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

Number 1Financial Stability Reportis a lower perception about the presence of corruption in courts. 'Debtor obstruction' (1.75),which relates to the possibilities which exist for the debtor to prevent, slowdown orotherwise obstruct the enforcement proceedings, seems to be a moderate impediment to theenforcement process. Compared to year 2005, debtor obstruction seems to be more of aproblem, mainly because debtors are increasingly causing process delays through filingunsubstantiated complaints or by influencing the process in other ways. In terms of scope ofcollateral, broad categories of assets can serve as collateral and the replacement ofcollateral or the inclusion of new collateral is possible, so the scope of collateral was scoredat 1.Score (1) was attained also for 'preferential creditors', 'credit control', and 'insolvencyranking'. For example, there are no preferential creditors that may have priority over bankclaims. This is also the case with the provisions of the bankruptcy law that give priority tosecured creditors (insolvency ranking). Then the practical experience with the cases seemsextensive and inventory quite effective as collateral. The insolvency process was not scoreddue to lack of experience with bankruptcy proceedings.Overall, the situation regarding the enforcement of creditor rights in Kosovo, in 2010, maybe considered to be in a similar level with year 2005. This is in line with the view thatinstitutions in general change slowly over time (Clague et al., 1997). Taking into accountthe fact that the situation with regard to the enforcement of creditor rights in Kosovo in2010 was at a similar level with year 2005, and also the fact that in general institutions areconsidered to change slowly over time, we compare the survey results obtained for Kosovoin 2010 with the results obtained from the EBRD’s survey for other transition economies inyear 2003 despite the time distance between the two surveys (Table 19). Regarding theoverall score for NLIS 2003, Kosovo’s score of 18.5 suggests that Kosovo, on average,outperforms SEE and CIS countries, while lagging behind the CEE countries. Consideringthe countries in the region, Bulgaria, Croatia and Macedonia are ahead. Regarding theprocess and scope factors, Kosovo scores 1.57, which outperforms the CIS average (2.18),the SEE average (1.94) and also the CEE average (1.68). For the process and scope factors,lower scores indicate better rating.Table 19. Enforcement of collateral laws in Kosovo, SEE, CEE and CISAmount, Time and Simplicity Process and Scope FactorsKosovo (2010) 18.5 1.57Albania 18 1.92Bosnia and Herzegovina 4 2.58Bulgaria 23 1.83Croatia 22 1.83Macedonia 21 1.58Romania 18 1.67Serbia and Montenegro 19 2.17SEE (average) 17.9 1.94CEE (average) 24.3 1.68CIS (average) 13.2 2.18Source: EBRD (2003) and own survey for Kosovo88 |