The International Finance Corporation (IFC), a member of the World Bank Group, and the Ministry of Trade and Industry of the Republic of Kosovo have announced that they are working together to improve local bankruptcy procedures. The effort is designed to support the development Kosovo’s private sector and stimulate economic growth across the country.
The IFC will advise the Government of Kosovo as it updates its insolvency regulations. The new rules will be designed to help troubled businesses get back on their feet while allowing failed businesses to be wound up efficiently, releasing valuable capital back into the economy.
The initiative, formally known as the Debt Resolution Project, will create a safety net for businesses and investors, which is expected to foster access to much-needed credit.
“We will work with IFC to enable the smooth liquidation of non-efficient companies and allow the return of their assets back into productive use,” said Arbëresha Krasniqi, Kosovo’s acting minister of trade and industry. “It is important to further reduce the levels of non-performing loans in Kosovo through an efficient restructuring process or out-of-court workout programmes.”
While Kosovo has made significant progress in becoming a market economy, there is still a large regulatory gap that makes doing business a challenge. Improvements in bankruptcy and insolvency procedures are seen as critical to jump-starting investments and making capital available for businesses large and small.
“Our goal is to nudge insolvency mechanisms into practice in Kosovo, but also to promote out-of-court workouts and expedited restructuring procedures,” said Damien Shiels, practice manager of finance, competitiveness, and innovation at the World Bank Group. “This will help spur the development of Kosovo’s private sector, which is an important source of jobs and innovation.”
The project will be implemented in partnership with the government of Switzerland, represented by the Swiss State Secretariat for Economic Affairs (SECO).
“We expect that at the end of this program, we will have an improved business environment in Kosovo, better legal and regulatory insolvency frameworks, that will lead to stronger financial and private sectors,” said Patrick Etienne, country director for Swiss Cooperation Office in Kosovo.