In less than ten days, two of the world’s largest international financial institutions the World Bank and the International Monetary Fund (IMF) have removed Kosovo from the Fragile and Conflict-Affected Situations List.
After more than 15 years on this list, Kosovo now reappears on the map as an institutionally more stable and financially consolidated country.
Both the Central Bank of Kosovo and the outgoing government describe this as an “important recognition of the country’s institutional and economic progress.”
Economic experts say this development could strengthen Kosovo’s image as a stable and reliable destination for investors and international partners. But what does Kosovo’s removal from this list mean economically?
Economic Experts See Opportunities and Challenges
Mejdi Bektashi, an economics professor at the University of Prishtina, says the decisions by the World Bank and IMF to delist Kosovo act as a catalyst for future developments, to which Kosovo must adapt.
According to Bektashi, Kosovo will benefit in multiple ways — not only from the World Bank and IMF as financial institutions but also from other financial markets operating in more developed countries.
“Primarily, this means improved access to credit, a reduction in risk premiums, which translates into lower interest rates, enabling Kosovo to borrow more affordably from these institutions or other financial markets,” Bektashi told Radio Free Europe/Radio Liberty (RFE/RL).
Another economics professor, Berim Ramosaj, notes that Kosovo’s removal from the list boosts confidence among domestic and foreign investors, expands access to more favorable credit options both nationally and internationally, and enables secondary and tertiary banks to perform better.
Additional Benefits and Ongoing Concerns
Bektashi emphasizes that support from the World Bank and IMF helps ensure macroeconomic stability for Kosovo, benefiting not only the public sector but also the private sector, which will have easier and more favorable borrowing conditions from developed countries.
However, he warns that a significant portion of Kosovo’s financial activity remains tied to the European Union (EU), which has imposed restrictive measures on Kosovo over the past two years due to tensions in the north.
“These restrictive measures by the European Commission, alongside the prolonged delay in forming Kosovo’s institutions, send very negative and discouraging signals to major financial institutions and the EU itself,” Bektashi said.
He adds that the World Bank’s and IMF’s decisions should serve as a positive signal to the EU to lift these restrictions and adopt a more moderate approach toward Kosovo.
Do These Decisions Reflect Real Improvements?
Bektashi describes the World Bank’s and IMF’s actions as a “stimulating carrot,” but he also points out ongoing political interference in Kosovo’s justice system, which calls into question the guarantee of fair decisions.
He further notes that Kosovo’s trade deficit remains high and that the outgoing government’s economic policies have not yielded expected improvements.
“Realistically, I don’t think there has been an improvement in the macroeconomic and financial situation. This decision is more political, where the Central Bank of Kosovo played a bigger role than the current government since interactions with these institutions mainly involve the Central Bank,” Bektashi said.
Ramosaj agrees that the Central Bank deserves credit for this decision. He acknowledges Kosovo’s progress in economic and institutional stability but stresses that the political and economic realities are still not fully stable.
“There have been improvements in budget revenue governance, particularly in macro-financial policies. But there are also other problems, such as delays in institution formation, failure of the legislature to function properly — which is the founder of several independent agencies — and the continued existence of only a caretaker government,” Ramosaj told RFE/RL.
He refers to the fact that Kosovo has yet to constitute its new Assembly following the February 9 elections due to political disagreements, resulting in the ongoing caretaker government.
Despite these challenges, Kosovo’s caretaker Prime Minister, Albin Kurti, described Kosovo’s removal from the Fragile States List as a result of his government’s “continuous and dedicated work” over the past four years.
“And it is only a step toward achievements to come,” he wrote on X (formerly Twitter).
Is There a Risk of Kosovo Returning to the List? What Should Authorities Do?
Bektashi does not believe Kosovo will revert to its previous fragile status with regard to the World Bank and IMF.
Decisions made by these financial institutions “are complex and not easily reversed,” he said.
“I believe that with the constitution of the Assembly and government, we will see considerable inflows of funds — both from these two institutions and from the EU. The economy will liberalize, and we will attract more foreign investment,” he added.
Ramosaj shares a similar view, emphasizing that the World Bank’s and IMF’s decisions result from a careful, lengthy process.
“This means they have a strong database and reasoning behind their decisions. For a reversal to occur, there would need to be significant institutional, political, and economic deterioration over time,” Ramosaj explained.
Both experts recommend that Kosovo continue strengthening its institutions and implement stable economic policies, carefully following the guidance of the World Bank, IMF, and international partners to ensure sustainable development and increase investor confidence.
