The Central Bank of the Republic of Kosovo publishes the 2020 Annual Report


This report includes all the developments of 2020, which were associated with new circumstances due to the COVID-19 pandemic.

Despite the challenges posed by the pandemic, the CBK has managed to successfully fulfil its constitutional and legal agenda. Thanks to the actions taken, we have managed to keep the financial sector stable, consistent and competitive, as well as with an upward trend. These developments have enabled the efficient support of the country's economy from the financial sector, continuous reduction of the cost of financial intermediation, increase of citizens' trust in the financial sector and increase of the interest of foreign investors in this sector.

From the first days of the restrictive measures, the CBK activated the Work Continuity Team, which had the task of monitoring and providing guidance that ensure the smooth running of the CBK functions and the financial system in general.

In order to deal as effectively as possible with the situation created, the CBK has continuously coordinated with all institutions of Kosovo, financial institutions in Kosovo, chambers of commerce, as well as international financial institutions, holding very frequent meetings to ensure that adequate and timely measures are taken against the needs of the economy.

As a result of our ongoing communications, the RFI (Rapid Financing Instrument) has been approved by the IMF, in the amount of EUR 52 million to cover the urgent and temporary needs of the balance of payments, as a result of the COVID-19 pandemic. Also, following the coordination with the central banks of the region, the European Central Bank has approved the request of the CBK to establish a repo financing line in the amount of EUR 100 million. This financing line enables the CBK to borrow liquidity in euro currency from the Euro-system, to address the potential liquidity needs of financial institutions in Kosovo, in the event of market dysfunction due to the COVID-19 pandemic.

Seeing that the country's economy was entering a pronounced crisis, where businesses and citizens were facing great financial difficulties, the CBK, based on international best practices and in cooperation with lending institutions in Kosovo, undertook a series of measures to help the economy cope with the challenges of this crisis as easily as possible. These measures initially consisted of applying a moratorium on loan repayments without any punitive measures for all borrowers who have been adversely affected by the pandemic.

The measures taken by the CBK were assessed as being very adequate, both by the local public and by international financial institutions, such as the International Monetary Fund in the Article IV report on Kosovo, the World Bank and the European Commission.

The contribution of the banking sector to support the economy was very important in terms of continued lending, despite the increase in the level of risks faced by banks and, at the same time, maintenance of high levels of liquidity and capital adequacy.

The banking sector continues to have a good quality loan portfolio with a non-performing loan level of 2.7 percent. The microfinance and non-bank financial institutions sector has also continued to have a significant impact on lending to households and small businesses.

The pension sector in 2020 was characterized by a significant slowdown in growth compared to the previous year, while the slowdown in the growth of the pension sector activity was influenced by the withdrawal of the 10 percent from the Trust funds by the contributors, under the economic recovery package.

Moreover, the negative return on investment during the first quarter of 2020 (as a result of the effects of COVID-19 on the economy and financial markets), contributed to the slowdown in the activity of the pension sector. However, losses incurred during the first quarter were offset in subsequent quarters, with a gross return on investment of EUR 160 million. Consequently, the sector closed the year with a positive gross return on investment of EUR 72.3 million, despite facing the challenge posed by the COVID-19 pandemic.

The insurance sector continued to have an improvement that is evidenced by the increase in the use of insurance products in our economy, where insurance sector assets in 2020 represented 2.8 percent of total assets of the financial system with an annual growth of 11.6 percent, thus maintaining last year's growth rate which was 11.8 percent.

Kosovo's economy is estimated to have declined by 3.9 percent in 2020. During 2020, Kosovo's economy continued to have fiscal and price stability. Public debt in 2020 has reached EUR 1.5 billion or 21.8 percent of GDP. The general price level in Kosovo, expressed through the consumer price index, has marked the rate of 0.2 percent in 2020. Price movement in Kosovo continues to be determined mainly by price movement in international markets, due to the high dependence of the economy of Kosovo on imports. The financial system, despite the difficulties caused by the pandemic, continues to be stable and to have a very significant role in the economic development of Kosovo.

More details from the 2020 Annual Report can be found in the following link: