The impact of the political crisis on Kosovo’s economy: Who is bearing the consequences?

Economists warn that the ten-month-long political crisis has had drastic consequences for Kosovo’s economy, while the increasingly likely snap parliamentary elections, according to experts, will not resolve the crisis. In the marathon race to form a new government, our interlocutors emphasize that it is the citizens who feel the greatest impact of uncertainty.

Written by: Milena Miladinovic

The Government of Kosovo, currently operating in a technical mandate, has adopted the Draft Budget for 2026, which has met with widespread public criticism in Kosovo.

Opposition politicians argue that a government in a technical mandate has no constitutional authority to make such significant decisions, and that they will not vote for the proposed budget in parliament, should it reach a vote. They describe the announced increases in salaries, pensions, and child benefits as part of the ruling party’s pre-election campaign.

As a result of this decision, the Network of NGOs “Avonet” has filed a lawsuit against the Government of Kosovo.

Economists warn that the political deadlock is suffocating the economy, putting Kosovo at risk of being left without a functioning budget or foreign investments, and even raising concerns about the payment system — namely, whether Kosovo will be able to pay public sector salaries in the absence of a new government.

While the snap elections have been postponed for another 15 days following Self-Determination’s (Vetëvendosje’s) proposal that Glauk Konjufca be nominated as the new prime minister-designate, and President Vjosa Osmani’s acceptance of the proposal, citizens say that the crisis is severely affecting their daily lives, but that politicians seem indifferent.

Although they hope for better days, most are skeptical that the economic situation will improve anytime soon.

According to Milos Pavkovic, Director of Strategy at the Center for European Policy in Belgrade, the political crisis in Kosovo has affected foreign investments, the public sector, and administration, with citizens bearing the greatest consequences.

“Ordinary citizens are the most vulnerable. This prolonged political crisis negatively affects foreign investment and international aid, which are among Kosovo’s main sources of financing. It will also impact the public sector and the administration. The question of whether the budget will be adopted remains crucial — if it is not, government expenditures will be severely limited,” Pavkovic told Kosovo Online.

He added that the political crisis in Kosovo will most profoundly affect citizens through its impact on the economy.

“First and foremost, it will be felt directly by ordinary people — through a decline in living standards, fewer job opportunities, and potential wage reductions, among other things,” Pavkovic explained.

When asked whether President Vjosa Osmani could propose to the Assembly of Kosovo the adoption of the previous budget as a temporary measure, Pavkovic said that, while this could serve as a transitional solution, the president lacks the constitutional authority to make such a proposal.

“It could be a temporary measure, but there is a serious question as to whether it is constitutional. This would fall under the jurisdiction of the Constitutional Court, should someone file a complaint. The president simply does not have the power to propose a budget — that authority rests solely with the government. The government, however, has been functioning in a technical mandate since February, with no realistic prospect of a new cabinet before the end of the year, while the budget should legally be adopted by the end of November,” Pavkovic noted.

According to Agim Shahini, President of the Kosovo Business Alliance, Kosovo is at risk of being left without a budget, and the ruling party – Self-Determination – bears responsibility for the poor economic situation.

“Without a budget, nothing can function. Salaries in almost every sector are in question. Without a new government, we will face serious problems. If elections are held in December, as announced, Kosovo will be left virtually without a state budget. This endangers the payment system, internal governance, and salaries of workers in health care, education, and local administrations. Without a budget, nothing can operate. The ruling party is responsible for this situation,” Shahini told Kosovo Online.

He added that 2025 has brought numerous negative developments in Kosovo. According to him, the first task of the next government — which he doubts will be formed anytime soon — must be to repair relations with the international community.

“In 2025, we have witnessed many changes in Kosovo — unfortunately, all for the worse. We are under EU sanctions, and two months ago, the United States removed Kosovo from the Strategic Dialogue, which was crucial for us. Despite not being a member of the UN or EU, Kosovo previously enjoyed strong U.S. support. I now doubt that this support will continue at the same level. The new government will first have to repair relations with the international community, especially with the United States and the European Union, as well as with the governments of the Western Balkans. The new Kosovo government will face enormous challenges, and although no one knows when it will be formed, I do not expect it to happen soon,” Shahini concluded.