Fiscal Policy Reforms in Kosovo

Abstract

Fiscal policy represents one of the most important components of economic policy and as such it should be treated in its context.For this there are at least two reasons:First, economic policy defines the goals and criteria of fiscal policy in order to assess its contribution to the implementation of economic policies, andSecond, defining the connection between the objectives and instruments, theory of economic policy explains the process of fulfilling the objectives of economic policy, part of which process is fiscal policy itself. Therefore, in the following, in a quite direct manner, we will address the interdependence between economic policy and fiscal policy.The word policy, in everyday life is used to clarify the principles on which various activities run, in order to realize the goals set by the designated authorities by determining the holders of those activities, their size as well as means by which those goals should be realized.In order to achieve prosperity and political stability, national governments aim at achieving economic equilibrium. Kosovo is one of the last countries in Europe to transition to a market economy. The transition process has begun from a very difficult starting point.During the years after the war, a symbolic economic growth occurred, which has been attributed mainly to remittances, investments in infrastructure and privatization. Investments, despite continuous growth, are considered insufficient to boost domestic production.This pattern of growth has not been able to meet the development needs of the state and failed to translate into a better standard of living for citizens, given that neither unemployment nor poverty are reduced. (The Progress Report on Kosovo, European Commission 2011).