Kosovo

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Office for South East Europe European Commission / The World Bank

Report on Progress Made in Committing, Contracting and Spending Donor Pledges to Kosovo

Information Note

September 2000

The European Commission / World Bank Joint Office has just completed a survey to find out in financial terms the progress donor governments and international organizations have made in implementing their programs to Kosovo. This is the follow up on the various pledges made at the donors’ conferences organized to support the reconstruction and recovery of Kosovo.

Since the end of the Kosovo crisis, two donors conferences have been held so far to raise urgently needed external financing to help meet Kosovo’s evolving needs. For example, directly after the conflict in July 1999, donors provided money for humanitarian assistance such as tents and emergency shelter for refugees, medicine and health equipment, emergency crop supplies, and teachers for refugee children. In November 1999, donors pledged financial support for reconstruction activities like rebuilding houses, hospitals and schools, providing textbooks, clearing mines, repairing power stations to keep electricity, and helping rebuild the private sector by supporting small and medium size enterprises. They also pledged financial support for the Kosovo budget, which is used for purposes such as paying the salaries of teachers and doctors, to keep people’s homes heated, and to provide pensions for the elderly.

Reconstruction activities and support for the budget are implemented in different ways, which affects the rate of spending donor pledges. For the Kosovo budget, donors transfer money from their accounts to the bank account of Kosovo’s Treasury Department—the Central Fiscal Authority—and spent according to the Kosovo Consolidated Budget. Since the Donors’ Conferences, donors provided even more money than was pledged last year for the Kosovo Consolidated Budget because of an increase in needs.

The rate of spending their money for Reconstruction activities, on the other hand, is inevitably slower. First, the donor needs to decide how to allocate its money to a specific need. Once the allocation has been approved by the donor government’s budgetary authority (such as a Parliament) or a Board, the pledge becomes "firmly committed". Bidding to hire goods, works, or services to carry out the project can then begin. Projects can be implemented by UNMIK, NGOs or other implementing agency, typically using contractors and suppliers.

The summary tables² on the status of donor pledges to Kosovo made at the July and November 1999 donors’ conferences included in this note have been based on a new set of reports by donors on the implementation of donor assistance to Kosovo as of June 30, 2000.

The main conclusion is that donors have made encouraging progress over the January-June 2000 period in carrying out the reconstruction and recovery program and providing additional funds for budget support for Kosovo. The aggregate amounts that have been allocated to date for activities relating to reconstruction and recovery and budgetary support, compared to the needs set out in the original reconstruction and recovery program presented by the World Bank and the European Commission last November is significant. Specifically, the original target for commitment of funds by the end of 2000 was $1.1 bn. Already as of June 2000, donors have reported Firm Commitments of $1 bn. This is partially due to a revision of the budget, and subsequent response from donors. In November 1999, Reconstruction and Recovery needs alone were assessed at $998 mn until the end of 2000; firm commitments as of June 30, 2000 reached $872. The evolution of future donor support will likely continue to move toward the updates of requirements as set out in UNMIK’s Public Reconstruction Investment Program.

The overall situation of donor pledges from both Donors’ conferences as of June 30, 2000 was as follows:

This compares with the situation at the end of 1999:

Pledges made for both the 1999 and 2000 budgets totaled $109 million, and commitments reached $137 million. By June 31, 2000, donors had spent $117 mn (108% of their pledges for budget support), as compared to $45 mn (37% of the pledges) by the end of December 1999.

For Reconstruction and Recovery and Peace Implementation Activities, about 70% of the pledged funds have been committed, 50% have been contracted, and 30% have been spent. In nominal terms, about $180 mn has been spent for Reconstruction and Recovery and Peace Implementation Activities since the last update at the end of 1999. This level of expenditure reflects the start of the reconstruction season. Two donors, however, have used the category "spent" to include amounts transferred to implementing agencies rather than amounts spent on goods and services, thus the amount recorded as "spent" is likely to be overstated until implementation of this part of the program is achieved. In addition, amounts spent for peace implementation activities may have accelerated the rate of expenditure at the outset.

It is noted that in particular, donors have contributed substantial amounts to Utilities and Housing--the two areas which the largest external financing requirements were sought; on the other hand allocations to the agriculture sector appear to be relatively low in comparison to the needs identified by UNMIK, the World Bank and European Commission in previous reports.

UNMIK is currently preparing a public investment program for Kosovo for 2001 which will update the financing requirements of the reconstruction and recovery program. The World Bank and European Commission will continue to work closely with UNMIK’s Department of Reconstruction and Central Fiscal Authority to maintain a high level of transparency on financial flows in support of the reconstruction of Kosovo, while minimizing the reporting costs for donors. The commitment and expenditure figures will be updated as of the end of December 2000, to capture further progress as of that date.

Attachments (pdf, 103 KB):

Table No. 1  Kosovo: Results by Donor in USD
Table No. 2  Kosovo: Results by Donor in euro
Table No. 3  Kosovo: Results by original Sectors in USD
Table No. 4  Kosovo: Results by original Sectors in euro
Table No. 5  Kosovo: Results by PRIP Sectors in USD
Table No. 6  Kosovo: Results by PRIP Sectors in euro

¹ See Annexed tables for figures.

² Since the humanitarian crisis following the Kosovo conflict is over, the generous amounts donors have provided for humanitarian assistance are no longer reported. The Joint Office is now tracking the status of donor support for Reconstruction and Recovery activities, Peace Implementation, and grants to support the Kosovo budget only.

³ Minor differences in the pledged amounts are a result of the reclassification in line with UNMIK’s categories, as well as the removal of an amount for KFOR which had been reported by a donor.