0.8OECD (average) 280 518 20 20 1.6 1.3Source: World Bank, Doing Business (2011)However, World Bank’s ‘Governance Indicators’ paint a less favourable picture for lawenforcement in Kosovo compared to the World Bank’s ‘Doing Business’, which is mainlyattributed to methodological changes. 16 .The Rule of Law Index, which is measured based onvarious aspects of the quality of institutions, reflects, among others, civil liberties, thefreedom of press, political rights, crime, infrastructure, enforceability of government andprivate contracts, speediness and fairness of judicial process. It ranges from -2.5 to 2.5 anda higher score corresponds to better law enforcement. The Rule of Law Index suggests that16 ‘Governance Indicators’ measure different aspects of the quality of institutions, such as political stability, government effectiveness, regulatory quality, controlof corruption and rule of law.84 |