UNMIK/FR/004/01

FEATURE RELEASE - 5 January, 2001

Public sector investment priorities for 2001

Continuing UNMIKDirect examination of the Department ofReconstruction report Kosovo 2001-2003: from Reconstruction to Growth, we look at the strategic priorities for which the Joint Administration will be seeking donor support.

AThe JointAdministration proposals in From Reconstruction to Growth are the starting point for discussion about the future of Kosovo something that should be debated by all Kosovars, not something the Administration is imposing on Kosovo,and underlines Roy Dickinson, the international Co-head of the DOR. His department job is then to find the resources to bring them to fruition.< BR>
From a public discussion standpoint, what the DOR proposals make clear are the public investment priorities implicit in the Administration plans for filling medium-term needsCneeds that go beyond short-term alleviating poverty and raising living standards. DOR, Dickinsons Kosovar counterpart, DOR Co-Head Mehmet Hajrizi, highlights 6 strategic priorities out of the 12 areas of public spending covered (see tables): private sector development, education, health, poverty alleviation public administration and housing. These six, he notes are not necessarily the ones needing the most funds: some are already well funded.< BR>
Against the background of the DOR Co-Headsvision of where Kosovo should be in 2003 and what needs putting in place to reach European standards by 2010, the public debate should focus both on the strategic priorities and on the relative spending different areas, for example, agriculture vs. trade and industry in the productive sector. The following highlights are the raw material for that debate.

Strategic priorities

Private sector development (trade and industry)
Most medium-term employment opportunities depend on a thriving private sector. This, not the public sector, holds the keyto Kosovo business recovery. Pump-priming of the economy by improving access to finance will therefore remain a major part ofdonors and the JointAdminication strategies. Trepca apart (where recovery will require continued public investment), direct support to businesses will take the form of technical assistance and business advisory services at the local level. Recognizing that substantial economic activity still continues in the parallel economy, priority will go to: developing a transparent and enforceable regulatory framework with effective incentives and obligations; programmes targeting small and medium-scale enterprises (SMEs); improving SMEaccess to credit facilities; and commercialization of non-private sector enterprises.

Education and training
While education is a universal priority, the DOR Co-Heads note, the youth of Kosovo is theterritory richest resource. The total investment of DM 138.3 million over three years will  see key primary and secondary targets reached. For example, all Kosovar children will be to integrated into compulsory education between the ages of 6 and 15. The quality and access to the education system will be brought into line with EU standards. But there will also be a premium on adult and vocational training to make good the exclusion of Albanians from public life for ten years. The University of Pristina will undergo major administrative, curriculum and syllabus reforms, new disciplines will be introduced and education delivery modernized. New central laboratory facilities will improve the quality of science education.
Two thirds (DM 61 million) of the education and science investment is required for school buildings and infrastructure. Nevertheless, the medium-term focus will be on improving the quality of education through provision of equipment and by modernizing the administration and management of the education service. Extensive donor support is also sought for new pre-schools and child-care facilities, for  re-equipping the primary and secondary schools and for rehabilitating the neglected special needs education sector.

Health
Improving the health status of the population, providing safe, accessible and affordable health services that have the confidence of the whole population and building a health system on principles of equality, non-discrimination and sustainability require a major reorganization of health provision. Future primary health care will be based on the concept of family medicine in centres that will cover the needs of 80-90 per cent of patients. Some 234 sites, already identified, will be equipped and developed to provide services that include emergency transport and essential oral health service. Special services will be provided for minorities. Funding has to be mobilized to bring the mental health system into line with those in other European countries. While introduction of co-payments and re-introduction of a health insurance scheme for health services are crucial for financial sustainability, further investment is required to rebuild and re-equipKosovo six hospitals. Other institutional strengthening will build up the Institute of Public Health to provide comprehensive health promotion and protection programmes, upgrade maternity services, develop a mental health service, secure pharmaceutical distribution and provide universal access to health emergency transport.

Poverty alleviation (social welfare)
The scale of humanitarian assistance still needed is indicated by the cash welfare to 50,000 families during the summer and the 40,000 people identified as needing assistance to survive the winter. The Centres for Social Work which administer welfare payments at municipal level are being restarted. Further funding will be required to set up an appropriate and affordable social protection system that alleviates poverty and delivers social services to vulnerable groups.

Governing Kosovo
Kosovars gradually taking responsibility for government Kosovo is fundamental to the Joint Administration=s strategy. The Central Fiscal Authority is developing a functioning budget process, basic fiscal policy and administrative systems that relies increasingly on domestic revenue, sound tax policy and a modern accounting and treasury system. It will also rely on a cadre of increasingly skilled local professionals familiar with appropriate information technology platforms for managing budget resources efficiently.
While much of the Department of Public Serviceswork (issuing ID cards, birth, death and marriage certificates, travel documents and property verification) will come under the Kosovo budget, its responsibilities for the physical infrastructure of all central administrative departments will require addition investment from donors.
Similar funding will be need at the municipal level (a responsibility of the Departmentof Local Administration) to cover infrastructure and refurbishment, capacity building and public services equalization.

Housing
As in the year 2000, the JointAdministration aim will be to ensure that every needy family is rehoused. This could amount to 15,000 to 20,000 houses for the most vulnerable families which would be unable to rebuild for themselves. The bulk of the funding will be sought for the poorest families, particularly those returning from abroad and displaced minorities. Attention will also be given to developing a properly regulated private housing market that balance urban and rural housing needs. It will also assist the munipalities to regulate urban and spacial planning and ensure consistent application of planning regulations and building laws 
 
Potential mismatch

Altogether the Department of Reconstruction and the Co-Heads of other JIAS spending departments and agencies are seeking DM 2.99 billion for public reconstruction and investment over the next three year.
Will it be forthcoming? Preliminary discussions with donors and some assumptions about their disbursement rates suggest a total availability of nearer DM 2 billion than DM 3 billion. From Reconstruction to Growth is therefore an advance indication both to donors and to the spending departments that there is a potential mismatchCboth in the overall requirements for reconstructing public life in Kosovo and the department level.
The exercise has enabled UNMIK andKosovo donors to see where are the major deficits in donor interest, e.g. in the housing programme, where considerably more funding is needed if private construction is to take over from donor grants by the end of 2003. The health sector and the shift from international to Kosovar responsibility for government will also require relatively more support.

Table 1: Priority Sectors for Reconstruction and Investment (DM millions)

Table 2: Other planned public reconstruction and investment spending (DM millions)

Contact: P. Ellwood
(038) 504 604 Ext. 5471
E-mail: ellwood@un.org
Reconstruction