December 23, 2016 / 11:11 AM / a year ago

Kosovo approves 2017 budget, aiming for 4.4 percent growth

PRISTINA, Dec 23 (Reuters) - Kosovo lawmakers on Friday approved a budget of 2 billion euros ($2.1 billion) for 2017, a rise of 300 million euros over 2016, to try to boost growth to 4.4 percent from 4 percent this year and ease poverty and unemployment.

Since independence from Serbia in 2008, the small Balkan state of 1.8 million people has struggled to attract foreign investors. Corruption, organised crime and political tensions are cited by foreign companies as the main obstacles.

“The government will spend 700 million euros in capital investment for next year, and this, among other things, will have an impact on economic growth,” Prime Minister Isa Mustafa said during a 14-hour debate in parliament that ended in the early hours of Friday.

He said Kosovo’s economy would grow faster than others in the region and in the European Union, but landlocked Kosovo remains one of the continent’s poorest countries. One third of the workforce remains jobless.

The rest of the budget - which is about 300 million euros higher than this year’s - will be spent mainly on pensions, salaries and public services. It was approved by 70 votes to eight in the 120-seat parliament.

The government has targeted a deficit of 1.5 percent of national output, funded mainly through treasury bills.

Kosovo has a loan deal with the International Monetary Fund (IMF) worth 184 million euros which ends early next year. The IMF has told Kosovo it should curb the expensive benefits it pays to war veterans or it will lose access to loans.

On Wednesday, state-owned Kosovo Telecom said it might face bankruptcy after an arbitration court ruled it would have to pay 29.6 million euros to local mobile telecoms service provider Z-mobile for breach of contract. ($1 = 0.9564 euros) (Reporting by Fatos Bytyci; Editing by Georgina Prodhan, Alison Williams/Mark Heinrich)

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