Republika e KosovësRepublika Kosova-Republic of Kosovo

Qeveria – Vlada – Government

Input to the Progress Report

April 2012PRISHTINA

TABELAT.....................................................................................................................................................................4

LISTA E SHKURTESAVE DHE AKRONIMEVE...........................................................................................5

INTRODUCTION......................................................................................................................................................8

1. POLITICAL CRITERIA......................................................................................................................................9

1.1. DEMOCRACY AND RULE OF LAW...............................................................................................91.1.1. Institutions........................................................................................................................91.1.2. Parliament / Elections.................................................................................................91.1.3 Public Administration.................................................................................................101.1.4. Judicial system..............................................................................................................101.1.5. Anti-Corruption Policies..........................................................................................11

1.2. HUMAN RIGHTS AND MINORITY PROTECTION.......................................................................111.2.1 Human rights and minority protection............................................................111.2.2. Minority rights, cultural right and protection of minorities.............111.3. Regional Affairs and International Obligations.............................................12

2. ECONOMIC CRITERIA...................................................................................................................................13

2.1. MARKET ECONOMY FUNCTIONING...........................................................................................132.1.1. Reporting on latest economic developments............................................132.1.2. Report on monetary and fiscal policies during the reporting period................................................................................................................................................152.1.3. Functionality of goods market............................................................................162.1.4. Financial Sector............................................................................................................17

2.2. CAPACITY TO COPE WITH COMPETITIVE PRESSURE AND MARKET FORCES WITHIN UNION...............................................................................................................18

2.2.1. Human and physical capital..................................................................................182.2.2. Reform and liberalization of network industry.........................................192.2.3. Structural displacements in economy............................................................192.2.4. Governments interventions in economy.......................................................202.2.5. Trade Integration........................................................................................................20

3. EUROPEAN STANDARDA...........................................................................................................................20

3.1. INTERNAL MARKET..................................................................................................................................20

3.1.1 Free movement of goods.........................................................................................203.1.2. Free movement of Capital......................................................................................21a. Customs..................................................................................................................................21b. Taxing Administration of Kosovo...........................................................................223.1.3. Costums and Taxtation………..……………………………………………………………………….223.1.4. Public Procurement....................................................................................................223.1.5. Employment and social policies.........................................................................233.1.6. Education and Research..........................................................................................24

3.2. SECTORAL POLICIES....................................................................................................................253.2.1. Industry and SMEs......................................................................................................253.2.2. Agriculture and Fishery….……………………………………………………………………………253.2.3.Food Safety and Veterinary…………………………………………………………………………….26 3.2.4. Environment...................................................................................................................263.2.5. Transport Policies.......................................................................................................263.2.6. Information Society and Media ..…………………………………………………………………….273.2.7. Energy................................................................................................................................273.2.8. Financial Control..........................................................................................................283.2.9. Statistics...........................................................................................................................28

3.3. JUSTICE, FREEDOM AND SECURITY................................................................................................29

3.3.1. Visas, borders, asylum and migration............................................................293.3.2. Money Laundering......................................................................................................293.3.3. Police and Organized Crime Combating........................................................293.3.4. Personal data protection........................................................................................30

TABLES1

Tabela 1 - Nominal and real GDP according to expenditures........................29Tabela 2 - Main development in external sector 2008-2011, in million euro. .29Tabela 3 – Annual difference in % of ICK and basic ICK.................................30Tabela 4 – Budget Income and expeditures of central and municipality January – February 2012..............................................................................................30Tabela 5 - Participation of Private Sectore in GDP.......................................................................30

LIST OF ABBREVIATIONS AND ACRONYMS

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ACA Anti-Corruption AgencyACSAP Anti-Corruption Strategy and Action PlanAGE Agency for Gender EqualityAI Administrative InstructionAIGK Association of Independent Journalists of KosovoAMPM Antemortum – PostmortumCBK Central Bank of KosovoCBP Cross – border pointCCMP Central Committee on Missing PersonsCEC Central Election CommissionCECS Central Election Commission SecretariatCEFTA Central European Free Trade AgreementCLM Child Labor MonitoringCMIS Case Management Information SystemCPC Corruption Prevention CommitteeCPI Consumer Price IndexDCSA Department of Civil Service AdministrationDMPAR Department for Management of Public Administration

ReformEC European CommissionECAA European Common Aviation AreaEPAP European Partnership Action PlanERO Energy Regulatory OfficeESPSM Electronic System for Pharmaceutical Stock ManagementETF European Training FoundationEU European UnionEULEX European Union Rule of Law Mission in KosovoFADN Farm Accountancy Data NetworkFIU Financial Intelligence UnitFMC Financial Management ControlFMN International Monetary FundFVA Food and Veterinary AgencyGDDS General Data Dissemination StandardGDP Gross Domestic ProductGGO Good Governance OfficeGPC Government Privatization CommitteeHHI Herfindalh – Hirchman IndexHIS Health Information SystemIBM Integrated Border ManagementICMM Independent Commission for Mines and MineralsICP Institute of Construction ProductsIDP Internally Displaced PersonsIFS International Financial InstitutionsIJPC Independent Judicial and Prosecutorial CommitteeIJPC Independent Judicial and Prosecutorial CouncilILCD International Legal Cooperation DivisionILEP Initial Legal Education ProgramIMCPAR Inter-ministerial Commission for Public Administration

ReformIMGD Inter-ministerial Group on DecentralizationIOD Intellectual Property DepartmentIOM International Organization for MigrationIOO Industrial Ownership OfficeIPA Instrument for Pre-accession AssistanceIPAK Investment Promotion Agency of KosovoKACC Kosovo American Chamber of Commerce

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KAD Kosovo Accreditation DirectorateKBA Kosovo Business AllianceKBRA Kosovo Business Registration AgencyKC Kosovo CustomsKCC Kosovo Chamber of CommerceKCDSEE Kosovo Company for Distribution and Supply of Electric

EnergyKCF Kosovo Curriculum FrameworkKCS Kosovo Correctional Service KEK Kosovo Energy CorporationKESP Kosovo Education Strategic PlanKFA Kosovo Forest AgencyKGAWP Kosovo Government Annual Work PlanKIPA Kosovo Institute of Public AdministrationKJC Kosovo Judicial CouncilKJI Kosovo Judicial InstituteKOSTT Electricity Transmission System and Market Operator of

KosovoKP Kosovo PoliceKPC Kosovo Procurement CouncilKPS Kosovo Police ServiceKSA Kosovo Standards AgencyLM Line MinistriesMA Municipal Assembly/iesMAFRD Ministry of Agriculture, Forestry and Rural DevelopmentMCR Ministry for Communities and ReturnMCYS Ministry of Culture, Youth and SportMED Ministry of Economic DevelopmentMEI Ministry of European IntegrationMESP Ministry of Environment and Spatial Planning MEST Ministry of Education, Science and TechnologyMF Ministry of FinancesMFA Ministry of Foreign AffairsMH Ministry of HealthMHRU Municipal Human Rights UnitsMI Ministry of InfrastructureMIA Ministry of Internal AffairsMKSF Ministry for the Kosovo Security ForceMLPA Ministry of Local Power AdministrationMLSW Ministry of Labor and Social WelfareMoJ Ministry of JusticeMoU Memorandum of UnderstandingMPA Ministry of Public AdministrationMTI Ministry of Trade and IndustryNGO Non-Governmental OrganizationsNQA National Qualifications AuthorityOAG Office of Auditor GeneralOCA Office for Community AffairsOCR Office for Communities and Return OLEP Ongoing Legal Education ProgramOPM Prime Minister‘s OfficeOSCE Organization for Security and Cooperation in EuropePAK Privatization Agency of KosovoPAR Public Administration ReformPIA Prishtina International AirportPOE Publicly Owned Enterprise

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PPA Public Procurement AgencyPPRC Public Procurement Regulatory CommissionPRB Procurement Review BodyPTK Post and Telecomm of KosovoQMS Quality Monitoring SystemRAE Project Project for Roma, Ashkali and EgyptiansRTK Kosovo Radio and TelevisionSCAAK Society of Certified Accountants and Auditors of KosovoSEB Standard Evaluation BodySEECEL South East European Centre for Entrepreneurial LearningSME Small and Medium EnterprisesSMESA Small and Medium Enterprise Support AgencySMP Staff Monitored ProgramSOE Socially Owned EnterpriseSOK Statistical Office of KosovoSOP Standard Operation ProceduresSPO State Prosecution OfficeTAIEX Technical Assistance and Information ExchangeTAK Tax Administration of KosovoTBP Tam/Bas ProjectTRA Telecommunication Regulatory AuthorityUNDP United Nations Development ProgramUNHCR Office of the United Nations High Commissioner for RefugeesUSAID United States Agency for International DevelopmentVAPU Victim Assistance and Protection UnitVAT Value Added TaxVET Vocational and Education TrainingVTC Vocational Training CentreWB World BankWG Working GroupWWRO Water and Waste Regulatory Office

IntroductionThis report contains main developments in Kosovo from January 1 2012 until March 30 2012, for the first quarter (Q1) of 2012. The Government of the Republic of Kosovo has expressed it’s willingness to submit additional data for this period, for the EC’s Progress Report for Kosovo, expected to be published in autumn 2012.

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Data presented in this report are mainly focused on the progress in: Reforms implementation; Legislative and administrative capacities development; Challenges identified on the EC’s Progress Report for Kosovo 2011, and Implementation of Priorities of the European Partnership through

European Partnership Action Plan;

Structure of data corresponds with the EC’s Progress Report for 2011, providing information on: Political Criteria, Economic Criteria and European Standards. The report is also based on quarterly reports drafted by Institutions of the Republic of Kosovo.

1. POLITICAL CRITERIA1.1. Democracy and Rule of Law1.1.1. Institutions During the reporting period Assembly has received 24 reports in total, 19 from the executive and 5 from independent institutions. In terms of capacity building two new officials have been hired within Division for Legal Standardization and Harmonization; and also there were 7 training sessions organized where 245 officials were trained.

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Furthermore, the Government has approved the AI no. 02/64 for procedure, criteria and methodology of preparation and approval of strategic documents and plans for their implementation, on March 7 2012.

Towards completion of legal framework for local self-governance, in February 2012 the AI 2012/02 for implementation of the law on municipalities’ immovable property lending and exchange was drafted and signed, and the AI 2012/01 for Kosovo Municipal Assemblies monitoring through information technology “tele-presence” in January 2012.

The Guide Handbook for implementation of the Law on Inter-municipal Cooperation was finalized in March 2012 and is expected to be published and sent to municipalities.

As about decentralization, the plan for capacity-building in new municipalities has been drafted. The report on overall evaluation of capacities in municipalities has been drafted and published in March 2012. The annual report of Inter-ministerial Group for Decentralization has also been drafted.

1.1.2. Parliament / ElectionsTowards electoral reform, on March 23 2012, the Assembly of the Republic of Kosovo has submitted before the Constitutional Court, amendments for changing the Constitution of the Republic of Kosovo.

In terms of preparations for extraordinary elections for Mayor of the Ferizaj Municipality, Central Elections Commission (CEC) has certified candidates of political parties for elections expected to be held on April 29 2012.

On March 19 2012, CEC has approved AI 01/2012 on nominating/discharging of Chief Executive, Vice-Chief Executive, director of the office for registration of political parties and the spokes-person for public information. CEC has also approved annual work-plan for 2012.

During the reporting period, CEC Secretariat has conducted two staff-training sessions, where four officials have been trained: two for “Statistics with Computer Software Programs SPSS” and two for “Labour Law enforcement in Practice”

1.1.3 Public AdministrationIn terms of completion of the legal framework on PAR, on March 2 2012 the Regulation No. 05/2012 for classification of jobs within civil service has been approved. Furthermore, on the meeting of Inter-ministerial Committee for Public Administration Reform (ICPAR) held on March 9 2012, proposal-Plan of Action for implementing revised Strategy for Public Administration Reform was approved, and also the Strategic Development Plan of MLSW was approved with some remarks.

Based on the civil servants training plan, so far, 35 training sessions have been organized on: overall management, administration and legislation, human resources, ITB public procurement, EU affairs and municipal affairs, where 496 civil servants have been trained. On 6 workshops organized by ReSPA an overall of 24 civil servants from 15 institutions have participated.

In terms of monitoring implementation of procedures, Department for Administration of Civil Service (DASC) has reviewed 82 requests for authorization of recruitment publications from institutions entitled to civil servants recruitment.

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1.1.4. Judicial systemOn February 1 2012, AI on reappointment/transfer of Judges in Court of Appeal has been approved, whereas on February 24 2012 Regulation for evaluating Judge’s performance has also been approved. Furthermore, Monitoring Commission for implementation of the new law for Courts, has determined the number of needed Judges for the Court of Appeal, and has also initiated the process for Appointing Judges within this Court. Also, PCK has approved Regulation on setting procedures and criteria for evaluating prosecutors’ performance effective as of January 1; as well as AI for setting annual rate for prosecutors which was approved on January 24 2012. On December 1, respectively December 5 2011, Transit Plan for Courts, and Transit Plan for Prosecution have been approved. Furthermore, on March 9 2012 KJC has approved Strategy for Information Technology.

PCK, on March 20 2012, has approved the regulation for appointing and transferring prosecutors. On April 3 2012, PCK has made an internal announcement calling all interested prosecutors within the prosecutorial system to apply for position in Appeal Prosecution and Essential Prosecution including application for respective departments. PCK has taken the Decision on setting the number of prosecutors in Essential and Appeal Prosecution on April 17 2012. On the same date, PCK has also revised and approved the proposal of the evaluation panel of PCK, of 13 candidates for Prosecutors in Prosecutorial system of Kosovo. On April 20 2012, PCK has sent the proposals for 13 candidates for prosecutors to the President for decree.

On March 22 2012, PCK has signed the memorandum of cooperation with Balkan Investigative Reporting Network.

Towards filling position for Judges, on March 23, the President of the Republic of Kosovo has decreed 11 Judges, 7 of which are on duty for the first time. Furthermore, during the reporting period KJC has recruited 12 people as supporting staff. KJC has signed memorandums of understanding with Prime-Ministers Office/Official Gazette, respectively Ministry of Finance/Treasury, for sending the official gazette and KJC’s obligations for payment, respectively for delegating the managing of expenses.

As about disciplinary measures for judges and prosecutors, during the reporting period 20 final reports for disciplinary procedures have been revised for a total of 12 judges; among these files, some resulted with suspension of two jusdges until the disciplinary procedures end. On the other hand, from 19 cases on prosecutors presented since the establishment of PCK, so far, Disciplinary Commission has scrutinized 12 files, from which 7 files were suspended, 1 dropped, 1 rebuked, 1 suspension, and 2 with the decision on decreasing the salary up to 50%, while 7 files are still being processed. In terms of evaluating prosecutors’ performance and better planning on decreasing the number of accumulated files, PCK has taken a decision on registering accumulated files on the application of Records Base (on March 20 2012).

During the reporting period, 79 participants have attended trainings on: “Organized Crime”, “Implementing interrogation of witnesses and witnesses under protection” and “Witnesse in Criminal Procedures”, from which 22 were judges, 1 prosecutor, and 56 candidates for judges and prosecutors. Also, during this period 10 trainers have been certified, 2 in the field of cyber-crime and 8 for Human Rights Convention.

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1.1.5. Anti-Corruption PoliciesIn the field of anti-corruption policies, ACA on March 28 has submitted before Assembly the annual report for 2011. The regular process of declaration of property in ACA, it has ended on March 31. From 3657 high officials obliged to declare their property, 3354 have completed it within the legal timeframe, 6 officials have notified ACA for the reasons for which they could not declare their property, 36 high officials have declared their property after the deadline (until April 11 2012), whereas 261 high public officials have not declared their property at all and their names were made public by ACA, accordingly with the law. ACA is in the phase of registering informations on database and initiating legal procedures in competent courts. During the reporting period, ACA has conducted 4-day training for 74 contact-points/officials from line institutions on the topic of property declaration.

1.2. Human rights and minority protection1.2.1 Human rights and minority protectionAs about missing persons, in the field of human right, a meeting of the Working Group for Missing Persons between Prishtina and Belgrade delegations has been held on March 9, as well as the informing session with families of missing persons.

As about property rights, regarding implementation of the agreemeing on cadastral dossiers return, on the meeting held on April 4, Serbia has submitted the final list followed by all supporting documents of cadastral registry. Furthermore, regarding the freedom of expression, on March 26 the Assembly has approved the Law on Independent Media Commision and the Law on Public Broadcaster/RTK. Also, the budget for broadcastin in official languages has been set in compliance with the new law on RTK. A report on implementation of the Law on Access to Official Documents has been prepared.

Regarding gender equality, two discussion round-tables have been organized: “Media Role in treating gender issues” and “Emporing the woman in rural areas - challenges and institutional support”.

1.2.2. Minority rights, cultural right and protection of minoritiesRegarding the reforms of the commission responsible for monitoring implementation of legislation on usage of languages, on March 21 the Government has approved the Regulation for the Office of Language Commissioner.

As about integration of RAE communities and closure of lead-rich camps, 3 familes have been moved from Osterode camp, 1 in “Roma Mahallë”, two others in “Tre Soliterat” on the northern part of Mitrovica. After this, the number of remaining families in the camp falls down to 14. Furthermore, the manual on training staff of health, social, psicologists, pedagogs and members of the community which will provide training or activities within the communities regarding lead-poisioning and advocating for health-related issues, has been drafted. Evaluation report on the scale of contamination as such has been drafted, but due to specifics of this contamination this report is updated according with the new finding on the field.

During the reporting period, 13 people in total have been treated, 11 adults and 2 children, where 3 of them are in re-treatmend due to rebound effect. The number of measurements of the level of lead for this period has reached 467, where 154 are capillary and 313 venous.

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As regards the return, three new OCR have been established (in Klokot, Partesh and Ranillug). Towards capacity-building, in March 2012 regional trainings for all OCR have been conducted, on the topic of re-patriation of people and re-integration in society.

MCR through the joint project with Brittish Embassy has started building 8 houses for moved RAE community families, in municipality of Istog.

During the reporting period, 530 m³ of burning material have been distributed for returned families and for those with low living social standards, as well as 20 food-hygienic packages. Also, 25 food-hygienic packages have been distributed for Goran community in Restelica Village municipality of Dragash. 15 NGO projects have been supported in the amount of 64,677.00 euro, which aimed at stabilization and re-integration of communities, and sustainable economic development, as well as their successful integration.

1.3. Regional Affairs and International ObligationsBased on the agreement reached in Brussels on Kosovo’s participation in regional forums, Kosovo has participated for the first time in the Meeting of the Board of Regional Cooperation Council (RCC) which has been held on 14 and 15 March in Sarajevo, whereas on February 23 in Brussels the Strategic meeting has been held and the Directing Committee of CEFTA meeting. From February 29 to March 1, the meeting of Task-Force for CEFTA’s Portal has been held. Also, on March 30 in Tirana, fourth meeting of Working Group on service Trade was organized. Regarding the cross-border, on March 6, Common Technical Secretariat with Albania has become operational, and with Macedonia the Common Committee of Monitoring has been established.

2. ECONOMIC CRITERIA2.1. Market Economy functioning

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During the reporting period (February-march) IMF has done the second evaluation of SMP for period September-december 2011. All quantitive criteria set for the end of December 2011 have been achieved with the exception of accumulation of Government debt towards suppliers, which were accumulated at a low value. In compliance with these developments IMF has released a positive evaluation on Kosovo’s macroeconomic performance for june-december, evaluating implementation of SMP program as successful. This has enhanced negotiating new Stand By Agreement with this institution. Kosovo Government has reached compliance with new Stand-By program for the period of next-coming 20 month in the amount of €107 milion, form which the main part of €92 is expected to be disbursed within 2012.

In compliance with positive evaluation of macroeconomic performance, during March 2012, Kosovo Government has completed negotiations with WB for disbursement of second installment of direct budgetary help in the amount of €36 milion as part of the Program for Sustainable Employment. Disbursement of these funds is expected during the first half of 2012.

2.1.1. Reporting on latest economic developmentsDue to missiong actual data on 2011, evaluation for economic growth are based on current trends of main macroeconomic indicators. Based on these indicators, real GDP growth for 2011 is estimated to have marked an annual rate of 5.3%. Main driver of economic growth in 2011 is estimated to be private consumption contributing on economic growth of 3.0%, and public consumption at 0.7%. as second contributor in GDP growth for 2011 were general investments, of which public investments with 1.1% and private investments with 1.0%. Despite considerable growth in exports, neto exports remain a negative contributor in real growth which is estamited to have contributed negatively with 1.7% in real GDP growth in 2011. Also, the reduction of donor presence in Kosovo has been estimated to be a negative contributor. General consumption during 2011 is estimated to have had an annual increase of 9.9%, from which private consumption has rapidly increased (10.0%) compared to public consumption (9.6%). This increase in private consumtion, among other factors, is attributed to growth of disposable income as a result of salary increase for public servants and natural growth of population, as well as the broadening of economic activities in the country. Based on import data and those of financial sector crediting, private investment have been estimated to have grown with 10.8% during 2011, where public investment increased with a faster rate (16%) as a result of capital investments particularly the investments on route 7 (Merdare-Morinë). Furthermore, nominal growth of GDP components during 2011 can be attributed also to the increase of price levels, although the data on the quantity of imported goods mainly used for consumption and investments show a considerable growth of these components in the real value as well.

Regarding external sector, during 2011 exports have marked and increase of 2.5% while imported goods increased with 14%. These devlopments indicate that despite the considerable marked increase in exports, due to low base and due to large investive programs which strongly stimulate import, a considerable improvement in trade balance cannot be expected.

Developments on Payment Balance

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Evaluation on payment balance for 2011 show an increase of trade deficit, improvement of service account, a slight improvement of income account and transfer account and as a result an increase of current account.

During 2011, imported goods are estimated to have increased with 14%, mainly as a result of consumption and investment increase, followed by a rapid growth of international price of imported goods. On the other side, a decrease in price of metals, mainly during the last quarter, has affected in the decrease on value of exported goods, which during 2011 is estimated to be 6.5%. As a result, trade balanced has marked an increase in terms of GDP with 2.9 points of percenentage.

On the other hand, exported services have marked a noted increase of 19.6% during 2011 compared to the decrease of imported services by 8.6%. This increase in exported services was mainly affected by the increase in travel services as well as communication and construction. More precisely, neto services of travel during this year increased by 40.2% while communication services increased by 57.1%. As a result, neto services in terms of GDP have increased by 2.7 points of percentage, thush compensating deterioration of trade balance.

Regarding incomes account, during 2011 the incomes from workers compensation have increased at a rate of around 25% comparet to the slow growth of outcomes in forms of returned profit from FDI as well as other investments from foreign investors. As a result, net income account has marked an increase of about 19% or 0.5 points of percentage in terms of GDP. During the following years, the increase of net incomes is expected to slow due to direction of financial institution’s investments direction on treasury bills which the government has started emmiting at the beginning of 2012.

Transfer account is estimated to have remaind constant, despite the increase in remittance from outside, because official transfer are decreasing continuously as a result of the countinuous decrese of international missions in Kosovo. Furthermore, during 2011 net remittances from diaspora have increased by 0.9% compared to those of 2012. On the other hand, other private transfers have increased by 20.4% increasing also the net value of total transfer for 4.4% compared to 2010.

Regarding the capital and financial account, the main contributors in their increase have been considerable growth of direct investments for 5.9% and considerable decrease of portfolio investments for 37.8% which is linked with latest developments in euro-zone member countries. Furthermore, these investments are expected to decrease further based on the fact that financial institutions will direct their investments towards treasury bills emitted by Kosovo Government (see annex: table 2 for details).

Employment trends Based on the registered data of the unemployed by MLSW, cumulative number of registered unemployed people at the end of 2012 was 276,655 marking a decrease by 17.7% compared to the registered number at the same period in 2011. This decrease of unemployed people is mainly attributed to the digitalization of unemployed register in MLSW, which from now on is expected to provide more credible information on the numbers of unemployed people registered.

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On the other side, the number of employed people through employment offices until the end of 2011 reached at 6,517 people. During February 2012, 1,709 new people have been registered as unemployed while 307 people have been employed.

2.1.2. Report on monetary and fiscal policies during the reporting periodEvolution of monetary policy frameworkExchange rate framework: see annex – table 3 for effective real rate and nominal exchange.

Evolution of fiscal policiesWith the budget of 2012, €1,548 milion have been set for expenditure, while projected incomes reach €1,395.5 milion. Assuming full realization of incomes and projected expense, it is expected that the primary deficit for 2012 will be €159 milion, while overall deficit (which includes payment of interest rates and public enterprise loans) will result at €172 milion.

For 2012, it has projected that €287.8 milion will be collected from TAK. Until the end of reporting period (February 2012), TAK has collected €49.4 milion or 17% of projected annual value. Compared to the same period of 2011 when collected income was at €46 milion, an increase of 7% can be noted.

Incomes at the border are projected to be collected €867.3 milion with the budget for 2012. Customs have managed to collect €85.74 milion or 10% of the total projected value until the end of February 2012.

Nontax incomes and self incomes (municipal and centra) for 2012 are projected to reach at €171.5 milion. From these, nontax incomes are projected to be €48.09 milion, out of which €5.72 milion or 12% have been collected until the end of February 2012. While self incomes (municipal and central) are foreseen to reach at €123.4 milion, out of which €16.97 milion or about 14% of the annual plan have been collected until the end of February 2012.

During the reporting period January – February 2012, €178.3 milion or about 12% of budgeted value have been spent. At the central leve, capital expenditure reached €74.18 milion with a rate of realization of 15% during January-February 2012 period, while at the municipal level these expenditures reached the value of €8.39 milion with a rate of realization at 7%. In total, during the reporting period €82.57 milion have been spent in capital expenditure, while €94.6 milion have been spent in current expenditure (from both levels of governance). Also, during the reporting period €1.05 milion have been disbursed to KEK as a loan. Taking into account the level of incomes and expenditure until the end of February 2012, it is expected that the budget of the Republic of Kosovo will be followed by a deficit of €2.99 milion. For more details see annex, table 4 which shows expenditure accordingly with sub-categories for central and local governments.

Overall government debt: Kosovo Government entered fiscal year 2012 with a general debt of €253.6 milion. The biggest part of this amout, or €226.3 milion was a debt from Consolidated Credit C, remaining from former Yugoslavi, while the remaining part has to be returned to the creditors as following: about €22.2 milion (18.8 milion SDR) is a debt towards IMF and about €5.1 milion (4.3 milion SDR) towards International Development Association (IDA).

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During three first months of 2012, payments from the debt of IMF have been realized, where as interest €64,296 have been paid, and also the payment for the remaining part from Yugoslavia in the amount of €9,940,373, respectively €5,668,538 main and €4,271,835 interest. As the result of these payments, foreign debt of Kosovo’s Government at the end of March was €248 milion.

One of the main activities regarding the public debt was also the release of bonds market on January of this year. During the first quarter three auctions have been organized and as a result Treasury bill at the nominal value of 30 milion euros has been emmited with a maturity of 91 days (10 milion euros in each auction). Total stoc of overall debt at the end of March was €278 milion or 5.76% of GDP.

2.1.3. Functionality of goods marketPrice liberalizationSize of Private SectorThe most recent data available show that private consumption had no significant movements, as they remain at an average of 91.3% of GDP. While private investments are estimated to have increased by 21.8% in 2010 to 22% in 2011, as a percentage of GDP and that as a result of faster growth of other components of GDP, such as accelerated growth of capital investments during 2011 compared with 2010. 

However, it is notewothy that private investment in nominal terms during 2011 has increased compared to 2010, for more see Table 5 in the Annex.

PrivatizationDuring the reporting period, the early distribution of 20% of disposable income from the sale of SOEs, 92 employees have benefited where the amount allocated is € 54,310.12. It is also completed the documentation for distribution of 17 SOEs for which the Special Chamber has confirmed there are no complaints and is not rejected, whereas the amount to be distributed is € 305,157.20. From January 2012 published 19 final lists and 8 initial lists of beneficiaries of 20% have been published

Businesses entrance and opt-outsDuring the reporting period January-March 2012 in Kosovo’s Agency for Business Registration 2,543 businesses have been registered, while 220 have seized to exist.

Business environment, judiciary and administrative capacitiesTowards easining doing business work permit, sanitary permit have removed, the number of export-import documents has been reduced, and has been removed the registration of companies to Kosovo Customs for import / export, thus the removal of tax for this service. Now companies through the VAT certificate shall perform the activities for export / import. Registration fee is removed, therefore, registration is free. Also, business registration time has been cut down (now the registration is done within a day) and registration procedures are reduced. Such as:

Business registration is done within one day. Business registration is free; Work permit from municipality has been completely removed; The necessity of companies to be registered in Customs for import-export

has been removed. Now the companies can perform their import-export activities through their VAT certificate;

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The number of documents required for import has been reduced from 8 to 4 and for export from 7 to 3;

Obtaining VAT certificate has been reduced from 10 days to 1; Request for initial capital has been removed. LLC registration for capital

investmens has also been removed. For Joint-stock companies the initial capital is brought down from 25,000 Euro to 10,000 Euro.

In the context of measures to strengthen property rights, during the reporting period 2.100 property claims have been implemented (in all forms of implementiation as ofrepossession, management, closing the case at the request of a party, etc). Property Clam Commission held a session where they decided on 3442 application submitted. While in terms of administrative and judicial measures in 46 different municipalities of Kosovo have been appointed notraries (30.03.2012).

2.1.4. Financial SectorTotal value of financial sector assets in 2011 reached € 3.5 billion (75.1% of GDP). The banking system continues to have greater participation of the financial sector (76.1%of financial assets, without assets of the CBK).

Pension funds managed with 17% of assets, while the rest of the assets were managed by microfinancial institutions (3.7% of assets), insurance companies (3.2% of assets) and financial auxiliaries (0.02% of assets). Regarding the number of financial institutions in Kosovo, 2011 was not characterized by any substantial change. Number of commercial banks, pension funds and microfinance institutions remained the same as in the previous year (8 banks, two pension funds and 59 microfinance and financial aid institutions) but two additional insurance companies that offer life insurance policies have come into thisindustry.

Ownership structure of banking sector in Kosovo has not changed since 2008, consisting of six foreign-owned banks and two local ownerships. The banking system remains dominated by foreign banks, which manage about 89.6% of bank assets. Moreover, the banking sector is characterized by a relatively high degree of concentration. This is because three largest banks in the country manage about 70% of bank assets.However, in recent years; the degree of concentration has fallen consistently. The degree of concentration expressed through the Herfindahl-Hirschman Index (HHI) for assets has fallen to 2.090 points, compared with 2.299 points in 2010

Lending to the economy remains the main activity of the banking system. Banking system loans dominate the structure of the structure of banking assets and in 2011 this had 68.3% share of total assets in 2011. Total value of loans issued by the Kosovo banking system in 2011 was € 1.69 billion (about 36.5% of GDP). In the last three years loans increased by a positive trend: 8.9% in 2009, 13.3% in 2010 and 16.4% in 2011. Moreover, in the first half of 2011 banks reported higher demand for loans by enterprises, especially small and medium enterprises.

Additional indicator of this increase may be accelerated the growth rate of loans to enterprises by 12.5% in 2011 compared with growth of 7.9%. Loans to households continued to grow at aslower pace of 17.7% compared with 24% in 2010

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Structure of loans in 2011 was dominated by loans to enterprises, which accounted for about 69.9% of total loans, while the remaining 30.1% were loans to households. The low level of production in the Kosovo economy and high reliance in imports from abroad is also reflected in the sectoral distribution of loans to private enterprises. The biggest part of loans was absorbed by the service sector (52.7%), followed by industry loans (24.8%), agriculture (3.5%), etc.

Banking sector's net profit for 2011 was € 37 million (€ 32.8 million in 2010). Factors contributing to improving the performance of the banking sector in 2011 were increases in all revenue categories, particularly interest income (interest income made up the largest banking revenue). Net profit growth resulted in improved performance indicators such as return on average assets-ROAA and return on average equity-RoAE. In 2011, ROAA was 1.5% and has not changed from last year, while RoAE increased from 14.8% in 2010 to 15.3% in 2011.

However, all banks operating in Kosovo are well capitalized and consistently maintain Capital Adequacy Index (CAI) over the minimum criterion of 12% set by the CBK. In December of 2011, CAI stood at 17.6% (17.9% in January).

Year 2011 was characterized by a slight decrease in interest rates for loans and deposits. The average interest rate for loans in 2011 was 14.6% which is consistent with previous year. The average rate for deposits in 2011 was 3.5% compared with the average deposit rate of 4% in 2010. Portfolio investment abroad declined in 2011 reaching € 143.6 million as of December 2011 (€ 231.0 million by December 2010). Developments in global financial markets can be considered as one of the contributors to the decline of investment portfolios. Out of a total of € 143.6 million (3.1% of GDP) portfolio investments, 67.2% are investments in capital markets in other countries, while 32.8% are investments in bonds and obligations. Pension funds and local commercial banks represent the main investors in this category.

2.2. CAPACITY TO COPE WITH COMPETITIVE PRESSURE AND MARKET FORCES WITHIN UNION 2.2.1. Human and physical capital Human capital: Through the informative system for Employment Management and jobseekers installed in all public employment services, so far 264,984 jobseekers have been registered. 200.956 of them are active job seekers and 64.028 are passive jobeseekrs, while 60,000 registeres on the old cartels can not enroll in the new system without personal identity number.

In order to alleviate structural unemployment in Kosovo, Division of Labor and Employment during January-February 2012 through public employment services has mediated about 41 job seekers of all minorities including Roma, Ashkali and Egyptian (RAE).

In the same period, public employment services have registered young jobseekers 4,273, where 1,964 of them women, 643 from

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minorities, and 14 disabled; and also it has been mediated in employment of 591 jobseekers  (268 of them women).

Professional Training Centers have developed programming packages in 8 professions which take place in PTC (elektroinstallers, welders, plumbers, processing of fruits and façade, etc).

Physical CapitalRegarding infrastructure, we have continued works on Merdare-Morine highway where ground works are completed in segment 4b-Duhël Sllapuzhan 4 km in length, and the bridge no. 12 is being completed (80%). In segment 5 Duhël-M9 junction (Gjurgjicë) one track (long 15 km) is opened, overpass is finished (100%) and 60% of on-track objects were finished.

In the energy sector, in order to improve quality and increase the transmission capacity and transformation in the transmission network, KOSTT during this period has implemented the following projects: High voltage equipment of SS 220/110 kV Prizren 2 has been replaced and is third transformer (TR3) 150MVA is being installed; Relay protections of NS Prishtina 2 and NS Prishtina 3 are changed.

2.2.2. Reform and liberalization of network industry In the field of civil aviation there are no developments to be reported

Water and Waste Regulatory Office (WWRO), during the reporting period has drafted AI on license tax and other fees for services on waste collection and storage, which have been approved on January 6 2012. Regarding improvements in payments and collection, the report for actual situation of regional companies performance has been prepared.

Regarding the telecommunication regulations, TRA board on February 22 2012, based on reviewed materials and the reports on market analysis in Landline Telephony, has approved decisions for definition and those for operators identified with sensitive powers in the market: Report on Market Analysis of Landline Telephony; Decisions on defined markets (a total of 7 decisions); Decisions for identifying enterprises (operators) with sensitive market power

(OFNT) accordingly with respective markets (a total of 8 decisions).

Revenues from telecommunications services for the fourth quarter of 2011 have reached € 55,003,353, which is decreased by about 13.68% compared with the previous quarter, respectively, decreased by 5% compared with fourth quarter 2010. Mobile operators' revenues comprise 81.7% of all market income, while landline operators own about 8.6%. Regarding landline telephony during the fourth quarter of 2011, the number of landline users has increased from 0.24%, where the number of active users is estimated to be about 86,000. Part of 81.700 belongs to operator PTK JSC / Telecom of Kosovo (ICT), while the remaining 4,804 to alternative operator IPKO.

Regarding mobile telephony, the number of users at the end of fourth quarter 2011reached the figure of 1,478,944 users, which represents a decrease of 41.498 users, or 2.73% less compared with the previous quarter respectively increased 1.87% compared with quarter of the same period of previous year.

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While in terms of internet services, in the fourth quarter 2011 has been an increase in the number of users who have access to internet services: 143.243 active lines which represents an increase of 4.66% compared with third quarter of 2011, respectively is marked a significant jump from 13,31% compared with same period previous year

2.2.3. Structural displacements in economy Sectoral structuresNothing has been reported.

Sectoral structure of SMEs distributionSMEs comprise over 99% of the total number of enterprises. They participate with about 80% of the total employment in the private sector.

Structure of SMEs by size consists of 98.39% micro enterprises, small enterprises with1.36%, medium with 0.20%, and large enterprises by 0.05%. From the standpoint of employees in the private sector, micro enterprises employ 64.2%, small enterprises 8.6%, and medium enterprises employ 7.9% of the employees.

By ownership, SMEs that are registered as individual business make 89.25%, 3.31% partnerships, corporations 6.85%, 0.49 foreing companies, SOEs to 0.02%, 0.01% public enterprises, cooperatives 0.6% and enterprises uner AKP 0.03%.

2.2.4. Governments interventions in economyBig state enterprises Privatization of KKDFE: Deadline for submission of bids by investors is May 21, 2012, and announcement of winners will take place in June 2012. After selecting the winners, signing of the agreement will be made within 90 working days.

PTK Privatization: During this quarter transaction advisor has been selected. It is also established a working group which has begun works to separate Post from PTK and the decision was taken by the Government of the Republic of Kosovo on the establishment of a temporary board to lead the new public company, Post of Kosovo.

State AidState aid to public sectors of energy, transportation and water and waste sector for 2012 is € 30,758,749 or 0.70% of GDP of Kosovo. For this year are approved these funds: € 8,108,749 for capital investments and € 22,650,000 for subsidies. MED prepared monitoring agreement which defines the responsibilities of beneficiaries. Public companies report on a quarterly basis under this agreement to the progress of investments acquired.

2.2.5. Trade IntegrationTrade exchange with EU countries for the month of January 2012 amounted to €55,793,000, of which the value of imports was € 48,296,000, while the value of exports was € 7,497,000. By comparing these data with the same period last year, it can be noted that the value of imports increased by € 4,085,000, while the value of exports has fallen by €5,082,000.

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3. EUROPEAN STANDARDS3.1. Internal Market3.1.1 Free movement of goodsStandardizationKSA has adopted in the reporting period a total of 82 international and European standards EN ISO / IEC standards as Kosovo standards. Of these, 61 standards are in the field of agro-food and 21 standards in the field of energy.

Accreditation and conformity evaluation Kosovo Accreditation Directorate (DAC) has been audited by the quality manager of GDA (General Directorate of Accreditation), where audit is finished on 03.02.2012. Quality Management System was audited according to standard DCA SK ISO / IEC17011:2004, and: Quality Manual MC-001 DAK, Dak-PM-001, Dak-PM-002, Dak-PM -003, DAK-PM-004, Dak-PM-005, Dak-PO-001, Dak-PO-002, Dak-PO-003, Dak-PO-004, Dak-PO-005, Dak-PO-006 , DAK-PO-007, Dak-PO-008, PT-001-DAK, Dak-002DAK PT-PT-003, PT-004-DAK, Dak-PT-006. Quality Manager of GDA during this period has audited 20 base documents of Quality Management System of DAK.

During this period, starting with the procedure DAK-PT-001 for supervision of testing,so far they are supervised for Conformity Assessment Bodies: Laboratory for chemical analysis and physico-mechanical, cement, 14.03.2012; Laboratory control of petroleum products, 05.03.2012; Water Laboratory for analysis of "DEA", 23.01.2012 Laboratory for analysis of aggregates and asphalt; Laboratory for analysis of oil and oil derivatives to 14.03.2012; Laboratory for analysis of oils 23.03.2012; Laboratory for review of construction material, concrete, asphalt and geologicalsurveys and soil geo 22.03.2012; Quality control of pharmaceutical products "Trepharm Laboratory, 30.03.2012.

By DCA so far 19 testing laboratory and inspection body are accredited; in total we have 20 Bodies for Conformity Assessment Accredited. Pre-evaluation assessment of DCA by signing up for the EA-MLA has resulted in 7 non-conformities resolved, and resolved observations 7,

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whereas 4 comments resolved. So far we have 20 accredited Conformity Assessment Bodies, and have three new applications for accreditation. Consumer protectionThe Office for Consumer Protection was established and during this period was working with the consumer awareness, where as of 14.01.2012 a television spot was launched in TV-broadcaster in Kosovo. Workshops are also organized on 13.03.2012 in UBT University, in the Faculty of Law was organized a roundtable titled “role and importance of consumer protection” on 14.03.2012, and also debates, interviews, publications, leaflets etc.

3.1.2. Free movement of Capital During this period in the development of modern interbank payment systems for effective banking services to customers, supervision and analysis division within the Department of payment systems is functional and was approved for credit register (February 2012). Also in January 2012 Electronic Trading Platform software (electronicplatform for trading securities - Software) and the central depository of securities (CSD) are finalized.

3.1.3. Customs and Taxationa. CustomsReplacing the current system of IT-TIMS with ASYCUDA system has progressed. A prototype of ASYCUDA World was prepared on January in Kosovo Customs, and is being defined as the process of customs declaration processing system AW. Modes are defined cargo management exp-imp at border crossing points. At the same time continued to increase human capacity to use the new system. From February 27 until the end of March 2012 over 200 customs officers have been trained to work with the new V14. Continued signing of mutual cooperation in customs matters. Compliance is achieved on the text of the Agreement with Austria Customs and draft agreements with Croatia were exchanged. Also, negotiations were reintroduced by the Memorandum of Understanding with the Customs of Poland.

During the reporting period in collaboration with the Police  34 cases have been undertaken and goods worth 13.495 euros were seized.

Since January 2012, 64 customs officials were trained and a total of 11 trainings were organized in the area of criminal investigation.

On 2 April Directorate for strategic planning was functionalized.

In conducting corruption cases allegedly committed 5 inspections and 4 officials  have been reported for disciplinary procedures in the Professional Standards Division.

b. Taxing Administration of KosovoDuring the reporting period continued human capacity building ATK in the field of tax law enforcement and other areas as managerial skills, taxes and laws in European countries.Altogether there are 36 training sessions held with 492 participants. In the area of capacity building of staff, ATK has received technical assistance from various international organizations as ESATK, GIZ, OECD and IKAP. ATK has continued withthe

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project's Call Center. During January-March 2012 Call Center reached 1285 call, which have led to the realization of revenue of EUR 85 343.62.

With the aim of replacing the base system, TAK has adopted the Information TechnologyStrategy 2012, with defined objectives and priorities. Along with the TechnologyStrategy, are also a number of functional modules such as control module, the moduleenforced collection, call center module, the module complaints. Electronic filing project is being developed under the plan provided, where the electronic reporting period stated a total of 443 declarations. Also all the elements for VAT e-filing  type of tax, for all proclaimers of VAT are prepared.

During the reporting period Performance Strategy 2012-2015 continued to be implemented, where has been progress in raising revenue performance. Taxpayer segmentation is done according to criteria specified in the Performance Strategy 2012-2015 and we began to treat the risks detailed under the Plan risks. ATK has built a plan to increase the quality of communication with the public and the taxpayers, involving: Workshops, announcements, press releases, tables and other forms of service delivery in the educational offices for taxpayers.

3.1.4. Public ProcurementAfter approval of the Public Procurement Law no. 04/L-042 on 05 October 2011, Public Procurement Regulatory Commission has approved all necessary acts for implementing the Law on Public Procurement in Kosovo.

With the approval of 60 parts of the secondary acts in January 2012, other acts of secondary legislation to enable the completion of secondary legislation in this area are fully approved and have entered into force in March 2012. With the approval of the Secondary Acts have been adopted contract management plan and the Operational Guidelines for Procurement, which contained detailed rules for monitoring the management contract. So far there has been don two Contract Management Monitoring.

In the context of capacity building, on March 7  has commenced basic training program and certification of procurement officers. Training will last at least 15 days and after successful completion of training and testing, participants will receive basic procurement professional certificate valid for 2012-2014. While in other capacities within PPRC, from 4 January two new legal experts have started work.

Second phase of the project: Training in Public Procurement in the Western Balkans and Turkey, funded by EC and implemented by the Consortium ITCILOand ADETEF, has started. The trainings are attended by 26 participants from Kosovo. The period 01.03 - 31.03.2012, monitorings were completed in 4 authorities as regular monitoring and monitoring 4 Authorities as random. 52 monitorings of contracting authorities have been completed in order to improve monitoring of reports published on the Web site of the PPRC.

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For the reporting period the Procurement Review Body (PRB) has received a total of 57 complaints from economic operators. Of the 57 complaints, 32 are considered by the PRB, while 25 are pending. While 30% of complaints have gone in favor of economic operators and in favor of contracting authorities 26%.

3.1.5. Employment and social policies As regards developments in the field of secondary legislation on January 21, 2012 the AI nr.01 / 2012 for the arrangement of light and works hard for people under age 18 was approved.

Also, the system for Labour Market Information is installed in all public employment services, this represents a system which is based on collecting data on the labor market. While Information System Employment Management means the informative Employment Management system and is functional for the registration of job seekers and employment management. Through this system so far 264,984 job seekers registered. SIMP-is operational in all public employment services.

MLSW’s working group for the development of negotiations between Kosovo and regional states and the EU in the field of bilateral Social Security – Pensional Insurance continued with the next meeting on February 27 to 2 March 2012 in Pristina, where negotiations were conducted between officials of Austria and the Republic of Kosovo on the preparation of a new Austrian-Kosovo agreement in the field of social insurance. This is as a result of negotiations held in Vienna on 23 to 26 May 2011.

Within the professional capacity building LIEB has organized and conducted training on safety and health at work attended by a total of 48 labor inspectors.

Action Plan for Health Sector Strategy has been amended according to the recommendations of the SAPD and Progress Report.

In terms of providing health services to the RAE community, awareness campaigns about the health risks of lead contamination has completed within the specified period but its implementation is ongoing as a necessity to prevent exposure to blood lead. Regarding this, a manual was also designed to train health workers such as psychologists, sociologists, educators and community members who will provide training or activities within the community and especially those people who are most affected by lead contamination and associated marginal with lead poisoning, and advocating for health issues.

Assessment report on the extent of contamination is completed but due to the specifics of contamination report is regularly updated with the values found in the ground. In this period, persons who are treated are 13 total, 11 adults 2 children, 3 of them are being re-treated due to the effect -bound (non-indication giving effect to the prescribed therapy). During the treatment is being applied protocol treatment approved by the MoH. Number of measurements leadlevel for this period has been 467, 154 of them capillary and 313 venous. Also, we can say that the main Family Medicine Center in Mitrovica has sufficient therapy for the treatment of persons with elevated levels of Pb, BI 45cg/dl.

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Activities undertaken aiming integration of communities in health system, were compound of meetings with Directors for Healthcare within municipalites of Shterpce and Gracanica which was held on February 24 2012, also aiming to identify modalities on financing health-care. Kosovo’s National Institute for Public Health has started implementing the project on inclusion of RAE commynity in healthcare system and providing services in the community, where this project is ongoing and time after time will receive reports on new data. Also, the module for registeration of Healthcare Statistics has been functionalized and 234 new specialisations have been set.

3.1.6. Education and ResearchAs part of Strategic Plan 2010-2015 for education of children with special needs in pre-university education, during the reporting period 14 educators and teachers have been hired, 7 educators in pre-school institutions and 7 teacher in elementary schools. As of January 2012 the number of covering institutions has reached 21, where 7 are pre-school institutions and 14 elementary schools. Also, 2 source centers and 1 elementary school have been equipped and functionalized with informative techonology equipments. Increasing capacities on teachers has continued, where about 6,000 teachers have been trained on ECDL program. Around 40 teachers have been trained in different Informative Technology programs.

Two informing sessions and trainings for FP7 have been held, with around 100 participants (researchers, governmental representatives, business representatives, etc) have been held.

MEST has established the Commission for reforming the Faculty of Education, with members from MEST, University of Prishtina and Kosovo Accreditation Agency.

MEST, supported by SWAP has defined the profile of kosovan teacher and has developed standards for this profile, which are comparable with standards in European countries.

20 – 24 February 2012, 5 workshops on regional quality assurance have been organized by Agency for National Qualifications supported by Brittish Council by assuring an external expert for quality assurance. These workshops were held in Prishtina, Ferizaj, Gjilan, Prizren and Peja. The aim of these workshops was to continue implementing quality assurance in Education and Professional Training, reviewing self-evaluation reports, development plans of institutions, improvement plans and challenges in 2011 as well as preparation in terms of quality assurance in Education and Professional Training for 2012.

In terms of implementing the Program on Training and Licensing Teachers of pre-university Education, during the reporting period 3% of teachers have been trained.

National Universitary Library and Science Research Institutes (Public Universities and History and Albanology Institutes) are subscribed in electronic library EBSCO.

3.2. Sectoral Policies 3.2.1. Industry and SMEs In February 2012, European Act for Small Business in Kosovo has been updated and has been sent to the European Commission.

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Also, during the reporting period, 12 new contracts have been signed and 4 contracts for existing businesses’ expansion, therefore the total number of businesses located in Business Park in Drenas reached at 33 with a total value of declared investments at around €30 milion and a declared number of employed people at nearly 1000. From 33 businesses located in this park, 26 are local businesses, 2 are foreign investments and 5 are a mixture of foreign and local investment.

3.2.2 Agriculture and fisheryDuring the reporting period, three laws have been approved: Law no. 04/L041 on Production, Collection, Processing and Trade of Tobacco,

published in the Official gazette no.26 on November 25 2011; Law no. 04/L-040 on Regulation of Land, published in the Official gazette nr

03, on February 22 2012; Law no. 04/L-074 for Consultancy services, published in Official gazette no. 04

on march 19 2012.

As regards the development of a simplified system of land parcels (LPI), the software has been functionales and using during farmers’ applications for surface, for direct payment of wheat and has been digitalized 37,452 parcels of 9,575 farmers. Also, the software for Farms Registration has been developed. For this reporting period, 15,740 farmers are registered, technical means were prepared, regulations, calls for applications and other informing material on annual agricultural and rural development program for 2012.

The questionnaire and guide for FADN data on “Farm Book” and data on absolute agricultural products have been gathered. Also, data on agriculture statistics (import-export) between Kosovo and EU have been analyzed. In terms of advancing consultancy services, 200,000 Euro have been committed, and terms of reference for the project on “Rural development through Consultancy Services advancement” have been prepared.

As about national registration of forests, the guide on data collection in all three languages has been prepared. The classification of test surfaces of 1,879.00 ha has been done. In terms of forest protection, 624 files have processed in respectiver courts for the damage caused of 899.19 m3 of wood. Kosovo Forest Agency in cooperation with “Norwegian Forest Group” Project has prepared the guide for treatment of young forests, for afforestation, forest roads and also the second guide for forests was prepared. As about drafitn menaging plans and afforesting bared forests, the menaging plan for 25,706.38 ha has been drafted. For this, locations have been identified and 1,200,000 saplings have been assured from Forestry Institute in Peja.

3.2.3. Food Safety and VeterinaryIn terms of further operationalizing IT infrastructure for identification of animals, 3150 movements of cattle have been reported, 4011 movements of sheep, goats and pigs. As about new reports during this period, 22,552 cattle have been reported, 5,625 sheep, 1,772 goats and 1,800 pigs.

Also, from butcheries 467 slaughters of differents animals have been reported. During this period veterinary inspectors have visited animal markets within

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Kosovo and have identified managers of these markets, and so far, 10 aplications for licensing animal markets have been received.

Food and veterinary laboratory has recruited 3 persons: two positions as chemists, and one for quality control.

3.2.4. EnvironmentAiming to complete the legal framework, during the reporting period MESP has approved AI no.14/2012 on holding conditions, marking method and identification of protected animals in exile. (February 28 2012)

Following the implementation of projects for environmental protection, on March 31 7 monitoring stations for air quality have been functionalized. Furthermore, feasibility study for the system of greenhouse gas inventories is finished.

In order to increase institutional capacity of Nuclear Safety Agency for Radiation Protection, a budget of € 28.000 for 2012 has been allocated.

MESP, for the purpose of enhancing cooperation and coordination of environmental awareness activities and other environmental issues with civil society, on March 02 2012, signed the memorandum of cooperation between KEPA and environment initiative “Clean Up Kosovo” represented by NGO “Liria”. On this purpose, MESP has held public debates on Environmental Impact Assessment, for 140 points of IPKO telephony. Debates were organized in: Mitrovica 09.01.2012, Prizren 08.02.2012, Peja 20.02.2012 and Prishtina 13.02.2012. In terms of capacity building, two training were organized under RENA project: a workshop on environment investments planning in Tirana-Albania, 24-25 January 2012 (WG1 – Strategic planning of investments) where 3 officials participated; and, a training on monitoring surface and ground water in Shkoder-Albania, 28 February – 01 March 2012 where 4 officials participated. 05-09 March 2012, a training on Competency Center Promotion within reforms of AAP in Kosovo, was held where one official was trained. Also, MESP has participated in training on ozone layer and measures against global warming in Japan, 01-17 March 2012.

3.2.5. Transport PoliciesIn the framework of the memorandum of understanding in South Eastern Europe to develop a basis for the transport network, Kosovo has taken an active part in meetings organized by the South-East European Transport Observatory (SEETO), namely the SteeringCommittee meeting on March 13, 2012 in Tirana.

In the course of implementation of R7 project, ground works have been completed to a length of 4 km (segment 4b), and the works have been completed at 80% on bridge no. 12. Further, in segment 5 the course has been opened in the length of 15km covering finalization works regarding overpass. As about following structures (objects), works are completed at 60%.

Furthermore, in the field of maintenance of roads, namely the implementation of the program of winter maintenance of the network of national and regional roads 2000 km were maintained and cleared of snow respectively.

In order to improve the quality of existing inter-city transport road network and transportation subsidy which is economically unsustainable, 3

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operators are equipped with licenses to transport passengers and two contracts were signed inhumanitarian transport (subsidized).

Regarding professional training, 17 drivers have been trained and certified to transport dangerous goods, and 210 drivers have been trained for professional competency accordingly with the standards of International Road Union.

3.2.6. EnergyWith regards to generating new capacities, request for proposals and agreements for “Kosova e Re” Project have been finalized and approved by the Steering Committee of the Project on March 6th, 2012. Aiming to implement the Law no.04/L-016 on Energy Efficency, the following have been approved: Regulation on establishment and functioning of the commission for certifying

Energy Auditors and Managers, approved 26.01.2012, and AI for Energy Audit approved by the Government and published with official

gazette – 30.01.2012

Towards improving transmission and transforming quality and increasing capacity, KOSTT in Transmission networks 400kV, 220kV and 110kV, during this period has implemented: Replacement of high tension equipments of NS220/110kV Prizreni 2 and a

third transformator (TR3) of 150 MVA was installed; Protection relays of NS Prishtina 2 and NS Prishtina 3 have been changed.

Regarding the provision of energy supply, from Sibovc mine South-West, KEK has done: Removal of 2,043,776 m3 wasteland and production of 1,498,249 t coal for

TC Kosova A and B, Reparing coal transporting stripes B-1600, and currently they are being

assembled Reparing of excavator E 7M and self-moving stripes are currently being

tested.

As about reinforcement and rehabilitation of distributed network, TS 110/35kV in Pepaj has been widened, and the technical acceptance and functionality of TS 110/35kV

Also there were developments towards improving measurements of electricity, such as placement of 5,721 out of 50,000 of multi-functional counters in households.

3.2.7. Information Society and MediaIn terms of legislation, the law on Informatics Society was approved by Assembly (15.03.2012) and now the law no. 04/L-094 is published in official gazette no.6 (11.04.2012). Also, the law on electronic communications was approved by the government on 01.02.2012, and it has passed the first reading in the Assembly on 15.03.2012.

In terms of advancement of completion of primary legislation in the field of freedom of expressions and media, on March 2 2012, Kosovo Assembly has approved Law (no.04/L-44) for Independent Media Commission, while on March 29 2012 the Assembly has approved law (no.04-L46) for Public Transmition in Kosovo.

26

Aiming to support minority and other media, within the Fund for Minority, Multinational and Other Special Groups Media, Kosovo Government has allocated 80,762 €, where 15 minority, multinationation and special groups media have benefited from this fund.

In terms of completing secondary legislation frameword TRA on March 19 2012, has approved Regulation on “the Right to the pathway and use of common public infrastructure” (Prot.no.030/B/12). As about developments in the field of market analysis, the analysis of landline telephony has finished. Also, TRA has taken 7 decision for defining the market and 8 decision for operators with sensitive market power.

3.2.8. Financial Control In the context of capacity building 10 internal auditors have been trained by local level on “Fundamentals of Internal Auditing”.

Two internal auditors were recruited. Two visits were conducted in order to assist management in establishing the internal audit function (Central Election Commission andthe Ombudsman).

About financial management and control of budget organization during this period Self-Evaluation Questionnaire has been prepared. Data on Budgetary Organizations were colleted and systemized on the database. Sistematization and analysis of data have been done. These questionnaires have been sent to 91 Budgetary Organization, 74 of them responded or 83%.

Also, 58 reports were received and reviewed by NJAB.

In terms of capacity building, General Auditor’s Office recruited 6 new auditors. The project of alignment of certification scheme with updated ISSAI standards has started. Around 180 auditing memos were sent to organization being audited. These memos provide advice for auditing directors and explain how previous recommendations were addressed. GAO, during this period has issued two special auditing reports for projects financed by donors.

Audit report on Public Investment Program has been published, and covers effectiveness on managing and monitoring PIP system.

3.2.9. StatisticsWith the approval of the Law on Statistics now this institution will be within the OPM asthe Kosovo Statistics Agency (KSA), and in accordance with the new law restructuring of the KSA is taking place

KSA by the end of April has finished analyzing and publishing: social welfare data for 2011, analyzing and publishing statistical sports data for 2010, consumer price index, foreign trade statistics etc.

KSA has developed several new areas to economic statistics including enterprise quarterly survey of industry and construction, transportation statistics, report published in February 2012, the quarterly statistics for hotels, energy, consumer prices and import production. In relation to business statistics, ’Structural Survey (ESS) that is the basis for compiling the Gross Domestic Product (GDP) by manufacturing approach is in final stage. KSA in the context of the census has made cleaning the data in

27

the database by passing the stage of editing, inputing, editing and tabulation plan was completed.

3.3. JUSTICE, FREEDOM AND SECURITY 3.3.1. Visas, borders, asylum and migrationTo enhance implementation of the Law on Civil Status, on February 3, a total of 5 AI have been approved: AI for Apostile Stamps no.01/2012; AI for Late Registrations no.02/2012; AI for re-registrations no.03/2012; AI for Personal Number no.04/2012 and AI for Complaints Commission no.05/2012

In terms of border management, two protocols have been signed with Albania: Protocol for Joint border patrols; and protocol for regular border meetings on national, regional and local level. With Albania, 8 regular monthly patrols have been realized, while with Macedoni 4 patrols per month. With Serbia, the protocol on joint border control for 6 border points between Kosovo and Serbia has been signed.

During this period, 1,114 civil registers have been digitalized and 42,500 biometric passprts have been produced.

As about migration and asylum, on February 6 2012, Permanent Center for Asylumseekers has been inaugurated and functionalized in Magure, Municipality of Lipjan. On April 18 2012, the Government has established the Commission for Refugees, compound of 7 members. 965 persons have been re-accepted and 14 asulym requests have been received. Also, three training were held: one training on English language, one training on refugee’s rights and one training on biometric equipments, where 7 officials from Department for Statehood, Asylum and Migration have been trained.

With regards to re-integration, in 2012 a total of 3,170,150.00 euro have been allocated. Number of requests received for benefiting from Re-integration fund for this quarter was 612, out of which 542 were approved, where 66 were requests for business plans. Towards sensibilization of citizens on illegal migration, medial campaing which started in 2011 is ongoing and leaflets are being distributed in Municipalities, airport, and border points.

3.3.2. Money LaunderingIn order to further improve IT systems functionality, at the end of 2011, 69,960.71 euro have been invested and now the software operates with 30% higher capacity where RAM memory has been increased by 50%. During the reporting period, 6 analysts have been trained in fields of financial investigation, such as: money laundering based on trade, and financial analysis techniques. Other trainings were held: advanced training on economic crime combat, and on the Law of money laundering and terrorism financing prevention. In total, during this period, 9 cases have been reported for not declaring cash on borders.

3.3.3. Police and Organized Crime Combating First monitoring of Kosovos Security Strategy has been done for six-months period (August-December 2011). The findings showed that from 218 actions to be undertaken by institutions mentioned on the acion plan, 26 activities or 11.87% have been completed, 28 actions or 12.84% are almost completed, 97 activities or 44.49% are in process, 16 activities or 7.33% are partially completed, and 51 activities or 23.39% have not been reported by institutions. Municipal councils on Community Security in new municipalities (Novobërdë, Kllokot, Junik, Mamushë, Graçanicë, Partesh dhe Ranilluk) are entirely functional.

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Furthermore, on March 2012, the recruitment of 8 officials in the Department for Public Safety was finished. During this period, also the place for building the warehouse for commercial explosive was set.

In terms of combating organized crime, 11 officials have been trained for investigation, while 1 prosecutor from special prosecution has participated in training on illegal property confiscation. As about capacity building in this field, during the reporting period 3 different trainings were held: for cyber-crime; for wealth confiscation; and money laundering; where 31 police officials have been trained.

Taking into account standard operation procedures and other legal procedures: 1kg and 700 grams heroin, 28gr. cocaine, 20kg marijuana, 325fiber cannabis sativa and around 33kg substances suspected as narcotics (other drugs) were destroyed. 135 cases have been initiated, 192 people have been arrested and: 31kg heroin, 118 marijuana, 3kg and 100gr suspected cocaine, 61 extasy tablets, 241 fibers cannabis sativa, 3100 seeds of cannabis sativa, and 131 plants Papaver Somniferum have been confiscated. 63 raids, 8 operative plans and 52 operations have been undertaken, where a total of 16 criminal groups have been identified.

Combating Human Trafficking, Directorate for Investigating Human Trafficking has conducted 32 police operations, which resulted with 49 arrestments, out of which 29 Human Trafficking and 20 for actions related to Human Trafficking. 3 criminal groups have been dissolved, while 18 victims of human trafficking have been identified. As about trainings, 5 prosecutors of district prosecution office have participated in trainings on international kidnapping of children and combating human trafficking. Furthermore, 4 trainings were held for police staff, where 27 officials were trained, and also 26 new officials have been recruited.

As about witness protection and safety, 6 trainings were held for 4 officials and the participation on 2 regional conferences for witness protection has been realized.

3.3.4. Personal data protectionAs about protection of personal data, on April 4 2012 AI for official cards of state supervisors has been approved, and a number of acts have been drafted: act/complaint form for subjects and personal data controllers, act/record field-work form for operational parts, act/form for transfer of personal data out of the country, and the standardized list of questions for supervisors on the field during inspection and control.

As about the cooperation with other countries, NAPDP has signed bilateral agreements of cooperation with Montenegro (January 2012) and Slovenia (March 2012). Furthermore, in terms of awareness rising in this field, the Agency has organized the workshop on: “Media and Privacy”.

Anex I – Approved laws from Government and Assembly

Prime Ministers OfficeLAWS:

Ministry of Public Administration LAWS:

Ministry of Justice

29

LAWS:Ministry of Local Governance Administration

LAWS:Ministry of Labor and Social Welfare

LAWS:Ministry of Trade and Industry

LAWS:Ministry of Internal Affairs

LAWS:Ministry of Agriculture, Forestry and Rural Development

LAWS:Ministry of Education, Science and Technology

LAWS:Ministry of Finance

LAWS:Ministry of Foreign Affairs

LAWS:Ministry of Environment and Spatial Planning

LAWS:Ministry for Economic Development

LAWS:Ministry for the Kosovo Security Forces

LAWS:Ministry of Culture, Youth and Sports

LAWS:Ministry of Infrastructure

LAWS:

Tabela 1: BPV nominale dhe rritja reale e saj

30

Pershkrimi 2007 2008 2009 2010 2011Vler.

Konsumi 3,811 4,345 4,280 4,531 4,982Investimet 893 1,094 1,166 1,369 1,540Neto eksportet e mallrave dhe sherbimeve -1,309 -1,587 -1,534 -1,710 -1,916BPV 3,394 3,851 3,912 4,190 4,605Rritja reale e BPV, në % 6.3% 6.9% 2.9% 3.9% 5.3%IÇK 4.5% 9.2% -2.4% 3.5% 7.3%

Ne miliona euro

Burimi: ASK dhe parashikimet e Departamentit te Makroekonomisë, MF

Metodologjia e përdorur për kalkulimin e rritjes reale është ndryshuar në pajtim me metodologjinë e përdorur nga Agjencioni i Statistikave të Kosovës (ASK). Rritjet për vitet 2007-2010 janë kalkuluar nga ASK, duke paraqitur rritjen reale në krahasim me vlerën nominale të vitit paraprak. Me të njëjtën metodologji është bërë edhe vlerësimi i rritjes reale për vitin 2011 dhe vitet vijuese nga ana e Ministrisë së Financave. Parashikimi është rifreskuar bazuar ne të dhënat e fundit të publikuara nga ASK dhe BQK.

Tabela 2: Zhvillimet kryesore në sektorin e jashtëm, ne miliona euro dhe si % në GDP1

ne mil. euro

ne % te BPV-se

ne mil. euro

ne % te BPV-se

ne mil. euro

ne % te BPV-se

ne mil. euro

ne % te BPV-se

Bilanci Tregtar -1,668 -43.3 -1,652 -42.8 -1,752 -41.8 -2,059 -44.7Eksportet 198.5 5.2 177.2 4.2 305.0 7.3 325 7.1Importet -1,867 -48.5 -1,829 -47.0 -2,057 -49.1 -2,384 -51.8

Sherbimet neto 81.1 2.1 194.5 3.4 144.0 3.4 281.3 6.1Te hyrat neto 164.8 4.3 83.0 2.3 61.0 1.5 114.6 2.5Transferet neto 794.4 20.6 983.4 19.7 962.5 23.0 948.1 20.6

nga te cilat: remitancat 449.7 11.7 475.3 10.1 485.1 11.6 489.3 10.6Bilanci i llogarise rrjedhese -628.0 -16.3 -390.9 -17.4 -584.5 -14.0 -715.1 -15.5Llogaria financiare dhe kapitale 462.8 12.0 213.2 13.7 341.9 8.2 553.3 12.0

Llogaria kapitale 10.4 0.3 100.3 2.8 21.3 0.5 31.0 0.7Llogaria Financiare 475.5 12.3 112.9 8.5 320.6 7.7 522.3 11.3

nga te cilat: Investimet direkte 341.5 8.9 280.9 7.0 390.9 9.3 414.0 9.0Mjetet Rezerve -23.1 -0.6 94.3 2.4 -65.6 -1.6 59.8 1.3

Gabimet dhe leshimet 165.9 4.3 177.7 2.4 242.6 5.8 161.8 3.5

2008 2009 2010 2011 Pershkrimi

Burimi: Banka Qendrore e Kosovës

Grafiku 1: Ndryshimi vjetor në % i ICK dhe në ICK bazë (Core Inflation)

1 Të dhënat e BQK për Bilancin e pagesave për peiudhën Tetor 2011-Dhjetor 2011 janë publikuar ne fillim të muajit prill dhe përfshinë disa ndryshime andaj edhe mund të ketë mospërputhje me në mes të tabelës 1 dhe tabelës 2 ne zërin e eksportit të mallrave dhe shërbimeve.

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0 %

2 %

4 %

6 %

8 %

10 %

12 %

Jan-

10

Feb-

10

Mar

-10

Apr-1

0

May

-10

Jun-

10

Jul-1

0

Aug-

10

Sep-

10

Oct

-10

Nov

-10

Dec-1

0

Jan-

11

Feb-

11

Mar

-11

Apr-1

1

May

-11

Jun-

11

Jul-1

1

Aug-

11

Sep-

11

Oct

-11

Nov

-11

Dec-1

1

Jan-

12

Feb-

12

2010 2011 2012

IÇK IÇK (përjashtuar çmimet e naftës dhe ushqimit)

Tabela 3: Normat efektive të këmbimit, nominale dhe realePërshkrimi 2012

Janar Shkurt Mars Prill Maj Qershor Korrik Gusht Shtator Tetor Nëntor Dhjetor JanarNEER 100.9 101.1 100.6 101.3 100.9 101.0 101.0 101.1 101.1 101.2 101.2 101.1 100.9

REER (Total) 106.3 108.1 107.7 107.0 106.6 105.9 105.9 105.9 105.2 106.1 105.7 105.8 106.5

REER (CEFTA) 106.2 107.7 106.6 106.6 106.3 106.0 106.0 106.0 105.5 106.3 106.0 106.6 106.9

REER (EU) 108.2 110.0 110.1 108.1 108.1 107.2 107.1 107.0 106.2 107.0 106.8 106.9 108.2Indeksi

2011

Burimi: Banka Qendrore e Kosovës

Tabela 4: Te hyrat dhe shpenzimet buxhetore te nivelit komunal dhe qendror Janar- Shkurt, 2012

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Tabela 5. Pjesëmarrja e sektorit privat në BPV

Përshkrimi 2009 2010 2011

Konsumi privat 92.3% 91.2% 91.3%

Investimet Private 19.6% 21.8% 22.0%

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