Given the tight overall resourceconstraints in Kosovo, and in the face of declining donorsupport and limited access to external finance, difficultchoices and trade-offs on spending decisions will need to bemade. The main challenge will be to develop expenditurepolicies which will preserve macro-stability and ensure thatpublic services are sustainable, comprehensive, andefficiently provided. Public spending policies need to laythe basis for broad-based equitable economic growth, andtarget the most needy, in an effective and efficientfashion. Through introducing the Medium Term ExpenditureFramework (MTEF) approach in 2002, the United NationsInterim Administration in Kosovo (UNMIK) and the ProvisionalInstitutions of Self Government (PISG) have started to makeprogress in adding a medium-term context to budget policy.This report identifies the several important expedituremeasures that require action. First, spending has to bereallocated across sectors, so reduce subsidies, reassesspublic sector employment, and provide finance for investmentneeds. Second, improve the efficiency of existing spendingin the health, education, and social protection sectors.Third, increase the budget spending on health to provide agreater range of services and target educational finance toreduce inequality. Fourth, strengthen the effectiveness ofthe budget as a policy tool. Fifth, further improvetransparency and accountability.
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