February 3, 2019 / 9:38 AM / a year ago

Kosovo's parliament approves 2019 budget, avoids crisis

PRISTINA (Reuters) - Kosovo’s parliament approved the 2019 budget on Sunday after an opposition party agreed to support the minority government two days after the deadline expired, forcing a temporary halt in all state spending.

FILE PHOTO: Kosovo's Prime Minister Ramush Haradinaj talks during an interview withe Reuters in Pristina, Kosovo, October 16, 2017. REUTERS/Hazir reka

The budget passed with 65 votes in the 120-seat parliament. The coalition government, which holds 53 seats, negotiated the support of the opposition Social Democrat Party (PSD).

Parliament also passed a bill raising public wages. Teachers ended a strike on Friday after reaching a deal with the government, meaning half million pupils and students will go back to school on Monday after three weeks away.

Workers in the energy sector, airport control, customs and doctors had also threatened to block their work if the new law on wages will not consider their demands.

Prime Minister Ramush Haradinaj said spending in this year’s budget was a record high.

“With 2.37 billion euros ($2.71 billion) this is Kosovo’s biggest development budget that will contribute to have an economic growth of 4.7 percent,” Haradinaj said after the vote.

The International Monetary Fund (IMF) said Kosovo will grow 4.2 percent this year from 4 percent last year.

The government plans to keep a budget deficit of 2 percent gross domestic product. Some 800 million euros will be spent on state infrastructure projects mainly to build new roads.

Haradinaj said capital investment expenditure was raised by 11 percent compared to last year’s budget, spending for law enforcement agencies by 6 percent and base pensions by 20 percent.

Kosovo economists say increasing public sector wages would further increase the gap between the public and private sector and harm competitiveness. The average private sector wage is 370 euros a month, comparing to 520 euros per month in the private sector.

Corruption and political instability have kept most foreign investors away from Kosovo since its 2 million people declared independence from Serbia in 2008.

Reporting by Fatos Bytyci; Editing by Raissa Kasolowsky

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