UNMIK/PR/1208
PRISTINA – The Acting SRSG Charles Brayshaw today chaired the 20th Economic and Fiscal Council meeting. The EFC discussed UNMIK Customs Service proposal to introduce excise on technical oils, the reconstruction fund, budget ceilings for the development of the 2005-2007 budget, a progress report on the mid-year review of the 2004 budget, VAT exemption on imports of agricultural inputs and transfer of PTK profits to the KCB.
UNMIK Customs Service has detected importation of large quantities of technical oils and additives being used as road fuels resulting in a considerable revenue loss for the Kosovo Budget. The Director of UNMIK Customs presented a proposal, which has been prepared in consultation with the government, to introduce excise on those oils. The Council advised that amendments to the excise regulation should be prepared for promulgation.
The economic adviser to the Prime Minister, Mr. Bexhat Haliti, confirmed that the Prime Minister has proposed to earmark € 9.7 million for the Reconstruction. The acting SRSG Brayshaw commended the government’s commitment to the Reconstruction Process and underlined his strong support to the process by allocating € 0.5 million from the SRSG’s contingency as a contribution to restoring and rebuilding Serbian orthodox religious sites. This contribution comes in addition to the 1 million already given from the SRSG contingency. He concluded by noting that the reconstruction is a process and consideration to the financial requirements should be given a periodic review.
The Government and Pillar IV together developed a proposal to introduce a 0% rate of Value Added Taxes (VAT) on imports of agricultural inputs. The council warmly welcomed this joint initiative, which is a very important in granting incentives for the further development of agricultural sector, one of Kosovo’s key economic sectors. The Government and Pillar IV in consultation with The Legal Advisor will finalise the proposal for promulgation.
The Ministry of Finance and Economy initiated the Budget Development Process by issuing the Budget circular for the 2005-2007 fiscal years. The chairman welcomed the decision of the Government to move from commitment to cash bases budget and invited the Minister of Finance and Economy to report on the budget process. The council discussed concerns about budget ceilings, government priorities and the budget timetable and agreed that the Ministry of Finance and Economy should report back on these issues at the next EFC meeting. The Minister of Finance and Economy also reported on the Mid-Year Review of the 2004 Budget. The Mid-Year review aims at reducing some current expenditures in order to finance urgent funding requirements in both transferred and reserved areas.
On the issue of transfer of PTK profits to the KCB, DSRSG Pillar IV recalled that the issue had been discussed at the EFC before and reiterated that there are legal obstacles to this request. The Legal Advisor confirmed that the legal framework does not permit to implement such a proposal at this moment, but agreed to look further into the matter The council noted the importance of transparency and accountability and requested a financial report of KEK and PTK at the next meeting.