Answers to the questionnaire on the preparation of the ...mei-ks.net/repository/docs/Answers_to_the... · Government of Kosovo on 7 May 2012 received a questionnaire for the preparation

Republika e Kosovës Republika Kosova-Republic of Kosovo

Qeveria –Vlada – Government

Answers to the questionnaire on the preparation of the Feasibility Study for a Stabilisation and Association

Agreement

June 2012

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INTRODUCTION

Following the General Affairs Council Conclusions of 28 February 2012, which took note of the intention of the Commission to launch a Feasibility Study for a Stabilisation and Association Agreement between the European Union and Republic of Kosovo, the Government of Kosovo on 7 May 2012 received a questionnaire for the preparation of the Feasibility Study for a Stabilisation and Association Agreement. Additional set of questions was sent on 18 May 2012.

Government of Kosovo contribution to the feasibility study is composed of answers to the questionnaire, as well as 80 annexes which are part of the official contribution. There are in total 444 questions.

All state institutions, at both central and local level, have contributed to the preparation of the answers. Answers aim at representing a factual, complete and precise overview of each sector.

Contribution has been prepared during the period 7 May – 8 June 2012.

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Table of content

1. POLITICAL CRITERIA ..................................................................................................... 7 1.1. Democracy and the Rule of Law ............................................................................ 7

1.1.1. Legislature .................................................................................................. 7 1.1.2. Executive and president ......................................................................... 17 1.1.3. Public Administration ............................................................................ 35 1.1.4. Reform of the security sector ................................................................ 59 1.1.5. The judicial system ................................................................................. 62 1.1.6. The fight against corruption ................................................................. 68 1.1.7. Relations with the international community .................................... 70

1.2. Human Rights and the protection of minorities .............................................. 72 1.2.1. Civil and political rights ........................................................................ 75 1.2.1.1. Right to a fair trial / Access to justice .................................................. 76 1.2.1.2. Freedom of expression ........................................................................... 77 1.2.1.3. Freedom of Assembly and association ................................................ 78 1.2.1.4. Freedom of thought, conscience and religion .................................... 78 1.2.1.5. Protection of personal data ...................................................................... 79 1.2.2. Economic and social rights .................................................................... 80 1.2.3. Respect for and protection of minorities, cultural rights ................ 86 1.2.3.1. Institutions/representation .................................................................... 89 1.2.3.2. Access to education ................................................................................. 91 1.2.3.3. Official languages ................................................................................... 93 1.2.3.4. Minority media ........................................................................................ 94 1.2.3.5. Roma, Ashkali and Egyptians............................................................... 95 1.2.3.6. Refugees and IDPs .................................................................................. 97 1.2.3.7. Cultural rights including cultural heritage ........................................ 98

2. ECONOMIC CRITERIA ................................................................................................ 103 2.1. Macro-Economic Data.......................................................................................... 103 2.2. Socio-Economic Data ........................................................................................... 107 2.3. Structural Indicators ............................................................................................ 111 2.4. The wage bargaining process and the social security system ..................... 115 2.5. Economic and structural developments and reforms .................................... 119 2.6. Financial Markets ................................................................................................. 159

2.6.1. General .................................................................................................... 159 2.6.2. The Banking Sector ............................................................................... 161 2.6.3. Non-Banking Sector.............................................................................. 166

3. ABILITY TO ASSUME THE OBLIGATIONS RESULTING FROM AN SAA .. 168 3.1. Political dialogue .................................................................................................. 168 3.2. Regional cooperation ........................................................................................... 168 3.3. Free Movement of Goods .................................................................................... 173

3.3.1. Market Surveillance ............................................................................. 173 3.3.2. Consumer Protection ............................................................................ 174 3.3.3. Trade ........................................................................................................ 177

3.4. Movement of persons, services and right of establishment ........................ 192 3.4.1. Movement of persons ........................................................................... 192 3.4.2. Movement of Services .......................................................................... 193 3.4.2.1. Financial Control ..................................................................................... 197 3.4.3. Company Law ........................................................................................ 206

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3.4.4. Trade in Services ................................................................................... 207 3.4.4.1. Postal Services .......................................................................................... 208

3.5. Competition ........................................................................................................... 209 3.6. Intellectual, industrial and commercial property .......................................... 209

3.6.1. Industrial Property Rights ................................................................... 214 3.7. Public Procurement .............................................................................................. 217 3.8. Justice and Home Affairs .................................................................................... 219

3.8.1. Reinforcement of institutions and rule of Law ............................... 219 3.8.2. Asylum, migration, control of borders/boundary and visa issues224 3.8.3. Combating money laundering ............................................................ 229 3.8.4. Preventing and combating organised crime and other criminal

activities, including terrorism ............................................................ 233 3.9. Cooperation policies ............................................................................................ 243

3.9.1. Statistics .................................................................................................. 243 3.9.2. Investment promotion and protection, industrial cooperation,

small and medium-sized Enterprises (SMEs) and tourism .......... 246 3.9.2.1.Industry ...................................................................................................... 246 3.9.2.2.SMEs ........................................................................................................... 250 3.9.3. Agriculture and agro-industrial sector .............................................. 254 3.9.3.1.Horizontal issues ...................................................................................... 254 3.9.3.2. Quality Policy........................................................................................... 269 3.9.3.3. Agricultural statistics.............................................................................. 269 3.9.3.4. Food Safety, Veterinary and Phytosanitary Policies ...................... 274 3.9.4. Customs and Taxation .......................................................................... 298 3.9.4.2.1. General ................................................................................................. 304 3.9.4.2.2. Value Added Tax .................................................................................. 305 3.9.4.2.3. Excise Duties ......................................................................................... 305 3.9.4.2.4. Direct Taxation...................................................................................... 306 3.9.4.2.5. Administrative cooperation and Mutual Assistance ..................... 311 3.9.5. Employment, social policy, public health policy, education and

training, and research technology and innovation ......................... 314 3.9.5.1. Employment and social policy .............................................................. 314 3.9.5.1.2. Labour Law and health and safety at work ..................................... 320 3.9.5.1.3. Background data ................................................................................... 329 3.9.5.1.4. Employment Policy .............................................................................. 338 3.9.5.1.5. Social inclusion ..................................................................................... 344 3.9.5.1.6. Social protection ................................................................................... 352 3.9.5.1.7. Pensions ............................................................................................... 360 3.9.5.2. Public Health Policy ............................................................................. 363 3.9.5.3. Education and training, research and innovation ........................... 384 3.9.5.3.1. Quality of Education ............................................................................ 384 3.9.5.3.2. Vocational Training ............................................................................. 398 3.9.5.3.3. Youth ................................................................................................. 399 3.9.5.3.4. Research and innovation: participation in EU framework

programmes ............................................................................................ 403 3.9.5.3.5. National funding and cooperation in research and innovation .. 404 3.9.5.3.6. Strategy on research and innovation ................................................ 408 3.9.6. Culture, audio-visual, telecommunications and postal services and

information society ............................................................................... 411

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3.9.6.2.1. Electronic communication .................................................................. 414 3.9.6.2.2. Information Society Services ............................................................. 420 3.9.6.2.3. Cybercrime ............................................................................................. 427 3.9.7. Transport ................................................................................................. 428 3.9.8. Energy, including nuclear safety ........................................................ 443 3.9.9. Environment and climate change ....................................................... 476 3.9.9.1. General Environmental Policy.............................................................. 476 3.9.9.2. Sectoral Policies ....................................................................................... 480 3.9.9.2.1. Horizontal Policies ............................................................................... 480 3.9.9.2.2. Air quality .............................................................................................. 481 3.9.9.2.3. Waste Management .............................................................................. 485 3.9.9.2.4. Water Quality ........................................................................................ 489 3.9.9.2.5. Nature Protection.................................................................................. 492 3.9.9.2.6. Industrial pollution control and risk management ....................... 496 3.9.9.2.7. Chemicals ............................................................................................... 498 3.9.9.2.8. Climate Change .................................................................................... 499

ANNEX A - Laws published in Official Gazette ANNEX B - List of Sub-Legal Acts Applicable in Kosovo ANNEX C - List of Strategies and Action Plans ANNEX D - List of International Agreements of The Government of Kosovo ANNEX E - List of Membership in Regional, European and International Organisations ANNEX 1 - Public Administration ANNEX 1.1 - Office of the President ANNEX 1.2 - Assembly of Republic of Kosovo ANNEX 1.3 - Prime Minister Office ANNEX 1.4 - Ministry of Justice ANNEX 1.5 - Ministry of Finance ANNEX 1.6 - Ministry of Internal Affairs ANNEX 1.7 - Ministry of Foreign Affairs ANNEX 1.8 - Ministry of Kosovo Security Force ANNEX 1.9 - Ministry of Education Science and Technology ANNEX 1.10 - Ministry of Culture Youth and Sports ANNEX 1.11 - Ministry of Trade and Industry ANNEX 1.12 - Ministry of Health ANNEX 1.13 - Ministry of Labor and Social Welfare ANNEX 1.14 - Ministry of Public Administration ANNEX 1.15 - Ministry of Local Governance Administration ANNEX 1.16 - Ministry of Environment and Spatial Plannig ANNEX 1.17 - Ministry of Agriculture Forestry and Rural Development ANNEX 1.18 - Ministry for Communities and Return ANNEX 1.19 - Ministry of European Integration ANNEX 1.20 - Ministry of Infrastructure ANNEX 1.21 - Ministry of Economic Development ANNEX 1.22 - Ministry of Diaspora ANNEX 1.23 - Kosovo Academy of Science and Arts ANNEX 1.24 - Telecommunications Regulatory Authority ANNEX 1.25 - Kosovo Anti-corruption Agency ANNEX 1.26 - Energy Regulatory Office ANNEX 1.27 - Privatisation Agency of Kosovo

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ANNEX 1.28 - Constitutional Court of Kosovo ANNEX 1.29 - Kosovo Competition Commission ANNEX 1.30 - Kosovo Council for Cultural Heritage ANNEX 1.31 - Independent Oversight Board Civil Service of Kosovo ANNEX 1.32 - Kosovo Prosecutorial Office and Chief State Prosecutor Office ANNEX 1.33 - State Agency for Protection of Personal Data ANNEX 1.34 - Office of the Auditor General ANNEX 1.35 - Water and Waste Regulatory Office ANNEX 1.36 - Civil Aviation Authority ANNEX 1.37 - Independent Commission for Mines and Minerals ANNEX 1.38 - Central Election Commission Secretariat ANNEX 1.39 - Ombudsperson Institution ANNEX 1.40 - Kosovo Judicial Institute ANNEX 1.41 - Kosovo Judicial Council ANNEX 1.42 - Kosovo Property Agency ANNEX 1.43 – Municipalities ANNEX 1.44 - Central Procurement Authority ANNEX 1.45 - Financial Intelligence Unit ANNEX 1.46 - Kosovo Academy for Public Safety ANNEX 1.47 - Kosovo Customs ANNEX 1.48 - Kosovo Forests Agency ANNEX 1.49 - Kosovo Institute of Public Administration ANNEX 1.50 - Kosovo Police Inspectorate ANNEX 1.51 - Kosovo Security Council ANNEX 2 - Temporary list of Cultural Heritage ANNEX 3a - Economic Criteria, Customs, Taxation, Financial Control, CBK, Statistics ANNEX 3b - Population data by age-groups and gender at municipal level (2011) ANNEX 4 - Readmission agreements ANNEX 5 – Agriculture ANNEX 6 - Health I ANNEX 7 - Health II ANNEX 8 - Health III ANNEX 9 - Health IV ANNEX 10 - Health V ANNEX 11 - Health VI ANNEX 12 - Kosovo Energy Strategy 2009-2018 ANNEX 13 - KEEP 2010-2018_1st Kosovo mid term EE action plan 2010-2012 ANNEX 14 - Simplified Plan for Renewable Energy Sources 2011-2020 ANNEX 15a - Correlation table concerning implementation of Directive 2009-72-EC ANNEX 15b - Correlation table concerning implementation of Directive 2009-73-EC ANNEX 15c - Correlation table concerning implementation of Regulation EC No 714-2009 ANNEX 15d - Correlation table concerning implementation Regulation EC No 715-2009 ANNEX 16 - Law on Energy Regulator ANNEX 17a - Bottom-up Methodology 2011 ANNEX 17b - Manual Top-Down methodology ANNEX 18 - Reg No.03-2012 on internal organization of MED ANNEX 19 - Reg.08-2011 on internal organisation of EE Agency

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1. POLITICAL CRITERIA 1.1. Democracy and the Rule of Law

1.1.1. Legislature - Please provide a description of the structure and functioning of the Parliament including the competences of the speaker of the Parliament and the Parliamentary Committees, and the prerogatives and competences of the Parliament with respect to control of the executive power, and of the procedures for the adoption of legislation (including an explanation of existing fast track procedures and their applicability to the adoption of acquis-related legislation, if any). The Assembly of the Republic of Kosovo exercises its competencies according to the Chapter IV [Assembly of the Republic of Kosovo] Article 65 [Competences of the Assembly] of Constitution of the Republic of Kosovo (further to be referred as Constitution). The Assembly is the legislative institution of the Republic of Kosovo elected directly from the people. With regard to the structure of the Assembly, Article 64 [Structure of Assembly] Paragraph 1 of the Constitution provides: ‘The Assembly has one hundred and twenty (120) deputies elected by secret ballot on the basis of open lists. The seats in the Assembly are distributed among all parties, coalitions, citizens’ initiatives and independent candidates in proportion to the number of valid votes received by them in the election to the Assembly.’’ The Competencies of the Speaker of the Assembly are regulated through the Rules and Procedures of the Assembly; Article 17 (Duties of the President of the Assembly): a. The President of the Assembly shall represent the Assembly, propose the agenda for

the Assembly’s session, convene and chair sessions, sign acts adopted by the Assembly, ensure order at the meetings and exercise other functions in accordance with the Constitution and the Rules of Procedure of the Assembly. The President shall make the final interpretation of the Rules of Procedure during plenary sessions;

b. Pursuant to Article 90 of the Constitution of the Republic of Kosovo, the President of the Assembly shall exercise the duties of the President of Kosovo, if the President is temporarily unable to perform his/her constitutional duties;

c. The President of the Assembly may exercise the post of acting President of Kosovo up to six (6) months.

Committees: The Assembly shall appoint standing committees, functional commissions and ad hoc committees. Committees reflect the political composition of the Parliament on the request of one third (1/3) -of all the members from committees for specific issues, including investigative matters. Each commission within the scope of its responsibilities is authorized to oversee the implementation of Law by the Government or by the ministry. Fast-track procedures: Article 84 (Departures from the Rules of Procedure) of the Rules of procedures of the Assembly provides as follow: “Departures from the Rules of Procedure may be decided upon the decision of two thirds (2/3) of the Members of the

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Assembly present. The departure may take place when it does not conflict with the provisions of the Constitution of the Republic of Kosovo and with the European standards.” This rule is used by the Assembly for the adoption of Laws. - Please describe in detail the Parliament's rules of procedure and your experience from their implementation. According to Article 76 (Rules of Procedures) Chapter IV [Assembly of the Republic of Kosovo] of the Constitution of the Republic of Kosovo, the Rules of Procedure of the Assembly are adopted by the vote of two thirds (2/3) of all its deputies and shall determine the internal organization and method of work for the Assembly. The Rules of Procedure of the Assembly of the Republic of Kosovo determine the organisation and functioning of the Assembly, the Speaker, the Presidency, the Parliamentary Committees and other working bodies and rights and obligations of the members of the parliament. The 67th Article of the Constitution, determines that the Assembly elects the President and five (5) deputy Presidents from among its deputies. Parliamentary Groups: 5% of deputies or at least six (6) members are needed to form a parliamentary group. In cases where the number of deputies, members of a parliamentary group falls below this minimum, the group ceases to exist. Parliamentary Committees: the Assembly has 13 committees, of which 4 are permanent committees, 9 functional committees, a sub-committee, and two temporary committees: 1) ad-hoc Committee to amend the Constitution of the Republic of Kosovo and 2) the Committee for amending the Law on General Elections. Draft Law proposal: Rules of Procedures, Article 54 provides as follows: “A Draft Law may be introduced to the Assembly by the President of the Republic of Kosovo within his/her scope of activities, Government, Members of the Assembly, Parliamentary Committee, Parliamentary group or by at least six (6) Members of the Assembly, and by ten thousand voters, in accordance with the manner established by the Law”. Upon receipt of the Draft Law by the Assembly, the first reading cannot take place prior to two working weeks and no later than four working weeks from the date of delivery of the Draft Law. Review of a Draft Law by Committees: following the approval of the Draft Law in the first reading, the Assembly shall assign for further review the following: Functional Committee as lead committee and Committees: for Legislation and Judiciary; Budget and Finance; European Integration; Human Rights; Gender Equality, Missing Persons and Petitions; and Rights and Interests of Communities and Returns, as main committees. Amendments to the Draft Law may be introduced by a Member of the Assembly, parliamentary group, parliamentary committee, and the Government, within two working weeks from the approval in principle. Amendments shall be addressed to the functional - lead committee. Functional Committee shall present to the Assembly a report with recommendations on the Draft Law within two months from the first

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reading. In special cases, the Committee may request from the Assembly an extension of the deadline for submission of the report of up to one month (Article 57 Rules of Procedure of the Assembly). Second reading of Draft Laws: shall commence upon the presentation of the report of the functional committee by the reporter. Once the report is presented, the right for discussion shall have the representatives of main committees, representatives of parliamentary groups, representatives of the Government and members of the Assembly. Second reading of Draft Law shall continue by a review and voting on the amendments presented by the functional – lead committee and on the amendments proposed by other committees, parliamentary groups, the Government and members of the Assembly. Amendments shall be reviewed and voted one by one, according to the order they were presented, along with the text of the Draft Law. When two amendments are proposed for the same article of the Draft Law, which are exclusive to each other, the amendment that receives higher number of votes shall be considered as adopted. (Article 58 Rules of Procedure of the Assembly) Third reading of Draft Laws: when the Draft Law does not receive the sufficient number of votes for its adoption in the second reading, the Assembly shall, upon the request of the sponsor of the Draft Law, decide to present the Draft Law to a third reading together with the adopted amendments. Amendments that were reviewed and rejected in the second reading, or those that are similar with the amendments of the second reading, shall not be proposed for the third reading (Article 59 Rules of Procedure of the Assembly). Ratification of International Treaties: the Assembly of the Republic of Kosovo ratifies international agreements by Law, pursuant to Article 18 [Ratification of International Agreements] of the Constitution of the Republic of Kosovo (Article 60 Rules of Procedure of the Assembly). Committee meetings: are called by the committee chairs according to the calendar adopted by the Presidency. Date and agenda is set by the President or one of the vice Presidents, unless the Commission has previously decided otherwise. The Commission meets at least once a month (Article 64 Rules of Procedure of the Assembly). Public hearings: the commission may hold public hearings to obtain information about issues that are under review, with public organizations, experts, representatives of interest groups and other persons (Article 66 Rules of Procedure of the Assembly). Committee on Mandate, Immunity and Regulation, is in the process of drafting the New Rules of the Assembly.

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- How is the Parliament exercising its legislative functions? Is there a system of verifying, at Parliament level, the compatibility of new legislation with the 'acquis '? Is there an obligation to analyse the fiscal impact of new legislation before it is adopted? How is this process working in practice? Please, explain. The Assembly exercises the legislative function by reviewing the draft legislation in the Parliamentary committees, drafting amendments and adapting the Draft Laws in plenary sessions. The Division for Legal Standardisation and Harmonisation, Legal Advice, Research and Library as a part of the Legal Department of the Administration of the Assembly, verifies the compliance of Draft Laws with EU legislation (acquis communautaire). Aforementioned Division drafts a preliminary report with observations and recommendations which is submitted to the Parliamentary Committees. This preliminary report is prepared before the first reading. After the first approval of the Draft Law, European Integration Committee, reviews and oversees the process of harmonization of any Draft Law that passed the Assembly in terms of alignment and compliance with the acquis communitaire, in line with the Rules of Procedure of the Assembly: Annex 1 [Scope of Activities and Responsibilities of the Parliamentary Committees]; Paragraph 4. [Committee for European Integration]. Annex 2, (Scope of the Responsibilities of the Committees) of the Rules of Procedure of the Assembly of the Republic of Kosovo, stipulates that: “Parliamentary Committee for Budget and Finance is responsible to review budgetary implications of Draft Laws for their first year after entering into force and for all consecutive years and providing recommendations to other functional committees” Committee for Budget and Finance is a permanent committee and as such shall review all Draft Laws before approval in a plenary session. - Please specify competences of the committees. How much time is dedicated to scrutiny of legislation by the committees? Committees of the Assembly exercise their competencies according to Chapter XIV (Assembly Committees) of The Rules of Procedure of the Assembly of the Republic of Kosovo. Assembly committees have the jurisdiction to review legislation. Permanent Committees, review all Draft Laws that were processed for review and approval by the Assembly. Functional Committees are obliged to consider the legislation that covers the specific field. Upon receipt of the Draft Law by the Assembly, the first reading cannot be done prior to two working weeks and no later than four working weeks from the date of delivery of the Draft Law. From the first to the second examination and approval of Draft Law, committees have two months left, to review and prepare amendments for drafting Laws in order to send the Draft Law for approval. Furthermore, Article 62 (Function of Committees) of the Rules of Procedure of the Assembly of the Republic of Kosovo provides:

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a. Committees shall process matters referred to them without delay; Committees shall recommend to the Assembly final decisions that relate only to the matters or works referred to them, or questions directly related to them. Committees may also handle other issues within their scope of activity;

b. Committees may create their own rules of procedure, in accordance with the Rules of Procedure of the Assembly;

c. Committees shall have a special budgetary line for their functions, within the budget of the Assembly;

d. In the absence of rules describing the procedures within committees, the procedures within committees shall apply in analogue manner with those of plenary session.

- How many political parties are registered in Kosovo? How many of these are represented in Parliament? What percentage of parliamentarians are (a) women and (b) from ethnic and national minorities? There are a total of fifty-one (51) political parties registered by the Central Election Commission in Kosovo. In the 4th (current) Legislature of the Assembly of the Republic of Kosovo there are 17 political entities represented in the Parliament with the following number of deputies: a. Democratic Party of Kosovo - PDK (34); b. Democratic League of Kosovo - LDK (27); c. Self-Determination - Vetëvendosje (14); d. Alliance for the Future of Kosovo - AAK (12); e. New Kosovo Coalition - AKR-PD-PSD-PPI-PPK-PNDSH-PGJK (8); f. Independent Liberal Party - SLS (8); g. Turkish Democratic Party of Kosovo - KDTP (3); h. United Serbian List - JSL (4); i. Vakat Coalition - VAKAT (2); j. Democratic Ashkali Party of Kosovo - PDAK (1); k. New Democratic Party - NDS (1); l. Bosniak Party of Democratic Action of Kosovo - BSDAK (1); m. New Democratic Initiative of Kosovo - IRDK (1); n. Ashkali Party for Integration - PAI (1); o. Serb Democratic Party of Kosovo and Metohija - SDSKIM (1); p. Civic Initiative of Gora -GIG (1); q. United Roma Party of Kosovo - PREBK (1); The Constitution of the Republic of Kosovo, Article 71. 2 (Qualification and Gender Equality), provides as follows: “The composition of the Assembly of Kosovo shall respect internationally recognized principles of gender equality”. Furthermore, General Elections Law, Article 27 (gender quota) paragraph 1 provides as follows: “In each Political Entity’s candidate list, at least thirty (30%) percent shall be male and at least thirty (30%) percent shall be female, with one candidate from each gender included at least once in each group of three candidates, counting from the first candidate in the list”. In the fourth legislature there are a total of 40 MPs female parliamentarians composing 33.3%of the total number of parliamentarians.

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With regard to the representation of minorities in the Assembly, Article 64 [Structure of Assembly] Paragraph 2 of the Constitution, provides that: “In the framework of this distribution, twenty (20) of the one hundred and twenty (120) seats are guaranteed for the representation of the communities that are not part of the majority in Kosovo as follows: a. Parties, coalitions, citizens' initiatives and independent candidates having declared

themselves as being represented as the Kosovo Serb Community. These shall have from the total number of seats won through the open election, a minimum of ten (10) seats, guaranteed if the number of seats won is less than ten (10);

b. Parties, coalitions, citizens' initiatives and independent candidates having declared themselves representing the other Communities shall have the total number of seats won through the open election, with a minimum number of seats in the Assembly guaranteed as follows:

i. The Roma community, one (1) seat; ii. The Ashkali community, one (1) seat;

iii. The Egyptian community, one (1) seat; and one (1) additional seat will be awarded to either the Roma, the Ashkali or the Egyptian community with the highest overall votes;

iv. The Bosnian community, three (3) seats; v. The Turkish community, two (2) seats; and

vi. The Gorani community, one (1) seat if the number of seats won by each community is less than the number guaranteed.

In the fourth (current) legislature minority communities are represented by a total of 26 or 21.6% of deputies. Number of women MPs from minority communities is a total of 8 MPs. - Please describe the legal provisions and the institutional arrangements in place for the election of members of Parliament and the rules applying to their replacement in the course of their mandate. Do you have legislation on "blank resignations" of holders of parliamentary mandates? If so, what are your plans to repeal it? The legal basis for the election of the Members of the Parliament is regulated by the: Constitution of the Republic of Kosovo Chapter IV [Assembly of the Republic of Kosovo] Article 63 [General Principles] and by the Law no .03/L-073 on General Elections of the Republic of Kosovo, Article 63 of the Constitution provides as follows: “The Assembly is the legislative institution of the Republic of Kosovo directly elected by the people”. Article 66 under the 1st paragraph provides that “[T]he Assembly of Kosovo shall be elected for a mandate of four (4) years, starting from the day of the constitutive session, which shall be held within thirty (30) days from the official announcement of the election results.” Article 70 [Mandate of the Deputies] of the Constitution provides as follows: a. Deputies of the Assembly are representatives of the people and are not bound by

any obligatory mandate.

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b. The mandate of each deputy of the Assembly of Kosovo begins on the day of the certification of the election results.

c. The mandate of a deputy of the Assembly comes to an end or becomes invalid when:

i. The deputy does not take the oath; ii. The deputy resigns;

iii. The deputy becomes a member of the Government of Kosovo; iv. The mandate of the Assembly comes to an end; v. The deputy is absent from the Assembly for more than six (6) consecutive

months. In special cases, the Assembly of Kosovo can decide otherwise; vi. The deputy is convicted and sentenced to one or more years imprisonment by

a final court decision of committing a crime; vii. The deputy dies;

d. Vacancies in the Assembly will be filled immediately in a manner consistent with the Constitution and as provided by Law.

Article 2 (Fundamental Principles) of the Law no .03/L-073 on General Elections of the Republic of Kosovo provides that “Elections for the Assembly of Kosovo shall be held on the basis of free, universal, equal, direct and secret vote pursuant to this Law and CEC rules.” As regards the distribution of seats, Article 111.1 (Distribution of Seats) provides as follows: Seats in the Assembly shall be distributed according to the system of representation established by article 64 of the Constitution of the Republic of Kosovo. Article 112 (Replacement of Assembly Members) of the Law no .03/L-073 on General Elections of the Republic of Kosovo provides further detailed provisions regarding the replacement of Assembly Members. - Please describe the provisions in place defining the persons having the right to vote in parliamentary, presidential and local elections and the arrangements regarding voter registration. The Assembly of Kosovo adopted the Law on General Elections in the Republic of Kosovo (no.03/L-073) and the Law on Local Elections (no.03L-072) which define the election procedures for the election of central and local bodies and the rights of the voters to vote. Regarding the right to vote, Article 5 [Voter Eligibility] of the Law on General Elections (no.03/L-073) and Article 12 [The right to vote, Registration and Certification] of the Law on Local Elections (Nr.03L-072) provides as following: A person is eligible to vote in an election in accordance with the present Law if he or she is at least eighteen (18) years of age on the day of the election and satisfies at least one of the following criteria: a. He or she is registered as a citizen of Kosovo in the Central Civil Registry;

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b. He or she is residing outside Kosovo and left Kosovo on or after 1 January 1998, provided that he or she meets the criteria in applicable legislation for being a citizen of Kosovo;

c. He or she obtained the status of a refugee, as defined in the Convention Relating to the Status of Refugees of 28 July 1951 and its Protocol of 16 December 1966, on or after 1 January 1995, and is eligible to be registered in the Central Civil Registry as a habitual resident of Kosovo.

No person may vote if he or she: a. Is serving a sentence imposed by the International Criminal Tribunal for the former

Yugoslavia (“the Tribunal”); b. Is under indictment by the Tribunal and has failed to comply with an order to

appear before the Tribunal; c. Has been declared mentally incompetent by a final court decision. With regard to the voters’ registration procedure, there is a passive Voters List extracted from the Central Civil Registry. Central Civil Registry is created and maintained by the Civil Registry Agency of the Ministry of Internal Affairs. During the process CEC receives three times the extract of the Central Civil Registry from the Ministry of Internal Affairs. The extract includes all registered citizens over 18 years old and those who turn 18 on election date and the list of deceased persons and those de-registered. The extract must be clear by the names of deceased persons registered and deregistered at the municipal office of registrar. Central Election Commission also registers and maintains records of voters living abroad. Their registration is subject to a detailed process of verification and assessment of their eligibility to vote. Furthermore, in order to facilitate the implementation of the aforementioned Laws, the Central Election Commission based on its authorities has issued Electoral rules for the: Registration and Operation of Political Parties, Contesting period and confirmation of the voters list, Voting for people with special need, Mailboxes of Political Entities, Counting and Results Centre, Election Observers, Voting and counting in polling stations at the level of the Municipal Election, Second Round of Mayoral Elections, Code of Conduct for Political Parties, Candidates, and their supporters, Campaign Spending Limits and Financial Statements, the Election Campaign and Political Events notification, Sanctions and Fines and Rules for Early Elections. - Please describe the overall framework for party and campaign financing, the rules guaranteeing its transparency and provide details on the monitoring of its implementation. Central Elections Commission, as an independent institution, through legal provisions and secondary legislation, regulates the financing of political parties and transparency and has created opportunities for monitoring the implementation of applicable Laws.

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The financing of political parties is regulated by Law no.03/L174 on Financing Political Parties. Furthermore, CEC has adopted Rule No.16/2011 on financing Political Entities. Article 4 (Financial and Material Sources) of the Law No.03/L174 on Financing Political Parties provides that financial and material sources of the political entities are: dues (membership fees); Contributions; financing from the budget of the Republic of Kosovo; assets gained as foreseen by this Law and incomes from the activities of political entities determined by Article 6 of this Law. Article 5, of the Law no.03/L174 on Financing Political Parties stipulates that political entities are allowed to receive contribution from natural persons in the amount not exceeding €2.000 per calendar year and legal entities in the amount not exceeding €10.000 per calendar year. Article 7, of this Law stipulates that the public financing of political entities, is carried out through the Fund for supporting the political parties within the Budget of the Republic of Kosovo. This fund functions within the Central Election Committee. In accordance with applicable Law, political parties submit financial statements for the use of the public funds every three months, while a comprehensive report is submitted at the end of the calendar year. Article 15, Paragraph 1 of the Law no. 03/L174 on Financing Political Parties provides that: “Registered political entities submit to CEC the annual financial report at latest until 1st of March of the coming year in the manner as foreseen by CEC”. After the deadline for the submission of the annual reports, the CEC initiates the procedures for the selection of a company which deals with the audit of the financial statements. By submitting a final report by the contracted auditor, all annual financial reports are published on the website of the Central Elections Commission. Reports of the campaign expenditures should be submitted forty-five days after the elections to the Office for the Registration of Political Parties. - Please describe how parliamentary immunity is defined and applied. The parliamentary immunity is defined by Article 75 (Immunity), of the Constitution of the Republic of Kosovo: a. “Deputies of the Assembly shall be immune from prosecution, civil Lawsuit and

dismissal for actions or decisions that are within the scope of their responsibilities as deputies of the Assembly. The immunity shall not prevent the criminal prosecution of deputies of the Assembly for actions taken outside of the scope of their responsibilities as deputies of the Assembly.”

b. “A member of the Assembly shall not be arrested or otherwise detained while performing her/his duties as a member of the Assembly without the consent of the majority of all deputies of the Assembly.”

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Rules of Procedure of the Assembly of the Republic of Kosovo, Articles 22, 23, and 24, determine the immunity of a deputy, the procedure of removing the immunity and the procedure when the deputy is detained or arrested, as follows: Article 22 (Immunity of Members of the Assembly) a. A Member of the Assembly shall enjoy immunity in accordance with the

Constitution; b. A Member of the Assembly shall enjoy immunity with regards to verbal or written

statements and other acts performed in the capacity of the Member of Assembly; c. A Member of the Assembly shall enjoy immunity from measure of detention, arrest,

prosecution until the Assembly takes a decision on waiving his/her immunity; d. The immunity of a Member of Assembly shall commence on the day of verification

of his/her mandate and shall cease at the end of the mandate; e. As an exception of paragraph 4 of this Article the Assembly of Kosovo may waive

the immunity of the Member of Assembly before the end of the mandate; f. The request to waive the immunity of a Member shall be made by the competent

body in charge of criminal prosecution. The decision to waive the immunity of a Member shall be taken by the Assembly following the recommendations of the Committee for Mandates and Immunities.

The measure of detention or arrest may be taken against the Member of the Assembly even without waiving the immunity in advance by the Assembly in cases when the Member of the Assembly commits a serious criminal offence which is punishable by five (5) years or more of imprisonment. Article 23 (Procedure of Waiving the Immunity) The competent body of criminal prosecution shall file the request for waiving the immunity of the Member of the Assembly together with other complementary documents to the President of the Assembly. The President of the Assembly shall submit the request of the prosecution body along with the complementary documentation to the Committee on Mandate, Immunity and Regulation within 48 hours. a. The Committee on Mandate, Immunities and Regulations shall, upon receiving the

request under paragraph 1 of the present Article, review the Request and submit the report and recommendations to the Assembly within 30 days;

b. The Committee shall inform the Member of the Assembly, whose immunity is to be waived, of the request and the time of its review in the Committee.

c. The Member of the Assembly shall be invited to participate in the meeting of the Committee and the plenary session to provide explanations and remarks on the matter;

d. The non-attendance of the invited Member of the Assembly shall not hinder the Committee and the Assembly to take a decision in his absence;

e. The Assembly shall review the report with recommendations in the second coming session at the latest. At the beginning of reviewing the matter, the floor shall be given to the Member of the Assembly to provide explanations and answer to questions of the Members of Assembly;

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f. The Assembly shall decide on waiving the immunity of the Member of the Assembly by a secret ballot of majority of the members of Assembly.

Article 24 Procedures when a Member of the Assembly is detained or arrested: In case of a detention or arrest of a Member of Assembly without waiving the immunity the competent body of prosecution shall inform immediately the President of the Assembly. a. Upon his notification the President of Assembly shall convene the Committee on

Mandate, Immunities and Regulations and submit the notification with other complementary documents of the competent prosecution body. The President shall require from the Committee to review the matter.

b. Within two days upon notification by the President of Assembly, the Committee shall review the case of the detained or arrested Member of Assembly. The Committee shall invite the competent prosecution body and the detained or arrested Member of Assembly.

c. The President of Assembly shall convene the session within two days upon submission of the report by the Committee.

d. The Assembly shall decide by a secret ballot on waiving or not waiving the immunity of the Member of Assembly.

e. In cases when a Member of the Assembly is not waived his immunity by the Assembly he is relinquished from the detention or arrest.

- How is the Parliament exercising its control functions, notably vis-à-vis the executive branch of Government? The Assembly of the Republic of Kosovo exercises its control functions over the executive through the following instruments: Interpellation Parliamentary questions to the Government for verbal answers, Parliamentary questions for written answers, reporting to parliamentary committees and in plenary sessions and through the control of the executive on the implementation of legislation enacted by Assembly. 1.1.2. Executive and president - Please provide a description of the structure and functioning of the Government. What is the legal basis for the structure and functioning of the Government? The legal basis for the structure and functions of the Government of the Republic of Kosovo is in the following: a. The Constitution of the Republic of Kosovo; b. Law No 03/L-189 on State Administration of the Republic of Kosovo; c. Regulation no 09/2011 on the Rules of Procedure of the Government of the Republic

of Kosovo, and; d. Regulation No 07/2011 on the Amendment of Regulation 02/2011 on the Scope of

Administrative Responsibilities of Prime Minister’s Office and Ministries. Chapter VI (Government of the Republic of Kosovo) of the Constitution defines the General Principles on the organization, functions and competencies of the Government. Based on Article 92 of the Constitution of the Republic of Kosovo, the Government is

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the holder of executive power, and consists of the Prime Minister, Deputy Prime Ministers and Ministers. Article 96 of the Constitution establishes that Ministries and other executive bodies are created as necessary, within the powers of the Government, while the number of the members of the Government is determined through an internal act. Pursuant to Article 93 of the Constitution the Government is responsible to: a) propose and implement internal and foreign policy of the country; b) promote economic development; c) propose legislation; d) provide the secondary legislation; e) guide the work of public administration; f) propose nominations for diplomatic missions. The Government of the Republic of Kosovo, in line with Article 96 (1 and 2) of the Constitution and article 22 (2) of the Law no 03/L-189 on State Administration, adopted the Regulation No 07/2011 on the Amendment of Regulation 02/2011 on the Scope of Administrative Responsibilities of Prime Minister’s Office and Ministries. The regulation defines the scope of responsibility and the number of the high state administration authorities and those of the high state administration bodies.1 This regulation determines the composition of the Government of the Republic of Kosovo, which consists of 19 Ministries: a. Ministry of Justice; b. Ministry of Finances; c. Ministry of Internal Affairs; d. Ministry of Foreign Affairs; e. Ministry of Education, Science and Technology; f. Ministry of Trade and Industry; g. Ministry of Health; h. Ministry of Labour and Social Welfare; i. Ministry of Culture, Youth and Sports; j. Ministry of Kosovo Security Force; k. Ministry of Public Administration; l. Ministry of Local Governance Administration; m. Ministry of Environment and Spatial Planning; n. Ministry of Agriculture, Forestry and Rural Development; o. Ministry of Returns and Communities; p. Ministry of European Integration;

1 According to the Law on State Administration 03/L-189 and the mentioned Regulation, high state administration authorities consist of the Government in its entirety, Prime Minister, Deputy Prime Ministers and Ministers, while high state administration bodies consist of the Prime Minister’s Office and Ministries.

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q. Ministry of Infrastructure; r. Ministry of Economic Development, and s. Ministry of Diaspora.

Article 94 of the Constitution defines the competencies of the Prime Minister, who is responsible to: a. Lead and represent the Government; b. Ensure uniform implementation of legislation and policies; c. Appoints Kosovo Police Director; d. Together with the President, appoints the senior management of the Kosovo

Intelligence Agency, and e. Performs any other duties within the powers of the Government. Article 95 of the Constitution establishes that the President proposes to the Assembly a candidate for Prime Minister, coming from the party that won the majority of votes in national elections, who is responsible to present to the Assembly the composition of the future Government, which, to be elected needs the majority of all of Assembly’s members vote. Also, the legislation in force defines that the structure of the ministries is as in the following: the General Secretary, Departments and Divisions. Each Minister, in line with Government instructions and policies, manages and represents the relevant ministries and is accountable to the Prime Minister on matters related to his/her ministry. The Deputy Ministers, as senior officials of the relevant ministries, are appointed by the Prime Minister to support the ministers, by managing activities as defined by the relevant ministers and by replacing the minister, whenever necessary. On the other hand the political advisers are not vested with management or administrative competencies, and are appointed by the Prime Minister, Deputy Prime Minister and Ministers. Their mandate is linked to that of the relevant senior official. The Constitution establishes that at least one Minister representing the Serb Community and another one representing other minorities should be appointed in the Government, while two deputy ministers representing Serb community and two others representing other minorities, should also be appointed. One Deputy Prime Minister (who is also Minister of Local Governance Administration) and two Ministers come from the Serb community another Minister is from the Turkish community, while a number of deputy ministers come from the mentioned and other non-majority communities. For a more detailed regulation of the function of the Government, the Draft Law on Government has passed its first reading in the Assembly, where it is awaiting adoption at its second reading. The current Draft Law on Government regulates all aspects for the functioning of the Government, defining precisely competencies, duties and obligations for its members. In addition, it also sets forth provisions for Government’s cooperation with other actors, with a special view to the Assembly and the civil society. Moreover, the Rules of Procedure of the Government of Republic of Kosovo was adopted in September 2011, outlining the functioning and decision-making procedures of the Government, rules and procedures for proposing legislation and policies as well

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as the organization of Government sessions. In addition, it is established that all Government functionaries and bodies are to comply with the provisions of these Rules of Procedure. - Please provide a description of arrangements within the Government for strategic planning and monitoring. Is there a Government programme? How is it prepared, what is the time-line for its implementation and how is its implementation monitored? The Office for Strategic Planning (SPO within Prime Minister’s Office), Ministry of Finance and Ministry of European Integration are the main institutions designed for strategic planning and monitoring within the Government. With the view to strengthening the capacities on strategic planning and monitoring, the Government established the Office for Strategic Planning (SPO) within the Prime Minister’s Office in April 2010, through the Government decision No. 06/77 of 10 October 2009 on establishment of the Strategic Planning Unit and the Government decision No. 03/92 of 6 November 2009, on the functioning of the Strategic Planning Office.2, which is now functional. The office is in charge of counselling the Prime Minister and Government on strategic priorities of Government policies, coordinates the process of strategic planning and reviews strategic documents, in order to ensure their harmonization with Government strategic priorities. In addition, in March 2011, the Government upgraded the Ministerial Offices for European Integration into Departments for European Integration and Policy Coordination (DEIPC), through Regulation 01/2011 on Departments for Policy Coordination and European Integration, whereby the function of strategic planning and monitoring was added to these mechanisms. The SPO and DEIPCs are responsible to facilitate and coordinate the development of strategic documents at the national and sectorial levels, as well as to develop a monitoring system for their implementation. In terms of inter-ministerial coordination of strategic planning the Government is in the process of establishing a Government Steering Group on Strategic Planning, consisting of senior management officials. Moreover, in March 2012, the Government adopted Administrative Instruction 02/2012 on the Procedures and Criteria, and the Methodology on the preparation and approval of Strategic Documents and Plans for their implementation, which aims to create conditions for a uniform drafting of strategic documents and the respective implementation plans, provide guidelines for developing

2 This decision also sets out the changing of the name as defined by the Government Decision 06/77 from Strategic Planning Unit to Strategic Planning Office. Beside this the decision 03/92 defines the functions of the SPO. Furthermore, the new Government Rules of Procedure adopted with the Government decision 04/34 of 25 August 2011 provides for the rules and procedures of strategic planning, thus strengthening the role of the SPO as main body in the planning process and policy coordination.

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such documents, templates for strategy development, procedures for their adoption as well as for reporting, monitoring and evaluation on their implementation. The Government Programme is a planning instrument adopted by the Assembly, upon establishment of new Governments after general elections. Its existence is in line with the Assembly’s Rules of Procedure (article 29.2). In essence such a document is political in nature and merges into itself plans, programmes and commitments undertaken by political entities before and during general elections. Although originating from the winning political party, the document undergoes checks by specifically mandated institutions like SPO, MF and MEI, in order to ensure its compatibility and coherence with the legal and strategic framework. In line with this, a team of SPO, MF and MEI, looked into the latest Government Programme, where they provided their suggestions. The timeline for the implementation of the Programme is generally linked to the mandate of the Government, but there are also activities which go beyond such time limits. In addition, the Government of Kosovo in April 2011 adopted the Economic Development Vision priorities, which serves as a policy document and underlines key policies and priorities among a wide range of sectors related to economic development. Action Plan of the Economic Vision of Kosovo (2011-2014) is a document which derives from Kosovo’s Government decision on Economic Development Priorities dated April 18, 2011, and provides key policy direction for implementation of reforms and economic development in the medium term. Moreover, since 2007, in line with the Law on Amending and Supplementing the Law on Public Financial Management and Accountability (LAS-LPFMA), No. 03/L-221, the Government prepares the Medium Term Expenditure Framework, which contains its three-year fiscal strategy. The document is revised annually and serves as the main document with the view to policy planning in Kosovo. Furthermore, MTEF also serves as a basis for budget planning, by providing the macroeconomic framework. The Medium Term Expenditure Framework sets out an analysis of the macroeconomic environment of Kosovo and presents a summary of the projected resources available to fund the major policy priorities of the Government. Main priorities of the Government programme are fully harmonised and anchored with the Economic Development Vision Action Plan, MTEF, and GAWP. As the Government Programme is by and large reflected into the Government annual Work Plan, it is monitored through the regular reporting on the implementation of such plan. Moreover, its implementation is also monitored by the Assembly committees. The Government Annual Work Plan is the central Government mechanism with the view to establishing Government’s goals and tasks at a central level on annual basis, based on the Government Programme developed after each national election. The Governmental Secretariat attached to the Prime Minister’s Office, jointly with the SPO is

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in charge of coordinating the drafting of the Annual Work Plan, based on the inputs of all Ministries and other executive bodies. The Annual Work Plan is composed of the Government Work Plan (Table A) and Ministerial Work Plan (table B). The main priorities of the first derive entirely from the Government Programme. The Secretariat, which is responsible to coordinate activities between the Prime Minister’s Office and the rest of the administration, in close consultations with the Ministry of European Integration (MEI) also ensures that the activities included in the yearly revised European Partnership Implementation Action Plan are reflected in the Government’s Annual Plan. The Secretariat, in close coordination with SPO, develops Governmental Annual Work Reports at the end of each calendar year, based on quarterly reports it receives from line institutions. Another important mechanism in the context of strategic planning is the European Partnership Action Plan, which is the basic document when it comes to European Integration agenda in Kosovo. Under MEI’s coordination, the Plan is revised annually, upon publication of the EC’s Enlargement Strategy, in order to address the challenges identified in the Progress Report and SAPD conclusions. The implementation of the plan is monitored regularly, with MEI receiving quarterly input from the concerned institutions. - How is the legislative programme of the Government prepared and monitored? Based on article 48 of the Rules of Procedure of the Government, the Office of the Prime Minister prepares the Government’s Annual Legislative Programme, which derives from the Government Annual Work Plan. Such a programme is prepared by the Prime Minister’s Legal Office, in close cooperation with the Governmental Secretariat, Ministry of Finance, SPO and MEI. The Programme, listing the proposed legislation for the following year, defines the time-line for drafting the legislation and the responsible institution(s). The proposed legislation contained in the Annual Work Plan, hence in the Legislative Programme, has to undergo all of the procedures underlined in the Government’s Rules of Procedure (please see the answer to the next question, on more detailed information on these procedures). The monitoring of the implementation of the Legislative Programme is carried out through reporting on the implementation of the Annual Work Plan and European Partnership Action Plan, but also through the functioning of the Legal Units Council within the Government, which chaired by the Prime Minister’s Office, meets regularly in monthly meetings, in order to provide advice on legal drafting, ensure the implementation of the Legislative Programme but also with the view to providing legal opinions. The Legal Office of the PMO prepares quarterly monitoring reports based on input provided by the legal units of the line ministries. Also, the Legal Unit, with support by the mentioned council coordinates the recommendations for amendments introduced to the Programme.

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- What types of legal acts exist? How and by who are they adopted? How are they prepared? What forms of consultation are used, both inside the Government (inter-ministerial coordination) and outside (stakeholders)? What mechanisms exist to monitor the effective implementation of legal acts by public bodies (e.g. reporting requirements, inspections)? The Constitution of the Republic of Kosovo determines the hierarchy of legal acts in Kosovo as in the following: Constitution: The procedure for amending the Constitution is outlined in Article 144 of the Constitution. The amendments to the Constitution may be proposed by the Government, the President or ¼ of the Assembly deputies. The adoption of the amendments requires the approval of 2/3 of all Assembly deputies, including the 2/3 of all the deputies of the Assembly holding seats reserved or guaranteed for the representation of non-majority communities. Prior to the adoption of the amendments, the President of the Assembly must refer the proposed amendments to the Constitutional Court for a prior assessment that the proposed amendments do not diminish any of the rights and freedoms set forth in Chapter II of the Constitution. Amendments to the Constitution enter into force immediately after their adoption in the Assembly. International Agreements: the conclusion of international agreements is regulated by Article 18 of the Constitution and the Law 04/L-052 on International Agreements, which stipulate that the initiative for such agreements may be taken by the Kosovo State institutions. Upon reaching an agreed text of the agreement, the relevant Kosovo institution should consult with Ministry of Foreign Affairs on its compatibility with Kosovo’s foreign policy objectives. The Law further establishes that the authority to sign international agreements lays with the President, Prime Minister and Minister of Foreign Affairs, and when authorised, also by the diplomatic missions’ representatives. According to article 10 of the mentioned Law, all international agreements involving matters listed below shall be ratified by the 2/3 vote of the Assembly, while those falling beyond the listed areas, can be ratified by President’s decree. a. Territory, peace, alliances, as well as political and military issues; b. Fundamental rights and freedoms; c. Kosovo’s accession into international organizations; d. Assumption on the part of Kosovo of financial obligations. Laws: according to Article 79 of Constitution of the Republic of Kosovo, legislative initiatives may be taken by the President, Assembly, Government and at least 10,000 citizens. This is further detailed by the Law 04/L –025 On Legislative Initiatives. The preparation of Draft Laws by the Ministries and other executive bodies responsible to the Government, is regulated by the Government’s Rules of Procedures, which stipulates that such an act should undergo the following procedure:

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Preparation by the initiating body of a concept document containing objectives, the recommended options, justification for the chosen course of action, other options taken into consideration and the respective financial impact assessments, consultations carried out; communication strategies to the public, as well as a problem analysis. The concept is then sent to Prime Minister’s Legal Office. Upon approval by the Government, the initiating body undertakes to develop the approved concept into Draft Law. When sent to the Government for approval the Draft Law should be accompanied by an explanatory note, which should contain the key objectives, rationale, the complete list of EU acquis acts to be included, a financial impact assessment and any other background information, as well as financial assessment by the Ministry of Finance, EU acquis compliance check opinion by Ministry of European Integration and respective opinions by the Prime Minister’s Office. Upon approval by the Government, the Draft Law is presented to the Assembly for adoption, where it has to undergo the procedure of two readings before (twice voted by the majority of deputies present and voting) it is considered adopted. Laws adopted by the Assembly are then promulgated by the President, who can return the Law to the Assembly after stating the reasons for this. This right can only be exercised once per Law. However if the Assembly adopts the returned Law by the majority of all of its deputies, the Law is considered promulgated. The Law is considered promulgated also when the President does not decide on promulgation or return within 8 days of its approval by the Assembly. Secondary legislation: prepared by the Government (Regulations, Administrative Instruction and Decisions): according to Rules of Procedure of the Government, the secondary legislation may be initiated by the Prime Minister, any Minister, General Secretary and more than two Department Directors. The secondary legislation is adopted by the relevant minister if it falls within the scope of the relevant ministry, or by the Government, when more areas are concerned and/or if it is so determined by the Law at hand. The secondary legislation adopted by the Government is listed in the relevant register, which is updated regularly every month. Moreover, in April 2011, the Government approved Regulation 03/2011 on Government Communication with the Public, which, inter alia, regulates activities on consultation and information with the public, with regards to Government legislation and policies. As regards monitoring of the implementation of legislation, the Government, in order to ensure a sustainable system, established the Governmental Commission for the Implementation of the Legislation. Also, Divisions on Legislation Monitoring, Divisions on Legal Support and those on Legal Inter-Institutional Cooperation are functional within Ministerial Legal Units. These Divisions are responsible to draft and monitor the implementation of legislation and policies within their scope of work. The Divisions, are also in charge of instructing and supporting the relevant executive bodies in drafting and monitoring the relevant legislation.

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Moreover, since the Constitution determines that the Government is in charge of implementing the legal and other acts adopted by the Assembly, the latter’s Rule of Procedure establish that the Parliamentary Committees, within their area of responsibility, are authorised to oversee the implementation of legislation by the Government. The relevant Ministries report to the mentioned Committees, at least once a year. If the information provided is not considered to be complete by the Committees, the issues at hand may be included for further discussion in the next Assembly Plenary Session. In addition, the Committees are also responsible to carry out impact assessment on the legislation implementation, and propose, when necessary, measures for specific cases. To do this, the Committees have in their disposal a number of external resources, with the view to gain the necessary expertise. - What mechanisms exist for inter-ministerial coordination? Specifically, what mechanisms exist to link strategic planning and budgeting, in each Ministry, at Governmental level? The main inter-institutional coordination mechanism is the Strategic Planning Office, within the Prime Minister’s Office. As pointed out in the previous answer, the role of the SPO is to ensure a strengthened strategic framework for the functioning of the Government, support the linkage between EPAP, MTEF and Government Plan but also to provide advice to the Prime Minister on proposals involving strategic implications. Overall, the Strategic Planning Office, Ministry of Finance, Ministry of European Integration and the Governmental Coordination Secretariat are the main coordinating mechanisms, responsible to coordinate strategic planning, harmonization of strategic documents and the reflection of strategic priorities onto the annual budget. As mentioned above, the Government has established the Ministerial Departments for European Integration and Policy Coordination, which under direct supervision by the relevant Ministry’s General Secretary ensure liaison between SPO and ministerial departments. In accordance with the Law on Amending and Supplementing the Law on Public Financial Management and Accountability (LAS-LPFMA), No. 03/L-221, the Government sends the Medium Term Expenditure Framework to Assembly before the 30th of April (as required by the Law). MTEF has already been advanced to a strategic planning document linking sectorial strategies to the annual budget. MTEF 2013-2015 reflects sectorial priorities and contains: a) the Government's priorities for the next 3 years (in accordance with EDVAP); b) macro-fiscal framework which defines the aggregate expenditure limits for every category; c) sectorial segment outlining the indicative limits for each expenditure category; d) the part of municipal financing, where sources of municipal financing are defined (Government grants and own source revenues) and indicative expenditure limits for each category of expenditure. The annual budget is drafted based on limits set in MTEF, which determines the expenditure for each category. So, domestic consensus on fundamental issues of

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economic policies is secured at the Government level, while the policies as such are also discussed in the Assembly. The Law on State Administration and the Rules of Procedure of the Government serve as a solid basis for inter-institutional coordination, first of all by precisely defining the rules on consultation based decision making within the Government as well as rules on legislation and policy development. It is worth mentioning that, the Rules of Procedure specify that except for ensuring internal harmonization, a piece of legislation or policies, needs to be consulted with Ministry of Finance, Prime Minister’s Office and Ministry of European Integration, in order to check whether such proposals are in line with the strategic framework, budgetary requirements, and European integration requirements. Based on the Rules of Procedure, there is a General Secretaries Committee, responsible to review matters with regards to coordination of Government’s activities. The Rules of Procedure also regulate coordination aspects in relation to the Assembly, President’s Office, Ombudsperson Institution as well as communication to the public. On the other hand, with regards to ensuring a linkage between strategic planning and budget, the Government has established a Public Investment Committee, with the purpose of ensuring that large investment proposals are in line with Government priorities as contained in the MTEF. Such a Committee is also in charge of determining the quality of such proposals, as to the analysis contained thereof and their eligibility for financing by Kosovo’s budget. Consisting of Deputy Minister of Finance, Budget Director and SPO Director, the Committee is also in charge of monitoring the implementation of larger capital investment projects, including the assessment of financial execution. - What structures exist to ensure the coordination of European Integration issues? How is the compatibility of planned legislation with the EU acquis and with international obligations been verified and monitored? Which body is responsible for such verification? Please explain. With the view to strengthening its support to the European integration agenda, in April 2010 the Government decided to upgrade the Agency for Coordination of Development and European Integration into the Ministry of European Integration, with the purpose of coordinating the European policy and assistance (including bilateral) frameworks (see Regulation 07/2010 for detailed information). The central coordinating body guiding and monitoring the EU integration process is the Ministry of European Integration, which, established in 2010, has a total of 69 staff members, of whom 31 dealing with European integration affairs on a day to day basis. In terms of parliamentary oversight, the Commission of European Integration is one of the main standing committees of the Assembly, which is in charge of overseeing and reviewing the national legislation with Acquis. Moreover, its competencies extend to coordinating with the EU institutions, oversight of the Government with regards to the latter’s implementation of the European integration related activities, including IPA, as

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well as to the oversight of the implementation of Council of Europe’s recommendations (please refer to Assembly’s Rules of Procedure of April 2010 for detailed information). In addition, in April 2011, the line Ministries’ Offices of European Integration were upgraded into Departments of Policy Coordination and European Integration, in charge of coordinating the sectorial European integration policy and donor assistance (see Regulation 01/2011 for detailed information). Moreover, all of the independent bodies have appointed a focal point on European integration. As mentioned earlier, the main policy mechanism in relation to European integration in Kosovo is the European Partnership Action Plan, which is revised annually upon publication of the EC Enlargement Strategy. The Plan contains activities with the aim of addressing challenges identified in the EC Progress Reports, SAP dialogue mechanisms as well as those identified by the national inter-institutional structures. In 2009 MEI has developed a monitoring and reporting system, through which it regularly receives input on the implementation of activities planned in the EPAP, from the line institutions, which in turn is the basis of the regular input MEI provides to the Prime Minister’s Office and the European Commission. Except for the mentioned institutions, in July 2008, through its Decision no 02/29, the Government decided to establish coordinating and inter-institutional structures on European affairs, as in the following3: a. Ministerial Council on European Integration: chaired by the Prime Minister and

comprised of political level Governmental representatives, with the purpose of guiding and monitoring the implementation of activities planned within the framework of SAPD;

b. Working Committee on European Integration: chaired by Minister of European Integration and comprised by General Secretaries, with the purpose to oversee and support the functioning of Executive Committees for European Integration.

c. Seven Executive Committees for European Integration: i. Executive Committee Internal Market;

ii. Executive Committee Innovation and Social Cohesion; iii. Executive Committee on Infrastructure; iv. Executive Committee Governance; v. Executive Committee Economy, Financial Control and Statistics;

vi. Executive Committee Agriculture and Fisheries, and vii. Executive Committee Trade, Industry and Taxation.

The executive committees are chaired by relevant Ministries’ General Secretaries and supported by MEI, while they are comprised by relevant middle management staff of

3 The mentioned Decision was replaced in February 2012, by Government Decision No 07/59, which inter alia upgraded the mentioned mechanisms from Working Groups on EI to Executive Committees on EI.

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the relevant institutions, with the purpose of planning and monitoring of activities related to SAPD and EU pre-accession assistance. In addition, in order to manage the SAPD, seven technical level Sub-Committees comprising of Kosovo and EC staff, meet annually to discuss progress in the relevant areas and plan future actions. Moreover, a Plenary SAPD meeting is held annually with participation from the political level representatives. In April 2012, the President of the Republic of Kosovo, called the first meeting of the National Council for European Integration, comprised of all relevant actors coming from Assembly, Government, Judicial Institutions, Civil Society Organizations, European Union Office in Kosovo and Donors active in the European integration process in Kosovo. The purpose of this mechanism is to further develop the mobilization of the whole societal actors as well as reach informed consensus among them on the priorities in the process of European integration. As a result, and in line with the conclusions of this first meeting, the Ministry of European Integration and the Assembly Committee on European Integration organized the first meeting of a Task Force of European Integration, with participation of representatives from Assembly, Government, Judiciary, Civil Society and Donors. The Task Force endorsed the establishment of seven Thematic Roundtables consisting of members from the mentioned areas, with the view to reach informed consensus on the long term priorities of the country with regards to European integration, which is expected to be translated into an operational National Strategy of Kosovo’s European Integration. The process of compatibility of planned legislation with the EU Acquis and international obligations takes place during the stage of legislative drafting. Each Ministry within the Government of the Republic of Kosovo is entitled to propose and plan legislation according to the scope of their policies pursuant to each internal regulation of scope of their policies. The rules and procedures on legislative drafting and policy recommendations by the ministries are defined within the Regulation on the Rules and Procedures of the Government of the Republic of Kosovo (Item 1-1.2 of Article 1, item 1.7 of Article 3, paragraph 1 of Article 3, and Article 43 of the present Regulation No. 09/2011 on the Rules and Procedures of the Government of the Republic of Kosovo). Article 7 of the present Regulation No. 09/2011 on the Rules and Procedures of the Government of the Republic of Kosovo, states that “the proposing body is responsible for ensuring that all the highest bodies of the state administration, central bodies of the state administration, independent bodies of the state administration and other relevant bodies which the Government is obligated to consult in accordance with the Constitution or whose work might be affected by the concerned proposal (Draft Law, sub-legal act or policy) have the opportunity to comment upon it.” This article refers to the consultation procedure and entails the consultation with the Acquis on relevant legislation (paragraph 1 of article 7 of the present Regulation No. 09/2011 on the Rules and Procedures of the Government of the Republic of Kosovo).

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Responsible bodies for verifying and monitoring of the compatibility of the planned legislation with the EU Acquis and with international obligations are the legal office of the Prime Minister Office (item 1.5 of Article 7 and paragraph 3 of Article 34 of the present Regulation No. 09/2011 on the Rules and Procedures of the Government of the Republic of Kosovo)Legal Department of the Ministry of European Integration (item 1.2 of the of the present Regulation No. 09/2011 on the Rules and Procedures of the Government of the Republic of Kosovo). - What systems are in place to monitor implementation of policies and Laws and to receive feedback? Policies: With regards to strengthening the inter-ministerial cooperation and coordination in terms of policy making and monitoring, the OPM has adopted the following Administrative Instructions: AI on Concept Documents and Explanatory Memorandums; AI on Monitoring on Annual Government Work Plan; AI on Annual Report and one of Monitoring of the Implementation of the Governmental Decisions. The adoption of such legal framework has strengthened the quality of the monitoring of policy implementation. As part of the responsibilities defined in the Regulation 09/2011 on Government Rules of Procedure, the Government Coordination Secretariat is involved in the monitoring of policy implementation, chiefly through the monitoring of Annual Work Plan and monitoring of Government Decisions. As part of such a process, the Secretariat requires that the line institutions report on the implementation of planned activities on quarterly basis, with the provided input being incorporated into the relevant database, which in turn provides the Government with up to date information on the state of implementation. In case shortcomings are detected, the relevant ministries are instructed on the course of action to be taken. The same procedure is followed with regards to implementation of the decisions taken by the Government. The process of policy monitoring is further supported by a monitoring and reporting mechanism utilized by the Ministry of European Integration, whereby, the implementation of European integration requirements (EPAP, SAPD conclusions, National EI Structures Conclusions) are monitored on quarterly basis, through input provided by the Kosovo institutions on the implementation of the planned measures and activities, which since 2009 have contained output and outcome indicators. Laws: As regards monitoring of the implementation of legislation, the Government, in order to ensure a sustainable system established the Governmental Commission for the Implementation of the Legislation. Also, Divisions on Legislation Monitoring, Divisions on Legal Support and those on Legal Inter-Institutional Cooperation are functional within Ministerial Legal Units. These Divisions are responsible to draft and monitor the implementation of legislation and policies within their scope of work. The Divisions, are also in charge of instructing and supporting the relevant executive bodies in drafting and monitoring the relevant legislation.

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Moreover, since the Constitution determines that the Government is in charge of implementing the legal and other acts adopted by the Assembly, the latter’s Rule of Procedure establish that the Parliamentary Committees, within their area of responsibility, are authorised to oversee the implementation of legislation by the Government. The relevant Ministries report to the mentioned Committees, at least once a year. If the information provided is not considered to be complete by the Committees, the issues at hand may be included for further discussion in the next Assembly Plenary Session. In addition, the Committees are also responsible to carry out impact assessment on the legislation implementation, and propose, when necessary, measures for specific cases. To do this, the Committees have in their disposal a number of resources, with the view to gaining the necessary external expertise. - What is the legal basis for decentralisation? What is the level of its implementation, including allocation of resources at the local level to meet the responsibilities stemming out from the decentralisation process? Local governance and territorial organization are defined in Chapter X of the Constitution of the Republic of Kosovo. The general principles of the local governance, its organization and functioning is based on Articles 123 and 124 of the Constitution, in accordance with which basic Laws on local governance have been adopted: a. Law on Local Self-governance establishes the legal basis for sustainable local

governance in Kosovo. The Law defines the legal status of the municipalities, own and extended competencies on the part of municipalities, including those delegated, basic financier principles, inter-municipal cooperation and internal arrangements, organization and functioning of the municipal bodies, direct democracy and citizen participation mechanisms as well as municipal relations to the central level;

b. Law on Administrative Boundaries, regulates the territorial organization of the local self-governance, the establishment of ne municipalities, definition of municipal administrative boundaries as well as municipal denominations and seats;

c. Law on Municipal Election regulates the organization of local elections for municipal assemblies and Mayors;

d. Law on Finances of Local Governance, defines financial resources, including municipal own revenues, operational grants, extended competencies grants, transfers for delegated competencies, extraordinary grants, loans and other financial resources necessary to perform the municipal responsibilities;

e. Law on Education in Municipalities of Republic of Kosovo regulates the organization of public education bodies and the provision of public education in pre-school, primary and high school systems;

f. Law on Exchange and Use of Municipal Immovable Property, regulates the procedure through which a municipality may grant its immovable property for use to natural and legal persons and exchange of municipal property with that of a socially owned enterprise;

g. Law on Inter-Municipal Cooperation regulates inter-municipal cooperation and the cooperation of Kosovo’s municipalities with municipalities and institutions beyond Kosovo.

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Implementation of Decentralization: With the view to coordinating activities with regards decentralization, the Government and the ICO created the inter-ministerial Group on Decentralization in April 2008. Its mandate has been extended until September 2012. Five working sub-groups have been established with the view to implementing the process of decentralization: a. Working Group on Legislation Reform and Competencies Delegation; b. Working Group on Establishment of New Municipalities; c. Working Group on Donor Coordination and Capacity Building; d. Working Group on Communication. The Group and the Subgroups have developed intensified activities in ensuring the implementation of decentralization. In the meantime, Municipal Preparation Teams, which administered the preparation of new municipalities as part of the decentralization, such as: Gracanica, Partes, Ranilug, Klokot and North Mitrovica? The process of establishing these new municipalities was successfully completed with the local elections of 2009/10 (except for North Mitrovica); where after a voter turnout of 40 percent, the municipal assemblies and other municipal bodies were established. However, North Mitrovica municipality is yet to be established, where currently the relevant Municipal Preparation Team is still operation. The Government has granted an amount of 5 million Euros for the economic development of the Northern Kosovo, which has started being utilised notwithstanding the difficulties caused by the non-cooperation of local partners. In an effort to make available municipal services to the citizens in the northern Kosovo, the Government opened a Civil Services Centre there in July 2010, delivering civil registration and vehicle registration services. Moreover, a Citizen Services Centre was also established in the northern Kosovo in May 2011, which provides services related to business and non-Governmental organization registration. As regards to this issue, the Government of the Republic of Kosovo has issued on 23.05.2012 a decision no. 01/75 on establishment of North Mitrovica Administrative Office, which shall be funded by the Government of Kosovo and designated as a separate budgetary unit, as set forth in the Law on Public Financial Management and Accountability. In addition, the Government shall allocate up to €1,000,000 directly from the Kosovo Central Budget each of the next 5 financial years for the purposes of general infrastructure support and outreach in Mitrovicё/Mitrovica North. For the purpose of functionalizing this office, MLGA has announced the vacancy announcement for 55 basic positions needed for the realization of duties and responsibilities of the Office. The Ministry of Local Governance Administration in cooperation with other relevant institutions supported the legal regulation of own municipal competencies as prescribed by the Law on Local Governance, the delegated competencies from the central level as well as the extended competencies as per the legislation in force, as in the following table:

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Table 1: Delegated competencies from the central level as well as the extended competencies Municipal Own Competencies Legal Basis

Local economic development Law 03/L-040 Urban and rural planning; Law 03/L-040 Land use and development; Law 03/L-040 Implementation of building control standards; Law 03/L-040 Local environment protection; Law 03/L-040 Providing and maintenance of public and municipal services, including the provision of water, wastewater, waste management, local roads, local transportation and local heating;

Law 03/L-040

Local emergency response; Law 03/L-040 Provision of public pre-school, primary and secondary education, including registration and licensing of education institutions, hiring, payment of salaries and training of instructors and education administrators;

Law 03/L-040

Promotion and protection of human rights; Law 03/L-040 Provision of public primary health care; Law 03/L-040 Public housing; Law 03/L-040 Public health; Law 03/L-040 Provision of family and other social welfare services, such as care for the vulnerable, foster care, child care, elderly care, including registration and licensing of these care centres, recruitment, payment of salaries and training of social welfare professionals

Law 03/L-040

Naming of streets and other public places; Law 03/L-040 Provision and maintenance of public parks; Law 03/L-040 Tourism; Law 03/L-040 Cultural and leisure activities; Law 03/L-040 Any matter which is not explicitly excluded from their competence or is not assigned to any other authority;

Law 03/L-040

Delegated competencies Social and family services; Law 03/L-040 Voter registration; Law 03/L-040 Business registration and licensing Law 03/L-040 Distribution of social scheme assistance Law 03/L-040 Forest protection and pasture management Law 03/L-040 Autonomous management of public expenditures Law 03/L-040 Cadastral records Law 03/L-040 Social assistance Law 03/L-040

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Theatres and libraries Law 02/L-013 Enhanced competencies Appointment of police station commanders Law 03/L-040 Secondary healthcare Law 03/L-040 Cultural activities Law 03/L-040 All these activities are accompanied by the allocation of necessary human and financial resources in accordance with the objectives, standards and requests set by the Government of the Republic of Kosovo. In addition, the decentralization process has been promoted by MLGA through an intensive awareness raising campaign. The public opinion has been informed by MLGA through a number of activities, amongst which the direct discussions between the citizens and the elected officials, TV debates, dissemination of information material, organizing of various awareness raising conferences and recording of TV and radio promotion clips. Fiscal decentralization: Throughout the decentralization process there has been significant change of local fiscal matters and management of public finances. The range of local revenue has increased, 3 inter Governmental grants have been established, while the financial management systems is now independent through the establishment of Treasury offices within the municipalities. The reforms in this area, which contribute also in management of financial relations between the central and local levels, are regulated by the following legislation: Law no. 03/L-049 on Local Government Finances; Law no. 03/L-175 on Public Debts and Law no. 03/226 on Exchange and Use of Immovable Municipal Property. Initially, the applicable legislation obliges the central level to allocate funds for the local governance, in the form of subvention, In addition to the subsidies from the central Government revenues, the municipalities generate also own source revenues (property taxes, vehicle registration, construction permits, inheritance registration, civil status documents, business registration, etc.). Even though secondary legislation is not completed, it is worth mentioning that the MLGA has drafted the Document of policies related to the Enhancement of Own Source Revenues, and it has initiated the preparation of models for simplifying the access to local economic development and it is also considering the opportunity of reviewing the financial system and the municipal administrative processes. MLGA prepares regular financial reports annually. Over the period 2008-2011 there has been an increase of approximately 43% of the municipal budgets. This has decreased for around 10% in 2012 due to fiscal facilitation measures for the private sector.

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The Government of Kosovo has allocated total grants for the municipal management as follows: a. 2008: 225,447,566.25 €; b. 2009: 284,312,990.16 €; c. 2010: 334,209,035.76 €; d. 2011: 396,576,302.82 €; e. 2012: 361,798,779.00 €. In order to assist the Kosovo municipalities in reaching their objectives, outside of regular scheme of intergovernmental grants, the MLGA in close cooperation with the municipalities in the period covering 2008-2011 has implemented over 300 capital projects of around 30 million euro value. Specifically, these projects have been implemented in newly established municipalities through which the citizens were informed regarding their participation in democratic and institutional processes. Capacity Building in the Municipalities: MLGA has paid the due attention in ensuring a smooth enhancement of local structures’ capacities with the view to a sustainable local governance reform. In line with this, MLGA developed a Concept Document on Municipal Capacity Building in June 2011, Capacity Building Action Plan in June 2011 as well as a Strategic Plan on Municipal Capacity Building, also in June 2011, as well as a Framework on Professional Competence on Human Resources and Municipal Administration and a Manual on Training Administration. Also, upon completion of an evaluation of the municipal capacities in 2009 and 2011, MLGA has developed the relevant training programmes and has defined training priorities through a General Plan on Priority Areas Training. It is worth mentioning, that MLGA has also assisted the municipalities in preparing an implementing their own training programmes, while also monitoring their implementation. Human Rights at Municipal Level: As part of strengthening the decentralization process, MLGA has also ensured the proper functioning of the Municipal Human Rights Units in 26 Municipalities, established based on AI on Human Rights Units. MLGA has also continuously monitored and supported their operation, also through organizing 20 training modules, whereby 72 municipal human rights officer have been certified. In 2009 four more such units were established in the newly established municipalities. Moreover, MLGA has continuously monitored the implementation of the Law on Use of Languages, while it has also monitored the observation of gender equality and other matters as prescribed in the international convents. In addition, in order to ensure proper implementation of minority’s protection, a number of municipal mechanisms have been in place, as in the following: a. Committee on Communities – responsible for ensuring compliance with minority

rights and interest at the local level; b. Deputy Chair of Municipal Assembly for Communities – promotes inter-ethnic

dialogue and serves as a focal point for addressing concerns brought forward by the non-majority minorities, with the authority to bring municipal legal acts before the

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Constitutional Court, in case his or her proposals are not taken into account by the Municipality;

c. Deputy Mayor for Communities – supports the Mayor on issues related to minority rights;

d. Municipal Community Offices – established by Regulation 02/2010, their main function is to represent and protect minority rights at the municipal level

1.1.3. Public Administration - Please provide a description of the structures and bodies of the public administration of Kosovo including independent agencies, specifying the source of their financing (budget or other), their mission, an organisation chart, the number of their statutory positions and the number of current employees and their functions. Public Administration in the Republic of Kosovo is organized through central and local administration. This division is in full compliance with the principle of separation of the legislative, executive and judicial powers specified by the Constitution of the Republic of Kosovo. Furthermore, independent institutions of public administration are organized and function in accordance with Chapter XII of the Constitution of the Republic of Kosovo. In the central level there are ministries, agencies, independent regulatory bodies and Public Enterprises while at the local level, municipalities. Funding sources consist of general grants, own revenue and funding from other sources including donations. For the mission, the number of employee positions and the budget see Annex 1. For organizational charts see Annexes from 1.1 to 1.51. - Is there a Strategy and an Action Plan for the reform of the Public Administration in place? If so, when was it adopted, what are the main objectives and what is the state of play of their implementation? How progress is measured (indicators)? What were the shortcomings noticed in the implementation process and how have they been overcome? The revised Strategy on Public Administration Reform was adopted by the Government on the 15th of September 2010 while the Action Plan on implementing the strategy has been adopted on 23rd of May 2012. The Strategy covers twelve (12) main areas with respective objectives as follows: a. Policy management - Reorganized system and institutional capacity building for the

planning, development and public policies debate in transparent manner, including EU integration policies;

b. Legislative drafting - Reorganized system and institutional capacity building for the planning, drafting and monitoring of legislation as necessary to give binding force to Government policies, including approximation to EU legislation;

c. Ethics and transparency - Public Administration that is ethical, transparent, responsible, un-corrupt, non-discriminatory and with equal opportunities;

d. Communication with and participation of citizens - Reorganized communication system and strengthening the participation of citizens in the drafting process of policies, legislation and decision-making;

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e. Budget planning - Planned budget in accordance with the priorities set by the Government, to support development policies that address public policies and the needs of the citizens of the Republic of Kosovo;

f. Budget execution - Improvement of effectiveness (performance) in budget execution and dealing with requests from budgetary organizations in accordance with set criteria through control of revenues and appropriations (including revision);

g. Internal control and audit - Improvement of internal audit system is a part of the system of internal control in public sector. Functionalisation of internal control, and improvement of control quality of audit units in public sector;

h. Public procurement - Modernization of public procurement procedures in accordance with the best European and international practices and standards;

i. Reorganization of public administration - Reorganization of the executive and its subordinated organs in accordance with the approved recommendations of the functional review and relevant normative acts;

j. Human resources management and development - Civil service which is professional, impartial, independent, merit based, including reform of salary system, oriented towards citizens and businesses;

k. Rationalization of electronic administrative processes - Advance of administrative services quality that are provided by the Government institutions for citizens, businesses, and itself, through digitalization of administrative processes;

l. Developing e-Government - Advanced and functional electronic Government through digitalization of the functioning of Government and public administration, in order to have a modern, transparent, and high-performing Government.

As the Strategy’s objectives are generally described and the activities to be undertaken towards the reaching of the respective aforementioned objectives are specified in details in the Action Plan, the implementation rate cannot be determined yet. The Action Plan contains very detailed success indicators (activities are decomposed into concrete outputs) and specific progress measurements/indicators (i.e. A – entirely, B – greatly, C – partly, D – at initial phase and E – not at all). In addition, separate schemes have been already prepared in order to measure in details the implementation of the document. - Which bodies/institutions are involved in the definition, coordination, implementation and monitoring of the Public Administration Reform Strategy? Is there a central body or ministry in charge of public administration reform? Is there a central body or ministry in charge of public administration reform? The two main bodies for definition, coordination, implementation and monitoring of the Public Administration Reform Strategy are: the Inter-Ministerial Commission on Public Administration Reform (at the political level) and the Department for Management of Public Administration Reform within the Ministry of Public Administration (at the technical level). Moreover, there are three (3) main institutions responsible for the implementation of Public Administration Reform Strategy: the

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Office of the Prime Minister, the Ministry of Finance and the Ministry of Public Administration. For all related matters to public administration reform, the main body in charge of, is the Inter-Ministerial Commission on Public Administration Reform (at the political level, established by Government decision on May 30th 2008), assisted by the Department for Public Administration Reform within the Ministry of Public Administration (at the technical level, upgraded from division to department level by Government decision on May 7th 2009). - What is the capacity of the administration to handle EU integration issues and to which extent have recent staff cuts had an impact on it? The central coordinating body guiding and monitoring the EU integration process is the Ministry of European Integration, which, established in 2010, has a total of 54 staff members, of whom 33 dealing with European integration affairs on a day to day basis. Regulation 07/2010 on the Organizational Structure of MEI, provides for the establishment of five departments within the Ministry: Department of Strategy and Coordination, Department of Governance, Department of Economy and Trade, Department of Infrastructure and Natural Resources and Legal Department. In January 2012, MEI advanced its institutional structure for coordination of EU assistance by establishing Office for Coordination of EU Assistance (NIPAC Office). In addition, there are Departments for Policy Coordination and European Integration, established in all ministries, which based on Regulation 01/2011 on Departments for Policy Coordination and European Integration, are responsible to advise the ministry concerned on setting priorities with the view to European integration, coordinate work on developing strategic documents while ensuring consistency with the rest of strategic framework, including EPAP and its monitoring. The departments are also responsible to support the coordination of programming and monitoring of pre-accession and other donor assistance for the area they cover. In accordance with the mentioned regulation, the Departments are organized into Divisions on European integration and Divisions on Policy Coordination. Each Division on European Integration has a Senior Programme Officer, a position created in line with 2007 IPA Regulation. In addition to these, each independent body and municipality has assigned one officer within their ranks to deal with European integration affairs. Moreover, except for the permanent institutions dealing with European integration there are also inter-institutional structures like National Council on European Integration, Ministerial Council on European Integration, Working Committee on European Integration and Executive Committees on European Integration, as well as 6 Sub-Committees (managed jointly with the EC) covering all areas of European integration (please refer to question “What structures exist to ensure the coordination of European Integration issues? How is the compatibility of planned legislation with the

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EU acquis and with international obligations been verified and monitored? Which body is responsible for such verification? Please explain).” Due to continuous efforts at capacity building there have been positive developments with the view to capacity building on European integration in Kosovo’s public administration. Thus, after having developed a comprehensive indicator based system of monitoring and reporting, the European Partnership Action Plan for 2012 was prepared within three month timeframe (it took 8 months to prepare such a document in 2008). Moreover, as recognized by the EC, the quality of EPAP has enhanced significantly over the last couple of years, ensuring now a solid basis for planning and monitoring in relation to European integration. Moreover, the years 2010, 2011 and 2012 have seen a strengthened process in effectively organizing the work of the SAPD mechanisms and monitoring their implementation. Also, as part of the overall strengthening of SAPD mechanisms, Kosovo has seen an improvement as to the functioning of national European integration structures, especially with the view to planning and monitoring of activities envisaged in the European integration strategic framework. Also, 2012 has seen a significant improvement in regards to programming pre-accession assistance, especially given that for the first time the whole process is predominantly driven nationally, with the entire IPA annual programme for 2013 being prepared by the Kosovo institutions. In parallel to making efforts in ensuring that such developments are sustainable, MEI is now working towards guiding the rest of the administration in strengthening its capacities with the view to legal approximation and preparation of national version of Acquis. - What is the legal basis for the status of civil servants and other public employees? Is there a public administration Law or regulation defining the status of civil servants, including independence, recruitment, promotion and career structures and remuneration? Are the principles of a European Public administration as identified by SIGMA4 embedded within the legal framework? What are the different categories of public employees (i.e. civil servants versus other public employees)? What are the distinctions between these different categories (in terms of legal regime, rights and obligation)? Please indicate the number of employees in each category. The legal basis for the status of the civil servants is to be found in the Law 03/L-149 on Civil Service of the Republic of Kosovo. The Law as such regulates only the civil

4 According to the SIGMA paper no. 27 "European Principles for Public Administration (1999)", these principles refer to: the separation of public administration of politics, the legal certainty and the proportionality of administrative decisions, the openness and transparency of administrative acts, the accountability of administrative bodies, the efficiency and effectiveness of public administration in achieving its goals.

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servants attached to the central and local level and excludes from its scope of regulation the employees in the education, health (medical staff), police, customs, correctional services, art and culture performers, members of the Kosovo Security Force, political appointees as well as judges and prosecutors. All of the mentioned categories’ employment relations are regulated by specific legislation as in the following: a. Law on Labour, 03/L-212; b. Customs and Excise Code, 03/L-109; c. Law on Police, 04/L-076; d. Law on Higher Education, 04/L-037; e. Law on Pre-University Education, 04/L-037; f. Law on Service in the Security Force of Kosovo, 03/L-082; g. Regulation on Salaries of Arts, Culture and Cultural Heritage Employees; h. Law on Local Self-Governance; i. Law on Courts, and j. Law on Prosecution Office. The definition of the status of the civil servants is laid out in the Law 03/L-149 on Civil Service, namely, article 3 regulates impartiality and professional independence; articles 11-13 regulate recruitment; and articles 27-33 regulate promotion and career development. On the other hand, the salaries of the civil servants are defined by the Law No.03/L-147 on Salaries for Civil Servants and its secondary legislation. Both mentioned Laws have been accompanied with a complete set of secondary legislation, which in detail regulate the various aspects of human resources management. So far 14 regulations deriving from the Law on Civil Service have been adopted, which, inter alia, focus on the application of principles with regards to recruitment of non-majority communities’ members and on ensuring an equal gender representation. As regards the incorporation of European principles on Public Administration, they are fully embedded into the Law on Civil Service, where article 5 defines the key principles of the civil service, such as: legal compliance, non-discrimination; accountability; efficiency and effectiveness; impartiality and professional independence, transparency, fight against conflict of interest and the provision of equal opportunities for non-majority communities and gender. The same principles are reflected into the legislation regulating the rest of the public administration categories. As of May 2012, the number of employees in the civil service and public administration is as in the following table.

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Table 2: Number of employees in the civil service and public administration

- How are civil servants and public employees recruited (on national, regional and local level)? Are recruitment and promotion based on merit and competence? What is the status of public employees? Is there legal framework regulating their status, job classification system, career promotion system, accountability and salaries of civil servants and public employees? Civil Servants are recruited based on the Regulation 02/2010 on the Procedures for Recruitment in the Civil Service, deriving from the Law on Civil Service. The regulation defines a complete set of rules and procedures on the recruitment of civil servants, whether in the local or central level. According to article 8 of the Law on Civil Service, the recruitment procedures undergo the following phases: a. A request to initiate the procedures for recruitment by the recruiting institution; b. Assessment and approval of the request by MPA; c. Publication of the vacancy announcement; d. Application assessment, identification and selection of applicants. According to the legislation in force, the procedure of recruitment is initiated by the relevant institution, based on its needs as pointed out in the relevant institutions’ human management plans (required by article 18 of Civil Service Law) and after providing the necessary proof of the availability of financial planning for the new or vacant positions. The relevant personnel unit in the recruiting institution, upon authorization by the Department on Civil Service Administration in MPA, carries out competition procedures for selection of the candidates for a specific position. This is ensured through the publication of the vacant or newly created position in the national media outlets, in the official languages. The published vacancy announcement should include all details as per the position, and should clearly state that applications from both genders and non-majority communities are encouraged to apply. The recruitment of career and non-career civil servants is possible after the candidates have undergone a written and verbal test.

5 The following are included in the category ‘others’: political appointees, municipal assembly councilors; judges and prosecutors.

C.S. Education Health Police FSK others5 TOTAL Number 18535 31756 12245 7326 2773 2983 75618 Percentage 24.51 41.99 16.19 9.68 3.66 3.94

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As regards senior management and middle management positions, the recruitment is carried out through promotion procedures of current employees. In case there are no eligible applicants from within the civil service, then the vacancy opening is made external. According to article 7 of the Law on Civil Service, ad hoc Selection Committees for Civil Service (SCCS) are established by the institution that carries out the selection procedures. Such a committee is composed of members holding higher positions than the vacant one (one of them may be of the same position), members from non-majority communities, and from both genders. Such committees carry out selection procedures for career and non-career positions. In case such a committee cannot be established, then the relevant personnel manager is to prepare a written statement stating the reasons why such establishment was not possible. The personnel unit manager of the recruiting institution proposes the members of the SCCS, while the highest administrative officer decides on its composition of five members. The committee is responsible to manage the assessment, short-listing, selection timeline, applying the needed tests, assessing the results and proposing the final list of the successful candidates, which is then sent for approval to the highest administrative officer in the institution. All communication with the selected candidates is done in written, while the recruiting institution is obliged to publish the results of the recruitment procedure on its official web-page. Article 42 of the Regulation on Recruitment, defines the right to complaints by the applicants in a selection procedure for a civil service position. The claims and contests are to be addressed to the Committee on Claims and Complaints Resolution. As described in the previous answer, all aspects of the status of the civil servants is regulated by the Law on Civil Service, while that of other categories of public employees is regulated by the Law 03/L-212 on Labour and the more designated legislation. As regards regulation of salaries in the civil service, the relevant Law was approved in 2010, which has provided a solid basis for strengthening the system of salaries, career development, and job classification. The whole set of secondary legislation implementing the Law on Salaries for Civil Servants is to enter into force on 1 January 2013. During this time, all efforts are being made to prepare our administration for the implementation of the mentioned legislation, firstly by developing a uniform salary system for all civil servants and the public employees in Kosovo. - Are there training institutions for civil servants? Please provide statistics on training provided in the last three years. What percentage of civil servants is (a) women and (b) from ethnic and national minorities (please provide details of grade and seniority, if available).

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The main institution dealing with training of the Kosovo public administration is the Kosovo Institute for Public Administration (KIPA), reporting to Ministry of Public Administration, whose purpose is to ensure training for all civil servants in Kosovo, through implementing training and educational strategies within the civil service in Kosovo. Table 3: Trainings delivered during the last three years by KIPA

Table 4: Ttrainings delivered by gender Male Female Total Central Level 9053 5119 14172 Local Level 4508 1851 6359 Total 13561 6970 20531 Percentage 66.1 33.9

Table 5: Ethnic structure of Civil Service

Alb

ania

n

Serb

ian

Bosn

iak

Turk

ish

Gor

ani

Ash

kali

Egyp

tian

Rom

a

Oth

ers

Tota

l Central Level 13210 567 162 156 15 15 7 24 16 14172 Local Level 5270 430 115 73 5 24 11 16 415 6359 Total 18480 997 277 229 20 39 18 40 431 20531 Percentage 90.0 4.9 1.3 1.1 0.1 0.2 0.1 0.2 2.1

- What are their conditions of service? Is there a Code of Ethics applicable to Civil Servants? If so, how is its application monitored? Are there specific rules applicable to specific categories of civil servants? How is the career development (promotion, transfers, etc.) organised for the civil servants? How is the legal framework regulating these aspects implemented (e.g. indications about the number of people being promoted each year)? As described in the previous questions, the civil servants service conditions are defined in the chapter V of the Law 03/L-149 on Civil Service in Kosovo, which are in line with the highest standards covering the area.

Year

Participants

Gender Minorities

Structure of the participants

F M SM

MM

P A Total

2009 1612

646 966 25 8 474 840 290 1612 38.17% 59.92%

2010 1878

725 1152 93 30 597 1098 153 1878 38.60% 61.34%

2011 2249

1160 1089 54 10 594 1379 257 2249 51.57% 48.42%

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The Code of Conduct for Civil Servants in Kosovo 01/2006 was adopted based on the older legislation in the country on civil service. Now that new legislation is in power, preparations are under way in preparing a new Code of Ethics for the civil servants. To date, the monitoring of implementation of the Code of Conduct is based on the principle of hierarchic control (the senior officer ensures the compliance of subordinates with the rules and procedures), and through receiving public complaints or through disciplinary measures for breaches of the ethical rules and procedures. All institutions falling beyond the civil service use their own specific legislation in regulating the conduct of their staff members. As regards career development, the Law 03/L-147 on Salaries of the Civil Service, article 11, sets forth the possibility for promotion of up to 50% of civil servants upon performance appraisal. Currently, efforts are under way in completing the Regulation on Promotion of Civil Servants as well as Regulation on Performance Appraisal for Civil Servants, expected to enter into force in January 2013. On the other hand, the transfer of civil servants is regulated by Regulation 06/2010 on the Transfer of Civil Servants, based on which, 332 civil servants were transferred during 2011. - Please indicate if there are temporary staff employments in the public administration? What is the procedure for recruitment of these categories? What is the legal status of these categories – are they considered civil servants and if not, what procedure applies for them becoming civil servants? Please provide data on annual employments of such categories (indicate also the percentage of these recruitments against the recruitments based on open competitions). Article 12 of the Law on Civil Service sets forth two categories of civil servants: career and non-career civil servants. The former are recruited on a permanent basis, while the latter are recruited on a two year contract. However, their status as civil servants is held on an equal footing. In addition to this, the mentioned Law points out the possibility for the civil service to make contracts for service delivery for up to six months with natural and legal persons, however these are not considered recruitments into the civil service, and while the delivery of services is paid, the person under contract is not considered as staff of the institution, but rather as service providers. Such contracts are regulated under the Law on Obligations whereby the persons as part of such contracts should undergo all recruitment procedures required by the civil service legislation6.

6 The newly adopted Law on Obligations 04/L-77 was adopted by the Assembly on 10 May 2012 and promulgated by President on 30 May 2012, but it stipulates that it will enter into force and hence supersede the old legislation, within six months from the date of its publication in the Official Gazette.

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- How are the management and middle management recruited and for how long? Who would be politically appointed? Do you have a delimitation between political and expert/management appointments in the public administration? Are there safeguards against the politicisation of the civil service? The senior civil servant management is recruited based on the Regulation 06/2010 on Procedures of Appointment in Senior Management in Civil Service. The mandates awarded through such recruitment are valid for three years, with a possibility of renewal. The appointment of senior management in civil service is regulated by the Law on Civil Service, and the Regulation 06/2010 on Procedures for Appointments to Senior Management Positions in the Civil Service. Article 5 establishes that the Council of Senior Management Positions is responsible to strategically guide the process of appointments of senior management positions. More specifically, the Council is responsible to develop job descriptions for senior management positions, ensure that the recruiting methods are successful in attracting suitable candidates and ensure the integrity of the recruitment and selections procedures. Article 7 points out that the Prime Minister shall appoint the seven members of the Council, as in the following: a) One Deputy Prime Minister; b) One Minister responsible for public administration; c) One Minister responsible for finance; d) One Minister from communities; e) Three other members from among the ranks of general secretaries or equivalent

positions. The institution where the vacancy has arisen, proposes to MPA the initiation of procedures for appointment of the senior civil service manager. Based on this, MPA publishes the vacancy and creates Criteria Assessment Commission (composed of three general secretaries, one faculty teacher and one member from civil society). Upon completion of the selection procedure the Minister of Public Administration sends the details of three candidates short-listed by the Commission to the relevant institution for approval. For Governmental institutions, the Minister of Public Administration proposes to Government for approval the candidate preferred by the institution, which is appointed by the Government to the relevant position for a three year term. On the other hand, the middle management (Department Directors) is recruited based on Regulation 02/2010 on Procedures on Recruitment in Civil Service, on a permanent basis (please see previous answers for more information on recruitment of middle management). In line with Law 03/L-192, the Independent Oversight Board participates in an observer capacity in the workings of the ad hoc Selection Committees for Civil Service for such positions.

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In addition, those appointed in political positions, are not subject to the described recruitment procedures (cabinet advisors and the supporting staff), while in the local level, municipal directors are politically appointed by the mayors. In accordance with article 14 of the Law on Civil Service, public officials cannot be appointed through executive decisions in positions, which by Law are reserved to civil servants. On the other hand, the Law on Civil Servants prohibits civil servants from holding political positions, while they are holding civil service positions. In case such civil servants seek election in local or national elections, they have to suspend their civil service position, until such time as their politically obtained mandate is complete. Moreover, the mentioned Law determines that civil servants, while allowed to be part of political parties, they however cannot hold leading positions and cannot be actively engaged in them. - Is there a transparent and regulated system of defining the functions and the authority of middle management staff within the administration? Please describe. The Law on Civil Service and the deriving Regulation 03/2010 on Job Descriptions within Civil Service set forth precise obligations on the part of institutions to develop job descriptions for all positions, including those for middle management (e.g. Department Directors, Division Heads or similar positions). According to the mentioned Regulation, the senior manager (General Secretaries or equivalent positions) shall seek the consent of Ministry of Public Administration and Ministry of Finance for the creation of the positions within his/her institution (including for middle management positions). Upon endorsement of such request the senior manager asks the direct supervisor of the to be position to draft the job description, which according to article 6 of the Regulation shall include precise functions and authority attached to the position. After such job description is prepared, the senior manager needs to approve it and send the approved version to Ministry of Public Administration for final approval. If approval to such version is received the senior manager should inform Ministry of Finance on the added job description as part of the organizational chart of the institution concerned. The same procedure should be followed for reviewing the current job descriptions of all positions within the institution concerned, including those for middle managers. In parallel to this, in cases where new middle management positions are created (e.g. creation of new departments) the senior manager in close coordination with the senior personnel manager shall propose the changes to the legal act utilized as the basis for the institution concerned, and after endorsement by MPA and MoF, shall present it to the Government for approval, including the new organizational chart.

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- Is there a transparent legal or regulatory basis for actions taken by civil servants? In particular, how is impartiality and non-discrimination of actions by civil servants ensured? There is a transparent legal and regulatory basis for actions taken by civil service, compliant to impartiality and non-discrimination principles. The legal framework ensuring this is as in the following: a. Article 7 of the Constitution of the Republic of Kosovo, sets forth that the

constitutional order of the Republic is based on the inter alia, non-discrimination; b. Chapter I of the Law 03/L-149 on Civil Service provides the transparent and

regulatory basis for actions taken by civil servants, in particular through the inclusion of key principles, such as: legal compliance, non-discrimination, responsiveness, efficiency and effectiveness, accountability, impartiality and professional independence;

c. Civil Service Code of Conduct provides the same principles for the actions taken by civil servants;

d. Law 02/L-28 on Administrative Procedure, chapter III, defines in a detailed manner how impartiality on the part of public employees should be ensured;

e. Law 2004/3 against Discrimination provides an overall legal framework on ensuring non-discrimination.

Although, all of the above mentioned legal acts aim at ensuring the legal, impartial and non-discriminate actions on the part of public employees, Law 02/L-28 on Administrative Procedure, goes into detailed length to define how such actions should be taken in full compliance with the legal framework. Hence, it would be worth elaborating the content of the Law, with the view to providing a clear picture of how it regulates the basis for actions taken by public employees. The Law covers the following areas: a. Part 1 defines the General Principles and Definitions: while the first chapter

provides the definitions contained in the Law, chapter II defines the principles which should be the basis of all actions on the part of public administration employees, such as:

i. The principle of legality; ii. The principle of balancing the public and private interests;

iii. The principle of equality before the Law; iv. The principle of proportionality; v. The principle of objectivity and impartiality;

vi. The principle of sustainability and predictability; vii. The principle of publicity;

viii. The principle of subsidiarity; b. Part 2 defines the establishment of competencies (chapter I); delegation of

competencies (chapter II); resolution of conflicts of competencies (chapter III); c. Part 3 defines the rules and procedures to guarantee impartiality of public

administration;

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d. Part 4 defines commencement of and participation in administrative proceedings (chapter I); issuance of administrative acts (expertise and other actions, hearing of the interested parties, intervention, mediation decisions and termination of administrative proceeding);

e. Part 5 defines all aspects of administrative activity, through: chapter I on administrative acts (validity of administrative acts, entry into effect, invalidity of administrative acts, revocation and abolishment of acts, implementation of individual and collective acts, voluntary implementation and deadlines for implementation, as well as administrative appeals). Moreover chapter II of this part defines real acts, while chapter III defines administrative acts of discretionary nature.

Moreover, impartiality and non-discrimination in actions taken by civil servants are ensured by a set of internal mechanisms (Human Rights Units at Ministerial and Municipal level, Internal Audit Units, Disciplinary Committees, Committee of Claims and Complaint Resolution) and external mechanisms (General Auditor, Civil Service Independent Oversight Board, Ombudsperson Institution and the Supreme Court as the authority in charge of resolving administrative contests). - How is accountability of administrative bodies ensured (e.g. are administrative bodies accountable or answerable for their actions to other administrative, legislative or judicial authorities, and subject to scrutiny by others)? Please name the structures involved. Does the legal framework comprise regulations concerning disciplinary measures against civil servants? Please explain. The Constitution of the Republic of Kosovo and the other legal acts, based on which institutions are created, define, inter alia, the accountability of such institutions vis a vis other bodies. The public administration bodies are accountable for their decisions and actions to the higher bodies (e.g. a Division is accountable to a Department, which in turn is accountable to the General Secretary). The higher administrative unit is entitled to exercise checks as to the implementation of responsibilities by the subordinate units, including with the view to undertaking the necessary measures. Moreover, in accordance with the Law 03/L-192, the Independent Oversight Board for Civil Service is in charge, to inter alia, perform the function of supervising the implementation of rules and principles of legislation related to Civil Service. In such capacity, the Board is entitled to have access to any information on the recruitment, appointment, disciplinary measures and promotion of civil servants. In addition, there are legal units in each institution that except for developing legislation, are also responsible in ensuring that the actions taken by the relevant body are compliant to the legislation in force. Moreover, there are Human Rights Units within local and central Governmental institutions, who are responsible to ensure that any legislation, policies and their implementation is carried out in compliance with

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Human Rights legislation and policy. Furthermore, in line with Law 03/L-128 on Internal Audit, Internal Auditing Units are functional in local and central public administration institutions, with the specific responsibility to ensure strict compliance of the actions taken by the relevant institution with the established rules and procedures. Except for these internal mechanisms, there are also external control mechanisms, of which the General Auditor is the most important. The Law 03/L-075 on General Auditor provides for the functioning of the General Auditor Office as an independent body, responsible to audit financial, performance and legality aspects of the work of all public administration bodies. In addition, in line with Article 123 of the Constitution and the Law 03/L-195 on Ombudsperson, the Ombudsperson Institution plays a significant role in ensuring that human rights legislation and policy is closely observed while actions are taken by administrative bodies whereas, the Public Procurement Review Body does the same with regards to public procurement procedures. Another important mechanism with the view to ensuring the accountability of the public administration bodies is the Anti-Corruption Agency, which pursuant to Law 03/L-159 on Anti-Corruption Agency except for the investigating competencies is also in charge of monitoring the implementation of the Anti-Corruption Strategy, including conflict of interest, asset declaration and prevention of corruptive actions. Moreover, the accountability of actions taken by civil servants is further strengthened by the Law 03/L-215 on Access to Public Documents, which allows for non-confidential information to be made available to the public upon request. Finally, the National Assembly and the Municipal Assemblies are responsible to oversee the executive bodies, hence the actions of the civil service, through regular reporting. Except for administrative and legislative mechanisms in ensuring accountability on the part of public bodies, there is also legal basis as to the criminal liability of public employees for actions or failures to act, envisaged as criminal offence in the chapter XXIX of the Criminal Code of the Republic of Kosovo, whereby it stipulates that if an official person with the intent of obtaining an unLawful material benefit for himself, herself or another person or a business organization or to cause any damage to another person or business organization, abuses his or her official position, exceed the limits of his or her authorizations or does not execute his or her official duties shall be punished by imprisonment of up to one year. As regards disciplinary measures against civil servants, chapter VIII of the Law No.03/L-149 on Civil Service regulates this area, while the Regulation 04/2011 on Disciplinary Procedures in Civil Service sets forth specific provisions in this regard, as does the Regulation 05/2011 on Procedures of Claims and Complaints Resolution. The

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Regulation 04/2011 defines violations of the civil servants into minor and serious ones. Minor violations have mainly to do with unjustified absence from work and disregard to working hours, while the serious violations are defined as: violation of Code of Conduct; fraud; theft; counterfeit of official documents; violence; discrimination; abuse of official position; giving false statements; conflict of interest; misuse of public funds; hindering others to perform official duties; concealment of facts and evidence or official records when required for official purposes; disclosure of confidential information and sexual harassment. While minor violations are punished through verbal and written reprimands (which are attached to the civil servant’s file) the disciplinary measures for serious violations in accordance with the article 8 of the Regulation 04/2011, are as in the following: a. Preventive suspension for three months; b. Suspension of duties and withholding of 1/3 of salary; c. Forced transfer to another position with similar duties and ban of promotion for 5

years by the disciplinary commission; d. Termination of contract of employment in civil service by the disciplinary

commission, without damaging or reducing the right to retirement; e. Early retirement for civil servants, two years before their normal retirement. In accordance with article 9 of the Regulation 04/2011, Civil service institutions shall establish their disciplinary commissions, composed of three officials selected by the senior manager (two of them for a 2 year term, while the third is chosen on a case to case basis). According to article 13 of the mentioned Regulation, the Commission is responsible to: a. Examine the evidence presented in relation to a report on a serious violation; b. Decide based on such evidence if the violation is committed; c. Decide on the penalty to be adopted. According to article 16 of the regulation, the civil servant involved in such decisions, is entitled to present his/her appeal to the Commission for Claims and Appeals, within 30 days after the decision of the Disciplinary Commission. The Civil Service Independent Oversight Board serves as the second degree body in handling the disciplinary cases as per the Law 03/L-192 on Independent Oversight Board for Civil Service. On the other hand the disciplinary measures for the senior management are regulated by Regulation 06/2012, of the Law on Civil Service. Chapter VII of this Regulation stipulates that such measures may be initiated by the Minister to whom the senior manager is responsible, the Prime Minister or the Council on Senior Management Positions, on the grounds of professional incompetence or misconduct or after being convicted of a criminal offence and sentenced to serve a prison term of six (6) months or more. The Regulation defines misconduct as a violation as defined by the Law on Civil Service. A special disciplinary commission composed of one of the Deputy Prime

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Ministers, Minister of Public Administration and a Minister coming from communities and two General Secretaries, established by a Government decision, is to be created with the view to dealing with alleged violations by any of the senior manager staff. The disciplinary measures for senior management utilized under article 15 of Regulation 06/2012, are as in the following: a. Suspension with pay for having committed a violation; b. Suspension with pay if remanded to police or judicial custody for a period longer

than 48 hours, in case of an alleged criminal offence; c. Dismissal. However, the Regulation specifies that all provisions applicable for civil servants shall analogously apply to disciplinary measures for senior civil servants. - Please describe the role of the Ombudsman in the oversight of administrative bodies. Please indicate if judicial proceedings could be initiated in case the Ombudsman's recommendations are not followed by the administration. The role of Ombudsperson in the oversight of administrative bodies is defined through: a. The Constitution of the Republic of Kosovo, Article 132 [Role and Competencies of

the Ombudsperson] b. Law on Ombudsperson - no. 03/L-195, Article 15 [Competencies} Protection, supervision and promotion of human rights and fundamental freedoms of individuals and entities from illegal actions or omissions of public authorities in the Republic of Kosovo are the main segments of action of Ombudsperson. Ombudsperson cannot initiate judicial proceedings in case its recommendations are not followed by the administration. Ombudsperson deals with the investigations and supervises the judicial inconsistency with standards of human rights but does not replace the court and cannot give binding decisions on the implementation of recommendations by the public institutions (Law on the Ombudsman No. 03/L-195, Article 15.6). In cases the Ombudsperson considers that a general practice or situation is not in accordance with local or international standards for human rights, it prepares a report with recommendations directed to the responsible institution for the purpose of improving the situation created and its harmonization with domestic and international standards for human rights. If the responsible institution does not take appropriate actions in accordance with the recommendations of the Ombudsperson within a timeframe of 30 days, then the Ombudsperson notifies the Assembly and may issue a public press release (Constitution of the Republic of Kosovo Article 135.3, Law on the Ombudsman - no. 03/L-195, Article 28 and Article 26 ).

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According to Article 113 of the Constitution and Article 15.7 of the Law on the Ombudsperson - no. 03/L-195, the Ombudsperson Institution is defined as an authorized party entitled to refer cases to the Constitutional Court of the Republic of Kosovo as in the following: a. the question of the compatibility of Laws, decrees of the President or Prime Minister,

and of regulations of the Government with the Constitution; b. The compatibility of municipal statutes with the Constitution. - What guarantees exist for the independence of the Ombudsman? Please specify in particular the procedures for its appointment, end of mandate and the allocated financial and human resources. The independence of the Ombudsperson institution is guaranteed by the Constitution of the Republic of Kosovo Chapter XII (Independent Institutions). Article 132 (Role and Competencies of the Ombudsperson) paragraph 2, provides as follows: “The Ombudsperson independently exercises her/his duty and does not accept any instructions or intrusions from the organs, institutions or other authorities exercising state authority in the Republic of Kosovo”. Procedures of appointment and the end of the mandate of the Ombudsperson are regulated by: a. Constitution of the Republic of Kosovo Article 134 [Qualification, Election and

Dismissal of the Ombudsperson]; b. Law on the Ombudsperson - no. 03/L-195, Article 8 [Proposal Procedure] In line with Constitution Article 134 [Qualification, Election and Dismissal of the Ombudsperson] the Law on the Ombudsperson - no. 03/L-195 Article 8 (Proposal Procedure) provides procedures for nomination and election of the Ombudsperson: a. The procedure for electing the Ombudsperson and his deputies starts six (6) months

before the expiration of their mandate; b. During the election procedure of candidates for Ombudsperson and his deputies,

ethnic and gender representation must be ensured; c. Proposal for Ombudsperson is made by respective Committee of the Assembly of

the Republic of Kosovo, which reflects the political, ethnic and gender composition, of the Assembly in accordance with Rules of Procedure of the Assembly of the Republic of Kosovo;

d. The Assembly of Kosovo publishes the competition for election of Ombudsperson, in written and electronic media;

e. In the competition the conditions for election of Ombudsperson are determined, envisaged by the Constitution and the Law. The time period for submission of proposals for candidates cannot be shorter than fifteen (15) nor more than twenty (20) days;

f. After expiration of time period foreseen in paragraph 5 of this Article, the Commission, within the term of fifteen (15) days, assesses whether the candidates

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meet the requirements envisaged by the Constitution and the Law to be elected Ombudsperson, and rejects nominees who do not meet these conditions;

g. The Commission conducts interview with each candidate who meets the conditions to be elected for Ombudsperson and based on the data presented and the results of the interview, prepares the short list of candidates qualified for Ombudsperson;

h. The short list comprises of three (3) candidates. i. The Commission delivers the short list to the Assembly of the Republic of Kosovo

with the attached list of all candidates who meet the requirements to be elected for Ombudsperson.

j. The Commission proposal contains justification why the Commission has given priority to some of the candidates in comparison with other candidates.

k. Proposal of the deputies is made by the Ombudsperson on the basis of open and transparent competition, according to the competition announced by the Assembly of Kosovo.

l. The proposal of Ombudsperson contains justification for the proposed candidates. m. At least one Deputy Ombudsperson must be a member of the Kosovo Serb

community and at least one (1) must be from other non-majority communities that are represented in the Assembly of the Republic of Kosovo.

n. The procedure for election and dismissal of Ombudsperson and Deputy Ombudsperson shall be regulated with a special Regulation of the Assembly of Republic of Kosovo.

The Assembly, in accordance with the Law on the Ombudsperson, has approved the regulation on the selection and the dismissal of the Ombudsperson and Deputy Ombudsperson. With regard to the Ombudsperson financial resources, according to the Article 32 of the Law on the Ombudsperson - no. 03/L-195, [Salaries]: a. The level of salary of the Ombudsperson and his deputies is determined in

accordance with the Law on salary of public senior officials. Whereas, according to Article 34 of the Law on the Ombudsperson - no. 03/L-195, [Financing]: b. The Ombudsperson Institution is financed from the budget of the Republic of

Kosovo. c. Regardless of the provisions of other Laws, the Ombudsperson Institution prepares

its annual budget proposal and sends it for approval to the Assembly of the Republic of Kosovo.

d. The Ombudsperson Institution manages independently with its own budget and is subject to internal and external audit by the General Auditor of the Republic Kosovo.

Although, the Ombudsperson has prepared and submitted its annual budget proposal to the Assembly of the Republic of Kosovo for approval, the Assembly faced with continuous budgetary restrictions and fiscal discipline has not approved its budget as

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requested by the Ombudsperson. To this end, Ombudsperson has continuously underlined the need for sufficient human, physical and financial resources in order to effectively deliver on its mandate. - Is access to all official documents granted to the Ombudsman? Is he entitled to suspend the execution of an administrative act if he determines that the act may result in irreparable prejudice to the rights of a person? If so, how is this implemented in practice? Does the Ombudsman have the right to contest the conformity of Laws with the Constitution and, if so, how is this implemented in practice? The Ombudsperson has access to official documents, in accordance with Law no. 03/L-215 on Access to Public Documents, Article 17 (The Ombudsperson Institution), and the Law no.03/L 195 on Ombudsperson. Ombudsperson has no right to suspend the execution of an administrative act, but the Law on Ombudsperson - no. 03/L-195 Chapter III Article 15, stipulates that the Ombudsperson has the right to recommend suspension of an administrative act to the relevant body. In order to identify problems and in order to provide data for the alleged violations, the Ombudsperson requires each organ, institution or other authority that exercises legitimate power in the Republic of Kosovo, to respond to the Ombudsperson and present him with all documents and data required, in accordance with the Constitution and the Law (Constitution of the Republic of Kosovo Article 132.3, Law on Ombudsperson - no. 03/L-195, Article 16.6. Article 16.7 and Article 16.8). If the Ombudsperson considers that immediate measures should be taken by public authorities, he may request the administrative body, legally competent, to undertake or suspend a specific action, as a temporary measure to prevent irreparable damage to the applicants or their wealth. (Constitution of the Republic of Kosovo Article 135.3, Law on Ombudsperson - no. 03/L-195, Article, 16.5). During the 2008 – 2012 there were a total of 5 cases where Ombudsperson took such action (Request for temporary measures) Based on the Law on Ombudsperson - no. 03/L-195 (Article 16.1.6 and Article 16.1.8) the Ombudsperson may recommend to the Assembly issuing new Laws, amending and harmonizing them with international standards of human rights. Furthermore based on the Constitution of the Republic of Kosovo (Article 113.2 and Article 133.4) the Ombudsperson is entitled to refer the compliance of Laws with the Constitution at the Constitutional Court. The Ombudsperson, during the period from the establishment of the Constitutional Court (January 2009) until now, has received dozens of requests on various matters for referral to the Constitutional Court. After reviewing these requests, the Ombudsperson has processed a total of 3 applications to the Constitutional Court.

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- Are there decentralised offices of the Ombudsman? In order to facilitate the access of the citizens of Kosovo to Ombudsperson, except the Central Office (headquarters) of the Ombudsperson in Pristina, there are regional offices established in Gjilan, Peja, Mitrovica, Prizren and Gracanica. Also, the Ombudsperson has established a sub-regional office in northern Mitrovica, which has been functioning since 2000. Rules of Procedures of the Institution of Ombudsperson, Chapter III [Proceeding], Article 23 (Receipt of Complaints) provides that Regional offices can receive Complaints and proceed these complains for registration to the Central office in Prishtina. Meetings with the citizens are organized every working day in headquarters of the Ombudsperson in Prishtina and in all regional offices. Citizens may also appoint a meeting with the Ombudsperson (or with his deputies) by contacting the nearest office of the Ombudsperson Institution or by sending an email. Such meetings are organized twice per month with the Ombudsperson or one of his/her deputies at the Central Office in Prishtina and once per month in the regional offices in Gjilan, Mitrovicë, Pejë, Prizren and Graçanica. - Please provide concrete data regarding complaints to the Ombudsman and how they were followed up for the last few years. Please provide data regarding how the Government takes on board recommendations of bodies in charge of administrative control. Please provide a detailed table indicating the activity of the Ombudsman per year since 2008 (number of received complains, number of cases solved, number of recommendations, number of followed recommendations). Regarding the number of complaints received, there is 17% increase in the number of complaints during 2011 compared to 2010; comparing the number of complaints from January 2011 and January 2012 there in an increase of 15% in the number of complaints. During the year 2011 there has also been an increase in positively closed cases reaching 60%. With regard to the previous years the percentage of the greatest number of complains is: Judiciary (31%), Government (23%), Municipalities (17%) etc. Number of complaints received, number of unacceptable cases (cases that after reviewing the complaints were declared inadmissible), number of open cases (cases that are investigated and actions are taken) and number of recommendations and reports from 2008 to 2011: Table 6: Received complains, Unacceptable cases, Open cases (Investigated), Reports and recommendations (Specific) Year 2011 2010 2009 2008 Received complains 1453 1233 1318 1277

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Unacceptable cases 907 819 800 780

Open cases (Investigated) 546 414 518 497

Reports and recommendations(Specific) 11 22 5 16

- Please specify the number of actions undertaken by the Ombudsman ex officio. The Ombudsperson has the power to open ex – officio investigations for allegations of human rights violations without individual complaint. Article 15.3 of the Law no. 03/L-195 on the Ombudsperson provides as follows: “The Ombudsperson has the power to investigate whether to respond to complaint filed or on its own initiative (ex officio), if from findings, testimony and evidence presented by submission or by knowledge gained in any other way, there is a base and it results that the Republic of Kosovo institutions have violated human rights and freedoms.” A total of 97 actions have been undertaken with Ex-officio procedure through the period of 2008-2012. - What systems are in place to monitor implementation of policies and Laws and to receive feedback? Is there an inspection of the public administration and how does it function? (On the systems on monitoring the implementation of policies and Laws, please refer to question “What systems are in place to monitor implementation of policies and Laws and to receive feedback?”) As regards the inspection of public administration, chapter VII of the Law on State Administration sets forth that the oversight of the public administration rests with the Government. More specifically, article 63 of the Law stipulates that the supervision of the legality and expediency of the administrative activities of the respective administrative body is exercised by the superior administrative body within Government. Also, the same article stipulates that for Governmental administrative bodies MPA is in charge of supervising the implementation of internal management rules and procedures. Also, with regards to implementation of recruitment, promotion and dismissal procedures within civil service, the Independent Oversight Board may exercise inspections in line with the Law 03/L-192, establishing such institution. With the view to supervising independent bodies, the Law on State Administration sets forth the need for creation of an independent supervisory body through a new Law, which still remains to be developed. As regards municipalities, the supervision is carried out by the Ministry of Local Government Administration, in line with the Law 03/L-040 on Local Self Government It is worth mentioning that the recently adopted Action Plan on Implementation of the Strategy of Public Administration Reform, envisages the development of a clear legal and institutional mechanism for inspection within public administration (Action 9.1.3),

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while preparations are under way as regards developing the respective sub-legal act in accordance with the Law on State Administration. However, as described in the answer to question “What are the procedures to guarantee citizens’ rights of recourse against public service actions? Describe these (e.g. parliamentary committees, ombudsman's office, internal and external audit, inspectorates, standard-setting authorities). To what extent are the recommendations formulated by these bodies (particularly the ombudsman's office) taken into account by the Government? Please provide concrete data. Do special administrative courts exist?)”, there is number of internal and external mechanisms, whose purpose is to ensure accountability on the part of public administration bodies. - What is done to ensure that the public service is open and transparent? Can any citizen affected by an administrative action find out the basis for the action? Law no. 03/L-215 on Access to Public Documents and regulations that are issued in order to implement this Law; Regulation no. 04/2012 on Official Evidence of Requests for access to public documents and Regulation no. 03/2011 on the Public Communication Service of the Government represent the main basis to provide an open and transparent public service, the right of every natural or legal person, without discrimination on any grounds, to have access, upon request, to official documents held, prepared or received by public institution. With regard to the right of access to documents Law no. 03/L-215 on Access to Public Documents Article 4 (The right of access to document)s provides: ‘Any applicant of document shall have the right of access to documents of the public institutions, complying with principles, conditions and limitations established under the Law’. Regulation no. 03/2011 on the Public Communication Service of the Government defines the duties and responsibilities of the Public Communication Offices in order to guarantee the transparency of public administration. Law no. 03/L-215 on Access to Public Documents Article 10 (Failure by the public institution to reply) stipulates that the Refusal of the application of the applicant as well as the failure by the public authority to reply within the prescribed period of time shall be considered as a negative reply and shall entitle the applicant to initiate the procedure before the Ombudsperson Institution, other public institutions, competent court, in accordance with the Law into force. Sub-legal acts that were adopted in order to implement the Law no. 03/L-215 on Access to Public Documents incorporates annexes published on the website of the Office of the Prime Minister in order to create a system easier to access public documents from citizens.

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Institutions have developed transparent service system providing possibilities for the realization of the right of access to public documents and to get a response within 7 days, as is required by Law on Access to Public Documents Since 2008, all meetings of the Government are fully open to the media. Cabinet Meetings are recorded and transmitted in the press room within the Government Building, where journalists can receive audio and video recordings of meetings. All decisions of the Government of Republic of Kosovo are published in official website of the Prime Minister’s Office. Besides news and communications about activities of the prime minister and deputy prime ministers, the portal also publishes all vacancy announcements, various procurement announcements, administrative directives, regulations, Draft Laws approved by the Government and administrative orders. This right is granted to everyone concerned regardless of their job profile. Each institution is required to have the officer or the unit for handling requests for access to public documents. Since last year, public institutions have improved filing official requests for access to public documents. For the first time this year Government sent to the Assembly a Comprehensive Report for the right of access to public documents, which also was published later. Although there is still work to be done to improve this system, the Office of Public Communications in the Office of the Prime Minister regularly supervises the implementation of this Law, making recommendations for all institutions, asking them for more transparency and enabling officers participation in various meetings and workshops, aimed at capacity building. Moreover, the municipalities have adopted regulations for transparency, in accordance with the Article 68 (Public Information and Consultation) of the Law No. 03/L-040 on Local Self Government and established the reception offices for citizens, offering services on demand related to municipal institutions. - What are the procedures to guarantee citizens’ rights of recourse against public service actions? Describe these (e.g. parliamentary committees, ombudsman's office, internal and external audit, inspectorates, standard-setting authorities). To what extent are the recommendations formulated by these bodies (particularly the ombudsman's office) taken into account by the Government? Please provide concrete data. Do special administrative courts exist? Article 32 of the Constitution of the Republic of Kosovo provides that ‘Every person has the right to pursue legal remedies against judicial and administrative decisions which infringe on his/her rights or interests, in the manner provided by Law’. Article 127 of the Law 02/L-28 on Administrative Procedure stipulates that ‘[A]ny interested party has a right to appeal against an administrative act or against unlawful

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refusal to issue an administrative act’ and that ‘[T]he administrative body the appeal is addressed to shall review the legality and consistency of the challenged act’. Only after all If, even after having received a response by the higher administrative body, the person is still not content with the result, he/she may turn to courts, in order to initiate an administrative contest. On the other hand, in the Republic of Kosovo there are structures in place for supervision of public administration activities, in charge of checking the legality of acts issued by administrative bodies. Parliamentary Committees are established by the Assembly, and present an important instrument with the view to checking the legality of action taken by administrative bodies. One such structure is the standing Committee on Human Rights, Gender Equality, Missing Person and Petitions within the Assembly, which deals with all matters relating to human rights, and it may also receive complaints directly from legal and natural persons not content by a public administration body’s actions, mainly through petition. Given the Committee’s authority to initiate legislation and oversee the implementation of legislation by the executive, it can intervene in its implementation, chiefly through recommendations. Moreover, the Law 03/L-195 on Ombudsperson Institution enables ‘each person, who pretends that his or her freedoms or rights have been violated by a Law, action or failure to act, mismanagement by public authority bodies, other bodies or organizations exerting public authority, may require that the Ombudsperson Institution initiates the necessary procedure’. In addition based on Article 16, all public administration bodies are bound to respond to Ombudsperson’s requests and provide access to documents. The Ombudsperson Institution is entitled to carry out ex officio investigation, come up with reports and provide counsel and legal services for protection and observance of human rights. If the Ombudsperson concludes that a certain practice or situation having an effect on the general public is in conflict with international human rights standards, he/she may issue a special recommendations report addressed to the Assembly and Government of the Republic of Kosovo. Except for the mentioned mechanisms, the Law 03/L-128 on Internal Audit, is the basis for establishment of the Central Harmonisation Unit on Internal Audit, directly responsible to Minister of Finance and Internal Audit Units at all public administration bodies (article 7 to 10). The functions of such mechanisms consist in conducting internal audit as to, inter alia, compliance with Laws, regulations, internal rules and contracts. In addition, Law 03/L-075 on General Auditor provides for the functioning of the General Auditor Office as an independent body, responsible to perform:

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a. Annual Regularity Reports as an attestation of financial accountability involving examination and evaluation of financial statements and other financial records and expression of opinions on, inter alia, the probity and propriety of administrative decisions taken within the audited institution or entity;

b. Performance Audits at any time in all public administration bodies as an audit of the economical manner, efficiency and effectiveness with which the audited institution or entity uses and manages its resources in carrying out its responsibilities.

As regards administrative courts, the Law 03/L-199 on Courts, sets forth the establishment of such mechanisms, after the Law enters into force in January 2013. Currently, the function of administrative courts is performed by the Special Collegium on Administrative Affairs, which is part of the Supreme Court. 1.1.4. Reform of the security sector - Please provide information on the status and the structure of the security forces, both civil and military, and their respective competences concerning internal security. What are the control mechanisms in place and how are they implemented? Please include information on human resources. The Constitution of the Republic of Kosovo provisions the main Security Forces of the Republic of Kosovo, ensuring civilian and democratic control over the security institutions (Chapter XI of the Constitution). In accordance to the Constitution and the Law No.03/L-045 on the Ministry for the Kosovo Security Force, and the Law No.03/L-046 on Kosovo Security Force the Assembly, the President, the Prime Minister and the Minister for the Security Force comprise the chain of civilian oversight of the Kosovo Security Force. The Commander of the KSF is accountable to the Minister for the KSF; while the Prime Minister has the competence to exercise effective oversight and control of the Security Force through the Minister of the KSF. The President of the Republic of Kosovo is the Supreme Commander of the Kosovo Security Force. Democratic oversight over the Security Force is insured through the Parliamentary Committee for Internal Affairs, Security and supervision of the Kosovo Security Force (article 4 of the Law No.03/L-045, article 4 of the Law No.03/L-046). Based on relevant Laws, KSF is authorized to serve within the territory of the Republic of Kosovo, and can be deployed abroad on operations only when mandated by the Assembly and in agreement with the recipient country, or upon invitation by international organizations. Under Article 10 “Missions and Tasks”, of the Law on KSF, it states that the tasks of the Kosovo Security Force are: to participate in crisis response operations, including peace support operations, this will include operations outside the territory of the Republic of Kosovo where invited to do so; to assist civil authorities in responding to natural and other disasters and emergencies, including as part of a regional or international response effort; to conduct explosive ordnance disposal; to assist civil authorities through civil protection operations.

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Law on KSF ensures political impartiality and integrity, article 11 of the Law stipulates that the KSF may not be used for political purposes or political activities. The mission of the KSF, as an instrument of security, is to support the Government of the Republic of Kosovo. Kosovo Security Force comprises of an active component of maximum 2500 personnel and a reserve component of a maximum 800 personnel. KSF initially consists of a Land Force Command comprised of 245 uniformed personnel, a Rapid Reaction Brigade of 1122 uniformed personnel, an Operations Support Brigade of 808 uniformed personnel and a Training and Doctrine Command of 192 personnel. The Law No.04/L-076 on Police regulates the authorizations, duties and the organization and other issues related to the activities and actions of the Kosovo Police. Kosovo Police functions under the authority of the Minister of Internal Affairs and the General Director of the Police. While in accordance to the Constitution the Prime Minister upon the recommendation of the Government has the authority of appointing the Police General Director. Democratic oversight of the Kosovo Police is ensured through the Parliamentary Committee for Internal Affairs, Security and supervision of the Kosovo Security Force. Kosovo Police has the power and duty to protect the life of people, their property and security, to maintain public order and safety, to investigate, to detect and prevent criminal acts and criminal offenses; to supervise and control traffic safety, to manage and control state border and provide assistance during natural disasters and other emergencies. Kosovo Police is organized in central and local level. The General Police Directorate constitutes the central level, while Regional directorates, Police Stations and Police Substations constitute the local level. Kosovo Police comprises of a total number of 8436 personnel out of which 7294 are uniformed personnel and 1142 are civilian personnel. Kosovo Intelligence Agency (hereinafter KIA) is established by the Law no. 03/L-063on the Kosovo Intelligence Agency. Founding article on the establishment and core responsibilities are reflected also within the article 129 of the Constitution. KIA is established as security and intelligence Agency responsible for reveals, assessment, investigating and supervising threats toward Kosovo sovereignty, territorial integrity, socio-political stability, organized crime, terrorism and other internal and external threats. Governed by the constitution, its specific Law on the intelligence Institution, KIA is professional, politically impartial, and multiethnic Intelligence Institution oversight by Parliamentary body. The mandate of oversight body is determined by the Law on KIA. Interactions between the KIA and oversight body are closed to the public unless otherwise specified by the Chairperson of the body. Director of the KIA reports to the parliamentary oversight body based on their requests

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regarding the activities of the KIA. There have been six reporting meetings in 2011 from Director and General Inspector of the KIA and it continues in the same dynamic in 2012. KIA is managed by Director of the Agency assisted by deputy director. The procedure of the appointment of the Director, deputy Director and General Inspector are regulated by the Law on KIA and reflects the joint accordance between the Prime Minister and the President of the Republic. Their responsibilities are foreseen in the Law on KIA, the Reregulation on Internal Organization and other Laws applicable thereto. Director is accountable directly to the Prime Minister of Kosovo. General Inspector of the KIA reports directly to the Prime Minister and every 6 months to the Parliamentary oversight body. The main responsibilities of the office of General Inspector are foreseen within the Law of KIA and the internal Regulations on the disciplinary measures in KIA. General Inspection is responsible to inspect KIA-s activities and through its recommendations and comments assists Director of the KIA regarding the identified potential problems in the activities of KIA. In general terms, General Inspector of the KIA initiate inspections, audits and investigations, investigating the complaints regarding the activities of the KIA or made by persons in Kosovo. KIA has strategic priorities that are foreseen within Annual Intelligence Security Policy Platform which contains general guidelines for the work of the KIA. Annual Intelligence Security Policy Platform is the document that needs to be approved by the Kosovo Government on the annual basis. KIA during the fulfillment of its mandate always act in the conformity with human rights, rights of other communities and always respects the rights of citizens without discrimination on the ground of sex, race, color, language, religion, political or other opinion, national or social origin, association with a national, minority, property, birth or other status. It respects the principles and carry out its activities in accordance with the Universal Declaration on Human Rights, the International Covenant on Civil and Political Rights, the European Convention for the Protection of Human Rights and Fundamental Freedoms, and other relevant principles reflected in internationally recognized legal instruments. KIA has no executive functions and has not the right to use direct or indirect force. It has not any power of arrest and based on the legal framework its operational structure are not able to initiate criminal proceedings and does not have the power to compel persons or companies to cooperate based on KIA-s requests. Citizens or companies may cooperate with the KIA just on a voluntary basis. The KIA does not collect intelligence using covert mechanisms and methods regarding third parties enjoying diplomatic immunities and privileges that are foreseen with

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relevant the Kosovo Laws, except for the purpose of preventing threats to such organizations and bodies. KIA cooperates with other Kosovo Government security institutions for the purpose of protecting the officers, facilities and information of the KIA. The KIA may provide intelligence support, including expert assistance, to other Government institutions as necessary for Kosovo security. Individuals, institutions and third parties shall have the right of complaint against the KIA. Complaints may be addressed to the Ombudsperson Institution in Kosovo (OIK). The KIA is authorized to collect information, retain and disseminate for Lawful Government purposes, which activity is regulated by strict procedures in accordance with the principles of legality, proportionality, and necessity, and only in furtherance of national security. All information so collected shall be classified in a manner deemed appropriate by the KIA Director and in accordance with the respective applicable legislation for the protection and classification of information. The KIA Director or his/her designee will approve the dissemination, as appropriate, to other Governmental institutions of the results of its analysis on a timely basis and consistent with the protection of classified information. Protection of secret, collection of information and protection of sources are elements that personify the work of intelligence institutions. KIA will continue to fulfill its mandate based on these principles, Constitutions and positive Law, Information about number of employees and its internal structure has to be treated as the confidential information, based on the internal Regulations and other legal acts of KIA. 1.1.5. The judicial system - Please provide an overview of the judicial system (incl. the organisational framework of the court system, as well as the judicial institutions), covering also human and financial resources (incl. judges, prosecutors but also clerical staff), competencies and tasks, selection procedures, passed and planned reforms, trainings, and infrastructure. The Judicial System of Kosovo is provisioned by the Constitution of the Republic of Kosovo, (Chapter 7 of the Constitution of the Republic of Kosovo) and by other relevant Laws (Law No. 03/L-199 on Courts and the Law No.03/L-233 on Kosovo Judicial Council). The Constitution of the Republic of Kosovo and the Law on Courts stipulate that the judicial power is vested in courts, while the Constitution mandates the Supreme Court as the highest judicial authority that has territorial jurisdiction over the entire territory of the Republic of Kosovo. The Supreme Court includes the Appeals Panel of the Kosovo Property Agency and the Special Chamber of the Supreme Court, the judges of which are part of the Supreme. According to the Constitution specialized courts may be

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established by Law when necessary, but no extraordinary court may ever be created. The President of the Supreme Court is appointed and dismissed by the President of the Republic of Kosovo for a non-renewable term of 7 years. The Constitution determines the Kosovo Judicial Council (hereinafter KJC) as the responsible body for ensuring the independence and impartiality of the judicial system, while fully reflecting the multi-ethnic nature of Kosovo and follow the principles of gender equality. In accordance to the Constitution, upon the proposal of the Kosovo Judicial Council, the President has the right to appoint, reappoint and dismiss judges. KJC manages the annual budget of the Council and the courts independently and is responsible for overseeing expenditures, allocating funds and maintaining accurate and current accounts and conducting financial audits. The Council proposes the budget directly to the Government as provided by Law. However if the Minister of Finance submits a budget for the Council and the courts that differs from that proposed by the Council, the Minster is bound by Law to submit to the Assembly for its consideration the Council’s originally recommended budget (article 15 of the Law on KJC). The annual budget for 2012 for the judiciary is €19,464,842, according to the allocated budget there are 392 statutory positions for judges, of which 252 positions are filled. KJC manages 60 courts using 33 facilities out of which 3 are on lease. The current judicial system of Kosovo is comprised by the Supreme Court of Kosovo, High Court for Minor Offenses, Economic Court, 5 District Courts, 26 Municipal Courts and 25 Municipal Courts for Minor Offenses. However with the Law on Courts entering into force in January 2013 the judicial system of Kosovo will be substantially restructured and reformed. Chapter 3 of the Law on Courts stipulates that the Court system of Kosovo will consist of the Basic Courts, the Court of Appeals and the Supreme Court, while within the area of jurisdiction of a Basic Court, branches shall be established. Within the Court of Appeals and the basic Courts, Departments and Divisions may be established for more efficient operation of the respective court. According to article 9 of the Law, the Basic Courts shall be the courts of a first instance. 7 Basic Courts will be established in main centres of Kosovo with branches covering the entire territory of Kosovo; Basic Courts will be established in Prishtina, Gjlan, Prizren, Gjakova, Peja/Peć, Ferizaj and Mitrovica. According to article 12 of the Law within the Basic Courts, Departments shall be established for the purpose of allocating cases according to the subject matter. There will be 5 Departments: Department for Commercial Matters operating in the Basic Court of Prishtina for the entire territory of the Republic of Kosovo; Department for Administrative Cases operating in the Basic Court of Prishtina for the entire territory of Kosovo; Department for Serious Crimes operating at the principal seat of each branch of the basic Court; a General Department operating in each Basic Court, and in each branch of the Basic Court; and the Department for Minors, operating within the basic Courts. The Court of Appeals shall be established as the second instance court with territorial jurisdiction throughout the Republic of Kosovo and will be organized in General Department, Serious Crimes

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Department, Commercial Matters Department, Administrative Matters Department and Department for Minors. Functions and responsibilities of the State Prosecutor and the Kosovo Prosecutorial Council derive from the Constitution of the Republic of Kosovo, the Law No. 03/L-224 on Prosecutorial Council of Kosovo and the Law No.03/L-225 on State Prosecutor which enters into force in January 2013. Constitution stipulates that the State Prosecutor is an independent institution with the authority and responsibility for the prosecution of persons in charge with committing criminal acts and other acts specified by Law. The Chief State Prosecutor is appointed and dismissed by the President of the Republic of Kosovo, upon the proposal of the Kosovo Prosecutorial Council. The mandate of the Chief State Prosecutor is 7 years without the possibility of reappointment. The KPC is mandated by Law to ensure the independence, professionalism and impartiality of the prosecution system, reflecting the multi-ethnic nature of the Republic of Kosovo as well as the internationally recognized principles of gender equality. Among other responsibilities the KPC has the mandate for establishing commissions, panels, and offices when deemed necessary. KPC is organized in the following: Evaluation Panel for Appointments of Prosecutors; Re-consideration Panel; Disciplinary Commission; Disciplinary Prosecutor’s Office; Unit for Evaluation of the Prosecutors Performance. Based on the current legislation State Prosecution is organized as the following: State Prosecutor’s Office, Special Prosecutor’s Office, 5 District Prosecutor’s Offices (Prishtina, Peja/ Peć, Mitrovica, Gjilan, Prizren,); and 7 Municipal Prosecutor’s Offices (Prishtina, Peja/Peć, Mitrovica, Gjilan, Prizren, Gjakova and Ferizaj). However with the Law on State Prosecutor entering into force in January 2013 the State Prosecutor will be restructured into the Basic Prosecutor’s Offices which will serve as first instance Prosecution, and the Appellate Prosecution Office as a second instance Prosecution. The Basic Prosecution Offices will be organized in the Department for Serious Crimes, the Department for General Issues and the Department for Minors. There will be 7 Basic Prosecutor’s Offices (Prishtina, Gjlan, Prizren, Gjakova, Peja/Peć, Ferizaj and Mitrovica. The Appellate Prosecution Office will be organized in the Department for Serious Crimes and the Department for General Issues. The KPC prepares the annual budget for the Council and Prosecution Offices and submits it to the Government as provided by Law. If the Minister of Finance submits a budget for the Council and the Prosecution Offices that differ from that proposed by the Council, Minister of Finance will then submit to the Kosovo Assembly for its consideration the Council’s originally recommended budget. The total budget for 2012 for the State Prosecutor is €5,187,409. In accordance to the Law No.04/L-079 on Budget, the State Prosecutor has 524 statutory positions, 146 for prosecutors and 378 for support staff. Out of 146 statutory positions for prosecutors 105 are filled in, while 29 candidates are in the process of re-appointment. Vacancy announcements are expected to be published for the remaining 12 positions. From 378 statutory positions for support staff,

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313 positions are filled in, 21 positions are currently in the process, while by the end of this year it is expected that the remaining 44 positions are filled in. Based on the Law No.02-L/25 on the Establishing the Kosovo Judicial Institute, the KJI is the main independent and professional body responsible for delivering training for judges and prosecutors, candidates for judges and prosecutors, lay judges, and other professionals identified by KJI. KJI acts in cooperation with KJC and KPC in coordinating the needs for professional training of judges and prosecutors and for other issues related to the judicial system. An important role played by the KJI is in the process of drafting, assessing and organizing of the preparatory exam for candidates for judges and prosecutors, training for the candidates on Initial Legal Education Program and in designing and conducting training courses for promotion of judges and prosecutors. KJI is financed by the Kosovo consolidated budget which is approved by the Assembly. However the revenues of the KJI may be supplemented by donors and by other local or international entities. The annual budget of the KJI for 2012 is € 512,515. KJI has 22 staff members, including managerial staff. KJI conducts its activities also with support of judges, prosecutor, Lawyers and other professionals engaged in capacity of temporary trainers. - In the input, please indicate how Kosovo ensures the independence, impartiality, accountability and professionalism of judiciary, by Law and in practice. The Constitution of the Republic of Kosovo ensures the division of powers between the legislative the executive and the judiciary. Chapter 7 of the Constitution determines the judicial power as unique, independent, fair, apolitical and impartial. Kosovo Judicial Council is the responsible body, mandated by Law, to ensure the independence and impartiality of the courts. The KJC has the competence and responsibility for recruiting and proposing candidates for appointment and reappointment of judges, including candidates that are not a majority in Kosovo, while it determines policies, standards and instructions related to the training of judges. The President of the Republic of Kosovo, upon the proposals of the KJC has the right of appointing and reappointing judges. The Council is composed of 13 members, while the Law prohibits membership to the council to members of the Government, to any mayor and to a member of the Assembly. Members of the Council are elected among fellow judges; however the majority of judges are elected by the Assembly, 8 are elected by the Assembly and 5 members are elected by the judiciary. Upon the proposal and the recommendation of the KJC with the amendment of the Constitution of the Republic of Kosovo and the amendment of the Law on Courts the KJC will have the power to appoint and reappoint the majority of the judges. KJC ensures accountability and professionalism of judges based on the Regulation on the Evaluation of Performance which sets out the criteria and rules of procedure

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regarding the evaluation of performance of judges of all courts. The regulation basically lays out the evaluation criteria and the sources of information to be used when evaluating judges. Based on article 1 of the regulation, judges will be evaluated at least every 18 months until a decision of their permanent appointment is made. While regular evaluation of permanently appointed judges will be carried out every 2 years. The regulation provisions the establishment of the Evaluation Committee which is composed of 7 judges, while the President of the Evaluation Committee is a judge of the Supreme Court appointed by the KJC. - Please provide information on the enforcement of court decisions, the range of sanctions that can be applied, and the prison system. The execution of court decisions are carried out based on the Law No.03/L-008 on Executive Procedure. The Law is of primary importance after the issuing of the final arbitral award and in the stage of the enforcement of the award. The Law determines that in the executive procedure the court has a duty to act with urgency and has a duty to receive cases for procedure according to the order the proposal for execution arrives, unless if the nature of the credit or special circumstances require for the courts to act differently. The Criminal Code determines the following criminal sanctions: principal punishments, alternative punishments, accessory punishments and judicial admonition. Principal punishments include long term imprisonment, punishment of imprisonment and a punishment of a fine. Alternative measures include, suspended sentence and semi-liberty. When imposing a suspended sentence, the court may also impose an order for mandatory rehabilitation treatment, an order for supervision by the probation service and an order for community service work. Accessory punishments include, fines, deprivation of the right to be elected, prohibition on exercising administration or public service functions, prohibition on exercising a profession, activity or duty, prohibition on driving a motor vehicle, confiscation of an object, order to publish a judgment and expulsion of a foreigner from the territory of Kosovo. Purpose of judicial admonition is to give perpetrator a reprimand when judicial admonition is sufficient to achieve the purpose of a punishment. The Regulation No.02/2012 on the areas of administrative responsibility of the Office of the Prime Minister and Ministries provides the basis for the Ministry of Justice in exercising the executive oversight over the Correctional Service and the Probation Service. The Ministry is responsible for developing policies and for creating preconditions for more efficient functioning of the prison system in Kosovo. Based on the Law No.03/L-191 on Execution of Penal Sanctions and Justice Juvenile Code No.03/L-193, the KCS and KPS are the mandated bodies for the execution of penal sanctions, and other measures as provided by Law. The Law ensures that penal sanctions and other measures are executed in such a way as to comply with the principles of human rights and European and international standards.

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The Kosovo Correctional Service is the responsible authority for the execution of imprisonment and long term imprisonment. KCS has the administrative staff and the uniformed armed personnel responsible for the implementation and supervision of the execution of imprisonment and long term imprisonment. KCS is composed of 3 Correctional Centres and 6 Detention Centres. The High Security Prison that is under construction will raise the level of security in managing high risk prisoners. The 2012 annual budget of KCS is €15,080,911; the number of staff of the KCS is 1608, out of which 1257 are correctional staff, 236 administrative staff and 115 medical personnel. The Kosovo Probation Service is the responsible body for the execution of court decisions for minors and adults sentenced with alternative measures. Court decisions executed by KPS are based on the Criminal Code (articles 41,49,50,51,52) and on the provisions of the Juvenile Justice Code detailing the alternative measures (article 8, 18, 23, 24, 31, 83, 84, 91, 94). The 2012 annual budget for KPS is €384,751; KPS has 67 staff members. - Please also provide information on length of proceedings and the overall number of pending court cases. The length of court proceedings is dependable on the case matter treated under court proceedings, there are no specific legal provisions as to determine the time frame of a court proceeding. The total number of cases in regular courts of the Republic of Kosovo is 295,842, out of which 82,805 cases have been resolved, while the total number of pending court cases is 213,037. - Please provide information on inter-institutional cooperation and coordination. Kosovo Prosecutorial Council has taken the lead initiative and established the Commission for drafting the strategy in order to increase the coordination and cooperation between the Prosecution, Courts and other Law enforcement agencies in combating organized crime and corruption. The aim of the Strategic Plan is to identify the areas of mutual cooperation in order to improve the track record in fight against organized crime and corruption. The draft strategy is expected to be approved by mid June 2012. As for the cooperation between the KJC and other institutions, the KJC has signed a number of Memorandums of Understanding, such as with the Kosovo Police, Kosovo Prosecutorial Council, BIRN-Balkan Investigative Reporting Network, Ministry of Justice, Ministry of Finance, Tax Administration of Kosovo Judicial Institute, Central Harmonization Unit for Internal Audit. In order to strengthen cooperation between State Prosecutor with domestic and international agencies and institutions, KPC and Chief State Prosecutor has signed following MoUs:

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a. MoU between Chief State Prosecutor and EULEX on cooperation; b. MoU between Chief State Prosecutor, Ministry of Justice, Ministry of Internal

Affairs, Ministry of Finance for coordination and support to the Kosovo International Law Enforcement Coordination Unit (ILECU);

c. MoU between Chief State Prosecutor and Kosovo Intelligence Agency; d. MoU between KPC and KJC relating to the Office for judicial and prosecutorial

evaluation and verification; e. MoU between KPC and KJC regarding the transfer of assets and personnel from KJC

to KPC; f. MoU between KPC and MoJ regarding the transfer of competencies from MoJ to

KPC regarding the personnel; g. MoU between KPC and BIRN; State Prosecutor signed bilateral MOU for cooperation in exchange of information in combating organized crime, transnational crimes, trafficking of human beings with following State prosecutors offices of the following countries: Croatia, Turkey, Italy, France, Albania and Montenegro. 1.1.6. The fight against corruption - Please provide an overview of the efforts made towards addressing corrupt practices. Please include an overview of the institutions, authorities, structures and mechanisms and provide a description of their respective scopes and tasks, as well as organisation charts, and an overview of human and financial resources. One of the priorities of the institutions of the Republic of Kosovo is fight against corruption and corrupt practices. The Government has created the necessary legal and policy framework on anti corruption and has established the necessary institutions in order to implement the legislation and policies on anti-corruption. The Government of Kosovo has adopted the Strategy and the Action Plan on Anti-corruption 2012-2016, the strategy is expected to be approved by the Assembly as well. The legal framework on anti-corruption encompasses the following Laws: Law No.2004/34 on Anti-corruption, Law No.03/L-159 on Anti-corruption Agency, Law No.03/L-151 on declaration and origin of the property and gifts of senior public officials, Law No.04/L-043 on Protection of Informants, Law No.04/L-051 on Prevention of Conflict of Interest in Discharge of Public Functions, Law No.04/L-050 on declaration, origin and control of property of senior public officials and on declaration, origin and control of gifts of all public officials. The Anti-corruption Agency is the independent and specialized body responsible for implementation of state policies for combating and preventing corruption. The structure and competencies of the Agency derive from the Law No.03/L-159 on Anti-corruption Agency. Article 1 one the Law stipulates the status and responsibilities in the field of combating and preventing corruption, especially in the area of reporting, detection and investigation of corruption, and the implementation of the Strategy and the Action Plan against corruption.

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The work of the Agency is supervised by the Committee on Legislation, the competencies of which include the reviewing of the reports of the Agency, supervision and periodical assessment of the performance of the Director of the Agency and initiation of procedures for the selection and dismissal of the Director of the Agency. With the proposal of the Agency, the Kosovo Assembly approves the annual budget of the Agency, while the Agency is independent in the execution of its budget. The Agency employs 35 people, while there are 10 statutory positions. The annual budget of the Agency is around €500,000. On 14th of February 2012, the President of the Republic of Kosovo has established the National Anti-Corruption Council. The decree and the rules of procedure of the National Anti-Corruption Council determine the duties and responsibilities of the institutions that are a part of the Council. The objective of the NACC is to streamline and coordinate the activities of the institutions in implementing the strategy on anti-corruption, and to determine priorities and policies for the implementation of the legislation on anti-corruption. Since its establishment the Council convened twice. The conclusions and the recommendations of the Council will take the format of an Action Plan to be implemented by the state authorities and other agencies. Moreover the Government on 26th of February 2010 has taken a decision No.02/110 for establishing the Task Force on Anti-corruption within the Special Prosecutor’s Office of the Republic of Kosovo. This task force is composed of 8 prosecutors, 5 local and 3 international, 30 police investigators and 5 experts on anti-corruption. Duties and responsibilities of the Task Force are to investigate cases of money laundering and corruption, involving cases of organized crime as an exclusive competence of the Task Force. The total budget of the SPRK is €701,792. On May 4th 2011 the Government of Kosovo has taken the decision No.05/14 for allocating additional budget for the SPRK in the amount of €130.000 thousand, this additional budget was allocated only for 2011. Furthermore the State Prosecutor has assigned a National Coordinator on Anti-Corruption within the District Prosecutor’s Office in Prishtina, also in each district prosecutor’s offices a prosecutor has been assigned for corruption cases. Duties and responsibilities of the National Coordinator are to better streamline and coordinate the activities of the prosecution on the national level. - Please also provide an overview on the inter-institutional cooperation & coordination in the fight against corruption. The President of the Republic of Kosovo has established the National Anti-corruption Council with the purpose of improving coordination and cooperation of the responsible institutions in combating corruption. The State Prosecutor has assigned a National Coordinator on Anti-Corruption within the District Prosecutor’s Office in Prishtina, also in each district prosecutor’s offices a prosecutor has been assigned for corruption cases. Please refer to the previous question for further details.

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- Please provide information and analysis on the implementation of the previous strategies, policies, action plans and legislation regarding the fight against corruption. The Anti-corruption Agency has carried out the evaluation on the implementation of the Strategy and the Action Plan on Anti-corruption 2009-11, based on the findings of the evaluation the new Strategy and the Action Plan 2012-16 has been drafted and approved by the Government. Conclusions and the recommendations deriving from the evaluation of the strategy suggested a better action planning, improving the linkage of the strategic objectives with the action plan, while improving reporting mechanisms on the implementation of the action plan. 1.1.7. Relations with the international community - Please provide an overview of cooperation with the International Criminal Tribunal for the former Yugoslavia. The Assembly has adopted the Law No.04/L-031 on International Legal Cooperation in Criminal Matters which mandates the Ministry of Justice as the competent authority in matters of international legal cooperation. The Ministry of Justice in accordance to the article 29 of the Statute of the Criminal Tribunal for the former Yugoslavia, that determines the cooperation of States with the tribunal in investigating and prosecuting persons indicted with criminal charges against humanity, has proceeded with all the requests in timely and efficient manner. Moreover pursuant to the Law No. 03/L-052 on the Special Prosecution Office of the Republic of Kosovo the SPRK has the exclusive competence to prosecute and investigate war crimes , including the various forms of attempt to collaborate to the crimes, that competent organs of international tribunals, such as the International Criminal Tribunal for the former Yugoslavia may refer to the authorities of Kosovo for investigation and prosecution, according to the procedures set forth by the applicable Law. Chapter III of the Law stipulates that war Crimes in Grave Breach of the Geneva Conventions (Art. 118, PCCK), War Crimes in Serious Violation of Laws and Customs Applicable in International Armed Conflict (Art. 119, PCCK), War Crimes in Serious Violation of Article 3 Common to the Geneva Conventions (Art. 120, PCCK), War Crimes in Serious Violation of Laws and Customs Applicable in Armed Conflict not of an International Character (Art. 121, PCCK) fall under exclusive competence of the SPRK. - Please describe the legal base for cooperation with KFOR and EULEX. Please describe practical cooperation with both. International military presence is determined by the Constitution of the Republic of Kosovo and the Declaration of Independence of the Republic of Kosovo, Article 153 of the Constitution stipulates that the international military presence has the mandate and powers set forth under the relevant international instruments, including UNSC Resolution 1244 and the Comprehensive Proposal for the Kosovo Status Settlement. Upon the Declaration of Independence the Institutions of the Republic of Kosovo

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welcomed the international civilian presence for supervision of the Ahtisari Plan and the EU mission for the Rule of Law. The Government of Kosovo has invited EULEX Kosovo and the European Union Office to establish a Joint Rule of Law Coordination Board (JRCB) for overall strategic coordination of their joint reform efforts in the broader field of the Rule of Law in Kosovo. The Board provides high-level oversight of progress and coordination of the implementation of joint Rule of Law reform efforts. These reforms are based on EULEX’s programmatic approach, mentoring, monitoring and advising by EULEX personnel and the Stabilisation and Association Process. In its work, the JRCB is to be guided by the following strategic objectives: to contribute to the development of effective, sustainable and democratic institutions in the broader field of the Rule of Law; to strengthen the ability of Kosovo institutions to align with European standards and best practices and the acquis communautaire in the area of the Rule of Law; to develop independent and multi-ethnic judicial, police and customs authorities and to ensure that these institutions are free from political interference, promote human rights and adhere to European recognised standards and best practices. On June 2008, NATO agreed to start implementing its new tasks in Kosovo, in assisting in standing down of the Kosovo Protection Corps and in establishment of the Kosovo Security Force and a civilian structure to oversee the KSF. These tasks are implemented in close coordination and consultation with the relevant local and international authorities. This professional, all volunteer force is being trained according to NATO standards and is placed under-civilian led, democratic control. NATO continues to assist in establishing a civilian-led organisation that exercises civilian control over the KSF. Primary responsibility for this task rests with NATO HQ in Brussels; KFOR is tasked to support the NATO advisory team that has been established in Prishtina. - Please indicate international organisations of which Kosovo is a member or observer. Table 7: List of membership in international organizations International Organisation Representation Admission date Central European Free Trade Agreement (CEFTA)

Kosovo/UNMIK 26 July 2007

International Road and Transport Union (IRU)

Road Transport Association

29 July 2008

Energy Community South East Europe Treaty (ECSEE)

Kosovo/UNMIK 1 July 2006

European Common Aviation Area (ECAA)

Kosovo/UNMIK 30 Nov 2006

South East Europe Transport Organization (SEETO)

Kosovo/UNMIK 11 June2004

International Bar Association Kosovo 28 May 2009

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International Monetary Fund Kosovo 29 June 2009 World Bank Kosovo 29 June 2009 Vienna Economic Forum Kosovo 25 March 2009 Regional Cooperation Council

1.2. Human Rights and the protection of minorities

- Is the European Convention on Human Rights and Fundamental Freedoms and its Protocols applicable in Kosovo? If relevant, please provide reference to the application of the ECHR or its case Law/jurisprudence in a specific case? International principles of human rights and fundamental freedoms are ingrained in the Constitution of the Republic of Kosovo. Article 22 of the Constitution ensures direct applicability of international agreements and in case of conflict guarantees the priority over the provisions of Laws and other acts of public institutions. Furthermore Article 53 of the Constitution obliges the Kosovo Authorities to interpret the provisions related to Human Right and Freedoms in consistency with the jurisprudence of the European Court of Human Rights. The Constitutional Court as a highest authority for the interpretation of the constitution makes reference to the ECtHR case Law, most of the decisions and judgments of the Constitutional Court are based on ECtHR practice. In Case No.KI 41/09, AAB-RIINVEST University L.L.C., Pristina vs. Government of the Republic of Kosovo in order to interpret the subsidiarity character of the Constitution, the Constitutional Court refers to ECHR case, Selmouni v. France, no. 25803/94, decision of 28 July 1999) In the same case, in order to interpret the requirement of exhausting legal remedies, the Constitutional Court refers to ECHR, Cinar v. Turkey, no. 28602/95. Decision of 13 November 2003. In another occasion, in Case No. KI 40/09 Imer Ibrahimi and 48 other former employees of the Kosovo Energy Corporation 49 individual judgements of the Supreme Court of the Republic of Kosovo the Constitutional Court concludes that there is a violation of Article 46 of the Constitution in conjunction Article 1 of Protocol 1 to the European Convention on Human Rights. The following international agreements and instruments are guaranteed by the Constitution: Universal Declaration on Human Rights; European Convention for the Protection of Human Rights and Fundamental Freedoms and its Protocols; International Covenant on Civil and Political Rights and its Protocols; Council of Europe Framework Convention for the Protection of National Minorities; Convention on the Elimination of All Forms of Racial Discrimination; Convention on the Elimination of All Forms of Discrimination Against Women; Convention on the Rights of the Child; Convention against Torture and Other Cruel, Inhumane or Degrading Treatment or Punishment. - Is the UN International Covenant on Civil and Political Rights applicable in Kosovo?

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UN International Covenant on Civil Rights and Political Rights is envisaged in Constitution and therefore directly applicable. - What are the challenges/actions taken to enhance the awareness on the two aforementioned documents and on the European Charter of Fundamental Rights among the present and future Lawyers and advocates across Kosovo? The Office of the Prime Minister is the mandated institution responsible for safeguarding and promoting the principles of human rights and fundamental freedoms by ensuring that these principles and values are reflected in the Kosovo legislation and implemented accordingly. OGG/OPM in cooperation with international mechanisms operating in Kosovo has provided trainings to the Municipal Human Rights Units on the importance of practical implementation of European Convention for Human Rights and Fundamental Freedoms, Convention against Torture and Convention on Civil and Political Rights. Moreover Kosovo Judicial Institute provides continuous legal training and education to judges, prosecutors, future Lawyers and advocates, including training modules on the Convention for the Protection of Human Rights and Fundamental Freedoms. Three training sessions took place during 2011 on topics related to: Right to Liberty and Security (art.5 ECHR); Right to Fair Trial (art.6 ECHR); Right of respect for private and family life (art.8 ECHR). Inclusion of these topics and their inclusion to training modules are highlighted in increasing practical skills of judges and prosecutors in applying provisions of the ECHR and case-studies from European Court of Human Rights. - Is the equality of treatment between women and men guaranteed by Law? The Constitution of the Republic of Kosovo, article 7, ensures gender equality as a fundamental value for the democratic development of the society, providing equal opportunities for both female and male participation in the political, economic, social, cultural and other areas of societal life. Furthermore, values of gender equality are maintained and reflected in the legislation and other legal documents such as in the Law on Gender Equality No.2004/2, Anti-Discrimination Law No.2004/3, Labour Law No.03/L-212, Heritage Law No.2004/26, Family Law No.2004/32, Law on Civil Servants No.03/L-149, Law on Reproductive Health No.02/L-76, Law on Termination of Pregnancy No.03/L-110, Law on Elections No.03/L-073 and Law on Protection from Domestic Violence No.03/L-182. - What are the international conventions on human rights ratified by Kosovo? Taking into account that Kosovo is not a member of UN and other mechanisms, it does not have the possibility to ratify international conventions for human rights. However the Republic of Kosovo has embedded in its Constitution (Chapter II Fundamental Rights and Freedoms) the international agreements and instruments that guarantee the principles and values of Human Rights and Fundamental Freedoms. - How does the reporting to international monitoring mechanisms function? The Office for Good Governance, Human Rights and Equal Opportunities within the Office of Prime Minister, is the main mechanism mandated with preparation of reports

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on the implementation of international conventions. OGG/OPM together with human rights unit at central and local level, has drafted first reports on implementation of international conventions in close cooperation with UN Agencies, HCHR, UNICEF, OSCE and other international mechanisms and submitted these reports to the UN. The Government of the Republic of Kosovo so far has submitted three reports: Report on implementation of the Framework-Convention for Protection of National Minorities (2005); Report on implementation of the Convention for Economic, Social and Cultural Rights (2008); Report on implementation of the Convention for the Rights of the Child (2010). - What are the relationships between Kosovo and the Council of Europe? The Government of the Republic of Kosovo is constantly working with institutions, agencies, donors, international organisations and local NGOs to facilitate and advance the process of enforcing human rights. Council of Europe has been and remains one of the most serious partners of such cooperation. Thanks to this partnership and cooperation, a significant progress has been made in shaping, harmonising and completion of Kosovo legislation with European Union standards. Office of Good Governance-OPM along with Council of Europe has worked together especially in implementing joint projects such as: a. Project addressed the recommendations received from CoE, derived upon the report

submitted from Kosovo side regards implementation of the Framework Convention for the Protection of National Minorities: it was implemented by OGG in collaboration with Ministry of Return and Communities and Council of Europe during 2008-2009;

b. Project on improving protection of human rights in Kosovo: this project aims at improving institutional as well as regulatory framework in line with European standards, increase capacities on reporting requirements of the Ombudsperson Institution (OIK), Office of Good Governance, other relevant institutions dealing with human rights at central and local level and the civil society organisations. This Project will be implemented during 2012-2013.

Project against Economic Crime in Kosovo: a project implemented by Council of Europe (2010) and its aim being strengthening institutional capacities to fight corruption, money laundering and financing of terrorism. As a result, a detailed evaluation of present situation will be made as well as recommendations be forwarded on improving and unifying necessary reforms in combating economic crime and corruption. - Are there any provisions on death penalty in Kosovo legal system? In the legal system of the Republic of Kosovo there are no legal provisions on death penalty.

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1.2.1. Civil and political rights - How are the war-time human rights abuses dealt with? (Disappearances/missing persons, war crimes, refugees, use of land and immovable property) One of the most serious consequences of the war-time period is the issue of missing persons. Disappearance of persons is a result of a gross violation of human rights, in breach of all international conventions, Laws and warfare customs. Families of missing persons have filed their claims and requests with the International Committee of the Red Cross in Kosovo were the total number of missing persons reached at 6,020. As of April 2012 according to the provisional list of ICRC, which is based on the works of Working Group on Missing Persons (a group established as forum for dialogue between Prishtina and Belgrade, chaired by ICRC) the number of missing persons is at 1,780. Since after the war in 1999, in charge of missing persons was UNMIK and held the exclusive powers on the issue of locating, exhumation and identification, until Kosovo’s declaration of independence. Up to 2012 the ICTY was involved in the identification phase and in gathering of the evidence of war crimes committed in Kosovo. Whereas throughout the process of resolving the fate of the missing persons, other bodies and mechanisms were involved such as International Committee of the Red Cross, International Commission on Missing Persons, KFOR, OSCE and from 2008 EULEX. From 2003 all identification is made through DNA analysis (established by the Memorandum of Understanding between UNMIK and ICMP) therefore exact number of identification made prior to that date is difficult to be determined due to different modalities used in identification process. Based on the available information gathered, an approximate of 2,000 persons were identified for the period 1999-2002. To enable coordination of the activities in the matter, with help and suggestion of international partners, Kosovo Government has established Governmental Commission on Missing Persons. Their administrative staff was directly transferred from the previously existing Office for Missing Persons. The Commissions’ mandate is regulated by Law on Missing Persons No.04/L-023. Property Rights: The Kosovo Property Agency was established as an independent Agency by the UNMIK Regulation 2006/10 on the Resolution of Claims Relating to Private Immovable Property, Including Agricultural and Commercial property amended by Regulation 2006/50 and Law 03/L-079. The main mandate of the KPA is to resolve, subject to the right of appeal to the Supreme Court of Kosovo, disputes related to ownership and right of use, claims in respect of private immovable property, including agricultural and commercial property, resulting from the armed conflict that occurred between 27 February 1998 and 20 June 1999. The Agency was also mandated to deal with a limited number of activities which fell within the mandate of the Housing and Property Directorate (HPD) namely the implementation of decisions of the Housing and Property Claims Commission (HPCC), of which enforcement was pending, managing properties under the administration of the HPD and implementation of rental scheme.

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In this regard the Agency has gathered over 41.958 claims of which approximately 90% have been submitted to the Agency’s offices located in Serbia, Montenegro or Macedonia by displaced persons who live out of Kosovo. From total number of claims, 88.8% are related to agricultural land (claimed 221.225 hectares of land), 8.9% housing property and 2.3% commercial property. Up to date, adjudicated are 29.797 claims whereas the remaining, are in preparation process for adjudication. Parallel with adjudication of claims, Agency is engaged in implementation of decisions. Successful claimants have possibility to select the remedies for implementation of decision including repossession of the property, placing the property under administration and rental scheme or closing the case. Once decisions of the Commission, Agency implements them and property right holder can repossess its property. Under administration are 5.542 properties out of which 1.032 are under rental scheme. The rental amount has been transferred to the property right holders of the property, except 5%, which id kept by the Agency for its services.

1.2.1.1.Right to a fair trial / Access to justice

- Please describe the situation regarding the 'right to a fair trial' and 'access to justice'. The Right to a fair trial is envisaged by the Constitution of the Republic of Kosovo, Art.31 “The Right to Fair and Impartial Trial” as well as Criminal Procedure Code Art.2 and Art.5 which provides for, that only an independent and impartial court can impose criminal sanctions whereas any suspected or accused person has a right to seek for an impartial and fair procedure and be concluded at a reasonable time. These principles have provided for sufficient grounds that citizens be tried fairly by independent bodies/courts. Access to justice is provided and guaranteed to all citizens of the Republic of Kosovo by its legislation in force, in addition to better ensure this access there is also Law on Legal Aid No.04/L-017 with its appropriate units for protection of victims and integration to judiciary, purpose being creation of best possible conditions for access to justice. The respective structures for victim protection and integration to judiciary, previously within Ministry of Justice, were transferred to relevant institutions such as Kosovo Prosecutorial Council and Kosovo Judicial Council. Aim being at providing all preconditions for fair trial and access to justice, taking into consideration KPC’s and KJC’s scope and competence. It’s worth mentioning the great contribution that the Kosovo Constitutional Court has given in guaranteeing a fair trial and access to justice with its tried cases in this field, always respecting and applying standards and best European practices.

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1.2.1.2. Freedom of expression - Please describe the legal framework guaranteeing and protecting the freedom of media and freedom of expression. Protection of freedom of media and freedom of expression is guaranteed by the Constitution of the Republic of Kosovo Art.40 and Art.42 as well as with other relevant Laws. The Constitution, namely Art.40, envisages freedom of expression as a guaranteed Right to Express, Disseminate and Receive Information, Opinions and messages without impediment. Further, Art.42 guarantees freedom and pluralism of the media, prohibiting censorship and dissemination of information or ideas through media cannot be prevented, save the cases where necessity arises from preventing incitement of violence, hostility or hatred based on racial, national, ethnic or religious grounds. Legal framework in place guaranteeing and protecting media freedom and freedom of expression is as follows: a. Law on Independent Media Commission, No.04/L-44, aims at promoting and

developing services in audiovisual media that serves all citizens of the Republic of Kosovo;

b. Law on Radio Television of Kosovo, No.04/L-046, aims at laying legal basis in providing citizens of the Republic of Kosovo with prompt and accurate information, regardless of their ethnic origin, language or religion;

c. Law against Defamation and Insult, No.02/L-65, aims at promoting a tolerant and democratic society in compliance with international standards and respect for the human rights;

- Is defamation a criminal offence in Kosovo? If yes, when does Kosovo intend to remove defamation from the criminal code? Legal uncertainty on defamation is eliminated with new Criminal Code which will be adopted by Assembly during 2012 and the provisions within Criminal Code after elimination shall be regulated solely by the Law on defamation and insults. Kosovo Criminal Code of 2004, Art.188 provides that ‘defamation’ is a criminal offence; however at later stage the matter is regulated by civil Law against Defamation and Insult No.02/L-65 which is in force since 2007. Moreover, on February 20th, 2012 Kosovo Supreme Court issued a stance No.AG.K.94/2012 clarifying that from entrance into force of the civil Law on defamation and insult, Art. 188 and Art.187 foreseeing defamation and insult as criminal offences within Criminal Code shall not be applied and these acts as such are decriminalised therefore all cases treating the matter shall be tried under the civil Law on defamation and insult. There have been reported cases from the judiciary concerning charges against journalists where in most of the cases, irrespective of whether Lawsuits were withdrawn or were adjudicated, it was never reported that courts referred to articles from Criminal Code or imposed criminal sanction in the matter.

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1.2.1.3. Freedom of Assembly and association - Considering the relatively recent adoption of the Law on freedom of association in NGOs, please present the plans and activities of the authorities to structures its relationships with the NGO sector. Knowing the importance of the cooperation with civil society and its participation in political life in general and decision making process in particular, the Government provides access and participation in policy making and Government strategies. Special attention is paid and space given for non-Governmental sector in public consultation process, as well as their role in designing and monitoring the implementation of strategic documents and policies. In order to further advance this process, OPM has published Guideline for Public Consultation which enables representation of civil society in various inter-ministerial mechanisms such as steering committees, committees and working groups. Furthermore, in accordance with and continuation of implementation of the Law on Freedom of Association No.04/L-57, initial draft strategy was produced in establishing regular communication between Government and civil society, which will after its finalisation be adopted. - How does Kosovo contribute to strengthening NGOs' capacities? Did Kosovo establish a fund for civil society purposes? Draft strategy for cooperation between Government and Civil Society envisages creation of a national grant scheme for developing civil society. So far, Government has supported, co-financed various projects yet there was no comprehensive legal framework foreseeing Civil Society Organisations’ funding. Lack of clear definition and rules for funding as well as selection of Civil Society Organisations in policy-making and providing services, has made more than necessary initiation of drafting the Strategy for Cooperation between Government and Civil Society. 1.2.1.4. Freedom of thought, conscience and religion - What are the main characteristics of the new Law/Draft Law on freedom of religion? The main characteristics of the new/Draft Law on freedom of religion consist in eliminating legal gaps, namely provisions on procedure and conditions required for registration of religious communities, their legal status, body responsible for registration and taxation of the income (clergy and other administrative staff) of these communities. - What are the legal requirements for a religious community to be established in Kosovo? With new/Draft Law on freedom of religion, establishment of a religious community in the Republic of Kosovo must meet the following criteria: a. Registration request, submitted by an authorized representative; b. Upon establishment, members of the community should be at least fifty (50), citizens

of the Republic of Kosovo with full legal rights; c. Statute/Regulation stressing out clear organisational hierarchy; d. Purpose or rituals are not to be inconsistent with all applicable Laws and public

order of the country;

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e. Providing information on property/properties owned by or managed by the community, for the purposes of liquidation;

f. Community activities shall not infringe human rights and freedoms or public order; g. Name of the community shall not be identical with already known and existing

community using such name, in the Republic of Kosovo. - Does Kosovo finance the religious communities? New/Draft Law on freedom of religion provides that state does not finance any of the religious communities. However, there are funds that are available annually for the maintenance of cultural monuments where religious communities can apply for such funds when these cultural monuments are administered by the communities itself. In addition, religious communities, individually or through their charitable organisations can also apply for state funds covering implementation of specific charity programmes. - Is the Law allowing for religious education to be taught in public schools? In the Republic of Kosovo, Law on Undergraduate Education No.04/L-032 does not allow religious education in its public schools. According to Art.3 paragraph 7 of this Law “Public educational institutions shall refrain from religious instruction or any other activities which propagate a particular religion”. - What is the institution responsible for the implementation of the above-mentioned Law? According to the Draft Law on freedom of religion, responsible institution for implementing the Law shall be the Ministry of Justice. After the adoption of the Law, within 3 months period MoJ should establish the Office for Registration of Religious Communities followed by completion of secondary legislation covering the registration procedures, within a six months period. - How does Kosovo manage to secure minority rights (including freedom of religion) whereas it affirms to be a secular entity in its Constitution? According to the Constitution of the Republic of Kosovo Art.8, Kosovo is a secular state. Rights and Fundamental Freedoms on the other hand are guaranteed by the Constitution Chapter II and Art.38.1 which stipulates that “Freedom of belief, conscience and religion are guaranteed”. Furthermore, Law on Freedom of Religion No.02/1-31 Art.3 stipulates that ‘Religious equality of all persons, regardless of their religion or belief, affiliation to a religious community or participation in rituals, are equal in front of the Law and are entitled to equal civil, political, economic, social and cultural rights’. All natural and legal persons enjoy equal rights according to this Law. 1.2.1.5. Protection of personal data - Please provide an overview of the situation in Kosovo, with regard to strategies, policies, legislation and independence of the data protection authority, as well as setting out the relevant institutions and agencies, and their scope/tasks. The National Agency for Protection of Personal Data was established by the Assembly, as an independent agency responsible for monitoring the legality of handling personal

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data. The function, duties and responsibilities of the Agency are regulated by the Law for Protection of Personal Data No.03L-172. Pursuant to the authority and powers deriving from the Law, the supervision of data processing is conducted through the Agency’s mechanism, such as inspections and controls of public and private bodies. To ensure implementation the Law and proper processing of personal data, internal legal acts were adopted such as: Rules of Procedure, Code of Ethics, Inspection Regulation, Administrative Instruction for Officer in charge of Personal Data Protection, Administrative Instruction for ID cards of the State Supervisors, Form for International Transfer of Personal Data and Control List for public and private bodies that processes data. In return to better ensure protection of personal data, the Agency has requested from relevant bodies to harmonise their internal legal acts with the Law for Protection of Personal Data, where according to this Law, Agency had also set-up a deadline (31 December 2011) in assigning officers for data protection within each public institution. Furthermore, a request was also sent to institutions that prior to adopting new legislation and those that involve personal data, shall await opinion of the Agency. Regular meetings were conducted between the Agency and Ombudsperson Institution, Independent Media Commission, Independent Commission of Written Media and Telecommunications Regulatory Authority, thereof this cooperation will be formalised by reaching cooperation agreements. As a relevant institution in the field of protection of personal data is Ombudsperson Institution, where according to Law establishing Ombudsperson Institution No.03/L-195, its scope and responsibility falls in protection, supervision and promotion of human rights and fundamental freedoms of natural and legal persons from unlawful acts or omissions from public authorities and other bodies/organizations exercising public powers. Within the regional cooperation the National Agency for Protection of Personal Data, has reached cooperation agreements with relevant institutions of the Republic of Macedonia, Republic of Albania, Republic of Slovenia and Republic of Montenegro, in exchanging best practices for a better functioning of the Agency. Future steps of the Agency include: possibilities for membership in international organizations dealing with personal data protection; awareness-raising campaign for citizens about their rights and protection of personal data, aiming at disseminating information on Data Registration, supervision of Video-Registration and informative leaflets. 1.2.2. Economic and social rights - Please describe legal framework and practical implementation of the following rights: women's rights and gender equality, children's rights, socially vulnerable persons and people with disabilities, ant-discrimination policies including LGBT, labour and trade-union rights and property rights. Legal framework for women’s right and gender equality in its entirety is drafted in line with international conventions and all legal documents (Draft Laws and secondary

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legislation) prior to their approval by the Government, are submitted for consultation to the Agency for Gender Equality which ensures gender perspective is reflected in draft legislation. Law on Gender Equality No.2004/2: ensures protection; while it treats and sets forth gender equality as a fundamental value of the democratic development of Kosovo society, providing equal opportunities for women and men, their participation in political, economic, social and cultural life. Anti-Discrimination Law No.2004/3: ensures prevention as well as combating discrimination, promotes effective equality and realisation of the equal treatment principle of all citizens of the Republic of Kosovo, therefore prevents and protects from any direct or indirect discrimination based upon gender. Labour Law No.03/L-212: ensures the rights of woman under employment contract through its specific provisions such as maternity leave, employment preservation and protection of health of women during pregnancy as well as right to special baby care. Heritage Law No.2004/26: protects the right of woman to inheritance and its provisions are gender neutral without discrimination. Family Law No.2004/32: regulates engagement, marriage, parents vs. children relation, adoption, custody, protection of children without parental care, property rights within family members and special court procedures for disputes that may arise between family members. It guarantees equal treatment when it comes to the right and obligations for both genders and prohibits direct or indirect discrimination based on gender. Law on Civil Service No.03/L-149: civil servant are entitled to equal treatment in all aspects such as personnel management, career development, rewards, compensation and legal protection, regardless of gender. The Law provides for a specific provision with reference to the terminology used in it that bares no prejudice to gender. Law on Reproductive Health No.02/L-76: ensures and guarantees of the right of every individual, regardless of gender, ideological, religious or cultural belonging, to information and education on sexual and reproductive health. Law also guarantees the right of a woman to decide freely on time, number and birth intervals as well as protects from forced pregnancy and guarantees safe motherhood. Law on Termination of Pregnancy No.03/L-110: provides legal basis for and regulates termination of pregnancy. Moreover, this Law aims obtaining all measures in protecting and eliminating the danger from mortality resulting from illegal abortions. Election Law No.03/L-073: through Art.27 its guaranteed the right to vote and be elected without discrimination based on race, ethnicity, colour, language, gender,

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religion or political views, education, social status or any other similar criteria, for all citizens of the Republic of Kosovo. Furthermore, the quota guaranteed by Law for women representatives is 30 %. Law on Protection from Domestic Violence No.03/L-182: aims at protecting from all forms of domestic violence for family members who are victims of such violence, through appropriate legal measures. Practical application of legal framework and constitutional rights are ensured through institutional mechanisms and public policies, as listed below: a. Agency for Gender Equality, the Office of the Prime minister; b. Gender Equality Officers in line ministries; c. Gender Equality Officers in municipalities; d. Women Group-Member of Parliament of the Republic of Kosovo; e. Parliamentary Commission for Human Rights, Gender Equality, Missing Persons

and Petitions; f. Ombudsperson Institution-Gender Equality Unit. Governmental strategic documents on gender equality adopted so far: a. Kosovo Programme for Gender Equality (KPGE), adopted on 24.04.2008; b. Kosovo Programme Against Domestic Violence, adopted on 25.08.2011; c. Action Plan for Women’s Economic Empowerment 2011-2013; d. Sectorial and inter-sectorial strategic documents that ensure socio-economic

development guarantee human rights as well as envisage mandatory gender indicators and reflect gender perspective.

In the fourth legislature there are a total of 40 female MPs composing 33.3% of the total number of parliamentarians, whereas in the Government, overall representation within civil service holding decision-making positions is at about 13%. Socially vulnerable persons and people with disabilities: As for the Rights of the Disabled Persons, Ministry of Labour and Social Welfare, within social sector, safeguards the rights of the persons with disabilities as well as providing social services through institutional-residential care. Legal framework in force, regulating social protection are the following: Family and Social Services Law, Law on Financial Assistance to the Families with Disabled Children aged 01-18 years, Law on Disabled Persons aged 18-64 years, Law on Social Scheme, Law on Vocational Training and Employment of Disabled Persons. Law on Family and Social Services No.02/L-17 and Administrative Instruction No.06/2011, clearly provides instructions on protection of the disabled persons, clear criteria on the conditions to be met by a child or an adult requiring 24h services in base Institute of Shtime or in one of the seven (7) Community Houses. Currently 24 hour care and services are provided to 130 mentally disabled persons within the Institute in Shtime and two Community Houses as well in Shtime, one in Ferizaj, one in Vushtrri, one in Gracanica, one Kamenica and one in Decan.

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Law on Financial Assistance to the Families with Disabled Children No.03/L-022 provides for concrete financial assistance to the families where total number of beneficiaries is 2,941 children with permanent disabilities and monthly amount per child is € 100. Law on Pensions for Disabled Persons No.2003/23, persons with disabilities aged 18-64, regulates pension scheme for disabled persons with inability to work. Currently beneficiaries from this scheme reach 18,121 people and monthly amount is € 45 (first category). Families that also meet other criteria also benefit from social scheme, where the disabled member of the family can be one or more and the number of the beneficiaries reaches 13,853 people (first category). Law on Vocational Training and Employment of Disabled Persons, No.03/L-019, provides for training services, vocational training and employment of disabled persons. According to Art.12 paragraph 1 of this Law, every employer shall employ a disabled person in every 50th employee. Also according to same Law there are other mandatory procedures and criteria for inclusion of persons with disabilities, namely in vocational training and employment. People living in poverty (vulnerable groups), according to the Law on Social Assistance Scheme, No.2003/15, shall receive assistance and/or benefits in cash once they fall within the group of the families living in poverty and meet classifying criteria for a social assistance scheme categories. a. Category I: Families where all members are dependent and none employed; b. Category II: Families with one member fit to work, with at least one child under the

age of 5 or provide care for an orphan under the age of 15; In both categories included are vulnerable persons within the family, namely: children aged 0-5, children 6-18 attending regular education, persons aged 18-65 with 80% disability to work, the only member of family fit to work but unemployed, permanent guardian within family, single parent as sole provider in the family. Monthly social assistance per family is multiplied by its members (min. € 40 and max. € 80). Social scheme assistance provides also other benefits such as: primary medical care, subvention of a given quantity of consumed electrical energy, exemption from tuition fees in higher education and university. Children’s Rights: Overall significant progress has been made in putting in place legislation to protect Rights of the Child, where during the drafting process the Convention on the Rights of the Child is being consulted and its principles included such as: non-discrimination, child participation, developing full potential of the child and the best interest of the child; ILO Convention 182 which treats Worst Forms of Child Labour; other instruments and international standards.

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With the purpose of enforcing legal framework in practice, strategic documents have been developed and are in process of implementation such as: a. Strategy and Action Plan for Children’s Rights 2009-2013; b. Strategy and Action Plan for Preventing and Eliminating Child Labour; These strategic documents identify issues that are a priority and need an immediate intervention in ensuring child protection, necessary care for the development and welfare of a child. Social Welfare: According to Family and Social Services Law as well as other legal acts, forms of protection and services for a child include: guardianship, foster care, adoption, residential housing, protection of the rights of the abused child, protection of the rights of trafficked children including victims of sexual crimes, protection of the child from heavy works and protection of the child with special needs. Anti-Discrimination: Promotion of equality and prohibition of discrimination are raised at the highest level of the country’s legislative framework. Thereof anti-discriminatory principles are stipulated in the Constitution of the Republic of Kosovo and Anti-Discrimination Law No.2004/3. The principle of equal treatment establishes that there shall not be any direct or indirect discrimination based on gender, age, marital status, physical or mental disability, sexual orientation, nationality, political views, religion or belief, ethnic or social origin, property, birth or other status, therefore everyone is entitled to equal legal protection. Office of Good Governance in conformity with obligation arising from the Anti-Discrimination Law, Art.12, paragraph 12.3, has adopted an Action Plan for the purpose of implementing the Law. Labour and Trade Union Rights: The right on employment is regulated by Labour Law, No.03/L-212, whereas the right to association in trade unions is regulated by the Law on Trade Unions, No.04/L-11: a. Labour Law regulates the rights and obligations arising from employment, or

between employers and employees. The provisions of this Law shall apply to employees and public employers as well private sector. Key issues that are guaranteed by provisions of the Labour Law are: prohibition of all types of discrimination, creation of employment relation, employment contract, content of such contract, placement of employees in the workplace, working hours, holidays and absences from work, protection, and safety of employees, salaries and benefits of employees, termination of employment, procedures for fulfilment of labour rights and relations, social dialogue as well other important matters concerning employer and the employee. To ensure implementation of the Labour Law fully, 11 Regulations were issued.

b. Law on Trade Unions aims at regulating and determines the rights and freedoms of employees to establish and organize free and voluntary labour and trade unions, in order to protect economic, social and professional interests. Matters regulated and rights guaranteed by this Law are: the right to union membership and organization,

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membership in labour unions, union elections, ceasing of the unions, criteria and conditions for registration of trade unions, trade union legitimacy, structure of the union, financial resources and the right to organize union federations and confederations, as well other matters related to this matter. Ministry of Labour and Social Welfare has issued one secondary legislative act with a purpose of implementing this Law.

Property Rights: Kosovo Property Agency is established according to the following legal framework: a. UNMIK Regulation No. 2006/10, dated 04.03.200 on the Resolution of Claims

Relating to Private Immovable Property, including Agricultural and Commercial Property amended by the UNMIK Regulation No. 2006/50, dated 16.10. 2006;

b. Administrative Direction No. 2007/5; c. Law approved by Assembly of Republic of Kosovo No.03/L-079 Amending UNMIK

Regulation 2006/50 on the Resolution of Claims Relating to Private Immovable Property, including Agricultural and Commercial Property dt.15 June 2008;

d. New Draft Law for amending of Kosovo Property Agency Law (in due process). The above mentioned legislation has been fully implemented by Kosovo Property Agency. From 41.958 claims received, until now, 29.797 claims have been adjudicated and the remaining is awaiting adjudication. In parallel with adjudication of claims, Agency is engaged in implementation of decisions through repossession, administration or case closures. Total number of properties under administration is 5.542, out of which 1.032 are under rental agreements. - What are the situation/main challenges/actions (including cooperation with regional, local authorities and NGOs, funding) as regards, sexual discrimination (LGBT groups) in Kosovo, in terms of discrimination, tolerance from the society, visibility and recognition of rights? According to Action Plan (2013-2015) due to implement Anti-Discrimination Law, its main objectives consist in organising public campaigns, disseminating information regards Anti-Discrimination Law and promoting its implementation as well organising debates and round tables. On November 3rd 2011 a formal meeting was organised with representatives of LGBT (Lesbian, Gay, Bisexual and Transgender community), its aim being an effective protection and promotion of the rights of LGBT which are guaranteed by the Constitution, Anti-Discrimination Law and various policies and strategies dealing with human rights and anti-discrimination. This was the first meeting of its kind, between institutions and the community with participation of 9 representatives. Ultimate goal of the meeting was exploring forms and modalities of better cooperation as well seeking ways for joint activities and projects for a democratic society, equality and without discrimination on the grounds of sexual orientation. Office of Good Governance, Human Rights and Equal Opportunities invited members of the LGBT to be part of the working group drafting the Action Plan for implementation of Anti-Discrimination Law as well participation in awareness raising campaigns intended for human rights and non-discrimination based on sexual orientation. In order to cooperate

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and efficiently promote the rights of the community, the Office of Good Governance will conduct regular meetings with the LGBT community, taking onboard their concerns and address specific recommendations of the relevant institutions mandated with protection and promotion of their rights in conformity with applicable legislation. 1.2.3. Respect for and protection of minorities, cultural rights - What is the situation/main challenges/actions taken (including cooperation with regional, local authorities and NGOs, funding) of the Roma population (including Ashkali and Epytian) in the area of education, employment, housing, health and discrimination? The Office for Community Affairs in the Office of Prime-Minister in cooperation with all Kosovo municipalities is supporting infrastructure projects such as building roads, houses, water supply and sewage. These projects are mainly aimed for RAE community. Moreover OCA funds and organizes the activities for marking the RAE Community day. During 2012, 6 houses were built for, whereas 4 for socials cases belonging to RAE community and additional 8 houses are being currently built for minority communities. Furthermore OCA announces annually call for proposals (grants), focusing on the rights of communities, including education, employment, awareness-raising concerning health issues, anti-discrimination. In addition the water supply network is being built in Gernqare village of Prizren municipality inhabited by Bosnian community and in Partesh municipality inhabited by Serbian community. During 2012, a school in Bostan village of Novoberde was renovated, for pupils of Roma and Serbian community. OCA through its funds supports students from minority communities studying in AUK University. OCA supports various educational projects for youth, sports, culture and cultural heritage (lately supported the football club in Pasjane and NGO ‘Future without Fear’ in Shterpce). In addition, first phase of an on-going project ‘Ali Ibra’ was completed where 29 RAE families are placed in new houses. OCA has allocated funds and support to RAE families such as building social housing in Obiliq. Cooperation with local authorities and NGO’s: OPM has organized 5 regional meetings aimed to increase coordination between central and local level governance in implementing RAE strategy Education: The Kosovo Government gives particular importance to education of RAE community children. MEST distributes textbooks free of charge for pupils of RAE community from 1-st to 9-th grade. MEST developed the curriculum and from October 2011 has started organizing and offering optional course for pupils of 2-nd grade in 5 primary schools of Prizren municipality. In addition, MEST has organized courses aiming to eliminate illiteracy in RAE community, for 120 females.

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MEST in close cooperation with Municipal Directorates for Education and local and international NGO’s has undertaken activities aiming to reduce dropout and increase the enrolment of students in schools in municipalities inhabited by RAE community. Concrete example is that during 2011 the number of pupils enrolled is 14% higher compared to 2009-2010. Current situation in schools is as following: a. Roma children enrolled in pre-school education - 57 b. Ashkali children enrolled in pre-school education - 2 c. Egyptian children enrolled in pre-school education- 0. d. Total: 59

a. Roma children enrolled in pre-elementary education - 79 b. Ashkali children enrolled in pre-elementary education - 159 c. Egyptian children enrolled in pre-elementary education- 52 d. Total: 290

a. Roma children enrolled in elementary education - 1566 b. Ashkali children enrolled in elementary education - 3541 c. Egyptian children enrolled in elementary education - 1378 d. Total: 6485

a. Roma children enrolled in secondary level education - 70 b. Ashkali children enrolled in secondary level education - 243 c. Egyptian children enrolled in secondary level education - 213 d. Total: 526 Health: The Ministry of Health has identified the importance of active participation of RAE community in the process of awareness-raising with regards to waste management and personal hygiene. This component for RAE community is envisaged also for the coming years. During 2010-2011, MoH has organized 6 training sessions in Fushë-Kosovë, Lipjan, Hallaq and Medveq with participation of 90 females from ages ranging 15 to 50 year old. Topics that were discussed in these sessions included: sexual education, gender perspective, violence against women, reproductive health and family planning, methods and contraceptive means, sexual infections and risky behaviours for STI and HIV / AIDS. Moreover, in cooperation with NGO ‘Health for All’, organized trainings with youth aiming at informing on health education and prevention of HIV/AIDS, it involved 12 participants aged 17 to 34 year old. In addition, HFA with support of NGO ARTPOLIS have organized drama exhibition related to HIV /AIDS. Housing: The Kosovo Government has completed the project ‘Osterode’ camp in Mitrovica municipality, where 4 housing buildings were completed; covering 20

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apartments and 48 families of RAE community placed and additional families were placed in 40 houses. In accordance with the agreement reached with Ministry of Return and Communities, RESTART and EU-MRSI programmes, 119 RAE families were relocated from Osterode camp, whereas additional 19 families are awaiting completion of house construction to finally leave the camp. The Osterode camp will be closed on 30 June 2012, whereas Cesmin Lug was officially closed on 4 October 2010. - What is the situation/main challenges/actions (including cooperation with regional, local authorities and NGOs, funding) of the Serbian minority in the areas of freedom of religion (in particular Serbian-Orthodox church), violence, protection of the Serbian language, protection of religious symbols and spaces (for example Orthodox churches and monasteries) protection of religious symbols and spaces (for example Orthodox churches and monasteries) and discrimination in general? Article 9 of the Constitution of the Republic of Kosovo and the Law. 02/L-88 on Cultural Heritage ensures the preservation and protection of cultural and religious heritage. The Law No.03/L-035 on Police, namely Article 11.5 stipulates that Police provides security and protection for places of religious and cultural heritage in the Republic of Kosovo. Special attention is given to the buildings and facilities that belong to religious communities and that are dedicated for religious rituals. Therefore these buildings and facilities are considered intact as regards the intervention of Government authorities, and can be accessed only with the consent of the appropriate religious institution, unless an injunction is issued because of illegal activities and/or in cases of danger to life or health. With regards to financing, religious communities enjoy customs and tax privileges for economic activities that are specific for the financial sustainability. Those privileges include import and purchase of essential products for manufacturing, materials, equipment and livestock and export of these products (Customs and Excise Code of the Republic of Kosovo, no. 03/L-109 Annex D). As for the use of languages, the Regulation no. 07/2012 on the Office of Commissioner for languages was approved on 4th of April 2012, which presents advancement in terms of the use of languages by the Office of Commissioner for Languages. OCA held 4 meetings of the working group for establishment of the Office of Commissioner for Languages. - What mechanism has Kosovo put in place to implement and report on the implementation of the CoE framework Convention on the Rights of the Minorities? The Office for Good Governance in cooperation with the Ministry for Return and Communities, OSCE and Council of Europe has established a Working Group in 2008 that has monitored implementation of recommendations emerged after reporting on CoE Framework Convention on Minority Rights. OGG during 2010 has developed and published the action plan for implementation of recommendations provided by the CoE

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and the plan was delivered to the Secretariat of the CoE. This plan has been of great help in implementation of the framework convention for protection of minorities. - What were the main recommendations of the CoE on the implementation of this Convention? Main CoE recommendations on implementation of the Convention are as following: a. Improvement of health conditions of RAE community located in the camp; b. Institutional protection of buildings and religious facilities and centers; c. Amendment of the Law on Languages; d. To increase efforts enabling persons belonging to all communities to actively

participate into economic and social life in Kosovo; e. Provision of teaching in minority languages. - How did Kosovo address these recommendations? Some of the addressed recommendations are as following: a. All RAE children are vaccinated and provided with cards, there are no cases of

tetanus registered. Ministry of Health in cooperation with the World Health Organization makes periodical blood measurements for lead contamination and treats individual cases;

b. In accordance with the agreement reached with Ministry of Return and Communities, RESTART and EU-MRSI programmes, 119 RAE families were relocated from Osterode camp, whereas additional 19 families are awaiting completion of house construction to finally leave the camp. The Osterode camp will be closed on 30 June 2012, whereas Cesmin Lug was officially closed on 4 October 2010;

c. Ministry of Culture, Youth and Sports during 2011 has established a working group for studying and recording the spiritual cultural heritage of RAE community. Department of Cultural Heritage during 2011 has financially supported refurbishment of Ashkali mosque in Dubravë, Ferizaj;

d. Law on Use of Languages No.02/L-37, was adopted on 27th of July 2006. The Regulation No.07/2012 on the Office of Commissioner for Languages was approved on 4-th of April 2012;

e. Majority of municipalities have already adopted local regulations for implementing the Law on Languages;

f. The Ministry of Labour and Social Welfare has offered emergency assistance of €36.500, hence approximately 7% out of this total is dedicated to RAE community;

g. Ministry of Education, Science and Technology has developed curricula in Roma language and so far has trained and employed 3 teachers. MEST has also provided transportation for pupils who travel more than 2 km.

1.2.3.1. Institutions/representation - What legal provisions are in place? Provisions in place related directly or indirectly with non-majority communities are international conventions directly applicable in the Republic of Kosovo in accordance with the Constitution:

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a. International Covenant on Civil and Political Rights (in particular Article 27); b. Council of Europe – Convention for Protection of National Minorities; c. International Convention on Elimination of All Forms of Racial Discrimination;; d. Convention on Elimination of all forms of discrimination against women; Other international binding agreements on the Republic of Kosovo, in accordance with the Constitution: a. Comprehensive Proposal for Kosovo Status Settlement; b. Including general provisions; Annex I on constitutional provisions; Annex II on the

rights of communities and their members; Annex III on decentralization; and Annex V on religious and cultural heritage.

Constitution of the Republic of Kosovo: a. Including Chapter III on the rights of communities and their members; Legislation related to the rights of communities: a. 03/l-047 on the Protection and Promotion of the Rights of Communities and their

Members in Kosovo; b. 2008/03-L068 Law on Education in the Municipalities of the Republic of Kosovo; c. 2006/02-L37 Law on Use of Languages; d. 2008/03-L040 Law on Local Governance; e. 2008/03-L041 Law on Administrative Municipal Boundaries; f. 2006/02-L88 Law on Cultural Heritage; g. 2008/03-L39 Law on Special Protective Zones; h. 2006/02-L31 Law on Freedom of Religion in Kosovo; i. 2008/03-L064 Law on Official Holidays in Republic of Kosovo; j. 2010/03-L237 Law on Population and Housing Census. Secondary Legislation: a. Government Regulation No. 02/2010 on Municipal Offices for Communities and

Return MPA Regulation on procedures for fair and proportionate representation of non-majority communities in the civil service: a. Terms of Reference for Municipal Offices for Community and Return (MOCR)

approved by the inter-ministerial Working Group on 21 April 2011 Annex 8.1 (c). Other relevant legislation on communities, anti-discrimination and access to public services a. 2004/3 Anti-discrimination Law; 2004/2 Law on Gender Equality in Kosovo;

2010/03-L-172 Law on the Protection of Personal Data; b. Health: 2004/4 Law on Health, 2008/03-L-124 Law amending the Law on Health; c. Education: 2006/02-L-52 Law on Pre-school Education; 2002/2 Law on Primary and

Secondary Education in Kosovo; 2002/3 Law on Higher Education in Kosovo; 2005/02-L-24 Law on Adult Education and Training;

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d. Social Welfare: 2003/15 Law on Social Assistance Scheme in Kosovo; 2005/02-L-17 Law on Social and Family Services; 2004/32 Law on Family; 2003/23 Law on Disability Pensions in Kosovo; 2008/03-L-019 Law on Vocational Ability, Rehabilitation and Employment of People with Disabilities;

e. Employment: 2010/03-L-212 Labour Law; 2006/02-L42 Law on Vocational Education and Training;

f. Citizenship, Civil registration, personal documents, residence registration: 2000/13 UNMIK Regulation on Central Civil Registration; 2008/03-L034 Law on Kosovo Citizenship; b2007/02-L118 Law on Personal Name; 2004/46 Law on Civil Registers; 2007/02-L126 Law amending the Law no. 2004/46 on Civil Status Registers; 2008/03-L037 Law on Travel Documents; 2008/3-L099 Law on ID cards; 2007/02-L121 Law on Dwelling and Emplacement; Civil Services: 2010/03-L-149 Law on Civil Service of the Republic of Kosovo; 2010/03-L-147 Law on Salaries of Civil Servants; 2010/03-L-192 Law on Independent Oversight Board of Kosovo Civil Service; 2010/03-L-215 Law on Access to Public Documents; ” Terms of Reference for the Municipal Offices for Community and Return (MOCR) approved by the Inter-ministerial Working Group on 21 April 2011. Annex 8.1 (c).

g. Property Issues: 2008/03-L067 Law on Kosovo Privatization Agency: 2009/03-L-154 Law on Property and Other Real Rights; 2008/03-L079 Law on amending UNMIK Regulation 2006/50 on the Resolution of Claims Relating to Private Immovable Property, Including Agricultural and Commercial Property; 2009/03-L-139 Law on Expropriation of Immovable Property; 2003/25 Law on Cadastre; 2003/14 Law on Spatial Planning:

h. Administrative appeals regarding the performance of public services: 2005/02-L28 Law on Administrative Procedure; 2010/03-L-195 Law on Ombudsperson;

i. Readmission: 2010/03-L-208 Law on Readmission; 2010/03-L-172. 1.2.3.2. Access to education - Are public primary and secondary schools accessible to minority pupils? If relevant, how many pupils from minority communities are educated in public schools? Do minority pupils study in their mother tongue? Are there curricula in their mother tongue? (Please precise which curricula in which language) Pupils belonging to minority communities such as Serb, Bosnian and Turk study in their mother tongues. As regards to Roma language, a curricula with elements of Roma language, culture and history was developed, hence during 2011-2012 school year was tested as a pilot-project in Prizren municipality with support of a teacher of Roma language recruited for this project. Open call for textbooks on Roma language is ongoing. Textbooks on Primary Education and Lower Secondary Education on Turkish, Bosnian and Roma languages are provided free of charge for pupils of these three communities. There are no textbooks for Higher Secondary Education on Bosnian and Turkish languages. Textbooks on Higher Secondary Education on Bosnian language were provided by an Bosnian NGO in Kosovo with the support of Tuzlla Canton for the coming school year 2012-2013, whereas textbooks of same nature on Turkish language were provided by the Turkish Embassy in Kosovo for 2012, 2013 and 2014 (for further

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information please refer to question: “Do minority pupils enjoy the same rights as the other in terms of schoolbooks provisions and bus transportation to the school-premises?”) In addition, curricula on Serbian language was developed covering grades 1 to 9, but is being refused by the Serbian community. Nevertheless, in compliance with legal provisions, the Serbian community is eligible to use curricula and textbooks from Serbia. Therefore, MEST has established a Commission with composition of 3 Albanians, 3 Serbs and 1 international that has reviewed all curricula and textbooks in Serbian language and has issued a report with recommendations (see MEST website for details). Curricula for Bosnian and Turkish community are available for Pre-School Education, Primary Education, Lower Secondary Education, Higher Secondary Education, Vocational School and informal education. Likewise, curricula on Albanian language for non-Albanian communities are available for grades 1 to 9. - Do minority pupils enjoy the same rights as the other in terms of schoolbooks provisions and bus transportation to the school-premises? Based on statistics, in public schools all over territory of the Republic of Kosovo, there are around 17.500 pupils of Serbian community (not complete data) 5289 pupils of Bosnian community, 3050 pupils of Turkish community, Roma community 1772, Ashkali 3945, Egyptian 1643, Croat 34 and Gorani 81. Pupils belonging to minority communities study in their respective mother tongue. Education for minorities in public schools of all levels from pre-school up to university level is offered in Serbian, Bosnian and Turkish languages. Pupils of RAE community learn in Albanian language. Ministry of Education, Science and Technology have developed curricula in languages of minority communities: In Bosnian language, the following were developed: a. Curricula on pre-school education; b. Pre-school education standards; c. Curricula on Bosnian language from 1-st to 9-th grade; d. Curricula on high schools; e. Curricula on vocational education for various profiles; f. Curricula on informal education, from 1-st to 9-th grade. In Turkish language, the following were developed: a. Pre-school education standards; b. Curricula on Turkish language from 1-st to 9-th grade; c. Curricula on high schools; d. Curricula on vocational education for various profiles; e. Curricula on informal education, from 1-st to 9-th grade. In Roma language the following were developed: a. Curricula on Roma language with elements of history and culture.

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In Serbian language, the following were developed: a. Curricula on Serbian language from 1-st to 12-th grade; b. It was developed and approved the Pre-university Education Framework Curricula

of the Republic of Kosovo in Serbian language. Pupils of various communities living in Kosovo enjoy equal rights as other pupils belonging to majority community. Pupils of all communities are provided with free textbooks each year from 1-st up to 9-th grade in their respective languages. All textbooks in community languages are financed from the budget of the Republic of Kosovo. Transportation of pupils from school to home and vice versa, in the distance up to 5 km, from the 1-st up to 9th grade is done by bus, free of charge. The transport is provided and financed by the municipal directorates for education. 1.2.3.3. Official languages - What about the planned amendment to the Law on the use of official languages? There were some shortcomings in implementation of the current Law on Use of Languages. In this regard, the Prime Minister of the Republic of Kosovo, on 4-th of April has signed the Regulation No.07/2012 on Office of Commissioner for Languages that aims to protect and promote official languages and their equal status in the Republic of Kosovo and all municipalities as well as to ensure protection of community languages that are not among official languages. A working group for reform of the Office of Commissioner on Languages was established and so far has held 4 meetings that are chaired by OCA. In this regard, taking into consideration that the Government has adopted the Regulation No.07/2012 that covers the field of use of official languages and made progress in addressing shortcomings, there is no need for amending the Law on Use of Languages. - What are the objectives of the amended/Draft Law? Taking into consideration that the Government of Republic of Kosovo has adopted the Regulation no. 07/2012 on establishment of the Office of Commissioner for Languages and its objective is establishment of the Board on language policies that is represented by various institutions of the Republic of Kosovo as well as creation of a network of policies on languages. A work-plan of this working group was approved. OCA has coordinated the process of appointment of representatives of the Board on language policies. - What are the official languages in Kosovo? The Constitution of the Republic of Kosovo, in its article 5 paragraph 1 establishes that: ‘Official languages of the Republic of Kosovo are Albanian and Serbian language’, it goes on in paragraph 2 of the same article that:’ Turkish, Bosnian and Romani language

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enjoy the status of the official language at municipal level and/or other level in accordance with the Law’, that is, with Law on Languages No.02/L-37. Law on Languages aims at regulating: a. Use of official languages and the languages of the communities, whose mother

tongue is not an official language in Kosovo institutions, public enterprises and other organizations providing public functions or services;

b. The right of the communities in Kosovo to preserve, protect and promote their linguistic identity;

c. The multilingual character of Kosovo society as a whole in representing its unique spiritual, intellectual, historical and cultural identity.

Official languages in the Republic of Kosovo have an equal status in its institutions. Whereas at local level, if at least 5% of the municipality’s inhabitants has as mother tongue other than the official languages than the native language shall be official language at municipal level as well enjoys equal status of use as official languages. Moreover, if at least 3% of the municipality’s inhabitants have as mother tongue other than the official languages than the native language shall enjoy the status of language in official use at municipal level; in addition, the same treatment is given to languages that are traditionally spoken in a given municipality. - Is the implementation of the current Law on the use of official languages satisfactory? Why? On 4th of April 2012 has entered into force the Government Regulation No.07/2012 on the Office of Commissioner for Languages. As a result: a. The Commission has suspended its functioning; b. It will be replaced with the new Office of Commissioner on Languages; hence its

mandate is regulated with the Regulation no. 07/2012. Until the Office of Commissioner is fully functional, if a complaint is submitted in connection with alleged violations of language rights under the Law on languages, the following steps will be taken: a. Archive service in the Office of the Prime Minister will register the complain; b. A copy of the complaint filed by the applicant is kept; c. Office of Prime-minister/ Office for Community Affairs will make recording and

preservation of the complaint; d. Once functionalized the Office of the Commissioner for Languages will review and

process the complaints in compliance with Government Regulation No. 07/2012. 1.2.3.4. Minority media

- Has Kosovo established a minority media fund? If relevant, what is the annual budget? The Fund for supporting Minority, Multi-ethnic and other Disadvantaged Media was created based on the Media Policy Strategy for Minority Communities in Kosovo that was approved by the Government on 19th April 2005. The Government with its decision

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of 6th May 2005 has allocated €50.000 for the Fund and has approved decision for establishment of the Commission for managing this Fund. The Law on RTK has set allocation of 5% from the funds collected from the public broadcast fee for the Fund on Minority, Multi-ethnic and other Disadvantaged Media. In addition, the Government has approved the Regulation for Functioning of Fund, its procedures, as well as rules of procedure for the Fund within the Office for Public Communication in the OPM. The Fund is managed by the Commission that consists of 7 members from independent media regulators and civil society. So far, the Fund has announced four calls for proposals and allocated 43 grants, total amount being € 310.882. Media broadcasters in minority languages, multi-ethnic or media in service to communities with special needs have benefited from these grants (32 broadcasters) and up to date, 425,902 € have been circulated including the amount that is currently Fund account holds (the Fund has currently 106,246 € for year 2012). The Commission is working on the selection process from 56 media that applied for grants, open call that was concluded in early May. The new Law on RTK that entered into force on 9th of May 2012 has removed the provision formerly authorizing allocation to the Fund of 5% of RTK pre-payment. The Government has ensured its commitment for sustainable financing of the Fund in the future. - What was the percentage of TV programmes broadcast in minority languages on public TV in 2011, as a share of overall broadcast times? As for statistical data on minority broadcasting programs, based on RTK’s annual report, the public broadcaster fulfilled its 15% foreseen by RTK minority programming scheme. - Implementing the new Law on the public broadcaster, when is Kosovo planning to operationalise the future public channel in Serbian language? According to the Law on Radio Television of Kosovo No.04/L-46 adopted by the Assembly on March 29th 2012, Art. 8 (Composition, RTK schemes) Paragraph 7 provides as follows: ‘RTK management and its board shall take all necessary steps to ensure the operational functioning of RTK channel 2, as broadcaster in Serbian Language, not later than twelve (12) months from the adoption of this Law’.

1.2.3.5.Roma, Ashkali and Egyptians - What is the status of the implementation of the Strategy and Action Plan to address RAE issues? According to the Action Plan for implementation of the RAE Strategy and its indicators, it has been noted a measurable progress in improving the quality of life of these communities such as in the field of education, health, housing, relocation from camps, and involvement in overall social and cultural life. It is worth mentioning that Ministry of Education, Science and Technology, in cooperation with Municipal Education Directorates as well as NGOs have undertaken

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several activities to reduce dropouts and increase number of children enrolled in schools. A positive trend was noted were number of enrolled children increased by 14% compared to previous period of 2009-2010. In addition, the Curricula in Romani language were developed. Moreover, the Government has implemented a project on relocation from the ‘Osterode’ Camp in the municipality of Mitrovica were residential buildings were constructed and 48 RAE families were placed, an additional 40 other were places in houses. In the area of healthcare, RAE children were vaccinated as well as provided with health cards, no Tetanus case was registered. Ministry of Health in cooperation with World Health Organisation (WHO) provides for periodic blood examinations for lead contamination and offers treatment to individual cases, once such contamination is established. As for the social welfare, the Ministry of Labour and Social Welfare has allocated an emergency assistance in amount of € 36,500 out of which 7% is dedicated for RAE community. Full report on the implementation of the RAE Strategy will be published in June 2012. - What is the 2012 public budget allocated for this purpose? The Government of the Republic of Kosovo does not have a specific Fund for this purpose, however the line ministries undertake activities and allocate budget according to the projects and objectives deriving from the Action Plan on implementing the Strategy for Integration of RAE Community, for year 2012 allocation of budget per line ministry is as follows: a. Office for Community Affairs-OPM, € 338,112.11; b. Ministry for Return and Communities, € 445,936.68; c. Ministry of Education, Science and Technology, € 183,000.00; d. Ministry of Health, € 93,000; e. Ministry of Culture, Youth and Sports, € 67,000.00; f. Ministry for Economic Development, € 4,000.00; g. Ministry of Labour and Social Welfare, € 2,834,522.00; h. Ministry of Local Governance Administration, € 9,500.00. - What are the main challenges that Kosovo is facing to improve the situation/integration of these three vulnerable communities? Adequate budget planning and its effective management: The precise allocation of budget has been the main challenge up to date, meaning there was no separate budget line allocated on the matter as foreseen by Action Plan for integration of RAE Communities. Inter-institutional coordination at local level: cooperation at central level Government is estimated as more efficient whereas at municipal level communication is channelled

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through the Ministry of Local Governance Administration. OGG/OPM is due to explore other forms of cooperation at local level as well as on improving communication and coordination with municipalities. Employment and Social Welfare: is a major challenge for the RAE Communities. Employment opportunities are conditioned upon the necessary qualifications and education. Social services are provided equally to all those in need without differentiation however baring in mind those services are covering merely the costs of living and are far from improvement of economic situation for the members of the three communities. Reintegration and repatriation: remains a challenge, namely in education, employment and housing. RAE children, after repatriation process often do not possess knowledge of any of the official languages. To help this process MEST provides language courses in order to facilitate RAE children into education system. Moreover, as far as housing is concerned, MRC together with OCA/OPM and close cooperation with municipalities are making great efforts in accommodating and resolving housing issues for the families of these communities. 1.2.3.6.Refugees and IDPs - Has Kosovo developed a policy to create the conditions for the return and re-integration to Kosovo of the refugees and internally displaced persons? The Government of the Republic of Kosovo, through the Ministry for Return and Communities has developed and adopted the Strategy for Communities and Return 2009-2013, whereas policies to create conditions for sustainable return and re-integration of refugees and Internally Displaced Persons (IDPs) are developed according to this strategy. It addresses the overall vision to contribute towards the development of a multi-ethnic, prosperous and democratic society with equal rights. To achieve this vision, the strategy focuses on three primary goals such as stable community, sustainable return and reintegration of IDP’s as well as economic reintegration of communities. As a result, following improvements are made in areas such as: I. Strengthening and Stabilization of Communities in Kosovo a. Strengthening of community rights and ensure the implementation of the current

Law on Protection and Promotion of Community Rights and their Members in Republic of Kosovo;

b. Ensure social participation and access of communities to all public services.

II. Sustainable return of displaced persons from Kosovo a. To offer support to all returnees in Kosovo; b. To ensure that displaced persons and potential returnees have sufficient information

on conditions of return and their rights; c. To provide adequate conditions at place for sustainable return and reintegration of

returnees.

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III. Support to economic development for communities in Kosovo, as the main pre-condition for stabilization of communities and sustainable return: a. Ensure equal opportunities for development of all communities; b. Ensure allocation of funds for projects that meet conditions for stabilization and

integration of communities. The third objective is directed towards improving economic conditions and the overall integration of communities, including returnees in order to promote a stable, prosperous and multi-ethnic society in Kosovo. Based on the Strategy, the Ministry for Return and Communities has issued the Guidelines in implementing Support for Return process, No.711 of March 27th 2012. Overall, the Government of the Republic of Kosovo with its activities from the Strategy for Communities and Return 2009-2013 has marked achievements in the process of return and better life for all communities living in the Republic of Kosovo. - What is the average public budget allocated for this purpose in the last five years? The Government of the Republic of Kosovo, in the last 6 years has allocated public budget for the purpose of creating the conditions for return and reintegration of refugees and IDP’s as well as integration of all communities in Kosovo, in the amount of € 41,385,346.00. Disaggregate data on annual budget allocated for the past 6 years: a. 2007, € 5,200,000.00; b. 2008, € 8,058,433.00; c. 2009, € 7,800,000.00; d. 2010, € 7,726,913.00; e. 2011, € 6,300,000.00; f. 2012, € 6,300,000.00. 1.2.3.7. Cultural rights including cultural heritage - Has Kosovo ratified the 2005 UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions? The Republic of Kosovo has not ratified the 2005 UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions, although the willingness and readiness was always expressed by the Kosovo side to ratify the Convention. Provisions for ratification and recognition of the Convention envisage that ratification can be made by UNESCO member states, UN member states, or even by states and territories that are members of a UN specialized agency, provided they receive an invitation by the General Conference of UNESCO (Article 26 and 27 of the Convention). Republic of Kosovo is member of International Monetary Fund and the World Bank, but so far has not received an invitation by the General Conference of UNESCO.

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- What is the legal framework guaranteeing the protection of cultural rights in Kosovo? The Constitution of the Republic of Kosovo, in Art.58 paragraph 5, envisages: ‘The Republic of Kosovo shall promote the preservation of religious and cultural heritage of all communities, as part of the heritage of Kosovo. It will have as special duty to ensure effective protection and integrity of the buildings and monuments of cultural and religious communities.’ Further, same article in paragraph 6 states that: ‘The Republic of Kosovo shall take effective action against all those hampering fulfilment of the rights of the communities’ members. It shall also refrain from policies or practices aiming at assimilation against the will of the communities’ members and shall protect these members from any such action.’ Moreover, Art.59 paragraph 12, guarantees that: ‘Members of the communities enjoy unhindered contacts among themselves within the Republic of Kosovo, to establish and maintain free and peaceful contacts with persons in other states, especially with those sharing an ethnic, cultural, linguistic or religious identity, common cultural heritage in accordance with international Law and standards.’ Legislative framework guaranteeing protection of the cultural rights in Kosovo is as following: a. Law on Institutions of Culture No.02/L-57 which was adopted by the Assembly on

6th of April 2006. The Law sets for basic conditions, criteria and the procedure for establishment of the cultural institutions, their character, organizational and managerial structure, duties and activities, obligations and responsibilities, as well as other matters on the activities and functioning of the cultural institutions;

b. The Law on Theatre No.02/L-12 was adopted by the Assembly on 23rd of March 2005. The Law regulates the functioning of theatre activities, including establishment, management and financing of public and private theatres. Due to continuous requirements of the artistic community, MCYS has drafted new Law on Theatre and currently awaiting approval by the Assembly;

c. Law on Philharmonics, Opera and Ballet in Kosovo, No.02/L-59 was adopted by the Assembly on 1st of June 2006. The Law regulates establishment, work, organization, operation and functioning of institutions such as Philharmonic, Opera and Ballet of Kosovo. The Law is due to be amended during 2012;

d. Law on National Song and Dance Ensemble "Shota" and other ensembles, No.03/L-56 was adopted by the Assembly on 6th of November 2008. The Law regulates functioning and activities of the National Song and Dance Ensemble "Shota" as well other cultural and artistic ansembles, establishment, direction, management and their financing, position of the artists and other relevant issues, important on the matter. The Law is due to be amended during 2012;

e. Law on Publishing Activities and Books, No.02/L-51 was adopted by the Assembly on 16th of March 2006. The Law regulates basic principles and practices for development of publishing activities, development of literature, artistic, scientific, professional and cultural creation in the Republic of Kosovo;

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f. Law on Copyright and Related Rights, No.04/L-065. The Law regulates property rights and moral aspects of copyright, focusing on the realization and protection of copyright;

g. Law for Libraries, No.04/L-097 was approved by the Assembly on 6th of April 2012. The Law defines basic principles for establishment and functioning of national, academic, municipal, school, special needs and private libraries;

h. Regulation No.05/2011 on Promotion and Salaries of Culture Authors and Performers and Professional Employees in Cultural Heritage, which regulates the system of promotion and salaries of culture authors and performers and professional employees in cultural heritage, working at the Cultural and Cultural Heritage Institutions.

- What is the legislation protecting tangible and intangible cultural heritage? Legislation for protection of tangible and intangible cultural heritage includes: a. Law on Cultural Heritage No.02/L-88, adopted by the Assembly on 9th of October

2006. The purpose of this Law is the preservation, protection and promotion of cultural heritage. The Law intends to explore legal measures for protection of all types of heritage, such as Archaeological Architectural Heritage, Movable and Spiritual (Law on Cultural Heritage No.02/L-88, Article 1). It also regulates relations among owners, holders and users of cultural heritage, thus creating institutional responsibility for cultural heritage. In addition, the Law on Cultural Heritage defines terms used for Cultural Heritage such as Cultural Heritage Inventory for the purpose of identification, registration and documentation of cultural heritage, legal measures for protection of cultural heritage and elaboration of preliminary procedures for setting the list of monuments with permanent and temporary protection as well as establishment of institutional mechanisms for assessment of cultural heritage. This Law is in the procedure of amendment with the aim of meeting international criteria and standards, elimination of legal collisions, defining institutional responsibilities, unification of terminology and its harmonization with the legislation in force;

b. Law on Special Protective Zones No.03/L-039 was adopted by the Assembly on 20th of February 2008. The aim of this Law is to define special protective zones and ensuring protection of Serbian Orthodox Monasteries, Churches, other religious sites, as well as historical and cultural sites of special significance for the Kosovo Serb community and other communities in Republic of Kosovo;

c. Law for Historic Centre of Prizren No.04/L-066 was adopted by the Assembly on 20th of April 2012. The aim of this Law is protection, preservation and promotion of cultural heritage values of Prizren, as a special protective zone, as well as defining rules and mechanisms for protection, preservation, administration and sustainable development of Historical Centre of Prizren;

d. Law on Hoqa e Madhe No.04/L-62 was adopted by the Assembly on 20th of April 2012. The aim of this Law is protection, preservation and promotion of cultural heritage values of Hoqa e Madhe village, as a special protective zone, as well as defining rules and mechanisms for protection, preservation, administration and sustainable development of Hoqa e Madhe village;

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e. Law on Spatial Planning No.2003/14 was adopted by the Assembly on 3rd of July 2003. The aim of this Law is to regulate the spatial planning in the territory of the Republic of Kosovo. The Law was amended on 10th of November 2008 in order to ensure full harmonization with the Law on Special Protective Zones;

f. Law on Environmental Protection No.03/L-025 was adopted by the Assembly on 26th of February 2009. The aim of this Law is to promote the establishment of healthy environment for population of Kosovo by gradually bringing the European Union Environmental standards;

g. Law on State Archives No.2011/04-L-088 was adopted by the Assembly on 15th of February 2012. This Law determines basic rules for the organization and operation of Archival Services in all institutions of the Republic of Kosovo.

Furthermore, in 2011, the Government of the Republic of Kosovo has approved the strategic document that precedes the Integrated Conservation Strategy. In drafting process are seven guidelines on cultural heritage: a. Guidelines on Asset Inventory for Cultural Heritage; b. Guidelines for Archaeological Research; c. Guidelines on licensing of Archaeological Research; d. Guidelines on criteria and conditions on assessing the assets of cultural heritage; e. Guidelines on developing conservation projects; f. Guidelines on conservation measures for protection and maintenance of movable

assets of cultural heritage. - What are the mechanisms in place to ensure the enforcement and implementation of these Laws? Mechanisms that ensure enforcement as well implementation of these Laws are as following: a. Ministry of Culture, Youth and Sports; b. Kosovo Museum and its network; c. Kosovo Archaeological Institute; d. Kosovo Institute for Protection of Monuments; e. Regional Centres for Cultural Heritage in Prishtina, Mitrovica, Peja, Prizren,

Gjakova, Ferizaj and Gjilan; f. Ministry of Environment and Spatial Planning; g. Kosovo Council for Cultural Heritage; h. Ministry of Trade and Industry; i. Kosovo Cadastral Agency; j. Institute of History; k. Institute of Albanology; l. Municipalities – Directorates for Culture and Directorates for Urbanism and Spatial

Planning. - What are the legally protected sites and artefacts protected in Kosovo? In accordance with articles 3.5, 3.6, 3.7 and 3.8 f the Law on Cultural Heritage, the Ministry of Culture, Youth and Sports has approved the List of Cultural Heritage on

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Temporary Protection, on September 2011 and it contains 930 monuments under temporary protection divided in two categories:

a. Category of archaeological heritage with its sub-categories: monument/ensemble and archaeological locations;

b. Category of architectural heritage with its sub-categories: monument/ensemble. The list of cultural heritage on temporary protection is listed in Annex 2, of which 930 objects and their locations are presented. MCYS is in process of assessing the entire cultural heritage and then developing the List of cultural heritage on permanent protection.

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2. ECONOMIC CRITERIA

2.1. Macro-Economic Data

Please briefly comment on the main macroeconomic trends during the last 5 years for:

a) Real GDP growth and its breakdown by expenditures; Over the last five years, the economy has successfully managed the impact of global economic crisis, reaching an annual average growth rate of 5%. Growth of Gross Domestic Product (GDP) is greatly influenced by consumption, although its share in GDP has fallen from 112.3% in 2007 to 108.2% in 2011. Public investments have contributed to a great extent to the rapid economic growth with an increased participation in GDP from 5% in 2007 to 11% in 2011. Private investment continues to participate with 22% in the GDP growth. Faster growth of import of goods has had an impact so the net exports remain constant as a share of GDP to around 40%. Exports of goods marked an increase, particularly in 2010. Their participation in GDP over the period rose from 5% in 2007 to 7% in 2011. Similarly, exports of services performed with an increasing trend with an upward trend from 10% of GDP in 2007 to 12% in 2011. On the other hand, imports of goods have increased from 46% of GDP to 52%. This increase is mainly due to the large public investment. In contrary, imports of services have remained largely constant at around 9% in terms of participation in GDP, for more detail see Annex 3a.

b) Inflation (including core inflation); Inflation over the period 2007 - 2011 was on average 4, 44%. In 2008, average annual inflation rate was 9.4%. After the fall of the price level in 2009 when the Consumer Price Index (CPI) recorded an average annual growth of -2.4%, the jump of international prices (mainly food and oil) has caused inflationary pressures in Kosovo too. Thus, in 2010 the price level increased by an average of 3.5%, reaching a peak of 7.3% in 2011. During the first three months of 2012, a slower increase in the rate of price was noticed, compared to last year. Considering that imports constitute a significant percentage of GDP in Kosovo, any movement of international prices directly reflected in the price level in Kosovo. Food is the main ingredient in the consumer basket and therefore, the movement of food prices in world market has affected the price of food in Kosovo, thus affecting the overall movement of prices.

c) General Government deficit and debt and its breakdown by Government level;

Three balances of the General Government are presented in the table below. Current balance, which presents the difference between current revenues and expenditures

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during this period, has remained positive, reflecting the Government's mature policies regarding this category of expenditure. On the other hand, the increase of capital expenditure has impacted the primary and the overall balance, to be negative although under the level recommended by the Maastricht Treaty. Government of Kosovo during the last five years has operated with general budgetary surplus. Total stock of public debt (internal/external) is approximately €282.8 million. From this total amount, € 253.1 million are external debt and €29.7 million are securities in form of Treasury bills issued by the MF. Table 8: Balance of General Government, in % of GDP

Description 2007 2008 2009 2010 2011

Current Balance 13.7% 8.7% 10.0% 9.1% 10.0%

Primary Balance 9.1% -0.3% -0.6% -2.3% -1.5% Overall balance

(Including interest payment) 9.3% -0.5% -1.1% -2.5% -1.7%

Source: MF

d) General Government expenditure and revenue and its breakdown by categories;

Based on data over the years 2007-2011, the total revenues have continued to grow at an annual average of about 10%. Revenues from the border during this period rose by an annual average of about 11.7% or about 55% compared with 2007. In 2011 alone, these revenues went up for 18% compared to 2010. Domestic revenues during the same period rose by an annual average of 8.5%, or about 36.1% compared with 2007. Non-tax revenues have declined, while own revenues, both at central and local level have doubled during this period. More specifically, municipality own revenues have risen by an average of 18.5% while own revenues of central level have risen by an average of 25.5%. In last 5 years, the Government of Kosovo received dividends from the Post and Telecom of Kosovo (PTK) and the Pristina International Transport (PIA) in the total value of €375.8 million. In 2010, Government of Kosovo has received budgetary support in the amount of €30 million from European Commission (EC) and in 2011 received € 19.2 million from the World Bank (WB). Continuous economic growth, recorded during the years 2007-2011, was coupled with an increase in overall budget expenditure as a share of GDP. The total budget expenditure as a share of GDP rose from 19.5% in 2007, to 30.1% in 2011, mainly as a result of increased capital expenditure. While other categories of expenditure, excluding

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categories of capital expenditure, wages and salaries, have decreased their share in GDP, for more detail see Annex 3a. Category of wages and salaries as a share of GDP has started to grow during 2009, around 0.6 percentage points compared with 2007, as a result of increased salaries for certain categories of civil servants, and the transfer of competencies from international to domestic institutions. Also, growth of this category of expenditure continued in 2011, as a result of salary increases of public servants, health and education sectors employees. Category of goods and services as a share of GDP has remained almost at the same level in this period, approximately 3.6% of GDP. However, in nominal terms, goods and services continued to grow until 2010. During 2011, this category declined. Category of subsidies and transfers, after an increase in 2009 due to the rise of 11% of all social benefits, during 2010-2011 remained constant at 5.6% as a share of GDP. The category with the highest increase during 2007-2011 was the capital expenditure. Starting in 2008, when Kosovo's Government raised the level of capital expenditure for about 120% and the share of this expenditure in GDP grew from 4.6% to 9%. From 2009 onwards, their participation stood between 10% - 11.5%, for more detail see Annex 3a.

e) Selection of monetary and financial indicators; The financial intermediation activity continued growing in 2011. Loans issued by the banking system marked an annual increase of 16.4%, whereas deposits grew by 8.5% over the last 5 years, the average annual credit growth was 22.3%. The highest rate growth were recorded in years 2007 and 2008 when loans had an annual increase of 40.1% and 32.7% respectively. The lowest growth rates were in 2009 when loans grew by 8.9%. As regarding deposits, the average rate of growth over the last five years is 18.1%.The highest rate of growth of deposits happened in 2008 where deposits grew by 26.3% while the lowest rate of growth was recorded in 2011 when deposits grew by 8.5%. The interest rate spread in 2011 was 10.65 percentage points. The five year average of this indicator for period 2007-2011 is 10.7 percentage points. In the last five years, the highest interest rate spread was in 2007 with a rate of 11.3 percentage points, while the lowest level was in 2009 with a rate of 10.01 percentage points. In 2011, the banking system in Kosovo was profitable with the Return on Average Assets (ROAA) of 1.5%. On average, ROAA in the last five years stood at 1.7%. The highest rate of ROAA in this period was in 2007 (2.6%) and the lowest in 2009 (1.4%). The Capital Adequacy Ratio (CAR) in 2011 was 17.5% which considerably exceeds the minimum rate of 12% required by the Central Bank. The high degree of capitalization was a characteristic of the banking system in Kosovo throughout its existence. Over the

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past five years, the banking system had an average CAR of 17.7%. The highest CAR rate during the five years was evidenced in year 2010 (18.7%), and the lowest rate was in 2008 (16.7%), which is still above the minimum level required by the Central Bank.

f) Balance of payments, including trade and current account, capital and financial account

The current account over the last five years was characterized with a continuous deficit which varies between 11% and 16% of GDP. The deficit was €672.9 million in 2011 (approximately 15% of GDP). This reflects the high deficit of trade in goods (€2.1 billion) which is partly reduced by the surplus of current transfers (€990.4 million), services (€281.3 million), and income transfers (€113.8 million). Kosovo’s economy is characterized with a large deficit in international trade of goods, where the average coverage ratio of imports over the past five years stood at 14%. The financial account marked a surplus of €377.5 million, mainly as a result of net income from foreign direct investment (€378.9 million) and reserve assets (€61.2 million), whereas the investment portfolio balance (€57 million) and other investments (€5.7 million) dropped into negative figures mainly due to increased investment outside the country. The positive direct investment balance was mainly in the form of equity investments and re-invested earnings (€329.5 million). Last year, reserve assets had a positive balance as a result of the decrease on CBK investments on foreign assets (deposits in securities). At the end of year 2011, reserve assets were €574.7 million, marking a fall of €60 million from the previous year. This is due to the decrease of CBK foreign investments. Reserve assets were on average around €620 million over the last five years. On 5th of May 2012, Central Bank has for the first time published data on the International Investment Position and Foreign Debt of Kosovo, thus making another important step in developing the statistical system in the country. Such statistics are published with time series on the web sites of CBK, IMF IFS and the World Bank. At the end of 2011, the net international investment position was €104.5 million. This represented a fall of €340 million compared to the same period of 2010. Over the period 2007-2011, the surplus of assets over foreign liabilities has suffered a continuous decline. At end of year 2011, Kosovo residents owned foreign assets worth €3.3 billion, marking an increase of 2.4% compared to the previous year. Main drivers of such a growth were Kosovo financial institutions which invested in foreign countries in the form of portfolio investments (securities and debt instruments) and deposits in non-resident banks. Another contributor was the growth of money in circulation. Kosovo is a ‘euroized’ economy, where the share of money in circulation in total foreign assets is around 27%. The liabilities balance of Kosovo residents at the end of 2011 stood at €3.2 billion, marking an increase of 15%. The increase was mainly due to the growth of foreign

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direct investment in Kosovo, which by the end of year 2011 were €2.4 billion or 20.3% higher than at year end 2010.

g) What is the volume and nature of Foreign Direct Investment? Foreign Direct Investment (FDI) continues to be affected by economic developments in member countries of euro-zone, which also represent the main sources of this income. FDI has recorded continuous growth during this period except for years 2008 and 2009, when their level, although at a small scale, was affected by the global economic crisis. The net cumulative of foreign direct investment (FDI) in Kosovo in late 2011 was €2.3 billion or 20.5% higher than at the end of 2010. Kosovo investments abroad were €102 million, an increase by 18%. The majority of these investments are in the form of real estate. In 2011, inward FDI in Kosovo was € 394.6 million, marking an increase of 7.9% compared with 2010. While foreign investments of Kosovo residents were € 15.7 million or 55% less than in 2010 for more detail see Annex 3a. Foreign investment in the form of equity and retained earnings are the main categories of FDI in Kosovo, followed by the category of other investments. Capital investments which make up 70.5% of total FDI, in 2010 reached a total of € 221.8 million (€211.1 million in 2009). In 2011, the structure of FDI by economic activity went through some changes. The construction sector has enjoyed an increase (as a percentage) of foreign direct investment in Kosovo, followed by real estate investments. Participation of manufacturing sector in total FDI has declined compared to last year. Financial sector participation in total investment has been on average about 12% of total FDI in 2011. Table 9: FDI inflows, volume and as a % of GDP, for period 2007 - 2011

Year 2007 2008 2009 2010 2011 FDI 440,7 366,5 287,4 365,8 394,6

GDP 3,393.7 3,851.4 3,912.4 4,215.6 4,700 (Estimate) FDI as % of GDP 12,99% 9,52% 7,35% 8,68% 8,40%

Source: CBK Origin of foreign investment is mainly from EU countries. Slovenia, Germany, and Great Britain are the lead countries of FDI investments in Kosovo.

2.2. Socio-Economic Data

- Please provide and briefly comment on the following data during the last 5 years a) GDP per capita in Power Purchasing Standards (in % of the EU-27 average);

Kosovo Agency of Statistics in 2009 has for the first time started a pilot survey on Purchasing Power Parity part of a European Comparison Programme. This project is currently ongoing. Price Level Index (PLI) for food drinks and tobacco for 2009 has been

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prepared. For this consumption category, PLI in Kosovo is higher than Former Yugoslav Republic of Macedonia, but lower than the rest of Western Balkan countries. Regarding per capita GDP indicators at Purchasing Power Standards, the agency has not yet produced such data.

b) Population by gender, age and regional distribution; Kosovo is officially divided in only in two levels, localities and municipalities, thus we have prepared data at municipal level. Data presented in the table represent state up to the end of 2011 and only for 2011. This number of population is produced after the data has been taken from vital statistics for 9 months of 2011 (from April to December 2011) where natural growth is produced by attaching the average by gender and age groups based on the average data of the census 2011. For more information about the population data according to age and gender at municipal level see Annex 3b. Table 10: Table Population by age and gender 2011, ASK

Age groups Aggregate Male Female 0-14 492.452 254.951 237.501 15-29 482.541 249.687 232.855 30-49 462.803 225.318 237.485 50-64 201.093 99.013 102.080 65-84 112.408 53.133 59.275 > 85 5.453 1.958 3.495 Total 1.756.751 884.060 872.691

Source : KAS-Population census 2011-preliminary results (database) Kosovo vital statistics for 2011 (database)

Note: Data on this table present the situation at the end of 2011 Office for census (OC) and KAS does not possess data on age groups, gender and regional distribution over the last 5 years, since up to 2011 a different methodology was used which included the non-resident population. Therefore, data does not correspond to standards and data of 2011 census. Also, KAS in its earlier surveys (2007-2011) has not produced population statistics by age and gender at municipal level.

c) Labour market indicators: economic activity rates, employment rates and unemployment rates, long-term unemployment rate, training by education, sex, age, also in terms of regional divergences.

Activity rate (active labour force contingent, presents percentage of the workforce in the working age population, which in Kosovo according to the latest Labor Force Survey, 2009, reaches 48, 1%). Table 10: Economic activity rate

Year 2005 2006 2007 2008 2009

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Total 49.2 52.3 46.8 46.2 48.1 Male 69 70.8 65.7 66.2 67.5 Female 29.9 33.7 28.4 26.1 28.8

Source: Kosovo Statistics Agency The table shows that activity rate in Kosovo is very low; variations in changes are due to definitions. Employment rate (presents the percentage of employed persons in the working age population that in Kosovo, according to recent data of labor force survey (LFS), 2009 reaches 26.4%). Table 11: Employment rate Year 2005 2006 2007 2008 2009 Total 28.9 29 26.5 24.3 26.4 Male 46.4 46.5 40.6 38 40.2 Female 11.9 11.9 12.7 10.6 12.6

Source: Kosovo Statistics Agency Unemployment rate (presents percentage of unemployment persons in the workforce, this percentage according to LFS, 2009, reaches 45.4%). Table 12: Unemployment rate Year 2005 2006 2007 2008 2009 Total 41.4 44.9 43.6 47.5 45.4 Male 32.9 34.6 38.5 42.7 40.7 Female 60.5 61.6 55.2 59.6 56.4

Source: Kosovo Statistics Agency Long-term unemployment rate (is defined by duration of one year or more, which in Kosovo, according to results of LFS, 2009, is about 81.7%). Table 13: Long term unemployment Year 2005 2006 2007 2008 2009 Total 83.7 91.5 85 81.8 81.7 Male 83.5 91.7 84.8 83.2 82.8 Female 84 91 85.4 79.3 79.8

Source: Kosovo Statistics Agency Note: When the final population census results are published this September, there is a possibility of filling in the labor force data for 2011. As to 2012, LFS is being carried out in the field currently; results will be published in March 2013.

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Ministry of Labor and Social Welfare has its own data on the activity, employment and unemployment rates for 2010 and 2011 which are available but were not included here with the intention of being consistent in presenting such statistics. Table 14: Training by gender and age organized by Employment Service (MLSW), 2007-2011

Year Total

number of persons

Gender Age

Female Male 15 - 24 25 - 39 40 - 54 over 55

2007 3,047 1,057 1,990 1,363 1,337 341 6 2008 3,240 1,276 1,964 1,633 1,282 311 14 2009 2,977 1,138 1,839 1,503 1,155 310 9 2010 3,306 1,511 1,795 1,632 1,309 347 18 2011 3,449 1,602 1,847 1,787 1,295 316 51

Source: Ministry of Labor and Social Welfare As evident from the table, there has been a continuous increase in the inclusiveness of persons in professional training with the exception of 2009 where there is a smaller participation. A more visible increase is noticed in the last two years due to increased training capacities and improved conditions of Regional Centers for Professional Training. Participation of women and the youth had a positive trend in professional training thus showing they are priority categories for the ministry. For comparison, participation of women in 2007 was 34.69% which in 2011 rose to 46.45%. Table 15: Training by education level organized by Employment Service, 2007-2011

Year

Total number

of persons

Education level

Unqualified semi-qualified qualified middle

school high

school universit

y

2007 3,047 846 41 132 1,807 73 148 2008 3,240 763 59 131 2,004 46 237 2009 2,977 654 27 89 1,885 50 272 2010 3,306 853 16 77 1,898 52 410 2011 3,449 898 19 60 1,953 29 490

Source: Ministry of Labor and Social Welfare The table above shows that dominant categories of the trainees are the unqualified, and secondary school, which make up the largest number of registered unemployed and are lacking basic skills for jobs.

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Table 16: Training by region organized by employment service, 2007-2011 Region 2007 2008 2009 2010 2011

Ferizaj 245 215 230 287 221 Gjakova 568 543 456 668 708 Gjilan 325 290 411 270 255 Mitrovica 348 521 327 444 625 Peja 365 283 288 330 436 Prishtina 618 846 788 664 618 Prizren 553 542 477 643 586 Total 3,047 3,240 2,977 3,306 3,449

Source: Ministry of Labor and Social Welfare Table above shows that participation in training has varied depending on market requirements and conditions of the training offered. For example construction of new and modern centre in Pristina in 2008, has resulted with an increase of the number. Similarly, building of the new centre in Peja in 2011 resulted with an increase of the number of trained persons. Parallel to the training hosted by Department of Professional Education, MLSW has purchased training services for profiles not available in its centers. In 2009/10, a total of 279 job-seekers were trained in Pristina (50 candidates trained in accounting, 40 in business administration, 43 in business management, 96 in IT, and 50 in entrepreneurship). In 2010, 235 candidates from regions of Pristina, Gjakova, and Ferizaj completed training for ECDL and accounting. In 2011, with support of Lux-Development, a professional training fund is established which is managed by MLSW. The total number of beneficiaries trained in 2011 is 330 (ECDL, advanced accounting etc). Also, in 2010, 60 blind job-seekers and 15 deaf mute persons were trained. In 2011, 60 blind job-seekers were trained and 10 were employed for a period of three months.

2.3. Structural Indicators

- Please provide and briefly comment on the following indicators during the last 5 years

a) Sectoral economic structure (as a share of GDP and employment);

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Table 17: Gross Domestic Product (GDP) by economical activities, current prices 2005-2009 (data for 2008 and 2009 are not officially published yet)

Economical activities NACE Rev, 1 2005 2006 2007 2008 2009 Agriculture, hunting, forestry and fishing

11,3

11,7

12,8

13,3

15,1

Mining industry 0,6

0,6

0,5

0,8

0,7

Processing industry, 9,5

9,7

8,3

10,6

11,7

Power supply, gas supply and water supply

3,6

3,1

3,9

3,8

4,3

Construction 8,4

8,9

9,9

8,3

4,8

Wholesale and retail trade; maintenance of vehicle and motorcycles and products for personal and home use

10,6

10,8

11,2

14,0

13,1

Hotels and restaurants 0,7

0,8

0,7

0,6

0,6

Transport, warehousing and traffic 4,2

4,6

3,5

3,6

3,7

Financial intermediation 2,5

3,0

4,3

4,2

4,8

Business with real estate, renting and business services

12,8

12,8

12,2

9,8

9,6

Public and defense administration; (including Health and Education)

20,0

17,3

15,5

13,9

13,7

Other social and society activities, of services and personal

2,1

2,6

2,2

2,7

3,2

Tax on products 13,5

14,1

14,9

14,4

14,7

Gross Domestic Product (GDP)

100

100

100

100

100

b) structure of enterprise ownership including an estimate of the capital stock, distinguishing between public and private capital;

According to data collected form the business and capital registration of privately-owned enterprises, 77,85% of shares are domestic-owned and 22, 15% of the shares are foreign-owned.

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Table 18: Public and Private Investment in nominal value and as percentage of GDP

Source: Ministry of Finance

(c) Labour productivity; evolution by economic sectors; too detailed) Labour productivity data are not available.

d) Unit labour costs, including indicators of international competitiveness (changes in relative unit labour costs, level and changes in average gross earnings, etc.);

Table 19: Average Monthly Cost by Economic Activity and additional costs.

Cod

e

Economic Activity

Ave

rage

mon

thly

labo

r cos

t

Wag

es a

nd s

alar

ies

Pens

ion

and

soci

al

cont

ribu

tion

Soci

al in

sura

nce

cont

ribu

tion

that

em

ploy

er

are

char

ged

C

ost

of p

rofe

ssio

nal

trai

ning

pa

id b

y em

ploy

er

Oth

er c

osts

Taxe

s pa

id b

y Em

ploy

er

Subs

idie

s re

ceiv

ed

by

empl

oyer

A Agriculture, hunting and forestry

357.6

345.4 7.6 - - 3.7 0.8 -

C Mining and quarries 491.3

445.1

16.7

13.3 - 4.0 12.

9 0.8

D Production 339. 306. 10. 1.4 1.5 7.2 13. 0.6

Description 2007 2008 2009 2010 2011 Value.

Investments 893 1,094 1,166 1,369 1,540 Private investments 737 747 766 914 1,012 Public investments 155 347 400 455 528

GDP 3,394 3,851 3,912 4,190 4,606

Description 2007 2008 2009 2010 2011 Value

Investments 26% 28% 30% 33% 33% Private investments

22% 19% 20% 22% 22% Public investments

5% 9% 10% 11% 11%

In million Euros

In million Euros

As percentage in GDP

In nominal value

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9 5 4 5

E Gas, electricity and water supply

349.5

326.4

14.6 5.5 0.1 0.1 5.4 2.7

F construction 363.8

316.4

13.8 3.0 0.5 18.9 11.

8 0.6

G Whole sale and retail, repairing motorized equipment

447.7

293.2

33.1 2.9 1.2 111.

1 6.6 0.4

H Hotels and restaurants 269.5

301.9 9.7 1.6 0.4 59.4 4.9 108.

4

I Transport, warehousing and traffic

587.6

407.9

22.9 2.9 0.4 141.

3 12.5 0.2

J Financial intermediation 470.7

448.6

23.0 - - - - 0.9

K Real estate, Renting Business activity

327.6

228.5

16.3 0.1 0.5 67.1 15.

3 0.3

L Public administration and defense

276.9

232.8

33.5 0.0 1.7 7.5 1.3 -

M Education 631.1

437.4

16.7 2.7 2.4 157.

3 14.8 0.2

N Health 470.4

399.3

27.3

11.9 0.7 10.7 20.

5 -

OA

Cleaning of waste and sewage

293.3

266.4

17.8 0.3 2.0 0.8 6.0 -

OC

Sports, Recreation and Culture activities

442.3

313.3

18.5 3.8 0.3 78.7 39.

1 11.5

OD

Other activities of services (washing and chemical cleaning, Beauty salon, funeral activities, body care activities and other serving activities p.c.

265.1

252.4

10.0 0.1 1.8 0.8 - -

Total 383.7

313.6

18.6 2.7 0.9 48.3 10.

1 10.1

Source: Labor Cost Survey 2010 / Kosovo Business Alliance / under auspices of MLSW

h) Percentage of employed persons receiving training; total number having received training and their share in the total number of employees, if possible by branch of activity; number of companies having provided training of their employees and their share in the total number of companies.

Kosovo Chamber of Commerce has its training program for businesses. Since 2009, they have provided training on management to 300 company managers. In transport, KCC has provided training for 600 candidates. KCC has started a joint craftsmanship training

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programme with the Craftsmanship Chamber of Commerce of Dortmund offering training is auto mechanics. 1100 employees from various companies have also been trained on hazardous materials since 2006. KCC also provides gastronomy trainings.

2.4. The wage bargaining process and the social security system

The wage bargaining process and the social security system Please provide quantitative and/or qualitative information for the last 5 years on the following:

a) Development of the average gross and net wages in the public and private sector, respectively;

Table 20: Average net wages in public and private sector, 2007-2011

2007 2008 2009 2010 2011 Average salary (Euro) 242 248 - 2927 3278

Public 208 237 270 268 3689

Private 241 258 - 303 327

Source:

a. Research on Needs of Labour Market 2010, KBA/MLSW b. Research on Needs of Labour Market 2011, KBA/MLSW c. http://esk.rks-gov.net/dmdocuments/Kosova in numbers

b) Arrangements for public sector wages and employment;

Law on Labour No. 2010/03-L-212 is the main legal act which determines the basic principles on payment and employment criteria, including the rights and protection of employment. Law No. 03/L-048 on Public Finance Management and Responsibilities determines the general rules of managing public finance including the treasury finance rules, procedures and time-limits of budgetary proposals and allocations, including independent agencies. Further, the annual Law on Budget which determines budgetary allocations for all public institutions and defines further procedures of budget expenditures for specific categories based on legal provisions of specific Laws in force and based on constitutional provisions when independent institutions are in question,

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next it regulates procedures on managing the own-source revenues of budgetary institutions. Law on Publicly Owned Enterprises No.03/L-087 regulates basic fees and performance incentive arrangements of Publicly Owned Enterprise (POE) directors and officers. Article 20 states: “The Audit Committee shall develop and publicly disclose a remuneration policy statement that covers POE’s directors and officers. Provisions of Article 21 of Law on Publicly Owned Enterprises define the selection and appointment of officers. Furthermore, employment and salaries in the public sector are regulated by specific Laws and/or acts of secondary legislation for certain sectors or public institutions. Please find the list of main Laws for the public sector institutions:

a. Law on Court No. 03/L-199; b. Law on State Prosecution No. 03/L-225; c. Law on People’s Advocate No. 03/L-195; d. Law on Police No. 04/L-076; e. Law on Central Bank of Kosovo No. 03/L-074; f. Law on Establishing the Office of Auditor General and the Auditing Office of

Kosovo No. 03/L-075; g. Law on Anti-Corruption Agency No. 03/L-159; h. Law on Constitutional Court No. 03/L-121; i. Law on Media Independent Commission No. 04/L-44.

Salaries of the courts personnel are defined and determined in the Law on Courts, Article 29, “Salary and judicial compensation” according to which:

a. President of the Supreme Court shall receive an equivalent salary with that of the Prime minster of Kosovo;

b. All judges of the Supreme Court shall receive a salary equivalent with that of a Minister of the Government;

c. President of the Appeals Court shall receive a salary equivalent with that of the judges of Supreme Court of Kosovo;

d. All judges of the Appeals Court shall a salary equivalent of ninety (90%) of the President of Appeals Court;

e. President of a Basic Court shall receive a salary equivalent with that of a judge of Appeals Court;

f. The supervising judge of a branch of Basic Court shall receive a salary equivalent with ninety (90%) of the President of Basic Court;

g. Every judge of a Basic Court shall receive a basic salary not less than seventy (70%) of the salary of the President of Basic Court Judicial Council of Kosovo shall announce a plan for supplementary compensation which recognize the unique responsibility of judges who serve in the department for Serious Crimes, Economic or Administrative Issues; but the amount of basic salary and supplementary compensation in no case shall exceed ninety (90%) of the salary of President of Basic Court;

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h. Salary of a judge shall not be reduced during the mandate for which the judge has been nominated, except the disciplinary measure pronounced under the authority of Kosovo Judicial Council;

i. Judges enjoy the right to annual leave of twenty (20) paid working days.

Also salaries of the personnel of prosecution are determined and defined clearly by the Law on State Prosecution, respectively Article 21 “Compensation of State Prosecutors” according to which:

a. Chief State Prosecutor receives a salary equivalent with that of the President of Supreme Court;

b. Prosecutors with a permanent mandate in the Office of State Prosecutor receive salaries equivalent at a rate of ninety percent (90%) of the salary of Chief State Prosecutor;

c. Chief Prosecutor of the Special Prosecution receives a salary equivalent at a rate of ninety five percent (95%) of the salary of State Head Prosecutor;

d. Prosecutors with a permanent mandate at the Special Prosecution receive a salary equivalent with the salary of prosecutors in the Office of State Head;

e. Chief Prosecutor of the Appeals Prosecution receives a salary equivalent with that of the President of Appeals Court;

f. Prosecutors with a permanent mandate at the Appeals Prosecution receive a salary equivalent at a rate of ninety percent (90%) with that of the salary of Chief Prosecutor of the Appeals Prosecution; Head Prosecutors of Basic Prosecution Office receive a salary equivalent with that of President of Basic Court;

g. Every prosecutor with a permanent mandate in the Basic Prosecution Office receives a salary not less than seventy percent (70%) of the salary of Head Prosecutor of Basic Prosecution. The Council shall issue a scheme on supplementary compensation that presents special responsibilities of the prosecutors working in the Department for Serious Crimes at the Basic Court, but in no case the amount of basic salary and the supplementary compensation shall exceed ninety percent (90%) of the salary of Head Prosecutor of Basic Prosecution;

h. Aside to basic salary, every prosecutor enjoys the right to supplementary compensation for other services as provided for in a Law or a rule issued by the Kosovo Prosecutors Council;

i. Notwithstanding any other provision of Law, the salary of state prosecutors shall not be decreased except if it is pronounced as a sanction by the Prosecutorial Council or the Council’s Disciplinary Commission based on the fact that a state prosecutor has committed an improper behavior or a criminal offence;

j. State prosecutors are entitled to annual leave equally with civil servants, but in no case less than twenty (20) paid working days;

c) Arrangements for public administration wages and employment; Except the Law on Labor which provides for the principles and basic rights in the field of employment, salaries and employment in the public administration are regulated by

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the Law on Civil Service of the Republic of Kosovo No. 03/L-149 and the Law on Salaries of Civil Servants No. 03/L-147. Law on Civil Service firstly defines the civil service and categories which are not part of the civil service. As regards the employment, this Law regulates the scheme of categories of employees in the civil service, general requirements for admission in the civil service, limitations on appointing the holders of a public office in the civil service, appointment in senior management positions, transfer of management officials within the civil service, civil servants elected or appointed in a public function outside the civil service, basic criteria for admission in the civil service, job relationship in the civil service, the probation period, grading and advancement, etc.

Based on Article 4 “Categories of public employees which are not part of the Civil Service” of the Law on Civil Service, the status of a civil employee is not applied for the following categories: staff of education system, medical staff of health system, art authors and performers, police officials of the Kosovo Police, customs officials of the Kosovo Customs, correctional officials of the Kosovo Correction Service and members of the Kosovo Security Force, political appointees and all those appointed by the political appointees and members of their cabinets – cabinet of the President, President of the Assembly, Prime minister and Ministers’ cabinets. Their job relationship is regulated by the Law on Labor, special Laws, collective agreements or sector regulations.

Elected officials in constituent positions in public administration institutions and officials appointed in certain positions by the elected officials are not civil employees. All the employees employed in cabinets of the public office holders are not civil employees.

The personnel employed in public administration institutions of the central and local Government, responsible to conduct supporting and maintenance functions, are not civil employees. Law on Salaries of Civil Service provides the legal basis for the salaries of civil service, including the basic salary and its calculation, the payment terms, classification of positions and salary grades in the civil service, duties and responsibilities of positions, placement of coefficients, supplementary salary including overtime and additional pay in accordance to the qualifications. Specific aspects of this Law are regulated by special acts of secondary legislation.

d) Share of taxes in the total wage bill, including social contributions paid by employers and employees, and the bracket structure of income taxes.

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Table 21: Share of taxes and social contributions including tax brackets Personal income tax and tax rate, in %, including obligatory pension scheme

contributions

Brackets of monthly income, in € Tax rate in %

Obligatory pension contributions on gross

salary

Monthly Annual Up to 2008

As of January

2009

From employer

From Employee

Total until 2008

Total as of

January 2009

Up to 80 € 960 0 0 5 5 10 10

80 – 250 €

960€ – 3000€ 5 4 5 5 15 14

250 – 450 €

3.000€ – 5.400€ 10 8 5 5 20 18

Over 450 € Over 5.400€ 20 10 5 5 30 20

Source: Kosovo Tax Administration

2.5. Economic and structural developments and reforms

- Please briefly clarify the following points: How has domestic consensus on the fundamentals of economic policies been secured? Please provide comprehensive information about the adoption of economic policy in Kosovo. The domestic consensus on fundamentals of economic policies has been secured within the Governmental institutions through active involvement, input, and intensive consultation of line ministries responsible for the sector of economic development, drafting of the Economic Development Vision 2011-2014, drafting of Mid-Term Expenditure Framework (MTEF) as a mid-term mechanism of strategic planning, and the budget. All this mechanism functions as follows:

a) Main economic policies and priorities are defined in the Economic Development Vision plan 2011-2014 approved in April 23, 2011 (decision no. 01/10). This document is a result of a participatory process of all the ministries responsible for economic development sector including the Ministry of Economic Development, Ministry of Trade and Industry, Ministry of Agriculture, Ministry of Infrastructure, Ministry of European Integration, Ministry of Education, Ministry of Labor and Social Welfare, etc. As a result, the Implementation Plan of Economic Development Vision 2011-2014 is drafted. The Plan was coordinated by a coordinating group composed of representatives of each ministry and led by

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the Office of the Prime Minister while the process was overseen and agreed by the ministers of Economic Development domain;

b) Ministers of economic department sector in early 2012 decided that the economic development vision be advanced to a Platform of Economic Development and has prepared a draft of this Platform. Government in April 2012 has decided (Decision no. 02/67) for establishment of the National Economic Development Council consisting of all the Ministers of all economic department sectors, Kosovo Business Alliance, Kosovo Chamber of Commerce and American Chamber of Commerce. The Council is led by Deputy Prime Minister responsible for economic development and monitoring the implementation of economic development platform and economic reform initiatives;

c) Based on the Economic Development Vision priorities, an Action Plan for Economic Development (APED), was drafted. The Action Plan presents a platform for implementing policy reforms and economic development of Kosovo in the medium term. APED 2011-2014 is the basic document for drafting and determining Government priorities for this period;

d) In accordance with the Law on Amending and Supplementing the Law on Public Financial Management and Accountability (LAS-LPFMA), No. 03/L-221, the Government sent the Medium Term Expenditure Framework to Assembly before the 30th of April (as required by the Law). MTEF has already become an advanced to a strategic planning document linking sectoral strategies to the annual budget. MTEF 2013-2015 reflects sectorial priorities presented in APED. MTEF contains: a) the Government's priorities for the next 3 years (in accordance with APED); b) macro-fiscal framework which defines the aggregate expenditure limits for every category; c) sectoral segment outlining the indicative limits for each expenditure category; d) the part of municipal financing, where sources of municipal financing are defined (Government grants and own source revenues) and indicative expenditure limits for each category of expenditure;

e) The annual budget is drafted based on limits set in MTEF which document determines the expenditure for each category. So, domestic consensus on fundamental issues of economic policies is secured at the Government level, while the policies as such are also discussed in the Assembly.

- What are in your view the particular challenges/priorities for Kosovo's economic policy, including in the context of the global post-crisis recovery, and how do you intend to tackle them? Economic Vision Plan 2011 has determined key priorities in the field of economic development. The priorities outlined in this plan and included in Medium Term Expenditure Framework 2013-2015 are as follows:

a. Preserving macro-fiscal sustainability; b. Increasing investment; improving the investment environment and support to

private sector; c. Modernization and development of public infrastructure; d. Revitalization of agriculture sector;

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e. Development of human capital. The economic crisis that the global economy is facing, in particular some European economies has had no substantial impact on the economy, due to the partial integration of Kosovo’s financial sector, the low export base and the very low level of public debt. Central Bank of Kosovo (CBK) has the mandate for overseeing the financial sector. Aiming to further strengthen the financial sector and to preserve its stability and credibility, the Government of Kosovo, together with CBK has established an Emergency Liquidity Support Fund (ELSF) which will serve as a fund in case of a financial shock. In broad terms, policy measures intended to be taken to tackle challenges/priorities include:

a. In the absence of monetary policy, fiscal policy remains the only tool for securing and maintaining macroeconomic stability. In this context, the Government has committed to: keeping the bank balance at the recommended levels of 3-4% of GDP, limiting growth of current spending to about 60% of total expenditure, development of fiscal policies in the period 2013-2015, and to increasing local revenue as% of GDP. Also, with the purpose of maintaining a sustainable level of deficit and public debt, the Public Debt Law (PDL) No. 03/L-175 provides that the level of public debt shall not exceed 40% of GDP. To ensure that fiscal policy remains on a sustainable path, Ministry of Finance plans to adopt a legally binding fiscal rule regarding sustainable budgetary balance which will serve as guidance for policymakers and the public.

b. Measures that are expected to create a more favorable environment for

development of private sector and investment include: improvement of the legal framework including byLaws, re-organization of construction permits process (including reducing the number of documents and time required to obtain building permits), the adoption of the ‘umbrella concept’ for permits which aims to eliminate up to 50% of existing licenses until 2014. By end of 2011, the trade balance amounted to about -40% of GDP, a level which is considered to be quite high. Despite the continuous annual growth of exports, its structure remains largely based on base metals (about 60%), in contrast to imports which are well diversified. To build a strong foundation of exports, the Government's intentions are creation of a more favorable investment environment, private sector development and design of fiscal policies which will be supportive to sectors considered to have a potential to be competitive in international markets.

c. Modernization and development of public infrastructure includes targets of

construction and development of road infrastructure by the year 2014, transformation of publicly owned assets, increase and diversification of energy supply, development of public-private partnership projects (PPP).

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d. Revitalization of the agricultural sector is another priority. Measures intended to be taken are: increasing agricultural production and livestock through direct support measures, better access to agricultural loans, facilitation of vocational training, increasing the competitiveness of human capital and development of agro-rural infrastructure.

e. Development of human capital - unemployment rate in Kosovo has historically

been high; therefore, it remains a continuous priority that needs to be dealt with appropriately. In the short term, this challenge should be targeted by creating favorite conditions for domestic private investment (SMEs) and foreign investment. Measures foreseen to be taken for developing human capital which would also have an impact on reducing unemployment are: restructuring and development of educational and professional system in order to meet the requirements of the labor market, establishment of a reliable system of labor market information, and increasing the capacity of vocational training for jobseekers/unemployed for about 20% until 2014.

- How has a co-ordination between various stakeholders (e.g. line ministries, the Ministry of Finance and/or the Central Bank) for the formulation of economic policies and their implementation been carried out? Which are the consultative bodies involved in the decision-making process? To what extent are social partners involved? If relevant, what is the time given to social partners and other consultative bodies to provide their opinion? Coordination of economic policy formulation is carried out at the political level through the Ministers’ Group of Governmental departments related to the economic domain. At the technical level coordination takes place through a group of advisers and civil servants who coordinate economic policy formulation and drafting of the Economic Development Vision 2011-2014. The coordination work took place between April and July 2011. Technical and political level groups have worked on the review of policies between January 2012 and April 2012. The draft Economic Vision Plan was published on the website of Office of the Prime Minister for access by the public. Meetings and consultations with business organizations, civil society, and the donor community, took place in October 2011. Whereas the consultative process for drafting the MTEF based on priorities set by the above-mentioned mechanisms, is led by MF pursuant to Law on Public Financial Management and Accountability No. 03/L-221 through the mechanism as follows:

a. MF initiates the mechanism of drafting MTEF by informing the Prime minister and its cabinet with activities, timeframe, and responsibilities of institutions/ministries in this process. It then issues instructions for preparing MTEF. This document is based on the Declaration of priorities and contains clear instructions on the responsibilities of budget organizations (BOs) in this process, schedule of delivery of documents by BOs and a concrete illustrative example of materials required to be submitted to MF.

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b. Governmental cabinets, secretary generals and civil servants are involved in the process of drafting MTEF based on the MF instruction. Their contribution includes their mission statement, overview of current situation, measurable objectives to be achieved, tables containing historic trends and the proposed budget appropriations within limitations of resource and budget constraints. The outcome of this process is the Draft MTEF which is submitted for approval to the Government cabinet of ministers.

c. Parallel to this consultative process in drafting MTEF, which occurs at the level of Governmental institutions, the Government of Kosovo in March of 2012 with the aim of enhancing the quality of economic policymaking took the decision no. 02/67 to establish the National Council for Economic Development of Kosovo (NCEDK). NCEDK is a consultative body, with participants from business organizations along the Governmental institutions. NCEDK consists of Ministry of Finance (MF), Ministry of Economic Development (MED), Ministry of Agriculture, Forestry and Rural Development (MAFRD), Ministry of Trade and Industry (MTI), Ministry of European Integration (MEI), Ministry of Labor and Social Welfare (MLSW), Ministry of Infrastructure (MI), Ministry of Justice (MJ), Ministry of Education, Science and Technology (MEST), Kosovo Chamber of Commerce (KCC), Kosovo Business Alliance (KBA) and American Chamber of Commerce in Kosovo (ACCK). NCEDK is chaired by the Deputy Prime Minister in charge of the Economic sector, who is also a Minister of Trade and Industry. According to the draft regulation xx/2012 for the functioning of the Council, meetings shall be held at least every two months, or more frequently at the request of the Chairman or at least three members.

Pursuant to Government Decision No.02/67, among others, NCEDK organizes and streamlines the activities of state institutions with the purpose of improving the business and investment environment, approves operational plans, and initiates discussions and cooperation with potential investors. One of the duties and responsibilities of this Council is also monitoring of implementation of APED (2011-2014), which is a priority of a high importance. Inclusion of social partners in the economic policy-making process is carried out through the Economic and Social Council (ESC) pursuant to Law on Social and Economic Council (LSEC) No. 04/L-008. The Council was founded with the aim of establishing and developing social dialogue in Kosovo for employees and employers on issues of special importance regarding the fulfillment of their economic, social and professional rights that are realized through bilateral and trilateral dispute settlement agreements. ESC is composed of five (5) representatives appointed by organizations of employees, five (5) representatives appointed by the organizations of employers and five (5) representatives appointed by the Government. According to the Law on Social and Economic Council no. 04/L-008, board meets at least once in 2 months.

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- Public finances: What is the scope of public finances system? How was it conceived? How have Government revenue and expenditure developed as a share of GDP during the last 5 years, as an aggregate as well as in terms of categories? Public financing influences the economic development in Kosovo. Consequently, it is conceived in a way that financing of functional categories correspond to the national priorities and revenue trends, based on relevant legislation. Planning and drafting of the national budget is carried out in the basis of Government priorities with the purpose of achieving the medium-term plans and fulfilling the vision of sustainable economic development. Such a process requires involvement of all BOs which are responsible for drafting their budgetary requests in line with macro-fiscal stability of the country. Implementation of fiscal policies drafted by Kosovo Government during the period 2007-2011 was carried out in accordance with the objectives for continues economic expansion, safeguarding the macro-fiscal sustainability, based on a simple tax system with a broad tax base and a low tax rate. Such an approach has allowed Kosovo to have one of the lowest rates of tax burden on businesses, for more detail see Annex 3a. Based on data over the years 2007-2011, total revenues have continued to grow at an annual average of approximately 14%. Revenues from customs during this period rose by an annual average of about 13% or around 55% compared to 2007 in nominal terms. Only during 2011, such revenues increased by 18% compared to 2010. Domestic revenues during the same period rose by an annual average of 10.3%, or about 40.7% compared to 2007. Just in year 2011 alone, they were up by 18% compared to 2010. In the table below are presented revenues as % of GDP. As an aggregate, Government revenues have increased continually during last 5 years. Total revenues in 2007 stood at €898 million, reaching to €1,146 million in 2009, and continuing the upward trend to reach 1,303 million € in 2011, for more detail see Annex 3a. Table 22: Revenues as % of GDP

Description 2007 2008 2009 2010 2011

Customs Revenues 15.7% 15.7% 16.2% 16.7% 18.0% Local Revenues 5.7% 5.8% 5.3% 5.3% 5.7%

Non-tax revenues 5.4% 3.6% 3.3% 3.5% 3.5% Other revenues 0.5% 1.2% 5.5% 3.7% 2.1%

Total 28.6% 24.2% 29.3% 26.5% 27.8% Source: MF Continuous economic growth recorded during the years 2007-2011, was coupled with a continuous increase of general budget expenditure as a share of GDP. Total Expenditure over the period 2007 - 2011 has grown by an average of 9.2%. As a share of GDP, expenditure increased from 19.5% in 2007 to 29.9% in 2011, mainly as a result of

125

increased capital expenditures. While other categories of expenditure, excluding the categories of capital expenditure and wages and salaries, have decreased their participation in the GDP. As of 2008, the Government of Kosovo is focused on increasing capital investments, which increased by 120% in 2008 alone. This policy was not associated with considerable increases of primary deficit over the years 2007-2011, mainly as a result of continued growth in the budget revenues. Implementation of mature fiscal policies has resulted with an almost balanced budget throughout the 2008-2009. During 2010, the primary balance reached -2.3% of GDP while in 2011 the deficit was further reduced to -1.5%. Table 23: Overall expenditure as % of GDP

Description 2007 2008 2009 2010 2011

Revenues 28.6% 24.2% 29.3% 26.5% 27.8% Primary expenditures 27.8% 28.8% 29.0% 28.7% 29.2%

From which: Capital Expenditures and Net Loans 4.6% 9.0% 10.2% 10.9% 11.5%

Current Balance 13.7% 8.7% 10.0% 9.1% 10.0% Primary Balance 9.1% -0.3% -0.6% -2.3% -1.5%

Total Balance (including interest

payments) 9.3% -0.5% -1.1% -2.5% -1.7% Source: MF As an aggregate, general Government expenditure was €661.2 million in 2007, €950.5 million in 2008, reaching €1,232 million in 2009. The upward trend continued during 2010 and 2011 with total expenditure of €1,272 million, and €1,388 million, respectively. - Budgetary system: Please describe the features of the planning, programming and execution process of the Government budget. Please indicate policy objectives, developments and achievements as regards budgetary policy. Are the social partners consulted at the planning/programming stage of the budget cycle? How is the efficiency and effectiveness of Government spending ensured? Budget planning: The budgeting process is preceded by the MTEF document which is prepared for the three coming years. This document provides specific measurable objectives which facilitate the fulfilment of development vision and Government Program. Also, this document helps the budgeting process since those objectives are translated into activities and projects during the budget drafting through budgetary programs. Budget drafting process begins with issuance of budget circulars starting from May 15 of each calendar year. Between August and September, budget hearings with all BOs of the central level are organized every year to review their requests for budget appropriations. Institutions invited to the budget hearings are: The Assembly Budget

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and Finance Committee, OPM, MIE and other institutions that express interest in them, including civil society. As to the municipal budget, forums with local authorities are organized during months of June-September related to the stages of developing the municipal budget cycle, with the focus on the fundamental principles of comprehensive participation of municipal staff, transparency, competitiveness and democracy. Public hearings with citizens are held where municipal priorities are elaborated, then Municipal Assembly approves the proposed budget and submits it to MF. In budget projections used electronic systems of BDMS (Budget Development and Management System) and Public Investment Programme (PIP) are the tools used in the budget planning. Appropriations under Pursuant to Budget Law, budget appropriations are divided in three categories:

a. Budget allocations by BO (Ministries, Municipalities, programs and sub-programs);

b. Allocations by function and allocations by economic categories. Budget execution: After the approval of budget appropriations in the Kosovo Assembly, the budget execution process begins through the Information System for Financial Management (IFFM), largely under the responsibility of BO and the Treasury Department. Budget departments only track changes in budget appropriations pursuant to the provisions of Law on Public Financial Management and Accountability (LPFMA), No. 03/L-048, Law on Local Government Finance (LLGF) No. 03 / L-049 and annual budget Laws. According to budget Law no. 04-L-079, at least twice a year, during the semi-annual report reviewing and reporting for the closing of the fiscal year the Minister shall report to the Government cabinet and / or Assembly for budget changes and adjustments that occurred during the fiscal year. Transfers/redistributions among economic categories, such as from subsidies to capital, as well as transfers/redistributions among ministries are regulated by Law. Transfers/redistribution among economic categories are regulated pursuant to the Law on Public Finances Management and Accountability No. 03/L-048, article 30 and 31 and pursuant to the Law on Budget of the Republic of Kosovo No. 04/L-079, articles 13-14.

a. Up to a certain percentage, the transfers and redistributions for programmes within the budgetary organisation may be approved by the minister (up to 15%), Government (up to25%) of negatively affected appropriations;

b. No transfer between budgetary organisations can be made without approval of the Assembly;

c. Whenever a central Budget Organization has under spent in accordance with the cash flow plan submitted to the Treasury, the Minister with the approval of the Government may authorize a reduction in the appropriation but the cumulative value of all such transfers must not exceed five percent (5%) of the total value of all appropriations;

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d. Where an appropriation relates to a specific responsibility of a budget organization, and such responsibility is Lawfully transferred or delegated to a different budget organization, the Minister shall transfer, as may be required under the circumstances, all or part of such appropriation from the former budget organization to the latter;

e. All the changes due to transfers and reallocations are evidenced in the Free-Balance systems (SIMFK) Budget Development and Management System (BDMS) and Public Investment Programme System (PIP).

Social partners are consulted at the policy-making level, and not during the budget cycle since at this stage consultations are carried out only with BO's, who shall transmit the commitment and the stance of the Social Economic Council. Quarterly and annual physical and financial progress reports of the implementation of capital projects are prepared through the PIP system for purposes of monitoring the efficiency of spending. With the purpose of increasing effectiveness and efficiency, through the budget circulars, BOs are required to present performance indicators for their budget requests. - Expenditure policy and structure: Please outline and briefly comment the structure of Government expenditure by economic elements and functions over the last five years. Which are the Government's main expenditure priorities and how are they linked to the overall economic development policy? Pursuant to Law on Public Financial Management and Accountability (LPFMA), No. 03/L-048 and the Annual Budget Law, expenditure structure by functional classification is divided in the following categories:

a. General services; b. Defence; c. public Law enforcement and security; d. economic issues; e. environment protection; f. residential and community issue; g. health; h. recreation, culture and religion; i. education; j. social protection.

During the period 2008-2011, Kosovo Government has oriented financing expenditures towards financing of economic issues, where particular emphasis was given to improving road infrastructure. Expenditures for this category have had an increasing trend from 18.6% of total spending in 2007 to 31.2% in 2011. Social protection category has had a decreasing trend from 17.9% of total expenditure in 2007 to 12.9% in 2011. Other categories have gone through a more or less linear trend over this period for more detail see Annex 3a.

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Structure of expenditure by economic nature, includes the following categories: a. wages and salaries; b. goods and services; c. municipal expenditures; d. subsidies and transfers; e. capital expenditures; f. other expenditures.

Total Expenditure by economic category as a share of GDP, increased from 19.5% in 2007 to 29.9% in 2011, mainly due to increased capital expenditure. Also, the category of wages and salaries increased from 6.1% (as a share of GDP) in 2007, to 8.4% in 2011, while the category of other expenses has decreased as a share of GDP. Budgetary process is preceded by the Economic Development Plan precedes (EDP) and MTEF. The MTEF 2013-2015 contains the Statement of Priorities of Kosovo Government for the mid-term period. With the purpose of an overall economic development, this statement contains four main pillars:

a. sustainable economic growth and development; b. good governance and strengthening of rule of Law; c. development of human resources; d. Increasing social welfare for all citizens.

These are the main pillars of economic development. Furthermore, through sectoral strategies and BO`s these priorities are broken down into specific objectives and translated into specific budgetary allocations. Concrete objectives are developed into individual projects and activities through the budgeting process for more detail see Annex 3a. - Tax policy: Which authorities are responsible for tax collection at the central Government level? Which taxes do they collect? Which fiscal responsibilities do the various authorities have (nature of the taxes collected)? How has the tax regime changed over the last five years (amendments of tax rates, introduction of new taxes and contributions etc)? Is there an adequate flow of revenue for municipalities in order to finance their competences? Is there a mechanism of redistribution of sources among municipalities? Is the central budget expected to finance municipalities? Collection of taxes at the central level of Government is carried out by the Kosovo Customs (KC) and the Tax Administration of Kosovo (TAK). Types of taxes collected at the central level by the Customs are:

a. Customs tax; b. Value added tax (VAT); c. Excise.

While, types of taxes collected at the central level by the Tax Administration are: a. Value added tax (VAT); b. Corporate Income tax;

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c. Personal income tax that according to Law on Personal Income Tax No. 03/L-161 includes income from wages, rents, interest, use of intangible property assets, capital gains, wining on lottery and games of chance, and the income generated by businesses with gross annual turnover of €50.000 or less.

Since 2007 to the present day, there have been several changes in tax policies of Kosovo. On 1st of January 2009, Law on Personal Income Tax has entered into force, which provided a reduction of tax rate from 0%, 5%, 10% and 20% to 0% for income up to € 960, 4% for annual income bracket €960 € to 3000, 8% for annual income bracket between €3,000 and €5,400, and 10% for annual income over €5400. Also, pursuant to this Law, tax rate was reduced from 20% to 10% for income from rents, interest, dividends, capital gains, lottery and gambling, pensions and other income. Then Law on Corporate Income Tax No. 03/L-115 was abrogated by Law on Corporate Income Tax No. 03/L-161 which excluded the dividend income from the category of taxable income. Also, with entry into force of the Law on Corporate Income Tax No. 03/L-113 on the 1st of January 2009, tax rate was reduced from 20% to 10%. Then, on 1 January 2010, entry into force of new Corporate Income Tax Law No. 03/L-162 provided several other tax changes. Such changes include the reduction of tax rate for insurance companies from 7% to 5%, exemption from tax of dividend income for resident and non-resident persons, interest of financial instruments issued by public authorities in Kosovo and economic activities of religious institutions for self-sustainability purposes. With the purpose of a neutral effect of this fiscal reform in budgetary revenues, VAT rate was increased from 15% to 16% pursuant to the Law on Value Added Tax No. 03/L- 114. With the entry into force of new VAT Law No. 03/L-146 on January 1st 2010, Minister of Finance is granted permission to, if is necessary, issue sub-legal acts for introduction of a lower rate (up to 5%) and upper rate (up 21%) of VAT for certain supplies of goods and services contained in Annex III to this Law. On November 11, 2008, the Customs and Excise Code Law No. 03/L-109 entered into force replacing UNMIK Regulation 2004/1 and 2005/32 and Administrative Instruction 2004/24. Also, some changes are implemented on the rates of excise, which under the Law on Amending and Supplementing the Law on Excise Tax Rate in Kosovo No. 03/L-220, petroleum gases and other gas hydrocarbons (tariff code 2711) used for production purposes are excluded from payment of excise duty. By mid- 2011, the Government made a decision to change excise rate on tobacco products, motor vehicles and approved the application of excise tax on gambling. Excise tax on tobacco products increased from 25 € to 27 € for 1000 units of tobacco products, while the excise rate from 500 € for vehicles was raised and classified based on motor power and year of production.

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Based on the Law on Immovable Property Tax No. 03/L-204, municipalities are responsible for collecting property tax. After its amending and approval by Kosovo Assembly, new rates with minimum threshold increased from 0.05% to 0.15% which pursuant to this Law shall take effect from January 1st, 2013. Table 24: Personal Income Tax and Tax Rates in %

Income brackets, euro currency Tax rates, in %

Monthly Annually Until 2008 from January 2009

Up to 80 € 960 0 0 80 – 250 € 960€ – 3000€ 5 4 250 – 450 € 3.000€ – 5.400€ 10 8 over 450 € over 5.400€ 20 10

Table 25: Corporate income and VAT tax rates, in % Up to end of 2008 From 2009 Corporate income tax 20 10 VAT tax 15 16

Source: Tax Administration of Kosovo Principles of municipal financing and participation of the municipal budget in Kosovo Budget (Government grants for municipalities) are structured in line with Law on Local Government Finances (LLGF) No.03/L-049 and other legislation in force. Municipalities, from year to year have had an increasing degree of fiscal decentralization and transparency of municipal budget planning, recording/executing and budget reporting. Determination of aggregate amounts of Government grants and their allocation to individual municipalities is carried out by Grants Commission (GC) under section 33 of LLGF taking into account the following criteria:

a. Application of principles, criteria and general formula set by LLGF b. Analysis of sectoral standards provided by line ministries MEST, MH, MLGA c. The allocation formula for specific grants in pre-university education and

primary health care d. Macro –fiscal framework as the basis of MTEF

Such institutional arrangement was developed by the Secretariat of Grants Commission in MF, pursuant to Article 32 item 5 of Law on Local Government Finances in consultation and coordination with: a) line ministries MEST, MH and MLGA, including funding for secondary healthcare as an added competence, b) municipalities including harmonization between mother municipalities with new municipalities as outlined in their memorandums of understanding, c) Department of Macroeconomics and Central

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Budget Department of Ministry of Finance , and in cooperation with international partners (IMF, WB, EC, USAID, OSCE, etc.). Current municipal finance system constitutes an advanced fiscal decentralization, where municipalities have considerable spending competencies, authority to provide public services, authority to collect revenue, and wide authority on public finance management. According to the recommendations of IMF Mission for 2013, municipalities will have flexibility in the allocation of municipal own revenues in the structure of expenditure by economic category for 2013, excluding category of Wages and Salaries. Municipal Financing Sources include: municipal own revenues, specific operating grants, and grants for additional competences, transfers for delegated competencies, extraordinary grants and foreign financial aid. Pursuant to LLGF, article 23, municipalities receive operating grants from Kosovo budget such as: general grant as defined in LLGF Article 24, specific grant for education and specific grant for health services including financing for secondary health, pursuant to Article 25 of LLGF. Pursuant to Law on Municipal Administrative Boundaries No. 03/L-041, Article 9, after establishment of a new municipality as a budget organization, Ministry of Finance in consultation with MLGA and respective mayors, transfers the sufficient budgetary allocations from existing BOs to the new municipality, in accordance with approved grant allocation from Grants Commission. - Public debt: How has budgetary financing been secured during the last 5 years (main instruments)? Please provide detailed information on the present stock of public debt (foreign/domestic creditors, currency, instruments, etc.), guarantees and arrears. Kosovo Government over last five years has operated with an overall budget surplus. Total stock of public debt (internal and external) is approximately €282.8 million. From this sum, €253.1 million are external debt, and €29.7 million is securities issued by Ministry of Finance in the form of Treasury Bills. The external debt shall be paid back to creditors as follows:

a. International Bank for Reconstruction and Development (World Bank) – €220.7 million

b. International Monetary Fund– around €27.3 million (SDR 23 million) c. International Development Association (World Bank) – around €5.1 million

(SDR 4.3 million) The internal debt of €29.7 million € is lent by commercial banks operating in Kosovo. Until now, Ministry of Finance has not issued loan guarantees for any institution. However, through sub-borrowing Agreements, Ministry of Finance has a binding agreement for sub-borrowing of funds to various public institutions such as; Kosovo

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Transmission and Market Operator (KOSTT) and Regional Water Company "Prishtina". There are no debt arrears. Labor market:

a. Unemployment: How has unemployment developed over time and sectors? What are the main categories concerned? What is the percentage of long-term employment? Please list the underlying factors.

Table 26: Unemployment over time, 2007-2011 Year 2007 2008 2009 2010 2011 Registered unemployed 334,595 335,942 338,895 335,260 325,261 Source: Labor and employment report 2011, MLSW Main categories of unemployment are long-term unemployed, youth, women, and minorities. Table 27: Long term unemployment of youth, women, persons with disability, and minorities Category

2007 2008 2009 2010 2011

Long term unemployment

93.00% 93.50% 94.20% 94.00% 93.80%

Youth (15-24) 98,695 101,658 103,896 106,342 107,122 Unemployed women

156,679 158,120 161,131 160,856 157,922

Persons with disability

1,726 1,814 1,903 1,937 2,030

All minorities 30,133 30,509 30,695 29,860 29,711 Source: Labor and employment report 2011, MLSW

b) Employment: What is the division of employment between the public and the private sector? What have been the main sectors of job creation? How do you assess the relationship between economic growth and employment?

Table 28: Division of employment between public and private sector, 2007-2011 Year 2007 2008 2009 2010 2011 Employment 225,037 218,231 233,338 245,502 251,510 Public 74,366 74,701 74,190 77,164 78,068 Private 150,671 143,530 159,148 168,338 173,442 Source: KAS & Pensions Trust Fund

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Chart 1: Relationship between annual GDP growth and employment growth

Constructed with data from Kosovo Agency of Statistics

c) Please describe the key features of the Government labor market policy. What are the main steps taken/to be taken to improve the labor market conditions and/or the mismatch between labor supply and demand?

Action Plan of Kosovo Economic Vision 2011-2014 highlights the main economic development priorities and sectors. Among others the priorities of this document include:

a. Improving investment environment and supporting the private sector: Increase of investments and support to develop the private sector is the foundation of a sustainable economic growth. Amendment and completion of the essential legislation that create conditions to attract investment in Kosovo and removal of excessive administrative barriers facilitates operation of the private sector and contributes to the economic growth of the country. This entails comprehensive reforms to eliminate 50% of the excessive license and permit requirements. Another aspect in terms of developing this sector is intensifying activities for attracting foreign investment and integration in the international financial institutions.

b. Developing Human Capital: Activities within this strategic priority aim at

increasing the quality of human capital with the objective of providing a higher quality workforce in the labour market. In this regard, emphasis will be given to education and professional development in terms of development of human capital in all sectors.

Employment Strategy 2010-2012 is one of the main Governmental employment policy document. In view of the impediments to employment growth, the appropriate longer-run strategy was broken down into three key pillars:

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a. Improving the investment climate and lowering the costs of doing business with the aim of increasing the pace of job creation by encouraging firm entry and expansion in more value added activities;

b. Promoting a strong skills base and higher rates of human capital development through the formal education and vocational training systems.

c. Improving the functioning of the labor market through better labor market institutions, policies and regulations.

In order to achieve a quick run improvement in labor market conditions, the Government undertook short run measures to address the urgent need for more jobs through expand the public investment and public works programs while pursuing medium and long-term objectives for a more sustainable job-creating path. The Sectoral Strategy 2009-2013 sets further objectives regarding employment policy and match of the labor market supply and demand. See the objectives below:

a. Objective 1: Increase of employment rate and strengthening of vocational training, according to labor market demands;

b. Objective 4: Improvement of cooperation with region’s countries (EU members and non-EU members) on increasing opportunities for employing Kosovo labor force.

To meet the first objective, the Ministry of Labor and Social Welfare is planning to increase the labor market services efficiency and effectiveness, improvement of information, intermediation and vocational training, physical infrastructure and information technology, review and modification of current vocational training curricula and development of new ones and increasing the vocational training capacities, VTC professional and management staff training, reduction of unemployment of youth, women and long-term unemployed, reviewing and expanding of active labor market policies’ measures for employment protection of such categories, social dialogue balance, etc. Under Objective 4, the MLSW is planning to strengthen the implementation of EU standards and cooperation on improving technical, financial and human capacities, through technical twinning agreements that would assist the cooperation process and development of policies, legislation and improvement of partnerships for attracting investments and funding job creation projects, by providing support to private sector through establishment of joint companies. Furthermore the Sector Development Plan 2012-2014 envisages continuing with reforming process towards creation of the capacities for policy development on the level of the Department of Labor and Employment, by creation of Divisions for policy development and implementation, creation of the National Employment Service, strengthen the capacities of the public employment services, develop the labor market information system, etc.

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- Price regime: In what sectors are prices administered (i.e. set explicitly by Government) or regulated (i.e. subject to approval by independent regulator)? Please indicate the broad categories of prices which are administered/regulated and the share of administered/regulated prices in total, including quantitative indicators. Sectors with regulated prices are sectors that offer public services. Regulation of prices is carried out by independent agencies that function as an economic regulator and report directly to the Assembly of Kosovo. The following sectors have regulated prices:

a. Energy (including central heating); b. Water supply and waste; c. Post – telecommunications; d. Railways; e. Health; f. Education;

Energy: Energy Regulatory Office (ERO) operates pursuant to Law No.03/L-185 for Energy Regulator. ERO has a legal mandate for the economic regulation with regard to the energy sector meaning that it has price setting role for the use of energy infrastructure in Kosovo as well for the use of electric and thermal energy. ERO is obliged to set the electricity tariffs for domestic customers. In cases where, according to the criteria set by ERO, is decided that competition in the electricity market is not effective, ERO has the authority to set electricity tariffs for other customers as well. In the last decision of ERO with regard to electricity tariffs is determined that competition within the electricity sector is not effective. Consequently it was decided that all customers in Kosovo will have the chance to buy electricity with regulated tariffs. The regulated tariffs of electric energy are: Tariffs for the Sale of Electric Energy to the Public Supplier; Tariffs for the Sale of Electric Energy from the Public Supplier; Transmission Tariffs (Transmission); and the Distribution Tariffs (Distribution). Tariffs for the central heating are set based on Law No. 03/L-116, under which the ERO determines the prices and fees based on the annual proposal of the distributor. Health: Health services in the private sector are fully independent, while the prices in the public sector are uniform throughout Kosovo. In absence of any Law or administrative instruction, the Ministry of Health (MoH) has drafted “Temporary price list for health services” in consultation with the health service providers in the public sector. Currently the MoH is drafting a List of basic health services; price setting methodology; as well as the Price List of health services in the sector of public health. These documents are expected to be finalized until July 1, 2012.

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Price administration takes place only in the public sector, for two categories of people: i) people who are not citizens of Kosovo, and ii) Kosovo citizens who are insured. For the citizens of Kosovo who are not insured a basic health package with services is applicable free of charge (at a minimal participation fee). Education: Tariffs of private institutions of higher education are determined freely by private institutions providing the education services. Pursuant to Article 30 of Law No. 04/L-037 for Higher Education (link: http://www.masht-gov.net/advCms/), the Ministry of Education, Science and Technology (MEST) determines on annual basis the maximum tuition fees that students shall pay in public institutions of higher education. The level of payment is determined depending on the student’s residence (inside or outside of Kosovo), nature and the cost of the program of studies. Public institutions of higher education charge tariffs and fees such as: the acceptance submission fee, exam re-sit fees, and student’s card fee. These tariffs are approved by the governing body of the respective institution and are confirmed by MEST. Water supply and waste: Water and Waste prices are regulated by Water and Waste Regulatory Office (WWRO) pursuant to the Law 03/L-086 (link: http://gazetazyrtare.rks-gov.net/GZ2008.aspx), and the Rules R-02/U&K/2008 on setting tariffs for the services of water supply, sewage, supply of bulk water, and R-02/M/2008 on setting tariffs for the services of collection and disposal of waste in Kosovo (link: http://www.wwro-ks.org/Tariffs_rregullat_tarifore.html). The WWRO regulates all prices related to:

a. the central enterprise for supply of untreated bulk water; b. the central enterprise for management of permanent landfills in Kosovo; c. 7 regional enterprises in the areas of water supply and sewage services; d. 7 regional enterprises for collection of waste.

There are three types of prices for water and sewage services: i) monthly fixed prices –EUR/month, ii) volumetric prices for water supply – EUR/m3, iii) volumetric prices for wastewater services - EUR/m3, and iv) prices for the supply of treated and untreated bulk water. This price system addresses three categories of consumers: i) households, ii) commercial-industrial, and iii) institutional. For the waste disposal of permanent waste landfills is one price. Participation/percentage of regulated prices from WWRO:

a. WWRO manages 100% of the charged prices from the regionalized and corporate companies of the water supply and sewage system as well as those that deal with the collection and management of the permanent sanitary land fields;

b. 71% of the entire population is supplied with drinking water, whereas 48% of the entire population in the country level is provided with sewage services;

c. With regard to the collection of solid municipal waste, 47% of the total population is provided with such services (such data’s are based on the total

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number of population that has been receiving these services and the total number of the population in the country).

Post and Telecommunications: Prices of the telecommunication services are set by the Telecommunications Regulatory Authority (TRA) under the authorizations granted by the Telecommunication Law No. 2002/7, amended with Law No. 03/L-85, (link: http://www.art-ks.org/?cid=1,8). According to the analysis of fixed telephony market, the TRA has established price control obligations on Operators with Significant Market Power (OSMP). TRA has placed the price obligations toward two (2) operators (PTK J.S.C and IPKO L.L.C.) for the separation of accounts and cost calculation model for the full distribution of costs (Fully Distributed Cost-FDC) on basis that OSMP must estimate their service prices. In the mobile market, TRA has done the pricing call termination (TRM), after the failure of operators to reach interconnection agreements, namely to determine MTR’s. Telecommunications Regulatory Authority is in the process of analyzing the market with regard to the termination of voice calls in the individual public mobile network and depending on the findings it can impose price controlling obligations. Furthermore, until the end of the year TRA will finish the process of market analysis for the leased lines and the Internet services thus in proportion with the findings will make price adjustments for OFNT. Railways: Pursuant to the Law No. 04/L-63 with regard to Kosovo railways, public company TRAINKOS JSC has the option of setting their own tariffs. Privatization:

a) Please provide an overview of the privatization process during the last 5 years for state-owned and socially owned companies, respectively. What have been the main methods of privatization? How many enterprises have been privatized/liquidated/sent into bankruptcy procedures? Please provide information on the size, employment and activity of these enterprises. What is the current status and portfolio of the agency in charge of privatization? What are the prospects for the further disinvestment and termination of activities of the same agency?

Privatization of Socially owned enterprises Overview and methods of privatization: The privatization process in Kosovo was initiated with the establishment of the Kosovo Trust Agency (KTA) in 2002. Methods used for the privatization of the Socially Owned Enterprises (SOEs) and their respective assets were: i) Ordinary Spin Off, ii) Conditional Spin Off, and iii) Special Spin Off. The Ordinary Spin Off does not involve any conditions other than the highest price in one bidding round. The winner under the Conditional Spin Off and Special Spin Off, other than the highest price (50% of the points), the winning bidder was determined also

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based on the employment commitment (25% of the points) and investment commitment (25% of the points) offered by the bidder. Furthermore, this method comprised of two rounds of bidding, whereby in the second round only the three highest bidders from the first round were able to participate. UNMIK administration upon the establishment in 1999 has arranged leases for up to 10 years (commercialization) of numerous SOEs with strategic importance. Up to date, from 18 Lease Agreements only one is still on lease whereas 8 of them are privatized. The Lease Agreement was terminated for 9 of them due to violation of the agreement. Out of nine (9) SOEs, five (5) were privatized, one (1) is under liquidation and three (3) are to be privatized in the future. In compliance with the Law No. 04/L-034 on the Privatization Agency of Kosovo (PAK), the Special Spin Off method, inherited from the KTA, is not applied by PAK since it proved to be extremely complex for the PAK Management and the Board, as some of the enterprises privatized through Special Spin Off exceedingly prolonged the fulfilment of the employment and investment commitments. Complications rose due to conclusion of contracts based on the English legislation which does not comply with the Laws applicable in Kosovo. POEs do not fall under the mandate of PAK. POEs used to be under the mandate of KTA, which also chaired the Boards and carried out the corporatization of these enterprises by transforming them into Joint Stock Companies, the shareholder of which is the Government of Kosovo. Privatization is now carried out by two main methods: Spin-Off Method and Asset Sale of enterprises placed in Liquidation. Privatized companies, their size, employment and activity: The total number of SOEs, from which New Companies were created and tendered, since the beginning of privatization up to date is 313, whereas the number of New Companies tendered from these SOEs is 696. The number of signed sale contracts is 675, while the number of liquidated enterprises is 3. Number of tendered NewCos does not mean the number of sold NewCos, a New Company may be tendered but not sold due to various reasons such as: no offers submitted, the bidders documentation is not properly fulfilled and the tender is cancelled, bidders withdrawals etc. Privatization Agency of Kosovo pursuant to Law No. 04/L-034 does not have the mandate to monitor the employment and activities of privatized enterprises partially or completely through the ordinary spin off (with no condition).Activities and employment by enterprises privatized through special spin off and with conditions, is monitored by the PAK mechanisms for a certain period of time. The monitoring period varies and depends on the contracts and commitments. Special Spin Offs had two (2) years to fulfill the commitments whereas the monitoring period for enterprises privatized through conditional spin off was from three (3) years up to five (5) years. From 25 privatized enterprises with special spin offs, where employment was also one of the conditions, the committed number for employees was 8,340 whereas the reported number for employment was 7,108 employees. From seven (7) enterprises that are now

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being monitored, six (6) of them as per the NCFR criteria (National Council for financial reporting) are classified as big enterprises whereas one (1) is classified as a medium enterprise. The activity of these enterprises is: three (3) are Processing Industries (food, tobacco and light industry), two (2) are hotel and hospitality, one (1) is mining and ore processing, and one (1) is Agro Industry. Total number of current employees is 1295. Status/portfolio: Article 5 of the Law 04/L-034 stipulates that PAK is an independent public body that carries out its functions and responsibilities with full autonomy. The Agency possesses full legal personality and in particular the capacity to enter into contracts, acquire, hold and dispose of property and have all implied powers to discharge fully the tasks and powers conferred upon it by the Law No. 04/L-034; and to sue and be sued in its own name. The Agency is the successor of KTA that was established and regulated by UNMIK Regulation 2002/12 “On the establishment of the Kosovo Trust Agency” and all assets and liabilities of the latter shall be assets and liabilities of the Agency. The current number of SOEs in the portfolio of the Agency is 595. During the 2011 three enterprises were removed from PAK’s direct administration after determination of their status. So far, from the entire portfolio of the Agency 306 SOEs are completely or partially privatized with the sale of 689 New Companies. Perspective and Disinvestment: PAK’s expected capital investments for the next three years are as in table No.1, while the amount of funds approved by the MF are presented in table No.2. Table 30: Limits of PAK’s submitted expenditure request for MTEF 2013-2015. PAK 2012 2013 2014 2015

Capital Expenditure 170,000.00 173,000.00 170,000.00 30,000.00 Table 31: Limits of approved expenditure, MTEF 2013-2015 2013 2014 2015 Total Capital Expenditure 170,000 125,000 80,000 375,000

Based on article 6 (dedicated revenues of independent Agencies) of the Law No. 04/L079 for the 2012 budget, PAK is allowed to sign a memorandum of understanding (MoU) with the Ministry of Finances (MF) for allocation of Agency’s dedicated revenues. This means that after signing the MoU the burden of the Kosovo Budget by the end of 2012 will be 0, since the Agency will cover capital investments from its self generated revenues.PAK Law No. 04/L-034 Article 21, paragraph 2 states: “All revenue of the Agency shall be the dedicated revenue of the Agency as provided for in Article 64 of the Law on Public Finance Management and Accountability No.03/L-048. In addition, five percent (5%) of all funds received as a consequence of any past or future sale, transfer, privatization, liquidation or other disposition of any Enterprise or Asset,

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whether conducted by the Agency or its predecessor – shall be the administration fee of the Agency to cover its general administrative and operating costs; and such fee shall also be the dedicated revenue of the Agency. The Agency shall promptly transfer and deposit all such fees into the Kosovo Consolidated Fund in accordance with the applicable rules issued pursuant to the LPFMA; the Treasury and the Ministry of Finance shall ensure that all such funds are placed and held in the Agency’s dedicated revenue account”. In accordance with the Law Nr. 04/L-034, and its Annex 1, the Agency will engage a Contractor which will form a Liquidation Authority for each SOE placed in liquidation. The Liquidation Authority will be responsible for gathering, evaluating and adjudicating claims; handling any legal action that may be undertaken in the process; proposing a creditors pay-out plan and administering it once duly approved; handling all administrative aspects of the liquidation process until the SOE is officially dissolved; keeping proper archives and records; etc. The Contractor will not be requested to sell assets, except in exceptional circumstances and with the prior agreement of PAK. This Liquidation Authority is expected to be engaged during 2012. With time, the Agency will become smaller with a clear mandate of ending its duty. The privatization process (Tendering of NewCos) is expected to be completed in two years. However the process will continue by placing all SOEs in liquidation, subsequently PAK will continue with asset sale only, whereas the contractor for Liquidation Authority as per the terms of references will be engaged for four (4) years, the authority is expected to commence with liquidation of the entire portfolio in the second year of its engagement.

b) Please quantify privatization in terms of sales revenues and fees during the last 5 years. How did the authorities use privatization receipts? How will the future funds resulting from privatization be used?

Total privatization proceeds received and banked are: 566,927,733 €, whereas the revenues from the privatization sales for the last five (5) years are 299,142,966€ and the revenues from the liquidation sales are 53,164,712€. In accordance with article 6 and 19 of the Law No. 04/L-034 on Privatization Agency of Kosovo, revenues from privatization and liquidation are kept in trust in the Central Bank of Kosovo, and 75% of these revenues are kept in trust for legitimate creditors and owners whose claims and requests are evaluated and resolved during the liquidation process. Residual funds are transferred to the Kosovo budget. Since the liquidation process stagnated due to complex legislative framework and the extended deadlines, payment of potential creditors and owners has not been done yet as per the desired dynamics. Until now only €45,139.89 has been distributed to eligible creditors/owners for 3 enterprises, the liquidation process of which is finished in PAK. Now a total of 179 Socially Owned Enterprises are under the liquidation process. In accordance with the PAK Law, eligible workers of respective enterprises are entitled to 20% of all sales proceeds. In this regard, the amount of €49,159,274 has been distributed to eligible employees for 20% from the privatization proceeds.

a) Has corporate governance improved as a consequence of privatization?

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Kosovo Privatization Agency has inherited 23 enterprises that were sold through the Special Spin Off method and which were under PAK monitoring to ensure the fulfillment of the commitments made by buyers of these enterprises. In this regard, as a result of PAK’s endeavors – commitments were fulfilled by the Buyers of 15 enterprises sold through Special Spin Off. Many of these enterprises may be considered as success stories since they are successfully carrying out their activities and export their products to the external market including the following companies: Ferronikel, M&Sillos, Kosovatex, Ballkani, Rahoveci Winery, etc.

The special case is the privatization of SharrCem, which is still under monitoring and is operating successfully in internal market since it covers 70% of the Kosovo market and is keeping the number of employees in compliance with contractual obligations. - Public sector: What is the public sector's share in the economy? What sectors are still controlled and/or owned by the Government and to what extent? Government of Kosovo is in the process of privatization of publicly owned enterprises with the aim of gradual transition to a free market economy for all sectors of the economy. Based on these principles, Government of Kosovo as legal owner has decided to privatize majority of shares (75%) of the public company service providing of mobile and landline services – PTK. Pursuant to the granted authority provided by the Laws in Kosovo and decision of the Government of Kosovo No.02/4, project of privatization 75% of share of mobile and landline business of PTK, managed by the Inter –Ministerial Committee for Privatization of PTK. Kosovo Energy Corporation (KEC) is also a publicly owned enterprise, as a sector of electricity generation as well as that of distribution and supply. In 2008, Government of Kosovo through a decision No. 08/09 approved the dismantling of the local distribution network and supply with electricity to form a new company for privatization through one open and competitive international tender. KEC has advanced the process of dismantling of its businesses in line with EU requirements, starting with the separation of KOSTT as transmission system operator, followed by the establishment of a company to take over business of Distribution and Supply, which are subject to privatization, a process in which International Finance Corporation (IFC) is acting as transaction advisor for Government of Kosovo namely the Governmental Committee of Privatization. In accordance with Law on Public Enterprises (LPE) (Law no. 03/L-087), except for KEC, PTK and KOSTT in ownership of Central Government are also following companies: Kosovo Railways, Landfill Management Company, Ibër Lepenci PHE, and Radio Television Kosovo (RTK). While under management of local Government are public services for waste and water.

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Table 32: Public sector's share in the economy

Description 2007 2008 2009 2010 2011

As % of GDP

Total Revenues 29.0% 24.2% 29.3% 27.8% 28.4%

Tax revenues 21.2% 20.6% 20.8% 21.3% 23.0%

Total Expenditures 19.5% 24.5% 29.0% 30.1% 29.9%

Current expenditures 14.9% 15.4% 18.4% 17.8% 17.8%

Capital Expenditures 4.6% 9.0% 10.2% 10.9% 11.5%

Public consumption 9.6% 9.7% 10.5% 11.5% 12.2% Source: Ministry of Finance - Protected sectors (utilities, transport, housing…): Which sectors are subject to specific protection (market entry, price setting...). Please describe recent developments in this respect, such as specific measures of liberalisation or deregulation. Which sectors are to remain under special protection? Pursuant to Law No. 03/L-086, Amending UNMIK Regulation 2004/49 on the Activities of Water, Wastewater and Waste Services Providers, dated 15 June 2008, the water and municipal non-hazardous solid services sector has the following situation: Water Services:

a) Water service sector is entirely regulated in the level of 7 regional companies; b) WWRO has licensed all publicly owned companies providing water supply

services and currently no private operator has access in the services of this sector, although the Law on Public Private Partnership has been adopted by the Assembly.

Waste Services;

a) The regional public company sector managing municipal solid waste is also regulated by WWRO, and the regulator currently has no licensed private operator;

b) In the waste collection sector, public operators have the legal possibility to subcontract private operators, and there are several such cases;

c) In the waste collection services, there are private operators licensed by other institutions, which conduct waste collection services in several urban and rural territories which are not economically regulated by WWRO.

Sanitary waste landfills are entirely publicly owned; however, the Government is considering the possibility to introduce the private capital in this sector.

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Investment opportunities have been reviewed to establish and modernize Kosovo’s landfills (4 landfills and 1 transfer station), with an overall capacity of Landfills of over 180,000 tons of waste. The Law on Postal Services No. 03/L – 173, Article 3.1.3 provides: Reserved service performed exclusively by the Public Postal Operator - Post of Kosovo are: acceptance, transport and delivery of ordinary shipments with a weight up to one (1) kg; acceptance, transportation and delivery of shipments with court, administrative and offender procedure; production, emission, placing in circulation and the removal from circulation of postage stamps; setting the post boxes, their emptying and maintenance. Services of acceptance, delivery of ordinary shipments shall not be considered as reserved services if they are carried out with a fee triple higher than the basic price. Pursuant to Law on Kosovo Railways No. 03/L-076 and the Government Decision 05/110, Kosovo Railways J.S.C. the deregulation of railway transport has started with separation of the company in two companies, one for operations (Trainkos J.S.C) and one for infrastructure (Infrakos J.S.C.). The Railway Regulatory Authority and Ministry of Infrastructure are responsible for issuance of regulations for licensing criteria, safety certificates, and permits. - Enterprise restructuring: How many state-owned (or formerly state-owned) and socially owned enterprises have been restructured so far? How many enterprises are currently being restructured or envisaged to be restructured? Please identify the remaining sectors and state-owned enterprises in need of restructuring. Please provide information about annual aggregate profit/loss of state-owned enterprises during the last 5 years. To the extent relevant, please describe briefly the privatisation strategy for the main state-owned and the remaining socially owned enterprises. The major restructuring of publicly owned companies over the last 5 years includes the following: Kosovo Railways, Prishtina International Airport, KEK and PTK. Based on the Law for Kosovo Railways no 03/L-076 and Government Decision 05/110, Kosovo Railways J.S.C. has been divided into two companies, one for operations (Trainkos J.S.C.) and the other for infrastructure (Infrakos J.S.C.). The International Airport of Prishtina "Adem Jashari" has been divided into two companies. One company deals the operation of air flights and passenger services which supports PPP in Law no. 04/L-045 in concession to Lion Limak for 20 years. The other company that deals with air control remains state owned. Distribution and supply of electricity has been separated as an independent company from KEK and is in the process of privatization, while the other part remains in the public sector.

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PTK is in its last stage of separation in two companies: Post of Kosovo, which is going to remain as a public property, and Telecommunication that includes services for fixed telephony, mobile and internet, and is in the process of privatization. This division is expected to be finalized by June/July, 2012, and in order to ensure the sustainability of the Post it is going to keep 1/3 of its current workers and all its immovable assets. There are two important state owned enterprises that have entered in the process of privatization in the recent years, PTK and KEK. The legal basis for the privatization of public enterprises is guaranteed by Article 160 of the Constitution of Kosovo and is defined with Article 9 of Law No.03/L-087 for Public Enterprises. Post and Telecommunications of Kosovo J.S.C (“PTK”): Based on the principles of the restructuring of the public property and the politics for the sector of telecommunications, the Government of Kosovo has decided to privatize the majority of stocks of public companies that provide fixed and mobile telephony services –PTK. This project is designed and based on the highest international standards for such transactions. According to OECD (Organization for Economic Co-operation and Development) for all aspects of the transactions, a professional adviser has been engaged. In addition with regard to strategic advices for the project, an international strategic advisor has been engaged as well. General overview of PTK privatization: Based on the broad strategy of the Government of Kosovo with regard to the participation of the private sector in the public owned enterprises, in December 23, 2008, the Government of the Republic of Kosovo (GoK) took the decision (02/41) to establish an Inter-ministerial Committee (IC) which will analyze all possible options for the participation of the private sector in PTK J.S.C, including the eventual privatization of all or only of some entities of its businesses After the completion of all analysis and studies, the Inter-Ministerial Committee has proposed to the Government of the Republic of Kosovo the decision for the privatization of PTK. After the Government itself approved this decision, they send the same document along with some other supporting ones for approval to the Assembly of Kosovo. In 15th of July, 2010, the Inter-Ministerial Committee established to review the options for the participation of the private sector in PTK, has recommend to the Government the option for the privatization of PTK. In its early operating phase the commission approved the management and implementing structures of the project. The commission in accordance with the approved structures for the project, appointed as the Advisor for Transactions (AT) the consortium of companies: Telco Ag and Wolf Theiss. The main activities performed in the initial phase of the project from November 2009 and during the first six (6) months of 2012 have included Examinations/Reviews of all PTK aspects as well as the potential market.

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After the completion of all analysis and studies, the Inter-Ministerial Committee has proposed to the Government of the Republic of Kosovo the decision for the privatization of PTK. After the Government itself approved this decision, they send the same document along with some other supporting ones for approval to the Assembly of Kosovo. In July, 2010, the Inter-Ministerial Committee established to review the options for the participation of the private sector in PTK, has recommend to the Government the option for the privatization of PTK. Based on this recommendation, in June 2010, the Government of Kosovo took the decision to sell 75% of the stocks for the establishment of the Governmental Commission for Privatization (GCP) of PTK. In July 2010 – the discussion for the privatization of PTK has passed in the Assembly of Kosovo and after two discussions of the functional Committee of the Assembly; at the plenary session the decision to privatize PTK was approved in principle. Given the importance of the project, in order to achieve a successful performance and effective process of privatization in PTK, in August 2010 “Hunton and Willaims LLP” company has been contracted as a Strategic Adviser who shall give independent opinions for each step of the privatization of PTK. After the approval in principal with regard to the privatization of PTK, in July 2010, by the Assembly of Kosovo, the Government Privatization Commission has decided to make the most rational use of the time, taking into consideration the competing projects in the region, to make the announcement of the calls for the pre-qualification of investors (potential buyers of the shares) in PTK. With this announcement it was clarified that the continuance of the project will entirely depend from the final decision whether to privatize or not from the Assembly of Kosovo. In September 2010, the deadline for the summation of the documents has finished with regard to the pre-qualification phase and the companies that have submitted pre-qualification documents were:

a. AlbTelecom J.S.C, Albania (Majority of the shares owned by Calik Group and Turk Telecom);

b. Hrvatski Telekom d.d. (HT), Croatia (Majority of the shares of HT are property of Deutsche Telecom);

c. Orascom Telecom Holding S.A.E., Egypt; d. Telekom Austria AG, Austria; e. Sabafon, Yemen;

Resuming of the Process in 2011: In March 2011, Parliament of Kosovo has approved the decision to sell 75% of the stocks of PTK. After the decision of the Assembly, the

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Government Privatization Commission has continued with the pre-qualification process launched in 2010 at the discretion of the Government of Kosovo. In June 2011, two companies have been pre-qualified to participate in the bidding process of PTK: Hrvatski Telecom (HT) and Telecom Austria. After the selection of two (2) potential buyers, during the month of July 2011, the Government Privatization Commission has reviewed the analytical reports for PTK (Financial Examination, Legal Examination, Technical and Business Examination, as well as the report for the regulatory issues in Kosovo) prepared by Transaction Adviser (TA), and has approved the sharing plan for the separation of the post from the perspective of the buyers with the aim of returning it in public owned enterprise. After this, during the summer months of 2011, the entire structure of the transaction has been planned as well as the documents for the transactions have been prepared, including: Information Memorandum for Companies, Instructions for tendering, the Contract of Sale and Purchase, the new status of the company with mixed ownership (25% public, 75% private), the Shareholders agreement, the bank account for the transferring of funds (ESCROW Agreement) Meanwhile, few days before the bid opening, Hrvatski Telecom Company has expressed its reservations to continue with the process, thus seeking to postpone it. The Government Privatization Commission, tried to keep this company in the process; however, without success at the end. In September, 2011 all the companies that participated in the initial phase were give a period of two (2) weeks to once again express their interest to participate as based on the predefined criteria, but this extra-time provided had not resulted in any other pre-qualified company. In October 2011, the Government Privatization Commission seeing that with the non-participation of Hrvatski Telecom in the process of purchasing of PTK stocks only one qualified company would remain to continue the process (Austrian Telecom) and with this the conditions for privatization will not be fulfilled, it decided to resume the process of privatization of PTK stocks. In the new created circumstances, the Government Privatization Commission analyzed the course of the project and decided to resume the process, to undertake few reforms within PTK which aim the further increase of value of PTK stocks such as: separation of the post, reduction of operative costs, interconnection of the costs for personnel as well as the costs toward the company performance, and so on. On 14 November 2011, the Government Privatization Commission based on the authorizations that has from the Assembly as well as from the Government of Kosovo, decided to proceed with the post separation from the other units of PTK. Let me remind you here, that this decision is particularly important, since this decision will be based on the principle of the post, which will remain publicly owned, as well as will remain with

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all current immovable assets of PTK and will create conditions for a proper functioning of postal services from the new post office company created in Kosovo. Whereas for sale will be offered 75% of shares with regard to the business sector of the telecom (that included current entities of telecom and Vala within PTK). The process of re-tendering of PTK has started in March 2012, with the new engagement of the Transactions Adviser, the consortium companies: Lazard Freres SAS, and Raiffeisen Investment AG. The selection of two companies worldwide known for the transaction advisor is expected to positively impact the successful completion of the transaction process. Plans for the Project Implementation: Currently, the Government Privatization Commission has approved the timetable for the implementation of the process of privatization, based on which, the pre-qualification is expected to open in early June, the tender in early July, while the completion of the transaction is expected to end by October 2012. Also, with the aim of testing the market and promoting the company, Government Privatization Commission has authorized the Transaction Advisor (TA) to organize two (2) conferences with potential investors in two (2) major European centres (London, on 22nd of May, and Istanbul on 28th of May 2012). Privatization of KEDS:

a. In March 2011, the Government has taken the decision no.02/04 for the re-establishment of the Governmental Commission for Privatization of Energy distribution and supply, due to the structural changes of the Government, where has amended the decision no. 08/09 date. 08 October 2008;

b. In January 2011 – is announced the “Invitation for Pre-Qualification”; c. In April 2011, after the received recommendations from the Assessment

Commission for pre-qualification and the Transaction Adviser IFC, Governmental Commission for Privatization of KEDS, has unanimously decided, that companies:

i. Limak,Yatirim Enerji ϋretim Işletme Hizmetleri ve Inşaat A.Ş”; ii. Çalik Enerji Sanayi Ticaret A. .Ş.- Çalik Elektrik Daģitim A.Ş”;

iii. TAIB Bank BSC & Yildizlar SSS Holding; iv. Elsewedy Electric S.A.E”, announces as Pre-qualified in the process of

privatization of KEDS and gives the possible access in the Room of Company Data;

d. In May 2011, the Room of Company Data was open for the pre-qualified investors in order to enable them to develop their studies and evaluation on the so –called company;

e. In June 2011 – The Appointment of the Governmental Group with regard to Energy Projects (GGEP) with representatives from each ministry, member of the Governmental Committee of Privatization and leading institutions in the energy sector: ERO, KEK, KOSTT, ICMM, and PATEL. This group serves as a working

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group in reviewing, analyzing and commenting of all energy project documents in order to protect strategic interests, financial as well as for the security of the detailed documentation with regard to the transactions of KEDS;

f. PIU, in cooperation with the MED, has established the Public Information Room, where the interested stakeholders from civil society, independent unions, companies or enterprises can be informed about the process, including recent developments in the privatization of KEDS’s;

g. GGEP has reviewed, commented and completed some for the main documents of the privatization of KEDS’s, which are to be approved by Governmental Commission for Privatization, such as:

i. Informative Memorandum (“IM”); ii. Request for Proposal (“RfP);

iii. Agreement for the Purchase of Wholesale Electricity (“BSA”); iv. Sale and Purchase Agreement (“SPA”); v. Agreement on Imports;

vi. Implementation Agreement; vii. Agreement from Transfer from KEK in KEDS;

h. On 30 November the announcement for “Invitation for offers ” for pre-qualified investors

i. Approval of Banks that will issue a Letter of Guarantee (Bid-Bond) to KEDS j. On May 26, 2012,Governmental Commission for Privatization based on the

request of the pre-qualified companies Çalik & Limak has approved the Agreement for Consortium;

k. On 17 April 2012, the Government Privatisation Commission based on the request of two pre-qualified companies: T.A.I.B.Bank and Elsewedy has approved the Agreement for Consortium, as well as the approval of “Offers of Protocol” and the “The Checklist for the Submission of Final Bids” in the process of offer for the privatization of KEDS’s;

Implementation Plans:

a. 21 May 2012, the deadline for the submission of offers from the pre-qualified companies;

b. June 2012, selection of preferred provider; c. Signature of Sale and Purchase Agreement (“SPA”) - 90 working days after the

selection of the winner, for more detail see Annex 3a. - Please describe the basic features of market entry in the corporate sector (business register, licensing procedures, number of separate administrative procedures, average amount of time for corporation) and of market exit (bankruptcy procedures)? How many companies declared bankruptcy over the last five years? How many companies are currently under bankruptcy proceedings? Registration procedures have been simplified. Law on Business Organizations No.02/L-123 provides that businesses registration is free of charge for start-up businesses; the seed capital for LLC is eliminated, for JSCs is reduced from €25.0000 to €10.000. Law on Internal Trade No.04/L-005 adopted in June 2011 has eliminated work permits and

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sanitary inspection permits. 6 licenses are eliminated for construction companies, which are: licenses for construction, design, revision, Oversight licenses, Technical acceptance license and lab license. The time for registering a business has been cut from 10 to 3 days. The total number of days for starting a business has been shortened from 59 days to 5 including the procedures of business registration, obtaining licenses, work permits, sanitary inspection certificates etc. 25 new registration centers have been opened in municipalities. Business registration system has been integrated with Tax Administration and Customs, whereby businesses now can, parallel to the registration, obtain the fiscal number, VAT Certificate or the import-export certificate in the case of small importers. In other words, businesses now can be registered with a single procedure in one place, or "One Stop Shop". "Business Services Centre" in Ministry of Trade and Industry has been opened where other than business registration, the following services are provided: Issuance of Licenses for Petroleum Products, trademarks, tourism licenses and tobacco licenses. Licensing procedures for exercise of activity in the fuel sector are defined by AI No.07/2010 pursuant to the Law No.03/L-138 on Trade of Petroleum and Petroleum Products in Kosovo. The Ministry of Trade and Industry, through the Licensing Office shall issue the License after application, submission of the required documents and fee payment. The License shall be issued for each activity and storage, respectively for each sale station point separately, and it has a validity of 2 years. Licensing procedures for entities exercising tobacco trading activities are defined by AI No.04/2012, pursuant to article 17 of Law No.04/L-041 on Production, Collection, Processing and Trading of Tobacco. To obtain a license, an applicant shall submit all the relevant documentation for exercise of business activities (business registration, VAT certificate etc) including proof that entity has sufficient space and means to conserve tobacco at minimum of 10 tons. To obtain a license for export/import and for wholesale of tobacco, a fee must be paid. A commission formed by the Secretary general of Ministry of trade and Industry decides for issuance, continuation, refusal, and abrogation of licenses. License validity is 5 years with possibility of extension. Licensing for activities of touristic agencies is regulated by AI No.12/2010, pursuant to Law for Tourism and Touristic Services, No.03/L-168. Licensing commission formed by Secretary General decides for issuance, continuation, refusal, and abrogation of licenses. The commission has a three year mandate. License for exercise of the activities by the agencies is valid for a 3-year period. A company may be established and registered in Kosovo for any Lawful purpose and may perform any Lawful activity specified in the nomenclature codes of activities. Procedures and list of supporting documents for registering the company with limited liability (LLC) are:

a. Completion of A0 (A zero) form; b. Company agreement under Article 86 of Law no. 02 / L – 123;

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c. Statute, pursuant to Article 33 of Law no. 02 / L – 123; d. Identification document (ID card, passport) of the owners, authorized persons of

company; e. Consent of registered agent (local) pursuant to Article 33.2 of Law no. 02 / L -

123. The time needed for completing the registration of a company with limited liability and joint stock company at Kosovo Business Registration Agency (KBRA) is 3 days. KBRA does not have bankruptcy procedures. It does provide cease of operations services. Procedures and documents necessary for the cessation of corporations are:

a. Completion of D form; b. Liquidation announcement in ½ page in daily newspapers in three languages; c. Certification from Tax Administration for business cessation; d. Certification by the Commercial Court; e. Original Business Certificate; f. Copy of owners Id, passport if owner is foreigner; g. Corporate Liquidation Decision; h. Decision for appointing liquidator; i. Capital assets report. The last three are pursuant to the Law on Business

Organizations, section 229. The payment pro forma shall be taken at ARBK and paid in the bank on the amount of €10. In the period 2007 - 2011 the total number of companies who ceased their operations is 5,822. For the period from 01.01.2012 to 22.05.2012 a total of 337 companies have ceased operations. - Please indicate what you consider to be the main priorities of structural/microeconomic reform agenda. The main priority (for the period 2010 - 2013) is to improve the free market reforms aimed at removing obstacles for doing business (including establishment and operation of businesses) in order to reduce Governmental constraints to existing and potential entrepreneurs. Within the framework of reforms of the Economic Development Vision 2011-2014 and SME Development Strategy 2012-2016, main priorities of the microeconomic reform agenda are: Doing business legal framework reform: Improved rules and regulations through: simplification and improvement of legal framework on business activity in order to create a clear-cut and stable legal environment of doing business, with minimal interference to the business, implementing best practices in Government procurement, with the purpose of increasing access to business information and increasing efficiency in tendering procedures. 2012-2016 strategy for development of SMEs in Kosovo with

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2020 vision, strategic goal 1) Specifies actions to be taken for strengthen legislative and regulatory framework for creation and development of SMEs. Specifically goal 1.1) concerns the simplification of existing legislation and regulatory framework. Reduction of barriers for businesses: Reducing barriers in trade through: improving policies, access to information and capacity building. Government of Kosovo Program 2011-2014 is based on the principles of market economy and free competition. 2012-2016 strategy for development of SMEs in Kosovo with 2020 vision, strategic goal 4) Strengthening domestic and international competitiveness of SMEs, specifies actions to be taken to facilitate access of SMEs in regional and international markets, specifically goal 4.6.3 pertaining to resolution of disputes and eliminating trade barriers. Improved business access to finance: Reducing risks of lending for financial sector is a priority, namely through measures such as: increasing the quantity and quality of information available to the loan registry, with the aim of strengthening the credit granting analysis, reduction of risk, and cost of borrowing. 2012-2016 strategy for development of SMEs in Kosovo with 2020 vision, strategic goal 2) specifies actions to be taken to improve SME access to finance. Specifically goal 2.1) deals with the development and expansion of types of financial instruments for SMEs. - Please provide information on the number of companies grouped by size during the last 5 years. Please describe the main impediments to growth and job creation for local companies. Table 33: Enterprises by size, 2007 - 2011

Number of enterprises grouped by size in last 5 years (2007, 2008, 2009, 2010, 2011)

Enterprises by size

Number of enterprises by years

2007 2008 2009 2010 2011

No. % No. % No. % No. % No. % Micro- enterprises (1 – 9)

workers 6 744 96.79 8 242 97.50 9 798 97.48 9 420 98.00 9 919 98.40

Small enterprises (10-49) workers 178 2.55 160 1.89 215 2.14 165 1.72 139 1.38

Medium enterprises (50 – 249) workers 40 0.57 43 0.51 31 0.31 21 0.22 19 0.19

Large enterprises over 250 workers 6 0.09 8 0.09 7 0.07 6 0.06 3 0.03

Total 6 968 100.00 8 453 100.00 10 051 100.00 9 612 100.00 10 080 100.00

Source: Business Registration Agency of Kosovo, prepared by the Agency for SME support. Several surveys conducted with micro, small, and medium enterprises, including the research of 800 SMEs (conducted in late 2010 and early 2011), indicate that main impediments to growth of SMEs and SME-related job creation are:

a. Access to finance (loans, interest, loan terms) b. General economic situation c. Electricity supply

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d. Informal competition (between local enterprises) e. Foreign trade conditions etc.

- Please describe how the level (in % of GDP), structure (type, per economic sector) and sources (public/private) of gross fixed capital formation have developed in the last five years. Please indicate the share related to infrastructure investment including changes in roads, rail and telephony lines. Please provide a synthetic assessment on the quality of major infrastructures (transport, telecommunication, energy), indicating areas where investment needs are important. Table 35: Private and Public investment in nominal terms and as a % of GDP, 2007-2011

Source: Ministry of Finance Table 36. Investments in road infrastructure, 2007-2011

year 2007 2008 2009 2010 2011

capital investments* 12.9 114.3 123.5 189.1 264.1

as % total public investments 8.30% 32.90% 30.90% 41.60% 26.10% *including road repairs, construction of new roads and bridges, signaling infrastructure

Note: The road capital investment figures are planned figures from the budget of Ministry of Infrastructure and MTEF. On average, the rate of execution of road related projects has been just over 90% over the period 2007-2011.

Description 2007 2008 2009 2010 2011 Value.

Investments 893 1,094 1,166 1,369 1,540 Private investments 737 747 766 914 1,012 Public investments 155 347 400 455 528

GDP 3,394 3,851 3,912 4,190 4,606

Description 2007 2008 2009 2010 2011 Value

Investments 26% 28% 30% 33% 33% Private investments

22% 19% 20% 22% 22% Public investments

5% 9% 10% 11% 11%

In million Euros

In million Euros

As percentage in GDP

In nominal value

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Table 37. Infrastructure, road quality assessment Type Current state of road

National roads (km) A1 A2 A3 A4 B1 TOTAL

105.2 286.4 245.4 4 641

Regional roads (km) A1 A2 A3 A4 B1

291 334.3 265.6 282.1 107 1280 TOTAL 1921

Legend: A1-Quality very high; A2-Quality good; A3-Quality minimal; A4-Quality poor; B1-Non-asphalt road. Water sector infrastructure: Is relatively good but requires additional investments to ensure and manage water, and water supply network in order to provide 24 hour water supply, as the majority of regions do not have stable supply; there is no treatment of sewage water but a pilot project was implemented in Skenderaj with the funding of the European Commission and became operational in the last quarter of last year. Public sector infrastructure of waste administration: Non-hazard solid municipal waste service is relatively good in the areas where the service is provided and the work is carried out based on the license issued by the Water and Waste Regulatory Office. The operating infrastructure is relatively good, they lack financial funds for updating the machinery park, it also requires internal restructuring and the revenue collected covers only the simplest operational expenses. Permanent sanitary landfills infrastructure: Four permanent sanitary landfills were constructed with EU funding in four regional centres. Their infrastructure is now degraded to a great extent; the public operators of waste collection pay only a part of the debt from the received invoices. Additional investments are required to preserve and render functional the same landfills; on the contrary their prospect is not bright. Railway infrastructure: Railway infrastructure is expanded throughout the territory of Kosovo in the length of 333,451 km of open railway line, 105,784 km in train stations and 103, 4 km in industrial line. The Railways of Kosovo through Leshak and Podujevo in the north and east respectively are connected to Serbia, whereas through Hani i Elezit in the south to FYROM. Currently, a part of the line (Prishtina to Podujevo and to the border with Serbia, as well as the south-western line from Xërxa në Prizren) is not operational due to great damages and the high cost of rehabilitation. The other lines are functional but their level is not satisfactory due to the enormous need for investments. Currently, the safety signals are installed only at the railway stations in line 10 (Leshak – Mitrovicë – Hani i Elezit), whilst all other lines do not have these equipment. The conditions of the building railway stations are still not at the desirable level despite repair work carried

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out on yearly basis. Mobile equipment and the machinery for the maintenance of the railway infrastructure are very old and of low efficiency and these require daily repairs which have a high cost. The key priority of INFRAKOS is railway line 10 which connects Kosovo with Serbia and Macedonia, and through which the majority of railway transport is carried out. The feasibility study of 2010 stressed the need for major investments for the modernization of this railway line. The main fields of railway infrastructure which require investments are as follows:

a. Rehabilitation of railway line 10 for the projected speed 100 km/h to 120 km/h; a project calculated to cost circa €174 million;

b. Purchase of the necessary machinery to maintain the railway infrastructure; a project calculated to cost circa €3 million;

c. Complete rehabilitation of other railway lines, including the safety signals, telecommunications and energy equipment; a project in the amount of circa €200 million

Telecommunications Infrastructure Landline telephony: Expansion in landline telephony is circa 5 percent. There are three licensed operators that provide landline telephony service:

a. PTK is the only enterprise that provides fixed access and calls through the public switched telephone network (PSTN). In the last decade, this operator built is network by focusing mainly on the NGN network, the connection of all urban centres with a high capacity network (optic fibre) and the digitalization of the central network. Whereas the access network is mainly based on the copper cables;

b. IPKO Telecommunications L.L.C provides landline telephony services through the cable network and covers almost the majority of urban centres of Kosovo. This infrastructure is based on the hybrid approach, i.e. the connection to the client’s location is combined starting with optic cable, coaxial and finally, following the CPE installation, the client is equipped with copper cable or in certain cases with IP telephones;

c. KONET is the third operator which does not provide landline telephony service, but only services of rented lines.

The level of coverage of the territory and population with the service of landline telephony is very small due to the complexity of works, the enormous need for investments in the access network. Mobile telephony: Currently, in Kosovo there are two licensed mobile operators (Standard GSM 900/1800). Coverage reached circa 99% of the population and 88% of the territory. The number of base transceiver stations is circa 721. The technology used is EDGE, which enables the provision of internet services in addition to voice and MMS and SMS.

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Internet services: Internet access is provided by 37 licensed enterprises, 5 of which have direct access to international gateways and provide access to the internet network to smaller ISPs which operate in different regions of Kosovo. The internet connection for user through the cable modem is the prevalent technology, with 98,000 users. Internet access to ADSL technology was, by the end of 2011, 36, 500 users, out of which 94% are individual users and the remainder 6% are business users. The data show an increase among users of internet through ADSL, which compared to 2010, is 7.34%. Wireless technology mainly dominates the rural areas and unlicensed frequency broadband of 2.5 GHz and 5 GHz are used. These services are provided by small internet providers and the average speed is 256 kbps. A considerable number of broadband connections are provided by the operators through the coaxial cable – copper line. The main technology continues to be cable modem with 67.6%, whilst 27.7% of internet users use the ADSL technology. The main internet provide with coaxial cable are IPKO and Kujtesa whereas PTK – TiK is the only operator that provides internet access to the end users through the ADLS technology. The following diagrams contain the percentage of the technology used for the provision of internet services. The investments by the telecommunications service operator for 2011 reach the amount of €38,266,377.33 and this is a considerable increase compared to year 2010 when investments reached the amount of €30,777,237.11. The following figure present the investments made for different category of services. In 2011, a great part of investments are made in the mobile telephony with 67.40%. The telecommunications sector, the need for investments is evident in the landline telephony network. In addition, following the newest trends in technology, there is a need to replace the copper cables with optic fibre as well as to expand the network to the next generation access (NGA). Electricity distribution network infrastructure: The Distribution network includes 110/x kV and below substations, as well as the 35kV lines and below. The following tables present the basic data of line according to their length and the substations according to the voltage level in the distribution system.

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Table 38. Lines and transformer stations kV Number of TS Number of

transformers Load (MVA)

220/35/10(20) 1 1 40 220/10(20) 1 40 110/35/10(20) 6 10 312 110/35 6 13 438 110/10(20) 2 4 143 110/10 10 15 512.5 35/10 48 100 640.8 35/0.4 1 1 0.63 10(20)0.4 1675 1718 603.35 10/0.4 5225 5353 1520.24 6/0.4 37 37 7.130

Rehabilitation and general strengthening of the network is composed of the replacement of lines and poles 0.4 kV and 10 kV and transformers 10/0.4 kV. The specific needs for investments are based on the state of networks assets and the level of performance in relation to the voltage and load, including the replacement of the conductor section, insulation to support operations at 20 kV level, expansion of the 10 kV network and increasing the capacities of transformers in TS 10/0.4 kV. These investments would improve the consistency of supply, voltage performance and reduce the technical losses. The investments needed are described below:

a. Potential expansion of the 110 kV network by replacing the 35 kV network in order to address the leakages of overload, increased the quality of supply and reduce losses; increasing the number of transformers and outputs in order to facilitate the restrictions in managing leakages of overload;

b. Replacement of the conductors, poles and damaged transformers of 10/0,4 kV in order to comply with the standard and to guarantee public safety;

c. Conducting studies in order to review options for the general rehabilitation of the system (including the durability of the buildings, the state of repairs and decrease of performance) in order to set standards for the future and to increase the capacities (for instance, changing the voltage level of the network from 0 kV to 20 kV), and to reduce technical losses in the system;

d. Operating the SCADA Distribution system, the district centres and the related operations and commercial processes for monitoring and controlling the distribution network;

e. Analysis of network model- Power Factory. Transmission network infrastructure

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The data on the quality of the basic infrastructure of our transmission system are: Physical Transmission Infrastructure:

a. Transmission capacity - Ki=1550 MW; b. Foreseen overload during peak hours for 2012 - Np=1190 MW; c. Security margin (network capacity back up for N criteria) - Kr=360 MW; d. Fulfilment of the N-1 criteria - ~ 90% of cases; e. Interconnection capacity NTC - ~1700 MW; f. Transformative capacity without distributive transformers - Ktrans=3150MW; g. Transformative capacity with distributive transformers 110/x - Ktrans=4970MW

Infrastructure for secure operation of the transmission system:

a. SCADA/EMS systems (Supervisory Control and Data Acquisition/Energy Management System);

b. Telecommunication System (OPGW); c. Remote Metering System;

Areas in which investments are needed:

a. Increasing the transmission capacities: i. for interconnection lines Line 400 kV Kosovo – Albania;

ii. Line 400 kV Kosovo – FYROM. Increasing the transmission and transformative capacities:

a. At the level of local consumption – increasing the capacities for the distributive level in order to support an increase in consumption;

b. Infrastructure for Load Frequency Control – with Albania. Natural gas sector: In Kosovo there is an underground natural gas constructed in the 1970s and which operated until 1988 and thus supplied a factory in Skopje, Ferronikel, Trepça, Llamkos and the former military barracks in Prishtina, the Prishtina Central Heating District “TERMOKOS” and some industrial facilities. The gas supply was based on the process of gasification of the lignite within the former Electro-Economy Company of Kosovo, i.e. the labour organization “Energy and Chemistry”. The designed operating pressure of this gas pipeline was 25 bars with an annual capacity of 480 milion Nm3. The gas pipeline is seriously damaged in some parts and is out of order. According to ESTAP I study, the existing line does not have a reasonable cost of repair and therefore it recommended a new line of pipelines with other operational parameters. However it is a positive fact that the Government owns the property rights of Hani i Elezit – Mitrovicë road and this will be considered during the review for the use of the present asset.

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In addition, a study on gasification in Southeast Europe was carried by the World Bank and KfW (October 2007), which considered the economic opportunities of transporting gas to Kosovo. The report concluded that the supply with commercial and industrial loads and the construction of the gas distribution networks in Prishtina and Mitrovica. However to date no study was conducted which would show the possibility and the costs of installing and expanding a gas system in all of the Republic of Kosovo. Therefore, the real costs of investments for installing and expanding natural gas, and the transmission and distribution network in Kosovo, would be evaluated through a study due to be concluded in 2013. There is no study on Kosovo concerning the development of regional transmission network, internal transmission network and the distribution network. However regional studies, especially the SEE region Gasification Study of 2007, contain many details for the development of natural gas network in Kosovo as part of the Gas Ring of SEE; a concept proposed and accepted by the SEE TKE. We shall refer to this study for the specification of the main needs of investments in the gas sector in Kosovo. Thus, the first and key stage for the development of the natural gas sector would be investments in the Kosovo segment of gas pipeline – the transmission line as part of the Gas Ring of SEE:

a. Transmission line: FYROM border/Kosovo-Prishtina; length of the line: 63 km, diameter of the pipeline gas: 24 inch;

b. Transmission line: Prishtina –border Kosovo/Serbia; length of the line: 33 km, diameter of the pipeline gas: 24 inch.

Central Heating Distribution Systems: The sector of the central heating is composed of four sections which supply heating to the urban areas of the following municipalities: Prishtinë, Gjakovë, Mitrovicë and Zveçan. This sector meets circa 5 % of the general demand for heating in Kosovo. The primary network of distribution is the Central Enterprise Termokos, Prishtine in the length of 63 km, with an installed capacity of 2x7 MW in the districts, 2x7MW installed capacity at the Prishtina Hospital (reserve) and 1x4MW installed capacity in the central heating itself for own needs and 2x0.8 MW installed capacity in Fushe Kosove (out of order). The general capacity is: 135.6 MW. An integral part of the distribution system is the pomp station and heat exchange, with 323 substations (312 active), which are also separation points between the primary and secondary networks. The primary source for the generation of thermal energy is industrial fuel oil. The primary distribution network in Gjakova is extended in the length of 23.5 km with a heating capacity of 38 MW. 275 active substations are an integral part of this network. The primary source for the generation of thermal energy is industrial fuel oil. The central heating system in Mitrovica contains dy separate network: the distribution network of Central Enterprise Termomit, Mitrovica, and the distribution network in

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Zvecan. According to the Heating Strategy of the Republic of Kosovo 2011-2018, the Termomit heating district supplies 160 consumers in the household sector in a heated area of 8500m2. The total length of the distribution network is 6 km with an installed capacity of 1x83 MW. The central heating system in Zveçan has a rather smaller distribution network, in the length of 0.8 km.

2.6. Financial Markets

2.6.1. General

- Please indicate how interest rates are determined Interest rates of the banking system of Kosovo are determined by the banks themselves. Due to euroization, the Central Bank of Kosovo (CBK) can not have a direct impact on interest rates. Determination of interest rates in Kosovo is mainly dictated by the changes of supply and demand for loans and deposits, bank risks developments, and by the bank’s overall cost of financing. - Do quantitative ceilings exist on credit expansion? What instruments are available to prevent excessive credit growth and eroding the quality of lenders' portfolios? Exposure limits for banks with risky credit products are determined by CBK regulations, as follows:

a. No bank shall allow credit risk exposure to a person or group of related persons exceeding 10% of Class I capital, unless these first exposures are properly adopted in regular meeting of Board of Directors, in which quorum was present and voted, and such approval has been noted in the minutes of that meeting;

b. No bank shall allow credit risk exposure to a person or group of related persons exceeding 10% of Class I capital, and total of collected active exposures exceeding 300% of class I of bank total;

c. No bank should allow credit risk exposure to a person or group of related persons exceeding 20% of Class I capital as is defined in Regulation for Capital;

d. Recommended level of Loan/deposits ratio from 80%. From the regulatory perspective, the growth of loan portfolio is mainly weighted by capital, respectively the ability to absorb loses from banks' excess capital, and CBK may request reducing or stopping the growth rate of lending activity of banks that show a tendency for deterioration of their financial health. From the supervisory aspect, Banking Supervision Department within CBK assesses and monitors appropriateness of credit portfolio growth of a bank versus the overall risk profile of a bank, adequacy of credit risk managing capacity, early warning systems and stress tests.

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- Provide an assessment of access to the international financial markets by Kosovo and by the private sector. Kosovo is a member of the WB and IMF, and has access to loans that are granted on bilateral financial agreements. Currently, Kosovo benefits from soft loans from KfW Bank, World Bank, IMF and is expected benefit from another loan from Government of Austria in the near future. Regarding financial investments, CBK has access to financial markets in particular euro-zone and EU member states. Such an access is considered quite conservative conform criteria of investment policy of CBK. Financial sector of Kosovo has no legal barriers to financial access in international financial markets. The banking sector access to the international financial markets is carried out through the securities market and money market arrangements. The insurance industry realizes such an access through re-insurance contracts. - What are the main characteristics of the interbank clearing and settlement system? Please assess the functioning of these systems. Are there changes envisaged in the payments' system? The interbank clearing and settlement system of Payments in CBK is a system of real time gross settlement for priority/urgent payments and net settlement of other payments. All interbank payments large and small are processed by this system (Kos Gyro payments, Direct Debit, Mass Payments / UNIREF; Regular payments, Priority / Urgent payments and Securities payments). The system relies on a domestic network communication, such as lease line / PTK and optic fiber / IPKO. Direct participants in the system are currently the eight commercial banks members of IECS, together with the Treasury for incoming payments, and CBK itself for its payments and payment orders on behalf of the Treasury. Functioning of this system is considered as being very effective (99.9%) without a single day of interruption since its establishment (May, 2001). It is characterized with a steady quantitative and qualitative growth (on time, fast and secure) with an average of 16 thousand transactions a day nominally, at a value of €20 million. The system has continually been improved and advanced in interbank payment system in general, the Kos Gyro scheme, Direct Debit, salaries and payments UNIREF module, securities module, etc. According to National Payments System Development Strategy, new changes and developments10 are envisaged, categorized into nine pillars, some of which have been

10 Strategy for National Payments System Development is published in CBK website: http://www.bqk-kos.org/?cid=1,59,306, where are presented in details all nine pillars, by including the onward implementation

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finalized. Others such as the second pillar also the most important, designed for establishing and developing the payments system of large amounts and urgent payments, RTGS (Real Time Gross Settlement system), is in its initial phase awaiting approval of World Bank for appointing an expert for assistance throughout the implementation of the project. The list of candidates has been selected by a commission of CBK (in March, 2012). Then pillar III for the National Cards Processing Centre, where CBK is foreseen to lead the way as a catalyst in carrying out the interbank card processing centre in the country. The project "Registry of bank account holders" is implemented and functional at CBK as of May 2, 2012, and in this context, all banks have begun for the first time reporting on all customer accounts, in the register of the Central Bank accounts. 2.6.2. The Banking Sector

- How many banks are there in Kosovo? How many other credit institutions are there in Kosovo? Please list them. There are 8 (eight) commercial banks and a total of 20 credit institutions (including microfinance and non-bank financial institutions) operating in Kosovo. Commercial banks are:

a. ProCredit Bank; b. Raiffeisen Bank Kosovo J.S.C; c. NLB Prishtina J.S.C; d. Banka për Biznes; e. Banka Ekonomike; f. TEB J.S.C; g. Banka Kombëtare Tregtare - Kosovo branch; h. Komercijalna Banka - Mitrovica Branch.

Microfinance and non-bank financial institutions are:

a. Finca; b. KEP; c. KGMAMF-Grameen; d. AFK; e. Besëlidhja; f. KRK; g. Mështekna; h. Qelim Kosovo; i. KosInvest; j. Start; k. Perspektiva 4; l. KAD; m. ACP;; n. Agro Invest;

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o. Timi Invest; p. Crimson Finance Fund; q. Lesna; r. Raiffeisen Leasing; s. Factor Leasing; t. Fundway Mortgage.

- Assets of the banking system and the other credit institutions? From its start of operations of Kosovo financial system, the banking system and other credit institutions have grown continually. In late 2011, total banking assets reached a value of €2.66 billion (56.6% of GDP). Annual growth of banking assets in 2011 was 8.3%, while average growth rates over the past five years was 18.2%. Assets of banking system in Kosovo are dominated by loans, which in 2011 reached a value of €1.7 billion (36.2% of GDP). In 2011, the banking system credit recorded an annual increase of 16.4%, while the average growth rate over the last five years was 22.3%. Lending activity in Kosovo economy is also supported by microfinance institutions. Assets of this sector in 2011 reached a value of €127.5 million (2.7% of GDP). Compared to 2010, assets of microfinance institutions had an annual decline of 8.8%, while the average growth rate over past five years was 15.9%. Structure of assets of microfinance institutions is dominated by loans, which in 2011 recorded a value of €104.7 million (2.2% of GDP). Compared to the previous year, this presents an annual drop of 9.8%. Over the past five years, loans issued by microfinance institutions recorded an average growth of 13.6%. - Total deposits (if possible, by type of credit institution – banks, savings banks, mortgage credit institutions, other). The banking system in Kosovo is composed of commercial banks alone, as the sole financial institutions that can receive deposits (excluding CBK). In 2011, value of all deposits in the Kosovo banking system stood at €2.1 billion. This presents an annual increase of 8.5%. The main deposit sources in the banking system are household deposits which represent approximately 70% of all deposits. - Concentration of the market (respectively as a share of total assets, of loans and of total deposits held by the largest institutions) Since its beginning, Kosovo’s banking system is characterized by a relatively high degree of market concentration. In late 2011, three largest banks in the country managed about 73% of total assets of the system. The high degree of market concentration is also illustrated by Herfindahl Hirschman Index which in 2011 reached 2090 points. The high Herfindahl Hirschman was similar for credit and deposit market, which indicates the degree of market concentration, is similar for both assets, and loans and deposits of banking system. However, degree of concentration of banking market in Kosovo has decreased continuously in recent years. For example, in 2008, Hirschman Herfindahl Index for the assets of banking system reached the level of 2842 points, whereas for deposits and credits, the index reached 2934 and 3009 points respectively.

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Moreover, in 2008, the three largest banks had in their management around 80% of total banking system assets. - Please describe the current situation concerning access of private companies to bank credit Most of the issued credit by the Kosovo banking system over the years has been received by private enterprises (about 70% of total credit in 2011), which indicates a great advantage of enterprises versus households regarding access to bank credit. In nominal terms, at the end of 2011, businesses in Kosovo have received a total of € 1,089,146 loans from banks, as opposed to € 470.283 loans that are issued to households. Depending on the size of business and their activity, banking and financial products are structured. Types of credit currently accessible by companies in Kosovo are the following: Commercial loans, Bio loans, Refinancing loans, Agricultural loans, Unsecured loans, auto loans, mortgage loans, leasing loans and other types of loans that fit the business activity. Besides the above-mentioned loans, private companies also have access to trading in financial products made available by the banking sector. Trade finance products issued in Kosovo are: paper guarantees, documentary collection, letters of credit etc. Depending on the type of credit applied for and the capacity of the company, banks issue loans by adjusting the credit amount to the payment capacity. Credit application criteria vary, but the most important are: business certificate, VAT certificate (if applicable), financial records of company, the company's stock list, the equipment list, business plan, a copy of the plan, possession list for mortgage collateral and other documents are required depending on the specifics of the credit applicable to the company. Banks in Kosovo have generally been conservative in the process of issuing credits, taking into account the economic crisis present in the European Union. According to the Association of Banks of Kosovo this has made banks more cautious, resulting in a stable and sustainable financial sector, despite external shocks that may have affected the economy in Kosovo. - Please evaluate the degree of competition in the banking system (price competition, new products, changes in market share, and other indicators). Are there any particular concerns about the market share of the largest banks? Despite the still high degree, continuous decline of the market concentration might infer an increase of competition in the banking system. The drop in the degree of the banking concentration became more noticeable from 2008, a period related to the entrance of three groups of foreign banks NLB, TEB, BKT) in the Kosovo banking market. In 2008, the Herfindahl Hirschman Index for bank assets had reached the level of 2,842 points, whereas in 2011, this index dropped to 2,090 points. Over this period, a considerable difference reduction of the interest rate spread was noticed. This might have originated from the greater competition in the banking system. In 2011, the interest rate spread

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was 10.65 percentage points, compared to 11.32 percentage points in 2007. Nevertheless, greater competition has been manifested more with fast expansion, POS terminals, and new products in the system rather than with lower interest rates. Taking into account the past behavior of banks and the continuous downward trend of the degree of concentration, it can be concluded that competition in the banking system has been increased. As a consequence, the high share of three major banks does not present a serious concern for the competition of the banking system. - What is the average interest rate spread (lending/deposit rates) in banking over the past five years? Please supply data on the profitability of banks during recent years and comment on developments. The interest rate spread in 2011 was 10.65 percentage points, compared to 11.32 percentage points in 2007. Over the last five years, this indicator reached the lowest level in 2009 standing at 10.01 percentage points, but the evolution of the crisis during this period brought it back to the highest levels. Kosovo's banking system is consistently characterized by a relatively high level of profitability which has represented an important pillar of its stability. Return on Average Assets (ROAA) in 2011 was 1.5%. However, compared to 2007, when ROAA was 2.6%, a reduction of profitability in banking system is noted. The drop in profitability has mainly resulted from faster growth of assets in comparison to net profit growth. Lower rates of net profit growth during this period primarily resulted from the slowdown in revenue growth of commercial banks, reflecting a slowdown of loans from the beginning of global crisis. Notwithstanding the drop in profitability, the banking system continues to be profitable. - What is the average maturity of bank loans to the private sector over the past five years? What is the share of loans with maturity of up to one year? Average maturity of bank credit for private sector (businesses and households) in 2011 was at credit maturity of up to two years (52% of all credit or 74% of credit amounts).Loans up to one year represent 28% of loans and 69% of the nominal amount. A similar situation of credit concentration appears in 2010, where loans with maturity up to one year represent 26% of the number of loans and 62% of the nominal sum of credit. Credit with maturity over one year and those over two years represent 29% the number of loans or 8% of total credit amount. Credit with maturity up to one year in December 2011 made up 21.4% of commercial bank credit given to businesses and households (or €351.9 million). This percentage of credit has not suffered large fluctuations over the last five years. Moreover, since 2007 represents the figure with the lowest percentage of credit with maturity up to one year (about 18% of credit to businesses and households). In this context, main category is made up of credit with maturity over two years and up to five years, constituting 42.6% of credit.

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- How do you assess the stability of the banking sector? What is the current situation and trend concerning capitalisation, structure of capital, regulatory capital, risk weighted assets? How has the banking sector been influenced by the global financial crisis? Kosovo banking system continues to enjoy a high level of stability, characterized by a high rate of capitalization, good quality credit portfolio and a satisfactory level of liquidity. In 2011, Capital Adequacy Ratio stood at 17.5% which significantly exceeds the 12% minimum required by the regulator. The CBK requirement of keeping this indicator at 12% continues to be met by all banks operating in Kosovo. Capital structure of banking system in Kosovo is characterized by a good quality, considering that most of the capital (59% of total capital) consists of shareholding capital. Compared to 2010, Capital Adequacy Ratio for Kosovo's banking system decreased by 1.2 percentage points. The decline of the capitalization indicator was largely caused by higher rates of growth of risk weighted assets in comparison with the rate of growth of capital. Faster growth of risk weighted assets in 2011 was primarily due to a higher rate of credit growth. The structure of risk-weighted assets is dominated by assets with a weighted risk of 100%, which represent 76.9% of the total assets. Kosovo's banking system is consistently characterized with a satisfactory liquidity position. Loan-deposit ratio remains at about 80% which is in line with CBK recommendation. The global financial crisis has had limited impact on the banking system in Kosovo. Primarily, this is the result of the structure of its banking activities with a fairly low level of exposure to the foreign sector. Activity of banks operating in Kosovo mainly relies on credit to the local economy, while the main source of financing are deposits collected within the country. The continuous maintenance of high levels of capitalization and good quality loan portfolio have served well to the immunity of banking system against potential adverse effects of the global crisis. Effects of global crisis in banking system have mainly contributed to the slowdown of loan growth in 2009, thus slowing down the interest income and reducing the profitability of banking system. However, in 2010 and 2011 l credit accelerated its growth trend causing an increase of profits of banking system. Global crisis also caused an economic growth slowdown in the country which was reflected in a slight increase of nonperforming loans. However, despite these effects, Kosovo's banking system has maintained a high level of sustainability, which is also indicated by the results of stress-test analysis for Kosovo's banking system conducted on regular basis by the CBK. High degree of stability of banking system is also illustrated by the fact that over this period Kosovo has been among countries with the highest growth of credit and deposits. - Please provide an analysis and an estimate (as an absolute amount, as a % of total assets) of non-performing loans (NPLs) in banks. In 2011, non-performing loans reached the amount of €96.2 million (approximately €83 million in 2010) which represent about 5.7% of total credit portfolio of banking system. Nonperforming loans in the banking system in Kosovo consist of credit classified as "doubtful loans" and "loss loans". Non-performing loan structure is dominated by loans

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classified as "loss loan", which represent 64.5% of total non-performing loans. Nonperforming loans have continuously been covered with over 100% by provisions for loan losses. In 2011, the coverage of non-performing loans with provisions rose further to reach 116.7% from 114.4% in 2010. - What has been the NPLs development over the past five years? Over the period 2007-2009, the share of non-performing loans in total loans varied around 4%, while in the fourth quarter of 2011 it amounted to 5.9%. The share of non-performing loans continued to grow during the first quarter of 2012 reaching 6.2%. However, in late 2011, non-performing loans decreased to 5.7% as a share of total loans, marking an annual decrease of 0.2 percentage points. - Have there been changes to the bankruptcy legislation? Are any (further) adjustments envisaged? Please comment on the practice as well as the legal framework. How easily can banks mobilise their claims through such proceedings? Pursuant to the new Law on Banks, Microfinance Institutions and Non-Bank Institutions No. 04/L-093, provisions for procedures of 'Resolution of problematic banks and exit strategies' are corrected and fundamentally supplemented by:

a. Allowing a Temporary Administration regime for weak banks; b. Outlining in detail the Liquidation Procedures applicable to banks whose license

is revoked; c. Clearly defining procedures by which banks can submit to voluntary liquidation.

With the new Law, bank claims can be mobilized much easier due to the added provisions for Temporary Administration of weak banks. This was not provided in the previous legislation. There has not been any practice of administration or bankruptcy except the liquidation case of one bank in 2006 which was carried out successfully. The liquidation process is still ongoing in accordance to the legal framework in effect 2.6.3. Non-Banking Sector

- How many insurance institutions operate in Kosovo? Number of insurance companies operating in Kosovo is thirteen (13) where ten (10) of them offer non-life insurance products, and three (3) insurance companies operate in the life insurance product market. From total number of insurance companies operating in the insurance industry, seven (7) companies are foreign owned, two (2) companies with mixed ownership, three (3) of them are insurance companies with wholly domestic ownership and one (1) is a subordinate company. - Concentration of respectively the life and non-life markets (in terms of gross premiums held by the largest undertakings).

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Insurance industry is mainly concentrated on non-life insurance, where the largest part is mandatory third party motor liability insurance. Regardless of the fact that until mid-year 2011 there was only one company operating in the life insurance market, life insurance premiums have raised and by 31 December 2011 the share of life insurance premiums was 0.15% of total premiums portfolio. By end of year 2011, two more companies were added to the life insurance market. Despite this, insurance industry continues to be dominated by non-life insurance, especially by Third Party Motor Liability Insurance. The two new companies in the life insurance market should stimulate more competition between companies and changes in the structure of life and non-life insurance premiums. - Please assess the degree of competition in the sector. The degree of competition is developed mainly on non-life products, especially in the Third Party Liability Insurance, voluntary Kasko property insurance, fire and personal accidents insurance. Now that the number of life insurance companies has increased, a greater degree of competition is expected. - What is the situation regarding new financial markets and instruments, for example venture capital companies, factoring, leasing, etc.? Is the legal framework in place for such operations? Please provide any available information on market developments. There are two non-bank financial institutions which perform financial leasing activities: Raiffesein Leasing and Leasing Factor. The legal framework is in place, such as the Law on Banks, Microfinance Institutions, and Non-bank Financial Institutions No. 04/L-093 that regulates the exercise of non-bank financial activities. - Please provide information on the capitalised pension system. What are the main challenges for its development? What are the planned steps? Kosovo pension system is organized in three pillars:

a. First pillar – base pension; b. Second pillar - individual pension’s that are insured by Kosovo Pension Savings

Trust; c. Third pillar – voluntary supplementing funds.

No seed capital is required for licensing of a pensions fund. Largest proportion of Kosovo Pension Savings Fund is invested outside the country; a small proportion is in the domestic bank system. With the opening of Securities Market in Kosovo and entry in force of Law on Pension Fund of Kosovo Nr. 04/L-101, is created the possibility for investing 30% of such funds on Kosovo Government securities. Inclusion of all employees in the pension’s scheme and strategic orientation for liberalizing the second-pillar are the major challenges. The planned steps include the standardization of legislation (approximation of legislation with EU directives and international standards), increasing competition in pillar III, and liberalization of Pillar II.

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3. ABILITY TO ASSUME THE OBLIGATIONS RESULTING FROM AN SAA

3.1. Political dialogue

- Please describe alignment of Kosovo's external relations and policies with EU policy. Kosovo is a reliable partner to the EU in a range of international and regional issues ranging from the contribution to regional dialogue and enlargement process, to contributions given in maintaining peace and stability in the world by providing aid within the budgetary means of Republic of Kosovo. Kosovo contributes to regional peace and stability by engaging earnestly and in full in regional cooperation. Government of Kosovo has been actively engaged in the technical dialogue with Serbia that was launched following an EU-sponsored resolution at General Assembly of UN in September 2010. Republic of Kosovo has appointed a high-level negotiator (Deputy Prime Minister) to lead dialogue and has taken decisions in full coordination with EU External Action Service. Government of Kosovo has also backed the agreements with appropriate decisions in the local level to implement agreements. Following the agreement reached in Brussels between Kosovo and Serbia on regional representation of Kosovo, Government of Kosovo has applied to 27 regional organisations and initiatives and is actively participating in 9 of them under various formats, thus contributing to furthering regional cooperation. The EU is a key partner of Kosovo in international issues ranging from global warming to the events following "Arab Spring". The basis for the Kosovo's foreign and security policies remains the use of diplomacy and dialogue to resolve regional issues stemming from former Yugoslav wars, but also in wider global context.

3.2. Regional cooperation

- Please describe participation of Kosovo in regional cooperation. Please list organisations of which Kosovo is a member or an observer. Kosovo contributes to regional peace and stability by engaging earnestly and in full in regional cooperation, Kosovo takes part in the initiatives on regional cooperation, and is a member of the Regional Cooperation Council since 2008. Kosovo performs its obligation towards the Council by contributing with 4% to the total amount of the budget of the countries of South-eastern Europe. Kosovo takes regular part on the Annual Meetings; Meetings of the National Coordination Board and to other sectorial meetings of the Council. Moreover Kosovo takes part in the RCC initiatives: Electronic South-eastern Europe Initiative and Broadband South Eastern Europe Initiative. Kosovo also takes part in the European Commission project for the Centre for Governance Development and the project for Monitoring of the Communication sector and the Services of the Information Society. The Ministry of Economic Development is a member of the Energy Community Treaty and regularly participates on the meetings organized by the Secretariat of the Community, such as the Inter-Ministerial Council,

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Permanent High Level Forum, Task Force on EE Task Force on Environment, Task Force on Regional Strategy for Energy and other forums organized by the Secretariat. However KOSTT continuously faces obstacles imposed by Serbia in regard to membership in international organizations and payments for using the interconnection for the transit of energy. The Secretariat of energy Community has delivered an open letter to Serbia regarding the violations of the provisions of the Treaty, however up to day the situation remains unchaining. Serbia is imposing obstacles in membership of Kosovo in EJL Regional Group for trade matters and in ENTSO-E, however KOSTT has managed to be a member of the Region 8, is a member of CAO-IG (Office for Allocation of Resources) and a member in SECI (South-eastern European Cooperative Initiative) while it reserves an observer role in EJL Regional Group for trade matters. Energy Regulatory Office is associate member of the Association of Regional Energy Regulatory Association ERRA, since 2005, and it has its representatives in the Committee for Licensing and Competition, Committee on tariffs and the in the Legal Working Group on ERRA. Table 40. List of Regional Organizations where Kosovo is a member/observer Regional organizations Representation Addmission date Investment Compact Kosovo 24.04.2012 South East European Centre for Entrepreneurial Learning

Kosovo 23.03.2012

Regional Rural Development Standing Working Group in SEE

Kosovo 26.03.2012

European Common Aviation Agreement Kosovo 23.03.2012 Regional Environmental Network for Accession

Kosovo 19 March 2010

Electronic Southeast Europe Initiative + Broadband Southeast Europe Initiative – Positive

Kosovo 20.04.2012

Network of Associations of Local Authorities of SEE

Kosovo 11.05.2012

ISIS Programme Secretariat, Kosovo 23.03.2012 Regional Cooperation Council UNMIK/Kosovo February 2008 CEFTA and Bilateral Free Trade Agreements,

UNMIK/Kosovo July 2007

South East Europe Transport Observatory (SEETO),

UNMIK/Kosovo 11.06.2004

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Table 41. List of Regional Organizations where membership is in due process Regional organizations Representation Addmission date Regional Anti-corruption Initiative, Kosovo In due process Regional Environmental Centre for Southern and Central Europe,

Kosovo In due process

South-east European Prosecutors' Advisory

Kosovo In due process

The Migration Asylum, Refugees Regional Initiative

Kosovo In due process

Police Cooperation Convention (PCCSEESECR)

Kosovo In due process

Task Force for Fostering and building Human Capital,

Kosovo In due process

Disaster Preparedness and Prevention Initiative

Kosovo In due process

Adriatic Region Employers' Centre, Kosovo In due process Centre for Security Cooperation (RACVIAC)

Kosovo In due process

Health Network, Kosovo In due process Centre for e-Governance Development Kosovo In due process

Regional School for Public Administration ReSPA

Kosovo In due process

Visegrad Group Kosovo In due process

Forum of the Adriatic and Ionian Chambers of Commerce

Kosovo In due process

Human Dynamics - Positive Kosovo In due process

- Please describe relations and cooperation with Kosovo's neighbours, both in terms of agreements in place and practical cooperation. One of the priorities of Kosovo’s foreign policy is regional cooperation and establishing of good neighbourly relations by establishing bilateral and multilateral agreements. Strategic objective of Kosovo is promoting Kosovo as a factor of peace and stability in the region. Kosovo aims to be fully integrated in regional initiatives as a member with fully fledged rights and responsibilities contributing to fostering good relations, peace and stability. Regional cooperation and good neighbourly relations based on equality respect and reciprocity are of vital interest for Kosovo in stabilizing the South-eastern Europe and in resolving the remaining open issues after the dissolution of Yugoslavia. As for cooperation with Serbia please refer to the question under 3.1on Political Dialogue. The following agreements with the neighbouring countries have been signed:

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Agreements with Albania: a. Agreement on cooperation in the area of Consular Representation, between the

between the Government of the Republic of Kosovo and the Council of Ministers of the Republic of Albania, signed on 13 of January 2012;

b. Protocol on cooperation between the Ministry of Foreign Affairs of the Republic of Kosovo and the Ministry of Foreign Affairs of the Republic of Albania, signed on November 25th 2009;

c. Agreement on Border Police Cooperation between the between the Government of the Republic of Kosovo and the Council of Ministers of the Republic of Albania, signed on October 6th 2009;

d. Agreement on cooperation in education and science reached between the Government of the Republic of Kosovo and the Government of the Republic of Albania, signed on October 6th 2010;

e. Agreement between the Government of the Republic of Kosovo and the Council of Ministers of the Republic of Albania on Cooperation and mutual assistance in customs matters, signed on October 6th 2010;

f. Agreement between the Government of the Republic of Kosovo and the Council of Ministers of the Republic of Albania on the re-admission of the persons residing without authorization, signed on October 6th 2009;

g. Agreement between the Government of the Republic of Kosovo and the Council of Ministers of the Republic of Albania on cross-border cooperation, signed on October 6th 2009;

h. Agreement between the Government of the Republic of Kosovo and the Council of Ministers of the Republic of Albania on mutual travel of citizens, signed on October 6th 2009;

i. Agreement on Conducting the common procedures to control the entry/exit between the border crossings Qafe Prush (Gjakovo) - Qafe Prush (Has, Albania);

j. Agreement on conducting the common procedures to control the entry/exit between the border crossings Qafe Morine (Gjakovo) - Qafe Morine (Tropoja, Albania);

k. Agreement on conducting the common procedures to control the entry/exit between the border crossings Vermica (Prizren) - Morina (Kukes, Albania);

l. Agreement for cooperation in the fields of international road transport of passengers and goods, between the Government of the Republic of Kosovo and the Council of Ministers of the Republic of Albania.

Agreements with Montenegro:

a. Agreement on Cooperation and Mutual Assistance in Customs Affairs reached between the Government of the Republic of Kosovo and the Government of Montenegro, signed in Montenegro on 17th of March 2010;

b. Agreement on Re-admission of Persons residing without authorization, and the respective Protocol, between the Government of the Republic of Kosovo and the Republic of Montenegro, signed in Montenegro on 30th of June 2011;

c. Agreement on late registering of displaced persons residing in Montenegro, in Basic Registry and the Registry of the Citizens of the Republic of Kosovo, signed

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between the Republic of Kosovo and the Republic of Montenegro on 30th of June 2011.

Agreements with Macedonia:

a. Agreement for the physical demarcation of the border between the Republic of Kosovo and the Republic of Macedonia; the agreement was ratified on 17th of October 2009;

b. Agreement between the Government of the republic of Kosovo and the Government of the Republic of Macedonia on Police Cooperation, signed on October 3rd 2009 and ratified on 21st of January 2010;

c. Agreement on Economic Cooperation between the Government of Kosovo and the Government of Macedonia in Skopje on 16th of December 2009;

d. Agreement on Health and Medicine between the Government of Kosovo and the Government of Macedonia, signed on 16th of December 2009;

e. Protocol on Cooperation between the Ministry of Foreign Affairs of the Republic of Kosovo and the Ministry of Foreign Affairs of the Republic of Macedonia;

f. Agreement on the avoidance of double taxation and prevention of fiscal evasion in connection to the tax on income and on capital, between the Republic of Kosovo and the Republic of Macedonia, signed on 6th of Aprill 2011;

g. Agreement on mutual legal assistance on criminal matters, between the Government of the Republic of Kosovo and the Republic of Macedonia, signed on April 8 2011 in Prishtina;

h. Agreement on the transfer of sentenced persons, between the Government of the Republic of Kosovo and the Government of the Republic of Macedonia, signed on April 8 2011 in Prishtina;

i. Agreement on extradition, between the Government of the Republic of Kosovo and the Government of the Republic of Macedonia, signed on April 8 2011 in Prishtina;

j. Agreement on Cooperation and mutual assistance in customs and matters, between the Government of the Republic of Kosovo and the Government of the Republic of Macedonia;

k. Agreement on border traffic railway, between the Government of the Republic of Kosovo and the Government of the Republic of Macedonia, signed on 15th of June 2011 in Skopje.

Agreements inherited by the period of UNMIK presence:

a. Agreement on Cooperation in the area of Culture Youth and Sports, between the Ministry of Culture Youth and Sports and the Ministry of Tourism, Culture Youth and Sports of the republic of Albania, signed on 13th of August 2002;

b. Agreement on free trade policy, between the Government of the Republic of Albania and UNMIK acting on behalf of the Ministry for Trade and Industry, signed on 17 of July 2003;

c. Agreement on the transfer of the convicted persons, between the Government of the Republic of Albania and UNMIK, signed on November 2nd 2005;

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d. Agreement on mutual protection and promotion of investment, between the Council of Ministers of the Republic of Albania and UNMIK, signed on 19th of February 2004;

e. Agreement on avoidance of double taxation on salary income and capital, and protection against fiscal evasion, between the Council of Ministers of the Republic of Albania and UNMIK, signed on 28th of September;

f. Agreement on cooperation in the area of tourism, between the Council of Ministers of the Republic of Albania and UNMIK, signed on May 9th 2006;

g. Agreement on cooperation on the area of energy, between the Ministry of Trade and Industry of the Republic of Albania and UNMIK acting on behalf of Kosovo, signed on October 17th 2006;

h. Memorandum of Understanding on coordination and construction of 400kw of energy interconnection, between the Ministry of Trade and Industry of the Republic of Albania and UNMIK acting on behalf of Kosovo, signed on October 17th 2006;

i. Memorandum of Understanding in the area of accreditation and standardization, between the Ministry of Trade and Industry of the Republic of Albania and UNMIK acting on behalf of Kosovo, signed on February 6th 2007.

3.3. Free Movement of Goods

3.3.1. Market Surveillance

Are there independent administrative structures and enforcement powers monitoring the market for consumer goods, in order to detect breaches of product safety rules and to ensure they are corrected? Please comment on your strategy for market surveillance, stressing the important aspects of the division of responsibilities, the infrastructures available and the methodology used. The Central Market Inspectorate within MTI was initially established in 2005, pursuant to the Law no. 02/L-01 on Market Inspection, in force since 2005, whereas it currently excericses its mandate based on the new Law no. 03/L-181 on Market Inspection, which entered into force on 9 August 2010 and is harmonized with the Regulation no. 765/2008/EC. Pursuant to this Law, the Central Market Inspectorate is an executive body of the Ministry of Trade and Industry that operates independently, with its separate budget allocation, and accountable to the Permanent Secretary of MTI. Pursuant to this Law, the Inspectorate is managed independently by the Chief Inspector, who is responsible for organizing and coordinating its work, setting up its structure and methods to carry out market inspection, through the annual work programme of the Inspectorate. The mission of the Inspectorate is to enforce policies, as well as to inspect and regulate the market, with a view to ensuring functioning of an open market economy and to creating a sustainable and competitive environment for the free movement of goods, services and capital. This Law provides for the organisation of the Central Market

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Inspectorate as a distinct executive structure within MTI, with a view to enhancing the efficiency of market surveillance by tackling Kosovo’s market as a single one, as well as to eliminating clarity of competencies between the central and local level. This Law also establishes principles and mechanisms to ensure operational independence of this body, including those of public transparency, consumer care and proportionality. The new Law also requires reforming, respectively centralization of the market surveillance system throughout the country under the Central Market Inspectorate, within the MTI, and in seven (7) Regional Offices (covering all the municipalities). Functionalization of Regional Offices is currently ongoing, and what is left is only the transfer of budget from Municipalities to the Central Market Inspectorate. The current number of staff of the Market Inspectorat is 92, which includes the following: the Chief Inspector (1), one (1) Administrative Officer, and Market Inspectors (90, out of which 16 are employed within the Central Office and 74 in Regional Offices in Prishtina, Prizren, Peja, Gjakova, Gjilan and Ferizaj). As far as its organisational structure is concerned, the Central Office consists of the three (3) sections:

a. Legal and Administrative Section - consisting of 4 officers (one head of section, one general and administrative affaris officer, one financial officer and one administrative officer;

b. Product Safety Section - consisting of 9 officers (one head of section and 8 market inspectors);

c. Planning and Inspection Section - consisting of with 3 officers (one head of section, one cooperation officer and one IT officer).

All staff members of the Central Office have university degrees, in various fields. As far as the market inspectors in Regional Offices are concerned, 19 of them are with secondary education, while the rest of them hold university degrees. With a view to further enhancement of institutional capacities for market inspection and consumer protection, MTI is currently conducting dialogue with Municipalities on including all municipal market inspectors into a single umbrella. The market surveillance strategy will be part of the MTI’s sector strategy (under the area of free movement of goods), which is being drafted and is expected to be finalized at the beginning of June 2012. During 2011, the Market Inspectorate has carried out over 3,000 inspections, which include general product safety (toy safety, machine equipments, electronic and home appliances, construction materials, etc.), fuels, general market inspection, tourism and touristic services. 3.3.2. Consumer Protection

Has the Government already planned the future strategy in the consumer protection area beyond 2014? If yes, please give details and timetable. The timeframe of implementation of the Consumer Protection Programme 2010 – 2014 ends in 2014. The future strategy in this field, applicable after 2014, covering the 2015 – 2019 five-year timeframe, will be drafted later.

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- What measures are being taken by the Government in order to reinforce the administrative capacity as far as consumer protection is concerned? Please give details including the allocation of human and financial resources together with related training activities. Kosovo has undertaken important steps in the field of consumer protection. On 31 August 2011, the Law on Technical Requirements for Products and Conformity Assessment, which protects and further advances consumer rights, has entered into force, while on 30 December 2011 the Law on General Safety of Products, which guarantees higher quality of products in Kosovo, has entered into force. The Kosovo Consumer Protection Council continued to monitor implementation of the Consumer Protection Programme 2010 – 2014. The most important measures undertaken so far include establishment of the Council for Safeguard Measures on Imports and intensification of public awareness campaigns. In this context, four roundtables have been organized. The Law on Consumer Protection is currently in the amendment process and is expected to enter into force in July 2012. Following the adoption of its new organisational structure, expected to happen soon, the Consumer Protection Office will be upgraded to the level of the office directly accountable to the General Secretary. The Consumer Protection Office was established in early 2012. Its competencies and responsibilities are based on the Law on Consumer Protection, while preparation of its Terms of Reference and Job Descriptions is under way. This office has currently two officers (its Head and one officer responsible for consumer protection), while recruitment of additional staff is under way: it is planned to increase the number of staff to four within this year. The budget of this office for the current year is €15,926. As far as training is concerned, a training session on ‘Consumer Protection Mission’ was held in November 2010, by UE experts, through TAIEX. This training was attended by around 20 participants (MTI staff responsible for market surveillance, metrology, standardisation, accreditation, industrial property rights and tourism, as well as staff of the Central Bank of Kosovo and of three civil society organisations dealing with consumer protection). During 2011, the office has also organized public awareness campaigns in this regard, respectively six (6) workshops with secondary school and university students. - Are there any updates as regards the institutional set-up and legal framework for consumer affairs in Kosovo? The new Draft Law on Consumer Protection (which will which will repeal the current Law no. 2004/17 on Consumer Protection, including the amended Law no. 03/L-131), was approved by the Government trough the Decision no. 01/73 dated 7 May 2012, and submitted for parliamentary procedures, and is expected to enter into force in June 2012. - Do non-Governmental organisations representing consumer interests exist in Kosovo? If yes, please describe their situation: - how many are there?

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- when were they created? - how is their membership composed? - are they representative of consumer interests at national level? - is the Government promoting and assisting their development? - what are their objectives? - which kind of activities do they carry out? - what are their main sources of financing? - how many staff do they employ? There are a few civil society organisations that focus their activities in consumer protection. Currently there are only two specialized organisations in this area: Organisation Consumer (Organizata Konsumatori – OK) and the Kosovo Consumer Protection Association. OK is represented in the Consumer Protection Council and has also actively participated in drafting Laws in this area, the Consumer Protection Programme, as well as in the roundtables and public awareness campaigns organized by the Consumer Protection Office and Council. There are also other civil society organisations which actively or occasionally are involved in these activities; these include the Centre for Strategic Social Research (STRAS), the Balkan Policy Institute (IPOL) and the University for Business and Technology (UBT). OK was established in 2005, the Kosovo Consumer Protection Association in 2004, IPOL in 2005, UBT in 2001 and STRAS in 2011. The membership of these organisations is predominantly project-based, with usually a limited number of staff (usually 2 – 3 of them) working in their implementation. They are neither organized in the form of specialized representation of interests nor in forms of federations, confederations or according to sectors of economic activity. These organisations represent consumers at the national level, but this representation is not yet comprehensive and systematic, since their activities do not cover the whole territory of the country. One of them, OK, is represented at the Consumer Protection Council, while the Kosovo Consumer Protection Association is represented at the professional Council of the Kosovo Food and Veterinary Agency (KFVA). Providing professional, material and institutional support to civil society associations and consumer counselling providers: is one of the priorities of the Consumer Protection Programme 2010 – 2014. In addition, this programme also envisages support to CSOs dealing with this field and their participation in policy development and monitoring, public information and awareness-raising, as well as allocation of a fund of €80,000 in total during the five-year-long timeframe as financial support to NGOs focusing their activities in this area. However, this amount has not yet been allocated due to budgetary limitations. These organisations are mainly funded by donors. Being project-driven, these organisations have not yet managed to develop a comprehensive and coherent set of objectives covering the area of consumer protection. They conduct various activities in this area, such as debates with citizens, media campaigns, published articles, issuing press releases, research, publications, roundtables and workshops. The most important publications include the research on Consumer

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Rights, Knowledge and Reliability in the Products Consumed and Quality of Public Services provided by the Municipality of Prishtina (published on 15 March 2012 by STRAS), as well as Consumer Protection: Legal Framework, Challenges in Kosovo and EU Standards (published on 8 June 2010 by IPOL). - Have consultation structures or procedures been established in order to allow consumer interests (including via consumer NGOs) to be represented in discussions on consumer policy, when drafting and implementing legislation? The existing legal basis in the area of consumer protection foresees representation of consumer interests (including through NGOs) in state institutions responsible for this area and in legislation and policy development in this area. The, Law no. 03/L-131 amending the Law no. 2004/17 on Consumer Protection (its Article 33A) provides for representation of consumer protection associations, business representatives and experts of respective fields within the Consumer Protection Council, while Article 32 of the Law no. 2004/17 on Consumer Protection foresees inclusion of civil society organisations which deal with consumer protection in drafting this programme in the framework of the Consumer Protection Council. Furthermore, the Government Guideline no. 062/2011, dated 26.09.2011, on the Public Consultations Process, sets out procedures obliging institutions to consult and take into consideration concerns and input of NGOs in drafting legislation. In this context, NGOs also have a key role in advocating consumer interests. When it comes to consultation structures, the Consumer Protection Council is the highest umbrella structure which ensures regular representation of consumer interests in development of legislation and policies in this field. So far this Council has ensured representation of these interests within the activities it was able to carry out (also given limited resources available), while the Consumer Protection Office has demonstrated willingness and cooperation vis-a-vis demands of civil society organisations dealing with consumer protection. 3.3.3. Trade - Can Kosovo demonstrate that it has adopted (or will soon adopt) the right institutional set up and that it has (or will soon have) in place the adequate administrative capacity for the negotiation, implementation and follow-up of the SAA's trade part? The central institution responsible for the area of trade is the Ministry of Trade and Industry, specifically its Department of Trade. This department is, among others, responsible for: a. Development of state trade policy (in favour of economic development), and

carrying out the necessary legislative, political and institutional reforms in the area of trade (including harmonisation with EU Acquis);

b. Development of guidelines and providing information on trade agreement, with a view to improving Kosovo’s access to and competiveness in the markets;

c. Cooperation and coordination with relevant actors (within MTI, line ministries and other stakeholders, including donors and international organisations) in developing and promotion of Kosovo’s trade policy and negotiation positions, and more broadly, in relation to requirements deriving from the European integration process;

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d. Organisation of work and professional support to the Trade Policy Working Group and its subgroups, as well as to the team that will negotiate the trade part of the SAA.

This department consists of three divisions: Trade Policy Division, Trade Agreements Division and Market Regulation Division (the latter with reduced capacities, but intending to expand, according to needs). The Trade Policy Division is responsible for: a. Initiation of trade negotiations; b. Formulation, monitoring and evaluation of trade policy (including setting out

objectives and instruments for their implementation and evaluation of its implementation);

c. Collection and analysis of statistical data and information on trade sectors (with a view to identifying strengths and weaknesses);

d. Performing studies and analyses on trade policy (including issuing reports on trade flow and balance);

e. Identification of issues related to policies and opportunities for trade; f. Searching for new markets and identification of trade opportunities with various

regions; and g. Informing stakeholders on trade policy. The Trade Agreements Division is responsible for: a. Issues of harmonisation of national legislation with the EU Acquis; b. Issues of access to markets and negotiations (including providing support to

negotiations); c. Evaluating the impact of trade policies and balance, conducting analyses, project

proposals and guidelines related to negotiation matters; d. Initiating legal amendments needed and of trade draft-agreements; e. Conducting analyses and drafting project-opinions on consistency and sustainability

of Kosovo Laws in the area of trade policy and of Laws of trade partners in relation to international obligations in this area;

f. Monitoring of implementation and of development of trade agreements; g. Identification of opportunities in the Kosovo market; h. Preparing agreements on access to various markets and informing the private

sectors on these markets; i. Evaluating the impact of current trade agreements and providing recommendations

on better utilisation of these agreement; and j. Preparation of proposals, leaflets and reports needed for the work of the Trade

Policy Division. The Market Regulation Division is responsible for: a. Receiving complaints from the business community and other stakeholders on

eventual unfair market practices which are in contradiction to market protection Laws;

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b. Initiating investigations (including procedures for collecting and analyzing the data in this regard); and

c. Carrying out research on recent developments in the area of market protection in order to utilize best international practices.

Job descriptions for the staff of this department are based on the Law no. 03/L-149 on Kosovo Civil Service and recommendations of the EC Further Development of Kosovo Trade Policies. They are also part of the new internal draft-regulation of the MTI, which is upon finalization and will be soon submitted for Government approval. The Department of Trade currently employs eleven (11) employees in total: ten (10) of them in the Trade Policy Division and one (1) in the Market Regulation Division The Ministry of Trade and Industry is currently drafting a comprehensive plan for restructuring the Department of Trade specifically, and the trade policy in general. This plan is being drafted in close cooperation and with the support of the EU. The restructuring process is expected to be completed in the coming weeks and will result in the creation of an improved structure of this department and other departments relevant for specific areas of trade policy, as well as of a framework that will enable further enhancement of capacities of these departments to perform the tasks arising from the future Stabilisation and Association Agreement (SAA). When it comes to establishment of functioning inter-ministerial structures in the area of trade, the Government of Kosovo has established in 2009 the Trade Policy Inter-Ministerial Council, which’s functionality will be further improved in the coming weeks and will serve as the highest political decision-making body in this area, where all relevant ministries (Ministry of Trade and Industry, Ministry of Finance, Ministry of European Integration, Ministry of Agriculture, Ministry of Infrastructure, and Ministry of Foreign Affairs) will be represented at the level of ministers. This body is mainly of political character, created to coordinate implementation of domestic and international trade policies. The scope of its functions concerns provision of support, facilitation of coordination and making major decisions on external trade. At the technical level, the Government of Kosovo, through its Decision no. 3/127, dated 1 June 2010, established the Trade Policy Working Group (WGTP). This mechanism brings together officials from relevant Governmental institutions, as well as representatives of the businesses community and civil society. The key function of this working group is to coordinate all activities related to trade and to development in general. In September 2011, five Working Subgroups within the WGTP were established: SWG for Agriculture, SWG for Market Regulation, SWG for Services, SWG for Industry and SWG for Trade Agreements. They are in charge of coordinating all the activities carried out in the context of trade policy (more specifically providing institutional support to businesses, as well as addressing various legal, technical and administrative barriers), and they regularly report to the WGPT. Regarding negotiations on the SAA trade part, the Department of Trade is foreseen to lead these negotiations. Depending on specific areas to be negotiated, the negotiation

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team will be organized in groups responsible for specific sub-areas, which will consist of respective line institutions (such as the Ministry of Agriculture, Forestry and Rural Development, Ministry of Finance, Ministry of Culture, Youth and Sports, Kosovo Customs, Central Bank of Kosovo, Kosovo Agency of Statistics, Veterinary and Food Agency and other relevant institutions). Furthermore, the Department of Trade will be in charge of coordinating analytical work, in cooperation with other respective institutions. At the highest political level, negotiation positions will be formulated and aproved by the Trade Policy Inter-ministerial Council. At the policy level, a comprehensive study on the freedom of movement of goods is under way, which will also contribute to improvement of coordination and division of responsibilities among MTI departments. Concerning enhancement of capacity and expertise of the Department of Trade and other line institutions, MTI continued with recruitment of staff with adequate qualifications and experience, mainly through transfers from other ministries, all of whom were part of the EU Young Cell Scheme scholarship. In addition to restructuring and significant improvements, both qualitative and quantitative, MTI also continued with provision of continuous training, including through the EU technical assistance. Most important trainings provided were focused on: EU trade policy, EU trade agreements, international trade policy, trade analyses and statistical analysis of trade indicators. Kosovo has also achieved significant progress in terms of approximation with European standards in areas related to that of trade, respectively in those of accreditation, standardisation and metrology. The following section provides a summary of most significant progress in these areas. Accreditation: The Kosovo Accreditation Directorate (KAD) within MTI has so far achieved significant progress. The Law on Accreditation has been amended in June 2011, and it now in compliance with requirements of the Regulation 765/2008 of the European Parliament and the Council. In November 2011, KAD signed in Warsaw the contract of Associate Member of the European cooperation for Accreditation (EA). Moreover, the Minister of Trade and Industry has adopted the Regulation on the Accreditation Council (on 9 February 2011) and the Regulation on KAD Professional Council (on 14 October 2011), and are being implemented. Furthermore, the KAD documentation has been revised (for the third time), harmonized with the requirements arising from the ISO/IEC 17011 standard, and adopted on 8 March 2011. This documentation includes the following: a. Quality Manual DAK-MC-001; b. Quality Policy DAK-PO-001; c. Assessment Policy DAK-PO-002; d. Assessment Group Policy DAK-PO-003; e. Policy on Changes to the Accreditation Criteria and Extension of KAD’s Scope of

Activities DAK-PO-004; f. Policy on the Use of Accreditation Symbol DAK-PO-005; g. Policy on Subcontracting Assessments DAK-PO-006;

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h. Policy on Participation in Inter-laboratory Comparisons DAK-PO-007; i. Policy on Traceability of Measurements DAK-PO-008; j. Policy on Impartiality, Conflict of Interest and Involvement of Stakeholders DAK-

PO-009; k. Policy on Participation in DAK Trainings DAK-PO-010; l. Policy on Organisation of Inter-laboratory Comparisons and Competence Tests

DAK-PO-011; m. Policy on ‘Witness Audit’ Evaluation DAK- PO-012; n. Policy on Cross-border Evaluation DAK-PO-013; o. Management Procedures DAK-PM-001 to DAK-PM-016; and p. Technical Procedures DAK-PT-001 to DAK-PT-010. KAD has applied for MLA with EA on testing laboratory, finalized the pre-evaluation stage, resolved non-conformities and following the implementation stage, it is expected that the phase of full evaluation of KAD by the EA will follow. Moreover, the amended Law on Technical Requirements for Products and Conformity Assessment entered into force in August 2011, which is in line with Regulations 765/2008/EC and 768/2008/EC, as well as with other relevant EC regulations and requirements of the General Product Safety Directive and General Product Safety Regulation. KAD has signed Memoranda of Understanding with the following counterpart institutions of other countries: Accreditation Institute of the Republic of Macedonia (on 14 May 2009), General Directorate of Accreditation of the Republic of Albania (on 27 March 2008), Accreditation Agency of the Republic of Turkey (TURKAK, on 19 November 2009) and Accreditation Agency of the Republic of Croatia (on 17 June 2010), while a memorandum with the Accreditation Body of the Republic of Montenegro will be signed soon. KAD has so far accredited 20 conformity assessment bodies, 19 testing laboratories and one inspection body. Standardisation: The overall number of standards adopted so far is approximately 4,000. The Kosovo Standardization Agency (KSA), through its Technical Committees, has increased the number of new standards adopted as Kosovo Standards (KS) to 850. The standards adopted include those in sectors of construction, oil and gas, management of quality systems, transport and postal services, electronics, metrology, healthcare, energy, food processing, machinery, toys, agriculture, mines and minerals, textile and leather shoes, environment, personal protection equipments, metals, plastic and information technology. Moreover, the European standards adopted as KS have been promoted and Catalogue with all SK standards has been published. KSA has provided businesses and other stakeholders, upon the latter’s request, with the list of these standards, which are stored in the KSA archive. 18 Technical Committees have been established so far. The Administrative Instruction on Organisation and Functioning of Technical Committees entered into force in June 2011, while the Administrative Instruction on Establishment of the Professional Council of

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Standardization entered into force in February 2011. A Memorandum of Cooperation with the Standardization Institute of the Republic of Macedonia (ISRM) has also been signed. Drafting of the Sector Strategy on Standardization is under way, as a component of the MTI overall Strategy, within the chapter on quality infrastructure. Transposition of the Directive 98/34/EC on Information on Technical Standards and Regulations has also started. The new standards database is also being made functional. Metrology: MTI is in the process of reforming and restructuring the policy and the Department of Metrology, including clear division between policy-making and policy implementation in the area of metrology. Regarding legislation, the Law on Metrology has been finalized and is expected to be approved by the Government during May 2012, while the Draft Law on precious metals is in the finalization stage and is expected to be approved by the Government soon. So far seven (7) administrative instructions regulating procedures and conditions for metric units in thermometry, electronic power meters, electronic meters of reactive energy, flow of fluids except water and non-automatic weighing instruments, have been adopted. These IAs are the following: a. AI no. 2011/15 on Technical-Metrological Requirements and Conformity

Assessment Procedures for Non-automatic Weighters; b. AI no. 2011/14 on Metrological Requirements for Equipments with Cylinders for

Measuring Braking Force; c. AI no. 2011/09 on Technical-Metrological Requirements for Electrical Medical

Thermometers for Constant Measuring of Temperature; d. AI no. 2011/06 on Testing Electronic Weighters of Active Electrical Energy of 1 and

2 Preciseness Class; e. AI no. 2011/05 on Technical-Metrological Requirements for Electronic Weighters of

Reactive Electrical Energy of 2 and 3 Preciseness Class; f. AI no. 2011/04 on Technical-Metrological Requirements for Clinical Thermometers

for Measuring Body Temperature; and g. AI no. 2011/03 on Technical-Metrological Requirements for Fluid-fuelled Glass

Thermometers. These subsidiary legislation acts are based on the Law no. 03/L-203 on Metrology, which also enables adoption of New Approach directives (NAWI and MID). Moreover, the Directive 90/384 on Non-Automatic Weighing Instruments has been transposed in July 2011, while drafting of the Directive 2004/22/EC on Measuring Instruments is under way. Calibration of metrology etalons in Kosovo is made possible for the first time. Continuous efforts have also been made towards full functionalisation of the Metrology Institute in Prizren. The Central Metrology Laboratory of Kosovo was inaugurated in March 2010, while the Metrology Institute in Prizren operates since 1947. The Central Metrology Laboratory has functionalized laboratories of measurement, electrical measures, flow and volume, and quality control of precious metal products, whereas the laboratory of force and thermometry is fully equipped and its officers are in the

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phase of certification process (with the support of TAIEX programme), a process to be concluded by September 2012. The Electricity Laboratory is completed with measurement system and comparators of high accuracy class (0.01) for calibration of primary and secondary etalons. Concerning capacity building, the Department of Metrology is benefiting from the TAIEX programme focusing on training through training on the use of metrology laboratory equipment and certification of its staff in areas of volume and flow, thermometry, force and electrical units. So far seven (7) officials have been certified who are carrying out metrological services, while two (2) more officials will be certified until the end of the programme. Authorizations for three companies responsible for control and verification of metrology instruments have been withdrawn during 2012, since they did not meet conditions for authorisation. - Please provide information on the main trading partners (for both merchandise imports and exports) and the overall structure of trade by sector. Kosovo’s Trade Partners: Kosovo has trading relations with many European and world countries. These partners can be divided into three groups: CEFTA, EU and other countries of the world. Table 42. Kosovo’s export to CEFTA countries during 2009 – 2011 (in million Euro and percentage)

Timeframe 2009 2010 2011 Value mil € % mil € % mil € %

Albania 26.2 49% 32.3 46% 33.2 40% Bosnia and Herzegovina 1.2 2% 1.9 3% 0.6 1% Croatia 2.2 4% 2.7 4% 2.7 3% Macedonia 17.4 32% 26.3 37% 30.7 37% Montenegro 3.1 6% 3.9 6% 6.9 8% Serbia 3.5 7% 3.8 5% 8.3 10% Total 53.6 70.9 82.4

Source: Central Bank of Kosovo and Kosovo Statistics Agency As indicated in the table above, destination of most Kosovo goods during these three years was to Albania and Macedonia. On the other hand, a low level of relations and slow increase of trade with Serbia has continued. As it is known, this change took place due to political reasons, namely due to unilateral embargo imposed by Serbia to Kosovo since the proclamation of Independence by Kosovo, in February 2008.

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Table 43. Kosovo’s import from CEFTA countries during 2009 – 2011 (in million Euro and percentage)

Timeframe 2009 2010 2011 Value mil € % mil € % mil € %

Albania 58.4 8% 69.1 9% 96.2 11% Bosnia and Herzegovina 59.7 9% 83 10% 79.8 9% Croatia 58.5 8% 59.3 7% 64 7% Macedonia 291.9 42% 316.1 40% 364 41% Montenegro 13.1 2% 11.4 1% 12.2 1% Serbia 210.9 30% 260.1 33% 270.9 31% Total 692.5 799 887.1

Source: Central Bank of Kosovo and Kosovo Statistics Agency As it can be noted, concerning imports from CEFTA countries, Macedonia (41% during 2011) and Serbia (31% during the same year) were main partners, followed by Albania, Bosnia and Herzegovina, Croatia and Montenegro. In general, main trade partners of Kosovo amongst CEFTA countries (in terms of both export and import) are Macedonia, Albania and Serbia. Table 44. Kosovo’s export to the EU market during 2009 – 2011 (in million Euro and percentage)

Timeframe 2009 2010 2011 Value mil € % mil € % mil € %

Austria 2 3% 5.6 4% 5.7 4% Belgium 5.2 7% 11.5 9% 5.1 4% France 0.6 1% 1 1% 1.2 1% Germany 7.6 11% 15.4 12% 23.4 17% Greece 0.2 0% 0.2 0% 0.2 0% Italy 46.2 65% 80.1 61% 83.7 61% Netherlands 1.5 2% 1 1% 2.9 2% United Kingdom 0.2 0% 0.7 1% 1.3 1% Czech Republic 0.5 1% 0.3 0% 0.8 1% Poland 0.1 0% 0.1 0% 0.6 0% Hungary 0.4 1% 0 0% 0.1 0% Slovakia 0.4 1% 0.9 1% 2.4 2% Slovenia 2.9 4% 6.2 5% 6 4% Bullgaria 2.7 4% 6.8 5% 1.2 1% Romania 0.2 0% 0.3 0% 1 1% Others 0.6 1% 1.4 1% 0.8 1% Total 71.3 131.5 136.4

Source: Central Bank of Kosovo and Kosovo Statistics Agency

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As shown in the table above, Italy (€83.7 million during 2011) and Germany (€23.4 million during the same period) were Kosovo’s biggest trade partners within the EU market. It is also worth noting that, in addition to Italy and Germany, Belgium was also a major export destination during 2008, but an increase of export to these countries was not made possible due to the financial crisis. The same was the case with Greece, which was one of most important export partners of Kosovo, but exports to this country during 2009 significantly decreased (a €0.2 million decrease during 2011). Table 45. Kosovo’s import from the EU market during 2009 – 2011 (in million Euro and percentage)

Timeframe 2009 2010 2011 Value mil € % mil € % mil € %

Austria 38.9 5% 32.7 4% 38.6 4% France 27.2 4% 26.5 3% 34.7 4% Germany 246.1 33% 275.3 34% 292.4 31% Greece 79.1 10% 103.7 13% 103 11% Italy 87.6 12% 100.5 12% 157.1 17% Netherlands 30.9 4% 14.7 2% 18.2 2% United Kingdom 14.1 2% 13.5 2% 17.1 2% Czech Republic 17.1 2% 20.5 2% 19.3 2% Poland 24.1 3% 39.6 5% 32.9 3% Hungary 26.9 4% 28.6 3% 34.9 4% Slovakia 5.2 1% 5.7 1% 5.7 1% Slovenia 66.2 9% 68.2 8% 71.4 8% Bulgaria 44.5 6% 35 4% 50.2 5% Romania 9.5 1% 17.3 2% 19.8 2% Others 37.6 5% 39.5 5% 46.4 5% Total 755 821.3 941.7

Source: Central Bank of Kosovo and Kosovo Statistics Agency It is clear that the situation in terms of imports from the EU market has not changed much: Kosovo continued to import mostly from Germany and Italy during this three-year-long period (the former with €292.4 million and the latter with €157.1 million during 2011), followed by Greece and Slovenia (with €103 and €71.4 million, respectively during 2011). In terms of both import and export combined, Germany and Italy remained major EU trading partners with Kosovo during this period.

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Table 46. Kosovo’s export to the rest of the world during 2009 – 2011 (in million Euro and percentage)

Timeframe 2009 2010 2011 Value mil € % mil € % mil € %

Turkey 6.5 19% 9.3 11% 7.8 11% Switzerland 10.5 31% 17.7 21% 21.6 30% China 1.6 5% 14.8 17% 28.2 40% India 15.5 45% 44 51% 13.3 19% Total 34.1 85.5 70.9

Source: Central Bank of Kosovo and Kosovo Statistics Agency China and Switzerland were two most significant export partners during 2009 – 2011, followed by India and Turkey. Altogether, exports to China reached the biggest increase (from €14.8 million during 2010 to €28.2 million during 2011). Table 47. Kosovo’s import from the rest of the world during 2009 – 2011 (in million Euro and percentage)

Timeframe 2009 2010 2011 Value mil € % mil € % mil € %

Turkey 141.5 40% 149.4 41% 183.6 39% Switzerland 21.9 6% 20.5 6% 35.5 8% Chila 128.3 36% 134.8 37% 169.6 36% Brazil 37.9 11% 26.9 7% 40.8 9% USA 26.7 7% 33.8 9% 38.2 8% Total 356.3 365.4 467.7

Source: Central Bank of Kosovo and Kosovo Statistics Agency Concerning import, Turkey (which is in lead, with €183.6 million during 2011) and China (with €169.6 million during the same period) were major partners during this period, followed by Brazil (with 40.8 million during 2011), USA (with €38.2 million during 2011) and Switzerland (with €35.5 million during 2011). Table 48. Kosovo’s export to EU countries during 2010 – 2011 (by categories of goods, based on the EU Harmonized System)

Categories of goods Export (2010)

Export (2011)

Trend (in absolute

terms)

Trend

(in %)

01 Livestock and animal products 0 0 0 0 02 Plant products 1,671,953 1,517,330 -154,623 -9.2 03 Edible oils 0 0 0 0 04 General foodstuff, beverages and tobacco

1,562,674 2,225,766 663,092 42.4

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05 Mineral products 7,134,516 842,707 -6,291,809 -88.2 06 Chemical industry products 393,406 126,844 -266,563 -67.8 07 Plastics, rubber and products thereof

3,767,900 5,778,344 2,010,444 53.4

08 Leather and products thereof 7,047,860 6,789,126 -258,735 -3.7 09 Wood and products thereof 400,867 796,376 395,508 98.7 10 Paper and products 301,133 166,869 -134,264 -44.6 11 Textiles and products thereof 3,686,981 6,371,143 2,684,161 72.8 12 Footwear 389 4,082 3,693 950.0 13 Stone, plaster, ceramic and glass products

424,311 109,954 -314,356 -74.1

14 Pearls, precious stones and metals etc.

9,893 1,378 -8,515 -86.1

15 Base metal and products thereof 100,873,94

2 98,954,337 -1,919,605 -1.9

16 Machinery, appliances and electric materials

2,305,094 10,305,852 8,000,757 347.1

17 Transport means 964,020 325,450 -638,570 -66.2 18 Optical, medical, photography musical instruments etc.

376,902 218,708 -158,193 -42.0

19 Arms and ammunition 0 496 496 0 20 Various manufactured articles 875,097 669,311 -205,785 -23.5 21 Works of art 13,914 99,351 85,437 614.0

Total 131,810,85

2 135,303,42

3 3,492,571 2.6

Regarding the structure of exports to the EU market presented in the table above, it remained at the same level during 2011l, consisting mainly of raw materials, in form of base metals, which make up 73% of overall exports. The trend of import during 2011, based on the sub-groups of goods and chapters according to the Harmonized System (HS), was as follows: a. Concerning foodstuff, which includes agricultural-livestock products and those of

food industry (chapters 1 – 24 of HS), the proportion was 8.3% to the total of exports (an amount of €25 million). This category was dominated by cereals, beverages, alcoholic beverages and vinegar, grinding industry products (vegetables, fruits or other articles), etc.

b. Concerning non-foodstuff products (industrial products, chapters 25 – 99 of HS), the proportion was 91.7% to the total of exports (an amount of €287 million). This category was dominated by steel, minerals, slag, cooper and its products, etc. Speaking in figures, the following products dominated this category:

i. Slag and steel, with €82.9 million or 61% of the total of exports (a decrease of 5.7% compared to 2010). The data on exports according to the 6-digit

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HS products indicate that iron and nickel made up 60.3% of the total of exports (a decrease of 3.8% compared to the previous year);

ii. Cooper an its products, with €12 million or 9.4% of the total of exports (a decrease of 26% compared to the previous year);

iii. Machinery parts and machines, with €1.6 million or 7.3% of the total of exports (an increase of 347.1% from 2010);

iv. Antelope and leather (others from wool), with €6.7 million or 5% of the total of exports (a decrease of 3.5% compared to 2010); and

v. Rubber and rubber products, with €2.2 million or 3.4 % of the total of exports (an increase of 105.9% compared to 2010).

According to the data presented in this section, it can be concluded that Kosovo’s trade partners can be divided into three categories: CEFTA market, EU market and countries outside CEFTA and the EU. In a nutshell, major trade partners of Kosovo (in terms of both exports and imports) within these three categories are Macedonia, Albania and Serbia (CEFTA), Italy and Germany (EU), and China, Turkey and Switzerland (outside CEFTA and EU). Regarding trade balance, although it remained negative during the reporting period, it is improving (albeit slowly), which shows that the country is moving towards a trade strategy oriented more to export than import. At the same time, the data provided here show that while Kosovo is improving trade relations with its current partners, it is also creating trade relations with new partners. - How has the trade integration with the EU developed over time? What are the main EU trading partners and products? How has the export structure changed? Kosovo’s trade relations: A big step taken recently has been adoption of the Kosovo Trade Policy in 2009. This strategic document contains series of measures aimed at improving performance of exporters. In its outset, it emphasises access of Kosovo producers to regional markets and beyond. Furthermore, the Commission for Evaluation of Anti-Dumping Measures and the Coordinating Group for Harmonising the Legislation in the area of Free Movement of Goods (which plays key role in coordinating activities resulting from CEFTA and EU Regulations and Directives related to services) have been established. The objectives set out for trade liberalisation in services include and increasing importance on elimination of barriers to trade in0 services, opening up of the market in line with World Trade Organisation and EU rules, as well as modalities of negotiations on liberalisation of trade in services. MTI has also commenced operationalization of the database of legislation on services. Kosovo is in the phase of finalizing its trade legislation. The new Law on External Trade (a major Law setting out guiding principles of Kosovo’s external trade) was adopted in 2011. Last year Kosovo completed the legal infrastructure on protective measures (with the adoption of the Law on Safeguard Measures on Imports). However, the Law on Anti-Dumping and Countervailing Measures is not in full compliance with best international practices, and it will therefore be amended during 2012. During 2011

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Kosovo chaired the CEFTA Agreement. All the objectives proposed in the respective programme in 2011 have been achieved. Trade in industrial products: Base metals are most exported industrial products, with their export having marked a significant increase of 26.6% in 2011, compared to 2006, whereas exports in mineral products increased for 38.6% in 2011 compared to 2006. However, 2008 has marked a significant change in terms of destination of these exports. There was also an increase in the category of equipments, machinery and electrical appliances, which constitute the third category of most imported goods in Kosovo, while there is also a number of others goods that constitute a significant amount of imports, although not as significant as exports, with base metals constituting the biggest percentage of exports. A similar situation as with mineral products is also with the category of machinery and appliances, which increased by 18.7% during 2011 compared to 2006. Table 49. Trade balance in industrial goods during 2010 – 2011 (in million Euro)

Timeframe 2010 2011 Imports 269.4 286.6 Exports 1668.5 1919.2 Trade balance -1399.1 1632.6

Source: Central Bank of Kosovo A recovery of the world economy in 2010 generated an increased demand for external trade in base metals. As a result, increase of market prices for base metals during the same year had a positive impact on the level of production, accompanied by an increase in the level of sale. Having in mind that 90% of metals exported from Kosovo consists of nickel, exports during 2010 increased by 77.8%, reaching €294.0 million in value. Increase of external demand in prices of the metal industry in international markets had a positive impact in creating a significant increase of exports of base metals, which reached a value of €185.2 million in 2010 (€88.4 million in December 2009), contributing with 58.6% in increasing overall Kosovo’s exports. General increase of exports during 2010 was also caused by an increase by 55.3% of exports of mineral products, which constituted 13.2% of total exports. Exports of machinery and appliances (mainly consisting of exports in electricity) constituted 3.6% of total exports. Trade in agricultural products and fisheries: Prior to 1990s, agriculture in Kosovo was dominated by socially-owned enterprises, which used to import a considerable part of raw materials. These socially-owned enterprises are not active any longer, and new private enterprises have started to operate instead. Nevertheless, the number of farmers is still relatively small, and they are capable of providing only a small part of demand for processed foodstuff. Consequently, the demand for processed and un-processed agricultural products is met mostly by imports.

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Table 50. Export of agricultural products during 2010 – 2011 (in million Euro) Timeframe 2010 2011

Living animals and animal products 0.9 0.4 Vegetable products 12.1 12.6 Animal or vegetable edible oil and food oil 0.1 0.1 Processed foodstuff, beverages and tobacco 11.4 12.8

Source: Central Bank of Kosovo The amount of imports of agricultural products in Kosovo exceeds that of exports, which results in trade deficit. During the 2010 – 2011 there was an increase in import of agricultural products. Export of agricultural goods during 2009 – 2010 decreased, while a slight increase in exports of these goods can be noted during 2011. Vegetable products constituted the biggest amount of exports in agricultural products (a value of €13.9 million), followed by processed foodstuff, beverages and tobacco (€14.3 million). These products were exported mainly to Albania, Macedonia, Serbia and Germany. Table 51. Imports in agricultural products during 2010 – 2011 (in million Euros)

Timeframe 2010 2011 Living animals and animal products 87 97.4 Vegetable products 108.5 136.8 Animal or vegetable edible oil and food oil 19.3 22 Processed foodstuff, beverages and tobacco 261.7 303.9

Source: Central Bank of Kosovo Regarding imports in agricultural products, Kosovo mainly imports processed foodstuff, beverages and tobacco, followed by live animals and animal products. - What are the current Kosovo trade arrangements (autonomous regimes, and trade agreements: bilateral/regional)? Kosovo currently conducts its trade in the framework of three categories of trade arrangements: a. EU Autonomous Trade Measures (ATMs), b. Extended Central European Free Trade Area (CEFTA) as a multilateral framework; c. Bilateral arrangements. Kosovo benefits from EU Autonomous preferential Trade Measures (ATMS) since 2000, which expired on 31 December 2010. Following a delay of almost one year, these measures were voted by the European Parliament on October 2011 and by the EU Council on 24 November 2011, which marked improved trade relation between Kosovo

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and the EU. Consequently, Kosovo benefits retroactively from this preferential agreement with the EU as of 1 January 2012. The new Regulation of the European Parliament and the European Council amending the Council Regulation, adopted by the EU Council on 25 November 2011, reinstated the right to unlimited access to EU market for all the products originating from Kosovo until the end of 2015. It also has retroactive effect, which means that Kosovo exporters which paid customs duties in EU countries between 1 January 2011 and the date this Regulation entered into force will be reimbursed. Since EU is Kosovo’s biggest trade partner, reinstatement of autonomous trade measures will incite trade and will increase Kosovo export to the EU. Furthermore, the EU Council Conclusion of 6 December 2011, besides giving the green light for granting the visa liberalisation roadmap, clearly express EU’s acknowledgement of the progress achieved in improvement of trade policies and relations with Kosovo, thus emphasising the fact that Kosovo has made significant progress in initiating free trade negotiations. Kosovo is a member of CEFTA since its establishment in 2007. Prior to that, it has signed four (4) bilateral free trade agreements with neighbouring countries that are now part of CEFTA. Upon signing of CEFTA Agreement, these bilateral agreements have become part of the CEFTA Agreement. Therefore, currently there is no bilateral free trade agreement. During 2011 Kosovo chaired CEFTA, and it has met all the obligations arising from the annual working programme. Lastly, Kosovo also benefits from the Generalized System of Preferences (GSP) with the U.S., Norway and Switzerland, which provide for free export to these countries of a considerable number of Kosovo products. Such an arrangement with Japan is also upon finalization and is expected to be adopted soon. The future Kosovo – EU Free Trade Agreement: In addition to the current trade arrangements summarized above, there has been significant progress towards a free trade agreement between Kosovo and the EU since the initiation of this process in 2010. As a first step, the EC sent a questionnaire to Kosovo Government, aimed at examining the current situation of several institutions involved in trade-related matters (including MTI and its bodies, Kosovo Customs, procurement agencies, Kosovo Statistics Agency, etc.). As a follow-up to the questionnaire, EC sent a fact-finding mission in July 2010. This mission evaluated Kosovo’s readiness to negotiate and implement the trade agreement and identified measures that Kosovo has to undertake in order to further advance towards this agreement. Kosovo has made significant progress towards starting negotiations for this agreement. In its 2011 Progress Report on Kosovo, the EU clearly acknowledged improvement of Kosovo’s position in the area of free movement of goods, including quality infrastructure, industrial property rights and trade policy. A document on monitoring the criteria for FTA was drafted in the end of 2011, as requested by the Commissioner De Gucht, aimed at examining the current situation of some of the institutions involved in trade-related matters.

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3.4. Movement of persons, services and right of establishment 3.4.1. Movement of persons - Has Kosovo signed any bilateral agreements on regulating rights on free movement of people? Kosovo has not signed yet any agreement as regards to free movement of persons. - How many permits for foreigners has Kosovo issued during the last 5 years? Issuance of working permits to foreigners who are in working relations in the territory of Kosovo has commenced in March 2010, following entry into force of the Law no. 03/L-136 on Issuance of Working and Employment Permits to Foreign Nationals in the Republic of Kosovo. 3,290 such licenses have been issued so far.

Table 52. Number of employment permits issued to foreigners in the territory of Kosovo during 2010 – 2011 period

Timeframe 2007 2008 2009 2010 2011 Total Number of employment permits issued 0 0 0 1,339 1,951 3,290

Source: Ministry of Labour and Social Welfare - Do provisions exist to prevent direct or indirect discrimination on grounds of nationality of EU nationals working in Kosovo as regards working conditions, remuneration or dismissal? In Kosovo, is applied Law on granting permit for work and employment of foreign citizens 03/L-136. EU citizens have equal treatment in employment as national employees when it comes to working conditions, remuneration and other rights of employment. In Kosovo is applicable is special Law against discrimination (No. 2004/3) that is applied to all employees. The purpose of the Law against discrimination No.2004 / 3 is the prevention and combating discrimination, promotion of effective equality and the realization of the principle of equal treatment of citizens. Issues that have to do with anti-discrimination are regulated based on the principles: a. The principle of equal treatment means that there will be no discrimination, direct

or indirect, against a person based on gender, age, marital status, physical or mental disability, sexual orientation, nationality, political opinion or belief , religion or belief, ethnic or social origin, property, birth or other status;

b. Principle of fair representation to all persons and all members of communities to employment within the public institutions at all levels.

c. Also in Labor Law nr.03/L-212 Article 5 Article 5 Prohibition of all forms of discrimination;

d. Also, Law no. 2004/3 on Anti-Discrimination, the provisions will be applied directly when it comes to employment connected between employees and employers.

Also the Law for issuing work permits for foreign nationals 03/L-136 regulates the conditions and procedures for granting permit for foreign nationals in Kosovo under

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conditions specified by Law, international labor Conventions and Bilateral Agreements. 3.4.2. Movement of Services - How Kosovo authorities' negotiations and conclusions with regional countries on bilateral agreements for coordination of social security schemes have progressed? Based on international conventions on social security, the Republic of Kosovo has inherited bilateral agreements signed by the former SFRY with EU Member States and other European Countries (Germany, Austria, Switzerland, France, Italy, Belgium, Netherlands, Norway, Denmark, Poland, Slovakia, Czech Republic, Bulgaria, Great Britain, Romania, Luxembourg and Hungary). These agreements are being implemented in some areas (retirement pensions, family pensions and partially for disability pensions). The Republic of Kosovo aims to negotiate with most of these countries, particularly Switzerland, Austria and Germany, for renewal of these social security agreements, as well as for signing new agreements with states that have emerged from the former SFRY. On 1 April 2010, the Swiss Federal Council has unilaterally decided to terminate the Agreement with the former SFRY. The Agreement on Social Security with Austria is being implemented partially. On 23 – 26 May 2011, talks between officials of the Republic of Austria and the Republic of Kosovo in the field of social security have been held in Vienna, which continued on 27 February – 2 March 2012, and resulted in an agreement on a bilateral agreement in the field of social security (with the draft-agreement finalized), which focuses in the area of pensions and disability. The agreement on social security with Germany is being implemented properly in some areas (retirement pensions, family and disability care). On 17 October 2011, a Protocol of Cooperation between Kosovo and Germany in the field of pension and disability insurance was signed. Furthermore, several meetings with the Ministry of Labour and Social Insurance of Macedonia were held. At the meeting held on 27 April 2011, the parties exchanged information regarding the regulation of the Pension and Disability System, and also discussed on issues and problems that may arise in the realization of the right to pension and disability insurance for citizens of both countries who meet the criteria for pension insurance in the respective states. - Is the Coordination Body for the harmonization of legislation to be fully functional? The Coordination Body for the harmonization of legislation in the field of services has been established in September 2010. This body has so far met twice, and as a result a database was made operational in June 2011. This database serves as a tool to review and follow all the legal changes made in the field of services. - What is the evolution of mutual recognition agreements (MRA) alignment with EU standards? The Republic of Kosovo does not yet have formal mutual recognition agreements with other countries in respect to education qualifications.

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The only agreement in this area is the agreement reached with Serbia within the technical dialogue between the Republic of Kosovo and Serbia. The implementation of the agreement has started in February 2012. According to this Agreement the European Universities Association (EUA) is the body which will certify university diplomat from both parties, so that the process is carried out in line with European integration process, in particular in line with the Bologna System and Lisbon Recognition Convention. EUA will carry out this process in cooperation with SPARK, a Netherland Organization, which is active in Kosovo since 2000. AUE will gather in a committee for recognition of higher education qualifications which will take place at least twice per year. However, there is an Administrative Instruction No.8/2012 in place on the “Principles and procedures for recognition of diplomas of higher vocational schools and university degrees gained abroad” which regulates principles and responsibilities that shall be applied in the procedure recognition and evaluation of the higher vocational schools’ diplomas and university degrees gained in the accredited institutions of the higher education in other countries. In addition the higher vocational schools and those that do not belong to university level (below Bachelor level), will be reviewed according to this AI, referring to International Standards for Classification of Education (ISCED) and EQF. Article 3 of this AI defines the main principles for evaluation and recognition of these qualifications. Except Serbia, cooperation as regarding mutual recognition of education qualifications with EU and other countries is very good, even though there are no formal agreements signed. According to the Administrative Instruction, the Ministry of Education Science and Technology has created the National Council for Recognition which decides on the requests for recognition based on the opinion of the Commission of Experts, respectively National Academic Recognition Information Center (NARIC) which acts according to European practices for recognition of diplomas based on the Higher Education Lisbon Recognition Convention in European Area. - Is the exercise or access to a service activity subject to any licence or authorisation? The exercise of activities in the area of services (banks, securities, investment funds, insurances, and pensions, retail financial services for individual customers and payment services) is subject to possession of the licence. The exercise of activities of banks and some other services that can be provided by Microfinance Institutions (MFI) and Non-Bank Finance Institutions (NBFI) require licence for banks or a registration as MFI/NBFI, which are issued by the Central Bank of Kosovo, pursuant to the Law no. 04/L-093 on Banks, Microfinance and Non-Banking Institutions, for the activities prescribed in Articles 44, 93 and 94 of this Law. Furthermore, activities of pension funds and insurances are regulated by the relevant Laws (Law no. 04/L-101 on Kosovo Pension Fund, Law no. 04/L-018 on Compulsory Motor Liability Insurance and the UNMIK Regulation no. 2001/25 on Licensing, Monitoring and Regulation of Insurance Companies and Mediators, which is in the process of being replaced by a Law on licensing, monitoring and regulation of insurance companies (which is in drafting process). All the activities outlined above are currently regulated and monitored by the

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relevant departments of financial supervision, as a function of the Central Bank of Kosovo. Regarding securities, there are only short-term securities (treasury bonds) in Kosovo, which are issued by the Government and are regulated by relevant regulations on primary and secondary markets and by the Law on Public Debt. - Has a Reference Rate for long term variable interest rate loans been introduced? A Reference Rate for loans is not applicable in Kosovo. Improving transparency and encouraging growth of inter-bank activity is one of CBK’s short-term objectives. CBK is not able to present a reference norm of its own, because it does not yet have an independent monetary policy, out of which a reference rate could be calculated. - Did Kosovo eventually issue treasury bonds in November 2011 to develop financial markets? Issuance of Government Securities has commenced, in accordance with the plan foreseen by the Government of Kosovo, in January 2012. The first auction of Securities was held on 17 January 2012. - Was the Law on pension funds adopted and implemented? Yes, the Law no. 04/L-101 on Kosovo Pension Funds has entered into force on 31 March 2012, and is continuously implemented. - Was the Electronic Trading Platform for the Open Market Operation put into operation? The Electronic Trading Platform for the Open Market Operation is functional since January 2012. - What are the rules concerning the payment system? Rules on which the payment system of Kosovo is based are the following: a. Operating Rules and Procedures of Inter-Banking Clearing System (2001); b. UNMIK Regulation no. 2001/26 on Payment Transactions; c. Rule XIX of CBK on the Standard System of Bank Accounts in Kosovo (iban); d. Rule XVIII of CBK on Clearing and Payment Accounts; e. Rule XVII of CBK, adopted (in March 2012) within the Regulation on the Minimal

Reserve Required; f. Rule XXXI of CBK on the Direct Debiting Scheme; g. Regulation on the Registry of Bank Account Holders; h. Internal and external Procedures and Instructions on Operation of the Clearing and

Payment System and on the Supervision of the Inter-Banking System. In the context of improving and advancement of the legal basis on the payment system, also foreseen by the Strategy of the National Payment System (Pillar 1: Legal Basis), the Draft Law on the payment system has been finalized. Furthermore, several regulations and instructions are in the process of changes and adaptations, such as: a. Regulation and instruction on international payments; b. Regulation on minimal reserve required for banks;

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c. Regulation on electronic payment instruments; d. Regulation on supervision of the payment system, direct debiting, Kos-GIRO; e. Regulation on operation of the electronic inter-bank clearing system, etc. - Please, present the key data on the financial services sector in Kosovo (e.g. number of workers, contribution to GDP, number of banks, insurance companies, financial intermediaries, present, market share, liquidity…) The overall value of the financial sector in Kosovo at the end of 2011 has amounted to €3.5 billion Euro (74.5% of GDP), which represents an annual increase of 9.3%. The structure of assets in the financial sector in Kosovo is dominated by assets of the banking system (76.3%), followed by those of the pension system (17%), micro financial institutions (3.7%), insurance companies (3%), as well as those of financial aid (0.02%). The number of employees in the banking system in 2011 was 3,728 employees. There are currently 8 commercial banks, 13 insurance companies and 57 financial intermediaries (15 micro financial institutions, 5 non–banking financial institutions dealing with lending activities, 4 offices dealing with money transfer, 30 exchange offices and 3 insurance intermediaries) operating in Kosovo. - Has there been progress in implementing Basel II risk and capital management prudential rules? Pursuant to the Law no. 04/L-093 on Banks, Micro-Financial Institutions and Non-Banking Financial Institutions, secondary regulations on capital and liquidity risk management, which are components of ‘Basel II’ and ‘Basel III’, have been drafted and are expected to enter into force soon. - Please provide information about Kosovo's social security and healthcare system. Is there a single work-based or residence-based system of social insurance that covers insured persons against risks such as invalidity or accidents at work and provides a pension for old-age? Based on UNMIK Regulation 2001/35, Regulation 2005/20 and Law No. 2002/1, in the Republic of Kosovo a Basic Pension(Old Age) is paid, to all persons habitually residing in Kosovo who have reached pensionable age, set at 65 years of age. This pension has a universal character, and is set at flat rate value. Based on UNMIK Regulation 2001/35, Reregulation 2005/20 and Law 03/L-084 all the economically active persons (workers and self-employed) are obliged to participate in the mandatory Individual Savings Pension Scheme which is a contributory scheme with employers and employees (those habitually resident and working in Kosovo) each required to contribute a minimum of 5% of wages to an individual account. This pension pillar recently is regulated by the Law on Pension Funds in Kosovo which was approved by the Assembly in April, 2012. Based on Law (No. 2003/23, on Pension for person with disabilities), which offers benefits for people who are fully and permanently disabled. This scheme covers persons in age between 18 to 65 years.

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- Similarly, is there a publically-run health insurance system that covers workers and/or residents for healthcare? Republic of Kosovo does not have yet public health insurance system. Heath services for all population are covered by existing budget for heath. Ministry of Health (MoH) has drafted Draft Law on health insurance harmonized with World Bank and Monetary Fund, which will take effect after the successful implementation of first phase of systematic reform with the implementation of Law on Health. - Has Kosovo signed any bilateral agreements on social security with third parties? Kosovo has inherited bilateral agreements , which the former SFRY had signed with various European countries, as: Germany, Austria, Switzerland, France, Italy, Belgium, the Netherlands, Norway, Denmark, Poland, Slovakia, Czech Republic, Bulgaria, Great Britain, Romania, Luxembourg, Hungary. These agreements in some areas (retirement pensions, family pensions and partial disability pension) with the exception of agreement with country of Switzerland are currently being implemented. Kosovo is negotiating with the state of Switzerland, Austria and Germany as well as Macedonia for the renewal of these agreements on social insurance, also is making efforts to sign new agreements with the States from the region and the EU countries. 3.4.2.1. Financial Control - How many internal auditors are there in Kosovo? Pursuant to Internal Audit Law No. 03/L-128, Audit in Kosovo is decentralized. In the public sector, currently there are 65 Independent Audit Units (IAU) with 135 internal auditors who are trained to perform internal audits. - What was the evolution of the practical implementation of public internal financial control? Internal Audit in Kosovo started functioning from 2000 under the Central Fiscal Authority (CFA) based on regulation no. 1999/16, published on 06 November 1999. With the establishment of the Ministry of Economy and Finance (MEF) Regulation no. 2001/19, the role of internal audit was included in Annex 11. Then, issuance of Internal Audit was regulated pursuant to Article 8 of Law on Public Financial Management and Accountability. On 16 November 2006, the Internal Audit Law No. 02/L-74 came into effect. In September of 2007, in cooperation with international experts, a Strategy for the Functioning of Internal Audit System in Kosovo 2008-2012 was drafted and later approved by September 2007 in the Government. The strategy requires and the EC recommends amending the Internal Audit Law (IAL). Hence, the new Law No. 03/L-128 was approved on September 17, 2009. IAL had two requirements:

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a. Establishment of Central Unit for Harmonization of Internal Audit (CUHIA) which was established on April 2008 as a separate structure within the MF and reports to the Minister of Finance. This unit prepares an annual report every year for the functioning of Internal Audit for the Minister, who then delivers it to the Government and Assembly. This year the fourth report in the sequence was submitted and discussed.

b. Decentralization of Internal Audit, which currently operates with 65 units of independent internal audits with 135 internal auditors who perform internal audit services in respective organizations.

Besides IAL, MF has issued these administrative instructions: a. Administrative Instruction no. 22/2009 for determining the criteria and procedure

of issuing temporary licenses of Internal Auditors in the Public Sector, in December of 2009;

b. Administrative Instruction no. 23/2009 on Establishment and Functioning of the Internal Audit Unit in the Public Sector, in December 2009;

c. Administrative Instruction. 11/2010 on Establishment and Functioning of the Audit Committee Entity Public Sector in August 2010.

During the period 2010 - 2011, the Program for International Certification and Training (PICT) was developed. The program is funded by the EU and implemented by CIPFA - UK and CEF-Slovenia. 54 internal auditors are enrolled and 32 internal auditors are certified by the program. In order to make the program of certification sustainable, during 2011, 12 local tutors have been trained and certified by CIPFA. In 2004, the first manual for Internal Audit was issued, and it has been revised twice, in 2008 and 2011. Internal control of public finances in Kosovo is based on primary and secondary legal provisions. Internal management controls are initially regulated with Administrative Instruction 1/1999, which has determined the ex-ante control of expenditure. This administrative guidance has been under the authority of CFA. LPFMA started being implemented by the Provisional Institutions (PISG), signed on 12 May 2003 from Special Representative of the Secretary General (SRSG). This Law was adopted in accordance with UNMIK Regulation no. 2003/17. Whereas, in June 2008 it was amended and supplemented with Law on Public Financial Management and Accountability No. 03/L-221. For the first time on January of 2005, Government of Kosovo approved the Policy on Internal Audit of Public Finance (Decision 4/130). This document provides the basis for establishing two units, Central Harmonization Unit/ Central Harmonization Unit for Financial Management and Control (CHU/FMC), which is under the authority of the Treasury within MF and Central Harmonization Unit of Internal Audit (CHU/IA) that is under the authority of Minister.

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The financial rules 01 (Financial Management and Control) is prepared and approved by the Minister of Finance in July 2010. This rule provides the basis for preparation of procedures for financial management and control. In April of 2011, the Policy Document for Internal Control of Public Finance was revised and approved by Government. Besides this document, the Procedures Manual for Financial Management and Control are prepared and promoted by Ministry of Finance. In 2012, CHU/FMC has prepared for the first time an Annual Report of Financial Management and Control, which is reviewed by the Government. The report is based on self-assessment summary chart that is filled out by budget organizations. Management Structure of the PIFC Reforms: Kosovo has opted to have two Central Harmonization Units (CHU) of PIFC: one for Financial Management and Control systems (FMC) and one for Internal Audit (IA). The CHU for Internal Audit reports directly to the Minister of Finance and is headed by a Director. This gives the CHU for IA sufficient political weight and credibility to its work. However, the CHU for FMC currently sits within one of four departments within the Treasury and reports to the Deputy Director. During DG Budget's mission to Kosovo in 2011, DG Budget suggested that the current organizational setting of the CHU for FMC was not optimal. In addition, DG Budget advocated for an appropriate co-ordination and change management structure, at senior level, to cover all financial management related reforms. Under such an approach, the CHU could gain the higher political visibility and 'legitimacy' that will be necessary to drive the reform process. Kosovo is asked to provide an update on its reflection on these points. The organizational structure of the CHU / FMC is the same. Managing the PIFC Reforms: The CHU is meant to act as the driver for PIFC reform. During DG Budget's 2011, mission, DG Budget suggested that the CHU for FMC should play a stronger and more proactive role in managing PIFC reforms and coaching budget organizations. Kosovo is asked to comment on the following aspects of CHU for FMC performance. - Has the CHU for FMC been made accountable for the progress of the FMC implementation program? Does the CHU for FMC have strategic objectives in this regard, as well as strategic and operational plans to do so? What are the key elements of the PIFC change management approach? What is the nature of the advice and coaching that the CHU for FMC has been providing and intends to provide in the coming 12 months? What does the CHU for FMC see as the main barriers to the implementation of FMC across the public sector?

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CHU / FMC is responsible for the progress of implementation of the FMC. In order to achieve this, have strategic and operational objectives. So in Strategic plans we have: a. Identification and review of legislative initiatives (such as Laws and regulations for

strategic planning, multi annual budgeting, human resource management and public procurement,

b. Coordination of projects with different donors, c. Monitoring and reporting on implementation activities of PIFC d. Establishing the working groups to draft patterns for internal control procedures

based on the Pilot units in addition to training supported by the EC. e. Operational plans f. Systematic coordination of the exchange of information between budget

organizations regarding their commitment to implement the FMC g. Formalize data from modified self-assessment lists and setting of deadlines for their

submission for preparing the annual report of the implementation of the FMC in Budget Organizations (BO),

h. Establishment of a network of chief financial officers to identify problems pertained to the implementation of FMC and exchange of experiences with other budget organizations.

Trainings: So far the symposia are held by a project financed by EU for Ministers, Mayors and Secretaries General. These symposia were held during 2011. During this year two pilot units were organized. Municipality of Fushë Kosovë and the Treasury Department. In the coming period we will arrange a meeting with Chief Financial Officers of BOs. CHU / FMC will make distribution of modified self-assessment lists for FMC, and will arrange meetings with chief financial officers on the manner of their completion, their reporting form and submission stages. Trainings are foreseen to be provided supported by the EU for Financial Officers and budget holders of each budget organization. Number of participants and training development time will depend on the EU-supported Project. a. We made redistribution of the PIFC Policy Document. b. Meeting organization of the Chief Financial Officers of budget organizations in June

2012; c. Promotion of the objectives and the role of CHU / FMC; d. Role and responsibility of the Chief Financial Officers to implement the FMC; e. Lack of training for risk management and other FMC modules Reliance only on the rules and regulations will constrain the adoption of Financial Management Control systems, which for its success, depends upon management empowerment and accountability, rather than just legal compliance. What efforts are ongoing to improve the climate for the recognition and acceptance of greater managerial accountability within the public sector?

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There are activities taken to raise awareness of a procedure implementation for delegating responsibilities and acceptance of accountability by performance. Thus, CHU/FMC made visits to budgetary organizations (BO) – municipalities of region of Pristina, to provide advices on the importance of completing the self-assessment Lists for FMC. During 2012 all BOs will be visited for giving them assistance in the implementation of the PIFC, related to FMC. During 2013 it is foreseen to have trainings for the CFO and budget holders for the enforcement procedures of FMC. - What efforts are ongoing to make a split between the administrative decision making and delegation frameworks? More adequate description of job positions and notification of the staff for their responsibilities. - What other related reforms are ongoing; e.g. to improve capacity for policy planning, to improve budgetary and accounting processes? Ongoing reforms are the following: a. The reform of public administration; b. Human resource management; c. Rules for determining the grading and job position descriptions d. Budget process reform; e. Budget based on performance and multi-year budget drafting and their continuous

monitoring during the implementation. Review of accounting policies: Property management, development of integrated accounting systems: The challenges identified are: a. Training of staff; b. Lack of budget funds; c. Fluctuation of trained staff. Implementation of PIFC from Budget User: All budget users are required to implement the PIFC legislation. Kosovo is asked to comment upon the following aspects of PIFC implementation in budget organizations. - Do budget users have PIFC implementation plans? What do these contain? Has the CHU been involved in this coaching the development of these plans? All CAO and CFO have PIFC Policy Document and FMC procedures manual available and based on these documents they should prepare the PIFC implementation plans. CHU / FMC is not involved in developing these plans. It intends to do it through the trainings that will be held in future training sessions supported by the EC. Implementation plans consist: a. Medium Term Expenditure Framework; b. Budget Planning;

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c. Schedule of commitments and cash flow; d. Annual Working Plan; e. Capital projects Plan; f. Periodic and annual financial reports. - What are the other key elements of these plans (with reference in particular to the revised role of the Financial Units)? a. Coordination of objectives and activities with other management units of budget

organizations; b. Cooperation with budget holders to prepare three-year budgets and those annual by

determining the priorities according to set objectives by the budget organization; c. Exchange of information on the achieved Performance of objectives and priorities set

during the budget process; d. Harmonization of decision making according to the approved budget; - How is implementation progress being monitored (including the practical effectiveness of the measures taken)? Is the CHU producing an annual report to Government on progress with the implementation of FMC? What has been the reaction of Government? The Annual Report for FMC is prepared based on the modified self-assessment lists received from budget organizations. The report was reviewed by the Government and is expected to be reviewed at the Assembly. Internal Audit

Kosovo has a considerable number of 1-2 person internal Audit Units. Such small units are not considered to be good practice. What consideration has Kosovo given to the creation of a semi-decentralized Internal Audit model, where these small budget organizations are serviced by an independent pool of internal auditors? In order to establish an effective system of internal audit we have issued administrative instruction where criteria for establishing internal audit units are determined. For each year the number of auditors is being increased in internal audit units and thus the criteria of administrative instruction are being fulfilled. But due to budgetary constraints in the number of workers, this process is going more slowly despite that budgetary organizations have a need for auditor. For the implementation and functioning of the internal audit of small budget organizations in the central level due to cost / benefit, we discussed with the Kosovo Assembly to increase the number of internal auditors in internal audit unit in the Assembly and this Unit to audit also the small budget organizations which report directly to the Assembly.

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Due to the specifics in the local level in some municipalities we are reviewing the possibility on how to create a common unit of internal audit which would cover with auditing these budget organizations. Previous technical assistance projects have helped with the training and certification of Internal Auditors. Does Kosovo have a plan for the development of a sustainable training program for future trainee Auditors and continuous professional training for certified auditors? We have a plan to continue the program for certification and continuous professional education. In the second half of this year we plan to begin with the training of the second group of internal auditors in Training and Certification Program. Training will be held by local trainers and will be supported by a project funded by the EC. There are activities taken to raise awareness of a procedure implementation for delegating responsibilities and acceptance of accountability by performance. CHU-IA has been engaging also in the creation of the system for continuous professional education. Currently we are finalizing the administrative instruction for the licensing of professional internal auditors where is included the continuous professional education. In this instruction are defined the hours and eligible areas for continuous professional education. The instruction is expected to be approved by the Minister of Finance. Internal Audit Committees

A special feature in Kosovo is the obligation of all larger budget organizations to form audit committees. Kosovo is asked to comment on the effectiveness of these committees, including for example, difficulties encountered to recruit suitably qualified members, frequency of meetings, independence of the members and possible resistance to these committees by management. In most budget organizations were the internal audit units were established audit committees are established too. Audit committee members are selected by the management, have adequate qualifications and usually meet every three months. For members of audit committees during 2011 we have organized training with a subject, the role and responsibilities of the audit. Training of audit committee members is planned to be held during this year too. During meetings of audit committees the internal and external auditor’s reports are discussed. After the discussions conclusions are drawn and through recommendations the management is advised for the steps to be undertaken for the implementation of the recommendations. A difficulty that audit committees face in functioning is the request of the members for additional payment. Due to lack of budget funds and applicable

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provisions the Committee members cannot be paid for such meetings. This did not affect BO to establish Audit Committees. External Audit: - Kosovo is asked to comment on the effectiveness of co-operation between the OAG and the Parliament, in particular, in relation to the consideration of the OAG's audit reports by Parliament. OAGs main counterpart in the Assembly is the Committee on Oversight of Public Finances (COPF). This committee was established a couple of years ago. The committees’ responsibility is to oversee the Governments budget execution. One of the ways to do this is to analyze budget execution based on audit reports from the Auditor General and to hold the responsible person to account for her handling of the budget. Public Hearings is one form for this. Included in this is also to hold the Auditor General to account for his handling of the budget. The base for this is the AGs Annual Performance Report. Despite the shorter session 2011 (due to the problems with the election) the almost totally new Committee handled 26 individual audit reports. Findings and recommendations were discussed at hearings where representatives of the audited bodies were invited. During 2011 COPF also reviewed our Annual Performance Report and Annual Audit Report (both reports were approved in plenary session). In a public hearing the recommendations given in the Audit Annual Report for 2010 were discussed with representatives from the OAG, MoF, PPRC, Media, NGOs and civil society. Asset Recording, public procurement and internal control were more significant areas that needs to improve and were treated with a special interest. In total thirty-three (33) regular meetings and one public hearing was held in the Committee. Representatives from OAG were present at the meetings where we contribute with professional advices. This is good progress. At the same time the understanding of the role of the Committee and work forms should be developed: several challenges remain. Just a few of them: a. Room for improvement still exist when it comes to being non-partisan; b. The perception on the role of the independent Auditor General differs. In some cases

we still have to tackle views on audits as financial inspection or control and the understanding of the role of performance audit differs substantially;

c. The understanding of the essence and content of modern public audit varies; d. The need for “checks and balances” and good governance in organizing the overall

public sector leave room for improvement; e. The understanding of the role of the Assembly and Assembly oversight in relation

to the Government in a democratic society needs to be developed; f. The discharge mechanism is still missing and the recommendations given by the

Committee to the Assembly are often rather vague;

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g. The division of responsibilities between different Assembly Committees in the budget process is un-clear and not effective; and

h. The cooperation forms between COPF and factual Committees in scrutinizing audit reports needs to be developed.

In general the planning of the work also leaves room for improvement. Several shortcomings in the execution of the responsibilities are directly related to this. All these challenges have an impact on the cooperation between COPF and the OAG. But, also the challenges of the OAG might contribute in this. One example is the way reports are written and presented that still needs to be strengthened. - Also, Kosovo is asked to comment on its progress regarding the implementation of audit standards for both financial and performance auditing. Regarding regularity audit a new Audit Manual was compiled in 2009 as the base for our audits. In all material parts this manual is in accordance with “the earlier” ISSAIs. After the latest up-dating of the ISSAIs we are amending our manual and the certification scheme we are currently using to the most modern public sector auditing standard. We are one of the few audit institutions that have in place a formal certification scheme provided by an outside source in compliance with and supervised by IFAC. When upgrading this scheme we will be, if not the first, amongst the firsts in doing this worldwide. Almost all our regularity auditors are involved in this certification scheme. In some few cases we have found other solutions, this related to community issues. Besides the quality control “in the professional line” we have a quality function in place for quality monitoring. Of course we have challenges if we look at the standards in an absolute way, but in general the job is quite advanced. The number of these audits has increased from 25 the audit season 2008/09 to 91 in the current season. Regarding performance audit, there is a guideline in place since 2009 and is build upon the ISSAIs. Introducing performance audit proper in the Kosovo environment is a challenging undertaking that takes several years. The analytical approach is not thoroughly established in the mindset and this is a separate profession from other audit approaches. Due to this we have gone into a long term bilateral cooperation with the Swedish NAO addressing this area in a corporate manner. Four of these are in the pipeline this season, compared to three last season (just one reported). Making us able to produce results that are not only linked to the regularity audit approach: quality of information and regularity in carrying out the budget, we have developed something we call management audit. This is a lighter form of performance audit focused on the quality of management a mandate or task. Ten of these audits are in the pipeline now, whilst four were reported last season and two the season before it. An overall 105 audit reports are in the pipeline. They will be in time, relevant and of a better quality than three years ago.

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Audit standards are not only related to the quality in the individual audit assignments carried out. The ISSAIs are also linked to corporate management in fulfilling the mandate of a modern Supreme Audit Institution. This of course includes the aspects of getting results in form of actual changes in the administration, adding value in building good governance etc. In assessing our approaches and results in this our international partners in general highly estimates what have been achieved so far. This is not fully recognized by some local partners. Our biggest challenge is to secure sustainability, both by beefing up our own organization and raising awareness amongst our stakeholders. 3.4.3. Company Law - Did the functioning of the Kosovo Business Registration Agency improve regarding staff and facilities? The number of employees working in KBRA is 14. With newly approved organizational structure, the number of employees will be increased by 5 new officials. The budget of KBRA for 2012 is 101,440.071 euro.

Reforms in this area have been intensified over the last two years, mainly focusing on accelerating and increasing efficiency of implementation. So far, the business registration system has been integrated, thus enabling all procedures (issuance of business certificate, VAT certificate, import-export certificate and fiscal number) to be performed in one place and through only one procedure (One-stop Shop). Moreover, the Business Service Centre provides other services, such as issuance of trademarks and licenses for petroleum, tourism and tobacco. Currently the procedures for selection of a bank offering payment services to the clients are being prepared. The centre has been renovated and was inaugurated recently, with the support of the World Bank. Furthermore, the number of employees accepting the applications has been increased (from one to three officials) and trainings on the usage of the new system for the new officials have been prepared and will be delivered soon.

- Is online registration open to all municipalities included in the second phase of the KBRA project? KBRA register is modern and compatible with EU standards. All municipalities are included in a central database, are able to issue certificates in one place ('One Stop Shop'). Online application is not operational yet. - How far the two Laws on accounting and auditing have been implemented in practice? Any specific difficulties in its implementation to report? The Law on Accounting, Financial Reporting and Audit (LAFRA) No. 04/L-014 entered into force in August 2011, and is in accordance with Directive 4 of European Council 78/660/EEC, on the Annual Accounts of certain types of Companies, Directive 7 of European Council 83/349 / EEC, for Consolidated Accounts and Directive 8 of European Council 84/253/EEC for Approval of Responsible Persons to Perform Statutory Auditing.

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Pursuant to this Law, The Council of Financial Reporting is established and seven new members of the Kosovo Council for Financial Reporting (KCFR) are appointed. Pursuant to Article 15, paragraph 2 of the Law, the necessary commissions are established: Commission on Standards of Accounting and Auditing, Commission Professional Standards and Quality Assurance, Licensing Commission and Commission for Investigation and Discipline. For the purpose of implementing the Law, a number of administrative guidelines are issued such as: AI 2012/4 for the Implementation of International Accounting Standards, International Financial Reporting Standards, International Auditing Standards and other requirements for preparing and auditing financial statements in conformity with the requirements and obligations arising from new Law and in accordance with Directive 8 of European Council and Standard 8 of International Education "Competence requirements for Audit Professionals", published by Standards Board Accounting Education (IASB / IAESB). This AD is approved by the Kosovo Council for Financial Reporting. AI 2012/1 for Licensing of Foreign Auditors and Foreign Audit Firms is adopted (which has replaced AI 08/2), AI 2012/2 for Domestic Licensing of statutory auditors (who has replaced AD 2008 / 3 and AI 012/3), and the Criteria for Approval of Audit Firms Kosovo (which has replaced AI 2008/4). Article 11 of the Law requires that by April 30, current year financial statements must be filled and submitted to KCFR. There are no particular difficulties on implementing the Law since its entering into force in September 2011. 3.4.4. Trade in Services - What is the state of play with regard to statistics on services? Trade in services balance in 2011 was positive. It reached a value of €634 million (compared to €530 million in 2010). More specifically, positive balance of trade in services during 2009 – 2011 reflects the so-called 'virtual exports', i.e. domestic sales of emigrants. In addition, this positive balance was characterized by increased income in communication services and other business services, mostly those of construction. During 2010, services generated an income of €515.0 million, an annual growth of 20.1%. At the same time, payment for services purchased from abroad reached a total value of €477.9 million (an annual growth of 55.2%).

Increased expenses for construction services, especially in services for building the first segment of the motorway (Morinë – Merdare), were the main reasons of decline in balance of services during this period. Revenues from construction services amounted to €52.0 million during 2010 (€15.7 million in 2009), while payments for 8 construction services amounted to €100.3 million (€5.0 million in 2009). Until December 2010, revenues from travel services recorded a growth of 18.2%, representing approximately 43.2% of total revenues from services. However, an increase in payments for travel services (mainly for summer vacation) to 28.1% affected an overall growth of travel services to about 10.4%. Besides travel, communications and Government services

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(services provided to embassies and military presence of NATO), all other services recorded a negative balance in 2010.

Table 53. Trade in services (millions of EURO)

Timeframe 2009 2010 2011 Transport

-39.1

-44.1 -53.4

Travel 157.6

179.2

251.2

Communication Services 58.3

49.0

77.0

Construction Services 10.7

-20.2

-5.3

Insurance Services -9.6

-12.8

-17.1

Financial Services 3.5

3.2

-0.8

Computer Information Services -1.5

-3.7

-0.3

Taxes, licenses and fees -3.0

-2.1

-0.4

Other business services -62.9

-60.6

-22.0

Personal, cultural and recreational services 0.7

-0.2

0.7

Government services 79.7

56.4

51.6

Source: Central Bank of Kosovo

3.4.4.1. Postal Services - How many staff work on supervision of Postal services and what training do they receive? MED and TRA are responsible for the postal sector. The MED is responsible for drafting legislation and policies, whilst the TRA is responsible for regulating the postal sector market. There are 2 employees at the MED and TRA respectively and who are responsible for postal services. To date, the MED and TRA staff underwent general training and need more specialized training concerning the postal sector. There are 132 employees engaged in the oversight process at the Kosovo Post; 48 in the capacity of general inspection; 21 in the capacity of inspection of postal offices; 10 in the capacity of operational inspectors in the field; and 53 in the capacity of key officials of municipal posts. The Kosovo Post staff finished training at the centre for training and development within PTK, including the code of conduct towards the consumers, and implementation of instructions for the services provided at the branches.

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3.5. Competition

- How have subsidies and public guarantees developed over the past five years? According to what economic criteria is state aid granted? Please provide data on direct subsidies awarded during the last 5 years. Please provide available annual reports on state aid. In the past, there was no specific legislation regulating award criteria for state aid. Subsidies to publically-owned enterprises were awarded pursuant to the annual Budget Laws, which provide for such an arrangement for the purposes of the public interest. In January 2012, the Law on State Aid no. 04/L-024 entered into force. This Law has regulated in details, criteria and procedures of providing State Aid. The subsidiary legislation on implementation of this Law is expected to be completed by the end of June 2006, while a Ministerial Committee on State Aid will also be established by this time. The table below provides detailed data on the amount of Government subsidies awarded to publically-owned enterprises over the last five years (2007 – 2011). Table 54. Subsidies for public-owned enterprises

Description Expenditu

re 2011

Expenditure

2010

Expenditure

2009

Expenditure

2008

Expenditure 2007

Energy – KEK 27,350,000 29,035,995 64,221,073 23,000,000 11,451,000 Imports of energy - social cases 4,483,494 4,499,979 4,499,764 - 4,500,000 Kosovo Railways 500,000 500,000 500,000 - 45,581 Central Heating 1,947,996 1,403,289 1,933,000 999,962 2,486,904 Water and waste 1,266,111 587,896 780,892 651,335 1,862,057 Trepça mines 1,911,380 3,082,870 4,739,431 984,058 3,089,431 Total 37,458,981 39,110,029 76,674,161 25,635,355 23,434,973

Source: Ministry of Finance - What is the legal framework for awarding state aid? What are the main features of this framework? How have subsidies and public guarantees developed over the past five years? According to what economic criteria is state aid granted? Please provide data on direct subsidies awarded during the last 5 years. Please provide available annual reports on state aid. Until early 2012, the area of state aid was not regulated by specific legislation. In January 2012, the Law no. 04/L-024 on State Aid entered into force. This Law sets out in details the criteria and procedures for providing state aid. The subsidiary legislation on implementation of this Law and the Ministerial Committee on State Aid are expected to be completed, respectively to be established, by the end of June 2012.

3.6. Intellectual, industrial and commercial property - How many cases of violation of intellectual property rights were registered?

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Table 55. Statistics on violation of intellectual property rights (IPR) during January - December 2010

Types of violations

Cases under

Investigation

Cases sent to the

prosecutor with known

perpetrators

Cases sent to the

prosecutor with N /

N

Cases sent with

report to the

Prosecutor

Number of

arrested persons

Number of

criminal

charges

Infringement of patent rights

Unauthorized use of firm, brand or model of foreign

4 3 3

Customer fraud

2 4 1 2 8

Production and use of label signs, false measures and weights

1 1

Total 6 8 0 1 2 12 Source: Kosovo Police

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Table 56. Statistics on violation of intellectual property rights (IPR) during January - December 2011

Types of violations

Cases under

Investigation

Cases sent to the

prosecutor with

known perpetrato

rs

Cases sent to

the prosecutor with N / N

Cases sent with report to

the Prosecuto

r

Number of

arrested persons

Number of

criminal charges

Infringement of patent rights

Unauthorized use of firm, brand or model of foreign

1 4 1 4 5

Customer fraud

5 4 1 1

Production and use of label signs, false measures and weights

Total 6 8 0 1 5 6 Source: Kosovo Police Table 57. Statistics on violation of intellectual property rights (IPR) during January - March 2012

Types of violations

Cases under

Investigation

Cases sent to

the prosecuto

r with known

perpetrators

Cases sent to

the prosecutor with N /

N

Cases sent with report to

the Prosecuto

r

Number of

arrested persons

Number of

criminal charges

Infringement of patent rights

Unauthorized use of firm, brand or model of

1 2

212

foreign Customer fraud

1 1 1

Unauthorized use of firm, brand or model of foreign

Total 1 2 0 0 0 3 Source: Kosovo Police Table 58. Statistics on cases of violation of intellectual property rights (IPR) resolved by courts during January 2008 – March 2012 Timeframe 2008 2009 2010 2011 2012 Total Number of cases

2 4 1 8 2 17

Source: Commercial Court in Prishtina All cases submitted to the Commercial Court in Prishtina have been resolved, except one case, which was submitted to the Court on 3 May 2012 (which is being proceeded). Therefore, it can be concluded that those cases of violation of intellectual property rights which are submitted to the Commercial Court are adjudicated quickly and effectively. - Were the gaps in the legislative framework filled? Do criminals pay fines? What happens if they don't? Regarding the legal framework in the area of copyright, new Law no. 04/L-065 on Copyright and Related Rights (replacing the previous Law no. 2004/45) has been adopted on 21 October 2011. The new Law regulates the ownership and ethical aspects of copyright, focusing on enforcement and protection of copyright. The administration of rights is guaranteed and expressed clearly and accurately, and in accordance with European practices. It provides for two forms of rights management: collective and individual. Following entry into force of this Law, the Ministry of Culture, Youth and Sports has developed Rules for Granting Permit to Associations for Collective Management of Rights. Besides this Law, intellectual and industrial property rights are protected by three additional Laws: Law no. L-029 on Patents, Law no. L-026 on Trademarks and Law no. L-028 on Industrial Design (all the three entered into force on 9 August 2011). Furthermore, final preparations are made to begin drafting of a Law on geographical indicators (the first draft of this Law will be prepared by August 2012, and it is expected for parliamentary procedures by November 2012). In terms of secondary legislation, seven administrative instructions have entered into force:

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a. AI no. 2007/14 on Application of Patents, Trade Marks, Industrial Designs, issued Patents, Trademarks and known Industrial Designs prior to entering into force of this AI (adopted in September 2007);

b. AI no. 2012/1 on early examination of applications of Trademarks (adopted in January 2012);

c. AI no. 2008/16 on Representation of the Industrial Property Rights (adopted in September 2008);

d. AI no. 2007/10 on the Procedure of Registration of Patents (adopted in September 2007);

e. AI no. 2007/12 on Industrial Design Registration Procedures (adopted in September 2007);

f. AI no. 2007/13 on Trademark Registration Procedures (adopted in September 2007);

g. AI no. 2009/19 for Administrative Taxes on Industrial Proprietary Objects (adopted in September 2009)

Furthermore, five other following AIs are in drafting process and are expected to enter into force in September 2012: a. AI on Administrative Fees for Registration of Industrial Proprietary Objects; b. AI on Patent Registration Procedures; c. AI on Procedures for Registration of Trademarks; d. AI on Procedures for Design Registration; and e. AI on Administrative Appeals Commission of the Industrial Property Office The legal framework stipulates penalty provision for perpetrators involved in infringements of intellectual property rights. The Patent Law stipulates that depending on the offenders (physical or legal entities), fines could be from €200 to €5,000. The Law on Trademarks provides for penalties from €500 to €15,000. The Law on Industrial Design provides for fines from €2,000 to €8,000 for violators. Moreover, intellectual and industrial property rights are also protected by the Kosovo draft-Penal Code. This draft-code (expected to enter into force soon) classifies violations of these rights as criminal offenses. It contains detailed provisions on various types of sanctions (such as fines up to € 50,000 and prison sentences from 3 months to 8 years) for IPR violations such as counterfeiting, piracy and other forms of violations of copyright. This code will also address the existing gaps regarding trademarks. It can be concluded that no legal loopholes exist in the present legislation. Regarding the procedures, court verdicts, including the compensation, must be executed within 15 days following adjudication. In order to ensure compensation for damages in cases when compensation is not made, the court has the legal authority to request from banks to block account of the physical or legal entity convicted. The most extreme case may be when the convict in question is not able to compensate for damages due to lack of sufficient funds in the bank account. In such cases, the court shall order confiscation of owner’s property and ensure compensation through auction procedures. This issue is

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regulated by the Law on Contested Procedure (in force since 29 July 2008) and the Law on Executive Procedure (in force since 24 June 2008). Regarding the customs IPR legislation, the Law no. 03/L-170 on Custom Measures for Protection of Intellectual Property (LCMPIP) provides for no administrative penalties for violators, but two procedures: a. Simplified procedure, namely a written agreement for disposal of goods between the

right holder and the entity declaring goods, a procedure requiring confiscation and destruction of goods; and

b. Regular procedure, namely adjudication of the dispute by the responsible court. At this stage, there are two main gaps in the IPR legislation: existence of tax (of €100) prescribed for filing an application for action, and of administrative fines for offenders/violators of intellectual property. - How does the Office for Copyrights and Related Rights (OCRR) try to attract young professionals? Since its establishment, the OCRR has been strengthened professionally and has recruited young professionals, namely its Director and one certification officer, both with adequate professional qualifications and experience (the latter a beneficiary of the EU-funded Young Cell Scheme scholarship). This Office has also established cooperation relations with professionals and experts of copyright Law, with whom it has various meetings and discusses developments, achievements, challenges and problems in this field. In cooperation with the Faculty of Law of the University of Prishtina, it is in process of selecting two new interns. 3.6.1. Industrial Property Rights Has the conformity of Laws on trademarks, industrial design and patents with EU standards been assessed? Since the Laws governing industrial property rights are quite new, all regulations and directives issued by EU institutions and various international conventions have been consulted during their preparation. The following is a list of international agreements and conventions that constitute the legal basis that IPO consulted with during the preparation of the legislation. Below is a list of international agreements which have been the legal basis by which OIP is consulted in the preparation of legislation. The Law no. L-029 on Patents in full compliance with: a. Directive 98/44/EC of the European Parliament and European Council on Legal

Protection of Biotechnological Inventions; b. Directive 2004/48/EC of the European Parliament and European Council on

Enforcement of Intellectual Property Rights;

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c. Regulation 816/2006/EC of the European Parliament and European Council on Compulsory Licensing of Patents Relating to the Manufacturing of Pharmaceutical Products for Export in Countries with Public Health Issues;

d. Regulation 469/2009/EC of the European Parliament and European Council on the Certification of Additional Protection of Medical Products; and

e. Regulation 1610/96/EC of the European Parliament and European Council on Establishment of Defence Certification for the Protection of Plant Products.

The Law no. L–026 on Trademarks is in full compliance with: a. Directive 2008/95/EC of the European Parliament and European Council on

Approximation of Laws of Member States Relating to Trademarks; b. Directive 2004/48/EC of the European Parliament and European Council on

Enforcement of Intellectual Property Rights; c. Regulation 207/2009/EC of the Council on Pro-Community Trademarks; d. TRIPS Agreement; e. Trademark Treaty Law of Singapore; and f. Madrid Agreement on International Registration of Trademarks and Protocol

Relating to the Madrid Agreement on International Registration of Trademarks. The Law no. L – 028 on Industrial Design is in full compliance with: a. Directive 98/71/EC of the European Parliament and European Council dated 13

October 1998 on Legal Protection of Designs; b. Directive 2004/48/EC of the European Parliament and European Council dated 29

April 2004 on Implementation of Intellectual Property Rights; c. Regulation of the Council 6/2002/EC on Community Designs (amended); d. Paris Convention for the Protection of Industrial Property (amended); e. TRIPS Agreement; and f. Hague Agreement on International Registration of Industrial Designs. The intellectual property protection legislation is also in line with the EC Regulation no. 2003/1383 and the TRIPS Agreement. - Did Kosovo establish a formal collaboration with local institutions, business community and international customs administrations? In the field of copyright and related rights, the Office of Copyright and Related Rights has established formal relations and cooperation with a number of institutions and partners. In the context of local partners, it has established relations of cooperation with cultural institutions with the aim of increasing awareness of the cultural and artistic stakeholders on existence and entry into force of the Law on Copyright and Related Rights, and it has also received inputs and remarks from them on the applicability of legislation in this area. Furthermore, it has established formal cooperation with other stakeholders relevant for implementation of the Law on Copyright, including the Independent Media Commission and Kosovo Customs, then the Kosovo Chamber of Commerce and business community (music producers, photographers, publishing houses, video production companies and companies that provide cable TV services in

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the Kosovo market), as well as representatives of interest groups (namely the Union of Film Artists and Writers League of Kosovo). These activities were focused on informing them on the rights and responsibilities arising from the Law, including in the context of preparation of an anti-piracy and anti-counterfeit strategy, mandate and duties of the OCRR and obligations of these stakeholders in the area of IPR. The Industrial Property Office is in close communication and cooperation with the Kosovo Police Economic Crimes Unit, the Commercial Court, Market Inspectorate and other institutions relevant for enforcement of industrial property rights. IPO has also established close cooperation with the business community (Kosovo Chamber of Commerce and Kosovo Business Alliance), focusing on dissemination of information to businesses and organization of joint activities related to industrial property. Further, with a view to increasing inter-institutional cooperation, the Kosovo National Council on Intellectual Property was established in September 2011. The Council is chaired by the IPO Director and its membership also include representatives of the Commercial Court, Kosovo Customs, Market Inspectorate, Office of Copyright and Related Rights, KP Economic Crimes Unit, Medical Products Agency, Veterinary and Food Agency, and representatives of the business community. Lastly, in the framework of cooperation with partner institutions of the region, IPO has signed Memoranda of Cooperation with the following: Intellectual Property Office of the Republic of Croatia (April 2010), Industrial Property Office of the Republic of Macedonia (August 2010) and General Directorate of Trademarks and Patents of the Republic of Albania (November 2011). In the context of cooperation with institutions in the country, Kosovo Customs has foreseen, as the main objective in implementation of its action plan, to increase the level of cooperation between institutions, with the business community, as well as with other countries’ customs administrations. Following its functionalisation, the KC’s DPI Section has established and is working to establish cooperation with the following institutions: IPO (MTI, in July 2011), OCRR (MCYS, in the process). Furthermore, in the context of ongoing participation in the ‘Venice Initiative’, it has created cooperation with regional customs services, as well as those of Turkey and Italy. It is also worth noting that a joint database, serving to exchange of information between customs that are part of this initiative, has been created. - Does Kosovo's legislation provide for injunctions against intermediaries whose services are being used by a third party to infringe intellectual property rights (IPR) such as covered by Directive 2001/29/EC? The legislation in force of the Republic of Kosovo in this area, namely the Law on Copyright and Related Rights, does not envisage issuance of court verdicts against intermediaries (providers of digital services – Internet) whose services are used by third parties and lead to violation of intellectual property rights, which rights are regulated by the EU Directive 2001/29, which rights are also protected by the Kosovo legislation in force. This Law is largely in line with the Directive 2001/29. Specific areas regulated

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include exclusive copyright, such as the right to reproduction, the right to communicating works and making them available to the public, and the right to distribution. According to the Law, the author decides on the right to public interpretation, the right to use by audiovisual media servers, the right to public communication by phonograms and videograms, the right to public performance, and the right of making their works available to the public. The Law also sets out measures against any action aimed at avoiding effective technological measures and measures for protection of information ensuring authorship. Violation of copyright by broadcasting or rebroadcasting organisations is sanctioned by the Independent Media Commission, while other violations are adjudicated by the courts, through court verdicts. This Law also regulates the manner and form of presentation of the request/claims within the context of judicial protection of IPR. - As the level of cooperation with World Intellectual Property Organisation (WIPO) has increased, when Kosovo would be able to sign IPR main treaties? Has any progress been made? The Office of Copyright and Related Rights, since it is responsible for implementing legislation for the field of copyright, through its work in the field, as well as by promoting creation of conditions for establishment of associations for collective management of rights, is creating opportunities and affirmative conditions for membership in WIPO and other regional and international mechanisms dealing with copyright, as well as for the signing of treaties and conventions, such as those of WIPO, the Berne Convention, etc.. Based on the capacity and positive trend of performance of OCRR and other relevant Government and nonGovernmental mechanisms, and assessment of OCRR, Kosovo would be able to begin signing and adhering to international conventions and treaties in the field of copyright by 2014. The level of cooperation with WIPO is satisfactory. Since the establishment of the IPO, the latter has been in contact with this organisation and has benefited from this cooperation. For the moment, it can be said that this cooperation is rather of a technical nature, and that it has benefited the IPO in installation of the Industrial Property Automation System (IPAS). IPO is continuously engaged in establishing contacts and cooperation with other international and regional offices that deal with intellectual property rights.

3.7. Public Procurement Is Kosovo preparing special rules for procurement in the sector of public enterprises and utilities? A separate chapter of the Public Procurement Law no. 04/L-042, which has entered into force on 5 October 2011, regulates procurement activities of public service operators. This chapter consists of 4 articles and is based on EC Procurement Directive no. 17/2004. Implementation of procurement activities of public services operators is provided for by the Public Procurement Regulation, which has entered into force on 1 February 2012.

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- How many procurement officials are currently working in Kosovo? There are currently around 530 public procurement officers working in all contracting authorities in Kosovo. - Please explain what training the procurement officials receive? Are the procurement officers tested? Article 25 of the Public Procurement Law no. 04/L-042 provides for training of procurement officers. KIPA, in cooperation with the PPRC, is responsible for developing training modules and curricula for qualifications in procurement. Training is classified into two levels: basic and advanced. All procurement officers are required to undergo tests for certification. So far, 579 procurement officers have attended training, of which 542 have been certified. In accordance with this Law, advanced training on public procurement has been provided during December 2011. All procurement officers who have completed basic level training were eligible to continue such training. Training at this level was attended by 457 procurement officials (two first modules of advanced training were completed at the end of 2011, while other modules are planned to continue during this year). So far in 2012 the basic level training on public procurement has been completed: out of 58 procurement officers who attended the training, 53 of them have successfully passed the test and are certified (this number is included in the total number of 542 certified officers). - How many contracting authorities currently operate in Kosovo? On December 31, 2011, there were 161 registered contracting authorities in Kosovo, including central and local authorities, public companies and other authorities. - What is the level of fees charged by the PPRC? Under Article 57, paragraph 3, of the PPL, contracting authorities may require the tender security, namely 3% - 5% of estimated contract value, but not less than € 1,000. Under Article 63, paragraph 2, of the PPL, Contracting Authorities may require contract performance security of at least 10% of predicted value. Under Article 118, paragraph 1, of the PPL, all applicants must pay PRB an appeal fee of €500, along with filing the complaint. Article 118, paragraph 4, provides that if the panel determines that any of the allegations in the complaint are false, the PRB may require the complainant to pay an additional fine of up to € 5,000. - What is the number of complaints resolved? Out of a total of 419 complaints received, 386 complaints were submitted by economic operators against decisions of Contracting Authorities to award contracts, 30 complaints were submitted by Contracting Authorities to review decisions of the PPA, while 3 complaints were submitted by Contracting Authorities against interpretation of the PPRC. By the Procurement Review Body:

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a. 8 complaints were not reviewed, due to lack of complete documentation; b. 11 complaints were withdrawn by the economic operators; c. 3,167 complaints submitted by economic operators , which have met the legal

requirements for review, in accordance with Articles 105,106,113 and 114 of the PPL, were reviewed by the Review Panel, and the following decisions were made:

i. In 106 cases, it was requested that the Contracting Authority be cancelled and the bids be re-evaluated;

ii. In 71 cases, the Contracting Authority's decision was cancelled and re-tendering of the procurement activities was requested;

iii. In 190 cases, decisions of Contracting Authorities were approved. - Does Kosovo plan to raise the minimum amount of fines (from €5.000)? Kosovo is not planning to increase the rate of fines, since the minimum is € 5,000, while the maximum is not limited. Therefore, it is assessed that the rate of fine to Contracting Authorities is sufficient.

3.8. Justice and Home Affairs 3.8.1. Reinforcement of institutions and rule of Law - Please provide an overview on how the Kosovo Police is organised; organisational chart, human and financial resources. The Constitution of the Republic of Kosovo, Chapter XI, Article 128, stipulates that the Kosovo Police is responsible for the preservation of public order and safety throughout the territory of the Republic of Kosovo. In accordance to the Constitution of the Republic of Kosovo and Law on Police No. 04/L-76, Kosovo Police is a legal entity, operating on a unified chain of command throughout the territory of the Republic of Kosovo and is headed by the Police General Director. Kosovo Police is organized in two levels: central and local level. According to the latest organizational structure of Kosovo Police, adopted on 17 May 2012 the central level is composed of the General Director, 2 Deputy General Directors - one in charge of operations and the other of resources, 5 Departments, 9 Divisions, and 36 Directorates. The Departments working within the KP are: Operations, Crime Investigation, Border Police, Human Resources and Administrative/Support services. The structure of the Kosovo Police Divisions is as the following: Public Security, Special Units, Road Traffic, Border Control, Integrated Border Management, Crime Investigation, Anti-Organized Crime, Administration and Trainings. In terms of local level organizational structure, in the domain of public order and security there are 6 Regional Directorates (Prishtina, Gjilan, Ferizaj, Prizren, Peja and Mitrovica) headed by the Regional Directors. Within the Regional Directorates there are Police Stations and sub-stations as well as other operating units.

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Chart 2. Organizational Structure of Kosovo Police

Kosovo Police has a total staff of 8436 persons out of which 1142 civil officers. Please refer to the “Table 59. Statistics of Kosovo Police” below for more details regarding their categorization into different Directorates and Departments of Kosovo Police:

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KOSOVO POLICE TOTAL POLICE OFFICERS

CIVIL OFFICERS TOTAL STAFF

General Director of Police 78 28 106

Deputy General Director for OPERATION 9 1

10

OPERATIONS DEPARTMENT 4 4 Traffic Division 25 3 28

Special Units Division 664 23 687

Public Safety Division 12 2

14

REGIONAL POLICE DIRECTORATE – PRISHTINA 1171 152

1323

REGIONAL POLICE DIRECTORATE – MITROVICA 846 135

981

REGIONAL POLICE DIRECTORATE – PEJA 761 104

865

REGIONAL POLICE DIRECTORATE – PRIZREN 693 114

807

REGIONAL POLICE DIRECTORATE – GJILAN 593 89

682

REGIONAL POLICE DIRECTORATE – FERIZAJ 417 84

501

BORDER POLICE DEPARTMENT 3 6

9

Border Control Division 1212 40

1252

Integrated Border Management Division 41 1 42

INVESTIGATION DEPARTMENT 43 3

46

Criminal Investigative Division 217 11

228

Organized Crime Division 235 5

240

Deputy General Director for Resource Management 15 2

17

HUMAN RESOURCES DEPARTMENT 3

3

Personnel and Administration's Division 12 39

51

Training Division 198 8

206

SUPPORT SERVICES DEPARTMENT 6 244

250

ICT Division 11 31

42

Laboratory Agency 25 17

42

GRAND TOTAL 7294 1142 8436

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The ethnic composition of Kosovo Police reflects the ethnic diversity of the population of the Republic of Kosovo and ensures the gender equality. Please see the table below, for statistics on ethnicity and gender composition of the KP. Table 60. Statistics on ethnicity and gender composition of the KP

Ethnicity Police Officers and Civil Staff

Gender representation

Gender Ethnicity

Police Officers Civil Staff

Male Female Total Male Female Total Total Total % Male 85.60% Albanians 5565 735 6300 724 294 1018 7318 86.75% Female 14.40%

Serbs 586 77 663 39 56 95 758 8.99% Community representation

Turks 63 8 71 2 2 4 75 0.89% Albanians 86.75% Bosniaks 149 27 176 11 5 16 192 2.28% Others 13.25% Roma 8 2 10 0 1 1 11 0.13% Ashkali 20 1 21 1 0 1 22 0.26% Circasians 2 0 2 0 0 0 2 0.02% Egyptians 10 0 10 0 0 0 10 0.12% Gorani 34 0 34 3 1 4 38 0.45% Montenegrins 0 3 3 1 0 1 4 0.05% Croats 3 0 3 0 1 1 4 0.05% Macedonians 0 1 1 0 0 0 1 0.01% Slovenes 0 0 0 0 1 1 1 0.01%

Total 6440 854 7294 781 361 1142 8436 100.00%

As for the financial resources of the KP, the total budget for 2012 is €78,712,708, which includes expenses such as salaries and per diems, goods and services, utilities, subventions and transfers and capital expenditures. For more details please refer to table below. Table 61. Expenses, Salaries and per diems, good and services, utilities, subventions and transfers and capital expenditures

No. Departments

Salaries and per diem

Goods and Services

Utilities

Subventions and transfer

Capital expenditure

Total 2 0 1 2

914 Management 221,072 € 221,072 € 300 Personnel

50,097,264 € 176,264 €

470,000 € 50,743,528 €

301

Operations/Public Order 264,249 € 264,249 €

30 Special 186,893 € 5,260,000 € 5,446,893 €

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2 Operations

303 Investigations 169,841 € 2,715,000 € 2,884,841 € 304

Support Services

8,827,185 €

1,567,000 € 6,654,000 € 17,048,185 €

305

Trainning Department 339,494 € 150,000 € 489,494 €

306 Border Police 248,446 € 1,126,000 € 1,374,446 €

307

Directorate for Witness Protection 240,000 € 240,000 €

Total budget of KP for 2012

50,097,264 €

10,673,444 €

1,567,000 €

470,000 € 15,905,000 €

78,712,708 €

- Please provide information on how Law enforcement cooperation is shaped, between the different KP directorates, but also between KP and other institutions (incl. cross-border), including customs and border/boundary police. Pursuant to Kosovo Criminal Code, Criminal Procedure Code and in particular Law on Police No. 04/L-76, Article 6, Kosovo Police shall apply the orders and instructions Lawfully issued by a public prosecutor or competent judge. Cooperation between Directorates within Kosovo Police is mainly regulated and harmonized via Administrative Instructions, Manuals of Work Principles and Standard Operating Procedure, namely Sh-SOP- 1.12 Case processing and subject matter jurisdiction. As for the cooperation between Police and other Law enforcement agencies, Kosovo Police has signed a number of Memorandums of Understanding with different agencies, such as Anti-Corruption Agency (MoU signed on 27.05.2010); Kosovo Central Bank (MoU signed on 15.07.2009); Kosovo Customs (MoU signed on 22.10.2009); Kosovo Property Agency (MoU signed on 9.10.2009); Kosovo Judicial Council – State Prosecutor (MoU signed on 27.01.2010); Kosovo Privatization Agency (MoU signed on 22.12.2008) and Kosovo Correctional Service (MoU signed on May 2012). Furthermore, the following SOP have been drafted and put in place to strengthen cooperation with Kosovo Customs:

a. SOP for the National Joint Centre for Border Control; b. SOP on the usage of joint equipments; c. SOP on joint activities.

In practice, Kosovo Police cooperates on daily basis with judges and prosecutors for case-related matters. Furthermore, senior officers of the Kosovo Police hold regular monthly meetings with prosecutors and judges.

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When it comes to cooperation in the area of border management and control, Kosovo Border Police cooperates closely with all the involved agencies as well as with all the Departments operating under the Kosovo Police. This cooperation enabled a more efficient work and resulted in 192 cases handed over to Kosovo Customs, 172 cases to Kosovo Food and Veterinary Agency, 355 cases to Public Order and Security Division of the Operations Department and 186 cases to Crime Investigation Department in 2011. 3.8.2. Asylum, migration, control of borders/boundary and visa issues In addition to an update of the input received for the SAPD sectorial meeting on JLS of 7-9 February 2012 (which includes, migration, civil registry, document security, border management, as well as readmission and reintegration), include responses to the following questions: - Please provide information on legislation or other documents concerning the development of a visa policy. According to the Constitution of the Republic of Kosovo, Chapter II, Article 35 on the Freedom of Movement, the right of foreigners to enter the Republic of Kosovo and reside in the country shall be defined by Law. As such, the new Law on Foreigners No. 04/L- 069, provisions the entry in the territory of Kosovo, departure as well as stay of foreigners in the Republic of Kosovo. Chapter III of this Law refers to the visa policy and foresees the arrangements for the following issues: Visa issuance, validity of visas, types of visas, procedure for visa issuance, visa extension, non-issuance of visa, competencies of the body for state border control and carriers’ responsibility. Further on, the visa issuance procedures are governed by two Administrative Instructions, namely the Administrative Instruction no. 21/2010 on the procedure for visa issuance at the border crossing points and the Administrative Instruction no. 04/2010 on the procedure for visa issuance by the consular offices of the Republic of Kosovo. On the 16th of May, 2012 the Government of the Republic of Kosovo has taken a Decision No. 02/74, with regard to the visa regime, affecting 86 countries. The implementation of this decision will follow on the 1st January 2013. Countries, subject to this regime are listed under two annexes. Annex I contains a list of 73 countries, citizens of which, prior entering the Republic of Kosovo, shall be granted a visa by the Republic of Kosovo consular offices, when applicable by the diplomatic mission or as foreseen by other visa issuance procedures. Annex II includes 14 other countries, whose citizens shall be granted a visa at border crossing points of the Republic of Kosovo. Visa regime will not be applied to citizens of countries not listed under these two annexes as well as to the holders of United Nations Travel Documents. The Government of the Republic of Kosovo has assigned the Ministry of Foreign Affairs and the Ministry of Internal Affairs with the task of approving within three months of entry into force of the decision, the necessary by-Laws for its implementation.

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Until the entry into force of the Decision No.02/74, the Ministry of Internal Affairs (MIA), applies an entry/permission procedure according to which foreigners, via their guarantees, shall present a number of documents prior entering Kosovo. The approval for entry will be issued by the Division for Foreigners, Visa and Residence Permit at the DCAM (Department for Citizenship, Asylum and Migration) of the MIA. This procedure is applied to the citizens of those countries that the EU applies the visa regime, except countries that the Republic of Kosovo has reached bilateral free movement agreements with. - Regarding asylum, please provide an overview of the situation, in terms of role of institutions/authorities, as well describing the legislation, policies, and actual situation. Pursuant to Chapter 2, Article 22 of the Constitution of the Republic of Kosovo, the Universal Declaration on Human Rights is one of the international instruments directly applicable in the Republic of Kosovo and in the case of conflict, has priority over provisions of Laws and other acts of public institutions. This implies that Article 14 of this Declaration, stipulating the right to seek asylum from persecution, is foreseen to be directly applicable by the Constitution of the Republic of Kosovo. Further on, on December 2011, the Republic of Kosovo has adopted the new Law on Asylum No. 04/L-073. The purpose of this Law is to regulate granting of asylum and recognition of status of refugee, granting the status of additional or temporary protection to persons who need it as well as their return in the country of origin, descent or in a third country. A number of by-Laws have been drafted and adopted lying down in more details the asylum procedure, such as: Administrative Instruction No. 04/2010, on the Procedure and Standards for Admission and Initial Treatment of Asylum seekers in Kosovo; Administrative Instruction No 05/2010 – MIA on the rights and obligations of asylum seekers; Standard Work Procedure (SWP) and Standard Operating Procedure (SOP) for Asylum seekers at the Directorate for Migration and Foreigners of the KP. The working group for the harmonisation of the above by-Laws with the new Law on Asylum No. 04/L-073 has been established. This working group will continue to draft the remaining necessary subordinate legislation for the implementation of this Law. According to Article 9 of the Law on Asylum No. 04/L-073, Department for Citizenship, Asylum and Migration is the competent body to decide on granting or refusing asylum as well as for removal of asylum seeker from Kosovo. This Department consists of the Asylum Division and Centre for Asylum Seekers. Meanwhile, the Directorate for Foreigners and Migration of the Kosovo Police is entrusted with specific duties as will be elaborated below. a. The Asylum Division is responsible for conducting the asylum procedure such as

handling the requests for asylum, conducting interviews and deciding on the first instance. Moreover, the Government of Kosovo with its Decision No. 04/70 has established the National Commission for Refugees (NCR) as a body handling the

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request on the second instance. Finally, judicial review can be requested by the Supreme Court of the Republic of Kosovo, regarding the legality of the decisions taken by NCR;

b. The Centre for Asylum Seekers is where the asylum seekers are admitted and accommodated;

c. Directorate for Migration and Foreigners within the Kosovo Police, conducts the preliminary procedure including: application, preliminary interview, obtaining fingerprints and picture. Other stakeholders involved in the asylum matters are: Ministry of Education, Science and Technology, Ministry of Health, Ministry of Labour and Social Welfare and UNHCR.

The integrated database for asylum seekers will be functional in July 2012 and will contain integrated data from all the institutions involved in the asylum area. - Please provide an overview of legal and irregular migration, in terms of institutional roles, legislation, policies and the actual situation. The Constitution of the Republic of Kosovo foresees that the international instruments such as: Universal Declaration of Human Rights; European Convention for the Protection of Human Rights and Fundamental Freedoms and its Protocols, International Covenant on Civil and Political Rights and its Protocols, Council of Europe Framework Convention for the Protection of National Minorities are all directly applicable and in case of conflict, have priority over provisions of Laws and other acts of public institutions. The legislation on the migration domain is therefore drafted in full accordance with the abovementioned international instruments. Law on Foreigners No. 04 L- 069 regulates the entry into the territory of Kosovo departure as well as stay of foreigners in the Republic of Kosovo. More detailed arrangements regarding rules and procedures for Foreigners are established via the following by-Laws: Administrative Instruction No. 02/2010 – MIA on the content, form, issuance and cancellation procedure of residence permit; Administrative Instruction No. 03/2010-MIA on banning entry into Republic of Kosovo; Administrative Instruction No. 19/2010- MIA on the procedure of notifying the residence or stay; Administrative Instruction No. 20/2010 - MIA on the form and content of the dwelling and emplacement register ABCD records register and guests register; Administrative Instruction No. 22/2010 - MIA on issuing of travel documents for foreigners; Administrative Instruction No. 23/2010 - MIA on maintaining and managing foreigner’s records; Administrative Instruction No. 31/2010 – MIA on identity cards for foreigners; Administrative Instruction No. 01/2010 - MIA on establishment of review committee and appeal committee; Administrative Instruction No. 21/2010 - MIA for issuing visas at crossing border points. Since this Law only entered into force on January 2012, Kosovo Government has established the working group for the harmonisation of the old by-Laws with the new Law on Foreigners No. 04 L- 069 and draft the remaining necessary subordinate legislation for the implementation of this Law.

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Law on Readmission No 03/L 208 sets forth the rules and procedures for readmission of a person who is either a citizen of the Republic of Kosovo or a foreigner, who does not fulfil or who no longer fulfils the requirements for entry or residence on the territory of the requesting state. For the implementation of this Law the following Administrative Instruction is in place: Administrative Instruction No.09/2011 for the implementation of the Law on Readmission. The Republic of Kosovo has concluded in total 16 Readmission Agreements with the following countries: Republic of Albania, Republic of France, Swiss Federal Council, Federal Republic of Germany, Kingdom of Denmark, Republic of Austria, Republic of Norway, Republic of Slovenia, Benelux countries, Czech Republic, Republic of Montenegro, Kingdom of Sweden, Republic of Finland and Republic of Hungary. Agreements with Republic of Croatia, Republic of Bulgaria and Republic of Malta, have been finalized and their signature is expected to take place soon; meanwhile the negotiations are taking place with Republic of Estonia, Republic of Italy and Republic of Latvia. Conclusion of such agreements was proposed to Republic of Turkey and Republic of Macedonia, for more detail see Annex 4. Law on Citizenship No.03/L-034 followed by the Law No. 04/L-05 on amending and supplementing the Law No.03-L-034 for Citizenship of Kosovo, prescribes the rules and procedures for the acquisition and loss of the citizenship of the Republic of Kosovo and regulates other issues related to the citizenship of the Republic of Kosovo. A number of by-Laws are in place for the implementation of this Law, however a working group has been established to harmonize the previous by Laws and draft the remaining necessary subordinate legislation as required by Law No.04/L-05 on amending and supplementing the Law No.03-L-034 for Citizenship of Kosovo. As for the policy documents regarding Migration, the Government of Kosovo has adopted its National Strategy on Migration 2009-2012 and the Action Plan. This Strategy aims at preventing illegal migration and promoting legal migration. Currently this Strategy and the AP are being revised. The Government has adopted on May 2010 the Revised Strategy on Reintegration of Repatriated Persons which aims at full reintegration of this category of citizens with special focus on their social and educational needs. For this purpose, the Government has allocated €3.170.000, 00 and has established the Executive Board for the management of this fund and other coordination and implementing structures. Department for Citizenship, Asylum and Migration (DCAM) is the competent policy making body monitoring legal and illegal migration. Within this Department, the Division on Foreigners, Visa and Residence Permits deals with registration and managing cases related to foreigners. Within MIA, two commissions have been established to handle the requests for residence permits in the Republic of Kosovo. The first instance commission, namely the Commission to review foreigners’ applications on temporary and permanent stay, and for the denial, suspension and revocation of

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residence permits, is composed of one officer from the DCAM, one from the Legal Department of the MIA and one officer from the Directorate for Migration and Foreigners of Kosovo Police. The requests are initially handled by the first instance commission, meanwhile the second instance commission, namely the Commission to review the foreigners’ appeals, handles the appeals against the decisions of the first instance commission. This Commission as well is composed of one representative from DCAM, one from MIA Legal Department and one representative from the Directorate for Migration and Foreigners (however not the same persons as in the first instance commission). Directorate for Migration and Foreigners ensures the deportation of a foreigner from Kosovo, according to the court verdict. Within DCAM, the Division for Returnees and Readmission deals with the readmission requests received by states that the Republic of Kosovo has concluded readmission agreements with and in accordance with the Law on Readmission. This division undertakes the necessary procedural measures in cooperation with the Ministry of Foreign Affairs and Directorate for Migration and Foreigners (KP) for the return (in principal to his/her country of origin) of the illegal migrant when denied the status of asylum. In terms of preventing illegal migration Kosovo has developed a wide awareness raising campaign. As such, there have been three TV series of advertisements broadcasted since November 2011, to educate people on this topic and the consequences of illegal migration. Flyers and brochures, in 5 different languages, have been disseminated all across Kosovo, including public and private institutions and municipal offices for reintegration. In addition, these materials could be found also in the consular offices of the Republic of Kosovo such as in Brussels, Berlin, Frankfurt, Stuttgart, Bern, Zurich, Geneva, Paris, Vienna, Stockholm, London, Rome, New York. Further on, information flyers have been placed at the Visa Section of the Swiss Embassy which represents also Austria and France in issuing visas for Kosovars. This year there will be billboards in all the municipalities of Kosovo as part of the awareness campaign on illegal migration. Three video spots in minority languages addressing the prevention of illegal migration have been finalised and will be transmitted in public media. The Belgian Embassy is considering financing the broadcast of the spots in private media. With regards to combating of criminal groups involved in smuggling of migrants, the KP, during 2011 has dealt with 14 cases of migrant smuggling where 19 persons have been arrested and 42 victims identified: 7 Kosovars, 10 Afghans, 14 Turks and 11 Palestinians.

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3.8.3. Combating money laundering - What are the 2011 crime investigation results? During 2011, the Directorate for Investigation of Economic Crimes and Corruption (and the Anti Corruption Taskforce processed in total 17 money laundering cases resulting in criminal charges being filed against 6 suspects. Table 62. Statistics of Directorate for Investigation of Economic Crimes and Corruption 2011 DIECC ACT Total cases 14 3 Cases remaining under investigation

4 3

Cases sent to the prosecutor with known perpetrators

3 0

Cases sent with Report to the Prosecutor

7 0

Number of detainees 1 0 Suspect against whom criminal charges were raised

6 0

Confiscation of property €164.000.00 0 The Kosovo Customs work on the prevention of money laundering by ensuring that cash is declared in the Airport Departures and Arrivals sectors, as well as in the Kosovo border road crossing points. As such, during 2011 they have detected 30 cases of non-declaration of cash at the border crossing points (22 cases at Prishtina International Airport, 4 cases at the border crossing in Merdare, 2 cases at the border crossing in Hani i Elezit, 1 case at the border crossing in Kulla and 1 case at border crossing in Vermica). Total amount of non-declared cash was €782, 794.00. These cases have been handed over to the Kosovo Police for further investigations. The Financial Intelligence Unit (FIU), established by Law on Money Laundering and Financing of Terrorism No. 03/L -196, operates within the Ministry of Finance and Economy (MFE) as a central independent national institution responsible for requesting, receiving, analyzing and disseminating to the competent authorities, disclosures of information which concern potential money laundering and terrorist financing. During 2011, FIU has handed over 114 cases or requests to competent Law enforcement agencies, such as to the: Kosovo Police, Kosovo Intelligence Agency, competent prosecutor, Kosovo Customs, Tax Administration Department of the Ministry of Economy and Finance and KFOR. - Is now the Agency for the management of confiscated and sequestered assets fully staffed and trained? The Agency for Management of Confiscated and Sequestrated Assets (AMCSA) was established by the Law on Managing Sequestrated and Confiscated Assets No. 03/L-141. The Agency is operational, staffed and consists of 17 officers. As for the trainings,

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during 2011 and 2012 there were 22 trainings that the Agency’s staff has participated in. For more details on the topics of the trainings please refer to the list below. Furthermore, AMCSA will benefit from IPA 2012 project which aims at supporting and increasing the capacities of this agency as well as providing more training for its staff. a. Seizure of Property”, organized by ILECU in Prishtina; b. Seizure of Property ", organized by EULEX, Prishtina; c. Advanced techniques of financial investigation," organized by the American

Treasury Department (U.S.) in Prishtina; d. Approximation of National Legislation with the EU, organized by the Twinning

Project in Prishtina; e. EU Law, its implementation and interpretation; f. International Legal Assistance – criminal issues; g. Seizure of Property - EU standards; h. EU offices for the return of property, organized by TAIEX - the European

Commission in Prishtina; i. Payroll management system, organized by the KIPA, Prishtina; j. Key features of the Law on Civil Service Nr.03/L-149 in Republic of Kosovo; k. Communication and drafting of documents in Public Administration; l. Assistance and Financial instruments of the EU; m. Assessment and management performance in the Institutions of Civil Service; n. Civil Service Regulations, emerged from the Law on Civil Service of the Republic of

Kosovo; o. Strategic Planning and Management; p. Purchasing module, organized by the Ministry of Finance, Prishtina; q. Regulatory impact assessment; r. Certification in Public Financial Management; s. Approvals module – commitments; t. Revenues module; u. Customs Valuation of Goods and; v. Expenditure module - certification / approval. - Is a Law which requires business organisations to report cash-based transactions for more than €10.000 planned? The issue of reporting cash transactions by Business Organizations is regulated by the Law on Prevention of Money Laundering and Financing of Terrorism No. 03/L -196, Article 16, which specifies that every person or legal entity trading goods, when receiving payment in cash in an amount of €10.000 or more shall report it to the FIU. In addition, Law on Tax Administration and Procedures No. 03/L-222 states that every Business Organization shall report once a year all its purchases exceeding €500 to the Tax Administration of Kosovo. This Law requires that every transaction above €500 is done through bank account (Article 13).

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- How does Kosovo plan to fight against business-related financial transaction on private accounts and large numbers of entities doing business without being registered? Kosovo Financial Intelligence Unit is fully operational and monitors all cash transactions with special focus on suspicious cash transactions. Moreover, on April 2012 Tax Administration of Kosovo has established its Tax Investigation Unit, in order to improve the fight against tax evasion. On March 2012 the TAK has established its Financial Unit and is working on increasing its capacities. These Units cooperate closely with FIU, Directorate for Investigation of Economic Crimes and Corruption within Kosovo Police, Prosecutor’s Office and Kosovo Customs. -Do NGOs systematically fulfil their financial reporting obligations toward the NGO registration office in the Ministry of Public Administration? Pursuant to Article 18, of the Law on Freedom of Association in Non-Governmental Organizations No.04/L-57 every NGO that is granted Public Beneficiary Status must file each year an annual report to the competent body with respect to its operations and activities within Kosovo. In total there are 243 NGOs operating under the Public Beneficiary Status in Kosovo and 190 of them have fulfilled their financial reporting obligations for 2011. Thus we conclude that the majority of the NGOs fulfil their obligation towards the registration office of the Ministry of Public Administration. -How does Kosovo plan to increase its capacity to investigate and prosecute economic crimes? One of the main bodies that work in the field of fighting economic crimes is the Directorate for Investigation of Economic Crimes and Corruption which is divided into the following Sectors and employs 113 police officers and 7 civilians: a. Sector for Investigation of Economic Crimes; b. Financial Investigation Sector; c. Sector for Corruption Investigation; d. Regional Unit Sectors; e. Office for statistics and analysis; There are continues trainings taking place in order to further increase the capacities of the Directorate for Investigation of Economic Crimes and Corruption. According to the training schedule for 2012, 68 Kosovo Police officers working in the domain of economic crimes will benefit from 8 trainings on economic crimes. With regard to increasing the capacities of prosecuting cases of economic crimes, the Kosovo Prosecutorial Council in cooperation with other relevant stakeholders is planning specialized trainings for the prosecutors dealing with cases of economic crimes. -How will Kosovo strengthen and address at an earlier stage of investigation the confiscation of assets in case of money-laundering and economic crime?

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The Criminal Code of Kosovo, Chapter VII, provisions the confiscation of material benefits acquired by the commission of criminal offences. However, the coverage that the Criminal Code has provided for the confiscation of assets was seen insufficient. As a result Kosovo is on its final stage of drafting the Law on Confiscation of Assets acquired through a criminal offence. This Law is expected to be approved by the Kosovo Assembly in September 2012. On the other hand, the Law on Prevention of Money Laundering and Financing of Terrorism (No. 03/L -196), Article 22 describes the purposes of possible asset freezing which is basically a prohibition of transfer, conversion, disposition or movement of funds or other property on the basis of, and for the duration of the validity of, a decision of a judicial or other competent authority. According to this Law the frozen funds or other property remain the property of the persons or entities that held an interest in the specific funds or other property at the time of freezing, and may continue to be administered by the financial institution. -Has the identification of illegal activity related to the import and export of large amount of money at Kosovo's airport been incorporated into the routine work of customs? The obligation to declare the monetary amount of €10 000 or more, when entering or leaving Kosovo is set in Article 29 of the Law on Prevention of Money Laundering and Financing of Terrorism No. 03/L-196. According to this Law, it is the responsibility of Kosovo Customs officers to take all the appropriate measures to prevent money laundering and terrorist financing and report any suspicious transactions or suspicious terrorist financing to the Financial Intelligence Unit. In the course of their duties the Customs officers shall liaise with the FIU, prosecutors, police, Tax Administration and other relevant bodies. When a person fails to declare the monetary amount of €10.000 or more, in compliance with the Law on Prevention of Money Laundering and Financing of Terrorism No. 03/L-196, he/she will be subject to a fine of 25% of the total amount in his/her possession. During 2011, Kosovo Customs have detected 22 cases of non-declaration with the total amount of undeclared money being €125.801.23 at the Departure, and €212.719.05 at Arrivals of the Prishtina International Airport. Furthermore, there have been a few risk assessment tests on the matter of non-declaration. Controls have been conducted by the officers of Kosovo Customs (KC) at the Airport together with the Directorate for Law Enforcement of the KC, EULEX Customs component, Kosovo Police and K9 Unit of the Kosovo Police and EULEX. With regard to money laundering, during 2011 Kosovo Customs staff has participated in a specialized training which has explored possible forms of money laundering. Participants in this training were the Customs Officers working at the Customs Pillar “Airport”. As from January 2012, KC has established its investigative structures which

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will investigate illegal activities related to the import and export of excessive amount of money. -How will Kosovo remedy the lack of experience and specialisation of prosecutors and judges in money-laundering? Pursuant to Article 3 of the Law on Prevention of Money Laundering and Financing of Terrorism, the Special Prosecution Office of the Republic of Kosovo is the competent body to handle cases of money laundering. Special Prosecution Office of the Republic of Kosovo will appoint special prosecutors in the fight against money laundering and financing of terrorism. Kosovo Prosecutorial Council has planned further trainings on this matter, to be organized in close cooperation with FIU, TAK, Anti-Corruption Agency, finance experts, and police officers part of the Anti Corruption Task Force of the Special Prosecution Office. These trainings are implemented by the Kosovo Judicial Institute in cooperation with other local and international partners. As of 2006 there have been 19 trainings implemented by KJI with certain modules on fighting money laundering. Furthermore, KJI will continue to cooperate not only with KPC and KJC but also with countries of the region in order to draft and implement more advanced curricula on the money laundering. 3.8.4. Preventing and combating organised crime and other criminal activities,

including terrorism - Please give an overview of the relevant strategies, policies, legislation, as well as the authorities and institutions involved (resources, scope, tasks, cooperation & coordination). The Government of the Republic of Kosovo has adopted the necessary legal and strategic framework on the prevention and fighting of all forms of organized crimes including terrorism. The Constitution of the Republic of Kosovo, Chapter I, Article 7 states that one of the main principles the country’s constitutional order, is the rule of Law principle. It is the Criminal Code, the Criminal Procedure Code and other Laws that refer to organized crime and other criminal activities in more detail. Article 274 of the Criminal Code sets the main forms and punishments for the participation in an organized criminal group as well as the commission of a serious crime as part of the organized criminal group, whereas Articles 109-113 of this Code provision the definition of terrorism, its forms and means as well as punishments for such criminal activity. Article 213 of the Criminal Procedure Code provides for the provisional arrest and police detention when a person is suspected of terrorism or organized crime while

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Article 257 of this Code sets the procedure for covert and technical measures of surveillance and investigation in the furtherance of terrorism or organized crime. Kosovo has adopted the Law on Prevention of Money Laundering and Financing of Terrorism on September 2010. This Law stipulates the measures, competent authorities and procedures for detecting and preventing money laundering and terrorist financing. For further information on the legal framework of the Republic of Kosovo for combating organized crime and other criminal activities, including terrorism please refer to the list below. Legal Framework against organized crime and other criminal activities including terrorism: a. Constitution of the Republic of Kosovo; b. Criminal Code of Kosovo; c. Code of Criminal Procedure of Kosovo; d. Law on the Prevention of Money Laundering and Terrorist Financing No. 03/L- 196; e. Law on Witness Protection No. 04/L-015; f. Law on the Special Prosecution Office No. 03/L-052; g. Law on Preventing and Combating Cyber Crime No.03/L –16; h. Law on Declaration, Origin and Control of Property No. 03/L-15; i. Law on International Legal Cooperation in Criminal Matters No. 04/L-03; j. Law on Protection of Informants No. 04/L-04; k. Law on State Border Control and Surveillance No.04/L-072; l. Law on Police No. 04/L-076; m. Law on Execution of Penal Sanctions No.03/L –19; n. Law on the Kosovo Intelligence Agency No. 03/L-063; o. Suppression of Corruption Law No.2004/34; p. Law on Preventing Conflict of Interest No. 04/L-051; q. Law on State Prosecutor No. 03/L-22; r. Law on Courts No. 03/L-19; s. Juvenile Justice Code of Kosovo; t. Customs and Excise Code of Kosovo No. 03/L-109; u. Law on Narcotic Drugs, Psychotropic Substances and Precursors No. 02/L-12; v. Law on the Management of Seized and Confiscated Property No. 03/L-141; w. Law on Classification of Information and Security Clearances No.03/L –17; x. Law on the Protection of Personal Data No.03/L – 172; y. Draft Law on Legal Eavesdropping; As for the strategies and relevant policies, Kosovo has adopted the necessary strategic documents for combating organized crime and terrorism. Please refer to the list below for strategic and policy documents in the area of combating terrorism and organized crime. a. National Security Strategy (2011); b. National Strategy and Action Plan of the Republic of Kosovo Against Organized

Crime 2009-2012;

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c. Republic of Kosovo National Strategy and Action Plan against Terrorism 2009-2012; d. National Anti-Drug Strategy and Action Plan of the Republic of Kosovo 2009-2012; e. National Strategy and Action Plan of the Republic of Kosovo on Prevention of Crime

2009-2012; f. National Strategy on Integrated Border Management and Action Plan; g. National Strategy of the Republic of Kosovo on Migration and Action Plan 2009-

2012; h. National Strategy and Action Plan Against Trafficking in Human Beings 2011-2014; i. Intelligence-led policing strategy; j. Integrated System of Emergency Management; k. National Response Plan; l. National Program of Civil Aviation of the Republic of Kosovo. Every adopted Strategy has its National Coordinator whose mandate is to coordinate, monitor and report implementation of policies, activities and actions as foreseen by the respective strategy. Thus, the Kosovo Government has appointed the following institutions: a. National Coordinator against Organized Crime; b. National Coordinator Against Terrorism; c. National Coordinator Against Trafficking in Human Beings; d. National Anti-Drug Coordinator; e. National Coordinator for Integrated Border Management; f. National Coordinator for Migration; g. National Coordinator of National Response Plan in emergency cases; h. Kosovo Intelligence Agency (KIA); i. Kosovo Police; j. Financial Intelligence Centre; k. Kosovo Security Force (KSF); l. Kosovo Customs; m. Special Prosecution Office and Courts.

In addition, each of the following bodies and institutions play a specific role in combating terrorism and organized crime: a. Secretaries of National Strategies’ Coordinators – are bodies whose role is to collect

all information and data from other institutions in order to analyze and evaluate such information and preparation of analytical reports for the National Coordinators;

b. Ministry of Internal Affairs – drafts policies on preventing, protecting, tracking and responding to activities of organized crime including terrorism;

c. The Kosovo Security Council – is the body which analyzes, evaluates and recommends policies for preventing and combating organized crime including terrorism, in accordance with the legislation in force;

d. Kosovo Intelligence Agency – is the body which collects and conveys information about the threats of terrorist activities against the security of Kosovo;

e. Ministry of Kosovo Security Force – its organization mechanism helps in prevention

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and combating organized crime including also terrorism; f. Ministry of Economy and Finance – through the Customs, Financial Intelligence

Unit and Tax Administration helps to prevent cross border movement of goods and materials that aim terrorist activities and assists in identifying, reporting and blocking criminal financial activities as well as terrorist activities;

g. Ministry of Local Government Administration – through mechanism of local Government helps in identifying elements that may lead to criminal and terrorist activities and to actively participate in preventing and preparing or responding to terrorist activities;

h. Ministry of Education, Science and Technology – plays an important role in preventing crime and terrorism through education, school based curricula, cross program approach and various extracurricular program activities;

i. Ministry of Culture, Youth and Sports – through programs for terrorism prevention offers trainings and awareness activities for NGOs and informal groups;

j. Situation Centre – serves as operational centre for information gathering, basic analysis and support for crisis management;

k. Prosecution Offices and Courts – are responsible institutions for prosecution of terrorists and organized crime perpetrators, their adequate punishment, confiscation of property and assets gained through criminal and terrorist activities.

- Please provide an overview of the situation regarding drug trafficking and trafficking in human beings, notably with regard to resources, cooperation & coordination, incl. cross-border. Focus on prevention, prosecution and, in the case of trafficking of human beings, the protection of victims. In 2009, Kosovo has adopted its National Strategy against Drugs 2009-2012. Main objectives of this Strategy are reducing the demand and minimizing the harm of drug consumption, reducing the drug offer and supply and enhancing cooperation and coordination among agencies working on combating drugs. This Strategy involves many stakeholders such as: Ministry of Internal Affairs, Kosovo Police, Kosovo Customs, Prosecutors, Courts, Ministry of Justice, Ministry of Health, Ministry of Education Science and Technology, Ministry of European Integration, Ministry of Culture, Youth and Sports, different NGOs and other stakeholders. During 2011, Kosovo Customs have cooperated closely with Kosovo Police/Directorate for Investigation of Drug Trafficking. The Intelligence Sector and the Anti-Smuggling Sector of the Kosovo Customs (50 Customs Officer) are equipped with special equipments for vehicle control, including Fibro scopes, Busters and X-Ray Scanners. During 2011, KC and KP have organized 25 joint operations against drug trafficking meanwhile KC has offered assistance to Kosovo Police in 20 cases, 3 of which had resulted in 14.86 kg of drugs confiscated. Furthermore, KC has detected 7 cases of drug trafficking and confiscated 58.74 kg of drugs (marijuana, heroin and cocaine).

From January until May 2012, 20 joint operations against drug trafficking have taken place. These operations resulted in 4 cases of drug trafficking and 21.048 kg drugs seized. The Directorate for Drug Trafficking Investigation (KP) consists of 85 officers, working in different teams including Prevention and Investigation Unit. This Directorate is supported by other departments within KP as well as by other agencies (Customs, Kosovo Intelligence Agency, Health Inspectors, Kosovo Medicines Agency etc). It is the responsibility of this Directorate to conduct drug related investigations. For statistical data of 2012 regarding drug trafficking cases and suspects please refer to the table below: Table 63. Drug trafficking cases and suspects for 2012

2012 Cases Suspected Arrested Detained Alb Srb Other M Female Operatio

ns Trafficking

Possession

Other offenses

Jan. 37 76 55 41 71 0 5 73 3 14 15 30 0 Feb. 36 55 45 29 51 2 1 55 0 12 14 27 0 Mar 63 110 92 61 94 1 15 106 4 28 20 55 2 Apr 39 60 47 26 53 5 2 60 0 6 7 22 0 Total 175 301 239 156 269 8 23 284 7 60 56 139 2

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Table 64. types of drugs seized for 2012

In terms of cross border cooperation, there has been a productive cooperation with the Republic of Albania and Macedonia in tracing cases of drug trafficking. The exchange of information with Republic of Albania has resulted in seizure of 18.363kg drug type heroin and the arrest of 3 suspects in February 2012.

2012 Heroin Marijuana Cocaine Cannabis seeds

Cannabis plant Ecstasy Other Weapons Mone

y Vehicles

January 23221.28 10287.74 0.4 1128 20 109 5 19,405 € 3

February 7111.4 27815.6 3013 228 6 60 1 75 € 3

March 687.1 82956 73 4607 32 1 131 plants PS

4 2,450 €

April 18363 20554 0 311 0 0 0 11 27,505 € 4

Total 49kg & 383g

141kg 613g

3kg 86.4g 6274 38 81 21 49,435

€ 10

Meanwhile as a result of cooperation with Macedonia during 2011 in the border crossing point Hani i Elezit 39 kg of Marijuana were confiscated and 14 persons were arrested. In cross border cooperation with Macedonia, in February 2012 Kosovo Police has managed to arrest one person in Ferizaj and have seized 2 kg of Heroin and 6 kg of Marijuana. When there are cases of suspects being foreigners, the relevant countries are notified via an ST message from the Office for International Cooperation of the Kosovo Police. According to Kosovo Judicial Council statistics, in 2011 Kosovo courts have solved 134 cases in relation to Article 229 (Unauthorised Purchase, Possession, Distribution and Sale of Dangerous Narcotic Drugs and Psychotropic Substances Drugs) and Article 230 (Unauthorised Production and Processing of Dangerous Narcotic Drugs and Psychotropic Substances) of the Kosovo Criminal Code. Thus, there have been 61 cases of punishment of imprisonments, 29 cases of punishment of fines, 22 cases of suspended sentence, 1 case of alternative punishment, 3 cases were rejected and 18 cases have been solved in other forms (e.g. ceding etc.). In 2011, Kosovo has adopted its new National Strategy against Trafficking in Human Beings 2011 - 2014. Main objectives of this strategy are preventing THB; protecting and assisting the victims and witnesses of THB; investigating, arresting and punishing the perpetrators of this crime; and child protection. The implementation of this strategy involves the Ministry of Internal Affairs, Kosovo Police, Kosovo Customs, Prosecutors, Courts, Ministry of Justice, Ministry of Labour and Social Welfare, Ministry of Culture, Youth and Sports, Ministry of Education Science and Technology, Ministry of Health different NGOs and other stakeholders. Directorate for Investigating THB is a specialized body within KP responsible for investigating cases of THB. This Directorate lies under the authority of the Division against Organized Crime. It is composed of Central Investigation Unit, Unit for Protecting and Assisting victims and 6 Regional anti Trafficking Units such as: Prishtina, Mitrovica, Peja, Prizren, Ferizaj and Gjilan.It works under centralized model and employs 53 police officers. One of the main tasks of the DITHB is to offer protection and assistance to the victims of THB. Furthermore it works on the process of rehabilitation and reintegration of the victims as well as assists their voluntary return to the country of origin. This directorate cooperates closely with other countries in fighting THB.

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Table 64. Fighting THB:

As a result of cross border cooperation with the Republic of Albania, in 2011 KP has detected 2 cases that resulted in the detention of 8 suspects. On the other hand, there was 1 case detected by KP as a result of cross border cooperation with Montenegro where 1 person was arrested. In 2012 there was 1 cross border case with the Republic of Macedonia which resulted with the arrest of 6 suspects. According to the statistics of Kosovo Judicial Council, during 2011 Kosovo courts have solved in total 21 cases in relation to Article 139 (Trafficking of Human Beings) of the Kosovo Criminal Code. Thus, in 19 cases imprisonment was imposed, and 2 cases were concluded with acquittal verdict. Concerning the protection of the victims of THB, Kosovo is the only country in the region having a state run shelter for the victims. This shelter is administered by the Ministry of Labour and Social Welfare. The DITHB of KP cooperates closely with 8 other non-Governmental shelters offering a good environment and a well designed programme for the victims. Furthermore, the National Coordinator against Trafficking of Human Beings has established the Direct Assistance Group, a body composed of representatives from the 9 shelters, DITHB, Ministry of Health, different NGOs and

Activities, cases, investigations, victims 2011 2012 January–April

Open cases 66 42 Cases handed in the Prosecution Office/Court 65 39 Cases under investigation 47 51 Arrests according to the criminal offenses in years 2011 2012 January–April Human trafficking 91 49 Providing prostitutions 39 20 Prostitution 50 15 Other offenses 4 Total detentions 183 84

Identified trafficking victims 2011 2012 January–April

Kosovo 35 20 Albanian 1 1 Moldovan / 1 Serbian 3 / Slovak / 1 Total identified victims 39 23

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other agencies. This group works on providing a better treatment and rehabilitation of the victims. - When it comes to drug use in Kosovo, please provide an overview of the current situation, an overview of measures taken in respect of drug demand reduction, and identify the types of programmes available for the prevention and reduction of health-related drug dependence. In parallel of the UN Conventions on: narcotics (1961), psychotropic substances (1971), and the Convention against Illegal Trafficking of Drugs and Psychoactive Substances (1988) directly applicable in Kosovo’s domestic legislation, the scope of using drugs in Kosovo and misuse of psychoactive substances is regulated by the: Law on Health No. 4/2004 (Article 23), Law on Narcotics, Psychotropic Substances and Precursors No. 02/l-128, the Health Sector Strategy 2010-2014, Mental Health Strategy 2008-2013, National Strategy against Drugs and its Action Plan 2009-2012, Administrative Instruction (AI) No. 10/2010 on Administration and Use of Methadone in the Framework of Replacing Drugs (treatment programs). The Administrative Instruction on protection measures of obligatory medical treatment for persons addicted to psychotropic substances and alcohol is in the process of drafting. Ministry of Health (MH) has also established the working group to draft “the State plan on the prevention of misuse of psycho-active substances and treatment of addiction sickness”. Kosovo has established necessary institutional structures and mechanisms aimed to effectively implement the legal framework and policy on prevention and reduction of addiction from drugs as the followings: a. National Institute of Public Health (NIPH); b. Centre on Treatment of Addiction Sickness at the Psychiatrics Clinics in University

Clinical Centre Kosovo (UCCK); c. Addiction Sickness Treatment Units in regional hospitals; d. Professional services of Mental Health supported by community. NIPH is responsible for health education and prevention of use of drugs and misuse of psycho-active substances; education-health activities on prevention of misuse of drugs are conducted in continuity by NIPH and civil society as stipulated in the Kosovo Law on Narcotic Medicine, Psychotropic substances and Precursors No. 02/L-128, in Article 32, paragraph 32.3. The Psychiatric Clinic of the University Clinic Centre of Kosovo (UCCK) and Units on Addiction Treatment in regional hospitals are responsible for diagnostics and emergency treatment of drug users, especially de-toxicities in acute phases of overdoses. In 2008, a special unit in Psychiatric Clinic within UCCK was established (two rooms with six beds) to treat drug addiction according to the clinical protocol approved for

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this treatment. Treatment in this unit, likewise in respective units in regional hospitals, which have two beds, until now has been based mainly in de-toxicities programs during emergency phase of addiction. Professional Services on Mental Health supported by communities of seven regions are responsible for rehabilitation and psychosocial treatment of drug users in the communities where they live and act. Within the Framework of the Program supported by Global Fund, in April 2012, implementation of pilot project on treatment of a limited number of patients with Methadone has started. Project includes Psychiatrics Clinics at UCCK, two regional hospitals, Correctional Health Service, and one private health institution. In order to implement legislation in force and respective health policy, MH cooperates with private health institution “Labyrinth” from Prishtina, to provide following programmes and services: a. Ambulant Detox (daily service on drugs cleaning); b. MHRT (Methadone Holding/Replacing Therapy, so far 36 persons included in this

programme); c. Prevention Programmes on Reduction of damage (Syringe Dissemination, Voluntary

advising and Testing on HIV, B Hepatitis and C Hepatise, production and dissemination of information and education materials (IEM), field services program;

d. Organization and conduct of training on drugs for the professionals and non-professionals;

e. Psycho-social services (individual, group, family advising and holding of self-help groups);

f. Medical controls, general and psychiatrics; g. Testing to determine drugs in the organism; In cooperation with “Trimbos Institute“ from the Netherlands and Kosova Health Foundation, NGO “Labyrinth” has conducted program, Training of Trainers for Family Doctors with the topic “Misuse of Substances“, hence six (6) family doctors have been certified as trainers on this field. Professional capacities engaged in the field of prevention, treatment and rehabilitation from use of drugs and misuse of psychoactive substances are: 24 health professionals whereas eight (8) are psychiatrists, two (2) psychologists, ten (10) nurses, and four (4) physicians. There are around 80 clients that are annually treated in the psychiatric clinic in Pristina, while the NGO ‘Labyrinth’, has offered out-patient treatment such as counselling services for more than 700 drug users, since it began its activities (referring to EMCDDA report of 2011 for Kosovo). Based on reports of Kosovo Police, EMCDDA and other reports, currently marihuana remains as most widely used drug in Kosovo which on part comes from Albania and in

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small quantity is cultivated in the country, followed by heroine at to small extend cocaine and synthetic drugs. Additional institutional activities are ongoing to address increased use of drugs in Kosovo and prevention measures on drugs addiction. In this regard, the National Plan on prevention of misuse of psycho-active substances and treatment of addiction is expected to be finalized by the end of 2012. Conceptual framework of this Plan will aim at increasing the capacities and efficiency in treating this issue in a multi-disciplinary and multi-sector way ensuring optimal coordination of family health services, social welfare services, clinical-hospital services at all levels of health care and services of NGOs in this field. In line with this, Ministry of Health will propose, establishment of National Observatory on Drugs Addiction as an institution at Government level, responsible to monitor and implement respective legislation and policy in this field that would maintain regular communication with European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) through a national package on reporting containing national report, statistical tables, and structured questionnaires. On the other hand, an inter-ministerial working group led by MIA was established with the mandate of revising the current Strategy and Action Plan against Drugs 2009-2012. The working group has already come up with new objectives divided in four chapters such as: harm reduction responses, reduction of offer and supply, cooperation and coordination, and monitoring and evaluation. The new Strategy has foreseen establishment of committees and research mechanisms related to drugs. The Strategy and Action Plan are planned to be finalized by the end of June 2012 and undergo necessary procedures for Government approval. In developing the Strategy and Action Plan have contributed national and international experts in this field, experiences from EU member states and EU and international organizations such as EUROPOL, INTERPOL, UNODC, EMCDDA, etc, were taken into consideration and in particular the involvement of the civil society in contributing to developing the Strategy and Action Plan.

3.9. Cooperation policies 3.9.1. Statistics - What is the state of play of the implementation of the statistical Law and the preparation of the multi-annual statistical programme? The Law on Official Statistics (No. 04/L-036) came into effect in December 2011. The Law sets the standards for developing, producing and publishing data in line with the EU standards. Considerable progress was made in implementation of the Law. In terms of organisational structures, the Kosovo Agency of Statistics (KAS) appointed the new Chief Executive for a three year term. In March 2012 the Prime Minister’s Office (PMO),

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by decision no. 097/2012, established the Statistical Council which selected its Chairperson and deputy-Chairperson and approved regulations for its functioning. The following by-Laws (administrative instructions), deriving from the Law on Official Statistics, are being finalised: a) restructuring of KAS, b) conditions and the way of providing statistical data obtained by special processing of official statistics, c) storage and utilisation of statistical subject matters, and d) procedures for establishing and maintaining statistical registers. All these byLaws are sent to the Government and are expected to be approved by the end of June 2012. In line with deadlines set out in the Law on Official Statistics, the draft annual work plan for 2013 is finalised and sent to the Government on 31 May 2012. Furthermore, a plan for five years Statistical Programme is expected to be finalised by the end of 2012. - Could you provide information on the status on the finalisation of the population and housing census results, to be presented in the final conference on 21 September 2012? Based on the plan and actual dynamics, the database will be cleaned up by June 2012 and KAS is expected to publish the final census results on 21 September 2012. The data will be available in hard and electronic copy. The final result (hard copy) will include the main indicators, such as: housing conditions, the type (material) of the housing, water supply, access to internet, the structure (size) of households, main activities of households, age, gender, marital status, ethnicity, religion, education level, employment, residence, etc. The data will also be available on the KAS website in Excel and PDF format. Users can create various tables with almost all the data included in the registration/census forms. - What are the plans of Statistical Office of Kosovo (SOK) for improving business and macroeconomic statistics? The following measures were undertaken for approximation of business statistics with European standards: a) questionnaires for the Structured Survey on Enterprises for 2011 were corrected (as per recommendations of experts and regulations of Structured statistics on enterprises), b) meetings were held with Regional offices for improvement of data collection, c) ambiguities of questionnaires were noted, and as a result the questionnaires for quarterly surveys on industry and construction were improved. Lack of human resource and engagement of staff in housing and population census of 2011 caused delays in publication of some macroeconomic statistics. Nevertheless, during 2010 improvements were made in statistics in terms of formation of gross fixed capital, calculation of depreciation of basic assets of the Government and NGOs, creation of added value in transport and hospitality activities. In order to continuously improve macroeconomic indicators, there is a need to improve sources of data (business surveys, household surveys, agriculture surveys, and labor force surveys, organization of short-term surveys as well as improvement of administrative sources of data).

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- What are the plans of SOK for the introduction of the economic activity classification NACE Rev 2? The use of NACE Rev2 classification for economic activities is closely related to business registration at the Kosovo Business Registration Agency (KBRA). It is decided that when new businesses start registering with NACE Rev2 (planned to start at the end of 2013 and continue in 2014), KAS and KBRA will transfer the corresponding tables from NACE Rev1 to NACE Rev1.1 and then to NACE Rev2. For other enterprises that cannot transfer automatically the corresponding tables from NACE Rev1 to NACE Rev2, registration of businesses will have to be done directly on the spot. From 2010, in the business survey for the year 2009, KAS started to apply double codes (NACE Rev1 and NACE Rev2) and this has continued with surveys for the years 2010 and 2011. - Please provide information on the status on the preparation for the agriculture census to take place in October 2013. The preparations for agriculture census are in progress: a. Project-proposal for Agriculture Census is prepared and signed by the Chief

Executive of KAS; b. The draft plan of activities for Agriculture Census is prepared; c. The Draft Law on the Agriculture Census is prepared and sent for final review to the

MAFRD, and it is expected to be sent to the Government for approval by the beginning of June 2012. The Law on Agricultural Census assigns KAS as the project management authority for the census. The definitions that are used in Eurostat are included in the Law. The census is based on regulation of the European Commission (EC) No 1166/2008;

d. About 95% of the draft questionnaire is finalised; e. The first draft of manuals for enumerators is prepared; f. The budget by activities and years is planned and ensured; g. Preparations for pilot agricultural census have begun; the census will take place in

November 2012. - How is the coordination of the main producers of statistical data (Statistical office, Central Bank, Ministry of Finance, etc.) carried out? What are the plans to enhance the reliability, regularity and mutual compliance of statistical data? Based on the Law on Official Statistics, the bearer of official statistics in Kosovo is KAS, the Ministry of Finance and the Central Bank of Kosovo. The Law has clearly specified the coordination responsibilities, which are divided between the Statistical Council (an advisory mechanism) and KAS. Before issuing any publication, KAS cross-checks the data with the relevant institutions in order to coordinate and ensure data consistency. For better coordination, during the restructuring process of KAS, a unit will be established that will coordinate producers of official statistics, statistics users within Kosovo and mechanisms outside Kosovo. Plans for enhancement of the reliability, regularity and mutual compliance of statistical data are based on the Law on Official Statistics, which assigned the main responsibility

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to KAS. In addition the Statistical Council will play a major role in this direction by providing recommendations and advises, monitoring and evaluation and upholding to consistency and quality assurance. The Committee for External Trade Statistics has been established where issues regarding import/export statistics are addressed. CBK is the country coordinator for IMF’s General Data Dissemination Standards (GDDS) and CBK is represented in the Statistical Council. Statistics compiled and published by the Central Bank of Kosovo are compliant to international standards for statistics of IMF, European Central Bank, Eurostat etc. Application of such standards ensures the regularity and mutual compliance of statistics within Kosovo and with other countries. The concrete steps taken by CBK for the reliability, regularity and compliance of statistics are: a. Publication of statistical methodology; b. Calendar of publications and adherence to it; c. Information through technical notes on revision of statistics; d. Transparency of statistical publications. 3.9.2. Investment promotion and protection, industrial cooperation, small and

medium-sized Enterprises (SMEs) and tourism 3.9.2.1.Industry - If an industrial/competitiveness policy is in place, please describe its main features and priorities. The Kosovo SME Development Strategy 2012 - 2016 (with vision up to 2020), adopted on 13 July 2011, provides for strengthening of SME competitiveness in domestic and international markets (strategic goal 4). In addition, the Industry Strategy 2010 – 2013, adopted in 2010, contains a number of priorities, which will be reflected in the MTI sector strategy planned (which is expected to be completed in June 2012 and will cover the five-year period 2012 – 2017). These priorities are the following: improving the legal framework in accordance with the new approach guidelines, promoting industrial development and increase the role of industry in GDP creation, increasing competitiveness of manufacturing enterprises and promotion of investment in industry. Furthermore, development of the Innovation Strategy, based on EU’s financial support, has started in March 2012. Finally, a research on training needs of SMEs is upon completion. - How these priorities are made consistent with the overall economic policy? Does the industrial policy take into account the necessity to create an attractive operating environment for business and investors; to promote the development of adequate professional skills, the creation of an integrated innovation system and the development of clusters? How is competitiveness addressed? The Kosovo’s SME Development Strategy 2012 – 2016 envisages strengthening of SME competitiveness in domestic and international markets through 6 goals and 25 objectives. The goals are the following:

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a. Development of technical, innovation and managerial skills of SMEs, in line with the EU programme on support to policies related to information and communication technology;

b. Incorporation within SMEs of International Standards and the Quality Management System;

c. Development of an Import Substitution Plan, aimed at supporting SMEs to be more competitive in the domestic market;

d. Identification and development of priority sectors for support to SMEs; e. Development and establishment of Business and Innovation Centres; f. Facilitating access of SMEs to regional and international markets. The fourth strategic goal incorporates SBA Act principles: I. Creating an environment in which entrepreneurs and family businesses can thrive and entrepreneurship is rewarded; VII. Helping SMEs to benefit more from the opportunities offered by the single market; and, X. Encouraging and supporting SMEs to benefit from the growth of markets. The operational framework programme of the EC on this aspect is the EU Competitiveness and Innovation Programme (CIP), which Kosovo aspires to join in the near future. The development of SMEs and the economy is given now regarded as a priority by all donors and Kosovo institutions; however there are few practical suggestions as to how to go about achieving SME growth and there is no unanimous view on what is Kosovo’s competitive advantage. A typical Kosovo supermarket is stocked with a large proportion of imported food products, many of which could be produced in country. Kosovo is part of the regional and global economy and, in order to compete, it must produce goods and services to the same levels of quality and performance as foreign producers. International competitive products are presently discriminating domestic consumers’ demand. The strategic goal 4 addresses the relevant issues through a range of measures: raising technical, innovative and management skills; introducing international standards; developing an import substitution plan; establishing a Business Innovation Centre; and, facilitating access of SMEs to regional and other foreign markets. - Who is involved in design and implementation of industrial/competitiveness policy (ministries, agencies, private sector, stakeholders) and how (including what consultation mechanisms)? In the context of Government institutions, agencies involved in development of industry/competitiveness policy are the following: Department of Industry, SME Support Agency and Investment Promotion Agency. In addition, an Industry Subgroup operates within the Trade Policy Working Group, where the following other stakeholders are represented: Ministry of Trade and Industry (Departments of Industry and Trade), Ministry of Finance, Ministry of Foreign Affairs, Ministry of European Integration, Customs Service, Food and Veterinary Agency, Tax Administration of

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Kosovo, Kosovo Chamber of Commerce, Business Alliance of Kosovo, Kosovo Chamber of Advocates, Association of Exporters, business representatives and relevant donors (UNDP, USAID, WB and EUO/EC). This subgroup operates since March 2011, and meets every three months. It has so far had the following main achievements: a. Approval of Standard Operating Procedures, which define the scope of the

subgroup as follows: i. Reform of doing business and harmonization of legislation with EU

directives on industrial products; ii. Reform in the construction sector in Kosovo, and

iii. Reform the system of regulation in the market economy. b. Signing of a Memorandum of Cooperation with the Kosovo Chamber of Commerce

(in May 2011) on organization of fairs and workshops in specific sectors of industrial products.

- What are the specific measures implemented to promote investment, and in particular to attract foreign direct investment? Do you have studies showing the opportunities (niches) for your manufacturing sectors on the EU and global market? In order to promote foreign investment, a number of specific measures within each respective area have been undertaken: a. Fiscal policies:

i. Reduction in corporate tax from 20% to 10%; ii. Reduction of the personal income tax up to 10%;

b. Improving the business-doing environment: i. Business registration within only 3 days, for free;

ii. Initial capital for new businesses and all costs to register a business are eliminated;

iii. All administrative procedures and waiting time for import has been reduced from 8 to 3, and for export documents from 8 to 2 documents;

iv. Municipal Work Permit is eliminated to allow a quick start of a business. c. Organization of conferences, in the country and abroad, aimed at attracting foreign

investors: i. Targeting potential investors in priority sectors, as set out by the investment

promotion strategy; ii. Promotion of investment opportunities in Kosovo in various magazines

worldwide; iii. Promotion of investment opportunities in Kosovo through prestigious

television outlets such as CNN. d. Promotional materials:

i. Brochure Invest in Kosovo; ii. Brochure Legal Guide;

iii. A film to promote foreign investment; iv. Investment promotion strategy.

e. Sectoral studies (aimed at providing better and detailed information to potential investors on a sector which they might be interested to invest in):

i. Study on the wood processing sector;

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ii. Study on the agricultural sector and opportunities this sector; iii. Study on the metal processing sector; iv. Study on decorative stones sector; v. Study on horticulture sector;

vi. Study on the sector of information and communications technology; vii. Study on the automotive sector;

viii. Study on the textile sector. - Please describe the policy and the achievement concerning realisations industrial parks or similar initiatives. Law no. 03/L-129 on Economic Zones was adopted on 30 April 2009. This Law regulates the establishment, operation, supervision and development of economic zones, the rights and obligations of developers, operators, managers, users, operating on them, types of activities performed within them, and how to determine the location of economic zones. Moreover, the following five subsidiary legislation acts have been adopted: a. AI no. 2009/14 on Establishment of the Division of Economic Zones; b. AI no. 2009/23 on the Procedure for Application and Criteria of Issuing Decisions to

Developers; c. AI no. 2009/24 on Relations between the Responsible Institution, Zone Developers

and Other Institutions; d. AI no. 2009/25 on Procedures for the Control of Economic Zones, and e. AI no. 2009/26 on the Form, Content, Validity and Tax to Grant the Decision. Following completion of the legal infrastructure, two economic zones have been created: Business Park in Drenas and Technology Park in Skenderaj. The Business Park in Drenas contains 33 businesses, which have declared an investment of €30,551,380 and 920 employees. These businesses reimburse VAT after the products have been sold. Furthermore, initiatives to establish economic zones have been submitted by other entities, such as Municipalities of Suhareka, Mitrovica, Lipjan, Shtime and Vushtrri, as well as Zinkunie Kosova Group ltd., based in Prizren, which are in the process of completing the documentation. Temporary tax exemptions for all categories of businesses that moved to Economic Zones are the following: a. Exemption from customs duties to imported raw materials (raw materials are not

subject to customs duties up to the product; as such, they are considered warehouse customs);

b. Exemption of IT equipment from customs duties; c. Exemption of businesses located in economic zones from all types of taxes for a

period of two years from the beginning of their activity; d. Supporting businesses located in economic zones with pro bono advisory services

(on best forms of business management and those that affect growth and development of businesses) for a period of two years from the beginning of their activity;

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e. Total exemption from profit tax for the amount re-invested for a period of two years from the beginning of their activities, and property tax exemption for a 10-year period.

In early 2011, the SME Support Agency, with a view to creating a favourable environment for business development and support the establishment of economic zones, has announced expression of interest for support to Municipalities to carry out a feasibility study on establishment of economic zones. So far, 15 Municipalities have applied for this project. 3.9.2.2.SMEs - Please provide us with the official definition(s) currently applied to SMEs. According to the Law no. 03/L-031 amending the Law no. 02/L-5 on Support to Small and Medium-Sized Enterprises (Article 3), SMEs are classified into the following three categories: micro-enterprises (up to 9 employees), small (10 – 49 employees); and medium enterprises (50 – 249 employees). - What is the share of micro (up to 10 employees), small (up to 50) and medium-sized companies (up to 250 employees) in the national economy in terms of GDP, employment and export? According to the data of the Business Registration Agency in Kosovo, SMEs participate in employment with 232,411 employees (about 63% of the total number of employees), and produce 47.6% of total exports. According to the data of Tax Administration, of 2010, SMEs participate with 43.3% in GDP. Table 65. Statistics on the number of employees in SMEs until December 2011

Categories of SMEs Number of SMEs Number of employees in SMEs

1 - 9 109 798 185 123 10 - 49 1 508 24 877 50 – 249 224 22 411 250 - .... 60 137 096 Total 111 590 369 507

Source: Ministry of Trade and Industry - Can you summarise the framework policy paper that defines/includes the Government’s approach and policy towards enterprises/SMEs? The main sectoral policy document in the field of SMEs is the SME Development Strategy 2012 – 2016, which contains 7 strategic goals, 34 goals and 138 strategic objectives. This strategy is a sub-sectoral component of the Action Plan on Kosovo Economic Vision 2011 – 2014. The SME Strategy is cross-sectoral one and includes a number of Government agencies that have responsibilities for certain parts of its implementation. Its successful implementation will help to removing many constraints to economic growth, increasing private sector activity, increasing domestic and foreign investments, and will therefore be the largest contributor to the creation of new jobs.

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- Which are the main tools/instruments, programmes, finance of SME Policy? Please estimate the amount of funding made available for SMEs through the national Government and other donors (EU, international/bilateral donors). The following section provides a summary of all programmes SME support programmes implemented so far in Kosovo. The Small Business Days is a campaign that aims to raise citizens’ awareness on the role of SMEs; Sustainable economic development of SMEs and promotion of public-private dialogue thus the policies that are to be developed to support businesses. Our goals continue to be harmonization with the goals of the European Commission. Business Start-up Competition, this project aims to encourage and stimulate young people with innovative business ideas to apply for grants and start their own businesses. Promotion of SMEs Development – Main program activities are the following: a. Capacity building of the SME Support Agency of Kosovo (SMESAK); b. Capacity building of SMEs; c. Facilitating Ease of access to finance. Actions to accomplish first activity are the following: a. Strengthening the capacities of SMESAK promotion and supporting the Agency in

improving public-private dialogue skills; b. Need-assessment analyses for training; c. Supporting SMESAK in strengthening capacities of SMEs database and creation of

mechanism for Municipality Competitiveness Indicator; d. Supporting SMESAK in implementation of Client Relations Management System; e. Supporting SMESAK in stimulation for creation and development of Business

Services providers Association of Kosovo and improvement of knowledge of local business consultants.

Actions to accomplish second activity: a. Supporting SMESAK in re-creation and re-organization of Counselling Voucher

Scheme; b. Supporting SMESAK in providing consulting and training services to local and

Diaspora SMEs through CVS. Actions to accomplish third activity: a. Conducting a feasibility study to evaluate the mechanisms providing improved

access to finance for SMEs; b. Supporting SMESAK in creating market-oriented Credit Guarantee Scheme in

support of SMEs sector; c. Supporting MTI/SMESAK in creation of financing strategy for providing funds

from potential fund providers of Guarantee Fund and Credit Guarantee Scheme;

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d. Supporting SMEs on increasing awareness of establishment of Credit Guarantee Scheme.

Grants for SMEs: after a study is conducted the priority sectors that will benefit grants will be set. Business Incubators: aim to offer working space and services to start-up businesses and young potential entrepreneurs. In 2011, NGO Inkubatorët e Biznesit was established (founders: IB in Gjilan, IB in Deçan and IB in Shtimje), aiming to establish the entity for become a member in European Business Incubators Network. Business Park in Drenas, lies in 22-kilometer of Pristina-Peja road, in the village of Koreticë e Epërme. At a diameter of 80 km, it covers every corner of Kosovo at a diameter of 400 km has access to main pan-European road corridors no.4, 5, 8, 9 and 10 as well as to major cities in the region: Thessaloniki, Tirana, Durres, Skopje, Sofia, Belgrade, Zagreb, Sarajevo and Podgorica. Business Park, with infrastructure in place, offers an ideal location for business establishment. It has an area of 24 ha and in future it can be part of an industrial area of over 130 ha. It offers locations for businesses of various sizes and types, mainly for production, processing and service sectors. Each parcel has direct access to main roads of the Park as well as individual access to infrastructure networks. Table 66. Overview of funds allocated by the Government of Kosovo and donors for support to SMEs during 2010 – 2012 (in Euro)

Projects 2010 2011 2012 (allocated) Total

European Week of Kosovar SMEs

9,550 9,550

Start-ups for women 25,000 25,000 Small Business Days Strengthening public-private dialogue and promotion of entrepreneurship

50,000 50,000

Promoting SME Development - Capacity building

of SME Support Agency

- Voucher Scheme of Consulting and Training

- SME access to

150,000 150,000

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finance Grants for SMEs (Co-financing with the EU)

250,000 250,000

Business Incubators - Program for

Management of Business Incubators

- Inventory and repair of BIs

200,000 200,000

Business Park in Drenas (Physical infrastructure)

2,000,000 2,000,000

Small Business Days Strengthening public-private dialogue and promotion of entrepreneurship (donor: EC, Swiss Cooperation Office, SPARK and Raiffeisen Bank)

113,000 113,000

BETA Project Establishment of “One Stop Shop” dhe Business Centres (donor: World Bank)

760 ,794 760 ,794

Projects: KPEP, YEP, NOA and CFF provide technical assistance, grants, loans and training SMEs in Kosovo(donor: USAID)

10,000,000 10,000,000

EUred: support to private sector development (training and consulting) (donor: EU)

2,500,000 2,500,000

Total 16,058,3

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44 Source: Ministry of Trade and Industry Despite programmes for SME development, challenges in their financing remain. The SME Support Agency aims to reduce the number of SMEs for which access to financial resources is an obstacle to their growth and development. In order to achieve this, this agency is working in four directions: a. Formulation of proposals for improving SMEs access to financing, including

alternative means that are viable (both financial and non-financial); b. Design and implementation of innovative SME financing instruments and capacity

building for intermediaries (through the Credit Guarantee Scheme for SMEs); c. Creation of working groups to improve quality and access to professional advice,

support and training on finances, and d. Developing programmes to establish credit for innovative business initiatives. 3.9.3. Agriculture and agro-industrial sector

3.9.3.1.Horizontal issues - Please provide, with an indication of recent and expected future developments, a general description of: - The national and regional farm income policy, production and structural policy (in particular rural development policy) The total area of Kosovo is 1.1 million hectares, of which 53% is agricultural land and 41% is forest land. The agriculture sector is characterised of small farms. According to the 2009 agricultural household survey there are nearly 180,000 active farms in Kosovo. The contribution of the agricultural sector in the Gross Domestic Production (GDP) is nearly 12%, agricultural products comprise nearly 16% of the total exports and the agriculture sector provides nearly 25% of the total employment, mainly in the informal sector. It is considered that 60% of Kosovo population lives in rural areas and the agriculture sector plays an important role in providing employment opportunities and generating incomes for the inhabitants living in these areas. In addition, sustainable agri-rural development is to be achieved even through the promotion of intensive agriculture and diversification of other economic and rural activities. The Ministry of Agriculture, Forestry and Rural Development is in charge of the development and implementation of the national policies on agriculture and rural development aimed at achieving a balanced economic development in all agri-rural areas of the country. In order to achieve this, MAFRD has developed the Agriculture and Rural Development Plan (ARDP) 2007-13, approved by the Government of Kosovo in April 2007, the implementation of which is based on the Law on Agriculture and Rural Development No. 03/L-098. The major objective of the ARDP is to provide a framework that will help Kosovo to: a) restructure its agri-rural sector in line with that of the EU including the obligations that

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Kosovo has in this sector until it becomes a member of the EU and b) improve the standard of living of its rural population in Kosovo by narrowing the urban and rural disparities, by providing increased support to less developed areas and narrowing disparities between them and rural areas in the EU. The general objectives of the ARDP 2007-13 for agriculture and rural development in Kosovo are: a. Additional income for farmers and rural dwellers, leading to improved living

standards and working conditions in rural areas; b. Improved competitiveness and efficiency of primary agricultural production, in

order to reduce imports and increase exports; c. improved processing and marketing of agricultural and forestry produce/sub-

produce; d. Improved on-farm quality and hygiene standards; e. Sustainable rural development and improved quality of life (including

infrastructure) through promotion and other economic activities that are in harmony with the environment;

f. Creation of employment opportunities in rural areas, particularly through rural diversification.

ARDP is based on two pillars: a) the first pillar aims agriculture development, b) the second pillar aims rural development. To achieve increased incomes for farmers allowing necessary structural development and increased production of certain agricultural products, direct support measures were included in the ARDP 2007-13. The measures are mainly based on provisions of the Council Regulation 73/2009 establishing common rules for direct support schemes for farmers and support measures under the first pillar of the CAP (Common Agriculture Policy). The ARDP 2007-13 strategy on rural development is based on the provisions of the Council Regulation on Support for Rural Development 2007-13 (European Agriculture Fund for Rural Development (EFARD) Council Regulation 1698/2005). To implement this strategic approach of resolving domestic bottlenecks and aligning Kosovo’s agricultural policy, direct support measures and rural development measures were adopted according to the four axes of the EU. These include the following: Agriculture/direct support measures: a. sheep and goats (per head); b. Milking cows (per head); c. Cereals and oil plants (per hectare); Rural Development/Projects:

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The implementation of the Agriculture and Rural Development Plan 2007-13 is based on four axes and 8 measures. Axis 1 – Competitiveness: a. Development of vocational training to meet rural needs (Measure 1); b. Restructuring physical potential in the agri-rual sector (Measure 2); c. Managing water resources for agriculture (Measure 3); d. Improving processing and marketing of agricultural products (Measure 4).

Axis 2 – Environment and improved land use: a. Improving natural resource management (Measure 5)

Axis 3 – Rural diversification and quality of rural life: a. Farm diversification and alternative activities in rural areas (Measure 6); b. Improvement of rural infrastructure and maintenance of rural heritage (Measure 7);

Axis 4 – Local Community Development: Support to local community development (Measure 8) - Farm advisory services and farmer's register Advisory services for agriculture and rural development were established and have been operational since 2004. The organisation of the advisory services was supported by Strengthening of Agriculture Support Services Project (SASS) and its successor projects SASS2 and RAS (Rural Advisory Services) funded by the EC and the “Development of Rural Areas by Advancing Advisory Services” project funded by the Government of Republic of Kosovo. Law No. 04/L-074 on Advisory Services for Agriculture and Rural Development, approved on 15 February 2012, regulates the organisation and implementation of the activities of the advisory services for agriculture and rural development and the relations among stakeholders on the development of agriculture and rural development. The advisory service is organised into public and private services (Article 4) in two (2) levels: the central and local level (Article 5). Advisory services for agriculture and rural development in the central level operate under the framework of the Ministry of Agriculture and include experts of the respective field. The main responsibility of the advisory services in the central level is to develop a general advisory system for farmers and agri-businesses and to plan, coordinate and monitor the work of the municipal offices which provide agricultural advice. In addition the officers for advisory services in the central level asses the training needs of the advisors and draft training programs for farmers, which are implemented by the regional and municipal advisors.

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Advisory services in the central level are established in seven (7) regional offices in the country, which through their professional advice mainly transfer knowledge on agriculture production, methods to increase production of different agricultural crops grown in the respective regions as well as provide training, assistance and advice on activities related to agricultural diversity and agri-business development. Regional offices of the advisory service provide assistance in the preparation and distribution of written informative and professional extension material.

The advisory services in the local level are established in 30 municipalities. These services assess the needs of farmers on advice and training and forwards farmers’ requirements to the regional level. In addition advisory services in the municipal level distribute extension material, transfer information to farmers on the periods of application for MAFRD financial support provided through investment grants and direct payments as well as provide assistance to farmers to fill in applications.

Advisory services for agriculture and rural development may be provided by individual advisors, natural and legal persons and include all the activities described in Article 3 of the Law No. 04/L-074 on Advisory Services for Agriculture and Rural Development.

Within the reorganisation of the MAFRD organisational units, advisory services in the central level will be transformed into a department divided into three (3) divisions (Technical Advice Division – 4 officers, Economic, Legal and Social Advice Division – 4 officers and Training, Information and Coordination Division – 4 officers) and composed of 15 experts in total, including the director. Municipal advisory services for agriculture and rural development are foreseen to be composed of 68 advisors who will cover all municipalities with advisory services.

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Chart 3. Organisational Structure of the Department of Advisory Services

This year advisory services are being supported by the World Bank Agriculture and Rural Development Project, which specifically includes advisory services for livestock products, agro-processing and horticulture. Farmers’ register: The establishment of the Kosovo Farmers’ Register started with the reforms of the agriculture policies to align agriculture and rural development policies with EU. In the mid-term the Ministry of Agriculture, Forestry and Rural Development aims at establishing an information management system for the administration and control of direct payment and rural development program in accordance with Kosovo’s specific needs and in compliance with the EU Integrated Administration and Control System (IACS) (as laid down in EC regulation 73/20091). The farmers’ register in Kosovo was established by the Administrative Instruction No. 7/2011 deriving from the Law on Agriculture and Rural Development No. 03/L-098 according to which farmers can register in the farmers’ register on voluntary basis, but are obliged to register prior to applying for MAFRD financial support, respectively direct payments and rural development projects. After each registration farmers receive a unique identification number (UIN) to be used in all other registers related to agriculture and rural development.

Director of the Advisory Services Department

Division of Economic, Social and Legal Advice

Information, Cooperation, Monitoring and Training Division

•Expert in information technology • Expert in training and capacity building •Expert in information, cooperation and networking •Expert in monitoring and evaluation

•Expert in livestock production •Expert in horticulture and winery •Expert in cereal and vegetable production •Expert in plant protection

•Expert in economy, including markets •Expert in rural development, cooperatives and associations

Division of Technical Advisory Services

Municipal advisory information centres for agriculture and rural development in each municipality with 68 advisors

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When the entire registration process is completed, the farms are recorded in the farms’ register and the certificate of the farmers’ registration is processed in the farms’ register with the (UIN) identification number. Up to date 16,560 farmers have been registered in total. - Please provide information on the institution in charge of the management of your agricultural policy (Ministry of Agriculture, regional offices, marketing boards, etc.). Information of the structures of the organisation(s) involved should also be provided To implement its policies efficiently, the Ministry of Agriculture, Forestry and Rural development (MAFRD) has reformed its administration and has established competent administrative structures corresponding to Common Agriculture Policy and the EU accession processes, and complying with the IPARD pre-accession polices.

Chart 4. Organisational Structure of the Ministry of Agriculture Forestry and Rural Development

Kosovo Forestry Agency (KFA): Kosovo Forestry Agency is established based on Law of nr. 2003/3, article 7, is in charge of issues related to the regulation of forests and forestland, administration and management of public forestland as well as forests in National Parks in Kosovo, excluding issues specifically assigned to any other authorities. The main responsibilities of the Kosovo Forestry Agency are: implementation of the forestry legislation; inventory and development of forest resources, issuance of timber and non-timber logging permits, timber transport and collection of non-wood products. In addition it inspects logging, storing and processing locations and the timber mass transport, oversees and follows logging and silviculture to ensure that the agreement requirements are met in accordance to the permits, annual forest management operational plans and standards of labour.

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Department of Rural Policy Development /including Managing Authority (DRDP): DRDP is in charge of the development, implementation, monitoring and evaluation of the annual and long-term rural development programme and it’s amending/supplementing in compliance with the EU CAP Pillar II. DRDP is responsible to align the legislation in the field or rural development including LFAs, to develop the National Agri-Environment Programme and to implement pilot agri-environment schemes. In addition it is responsible to develop detailed rural development support measures such as investment support schemes to increase the competitiveness of agriculture, diversification of agricultural activities and LEADER approach. This department consults and has dialogue with socio-economic partners, NGOs and other stakeholders in the process of ARDP programming, monitoring and evaluation, develops ARDP communication and publicity plans and is responsible for agriculture statistics including FADN and AMIS. Chart 5. Agriculture and rural policy management diagram

Source: MAFRD Department of Agriculture Policy and Markets (DAPM): The main function of this department is to develop agriculture and trade policies for agriculture products and to draft suitable provisions for their implementation through the legal framework and the establishment of the support schemes for farmers and markets. In addition this department is responsible to establish the technical framework for livestock and plant production and the related quality standards. To implement these functions, this department cooperates closely with the research institutes and the university, in particular to integrate technologies and to transfer knowledge on new applied techniques. The development of agriculture education system will also be coordinated by the department in order to achieve the highest education level in the agriculture sector in the future and to enhance the general performance of the sector. Land use and registration is also very important in the activities of the department to establish a support scheme based on evidence (area payments) and a functional land market. Department of Forestry: The scope of activities of the Department of Forestry is the development of the forestry policies related to the main functions of the forest areas in Kosovo, the drafting of adequate provisions to implement forestry policies through the introduction of the respective forest management system and their sustainable

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economic use, including hunting, wild animals protection and biodiversity in the forests of Kosovo. In addition, some of the main functions are to deliver trainings on sustainable and economic forest management and present the GIS system for continuous updating of the forest maps, including orthophotos. Department of Advisory Services: The main function of the Department of Advisory Services is to develop an advisory system for agriculture producers by providing technical, economic, legal and social advice. This department is responsible to plan, coordinate and monitor the work of the municipal offices for agricultural advice and to develop regular analyses on farmers’ training needs and information campaigns. In cooperation with the Rural Development Department and the Paying Department it develops information materials and assists farmers in the process of application for MAFRD support. Paying Department (forerunner of the Paying Agency): The main function of the Paying Department (PD) is the implementation and execution of the support schemes funded by Kosovo Consolidated Budget, EU and other donor organisations drafted by the Managing Authority. This operational structure acts in full compliance with IPARD rules and procedures. An important role in the process of implementation is being played by municipal directorates for agriculture. These directorates receive applications for all measures under implementation, while the regional offices make the necessary field inspections. Chart 6. Organisational Structure of the Paying Department/Agency

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Other departments of MAFRD are Department of Legal Services, Department of Administration Services and Department of European Integration and Policy Coordination. Peja Agriculture Institute: The role of the Agriculture Institute is to provide technical and scientific support to MAFRD technical departments, to control the quality of agriculture inputs and food, to protect the living environment and to research varieties of agricultural crops (wheat, barley, maize and potato) as per the agro-ecological conditions. In addition it is responsible for research work in the creation of wheat cultivars and maize hybrids, preparatory work for the establishment of the gene bank for different crops, assessment of productive qualities and land productivity (bonitet) in Kosovo as well as research, identification and inventory of the biological damaging agents (pests, pathogens, weeds etc.) - Please provide general information on the trade policy and mechanism applied in Kosovo regarding agricultural products including bi-lateral and multi-lateral agreements, import/export schemes, tariff quotas, systems of licenses, safeguard clauses etc, as well as operational structure in place; please also specify whether the EU Combined Nomenclature is applied Trade policies on agriculture: Kosovo has liberalised agriculture products circulation markets since the first year that CEFTA came into effect (2007), and has eliminated the 10% tariff rate and quantity quotas for all agricultural products of the CEFTA member states. In addition, a working group on trade policies has been established within the Ministry of Trade, which mainly addresses agri-business problems and anti-balancing and anti-damping protection measures with the participation of the business community. Mechanisms established in the field of trade policies are: a. Subcommittee on Agriculture and Phytosanitary (CEFTA). The Sub-Committee for

CEFTA was established by the decision of the office of MAFRD General Secretary (dated 05.04.2011, Ref. ZSP-157/11 No.63). The sub-committee deals with agricultural issues on sanitary and phytosanitary measures. It operates under MAFRD and involves all relevant institutions;

b. Committee on evaluation of import measures/inter-ministerial committee. The Committee for Evaluation of Import Measures was established according to the Law No.03/L-097 on Anti-dumping and Countervailing Measures (Article 16 on Investigation Authorities). The Committee operates under the Ministry for Trade and Industry, while the MAFRD participates with one member;

c. Sub-working group on trade policies in agriculture. Sub-working Group on Trade Policies in Agriculture was established in 2010 with the Government Decision 3/127, as key consultative mechanism for involvement of the interest groups from the private sector in development and formulation of trade policies. The sub-working

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group operates under the Ministry for Trade and Industry, whereas MAFRD co-chairs the group with one representative from agro-business community.

Trade agreements: Kosovo has initially established bilateral trade agreements with countries in the region, but in 2006 these bilateral agreements were substituted by a multilateral agreement – CEFTA. Since 13 December 2011, Kosovo has benefited from the agreement No. 1336/2011 on EU autonomous trade preferential measures. Import–export schemes: There is no specific import-export scheme for agricultural products, but data standardisation on trade exchange between Kosovo and other countries is being developed since 2009 by the Ministry of Agriculture, using the standard EU statistical data system. Tariff quotas and custom tariffs: Law No. 03/L-114 on Value Added Tax regulates the value added tax payable at 16% of the taxable value of imports, other taxable inflows and supplies excluding zero-rated supplies. Article 10 of this Law (Chapter IV) describes the zero-rated supplies for: exports, supply of goods and services related to the international transport of goods and passengers; irrigation of agriculture land as well as imports and supply of other agriculture goods (livestock, horticulture, cereals, agriculture machinery and mechanisation etc.) As far as the 10% custom tariff is concerned, the Customs and Excise Code of Kosovo No. 03/L-109 releases agriculture, livestock, apiary, horticulture and forestry products from custom duties. The majority of agriculture inputs and equipment is released from the custom tariffs and VAT (Regulations no. 2004/13, no. 2004/35, 2006/4, 2007/12 and no. 2007/31, for more details see Annex 5. Law No. 03/L-112 on Excise Tax Rate in Kosovo (Article 1) regulates excise tax rates for agricultural products, for more details see Annex 5. Licensing system: The exercising of agricultural activities requires licensing, is a process regulated by Law on Livestock No. 204/33, Law on Planting Material No.2 004/13, Law on Seeds No. 2003/5, Law on Plant Protection Products no. 03/L-042 and Law on Forests of Kosovo No. 03/2003. MAFRD has established the legal and administrative mechanisms to licence enterprises for agriculture inputs trading (sales, export, and import) and forestry activities. The term of licensing in most of the cases is one year with possibility of extension and the licensing procedures and criteria for each of the activities have been defined in administrative instructions.

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Protection clauses: Kosovo is part of CEFTA agreement and enforces rules of free trade by practicing liberal trade policies without quantity quotas and protection measures. Our country is not yet part of the WTO and CAP, however all measures taken and mechanisms established are based on their requirements. EU Combined Nomenclature: Kosovo Customs and Excise Code No. 03/L-109 describes the measures set forth in applicable legislation to be applied for imports and exports in accordance with the tariff classification under the TARIK goods (Integrated Tariff of Kosovo 2012) which consists of the legally binding Goods Nomenclature based on the Harmonized System of the World Customs Organization (W.C.O.) and on the Combined Nomenclature of the European Communities (Article 5 of the Code). - Please provide a description, including financial details, of measures (state aid) or any other policies specifically applied in the sector of primary agricultural production, processing and marketing of agricultural products, as well as in the forestry sector (but not covered elsewhere in replying to this questionnaire). This should include direct and indirect input subsidies; social policy measures primarily directed to the agriculture sector; tax policy measures primarily directed to the agriculture sector; policies directed to privatisation of land and other factors of production (including the agro-food processing sector); measures which are aimed at developing a land market; credit subsidies; risk management tools and others Financial details of the measures: The support of the Government of Kosovo for the sector of agriculture and rural development is based on the ARDP 2007-13 and includes direct support measures, which strongly correspond to Pillar I measures under CAP. The inclusion of this part was necessary in order to make the ARDP 2007-13 a comprehensive and complete policy framework mirroring support measures from Pillar I and II of the CAP. Regarding the financial details, of measures (state aid) and other policies applied in the sector of primary agricultural production, processing and marketing of agricultural products, as well as in the forestry sector please refer to see Annex 5, table on National agriculture and rural development programme 2010-2012. Social measures: MAFRD does not provide any legislative basis for social measures. However, its general criteria include affirmative measures for certain social categories, with special priority given to young people, women and residents of remote rural areas. - Policies directed to privatisation of land and other factors of production (including the agri-food processing sector) Privatisation of agricultural land is under the authority of the Privatization Agency of Kosovo (PAK), an independent public body which carries its functions autonomously. Pursuant to Law No. 04/L-034 on the Privatisation Agency of Kosovo, PAK has all the competences to carry out the tasks related to the process of privatization and has the authority to sell, transfer and/or liquidate enterprises and assets of socially owned enterprises, which include agriculture land.

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The total agriculture land area for privatisation is 46,145 ha, of which 28,842 ha have been privatized and nearly 17,303 ha of agricultural land are in the process of privatisation. Privatisation of Socially Owned Enterprises and agriculture land is carried out using two main methods: spin off and sale of assets of the enterprises in liquidation. In the past, special spin-off and conditional spin-off methods were used (2,508 ha were privatized by special spin-off and 25,334 ha of agriculture land were privatized by ordinary spin-off). To avoid any possibility of privatisation of agricultural land for construction purposes, all potential bidders are notified during the tendering process that the use of agriculture land shall be in compliance with the Law on Agriculture Land No. 02/L-26 and the Law on Spatial Planning No. 2003/14. The Privatization Agency of Kosovo exercises its activity in compliance with Article 159 of the Constitution of the Republic of Kosovo and the processes and procedures used during the privatisation of agriculture land reflect the best international practices, because they were drafted in cooperation with international experts and consultants. Measures aimed at developing a land market: To facilitate the agriculture land market, MAFRD pursuant to the Law on Agriculture Land 02/L-26, issued a Standard Lease Template for agriculture land, which was forwarded to all the municipalities of Kosovo in 2009. This template is being used by all farmers leasing agriculture land. In addition the Fundamental Land Valuation Maps have been drafted for 7 municipalities of Kosovo (Suhareka, Kacanik, Gracanica, Istog, Peja, Vitia and Prishtia). The majority of municipalities have Municipal Development Plans (MDPs) in place, but due to the fact that these plans are mainly focusing on urban areas, not the rural ones, the methodology on rural spatial planning and construction zoning based on GIS is being drafted within the reform for the development of the land market and based on the Law on Spatial Planning No. 2003/14, in order to have a better reflection of the agriculture land and construction land zoning (the database has been established, which will help in the development of the land market). In compliance with the Law on Land Regulation No. 04/L-40 another measure taken to develop the land market is the implementation of the past years incomplete land consolidation projects in five municipalities (1,350 ha have been regulated in Gjakova municipality, 1,318 ha in Rahovec municipality, 930 ha in Prizren municipality, 3,339 ha in Vushtrri municipality and 453 ha in Obiliq municipality). In locations where land consolidation is completed, farmers have registered their property in the Immovable Property Rights Registry (IPRR), which is another very important facilitating measure for the development of the land market.

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Credit subsidies: MAFRD does not have Guaranty Fund for supporting of farmers with loans which are given by Commercial Banks. Risk management tools: The management of the risk from different veterinary and photosanitary diseases is regulated by the Law on Food No. 03/L-016 and is based on scientific evidence and legal provisions. In addition this Law sets forth the emergency measures in cases when food presents hazards to the health of humans, animals or the environment. Food quality, including animal feed, animal health and animal welfare as well as the quality and safety of plant and animal origin food are regulated by the Law on Food (Article 37). The quality of food products and the compliance with the established standards to ensure a food chain of sustainable quality is regulated by the Law on Agriculture and Rural Development No. 03/L-098 (Article 4) The protection and rescue from natural and other disasters are regulated by the Law No. 02/L-68. This Law defines the central and municipal Government competences for protection against disasters and management of damages incurred, not only for natural disasters but also the appearance of veterinary and phytosanitary diseases. Pursuant to the MAFRD General Secretary Decision No. 401, the Ministry established the committee for assessment of damages caused by flood, hail and natural disasters in agriculture, which makes the assessment of cases. Despite the fact that a special damage compensation fund is missing, last year the Ministry through its Decision No. 572 started compensating farmers for damages incurred from natural disasters by 20-50%. - Please describe the current land cadastre system and mechanism, and if existing, any system used for the identification of agricultural parcels. Law on Cadastre No. 04/-L-013 determines the rules for the administration of cadastre, which is the official register of parcels, buildings and parts of buildings in Kosovo (article 1). The land parcel is an undivided land property formed by boundaries and boundary points, located within one cadastral zone and recorded in the Cadastre as a land parcel with a unique number (article 7). Authorizations and responsibilities: The Kosovo Cadastral Agency (KCA) is responsible for the cadastre and has the authority to constitute and maintain the overall official evidences on immovable properties pursuant to the recorded dates of census and land cadastres and has the authority to make the overall supervision of cadastral activity as well as issuing of the other sub normative acts regarding to cadastral activity. The Municipal Cadastral Offices (MCOs) and licensed geodesists perform their activities under the authority of Agency, the Administrative Instructions and the other by-Laws issued by the Ministry of Public Administration Service. They are responsible for the cadastral procedures and measurements.

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There is a unified Immovable Property Rights Registry (IPRR) in Kosovo where all cadastral property units (land parcels, buildings and parts of buildings in some towns) and titles are recorded. The entire land surface of the Republic of Kosovo is recorded in the registry. It also contains the mortgages and other property servitudes. The central database of this registry is administered by the Kosovo Cadastral Agency operating under the Ministry of Environment and Spatial Planning. The maintenance of the registry is carried out by the Municipal Cadastral Offices (MCOs) in accordance with the procedures set forth by the Law on Cadastre No. 2003/25 and the Law on the Establishment of the Immovable Property Rights Registry No. 2002/05. The Cadastral Agency licenses the surveying companies and geodesists to carry out cadastral measurements. To be licensed these companies should be registered in the Registry of Business Organisations in accordance with the Law on Business Organisations No. 02/L-123. Municipal Cadastral Offices are municipal bodies and each property, including land parcels are identified by unique numbers. There is no separate registry for agricultural land, but these are registered as cadastral land parcels of agriculture use. The statistics of the registry indicate that 53% of the territory of the Republic of Kosovo is registered as agriculture land. Land classes are also recorded. In addition Kosovo Cadastral Agency possesses orthophotos from the 2004 and 2009 aerial recordings of the entire territory of the country, where the state of agriculture cadastral land parcels can be observed. System used for the identification of agricultural parcels: There are two systems for the identification of agriculture land parcels in the Ministry: Land Parcel Identification System (LPIS) and Cadastre System for Management of Vineyards and Wine Industry. Land Parcel Identification System (LPIS): The Land Parcel Identification System (LPIS) is one of the elements of the Integrated Administration and Control System (IACS), which is a key tool to control agriculture subsidies provided by the EU Common Agriculture Policy (CAP). The LPIS software and system is finalised, tested and fully operational. The web-based application is installed in a server located in the Ministry of Agriculture and supports 400 users simultaneously. LPIS can be used for wheat, maize and other agriculture crops applications by 100 users simultaneously. In addition LPIS contains ortho-images for the entire territory of Kosovo, additional layers such as open roads maps and topographic maps and all digitised parcels are saved in a separate layer for each year. Cadastre System for Management of Kosovo Vineyards and Wine Industry: MAFRD has established the cadastre system for management of vineyards and wine industry to identify parcels, farmers and other detailed data. The system integrates all data in a unique database in ORACLE and allows the presentation of textual and graphic data accompanied by forms, reports and other

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statistics. Its final KaveKO v1.2 application enables easy and efficient management of vineyard cadastre in Kosovo. It is also multifunctional in providing support to farmers. - Please provide information on the existence of any type of cross-compliance systems (e.g. reduction in agricultural support paid to farmers if environmental, animal welfare, public, animal or plant health standards are not complied with). Currently Kosovo has no cross-compliance system, however all criteria on environmental welfare, animal welfare and plant health are being respected. These criteria are established for all measures undertaken by the Ministry of Agriculture to support farmers financially. All beneficiaries of the measures have to meet these criteria for their projects to be selected for financing. - Please provide information on the existence of microeconomic instruments providing an overview of farm economics, in particular on the income of agricultural holdings, sectoral analysis and distribution of direct payments (comparable to the EU Farm Accountancy Data Network). The institution in charge for the collection, processing, analysing and publication of the FADN data in Kosovo is the MAFRD, respectively the Office of Statistics operating under the Ministry Administrative Instruction No. 06/2011 which determines the criteria for the farms to be included in the system of farm accountancy, for the establishment of the data collection network and agriculture household accountancy and for the identification of the annual incomes. In 2005 the collection of FADN data started in pilot basis. The sample of 159 farms in 2005 increased to 300 farms in 2008 (it is planned to increase to 350 farms in the coming years) and a database was developed in 2009/10 for these farms using MS Excel as the key platform for data entry. Farms included in FADN have long-term cooperation with the advisors and a predetermined economic size. Farms under the value of 1 European Size Unit (ESU) are not included. FADN has been operational for four years and allows for the calculation of Gross Margins for different kinds of plants and animals. Farm summary reports present data from the base level divided by time of production, type of expenditure, land and building value, asset depreciation, working capital and debt, etc. In addition it includes data on general indicators such as members of associations, education, and farmer’s age. The information system allows the provision of grouped base data harmonised as per different criteria, for instance kind of production (animals/plants), type of income and expenditure from the final processing of agricultural products (animals/plants, etc. FADN data have been gathered from private farms which are not obliged to have book-keeping in place. Agricultural enterprises and cooperatives are obliged to have book-keeping in place. Such FADN data are confidential and are used only for statistical research purposes and development of agriculture policies. Individual farms data are not published. A basic FADN element is the calculation of Standard Gross Margins and it is an

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obligation of Ministry of Agriculture to update these calculations annually. Through gross margins direct revenues and expenditure for each plant or animal are calculated expressed in hectares or heads. The value of products is expressed in kilograms, hectolitres (100 litres for wines), litres or pieces/quantity for eggs and financial values are expressed in Euros (€). 3.9.3.2. Quality Policy - Please indicate whether a clear domestic policy, with related instruments, exists for recognition and protection of geographical indications and traditional names for agricultural products and foodstuffs. If yes, please describe the instruments for registration and protection. Please detail any other quality schemes in existence with regard to product origin or other quality characteristics. Within the Legislative Strategy of the Government, the Draft Law on Geographical Indications is being drafted. It includes rules and criteria for production of distinguishable characteristic products from the country of origin (the plan is to finalize this Law on 20 August 2012). The trade mark is protected by the Law on Trade Marks No. L-026/2011. This Law determines requirements and procedures for the registration of trade mark (article 1). A trade mark right shall be acquired through registration of trade mark in the trade mark register, maintained by Industrial Property Office (article 4). The protected geographical origin of wines is designated by the Law on Wines No. 02/L-8 (Article 3) and Law No. 04/L-019 Amending and Supplementing the Law on Wines No. 02/L-8 (Article 3). Law No. 02/L-8 protects wines produced in a specific geographical region. This Law determines the conditions to be met by products of designated geographical origin and authorises MAFRD to issue by-Laws setting the conditions to be met for the designation of protected geographical origin wines and the designation of localities with protected geographical indications. MAFRD issued the Administrative Instruction No. 03/2009 on Stipulation of the Vineyard Territory in Kosovo, which determines the vineyard territory in the Republic of Kosovo devided into regions, sub-regions, vineyard areas and vineyard localities. The system integrates all data in a unique database in ORACLE and allows the presentation of textual and graphic data accompanied by forms, reports and other statistics. 3.9.3.3. Agricultural statistics - Please provide a brief description of the organisational structure for statistical collection and monitoring underlining the co-operation between the Ministry of Agriculture and central/local statistical offices concerning agricultural statistics. The Law on Official Statistics of the Republic of Kosovo No. 04/L-036 defines the position, work and coordination of the system of organisation of official statistics, including agriculture statistics. The Kosovo Agency of Statistics (KAS) is a professional independent bearer and disseminator institution and coordinator of official statistics of

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Kosovo. This Law establishes a Statistical Council composed of the chairperson and twelve members, one of which is the Ministry of Agriculture. Methods, classification and standards used by these bodies are determined by KAS in accordance with the Program of Official Statistics and Annual Plan. KAS is entitled to draw the data necessary for the production of Official Statistics from all types of sources such as the responses from statistical units called upon and from administrative records or by means of estimations on the basis of information already available in KAS (Article 19). In addition KAS collects, processes and analyses statistical data. Agriculture statistics for the needs of the MAFRD are collected by its Division of Agriculture Statistics. The role of the Division of Agriculture Statistics in the Ministry of Agriculture is to provide quick, reliable and comparable statistics in accordance with EU recommendations. This division drafts the necessary templates and instructions, organises FADN survey training sessions for enumerators, collects data, controls them logically, processes, analyses, compiles spreadsheets and publishes data. This division aims at applying accurately the international standards, methodology and Eurostat Nomenclature. Currently it is composed of sour sections: FADN section, trade exchange (import/export) data, agriculture price statistics and GIS section. The division cooperates closely with Kosovo Agency of Statistics in particular in receiving agriculture statistic data deriving from KAS statistical surveys for: a. Further processing in form and content by the Ministry of Agriculture of the SAK

agriculture products prices, to be disseminated for general use; b. The database of individual information of agriculture products (codes 01/24) in the

8 digit level for export and import for further processing by the Ministry of Agriculture, etc.

On the other hand, the Ministry provides KAS with FADN data. The Market Information System provides monthly data on the prices of agriculture products for 400 items (agriculture products in the MAFRD service contract). This division has mutual cooperation with the Ministry of Environment and Spatial Planning in providing and receiving specific data on land use analysis and harmonisation. The agricultural sector should be described (in a table) by the following statistical information (as far as it is available), each time for the past 5 years (including the most recent year available):

a) Agricultural population and its evolution, preferably based on the Labour Force Survey: share of total active population; regional distribution; full-time and part time farmers; distribution by age and sex;

With regard to sub question (a) please refer to Annex 5: Table 1. Agriculture population grouped by age 2005, 2006, 2007, 2008, and 2009; Table 2. Structure of Agriculture Population grouped by age according to regions 2005, 2006, 2007, 2007, 2008; Table 3.

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Involvement of households’ members in farms 2005, 2006, 2007, 2008, 2009. Involvement of households’ members in farms: full time, part time, or occasional. People that work at least 20 hrs/week in agriculture are classified as part time employees in agriculture. Those that work around 56 hrs/week are classified as full time employees, whereas people that work less than 20 hrs/week are classified as occasional employees. Table 67. Percentage of employment and unemployment in the agriculture sector by gender in 2005, 2006, 2007, 2008 and 2009.

2005 2006 2007 2008 2009 Unit

Male

Female

Total

Male

Female

Total

Male

Female

Total

Male

Female

Total

Male

Female

Total

Employment in the agriculture sector % 18 21 19 22 20 21 13 19 15 9 3 8 7 3 6 Unemployment in the agriculture sector % 3.2 0 2.4 2.6 2.3 2.3 5 0 4 5 2 5 6 3 6

b) Contribution of the agricultural sector to Gross National Product (GNP) by region; Regarding GNP, the data are not available. c) Wine (surface of the vineyards and annual production including alcohol and grape must);

Surface of vineyards by region: Table 68. Surface of vineyards area Vineyard area 2008 2009 New

plantations 2010

2010 Percentage

Rahovec 1,967.00 2,140 140 2,280.00 71.20% Suhareka 946 606 58 664 20.70% Prizren 320 151 2 153 4.80% Malisheva 88.5 52 0 51.5 1.60% Gjakova 55 37 1.3 38.7 1.20% Peja 33 7 1.5 8.5 0.30% Istog 16 5 0 5 0.20%

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Total 3,425.50 2,998 202.8 3,200.70 100% Table 69. Surface of vineyards in Kosovo

Crop

2007 2008 2009 2010 201 area (ha)

Prod. (t)

yield (t/ha)

area (ha)

Prod. (t)

yield (t/ha)

area (ha)

Prod. (t)

yield (t/ha)

area (ha)

Prod. (t)

yield (t/ha)

are (ha

Vine grape 2377 22581 9.5 2417 22961 9.5 2420 20570 8.5 2504 22536 9 251 Table Grape 630 6300 10 625 6250 10 637 3303 9 636 6042 9.5 648

Source: Vineyard cadastre

d) Agricultural budget in general and broken down according to measures (support of markets, direct payments, social security, rural development) and total agricultural support;

Table 70 . Budget for the agriculture sector Year Total Government

budget in € Budget for MAFRD Share in

%

2007 718,306.882.00 6,366,283.00 0.88 2008 1,122,020,317.00 9,474,591.00 0.84 2009 1,248,276,215.00 9,054,613.00 0.72 2010 1,234,625,017.00 11,087,255.00 0.89 2011 1,414,927,737.00 13,725,746.00 0.97 2012 1,508,912,003 21,409,230.00 1.41

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Table 71. Budget of the Ministry of Agriculture, Forestry and Rural Development Budget

2009 in € in % Budget

2010 € in % Budget

2011 in € in % Budget

2012 in € (draft)

in %

Direct payments11 √ √ √ √ coupled12 3,392,062.0 22.5 2,798,185.

5 18.21 5,200,000 37.8

8 7,800,000 36.4

de-coupled13 - - - - - Market measures14 - - - - - Rural Development15

4,175,531.0 27.7 4,976,643,1

32.40 5,500,000 40.8 10,069,295 47.03

of which capital investments

Fruit, Vegetable (green houses), Vineyard, Septic tanks, Investments in Tertiary irrigation system, Support to LAG, advisory service, land consolidation

Fruit, Vegetable (green houses), Vineyard, Milk producing agricultural holdings, Investments in Tertiary irrigation system Support to LAG, advisory service, land consolidation

Fruit, Vegetable (green houses), Vineyard, Milk producing agricultural holdings, Investments in Tertiary irrigation system Support to LAG, advisory service, land consolidation

Fruit, Vegetable (green houses), Vineyard, Milk producing agricultural holdings, Collecting centres Investments in Tertiary irrigation system Support to LAG, advisory service, land consolidation

Forestry policy 650,670.00 4.32 374,628.00 2.44 700,000 5.09 700,00 0.32 of which capital Reforestati Reforestat Reforestati Reforestati

11 Direct payments to farmers 12 If available 13 If available 14 Including price support measures, public intervention, management of public/private storage, export refunds 15 Including water management

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investments on, Thinning

ion, Thinning

on, Thinning

on, Thinning

Vet & Phyto Services

2,537,450.0

16.8 2,725,323.0

17.75

of which capital investments

- - - -- - - - -

Administration 16 4,299,625.0 28.5 4,485,829.00

29.20 2,325,746,00

16.8 3,939,935 18.4

Total budget17 15,055,338.0

100.00

15,360,608.00

100.00

13,725,746.0

100.0

21,409,230.0

100.00

e) Trade flows (volume and value) by product category, indicating the amount

of preferential trade, and divided between imports and exports: a. From the EU, see attached Annex 5, Table 1. Export to EU 27

Countries; Table 2. Export to 27 Countries and Table 3. Import to 27 EU Countires.

b. From Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia, Albania, Montenegro, Serbia and Turkey, see Attached Annex 5, from Table 1 Export to Albania; Table 2. Export to Bosnia and Herzegovina; Table 3. Export to Croatia; Table 4. Export to Macedonia; Table 5. Export to Montenegro; Table 6. Export to Serbia; Table 7. Import from Albania; Table 8. Import from Bosnia and Herzegovina; Table 9. Import from Croatia; Table 10. Import from Macedonia; Table 11. Import from Montenegro; Table 12. Import from Serbia

c. From the rest of the world, specifying the three most important partners, see attached Annex 5. Table 1. Import-Export from Turkey 2007, 2008, 2009, 2010, 2011 and 2012; Table 2. Import from Brazil 2007, 2008, 2009, 2010, 2011; Table 3. Import – Export from USA 2007, 2008, 2009, 2010, 2011, 2012;

1.9.3.4. Food Safety, Veterinary and Phytosanitary Policies - Please provide flowcharts/organisation charts outlining levels of competencies and showing management lines to describe the structure and organisation of the services in charge of food safety veterinary and phytosanitary policy. The division of competencies and the links between central, regional and local level should appear clearly (degree of decentralisation/ devolution of competence should be defined). The Law on Veterinary no. 21/2004, the Law on Food no. 03/L-016, and the Law on Animal Welfare no. 02/L-10 sets the Food and Veterinary Agency as a competent authority for preservation of public health, animal health and welfare, and food safety.

16 Total cost for running the ministry (central and decentralised services): administration, including salaries, capital investments, rent, and internal services. 17 Total budget of the MAFRD

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The Agency operates under the Office of the Prime Minister (OPM) and performs its function under the applicable legislation, Laws and regulations. Its structure, functions and responsibilities are defined by the Regulation No. 03/2010 on organization of the Agency and the Regulation 01/2011 for the internal organization and systematization of jobs. These regulations also describe the duties and responsibilities of Agency’s organizational units. The Current Organization of the Agency: The Agency is led by the Chief Executive. Other bodies are the Management Board of the Agency and the Scientific Council. In addition to the Office of the Chief Executive, the Agency consists of five (5) organizational units in the level of directorate and six (6) regional offices. Directorates of the Agency are: a. Public Health Directorate b. Directorate for Animal Health and Welfare, c. Inspection Directorate, d. Laboratory, e. Administration Directorate. Table 72. Organization Structure of the Office of the Prime Minister

The Law on State Administration of the Republic of Kosovo no. 03/L-189, Article 5 sets the competences, duties and responsibilities of the Chief Executive.

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Chief Executive is the head of the Agency. He is responsible for exercising the Agency's activities and performing other duties under his competences, as set by the Law on State Administration of the Republic of Kosovo with no.03/L-189, Article 5. Table 73. Organization Structure of the Food and Veterinary Agency

Deputy Chief Executive

Chief Executive

Central Archives Sector

IT Sector

Media Communication

Officer

Internal Audit

Procurement Sector

Certification Officer

Hunam Resources

Sector

Administrative Assistant

Chief Executive Office

Human Reources Manager t

Peronel Officer

Chief of Sector

Procurement Officert

Chief of Sector

Archive Officer

Chief of Sector

IT Officer

System Administrator

Executive Assistant

Management Board and Scientific Council: a. Management Board consists of seven members and according to the Law on Food

03/L-016 is represented by MAFRD (2 members), MH (2 members), Association for Consumer Protection (1 member), Kosovo Chamber of Commerce (1 member), and for the position of Board member is also the Chief Executive;

b. Scientific Council consists of five members and according to the Law on Food 03/L-016 is represented by the Faculty of Agriculture and Veterinary (2 members), Faculty of Geosciences and Technology - Food Technology Department (1 member) NIPH (1 member), and the Kosovo Institute for Agriculture (1 member).

Responsibilities of the Management Board are determined by Regulation no. 04/2010, while the responsibilities of the Scientific Council are determined by Regulation no. 05/2010. Public Health Directorate is responsible for: a. Hygiene of food with animal origin, including processing, storage, distribution and

trade; b. Certification of products for domestic and international trade; c. Control of residues in raw materials and products with animal origin; d. Control of animals before, during and after their slaughter;

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e. Licensing of slaughterhouses, meat processing factories and other entities that deal with production, storage, distribution and trade of food products with animal origin.

This directorate consists of the following sectors: a. Sector of Hygiene of Food with Animal Origin; b. Sector of Hygiene of Food with Non-animal Origin; c. Sector of Animal By-products; d. Sector of Food Residues. Table 74. Organization Structure of Public Health Directorate

Public Health Directorate

Director

Sector for animal by products

Sector of Hygiene of Food with non Animal Origin

Sector of Food Hygiene with animal Origin

Sector of Residues in Food

Chief of Sector

Officer for Hygiene of Meat and Fish

Office for Hygiene of Milk , Honey and Eggs

Officer for Certification of Products

Chief of Sector

Officer for food products with non animal origin

Officer for non food products

Chief of Sector

Higher officer for monitoring of disposal of animal by

products

Officer for monitoring of collection of animal by

products

Chief of Sector

Officer for Veterinary Residues

Officer for processing the data of residues in animals

Directorate for Animal Health and Welfare is responsible for: a. Animal health and welfare; b. Control, prevention and eradication of animal diseases; c. Animal identification and registration; d. Animal food control; e. Monitoring of the epizootic situation in the country and abroad; f. Control of residues with animal origin (ABP); g. Licensing-authorization of veterinary medicinal products, biocides and their control

in the market; h. Licensing of private veterinary practices; i. Permission for import and export of live animals;

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j. Disinfection of locations where animal diseases can be transmitted from; k. Drafting of contingency plans and crisis management. This directorate consists of the following sectors: a. Animal Health Sector, b. Animal Identification and Registration Sector, c. Animal Welfare Sector, d. Sector of Veterinary Medicinal Products; Table 75. Organization Structure of the Directorate of Animal Health and Animal Welfare

Directorate of AnimaL Health and Animal Wefare

Director

Animal Wefare Sector

Sector for I&R of Animals

Animal Health Sector

Sector for Veterinary Medicinal Products

Chief of Sector

Officer for Animal Health

Officer for Epidemiology

Animal Health data entry officer

Chief of Sector

Officer for I&R of animals

I&R Data Entry Officer

Chief of Sector

Officer for monitoring of Animal Wefare

Chief of Sector

Officer for Marketing Authorization of VMP’S

Officer for registration of distribution of VMP’s

Officer for Feed

Officer for implementaion of contigency plans , crises

management and biosafety

Inspection Directorate is responsible for: a. Overall inspection of animal health, animal welfare, animal identification and

registration, food with animal and plant origin and animal feed; b. Veterinary and phytosanitary border inspection, and veterinary and phytosanitary

internal inspection; c. Sanitary Inspection within the territory of the Republic of Kosovo, including food

hygiene with non-animal origin, processing, trade and storage, water and juices, supplements and food additives; specific and new products, alarm system, food information and research(RASFF);

d. Inspection of veterinary medicinal products; e. Inspection of private veterinary practices; f. Inspection of farms, stockyard markets, warehouses and points of purchase of

products with animal origin, plant and other;

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g. Import, export and transit control. This directorate consists of the following sectors: a. Veterinary Inspection Sector; b. Sanitary Inspection Sector; c. Phytosanitary Inspection Sector; d. Border Veterinary Inspection Sector; e. Border Phytosanitary Inspection Sector. Table 76. Organization Structure of Inspection Directorate

Agency’s Inspectorate

Director

Phytosanitary Inspection Sector

Sanitary Inspection Sector

Veterinary Inspection Sector

Border Phytosanitary Onspection

Chief of Sector

Veterinary Inspectors

Chief of Sector

Sanitary Inspectors

Chief of Sector

Chief of Sector

Border Veterinary Inspectors

Chief of Sector

Border Phytosanitary Inspectors

Officer for collection and transportation of samples

Border Veterinary Inspection Sector

Administrative Assistant

Phytosanitary Inspectors

Food and Veterinary Laboratory is responsible for: a. Performing laboratory analysis of food; b. Performing laboratory analysis for feed; c. Performing laboratory analysis on residues of food products with animal origin and

live animals; d. Performing laboratory analysis of milk and its products; e. Performing laboratory analysis to verify the statement compatibility of food

products; f. Perform laboratory analysis for animal diseases; g. Perform laboratory analysis of samples taken from subjects which deal with food; h. Communicating the results of performed analysis; i. Provision of recommendations for further action after laboratory analysis; j. Cooperation of relevant local and non-local authorities and institutions with

accredited laboratories; k. Planning and organization of validity of laboratory methods; l. Creation of preconditions for the accreditation of the laboratory.

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Following sectors operate under the Food and Veterinary Laboratory a. Pathology Sector; b. Bacteriology Sector; c. Serology, Virology and Molecular Diagnostics Sector; d. Food Microbiology and Preparatory Sector; e. Food Chemistry and Veterinary Residues Sector; f. Raw Milk Sector. Table 77. Organization Structure of Food and Veterinary Laboratory

Laboratory

Director

Sector for Serology and Molecular Diagnostics

Sector for Bacteriology , Parasitology and Micology

Sector for Pato Histology

Sector for food chemistry , residues and raw milk

Chief of Sector

Laboratory Expert

Chief of Sector

Laboratory Expert

Chief of Sector

Chief of Sector

Laboratory Expert

Chief of Sector

Laboratory Expert

Sector for Food Microbiology and Prepatory

Administrative Assistant

Laboratory Expert

Officer for receiving the samples

Quality Manager

Laboratry Technician

Laboratry Technician

Laboratry Technician

Laboratry Technician

Laboratry Technician

Laboratry Technician

Administration Directorate is responsible for: a. Overall Organization of the Agency; b. Preparation of legislation on the competences of the Agency, under the procedures

established by Law; c. All issues dealing with budget and finance, such as budget planning, tracking

budgetary expenditures and other issues related to budget and finance; d. All issues related to property registration, logistics and service delivery for Agency's

organizational units.

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This Directorate consists of the following sectors: a. Administration Sector, b. Budget and Finance Sector. c. Legal Office. Table 78. Organization Structure of Administration Directorate

Directorate of Administration

Director

Sector for Budget and Finance

Sector of Adninistration

Legal Office

Chief of Sector

Property Management Officer

Chief of Sector

Chief of Sector

Higher Legal Officer

Budget Analist

Officer for Logistics

Financial Officer , receiving the goods and cashier

Legal Officer

Translator for English language

Translator for Serbian language

Higher officer for revenues and Obligation

Budget Coordinator for Capital Projects

Regional Offices of the Agency: The Agency consists of six regional offices. They are organizational units of the Food and Veterinary Agency that directly report to Chief Executive and are organized in such a way as to cover the entire territory of Kosovo. Responsibilities of the regional offices are: a. Perform official controls - inspections throughout the territory where the

administrative part is covered by the respective offices; b. Perform official controls; c. inspections in relevant areas as set by the legislation in force in the field of

veterinary, animal health and welfare, food safety, phytosanitary and sanitary field; d. Supervision of implementation of legislation in the field of veterinary, sanitary and

phytosanitary field; e. Cooperation between regional offices; f. Cooperation with institutions and authorities and other organizational units of the

Agency to implement working plans of the regional offices; g. If necessary, to carry out official controls-inspections also in the territory where the

administrative part is covered by another regional office;

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h. Other responsibilities for official controls – inspections which have been determined and those that will be defined by the legislation.

Tabela 79. Organization Structure of Regional Offices

Regional Office

Office Coordinator

Responsible Inspector

Inspectors

- Please indicate resources and planned resources (human, material and financial) allocated to each sector Human Resources The agency currently employs 124 officers. Table 80. Number of employees in Agency TITLE NUMBER QUALIFICATION 1 Chief Executive 1 Veterinary 2 Deputy Chief 1 Agronomist 3 Director 5 3-Veterinary,1-Lawyer, 1- Mercolog

4 Chief of Sector 11 6-Veterinary,2-Agronomist,2-Economist,1- Lawyer

5 Officer 2 5

1-Veterinary,5-Economist,2-Lawyers,1-Linguist,1-Biologist,1-IT,2- with Political Science,12- High School

6 Coordinator 1 1-Agronomist

7 Inspector 66 27-Veterinary,30-Agronomist,4-Doctors,1- Chemist,3-Mercolog,1-Technical,

8 Epidemiologist 3 1-Veterinay,1-Doctor,1-Biologist 9 Pathologist 1 1-Veterinary 10 Bacteriologist 1 1-Veterinary 11 Chemist 3 3-Chemist 12 Microbiologists 1 1-Biologist 13 Ing. Of Agriculture 1 1-Agronomist 14 Serologist 1 1-Chemist 15 Technician 3 1-Chemist, 2- High School

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Planned Human Resources: Certain sectors within the Agency have not been able to fulfil planned positions due to the lack of budget. In order to achieve its objectives, the Agency must employ forty (40) additional officers, professional staff, also for drafting and transposing national legislation with Aquis Communitaire. The officers should fill the positions in the following Directorates: Administration Directorate (7 officers), Laboratory Directorate (15 officers), Directorate for Public Health (6 officers), Directorate for Animal Health and Welfare (6 officers) and the Inspection Directorate (6 officers). Currently, in terms of budget, the Agency is able to fill these positions. Material Resources: Main buildings of the Food and Veterinary Agency in Prishtina are built in the Industrial Zone, with a total of 1.5 ha of land allocated by the Government of Kosovo. The total surface of the buildings is 3337.86 m2. The structure is as follows: a. Administration Building with 55 offices, halls and rooms for meetings and other

facilities with a total surface area of 1623.15 m2; b. Food Laboratory with 7 Offices, 7 Laboratories, 2 preparatory rooms, meeting

rooms, kitchen, 4 rooms for the Staff Wardrobe, halls, and other facilities with a total surface area of 1100.63 m2;

c. Animal Health Laboratory with 9 offices, 4 laboratories, 2 warehouses, and spaces for the staff wardrobe, halls and other facilities with total surface area of 614.82 m2.

As regards the Regional Offices, The material resource of the agency are as follows: a. Regional Office in Mitrovica with 5 offices and a total space of 162 m2; b. Regional Office in Gjilan/Gnjilane with 2 offices and a total space of 81 m2; c. Regional Office in Prizren with 4 offices and a total space of 124.20 m2; d. Regional Office in Peja/Pec with 6 offices and a total space of 114.80 m2; e. These offices are followed by other accompanying spaces such as facilities for

sanitary needs. Planned Material Resources: The Agency has planned the construction of a rendering plant. The first phase of the project which was approved by the EC will determine the design, location, and its surface; so far no further details have been provided for construction of this facility. Budget: The budget allocated to the Food and Veterinary Agency for 2012 is 3,894,035 €.The Medium-term Expenditure Framework (MEF) 2013-2015 has also been approved: Table 81. Budget allocated to the Food and Veterinary Agency for 2012 Name of the Directorate

Staff No.

Budget Allocation-2012

Assessments 2013

Assessments 2014

Assessments 2015

Food and Veterinary Laboratory

33 600,000 600,000 600,000 600,000

Supplying with equipments of Food

600,000 600,000 600,000 600,000

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and Veterinary Laboratory and Laboratory of avian influenza for its accreditation Directorate for Health and Animal Welfare

18 1,130,000 1,050,000 1,050,000 1,050,000

Protection of public health and animal health through vaccination against infectious diseases.

400,000 400,000 400,000 400,000

Protection of public health and animal health through diagnostic research

150,000 150,000 150,000 150,000

Animal identification and registration

350,000 350,000 350,000 350,000

Disinfection points 80,000 Animal welfare and control of stray dogs

150,000 150,000 150,000 150,000

Directorate for Public Health

12 420,000 420,000 420,000 420,000

Food safety- Export support

200,000 200,000 200,000 200,000

Monitoring of drug residues in food

120,000 120,000 120,000 120,000

Twinning Project - IPA

100,000 100,000 100,000 100,000

Agency Inspectorate 250,000 350,000 350,000 200,000 Inspection of border points and bio-safety (food control)

200,000 200,000 200,000 200,000

Purchase of sanitary equipments

50,000 50,000 50,000 50,000

Administration Directorate

26

Salaries and supplements

964,583 964,583 964,583 964,583

Goods and Services 461,452 461,452 461,452 461,452 Utilities 68,000 68,000 68,000 68,000 Total Expenses 1,494,035 1,494,035 1,494,035 1,494,035

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Staff Number 175 175 175 175 175 Project support provided by donors: Table 82. List of projects provided by donors 2012 2013 2014 2015 Name of the project Technical assistance for designing the recycling factory

700,000

Twinning Project 1,000,000 1,000,000 Construction of recycling factory

2,000,000

Supply of Recycling Factory with mechanisms and equipments.

3,000,000

Total 1,700,000 3,000,000 The Agency generates revenues in the amount of 3,800,000 € from official control fees and other services that it performs. - Please provide a description of the current structure, as well as of the evolution foreseen. Two sets of organisation charts: one with the current structure and another one with the planned future structure (the dates foreseen for the establishment of new entities should be indicated). Current Structure For further information please refer to question “Please provide flowcharts/organisation charts outlining levels of competencies and showing management lines to describe the structure and organisation of the services in charge of food safety veterinary and phytosanitary policy. The division of competencies and the links between central, regional and local level should appear clearly (degree of decentralisation/ devolution of competence should be defined”. Planned structure: No significant changes are planned for the organization of the Agency. The Law on Food is currently being amended, and the Working Group established with the decision of the Secretary General of MAFRD No. 96 dated 19.03.2012 for amendments has given proposals that the Food and Veterinary Agency be transferred from OPM to MAFRD. Within the new Draft Law the issue of inspectors will be clarified. The Draft Law will be adopted by the end of 2012. - Legislative powers in the fields of food safety, veterinary and phytosanitary legislation: a. specification of the competent authorities (for legislation) and how legislation will be passed (primarily through parliamentary procedure or ministerial orders or decrees); b. explanation of how co-ordination is (or will be) ensured in terms of transposition, implementation, and policy-making to ensure that the food chain is fully covered;

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c. legal possibility to adopt legislation which will be implemented progressively and which can incorporate EU notions and cross-reference to another piece of EU legislation. The Agency of Food Safety and Veterinary Services is the responsible authority for drafting legislation in the respective field in consultation with other relevant institutions to be reviewed and approved by the Government of Kosovo. The law is then sent at the Assembly of Kosovo for approval. With entry into force of the Law no. 03/L-016 on Food, the Agency drafts secondary legislation in the form of draft-regulation, which is then approved by the Government (Article 18, paragraph 1.3 of the Regulation no. 09/2011 of Rules and Procedures of the Republic of Kosovo). Proposals of secondary legislation are accompanied with explanatory memorandum/concept document, assessment of financial impact, statement of compliance with provisions of regulation No.09/2011 (article 30 and 34 of Regulation 09/2011). The Food and Veterinary Agency has managed to transpose a high level of legislation from the Hygienic Package legislation (regulations of the European Commission and Parliament No. 852/2004, 853/2004, 854/2004 and 882/2004), and has prepared other draft-regulations such as the draft-regulation for setting microbiological criteria for food products (based on EU Regulation No. 2073/2005), the draft regulation for setting conditions of animal health and public health and veterinary certification for import of raw milk and its products (EU regulation no. 605/2010). As regards the techniques of transposing the legislation, the Agency applies the recommended techniques by experts of the European Commission - Twinning Project, by using the compliance tables and transfer of provisions from other reference acts. - Competences and procedures for approval of secondary legislation (Administrative Guidelines, Regulations). Until the entry into force of the Law on Food Nr.03/L-016 (10 April 2009) which established the Food and Veterinary Agency (Article 36 of the Law), secondary legislation has been prepared in MAFRD according to the procedures and drafting techniques in conformity with Administrative Instruction of the PMO No. 14/2008. The approval was done by the Minister of MAFRD according to the competences set by UNMIK Regulation 2001/19. With entry into force of the Law no. 03/L-016 on Food, the Agency drafts secondary legislation in the form of draft-regulation, which is then approved by the Government (Article 18, paragraph 1.3 of the Regulation no. 09/2011 of Rules and Procedures of the Republic of Kosovo). Proposals of secondary legislation are accompanied with explanatory memorandum/concept document, assessment of financial impact, statement of

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compliance with provisions of regulation No.09/2011 (article 30 and 34 of Regulation 09/2011). The Food and Veterinary Agency started with the transposition of legislation in the field of food safety and animal health and welfare three years ago. Accordingly, the agency has managed to transpose a high level of legislation from the Hygienic Package legislation (regulations of the European Commission and Parliament No. 852/2004, 853/2004, 854/2004 and 882/2004), and has prepared other draft-regulations such as the draft-regulation for setting microbiological criteria for food products (based on EU Regulation No. 2073/2005), the draft regulation for setting conditions of animal health and public health and veterinary certification for import of raw milk and its products (EU regulation no. 605/2010). As regards the techniques of transposing the legislation, the Agency applies the recommended techniques by experts of the European Commission - Twinning Project, by using the compliance tables and transfer of provisions from other reference acts. - Please provide detailed information on control activities and enforcement in the fields of food safety (and animal feed), veterinary and phytosanitary policies, including details on the organization of controls in the frequency, choice of establishments, the procedure for sampling and procedures in case of infringements. Please specify which bodies are (will be) in charge of control activities and enforcement, and their respective responsibilities. Please describe mechanisms of co-ordination. a. Implementation: For each of the following items of the food safety, veterinary and

phytosanitary policy, listed below please give details about the measures taken to ensure proper implementation of legislation with as relevant to the following activities (indicative list):

b. Laboratories used in hygiene, veterinary, phytosanitary controls, food-and feed-stuff analysis (chemical, microbiology, GMOs, etc.): present or planned activities (with time-table) to comply with EU systems, timetable of accreditation according to EU Law with name of accreditation body, method of sampling and analysis (in general, contaminates, for food contact materials, etc.);

c. -management of crisis the setting up of the Rapid Alert System for Food and Feed

(RASFF) Policies, strategies and plans for official controls are drafted by the Public Health Directorate and by the Directorate for health and animal welfare while the implemnetation is done by the Inspectorate Directorate.

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Categorization of Establishments of Food with Animal Origin is based on the Law on Veterinary No. 2004/21 and Administrative Instruction MA 01/2005 for Approval of Dairies, and Administrative Instruction MA 01/2006 for approving the Slaughterhouses and Meat Processing Plants. Since, 2011 with the entry into force of regulations deriving from the “Hygiene Package” provisions of these regulations are taken into account during the approval process of these enterprises. Special legal acts planned in the legislative plan 2012 are prepared for harmonization of application procedures, evaluation and registration of the enterprises for approval. Evaluation Committee is selected by a decision of the Chief Executive of the Agency and is composed of two officers from the Directorate for Public Health and one Regional Veterinary Inspector depending on the region where the applicant comes from. In regards to the choice of food establishments the evaluation Committee of the Agency of Food and Veterinary Services, uses questionnaire drafted on the basis of provisions of regulations from the ‘Hygienic Package’ concerning the general and specific conditions. So far the Agency approved: a. 25 Dairy Points; b. 30 Cattle Slaughterhouses; c. 4 Poultry Slaughterhouses; d. 30 Meat Processing Factories, and e. 21 Cooling Warehouse; All these enterprises have undergone the categorization process according to risk based assessment against the following parameters: a. Group of treated food products; (animal, non-animal, meat, milk); b. Type of activity of food treatment; (production, processing, packing); c. The scope of activities for food treatment; (direct supply to consumers, export, supply of other

businesses); d. Status of Self-control based on the hazard analysis and critical control points (further - HACCP)

including application of rules for good hygienic practices; (the system fully, partially or does not operate at all).

According to the results from the ‘point base assessment’ all approved enterprises are categorized into the following groups: Operators that meet all requirements for approval, only minor deficiencies were noted (low risk) a. In general requirements for approval are met, deficiencies were noted and the same

should be eliminated (medium risk) b. Approval requirements have not been met, but the deficiencies are likely to be eliminated

with an modest investment (medium risk)

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c. Requirements for approval can be met only after a big investment is made for the elimination of observed deficiencies (high risk)

The National Annual Plan of Official Controls and Testing of these Enterprises has been drafted based on this categorization. Control Plan for Food Products: In order to implement provisions from the Law on Food as to achieve a high level of food safety and prevention of incidents caused by food, protection of public health, establishing cooperation with food business operators and increase the transparency of official controls, the FVA has drafted an annual plan of official controls with Food Business Operators. This plan includes definitions set in Article 27 of the Law on Food no. 03/L-016, and are listed as follows: a. The number and the type of inspectorial controls that are planned to be carried out; b. Number of samples, planned to be taken; c. Number and type of establishments that will be included in the inspectorial control; d. The criteria applied to the development of the program; e. The required financial assets. This plan foresees also the supervision of the Food Business Operators in terms of fulfilling provisions from the Law on Food no. 03/L-016, specifically Chapter IV, Sections 16, 17 and 18 which define the responsibilities and obligations and implementation of methods and self-control procedures within their manufacturing activities. The plan is based on the provisions set out in Regulation 10/2011 “On official controls to verify compliance of the Law on Food and Animal Feed and regulations for health and animal welfare”, namely Sections 8,9,10 and Article 11. Food products samples are analyzed in microorganisms provided by Regulation 2073/2007 of the EU on Microbiological Criteria for food products in laboratories authorized by the FVA, under Article 31 of Regulation 10/2011. The frequency of official controls under this plan is determined by the process of categorization of enterprises according to the risk that they pose in terms of production type, production activities, sanitation and declared production quantity. Tabela 83. Business Risk Groups The businesses risk group for treatment of food

Total of Points The frequency of official controls

High risk 55 and more 6 times a year Medium risk 40-54 3 times a year Low risk Up to 39 1 time a year

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Official documents published from the European Commission, guidance, regulations and different hazard analysis taken from EU Scientific structures were used for preparing the draft of this program. Supervisory official controls will be implemented by persons authorized by the Agency, in an independent and transparent manner and with the help of checklists (questionnaires) drafted according to the provisions from the regulations of “Hygiene Package” that define hygienic requirements for Food Business Operators. Official controls and testing of products under this plan are conducted by the Regional Veterinary Inspectors of FVA according to the schedule and according to SOP (Standard Operating Procedure) which is in the stage of approval. Samples taken by the operator will be analyzed for the presence of microorganisms (Microbiological analysis) under the regulation of Microbiological criteria of food articles and physic-chemical analysis according to international standards. On the basis of laboratory analysis, adequate measures will be taken for treatment of products (prohibition of circulation, re-processing, destruction), the adjustment of deficiencies in enterprise’s production lines by operators. Table 84. Products Destruction last two years

Products destruction 2011 2012 Meat and meat products 57.826,73 kg 82.558 kg Milk and milk products 50.133 kg 7.300 kg Fish 11.500 kg 35 kg

The results achieved by the plan for official controls and food sampling will serve as a basis for the development of the strategy for up-grading of agribusiness and further development of multi-annual control plans as an obligation that derives from the legislation in force. For analysis of food with animal origin, FVA has authorized the Public Health Institute, respectively the Human Ecology Laboratory accredited according to ISO Standards 17025, by the Kosovo Accreditation Directorate. Methods and standards required for laboratory analysis are set according to the regulation on microbiological criteria for food products No. (EC) 2073/2007. Residues Monitoring Plan: This plan was developed based on applicable legislation namely on Administrative Instruction MA-No. 26/2005 “On measures to monitor certain substances and their residues in live animals and their products” based on Directive 96/23 / EC;

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Administrative Instruction MA-No.14/2006 “Setting the Maximum Limit of Residues; and Administrative Instruction MA-No. 07/2005 “On establishing the conditions for licensing businesses which deal with import, wholesale and retail of veterinary medicinal products.” For preparing the plan, several statistical information were used from the relevant institutions but also by various business associations, as well as official notes from DSHMK which in its sectors, under legal provisions, has a mandate of authorizing the veterinary medicinal products, licensing private practices and business entities that deal with medicine trade. The number of samples set is taken from publications of annual production by dairy associations; reported slaughters and the amount of leather exported, as well as information regarding the amount of products produced by the respective associations for eggs, honey and fish. Parameters required under described legal acts are in line with EU requirements. The plan sets the frequency of sampling for entities dealing with the production of animal products, according to regions, the quantity of production and business activity. It also sets a time limit of getting samples and their testing. Sampling is done according to the manual of sampling for residues, which contains information for all types regarding their quantity, storage, and transport to the laboratory. According to the legislation, it is foreseen that all analysis are performed in accredited laboratories with ISO Standards 17025. Currently, for 2012, FVA has received offers from several laboratories from regional countries and EU and the procedures for the authorization of laboratories for performing analysis shall be completed throughout June 2012. Certification of products for export: In order to export food products with animal origin it is required an official certification of the product, in which the following criteria apply: a. The enterprise must be approved by the competent authority/the Agency; b. To be subject to official controls according to the Regulation no. 13/2011 - for

determination of specific rules for the organization of official controls of food with animal origin intended for human consumption, based on Regulation (EC) 854/2004;

c. Meets the requirements from Regulation No. 12/2011-For Specific Hygiene Rules for food with animal origin, based on EC Regulation 853/2004;

d. Sufficient evidence of laboratory tests and fulfilling of the Microbiological Criteria set out in the Annual National Plan for official controls;

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e. Meets the requirements for transporting food products associated with hygiene and temperature control;

f. As well as the requirements set by the importing country through the Health Certificate.

After verification of these criteria, the Regional Veterinary Inspector provides business operator with health certificate which states product specifications, quantity, destination, and transport information. Based on this certificate, the officials of the Directorate for Public Health issue Health Certificate for export by referring to bilateral or international agreements and criteria set forth by countries in particular. In regards to the plan for monitoring the animal health, the plan is based on the Law on Veterinary No. 21/2004 and Administrative Instructions for prevention, control and eradication of animal diseases. The plan is based on the Law on Veterinary No. 21/2004 and Administrative Instructions for prevention, control and eradication of animal diseases. In order to implement the plan, the FVA authorizes Private Veterinary Practices through a 2 year contract, which specifies tasks, responsibilities, and activities under applicable legislation. Implementation progress is monitored by the officers of FVA. The program for monitoring animal health contains: a. Preventive vaccinations against animal diseases, rabies, anthrax-it, and classical

swine fever virus (CSFV), atypical poultry influenza (NDV), Brucella melitensis; b. Diagnostic research on animal diseases: IBR, BVD, Leukemia, FMD (in cattle

Bluetongue, B. Melitensis (sheep, goats), Salmonellas, atypical poultry influenza (NDV), avian influenza (AI), bees and fish diseases, diseases of wild animals such as rabies and classical swine fever virus (CSFV) and diagnostic investigations for hyper-sensibilisation of cattle for TBC and Mastitis.

The selection of animals to be vaccinated is conducted in this way: a. Anthrax – includes only animals at the boundary; b. Rabies –pets (cats and dogs) ; c. Classical Swine Fever Virus (CSFV) – massive vaccination; d. Atypical of poultry influenza (NDV) –poultry at commercial farms; e. B Melitensis – massive vaccination Selection of animals for disease research is done in the following manner: a. IBR, BVD, Leukemia FMD, Bluetongue, (in cattle) - random selection (random

sampling) 8% of the total number of cattle in RK selected from the database of the identification and registration of animals sector;

b. Melitensis (sheep, goats) - 2% of the total number of animals vaccinated with this vaccine;

c. Salmonella - number of samples depends on the capacity of laboratory that perform diagnostic research

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d. A typical poultry influenza (NDV), avian influenza (AI) - passive monitoring f. Diseases of bees and fish - passive monitoring; g. Diseases of wild animals: rabies and classical swine fever virus (CSFV) - passive

monitoring; h. Classical swine fever virus (CSFV) - 1% of the total number of pigs identified and

registered; i. Hyper-sensibilization of cattle for TBC and Mastitis - 8% of the total number of cattle

identified and registered. Vaccination is conducted once a year and diagnostic research is performed according to the frequency foreseen in the national plan for monitoring of diseases. Samples are selected from the database of sector for identification and registration of animals, which has data on the number of farms, the definition of GIS and GPS coordinates, and monitors the movement of animals, slaughter, births, and deaths. Through the program INTERTRACE it also enables interconnection of relevant sectors to monitor the general situation regarding animal health, public health, and crisis management in different situations. Specific measuers required by the legislation in force (explanation in crisis management) are undertaken if any of the above-mentioned diseases appear. Sampling for animal disease research is done according to the OIE manual and are sent for laboratory analysis in LUVK; this lab has begun the process of accreditation at the Kosovo Accreditation Directorate, and it can last up to 2 years. In cases when a sample gives positive or suspicious samples it is sent to regional accredited laboratories and reference laboratories of OIE. The results attained by the plan for official controls will serve to improve animal health state in the country and in the region. Inspection Directorate is the main responsible body in charge of control activities and enforcement. Duties and responsibilities of this directorate are: implementation of policies in the area of food safety, veterinary and phytosanitary. Implementation of these policies is done through official controls by inspectors of relevant sectors under the legislation in force. The control activities are conducted by the following sector inspections: Border Veterinary Inspection Sector, Border Phytosanitary Inspection Sector, Phytosanitary Inspection Sector, Veterinary Inspection Sector-(Central Level) and Sanitary Inspection Sector - (Central Level) Border Veterinary Inspection Sector: Performs control at the Kosovo borders of food and non-food products of animal origin based on the Administrative Instruction No. MA. 18/2005. Official control includes: a. Control of identity, meaning compliance of documentation and imported goods;

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b. Control of documentation, meaning control of the accompanying documentation (veterinary certificate), is done for each cargo;

c. Physical control and laboratory analysis, meaning detailed control of the cargo Sampling and delivering samples to the laboratory is done in 20 - 45% of the cargo which is done according to the annual national plan for official control and sampling;

d. Risk assessment and determination of the percentage of controls based on the number of cargo that enter during the day, origin and type of goods;

e. In the cases when the official controls faces cargo incompatibility with the legislation i force, the entrance of goods is not allowed.

Samples and swabs are sent to the accredited laboratory of the National Public Health Institute (NIPH). Border Phytosanitary Inspection Sector: Based on legislation in force, it performs border control in Kosovo of food and non-food with plant origin. Official control includes: a. Control of identity - meaning compliance of documentation and imported goods; b. Control of documentation (phytosanitary certificate or quality certificate based on

product); c. Physical control and if necessary taking samples for laboratory analysis which is

done according to the annual national plan for the official control and sampling. Samples are taken in case of suspicions during the physical examination of cargo, in which case the cargo should be sealed until the analysis results are received;

d. In cases when official controls face cargo incompatibility with the legislation in force, entry of goods is not allowed.

Samples are sent to the Kosovo Agricultural Institute (KAI) who has applied for accreditation at the Kosovo Accreditation Directorate. In cases when the sample results are positive or give suspicious results they are sent for confirmation in accredited laboratories. Phitosanitary Inspection Sector (Central Level): It performs inspection and sampling of health conditions of plants and plant products and upon requests for export, it issues phyto-certificate for export and re-export or internal certificates. This section performs also the following activities: a. Field inspections for certification of wheat seeds and planting material. b. Inspections of agricultural pharmacies, warehouses with pesticides and commercial

entities with artificial seeds; c. Inspections of commercial entities for licensing; d. Unsealing of cargos with products with plant origin, in cases where the analysis

report is positive the products should be destroyed. In case when this is disputed a super-analysis in a secondary accredited laboratory should take place;

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e. The frequency of sampling is done according to the national plan and needs in the field.

Samples are sent to the Kosovo Institute for Agriculture (KIA) who has applied for accreditation at the Kosovo Accreditation Directorate. However, when sample results are positive or give suspicious results they are sent for confirmation in accredited laboratories. Veterinary Inspection Sector (Central Level): It implements veterinary policies and official control plans related to compliance with the rules for animal health and welfare and safety of foods with animal origin with rules established by the Law on Food and regulation 10/2011 and 13/2011. Official control process includes: a. Active and passive monitoring of animal diseases, b. Inspection of food business operators with products of animal origin, includingall

stages of food chain; c. Monitoring of vaccination against Rabies, atypical plague poultry (NDV), Anthrax,

and Classical Swine Fever; d. Monitoring mastitis and hyposensibilization for TBC; e. Sampling from the field and transfer to the laboratory; the frequency of sampling is

done according to the national plan and needs in the field; f. Control of animal markets; g. Monitoring implementation of diagnostic research. Sanitary Inspection Sector (Central Level): It implements sanitary policies and official control plans related to compliance with the rules for food safety and hygiene, with rules established by the Law for the sanitary inspectorate and regulation 11/2011 and relevant legislation in force. The process for official controls includes: a. Inspection of food business operators with non-animal origin, technological

processes, control of sanitary hygienic conditions of food-industrial facilities, food trading facilities, hotels, health facilities, educational facilities and other institutions;

b. Hygiene control of people dealing with food preparation in public enterprises; c. Control of grocery, hygiene and cosmetics items; d. Supervision and monitoring of contagious diseases through food poisoning; e. Supervision and monitoring of the process of smoking prohibition; f. Inspection and sampling according to the national sampling plan; g. Undertake legal measures in conformity with test results and actual situation

during inspection; h. In case of non-compliance with legislation in force perform following actions: :

destruction of products, temporary closure of business operators and other activities provided by the legislation in force.

i. Send samples and swabs to the accredited laboratory of the National Institute for Public Health (NIPH).

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Methods of Sampling and Analysis: All sample tests taken from official controls described above are sent for analysis to the following Laboratories: a. Samples of food products with animal origin from local food business operators and

imported products according to the Annual National Control and Sampling Plan are sent for analysis in Human Ecology Laboratory of NIPH, accredited by the Directorate of Kosovo Accreditation;

b. Processed food products and water are sent to Laboratory for Analysis in Human Ecology of NIPH, accredited by the Kosovo Accreditation Directorate;

c. Samples of food products with plant origin from local food business operators and imported products according to the Annual National Control and Sampling Plan are sent for analysis to the Kosovo Institute for Agriculture that has applied for accreditation at the Kosovo Accreditation Directorate;

d. Regarding the samples for analysis of veterinary residues for 2012, FVA has received offers from several laboratories of regional countries and the EU, and the procedures for the authorization of laboratories for analysis shall be completed within June 2012;

e. Samples taken for monitoring and diagnosing animal diseases are sent for analysis to the Food and Veterinary Laboratory, whereas positive and suspected cases are sent for confirmation to the OIE reference laboratories.

Laboratory: Food and Veterinary Laboratory has already applied for accreditation at the Kosovo Accreditation Directorate for these laboratories: a. Laboratory of Serology; b. Laboratory of Food Chemistry; c. Laboratory of Veterinary Residues; d. Laboratory of Food Microbiology; e. Laboratory Analysis of Raw Milk. During the preparatory phase for LUV accreditation, with support of the Twinning project number KS/07/AG/IB01 "Food Safety and Veterinary Services", it has prepared, translated, and adapted the documents of the Quality Management System (Quality System Procedures, Quality System Forms, System Quality Manual, Quality Manual Lists and Standard Operating Procedures for all Laboratories). Laboratory of Serology and Veterinary Residues participated in the Proficiency Test with laboratories accredited by the Friedrich Loeffler Institute in Germany, and respectively Italy. The staff that will be responsible for the laboratory accreditation process has been appointed; the number of professional staff in the laboratory has been increased, as well as professional capacity building of staff has been done through various training offered by projects. The Accreditation of the Laboratory from the Kosovo Accreditation Directorate is planned to be finished within a period of one year, after the drafting of documents on Quality Management System has been completed.

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Crisis Management: In cases of outbreaks of animal diseases by the OIE reports, FVA prohibits import of live animals and their products from neighboring countries, whereas in the case of notification of diseases in Kosovo, FVA does eradication of these diseases through the Stamping-out method and compensate the damage from the budgetary resources for farmers and reports to the neighboring countries through the report sent to the OIE. Animal diseases are classified according to priorities of diseases as managed by the veterinary service and according to the Law on Veterinary for diseases of first and second program. In cases when public health is put in danger (such as Avian Influenza) or such diseases cause major economic damage (such as FMD, CSF, Bluetongue) other entities are also engaged. Emergency Plans for their control have been drafted. The emergency plan shall activate the National Crisis Staff, which deals with implementation of the Action Plan in case of disease outbreaks. The National Crisis Staff is also responsible for: a. Implementation of field standard operating procedures; b. Risk Assessment; c. Mobilization of all FVA personnel which should be on alert during 24 hours; d. Implementation of communication plan of FVA - with state authorities of the Office

of the Prime Minister, Crisis Management Agencies, International Liaison Offices, Ministry of Health, MAFRD and reference laboratories worldwide;

e. Informing the public, farmers associations, local veterinarians, written and electronic media, the Kosovo Police, KSF and all Municipal Assemblies.

FVA establishes following emergency groups, which are composed of these units and depend on the number of animals affected with diseases, and the number of animal disease outbreaks throughout the territory: Emergency Group for Performing Disinfectant Tasks: a. Provide a mobile mechanism and all devices for disinfection of infected sites. b. Deploy persons who are equipped with disinfectant and protecting means for

conducting the disinfection. Emrgency Group for Performing the Liquidation of Animals: a. Provide necessary mechanism for burial, transport of cadre and destruction of

animals. Emrgency Group for the Decontamination of People who come out from Infected Areas: a. Disinfect all equipment used during management of disease outbreak. In order to implement the emergency plan and keep the situation under control, following steps are undertaken: a. Prohibition or restriction of movement of live animals from areas affected by

disease;

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b. Restriction of movement of persons in contact with infected animals or animals which are suspected to be infected;

c. Prohibition of slaughtering; d. Prohibition of the flow of raw material, waste and residues from animals, animal

feed, and other things that can spread diseases; e. Accumulation of dead and infected animals and their transport to disposal places. f. Disinfection of farms, buildings, spaces where infected animals or animals suspected

of disease have been located; g. Prohibition of animal fairs, markets and animal exhibitions; h. Implementation in a radius of 3 km from the outbreak of the disease (infected area),

where measures of tracing with the radius of 10 km (risk area) are increased. To evaluate the efficiency of this emergency headquarter, in 2005-2006 FVA has organized two practical exercises (Simulation Exercise) in the field related to the Avian Influenza Disease. Establishment of a Rapid Alert System for Food and Feed (RASFF): Rapid Alert system has been transferred from the European Commission to the Food and Veterinary Agency through the offices of UNMIK or the European Commission Liaison Office in Kosovo, for food product risks reported or identified within the RASFF, EU system and destined for Kosovo market. Since 2009 there were a total of four rapid alarms for which the FVA officers responded immediately according to the product specifications and recommendations for measures to be taken. In order to improve the functionality of the rapid alert system, considering timely establishment of FVA structures, it is needed for the EU Delegation to establish contact points of local structures (FVA ) and to give the possibility of accessing RASFF (Password and username). After amending the Law on Food, the FVA plans to establish a national internal rapid alert system including all relevant stakeholders. 3.9.4. Customs and Taxation

3.9.4.1. Customs - Please provide information on legislation and other rules governing the customs area. The following legislation governs the customs area: a. Kosovo Customs and excise code No. 03/L-109, of date 10/11/2008, based on

Council Regulation 2913/92/EEC on Community Customs Code. (Changes: Law for Customs and Excise Code which amends and supplements the current Law (published in the Official Gazette on 1st of June 2012). The Law is in compliance with the modernized EU Regulation No.450/2008/EC of date 23/04/2008);

b. Law No. 03/L – 170, for Customs Measures for Protection of Intellectual Property Rights of date 08/01/2010, based on Council Regulation (EC) No. 1383/2003 of date 22/07/ 2003. (Status: This Law has changed regulation 2008/22 on Application of

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Customs measures related to goods that violate intellectual property rights of date 1/06/2008.);

c. Law No.04/L-021, for Excise on Tobacco Products of date 14/10/2011; d. Law No.03/L-146 on Value Added Taxes of date 08/01/2010; e. Administrative Instruction No.11/2009, dated 02/09/2009, laying down provisions

for implementation of the Customs and Excise Code; It is based on Commission Regulation (EEC) No. 2454/93 of date 2/07/1993;

f. Administrative Instruction No.86/2010, of date 15/10/2010, which determines obligation for affixing fiscal control stamp on alcoholic beverages. This AI implements customs code;

g. Administrative Instruction No.69/2009 of date 26/06/2009, which determines criteria for transportation of excisable goods and the accompanying documents. This AI implements customs code;

h. Administrative Instruction No.07 12010, for implementing Law No. 03/L-170 for Customs Measures for Protection of Intellectual Property Rights of date 30/07/2010;

i. Regulation 2007/31, into force as of date 17/10/2007 for changing regulation no. 1999/3 on establishment of Customs and other respective services;

j. Regulation 2006/4, into force as of date 19/01/2006, for changing regulation no. 1999/3 on establishment of customs and other related services in Kosovo.

Draft By-Laws: a. Administrative Instruction for issuance of licenses on payment of excise taxes and

amount of administrative tax with purpose of implementing article 11.3 of Law no.04/l-021 for Excise on Tobacco Products (AI awaiting signing);

b. Administrative Instruction for printing and use of fiscal stamps with purpose of implementing article 17 of Law no.04/l-021 for Excise on Tobacco Products (awaiting signing);

c. Administrative Instruction for seizure and destruction of tobacco products with purpose of implementing article 10 of Law No. 04/L-021 for Excise on Tobacco Products (waiting signing).

Other legislation applicable by Customs: a. Law on External Trade, No. 2011/04-L-048 of date 02/12/2011; b. Law on Trademarks, No. 2011/04-L-026 of date 09/08/2011; c. Law on Narcotic Medicaments, Psycho-Tropes and Precursors, No.2007/02-L-128 of

date 19/02/2008; d. Law on Civil Use of Explosives, No. 2011/04-L-022 of date 09/08/2011; e. Law on Patents, No.2011/04-L-029 of date 09/08/2011; f. The Criminal Code of Kosovo; g. Code of Criminal Procedure; h. Law on Tobacco, No. 2005/02-L-36 of date 09/01/2007; i. Law On Medicinal Products and Medical Devices, No. 2010/03-L-188 of date

18/10/2010; j. Law on the Prevention of Money Laundering and Terrorist Financing, No. 03/L-196

of date 30/09/2010;

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k. Law on Anti-Dumping and Countervailing Measures, No.2010/03-L-097 of date 14/04/2010;

l. Law on Safeguard Measures on Imports, No.2011/04-L-047 of date 31/08/2011; m. Law on Industrial Designs No, No. 2011/04-L-028 of date 09/08/2011; n. Law on Copyright and Related Rights, No.2004/45 of date 29/6/2006; o. Law on State Border Control and Surveillance, No. 03/L-065 of date 21/5/2008; p. Law on Seeds in Kosovo, No. 2003/5 of date 20/3/2003; q. Law for Sanitary Inspectorate of. Kosovo, No. 2003/22 of date 6/11/2003; r. Law on Protection of Plants Varieties, No. 02/L-98 of date26/1/2007; s. Law on the Administrative Procedure, No. 02/L-28 of date 22/8/2005; t. Law on General Safety of Products, No. 02/L-21 of date 20/5/2005; u. Law on Trade of Petroleum and Petroleum Products No. 2004/5 of date 22/4/2005,

amended with Law No. 2006/02-L-89 of date 05.02.2007; v. Law on Pesticides, No. 2003/20 of date 16/10/2003; w. Law No.02/L-89 on amending the Law No. 2004/5 Trade of Petroleum and

Petroleum Products in Kosovo, of date 10/10/2006; x. Law on Transport of Dangerous Goods, No. -2004/6 of date 1/4/2004; y. Wine Law, No. 2011/04-L-019 of date 12/08/2011; z. Patent Law, No. 2004/49 of date 27/9/2004; aa. The Veterinary Law, No. 2004/21 of date 16/6/2004; bb. Law on games of Chance, No. 2004/35 of date 03/02/2005; cc. Administrative Instruction on implementation of Law No. 01/2011 of date

1/9/2011; dd. Governments Decision of Games of Chance, No. 01/13 of date29/4/2011; ee. Administrative instruction for exemption from custom duties of war invalids, No.

725/2009 of date 14/07/2009; ff. Administrative Instruction on Vehicle Homologation, No. 08/2008, of date

01/01/2009; - To which extent has the recognition of the Kosovo customs stamps by Serbia and BiH influenced the trade regime and the customs treatment of goods coming from Kosovo and sent through or to these countries? Since 2nd of September 2011 and the start of implementation of the reached agreement for recognition of customs stamps, Kosovo exporters are exporting to and passing goods through Serbia and BiH. No problems have been reported so far. Comparison of export figures of the fourth quarter of 2011 with the same period of 2010, results with an increase of 103% of Kosovo exports to Serbia in the last quarter of 2011. There is also an increase of 126% of Kosovo exports to Serbia in the first quarter of 2012 compared with the same period of 2011. In nominal terms, the increase was from €1.2 million in quarter one of 2011 to €2.7 million in quarter one of 2012. Figures of Kosovo exports to Serbia for years 2010 and 2011 indicate that after the start of implementation of the customs stamps agreement, such exports rose from €3.8 million to €7 million.

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- Can Kosovo goods be sent to the EU via the territory of all neighbouring countries? Sending goods to the EU via the territory of neighboring countries was never an issue in the past, with the exception of Serbia and BiH. Implementation of agreement for customs stamps has also resolved the issue of transiting goods to EU or other countries via Serbia and BiH. - Does Kosovo Customs issue Certificates of Origin for goods originating in the North? If Yes, how does the Customs Administration checks the origin? If No, are goods originating from the North exported to countries where they can benefit from a preferential treatment? In that case, on which basis would such preferential regime be applied? Until 31st of May 2012, we have not received any requests from companies based in the North wanting to export specific goods of Kosovo preferential origin to any country. So far, exports from the northern Kosovo are the minerals exports of “TREPÇA” to Switzerland for which the import tax on Switzerland is 0 (zero), hence there was no need for Certificates of Origin. Since exportation is currently not allowed through the two border crossings in the northern Kosovo, if there was a need for Certificates of Origin and control of origin, such services can be provided directly on the goods declared for export through goods and documents analysis before the goods leave the territory of Kosovo and by visiting the company itself. If there is such a request from this part of the country in the future, we will act according to legislation in effect, such as the Customs and Excise Code and AI for implementing the Customs Code. (http://dogana.rks-gov.net/Uploads/Documents/Kodi%20Doganor_En.pdf) (http://dogana.rks-gov.net/Uploads/Documents/AI112009customwscode.pdf) - Has Kosovo further initiated agreements on customs cooperation or mutual assistance with third parties? How many are initiated until now? Which countries have signed such agreement? Kosovo Customs has initiated 24 Agreements on customs cooperation with other customs administrations. Currently, 14 of them are in the negotiation process while 7 bilateral agreements have been signed, with the following countries: Finland (signed on 04.06.2010), Albania (signed on 06.10.2009), Macedonia (signed on 11.02.2011), Montenegro (signed on 17.03.2010), Slovenia (signed on 23.06.2011), France (Joint Statement signed on 09.11.2009), and Turkey (signed on 13.01.2010). Kosovo Customs has signed bilateral protocols on pre-arrival systematic electronic exchange of data (SEED) with the neighboring countries Macedonia, Albania, and Montenegro. World Customs Organization (WCO) has taken into consideration our request for participation in all events organized by WCO in two previous Policy Commission sessions. The same Request will be discussed during the upcoming session wherein we expect a positive reply on this matter. The Instrument of membership has been deposited to the Ministry of Foreign Affairs of Belgium, to be submitted to the WCO. Membership Instrument by the Kosovo Assembly, we have applied for full membership in WCO. This matter is expected to be considered in the annual session of WCO during 2012.

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- What is the state of play of the development of the new CDPS system and which will be its main functionalities? Customs is in the process of finalizing the development of new CDPS system the so called ASYCUDA (Automated System for Customs Data) which will replace the current system of TIMS (Trade Information Management System). Its practical implementation is planned to start by 1st of June 2012, initially for three large offices following with others until the end of year. Main functionalities of the new system are: The whole system will function as a “web based” concept, meaning that it is accessible from anywhere with access to internet. It will be centralized via a central server that will enable unifying of customs procedures and dispersion of workload among customs offices; it allows the electronic tracking of goods in transit; and it enables the online application of bank guarantees and online declaration (paper less concept). - Is Kosovo customs sharing information with other Law enforcement bodies in or outside of Kosovo? To which extent does this happen and how is it organised, including the legal basis? Kosovo Customs has bilateral cooperation with all the national Law enforcement bodies, including the cooperation EULEX, with whom has signed also Memoranda of Understandings on mutual cooperation, such as: Kosovo Police, Tax Administration, Kosovo Intelligence Agency, Financial Intelligence Centre and State Prosecution. Besides the bilateral cooperation with these bodies, Kosovo Customs is part of ILECU (International Law Enforcement Cooperation Unit). This body is established based on the Kosovo Government Decision no 04/02 of date 02.03.2011. In accordance to this decision, a Memorandum of Understanding was signed on 29.04.2011 between Ministry of Internal Affairs, Ministry of Justice, State Prosecutor and Ministry of Finance (covering Customs). Each authority has appointed one contact point who communicates with this body through secured electronic and communication lines. In accordance to national and international legislation, Customs shares information through this body with other national and international bodies through secured line of communication. Kosovo Customs has signed 7 Bilateral Agreements with other Customs Administrations. The information communicated pursuant to this Agreement shall be of a confidential nature. It shall be covered by the obligation of official secrecy and shall enjoy the protection extended to the same kind of information and documents under the legislation in force in the territory of the two countries. The sharing of information is done through written requests, in urgent situations, oral requests may be accepted, but must be confirmed in writing immediately. - Does Kosovo apply the system of Approved Exporter for proving origin of goods? The system of Approved Exporter for proving origin of goods is incorporated in the legislation in effect; Administrative Instruction No.11/2009 article 53 provides such a

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possibility for exporters that frequently export goods of preferential origin. So far, there were no such requests from exporters. - Which steps has Kosovo taken to reduce corruption in customs during the last 2 years? Customs has two separate unit/sectors that directly deal with prevention, fighting, investigation, and sanctioning officials suspected of corruption and other violations of the Code of Conduct. KC has signed a Memorandum of Cooperation (MC) of the Kosovo Anti-Corruption Agency (KACA) and has been an active participant in drafting the National Plan against Corruption, which also reports annually on a regular basis (and upon request of the Agency). Customs has two special sectors, Internal Inspection Section and Professional Standards Division, which directly deal with fighting, prevention, investigation and sanctioning of officials suspected of corruption, but also to other actions, that are inconsistent with the Code of Conduct. During 2011, under the Internal Inspection Section, 15 inspections were conducted in the field, 1 case was reported to the prosecutor, 10 officials reported to disciplinary proceedings, provided 34 recommendations for the elimination of opportunities for misuse of official duty and 16 officials are subject to the inspection process. While in 2012, there were 8 inspections, one case is prosecuted to the prosecutor, three officials were reported to the disciplinary procedures, 34 recommendations are set out for the elimination of opportunities for misuse of official duty and 4 officers were subject to the inspection process. During 2012 the Professional Standards Division has initiated five cases of corruption, where the total of subjects in procedure is 7, total of measures imposed is 8, is given 1 verbal warning, 2 written warning, 1 pre-imposed exclusion from work - last written warning, 2 promotion prohibition, 2 additional training, 4 cases were reviewed by the Disciplinary Board, 2 cases were initiated in Prosecution and one case is initiated in police involving 3 customs officials. During 2011, 29 cases were initiated, total subjects in procedure is 90 (including cases in which proceedings are transferred from previous years), total of measures imposed is 42, 13 verbal warnings and 10 written warnings are given, last two written warnings imposed 2 degradations, 2 mandatory transfers, 1 cancelation of proposed performance for bonuses, 2 mandatory trainings , 8 prohibitions for promotion, 1 compensation of damage, 14 cases were reviewed by the Disciplinary Board, 2 termination of contracts with the recommendation of the Professional Standards Division, after conducting disciplinary procedures.

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- Please describe how customs operations are conducted for trade with Serbia, including from the north of Kosovo and for goods in transit. Trade with Serbia regarding customs procedures, is the same as with other countries. As of September 2, 2011, Customs has a 24/7 presence at two border crossings in northern Kosovo, which enables the same procedures in this part of the country. Due to blockages in the roads in this part of Kosovo, it is not noticed any great commercial activity, especially compared with two other commercial crossings with Serbia in Merdare and Dheu i Bardh. (See question on Certificates of Origin for Operations in the Northern Kosovo).

3.9.4.2. Taxation 3.9.4.2.1. General - Please specify the elements of your VAT and excise legislation which might provide for:

a) a higher level of taxation on imported products than that imposed on similar domestic products (Article 110 Treaty on the Functioning of the European Union (TFUE));

Kosovo tax legislation treats equally import goods and domestic products. With the aim of promoting fair competition, Kosovo has harmonized Law on VAT with the respective EU Directive (VAT Law and Administrative Instruction 16/2010). Excise rates are as in Annex A of Law for Supplementing and Amending the Law 03/L-112 on Rate of Excise Tax in Kosovo (RETK) and are the same both on import and to local products. From excise products under Annex A of RETK are exempt: a. According to the Law on Customs and Excise Code No.03/L-109, are exempt for

petroleum excise tax with special authorization for petroleum production subjects -2710- (for products that are to be exported);

b. According to the Law 03/L-220 Article 2.1 Are exempt from excise tax with special authorization -2711- for manufacturing subjects in Kosovo.

b) Repayment of tax on exported products which exceeds the internal tax

imposed on them (Article 111 TFUE). Pursuant to Law on VAT is foreseen the procedure of VAT reimbursement on exported products. Reimbursement procedures for exports foresee VAT return for each month with the request of taxpayer-business. In Article 40, paragraph 2.2, of Law on VAT is foreseen that export transactions reflect at least 25% of total transactions with the right of deduction of reclaimable VAT and value of the VAT credit exceeds € 5,000 at end of tax period. This means that this adjustment is in full compliance with European Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, and in concrete case the Treaty on the Functioning of the European Union (TFEU).

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3.9.4.2.2. Value Added Tax Please provide information regarding rules governing travelers’ allowances on import and export. Is a general tax rate envisaged? How would it be collected? Traveler’s allowances on import and export are regulated by Law Nr.03/ L – 146 on VAT. Article 30.1.6 regulates the special allowances related to import for goods to be carried in traveler’s personal luggage which are imported for non-commercial purposes and which are exempt from payment of customs in accordance with Customs legislation. Article 31.2 regulates allowances on exported goods to be carried in the personal luggage of travelers shall apply only if the following conditions are met: a. The traveller is not established within Kosovo, b. The goods are transported out of Kosovo before the end of the third month

following that in which the supply takes place, c. The total value of the supply, including VAT, is more than one hundred and

seventy-five (175) €. Articles 35.4 provides allowances for goods intended for sale in “duty free shops” at an airport open to international air traffic or a port open to international traffic, are also exempt from VAT, on condition that travelers carry such goods as personal luggage in permitted quantities to another country by aircraft or ship, and article 35.5 regulates the allowance on goods intended for sale to travelers on board of an aircraft in the course of a flight are exempt where the place of arrival is situated outside of Kosovo. The VAT tax rate is 16% of the taxable supply of goods. In cases where taxpayers-businesses export, such supply of goods is treated as exempt supply of goods with a right of crediting the VAT amount. Mechanisms for collection of the VAT tax from the supply of goods sent or transported outside Kosovo or in the interest of a non-resident costumer in their personal luggage remains to be regulated by Minister of Finance through issuance of a secondary legislative act. 3.9.4.2.3. Excise Duties - Please give a description of your current excise legislation, particularly in the following areas:

a) Control procedures (in particular, what use is made of tax stamps and other fiscal markings, including fiscal markings for mineral oils).

As of November, 2011, pursuant to Law on Excise No. 04-L/021, rules regarding payment of excise on tobacco products have changed. The excise tax is no longer paid when ordering tax stamps but when importing goods. Otherwise, control procedures remain the same, which means the party orders the stamps before imports take place. Customs orders the printing of stamps which then are sent to tobacco manufacturer. The tax stamps are put on the cigarettes and imported. At the border, the customs authorities check the authenticity of stamps to verify they are the same ones ordered by the company in question.

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Licensing procedures for exercise of activity in the fuel sector are defined by AI No.07/2010 pursuant to the Law No.03/L-138 on Trade of Petroleum and Petroleum Products in Kosovo. The Ministry of Trade and Industry, through the Licensing Office shall issue the License after application, submission of the required documents and fee payment. The License shall be issued for each activity and storage, respectively for each sale station point separately, and it has a validity of 2 years. This institution is also responsible for control of quality. The Customs only controls and verifies the validity of licenses and other related economic procedures. - What specific measures are taken to tackle illicit trade in excisable goods from third countries (e.g. cigarettes)? Customs has a good cooperation with neighboring countries and other countries with which Kosovo has trade exchanges. Such cooperation is materialized via regular exchange of electronic data in pre-arrival (SEEMS/SEED system) and exchange of information of the origin or other financial data for certain goods of the origin from these countries. In addition, Customs has signed cooperation agreements with most of the manufacturers of tobacco, in order to identify and combat illegal trafficking of cigarettes. Risk analysis for border controls is jointly prepared by the three border agencies: Border Police, Customs and Food and Veterinary Agency. Imports of excisable goods are a substantial part of the risk analysis with emphasis on the amount and value of excise to be paid. 3.9.4.2.4. Direct Taxation - Please explain the taxation of income of non-residents stressing any differences with the taxation of residents: Taxable base: Pursuant to Law on Personal Income Tax No.03/L-161, the object of taxation (taxable base) for resident taxpayers is taxable income from sources of income from both inside and outside Kosovo, while the object of taxation for non-resident taxpayers is only the taxable income from the sources in Kosovo. Non-resident taxpayers are not obliged for pension contributions and are taxed on the total amount of the salary as a gross income, while residents are taxed on the income after deduction of pension contributions as an obligatory deduction. Law on Corporate Income Tax, article 31 and Law on Personal Income, article 41 provide the procedures for withholding on certain payments to non-residents: a) Income attributable to a non-resident of Kosovo as an entertainer, such as a theatre, motion picture, radio or television artiste, or a singer or musician, or as a sportsman, from his/her personal activities exercised in Kosovo shall be subject to withholding by the payer of that income, whether paid directly or indirectly to the non-resident, so long as the gross compensation from such activities exceeds one thousand (1,000) € in a tax period; b) Income, other than income described in paragraph 1 of this Article, earned from agreements or contracts, whether written or verbal, with Kosovo persons or entities by a non-resident person or entity from services performed in Kosovo shall be subject to withholding by the payer of that income, so long as the non-resident person

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or entity has no permanent establishment in Kosovo and the gross compensation paid to the non-resident is more than five thousand (5,000) € in any tax period; c) Notwithstanding any other provisions in this Law, the amount of withholding under a) and b), shall be five percent (5%) of the gross compensation. Deduction of expenses: Pursuant to Law on Personal Income Tax (PIT) No. 03/L-161, Article 15 and Law on Corporate Income Tax (CIT) No.03/L-162, articles 8 and 9, a non-resident conducting business activity in Kosovo has equal treatment with the residents. Non-residents conducting business activity in Kosovo registered according to the respective legislation have the right to deduct all expenses related to the business activity. Allowed deductions are contributions provided for humanitarian, health, education, religious, science, cultural, environment protection, and sport purposes and according to Law on CIP are allowed as expenses up to maximum of 5% of taxable income calculated before deducting the charity contribution. Training expenses which do not exceed €1.000 for one employee in every taxable period are deductible expenses. (PIT Article 9)

Allowed deductible expenses are pension contributions, bad debt (upon fulfilment of criteria), business travel expenses, representation expenses that do not exceed 2% of yearly gross income, deduction of depreciation for material property specified in Law on PIT, Article 20 (Chapter IV). Exemptions: Pursuant to Law on Personal Income Tax No 03/L-161, article 7, exempt income includes income of primary contractors or sub-contractors excluding residents, that is generated by contracts with foreign Governments, their bodies and the international agencies and organizations with a special status – the European Union, Specialized Agencies of the European Union, UN, the World Bank, International Monetary Fund, International Atomic Energy Agency, and international inter-Governmental organizations providing goods and services in support of projects and programs for Kosovo. Income from dividends and interest from financial instruments issued or guaranteed by the Kosovo Public Authority are exempt from taxation for both residents and non-residents. Inherited property, education expenses paid by employer for the benefit of employee, expenses paid to the benefit of the employee directly and only related to health insurance premiums are also exempt income. (Article 8, Law on PIT). Tax rate: Tax rate for residents and non-residents is the same rate of 10% of taxable income, except when the rule of withholding tax on source for non-residents of 5% is applicable pursuant to article 41 of the Law on PIT and article 31 of Law on CIT.

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When annual gross income is of value less than €50,000, tax rates are 3% or 5% with a minimum payment of €37.5 per quarter. All rents payers withhold 9% of taxes at the time of payment or crediting. Taxable income in the taxing period starting January 1, 2009 and thereafter, the tax rate on personal income is charged according to the following rates: a. For the taxable income of €960 or less 0%; b. For the taxable income of €960 up to €3.000, 4% of the amount above 960€; c. For the taxable income above €3.000 up to €5.400, including the amount of €5.400,

€81.6 plus 8% of the amount above €3.000; d. For the taxable income above €5.400, €273.6 plus 10% of the amount above €5.400

(Law on Personal Income Tax, article 6). Tax incentives: Kosovo Tax legislation ensures an equal treatment of residents and non-residents. All non-residents generating income in Kosovo are entitled to the same tax incentives to residents pursuant to Laws in effect. The allowed period of carrying forward losses has been extended from 5 to 7 years. Special deductions are allowed for assets made functional for the first time in Kosovo. The printing industry and books sold to the final consumer are exempt from VAT. Equipment imported for production purposes is allowed a delayed payment of VAT of up to 6 (six) months. “One stop shop” business services provide business registration services, issuance of fiscal number, VAT Certificate and Import-Export Certificate in an integrated platform of Tax Administration, Business Registration Agency and Customs. Specific regime for permanent establishments, if any: Treatment of “permanent establishments” is regulated pursuant to article 29 of Law on Corporate Income Tax No 03/L-162. Permanent establishment means a fixed place of business through which the business of a non-resident person is wholly or partly carried out in Kosovo. The same provisions regulating the payment of direct taxes of non-residents are applicable to permanent establishments as laid out in both Law on Corporate Income Tax and Law on Personal Income Tax. - Does your legislation allow for levying withholding taxes on payments (dividend, interest, royalties or rent etc.) to other legal entities (natural persons or corporations) residing in and/or outside of Kosovo? Pursuant to tax legislation in Kosovo (Law on PIT and Law on CIT), income from dividends, for both residents and non-residents, is exempt income. Income from interest (10%) and rent (9%) for both residents and non-residents are taxable income, excluding the interest from financial instruments issued by Kosovo public authorities who is exempt from tax payment.

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a) What are the main features of the taxation regime on income from capital (personal and corporate)?

Pursuant to Law on Corporate Income Tax No.03/L-162 (Chapter IV) and Law on Personal Income Tax No.03/L-161 (Chapter VI), income from capital gains is taxed at a rate of 10%. Capital gain means income that a taxpayer realizes through the sale or other disposition of capital assets including real estate and securities. The amount of capital gain is the positive difference between the sales price of the capital asset and the cost of the capital asset and it shall be recorded as income for both legal entities and individuals. The cost of the capital asset is the amount that the taxpayer paid for the acquisition of the asset, increased by the cost of improvements, and reduced by depreciation and other expenditures allowable under Law on CIT and PIT. Gross income from capital gains does not include capital gains realized from the sale of the assets of the Kosovo Pension Savings Trust or any other pension fund defined under legislation on pensions in Kosovo, and, it is not taxed. If a sale of a capital asset involves an installment agreement that lasts more than the tax period in which the sale is finalized (all applicable documents are signed by all parties and the sales agreement is legally enforceable) any gain must be reported on a straight-line basis over the life of the installment agreement and the amount of gain attributable to any tax period must be reported on the tax declaration as income in that tax period. Also, if the sale of capital property is realized in premiums lasting more than the taxable period in which the sale has been finalized, every earning must be depreciated based on the straight line method and the amount of profit attributable to any tax period must be reported in a tax statement as an income of that taxing period.

b) Are there withholding taxes on income from capital (interest on bank deposits, debt instruments)? Please indicate tax base, tax rates, exemptions, fiscal treatment of residents (on domestic and foreign income) and non-residents, automatic reporting etc.

Each taxpayer who pays interest or royalties to resident or non-resident persons shall withhold tax at the rate of ten percent (10%) at the time of payment or credit and remit the tax withheld to an account designated by Tax Administration in a bank or financial institution licensed by the Central Bank of Kosovo. The withheld tax must be paid to the bank or financial institution by the 15th day of the month following the month in which the account is credited or the payment is made (Law on Corporate Income Tax, article 30 and Law on Personal Income Tax, article 39). Tax base for gross income from interest includes: interest from bonds and other securities issues by business organizations and the interest from savings accounts held in banks and other financial institutions.

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Interest on loans provided by financial institutions licensed by CBK to their customers in the ordinary course of their business and interest on financial instruments which are issued or guaranteed by a public authority shall not be subject to withholding. Gross incomes from interest that are exempt include the interest on Kosovo Pension Saving Trust or whatever other pension fund within Kosovo. Automatic reporting and collection mechanisms for direct taxes in general: Tax declaration is regulated pursuant to Law No. 04/L-102 on Amending and Supplementing the Law on Tax administration and Procedure 03/l-222. The tax declaration shall filled in a form developed by Tax Administration and shall include the taxpayer’s identification number, a computation of the tax due, and all other information required by the applicable legislation or administrative instructions issued pursuant to such legislation. Declaration is carried out in monthly basis, every 15th of the calendar month when it is calculated the withheld tax pursuant to tax rates determined by article 6 of Law No.03/L-222. The payment is done to an account designated by the Tax Administration in a bank or financial institution licensed by the Central Bank of Kosovo. In May 2010, Tax Administration has launched the electronic declaration service for declaration and payment of income tax and pension contributions.

c) Are turnover taxes or stamp duties applied to securities, credit contracts, insurance contracts, etc

The tax applied to securities is treated as income from the capital and is taxed pursuant to Laws on Personal Income Tax and Corporate Income Tax. Activities of Insurance Companies are treated pursuant to article 32 of the Law on Corporate Income Tax No.03/L-162 where a turnover tax of 5% is applied in gross premiums collected during a taxing period, for the insurance or reinsurance of life, property, or other risks. Taxes do not apply in securities issued by Government of Kosovo.

d) What treatment applies to dividends distributed by foreign companies that are resident in Kosovo? What mechanisms apply to avoid double taxation on dividends?

Pursuant to article 7 of the Law on Corporate Income Tax, incomes from dividends received from a resident or non-resident taxpayer are exempt from paying taxes. The exemption automatically eliminates double taxation on dividends. Article 28 of Law on Corporate Income Tax provides the mechanisms for avoiding double taxation in general. - How is foreign income, received by resident taxpayers, treated in Kosovo? What kind of system do you apply to prevent double taxation?

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Pursuant to Law on Corporate Income Tax No.03/L-162 and Law on Personal Income Tax No 03/L-161, article 4, the object of taxation for a resident taxpayer shall be taxable income from Kosovo source income and foreign source income. Pursuant to article 28 (Law on CIT) and article 37 (Law on PIT) on Avoidance of Double Taxation, a taxpayer resident in Kosovo who receives income from business and/or economic activities outside of Kosovo and who pays income tax on that income to any other State, shall be allowed a tax credit under this Law for the amount of income tax paid to such State that is attributable to the income derived from that other state. The tax credit allowed is limited to the amount of foreign tax paid on the income earned outside Kosovo, not to exceed the amount of tax due in Kosovo on that same income. To the extent that Kosovo tax on that income exceeds the foreign tax paid, the excess amount must be included in the computation of Kosovo tax due. Any applicable international agreement negotiated by the Minister, and ratified by the Assembly, on the avoidance of double taxation shall supersede the provisions of the present article as they relate to the parties to that international agreement. (See list of agreements with other countries on exchange of information and double taxation below) - Which is your general policy on transfer pricing? Does your legislation contain any specific rules in transfer pricing? Please explain. Transfer pricing is regulated by Law on Corporate Income Tax (article 27), Law on Personal Income Tax (article 36), and Administrative Instruction No. 14/2010 (article 20). The price used in conjunction with asset transactions or contract obligations between related persons shall be considered the transfer price. The price expected to be received in conjunction with asset transactions or contract obligations between parties that had been dealing according to market dominance shall be considered the open market value. The open market value shall be determined under the comparable uncontrolled price method and, when this is not possible, the resale price method or the cost-plus method or any other method as defined by sub-legal act. The difference between the open market value and the transfer price shall be included in taxable income. In the event that none of the previous methods can be applied, the Tax Administration of Kosovo may allow use of the transactional net margin method. Taxpayers who conduct transactions with related parties must maintain sufficient documentation to justify their choice of open market value determination method and to show that it produces an “arm's length” result. 3.9.4.2.5. Administrative cooperation and Mutual Assistance - Please indicate how you cooperate with other third parties in the field of administrative assistance in tax matters.

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Tax Administration has Memorandums of Cooperation signed with the following institutions: Kosovo Customs, the Prosecutor, Kosovo Business Registration Agency, Financial Intelligence Center, Post and Telecom of Kosovo, and several ministries. An integral part of the signed memorandums is the closer cooperation on exchange of information and conduct of joint activities. Tax Administration has continually received technical assistance from various international organizations including the European Commission, USAID, and IMF in the field of capacity-building, policy development, legislation, guidance, procedures etc. For cooperation with other tax administrations, see answer below on agreements with other countries for exchange of information and double taxation. - What is your policy to promote good governance in tax matters notably the international standard on exchange of information for tax purposes, on transparency of tax system and on fair tax competition? (MF/ATK) Kosovo Tax Administration Strategic Plan 2010-2015 outlines main principles which are in accordance with international best practices. The core principles cover: a. Integrity and honesty that enable an equal treatment of taxpayers and a fair

enforcement of Laws; b. Professionalism aiming to continuously improve towards the highest professional

standards; c. Transparency with an impact on building a strong bond between Tax

Administration and taxpayers; d. Respect, meaning respect of taxpayers and their rights and obligations. Tax policy in Kosovo is in accordance with international standards and best practices. It entails provision of equal treatment, access to information and tax services for all investors, either domestic or international. Tax system is based on the principles of self-evaluation and voluntary fulfillment. Voluntary fulfillment is supported by citizens who voluntarily determine their tax obligations and submit statements and payments. TAK has made continued efforts to facilitate the voluntary fulfillment so that the public trust can be gained at the possibilities of administering the tax system in a direct and transparent way.

In order to notify the, and cooperate with taxpayers, TAK has the public communication program which includes seminars and announcements in written and electronic media. - With which countries do you currently have Double Tax agreements or Exchange of Information agreements for taxation of capital and income? What kinds of income and capital sources are covered by such agreements? Are there any restrictions on the availability or use of such information? Please provide a version of an article on exchange of information for tax purposes you are currently negotiating with your

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contracting partners in relation to Double Tax agreements or Exchange of Information agreements. Double Taxation and Exchange of Information Agreements: a. The Agreement between Albania and UNMIK currently in effect. In November 2011,

negotiations have started in Tirana for a new Agreement. At the request of Tirana, we have agreed that negotiations be closed in Prishtina in the second round;

b. Agreement with Macedonia is in effect since June 2011; c. Agreement with Turkey has been signed at the experts level in November 2010; d. Agreement signed between Germany and former Yugoslavia in 1987 is in effect from

September 2011; e. Agreement signed between Belgium and former Yugoslavia in 1980 is in effect since

April 2010; f. Agreement signed between the Netherlands and former Yugoslavia is applicable. g. Agreement signed between the Great Britain and former Yugoslavia in 1981 is in

effect since September 2010. The new Agreement has started to be negotiated in February 2012 in Prishtina;

h. Agreement signed between Finland and former Yugoslavia in 1986 is in effect since September 2011;

i. Kosovo has initiated in 2010 signing of an Agreement with Italy; at the request of Italy, in 2011 Kosovo has submitted a summary of tax system to them;

j. During December 2011 negotiations have been held in Budapest at the experts’ level; the Agreement is in its last finalization stage;

k. In February 2011 an agreement with the Czech Republic has been negotiated in Pristina and is in its last finalization stage.

Other agreements initiated by Kosovo and which are at the negotiation phase are with: Monte Negro, Austria France, Slovenia, Croatia, Sweden, Denmark, Poland, USA, Switzerland, Qatar, and Saudi Arabia. Such agreements cover personal and corporate income taxes as regulated by the Laws in effect in Kosovo. Article on Exchange of information taken from an agreement for “Avoidance of double taxation and prevention of tax evasion for income taxes”:

ARTICLE 25 INFORMATION EXCHANGE a. Competent authorities of the Contracting States shall exchange such necessary information to implement provisions of this Agreement or administration or implementation of internal Laws of the Contracting States related to taxes of every type and description put on behalf of the Contracting States, their political sub-divisions or local authorities, as far as those taxes are not in contradiction with the Agreement. Information exchange is not limited by Articles 1 and 2;

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b. Every information received, in accordance with paragraph 1, by a Contracting State shall be treated in secret the same way as the information received under the internal legislation of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the calculation or collection of taxes, with the imposition or pursuance related to tax breaches or related to complaints against taxes referred in paragraph 1, or supervision of the above. These persons or authorities shall use the information for such purposes only. They may disclose the information in judicial procedures or decisions. c. In no case provisions of paragraphs 1 and 2 shall be interpreted in the meaning of imposing on any Contracting State the duty to:

i. Implement administrative measures different from Laws and administrative practices of that State or the other Contracting State;

ii. Provide information prohibited under the Laws and normal administrative practice of that State or the other Contracting State;

iii. Provide information that could disclose a business, commercial, industrial, professional secret or trade secret, or information the communication of which would be in contradiction with the public policy (public order).

d. If the information is requested by the Contracting State in accordance with this Article the other Contracting State shall use the means to collect the information to ensure the requested information even if the other State may not need such information for purposes of their taxation. Obligation included in the previous sentence is subject to limitation in paragraph 3 but such limitations in no way shall be established to allow the refusal of a Contracting State to ensure the information just because such an information does not present a domestic interest. e. In no case provisions of paragraph 3 of this Article shall be interpreted to allow a Contracting State to refuse provision of information just because it is held by a bank, other financial institution, an appointed or person acting in an agency or in the capacity of confidence or because it is related to property interests of a person. - Do you have agreements with third parties for the recovery of taxation, and/or the serving of official notices from other states?(MF/ATK) Part of the above-mentioned agreements on double taxation and exchange of information is the recovery of taxation and exchange of information including official notices between tax authorities of Kosovo and the respective countries. 3.9.5. Employment, social policy, public health policy, education and training, and

research technology and innovation 3.9.5.1. Employment and social policy 3.9.5.1.1. Social Dialogue - How is the right to join or not to join trade unions legislated for? Explain through which legislation. What are the rules governing the unionisation in the public sector and for civil servants? Please describe limitations if any. How is the freedom of

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association (set-up of trade-unions, professional associations) implemented in the public administration in general and in the Army, the Police and in the Judiciary in particular? The right to join and organize in trade union organisation in Kosovo is a general right and it is unique for the public sector and civil service. I is right that is primarily guaranteed by the Constitution of the Republic of Kosovo, (Article 44, 2) which stipulates that “Freedom to establish and join the trade unions, with the aim to protect the interests, is guaranteed. This right may be limited by a specific Law for special categories of employees”. Furthermore, a general provision on the trade union organising is set out also by the Labour Law No. 03/L-212 (Article 88) which stipulates that “Employees and employers are guaranteed the freedom of association and action without undue interference from any other organisation or public body”. Pursuant to Constitution and the Labour Law, a special Law on Trade Unions No.04/-L-011 was adopted. This Law sets out the main concrete provisions on regulation of organising and joining the trade unions in Kosovo. It regulates and determines the right and freedom of the employees to establish and freely and voluntarily organize in trade union organizations in the public and private sector, with the aim of the representation and protection of economic interests, social and professional workers from work and work relation. The Law on Trade Unions does not regulate the rights and freedoms of action and trade union organizing in the Kosovo Security Force and other services regulated by special Laws. The Law on Civil Service of the Republic of Kosovo No. 03/L-149 (Article 46) guarantees and allows among other rights also the right to join and organize in associations and trade unions, except in the cases that it may be a conflict of interest. The Law on Police No. 04/L-076 (Article 46, 1 & 2) gives the same civil and political rights to the police members as other citizens, being subject only to restrictions deemed necessary for the effective exercise of their police powers and duties. The Law stipulates that the police officers shall enjoy the same social and economic rights as other public servants, including the right to organize or to participate in representative organizations. As regarding Kosovo Security Force Law on Trade Union Organisation explicitly excludes the regulation of this category of employees. While according to legislation on Kosovo Security Force, the Kosovo Security Force is prohibited to organize in Trade Unions. At the other hand, the civil employees in the Ministry of Security Force are subject to the Law on Civil Service if not otherwise regulated by specific legislation. Concerning the Judiciary, the Law on Courts No. 2010/03-L-199, the Law on Special Prosecutions No. 2008/03/L-058 and Law on State Prosecution No. 2010/03/L-225 do not contain any provision on the freedom of organizing and joining the trade union organisations. - What is the legal basis for bilateral social dialogue (i.e. between employers' organisations and trade-unions)? The bilateral social dialogue is regulated by Labour Law No. 03/L-212 (Article 90), which stipulates that employers’ organizations or their representatives and the employees’ organisations or their representatives may conclude Collective Agreements

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in state level, branch level and enterprise level. The Collective agreement shall be concluded in writing and for a certain period of time, maximum 3 years. The Labour Law stipulates that the Collective Agreement must not include provisions that limit the rights of employees and that are less favourable than the ones defined by the Law. - What are the trade unions and employers’ organisations recognised at central, regional and branch levels? What are the criteria for recognition? Provide a list of their names, dates of creation and coverage. How are these organisations entitled to recognition as social partners’ organisations (criteria set out by Law, code of labour, etc)? There are two recognized trade unions at central level: a. The Union of Independent Trade Unions of Kosovo (BSPK); b. Confederation of Free Trade Unions of Kosovo (KLSK). There are 18 recognized trade unions at regional level: a. The Farmers Union Federation of Kosovo (FSBK); b. Independent Trade Union of Radio Television of Prishtina, date 12.06.2009; c. Independent Trade Union of Kosovo Correctional Service, date 30.09.2009; d. Independent Trade Union of Municipal Housing Operations of Kosovo (SPVKBK),

date 30.09.2009; e. Federation of Metallurgy and Chemical Industry of Kosovo (FMIKK), date

26.01.2010; f. Federal Union of Health (FSSHK), date 01.02.2010; g. United Union of Education, Science and Culture of Kosova (SBASHK), date

26.02.2010; h. Independent Trade Union of small business and handicraft (SPEVZ), date

23.03.2010; i. Kosovo Police Union (SPK), date 19.04.2010; j. Independent Trade Union of Transport and Communication of Kosovo, data

29.04.2010; k. Independent Union Agrokompleks of Kosovo (SPAgK), date 29.04.2010; l. Independent Union of Construction and Design of Kosovo (SPNPK), data

29.04.2010; m. Federation of Association of Municipal Enterprise and Environment of Kosovo, date

29.04.2010; n. Kosovo Industry Trade Union Federation of Textile and Leather Shoe, date

29.04.2010; o. Independent Trade Union of Miner, date 30.04.2010; p. Independent Energy Union of Kosovo (SPEK), date 25.03.2010; q. Independent Union of Jurisprudence of Kosovo (SPJK), date 12.04.2012; r. Workers' Union of RTK, date 12.04.2012 There are 121 trade unions organized at local level.

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The criteria for acceptance/recognition of trade unions are regulated by the Law No. 04/L-110 on Trade Union Organizing in Kosovo and with Administrative Instruction No.03/2012, on regulation and determination of trade unions' registration criteria and procedures. According to the Law on Trade Union Organising (article 12), the workers organisations (Association Federation and Trade Union Confederation) shall apply to the respective body of the Ministry of Labour and Social Welfare in order to formalize the jurisdiction of the organization: a. The criteria for the registration in of Trade Union Association are that it must have

at least 10 Trade Union members; b. The Trade Union Federation may be registered if there are at least 2 associations of

trade union activities of the same or similar membership of which is at least 10% of employees at the level of respective sector;

c. The Trade Union Confederation may be registered if in the context of its work, at least 2 Federations of Trade Union activities, membership of which is at least 10% of employees at the country level.

There are two organizations at national level which represent the employers: Chamber of Commerce (KCC) and Kosovo Business Alliance (AKB).

- Tripartite social dialogue: explain how it is regulated and assess how it is functioning. At which levels (central/local) is tripartite social dialogue established? What are the trade unions and employer organisations that participate in this tripartite process (list them) and what are the main criteria for their participation? What are the main areas covered by tripartite consultations? Have there been tripartite central agreements concluded over the past 5 years (list them)? Are there any plans to modify or develop tripartite bodies in the future? The tripartite social dialogue in Kosovo is organized through the Social and Economic Council, which as an independent tripartite body that, leads the consultation at the national level. The Law on Socio-Economic Council No. 04/L-008, regulates and defines the organization, scope, forms of work and the overall functioning of the Social Economic Council, as well as defining terms and criteria for representation of social partners in this tripartite body. According to the Law the Socio Economic Council is the main tripartite social dialogue body in the national level. Since May 2011, Socio Economic Council has held in total seven meetings. Pursuant to the provisions of the Decision No.09/57 dated 13.03.2009 and provisions of Article 9 of the Law No. 04/L-008 on SEC, which provides for SEC tasks, responsibilities and competences, over 30 issues on employment, social protection and other economic policy-related issues were addressed. Among many other issues discussed at SEC meetings, the main tripartite social dialogue body, see in the following the main achievements: a. Fully operational SEC as the highest tripartite body at the national level; b. Adoption of the Law No. 04/L-001 on Trade Union Organization in Kosovo; c. Adoption of the Law No. 04/L-008 on Social Economic Council; d. Establishment of 5 SEC Tripartite Professional Commissions;

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e. Fully operational SEC Secretariat in charge of administrative works of SEC; f. Decision on appointing the Working Group for developing the Initial Draft of the

new Collective Agreement at national level; g. Sub-legal act for setting the conditions and criteria for registration of trade union at

the Ministry of Labour and Social Welfare; h. Sub-legal act on Essential Services; i. Sub-legal act on the Structure and Composition of the SEC members’ Selection

Committee from Employers’ and Workers’ organizations.

The employees trade unions participating in social dialogue tripartite Socio Economic Council are the Union of Independent Trade Unions of Kosova (BSPK) and Confederation of Free Trade Unions of Kosovo (KLSK), The employers’ organizations participating in social dialogue tripartite Socio Economic Council are Kosovo Chamber of Commerce (KCC) and Kosovo Business Alliance (AKB). The criteria for recognition of the trade union organisations as social partners are set out by the Law on Socio-Economic Council No. 04/L-008 (article 7) as the main body of tripartite social dialogue in Kosovo. The Law sets the criteria of representation in the Socio Economic Council which means the criteria of trade union organizations recognition as social partners. The conditions and criteria for representation in SEC, for the Employees’ Organizations are the following: a. The total number of members and syndicate members payment not be less than 10%

of the total number of employees in the Republic of Kosovo; b. the number of collective contracts related to the enterprises or different institutions; c. The number of trade union branches, affiliated to trade union forms of organization

at the national level, which apply for representation at SEC; d. The number of resolved labour disputes and other disputes through Collective

Agreements and mediation; e. Membership in International Organizations of workers. The conditions and criteria for representation at SEC for Employers’ Organizations are the following: a. The total number of affiliated companies, which cannot be less than 10% of the total

number of enterprises registered in the Tax Administration of the Republic of Kosovo;

b. Number of workers employed in companies affiliated in Employers’ Organizations which apply for representation at KES;

c. Number of resolved labour disputes and other disputes through Collective Agreements and mediation;

d. Number of enterprises and other economic entities which directly affect the promotion of employment and unemployment alleviation;

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e. Membership in International Organizations of Employers; The main areas covered by tripartite social dialogue, namely SEC are set out by the Law on Socio Economic Council (Article 9), according to which the tripartite social dialogue shall include: the establishment, development and progress of social dialogue in the Republic of Kosovo; legal initiatives for issuance or supplementing and amending the legal and sub-legal acts in the field of labour and employment, social protection and economic policies in general; review and evaluation of social policies as well the undertaking measures for the creation of social stability in the Republic of Kosovo; promotion of ideas for solving social issues and problems in Kosovo; policies promoting employment, reducing unemployment, competitiveness, labour productivity, prices, wages and minimal wage of employees in the Republic of Kosovo; review of Draft Laws and sub-legal acts in the field of employment and social protection, in order to provide recommendations to the Government and Assembly of the Republic of Kosovo; providing the assessments and opinions for the responsible bodies regarding the implementation of primary and secondary legislation in the field of employment and social protection; Assessment of the functioning of works councils in enterprises in private and public sector and forms of statutory organization of enterprises; Providing and ensuring recommendations for the prevention and elimination of informal labour market in the Republic of Kosovo. Since 2001, when the so called Tripartite Consultative Council was established (now upgraded to Socio Economic Council), as the first social dialogue mechanism in Kosovo, only one tripartite agreement by social partners at national level was signed in 2004, namely the Tripartite Collective Agreement. At that time this agreement was signed between Kosovo Government, Kosovo Chamber of Commerce as a representative of employers and the Union of Independent Trade Unions as the representative of employees. This agreement was not implemented entirely due to financial cost. The agreement was not officially abrogated which means that it is still into force. While for the first time, the Government of Kosovo and social partners have reached a consensus on the minimal wage in Kosovo for 2011. - Autonomous bi-partite social dialogue: please assess the state of development of autonomous bipartite social dialogue. At what levels are collective agreements signed mostly? Please supply information about the coverage by collective agreements. Are collective agreements signed in public sectors such as education, health etc.? What is the situation with regard to trade union recognition and signature of collective agreements in publically owned enterprises? Is there collective bargaining or involvement of workers at enterprise level? Although there is legal basis, in the autonomous bipartite social dialogue, there is no significant progress in this regard. One of the reasons for lack of progress is there is still a lack of proper dialogue between organizations of employers and employees as a result of insufficient trade union activity. It has just been signed a collective agreement at national level in the public health sector. There are trade unions established in public

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companies such as Post and Telecom Trade Union of Kosovo (PTK), Independent Energy Union of Kosovo (SPEK), Kosovo International Airport “Adem Jashari” Union etc. 3.9.5.1.2. Labour Law and health and safety at work

I. Labour Law - Please present an overview of the legal framework in the field of labour Law (i.e. related to conditions of work and pay; employment and employment protection; industrial disputes) The Labour Law No. 03/L-212 sets out the legal base which aims to regulate the rights and obligations deriving from employment relationship, the procedures for their realization in compliance with the International Labour Conventions and EU legislation. The provisions of this Law are applicable for the employees and employers of the public and private sector. In addition the Law is applicable also for the foreign citizens and persons without citizenship who are employed by employers in the Republic of Kosovo. Provisions of the Labour Law are applicable for employees and employers, whose employment is regulated through a special Law, if the special Law does not provide for a solution for certain issues deriving from employment relationship. While the provisions of the Law are not applicable to employment relationships within international missions, diplomatic and consular missions of foreign states, International Military Presence established in the Republic of Kosovo under the Comprehensive Proposal for the Status Settlement and international Governmental organizations. The Labour Law contains provisions which prohibit any kind of discrimination in respect of recruitment, training, promotion of employment, terms and conditions of employment, disciplinary measures, cancellation of the contract of employment or other matters arising out of the employment relationship and regulated by Law and other Laws into force. Special provision of the Law prohibit direct or indirect discrimination of persons with disabilities is prohibited during employment, promotion and capacity building, if that job may be performed adequately by a person with disabilities. In addition the Law also defines what is not considered discrimination, by stating that any distinction, elimination or giving priority, relation to any designated place of work, based on certain criteria required for that job. In addition the Law regulates and prohibits the gender based discrimination stating that in the case of hiring new employees, employer is obliged to create equal opportunities and criteria to both male and female applicants. Labour Law No.03/L-212 consists of 12 chapters. The main chapters which regulate of the Law are Chapter I. The general provisions, Chapter II Establishing employment relationship, Chapter III Systematization of Employees in Working Posts, Chapter IV Working hours, Chapter V Breaks and Absence from Work, Chapter VI Occupational Protection and Safety, Chapter VII Salary and Benefits of Employees, Chapter VIII Termination of Employment Relationship, Chapter IX Procedures for the Exercise of

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Rights Deriving from Employment Relationship, Chapter X Organizations of Employees and Employers, Chapter XI Punitive Provisions, - Are there reforms undertaken or planned (please explain purpose and calendar)? MLSW has organized a comprehensive workshop related to the implementation of the Law for one year. The recommendation deriving from this meeting is that the Labour Law shall be amended. One of the main reasons for the need to amend the Law is the continuous need and plans for transposition of EU directives into the national Law. In addition, the review of the right to maternity leave and other issues that are considered as necessary to be amended based on the recommendation of the parliamentary commission. The amendment of the Labour Law will be included in the Legislative Programme of the Government in 2013. - Does your labour Law apply to other categories of workers, apart from persons in paid employment? Which categories of workers are not covered by the labour legislation? Are workers in the public and private sectors treated differently (if so, please explain)? The Labour Law 03/L-212 is applicable to employees and employers of the private and public sector, employees with the foreign citizenship and without citizenship who are employed by employers of the Republic of Kosovo. The Labour Law is implemented for the categories of persons who are not employed with payment such as interns and persons who are attending the vocational trainings. The Article 6 of the Labour Law on interns specifies that the employer may conclude an employment contract with an intern who shall accomplish all rights and obligations from employment relationship the same as the other employees. At the other side the employer is obliged to offer occupational protection and safety based on the Law No. 2003/19 on Health and Safety at Work and Workplace. In addition the Law specifies that the practical work of an intern with high, university and post-graduate qualification shall not last more than one (1) year, whereas the practical work of an intern with secondary education shall last not more than six (6) months. The employer, in agreement with interested party, may engage interns without pay or any other rights emerging from the employment relationship, apart from being obliged to offer occupational safety and protection according to the Law. The employer, who engages the intern without compensation of salary, shall be obliged to evidence the intern in the list of evidences without compensation of salary. The categories of employees which are not regulated by the Labour Law are the civil servants of the Republic of Kosovo, Kosovo Police, Kosovo Security Force and the kosovar employees who are employed in diplomatic missions accredited in Kosovo. The employees in public and private sector are treated equally by provisions of the Labour Law. - What are the legal forms governing employment relations (e.g. open-ended contracts; fixed-term contracts; temporary work; part-time work; other forms)?

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The legal forms governing employment relations are set out by the Labour Law (Article 10). The Law states that an employment contract shall be concluded only in written form and signed by the employer and employee. There are three legal forms of contracts: indefinite period contract, fixed period contract, specific task contract. a. Indefinite period contract which contains no indication of its duration shall be

deemed to be for an unspecified period of time; b. Fixed period contract may not be concluded for a cumulative period of more than

ten (10) years. A contract for a fixed period of time that is expressly or tacitly renewed for a continued period of employment of more than ten (10) years shall be deemed to be a contract for an indefinite period of time;

c. A contract for a specified task may not be longer than one hundred and 120 days within a year.

Article 11 of the Law sets out and defines the content of each of the types of contracts mentioned above. - Does the system guarantee that labour contracts continue to apply where an economic entity is transferred to a new employer? Does it include rights regarding collective redundancy? Regarding individual dismissal/redundancy? The Labour Law guarantees the continuation of labour contract where an economic entity is transferred to a new employer. Article 13 of the Law sets out that in cases of statutory change, change of employer, respectively, the next employer from the previous one shall take over all obligations and responsibilities of the employment relationship that are applicable on the day of the change of the employer, in compliance with the Collective Contract and employment contract. The previous employer is obliged to inform properly and entirely the next employer for the rights and obligations from the employment contract or Collective Contract if applicable, to be transferred to the next employer. The employees’ rights in cases of collective redundancy are regulated by the Article 76 of the Labour Law. According to this article, a collective dismissal is considered the dismissal of at 10% of the employees but not less than 20 employees discharged within 6 months period. In these cases the employee may not be discharged until the employer provides a single severance payment to the employee. The severance payment shall be paid to the employees with indefinite period contract on the date of termination at the following scale: a. from 2 to 4 years of service, 1 monthly salary; b. from 5 to 9 years of service, 2 monthly salary; c. from 10 to 19 years of service, 3 monthly salary; d. from 20 to 29 years of service, 6 monthly salary; and e. from 30 years of service or more, 7 monthly salary. In addition, if within a period of 1 year from the termination of the employment contracts of employees, the employer hires employees with the same qualifications or

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training, the employer shall not hire other persons before offering to hire the employees whose contracts have been terminated. The Labour Law also regulates the individual dismissal/redundancy (Article 70, 71 and 72). These articles define the justification of contract termination by employer, Notification period for termination of employment contract, conditions, justifications and the rights of employees in the cases of individual dismissal and redundancy. The employer is obliged to execute the salary and other allowances up to day of the termination of employment relationship. The employer who does not intend to renew a fixed term contract must inform the employee at 30 days before the expiry of the contract. Failure to do so entitles the employee to an extension of employment with full pay for thirty 30 calendar days. - Does the legal system provide for unemployment benefit? Is such provision made in the labour Law or in the social security Law? The actual legislation into force on labour and labour relations does not provide for unemployment benefit due to the lack of primary legislation on the promotion of employment and assistance to jobseekers. - What is the minimum age for employment? From what age and under what conditions may children perform minor jobs? Are there specific provisions concerning the number of hours that people of less than 18 years may work? If so, what do they specify? How important is child labour (numbers and sectors/occupations)? Please provide information on the Government’s measures in place to fight child labour and on the situation. According to the Labour Law (Article 7), an employment relationship may be concluded by any person of 18 years of age or above. An employment relationship may also be established with a person between fifteen 15 and eighteen 18 years of age, who may be employed for easy labour that do not represent a risk to their health or development and if such a labour is not prohibited by any Law or sub-legal act. No employer may conclude an employment contract with a person below 15 years of age. Article 45 of the Labour Law specifies that an employee under 18 years of age shall not work under conditions, which under their nature or circumstance performed, may damage the health, safety or the moral of the employee. Therefore the employer is obliged by the Law to adopt the necessary measures for occupational safety and health protection of youth by specifying the risks of the labour process. According to Article 45 of the Labour Law an employee less than 18 years of age shall not conduct the following dangerous labour: a. underground, under water, dangerous heights or closed premises; b. dangerous machinery, equipment and tools used in the labour process and in the

transportation of heave shipments; c. unhealthy environment, which exposes youth to dangerous substances, factors or

processes, temperatures, noise or quake that may be harmful to health;

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d. under especially difficult conditions, such as extended working hours or certain circumstances during the night, or closed environment.

Ministry of Labour and Social Welfare has adopted the Administrative Instruction No. 01/2012 on the easy and prohibited labour for persons under 18 years old. MLSW has also adopted the Administrative Instruction No. 10/2011 on the classification and systematization of the hazardous work which damages the health of employees. According to the Labour Law the provisions to be implemented for the list of forms of hazardous labour shall be reviewed each year by respective bodies, comprised of representatives of Ministry of Labour and Social Welfare, other line ministries of the Government, organisations of employers and organisations of employees (trade-unions). According to the Labour Law, persons under eighteen shall not exceed 30 hours per week of full time working hours (Article 20). According to the Article 23 of the Labour Law the extended working hours are prohibited for employees less than 18 years of years. The Article 26 of the Labour Law sets out that the extension of working hours (overtime) shall be prohibited for employees less than 18 years old, while the Article 27 prohibits the night shifts for persons under 18 years old. There are no official data on the number of children engaged in work as well as about the sector in which they are engaged. In order to combat child labour, the Government of Kosovo, has taken some concrete measures to combat the child labour by establishment of the Kosovo Committee on prevention and elimination of the child labour at the central level. In addition, at local level, each municipality has established the local committee for prevention and elimination of the child labour. - What is the maximum weekly working time? Are there specific rules for certain sectors, occupations or type of work? According to the Labour Law the maximum weekly full working time is 40 hours, unless it is regulated otherwise by the Law for specific cases and categories (Article 20). According to Article 23 of the Law in extraordinary cases when there is an increase of volume of works and other necessary cases, by the request of the employer, an employee shall work extended working hours (overtime) for a maximum of 8 hours per week and it may last only as long as it is necessary. In addition the employees may work overtime voluntarily in agreement with the employer). Working hours may be reduced to no less than 20 hours per week for jobs with high level of hazard (Article 22). The extended working hours are prohibited for the persons under 18 years old. Article 26 of the Labour Law prohibits the extended working hours for employed persons less than 18 years old and in cases of pregnancy, a single parent with a child under 3 years old or with a child with disabilities. Night shifts may be performed by single parents and women with children younger than 3 years of age or with children with permanent disabilities only with their consent. Article 43 of the Labour Law states that an employee shall not be commissioned to work longer than the full-time working hours

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or a night shift, if a competent body for the assessment of health condition, on the basis of health insurance, concludes that such a task may worsen employees’ health condition. - Is there a guaranteed minimum level of pay? Is this a statutory minimum or is it subject to collective agreement? How is pay determined? What are the relevant criteria? The minimum wage in Kosovo is guaranteed by the Labour Law. The minimum level of pay in Kosovo is subject to collective agreement through tripartite social dialogue. According to the Labour Law (Article 57) the Government of Kosovo shall define a minimum wage at the end of every calendar based on the proposals from the Social- Economic Council. During the last two years the Social Economic Council (the tripartite partners) has proposed a minimum wage to the Government. According to Article 57 the minimum level of salary is defined based on the: 1. the cost of living expenses, 2. the percentage of the level of unemployment, 3. general state in the labour market, and 4. general level of competitiveness and productivity of the country. In addition this Article also provides that minimum wages may be determined by collective agreements at national, branch and enterprise level, but shall not be less that any minimum wage approved by the Government, proposed by the Socio Economic Council. - In what way is the payment of wages and salaries guaranteed? What are the guarantees in case of insolvency of the employer? The payment of wages and salaries is guaranteed by the Labour Law. According to Article 55 of the Law, an employee is entitled to a salary defined in compliance with the Law, Collective Contract, Employer’s Internal Act and Employment Contract. The right to salary, overtime, salary compensation and other income, shall be exercised by the employee on the basis of the agreement reached with the employer for the work performed and time spent at work as defined in the employment contract. According to the Law the salary shall be paid in Euros and shall be paid at least once per month. The Labour Law does not regulate the guarantees or rights of employees in case of the insolvency of the employer. This issue is regulated by the Law one Liquidation and Reorganization of Legal Persons in Bankruptcy. Article 65 of this Law “Distribution Priorities”, states that the claims’ for unpaid pre-petition employees’ wages (limited to two months’ salary or wages per person) are part of the distribution priorities of funds distribution. In addition it also includes as a distribution priority the unsecured claims, including wage claims not subject to the unpaid pre-petition wages. - Are there any rules regarding information and consultation of workers at establishment or undertaking levels? The Labour Law, Article 13 on the change of employer regulates that the previous employer is obliged to inform, in writing, all employees for the transfer of obligations and responsibilities to the next employer. However the Labour Law does not include specific provisions regarding information and consultation of workers.

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- How the right to strike is regulated? Are there restrictions on the right to strike in the private and public sectors? The right to strike in Kosovo is regulated by the Law on Strikes Nr. 03/L-200 which guarantees guarantee freedom and rights, related to organization and participation of Kosovo employees on strike under international standards and it regulates and defines the rights of employees on strike, conditions and ways of organizing the strike and also the rights and obligations of employees and employers while being on strike. The Law on Strikes, Article 3 on organization of the strike in state institutions prohibits the right to organize the strike by the Kosovo Security Force, Kosovo Police, Fire Services, Emergency Health Services and other bodies of particular interest for the Republic of Kosovo, if by special Law is not regulated differently. In addition, according to Article 15 of the Law on Strikes the strike cannot be held or must be suspended in case of extraordinary condition for as long as this condition continues. According to this Article the extraordinary conditions include natural disasters, war state, epidemics and cases when the freedom of election is endangered. Article 17 on the services of vital importance specifies that the the organization of strikes at the activities of special public interest may, and at the activities on which work interruption, based on work nature, risk life or health of people, or cause damages with high consequences, may be realized if the special conditions defined by the Law are met. A special condition is to provide the minimum of work process and production, to ensure the life and health of people, or non-causing of damages with high consequences. According to this Article the services of vital importance include: protection services for security of the country, emergency medical and hospital services, water supply services, electricity power supply services, air traffic control services, services for protection against fire, the prisons services, services for veterinary protection when are in questions the different outbreaks and hygiene-sanitary services. - Could you please present an overview of administrative capacity in this field: which Ministry is responsible? Which other administrative bodies are involved? Could you inform about staff numbers and responsibility levels? The Ministry of Labour and Social Welfare (MLSW) is the main institution in the field of labour which is responsible for policy and legislation development and monitoring of its implementation. The labour area is located under the Department of Labour and Employment of the MLSW. MLSW has in total 920 employees. There is a Labour Inspectorate, which operates under the Ministry of Labour and Social Welfare and it is the main responsible body for monitoring the implementation of the labour legislation (please refer to the answer on the following question regarding the number of staff). A very important role in this area is also played by the Socio Economic Council the main tripartite social dialogue body at the national level. In this regard, very important role is played by the Union of Independent Trade Unions of Kosovo (BSPK), Confederation of Free Trade Unions of Kosovo (KSLK), Kosovo Chamber of Commerce (OEK) and Kosovo Business Alliance (AKB) as the main tripartite social dialogue partners, which among other, help also on shaping of policies and legislation in this area.

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- Please inform about organisation and staff numbers of the labour inspectorate responsible for the monitoring of working conditions and the application of labour Law. The Labour Inspectorate (LI) is established by Law 2002/9 (on Labour Inspectorate) as an Executive Authority. Labour Inspectorate consists of the Chief of Labour and three deputies (for labour relations, labour safety and health), 50 labour inspectors and five employees in the administration. Table 85. Organisation Structure of Labour Inspectorate

- Which court or courts are competent to deal with individual and collective labour disputes? The courts responsible for individual and collective disputes are the Basic Courts as regulated by the Law on Courts No. 2010/03-L-199. Health and Safety at Work - Please present a general overview on the policies and strategies in the field of health and safety at work and their implementation. Provide also a list of related strategic and policy documents indicating the principal goals and the time period covered, in particular indicating whether you have a Strategy for health and safety at work for the current period. The Government policies and strategies related to safety and health at work include MLSW Sector Strategy 2011-2013, Legislative programme 2012 and EPAP 2012, all of which foresee to draft a new Law on safety and health at work. The MLSW developed an initial Draft Law on health and safety at work, which is based on the so-called Essential Directive No. 89/391/EEC (on introduction of measures to initiate improvements in the area of employees’ health and safety at work). The Draft Law was consulted with international experts; the same experts provided training to labour inspectors on the Draft Law and the Directive. In principle the draft was agreed

LABOUR CHIEF INSPECTOR

Deputy inspector forsafety on work

Deputy inspector for health Administration

Labour Inspectors

Deputy inspector of working

MINISTER OF MLSW

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by social partners and it is expected to be approved by the Government by the end of August 2012. The Government has no specific strategy for safety and health at work; however such a strategy is planned to be drafted this year. Moreover, the MLSW has envisaged establishing a database on health and safety during 2013. - Please present an overview of the legal framework regarding health and safety at work. Health and safety at work is currently regulated by Law No. 2003/19 on Occupational Safety, Health and Working Environment and the two related acts: i) Regulation No. 2004/01 for sanitary and technical measures of safety at work, and ii) Regulation No. 2005/02 on risk assessments at work. Pursuant to Labour Law No.03/L-212, three Administrative Instructions on health and safety at work have been issued: a. Administrative Instruction No. 10/2011 for classification and systematisation of

dangerous work which seriously affect health of employees; b. Administrative Instruction No. 11/2011 for the classification of hard and dangerous

forms of labour that may damage the health of pregnant and breastfeeding women; c. Administrative Instruction No. 01/2012 for systematisation and classification of

hard and dangerous works for persons under 18; d. The Draft Administrative Instruction on security, injuries’ classification and level of compensation for injuries occurred at work is in the stage of preliminary consultations in accordance with the Government Rules of Procedure No.09/2011, Article 7.

- Please provide information regarding the transposition into Kosovo Law of the Framework Directive (89/391/EEC), i.e. draft legislation prepared and the planned time-table for its adoption. The Framework Directive (89/391/EEC) is being transposed into the Draft Law on occupational safety, health and the working environment. According to our estimations, the rate of transposition of the directive in the Draft Law in question is almost completed. The Draft Law is planned to be approved by the Government in October this year. - Do you have legislation corresponding to other EU Directives in the field of health and safety at work? The Law No. 2003/19 on occupational safety, health and the working environment is partly harmonized with the Framework Directive (89/391/EEC). Besides this Directive, the legislation in the field of safety and health at work also reflects other relevant directives or guidelines such as: a) The Council Directive 92/85/EEC of 19 October 1992 (tenth individual Directive

within the meaning of Article 16 (1) of Directive 89/391/EEC) is partly transposed in AI no.11/2011 for the classification of hard and dangerous forms of labour that may damage the health of pregnant and breastfeeding women.

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b) Council Directive 94/33/EC of 22 June 1994 on the protection of young people at work is transposed at a relatively high degree in the Labour Law and AI No.01/2012 for systematisation and classification of hard and dangerous works for persons under age 18. Besides this, the AI No.10/2011 superficially touches many other directives related to biological, physical and chemical agents, then work with asbestos in construction, etc.

- Please provide an overview of the bodies responsible for enforcement of health and safety at work legislation. Is there a labour inspectorate responsible for the monitoring of health and safety at work? Could you inform about staff numbers and organisation? How do you assess adequacy of capacities? The Executive Body of the Labour Inspectorate is the responsible body for monitoring implementation of legislation for safety and health at work. This body is established by the MLSW in line with the ILO Convention No. 81 and the Law 2002/9 on the Labour Inspectorate. The Inspectorate reports to the MLSW and the organisational hierarchy is as follows: a. MLSW, ii) Minister; b. Chief Labour Inspector; c. Three deputies of Chief Inspector for Labour relations, Safety at work, Protection

of workers’ health and work environment; d. 50 labour inspectors; e. 5 administration staff. The Inspectorate function in all Kosovo municipalities and its responsibilities include monitoring the implementation of legislation, carrying out inspections at working places and may instruct termination of work in cases where there is no safety at work, provide information and advice, etc. Considering the responsibilities and workload, the capacities of the labour inspectorates are weak in quantitative terms. The ratio of one inspector per number of inhabitants is yet not sufficient for effective labour inspection activities. However the Government of Kosovo has continuously worked on increasing the capacities of the Inspectorate as in terms of trainings also in terms increasing the number of inspectors which was lower in number in previous years. Our estimation is that the labour inspectors are well prepared in professional terms, receiving continuous trainings as regarding EU legislation in this area. 3.9.5.1.3. Background data - Please provide the main demographic indicators (for the last 5 years):

a) net population increase; population by regional distribution, sex and age structure (less than 15 years; more than 60 years; over 75 years); demographic dependency ratio (population aged 65+ over population aged 15-64); how id demographic dependency (expected to evolve over the coming decades? Demographic forecasts if available.

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Table 86. The average annual net growth percentage of the population is about 21.800 inhabitants.

Natural Increase by Year Years 2007 2008 2009 2010 Annual average for 4 years

Natural increase 22,465 22,253 21,735 20,746 21,800

Note: in this calculations are not included viral phenomena that have occurred abroad. Vital data for 2011 published at the end of June 2012

b) Population according to regional distribution, Table 87. Population and its distribution in the level of Kosovo municipalities, (2011)

Rank Municipalities Total

1 Deçan 40,404 2 Dragash 34,350 3 Ferizaj 109,659 4 Fushë Kosove 35,222 5 Gjakovë 95,388 6 Gjilan 90,882 7 Gllogoc 59,278 8 Graçanica 10,655 9 Hani i Elezit 9,498 10 Istog 39,089 11 Junik 6,134 12 Kaçanik 33,780 13 Kamenica 36,178 14 Klina 38,993 15 Kllokot 2,550 16 Leposaviq − 17 Lipjan 58,173 18 Malisheva 55,552 19 Mamushë 5,586 20 Mitrovica 72,748 21 Novobrdo 6,751 22 Obiliq 21,782 23 Partesh 1,783 24 Pejë 97,282 25 Podujeva 89,420 26 Prishtina 200,838 27 Prizren 179,494 28 Rahovec 56,926

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29 Ranillug 3,852 30 Shtërpcë 6,972 31 Shtime 27,515 32 Skenderaj 51,480 33 Suhareka 60,572 34 Viti 47,433 35 Vushtrri 70,536 36 Zveçan − 37 Zubin Potok −

Total 1,756,751 c) Gender and age structure (less than 15 years; more than 60 year; over 75 years);

demography dependency rate (population aged 65+ compared with the population 15-64 years);

Table 88. Population by age and sex

Age group Gender

M F Total % Total %

< 15 254,951 51.8 237,501 48.2 > 60 80,138 47.1 90,103 52.9 65+ 55,091 46.7 62,770 53.3 75 + 16,995 43.4 22,199 56.6 15-64 574,017 50.1 572,420 49.9

Source: Preliminary data from Census 2011 (form database)

d) How demographic dependence is (expected evolution in future decades)? A demographic projection, if this is possible.

After the publication of final data from Census (2011), KSA will make demographic projections.

e) Fertility: birth rate per 1000 inhabitants, total fertility rate, means age of women at child bearing, net reproduction rate;

Table 89. Statistcs of births: percentage of births per 1000 inhabitants:

Years Promille (‰)

2007 17.31

2008 17.02 2009 16.59 2010 15.90

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Source: Department of Vital Statistics KSA. (Vital data for 2011 will published at the end of June 2012)

Table 90. Total birth/delivery rate. Years Births %

2007 28,908 1.73 2008 28,806 1.70

2009 28,436 1.66 2010 27,602 1.59

Note: in this calculation are not included births that occurred outside Kosovo

f) Average age of pregnant women, The average age of pregnant women are not followed – is investigated by KSA, the following is the average age of the mothers who gave birth for years as following: Table 91. Average age of the mothers who gave birth for years as following

g) Total percentage of reproduction

Within a year, reproduction in Kosovo is 1.19% or 20,746 people per year.

Life expectancy at birth (by gender), at age 40 and 65, healthy life years expectancy at birth and at 65; if available, key data on life expectancy by socio-economic status. Table 92. Life expectancy at birth (by gender)

Year Average Male Female 2009 69.9 68 71.8

Source: Demographics survey, social and reproductive health in Kosovo 2009 KSA for years and other age groups KSA has no data.

Years The average years of mothers who gave birth 2007 27.3

2008 27.6

2009 27.7

2010 28.1

2011 28.1

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h) Migration: emigration and immigration: crude rate of net migration, main trends, main developments in absolute figures, percentages of population, age groups, regions and ethnic groups.

Kosovo Statistical Agency is not monitoring and does not have representative data on migration. - Please provide the following indicators:

a) Unemployment rate by gender, by communities, by educational attainment (primary, secondary, tertiary); further information on vulnerable groups affected by unemployment (young people under 25, older people, persons with disabilities, migrants etc.); highlight regional differences;

Labour market in Kosovo is characterized by long-term unemployment of youth, women, persons with disabilities and minorities. See the table below. Table 93. Long-term unemployment of youth categories, women, persons with disabilities and minorities 2007 2008 2009 2010 2011 Category Long term Unemployment

93.% 93.5% 94.2% 94.0% 93.8%

of Youth (15-24) 98,695 101,658 103,896 106,342 107,122 Unemployed females 156,679 158,120 161,131 160,856 157,922 Persons with disabilities

1726 1814 1903 1937 2030

All minorities 30133 30509 30695 29860 29711 Source: Work and Employment Annual Report 2011/MLSW According to the KSA Labour Force Survey 2009, with a rate of approximately 64%, the persons with the lowest qualification are most likely to become or remain unemployed, and this rate decreases to approximately 46% on the middle level (secondary education), while persons with college or university education exhibit an unemployment rate of around 15%. As related to employment, females are in a negative position than males at all levels of education, but the differences decrease with relation to the higher the qualification (See the graph below. The data are categorized by gender in the order: male, female and all).

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Graph 1. Unemployment by education attainment

Kosovo is officially divided in two levels; localities and municipalities. Therefore we don’t posses data on regional level differences.

b) Employment rate by gender, by communities, by educational attainment (primary, secondary, tertiary); employment rate of young people under 25, of older workers (55-64); highlight regional differences; employment rate for women combined with number of children;

Employment rate (presents the percentage of employed persons of the working age population in Kosovo, according to recent data of labour force survey (LFS), 2009 reaches 26.4%). Table 94. Employed rate in Kosovo Year 2005 2006 2007 2008 2009 Total 28.9 29 26.5 24.3 26.4 Male 46.4 46.5 40.6 38 40.2 Female 11.9 11.9 12.7 10.6 12.6

Source Kosovo Statistics Agency According to KSA Labour Force Survey 2009, even though lower than for males, these differences between education levels are even more apparent for females. In fact, on the tertiary level of education, females almost reach the same employment rate as males. In other words, the qualification factor plays an important role for females because they are bound to suffer more under respective deficits and profit more from high investments in human capital (See the graph below. The data are categorized by gender in the order: male, female and all).

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Graph 2. Employment rate by education level and gender, KSA Labour Force Survey 2009

According to the last KSA Labour Force survey 2009 data on both genders, the employment rate is lower for 15-24 age group with only 10.7% to 3.7% for males and females, in part, can be seen that it is due to continued education, but also can be the consequence of difficulties to achieve the first entry in the labor market. In the older age group population (55-64), bigger difference between men and women is presented. The main cause of this discrepancy may be tendency of woman to go into earlier retirement. In this graph you can see the level of employment rate of age group over 65 that is 4.6% to 0.8% for males and females, while the corresponding figures for 2008 were 2.5% to 0.3% for males and females (See the graph below. The data are categorized by gender in the order: male, female and all). Graph 3. Employment rate by gender and age groups 2008-2009, ESK Labour Force Survey 2009

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Kosovo is officially divided in only in two levels, localities and municipalities, thus we don’t posses data on regional level differences.

c) employment by sector (public/private; branches) and by gender; Table 95. Division of employment between public and private sector, 2007-2011 Year 2007 2008 2009 2010 2011

Employment 225,037 218,231 233,338 245,502 251,510 Public 74,366 74,701 74,190 77,164 78,068 Private 150,671 143,530 159,148 168,338 173,442 Source: KAS & Pensions Trust Fund

d) population by educational level and gender; According to the last KSA Labour Force Survey 2009, all persons in Kosovo aged 15 years and above, almost 41% of males and over 65% of females in Kosovo had completed less than secondary school.

According to the last KSA Labour Force Survey 2009, all persons in Kosovo aged 15 years and above, almost 41% of males and over 65% of females in Kosovo had completed less than secondary school. Only every twelve male and every sixteenth female had a college or university education. Even if one takes into account that, on the one hand, some young people have not yet finished their education and, , younger age groups generally tend to reach higher levels of education than their older counterparts, these figures must give reason for concern since a person’s qualification determines both his or her employment chances and the risk of unemployment. Both of these effects will be demonstrated in the following sections.

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Graph 4. Population by educational level and gender

e) income distribution (income quintile share ration, GINI index; at risk of poverty rate and threshold, definitions, highlight vulnerable groups);

There are no official data available on income distribution. GINI index measures the inequality in consumption. This may be applied for the variables such as incomes, consumption, land property etc. In our report we have used the consumption variable. The definition is made based on the consumption, excluding the values of household assets. GINI index in 2009 in Kosovo was 30.2. According to this indicator it appears that in general the inequality in Kosovo is relatively low. Note: The minimal value of GINI is zero, while the maximal value is 1. Therefore GINI index varies from 0 to 1. One GINI (100%) happens when a person has all the consumption in place, while the others do not consume anything. In general, one GINI from 30.2 is quite low indicating that the consumption distribution in Kosovo for 2009 is relatively equal. (Source: Household budget survey, World Bank, KSA 2009).

f) family structure: main trends, number of children per family; age of mother; divorce rate; percentage of one-parent families; percentage of single households.

The number of children per family is not yet defined according to the last census. These data are planned to be available in August this year. Regarding the age of mother, these data could be derived only from the vital data which follow the birth rates. According to this the average age of mothers in birth in Kosovo is 28.1 for the year 2011.

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Table 96. Average age of mothers at birth Year Average age of mothers at birth 2007 27.3 2008 27.6 2009 27.7 2010 28.1 2011 28.1 Table 97. Percentage of divorces in 100 marriages in Kosovo.

The percentage of one-parent families and the percentage of single households can not yet be derived by the Regional Employment Office. These data will be available after final publication of the data. 3.9.5.1.4. Employment Policy - What is your overall view of the labour market situation in Kosovo and of the main medium and long-term issues/challenges? With total of 325.261 persons registered as unemployed at public employment services (PES) in Kosovo by the end of 2011 – representing a decline of -3.0% compared with 2010, out of which 93,8% are long term unemployed, 48.6 female, 60% of them unskilled, age group 15-24 years face the highest level of entrance in the labour market, 72% of all unemployed registered persons are belonging to a level below high school education. On average, an employment officer in Kosovo in 2011 should support around 1,787 unemployed persons. In 2011, the Public employment services in Kosovo have recorded 9,776 job vacancies accumulated for a year. Private sector provided about 67% of vacancies. During 2011, the office of public employment services assisted 7,484 direct employments of registered persons as unemployed in the new work place. A total of 3,449 entries in training have been registered during 2011. Long term and continuous challenges in labour market are: low and slow economic development, high unemployment among youth, lack of human capacity in PES, limited budget in support of active measures of labour market, low ability of increasing lobar market demand. - Are there any labour market forecasts? Currently, MLSW does not have any labour market forecast.

Year Divorces 2007 9.26 2008 5.72 2009 7.69 2010 7.94

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- Institutional/administrative setting: Who has the responsibility for designing and implementing employment policies at central, regional and local levels? Who is responsible for policy coordination among the relevant departments in the administration at central, regional and local levels? Please provide information about staff numbers and responsibility levels for employment policy. Ministry of Labour and Social Welfare in the organization structure has the Department of Labour and Employment, within which are Division of Work and Employment and Division of Professional Education. Employment policy drafting is done by the Department of Labour and Employment, respectively Division of Employment at the central level. Implementation of these employment policies is a responsibility of Employment Office under the management of Regional Employment Centres at regional level and the whole process under the supervision and monitoring of Department of Labour and Employment, respectively Division of Labour and Employment at central level. Currently the process of coordination of employment policies is centralized from top down. Department of Labour and Employment with Employment Division comprised 14 officials at Central level. Out of this number, 2 employers are in charge at central level for drafting the policies. - Does a public employment service (employment office) exist? If yes, what is its legal status and how is it organized? What are the main tasks/functions of the public employment service? What is its relationship with the Ministry of Labour? What are its resources and staff? The MLSW has the Department of Labour and Employment with two divisions: Employment (which has 7 Regional Employment Office and 23 Municipal Employment Office) and Vocational Training (which has 8 Centre for Vocational Training). The Administrative Instruction No.02/2009 amending the Administrative Instruction No.08/2005 on organizing, systemising and management in Ministry of Labour and Social Welfare (Article 20) determines the arrangement and definition of organization and job systematization, regulation and organizational structure, management and structural regulation of the function and institutional principles of MLSW. Table 98. Department of Labour and Employment in total including central, regional and local

Central Level

Regional Level

Local Level

Total

Department of Labour and Employment

9 0 0 9

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Division of Labour and Employment

5 95 84 184

Vocational Training Division 4 79 0 83 Total 18 174 84 276 Source: Division of Labour and Employment/MLSW 2012

Based on the table above we can estimate that the central level which makes 6.5% of human resources in relation to regional and local level which makes up 93.5%, is difficulties to deal with the dynamics of labour market development. Department of Labour and Employment is organized as follows: a. Employment Division; b. Vocational Training Division. According to the AI No. 08/2005 on organizing, systemising and management in Ministry of Labour and Social Welfare, Department of Labour and Employments is responsible for: a. Formulation, design and implementation of employment policies without any

discrimination, b. Development and implementation of employment strategy adopted by the highest

authorities c. Management and supervision of employment (Regional Employment Office,

Vocational Training Centres and Municipal Employment Offices), d. Drafting and implementing strategy for vocational training, approved by higher

authorities, e. Drafting and implementing of necessary legislation in the field of employment. f. Assurance of technical assistance and monitoring of the divisions regarding to

implementation of employment policies, g. Administration and supervision of trainings to ensure tasks assigned are

successfully completed h. Ensuring that offered services are available for the entire territory of Kosovo, i. Communication and full and effective cooperation between all actors dealing with

labour and employment field, j. Maintaining regular contacts with donors regarding to the design and

implementation of local projects and international mechanisms in the field of labour and employment,

k. Coordination and cooperation with social partners for development and promotion of social dialogue in Kosovo, in accordance with the Primary and Secondary Legislation which is applicable to these issues.

- Explain what are the main policy documents/strategies, their main goals and the time period covered. Explain how they are monitored and present monitoring results. MLSW has drafted and adopted the Employment Strategy 2010-2012, Sectorial Strategy 2010-2012 and Vocational Training Strategy 2012-2014. There are also Action Plans for implementation of these strategic documents which are being implemented.

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Employment Strategy /2010-2012 aims to increase the employment rate by improving the investment climate and reducing the cost of business in order to increase the speed of job creation by encouraging the opening of new businesses; promoting a strong base of skills and greater development of human capital through formal education and vocational training systems, improving also the functioning of the labour market through the best institutions of the labour market, policies and procedures. tEh Sectorial Strategy 2010-2012 fundamental goals is to enhance the level of employment and raising the professional skills, depending on the requirements of the labour market. To develop the cooperation with regional countries (EU members and those outside the EU) and increase employment opportunities workforce from Kosovo. Monitoring of the implementation of actions under the strategy is carried out by monitoring groups established under the Ministry of Labour and Social Welfare. In the function of the effective monitoring, a matrix of progress has been designed. A monitoring and evaluation process is ongoing. - What is the legislative framework for the implementation of employment programmes and measures? How do you monitor implementation? For the implementation of Programs, projects and employment measures, MLSW approved the secondary legislation in the form of Regulation No. 01/2012 for Active Labour Market Programs. Implementation of this Regulation will be monitored initially by officers of the Labour and Employment Division at central and regional level by the Directors of Regional Employment Offices and at the local level by the Head of the Municipal Employment Offices through reports and labour market information. - What are the active labour market measures in place? What is the share of unemployed addressed by these measures (if possible by measure)? If possible provide data for the last five years. Through the program "Active labour market for employment generation Program" UNDP, has mediated for employment (617). “Vocational Training in Kosovo" from Lux Development from Luxemburg (250); “Assistance on Vocational Education and Training in Kosovo "Kosvet -6, (890); Public Works Kosovo in 2011 (1809); “Protection of forests from fires'' to MAFRD (60);”Beautiful Kosovo” EC MLSW (241); "Stock employment” contracted activity with KBA (1500). Table 99. Total of jobseekers mediated for employment is 7484.

Years 2007 2008 2009 2010 2011 Total

No. of beneficiaries through active employment measures

5993 5845 7232 6787 7484 33341

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% -19% 1% 20% -10% 10%

Source: Labour and Employment Division/MLSW, 2012 Data presented in the table above show that in 2009 there was an increase of beneficiaries thorough active labour measures to 20% compared to previous year. This comes as a result of the expansion of active labour measures. Whereas, in 2011 an increase of 10% compared to 2010 also as result of the expansion of active labour measures. - Describe strategy and measures undertaken to address informal/undeclared work and their results Governmental Program on Prevention of Informal Economy in Kosovo and its Action Plan 2010-2012 follows the objective of the prevention of informal Economy. The primary objectives of the Governmental program and action plan on the prevention of informal economy are focused in the improvements of various subjects such as: a. organizational structures of responsible authorities, b. legislation, c. the coordination of official duties and sources of responsible authorities, d. cooperation agreements between responsible authorities, e. the treatment for public and private institutions, f. development of the entrepreneurial sector and the decrease of labor market

distortions, g. the awareness of the influence and prevention of informal economy, h. information technology systems and the instruments of responsible authorities, as

well i. Taxes.

Based on the Government Strategy for the prevention of 2010-2012 informal economy and the Action Plan for implementation of this strategy MLSW in cooperation with the TAK and the Kosovo Police, Labour Inspectorate has conducted joint inspections, and the result of these inspections is 3.219 legalized workers and 94 validated subjects which until that time worked unregistered. - What are the registration rates of the unemployed? What is the share of men and women; of young people and older unemployed; of various communities?

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Table 100. Registration of unemployment by gender age group Indicators 2007 2008 2009 2010 2011 Registration of unemployed 334595 335942 338895 335260 325261 Gender Female 156679 158120 161131 160856 157922 Male 177916 177822 177764 174404 167339 Age group 15-24 98695 101658 103896 106342 107122 Female 47398 48891 50404 52071 53172 25-39 147411 147995 149382 148059 142276 Female 70080 70639 72022 71796 69636 40-54 66286 65585 65819 63631 59995 Female 30071 29857 30176 29372 27857 55+ 22203 20704 19798 17228 15868 Female 9163 8774 8551 7674 7349 Ethnicity Albanian 304461 305433 308200 305400 295550 Serbs 13428 13198 13190 13021 12810 Other minorities 16706 17311 17505 16839 16901 All minorities 30133 30509 30695 29860 29598 Source: Labour market information in Kosovo, Monthly report/LED/MLSW Decrease of registration of unemployed in 2011 compared with previous years is the result of increased outflow (cancellation, job-training) in relation to inputs. Decline of registration is about - 3%. - Funding: How is employment policy funded? What is the amount allocated (eg as a share of the central budget; for the last 5 years)? What are the sources for funding your active labour market policy? What is the amount spent on active labour market measures (as a share of budget; as a share of GDP; over the last 5 years) Employment policies are currently being funded from two sources: from the Kosovo Consolidated Budget and donors, for more details see the table below. Table 101. Funding of Employment Policy

2007 2008 2009 2010 2011

Total Kosovo Consolidated Budget

717.473.900 1,000,903,323 1,139,378,232 1.295.096.800 1,414927,737

Funding of employment policies from KCB

345,000 358,990 300,000 2,065.000 3.171.400

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% of support of employment policies from KCB for MLSW

0.05% 0.04% 0.03% 0.16% 0.22%

Donators 905,000 1,218,000 1,801,810 4,450.000 3.102.500

Source; Labour and Employment Division/MLSW/2012 - Describe recent major reforms which have been implemented. What were the main objectives of the reforms? Explain what are the planned reforms and their current status. What is the expected impact of these reforms? Management Information System of Employment is put in place across all Public Employment Services in Kosovo. Minimum structural and functional standards for the Public Employment Services are approved by the Ministry. The main objective of these reforms is to increase the quality of public employment services, client-focused approaches, providing for effectiveness of active labour market to serve customer needs, to define a better understanding of labour market of national and local level. Researching, processing, analyzing, and recording the labour market information of local to Regional Offices and Municipal Employment Services and systematization, updating and development of the database that is accessible to all. Based on the Strategic Development Plan 2012-2014, a document approved by the Government, it is planned to continue with capacity building reforms to design policies at the Department of Labour Employment establishing also Divisions for drafting policies and Policy Implementation Division, reorganization of professional training, creating capacity for providing training, organization of employment offices through sharing the responsibilities of development, drafting and monitoring the area of employment and social cohesion and the Formation of the National Employment Service. The expected impact of these reforms will be expressed by increasing the quality in the Public Employment Services in the field of information, advice, mediation, research, career orientation, focus on customer, expansion and deepening of active measures of labour market and on the all building quality services to the labour market. 3.9.5.1.5. Social inclusion - Is there an official definition of absolute and/or relative poverty and/or social exclusion? What is the absolute/relative poverty line and how is it calculated? Absolute Poverty: It is defined without taking into account the overall level or distribution of welfare in the society. Absolute poverty is defined as a minimum income, food, or consumption of calories. Relative Poverty: defines that category of people who are poor within the general scope of the distribution of welfare, within a given society. It is expressed with the distance

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(separation) between the individual consumption, income or access to services, compared to the norm of society, in which the person lives. According to the approach of relative poverty, poverty is increased with the average income of the state. If all revenues and expenses will be doubled after calculating the inflation, it would have a substantial reduction of absolute poverty, while poverty will remain completely unchanged. Kosovo’s poverty lines were established using the Cost of Basic Needs method (Ravallion 1994). Food component of the poverty line starts from calculating calories of 2.100 Kilo-calories per person per day, based on the average consumption of the households close to poverty line. The nonfood component of the poverty line is based on the share of total expenditures that poor households allocate to nonfood items. The poverty line is the sum of the food and nonfood components. The extreme poverty line is set equal to the food poverty line, meaning that a household that is extremely poor has a total consumption level below the amount required according to the poverty reference food basket. According to the latest Poverty Assessment of the World Bank in 2009, more than third of the population, respectively 34%, live below the absolute poverty line from 1.55 euro per person per day, and 12% living under the extreme poverty line from 1.02 euro. Poverty lines in rural and urban areas are almost the same, with slight differences in terms of seven regions of Kosovo. - Please explain who are the vulnerable groups and present data/estimates about their size (e.g. persons with disabilities, unemployed, those in the informal sector/subsistence agriculture, ethnic/cultural communities (please specify), families, children and young people, women, elderly, single parent families etc.)? Describe social exclusion in terms of urban/rural and of regional factors. Describe the regional distribution of ethnic/cultural communities. One of the most vulnerable groups being faced with a serious socio-economic situation are RAE community, besides a higher rate of poverty and social exclusion, they have a low education level and high scale of illiteracy, due to early school dropout, especially girls who in very rare cases complete their education. Other vulnerable groups include: children, elderly and families in which the contributions and their earnings do not meet vital needs. A vulnerable group is considered also the category of people with disabilities, women from rural areas, housewives and long-term unemployed. Consequently, these categories are pressed to dropout school due to socio-economic conditions. Opportunities for these groups in accessing different services are limited and vary in terms of the place they live or reside. Engagement of the RAE community in the labour market is limited both in urban and rural areas and opportunities to engage in

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employment are mainly work force (physical work), due to lack of qualification for any occupation. The categories of people with disabilities, women and long-term unemployed living in rural areas, have a tendency to move to urban areas to find employment opportunities or integration. The most disseminated community in all regions of Kosovo is RAE community. Other communities such as Turkish, and Bosnian are located more in one or two specific regions. The Serb community is widespread in most regions, cohabitating with a number of majority of Albanian community and others, besides the three municipalities in northern Kosovo which are not integrated in Kosovo society, even though they are part of the benefits of various schemes and social services. Table 102. Unemployment over time, 2007-2011 Year 2007 2008 2009 2010 2011 Registered unemployed 334,595 335,942 338,895 335,260 325,261 Source: Labor and employment report 2011, MLSW Main categories of unemployment are long-term unemployed, youth, women, and minorities. Table 103. Long term unemployment of youth, women, persons with disability, and minorities Category

2007 2008 2009 2010 2011

Long term unemployment

93.00% 93.50% 94.20% 94.00% 93.80%

Youth (15-24) 98,695 101,658 103,896 106,342 107,122 Unemployed women

156,679 158,120 161,131 160,856 157,922

Persons with disability

1,726 1,814 1,903 1,937 2,030

All minorities 30,133 30,509 30,695 29,860 29,711 Source: Labor and employment report 2011, MLSW Please explain what are the policy responses with regard to the individual groups? For all these categories, MLSW has developed alternative forms of protection regardless of ethnicity, race and religion. The main policies of MLSW are: protection of abandoned children, children of divorced parents, neglected children, abused and mistreated children, children with disabilities, children at work, physically abused children and those victims of trafficking.

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Since 2000, the social assistance scheme is assisting poor families in need, which is provided as social benefits through monthly payment in cash, exemption from electricity payment to a certain amount, provision of free medical services, etc. Regarding ethnic minority groups in other ethnic-majority municipalities we have established sub offices for minorities which provide various social services. Such offices are established for the Albanians in 3 northern Kosovo municipalities, for Serbs in the municipalities of Peja, Rahoveci, Gjilan, Vushtrria, and for the Turkish community in Mamusha municipality. Regarding people with disabilities, except services offered by local institutions, there are schemes which are designed for those permanently disabled or receive disability cash benefits which are financed from state budget and administered by MLSW. These schemes include; the scheme supporting families who have children with disabilities aged 1-18, disability pensions’ schemes including support for trainings, rehabilitation and employment of persons with disabilities. All these are regulated by the special Laws for each category of benefits as well as Laws for specific social services. - Who has the responsibility for designing and implementing social inclusion policies at central, regional and local levels? Who is responsible for policy coordination among the relevant departments in the administration at central, regional and local levels? Describe the organizational structure of institutions involved in these policies, the role of social service providers, NGOs, advocacy groups, the co-ordination among the institutions and the coverage of their activities. The main institution responsible for designing and implementing social inclusion policies is the Ministry of Labour and Social Welfare in the central Level, in cooperation with the Municipal Departments of Health and Social Welfare in the local Level, and the Office for Good Governance within the Prime Minister Office which has a coordination role. The coordination of the policies in social inclusion in the central level, in most of the cases is carried out through the establishment of the Working Groups or Commissions, which are mandated to draft a policy documents, strategies or action plans. There is not yet any coordination body established in the local level in respect to drafting the social inclusion policies. The implementation of the policies is done by the local level institutions (Municipal Departments of Health and Social Welfare) and the Departments of the central body that operates locally or regionally. Key institutions involved in designing and implementing these policies were MLSW, in central level, Municipal Departments of Health and Social Welfare through the Centres for Social Work, which are under municipal responsibility since 2009, and provide social and family services to all citizens.

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Except public institutions, an important role is played by NGOs, which can be divided into two categories: (1) NGO associations which are engaged in providing social and family services through donor support and are also contracted for services by institutions (MLSW and Municipalities) and (2) NGOs which advocate and monitor the implementation of legislation and social inclusion policies. - Which are the financing authorities and mechanisms? The main financing authority on central level is the Ministry of Finance which allocates funding to MLSW to cover the costs and professional development of services for all citizens who meet the requirements under legislation into force. The allocated budget for the MLSW is divided on the basis of several programs and sub-programs covering social services benefits, social assistance and other services of residential care. Since 2009, the municipalities are responsible to finance the Social Work Centres. The main financing source is the central budget, through which the budgetary central and local organizations are finance. The municipalities have specific grants for education and health as well as General Grant distributed by Central Government, under which they have the possibility to finance social and family services. The municipalities also have revenues which could finance services according to certain priorities. Through the donor support, the criteria and funding formula have been designed for social and family services. This was presented to municipalities in the form of guidelines for budget allocation by the General Grant and on the revenues to finance social and family services through which implementation of policies of social inclusion will be supported. Explain the policy towards social inclusion of Roma: what are the main strategic/policy documents, their objectives? What is the state of implementation? What are the results? Where do you see the next challenges? - Provide information (data) on the employment situation of the various minority communities; describe the policies and measures put into place to support employment and social inclusion of these communities and their results. How do you assess the results? Strategy and Action Plan for Integration of Roma, Ashkali and Egyptian, 2009-2015, is among the priorities of Kosovo Government. The strategy is in its third year of implementation. The OPM /OGG is continuing the process of monitoring, coordination and reporting on implementation of the Action Plan for RAE communities. Now it is in the process of finalizing the report for 2011. In regard to achievements, a report highlights the problems, difficulties and challenges that are faced by the institutions in the process of meeting the objectives envisaged in the strategy and action plan for integration of RAE. Regarding RAE labour market information, see refer to the tables above on employment and unemployment, under category 'other minorities' part of which category is also the RAE community.

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Challenges: a. Non appearance of RAE community members for registration to public employment

services to assist on their inclusion to labor market. b. Low level of economic development of Kosovo. c. Lack of the Law on promotion of employment and monetary compensation. d. Illiteracy rate of RAE community members. e. Low level of application of a portion of RAE in active measures of labour market. In line with the Strategy and Action Plan for Integration of Roma, Ashkali and Egyptian 2009-2015, respectively with aim to achieve the Objective 3 “Increase the employment rate of Roma, Ashkali and Egyptian communities through the mediation, vocational training and employment in public work”, during 2011, 478 jobseekers (211 females) from the community of Ashkali, 207 Roma (99 females) and 156 others (74 females) have been registered at Public Employment Centres. Therefore the total number of registered unemployed of RAE is as following: a. Ashkali 4183 – 2,245 female, b. Roma 3683 – 1,679 female, c. Others 937. The number of employed RAE during 2011 are as follows: a. Ashkali 239 - 55 female, b. Roma 38 - 4 female, and c. Others 33 - 8 female. A total number of 69 (20 female), Ashkali 29 (6 female), roma 10 (3 female), others 30 (11 female) have participated in VTC trainings in 2011. 138 jobseekers of RAE communities have been mediated - 62 Roma, 67 Ashkali, 9 Egyptian were registered to Public Employment Offices in 2011. A total number of RAE beneficiaries included in social services benefits in 2011 is 210, out of which 54 Roma, 102 Ashkai and 54 Egyptian . Within the period January – December 2011, under the social assistance scheme for families who have children with permanent disabilities under ages 1-18 years, in total 21 families have applied, out of which 9 are still active in this scheme (5 Ashkali, 2 Egyptian and 2 Roma). Since 2009, a total number which receive the benefits under this scheme is 97 (Roma 24, Ashkali 53 and Egyptian 19) who receive a benefit of 100 euro per month. 53 children are sheltered in the next of kin families, out of which 37 Roma, 13 Ashkali and 3 Egyptian.

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Based on the Law No. 2003/15 for the Social Assistance Scheme and other sub legal acts, the Social Assistance Scheme in Kosovo was dedicated to all poor families, regardless of ethnicity, language, age, tender etc. According to the data of CSW-MLSW 2011, the social assistance in Kosovo is provided to 35,762 families with 155.998 family members. See below the break donw per RAE communities: a. Ashkali: 1.384 families with 7.354 family members or 3.87 %; b. Roma: 923 families, with 4.207 family members or 2.58 %; c. Not declared: 72 families with 335 family members or 0.2 %; d. Declared as others: 175 families with 785 family members or 0.49 %. According to the data of December 2011: a. Ashkali: 1.395 families with 7.429 family members or 4.00 %; b. Rom: 951 families, 4.353 family members or 2.73 %; c. The undeclared: 56 families, with 252 family members or 0.16 % and d. Declared as others: 188 families with 879 family members or 0.54 %. Within the period January-December 2011, the respective Commission of MLSW/DSW, has reviewed a total number of 309 requests for the current emergency assistance. 261 requests were approved (52 families have benefited an amount of 300€, while 209 families have benefited an amount of 100 €). Within period January – December 2011 the MLSW has spent 36.500€ on this purpose. Since under this category the ethnicity was not specified according to estimations around 7% of the beneficiaries belong to RAE community. A Memorandum of Understanding has been signed between MLSW-MF-KEK for 2011 to subsidise the families under the Social Assistance Scheme, which applies also to RAE community beneficiaries of this scheme. Please describe recent major reforms which have been implemented. What were the main objectives of the reforms? Explain what are the planned reforms and their current status. What is the expected impact of these reforms? The Memorandum of Understanding has been signed in January 2009 to transfer responsibilities of social services and social assistance from the central (MSLW) to local level (municipalities). The Municipal Health Departments have taken responsibility in managing and financing activities of the Centers for Social Work, as the main institutions that provide social services. With the support of European Commission funded project, "EU support to MLSW" a reforming process has started as regarding adaptation and harmonisation of the primary and secondary in the area of social services and social assistance. Among the objectives accomplished with the support of this project is the draft action plan for implementation of sectoral strategies, revision of social assistance scheme, development of five social service standards, preparation of legal framework for the licensing of providers of social and family services as well as capacity building of 5 pilot municipalities for preparation of local development plans for social and family services.

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The reforming process of MLSW has been supported also by DFID project "Strengthening the administrative and financial capacities for decentralization of social services" supporting the MLSW and Municipalities. This project started in 2011 it objectives are to establish a policy advisory committee for social services decentralization, unit costs for social services, designing criteria and funding formula for social services, capacity building of municipalities etc. With the support of the mentioned projects, the MLSW is in the initial implementation phase of amended primary legislation (Law of Social Assistance Scheme), whereby the secondary legislation drafted for licensing of providers of social services and the implementation of the five minimum standards for social and family services are approved. The advisory committee for social services is composed of MSLW, MF, MLGA, Municipalities Association and the OPM. This Committee is developing a 5 year strategy for social services decentralization. Even though it was envisaged to create a financing mechanisms for social and family services, since 2012 family services were financed by the General Grant of municipalities. DFID project has provided advice to advisory committee for preparation of a financing formula, which after having presented to Grants Committee in March 2012; the Ministry of Finance has decided to provide guidelines to municipalities on budget allocation for social services under the General Grant, until Law on Local Finance is amended. The MLSW objective is to transfer to municipalities the responsibilities for residential and day care services for elderly, children and persons with disabilities. Therefore the MLSW is making further efforts to establish appropriate mechanisms and capacities to implement the reform of complete decentralization of social and family services to local level. At the same time it will continue with the process of licensing of providers of these services. of the non-governmental sector which will be engaged in providing social services, while the municipalities will have the funding formula for social services in place in order the social inclusion policies are effectively implemented. How do you see the main challenges for combating poverty and for promoting social inclusion in your society? Lack of economic statistics prevents an accurate assessment of current economic and social situation. Based on estimates of current situation and future goals, opportunities for addressing the challenges of fighting poverty and promoting social inclusion will depend on: a. Institutional coordination and management between central and local institutions, to

achieve objectives for solving multidimensional problems of poverty. b. Creating jobs is important, and opportunities to create enough work places are

limited.

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c. Temporary employment can play an important role - mostly public works programs and their linkage with involvement of beneficiaries of social assistance schemes

d. Administrative capacity building to better define the targets of most vulnerable groups of population and development programs on mitigatin the risks faced by poor people.

e. Low levels of education and qualifications of people in extreme poverty, create difficulties for their inclusion to the society and employment.

f. Uncertainty of decentralization process and a non defined financing mechanism for social services create difficulties for combating poverty and promoting social inclusion.

3.9.5.1.6. Social protection Please describe the social protection system (involved ministries, statutory insurances, main institutional levels - centralized/decentralized, the role of employers and employees, the role of NGOs; explain the main institutional responsibilities for the fields of social protection - legislation and administration; if possible supply an organisational chart). Kosovo social protection system is composed of professional services and cash benefit plans that are funded by state budget. There is a clear distinction between cash benefit plans (social welfare payments) and social services. Main programs being implemented by MLSW through a network of Centres for Social Work (CSW) and the Regional Offices of Kosovo Pension Administration are focused on the distribution of welfare benefits, pension payments and other professional social services to individuals and families with social problems. Pension contributions are used only for second level of pension system for employed people who are administered by the Kosovo Pension Savings, Trust fund, an independent body which has a board that reports to Kosovo Assembly. According to regulation No.02/2011, the MLSW is a leading institution from central level responsible to establish employment and social welfare policies, to draft and implement the legislation in these areas, to provide financial assistance for families and individual from the respective allocated funds, to administer and promote the social security system, including pension system and unemployment benefits, to provide emergency and permanent financial and social support through institutions and services established for this purpose. The Municipalities are territorial units of the local governance. There is no overall regional management between local and national level as it is the case in many other countries. It is particularly important for inter-municipal provision of certain social protection services. Based on local governance legislation, a part of social protection services have been transferred to the municipalities in 2009, such as social and family services, while the provision of social assistance responsibilities is delegated entirely. Despite Centres for Social Work that provide social services, which are administered by municipalities, the social protection system continues to be centralized. Regarding the

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benefit payments from various schemes and in order to facilitate their administration, the model of de-concentration has been developed. Thus, the local level develops enrolment procedures, beneficiary selection and decision making, while central administration administers the data and carries out the payments for all beneficiaries. MLSW continues to manage the following institutions; House of elderly people in Pristina and Special Institute Shtime and 9 regional community houses which provide 24 hour services for elderly and disabled. The NGOs continue to provide services through agreements with central level (MLSW), Some services such as protection of victims of domestic violence is provided by contracted NGOs by the MLSW whereby 6 shelters have been contracted financed with 50% by the MLSW budget. MLSW/DSW collaborates with donor financed projects, which aim to support and provide services to citizens in need. MLSW also manages with Regional and Municipal Pension Administration offices responsible for pension schemes’ administration. The application process and registration is in municipal and regional offices, while data collection and payments are made by central level. Financing: what are the main financing sources of the social protection (e.g. taxes, social contributions, other taxes or Government subsidies) and institutions involved (Government, para-fiscal organisations, regional authorities, NGOs, private households etc.). What are the main financing principles for the fields of social protection (pay-as-you-go, funded financing)? What are the contribution rates, contribution base and tax base; is there an upper (lower) ceiling? The main financial source of social protection, covering cash benefits, is financed by state budget. There are various schemes of cash benefits for different categories (elderly, persons with disabilities, poor families, war invalids and martyrs' families, family housing payments, payments for children with disabilities, etc.). The professional services are also financed from state budget. Key principles of financing of the social protection are not based on the basis of contributions or any form of system like pay-as-you-go, but from taxes collected from citizens where revenues are generated in the state budget. As regarding the provision of social protection services, it is not applicable any obligatory form of payment that the citizens must pay for obtaining services, except for any administrative fee. The mandatory pension contribution applies only to the second pillar of pensions which is regulated and managed by Kosovo Pension Savings Trust. The minimum amount of contributions is 10%, with 5% being paid by employee and 5% from the employer which is obligatory while with the agreement between the employee and employer this amount can be higher as well. No tax rate is applied to the benefits provided by the MLSW.

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Please provide the social protection expenditure as percentage of GDP and as percentage of central budget. Around 325,000 citizens benefit from social and pension scheme in Kosovo, finance by Kosovo Budget. Based on approved budget for 2012, which 1.5 billion Euros, 212 million Euros or 14% of central budget expenditure are allocated to social protection The percentage of social protection expenditure in GDP value, which is estimated to be Euro 4.2 billion, is 5%. Please provide an overview of allowances: benefits and services provided by social protection (coverage, qualifying conditions, level of benefits, length of provision, taxation of benefits):

a) Health care; (Please refer to public health answers) b) Sickness;

The Labour Law, Article 59, envisages the compensation of sick leave up to twenty (20) working days within one year, which is compensated with 100% of salary. The employee is entitled to compensation of sick leave in cases of injury or illness at work compensated with 70% of the salary. The employee is entitled to sick leave compensation under paragraph 3 of Article 59 for a period of ten (10) to ninety (90) working days. The payment for sick leave compensation is the responsibility of the employer. These rights can be regulated also by the Collective Agreement and Internal Employer Act, but shall not in any case be less favourable than as provided by the Labour Law.

c) Maternity; According to the Laws in force, the employed women are entitled to maternity leave of 12 months. First six months of the maternity leave compensation is paid by employer with 70% of the base salary of employee. The following three months are paid by the Government of Republic of Kosovo with 50% compensation of the average wage in Kosovo. In addition the employees are entitled to additional three months of unpaid maternity leave. From 2007 to 2012, 4917 female employees have applied for maternity leave in MLSW, for which purpose 1,392,076 Euros are spent. From 2007 to 2011, 50% of the average wage was paid, at the amount 84 Euros. While as of July 2011 agrement on the average age in Kosovo, the payment of maternity leave of 50% of average wage is paid at 146 Euros. The maternity leave payment is not subject to taxes. Table 103. Maternity leave payments VITI 2007 2008 2009 2010 2011 2012 Total

No. applicants

889 874 920 971 748 515 4917

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Spent financial means

208,908.oo 214,060.oo 236,628.oo 240,702.oo 256,833.oo 234,945.oo 1,392,076.oo

d) Invalidity / disability;

As regarding the pensions of persons with disabilities, the Law No. 2003/23 which entered into force on 01.01.2004, provides for the persons who are completely disabled to work from age 18 to 65 years. The qualification criteria are determined by Law. While the permanent medical commission evaluates the ability or complete inability to work. Persons with disabilities qualified under this scheme are subject to a reassessment by the medical committee at 1 to 5 year periods. The level of pension amount for persons with disabilities is equal to the amount of basic pension which is currently € 45 linear. These pensions are not subject to taxes.

e) Old age; Basic Pensions, includes the entire population of Kosovo from age of 65 years, according to UNMIK Regulation 2001/35, as amended by the Regulation 2005/20, Law on the methodology of determining the level of basic pension No. 2002/1. As of 01.07.2002, the level of basic pension is € 45, paid in linear form. Pension contributions, according to Government Decision 13/277 and Administrative Instruction 11/2007, as replaced by AI Nr.15/2009, this scheme includes former pensioners over 65 years based on the payment of pension contributions by former system over 15 years of service. The contribution based pension level €80, composed of the basic pension of €45 plus the pension contribution of €35. These pensions are not taxable, as all other schemes of the first pillar.

f) Survivors;

According to UNMIK Regulation 2001/35, section 12.5 and the Law on Pension Funds (which entered into force at the end of May) (Article 12), Survivors are entitled to retirement benefits of the second pillar of Pension System. The survivors are entitled to the Kosovo Protection Corps (KPC) pension scheme. The inheritance pension (spouse and/or the children) in the cases of a death of a KPC member is 60% of the salary, while 20% of the salary is for the children of the school age.

g) Employment injuries and occupational diseases;

According to Article 60 of the Labour Law, the compensation in cases of injuries or illnesses at work, the medical treatment expenses shall be covered by the employer. In order to implement this article, MLSW has issued the Administrative Instruction Nr.05.2012 for reimbursement of expenses for injuries and occupational diseases. According to Administrative Instruction, in case of injuries and occupational illnesses of the employee obtained at the workplace while performing the work, the employee has the right to a mandatory compensation of expenses as provided by legal acts and sub-

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legal acts into force. Also Article 61 of the Labour Law envisages the right to absence from work due to the insecurity and health protection. During the temporary absence from work, the employee has the right to full salary compensation, but not longer than forty-five (45) days in the calendar year. Law No. (2003/19), on Occupational Safety, Health and Working Environment regulates the prevention of occupational injuries, occupational illnesses in the workplace and the protection of the working environment. Under this Law, occupational safety, protection of employees' health and working environment is an integral part of work organization and process. This Law also defines the obligations and responsibilities of employers, employees’ rights and responsibilities. It also defines and regulates the protection of youth, women and people with disabilities, special areas of occupational safety, etc. In order to implement the Law No. 2003/19, on Occupational Safety, Health and Working Environment, MLSW has issued; a. Regulation No. 2004/02, on risk assessment at work and related to work; b. Regulation No. 2004/01, on hygienic technical measures for safety at work.

h) Family benefits;

According to the Law on Social and Family Services (No. 02/L-17), the key responsibilities of MLSW are the general organization and provision of social and family services, within which are regulated several benefits to families and children which fall under one of the social insurance categories named as family benefits. Under the family benefits, with the aim of better development and protection of children with special needs without family care, the recruitment, training and certification of sheltering families has been carried. This is implemented by the Centres for Social Work in coordination with the panel established under the Department for Social Welfare. This form of protection is subsidized with the amount of 250 Euros per month because of the specific and special needs that these children have. Residential shelter, as another form of protection for children without parental care in community protection houses is carried out for those children who cannot benefit from the form of family sheltering. The total number of sheltered children in community protection houses is 21. Protection of children with special needs - this form of protection is provided according to the Law No. (03/L-022) to support the families who have children with permanent disability 1-18 years, which is implemented according to the evaluation of the Medical Commission, working in the whole territory of Kosovo. The monthly fee is per child is 100, while the overal number of the beneficiaries is 2,941.

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Family shelter to the next of kin families - for children without parental care that are sheltered to the next of kin families, the current number of children part of this form of protection is 591 children, receiving a financial assistance of 75 € per month. Alternative family shelter/outside the family - for abandoned babies after birth, neglected and abused children and in cases when the parents are prevented to exercise parental duty, are temporarily sheltered to the assessed families and trained by the SWC, which are not next of kin families. The financial fee is € 150 per month per child plus € 75 initial fee upon registration in this shelter. At the moment there are 56 children in this kind of shelter. Protection of the rights of abused children and cases of family violence, along with social services provided by public institutions, MLSW buys services and contracts NGOs for temporary protection and shelter of victims of family violence. 7 NGOs are contracted for protection, shelter and rehabilitation of victims, whereby MLSW has contributed with 50% of expenditures, while the other part is provided as a donation.

i) Unemployment; There is no specific social insurance scheme that covers the unemployment risk.

j) Minimum resources/social assistance; Social assistance scheme aims at reduction of poverty. It is a public-universal scheme and is financed by public funds. The scheme covers families with very limited means for existence. The qualification requirements apply in terms of family composition. The scheme applies general sum of money in cash and is limited in terms of time. Social Assistance Scheme was introduced in 2000 and revised in December of 2003, and with the support of the EC project "EU Support to MLSW" the Law on Social Assistance Scheme 2003/15 was amended and adopted by the Assembly in May 2012. This is a very concentrated scheme with e limited amount of financial resources which targets the poor families. The scheme includes two kinds of beneficiaries: a. First category is intended to provide financial assistance to families which don’t

have members who are able to work or who do not expect to be trained for work; b. Second category is intended to provide financial assistance to families with members

able to work but currently cannot find a job. The maximum monthly amount for recipients of such benefit is set by referring to the extreme poverty line (food basket) that should provide 2100 calories for an adult and is defined by the number of family members. It should be indexed annually by the Government while taking into consideration changes in the cost of food basket. The monthly amount of social assistance for a family is defined by the number of family members (minimum € 40 and maximum € 80).

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The family that has the right to social assistance, according to the criteria envisaged by Law (categories I and II), will receive benefits up to six months, provided that during this period the family meets all the set criteria. After this period, the family must repeat the request (re-apply) for the continuation of the right to social assistance. The new amendments to the Law on SNS have increased the duration of 6 months to 12 months.

k) Long-term care;

MLSW has made the legal infrastructure for long term care of elderly persons, children and adults with disabilities. The legal infrastructure is based on the Law of Social and Family Services. The forms of care are based on administrative Guidelines and rules of procedures: a. Administrative Instruction (no. 07/2011) has defined the criteria for obtaining

services and residential and community houses, which constantly adjusts the admission, care and delivery services 24 hours for the elderly people over 65 years in the Institution based in Prishtina and four other community housese in Kosovo;

b. Administrative Instruction (no. 06/11) defined criteria for obtaining long-term care services in residential and community houses, which regulates the admission, care and services for 24h for children and adults with disabilities in Shtime Institute and in seven other community houses;

c. Administrative Instruction (no. 13/2010), which regulates the provision of services in community houses for elderly people and daily care services;

d. Administrative Instruction (no. 10/2010), which regulates the provision of cares services for children and adults with disabilities in community houses and daily care centres;

e. Internal regulation for elderly people in residential and community houses No. 09/2008;

f. Internal regulation (No.08/2008), for children and adults with disabilities in residential and community houses.

In the institutions such as the Elderly House in Prishtina, the Special Institute in Shtime, and 9 community houses (two in Shtime, Ferizaj, Decan, Vushtrri, Kamenica, Garaqanicë, Gurakoc-Istok and Skenderaj) the elderly, children and adults with disabilities receive 24 hours services and accommodation, as they are social cases. Regarding the qualification criteria, the Centre for Social Work identifies the cases, completes the documentation and submits them to the Sector of Institutional Care, whereby the professional committee evaluates the documentation and issues a decision on acceptance or rejection of the case, according to the eligibility criteria under the guidelines. The duration in these institutions is not limited for elderly people without care and social cases, while it duration is limited for the adult and children, collaborating with the CSW for their sustainable return in the community. The cooperation with CSW is continuously maintained also as regarding provision of services in community houses, in dailey care centers for elderly people, adults and children with disabilities.

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The services in basic institutions and community houses are received from 260 clients. The number of staff working in these institutions is 235 employees, with the relevant qualifications such as doctors, nurses, nurse assistants, social worker, physiotherapist, work therapist, cook and other professions.

l) Housing

Based on Law on Financing of Special Housing Programs, no. 03/L-164 residential housing is under the responsibility of municipalities. Municipality is responsible to identify the housing needs for the population under their territorial jurisdiction as follows; three years programs for housing projects based on financial resources, provision of land for construction and infrastructure, applying for financing new investments and subsidies to MESP , creating and managing database for families who benefit from housing programs, building insurance, management and maintenance of rental housing through the municipal competent authority, annual reporting to the Ministry for the performance of housing programs; Also, housing can be done through special financing programs for rental housing including buildings constructed by the municipality, Government and donors, existing homes owned by natural or legal persons who can be rented for families with living bonuses. The other flats owned by the municipality, can be adapted for residential use. The housing bonus is approved in the local Assembly. Based on the Law, families who have not owned a flat or individual house and are homeless as a result of damage of homes during the recent war in Kosovo and possess housing land are defined based on social and economic categories. Benefit from housing programs is based on the verification of family economic condition. Verification of family economic situation is made by municipal bodies which are regulated by AIs in place: a. AI Nr.18/2010 on contract for non-profit rental housing; b. AI Nr.19/2010 on Contents of the housing bonus; c. AI 21/2010 on Criteria for determining the priority of categories of households that

could benefit; d. AI 22/2010, on Procedures for obtaining the specific housing programs; e. AI 23/2010, on Procedures for the declaration of the specific housing programs f. AI 24/2010 on "Minimum household rates for special programs; How are the various benefits and allowances delivered to the beneficiaries? The delivery of social assistance benefits to the beneficiaries is regulated through the contract agreement with the Commercial Banks. These agreements specify the terms, conditions and responsibilities of MLSW and the Banks. Therefore the social assistance benefits are delivered through the bank accounts of the beneficiaries. For some social assistance schemes, the bank accounts are opened by the MLSW and those accounts can not be used for other transactions. In most of the cases the social assistance benefits are withdrawn by the beneficiary, expect for the cases when the beneficiary is not able to

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make this withdrawal, he/she can authorize a family member to realize such withdrawal. What are the data sources for social data? Who is in charge of collecting and processing social data? The social data resources are mainly the databases installed in the central and local offices of institutions that provide various social services and payments in local and regional level, which are under the management of MLSW. Registration, processing and insertion of these data is based on the Laws and administrative guidelines, which specify the procedures starting from the application process, registration and up to preparation of the final list of data. The data that are managed by MLSW are reported to the Kosovo Statistical. Each department within MLSW manages a database for services or social payment scheme and it is responsible to update, distribute or even process the registered data. In order to integrate all the databases, the MLSW during the last two years has established a new web based software which integrates all the databases. The establishment of this system will facilitate communication and easier exchange of data and will create opportunities to provide data that facilitate the decision making process. Please describe recent major reforms which have been implemented. What were the main objectives of the reforms? Explain what the planned reforms are. What is the expected impact of these reforms? What is their status? As regarding the reforms implemented in the field of social protection, the legal framework in the area of pensions, social assistance and social and family services has been approved. The The Law on Social Assistance Scheme, the Law on State FundeD Pension, the Law on Social and Family Services were amended and adopted. The objectives of amendments to these Laws were to enable better targeting of poor households, linkage of the social assistance benefits with the engagement to the labor market. Planned reforms are addressed to poverty reduction, increasing the welfare of pensioners and elimination of fraud from applicants who have benefited due to the weak legal framework. In the field of family support and promotion of long term care services for elderly and disabled persons, the development of alternative forms of service delivery such as community and family services are ongoing.

The operational framework for licensing of providers of social and family services, which will enable NGOs and other private providers to be partners in service delivery and implementation of goals for a better system of social protection are being prepared. 3.9.5.1.7. Pensions Please describe the pension system: What is the public-private mix? What role do mandatory, occupational and individual pension schemes play for income security in old age (different pillars of the systems)?

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Since 2011, Kosovo has been applying pension system of the former Yugoslavia (PAYG). Since then Kosovo has established a new pension system which is based on three key pillars. First Pillar: The first pillar includes pension schemes financed by the state budget: a. Basic pensions include the entire population of Kosovo from the age of 65; b. Pension which is based on contribution and age includes former pensioners over 65

years. This is based on payments of contribution made from former pension system of over 15 years experience of contribution;

c. Pensions for persons with disabilities; d. Early Pensions of mining of the Complex “Trepca”; e. Pensions of former members of the Kosovo Protection Corps (KPC); f. Implementation of international conventions from personal and disability pension

based on agreements between the former SFRY and the signatory countries, which partly apply to the renewal of new agreements with the Republic of Kosovo.

Second pillar: a. Includes pension savings in individual accounts mandatory for all employees

working in Kosovo over the age of 18 years, based on participation with contributions of 5% of gross salaries of employees, 5% of the employer and benefits from the investment (individual savings capitalism). An advantage of this system is that employees take individual responsibility for pension savings;

b. Pension savings are administered by an independent institution, Kosovo Pension Savings Trust (KPST). which is responsible for decisions regarding the investment of deposits and provision of individual accounts. Trust is licensed and supervised by the Central Bank of Payments (CBK). The Board of KPST is appointed by the Assembly of Kosovo.

Third pillar: a. Supplementary pension system (additional voluntary) stimulated by tax concessions

from the state; b. Additional voluntary private scheme which may be established by employers as a

benefit for their employees, from their pension contributions; c. The third pillar includes formal employees and self-employed; d. Supplementary system in Kosovo that currently operates in the market is the

Slovenian – Kosovo Fund.

Coverage: Is there a universal system for the whole population? Are there certain groups excluded from the system? Is there a possibility of ‘opting out’? If so, are there any problems caused by the exclusion of certain groups? Do you consider the system as equitable with regard to gender equality and other groups of the population? Pension System in the Republic of Kosovo is universal and includes all groups living in Kosovo, without discrimination on the basis of gender, race and nationality. Criteria

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established by legal acts do not exclude and there is no possibility of excluding certain group from the right to pension. Benefits: Describe the level and structure of benefits (replacement rate; pension distribution; adjustment and indexing of pensions). Explain the issue of poverty among pensioners. Do you think that the pension system is adequate with regard to income security in old age, the intergenerational distribution and the reduction of poverty in old age? Benefits are pension schemes which are part of the first pillar of pension system. The level of basic pensions and pensions of persons with disabilities are linear (flat rate). This amount on monthly basis was €40 in 2007 and 2008, €45 in 2009, 2010 and 2011. Basic pension scheme, in addition to contribute-payers has been applied since 01.01.2008 in the monthly amount 40 +35 = €75, whereas from 01.01.2009 with an increase to 11.11% of basic pension it amounted to 45 +35 = €80. Early pension scheme of the mining Complex “Trepça” amounted to €50 in 2007 and €70 in 2011 (40% increase). Pension scheme of the members of the former Kosovo Protection Corps (KPC) – level of the pensions is accounted for 70% of the average salary for the last years prior to the retirement, whereas the pension of heirs (spouse/children) is 60% of pension of the deceased member of KPC and 20% for children during regular education. Basic pension rate is determined based on Law No. 2002/1. Rate is based on minimal caloric value of the food basket (food basket of 2100 calories). This is set by the Ministry of Finance in accordance with international standards. Basic benefit pension provides the minimum for the existence of the pensioner. The amount of pensions in Kosovo currently ensures that recipients remain above the poverty rate. Financing: Describe current problems of financing the pension system. Can you assess the financial sustainability of the system (of each pillar) with regard to demographic, economic and social changes? Financing of the first pillar of pension system covers the entire population over 65 years. This cover basic pensions and disability pensions until 65 years. Monthly financial amount offered provides the minimum for the existence of the pensioner. Since this financing is solely made from the Kosovo budget, the amount of pensions depends on the financial sustainability of Kosovo budget, as well as International Monetary Fund and World Bank. The second pillar provides to future generations a sustainable pension through pension savings in individual accounts mandatory for all employees working in Kosovo over the age of 18. This is based on contributions from 5% of gross salary of employees, 5% of employer and benefits from the investment.

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Whereas the third pillar, supplementary pension system stimulated by tax concessions from the state, is foreseen that in the future will complement the first and second pillar. Describe recent major reforms which have been implemented. What were the main objectives of the reforms? Describe the discussion and status of planned reforms. What are the main political positions? What is the expected impact of these reforms? The objective of recent reforms implemented in the first pillar of pension system, deal with the reorganization of pension schemes, their decentralization, reform and integration of Information Technology and the transfer of decision-making through Kosovo Regional Centers towards a more effective and efficient administration, strengthening internal control and monitoring all administrative proceedings based in legal infrastructure. Planned reforms in the first pillar are foreseen by the Draft Law on Pension Schemes Financed by the State, which is expected to be approved by the Assembly of Kosovo in the second quarter of 2012. The objective of this Draft Law is the consolidation, harmonization, unification and completion of pension schemes. Draft Law also foresees two new pension schemes: disability and family pensions. In line with the recommendations of the World Bank and IMF implementation will start in January 2016. Furthermore, Law on Kosovo Pension Fund which regulates the second and third pension pillar has been adopted by the Kosovo Assembly in April 2012. Provide an analysis of current trends in pension policy and an assessment whether in your view these reforms (recent and planned) will cope with future challenges. On the basis of the analysis and current trends of pension policies, current three-pillar pension system in Kosovo will be able to overcome current and future challenges. 3.9.5.2. Public Health Policy What level of alignment with EU standards of EU health legislation? Please provide a survey of progress in the following public health fields?

- Tobacco control - Human substances: blood- tissues and cells-organ donation and

transplantation - Patient’s right’s in cross border healthcare - Communicable diseases

In preparing the legislation in the area of health, MoH always ensures that the Compliance Statement with EU legislation is obtained from the Ministry of European Integration. This is despite the fact that a large proportion of legislation in the field of health is not subject of strict EU regulations of EU, but it is left to be regulated by member states autonomously, depending on their social, economical, political, and cultural specificities. Therefore, MoH also closely monitors developments in this aspect

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while ensuring that European standards are reflected in these national legal provisions, while also regularly reporting to the EU on specific fields of public health policy. In order to ensure the compliance with the EU legislation, the Department of EU Integration at the Ministry of Health has provided all relevant guiding documents to the relevant working groups in drafting legislation and strategies planed within the EPAP 2012.

a. Tobacco control The issue of smoking control is regulated by the following legal acts and policy documents: Law no. 02/L-36 on Smoking and Law no. 03/L-157 amending the Law no. 02/L-36 on Tobacco, Law no.02/L-78 on Public Health; and AI no. 05/2007 on Smoking Areas, Non-smoking Sings, and Marking of Packages of Tobacco Products from its Producers and Importers, AI no. 06/2007 on Prohibition of Sale of Tobacco Products to Persons under 18 Years of Age and AI no.07/2007 on Measures for Reducing and Limiting of Smoking, and also EPAP 2012 (action 66.4 indicator 4). The institutions responsible for enforcement of the Tobacco Law are the following: Sanitary Inspectorate, Labour Inspectorate, Market Inspectorate and Education Inspectorate. According to the assessments conducted by NIPH, UNICEF and WHO, one-third of the population is tobacco consumer. Smoking prevalence among youth from 18 to 24 is 24%, while the prevalence among pregnant women is 20.9%. Since the latest Global Youth Tobacco Survey (GYTS) in Kosovo was conducted in 2005, the NIPH has planned to conduct another such a survey. So far, several significant difficulties in enforcement of the Tobacco Law have been encountered. Commercial and hotel facilities have made separation of non-smoking areas from smoking ones, yet the supervisory bodies faced difficulties in identifying the non-smoking areas, particularly in small spaces where all guests are passive smokers. Moreover, the 2011 Progress Report required the amendment and enforcement of the Law on Tobacco and strengthening the measures for its control. In the framework for the 2012 Legislative Plan, the MoH has drafted the concept paper on amending the Tobacco Law, which was approved by Kosovo Government on 29 February 2012. It justifies the need for changes to the current Law by strengthening measures for tobacco control. In line with this, the new Tobacco Law will provide for 100% prohibition of smoking in public and work spaces, as well as for higher fines and stricter measures against tobacco sponsorship and advertising. This draft-law was finalized by the end of May, after going through the consultation phase, and will be soon submitted for Government approval. In the meantime, relevant inspectorates continued monitoring of enforcement of the current Tobacco Law, while MoH, in cooperation with UNICEF and WHO, is preparing a media campaign for improving enforcement of both the current and the new Tobacco Law.

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The new Tobacco draft-Law foresees higher level of approximation with WHO Framework Convention on Tobacco control, as well as with the following EU Acquis: a. Directive 2001/37/EC of European Parliament and of the Council of June 5, 2001 for

approximation of Laws, regulations and administrative provisions of the member states concerning the production, presentation and sale of tobacco products – Statement of The Commission;

b. Directive 2003/33/EC of European Parliament and of the Council dated 26 May 2003 on approximation of Laws, regulations and administrative provisions of the member states concerning the advertisement and sponsorship of tobacco products;

c. Decision 2003/641/EC of European Commission dated 5 September 2003 on usage of colour images or illustrations as health warning on tobacco packaging;

d. Council Recommendation dated 2 December 2002 on prevention of smoking and initiatives to improve tobacco control.

b. Human substances: blood/tissues and cells, donation and organ transplanting

The area of blood/tissues is regulated by the Law No.02/L-101 on Transfusion and Control of the Blood and its Products. This Law, inter alia, outlines several issues to be regulated by subsidiary legislation and obliges that they should be in line with the following EU directives: a. Directive 2002/19 of the European Parliament and of the Council dated 27 January

2003 on collecting, testing, processing, protection and distribution of blood and its component;

b. Directive 2002/98/EC of European Parliament and of the Council dated 27 January 2003 on establishing standards of quality and safety associated with collecting, testing protecting and distribution of human blood and its components (amending Directive 2001/83/EC);

c. Directive 2005/62/EC of the European Commission dated 30 September 2005 on implementation of the Directive 2002/98/EC of the European Parliament and the Council on the community standards and specifications for quality system for institutions dealing with blood;

The National Blood Transfusion Centre (NBTC) and regional Hospitals are responsible institutions for blood and tissues, while other responsible institutions for implementing health legislation in the fields of human substances and contagious disease include NIPH, UCCK, KAMP, and Coordination Council for blood supply. Main institutions and actors dealing with promotion of blood donation are the following: MoH, Ministry of Education, Kosovo Red Cross, Association of Voluntary Blood Donors, media, schools and trade union organizations. NCBT, since 1986, carries out tests of all blood donors for HIV, syphilis, Hepatitis B and C. From 2002 to 2008, it has analyzed around 14,000 blood samples and identified two cases with HIV, 0.04%of cases with syphilis, 3.3% of cases with HBV and 0.3% with HBC. Blood collection has increased with 13% in 2012, as compared to 2011, and currently all blood needs are covered. Blood collection is done voluntarily. There is no charged donation form according to the current Laws.

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Regarding donation and transplanting of organs in Kosovo, it is carried out by specialized facilities, under special agreement and permissions of MoH. Autogenic transplanting of bone tissues and the skin is done by the Orthopaedic and Surgery Clinic of the University Clinical Centre of Kosovo (UCCK). This area is regulated by the following legal acts and policy documents: Health Law no. 04/2004 (Article 110); first objective of the Health Sectoral Strategy 2010 – 2014 (on reducing morbidity and mortality of the population) and its Action Plan (the main priority area has to do with improvement of health status and improving quality of healthcare services). According to these documents, the UCCK is the highest institution clinic of tertiary level in charge of carrying out transplanting. The Kosovo health system currently does not have specialized human resources for providing and monitoring organ transplanting and, in considerable part, of tissues and cells. There is lack of suitable physical infrastructure and adequate institutions for protection of tissues, cells and organs (banks) in compliance with international standards. The Ministry of Health does not have data on the number of persons in need for transplanting. Therefore, development of the Registry for persons that are waiting for transplanting of cells, tissues and organs, and the Registry of donors of cells, tissues and organs is required. Lack of medical treatment in the area of transplanting has had an impact in continuous increase of the number of patients on dialyses, expenditures on materials, equipment and medicaments for patient treatment. The Stabilisation and Association Process Dialogue18 has recommended addressing this problem through Directives 2010/45 on Quality Standards and Safety in Human Organ Transplanting, while the 2011 Progress Report has pointed out non-adoption of the legal framework in the field of tissues and cells transplanting as a challenge in the area of health policy.19 Ministerial Council for European Integration has foreseen as objective for 2012 enhancing implementation of the Law on Blood, Cells and Tissues.20 MoH is on final phase of preparation of Draft proposal for transplanting tissues and cells, and Draft Proposal of organ Transplanting. In the process of decision-making for regulating this issue by the two Laws, the EU Directive 2004/23/EC for setting standards of quality and safety for the donation, procurement, protection, testing, processing, warehousing and distribution of human cells and tissues (preamble, paragraph 9) has been taken into consideration. Concept papers on these two draft-laws have been approved by the Government, and they reflect WHO principles and guidance on transplanting of cells, tissues and organs.21 Moreover, in further progress in addressing the needs for transplanting, all the relevant international stakeholders, both domestic and international, in field of safety and human rights, will be consulted.

1 Conclusions of SAAD-Internal market, Brussels.06-07 April 2011 2 2011 Progress Report for Kosovo, Health sector.12.10.2011, pages 44, 45 3 Conclusions of Ministerial Council for EI VIII 21 June 15, 2011 - Volume 91 - Supplement 11S, Third WHO Global Consultation on Organ Donation and Transplanting: Striving to Achieve Self-Sufficiency, March 23-25, 2010, Madrid, Spain http://journals.lww.com/transplantjournal/Fulltext/2011/06151/Executive_Summary.5.aspx

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MoH is considering various modalities, including those of public-private partnership, in the field of transplanting tissues, cells and organs as effective. The MoH aims the quality, safety and efficiency in providing these services in country within optimal period of time, after approval of relevant legislation by the Kosovo Assembly that is foreseen for September 2012. However, MoH is aware that provision of such services would also require strict standards, regulations and procedures to be in place which would subsequently need additional human, capital and financial resources, and the MoH is working towards achieving them. These two draft-proposals will incorporate relevant EU documents: Communication from the Commission to the Council and the European Parliament of 30 May 2007 entitled “Organ donation and transplanting: Policy actions at EU level”, Action plan on Organ Donation and Transplanting (2009-2015); Strengthened Cooperation between Member States, Directive 2004/23/EC of the European Parliament and of the Council of 31 March 2004 on setting standards of quality and safety for the donation, procurement, testing, processing, preservation, storage and distribution of human tissues and cells.

c. Patient rights in cross-border health care Kosovo citizens use health services in the Republic of Albania, and vice versa, on equal conditions on the basis of special mutual agreement. According to this agreement, MoH provides medical services, including dialyse services, to patients of the Republic of Albania. Within this agreement, Regional Hospital of Gjakova provides support with staff to the hospital Bajram Curri in Albania, while emergent cases are sent from Bajram Curri to Gjakova Hospital. 100 Kosovar patients are treated each year for free in health institutions in Republic of Turkey, based on a special bilateral agreement. Referral procedures are defined by the AI no. 02/2012 for medical treatment outside public health institutions, and in line with this Kosovar citizens have the right to use foreign medical institutions, supported by 2 million euro annually, from sources of the Kosovo budget. Users of private schemes for health insurances in Republic of Kosovo use medical services of foreign countries, based on personal health insurance contracts. Currently non-Kosovar residents use services of Kosovo health institutions under same conditions as Kosovo citizens. MoH intends that, as part of health institutions reform, to establish also public system of health insurances, which would also regulate mutual relations between citizens of Republic of Kosovo and EU Member States regarding interstate health care, based on bilateral relations that would be singed for this purpose, until Kosovo’s accession to the EU, considering EU Directives 883/04 and 987/09 for payments from other countries, pursuant to the interstate agreements and EU regulations, but also regulations of EU 883/04 and 987/09 for payments from health insurances funds according to the bilateral agreements.

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The upcoming legislative activities related to cross-border healthcare will be based on the EU Directive 2011/24 on patient rights on interstate health care of February 2011.

d. Communicable diseases The field of contagious diseases is regulated by the following legal and policy acts: Law on no. 2004/4 on Health, Law no.02/L-78 on Public Health, Law no. 02/L-109 on Contagious Diseases, Law no. 2003/22 on Sanitary Inspectorate, Law no. 02/L-38 on Health Inspectorate, Law no. 2004/21 on Veterinary, and EPAP 2012 (Action 66.4 indicator 10). Institutions responsible for implementing the legislation in this field are the following: NIPH, NCBT, UCCK ( infective clinic), regional hospitals, Microbiological labs, Sanitary inspectorate, Health Inspectorate, Police services, KMA, Main Family health Centres, Coordinating Council for Supply with Blood, and Veterinary services. Managing of contagious diseases in the recent years has improved. Since after the war in Kosovo all epidemics are managed according to the WHO standards and this has been positively evaluated by foreign experts. Conditions for managing infective diseases since 2007 have improved, also drawing on the support of WHO and World Bank. Infective diseases are managed based on protocols recommended by CDC and WHO. This is implemented by 44 Infectious Disease Specialists employed in public sector. The UCCK Infections Disease Clinic has 130 beds, 7 departments and intensive care with rooms with positive and negative pressure for managing, airborne and other routs diseases. 4 regional hospitals in Kosovo have infectious diseases departments. The Regional Hospital in Gjilan has 7 infection diseases specialist doctors, the one in Peja 3 of them, the one in Gjakova Hospital 2 and the one in Prizren 4 infectious disease specialist doctors. Currently 13 doctors are attending the specialisation programme in the field of infectious diseases. Since 2007, all patients with HBV and HCV are being treated in Kosovo, in line with the EU protocols in force, with medicaments provided by MoH. The Hemorrhagic Crime Congo fever and the renal syndrome hemorrhagic fever are also treated in Kosovo, with Ribavirin, in line with the current EU protocols, with medicaments provided by MoH. Treatment of other serious diseases, such as purulent meningitis and TBC meningitis (50 – 80 patients annually) are also treated, with a le the mortality rate of 4%, which is an improvement at the regional level. As a result of working in education and prevention of contagious diseases, Kosovo highlights evident decrease of incidence of infectious diseases of preventable vaccines diseases (morbillis, rubeola, HIB meningitis, pneumococcal meningitis, TB meningitis). Kosovo faced swine flu pandemic was rated high by WHO regarding management and treatment of H1N1 cases in 2009-2011, over 400 hospitalized and over 700 outpatient treated with mortality which can be compared with EU countries. The MoH objective is to improve the quality and security of the health services in this regard it aim international accreditation of the NBTC and further increase of the capacity of the NIPH. MoH is currently drafting a Plan for the Prevention of Contagious Diseases. Please provide an organigram of the Ministry of Health and the Kosovo Health System at central and local level

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Organogram of MoH, Annex I. Organogram of health systems including primary, secondary and tertiary levels of care (central and local) Annex II MoH is currently on the phase of changing the organizational structure, in line with the Government Regulation no. 09/12 on Standards for Internal Organization and Job Systematization (revision of terms of reference) of the State Administration. Organizational and functioning structure of health institutions is regulated by subsidiary legislation, namely statutes. Is a Health Information System in place? What are main challenges to implement Health Information System? The issue of health information system (HIS) is regulated by the Law no. 04-2004 on Health (Chapter II, Section 9 and Chapter XI Articles 62 – 68). The Sectoral Health Strategy 2010 – 2014, adopted in 2009, considers HIS development as a strategic priority. Other relevant documents are HIS Strategy 2010 – 2020, adopted in 2011, E-Government Strategy and Action Plan for Implementation of the Strategy, as well as AI no. 18/2006 on Health Statistics Database. Institutions responsible for implementing policies in this field are the following: MoH (responsible for policy drafting), Ministry of Public Administration (responsible for providing access to health care institutions in the Government network), Kosovo Statistics Agency (responsible for statistical publication of reports for all sectors), NIPH Reference Centre (for analyzing health data from health institutions and health institutions responsible for data collection and retention of medical records of patients). The current system of health statistics was developed in 2002, with the support of the European Agency for Reconstruction. This system provided limited use of MS Access system, which could not be used as the basis for an integrated health information system, due to restricted financial resources the MoH for maintaining it, thus resulting in the lack of data reflecting situation in the health sector. This also hampers the work of MoH in terms of proper planning of financial, human and capital resources. Therefore, MoH has addressed HIS as one of strategic priorities within the Sectoral Strategy 2010 - 2014. In addition, MoH has also taken concrete steps in order to improve data collection by consolidating three modules of this system: health statistics module, pharmaceutical module and human resources module. The HIS Strategy 2010 – 2020 was adopted in 2011, with clear vision to promote the health system as a whole. Its Action Plan is developed in three phases: a. Phase A contains short-term actions (2011 – 2013) related to infrastructure, design

and implementation of HIS pilot system in Pristina and Prizren regions, as well as to improvement of existing health statistical system;

b. Phase B contains midterm actions (2012 – 2014) planned for transformation of pilot HIS system in routine practice, after evaluating the results of the piloting. This phase

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will involve application of module and processes for monitoring the quality and cost-effectiveness of health services, as well as automation of regular reporting to a considerable number of health indicators;

c. Phase C contains long-term actions (2013 – 2020) aimed at consolidating the infrastructure, its operations and technologies to support the operation of the new HIS in full scale throughout Kosovo and to expand the spectrum and its functions towards the objectives outlined above.

During 2011 MoH, as part of phase A activities, has managed to re-functionalize three existing HIS modules in all public health institutions in Kosovo, except in the newly-established municipalities. System for recording health statistics is semi-computerized, un-centralized, from which are generated statistical data need to monitor health system performance and health status of the population. A challenge in this regard is the low quality of data. This module will operate up to designing, piloting and full functioning of the Integrated System Software of Health Information that will be developed with KSV-014 project (funded by the Luxemburg Government). MoH during 2011 has also developed the Online System for Pharmaceutical Stock Management, with public health institutions connected online. This system, by HIS strategy was scheduled to be developed later. Phase A of the HIS Strategy is being implemented. During this phase, about 40% of public health institutions (network of health institutions in the region of Prizren PHC, UCCK, and MFHC Pristina in Pristina municipality) are involved in the implementation of infrastructure (information technology) for functioning of HIS, as well as centralization of the information in the National Data Centre at the Ministry of Public Administration. Other components of this phase are the design, testing, and piloting of Integrated System Software of Health Information, as well as human capacity-building for operation with this system, at local and central level. The system will be completely electronic. During the coming months implementation of information technology infrastructure in all mentioned institutions will start (with the tendering process under finalization). In addition, definition of processes and procedures in the health system, which will serve as the technical specifications of the tender for development of software for integrated system health information, is being finalized. MoH is planning to take the following systematic activities to ensure functional HIS to address challenges: a. Establishment of the new department within the Ministry of Health responsible for

functionalizing and implementation of integrated HIS including increasing the number of staff and human resources within the Department;

b. Implementation of HIS legislation; c. Implementation of the Data Centre in the Ministry of Public Administration, a

project expected to begin soon and will be funded by the World Bank; d. Monitoring and evaluation of HIS Strategy 2010-2020;

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e. Generating of consolidated data on the morbidity and performance of health care institutions.

Implementation of Phase III of HIS Strategy, which aims Integrated Health Information System, is expected to generate reports in accordance with the WHO and Eurostat standards, in line with Directive 2002/22/EC, 2002/58/EC, Regulation (EC) no. 2006/2004 and EpSOS. - Have you attended in any training organized by European Centre for Diseases Prevention and Control? MoH experts participated in trainings organized by European Centre for Disease Control (ECDC): a. Danish Presidency of the Council of European union 2012 meeting “Combating

Antimicrobial Resistance–Time for Joint Action”&Joint meeting of the National AMR Focal Points and FWD Network Salmonella/Campylobacter Experts, 13-15 March 2012, Copenhagen, Denmark;

b. Joint Annual Meeting of the Antimicrobial Resistance and Healthcare-associated Infections (ARHAI) Networks, 23rd-25th November 2011, Warsaw, Poland;

c. ECDC Coordination meeting on working with EU enlargement countries: Current status and future perspectives, 8–9 September 2011, ECDC, Stockholm;

d. 10th Meeting of National AMR Focal Points and Joint Session on "Carbapenemase-producing bacteria: a real public health threat for Europe?" Budapest, Hungary, March 21st-22, 2011;

e. 9th Meeting of National AMR Focal Points and the EU Expert Conference on “New Strategies to monitor and control infections, antibiotic use and resistance in health care facilities in the EU Member States”, November 8-10, 2010, Brussels, Belgium;

f. 8th National AMR Focal Points Meeting, Madrid, Spain, June 2,2010; g. 7th National AMR Focal Points meeting and Conference "Working together to tackle

MRSA and other healthcare-associated microorganisms", 20-21 October 2009, London, UK ;

h. 1st Annual meeting of ECDC Expert Group on Climate Change, European Centre for Disease Control, Stockholm, Sweden, 7-8 September, 2009.

- Provide latest information on current state of implementation of Health Sectoral Strategy 2010-2014 and its Action Plan Implementation of health sector Strategy 2010-2014 and its Action Plan is based on the following legal acts: Health Law 2004/4 (Chapter X. Article 56) and Government Regulation 2/2012. Responsible institutions for implementing Health Sector Strategy 2010-2014 are MoH, Health Institutions and Municipalities. Health sector strategy is approved by the Minister of Health in 2009. In 2010 an Action Plan for implementing sectoral strategy 2010-2014 was drafted. This plan serves MoH to develop annual government working plans, budget planning as well as the Medium Term Expenditure Framework (MTEF). In addition to this, this document enables monitoring and evaluating implementation of the Government Program however in

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order to ensure flexibility, this document is considered to be a living document, as a result in April 2011, a working group of relevant experts was convened and has amended it, this was done in order to accommodate SAPD and progress report recommendations, and therefore it represents a consolidated document that gives an overview of actions that need to be undertaken in order to achieve health system goals. Moreover the document is also updated according to the requirements of Administrative Instruction 2/2012. This Document also serves supporting document to coordinate donor investments in health sector. The above mentioned action plan is thus presented to the donor community that have interest and are involved in health sector. In order to achieve the objectives set out in the Sector Strategy within the work plan, a monitoring mechanism has been established. This mechanism is composed of Permanent Secretary holding regular weekly meetings, whereas Minister chairs and attends monthly meetings. Meetings are attended by relevant stakeholders, and aim to address regular challenges and monitor the implementation of annual Government working plan which contains actions of EPAP related to health under the Strategic Plan. MoH actively provides support to relevant structures in achieving the goals set by the strategic plan. MoH is working on strengthening the role of monitoring and evaluation of the Health Sector Strategy 2010-2014. Report on achievements over implementing Health Sector Strategy 2010-2014, Annex III. - Is it being implemented “National Program for Prevention and controlling of Transmitted Diseases”. “National Program for Prevention and Control of Transmitted Diseases", based on Kosovo legislation, is being implemented according to the criteria of the EU and International Health Regulation. MoH has established a working group to draft "Plan for the prevention of contagious diseases." The system of supervision, control and epidemiological response, is functional and efficient. Attached “Surveillance system of communicable diseases in Kosovo”, Annex IV. - What are the steps that are taken to improve immunization; are there any results so far? Please provide us with National Program in the English language The immunization coverage rate is over 95%, which enables the creation of sufficient preventive barrier. Additional activities in order to identify unvaccinated children and especially from the Roma, Ashkali and Egyptian community are ongoing activity and in addition specific awareness raising campaigns are being developed. National Program in the English language version is attached in Annex V. What actions did you take in the field of preventing non-transmitted diseases? Please describe. In the field cancer screening, do you include the EU acquis

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(Recommendations of the Council) and EU guidelines for breast cancer screening, cervical and colon to support the implementation of recommended measures? In the field of preventing non-transmitted diseases, the National Institute for Public Health, in cooperation with other relevant actors is attempting to ensure and consolidate the data of non-transmitted diseases. Morbidity data in general and in particular for non-transmitted diseases are reported by health institutions. The analysis of morbidity data at the primary health care level indicate that the most common diseases registered are: diseases of the respiratory system, diseases of the circulatory system and skeletal muscular system diseases), while data morbidity data from the secondary and tertiary level of care are being analysed. UNFPA supported the Kosovo Statistics Agency in analyzing the causes of deaths in Kosovo in close collaboration with the National Institute of Public health 2006 – 2009. The latest available data indicate that 49.43% of reported deaths are caused by diseases of the circulatory system, 26.45% of clinical conditions unclassified elsewhere, while 10.56% from tumours and 17,50% of deaths are unencrypted22. Regarding malignant diseases, a Board for developing the state program for cancer control was established. The Board has prepared a new application for the cancer registry, which is in its initial phase of implementation. The mission of the Board is the development of the Strategy for Cancer Prevention and Treatment, which will also consider EU relevant documents. (Council Resolution of 13 December 1993 concerning future guidelines for the 'Europe against Cancer' programme following evaluation of it for the period 1987 to 1992; 96/469/EC: Commission Decision of 30 July 1996 an advisory committee for cancer prevention (Text with EEA relevance); Council Recommendation of December 2, 2003 on cancer screening; Resolution of the Council and the Representatives of the Governments of the Member States, meeting within the Council, of July 7, 1986, the European Communities action programme against cancer). The Board has drafted the handbook for reporting malignant diseases, 10 workshops were conducted with 300 health employees of all three levels of health care. The training aimed to introduce filling of the application form for reporting the diagnosed malignant diseases. The Board will develop a strategy for prevention and early detection of breast cancer, cervical and Colonorectal cancer. To determine risk factors for chronic diseases as well as the activities for targeted prevention programmes related to chronic diseases in Kosovo, STEPS (simple, standardized method for collecting, analyzing and disseminating data for chronic disease risk factors in WHO member countries) survey was conducted. The survey

22Kosovo Statistical Agency– Causes of deaths in Kosovo 2008–2009.

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sample includes 6400 inhabitants living in Kosovo. The survey team is in the process of data analyzing. In order to find the most appropriate responses to cardiovascular diseases MoH has created the State Board for Cardio-surgical and Cardiovascular Diseases. MoH has assigned the State Board of Rare Diseases with the task of drafting the Strategy for rare diseases. Did the implementation of the primary health care strategy start in 2011? If not, are there obstacles to start the implementation? The field of primary health care is regulated by the Law on Health No.2004/4, Primary Health Care Strategy (PHC) and Action Plan of this Strategy. The responsible institutions for implementing the PHC are: Municipal Departments of Health and Social Welfare, MFHC, Centres of Family Medicine, Clinics and Health care stations. PHC strategy started being implemented in 2004. So far the the following activities have been implemented: a. Development of professional human resources; b. Building of professional skills; c. Improving of quality of health services; d. Implementation of Family Medicine Concept. Regarding human resources development: a. 235 specialists participated in a three-year specialist education in the field of Family

medicine, led by CDFM/MoH during 2004-2010; b. From 2000 - 2004, was developed An accelerated fast-track programme was

developed during 2000-2004 for specialist education in MF, initially led by WHO. During this period 312 medical practitioners have completed the programme and promoted to Specialist Family Physicians ;

c. The number of trained doctors that completed specialist education programme and received the title Family Medicine Specialist in the period 2000-2010 was 547.

d. Currently there are 83 Medical practitioners attending thespecialist education programme (2011 – 2014) of the Family Medicineand are excepted to complete the programme by 2014;

e. The three-year program of SP in Family Medicine is internationally accredited by the Royal College of General Practitioners - RCGP - being the only program in the region that has secured international evaluation and accreditation;

f. A cooperation agreement between the Royal College of General Practitioners of Great Britain (RCGP) and MoH / FMDC was signed in 2005.

g. The Agreement of Cooperation between the Ministry of Health and RCGP FMDC that aims the evaluation and supervision of specialist education program aimed at getting closer to desired international standards, was renewed in November 2011. Moreover the purpose of the agreement is to update theProgramme for Continuing

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Professional Development family doctors and other professionals in PHC, and assist in implementing the concept of family medicine in Kosovo and ensuring regional cooperation in the field of PHC;

h. In conformity with the Memorandum signed in November 2011, RCGP certified family medicine trainers engaged in the specialist education in family medicine;

i. Specialist education curricula in Family medicine is being updated and upgraded, under the supervision of the RCGP. Curricula is expected to be completed by February 2013;

The new cohort of specialist education in family medicine is planned this year, (2012 to 2015). The cohort is expected to start in October 2012 and 50 doctors are expected to attend.In terms of professional skills building: a. The revision of the Curricula for Continous Professional Development of Family

Medicine was completed in January 2012, in close cooperation with RCGP and supported by Lux DEV Agency. Such a Programme defines the mandatory modules for all family doctors to undergo. Within the next five years all of the health staff needs to undergo such modules in line with the legal framework in place.

b. In compliance with the CPD Curricula, regular activities are being developed in the health institutions in PHC and 8 Training Centres of Family Medicine, throughout Kosovo run by coordinators. Trainers in Family Medicine led by CDFM;

c. The reporting form is drafted for CPD needs. In this regard, Municipal Health Departments report to CDFM, CPD officer, on quarterly basis for this purpose. The report contains the activities conducted, topics, attendees as well as the accompanying records;

d. The draft “curricula and manual for trainers and attendees in Family planning” was completed, supported by UNFPA and in cooperation with KHF 2010;

e. Training on “family planning” in PHC supported by UNFPA involved 305 family doctors from all over Kosovo was conducted in the period 2010-2011;

f. Training on children health care for family doctors from Prishtina region, supported by WHO and in cooperation with DShMs – MA Prishtina and MFHC in Prishtina was delivered to 80 trained family doctors;

Improvement of quality of health services: a. So far 20 clinical guidelines have been drafted and edited at the PHC level for the

needs of family doctors in compliance with World Health Organisation guidelines. Their revision is expected to be completed during this year. Standard Therapeutic guidelines in PHC are distributed at HI of PHC. Training of HI of PHC managers in Gjilan and Gjakova region was held on “Applying of Microsystems in Primary Health Care’, supported by Dartmouth Medical School.

Regarding implementation of the concept Family Medicine: a. The indicators for assessing and monitoring health services provided at the PHC

health facilities and implementation of MoH legislation related to PHC, are now compiled.

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b. MoH, in cooperation with the Ministry of Environment, Ministry of Local Government and the Ministry of Finance organized a meeting with municipal health directors of five new municipalities (Graçanica, Kllokot Ranillug, Novo Brdo and Shtrpce). The meeting was organized in close cooperation with representatives of ICO in Kosovo. The health institutions have provided their statutes that are currently under revision in light of legislation and strategy of PHC in force. The MoH continues optimal integration of the PHC services.

c. A regional cooperation agreement has been signed between CDFM/MoH, representatives of PHC health institutions from Macedonia, Montenegro, Albania and Croatia with the aim of "coalition building in PHC. This year, in October, 2012 is planned the organization of the International Conference on PHC that is expected to contribute to further reform of PHC and strengthen the regional cooperation in the field of PHC.

d. The Minister of Health in April 2012 established a working group to update the Strategy and Action Plan for PHC, with the draft being in progress. The strategy will include the period 2013-2017. PHC revised strategy is expected to be adopted by the end of July 2012.

e. Primary health care in Kosovo is completely decentralized. Challenges remain on the monitoring and evaluation of the PHC strategy implementation and as well as consolidation of PHC services in accordance with legal provisions ensuring the full realization of the concept of family medicine. In this regard MoH plans through financial stimulating measures that will be part of health system reform, to motivate the management of health institutions at the primary health care teams to engage medical staff and nurses with individual medical and family record folder.

Please describe the structure of the health care system in Kosovo. Show the allocation of committed resources for primary and secondary health care The structure of the health care system in the Republic of Kosovo is regulated by the Law on Health no. 4/2004 (especially Articles 3, 18 23, 26 - 50, 74, 75 and 86 to 94). The highest health authority of the Republic of Kosovo is MoH. Health care is provided at three levels - primary, secondary and tertiary. Primary Health Care (PHC): PHC Strategy developed by the MoH in 2004 is based on the organization and implementation of primary health care by the 37 municipalities. Implementation of primary health care gives priority to preventive measures through the concept of family medicine. PHC institutions are organised in Main Family Health Centres (MFHC), Family Health Centre (FHC) and Satellite Family Medicine (SMF). In municipalities where there is no easy access to hospitals the MFHCs provides out-of-hospital maternity and Women's Wellness Centres (WWC) services. Emergency Medicine Centre is planned to operate in municipalities with more than 150,000 inhabitants. PHC is directly funded by the Government through the Municipal Health Grants allocated by the Ministry of Finance after a consultative process with the MoH and relevant municipalities. The PHC budget for 2012 is 41 million Euros (MF 2012).

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Secondary Health Care (SHC): Secondary health care is provided through regional hospitals (Mitrovica, Peja, Gjakova, Prizren, Gjilan) and city hospitals (Ferizaj and Vushtrri). These institutions provide hospital and specialist treatment including outpatient care. Mental Health care is also offered at the SHC level, through Mental Health Centres (MHCs), Community integration Housing (CIH, Gjilan) and the Centre for Integration and rehabilitation of chronic psychiatric patients in Shtime. The Ahtisaari Proposal foresees that certain municipalities have the right to provide SHC, as provided for in the amendments to the Law on Health under Ahtisaari Proposal No. 03/L-124 dated December 16, 2008. Municipal hospitals are foreseen to be established in Gracanica, Shtrpce and North Mitrovica.. Tertiary Health Care (THC): Tertiary health care entails advanced medical specialist services offered by health institutions, including teaching obligation students, postgraduate studies and relevant scientific research. THC services are offered by the University Clinical Centre of Kosovo (UCCK), University Dental Clinical Centre of Kosovo (UDCCK), National Centre for Blood Transfusion (NBTC), Institute of Labour Medicine (IMP), Sports Medicine Centre (SMC) and National Institute of Public Health (NIPH). For the Pristina region, the tertiary health institutions also serve as secondary level health institutions. The private health sector is growing, and includes private hospitals, diagnostic-therapeutic centres (Polyclinics) and specialist clinics. Payment for private health care services is mostly done through direct out of pocket payment as legally stipulated in the Health Law 4/2004 (sections 98 and 99 and in the Law on private Health no. 50/2004. Secondary and tertiary health care in the public sector is funded through the health budget managed by the MoH, which for 2012 amounts to 88.5 million for CHS and THC. The health system in Kosovo was severely affected during the 90s by underfunding and under development. In 1999 the public health insurance system was replaced by the central funded health budget. Continuous lack of prioritisation of the health sector and extreme lack of funds has resulted in lower quality of care and limited scope of services especially at the tertiary level of care. Plans to reform the system – MoH is aware of the immediate need for improvement, change and adjustment of the health system. Therefore MoH embarked in early 2011 on a visionary and substantial reforms of all health system. The reform focuses on three pillars: reorganization of the health system, restructuring of health financing sector, and decentralization of human resource management. The health system reform aims to improve quality of health services for the citizens and will be implemented in two phases: organizational reform of the health system and the health financing reform phase.

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During the ongoing first phase of the reform the MoH has prepared the legislative reform package in close cooperation with international partners’ requirements such as: World Bank and International Monetary Fund. The MoH utilized consultative services from the European Commission Office in Kosovo, WHO, OSCE, ICO, UNICEF, LuxDev etc. The Draft Laws, which will enable the initiation and implementation of comprehensive reform in the health sector are the Draft Health Law (approved by the Government on May 30th 2012), the Draft Law on Health Insurance (to be legally processed during the next phase of the reform in 2013). The Draft Law for Equipments and Medical Products and the Draft Law on Professional Medical Chambers all in the process of being finalised. The health reforms foresee also the establishment of Kosovo Health Service (KHS), organising the existing hospitals as a public non-profit enterprise at the central level, but with a high degree of managerial autonomy for the individual hospitals within the KHS. The hospitals within the KHS will initially receive funds based on a contract with the Agency for Health Financing, to be established by MoH and to be developed into public health insurance fund. Financing: How is the healthcare system financed (is there compulsory insurance or budget financing)? Please indicate the respective parts of taxes and social contributions, the breakdown between compulsory coverage and voluntary complementary coverage and further information on out-of-pocket payments (if available). What is the level of total healthcare expenditure in % of GDP? What is the proportion of public and private financing? What is the incidence of out-of-pocket payments (official and unofficial) in healthcare (if available)? The existing Health Law no. 4/2004 (Articles 12.6, 12.7, 12.8, 57, 61 and 124) defines the way of financing the health institutions. Co-payments are regulated by the Law on Health 4/2004 (Article 12.8 and 22) and AI Nr.6/2006. The public health system in Kosovo is currently funded through the state budget and co-payments. Revenues of health institutions are not kept in the health sector but paid to the treasury in accordance with the Law on Public Financial Management and responsibilities. According to the WB, out-of–pocket payment to the private sector amounts approximately to the same amount than the public health expenditure. There is no mandatory public health insurance. New Scheme – Last year MoH has drafted two documents for health financing system. The health reform includes the introduction of the health insurance during phase two (from 2013 and onwards) as stipulated in the Draft Law on Health Insurance and in the Draft Health Law. The health insurance system to be introduced in Kosovo is a mixed model based on pooling of resources obtained through premiums paid by citizens and through Government funds collected by taxation by a single public independent health insurance fund. Health insurance will be organized and implemented as mandatory health insurance and additional voluntary health insurance. Mandatory health insurance will cover basic health care services and will be implemented through the Health Insurance Fund (HIF).

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Citizens with mandatory health insurance are entitled to health services defined by the list of essential health services. The list of essential health services will be drafted by a technical committee appointed by the Supervisory Board of the HIF and be adopted by the Government on the proposal of the MoH, in accordance with the financial resources available and the health needs of the population. Financial means for mandatory health insurance will be paid to the HIF as: premiums for health insurance from all citizens and residents of the Republic of Kosovo; Budget Transfers from relevant Government institutions for covering mandatory health insurance premium for special groups (retired persons, unemployed, persons with disabilities and disabled war veteran, and persons under social assistance),; budget transfers covering the public responsibility of the Government for provision of quality health service to the citizens determine within annual budget and according to the medium term expenditures framework (MTEF). Premium for mandatory health insurance will be calculated annually as a fixed rate based on the average income in the Republic of Kosovo. The premium rate is subject to Government decision, based on the available budget resources and the health needs of the population. Persons who are not covered by the mandatory health insurance will pay the full price of basic health care services according to the price list approved by MoH based on the proposal of HIF. Additional health services that are not part of the List will be provided upon obtaining of additional private health insurance or by direct payment to the health institution. The HIF is foreseen to be supervised by Kosovo Assembly and the Government. The HIF is leaded by a Supervisory Board and its Director. Financial repercussion of the new scheme The new model of health financing is based on three main sources of funding (Graph 6.). The Government will pay the premiums for the special social categories of citizens will make the budget transfer for the public obligation for health and citizens will pay the premium for health insurance. The total anticipated amount of pooled funds is illustrated below.

As illustrated the health insurance scheme is expected to increase the total amount of resources for health, which will provide the financial basis for achieving the Government’s goal of improving the health status of the population. The health budget, which today amounts to approximately 117 million Euros per year, will with the introduction of health insurance increase to 129 million as illustrated in figure 3.1 and 4.1.At the same time the Government's contribution remains constant. The long-term impact of the reform will be reduction in "out of pocket" payment for the citizens and payment of services that today are obtained free of charged by insurers from other countries (Diaspora and foreign workers that are working in Kosovo). Table 104. Projection of menace collected from premium payments from citizens Grapth 7. Illustrates the structure of Governmental funding for 2013 .

1 2 3 100000 60 6,000,000

200000 60 12,000,000

300000 60 18,000,000

400000 60 24,000,000

500000 60 30,000,000

600000 60 36,000,000

700000 60 42,000,000

800000 60 48,000,000

900000 60 54,000,000

1000000 60 60,000,000

1100000 60 66,000,000

1200000 60 72,000,000

1300000 60 78,000,000

1400000 60 84,000,000

1500000 60 90,000,000

1 - Number citizens who pay premium 2 - The average annual premium payments (5 Euros x 12 months) 3 - Total collected from premiums (in Euro)

Figure 3.2 Projection of

menace collected from

premium payments from

citizens

0%

20%

40%

60%

80%

100%

2012 2013 2014 2015 2016Premium Payment 28,945,5 37,105,8 38,362,2 38,362,2

Citizens Primiums 8,646,87 34,795,0 60,067,1 61,622,0 61,622,0

Budget transfer 115,970, 84,123,3 80,888,2 84,765,9 84,765,9

Figure 3.1 Projectionof financial sorcesbased on the new law of MoH

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Health services: Every citizen of the country has the right to use all health services which are provided by public health institutions. Today special social categories of citizens do not pay co-payment by Article 22 of the Health Law no. 4/2004. Table 105. The public health care expenditures

2009 2010 2011 2012

Budget for Ministry of Health (second and third level) (in million euro)

66 71 79 89

Budget for municipalities (in million euro) 26 27 38 41

Total (in million euro) 92 98 117 130

GDP (in million euro)* 3,912 4,216 4,637 4,911

Total health costs as a % of GDP 2.35 2.33 2.53 2.64

* Source: IMF Country Report, April 2012; MF;

The level of Government expenditure for health services is estimated at 50% of the total health expenditures in Kosovo therefore citizens pay directly out-of-pocket the costs of and other 50% for further health services (World Bank, Kosova Health Financing Reform Study, 2008). Per capita expenditures from the Government/state budget is around 75 Euro/year.

Is the healthcare system sustainable from the financial point of view? Is it sustainable from the point of view of human resources? Do you observe outmigration of staff or staff shortages? If yes, are there any strategies in place to retain staff? As health care institutions are financed by the central budget with no possibility for obtaining credit, the health care system is, in the short-term, financially sustainable. Whether the only 75 Euro per capita for public health service, in the longer-term will be sufficient to maintain the population’s willingness to pay taxes and to ensure social stability is more questionable. Therefore, the Progress Report for Kosovo 2011 concludes that the health sector is improperly financed.

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The main goal of the ongoing health reform is to increase the sustainability of financial system offering affordable defined scope of quality health services of ensured quality and to avoid unnecessary expenses for the population and thereby address the sustainability. Human resources in the health sector are regulated by Law on Health 04/2012, Law on Civil Service, Law on Labour, and bylaws as the AI No. 23/2004/ for continuous professional development, and UA No. 08/2011 for specialised education. The licensed health workers in Kosovo are distributed as follows: 4099 doctors, dentists 1234, pharmacists 1030, nurses/midwifes (bachelor) 139, psychologists’ 26, physiotherapists 238, nurses (high school) 16,736, which totals in 23,502. Due to limited financial resources, the possibility for hiring health care staff employment is restricted. The low wages in the public sector also makes that specialists prefer to work in the private sector not only in Kosovo but also beyond national borders. Ministry of Health has acknowledged the problem of migration of staff to the international market but do not have financial means to address the problem fully. However, MoH is making a great effort in addressing the serious challenge during the ongoing reform, and is undertaking concrete actions to minimise the negative trends. Specifically, new Draft Law on Health includes a number of policies that will have a direct effect on improving the employment in the health sector. At the same time, the Ministry of Health has opened 475 new specialization opportunities for doctors, orthodontists, and pharmacists as well as 65 new specialists at UCC and regional hospitals. Moreover, MoH has offered to specialists and sub-specialists in different fields the opportunity to attend an international professional training. The fact that skilled labour force is continuously abandoning Kosovo health is quite concerning. MoH is giving a great effort on addressing such a serious challenge through drafting the reformative legislation, and undertaking concert actions on terminating such a negative trend. Specifically, International Monetary Fund and the World Bank have already agreed with the new Draft Law on Health and it will soon be presented to the Assembly of Kosovo for approval. This Draft Law includes a number of policies that will have a direct effect in improving the status and perspective of the Health conditions in Kosovo. At the same time, during the last year, the Ministry of Health has opened 475 new specialization opportunities for doctors, orthodontists, and pharmacist as well as it announced a job vacancy for 65 new specialists at UCC and regional hospitals. In Kosovo, despite the grave financial situation in the health sector, there is no discrimination as to access to health services. Outcome/Quality: What are outcomes of the health system as measured by different indicators? How technologies are in the care system assessed (is there an independent body in charge of the assessment)? The objective of the Sectorial Strategy of health 2012-2014 is: "To decrease the rate of morbidity and mortality of the total population". The achievement of this

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objective will be shown by the level of accomplishment of Millennium Development Goals (MDO) which for health sector of Kosovo includes: MDG 4: Decreasing infant mortality rate thereby 2/3 of the current rate (until 2015: 9 o/oo), MDG 5: reduction in members mortality by 3/3 (until 2015: 5.5 per 100.000), and MDG 6: To fight against HIV/AIDS and tuberculosis (2015: to avoid the spread and to start the decreasing of incidence and prevalence). Regarding MDG 4 prenatal death has decreased from 29.1 o/oo in 2000 (Second report of UNDP for MDG for Kosovo page 40) to 19,3o/oo in 2009.), with decreasing trends according to the preliminary data for year 2011 in 17o/oo; however, compared to regional data it is still high (data for year 2004: Albania=16o/oo, Croatia 60/oo and Slovenia 4 o/oo). For MDG 5, the main indicator has declined from 23 per 100.000 in 2000 to 6 in 2010, the percentage of births controlled by health personnel has increased from 95% in 2003 to 98% in 2011 as well as the level of usage of contraceptives has increased from 44% to 60% (Second UNDP report for Millennium Development Goals for Kosovo, page 44). Regarding the incidence of TB in 2005 it was 52 per 100.000 while 42 in 2012; nevertheless, this is quite far for accomplishment of the aim by 2015 for 26 per 100,000. Health services still have a lot of work to do in order to achieve the goals of MDG by 2015, even though, the results of general indicators show a positive development health trend. The exact activities, their main indicators and due dates, are presented with details in Action Plan for Implementation of Health Sectoral Strategies, in accordance with strategic priority 1: Improvement of health situations as well as the quality of health services provided to citizens. Nonetheless, a great problem related to the indicators is lack of credible general data; a problem which is being treated through the ongoing process of integrated medical information system. How quality of care is controlled (e.g. is there an independent body in charge of controls) The documents that are relevant for the improvement of the quality of health services are the following: Law on Health no. 04/2004; Private Practice Law no. 2004/50; Law on Health Inspectorate 2006/02-L38; Health Sector Strategy 2010-2014; International Principles for Health Care Standards; Licence, accreditation and certification in the quality of health services; Management of the quality in primary health care; Management of the quality in hospitals; taxonomy of health system standards; Quality of standards for licensing and accreditation of hospitals in Kosovo; Quality standards for licensing and accreditation for other health care services; Quality standards for licensing and accreditation of primary health care institutions; AI 09/2005 Quality standards for licensing and accreditation of health institutions and their implementation; AI 12/2010 for clinical guidelines and protocols. The Division for Quality of Health Services within Ministry of Health is functional since 2002 and right now it consists of two officials. This division created the network of health coordinators in all levels of health care. The coordinators report to the division for quality of health services.

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The evaluation and monitoring of the quality of health services is controlled by health coordinators and quality inspectors. The Strategy for improvement of quality and security of health services 2012-2016 is in progress. 21 guidelines and clinic protocols are being prepared from groups of different health professionals in different fields that will be included in the process of final evaluation. Within the Ministry of Health, Kosovo Council for Guides and Clinic Protocols has been established. At the moment, there is no independent body for quality controls. The establishment of such a body will be included in the forthcoming strategy.

How technologies are in the care system assessed (is there an independent body in charge of the assessment)? In the period 2002-2003, 6 basic modules were developed for evaluation of medical equipment; as a result, a bio-engineers structure was created in QKUK as well as all other hospitals that deal with the 97% of maintenance of medical equipment were included in the system. Standardized formal evaluation of health technology is not applicable in the health sector of Kosovo. Against this backdrop, the Action Plan for Implementation of Health Sector Strategy 2010-14 entails the duty to have enough substitution sources for essential infrastructure maintenance and the technology with below listed activities, that have to start before the end of 2013, such as: a. Introducing the concept of Health Technology Appraisal; b. Calculating the future maintenance and substitution/reconstruction cost of

the equipment as well as improvement of building; c. Adapting the legal basis for investment decision to include the effects of

current budget; d. Reallocation of investment budget to cover the periodic need for maintenance

and substitution; e. Investment plan based on Master plan, new technical standards and new

legal base; Kosovo does not have any independent body for evaluation of health technology. 3.9.5.3. Education and training, research and innovation 3.9.5.3.1. Quality of Education - What are the relevant primary Laws, and what secondary legislation is applicable to education and training? Applicable Laws in Education and Training: a. Law Nr. 2011/04-L-032 on Pre-University Education; b. Law Nr. 2011/04-L-037 on Higher Education; c. Law Nr. 02/L-52 on Pre-School Education; d. Law Nr. 02/L-2006/02-L42 on Vocational Education and Training (under

amendment process); e. Law Nr. 03/L-060 on National Qualifications; f. Law Nr. 02/L-018 on Final and State Matura Exam; g. Law Nr. 2004/37 on Education Inspection in Kosovo;

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h. Law Nr. 2004/42 on Research Activity (under amendment process); i. Law Nr. 2005/02-L24 on Adult Education; j. Law Nr. 2006/02-L51 on Publishing Activities and Books; k. Law Nr. 2008/03-L068 on Education in the Municipalities of the Republic of

Kosovo. Secondary Legislation Applicable in Education and Training: a. Administrative Instructions which regulate the Pre-University Education (in

total 160), respectively the pre-primary, primary, lower and higher secondary education, vocational education and adult education, final and Matura exam, etc;

b. Administrative Instructions on Higher Education (in total 14) which regulate establishment, accreditation, licensing, the rights and obligations of the higher education providers and the rights and obligations of the students, etc.

Teacher development and teacher licensing, education management in the municipalities and formula of financing, school grants, etc. - Please describe the structure of the education and training system in Kosovo, including pre-primary, primary, general secondary, VET, adult education and higher education. Kosovo education system is composed of 6 levels of formal education, structured in compliance with the lifelong learning principles and according to International Standard Classification of Education (ISCED). The ISCED education levels from 0 to the end level 3 are part of the pre-university education and are regulated by the Law on Pre-University Education. The ISCED level 4, post secondary education in vocational and training schools, is regulated by the Law on Vocational Education and Training, while ISCED levels 5 and 6 are regulated by the Law on Higher Education. Pursuant to the Law on Pre-University Education and in accordance with the ISCED levels, the level zero (0) includes two categories of education; 1) pre-school education (early childhood development) for the ages 0 to 5 years old, which is not part of the compulsory education, and 2) pre-primary education for the ages 5-6 years old which is part of the compulsory education in Kosovo. Early child care and development can be organized in pre-school public and private institutions, socio-cultural centres, which are licensed pursuant to the Law on Pre-University Education. Level 1 according ISCED corresponds to primary education, with a duration of five years, ages 6-10 years old, respectively grades I-IV. Level 2 according to ISCED corresponds to lower secondary education, with a duration of four years, normally between ages 11-14 years old, respectively grades VI-IX. Level 3 according to ISCED corresponds to higher secondary education, withna duration of three years, depending on the curricula which is defined by the

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Ministry. This level corresponds to ages 15-17, including gymnasiums, vocational and training schools, music and art school. Level 4 according to ISCED corresponds to post-secondary education in vocational education and training institutions for a period 1-2 years; usually it starts from the age of 18 years old and above. According to the Law on Pre-University Education (Article 9), the Compulsory schooling shall begin at the start of the school year following the date on which a child attains the age of 6, the minimum compulsory school age and shall end upon the completion of ISCED level 2. The same article provides that the compulsory education in Kosovo shall be provided free of charge. Vocational Education and Training is regulated by the Law on Vocational Education which is actually being revised in order to be harmonized with the Law on National Qualifications. According to the actual Law into force, enrolment to the formal vocational education is open to those persons who meet the criteria set out by the Law. The programs of the higher vocational education are open to those who have completed the compulsory education and are not older than 17 years old. An exception to this rule is maid when the school teachers’ council decides for the persons above 24 years old to be enrolled in the programs of higher vocational education, pursuant to the Ministry legal provisions, which regulate the conditions and criteria for enrolment of candidates to the secondary vocational schools. The courses of post-secondary vocational education can be registered from persons who have successfully completed the courses of the higher secondary education, which can be either vocational education or gymnasium, in accordance with the specific requirement of a particular program. Pursuant to the Draft Law on Vocational Education and Training, the formal VET education institutions provide qualifications and education modules of the levels 3, 4 and 5 of the National Qualifications Framework. The types of vocational qualifications that will be provided are the qualifications and modules that correspond to grades 10, 11 and 12, which shall be in compliance with the National Qualifications Framework. Furthermore the qualifications and modules of post-secondary education, vocational or academic, which correspond to level 5 of NQF, are provided as well. The designation and function of the qualifications will be regulated by the secondary legislation. The orientation and career guidance shall be an integral part of all the programmes provided by the VET institutions, as stipulated by the new amendments to the Law on VET. Dual forms of VET are allowed in VET institutions, whereby the practical training and experience is gained in the enterprise, which shall be contracted for this purpose. The adult education and training is regulated by the Law on Adult Education and Training. This Law creates a framework for the adult education and training, including compensatory education and other forms of adult education and training that are not regulated by the Law on Pre-University Education, the Law on Vocational Education and Training and the Law on Higher Education. This framework is not applicable to the adult education and training provided

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under Governmental mandates or otherwise realized out of the education and training institutions as regulated by the Law. The objective of the adult education and training is to develop the necessary skills, knowledge and principles for the adults, as part of the general lifelong learning framework. The type of education can be obtained in licensed public and private institutions and in partnership institutions, in the programmes of ISCED level 3 and 4 of education in Kosovo. Adult education and training is an integral part of the education system in Kosovo. According to the Law, the adult education and training means the entire public and private education and training provided for the adults and/or the youth above the age of 15 years old, who have the right to attend the adult education programs. The adult education and training is organized in the education and training institutions, registered and licensed for this purpose. The exams organized for the adults attending the compensatory programs of education or those who request formal certification, are in compliance with the existing standard requirements for the regular students. The adult education for the compulsory levels of education is free of charge according to the Law on Pre-University Education, while adult education and training for the non-compulsory levels of education is subject to financial fees in accordance with the specific legal provisions into force. The duration of programs as well as planning and conducting the adult education activities, may be regulated different to the regular school calendar of education institutions. The education institutions and organizations which organize certification courses shall at least twice a year publish the exam dates for the education programs they provide. The duration, order of subject courses or parts of those courses and assessment forms are adapted to the specifics, needs and possibilities of the participants to the adult education. Higher Education in the Republic of Kosovo according to the Law on Higher Education Nr. 04/L-037, is considered any post higher secondary education (Law Nr. 04/L-32 on Pre-University Education), in the levels 5, 6, 7 and 8 of the European Qualifications Framework on lifelong learning, for which the ECTS can be granted. In compliance with the Bologna System, the higher education in the Republic of Kosovo is organized in three main cycles: Bachelor, Master and PhD studies. a. Level 1, Bachelor, which duration is 3-4 years of studies, whereby upon

completion of this level the student gains 180, respectively 280 ECTS and he/she is entitled to a Bachelor Diploma;

b. Level 2, Master, which duration is 1-2 years of studies, whereby upon completion of this level, the student gains 60, respectively 120 ECTS and he/she is entitled to a Master Diploma;

c. Level 3, PhD, includes PhD study programs of an independent academic and research character;

d. Any other post secondary education in the levels 5, 6, 7 and 8 of the European Qualifications Framework for which ECTS can be granted.

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The higher education qualifications in the Republic of Kosovo may be academic or vocational and may be issued by public or private higher education providers such as Universities, University Colleges, Institutes, Schools or Academies. Pursuant to the Law on Higher Education and the Law on National Qualifications Framework, the accreditation of programs and institutions which provide higher education, qualifications is done by the Kosovo Accreditation Agency. The higher education institutions in the Republic of Kosovo, public or private, use the European Credit Accumulation and Transfer System – ECTS. In Higher Education Institutions in Kosovo, the annual volume for the regular students is assessed to be 1500 hours. This means that 1 ECTS is equal to 25 hours of planned education. Table 106. Kosovo Education Structure International Standard Classification of Education (ISCED)

Education Structure Ages

Adult education/ Lifelong learning (formal and informal)

23/24+

ISCED 6 Post-University Education

23/24+

ISCED 5 University Education ISCED 4 Post-Secondary Non-

University Education 18+

ISCED 3 Higher Secondary Education, Grades X-XII

15-17

ISCED 2 Lower Secondary Education, Grades VI-IX

11-14

ISCED 1 Primary Education, Grades I-V

6-10

ISCED 0 Pre-Primary Education 5-6 Pre-School Education Birth-5

Table 107. Comparison of ISCED and Curricula Levels for Pre-University Education International Standard Classification of Education

Formal Levels of Educations Systems

Curricula Levels

ISCED 3 Higher Secondary Education, Grade XII

Curricula Level 6: Consolidation and specialization

Higher Secondary Education, Grades X-XI

Curricula Level 5: General and professional basic development

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ISCED 2 Lower Secondary Education, Grades VIII-IX

Curricula Level 4: Reinforcement and orientation

Lower Secondary Education, Grades VI-VII

Curricula Level 3: Further development and orientation

ISCED 1 Primary Education, Grades III-IV

Curricula Level 2: Reinforcement and development

Primary Education, Grades I-II

Curricula Level 1: Basic learning

ISCED 0 Pre-Primary Education Ages 0-5 Preparatory Level of

Curricula: Early childhood education

Table 108. The levels of the National Qualifications Framework related to selected stages of lifelong learning in the context of the current education structure and legislation

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- Please summarise the objectives of the Kosovo Strategic Education Plan (KESP). The Kosovo Education Strategic Plan is a strategic document which is drafted and based on the education sector wide approach. As a result also the priorities and objectives of this strategic plan are based on existing sub-sector strategies and tent to address the sector wide challenges of education in Kosovo. The strategic priorities, issues and constraints addressed by KESP include: a. Developing and supporting an inclusive system of education enabling

equitable access to quality and diversified education; b. Developing and supporting a system of pre-school education that encourages

improved access and networking of public and private initiatives; c. Reducing the number of shifts in schools by eliminating shift schools, mostly

located in the urban areas by building new primary and secondary schools; d. Develop quality education standards; e. Developing and expanding upper secondary schooling; f. Improving the quality of teaching and learning with learning outcomes more

closely aligned to employment; g. Restructuring of secondary education and promoting vocational education

and training; and the building of vertical and horizontal pathways across the different education sectors and levels;

h. Developing Centres of Competence (CoCs) and links with other VET providers;

i. Closer alignment between education and employment including the development of tertiary vocational education and training in response to labour market demand;

j. Improving the quality of higher education by ensuring quality control, application of European standards and a review of academic structures organization;

k. Expanding provision of higher education and the establishment of new higher education institutions;

l. Establishing higher education research institutions within higher education institutions to relate better to the needs of the economy and society;

m. Developing information technology (ICT) in all levels of education; n. Declaring development of human resources a national priority and creating a

life-long learning culture. The Kosovo Education Strategic Plan (KESP) 2011-2016 has been divided into eight programme areas, which at the same time serve as the main objectives, for which specific outputs and indicators have been developed. These eight programme areas are as follows: a. Pre-school Education (PSE) & Pre-primary Education (PPE): To develop a

system of inclusion for all pre-school and pre-primary children in quality, inclusive and non-discriminatory education;

b. Pre-university Education (PUE): To develop inclusive, equitable and quality and effectively managed pre-university education that will increase access, retention and encourage life-long learning;

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c. Vocational Education and Training (VET): To improve access to and the quality and relevance of VET and improvement in its coordination and relevance to the labour market. To strengthen the institutional and management capacity of the VET system and the establishment of a sound financial basis for its long-term development and sustainability. To increase opportunities for training of early school leavers, upper secondary school students and school leavers and adults, in order to enhance employment, especially for women and enhance prospects of self employment together with developing the Centres of Competence are a key to this approach;

d. Teacher Education (TE): To put in place an effective and sustainable teacher development system to improve quality of education. This strategic goal aims to carry Kosovo sub-sector for teacher development from its emergency phase to a development phase to become compatible with similar trends in the region and in European countries;

e. Higher Education (HE): To develop quality academic and professional higher and tertiary education and research supporting social and economic development;

f. Adult Education & Training (AET): To develop a sustainable and quality system for continuous education and training of adults that ensures equitable access to demand driven quality education that meets individual, social and needs of the Kosovo economy by contributing to the development of life-long learning;

g. Information and Communication Technology (ICT): To support and enhance the learning process of all by effectively integrating ICT and strengthening and adapting the use of ICT in the education sector to enhance inclusion and equity goals and with appropriate attention given to curriculum and education development.

h. Capacity Building for MEST and central agencies (CB): To strengthen MEST and the central agencies capacity in the sector in the transition to their new role to co-ordinate planning, and to oversee, support and monitor development efforts in the education sector in accordance with KESP 2011-2016.

- Do the municipalities have the capacity to sustain decentralisation to them of management and decision-making in the education and training system, including in budgets? Responsibilities (competencies) of Kosovo municipalities in education sector are set out in the Law on Education in the Municipalities of the Republic of Kosovo (no. 03/L-068), the Law on Pre-university Education (04/L/032) and the Law for Local Government (no. 03/L040). The Law on Education in the Municipalities regulates the organization of public educational institutions and the provision of public education at the pre-primary, primary, lower secondary, upper secondary and higher education levels in the municipalities of Kosovo. The municipalities are continuously taking over the responsibilities of decentralization of education system. However further capacity building is necessary for them to fully take over responsibilities as set out by the

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decentralisation process as regarding decentralization of management, decision making and budget in the education and training system. Factors affecting the effectiveness of the decentralisation process are: limited staff of Municipal Education Directorates (MED) and the mismatch between their professional background and the needs that the decentralisation process brings about. This makes it difficult for MEDs’ staff to properly understand their tasks in terms of management and decision making in education system. Regarding the financial decentralization, capacities in the municipalities are improving. MEST, in cooperation with the World Bank and other donors, support the capacity building on budget planning through training municipal budget officials and school principals. Law on Education in the Municipalities of Kosovo (no. 03/L-068), Law on Pre-university Education (04/L/032), Kosovo Education Strategic Plan 2011/2016 and Kosovo Curriculum Framework are main documents that regulate capacity building at municipal level. Some of the main activities that were carried out for capacity building at municipal level so far are: a. The delegation of financial responsibility to the municipal level has been

implemented; b. MEST adopted the Administrative Instruction on ‘Implementation of

municipal formula in determination of school budgets and implementation in school level’ no. 2/2011, of the date 30.06.2011 and Administrative Instruction on ‘Standards of professional practice of the school principals’;

c. Memorandum of Understanding has been signed with MEST, MF and relevant municipalities to support financial autonomy of schools;

d. MEST organized trainings for MED’s staff in 32 municipalities for total 1328 participants out of which 29 participants were of Serbian community.

One of the key factors for successful implementation of the decentralization process is to strengthen the Governing Board of the Schools (GBS). According to the Law on Pre-university Education, each publicly funded educational and/or training institution shall have a governing board (article 17). The new Law on Pre-university Education stipulates that the GBS takes over greater responsibilities. Therefore, MEST, in collaboration with BEP/USAID, has focused on capacity building of the GBS members through training programmes and guidelines for the operation of the GBSs. This Board is a decision making body of the school and it is comprised of a wider participation of the community, respectively of three representatives of parents, including at least one representative of non-majority communities where applicable, two representatives from society (stakeholders) nominated by the municipality and in cases of schools of ISCED Levels 2 and 3, one representative of the students, elected by students themselves. The members of the governing board are appointed to a three year term. Their responsibilities are very important for the well-functioning of schools, including drafting the school rules, approving the

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school’s extra-curricular activities as proposed by the school director, expressing its views on any issue relating to the school etc. - Please provide an update on the implementation of the Kosovo Curriculum Framework. Please provide an update on reforms to the Matura. Kosovo Curriculum Framework (KCF) was approved on 29.08.2011. The new version of the KCF sets the vision for developing and implementing a learner-centred and competency-based curriculum, integrating and reflecting the fundamental values and principles of human rights, living together, social justice and inclusiveness. It also envisages solutions for addressing the learners’ needs and providing fair access to quality education for all. At the same time, the revised Framework points to main challenges facing curriculum development and implementation, including the alignment of the curriculum with teacher education and training, assessment and school and classroom management. To enable a successful implementation, some preconditions must be ensured: a. Qualitative design of the curriculum documents in the spirit of the

Curriculum Framework; b. Comprehensive preparation of the school system and individual schools to

take over the implementation of the new state curriculum; c. Capacity building of management and teachers. As part of designing curriculum documents the Optional Curriculum Manual, and the Assessment document were developed and approved by MEST. Up to now, main achievements of MEST regarding the implementation of the new KFC are: a. Textbook standards finalized and approved (31 August, 2012); b. Assessment/evaluation standards finalized and approved (February, 2012); c. Operational guidelines for curriculum developers, as the main reference

document for writing curricula are developed; d. Guidelines for implementation of the Curriculum are developed; e. Action plan for gradual implementation of the KCF, in cooperation with Edu

SWAp project is developed; f. The following learning outcomes were developed:

i. The main learning outcomes that express the necessary level of achievement of key competences upon completion of pre-university education;

ii. Learning outcomes that express the necessary level of achievement of key competences upon completion of any level of the curriculum;

iii. Learning outcomes for each area of the curriculum during a level of the curriculum;

g. Pilot schools have been selected to implement the new curriculum framework;

h. The capacity building plan for management and teachers has been drafted - professional development to ensure implementation of the KFC (the process is ongoing).

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MEST is in the process of designing and developing a series of Kosovo Curriculum documents, in order to facilitate its implementation in schools: a. Core curriculum for pre-primary and primary education, (June 2012); b. Core curriculum for lower secondary education, (July, 2012); c. Core curriculum for gymnasiums, (July 2012); d. Core curriculum for vocational schools, (July 2012); e. Subject syllabus of the pre-primary grade, grade I to grade XII, covering all

areas/subjects for each class.(December 2012) f. Curriculum and instruction manual for elective classes, (August 2012); g. Early childhood curriculum (birth - 5 years), (2013); h. Standards for early childhood (birth - 6 years), (2013); i. Guidebooks for teachers of the preschool level, (August 2012); j. Guidebooks for teachers of the pre-primary level, (August 2012); k. Guidebooks for teachers of the primary level, (August 2012); l. Guidebooks for teachers of the lower secondary level, (August 2012); m. Guidebooks for teachers of the upper secondary level, (August 2012); n. Guidebooks for school directors of the preschool level, (August 2012); o. Guidebooks for school directors of the pre-primary level, till grade IX,

(August, 2012); p. Guidebooks for school directors of the higher secondary level, (August 2012). The USAID “Basic Education Project” and the Teacher Training component of EU IPA 2009 “Support to Employment and education” project provided substantial support to the trainer training and teacher training from September 2010 and September 2011 respectively. State Matura: is being developed in line with the Law on Final Exam and Matura (no. 03/L-018). This Law regulates the organizing procedure, content, conditions, criteria and other procedures of the Final and State Matura Exam in Kosovo. This year MEST undertook several actions aiming at reforming the State Matura process. The Plan of Activities for State Matura 2012-2015 has been drafted. This Plan foresees ‘more and better tests’, modification of rules for certification and admission, strengthening of the administration etc. One of the reforms being undertaken has to do with the format of the test. The number of items (questions) has been increased by 100% (from 100 as it used to be to 200 items/questions). In 2012 Matura test will be organized in two days. On the first day there will be questions from general subjects like Albanian, English language and math, while on the second day there will be questions of specific profiles (gymnasiums, vocational education including students with special needs and students of the informal education). To ensure a successful implementation of the Matura test, rules for administering the test and training administrators have been drafted. In a testing centre there will be 150 students mostly. In each centre there will be one monitoring person, one assistant and the Testing Centre Commission.

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According to this, every person in a testing centre will have 10-12 students under his/her supervision. DESM (Division for Evaluation, Standards and Monitoring) is working on improving the quality of questions/items and each test compiler is going through adequate training. Until the new Curricula is introduced, National Matura Council (NMC)/ DESM / MEST will work together to achieve the aim of strengthening and improving the administration of the Matura Test, based on the experience gained in 2012. - What stage of development or implementation has the National Qualifications Framework (NQF) reached? What are the priorities in implementation? What is being done to promote validation of non-formal and informal learning (or recognition of prior learning)? National Qualifications Authority (NQA) was founded in 2009 based on the Law on National Qualifications (no. 03/L-060). The Law establishes a National Qualifications System, based on a National Qualifications Framework (NQF) regulated by a National Qualifications Authority (NQA). The role and responsibility of the NQA is to develop and manage the National Qualifications Framework. National Qualifications Framework (NQF) has been prepared by the National Qualifications Authority (NQA), with the support of EU KOSVET V project, funded by the European Union. NQF was drafted through a long consultative process with all relevant stakeholders. The Framework was approved in December 2011 by the Governing Body of the National Qualifications Authority. The National Qualifications Framework is now printed in three languages (Albanian, English, and Serbian) and continuously distributed to NQF's actors. In February 2011, the Administrative Instruction no. 01/2011 on ‘criteria and procedures for validation and approval of national qualifications and accreditation of institutions offering qualifications in Kosovo’ has been approved. Application forms for providers, as well as numerous guidelines to facilitate their work have been drafted. In order to test the Administrative Instruction 01/2011 and implementation of the NQF, in June 2011 NQA began a pilot phase that lasted until July of 2011. Eleven (11) VET institutions were involved in the piloting stage (Vocational Schools and Vocational Centres of MLSW, Vocational Centres of KEK and other institutions) for 15 Priority Qualifications: plumbing and heating, electrical installation, auto mechanic, metalwork, industrial electronics, accounting assistant, informatics, welding, business administration, and police officer. Thirteen panels were organized to implement this process. Panels were comprised of an officer from NQA, an EU expert of the KOSVET V project and an expert of a specific vocational field. All activities were conducted in July 2011. In February 2012, NQA has announced public invitation for the submission of applications of providers in the sector of machinery and business administration. Also, the vacancy for experts who undertake activities for validation of

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qualifications and accreditation of institutions that offer these profiles was published. Seven regional Vocational Training Centres have applied. After approval of applications by the NQA Governing Council and approval of the list of experts for evaluation panels, the selection process was carried out according to criteria as set out in the Administrative Instruction no. 01/2011. After the revision of applications, these institutions were visited by the team of experts. Upon completion of this phase, the draft reports for each institution were prepared and were sent to institutions for their comments. During the process, all procedures for validation of qualifications and accreditation of the institution were respected. Now we are waiting for comments and evidence from the applicant institutions and afterwards the team of experts will make the necessary corrections and then will be sent to the NQA Governing Council for approval. It is expected that the NQA will come up with a decision in June 2012, a timeline set by the AI no. 01/2011. After the completion of this process, NQA will announce invitation for the second round for validation of qualifications and accreditation of VET providers, for two profiles that have been part of the piloting phase in 2011 for which professional standards exist, verified by the NQA. During this time another project for increasing quality at VET schools of MEST, was implemented together with the British Council. Also, NQA began a project with the ETF in quality assurance. ETF provided an international expert to develop and explore possibilities for increasing the quality at MEST schools. This project will last till October 2012. NQA develops policies and strategies for creating and implementing a National Qualifications System in compliance with the Law on the National Qualifications (No. 03/L-060). Plans, priorities and activities of the NQA are determined in the Action Plan 2012 of the NQA. NQA priorities for 2012 in terms of implementing the NQF are: a. Populating the NQF with approved qualifications through the validation

process (through 3-4 provider accreditation processes); b. Accrediting public and private providers of vocational education and

training across the country (through 3-4 provider accreditation processes); c. To contribute in ensuring the quality of programs and activities in vocational

schools of MEST; d. Interactive Communication Strategy that ensures greater efficiency in the

process of validation, accreditation and quality assurance; e. Extensive consultation with relevant actors of NQF; f. Promotion of the NQF through activities that increases public awareness; g. Wider participation in EU projects and international activities as part of

continuous professional development of NQA;

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Once the NQF starts to be implemented, constant priority of the NQA is to ensure mutual recognition with other countries, always ensuring compliance with: a. European Qualifications Framework for Lifelong Learning (EQF) and the

Framework for Qualifications in the European Area of Higher Education (FQEHEA);

b. Descriptors of the EQF and the Dublin descriptors for higher education; c. Principles of Quality for higher education and VET, attached to KEK and

relevant criteria for referral of NQF to KEK; d. The European Credit System for Vocational Education and Training (ECVET)

and European System of Credit Accumulation and Transfer (ECTS); e. European Reference Framework for Quality Assurance, Education and

Training (EQARF); f. Documents of the EU which are tools for the transparency of diplomas,

certificates and competences. In order to promote the recognition of non-formal and informal learning (or recognition of prior learning) NQA in continuous consultation with social partners and actors who are part of non-formal and informal education and with the help of international experts has developed policies and Guidelines for the Recognition of Prior Learning, which is also included in the NQF. Secondary legislation for validation/recognition of the non formal and informal learning will be drafted this year in consultation with all social partners. Working groups will be established comprising of social partners and relevant actors for drafting the Administrative Instruction on Recognition of prior Learning, in order to increase quality in this aspect, but also to enable individuals who get qualifications to find job in the labour market. - How many schools still operate shifts? Please provide information and statistics on ICT use in education and training, including the number of pupils per computer and distance learning facilities, etc. Ministry of Education, Science and Technology is continuously improving the physical conditions of schools, by building new spaces and improving the existing ones. Considerable progress has been made in this respect. MEST, in cooperation with development partners has achieved to reduce the number of schools who work in multiple shifts. Third shifts are almost eliminated. Official statistics show that: a. 24 schools operate in three shifts; b. 619 schools operate in two shifts; c. 77 schools operate in one shift. MEST is currently constructing 32 new school facilities, out of which 19 are secondary schools and 13 are primary schools. After these constructions are finished, the number of schools who work on three shifts will be reduced by 10, while upper secondary schools will reduce the

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number of students per class (at the moment the number of students per class at upper secondary level is around 40). ICT integration in the education system of Kosovo is an ongoing process. In this context, MEST in cooperation with donors has worked on developing human resources, by offering trainings of the ECDL (European Computer Driving Licence). The training was successfully carried out and 10,700 teachers have completed this training. Also, considerable progress has been achieved in infrastructure investments which led to an improved situation. Many schools are equipped with computing labs. According to official statistics gathered from primary and secondary schools in Kosovo, the conditions in schools regarding ICT application is satisfactory and trends are positive. In secondary schools, the average number of computing labs is as follows: a. Vocational Schools – 1.53 labs; b. General Schools – 1.2 labs; c. Mixed Schools – 1.4 labs; d. Centres of Competences – 6 labs. According to official statistics of MEST the average number of computers in secondary schools is as follows: a. Vocational Schools – 35.19 computers b. General Schools – 32 computers c. Mixed Schools – 24.8 computers d. Centres of Competences – 312 computers Around 60% of all schools of the pre-university level are equipped with ICT labs. The remaining part will be equipped during next two years. According to the “Recommendations for e-Learning Strategy in Kosovo, 2010 the average number of students per computer in EU is 9 and in Kosovo around 86 students share a computer. It should be noted that there are considerable differences among schools regarding ICT equipment, and it seems that VET schools are equipped the best. Also, computer labs are generally only open for IT classes during the day and closed after school. Just a few schools allow students access to computer labs outside regular IT classes. However, according to MEST’s statistics, in 2012the ratio between the number of students and computer is about 45 students per computer. Taking into account that labs are used in two or three shifts, this number goes down. Kosovo does not organize distance learning. 3.9.5.3.2. Vocational Training - What stage have the planned amendments to the (separate) Laws on VET and Adult Education reached? What are the intended effects of the revisions to the Laws? Who has been consulted in preparing the revisions?

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The amendment of the Law on Vocational Education and Training and the Law on Adult Education is in its final phase. By the end of May both Laws will be submitted to the Government of Kosovo for approval. Some of the changes made in the new Draft Law on Adult Education and Training are the program evaluation for adults, recognition of prior learning, establishment of the Agency for Vocational Education and Adults’ Education and Training, coordination with the Authority for National Qualifications and National Qualification Framework. The new Draft Law on VET foresees greater involvement of Kosovo Chamber of Commerce and social partners, establishment of a VET Agency and regulates the functioning of the CVET. The intended effects deriving from the revision of the Laws are: avoiding gaps in current education and training (VET) and education and training for adults, making VET an important factor of economic development based on labour market demand, quality assurance based on EU standards and criteria, compliance with the national legislation in power, i.e. the Law on National Qualifications and National Qualification Framework. In preparing the revisions of both Laws relevant stakeholders have been consulted, including relevant ministries, municipalities, VET experts and social partners as follows: Legal Office of the Prime-Minister, Office for Strategic Planning, office for public communication of the Prime-Minister’s office, Agency for Gender Equality, Office of Good Governance, Consultative Council of Communities, Ombudsman, Ministry of Justice, Ministry of Public Administration, Ministry of Local Governance, Ministry of Communities and Returns, Ministry of Finance, Ministry of European Integration, Ministry of Labour and Social Welfare, Ministry of Youth Culture and Sport, European Commission, German International Cooperation, Lux Development, Hamburg Institute, Municipal Education Directorates, Center of Competences, civil society, school directors, Kosovo Chamber of Commerce. Both Draft Laws has been sent to the Ministry of European Integration for the declaration of approximation and the Ministry of Finance for finance declaration. 3.9.5.3.3. Youth - Does Kosovo have a strategic framework to address youth issues? What is the legal framework in this area? Is it aligned with the EU policy in that area? Are the youth and other interested organisations participating in the Youth in Action programme? Please list the Youth-in-Action focal points. Ministry of Culture, Youth and Sports (MCYS) has drafted the following strategy: “Strategy of Kosovo and Action Plan for Youth 2010-2012” which sets out objectives and indicators that assist youth capacity development in the country and youth empowerment in the society as well. Youth priorities are evolved in the following 6 categories: (1) Youth Participation; (2) Informal Education; (3) Employment; (4) Health Services for Youth; (5) Human Safety and (6) Culture, Sport and Amusement.

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The aim of the Strategy of Kosovo and Action Plan for Youth (SKAPY) is to improve youth position by involving all respective Governmental and nonGovernmental institutions, organisations and service providers in order to investigate and accomplish youth needs and find out the mechanisms enabling youth participation in decision making process. The strategy encourages the cooperation between youth organisations and Government, respectively the cooperation among all Ministries whose activities are related to youth, as well as among central and municipal bodies with the aim of empowering youth policies and programs. The youth action plan describes steps to be undertaken in order to accomplish the vision, implementation of strategies, determination of respective stakeholders, responsible organisations and necessary financial funds. By October 2012 the new Strategy and Action Plan for youth 2013-2017 will be drafted. With the aim of continuous progress and reaffirmation of youth participation in decision making process and in order to develop a democratic society, improve the youth quality of life and their social status, by taking into account the youth requirements and interests conform European standards and best international experiences, the Assembly of Republic of Kosovo has adopted Law No 2009/03-L-145 on Youth Empowerment and Participation. Purpose of the Law: a. Defining basic responsibilities for empowering youth sector in Kosovo by

supporting their participation in the decision making process. b. Defining the responsibilities of local and central Governmental institutions

toward youth and youth organisations in respective fields which have been regulated according to this Law.

c. Defining voluntary work and informal education of youth. d. Defining the Instruction on licensing youth centres. Pursuant to Article 145, point 2, of the Constitution of Republic of Kosovo, based on Article 1, paragraph 1.3, point (ç) and Appendix V point (i) of UNMIK Regulation 2001/19 on Branch of the Executive and with the aim of implementing Law No. 03/L-145, on Empowerment and Youth Participation, Article 15, Ministry of Culture, Youth and Sports issues the following four Administrative Instructions: a. Administrative Instruction on Informal Youth Education, which shall

regulate the areas, the courses plan for informal youth education, certification, criteria for the youth informal education providers, as well as the work of Committee for the implementation of informal youth education;

b. Administrative Instruction on Responsibilities and Procedures of Establishing and Functioning of Youth Action Councils in Kosovo, that shall regulate establishment procedures, functioning and registration of Youth Action Councils in the Republic of Kosovo;

c. Administrative Instruction on Youth Voluntary Work, that shall regulate the rights, obligations and procedures related to youth voluntary work, as well as the work of Committee for the implementation of youth voluntary work;

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d. Administrative Instruction on Licensing Youth Centres, that shall define the procedures of licensing youth centres through Municipalities.

The framework of Kosovo Strategy and Youth Action Plan has been based on legal acts and youth policies related to youth, both international and regional. At regional level SKYAP is being drafted according to the reviews carried out to other documentations related to youth action plan policies. As for European level SKYAP follows the best experiences and recommendations of the Council of Europe (CE), the European Union (EU) and the European Youth Forum (EYF), such as the “European White Youth Paper”. The SKYAP takes into account the so called 11 youth policy indicators explained by the EC and the European Youth Forum. Indicator 1 Informal Education. – This indicator is clearly covered in

SKYAP. Informal Education is the main policy objective in the field of

education in Kosovo.

Indicator 2:

Youth training. – This indicator is mentioned several times in SKYAP and it is related to formal and informal education, employment and health.

Indicator 3:

Legislation on Youth. – In Kosovo’s case the Government of Kosovo, with support of international donors and in collaboration with the International Council for National Youth Policies has drafted the project Law on Empowerment and Youth Participation prior to SKYAP, while in many countries of the world often occurs the opposite. Therefore, the legal dimension of youth policy is rooted in SKYAP. In addition, this document partly touches on some Laws effecting Kosovo youth and urges their implementation and improvement.

Indicator 4:

Youth budget. – The process of drafting SKYAP has been financed by the Ministry of Culture, Youth and Sports and international donors. The implementation part (Action Plan) sorts out concrete steps needed for the implementation of the respective plan, as well as indicates the appropriate and accurate budget figures. By using the Kosovo Government resources and with co-finance by international donors, SKYAP provides the budget in order to improve the youth situation in Kosovo.

Indicator 5: Policy on youth information

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– This is an inter-sector component and it is dedicated to the field of education, employment, health and human safety

Indicator 6:

Policies address many levels. – SKYAP is not a plan that addresses only the central level of the Government. The strategy includes also the representatives of local administrations and local youth NGOs. Compilers of the strategy have consulted authorities at local level and municipal are encouraged on developing local action plans based on the text of youth policy.

Indicator 7:

Investigations for youth. – This is one of the most significant components of SKYAP. In May 2006 the secretariat of SKYAP has developed investigations related to the needs and problems that youth and youth sector encounter in Kosovo. This secretariat has used the data collected by UNDP Report regarding human development in Kosovo.

Indicator 8:

Participation. – Youth have been included in developing SKYAP since the beginning. Different youth organisations such as: Kosovo Youth Network has been actively engaged in compiling the draft document. Several conferences have been organised at local and regional levels in order to ensure youth engagement and youth organisations on drafting and implementation process of SKYAP.

Indicator 9: Inter-ministerial Cooperation.

During drafting of SKYAP an inter-ministerial committee has been established in order to represent main ministries whose activities are related to youth. This committee had regular meetings with the aim of reviewing youth Strategy of Kosovo and Kosovo Plan for Youth.

Indicator 10:

Innovation. – The process of structure itself has been an innovation, coordinating and had its representatives (contact points) at different ministries in order to incorporate within the strategy all youth activities and programs during the process of draft compilation.

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Indicator 11:

Advisory Youth Bodies. – Law on Empowerment and Youth Participation foresees the establishment of Kosovo Action Council for Youth as the representative body of youth organisations and annual conferences shall be arranged with the aim of discussing youth policies, and exchange opinions regarding Governmental and nongovernmental youth programs.

Through Salto Youth, Kosovo participates in the program “Youth in Action”, represented by the NGO called ‘Institute for Sustainability and Development of Youth (ISDY)’. Consequently, the Youth-in-Action focal point is the ‘Institute for Sustainability and Development of Youth (ISDY). 3.9.5.3.4. Research and innovation: participation in EU framework programmes - Have entities from Kosovo participated in the Seventh EU Research Framework Programme (FP7) and if so, in which thematic areas? Has Kosovo created administrative capacity to facilitate participation of the Kosovan' research entities: is the Government supporting the activities of the National Contact point and how? Will other Contact Points, on thematic or horizontal areas, be nominated? What has Kosovo done to promote cooperation under FP7? The Government of Kosovo has continued its efforts to improve and increase the participation of the scientific research community in the European Research Framework Programme FP 7. Up to date, 24 applications have been received from research institutes and organizations, with a success rate of 21%. 20 out these applications are submitted under “Cooperation” thematic area, out of which 4 are approved; 3 in the area of Information and Communication Technology and 1 in the area of socio-economic and human sciences. In addition, 4 other applications are submitted in the “Capacities” thematic area (3 applications) and in the “People” thematic area (1 application), out of which only one project in “People” thematic area has been financed. In November 2011, the Ministry of Education, Science and Technology has issued a decision on nomination of the National Contact Point (NCP) for FP7, as a coordinator of NCP. With a support of MEST, the NCP coordinator is preparing the creation of the NCP system for Kosovo during 2012, in order to nominate other contact points for specific thematic areas based on key FP7 thematic areas as well as National Research Programme priorities of Kosovo. During this preparatory phase, the NCP coordinator has visited the NCP system in Austria and will also visit the NCP system of one of the regional countries, with the aim of applying the best practices from other countries, during the Kosovo NCP designing phase. After the other thematic contact points are nominated by MEST, the nominated persons will attend adequate general trainings on the EU Research Framework Programme FP7, and on specific thematic areas they are nominated for.

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Up to now, the NCP coordinator has organized a series of information sessions for the research community in Kosovo, around the different financing possibilities for their scientific projects. More than 100 researchers have attended 5 information sessions which were organized up to now, in order to distribute general information on the FP7 programme, as well as on the special schemes of the programme, such as ICT scheme, mobility programme ‘Marie Curie’, e-infrastructure scheme, air transport, aeronautics, etc. A Training of Trainers was held in 2012 with a participation of 10 representatives from academia, research institutes, Governmental institutes, businesses and civil society, who will serve as multipliers in terms of transfer of knowledge and practices gained in this training, to their colleagues and others. 3.9.5.3.5. National funding and cooperation in research and innovation - Has Kosovo a national funding programming for research and innovation? How is the funding programme established: consultations with stakeholders? How are the themes and/or topics that will be funded, selected? Is Kosovo concentrating efforts on key topics in which it has already some potential (smart specialisation)? - Is the funding allocated on a competitive basis? What are the criteria? Is Kosovo applying international peer review? The actual Law on Scientific Research Activity (article 7) sets out that 0, 7% of the Kosovo Budget shall be allocated to research, in order to ensure the necessary conditions and means for research activity. In addition, according to National Research Programme, the planned investment in research amounts to an average 3 million Euros per year within a long term period from 2010 to 2019, in order to achieve the planned objectives of this Programme. However due to the severe budgetary constraints that Kosovo is facing, the Government was not able to stick to the financing programme and as a result the budgetary allocation for research in 2011 was €400,000, while for 2012 it is €480 000. However there are few programmes for implementation of the allocated funds for research such as: 1. Special Research Grant, 2. Publication of scientific work, 3. Brain gain, 4. Short-term mobility, 5. “Kosovar researchers of the Year” and the “Best newcomer researchers of the Year in Kosovo”. Special Research Grant aims to establish a research programme based on international standards through autonomous research concentration at a single research institution/university location. Extremely productive, tightly interconnected research establishments for the execution of complex research projects should be built up, preferably in an interdisciplinary manner. The projects financed by this programme should have an added value compared to small sized research projects through the establishment of programmatic based research endeavours. Each project should involve at least 4 researchers and a maximum of 8 researchers from one institution. In addition each project has to involve two international experts in the special research field as external advisors. The programme’s scientific goal is to unlock the research and innovation potential by enabling excellent scientists to work together intensively on special research themes. The total grant for a project for one year cannot be higher than 125.000 Euro. Proposed projects have to last for a minimum period of 12 months and a maximum of 24 months.

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Publication of Scientific Works Program provides financial support for publication of scientific works which result from a non-benefit research activity and which are linked to one of the five plus one national research priorities of the National Programme for Research. This program also provides financial support to translations in Albanian and/or Serbian languages of important international publications which fall under five plus one priorities of the National Programme for Research. Only the publications that have a high scientific character and which ensure a significant improvement of the scientific knowledge or that ensure further advancement of research within that particular field, can receive financial support for translation. This fund will emphasize the significant importance that the science and research has for the society by identification of solutions to social, economic, cultural and scientific problems and to it will also encourage and increase the role of the research in Kosovo by ensuring the information on the research activities at international level. The financial support for original scientific publications is €3000, in special cases it can amount to €5000; €1500 for the easy access publications and €1500 for translations and editing from foreign languages. The Short-Term Mobility Grant aims to enable Kosovar scientists to work for short-term abroad at universities or reputed research institutions with the purpose of gaining research experience abroad and/or to enable Kosovar scientists to participate at scientific conferences etc. to present their own research results abroad. In addition it aims to achieve the results of review, exchange and/or open up new areas of knowledge, new scientific approaches, methods and techniques; new publications and to further strengthening the cooperation between home and host institutions for the collaborative advancement of sciences. The duration of the mobility is 2 months with a total financial support of €1500. “Kosovar researchers of the Year” and the “Best newcomer researchers of the Year in Kosovo” Programmes aim to promote scientific excellence, to encourage science careers and to recognize the efforts and commitment of those researchers who are advancing the knowledge in their area of expertise. The award “Kosovar researchers of the Year” is given annually to the five most outstanding Kosovar researchers. Each of them receives prize money up to €6.000 to support the continuation of their research career and to enable prize winners to build up or consolidate and lead research groups. The award “Best newcomer researchers of the Year in Kosovo” is given to the best five newcomer researchers annually with a prize money up to €2.000. Kosovo Brain Gain Grant (BGG) aims to attract the best researchers living abroad to enable them professional scientific careers in Kosovo. The Kosovar host organisation should guarantee that it will employ the candidate after the end of the support provided by the BGG for at least the double duration of the given Kosovo Brain Gain Programme grant. Proposed projects have to last for a minimum period of 12 months and a maximum of 24 months. The total amount for the BGG in 2010 was €250.000.

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In 2010, in total 54 applicants have applied for Special Research Grant with scientific projects of duration 1-2 years, out of which 10 projects are selected. The total amount for scientific projects in 2010 was €208,956. Under the publications grant for 2010, 12 scientific publications were selected with a total amount of €40,000. Within the short-term mobility programme, in total 10 grants are provided with a total amount of €10, 500. While there were no interested candidates for the Brain Gain Programme for which a total amount of €60,000 was dedicated for 2010. While the awards “Kosovar researchers of the Year” and the “Best newcomer researchers of the Year in Kosovo” were not awarded in 2010. During 2011, the following programmes were announced: 1. Publication of scientific work, 2. Short-term mobility, 3. “Kosovar researchers of the Year”. Under the publication of scientific works, 15 candidates were selected. The total amount for this programme was €32,315. While under the short-term mobility programme 10 candidates have benefited, out of which 4 for participation in different conferences and 6 research projects. The total amount of this grant was €9,485. 8 other short-term mobility grants are provided during this year in an amount of €7,500. In 2011 an award of “Kosovar researchers of the Year” was awarded in the amount of €3,000. Table 109. Thematic areas financed by financing programmes for 2010 and 2011 (1) Grant (2) Thematic areas

2010 and number of beneficiaries per theme

(3) Thematic areas 2011 and number of beneficiaries per theme

(4) Special Research Grant

(5) Linguistics 1; ethnology 2; electronics 1; health 3; tourism 1; socio-economic development 1;

(6)

(7) Publications Programme

(8) History 1; political science 3; linguistics 1; ethnology 2; literature 2; anthropology 1; media 1; science 1.

(9) Literature 5; philosophy 1; music 1; ethnology 1; Law 1; political science 1; education 1; architecture 1; history 1.

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(10) Short-term Mobility Grant

(11) Mathematics 1; history 1.

(12) Conferences; forestry 1; history 1; technology 1; literature 1; political science 1.

(13) Research projects: political science 2; religion 1; history 1; literature 1.

Creation of the research financing programmes is based on the Law on Scientific Research Activity and the priorities of National Programme for Research, as an agreed and consensus based Programme. Therefore the financing programmes are based on the priorities and objectives of the National Programme for Research, which are emphasized in the answer to the next question. The development of this Programme has undergone a wide process of consultation and discussion with all the relevant stakeholders, including all the relevant public Governmental and independent institutions, civil society, business representatives and donor community. As a first step undertaken in the area of science and research, based on the Law on Research Activity Nr. 2004/42, was the establishment of the National Council for Research which was the main body responsible for development of this Programme. The Council itself reflects an inclusive composition of all relevant stakeholders in the area of research. The number of members of this Council is 15. Due to the budgetary constraints and the limited budget allocated for science and research, it was not possible for the financing programmes to be more focused on major importance projects, according to what has been planned in National Programme for Research. However, the implemented grants for science and research are relevant and in accordance with the first Objective of the National Programme for Research, being particularly focused on capacity building for research, as the first step towards further development of the research in general. As regarding implementation of the financing programmes, their competitive implementation is ensured by the Law on Scientific Research Activity which sets out the procedures of call announcements and types of projects that can be financed (article 60), it further regulates who can apply and who can implement it (article 61), it sets out the general criteria of evaluation and selection of the projects (article 62), the administrative procedures of contract conclusion with the project implementing institution and monitoring of the project implementation (articles 63, 64, 65). Implementation of all the financing programmes mentioned above was done through public announcement in accordance with the Law on Scientific Research Activity. In addition, for all the financing programmes, special application guidelines which explain the goal and objective of each programme and application procedures are developed and made public.

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The basic criteria for financing of scientific research projects are set out the by the Law Nr. 2204/42 on Scientific Research that the project shall have an importance for development of the country, shall have a scientific value, the implementer of the project shall have recognized scientific achievements and the project shall have an economic rationality for its implementation (article 62). Besides the Law, the general criteria for financing scientific research are the priorities and objectives of the National Programme for Research. In addition, each financing programme has its application guidelines, where also the main criteria of financing are highlighted. There are some general criteria which are developed by the Science and Research Council of MEST based on the Law and Programme for Research, which apply to all financing programmes. 1. Scientific achievement and originality of the proposal, which seeks for the quality (well prepared proposal and clear objective), innovative potential, good and proper methodology, implementation feasibility (administration, proper budgeting, resources, deadlines), potential contribution to science, technology, economy, environment and society. 2. Scientific qualities of the project partners which seeks for the scientific experience of project partners, publications in scientific journals, reputation of the organization. 3. Inter-disciplinary dimension of the project, which requires a link of more than one scientific thematic area and the project partners shall be from different scientific thematic areas. Based on the Law, MEST has created different scientific councils for specific thematic areas which among other tasks are responsible also for reviewing and evaluation of projects. The composition of these councils is quite inclusive, members of which have relevant scientific experience and titles. 3.9.5.3.6. Strategy on research and innovation - Has Kosovo established a national strategy on Research and Innovation? How much is Kosovo investing in research: share of its GDP? Is investment by the private sector being stimulated? How many persons are employed on research/science in Kosovo? Which actions does Kosovo intend to take to strengthen its research and innovation capacity building? Is Kosovo taking actions to foster innovation? Kosovo has adopted a National Programme for Research based on the Law Nr. 2004/4 on Scientific Research Activity. The main objectives of this Programme are as follows: a. Objective 1: Development of human capacity for research activities; b. Objective 2: Development of research infrastructure; c. Objective 3: Internationalization of scientific research activity; d. Objective 4: Strengthening the links between science and society and

economy for enhancing economic and social development; e. Objective 5: Excellence in research and scientific activity. While the main thematic priorities of the National Programme for Research are as follows: 1. Natural Resources, Energy and Environment, 2. Agricultural Production and Food Safety, 3. Medical Research, 4. Social and Economic Studies, 5. Linguistic, Cultural and Historic Studies, In addition, the field of

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Information and Communication Technologies is considered as cross horizontal priority that may occur in any of the abovementioned fields. These priorities are set out based on some of the main criteria such as relevance to economic and social development of the country, number and quality of human resources in the country and Diaspora, conditions of research infrastructure, contribution to preservation and promotion of national identity of Kosovo, the potential to achieve research results and apply them within the country and abroad, existing international cooperation in the field. According to the Law on Scientific Research Activity, 0.7% of the Kosovo budget shall be allocated to research (article 7). This budget shall be allocated in order to finance the regular scientific research activity, increase of the quantity and quality of research activity, development and expansion of research results, publication of scientific research achievements, implementation of the scientific research results, supporting and encouraging the scientific and research community to carry out scientific and research activity. However due to significant budgetary constraints, the amount allocated for 2011 was € 400,000, while for 2012 the amount is €480,000. The stimulation of private sector to deal with research is also foreseen by the National Programme for Research, but due to budgetary constraints, those activities could not be implemented. However, the Law on Higher Education allows the possibility of establishing the higher education institutions, including also the institutes, by the private sector or by private enterprises or companies. Furthermore, the Law on Scientific Research Activity sets out that, besides public funds, research institutes have the right to receive funds from other funding sources, foundations and donations (supposing that also the enterprises are part of this category), and from other sources of financing secured by research institutions (for example licensing of protected knowledge) (article 66). The Law on Scientific Research Activity (article 69, 2), explicitly lists three public scientific research entities: 1. Kosovo Academy of Science and Arts, 2. the Albanological Institute and the History Institute as scientific research institutes, 3. Universities, that pursuant to the Law the scientific research institutes established within the institutions of higher education are part of the founding institutions. There are no official data on the number of staff who deal with research activities. However, see in the following the number of the academic staff and research employees in public academic and research institutions: a. Albanological Institute, 33 employees; b. Pedagogic Institute, 23 employees; c. History Institute, 14 employees; d. National University Library, 100 employees; e. Centre for Innovation and Transfer of Technology, 2 employees; f. 1400 academic public universities’ staff; g. In total there are 1672. Besides public entities or institutions, there are also private institutions and private higher education providers that deal with research. However there are

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no official data for the scientific research staff engaged in the private sector or the temporary staff engaged in public universities or private providers of higher education. As regarding research and innovation capacity building in respect to human capacity development, National Research Programme mid-term plan aims to create PhD programmes for education of the youth in advanced academic and research institutions as might be the different joint international programmes that lead to twofold academic titles, individual post-doctoral programmes in priority areas, continuation with the short-term mobility programme to further strengthen the cooperation between local and hosting international institutions. In addition, it is planned to work on the improvement of the scientific research infrastructure which includes the necessary revision of legislation (the Law on Scientific Research Activity is already being revised), capacity building on management of the scientific research programmes, creation and operation of an information system for RTD. Furthermore, it is planed to ensure the access to international libraries, internationalization of the scientific research activity of the country through continuation of financial support to scientific research publications and technical support for application to EU FP7 Framework Programme, competitive financing of joint programmes with partner institutions financed by bilateral inter-Governmental RTD programmes. It is also planned to work on the linkage between science, society and economy to encourage the socio economic development, such as development of an applied RTD programme within a mid-term frame. As regarding improvement of scientific research activity, it is planned to competitively finance five national centres in priority scientific and research areas (especially in technology) as well as creation of a group which will prepare a financing programme for all fundamental thematic areas in scientific research activity. Kosovo does not yet have a national particular strategy on innovation which would set priorities in this area. Ministry of Education, Science and Technology in cooperation with OECD and line ministries are in the study phase of drafting the national strategy for innovation. The Law on Scientific Research Activity, which is being revised, foresees specific provisions for innovation and institutions in this area. This Draft Law gives the main competences to Ministry of Education, Science and Technology, among which also the preparation of the strategic planes in the area of innovation. In addition, the Draft Law foresees the creation of the innovation council by the Ministry which will follow the development and commercial usage of innovations, within which it can also propose the necessary legislation for regulation of innovation. In terms of promotion of innovation, the Draft Law on scientific research activity includes provisions on creation of supporting mechanisms and institutions for provision of infrastructure support in the area of innovation, such as technological business incubators, with the aim of making available the working spaces, provision of administrative, technical and other services for the first five years of start up phase to recently created enterprises or institutions which deal with innovation activities. In addition, it is foreseen to create the technological scientific park which will provide professional and infrastructure services to

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universities, research institutes and other institutions which deal with innovation in specific scientific and research areas. The mentioned park services will aim to create the link between research and innovation institutions for application of technologies, creation of new products and services and their placement to the market. All the institutions which use the scientific technological park services or are associated with it, are entitled to a membership status to this park. The membership status enables them to use the infrastructure services and working spaces and other services with the aim to increase the capacities and quality of the scientific research, development, innovation and production of the country. According to the Draft Law on scientific research activity, also the enterprises are allowed to register as a technological scientific park, based on the provisions of the Draft Law which stipulate that the enterprise has to have regulated by its statute the scientific, research, development and production areas of the park; that it has at least five members who have the same or similar research, innovative and production areas; that it must have at least three full time employed PhD staff in the main research area of the park; that the park must have a at least 30 m2 working space per member of the park; that it has the necessary equipments, access to internet and other means for implementation of the programme and projects, and that it has professional and scientific documentation in the respective areas. 3.9.6. Culture, audio-visual, telecommunications and postal services and

information society 3.9.6.1. Culture and audio-visual

- Please provide an overview of the institutions and authorities in charge of audiovisual policy. Please refer to the level of independence and functions of regulatory authorities for the broadcasting sector, and include level of administrative capacities. According to the Constitution of the Republic of Kosovo, respectively article 141, the Independent Media Commission is an independent body that regulates the broadcast frequency spectrum in the Republic of Kosovo, licenses public and private broadcasters, establishes and implements transmissions policy and exercises other competences prescribed by Law. Moreover, based on the Law no. 04/L-44 (Article 3), IMC is an independent body which is responsible for regulating, managing and supervising the transmission frequency spectrum. IMC regulates the rights, obligations as well as responsibilities of physical and legal entities who provide audio-visual and media services. Executive Office of IMC operates with a total of 31 civil servants. The office is divided into following departments: Legal Department, Monitoring and Analysis Department, Licensing Department, Frequency Management Department. The Office has also the Administration Department consisted of 6 civil servants. IMC also has the decision making body which is composed of seven (7) members of the Commission and the Board of Appeals consisting of three (3) members.

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All the members are nominated by the civil society and appointed by the Assembly of the Republic of Kosovo. - How are the competencies shared between the competent authorities in the field of audiovisual policy? According to the Article 141 of the Constitution of the Republic of Kosovo and Article 3 of Law no. 04/L-44 on the IMC, the IMC is the sole regulatory authority for audio-visual field. The Commission compiles and adopts broadcast policy as well as all regulatory bylaws in the audio-visual field. - What is the level of cooperation with other regulatory bodies within Kosovo and with third parties? The TRA has signed a Memorandum of Understanding (MoU) with IMC in order to define obligations and exercise the full competences of TRA and IMC as prescribed by the provisions of the applicable Laws. The MoU is focused on the function of the uniform and efficient management of limited resources, spectrum resources (frequency bands) and coordination of activities especially in areas where efforts of both agencies are combined.

Ref. Agreement with Prot. No. 376/2/2010 date 10 October, 2010.

The TRA has also signed a MoU with the Kosovo Competition Authority with the aim of reaching an agreement for the implementation of the article 142.3 of the Constitution of the Republic of Kosovo, the provisions of the Law on Protection of Competition No. 03/L-229, and Telecommunications Law No. 2002/07 changed with the Law No. 03/L-085. Main objective is to strengthen cooperation between the two authorities and competition policy with focus on electronic communications sectors as well as individual cases based on the principles of ex-ante regulation. The principles are incorporated in the applicable Laws as aforementioned.

Ref. Agreement with Prot. No. 556/2/2011 date 21 September, 2011

TRA has also signed five (5) MoU’s with state regulators in the region, respectively with Montenegro, Albania, Macedonia, Turkey, and Croatia. Cornerstone of the agreements is to create condition for friendly relations based on the equality and mutual benefits, referring to the importance of developing electronic communications in order to increase the social and economic welfare of countries. This MoU enables keeping regular contacts and helps in ing practical cooperation on issues relating to electronic communication services and telecommunications. Besides cooperation with TRA, the IMC has established cooperation with other local institutions as: State Agency for Protection of Personal Data in 2011 where in 2011 a joint workshop on media and privacy was organized. In addition, it has reached an agreement with Kosovo Ombudsperson to use the services of the internal audit unit.

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IMC since 2003 is a member of European Platform of Regulatory Authorities/EPRA (European Platform of Regulatory Authorities/EPRA) whereas from the year 2011 is a member of observation of the Mediterranean Network of Regulatory Authorities (Mediterranean Network of Regulatory Authorities) and this has enabled IMC also cooperation in the aspect sharing experiences with other regulatory authorities of the European regulatory authorities of audio-visual sector. - What limitations (if any) are there on the ownership of television and/or radio stations? Are there any specific limitations to foreign investors? The Law No. 04/L-044 on the IMC, respectively Article 22 on "Applications for Broadcasting Licenses" has specified that the broadcasting license may be issued only to legal entity that meets the requirements stipulated in this Law and the criteria set out by the IMC, which ensure fair and open procedure of competition. Broadcasting license shall not be issued or shall not be continued to be granted to: political party, religious community, group or organization which is managed by an individual who holds an elective post or is a member of an executive body of a political party, the legal entity which is managed by an individual who is convicted in a process in accordance with international standards for a crime involving violence or fraudulence.. Restrictions for granting the license are also determined with the IMC Regulation on Qualifications for Granting the IMC Broadcasting License CIMC - 2009/02. According to this Regulation, foreign ownership of a broadcaster is allowed only in case of commercial companies legally registered in the Republic of Kosova in accordance with applicable Law. Based on the same regulation, it is allowed the change of only 49% of ownership of a radio or television station licensed by the IMC. - What systems are in place as regards statistics pertaining to the audiovisual sector? IMC possesses a database of audio-visual media services which contains the data on the number, location, region, form of business registration, the date of issuance of the license, the license expiration date, frequency and type of coverage, broadcasting languages and contact details. Furthermore, this database includes also the Legal Cases and Licensing Cases. In 2011, the IMC for the first time at the country level has managed to conduct research through the contracted research companies for the level of viewership and media penetration as well as the evaluation of advertising media market. IMC has not yet established a proper system to continuously evaluate these components on yearly bases. - Please provide information on the audiovisual industry sector in recent years. Are there financial support systems in place for the audiovisual sector (including cinema)? For several years after the postwar period, only radio and TV stations with terrestrial network frequency have been operating in Kosova. Rebroadcasting of program contents through cable networks has started since August 2008 when IMC has begun licensing of the Cable Operators (Network Operators) for

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rebroadcasting of program contents, while since December 2008 the IMC has begun licensing of Program Service Providers (cable TVs) that has increased the number of audio-visual media services. Currently there is a total number of 105 broadcasters/audiovisual media service providers, 37 program service providers that broadcast through cable networks and 11 cable operators. The Law No. 2004/22 on Cinematography (Article 48) has established a Fund for Cinematography in order to create material conditions for the development of production activity and reproduction cinematography financed by the Kosovo Consolidated Budget. - Have you established a strategy for you national film heritage and annual plans for specific issues (digitisation, restoration, education etc.)? At the moment Kosovo does not have a strategy for national film heritage and annual plan for specific issues in this field. In this regard, the main reason and obstacle to improve the situation in this regard is the fact the Serbia has taken out the entire film fund and heritage. Original negatives of approximately 35 films, documentary and short films are still kept in Serbia. In 2003, with the intermediation of UNMIK, Ministry of Culture, Youth and Sport (MCYS) bought six (6) copies of artistic films from Belgrade (not the original negatives). ‘Kosovafilm’ as a subordinate institution of the MCYS has digitised 24 artistic feature-length films from general national fund, out of which 15 are artistic films, 6 documentary films and 2 short feature-length films. Ministry of Culture, Youth and Sport is in the process of amending the Law on Cinematography L-2004/22, which will stipulate drafting of a national film strategy.

3.9.6.2. Telecommunications, Postal Services and Information Society

3.9.6.2.1. Electronic communication - Please provide an overview of the institutions and authorities in charge of telecommunications. Include reference to administrative capacities. Please refer to the level of independence and functions of regulatory authorities for the electronic communications sector. The responsible bodies for electronic communications in Kosovo are the following: a. Ministry of Economic Development (MED) – which prepares legislation and

Sector Policies; b. Government of Kosovo (GoK) – which approves Policies; c. Ministry of Public Administration; d. Telecommunications Regulatory Authority (TRA) – is responsible for the

Regulation of Telecommunication Market, management of numbering and frequency resources and licensing of companies which provide telecommunication networks and services;

e. Independent Media Commission (IMC) – which manages radio-diffusive broadcasting frequency spectrum and licensing of audio-visual content;

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f. Kosovo Assembly – approves National Frequency Plan. There are improvements regarding administrative capacities of employees which are responsible for electronic communication (TRA – during 2010 experienced an increase of 10% in professional staff number who received continuous professional trainings). However, TRA is in need for further capacity building and introduction of adequate incentives for the professional staff so that remain in the public institutions. Current organizational structure of TRA is organized as below: a. Total staff including the Board member 33 (28 + 5) b. Telecommunication Department 7 professional staff c. Frequency Management Department 5 professional staff d. Radio-monitoring Sector 2 professional staff e. Postal Service Sector 2 professional staff f. Law Office 3 professional staff g. Chairman` Office 2 support staff h. Administration and Procurement 5 + 2 administrative staff Law on Telecommunication No.2002/7 guarantees adequate independence of TRA in the process of election and dismissal of executive bodies. TRA exercises its legal responsibilities independently from any external influence. - Please describe the policy, strategy and legislation for the e-communications sector. Refer also to future plans to further align the framework to EU acquis communautaire. Include also information in data and consumer protection. The Strategic Documents which are in force in the sector of Electronic Communication are as follows: a. National Strategy for Information Society 2006-2012; b. Telecommunications Sector Policy; c. Documents of former Stability Pact initiatives (currently Regional

Cooperation Council) “eSEE Agenda Plus for the Development of the Information Society in South-East Europe” and “Memorandum of Understanding for development of Unified Regional Broadband in South-East Europe”- bSEE MoU (documents approved by the GoK).

Applicable legislation for e-Communication is as in the following: a. Law on Telecommunication no. 2002/7 as amended by Law no. 03/L-085 13

June, 2008; b. Law on Information Society Services no. 04/L-094, approved on 15 March

2012, transposed directives of European Commission for electronic commerce, electronic signatures and electronic payments;

c. Law on Prevention and Fight of the Cyber Crime no. 03/L-166, approved on 10 June 2010;

d. Law on Protection of Personal Data no. 03/L-172, approved on 29 April 2010; e. Law on Copyright and Related Rights no. 04/L-065, approved on 21 October

2011. f. Law on Independent Media Commission no. 04/L-044 regulates broadcasting

sector.

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Draft Law on Electronic Communications transposed regulatory framework for Electronic Communication of 2009. The Draft Law is approved in the first reading by the Kosovo Assembly. This Draft Law is expected to be approved by the Kosovo Assembly by the end of June 2012. Telecommunications Sector Policy document will be reviewed during 2012 and will serve as a basis for drafting Electronic Communications Sector Policy which is expected to be approved by the GoK by the end of November 2012. The document “Electronic Communication sector Policy” will contain activities described in the document of European Commission “Digital Agenda for Europe” as well. Law on data and privacy protection and Law on consumer protection contain general provisions for data protection, privacy and consumer protection. However, data protection and consumer protection in Electronic Communications are entirely covered by the Draft Law on Electronic Communications. - What is the strategy policy established or foreseen with regard to the switch-over to digital broadcasting and the use of digital dividend? In 2009, IMC has analyzed terrestrial digital television frequency plan that resulted from the ITU Conference RRC-06 and organized an international conference in Prishtina with regional regulatory authorities to share experiences and to assist in the preparation process of Kosova towards the digitization process. In 2010, IMC has begun concrete work through the activities of five working groups established for this purpose. These groups were established to create legal and technical programme as well as socio-economic framework of transition to digital broadcast, while the fifth group was established for the information and education of the public. Working groups have managed to offset the basic criteria for establishing the overall framework, which will help in determining the appropriate policy of the state of Kosovo in the process of transition to terrestrial digital television broadcasting. Activity of the working groups continued also in 2011 in order to reach finalization and adoption of this strategy by the Council, and to ensure the strategy is based on applicable European practices and standards. However, this institutional and national objective is not completed because on 15 December 2010 the mandate of four (4) members of the IMC Council expired and since then the Council has had only two (2) members who in the absence of a quorum could not be functional. Since November 2010 nominations for the appointment of new members are proceeded in the Assembly by IMC but appointments are not made. The Law on IMC entered into force on 21 April 2012 and the nomination process was completed on 16 May 2012. It is expected that the members of the

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Commission will soon be appointed, not later than three months after the entry into force of the Law on IMC. IMC Council is the decision making body and its role in the preparation process for Kosovo transition on digitalization initially has been to approve the work of each working group in order to reach a consolidated draft-strategy which should be sent to the Government for final approval. The IMC Law foresees the need to have the Law on Digitalization which will be based on the strategy developed by the IMC. Digital Dividend and usage of this dividend will be a part of the Electronic Communication Sector Policy document. It is general agreement that Digital Dividend which will be available after switch-off from analogue broadcasting technology to digital broadcasting technology will be used for mobile broadband. A part of the Digital Dividend (channel 67) is already available to be used for Broadband networks and Services of new generation of (LTE Advanced, WiMAX), 4G. - Provide a brief overview of the market situation in Kosovo. Fixed telephony: Market for the Fixed Telephony in the Republic of Kosovo is developing with slow trend. However, similar flow is noted in the region as well as in European countries when it comes to penetration and general incomes as well. So far, TRA has licensed three operators for providing fixed telecommunication services in the entire territory of the Republic of Kosovo. These operators are as follows: a. PTK – Fixed Telephony (Kosovo Telecom - TiK), licensed on 30/07/2004, b. IPKO Telecommunications LLC, licensed on 08/09/2006, and c. KONET, licensed on 02/02/2009. Presence of three operators in the market of fixed telephony (two of them are active in providing services while KONET offers only leased lines services), give a general picture that Kosovo has liberalised the services in landline telephony. Compared to the intensity of development of mobile telephony market, despite investments in the fixed telephony services, level of coverage of the territory and population is very low. Main factors for this low coverage with fixed telephony services in the territory of the Republic of Kosovo are supposed to be: complexity of works, need for more investments, low demand for such services etc. Based on data provided by the operators in 2011, there are approximately 87,121 users of fixed telephony which is lower by approximately 1,256 users comparing to 2010 or in percentage is around 1.42% or compared to 2009 it is higher by 4.34%.

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Graph 8. Market share between two network operators and fixed telephony providers according to users and revenues.

Dominance of the public operator (‘incumbent’) is noted also in other regional and European countries and reaches over 80%. MOBILE TELEPHONY: AT THE MOMENT THERE ARE TWO LICENSED MOBILE NETWORK OPERATORS IN KOSOVO (STANDARD GSM 900/1800) AS FOLLOWS:

PTK J.S.C/Vala licensed on 30/07/2004 (ART Nr. Prot. 111/04) with the validity period of 15 years; and

IPKO Telecommunications LLC licensed on 06/03/2007 (ART Nr. Prot. 77/07) with validity period of 15 years.

Besides two licensed Mobile Network Operators mentioned above, there are two other licensed Mobile Virtual Network Operators (MVNO): a. Dukagjini Telecommunications sh.a. (D3mobile) licensed on 24/06/2008

(ART Nr. Prot. 124/08) with validity period of 15 years; b. Dardafon.net LLC (Z Mobile) licensed on 12/06/2008 (ART Nr. Prot. 112/08)

with validity period of 15 years. Graph 9. Penetration of mobile telephony

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Graph 10. Market share by the mobile operators for 2007- 2011

Total incomes from all mobile telephony operators during 2011 are 199.2 € million, which is higher by 9.94% with the previous year when incomes were around 181.2 € million, respectively there is an increase by 16.15% compared to 2009. The following chart presents the trend of incomes from mobile telephony in the period 2007-2010 where it is shown a consolidation of incomes during 2011 compared to trends in previous years. Graph 11. Income of mobile telephony

Current coverage with mobile telephony has reached around 99% of the population in the country and 88% of the territory. Number of the broadcasting transmitting stations (BTS) is around 721. Technology in the use is EDGE which enables internet services parallel to voice and MMS services (including SMS). Internet and broadband: Access to the internet for citizens of the Republic of Kosovo is offered by 37 licensed companies out of which 5 have direct access to international gateways and provide internet access to smaller internet service providers which operate in different regions of Kosovo. The number of users of internet broadband services has marked a further increase in 2011 According to official data reported by operators, household broadband penetration is approximately 48.55%. According to these data internet penetration per inhabitants were 8.26% in 2011 . Graph 12. Internet service penetration 2007-TM4-2011

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Graph 13. Internet market share for 2011

Graph 14. Fixed and mobile market penetration arket. 3.9.6.2.2. Information Society Services

- Is there a strategy/policy for broadband development? What are the main

opportunities, obstacles and challenges for the future development of the sector in Kosovo? National Strategy for Development of Information Society 2006-2012 and Telecommunication Sector Policy contain provisions which address issues of development of broadband networks and communication services. In addition, the GoK has also approved the Memorandum of Understanding for development of Unified Regional Broadband networks and service in South-East Europe and Action Plan of this Memorandum (bSEE Action Plan).

1 86,014 88,372 -2.67% 82,084 4.79%

1.2 5.02% 5.09% -1.38% 4.81% 4.37%

2 1,478,944 1,451,747 1.87% 1,359,170 8.81%

2.1 84.96% 82.96% 2.41% 69.72% 21.86%

3 143,243 126,415 13.31% 136,711 4.78%

3.1 7.92% 6.33% 25.12% 7.88% 0.51%

4 238,137,674.01 222,491,069.80 7.00% 209,464,183.40 12.04%

4.1. 21,435,903.47 20,026,000.00 7.00% 20,972,000.00 2.21%

4.2. 199,243,326.00 181,236,432.00 9.94% 170,637,460.00 16.15%

4.3. 1,514,364.54 1,657,151.00 -8.62% 872,512.38 73.56%

4.4. 15,944,080.00 19,571,486.80 -18.53% 16,982,211.00 -6.11%

5 38,240,000.00 30,777,237.11 24.33% 33,941,294.16 12.74%Internet

Investments

Fixed

Mobile

Leased Lines

Total Revenues (€)

No. of Mobile Subscribers

Fixed Telephony Penetration (%)

Mobile Penetration (%)

No. of Fixed Telephony Subscribers

No. of Internet Subscribers

Internet Penetration (%)

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http://www.eseeinitiative.org/index.php?option=com_content&view=article&id=173&Itemid=50). There is potential for the development of ‘broadband’ considering level of networks and broadband services in Kosovo. The main obstacles to the development of broadband are: a. Creation of suitable conditions for investment in broadband technology in

respect of offering these networks and services (supply side) and stimulation of the demand for these services (demand side);

b. Delay in the drafting and implementation of the strategies of switch-off from analogue and moving to digital broadcasting technology;

c. Ensuring of Rights of Way at national and municipal level as well; d. Lack of adequate budget for the development of broadband; e. Privatisation process of PTK j.s.c. - What is the budget allocated to the information society policies, including broadband development, what is the administrative capacity of the relevant authorities Due to budgetary restrictions, the allocated budget for development of information society is very low, particularly to develop broadband network and services and is delaying most of the processes for achieving the desired results. The administrative capacities of authorities are still not sufficient in respect to number of employees and their professional level. In this regard, they need additional support in order to face upcoming challenges in this sector. - Provide information on the development of eServices (eGovernment, eHealth, eCommerce, etc Ministry of Public Administration (MPA) in cooperation with all institutions has established a wide variety of electronic services with central and local institutions of the Republic of Kosovo. MPA has prepared Draft Law for establishing Agency for Governmental Bodies for Information Society. This Law will create more opportunities in the implementation of various electronic services for different institutions. Below are details for legal infrastructure, hardware, and software of e-Governance. Regarding the software infrastructure, the e-Governance applications that have been conducted so far are the following: E-State portal: a. State portal is the main WEB page of the Institutions of the Republic of

Kosovo. E-portal offers wide range of information that is in the interest of the citizens of Kosovo. Information shown in the e-Portal is grouped by categories starting from three most important ones: Institutions of Republic of Kosovo, Citizens, and Businesses.

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Electronic Archiving System of Documents a. A comprehensive electronically archived information management system

was created through this application; b. Enables generating periodic results and delivers to all interested stakeholders

in the process of electronic Archive; c. Through this system was enabled performing of services from distance

(abroad) as well as getting the necessary archival documents through internet by using e-StatePortal and e-sub-portals of other institutions.

Application of civil status a. Through this application, all the citizens of Republic of Kosovo have the

opportunity to apply for different certificates such as: birth certificate, marriage certificate, death certificates, residence certificates, citizenship certificate, certificate of marital status, declaration of family status etc.

Management System of Government Property a. Property Management System is a unique and electronically integrated

system which enables an effective management of institutional property, accurate maintenance of data, enables managing and monitoring of stocks state, minimizes or eliminates stocks from stockrooms (warehouses) of institutions, enables online auditing of property by general auditor, support generation and placement of barcodes on equipment and inventory, manages all the inflows and outflows of materials and assets.

Drivers Licence Application a. Application enables creation of a unique database for driver licence, eases the

application procedure for citizens by offering online services as well as connection of other systems that are involved in the procedures of driving licence.

Project Management System a. This system enables Government to manage all the projects in central and

local institutions starting from project idea up to finalization stage. System is unique and comprehensive tool that supports not only projects financed from GoK but also project financed by different international organizations and donors as well.

Application for identification of vehicle and driver licence a. It is a project that could function in all areas of Kosovo. Equipments are

assembled in vehicles of Kosovo Police (in 50 vehicles) and the commencement of implementation is expected to start soon. Application form is in the testing phase.

Vehicle Registration Application a. Application eases duties of employees and officers of Vehicle Registration

Centres, while provides faster and higher quality services to the citizens. b. Actions needed related to the vehicles are preformed through this

application, starting from: first registration of the vehicle, continuation of the registration, de-registration of the vehicle, change of the owner, DVR's loss,

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loss of registration plates, legalization, test plates, transfer of the case, and temporary registration.

System for managing attendance at work a. Through this project, all enters and exits of the officials in state buildings are

recorded. b. Through this process, the personnel office manages all the process of work

attendance.

System for managing vehicle expenses a. This application manages and controls the expenses and location of vehicles

in digital manner. Drastically reduces expenses and significantly reduces the misuse of official vehicles during the work of the Government institutions.

b. System works online, and it constantly shows the location of the vehicle, monitors and controls the amount of the fuel supplied, amount of fuel spent, number of persons in the vehicle, travelling kilometres etc.

E-school application a. Achievement through this application will be the digitalization of the entire

administrative and teaching process in pre-university system, starting with the digitalization of record book in schools, digitalization of school diary, schedule, booklet, grade certificates, registers of the students, register of the teachers, register of the schools, register of the classes, creation of electronic documents for students and many procedures of education process. Application form is in testing phase.

Document Management System a. Management of all electronic official documents will be done through the

system. The entire work procedure through documents has been digitized starting from receiving the documents up to the response to the citizens. This application is associated with e-Archive, and the documents that require archiving will be moved automatically to electronic archive. Application form in is the testing phase.

System for online registering and licensing of businesses a. This application will enable businesses to apply for licence and register

online.

Health Information System a. Electronic health database will be created through this system. E-Health is

initiated from the Ministry of Health and is in the initial phase of establishment.

E-Cabinet a. This system will enable management of Government Cabinet Sessions

electronically by avoiding the usage of paper. E-cabinet is in the testing phase.

Regarding legal infrastructure, following is the legislative framework:

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a. E-Government strategy and the action plan 2009-2015. b. A.I No.02/2010 for Information Security Management. a. A.I No. 01/2010-MPA on Security and Access to Data Base. b. A.I No. 04/2010 for the Use of Electronic Official Post in the Institutions of

the Kosovo. c. A.I No. 01/2011 for The Management and Use of The Internet in the

Intsitutions of the Kosovo. d. A.I No. 07/2008-MPA to Strengthen Transparency and The Standardization

of the Internet WebPages in the Institutions of Kosovo. e. A.I No.03/2010 MAP for Hardware and Software Usage. f. A.I No. 02/2011 for the Government Portal for the Republic of Kosovo. In addition, MPA has contributed and participated directly in the field of electronic service as: a. Strategy for Public Administration Reform 2010-2013. b. Law No. 03/L-189 for State Administration of Republic of Kosovo. c. Law No. 03/L-215 for Access in Public Documents. d. Law No. 03/L-172 for Protection of Personal Data. e. Law No. 03/L-166 for Prevention and Combating of Cyber Crime. f. Law No. 04 L-094 for Society Services Information. Regarding the hardware infrastructure, physical infrastructure of the network is the base which is creating good opportunities to provide services with G2G, G2B, and G2C. National centre of the data is being developed. Hosting and deployment of system and applications from various institutions in one place by giving access opportunities only to relevant institutions has contributed in building a new image for electronic services as well in saving time, space, and financial funds. National Network covers most of the offices in the central and local institutions, respectively in 35 municipalities. They are covered with more than 400km of optic fibber where 23 municipalities are connected through optic fibber while other municipalities with microwave links (170 connection), 500 located in Prishtina and other municipalities are managed from more than 200 servers with Terabytes capacity. In terms of physical infrastructure of ICT, a high number of projects have been implemented to strengthen the microwave network by interconnecting the municipalities with other institutions. With the System Centre of IT, "electronic highways" through the flat cable ring optical network, interconnecting the municipal regions of state network has been implemented. Following institutions are connected to the state network: Vehicle Registration Centre, Courts, Financial Intelligence Centre, and UCCK with entire internal network, Government institutions in the north Etc. Graph 13. The fibre optics and the microwave network in the Republic of Kosovo

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The institutions can log on to state network or connect through it and as an example we can take: Pharmaceutical application - Ministry of Health, E-Employment Application - Ministry of Labour and Social Welfare, Ministry of Local Government has implemented video conferencing project and service centres to citizens in respective municipalities, which is functioning successfully. Server for vehicle supervision of travel volume through "Ibrahim Rugova" highway has been offered to Ministry of Infrastructure. VPN connections enabled for not only Government institution in the entire territory of Republic of Kosovo but also for the embassies of Kosovo in the world to connect in the state network and use the resources that information technology system of the state provides. More than 95% of Civil Offices are connected into the state network. Within the Modernization of Public Sector Project which is being implemented in collaboration with the GoK and World Bank, the following projects are being implemented: National Data Centre, E-Procurement, and HRMIS a human recourses project. First phase of the project, "Data Centre was completed which will serve to place all data of the state institutions. In addition, VoIP project was implemented to enable with the aim to improve the capacity of communication between civil servants. This project provides stabile communication and reduces significantly the cost of Kosovo's budget. - Please report on the alignment with and implementation of the Directive 2000/31/EC on Electronic Commerce) and the Directive on a Community framework of electronic signatures 1999/93/EC.

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Directive 2000/31/EC for Electronic Commerce and Directive 1999/93/EC for Electronic Signatures are transposed with the Law no. 04/L-094 for Information Society Sector. This Law was adopted by the Kosovo Assembly on 15 March 2012. Law on Information Society Services besides trade and electronic signatures addressed issues of electronic payments and security of information systems. This Law creates legal ground for internet transactions. According to this Law, electronic documents are legally equal to hardcopy documents. - What kind of protection is currently provided to protect the renumeration of providers of services protected by conditional access? Do you consider that this conforms to Directive 98/84/EC? Usages of hardware or software which illegally enable access to conditional services are sanctioned by applicable Law. Protection of conditional access services and compensation of the users is not in compliance with the Directive 98/84/EC. - How does the allocation of frequencies and numbers/codes take place? According to the Radio Regulation of ITU for frequency management, there are two meanings on allocation of frequency resources which are defined as follows: a. Allocation – this term is referred to allocation of a frequency band for usage

purposes by a certain user under certain circumstances. This allocation of frequency band is implemented in allocation Table in international level by the ITU and CEPT standards; every country approved National Table for frequency allocation.

b. Assignment – this term refers to assignment of radio frequency or frequency channel. Assignment of frequency channel is authorised by the Regulatory Authority for use by a radio station under certain circumstances.

Allocation of frequency broadband is stipulated by the National Plan of radio frequency usage, approved by the Kosovo Assembly with the Decision of no. 04-V-93, of the date 23 June 2011. This plan is totally in compliance with European Table of Frequency Allocations. Frequency assignment is done according to the following procedure: The applicant shall offer to the DMF all documentation required by the Regulation on issuing license in order to grant the right to use radio frequencies. After the application is received by the DMF, assignment of the frequency is done in compliance with the national plan of radio frequency usage, ITU and CEPT Recommendations and ETSI Standards and Technical Norms. After the application is reviewed, interference analysis is carried out according to information in the database. The DMF assigns the frequency channel and assigns the tariff in accordance with the Regulation on tariffs of frequency spectrum. DMF of TRA issues the license which indicates the assigned frequency channel and other parameters. According to license terms of reference, TRA is obliged to ensure that this authorization assignment functions without interferences. The licensed body should also fulfil all terms and conditions as stipulated by licence.

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Numbers, serial numbers, names and addresses based on Numbering Plan are used for public telecommunication network or for public telecommunication services upon the approval of TRA. Based on Regulation on National Numbering Plan, TRA allocate numbers, serial numbers, names and addresses for public telecommunication operators, public telecommunication services and for users. Before allocation of numbers, following factors are taken into consideration by the TRA: a. Efficient use of number resources; b. The need for sufficient number resources which will be available for a longer

time period; c. Requirements and desires of the applicant, user and other interested parties; d. Costs that will be fulfilled by the applicants, other public telecommunication

operators and public telecommunication service providers as well as users during the time they hold the number;

e. Using serial numbers which were formerly assigned to applicants for certain telecommunication services:

f. Adopting the request with the Authority conditions regarding assignment of numbers, serial number, names and addresses;

g. Relevant recommendations, standards and agreements; and h. Other factors which TRA considers as relevant for implementation of

Numbering Plan. 3.9.6.2.3. Cybercrime - Is Kosovo legislation compatible with the Council of Europe Convention 185 on Cybercrime? Law on Prevention and Fight of the Cyber Crime approved by the Assembly of Kosovo on 10 June 2010 is in full compliance with Convention on Cybercrime of the Council of Europe No. 185. The Law was drafted in consultations with legal experts in the field of cybercrime from the Council of Europe. The Convention on Cybercrime of the Council of Europe no. 185 was the primary base for drafting this Law. In this course, the Law addressed eight (8) types of crimes identified by the Convention on Cybercrime. - Is there a specific public policy for promoting and supporting research on information society technologies (IST)? Due to budget constraints, promotion and support of researches in Information and Communication Technology, respectively for information society was not possible to be integrated into Kosovo Public Policies. However, issue of the research and development in IST will be one of the priorities in the National Strategy for Information Society 2013-2020 foreseen to be drafted and approved by the GoK in 2013

3.9.6.3. Research Is there a specific public policy for promoting and supporting research on information society technologies (IST)?

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Due to budget constraints, promotion and support of researches in Information and Communication Technology, respectively for information society was not possible to be integrated into Kosovo Public Policies. However, issue of the research and development in IST will be one of the priorities in the National Strategy for Information Society 2013-2020 foreseen to be drafted and approved by the GoK in 2013. 3.9.7. Transport - How will Kosovo manage a progressive harmonisation of the transport legislation with the EU acquis and guarantee non-discriminatory and unrestricted access to the transport market and create a freely competitive environment? (This includes obligations in the fields of safety, security and environmental standards) Harmonization of legislation with EU acquis in transport will be conducted based on internal capacities existing in the appropriate Department of the relevant Ministry, while technical assistance will be requested where there is a lack of expertise. Moreover it should be emphasized that adequate trainings will be organized in these fields. While the non-discriminatory approach and without any restrictions in the transport market and creation of a freely competitive environment, is enabled through the legislation in force (Law on Road Transport no.2004/1, the amendment and supplement of the Law on Road Transport -2/L-127, Administrative Instruction (A.I) 3/2011 on Licensing of Operators of Road Transport for goods and the Administrative Instruction 1/2009 on Licensing of the Operators for bus transport of passengers). The technical assistance of “Egis International “in the framework of the EC project (Support for implementation of transport community EU/ TCA), in cooperation with MI has conducted an assessment of the level of compliance of the existing legislation with acquis in transport. The work on harmonizing the legislation is ongoing. Law on Traffic Safety No.02/L-70 is in compliance with Directive 2009/40/EC, Directive 2006/126/EC, partially is in compliance with Regulation 3821/85 for tachograph, Regulation 561/06 for safety, Regulation 2003/59 for professional qualification for drivers, Directive 2002/15 on working hours, Directive 96/53 for dimensions, while there is no compliance with Directive 2006/22, Regulation 581/10, Directive 92/6 for speed limit, Regulation 661/09, Directive 2000/30. Law on Road Tansport no. 2004/1 is partially in compliance with Regulation (EC) No. 1071/2009, Regulation 1072/2009, Regulation 1073/2009, while there is no compliance with Regulation 3916/90. Law on Transport of Dangerous Goods No.2004/6 is partially in compliance with Directive 95/50/EC and is in full compliance with Directive 2008/68/EC for Roads No. 2003/11.

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Drafting of the Law on Traffic Safety is in the final phase, and it includes obligations in the safety field and is compliance with the EU acquis. All obligations foreseen with this Law will be completed from the Secretariat for Road Traffic safety and responsible departments. In addition, the amendments of Law on Traffic Safety and other legal acts will be drafted in compliance with the European Union Directives [(2009/40/EC with recommendation 2010/378/EU), (2000/30/EC (amendment 2010/47/EU) with recommendation 2010/379/EU, 2007/38/EC, 2007/46/EC, 1996/53/EC, 1992/6/EEC (supplemented 2002/85/EC) and 1999/37/EC]. The Law on road traffic safety, Law on road transport and Law on Transport of Dangerous Goods will be approved by the end of 2012. Moreover, the existing legislation needs to be reviewed and harmonized with EU legislation and will be included in the 2013 legislative agenda. In terms of environment, the AI 2008/13, Article 21 on the Technical control of vehicles defines the standards for emission of vehicle gases in atmosphere. All passengers’ vehicles that are imported have to comply at least EURO 3 Gas Emitting Standard, while heavy vehicle with over 3, 5 tons (Buses, trucks etc.) have to fulfil the Gas Emitting Standard EURO 1 (based on Law no 02/L-70 on road safety; and A.I 2008/8 Homologation of Vehicles) Technical Control Centers (TCC) for vehicle possesses equipments for testing emitted gas from vehicles. Vehicles that are registered are not obliged to fulfill these above mentioned standards during technical control and regular annual registration of vehicles. Current testing of gas emitting has experimental (informative) character. - What are the plans for administrative capacity-building including restructuring plans within existing entities? In terms of legislative framework on the human recourse recruitment and capacity building is regulated by the following: Regulation No. 05/2012 on Classification on jobs in civil service; Regulation No. 08/2012 on Standards of internal organization and systematization of jobs in state administration; and Regulation No. 08/2012 for Redundant Civil Servants. In the course of policies, plans for capacity building and restructuring are outlined in the Strategic Development Plan 2010-2014 prepared in cooperation with FRIDOM. In regard to reorganizational matters, office for European Integration was organized in the Department for European Integration and Policy Coordination; Department of Civil Aviation was reorganized during 2011; the Secretariat of the Council on Road Safety has been established with Administrative Instruction (A.I) 18/2008 on 14 January 2009,while the department of road infrastructure will be reorganized by the end of 2014. On the other hand, Road Transport Department is in the process of reorganisation and will be completed by the end of 2012, while the Department of Central Administration is also under reorganizational process and will be

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completed by the end of 2013. For purposes to further increase and strengthen human capacity it will be necessary to continue organizing trainings, study visits and exchanging experience in the filed of transport sector. - How will Kosovo ensure strategic and coordinated transport planning? Please provide relevant information about Kosovan infrastructure planning and investment plans (short-/ long-term as well as financing plans), as well as plans for infrastructure asset management (and charging) and proper infrastructure maintenance (in all modes)? Transport sector is one of the strategic priorities in the program of the Government of Republic of Kosovo, which has resulted with increase of investment in the past three years. The implementation of around 200 projects including construction, reconstruction and road maintenance covering over 900 km of national, regional and local roads, has significantly improved road network. MI is responsible for around 1,950 km (650 km of national roads and about 1,300 km of regional roads).Municipalities are responsible for about 6,571 km of local roads. Ministry prepares and updates its standards documents for sector in annual basis for strategic planning, based on the obligations arising from the Government decision for the development of the sector. In terms of policy orientation, the bases for development of transport sector are the following documents: a. Multimodal Transport Strategy with action plan, b. Medium Term Expenditure Framework (3-year plan); c. Budget planning (1-year plan). Strategic Planning of the Ministry of Infrastructure is regulated by the Strategy on Multimodal Transport, a document approved by the Government in 2009. The strategy was reviewed during 2010-2012 and will be sent to the Government in June for approval. This document covers the period 2012-2025 and contains also action plan with financial costs for the year 2012-2016. According to the strategy Policy Coordination Division within the Department for European Integration will be responsible for planning and coordinating the implementation of action plan of the Strategy. Table 110. Estimated expenditure of MTEF 2013-2015

2012 2013 2014 2015 Total 275,971,941 693,627,408 250,528,450 144,540,250 Wages and salaries 1,223,430 1,306,358 1,399,000 1,439,850 Goods and services (including the maintenance of road network)

7,539,506 16,245,100 13,332,750 13,155,500

Utilities 105,190 115,700 115,700 113,900 Subventions and Transfers 2,103,814 2,500,000 2,500,000 2,500,000

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Capital expenditures* 265,000,001 673,460,250 233,181,000 127,331,000

Number of staff 266 283 284 284 After the adoption of MTEF by the Government, subsequently these projects are harmonized and incorporated in the annual financial budget. Road infrastructure asset management is carried on a regular basis and annually updated with new data, which serves for planning purposes. Ministry of Infrastructure has installed the Road Inventory Database (IDR). 20 automatic traffic counters were installed up to date, at the national and regional roads. In addition the program Highway Maintenance and Development Program HDM IV was installed as the basis for planning the need for maintenance and regulation of existing road network. Regarding the regular maintenance of road network, Ministry of Infrastructure is planning to upgrade the regular maintenance program from annual to multiannual planning, using Performance Based Contracts. - What steps have you taken to implement the Memorandum of Understanding of the South East Europe Core Regional Transport Network? To what extent is the South East European Comprehensive Transport network taken into account as the precursor for the future TEN-T network for Kosovo? As a signatory of Memorandum of Understanding on the South East Europe Transport Network, Kosovo has implemented all obligations arising from the document. Kosovo representatives actively participate in all levels of SEETO, including participation in regular Ministerial meetings, Steering Committee meetings, National Coordinators and Working Groups meetings. Kosovo transport network is included in the basic South East European Transport Network in these directions: a. Skopje – Prishtina – Mitrovica- Zubin Potok – Serbia (R6); b. Prishtina – Airport – Peja – Montenegro (6A); c. Durrës – Morina – Prishtina – Merdare – Nis (R7); d. Railway line 10 Lesak – Hani i Elezit; and e. Prishtina International Airport (PIA). As an active participant Kosovo has managed to plan the development of basic transport network connected with the South East Europe Transport Network. This includes investments in strategic projects on road directions 6,6a and 7, as a part of future TEN-T network. Priority projects: Road direction 6 Skopje – Pristina Rout 6 Skopje – Pristina has an economic importance for Kosovo and the region by integrating the regional capitals and economic centres in the regional transport network. Ministry of Infrastructure has undertaken the necessary preparation for the implementation of this strategic project, and the corridor where the future

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highway crosses has been declared as a Corridor of National Interest. The project is part of regional priority projects. The following studies have been completed during the project: a. Feasibility Study and Environmental Impact Assessment (EIA) study, COWI,

December 2006; b. Implementation Project, EGIS, June 2010. The total road length is approximately 55km. Physically it has been divided into two sections: a. North Section: From the north of Lipjan to Kaçanik, with a distance of 42 km. b. South Section: From Kaçanik to the border with FRY Macedonia, with a

distance of 13 km. Separation of the project in two sections gives space to adapt to physical and environmental constraints. It also allows completion of construction in several phases, if required. Design Standards: In the northern part, the main track design is in compliance with the TEM standards for geometric features for designing speedup to 120km/h. In the north part dual carriage way has been projected (traffic circulating lane form 3.75 m each) with hard shoulder from 3.0 m. In the southern part the topographical constraints along with environmental constraints and the need to ensure effective cost design, has led to the decision to reduce projecting speed in 80km/h. Transverse profile in the southern part is framed as follows: a. Road with dual traffic carriage wau by 3.50 m each. b. Green strip with a width of 2.6 m, with a hard shoulder, New Jersey type in

the center. c. Hard shoulder with a width of 2.5m. In regards to the environment protection, a comprehensive study has been conducted to assess the Environmental Impact [EIA, EMMP and Noise Report]. EIA report is in accordance with the requirements of Directive 85/337/EEC as determined by 97/11/EC. The main limitation of the project in terms of environment protection is the proximity of dwellings with the new infrastructure (noise issues) therefore a track that will affect people the least will be preferred. Structure/s - North Section: 71 structures including: a. 33 overpasses and underpasses. b. 1 railway crossing. c. 4 bridges over the river. d. 34 hydrological structures.

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South Section 31 structures including: a. 2 big viaducts. b. 7 other viaducts. c. 8 overpasses and underpasses. d. 1 pedestrian underpasses. e. 13 hydrological structures. Tunnel/s: The construction of three tunnels is foreseen in the southern part, each consisting of a two direction tube with dual carriageway, with supporting corridor between tubes every 300 m. The length of the tunnels is: Kaçanik tunnel 2.2 km, Lajçi tunnel 0.9 km and Kashani tunnel 0.2 km. The project will include all safety equipment according to the international standards including also the protective fencing, traffic alerts and traffic messages of various kind, road signs etc. Road lighting will be provided in service areas, tunnels and intersections. The project will be implemented depending on financial possibilities. Road direction 7 Durrës – Morina – Prishtina – Merdare - Nis Government of Kosovo has identified the construction of highway Vermica – Prishtina – Merdare as an investment with high priority. This road direction is identified as the regional Rout 7 of the South East Europe Core Regioanl Transport Network that will connect Adriatic Sea – North Albania, Prizren, Pristina and connect through Merdare with Serbia and in Nis with the TEN’s Corridor X. On 12 April, 2012, the Government of Kosovo signed a contract with Bechtel-Enka for construction of the highway (84 km), from Morina - border with Albania up to to the intersection in north of Prishtina, divided into 9 independent working segments. The implementation of the Highway Project achieved significant progress by completing first 38 km of highway, from Morina – Sllapuzhan (segment 1-4a) which were opened for traffic on 12 November 2011. The works continuing with high intensity in segment 4b – 5 Sllapuzhan – Dule – Gurgjice (intersection M9) and is expected to be completed by the end of 2012, which will be open for traffic with 60 km of highway available. In addition, the draft project for segment 7-9 Sllatina – Prishtina – North Prishtina (22 km), was approved and the implementation projects is foreseen to be completed by the end of June.The highway Morine – Prishtina is a closed system highway (entrance – exits only in the highway connections) with width of 27.5 meters, with 4 circulating tracks with 3.75m, 3 tracks for slow driving with 27.5m and green strip in between the widths of 4 meters. Projected speed is 120 km/h.

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The overall completion of Highway to Besi (North Pristina) is expected to be completed within 42 months. The work is being executed according to the set standards. Ministry of Infrastructure, designing companies and BEGP worked rigorously to manage project costs, which is within the provided budget and under the terms of the Contract. Financing of the work on the highway is done from Kosovo Budget, and the dynamic work plan is in accordance with the available budget and the cash flow plan. Projects for expansions of national roads N9/R6a Prishtina – Peja – Montenegro (funded by Kosovo Budget) a. Segment Pristina – Sllatina is completed, in a length of 8 km, with total

project value of € 38.9 million. b. The work in the segment Sllatina – Gjurgjice, in a length of 21 km, is almost

completed, with total project value of € 56.6 million. Projects for expansions of national roads N9/R6a Pristina – Mitrovica (funded by Kosovo Budget) a. Segment Pristina – Intersection Shkabaj is completed, in a length of 3 km,

total project value is € 11.1 million. Work in the segment Intersection Shkabaj – Milosheva, in the length of 5.7 km, is almost completed, with total project value of € 15.6 million. - Which regulatory authorities, accident investigation bodies and safety authorities will be (or have been) established in the different modes of transport and how will their independence be guaranteed? Regulatory Authorities regulate sectors and report directly to the Assembly of Kosovo, while accident and incident investigation on aviation and railway is done by a permanent organ within the Office of Prime Minister which sends its reports to Assembly and Government Road transport - The Council for Safety on Road Traffic was established on October 2008, with A.I No. 18/2008 in accordance with article 5 and 6 of the Law No. 02/L-70 on Road Traffic Safety. Council for Safety on Road Traffic together with Ministry of Infrastructure represents an advisory entity for the Government and its work is supported by the Secretariat at the Ministry of Infrastructure. Railway transport - Regulation of railway sector is done by the Railway Regulatory Authority (RRA), which is a functional and independent body reporting to the Assembly of Kosovo. The monitoring of the railway safety falls under the responsibility of the Department of Railway Safety, within the Railway Regulatory Authority. On the other hand, railway accident investigations are carried out by Commission for accident and incident investigations in aviation and railway

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sector, which reports to the Aeronautical Accident and Incident Investigations Commission (AAIIC) within the Office of Prime Minister (Prime Minister’s decision No. 03/68, on 12.06.2009) and the Law on railway (Law No. 03/L076 on Railways). Air Transport - Responsibilities of institutions in air transport are determined by Law No. 03/L-051 on Civil Aviation. Civil Aviation Authority (CAA) is independent authority which reports to the Kosovo Assembly and is responsible for regulation and monitoring of civil aviation safety in Kosovo. This authority regulates economic aspects of civil providers of air navigation and airports. CAA is self-financed through a security fee set on passengers’ tickets. Economic regulation and licensing of aircraft operators is done by the Department of Civil Aviation within the Ministry of Infrastructure. Regulation and monitoring of aviation security is done by the National Civil Aviation Security Committee within the Ministry of Internal Affairs established by the Prime Minister Office based on Article 89 of the Law on Civil Aviation and according to the Decision no. 08/19 on 15 June 2011. Investigation of civil aviation accidents is done by the Aeronautical Accident and Incident Investigations Commission, functioning within the Office of Prime Minister (Prime Minister’s decision No. 03/68, on 12.06.2009). Aeronautical Accident and Incident Investigations Commission that exist within the OPM, operates under two specific Laws, Law on civil aviation (Law No. 03/L-051 on Civil Aviation). The independence of regulatory authorities is guaranteed by the Constitution and current aforementioned Laws as well. - Concerning road transport, what are the plans to align the Kosovan legislation with the EU acquis in terms of market access for road transport of passengers and goods? Based on the legislative strategy for 2012 of the Government, the Law on Road Transport will be finalised by end of 2012. The Draft Law is in accordance with the acquis comunitare of the EU, respectively with directives as 1071/2009, 1072/2009 and 1073/2009 and it includes market access, driving and resting time. The criteria for access to market have been specified with the Law on Road Transport no.2004/1, the amendment and supplement of the Law on Road Transport -2/L-127, Administrative Instruction 3/2011 on Licensing of Operators of Road Transport for goods and the Administrative Instruction 1/2009 on Licensing of the Operators for bus transport of passengers. The operators must fulfil the following criteria in order to access the profession: c. Professional competence; d. Good Reputation; e. Financial accountability.

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Professional competences are met when the manager and the driver of the company have been trained and certified on CPC from the authorising subject of MI and accredited by IRU. Good Reputation is achieved if the operator of the goods and passenger transport functions without any legal or administrative and fiscal constraints on conducting their activity. Financial accountability is met when the physical or legal entity owns a reasonable value of 10.000 € when registering the business, and for each additional vehicle 5000 € in transport of goods. In terms of the passenger the amount required for the operator is 2000 €, and for the first vehicle 3000 €, while for an additional vehicle is 2000 €. - To which extent are the four criteria for access to the occupation of road transport operator met? What are the social rules concerning driving and rest times? Is there legislation on digital tachographs? Concerning road safety what are the procedures in place for obtaining driving licenses and for roadworthiness tests? Four criteria for access to road transport of passenger and goods are supplemented and incorporated in primary and secondary legislation in force, respectively Law 2004/1 on Road Transport, Law no 02/L-127 on the amendment and supplement of the Law on Road Transport 2004/1, AI 3/2011 on Licensing of Operators for Road Transport of goods and AI 1/2009 on Licensing the Operators for bus Transport of passengers. Rules for driving and resting time are described in the Law on road traffic safety. Article 295 and 296 specify the rules for driving and resting periods for drivers who operates buses, transporting vehicles, or the combination of vehicles where the maximum allowed measure is no more than 3.5 t, and the driver is not allowed to operate that vehicle in duration of more than 9 hours within the 24 hours. Weekly driving maximum time is 6 days. After 4.5 h (four and half of hours) of nonstop driving, driver must rest at least 45 minutes, except if he starts the resting period, and this break period could be replaced from the breaks from at least 15 minutes each divided according to the driving time. Average of the weekly working time for drivers can not cross 48 hours. Exceptionally it can exceed 60 hours if the average of 48 hours per week does not exceed within a 4 week period. These rules are also applied by the driver instructor from the educational course of “Operating the motor vehicle”. There is no special Law for the digital tachograph, but the framework of the road traffic safety includes the rules for digital tachographs as sub-paragraph 96 and 97 of paragraph of Article 3 and Article 297. Driving and resting time are defined by Law on road traffic safety, since the driving and resting time will be regulated by the Law on Road Transport, new Law will include the rules of driving and resting time in harmony with AETR agreement and EU rules. In addition the Law will include the regulation of digital tachograph and establishment of the Card Issuing Authority (CIA).It is envisaged that this will be done in cooperation with an EU member country. Furthermore, MI has authorized Kosovo Chamber of Commerce which has international accreditations by International Road Transport Union (IRU) for

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these types of training such as: Passenger Transport Management CPC (national and international), Freight Transport Management CPC (national and international), Driver CPC, Trainings for transport of dangerous goods for drivers and manipulators, ADR Certificate (based on chapter 8.2 f ADR European Agreement concerning carriage of dangerous goods by road). Procedures for getting driving license are determined with Law on road traffic safety and administrative instructions No. 2008/2 on examiner licensing; 2008/5 on organization of examination and licensing professional instructors in driving schools; 2008/7 on licensing driving schools; 2008/9 on passing the driver exam; 2008/10 on training curriculum for driver candidates; 2008/11 on licensing and certification of instructor drivers skills. According to an assessment of existing legislation and their compliance with EU legislation, it was concluded that existing provisions are in full compliance with Directive 91/439/ECC and with the main principles of Directive 2006/126/EC. Amendments to the Law and other sub-legal acts which are under preparation in the scope of driving licenses will be in full compliance with Directive 2006/126/EC. Training of candidates takes place in licensed driving schools by the Ministry of Infrastructure, while the driver’s license exam is held in test centres that are functioning in the framework of the Ministry of Infrastructure. MI follows the best practices in the field of driving Through the CIECA (International Commission for Driver Testing), member of which is the Ministry of Infrastructure follows the best practices in the files of driving test candidates. Requirements for vehicles technical control and the manner of vehicles technical control is determined by the Law on road safety and A.I 2008/13. This A.I is issued in accordance with European Commission directive 96/96 (96/96/ EC of 26 December 1996, On the approximation of the Laws of the Member States relating to roadworthiness test for motor vehicles and their trailers). All vehicles are required to pass technical control at least once per a year, and vehicles with measure over 3.5 t (trucks and buses, taxi, auto ambulances, vehicles that are used for driver training of candidates) every six months are subjected to technical inspections. There are two types of technical control conducted: extraordinary technical control and technical control on the road which is performed by the ministry and the Kosovo Police. Technical control is performed in a visual way, and if necessary vehicle should be taken to the nearest technical control for exceptional control. MI follows the best practices in the field of vehicle technical control through membership at the CITA (International Motor Vehicle Inspection Committee). - Concerning technical rules and standards could you please elaborate on the Kosovan limits of maximum weights and dimension as well as legislation on transport of dangerous goods?

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Weight and dimension in the Republic of Kosovo are regulated with the Law on roads 2003/11, Administrative Instruction 2005/5, while the overall weight allowed in the Republic of Kosovo is 40 t, the vehicle width 2.50 m, height 4.00, length no more than 19.8 m axle load 10 t per axle. Law 2004/6 on transport of dangerous goods regulates secure traffic during the transportation of dangerous goods, obligations of persons involved during transportation of dangerous goods and adoption of European standards which are important to prevent the risk during dangerous goods transportation. Law on transport of dangerous goods is in harmony with ADR. The following Administrative Instructions derive from the Law: Administrative Instruction No. 2005/3, Administrative Instruction No. 2005/7, and Administrative Instruction No. 2006/5 and Administrative Instruction No. 2006/11. Law on Transport of Dangerous Goods will be supplemented and amended during this year. The Law is in full compliance with Directives 2008/68/EC and partially with directive 95/50. - Which charges apply to road vehicles (heavy good vehicles and other) and what is their scope (Kosovan, foreign, EU vehicles)? The charges that are applied in the territory of Republic of Kosovo for vehicles for transport of goods are determined by the UNMIK Regulation no.2005/14 of date 16 March, 2005, on Vehicle Road Tax. However the Law on Road and Environmental Tax for Vehicles has passed first reading by the Assembly on 24 May 2012 and expected soon to be adopted, while shall enter into force on 01 July 2012. This Law will supersede UNMIK Regulation no.2005/14 on Vehicle Road Tax. There are no charges applied for other vehicles that enter in the Kosovo besides of border insurance, therefore this issue should be harmonized with EU legislation. The fees are set based on the measure of the vehicle (see table). The same fees are valid for all vehicles, regardless if they are from EU or outside EU or of Kosovo citizens. Table 111. Fees that are applied to road taxes (pay toll) and administrative and municipal fee for vehicle registration:

Vehicles Tax Price € Tax Price € Tax Price €

With mass under 3.5 t Road 40 Admin. 25 Municipal 10

transp. with mass 3.5 t and above 3.5 t

Road 90 Admin 50 Municipal 20

Heavy trucks Road 90 Admin 30 Municipal 20 Light trucks Road 00 Admin 10 Municipal 00 Cars Road 40 Admin 25 Municipal 10 Buses Road 90 Admin 50 Municipal 20 Vans Road 40 Admin 25 Municipal 20

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The above specified fees are not applicable for vehicles with foreign plates which entered in the Kosovo. Based on the data from the year 2011, in total 272,717 vehicles have passed the technical inspections, motorcycles (L) 2,088; cars (M1) 226,034, minibuses and buses (M2, M3) 3,580; transportation vehicles (N1) 24,055; heavy vehicle transportation (N2, N3) 13,272 and combined vehicles (O) 3,688. Moreover, the ecological tax shall apply on both domestically-registered and foreign motor vehicles from 1July 2012. For local vehicles the eco tax will be collected by Vehicle Registration Centre of the ministry of internal affairs at the time of the annual registration of the vehicle, while the eco tax on foreign-registered vehicles entering Kosovo will be collected when the vehicle crosses the state border or at any other moment pursuant to administrative instructions issued by the minister of finance for foreign vehicles. Amount of the eco tax is as follow: a. For vehicles under 3.5t € will be levied 10€; b. For vehicles over 3.5t will be levied 30€. - How and by whom is the legislation concerning road transport mentioned above enforced? Ministry of Infrastructure implements the Law 2004/1 and amendment Law 02/L-127 and the sub legal acts. Legislation on road transport is implemented by the Ministry of Infrastructure, Kosovo Police and Municipal Assemblies, based on the competences specified by the legislation in this sector. Based on the Article 4 and 5 of the Law no. 2004/1 on Road Transport specifies the policies for development of road transport and determines the rules on the operation of transport services for goods and passengers (through licenses, permits and travelling timetable). Based on the Article 6 and 7 of the Law 2004/1 on Road Transport each municipality will set the policies and strategy for the development of the road transport, and regulations on the operation of the transport services for passengers and goods permits and travelling timetable) within municipal territory. Monitoring of the implementation of the legislation of road transport is conducted by the Department of Inspectorate, established by the Administrative Instruction 2004/1, Article 72 of the Law on Road Transport, while the monitoring of the implementation of municipal regulations is conducted by the Municipal Inspectorate. Kosovo Police is responsible for monitoring the safety of roads. The police organises joint actions during the year in close cooperation with the inspectors of the Ministry of Infrastructure for monitoring the safety of road transport of passengers and goods. - What are the rules for market access in railway transport? Who awards licenses and safety certificates? Does the current railway operator hold those?

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The Law No. 04/L-063 and AI 2-2012 for Kosovo railways determines open and non-discriminatory access for operators offering services in the railway sector market. RRA determines rules and criteria for market access into railway transport: a. Licensing railway operators; b. Safety certificate for railway operator; c. Safety authorization of railway operator. Article 91 of the Law on Railways No.04/L-063 prohibits access or operation with railway services in Kosovo without license, certificate and safety authorisation. A.I No. 02/2012 Article 2.2 obligates ARH to provide license for railway operators in a transparent and non-discriminatory manner, not later than 3 months after receiving the request for license if it fulfils all required legal criteria. This AI sets the conditions and criteria on the acknowledgment of European Licenses, those of SEETO, and other states relevant for Kosovo, after verification from ARH on the compatibility with the Kosovo legislation, Article 4, 5 and 6. The existing railway operators are in application stage for licenses and safety certificates within envisaged by the legal timeframe. The license and safety certificate will be provided for TrainKos and InfraKos. On 7 May 2012 MI has issued the A.I No.02/2012 on licensing of railway transport operators (TrainKos) and is drafting the A.I on licensing of infrastructure managers (Infrakos) and the A.I on safety certificates. The article 144 of the Law on Railways allows the operation of TrainKos and InfraKos without license for the period of 6 months after the Law enforcement and without any safety certificate for the period of 24 months. - What steps does Kosovo undertake regarding unbundling of the infrastructure manager and railway operators? Is a network statement available and if not, what are the plans to make it available? Unbundling of Kosovo Railway j.s.c into Infrastructure of Kosovo Railway j.s.c (InfraKos) and Operations with Trains of Kosovo Railway j.s.c (TrainKos) has been completed and two new companies were established (InfraKos and TrainKos) and registered in September 2011. Moreover, operative and financial issues are completed as well. The final draft of the Declaration on Networks for year 2013 has been completed and is available. The draft of the Declaration on Networks has been drafted by InfraKos and is in the public discussion and according to legal procedures, after public discussions and approval by the MI it should be published in the web page of the ARH until 31 August 2012, and will enter into the force from 01 January 2013.

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- Are there agreements on rail border crossings in place? Are they aligned to EU railway legislation? There is an agreement between the Government of Republic of Kosovo and the Republic of Macedonia on the border railway traffic signed on 15 September 2011, in compliance with EU railway legislation. - Are there public service contracts in place concerning rail passenger traffic? If not, are there plans to establish them? There is agreement between MI and TrainKos which obliges economic operators to perform services in the field of railway traffic with the aim of providing better services of railway traffic for citizens of the Republic of Kosovo. The contract is extended on the basis of the performance. Agreement No. A1/77 dated 29 November 2011 is valid until 31.12.2012, and includes railway line F.Kosove – Hani i Elezit (MI – TrainKos), Prishtina – Peja (MED – TrainKos).

- Who sets and enforces technical, safety and environmental standards? Technical, safety standards and the environmental standards are determined by the Ministry of Infrastructure, and implemented by Railway Regulatory Authority and railway operators. The Ministry of Infrastructure will set the technical, safety and environment standards with sub-legal acts. - Are there any activities concerning maritime transport in Kosovo? There is no any activity related to the maritime transport, but should be noted that the Ministry of Infrastructure will take over all obligations arising from the Transport Community Treaty with the countries of South-East Europe (after signing and entering into force). Also, Kosovo will reflect on the best practices of the states which do not have sea. - In air transport, what are the current status and the future plan concerning the implementation of the European Common Aviation Area Agreement (ECAA)? Based on the Law No. 03/L-051 on Civil Aviation approved on 13 March 2008, all civil aviation activities in Kosovo are carried out in accordance with the provisions of the ECAA Agreement. Transposition of the whole legislation of the 1st Phase of the ECAA Agreement is finalized and its implementation is being monitored by the appropriate authorities. Regarding the 2nd (Second) Phase of the ECAA Agreement, the whole legislation on aviation safety is transposed and the work is in process for transposition of other legal acts listed in the Annex I of this Agreement. All Kosovo aeronautical authorities are in the process of fulfilling all the obligations arising from the Agreement, with particular emphasis on the enforcement of legal provisions and guidelines for the aviation industry, in order to facilitate their implementation in practice.

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- How is the ECAA agreement taken into account in relation to the authorization of air services? Which bilateral agreements with non-ECAA members are in force? ECAA Agreement, respectively the provision of the Regulation (EC) 1008/2008 transposed into the internal legal framework of the Republic of Kosovo through the Regulation 2010/1 of the Ministry of Infrastructure is the only framework that deals with the authorization of air services between Kosovo and the ECAA member countries since 2006. Community air carriers are entitled to unrestricted traffic rights between Pristina and every destination in the Community. Air carriers licensed in partner states of ECAA enjoy unrestricted traffic rights between Pristina and any destination in their countries. There are two air service agreement in force with Swiss Confederation (2010) and the Republic of Turkey (2011). - How are airports certified? How are air carriers licensed? Which body is in charge of exercising regulatory control for services related to air transport (aeronautical products, aerodromes, air navigation service provision, and which body is in control of enforcing aviation safety requirements and monitors its implementation? Airports in the Republic of Kosovo are certified under the Regulation 1/2008 of the CAA on Airports that implements standards determined in Annex 14 of the Chicago Convention. Pristina International Airport has been certified as international civil airport by the Kosovo Civil Aviation Authority in December 2008. Air transport operators are licensed in compliance with Regulation (EC) 1008/2008 (transposed through Regulation 2010/1 of the Ministry of Infrastructure). Based on the Law on Civil Aviation, the Kosovo Civil Aviation Authority is responsible organ for regulation of civil aviation safety, including certification of airports, certification of providers of air navigation services, certification of air operators and respective staff. Kosovo CAA also monitors implementation of safety requirements through regular audits and inspections of operators. - Is there an independent organization responsible for the provision of Air Navigation Services (ANSP) and who certifies it? The Kosovo ANSP currently carries out its obligations and duties independently from CAA but full independence will be provided and guaranteed by the Law on Civil Navigation Services and establishment of Navigation Agency (ANSP). Kosovo CAA is responsible authority for certification of ANSP based on the SES legislation transposed in national legal order of Kosovo. The CAA is reviewing ANSP application for certification. - What is the applicable legislation on civil aviation security?

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The Law No. 03/L-051 on Civil Aviation approved on 13 March 2008, regulates all civil aviation activities in Kosovo. Ministry of Internal Affairs in the Republic of Kosovo, as responsible institution for aviation security has transposed eleven EU regulation for security and its inspectors are monitoring their implementation. In addition, required programs of National Civil Aviation Security are established in Kosovo since 2011, i.e. National Program of Civil Aviation Security, National Civil Aviation Security Quality Control Program as well as National Civil Aviation Security Training Program 3.9.8. Energy, including nuclear safety - Please provide a short description highlighting the current energy situation including the organisation of the sector and infrastructure developments. Do current energy prices reflect the costs (electricity, heat, coal, oil)? Please give an overview of main energy prices and compare them with their costs. How has the privatisation process developed in the sector and what are the perspectives (please provide information per sub-sector)? The structure of primary energy sources in Kosovo is consisted of coal (lignite), oil, biomass (firewood), wind, hydro and solar. However, the energy structure is not much diverse, having coal as the main energy resource. Policy development, organization, regulation and management of the energy sector in Kosovo are based on a set of Laws in compliance with the European Union (EU) acquis on energy. Moreover, Kosovo has signed the Treaty for the Establishment of the Energy Community (ECT) and remains committed to the fulfillment of obligations deriving from the Treaty. Energy Institutions and Enterprises in Kosovo - Key institutions of the Energy sector are as follows: the Ministry of Economic Development (MED), the Ministry of Environment and Spatial Planning (MESP), the Ministry of Trade and Industry (MTI), the Ministry of Finances (MF), the Ministry of Labour and Social Welfare (MLSW), Energy Regulatory Office (ERO), and the Independent Commission for Mines and Minerals (ICMM). The energy enterprises are: Kosovo Electricity Transmission System and Market Operator (KOSTT j.s.c) and Kosovo Energy Corporation (KEK j.s.c), and three District heating, in Prishtinë, Gjakovë and Mitrovicë. Energy sector of Kosovo Lignite is the most important energy resource in Kosovo, supplying some 97% of the total production of the electrical energy. Within year 2011, an amount of 8.212 million ton of lignite was produced to supply the two existing Thermo Power Plants (TPP) Kosova A and B, which was an increase of 3.2 % compared to year 2010.

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For further needs of lignite supply to the existing plants, in 2010 a new open pit mine – Sibovci South West was opened. The Sibovc mine will be the main lignite supplier in upcoming years. The electricity sector of Kosovo is managed by the two public enterprises, the Kosovo Transmission and Market Operator (KOSTT j.s.c) and the electricity generation and sole provider, Kosovo Energy Corporation (KEK j.s.c.). Electricity is mainly generated by two coal combustion plants: Kosova A and Kosova B, with an installed capacity of 1478 MW; Kosova A has five units installed, A1 to A5, out of which only three are currently operational and TPP Kosova B with two operational units. During 2011, the average generating power of the TPPs was as follows: TPP Kosova A: A3 -130.93 MW, A4 - 130.54 MW and A5 –135.26 MW; TPP Kosova B: B1- 261 MW and B2- 265 MW. Besides the existing TPPs, which are managed by KEK, there are also several hydro potentials installed, such as: a. HP Ujmani (2x17.5 MW), managed by public enterprise Ibër-Lepenci; b. Fours small HP managed by private companies with the following installed

capacity: HP Dikanc – 1.9 MW, HP Radac – 0.8 MW, HP Burim – 0.8 MW and HP Lumbardhë – 8.3 MW.

There is only one wind potential installed in Kosovo with the capacity of 1.35 MW. The electricity is supplied to 447, 492 consumers, out of which 233 industrial; 696 public ltg; 68,591 commercial and 377, 966 household. In regard to future energy potential, the Kosovo Energy Strategy 2009-2018 for the mid and long term of electricity supply foresees as follows: a. Opening of the new South Sibovci lignite mine; b. Construction of the New TPP “Kosova e Re”(New Kosovo)with an capacity

of 600-700 MW; c. Rehabilitation of the two units of the existing TPP Kosova B. The Transaction of the Kosova e Re Project, with the three above stated components, is developed by a Public-Private Partnership, where the Government of Kosovo preferred equity shareholding in generation is 31.4% and 49% in mines. In March 2012, the Government has announced the Request for Proposals for the transaction of the project for the pre-qualified investors. According to the schedule, the pre-qualified investors will submit their offers in September 2012, whereas the financial close will be made in July 2013. There are four international investment consortia selected at the pre-qualification phase, and in the meantime the project agreements and the Request for Proposals for the ‘Kosova e Re’ Transaction were prepared.

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By the decision 03/38, 02.10.2008 of the Government, the distribution and supply business of KEK are being privatized. The Government has selected the transaction advisors that will assist the preparatory process and selection of one strategic investor. Meanwhile, the four of the pre-qualified companies have made consortiums: Çalik &Limak and T.A.I.B. Bank and Elsewedy, and have submitted their offers on 21 May 2012. The selection of the winner is June 2012. The signature of the Sale and Purchasing Agreement (SPA) will be made 90 days after the selection of the winner. A detailed process on the privatization of KEK Distribution and Supply has been provided on the Economic Criteria; Privatization: Restructure of public enterprises. As regard to the Electricity Transmission System, KOSTT manages the transmission network of high voltage 400 kV, 220 kV and 110 kV. Currently, the Kosovo transmission network is connected with neighbouring countries through seven cross-border lines. The construction of the new 400kV high voltage line with Albania is under tendering process. KOSTT operates with an overall capacity of 1112 MW, which covers the national electricity demand. The current capacities of the transmission system are of satisfactory levels, which are achieved by the developments towards the increase of quality of supply, upgrade of capacities and fulfilment of the operating criteria. The system currently operates by the following characteristics: a. The length of lines (km)

i. Level 400 kV – 188.49 km ii. Level 220 kV – 231.88 km

iii. Level 110 kV – 764.94 km b. The transformation capacity

i. Level 400/110 kV = 600 MVA ii. Level 400/220 kV = 1200 MVA

iii. N Level 220/110 kV = 1200 MVA On the matter of security of operation and measure accuracy, KOSTT has undertaken the following activities: a. Implementation of SCADA/EMS (Supervisory Control and Data

Acquisition/Energy Management System) and telecommunication. b. Replacement of high voltage equipment on Sub-station (SS) 400/220 kV

Kosova B. c. Replacement of relay protection on Substation (SS) Prishtina 2 and SS

Prishtina 3. d. IT System for Market Operator. e. ITSMO – Meters. For the further distribution and supply of electricity, KEK operates by the below distribution network characteristics: a. 35 kV - 675 km,

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b. 10(20) kV - 445 km, c. 10 kV - 5863 km, d. 6 kV - 46 km, and e. 0.4 kV - 11.870 km.

In terms of substations, there are 6,200 substations (SS) of level 220kV (from transformer) up to the level 10(20)/0.4kV, or more specifically as below: Table 112. Numbers of substations and transformers

Tension kV Number of SS Number of transformers

Power ( MVA )

220/35/10(20) 1 1 40 220/10(20) 1 40 110/35/10(20) 8 15 475 110/35 5 9 300.5 110/10(20) 12 19 687 35/10 42 116 789.8 35/0.4 1 1 0.63 10(20)/0.4 1675 1718 603.35 10/0.4 5225 5353 1520.24 6/0.4 37 37 7.130 Total 7006 7270 4463.65

The heating sub-sector is structured by three District heating systems in Kosovo, Prishtina, Gjakova and Mitrovicë. The three companies are owned by the respective municipalities/districts. These systems cover only 3% of the overall demand for space heating. The heating technology is based on heavy oil and combustion oil. Currently, only two are operational, the one in Gjakova, the City Heating Gjakova j.s.c and in Prishtina, Termokos j.s.c. The District heating in Gjakova has an installed capacity of 38.6 MW, which is supplied to 10500 consumers. The District District Heating, Termokos in Prishtina has an installed heating capacity of approximately 116 MW and annual production of 186 GWh. This capacity is supplied to 12500 consumers. Considering the old age technology and to further improve the heating, a co-generation project, “Improvement of the District Heating System in Prishtina” between TPP Kosova B and Termokos j.s.c is being implemented. The implementation of the project is set in two parts: Part I: a. Rehabilitation of the district heating system of Prishtina, and b. Institutional strengthening of Termokos. Part II: Investing in the heat extraction from the power plant Kosovo B and connection to the district heating system of Prishtina. Advantages of Part II

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a. Reduction of the operational expenses of the district heating of Prishtina up to 50%;

b. Full replacement of heavy oil use with the steam extracted from the power plant Kosovo B, thus reducing pollution and harmful emissions as well as CO2;

c. Improvement of the air quality for the citizens of Prishtina; d. Reduction of the demand for electricity by private households for heating,

thus reducing considerably the lack of electricity in Kosovo. For the subsector of natural gas, currently Kosovo has no natural gas. However, it is committed to be part of regional gas supply projects, such as the Gas Ring of South East Europe. Moreover, Kosovo has adopted the Law on Natural Gas which opens the path for investments and development of a gas sector. Energy Tariffs Current electricity tariffs fully cover reasonable costs of enterprises for offering regulated energy activities. Energy Regulatory Office (ERO) is in the process of studying the energy service costs regarding each consumer’s category. In case this study reveals existence of eventual inter-subsidies between consumer’s categories of electricity, then ERO is legally obliged to reduce such inter-subsidies until 31 December 2014. Regarding the prices of each segment of energy sector, the multi-year setting tariff is applied, in which case to each reasonable cost of the entity is added the standing rate which is considered as reasonable by ERO and which is determined through Weighted Average Cost of Capital – WACC). Tariffs for energy are set up in such manner to enable coverage of all reasonable costs of licensees which are necessary for effective operation of energy plants, including the operation and maintenance costs, costs of reasonable losses and the capital cost, which presents the allowed standing rate for regulated companies. Coal tariffs also cover reasonable operation and maintenance costs of the plants as well as the reasonable capital cost. Average coal cost calculated during the last tariff review was 9.7 €/ton.

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Table 113. Retail electricity tariffs for various consumers’ categories

High season Low season

1 October - 31 March

1 April - 30 September

Standing (customer) chargeStanding (demand) chargeActive energy (P), of which:Standing (customer) chargeStanding (demand) charge €/kW 5.59 5.59

€c/kWh High tariff 6.49 1.92€c/kWh Low tariff 2.70 1.58

Reactive energy (Q) €c/kVArh 0.00 0.00Standing (customer) chargeStanding (demand) charge €/kW 5.81 5.81

€c/kWh High tariff 6.79 2.94€c/kWh Low tariff 3.59 2.65

Reactive energy (Q) €c/kVArh 0.66 0.66Standing (customer) chargeStanding (demand) charge €/kW 5.01 5.01

€c/kWh High tariff 7.61 3.39€c/kWh Low tariff 4.10 3.09

Reactive energy (Q) €c/kVArh 0.66 0.66Standing (customer) chargeStanding (demand) charge €/kW 2.91 2.91

€c/kWh High tariff 8.45 4.69€c/kWh Low tariff 5.33 4.43

Reactive energy (Q) €c/kVArh 0.66 0.66Standing (customer) chargeActive energy (P) €c/kWh Single tariff 10.41 6.73

€c/kWh High tariff 12.53 8.21€c/kWh Low tariff 6.26 4.10

Standing (customer) chargeActive energy (P), for consumption:

€c/kWh High tariff 4.64 3.33€c/kWh Low tariff 2.33 1.66€c/kWh High tariff 6.43 4.60€c/kWh Low tariff 3.22 2.31€c/kWh High tariff 9.33 6.68€c/kWh Low tariff 4.66 3.35

Standing (customer) chargeActive energy (P), for consumption:<200kWh/month (First Block): €c/kWh Single tariff 4.14 2.96200-600 kWh/month (Second Block): €c/kWh Single tariff 5.73 4.10>600 kWh/month (Third Block): €c/kWh Single tariff 8.31 5.96

<200kWh/month200-600kWh/month>600kWh/monthStanding (customer) chargeActive energy (P), for consumption: €c/kWh Single tariff 8.42 8.42

High Tariff applies 07:00-22:00 Monday-Saturday during the High Season and 08:00-23:00 Monday-Saturday during the Low SeasonCustomers registered as social cases are charged at a zero rate

€/customer/month 2.92

7€/customer/month 21.50€/customer/month 38.92€/customer/month 65.58

€/customer/month 2.92

€/customer/month 2.08

€/customer/month 2.08

€/customer/month 11.08

€/customer/month 4.58

€/customer/month 2.58

€/customer/month€/kW/month

83.832.05

13.26167.67

Proposed

8 Public l ighting

0-1 220kv

6 0.4kV (domestic, 1-rate meter)

Estimated Consumption:

0.4kV (domestic unmetered)

4 0.4kV Category IIActive energy (P), of which:

50.4kV (domestic 2-

rate meter)

<200kWh/month (First Block):

200-600 kWh/month (Second Block):

>600 kWh/month (Third Block):

2 10kVActive energy (P), of which:

30.4kV Category I

(large reactive power consumers) Active energy (P), of which:

0-2 110kVActive energy (P), of which:

1 35kVActive energy (P), of which:

Tariff Group

Voltage level of supply Tariff elements Unit Time-of-day

€c/kWh€/customer/month

Central heating tariffs are set up in similar manner with those of electric energy. Permitted incomes comprise the amount of all operation and maintenance reasonable costs and the capital cost which is also calculated according to Weighted Average Cost of Capital – WACC).

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Table 114. Central heating tariffs

Regarding oil, Kosovo is net importer of petroleum products and has two small desulphurization plants. The imported products in year 2011 amounted 0.602 million tons and produced products (heavy fuel oil, diesel, lubricants) amounted to 0.011 million tons. The total of imported and produced oil products is 0.613 million tons, which is about 8% higher than in year 2010. The product which had the highest import increase compared to year 2010 was diesel, with 18%. Part of this increase could be due to the increase of control in border entry points which restricted illegal entries and part due to work in progress in the highway construction. About 70% of oil products imports came from FYROM and Greece and 19% from Albania. The excise duties for oil products are: diesel and gasoil 0.36 euro/L, petrol 0.385 euro/L, heavy fuel oil, lubricants, and bitumen 0.325 euro/L, LPG 0.10 euro/L. There is no customs duty applied for diesel and gasoline. For other petroleum products there are customs duties in value of 10% except for CEFTA member countries. VAT of 16% is applied in all products. Prices of petroleum products are lower than in Serbia, slightly lower than Montenegro, slightly higher than Albania, and higher than Macedonia. Licensing of oil product import, wholesale, retail, and storage of oil and oil products is done by Office for licensing, regulating, and monitoring oil sector. The quality of petroleum-derived liquid fuels is regulated by the Administrative Instruction 07/2012, which is in line with quality requirements of directive 2009/30/EC and 2005/33/EC and other relevant EN standards. - Please provide information on your energy strategy documents (energy policy, energy saving or policies in sub-sectors) and legislation on energy matters, including copies of strategy documents and legislation. A short summary of the reports and legislative acts would be appreciated, including an indication of which report/act of legislation corresponds with which EU strategy or EU legal act. What is the general assessment on their (non-) compatibility with energy strategies and legislation of the EU?

A. HEATING TARIFFS FOR UNMETERED CONSUMERS C. H. COMPANIES

Tariffs’ components Domestic

Consumers [€/m² per month]

Commercial/institution Consumers [€/m² per month]

Contracted heating capacity (flat rate) 0.06 0.08 Supplied heating (variable) 0.78 0.92 Contracted heating capacity (flat rate) 0.09 0.12 Supplied Heating (variable) 0.88 1.27

B. B. HEATING TARIFFS FOR METERED CONSUMERS

C. H. COMPANIES

Tariffs’ components

Unit Price Contracted heating capacity (flat rate)

)

€ / kW per month 0.70 Supplied heating (variable) € / MWh 45.50 Contracted heating capacity (flat rate) € / kW per month 0.91 Supplied heating (variable)

€ / MWh 58.76 C .H. GJAKOVA SHA

C. H. TERMOKOS SHA

C .H. GJAKOVA SHA

C. H. TERMOKOS SHA

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The energy sector in Kosovo is developed and regulated Energy Strategy of Kosovo 2009-2018, which can be found in Annex 12. The Energy Strategy of Kosovo 2009-2018, identifies the most important challenges that the energy sector faces; guides conducive policy development to transform this vital sector of Kosovo into a sustainable and financially sustaining sector, providing quality energy services for consumers in Kosovo. Identifies key policies and measures that must be undertaken to enhance reforms in the sector, and thus attract private investments and fully integrate with Kosovo’s regional and European energy systems. The Strategy strives to ensure an effective management of existing energy sources and environment protection. It focuses in increasing security of supply in line with European standards and diversification of energy sources. The Strategy also aims to encourage a rational use of energy and improve efficiency in use, the use of renewable energy sources, introduction of new technologies which do not cause irreparable damages to the environment, respecting the internationally recognized environment standards. The Energy strategy includes the following strategic objectives: a. Provision of sustainable energy supply; b. Restructuring and development of the energy sector, in line with the Energy

Community Treaty (ECT); c. Development of new lignite-fired energy generation capacities; d. Development of energy transmission infrastructure; e. Development of energy distribution infrastructure; f. Promotion of foreign investments in the energy sector; g. Optimized utilization of all energy sources available, including local and

imported sources; h. Promotion of awareness on environment protection in energy activities; i. Ensuring an efficient use of energy and promotion of renewable energy

sources; j. Development of gas network infrastructure.

The Strategy includes a 10 year period, and was drafted based on relevant prior studies and documents. Measures to implement the strategy are divided into short-term (three years), mid-term (until 2015) and long-term (until 2018) measures. Objectives and measures envisaged in this document make a clear vision for several key aspects of high interest for the development of the energy sector in the 2009-2018 decade. Heating Strategy of Kosovo 2011-2018 describes the strategic objectives, policies, and priority developments for the heating sector. It also identifies the key policies and measures which shall be undertaken to enhance priorities and objectives in the energy sector, and encourage private investments in increasing energy efficiency, demand side management, and use of Renewable Energy Sources.

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The Mission of this Strategy is to contribute in the sustainable development of the heating sector, in line with European standards, based on a rational and efficient use of energy sources, with special emphasis in local energy sources, in order to achieve a sustainable and quality supply of heating of indoor areas and sanitary water for consumers, protecting the environment. Identified strategic objectives in the strategy are:

a. Reduction of the use of electricity for heating, developing district heating systems;

b. Creating conditions to use alternative energy sources and RES for heating, having a positive impact in environment protection and a sustainable development of the sector;

c. Creation of conditions for an efficient use of heating appliances, and increasing the thermal performance of the building stock.

Envisaged objectives and measures in the document create a clear vision of several greatly important aspects for the development of the heating sector in the period 2011-2018. Kosovo Energy Efficiency Plan for 2010-2018 (see Annex 13) has been adopted. By year 2018, the plan sets the energy saving target to 9%. Currently the First Preliminary Report of Kosovo Action Plan for Energy Efficiency 2010-2012 is under preparation. The targets for this period are set to 3%. The purpose of the Kosovo Plan on Renewable Energy Sources (KPRES) represents long-term planning of the utilization of national renewable energy sources’ potentials to meet the demand of electricity and thermal energy, respectively the development of the infrastructure for the implementation of the measures foreseen for full implementation of requirements set forth in Directive 2009/28/EC. The plan determines indicative targets of renewable energy consumption by 2020, for more details please refer to Annex 14. KPRES contains targets for renewable energy sources in final consumption of energy up to 2020. Based on the study for calculation of RES targets up to 2020 which was contracted by ECS with IPA Energy and Water Economics for ECT member states, for Kosovo it resulted to be around 26% RES of Gross energy final consumption in 2020. Such calculation of RES targets was carried out based on the Methodology of the Directive 2009/28/EC which is calculated also for EU member states, with the only change that base year for calculation of RES targets for 2020, for ECT member states was taken the year 2009. Due to this reason ECS launched a study in a form of a survey on biomass consumption for ECT member states, which study completed at the end of 2011. According to this study, the biomass consumption for heating in Kosovo during 2009-2010 is 18% of participation, out of the final gross energy consumption. The Kosovo RES targets by 2020 year have to be defined by end of 2012 year. These targets will be fulfilled by diverse renewable energy sources, mainly from biomass, hydro and wind energy. Part of these targets is also the target for biofuels which will be 10 % of fuels in the transport sector.

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KPRES also serves to the following objectives: diversifying consumed energy, from the perspective of sources used; country’s economic development and improvement of the environment, through the utilization of clean energy sources. The energy sector of the country is regulated by the below listed primary legislation: a. Law No. 03/L-184 on Energy; b. Law No. 03/L-201 on Electrical Energy; c. Law No. 03/L-185 on Energy Regulatory; d. Law No. 04/L-016 on Energy Efficiency; e. Law No. 03/L-116 on District Heating; f. Law No. 03/L-133 on Natural Gas; g. Law No. 02/L-103 on equipment under pressure; (reference Directive

97/23/EEC). The national Laws were finalized by the support of the Energy Secretariat Experts and are in compliance with the second, and partially the third package of the acquis (Directives 2003/54/EC, 2009/72/EC, 2009/73/EC, and 2003/55/EC). Parts of the Third Package, partly transposed in National Energy Legislation are as follows: Directive 2009/72 as applicable to the energy community : Article 3 - Public service obligations and customer protection; Article 5 Technical rules; Article 6 Promotion of regional cooperation ; Article 7 Authorization procedure for new capacity; Article 10 Designation and certification of transmission system operators; Part of provisions of Article 11 Certification in relation to third countries; Article 12 Tasks of transmission system operators; Article 13 Independent system operator; Article 18 Independence of the transmission system operator; Article 19 Independence of the staff and the management of the transmission system operator ; Article 22 Network development and powers to make investment decisions; Article 23 Decision-making powers regarding the connection of new power plant to the transmission system; Article 35 Designation and independence of regulatory authorities; Article 36 General objectives of the regulatory authority; Article 37 Duties and powers of the regulatory authority; Article 40 Record keeping; Regulation EC/714/2009 as applicable to the energy community partly transposed in Article 15 Provision of information. Directive 2009/73 as applicable to the energy community; Article 1 (definitions) is partly transposed; Article 6 Regional solidarity; Article 7 Promotion of regional cooperation is partly transposed; Article 9 Unbundling of transmission systems and transmission system operators; Article 10 (is partly transposed) Designation and certification of transmission system operators; Article 13 Tasks of transmission, storage and/or LNG system operators; Article 14 Independent system operators (partly transposed); Article 16 Confidentiality for transmission system operators and transmission system owners (partly transposed) ; Article

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18 Independence of the transmission system operator ; Article 22 Network development and powers to make investment decisions ; Article 23 Decision-making powers regarding the connection of storage facilities, LNG regasification facilities and industrial customers to the transmission system (partly transposed); Article 40 General objectives of the regulatory authority. - (Partly Transposed in Law No. 03/L-133 on Natural Gas) . Regulation EC/715/2009 as applicable to the energy community: Article 13 Tariffs for access to networks; Article 15 Third-party access services concerning storage and LNG facilities (partly transposed); Article 19 Transparency requirements concerning storage facilities and LNG facilities (partly transposed); Article 20 Record keeping by system operators - (Partly transposed in Law No. 03/L-133 on Natural Gas). The above listed Laws have a direct impact towards: a. Protecting competition and meeting the requirements of the Energy

Community Secretariat; b. Attracting private investments, considering the EU approach to new energy

infrastructure development, particularly in new generation capacities; c. Setting a clear framework to design and develop the wholesale and retail

market, in line with the EU acquis communautaire; d. Creating conditions to enhance power security of supply; e. Increases the role of the Energy Regulator and its independence. Further, besides the primary legislation, Kosovo has developed and enforce a considerable number of a Secondary Legislation: a. Administrative Instruction No. : 07/2011, on Rules on energy balance

(Reference Regulation 1099/2008; b. Regulation No. : 08/2011 on internal organization of the Kosovo Agency for

EE; c. Regulation No. 01/2012 on establishment and functioning of the Commission

for certification of Energy Auditors and Managers; d. Administrative Instruction No.: 01/2012 on Energy Audits , (reference Dir.

2006/32/EC); e. Administrative Instruction No.: 03/2009 for Supplementation and

Amendment of No. 01/2009; f. Administrative Instruction No.: 01/2009 on condition’ description of criteria

for the determination of privileged consumers for 2009; g. Administrative Instruction No.: 2005/1 on Energy Inspectorate; h. Administrative Instruction No.: 2005/2 on rules determining the right of

construction of the expansion of the existing energy sites for the transmission and distribution of electricity, heat or natural gas on non private land;

i. Administrative Instruction No.: 2005/3 on Rules on right of way and to access to private land: criteria and condition for compensation;

j. Administrative Instruction No. 2005/6 on Rules for limitation measures for energy supply (adopted by the Government);

k. Administrative Instruction No.: 2005/7 on Rules for safety zones (adopted by the Government);

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l. Administrative Instruction No.: 01/2007 on defining selection terms of privileged consumers for 2007;

m. Administrative Instruction No.: 05/2007 on determination of criteria on administrative measures and fines;

n. Administrative Instruction No.: 06/2007 indicative targets on electricity and thermal Energy generation from renewable Energy sources and co-generation;

o. Administrative Instruction No.: 01/2008 on authorization of commercial entities for examination of pressure equipment, filling of containers of liquid petroleum gas and technical gases;

p. Administrative Instruction No.: 02/2008 on setting conditions for determination of the third group of eligible consumers for 2008;

q. Administrative Instruction No.: /2008 on simple pressure vessels; r. Administrative Instruction No.: 01/2009 on Description of conditions for

determination of eligible consumers for the year 2009; s. Administrative Instruction No.: 04/2009 on opening of the electricity market

for all non-household consumers; t. Administrative Instruction No. 2010/01 on Security of Supply in the Natural

Gas sector; Currently under revision: a. Administrative Instruction No.: 15/2008 on promotion of efficient energy

utilization by final users and energetic services (adopted by the Government); b. Administrative Instruction No.: 10/2008 for labeling domestic electric

equipments (adopted by the Government). Bylaws to be finalised by Q3-2012: a. Draft AI on Promotion of EE to the final consumers and energy services

(Reference to Dir. 2006/32/EC), and b. Draft AI on labeling equipments utilizing energy (Reference to Dir.

2010/30/EC). - Please outline your concrete plans and timetables to ensure full compliance with existing Energy Community obligations. Could compliance with these obligations raise any particular problems, and how do you foresee to address them? Please indicate also how you foresee to ensure the full implementation of the third internal energy market package by 2015, as required by the Energy Community Treaty According to the Energy Community Secretariat request on transposing the third energy package, aiming further improvement of the internal energy market the MED and other energy institutions have identified third package dispositions which are requested to be transposed in the national legislative package by 01 January 2015. The partly transposed of the Third Package is provided on the above given answer. For a detailed compliance with the obligations see Annex 15a, 15b, 15c, 15d.

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In regard to the Direction 2009/28/EC, Kosovo plans to fulfil ECT obligation for transposing of this direction by December 2013. Moreover in compliance with this direction and based on the methodology of Energy Community Secretariat for 2011-2020, the Simplified Action Plan on RES was compiled. This document will be supplemented in compliance with further steps planned by the Energy Community Secretariat and will contain also RES indicative targets until 2020. In June 2012, Kosovo like other members of Energy Community Secretariat will report on implementation of the First Three Year Action Plan on EE for 2010-2012. This will be followed by the preparation of the second Action Plan on EE for 2013-2015, for which a technical assistance through IPA 2009 was provided. In regard to tariffs, the Law on Energy Regulator stipulates that ERO regulates tariffs for regulated services for all consumers in Kosovo, except for the domestic consumers, whose tariffs can be regulated until 1 January 2015. However, in cases when supply competition is not developed in such level to offer prices that reflect conditions of a competitive market, ERO has the right to set up tariffs also for the commercial and industrial consumers. The Regulator believes that legal provisions for removing of eventual inter-subsidies in electric energy service as well as ease of procedures to change the energy suppliers will facilitate the opening process of the internal market in Kosovo. Based on obligations arising from Law on Electricity, awarded licenses and EC Regulation 1228/2003, the Kosovo Transmission System and Market Operator (KOSTT) has developed Procedures for Allocation of Interconnector Capacities and the same were approved by ERO. Even though the procedures are ready for implementation, the derived circumstances of the “so called political conflict’, continuously obstacles from Serbian TSO, non inclusion of KOSTT in the international mechanism and not recognition of KOSTT as control area are preventing implementation of these procedures to manage congestion in interconnection capacities. The Elektro Mreza Srbije (EMS) without any legal right or authorization and in non-transparent manner allocates interconnection transmission capacities of Kosovo. In this way, Serbia prevents KOSTT from implementing provisions of the Regulation 1228/2003/EC concerning congestion management, which results in substantial profits for the Serbian operator and causes substantial financial damage to KOSTT and consumers. The official complaint that KOSTT submitted to the Energy Community Secretariat in August 2008 against Serbia as a contracting party, which refers to the violence of the Energy Community Treaty by Serbia regarding implementation of Regulation 1228/2003 for access to network and cross border trade, known as “Case-3/8” has not been resolved yet. The Energy Community Secretariat has organized meetings between KOSTT, Ministry of Energy and Mining of Serbia and EMS in order to find a compromise which would resolve the issue. In October 2011 Secretariat submits a Reasoned Opinion in Case ECS-3/08 that Serbia through its TSO- EMS is in breach with provisions of Energy Community Treaty, respectively Articles 3 and 6 of the Regulation 1228/2003 on Inter TSO Compensation and Congestion Management.

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- Please outline in detail your strategy for the development of the New Kosovo power plant, as well as for the closure of the Kosovo A power plant by 2017 at the latest, and the refurbishment of the Kosovo B power plant. All generation capacities for electricity generation based on coal in Kosovo were constructed during the time period from 1962 to 1984, whereas during the period from 1990-1999 these capacities have not been rehabilitated nor maintained properly. Having made some modest maintenance investments form year 2000, these generation capacities operate with a capacity which does not cover current demand, about 10% electricity consumption continuously is being supplied by import. Kosovo Energy Strategy 2009-2018 for the mid and long term of national electricity supply foresees as follows: a. Opening of the new lignite mine, South Sibovci. b. Construction of the New TPP “Kosova e Re” (New Kosovo)with a capacity of

600-700 and, c. Rehabilitation of the two units of the existing TPP Kosova B. Projects, according to the energy strategy and Government’s decisions, will be implemented through public-private partnership, namely the opening of New Mine, rehabilitation of TPP Kosova B and construction of new capacities. The co-generation project of electricity and heating from TPP Kosova B will be implemented through donation and loan. The projects’ implementation timelines are given below: a. By the end of 2017 complete opening of the New South Sibovci Mine; b. Commence of New capacity TPP Kosova e Re, 2017 and 2018; c. Rehabilitation of two units of TPP Kosova B, the latest by the end of 2017; d. By the end of 2013, the implementation of the co-generation project from TPP

Kosova B. Expected impacts by building new generating capacities, the rehabilitation of Kosova B Power Plant and Co-generation project: a. Operation of the mines in compliance with EU environment requirements

and lignite supply of existing projects and future development facilities; b. Construction of ‘Kosova e Re’ power plant with efficient units and in

compliance with EU Directive c. Enhancement of security supply of domestic electricity demand d. Increasing of domestic electricity production e. Life time extension and operation of TPP Kosova B units by 2030/31; f. Increasing of production and efficiency of TPP Kosova B units; g. Co- generation project implementation and connection in the town Heating

system; h. Reduction of heavy oil import in Kosovo; i. Reduction of pollution: Ashes, SO2, CO2 from TPP Kosova B production; j. Replacement of TPP Kosova A generation after 2017. By the time of the commence of Kosova e Re units and other new RES capacities, Kosova A units will have significant role for supply of the consumption with

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electricity since the same contributes with about 40% of local production and covers around 1/3 of the national needs. Taking into consideration: (i) continues increase of the demand; (ii) shortage of import energy and challenges linked to the import; and (iii) challenges linked to implementation (financing) new projects; operation of the blocks of this power plant are more than necessary. Operation availability and environmental performance of Kosova A units are significantly below the operation standards of old units. Having in mind that these units will be operating also in the next 4 years, there are efforts that even during this limited operation period, to have improvements of environmental performance and to increase production availability of this power plant. Parallel with this, with the support of European Commission are being developed activities regarding the preparation for decommissioning of these units. - Please provide information on your strategy to address the problem of technical and non-technical distribution losses and to increase the billing and collection rates According to the Energy Strategy 2009-2018, the Government supports the operators in reducing the technical and non-technical losses, as well as the increase of billing and collection. There are several challenges in the field of measurement of electric energy and energy calculation to costumers. The strategy of calculating electricity will assist KEK focusing on efforts to reduce commercial losses. It will also provide the opportunity to measure the technical losses at the highest levels of voltage where commercial losses are limited and assist in directing the activities of KEK to reduce technical losses. In regard of measuring the power to consumers, installation of measuring points with the possibility of reading from distance is important to be considered especially in countries with high consumption and difficult locations to access. Meters for energy calculations are important for proper calculation of energy within the different 10/0.4kV subsystems across the field of service. This approach will provide information to improve the assessment of technical losses and easily identify areas where commercial losses are high. Primary functions of meters for the calculation of energy include four rectangular, load profiles, resistant to impulse, evidence of impulse, optical port, remote communications (reading and configuration) via GSM/GPRS, etc. Currently KEK is implementing the instalment of remote reading meters for calculating the system energy from 110kV substations to 10/0.4kV transformers, which includes installation of meters in all 110/kV substations and 35/kV and 10kV and 10/04 kV. In addition to this, KEK has installed remote reading meters to all industrial customers connected at 35 kV and 10 kV level and to high electricity consumption customers connected at 0.4 kV. This project also includes the automatic meter reading and as well as the use of management system of meter data that can effectively integrate the remotely reading meters from

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various manufacturers and provide reports to assist operations on a regular basis. In order to improve measurement at households with a reasonable cost, in the end of 2011 KEK signed a framework contract for purchase of 100,000 simple electronic meters, which will be delivered during 2012 according to the needs. The process of replacing old meters with new electronic meters is being implemented. The primary strategy in 2012 shall be focused on annual replacement of 15% (about 60,000) old meters with simple electronic meters. Availability of financial resources will help accelerate this process. Meters to be replaced will be identified based on need and priority. Primary strategy will focus on replacement of meters that are older than 40 years. Moreover, the new meters will be used for all new connections and will replace the defective meters. - What is your policy, what are your plans, including funding and network access agreements, on electricity, gas or oil exchanges and network interconnections with neighbours and/or regions? According to the Energy Strategy 2009-2018 of Kosovo transmission system should have sufficient interconnection capacities in order to increase Kosovo opportunities to exchange electric energy with regional market. Firstly, it is important to overcome limitations in exchange of electric energy with neighbouring countries, especially with Albanian through construction of new 400 kV line. Based on the legal requirements, Transmission System Operator has drafted respective documents through which it treats the approach of the third party in the Transmission network in a transparent and non-discrimination manner. The document known as the Transmission Connection Charging Methodology applies hybrid model which means treating of connections in two categories such as Deep Connections and Shallow Connections. All generators are ranked in the deep connections and the charges will be considered as such only when their planned connection is not in compliance with Transmission Development Plan. In cases when connection charge is foreseen and is part of the approved Transmission Development Plan, the shallow connection charge will be applied and the applicant shall fund Direct Assets, whereas New Infrastructure Assets and Assets for Reinforcement of Existing System Infrastructure will be funded by KOSTT through TUoS tariffs. Concerning the interconnections of transmission network with the neighbours, it can be stated that so far Kosovo Transmission System Operator reached an Inter-TSO Agreement with Albania Transmission System Operator, prepared the draft agreements and is in negotiation to implement the same thing also with Transmission System Operators of Monte Negro and Macedonia and it is planned to reach the same also with Serbia TSO. It is planned to increase the inter-connection capacity with Albania from the entire current inter-connection of 1700 MW to 2300 MW.

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KOSTT is active participant in CAO Implementation Group and has signed the Memorandum of Understanding for establishment of CAO and actively participates and fully establishment of CAO. Also, KOSTT has signed the declaration of financial contribution to the set up of a Project Team Company for establishment of CAO. It is expected that Coordinated Office for Allocation of Inter-connective capacities (CAO) with HQ in Podgorica will start operating in June 2013, in which case, such operation will enable transparent allocation for entire Southeast Europe. As stated earlier, Kosovo has no natural gas. However, it is committed to be part of regional projects for gas supply, such as the Gas Ring of South East Europe. Currently, such project is a feasibility study financed by the World Bank through WBIF, whose overall aim is to create a roadmap to develop and implement the Energy Community Gas Ring project. The development of the gas ring will be facilitated through the development of gas anchor loads, which are envisaged to be combined cycle gas turbine power stations, amounting to 2-3B M3 per annum of gas demand at strategic points on the proposed gas ring. Moreover, Kosovo has the adopted the Law on Natural Gas which opens the path for investments and development of the gas sector. On the matter of crude oil, Kosovo has no pipeline for crude oil, and neither for petroleum products. Oil products are imported mainly by trucks and partially by rail. There are no concrete short term plans for oil/oil product pipeline interconnection with region or seaports of Albania. Kosovo has railroad connections only with Macedonia and Serbia. - What is the current level of oil stock reserves in Kosovo, calculated according to EU methodology, and how are stocks currently calculated and controlled? Please provide a realistic timetable for reaching EU oil stock requirements according to Directive 2009/119/EC on the maintenance of stocks of crude oil and/or petroleum products. Emergency oil stocks are defined in the Law on Trade of Petroleum and Petroleum Products as stocks reserved for use in cases of natural and social disasters or technical and technological catastrophes. All petroleum and petroleum product storage facilities and sale points are obligated at any time to possess reserves of at least 5% of their storage capacity for State emergency purposes. It would equal to about 4 days of average daily net import. In case of market failure, the Minister of Trade and Industry through special legal acts can determinate a maximum percentage for emergency reserves. Currently Kosovo does not possess nearly enough storage capacity for meeting the objective of directive 2009/119/EC for 90 days of average daily net import. New Draft Law for trade with oil is in a drafting process. In March 2012, assisted by a TAIEX expert the Ministry drafted a proposal of the new Law with many details regarding obligatory oil stocks. Establishing of the Central Stockholding Entity (CSE) defined in directive 2009/119/EC, is a necessity for achieving step-by-step the required 90 day

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reserves by 2020. The MTI is seeking as a solution that at least for the initial phase to form a division within the Department of State Commodity Reserves to deal with obligatory oil stocks. This division will be called Division for obligatory oil stocks and it will prepare all necessary tasks to form CSE and will do first operations. The financing is foreseen to be through a special fee, which must be paid to CSE by all importers of oil and oil products in Kosovo for the creation and management of obligatory oil and oil products reserves. The timing of achieving the requirements of the directive is highly related to the time of starting to collect the fee. As stated above, the Draft Law is in the final phase of being reviewed inside the Ministry, and, as planned, by end of May 2012 the Ministry will submit the draft to the Government for approval. Therefore, the earliest that the Law can be signed is by end of Q3. After the Law is decreed, the strategy for creating and maintaining the obligatory oil stocks will be drafted in line with the Law. - In relation to Directive 2009/28/EC on the promotion of the use of energy from renewable sources, what is the current situation (i.e. the shares of renewable energy in energy consumption, shares of various types of sources of renewable energy – e.g. hydro, wind, biomass, geothermal, solar, biofuels, etc) and what are your ambitions for the contribution of renewable energy sources in energy consumption by the year 2020 (or possible intermediate years)? (Please use the methodology of Directive 2009/28/EC for calculating these shares. Please provide a detailed overview of the current situation, including installed capacity, source of renewable energy, and timetable for the commissioning and on-going or planned projects) Kosovo as member of Energy Community Treaty (ECT) is part of Task Force for RES, engaged in fulfilment of the obligations deriving from Directive 2009/28/EC on Promotion of Utilizing Energy from RES. This Direction is still not compulsory for ECT member states, only some parts of this Directive are recommended to be applied by ECT member states during various time periods. Kosovo compiled the first draft of simplified Plan for Renewable Energy Sources 2011-2020. This plan was compiled based on the requirements of the Energy Security Secretariat (ECS) and was submitted on 31 December 2011. The plan will continue to be supplemented with new requirements until the end of the year. It contains targets for renewable energy sources in final consumption of energy up to 2020, and based on the study for calculation of RES targets up to 2020 for Kosovo it resulted to be 26% RES of Gross energy final consumption in 2020. Such calculation of RES targets was carried out based on the Methodology of the Directive 2009/28/EC, which is calculated also for EU member states with the only change that base year for calculation of RES targets for 2020, for ECT member states was taken the year 2009, different from the EU member states who used 2005 as base year. This took place due to unsustainable statistical data for ECT member states, especially data related to heating biomass consumption. Due to this reason, the ECS launched a survey on biomass consumption for ECT

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member states, according to which the biomass consumption for heating in Kosovo during 2009-2010 is 18% of the final gross energy consumption. Kosovo has approved AI on Annual and Ten Year Indicative Targets (2007-2016) for Renewable sources and co-generation, as well as adopted the Decision on implementation of stimulation measures towards the development of energy renewable sources. The Government of Kosovo is in process of reviewing of AI for indicative targets based on the target assigned for RES in 2020 by the ECS in compliance with Directive 2009/28/EC. Studies on identification of hydro potentials were conducted. The total assessed potential capacities of the small hydro power plants in Kosovo are 128 MW. Towards the facilitation of procedures to stimulate construction of small Hydro Energy Plants (HEP), in 2008 a Tendering Procedure Package for construction of small Hydro Energy Plants was adopted by ERO. In meantime, several demonstrating projects were developed for the purpose of promotion of greater utility of energy from RES, such as establishment of solar panels in few facilities, more specifically at the Kosovo University Clinic and Students’ Centre in Prishtina. These projects were funded by the Government (during 2008-2009). Such activity was carried out in another three public buildings, as part of the project for implementation of Energy Efficiency Measures funded by European Commission in 2010. Other RES potential is the installation of Wind Turbines for electricity generation with capacity of 3x 0.45 MW, in Golesh Hill, in the suburb of Prishtina in 2009; Moreover, a range of promotion activities on RES were conducted, such as a Seminar on the role of EE and RES (2005); Study on preparation of projecting data for systems using solar energy in Kosovo (2010). Within Kosovo electricity system, respectively KEK operates with the Small Hydro Energy Plant Lumëbardhi and has an installed capacity of 8.3 MW. The same was given on concession and became operational in 2010. During the rehabilitation of this Small Hydro Plant, its capacity increased from 1.9 to 2.6 MW; the Small Hydro Energy Plant Radavci from the installed capacity of 0.35 MW and increased to 0.65 MW; the Small Hydro Energy Plant Burimi, the capacity increased from 0.56 MW, to 0.64 MW. The Hydro Energy Plant Ujmani is also contributing to the electricity generation in Kosovo, with a capacity of 35 MW, and annual production of around 88 GWh (in 2010). For year 2012 and 2013, MED foresees to implement a project, “Study on Development of Energy Production from Biofuels”. The study aims to identify (asses) the natural potential, economic and technical possibilities of energy generation from biomass, namely biodiesel and ethanol. - Is there any legislation in place on giving priority or guaranteed access to the electricity grid to electricity from renewable source? If not, is there a calendar for its adoption Current Legislation (Law on Energy, Law on Electricity and the Law on Energy Regulator) contain clear legal provisions which obliges Transmission System Operator and the Distribution System Operator to prioritize the aspect of

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transmission and distribution of the energy produced from renewable sources, while, and on the other hand obliges the Public Supplier to treat the purchase of electric energy produced from renewable sources with priority. Below are the legal provisions that regulate the priority of the energy produced by RES: Law on Energy, in article 12 (Obligations of Energy Enterprises for Renewable Energy Sources and Co-generation) determines: “1. When dispatching electricity generation, the transmission system operator, or the distribution system operator where appropriate, shall give priority to electricity generation from renewable energy sources and co-generation, subject only to any limits specified for purposes of system security by the Grid Code and other rules and codes.” “2. Transmission and distribution system operators shall establish and publish standard rules on who bears the costs of technical adaptations, such as grid connections and grid reinforcements, necessary to integrate new electricity generation feeding electricity produced from renewable energy sources into the interconnected system. Such rules shall be submitted for approval to the Energy Regulatory Office, shall be consistent with the Energy Strategy and shall be based on objective, transparent and non-discriminatory criteria, taking particular account of all the costs and benefits associated with the connection of these producers to the system.” “3. Transmission and distribution system operators shall provide any new electricity producer using renewable energy sources or co-generation wishing to be connected to the system with a comprehensive and detailed estimate of the costs associated with the connection for which estimate the system operator may levy a charge that reflects its reasonable costs.” Law on Electricity: Article 9.3 determines: The public supplier shall give purchasing priority to electricity produced from renewable energy sources for which a certificate of origin has been issued by the Energy Regulatory Office.” Article 18.6.3 determines: “The Public Supplier shall purchase as a priority any capacity and electricity for which a certificate of origin has been issued by the Energy Regulatory Office at a regulated tariff determined by, or established according to a methodology approved by the Energy Regulatory Office; - Has any evaluation of the existing administrative procedures for the authorisation of renewable energy projects been done (with the view to streamline and expedite them)? If not, are there plans to do one? If yes, please provide details on its main conclusions. Please provide details on legislation on streamlining and expediting these administrative procedures should these exist.

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Pursuant to the Law on Energy Regulator, Article 38 stipulates that building new generating capacities, including also the RES, shall be implemented through authorization procedures. The procedure is carried out by ERO. Based on this, ERO adopted the Rule on Authorization Procedure which in details defines entire process of obtaining the authorization. For further details on the Law on Energy Regulator, please refer to Annex 16. The Rule sets forth the criteria and procedure related to the issuance of Authorizations for the construction of new generation facilities, new systems for transport and distribution of gas, including interconnector, direct electric-energetic lines and direct pipelines for distribution of natural gas in order to create conditions for efficient and cost-effective use of electric power with protection for human health, safety and the environment. The Authorization Procedure will be applied in compliance with objective, transparent and non-discriminatory criteria that promote the establishment of a competitive energy market and stimulate investment while ensuring security and stability of the energy sector in Kosovo. Article 4 states that No natural and legal person shall construct a plant (as determined by art. 38 of the Law on Energy Regulator) without first obtaining an Authorization from ERO in accordance with the procedures set down in this Rule. Recently for purposes of reviewing matters that are related to promotion of Renewable Energy Sources, an inter-institutional working group is being established. In this regard it is aimed to identify various legal and procedural obstacles in attacking investments from private sector, for further development of the sector. - Do you have or intend to elaborate a National Energy Efficiency Action Plan? Please provide information on its timeline, sectors addressed and expected/achieved savings, as well as how national energy efficiency/savings targets are defined and measured The Kosovo Energy Efficiency Plan 2010-2018 (KEEP), adopted last year, contains 9% or 91.89 ktoe target that shall be achieved during 2010-2018. The First Preliminary Report of Kosovo Action Plan for Energy Efficiency 2010-2012 is in preparation phase. Targets for this period are set to 3% or 31.95 ktoe. Energy Efficiency Improvement (EEI) measures will be undertaken in these sectors: Household, Services, Industrial, Transportation, and Agriculture. According to the first preliminary report of First Kosovo Mid-Term Energy Efficiency Action Plan 2010-2012 the target is achieved 2.2% or 20.05 ktoe. Savings in Household sector are 49.56% or 9.9365 ktoe and Services sector 50,44% or 10.107 ktoe, in Industry and Transportation there is no evaluation made due to the lack of Methodology Monitoring & Verification & Evaluation (M&V&E). Regarding the measuring of the achieved objectives, the same will be carried out with Bottom - Up and Top-Down methodology on which an assistance by the

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Secretariat of Energy Community is offered. The national targets are set based on EU Directive 2006/32/EC, (Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use efficiency and energy services and repealing Council Directive 93/76/EEC). For more details about the Preparation of Methodology for M&V of Energy Savings-Development of Bottom Up and Bottom Down methods please refer to Annex 17a and 17b. - Please provide information on the main current and planned legislative and non-legislative measures (such as white certificates schemes or voluntary agreements) promoting energy efficiency (nature of measures; budget available, etc.). Directive 2006/32/EC has been transposed with the Administrative Instruction 15/2008. This instruction is under a reviewing procedure, the draft of which defines obligations of relevant parties for the provision of necessary information for end-consumers. This information shall serve to ensure white certificates. Application of white certificates is expected to be made after 2015. - Please provide an organisation chart and information on staffing levels and responsibilities of the relevant energy authorities (ministry, agencies, regulator, etc.), as well measures do planned to ensure the effective independence of the energy regulator as required by the third internal energy market package? The Ministry of Economic Development (MED) is responsible for drafting and implementation of Government policies in the fields of Energy and Mining. MED organization and activities are based on applicable Laws, regulations and bylaws, and the present Regulation. For more details about the Regulation No 03/2012 on internal organizing and systematization of working positions in the MED please refer to Annex 18. The regulation determines the legal framework for the functions, tasks and responsibilities of all structures of the MED. For more details about the Regulation No 08/2011 on internal organization of the Kosovo Energy Efficiency Agency Annex 19. Graph 13: Organisational structure of MED

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Total number of employees in the Department of Energy and Mining - MED: 22. Kosovo Energy Efficiency Agency implements energy efficiency policies, through the assessment of energy savings and implementation of energy efficiency measures in all energy consumption sectors. Total number of employees: 4. High qualification: 3. Superior professionals: 1.

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Graph 14. Organisational structure of KEEA

Energy Regulator Office (ERO) is an independent agency established by the Assembly of the Republic of Kosovo in compliance with article 119.5 and 142 of the Constitution of the Republic of Kosovo. ERO is managed by the Board (5 members) which is proposed by the Government and appointed by Kosovo Assembly. ERO consists of 4 departments and administration. ERO’s financial and decision-making independence is determined by the Constitution and the Law on Energy Regulator, and is in full compliance with the third package of the EU legislation on energy. Total number of ERO employees is 28 (including 5 Board members). Qualifications: Medium professional education 5, High education 19 and superior professionals 4. Graph 15. Organisational structure of ERO

Kosovo Transmission, System and Market Operator operates under two licenses issued by the Energy Regulatory Office: (1) License for the Transmission System Operator and (2) License for the Electricity Market Operator. KOSTT is

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responsible for planning, development, maintenance and operation of the electricity transmission system in Kosovo; ensure an open and non-discriminatory access, functioning of the new electricity market, provide conditions that encourage competition in Kosovo; cooperate with neighbouring Transmission System Operators (TSO) for the benefit of Kosovo and the region. The total number of employees: 369. Qualifications: No qualification 5, Low qualification 30, Medium professional education 192, High qualification 23, High education 7 and superior professionals 112. Graph 16. Organisational structure of KOSTT

Kosovo Energy Corporation j.s.c (KEK) is the sole power corporation in Republic of Kosova. KEK j.s.c is vertically integrated and was legally incorporated in the end of 2005 year. The core business of the Corporation is production of coal, energy production, and supply with energy, sales and customer care service. In accomplishing the above mentioned functions the KEK is organized into four main divisions: Mines, Generation, Distribution and Supply Divisions. There are two open-cast mines, namely the Mirash mine and Bardh mine, two power plants, PP “Kosova A” and PP” Kosova B”, around 18.898km (from 0.4 kV voltage level to 35 kV) of distribution network covering the whole territory of Kosovo and the operation is finalized with supply activity, including the energy sale function . The functions of KEK are regulated according the politics of Energy Regulatory Office of Republic of Kosovo. Total number of employees is 7532. Unqualified 279 employees, Low qualification 1728 employees, Medium professional education 4238 employees, High qualification 201 employees, Higher education 241 employees, University 816 employees, Master 25 employees and PHD 4 employees.

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Graph 17. Organisational structure of KEK

Prishtina District Heating – Termokos j.s.c is the district heating in Prishtina. The heating season usually starts on October 15 and ends on April 15. Besides providing heating to its consumers, the company is responsible for operation and maintenance of boilers and primary network up to the heat exchanger in substations. Total number of employees: 207. Qualifications: Low qualification 9, Medium education 149, High qualification 14, Superior professionals 35. Graph 18. Organisational structure of Termokos

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- What are the likely investment needs in the various energy sub-sectors for the period until 2015, and then from 2015-2020? What type of financing is foreseen (public, private) and what are the sources of financing? The investments planned for 2012-2015, MED shall focus in implementing projects in heating, natural gas and EE measures. These investments target the public sector and are planned to be realized through financing from the budget of the Republic of Kosovo and the use of credit lines supported by the World Bank and KfW. Table 115. Projects in the pipeline Type of the project

Year Name of the project

Aim of the project

Current situation

Financing amount

KB/Donor

Promotion and Implementation

2012 -2014

Support in energy efficiency and RES promotion

Assistance to MED, Energy Efficiency Agency and EE offices in municipalities

The company which will provide the assistance has been selected. The assistance will begin in June

1.500.000,00 European Commission

Promotion and Implementation

2012 – under decision making process

Study and Implementation of EE measures in Public buildings – municipal level

Implementation of EE measures in 30 identified buildings- municipal level

Project is under the evaluation process by the WBIF.

7.500.000,00

WBIF – supported by the KfW Soft loan& grant

Promotion and Implementation

2012 – under decision making process

Study and Implementation of EE measures in Public buildings managed by the Central Level

Implementation of EE measures in public buildings – central level

Project is under the evaluation process by the WBIF.

10.700.000,00

WBIF – supported by the World Bank Soft loan

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Promotion and Implementation

2012 – under decision making process Application submitted by Croatia – supported by Kosovo

Establishment of a regional EE programme for the Western Balkan Countries

Establishing a financial programme for implementation of EE measures, support for ESCO as well as involvement of the private sector.

Project is under the evaluation process by the WBIF.

23.350.000,00 - grant 160.000.000,00 – soft loan

WBIF – Supported by the EBRD

Study 2012-2014 Study on energy generation from biofuels

Under tendering process

Kosovo Budget

Study 2012 Study for district heating in Pejë, Prizren, Gjilan and Ferizaj

Possibility of installing a heating system and hot water in these municipalities

Under tendering process

90,000.00 € Kosovo Budget

Study 2013 Feasibility study Natural Gas network distribution in Kosovo.

Connection in regional gas networks, as well as the development of internal distribution network

100,000.00€ Kosovo Budget

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Implementation

2011-2013 Improvement of district heating – cogeneration project between Termokos and Kosovo B

Rehabilitation and extension of the district heating system of Prishtina

On -going

26.800.000,00 Municipality of Prishtina – 2 mil KfW – 6 mil –grant , 5 mil loan and EU – 13.8 mil- grant

Municipality of Prishtina KfW and EU

Table 116. Planed capital projects of KOSTT Nr. Project Form of funding Source of funding

1. New line 400 kV Kosovo–Albania

Public Partially donation& soft loan

2. New line 110 kV SS Rahovec- SS Theranda

Public KOSTT (loan)

3. Revitalization of line 110 kV L155/2 in coordination of the construction of SS Leposaviq 110/10kV

Public KOSTT (loan)

4. SS Dragashi and line 110kV SS Kukës-SS Dragash- SS Prizren 2

Public KOSTT (loan)

5. Re-vitalisation of line 110 kV:L163/1

Public KOSTT (loan)

6. AT2-300 MVA in SS PEJA3 Public donation & loan 7. AT2-300 MVA in SS FERIZAJ 2 Public donation & loan

Table 117. Projects planned for the period 2015-2020 No. Project Form of

Financing The source of financing

1. New line 110 kV SS Peja 3- NS Peja 1 and re-vitalisation of SS Peja 1

Public Donation& loan

2. Re-vitalisation of line 110 kV:L126/2 SS Peja 2- SS Deçan

Public KOSTT (loan)

3. Re-vitalisation of line 110 kV: L179/1 SS Prizreni 1 - SS Prizreni 3

Public KOSTT (loan)

4. New line 110 kV SS Peja 3- HP Ujman

Public KOSTT (loan)

5. New line 110 kV SS Prizren 1- SS Prizren 2

Public KOSTT (loan)

6. New line 110 kV SS Peja 1- SS Deçan

Public KOSTT (loan)

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7. Re-vitalisation of line 110 kV: L118/1 SS Prishtina 1 - SS Kosova A

Public KOSTT (loan)

Kosovo Energy Corporation (KEK) is committed in reducing the environmental impact of Thermo Power Plant Kosova A.KEK has undertaken a project with a cost of €25 Million for replacement of electrostatic precipitators (Electro Filters EF) of the active units of TPP Kosovo A. This will reduce emissions of ash and dust in accordance with EU Directive on Large Combustion Plants. Currently, the replacement of the EF in A5 unit is under way and it is expected to be completed in July 2012. Entire funding of this project is done by KEK. KEK is also undergoing rehabilitation of the ash dump near TPP Kosova A by using environmentally acceptable methods and is building a hydraulic system for bottom ash transportation. Funding is covered by the World Bank and KEK. Considering the need to establish energy security in Kosovo, KEK has initiated procedures for rehabilitation of A2 in TPP Kosova A, since the generation potential of 100 MW from A2 remains the only option of KEK until new capacity is in place. Capital repair/overhaul does not include extending the length of working life, but aims to ensure the sustainability of the unit until its scheduled closing at the end of 2017-in accordance with the Kosovo Energy Strategy, 2009-2018. Funding will be covered by KEK. For a long term period commercial operation KEK carries out periodic (continuous) repairs/ overhauls of the two units of TPP Kosova B. During the year 2011, capital repairs have been carried out in B1 unit, whereas in 2012 unit B2 will also undergo through capital repair. These overhauls were financed by KEK and will improve the availability of generating units. Network Projects to be implemented In order to reduce the overall network losses, in the past numerous projects were carried out by KEK on the distribution network. These projects helped improve the quality of the network, such as the reduction of losses for 2.84 %, namely from 39.52% in 2010, to 36.68% in 2011. The 110kV system serves as the main pillar for the energy supply to seven Kosovo districts. Districts use 35kV and 10kV systems to distribute energy to their locations, by supplying the majority of customers through 10/0, 4kV transformers. The 10kVnetwork level contains approximately 600-10kV feeders and 7000-10/0, 4kV transformers. The need for projects will be reviewed and updated annually to ensure that variable business and system conditions are calculated. The resulting projects will continue to be considered in future years as part of overall strategic plan for the network development. The study will attempt to model the elasticity of demand-load, taking into account that regulation of costumers will reduce commercial losses and will ensure that implementation plans take in to consideration regional differences.

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Table 118. Planned network projects

Priority Order

Scope

0 Projects carried over from 2010 to 2014

1 2011 Metering – Installation, communications & supplies

2 Protection implementation & miscellaneous supplies for selected substations

3 Annual network reinforcement 4 Annual metering enhancements

5 Design and construction of 110/35/10(20) kV SS Vaganica and reconfiguration of the 35kV and 20kV networks in the Mitrovica area.

6 Civil construction works for laying 10 (20) and 0.4 kV cables at SS Gjilani V (Other costs are funded by the Swiss Government)

7 Upgrade SS Prishtina 3 from 35/10kV, 32MVA to SS Prishtina 6 110/10(20)kV, 80MVA

8 Add a 110/xx kV transformer to SS Viti, Deqani, Klina, Istog, Prizreni 1, Gjakova 1, and Therande

9 Upgrade SS Malisheva from 35/10kV, 24MVA to 110/10(20)kV, 63MVA

10 Upgrade SS Fushe Kosova from 35/10kV to SS Fushe Kosova 110/10(20)kV

11 Build new 110/20kV, 40MVA SS at Bondsteel

12 Upgrade SS Shtime from 35/10kV, 24MVA to 110/10(20)kV, 63MVA

13 Implementation of DMS and full substation automation

14 Upgrade SS Kacanik from 35/10kV, 24MVA to 110/10(20)kV, 63MVA 15 Construction of 35/10kV SS Junik

16 Upgrade SS Drenas from 35/10kV to SS Drenas 110/10(20)kV

17 Upgrade SS Dragash from 35/10kV to SS Dragash 110/10(20)kV - What is the status of compliance with the Euratom Treaty and Euratom acquis provisions concerning nuclear safety and radiation protection? Law 03/L-104 on Protection from Non-ionizing, Ionizing Radiation and Nuclear Safety currently in force, in Progress Report and by experts was assessed as too general and does not have the acquis transposed, therefore is not in compliance with Euratom Treaty. Due to such reason, the modification and amendment of this Law was initiated to provide the transposing of the following EU directives:

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a. Directive 96/29/Euratom of 13 May 1996 laying down basic safety standards for the protection of the health of workers and the general public against the dangers arising from ionizing radiation;

b. Directive 97/43/Euratom of 30 June 1997 on health protection of individuals against the dangers of ionizing radiation in relation to medical exposure, and repealing Directive 84/466/Euratom;

c. Directive 2003/122/Euratom of 22 December 2003 on the control of high-activity sealed radioactive sources and orphan sources;

d. Commission recommendation of 8 June 2000 on the application of Article 36 of the Euratom Treaty concerning the monitoring of the levels of radioactivity in the environment for the purpose of assessing the exposure of the population as a whole (2000/473/Euratom);

e. Directive 2011/70/Euratom of 19 July 2011 establishing a Community framework for the responsible and safe management of spent fuel and radioactive waste;

f. Commission Decision of 5 March 2008 establishing the standard document for the supervision and control of shipments of radioactive waste and spent fuel referred to in Council Directive 2006/117/Euratom;

g. Commission Recommendation of 4 December 2008 on criteria for the export of radioactive waste and spent fuel to third countries;

h. Directive 2009/71/Euratom of 25 June 2009 establishing a Community framework for the nuclear safety of nuclear installations Shipments of radioactive substance;

i. Commission Recommendation of 15 December 2005 on guidelines for the application of Regulation (Euratom) No 302/2005 on the application of Euratom safeguards;

j. Directive 89/618/Euratom of 27 November 1989 on informing the general public about health protection measures to be applied and steps to be taken in the event of a radiological emergency;

k. Decision of 14 December 1987 on Community arrangements for the early exchange of information in the event of a radiological emergency (87/600/Euratom);

l. Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items;

m. Regulation (Euratom) No 3954/87 of 22 December 1987 laying down maximum permitted levels of radioactive contamination of foodstuffs and of feeding stuffs following a nuclear accident or any other case of radiological emergency.

n. Directive 90/641?Euroatom of 4 December 1990 on the operational protection of outside workers exposed to the risk of ionizing radiation during their activities in controlled areas;

o. Council regulation 93/1493/Euroatom of 8 June 1993 on shipments of radioactive substances between Member States.

- Please provide information on the structure of the National Regulatory Authority (NRA) in the fields of nuclear safety and radioactive waste management, including radiation protection and radiological emergency preparedness.

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The MESP, as the Regulatory Authority for Nuclear Safety with the decision No 015/211, date 20 June 2011, the Acting Chief Executive Officer of the Agency is appointed. This is followed by the decision of the head of the Agency on transferring two officers from the Department of Environment of MESP to the Agency. Due to the lack of the budget, the Agency has not yet been fully functional. However, for 2012 a budget of €28,000 is allocated to the Agency which enables opening of two additional positions, position of an Officer for Radiation Protection and position of an Officer for Nuclear Safety. The Law on the Kosovo Agency for Radiation Protection and Nuclear Safety which sets all the responsibilities, tasks and competences of the Agency, as well as foresees the agency to pass under the Prime Minister’s Office. The Law was recently approved in the Assembly. - Do you have a national waste management programme covering all types of radioactive waste and all management stages including final disposal? What is the existing and planned capacity for storing spent fuel and radioactive waste? Kosovo does not yet have a waste management programme which would include all types of radioactive waste. However, within the regional project for Agency’s support on capacity building for identification and radioactive waste management of closed radioactive sources, including radioactive lightening rod, is being implemented. The same project also foresees the design of a project for Radioactive Damp Site. - Please provide information on the billing and collection rates of KEK over the last five years and briefly analyse the main financial indicators of the company. Billed energy in relation to the energy available for sale is in a growing trend; in 2007 was at 70%, 80% in 2008, 79 % in 2009, 78% in 2010, and 82% in 2011. Also, the energy collected (collections) in relation to energy billed has a growing trend; in 2007-it was 77%, 76% in 2008, 81% in 2009, 88%, in 2010, and 91% in 2011. The data are presented below:

KEK has a detailed system of reporting of energy balance to determine the amount of energy lost for each route.

Energy Collected Available Energy Billed as Collected as %

for Sale Billed % Billed Collected as % Energy Period (GWH) (GWH) EAFS (MIL '€) (MIL '€) Billed Supplied

Actual 2007 3,230 2,258 70% 145 111 77% 54% Actual 2008 3,490 2,780 80% 178 135 76% 60% Actual 2009 3,845 3,049 79% 197 160 81% 64% Actual 2010 4,301 3,374 78% 202 178 88% 69% Actual 2011 4,356 3,569 82% 221 201 91% 75%

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Table 119. KEK main financial indicators

According to the reports of the external auditor, KEK managed to have a profit of 16.5 mil Euros in 2011 from the loss of 36.2 mil Euros in 2007, and also increase the company assets from 2007 for 263 mil Euros. In 2011 the company had a liquidity coefficient of 2.13, which intends that the short term obligations can be covered by circulating assets more than two times. 3.9.9. Environment and climate change

3.9.9.1.General Environmental Policy

- Please indicate the main principles underpinning environmental legislation and describe the environmental protection framework? Does Kosovo have a long term strategy governing protection of the environment and/or a sustainable development strategy, together with a concrete action programme? What is the level of investment in environmental infrastructure over the past 3 years and the current budget allocated to environment? The Constitution of the Republic of Kosovo has set environmental protection as one of the values of the constitutional order of the Republic of Kosovo (Article 7). Under the Article 52 (part of the Chapter on Basic Rights and Freedom), nature and biodiversity, environment and national inheritance are considered to be everyone’s responsibility. Furthermore, the Article 52 states that everyone must be provided the opportunity to be heard by public institutions and have their opinions considered on issues that impact the environment in which they live and the impact on the environment shall be considered by public institutions in their decision making processes. Legislative framework that regulates environmental protection includes the following Laws: Law on Protection of Environment No. 03/L- 025; Law on Nature Protection No. 03/L-233; Law on Special Protection Zones No. 03/L- 039; Law on Noise Protection, No. 02/ L- 102; Law on Chemicals, No. 02/L- 116; Law on Strategic Environment Assessment, No. 03/L- 230; Law on Environment Impact Assessment, No. 03/L- 214; Law on Water, No. 24/2004; Law on Waste, No. 02/L – 30; Law on Prevention and Integrated Pollution Control, No. 03 /L- 043; Law on Biocide Products, No. 03 /L-119; Law on Protection from Non-ionising, Ionising radiation and Nuclear Safety, No. 03/L – 104; and Law on Protection from Air Pollution No. 03/L-160. The Law on Environment Protection which is the main legislative act regulating environment related issues has set the principle of sustainable development;

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principle of integration of environmental protection; principle of gradual harmonisation with EU Standards; principle of precaution and prevention; principle of prevention; lack of general technological knowledge; principle “polluter pays”; principle “user pays”; principle of subsidiary responsibility; principle of encouraging measures; principle of protection of the court rights; principle of public access to official documents; principle of high level protection; principle of consistency with EU Law; principle of prior measures; principle meaning that environmental damage should be regulated in the source; and principle of expense coverage, as pillars that guide the primary and secondary legislation. Kosovo has been implementing the Strategy for Environment and Sustainable Development 2005-2015 and the Kosovo Action Plan for Environment 2006-2010. The strategy was reviewed in 2011 and replaced by the draft Strategy 2012-2021 and the Action Plan for the period 2012-1016. The new Strategy foresees a clear environmental infrastructure investment framework with regard to environment protection. The following sub-sectoral strategies have been drafted: Strategy and Action Plan on Biodiversity 2011 – 2020 approved by the Assembly; Draft Strategy (2011-2021) and Action Plan on air quality (2011-2016); Draft Kosovo Strategic Plan on Waste Administration (2011-2020); and Draft Plan of intervention in case of environment accidents. Over the past 3 years, the level of investments by the central institutions in environmental infrastructure is 9,864,512.79 Euro. (4,716,395.30 in 2009, 3,877,626.14 in 2010 and 1,270,491.37 in 2011). The budget allocation for 2012 is 4,265,000.00 Euros. For the period 2009-2012, the activities supported by foreign donors reach the amount of 23.3 million Euros. Other projects, which had impact on environment and were implemented by municipalities reach the amount of 42,775,536 Euro. - What are the mechanisms for monitoring compliance with environmental legislation and the state of the environment? What type of economic instruments (taxes, duties, tradable permit schemes, etc) is used for environmental policy? Are the environmental considerations integrated in other policies, in particular agricultural, industrial, energy and transport? The consistency of Kosovo environmental legislation with EU is carried out through Progress Monitoring on transposing and implementing the legislation which is based on the Table of Concordance (TOC) and implementation questionnaire (IQ). In terms of the monitoring mechanisms, the Law on Environmental Protection, Article 50, and Article 51 have designated the Ministry for Environment and Spatial Planning as the main body for monitoring, including municipalities and legal or physical entities authorised by the Ministry or the polluter. Article 60 of the respective Law defines KEPA as the responsible body for collection of environmental data and reporting on the state of environment. KEPA publish

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the report on state of environment biannually. Moreover, the Articles 81-91 regulate the inspection supervision whereas the Article 83, paragraph 1.3 designates the inspectorate as the responsible body for supervision of legal and physical entities regarding their activities on the monitoring of the state of environment. In addition, the inspection services and responsibilities are outlined within specific environmental Laws regulating the protection of environment. To improve inspection structure the Government is drafting a Law on Inspectorate which will regulate the overall function of the inspection services at the Central and local level. Kosovo does not have adequate mechanisms for applying the economic instruments for the environment. The Law on Environmental Protection, Article 7 refers to economic instruments for protection of environment, while Article 77 (Article 71.1, 71.2) stipulates establishment of an environmental fund, with a special Law that regulates competencies, administration, financial resources and means used for environmental protection. MESP is discussing different modalities with national institutions for creating the Environmental Fund. The Law on Environment Protection, Article 92 states that in cases when the violation of the provisions of the Law are defined as penal acts according to the Kosovo Penal Code, the Environmental Inspectorate shall submit the subject to the prosecution, while Articles 93, 94, 95 specify the fines based on the violation of the legal and physical entity. Law on Integrated Pollution Prevention and Control 2009/03-L-043, Article 4.2 stipulates that the application for a permit for operation shall be accompanied by the appropriate fee carried out based on the sub legal act issued by the Ministry. The environmental legal framework addresses the issue of penalties and fines through the additional Administrative Instructions: AI no. 04/2009 for Penalties on Mandatory Charges; AI no.11/2011 to determine the amount of the fee for services relating to the issuing of the environmental consent ; AI no. 07/2011 Article 10 on Licensing of persons for preparing the reports on environmental impact assessment; AI no. 01/2009, Article 13 on Transit export/import of waste; AI no. 09/2009 on Licence for waste administration, Article 30; AI no.02/2009; AI no. 02/2009 on maximal permitted levels of discharging and dispersal of pollutant in soil, article 11. - Are the environmental considerations integrated in other policies, in particular agricultural, industrial, energy and transport? Environmental principles are part of the agriculture policies, through: Law on the Forests of Kosovo No. 2003/3; Law on Agricultural Land No. 02/L– 26; Law on Hunting No. 02/L – 53; Law on Fire Protection No. 02/L – 41; Law on

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Protection Against Natural and Other Disasters No. 02/L – 68; Law on Plant Protection No. 02/L – 95; Law on Organic Farming No. 02/L – 122; Law on the Products for Plant Protection No. 03/L – 042. Concerning the industrial policies the Government does not have an approved strategy on industry that will address the environmental protection. The energy sector has incorporated environmental protection within their sectoral strategies. The Kosovo Strategy on Energy 2009-2018, point 3.6 and 11.7 address the need for environmental protection. A separate plan of relevant measures and activities is prepared and being implemented. The Kosovo Heating Strategy 2011-2018, point 3.7 addresses environmental protection from the energy perspective and the need for the reduction of energy consumed for heating to facilitate the mitigation of negative impacts in the environment. Moreover, the strategic objective 7.1.2 outlines the appropriate policies and measures to ensure creation of conditions for the use of alternative energy sources and RES for heating, with a positive impact in environment protection and a sustainable development of the sector. Moreover, the Draft Law on road and ecological tax for vehicles is in place. The means for controlling the release of gas from vehicles has been regulated by the AI No.2008/13 Technical control of vehicles Article 21. Please describe any initiative or program related to Regional Cooperation in the environment field in which Kosovo participates. Kosovo participates in the Regional Environmental Network for Accession (RENA) which aims at strengthening the beneficiary’s human capacities for EU accession process. Project activities are being implemented through four working groups as follows: a. Strategic Investments and Planning - (Working Group 1); b. Climate Change - (Working Group 2); c. Cross-Border Cooperation and Multi-party Agreements - (Working Group 3); d. Environmental Compliance and Enforcement Network for Accession

(ECENA) - (Working Group 4). Kosovo is part of Environment and Security Initiative (ENVSEC) since 2004. ENVSEC mission is to contribute in reducing environmental risks and safety risks through cooperation within the countries of the region. This initiative helps Governments and communities to identify common solutions and to develop joint projects to achieve them, and facilitates dialogue and cooperation between policy makers, environmental experts and civil society across borders, including decision makers, ministries, experts and national agencies, as well as NGOs and research institutes. Kosovo participates in the activities of the European Environment Agency EEA and the European Environment Information and Observation Network EIONET as a cooperative party since 2010. Within the framework of this project in Kosovo there are 23 NRC (National Reference Centre) have been assigned for certain

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areas being coordinated by one national focal point. KEPA participates in all initiatives including trainings meetings and seminars. Since February 2012, Kosovo participates in the network of heads and directors of Europe Environment Agencies – EPA Network as an equal member. Kosovo jointly with Slovenia, Croatia, Montenegro, Albania and Macedonia is a signatory of the Resolution on the Sustainable Development of the Dinaric Arc Region, which aims to create common policies that enable sustainable development including environmental integrity and territorial cohesion of the countries of the Dinaric Arc Region. In addition, MESP is part of two IPA MB 2009 projects: ‘Strengthening the system of dosimetry control for occupationally exposed workers and patients’ and ‘Management of sealed radioactive sources, including radioactive lightning roads’. 3.9.9.2.Sectoral Policies 3.9.9.2.1. Horizontal Policies - What are the provisions regarding public participation (information and consultation) in decision making regarding the environment, including administrative review and/or judicial in cases that access to information is not allowed? Constitution of the Republic of Kosovo, respectively Article 41 provides the basis for public participation in decision making process, stating that each person has the right of access to public documents, and, documents of public institutions and of state bodies are public, except of information that is limited by Law, due to privacy, business secrets or classified security information. Furthermore, this is regulated by the following Laws in the environment sector: Law on Environmental Protection 03/L–025, Article 52-57; Law on Nature Protection No. 03/L-233, Chapter VIII, Article 148- 152; Law on EIA No. 03/L-214, Article 27-30; Law on SEA No. 03/L-230, Article 16-19. The A.I. No. 09/2011 for determining the way of information and public participation and stakeholders in the procedure of Environmental Impact Assessment, set rules for information. Regarding the limitation of participation of the public in decision making process, Article 57-58 of Law on Environmental Protection states that the Government may, in order to protect the interest of national security and defence, limit participation of public in decision making. This issue is also regulated by the Article 28, paragraph 5 of the Law on Nature Protection, which states that data from the Register of nature protected values shall be public, except if its determined that extension data’s of nature protected values shall remain confidential for the sake of protection thereof. - What are the measures for assessment of environmental impact of certain projects and policies? How it is taken into consideration the impact of habitat/species in environmental assessment procedures? Environmental Impact Assessment has started to be implemented with the approval of the AI No. 09/2004. The Law on EIA no. 03/L-214, is in full

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compliance with European Commission Directive for EIA 85/337/EEC and other Directives.

The purpose of this Law is to prevent or reduce negative impacts of proposed public and private projects. The Articles 10 to 15 of this Law defines the procedures for identification, assessment and reporting the impacts of certain projects on the environment and accompanying administrative procedures during the decision-making process by the MESP. In addition the implementation of this Law is assured through the following secondary legislation: a. A.I. on setting of documents, according to the type and nature of projects or

activities of which application will be presented; b. A.I. No. 09/2011 for setting of information way and public participation and

stakeholders in the EIA procedure; c. A.I. No. 07/2011 on procedures and criteria for licensing of physical and legal

persons to draft EIA's reports; d. A.I. Nr. 11/2011 for setting of the value of fees for services related to the EIA

process; The impact of habitat/species in environmental assessment procedures is being considered through the Law on Nature Protection no. 03/L-233 (Chapter two, Article 17 and 18) which is in full compliance with Wild Bird Directive 2009/147/EC. The implementation of the Law is assured through the AI no 12/2011 for the sorts of natural habitat types, natural habitat maps, threatened and rare natural types, as well as safeguard measures for the conservation of natural habitat types. - What is the common standard of responsibility when dealing with damages caused to the environment (it is strict or fault based)? According to the Article 34 of the Law on Environment Protection 03/L–025, the legal or physical entity or public authority that has caused the environmental damage is obliged to repair the damages and reduce the risk of environmental degradation and its impact on human health. Natural or legal person or public authority is required to submit to the Ministry the plan for measures that should undertake. This standard is strict. 3.9.9.2.2. Air quality - Do air quality limit values or target values exist for specific atmospheric pollutants? If so, what are these values? Are there estimates of emissions of the major atmospheric pollutants? Limits values of air quality are defined in chapter II, respectively in Appendix VI of A.I. No. 02/2011 on air quality standards.

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Table 120: Limit values of air quality

Average Period Limit Value Date when the limit value must be fulfilled

Sulphur dioxide

1-hour 350 µg/m3, should not be exceeded more than 24 times during the calendar year 1 January 2017

1-day 125 µg/m3, should not be exceeded more than 3 times during the calendar year 1 January 2017

Nitrogen dioxide

1- hour 200 µg/m3 should not be exceeded more than 18 times during the calendar year 1 January 2017

Calendar year 40 µg/m3 1 January 2017 Benzene Calendar year 5 µg/m3 1 January 2017 Carbon monoxide Average daily maximum 8- hours (1)

10 µg/m3 1 January 2017

Lead Calendar year 0.5 µg/m3 1 January 2017 PM10

1-day 50 µg/m3, should not be exceeded more than 35 times during the calendar year 1 January 2017

Calendar year 40 µg/m3 1 January 2017 PM2.5 PHASE 1 Calendar year 25 µg/m3 1 January 2017 PM2.5 PHASE 2 (2) Calendar year 20 µg/m3 1 January 2020

Daily average of maximum 8-hours, concentration will be resolved by examining the average of the 8-hour function, calculated from the data every hour and updated every hour. Each average of 8 - hours calculated as such shall be assigned to the day on which it ends, meaning, the first period of calculation for each day shall be the period from 17:00 of the previous day to 01:00 of that day; the last calculation period for each day shall be the period from 16:00 to 24:00 on that day. Phase 2 - will only apply when the European Commission decides after a review of the limit value in 2013. Target values for arsn, cadmium, benzo and PM2.5 are set out in Article 16, respectively in Annex VII of the A.I. for air quality standards.

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Table 121. Target values for arsn, cadmium, nickel and benzo (a) pyrene Polluters Target Value (*)

Arsn 6 ng/m3

Cadmium 5 ng/m3

Nickel 20 ng/m3

Benzo(a)pyrene 1 ng/m3 (*)For the total content in particles in PM10 o fraction averaged over a calendar year. The major contributors to air pollution are power plants, industrial plants (metallurgy, mines, and cement factories), the transport sector, small combustion plants, agricultural activities, domestic waste and locations used for waste incineration. Table 122. Current emissions and limits according to the memorandum of Athens

Polluter PPA PPB Limit To be achieved Dust 902.32 156.35 50 31 December 2017 SO2 251.42 208.55 400 31 December 2017 NOx 705.75 835.08 500 31 December 2017

As it is shown from the table, dust emissions, compared with the limits under the Athens Memorandum requirement are very high, especially from the PP. Also, according to calculations NOx emission is above the required levels. SO2 emissions, although according to calculations are lower than the limit of the Directive. While CO2 emissions calculated from the total coal use, is estimated to be about 5 million tons per year (Table 8). Table 123. Emissions of CO2 from PP Kosova A and PP Kosova B‡‡‡‡‡‡

Power Plant Blocks Emissions of CO2 (t/year)

Kosova A A1, A3, A5 1.532.930

Kosova B B1, B2 3.608.876

Three public heatings in Prishtina, Gjakova and Mitrovica are in operation. Referring to the figures provided by the Central Heating -Termokos for 2010, it is shown that sulphur dioxide SO2 (3% O2) is 491.0 mg/Nm3, for SO2 emission is therefore above the allowed values. The amount of CO2 is 118.0 mg/Nm3 and is also within the allowed limits.

‡‡‡‡‡‡ Report by Environmental Strategic and Social Assessment for Power Plant Kosova e Re, Patel & MEM 2008

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Table 124. Average values of emissions in mg/Nm3 in the area of cement factory Sharrcem

YEARS 2003 2004 2005 2006 2007 2008 2009 2010 Average emission of SO2

470 420 350 350 182 234 306 56.15

Average emission of NOx

820 548 590 580 564 593 536 447.93

Average emission of dust

250 108 120 100 60 77 61 67.60

- Is there a central programme for monitoring air quality or central/regional/local plans on air quality? Air quality monitoring in Kosovo, currently is done according to the monitoring plan of Kosovo Hydro Metrologic Institute. Within the air quality monitoring system, 9 air quality monitoring stations are functional, measuring these parameters: SO2, NO2, CO, O3, PM10, and PM2.5. In addition one mobile air quality monitoring stations is in place. Monitoring of air quality is done also by the National Institute of Public Health with 2 monitoring stations, whereas Economic Operators: Kosovo Energy Corporation and NewCo Feronikel have their own systems for monitoring air quality with two monitoring points by which are measured SO2 parameters , soot and airborne particles and aero-sediment.

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Table 125. Air quality monitoring systems

- What arrangements are in place to control Volatile Organic Compound (VOC) emissions from different sources? Measures for control of Volatile Organic Compounds (VOC) are defined in the AI No. 06/2007 on the rules and standards of the discharges on air by the stationatry sources of pollution. Limit values for VOC emissions are defined in Chapter V of the mentioned above A.I. 3.9.9.2.3. Waste Management - Is there a general waste management policy (programme, strategy etc.) in place? Are there any provisions on waste prevention? What are the main features of the legislation concerning waste management (incl. household waste, waste from consumer goods, packaging waste and electric and electronic equipment, end-of-life vehicles, polychlorinated biphenyls and polychlorinated terphenyls (PCB/PCT), industrial waste including hazardous waste, sludge from urban waste water treatment and other waste from specific activities)? The Waste Law 02/L – 30, approved on 22.07.2005 and the amendment of the Law approved on 24.05.2012 under article 8 foresees the development of strategic documents for administration of waste. A general waste management policy is in place composed of a general framework of the legislation for the administration of waste, which is well harmonized with the EU legislation. As part of efforts toalign with EU policies for waste management, MESP has drafted the Draft Strategy for waste management which also includes the Action Plan for the period of 2010-2021. The main objective of the Strategy is the creation of a framework of measures as well as the development of sustainable waste management system in Kosovo. The document focuses on the reduction of the waste production at the source and the reduction of waste that needs to be stored. The development of the

No. Municipalities

Station ID Location Type of area

Type of station

01 Prishtina

KS01010 IHMK-Prishtina Suburban Background KS0102 ish-ndertesa e

“Rilindjes” Urban Traffic

02 Mitrovica KS0203M Stacioni Meteorologjik në

Mitrovicë

Urban Background

03 Drenas KS0104 Oborri i Komunës Urban/Industrial

Background

04 Hani i Elezit KS0505 Shkolla Fillore “Ilaz Thaqi”

Urban/ Industrial

Background

05 Peja KS0306 Sheshi “Luan Haradinaj”

Urban Background

06 Prizren KS0407 Oborri i Komunës Urban Background 07 Gjilan KS06089L Oborri i Komunës Urban Traffic 08 Shtërpcë KS0409 Zona Turistike në

Brezovica Rural Background

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infrastructure for the integrated system in waste management (Reduction – Reusal – Recycling – Burning – Storage); the reduction of dangers from waste; increase of capacities for waste management; public education, training of officials; completion of legislation and manuals for waste management. The new Law on Waste aims to enhance the policies for waste management and further harmonisation of inter-institutional legislation, defining competencies, harmonization of national legislation with EU, and implementing the decentralisation of competencies. Article 13 of this Law foresees the division of competencies of waste management on national and local levels. Also the amended Law on waste defines the main principles of waste management, the definitions are in harmony with EU directives on waste, the duties and responsibilities of the producers of goods, waste producers, owners of waste, waste transporters and operators. At the same time the Law defines the manner and content of waste management planning, the management of municipal waste, special waste, hazardous waste, licensing and permits for trans-border transport of waste as well as the financing for waste management, monitoring, control and sanctions for in-proper waste management. Waste prevention is one of the main principles of the Law on Waste (Article 5, Paragraph 3.1) where public authorities are obliged to encourage and under take appropriate measures for waste prevention. Article 24 of the Law on Waste specifically addresses the prevention of waste by identifying the waste producers as responsible for preventing the pollution of environment and protection of human health (24.1) and requesting drafting of plans with clear measures on waste prevention. Chapter III specifies the classification of waste in accordance with the European Waste Catalogue while Chapter VII of the Law on Waste outlines the activities for waste administration (Article 20—34) including the organising the administration of the waste, waste treatment facilities, prevention of waste, collection and waste transportation, recycling and storage of waste. Article 34 defines the administration of waste at municipal level while articles 35-54 address the administration of all types of waste including: hazardous waste (Article 35- 37), electric and electronic equipment (Article 43), polychlorinated biphenyls and polychlorinated terphenyls PCB/PCT (Article 45) waste from end-of-life vehicles (Article 48), packaging waste (Article 51), sludge from urban waste water treatment (Article 53), industrial waste (Article 54). In addition to the Law, there are 21 sub-legal acts which cover and regulate the area of municipal management of waste, hazardous waste and specific waste. -- Please provide basic information about facts and figures on waste generation and management. Around 90-95% of urban Kosovo population receives services of waste collection. All services are of low quality due to lack of buildings and adequate equipment. Rural zones receive this service in only some 20% of cases. Taxes for the waste collection are around 4€/per family/per month, while the payment of this tax is achieved at around 40-50%. Collection of municipal waste is conducted

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by 7 regional public companies, which cover 37 municipalities of Kosovo through operational units. All the old waste treatment plants were rehabilitated and closed permanently through donor aid and Kosovo budget. The waste management system in Kosovo does not offer full data on the generation, collection, treatment and disposal of waste. On average the waste collection service is used by 42 % (2007), respectively 39 % (2008) and 42% (2009) of the population. Prishtina region covers the highest percentage of population (64% in 2007, respectively 52% in 2008, 53% in 2009), while Mitrovica region the lowest with only 29% (2007- 2008) respectively 30% in 2009. The amount of waste generated per person in Kosovo for 2008 was 393.8 kg while for 2009 it stood at 454.4 kg marking an increase of waste generated per person. Compared from the regional aspect, Prishtina region leads with most waste generated per person. The average daily waste generated per person in 2008 was 1.1kg while in 2009 1.2kg per person per day. The largest amount of waste during 2008 was stored in Prishtina waste plant (80.185.06 ton), while the least was collected in Podujeva (3,862.64 ton). In total during 2008 a total of 218,402.43 ton was collected. The largest amount of waste during 2009 was again stored in Prishtina waste plant (84,660.59 ton), while the least was collected in Sharri (5081.7 ton) out of a total of 255,546.27 ton collected that year. Table 126. Type of waste, from the report on state of environment 2008-2010 KEPA

Type of waste Daily average/kg/inhabitants

Average per year year/kg/inhabitants

Annual amount/ton

Household waste 0.277 101 232 541 Commercial waste 0.250 91.25 209 875 Medical waste 0.0024 0.876 2 014.5 Waste from ashes and slag 0.907 331 761 426.5 Waste from construction and demolition

0.200 73 167 900

Other waste (package), plastic, rubber, pesticides, electronic, wood etc)

0.360 131.4 302 220

Total 2.05 729 1 675 977 Table 127. Landfills in the Republic of Kosovo

Landfills: Region Type of Landfill

Area Ha.

Inhabitants

Timeline/years

Prishtina

Prishtina, F. Kosova, Lipjan Obiliq, Gllogoc,

Regional 40 724.251 15

Gjilan Gjilan, Kamenica, Viti, Ferizaj, Novobërda

Regional 24 242.195 15

Prizren Prizren, Suhareka, Malisheva Rahovec, Gjakova

Regional 24 316.728 15

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Podujeva Podujeva Municipal 5 131.300 15 Mitrovica Mitrovica, Vushtrri, Skënderaj Regional 7 250.000 15 Peja Peja, Deçan, Klina, Istog Regional 3.6 250.000 Sharr Sharr Municipal 1.2 27.000 16 Ferizaj Ferizaj, Shtime, Kaçanik,

Shtërpcë, Hani i Elezit Transfer station

210.120

Zveçan Zveçan Municipal 15 Total 2.151.159 - Which instruments exist apart from legislation (e.g. economic instruments, waste management planning)? There are no economical instruments apart from the legislation on waste. Based on the Law on Waste 02/L – 30, Chapter XI on Financing the Waste Administration, (Article 59) income is generated from taxes for licensing for waste administration, taxes for import and export permits of waste, taxes from sanctions for waste from the environmental inspectorate, and the tax for approval of environmental impact assessment of waste. Article 15 paragraphs 1.8 identifies the municipality as the responsible organ to set the tariffs and method of collection of financial means for municipal services while paragraph 4 of article 14 identifies the municipalities responsible organ for setting the tariffs for waste storage. The Water and Waste Regulatory Office (WWRO) is the competent authority for setting Service Tariffs for Water and Wastewater Services, Bulk Water Supply, Waste Collection Services and Waste Disposal Services in accordance with Regulation 2004/49 and the Law No.03/L-086 and the secondary legislation (WWRO Tariff Rules). WWRO is responsible to regulate tariffs in waste sector for 7 regional enterprises for collection of municipal waste and 1 enterprise for management of landfill. Waste tariffs administered by the WWRO are set for the following services: a) services on non-hazardous municipal waste are set according to the following categories: (i) households (ii) commercial-industrial and other sub-categories b) on storage of waste at the permanent landfills. - Is there an administrative infrastructure in place? If yes, on which level (central, regional, local)? Administrative infrastructure is in the phase of changing, in particular with the approval of the Draft Law on waste. This structure is defined in three levels: National, regional and local. Chapter V of the Law on Waste identifies two levels of competent authorities for waste administration: 1.1 the Ministry and other relevant institutions specified by the Law; 1.2 and municipalities. Article 14 of the Law defines the main responsibilities of the Ministry of Environment and Spatial Planning in waste administration including drafting policies and action plan, licensing, identifying the methodology for tariff setting

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while KEPA is responsible for creating a database and reporting. Article 14 also defines responsibilities of other institutions including Ministry of Internal Affairs (in case of natural disasters) Ministry of Health and Ministry of Agriculture and Rural Development for monitoring medical and veterinary waste. Article 15 of the Law on waste identifies municipalities as responsible organs for creating system for waste administration, drafting action plan, reporting to the Ministry on annual basis, licensing and setting tariffs for municipal services on waste administration. Article 22 on activities for waste administration paragraph 2 specifies that the administration of waste will be conducted by institutions, public or private licensed enterprises, which will provide services on contract basis. In addition, Article 14, paragraphs 2 and 3 specify that current regional landfills will be transferred in municipal competences through sublegal acts to be drafted by the Ministry. 3.9.9.2.4. Water Quality

- Could you describe the legislative basis for water protection and water resources management, in particular: The regulations in force in the field of water, regulate protection of water against pollution, protection from adverse effects of water, use and management of water as goods of common interest, conditions and manner of performance of water management, adoption and implementation of water protection measures, organizing and surveillance of water management, information system and public participation, cross-border cooperation, violations and penalties and meteorological and hydrological activity. The legal framework is set by the Law on Water (2004/24) which has recently been amended to further approximate the Law with EC WFD (2000/60 EC). The Law on Water aims to ensure the development and sustainable use of the water resources necessary for human health, the environment and the socio-economic development of Kosovo, establish procedures and guiding principles for the optimal allocation of Water Resources based upon use and purpose, ensure protection of Water Resources from pollution, over-exploitation and misuse and determine the institutional framework for the management of Water Resources. The principles of sustainable water management, in this Law are set by the Article 5 of the Law on Water. The water management is in the competence of the Republic of Kosovo and is performed through competent ministries, autonomous province bodies, local Government unit bodies and public water management enterprises. The Article 21 of the Law defines basic Documents for Planning and Development of Water Management in Kosova: 1) Strategic Plan for Waters; 2)

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Water Management Plan; 3) River Basins Management Plan; 4) flood management plan. The Law also prescribes programme of measures for achievement of objectives of previously mentioned documents and active participation of public in passing of planning documents. Articles 61, 62, 63 and 64 of the Law regulate establishment of Water Information System and public participation with the aim of water classification, monitoring and improvement of water regime, planning of water systems development and water management. The issue of inspection surveillance in the field of water is prescribed in the Chapter XI of the Law on Waters, in particular in Articles 73, 74. Surveillance of implementation of this Law and regulations passed on the basis of it, other regulations and general acts is performed by the water inspectorate competent for water management activities within the MESP. a) water quality and water quantity, The issues of water quality and quantity in Kosovo are regulated by Law on Water (2004/24) and by the Law on Hydro-Meteorological Activities (02/L-79). The Hydro-Meteorological Institute has been merged into the Kosovo Environmental Protection Agency recently, and is the responsible authority to monitor surface waters as prescribed by the articles 5 and 6. There are 54 monitoring points. In the absence of the groundwater monitoring network, the groundwater monitoring is not being conducted. Kosovo is estimated to have 1600 m3/capita/year which places it as a water stress country. A (surface) water mass balance based on WEAP (Water Evaluation and Planning) model for all 4 river basins has been completed. The model fails to include groundwater information (due to lack of it) and hence is incomplete. However, it serves a valuable tool to manage issuance of water permits. b) ground water and surface waters, The issues of ground water and surface water in Kosovo are regulated by Law on Water (2004/24) and by the Law on Hydro-Meteorological Activities (02/L-79). The article 40 of the Law on waters appoints the Kosovo Environmental Protection Agency as a responsible body for monitoring and reporting the water level. Groundwater regulation is superficially regulated, considering there is no groundwater monitoring network in place. Groundwater aquifer have been set up in few locations:: Istog, Vrellë, Drini i Bardhë, Lubizhdë, Peja, Deçan, Lloqan, Krk Bunar, Korishë, Shumadia e Re in Suhareka ( The assessed capacity is 511x 106 m3). Surface waters are rivers, natural water sources (Assessment of inflow in four river ponds 108.4 m3 / s) and surface water accumulations (Assessed volume 567 million m3). c) drinking water quality, Article 7 of the Law on Public Health (no. 2007/02 L78) gives to the National Institute of Public Health of Kosovo (NIPHK) power to supervise and inspect the

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drinking water and packing water quality. NIPHK is the responsible body for implementation of water quality standards in Kosovo. The issue of drinking water quality is regulated by Administrative Instruction 2/1999 that has recently been amended so as to transpose the EC Directive on Drinking Water quality 98/83/EC. The administrative instruction is under approval procedure. In addition the Law no. 03/L-086 amending the UNMIK Regulation 2004/49 on the Activities of the Water, Wastewater and Waste Service Providers (Chapter 4, section 11 ‘service standards’), obliges the water service providers to assure the quality of water supplied by reference to standards imposed by the NIPHK. Furthermore, in order to protect the waters (especially the drinking water sources), MESP has approved an administrative instruction (no. 40/2007) on establishing the criteria for defining the water protection zones and their protection measures. d) bathing water quality, Water Law (2004/24) foresees a programme of measures for water protection, including ones for bathing waters (Article 28.3). The Article 54 sets the ground for drafting an administrative instruction on defining and monitoring bathing waters / areas, as well as bathing water quality and zones. In addition to this, Ministry of Health based on the Law on Sanitary Inspectorate of Kosovo (No. 2003/22, Articles 6, 9, 14, 16, 18 and 22) and the Law on protection of population from transmittable diseases 51/84, has issued an Administrative Instruction (8/2002) for swimming pools, obliging NIPH to monitor water quality and the Sanitary Inspection as the implementing and enforcement agency. - Does the existing legislation provide for principles such as prevention of pollution at source, emissions control and water quality standards? Article 6 of the Law on Environmental Protection (2009/03-L-025) laids down the principles providing prevention of pollution at source, including: Principle of prevention that shall be implemented through Environmental Strategic Assessment, Environmental Impact Assessment and implementation of Integrated Prevention Pollution and Control, as well as “polluter pays” principle - the polluter pays fee for polluting of environment when, by its actions, cause or might cause the pollution of environment. In the Article 5 of the Law on Waters (2004/24) the principles that are the basis of water management are laid down. The principle of sustainable development is implemented through water use based on long-term protection of available water resources according to quantity and quality as well as the principle of prevention. An Administrative Instruction No. 22/2005 on the cadastre of the emission for environmental polluters is already in place. - To what extent is the quality of drinking water supplied to people from the public supply systems in compliance with existing legislation? Please provide

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basic information about facts and figures on urban waste water management. Please provide information on number and performance of waste water collection and treatment facilities and estimates on the percentage of population and industries connected to collecting systems and to treatment facilities. In Kosovo, 76% of the population gets proper water supply (24% have access through wells and other non-safe sources). Whereas 100 % of the urban population is covered, only 61 % of the rural population is covered. According to NIPH results, 4 out of 7 Regional Water Companies (RWCs) achieved over a 90% pas rate from bacteriological, physical and chemical tests. RWCs of Ferizaj, Peja and Prizren need to particularly improve the water quality. All companies are expected to have a pass rate of 99% in order to meet European standards. In sanitation only 65 % of population have sewage systems but there is almost no treatment of waste water (there is only one urban wastewater treatment plant in the town of Skënderaj recently commissioned for 10000 PE). There are partial data regarding the industrial waste water discharge. With regard to waste water treatment plants, Kosovo has finalized Feasibility Studies for the regions of Peja, Ferizaj, Gjakova and Prishtina. The waste water treatment plant is being constructed in Halilaq - Fushë Kosovë and expected to start with construction in Prizren during 2012. 3.9.9.2.5. Nature Protection - What systems of protected areas exist for nature conservation, including specifically protected areas? On what basis have protected areas been designated? What is their current surface coverage? What is the percentage of the territory protected at present? What are the plans for increase of protected areas? Based on the Law on Nature Protection no. 03/L-233 (chapter 2, article 8), categorization of Protected Areas is done according to the World Union for Nature Protection IUCN. National network of protected areas consists of 97 natural areas with surface of 47.842.34 hectares or 4.39% of the territory of Kosovo and over 195 areas proposed for protection including the National Park “Bjeshkët e Nemuna” with an area of 62,488 ha. Within the protected areas are included: 11 Nature Reserves, 1 National Park, 82 Natural Monuments, 2 Natural Regional Parks and 1 Forest Park.

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There are plans to expand protected areas through the approval of two Laws that have passed in first reading in Parliament of the Republic of Kosovo. With the promulgation of these areas, the protected area will grow to about 120.273 ha or 11% of the total area of Kosovo. Kosovo has in place a preliminary identification of areas “Natura 2000” and has begun drafting of professional reasoning for the announcement of a pilot area of Natura 2000. - Which are the main instruments (legal and practical) for the protection of nature, especially in terms of species and habitats on protection interest (e.g., systems of permits, impact assessments, management contracts, conservation plans, compensation systems, etc.), of planning of land use control and enforcement measures that exist: a) For protected areas; Article 19 of the Law on Nature Protection No. 03/L-233 sets the legal ground for competences, procedures and announcement of the protected areas in Kosovo. Kosovo has the Strategy and Action Plan for Biodiversity 2011-2020 in place which is a fundamental document for protection of nature, which determines long-term objectives for conservation of biodiversity and landscape diversity, protected nature value, and also the manner of implementation in harmony with general economical, social, cultural development in Kosovo. Article 8 of the Law on Nature Protection No. 03/L-233 defines nature protected values as: a. protected areas (strict nature reserve, national park, special area, nature park,

nature monument, protected landscape and park architecture monument); b. protected species (strictly protected wild species, protected wild species and

protected local modified species); c. Protected minerals, exfoliation and fossils.

Nr Labelling Nr: Category/IUCN

Surface/ha

1 Strict Natural Reserve 11 I 867

2 National Park 1 II 39.000 3 Nature Monument 82 III 6078, 08

4 Nature Park 2 IV 1682 5 Protected Landscape 2 V 84

Total 97 47.306,08

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According to the Law on Nature Protection No. 03/L-233, intervention in nature shall be allowed through a process of permitting (Assessment of acceptability); an approach described within the articles 33 to 42 for the intervention in nature. Article 3 of the Law on Environment Impact Assessment No. 03/L–214 describes the procedures that shall be applied for any single project which may have impact in environment. This is also foreseen through the Article 3 of the Law on Strategic Environmental Assessment No. 03/L- 230 which sets the procedure for any plan and program that shall be applied as well. Moreover this issue is regulated through the secondary legislation deriving from the Law on Nature Protection No. 03/L-233: a. Administrative Instruction for the collection of protected wild plants species

with the purpose of processing and trading No. 08/2011. b. Administrative Instruction for the sort of natural habitat types, natural

habitat map, threatened and rare natural habitat types as well as safeguard measures for conservation of natural habitat types. No. 12/2011.

c. Administrative Instruction for maintenance conditions, the manner of marking and evidencing of the protected animals in captivity. No. 14/2012

d. Administrative Instruction for the notice manner of nature conservation areas No. 01/07.

e. Administrative Instruction on form and manner of keeping the central Register of nature protection areas No. 04/2006.

Criminal activities that have to deal with biodiversity, are sanctioned with Criminal Code of Kosovo, Chapter XXIV: Criminal Activities against environment, animals, plants and cultural objects: Articles 276- and 288. b) for protection of nature outside protected areas: Based on the article 7 of the Law on Forests No. 2003/6 managing authority for the forest and forest land (public and private) is the Kosovo Forest Agency. In addition the issue of protection of nature outside protected areas are addressed through the Law on Agriculture land No. 02/L-26 which determines the use, protection, regulation and lease of agricultural land for the purpose of permanent preservation and protection of agricultural potential, based on the principles for a sustainable development. Articles 42 to 44 of the Law on hunting No. 02/L–53 regulate hunting procedures. Hunting area management plan must be consistent with hunting management programme, forest management plans, and conditions and was of using agricultural lands, water master plan, spatial plans, Law on Nature Protection No. 03/L-233 and international documents in this field. c) for protected species? Protected wild species are regulated with Law on Nature protection: Article; 8 sub paragraph 1.2. protected species, Article 17 protected species, Article 25 protected species, Article 26 Local modified species, Article 86 Protection and conservation of wild species, Article 91 Introduction of wild species, Article 92

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Incidental introduction, Article 93 Reintroduction, Article 94 Method of using protected wild species, Article 96 Strictly protected wild species, Article 101 Tran boundary trade in protected wild species, Article 104 Keeping, breeding and trade in wild species. In order to ensure implementation of the legislation which regulates this area, there is a need to develop further the legislative framework, i.e. sublegal acts, and to establish a monitoring and reporting system. Conservation plans are part of the Strategy and Action Plan for Biodiversity 2011-2020. The biodiversity Action Plan foresees concrete projects in order to achieve the objectives set within the Strategy. There is no compensation system in place. This area is regulated via AI Nr. 12/2009 on Damages from and to wild animals, which is further based on the constitution of the Republic of Kosovo article 145 and the Law on hunting Nr. 02/ L-53 (article 49.3 and 55.5). The purpose of this AI is to undertake the proper measures for preventing the damages. Articles 15 and 16 of this AI regulate the procedures for evaluation and compensation of the damages caused from and to the animals via setting the tariffs for compensation. - Is there any system for systematic monitoring of biodiversity? If yes, please give details? Kosovo does not have a systematic system for monitoring of biodiversity. However, there is a protected area monitoring carried out under the work plan of the Kosovo Institute for Nature Protection under the Law on Nature Protection, Article 146, subparagraph 1.3. Also, the Directorate of National Park “Mountain Sharri” and the management of Gërmia Park carry out monitoring of the situation in the National Park Mountain Sharri and Gërmia Park. The article 146, paragraph 1.3 sets the Institute of Nature Protection as a responsible authority for monitoring and reporting of the biodiversity in Kosovo. - Does Kosovo have a national program for forestry and a national system for forest inventory? Is there any system for systematic monitoring of forest conditions? The Strategy for Development of Forestry and Action Plan 2010–2020 is in place. Administration and monitoring of forests is carried out by MAFRD through its structures. During 2011 Kosovo has started the National Forest Inventory supported by the Norwegian Government implemented by NFG, cooperating with the KFA. Up to now a database is established ‘The Kosovo Forest Information System’, in which all management units covered with managerial plans, are included. The manual for data collection is completed. It is expected that the forest inventory to be in place by December 31, 2012. Draft management plans in Kosovo at the digital system are in place since 2006 and until now about 90 000 ha forests surfaces with public ownership have been covered. All data for these management units are included in FISKOS. FISKOS

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system has the function of providing data for each plot and sub-plot as volume, quality, species, annual increase, etc. - Please describe the general policy and legal basis for land protection, including provisions for identifying and managing of contaminated places. Is there any land monitoring system? Article 20 and 21 of the Law on Agricultural Land no. 02/L-16, protects agriculture land from pollution, and, based on legal provisions in force it is planned to implement the following actions: a. Determining the area and degree of land pollution – inventory; b. Continuous monitoring of the situation and any changes in agricultural land,

as the physical, chemical and biological feature; c. Establishment of information system for polluted agricultural land. There is no monitoring system in place for land contamination. KEK and Feronikel monitor their own land. MMPH has signed an AI (AI no. o2/2009) on allowing norms of hazardous substances and harmful presence in soil. This AI in chapter 1, article 1 and chapter 2, article 3 defines the contamination of land based on the norms set forth in chapter 4 of this AI Ministry of Agriculture, Forestry and Rural Development has not yet established monitoring system of agricultural land and for the above three actions, including the monitoring system of contaminated agriculture lands. MESP is implementing the Administrative Instruction for the maximum permitted levels of release and emission of land pollutants no. 04/50 dated in order to prevent loses of quality of land by economical activities that cause decrease of ecological abilities of the land and other occasions that are contrary with measures of harm obstructions and protection of the land (Article 8). 3.9.9.2.6. Industrial pollution control and risk management - What are the main features of the legislation regarding permitting of industrial installations related to the release of pollutants in the air, water and land? How many integrated installations exist for prevention and pollution control (IPPC)? Which are the monitoring, implementation and reporting activities related to the legislation? In order to create Environmental Standards in Kosovo for Prevention and Integrated Control of Pollution, in harmony with European Union, the Law on Integrated Pollution Prevention Control (IPPC), no. 03/L-043 is in place. The issue of permitting of industrial installations related to the release of pollutants is regulated through the secondary legislation such as: a. A.I. for content and method of keeping the Register for integrated permits

issued; b. A.I. for procedures for development and approval of Reference Documents

for TMM; c. A.I. for Permit Conditions for specific types of function that cover the process

for prevention and integrated control of pollution.

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The purpose of this Law is prevention and integrated control of pollution which comes as a result of activities listed in Annex 1 of this Law, in particular preventing and reducing waste, emissions in air, water and soil. In Kosovo there are identified 25 installations that are subject of IPPC and which should be equipped with integrated environmental permit. The article 6 of the IPPC Law defines the permit requirements. Up to now “New Ferronikeli Complex L.L.C.” which deals with the production of Ferro Nikel, Corporation “KEK” which deals with the production of electricity and “Sharrcem” which deals with cement production has applied for IEP. - What are the key features of legislation related to emissions from large combustion plants (thermal assessment input over 50 MW), waste incineration and installations using organic solvents? Chapter VI of A.I. No. 06/2007 On the rules and standards of the discharges on air by the stationatry sources of pollution, presents the emission limit values for combustion plans, where are set rules for combustion plants, thermal power, in greater access 1 MW, regardless of the type of fuel used (solid, liquid or gaseous). The Article 86 of A.I. separates the combustion plants, depending on thermal power, in medium 1 to 50 MW and large> 50 MW and the types of combustion according to liquid fuels; solid, liquid and gaseous. In Article 90 of A.I. are set ELV for large combustion plants using solid fuel, ordinary, special and are simultaneously presented to EU norms. Also in Article 91 are defined ELVfor large combustion plants, which use liquid fuel, ordinary and special. Chapter IX of A.I. No. 06/2007 On the rules and standards of the discharges on air by the stationary sources of pollution describes the emission limit values for the processes of thermal processing of waste. The provisions of this chapter describe the ELV, of pollutants materials in the gases discharged to the processes of thermal waste processing, waste burning and incinerators. - How is treated and controlled the issue of risk and industrial accidents by public authorities? Is there any system to control major accidents hazards (Seveso directive)? Article 47 of the Law on Environmental Protection 03/L-025, defines the obligations of the person during the action with dangerous chemicals to avoid hazards and industrial accidents. The issue of risk and industrial accidents are regulated through the A.I. No. 10/2011 on prevention of major accidents involving dangerous substances as well as A.I No. 05/2011 for the methodology of risk assessment of chemical accidents and measures to mitigate consequences. The draft Plan for intervention in cases of emergency is completed. MESP is currently working on inventory of SEVESO 2 entities.

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3.9.9.2.7. Chemicals - What are the main features of the legislation concerning chemical substances? Are there data collection and risk assessment procedures for chemicals, especially pesticides? Are there rules on classification, packaging and labeling of chemicals (for substances and preparations)? The Law on Chemicals no. 02/L-116 aims at setting a sustainable management of chemicals, including measures to protect the environment and human health from the harmful effects of chemicals. Article 1 of this Law regulates the rights and obligations of legal and natural persons, requirements and procedures for registration of chemicals, for notification of new substances and issuance of chemicals on the market, assessments of new substances, classification, packaging and labelling of chemicals, the national plan for Chemical Safety, supervision and control of chemicals. Law is partially harmonized with European legislation and is therefore the amendment of this Law was undertaken and it’s foreseen to be adopted by December 2012. Registration of dangerous chemicals has not yet started to become. So far we have just approved the AI No.10/2010, for Technical List for Chemical Safety and How to Complete it, {according to ISO 11014-1: 1997 (E) and in accordance with Regulation 2006/1907/EC}, and drafted the A.I. for notification of new substances; A.I. for CLP (classification, labelling and packaging) of chemicals (hazardous substances and mixtures) according to1272/2008 with the exception of Annex I for its assessment. - Are there procedures for registration / authorization of pesticides, i.e. plant protection products (agricultural pesticides) and / or biocides (non-agricultural pesticides)? Article 13 of the Law on Products for Plant Protection No. 2008/03-L-042 sets the procedures for registration / authorization of plant protection products. This Law regulates the classification, packaging and labelling of plant protection products in accordance with EC Directives. The Law on Biocide Products No. 2009/03-L-119 (non-agricultural pesticides), in Section 6-10 sets procedures for registration/authorization of biocide products, its main purpose is to set and regulate conditions for placing on the market and use of active substances that are used for production of biocide products on the territory of Kosovo Republic and thereby protect the health of humans, animals and the environment. This legislation has not been completed so far, mainly in lack of capacity for professional staff. - Is there any legislation concerning the export and import of dangerous chemicals? Are there administrative capacity and infrastructure to manage and control the implementation of this legislation and in particular the export of chemicals pertaining to this legislation? Based on the Law on Chemicals (02/L-116), MESP is implementing the A.I. No. 4/2005 “On the classification of goods for export and import forms”. The Article 2 of this AI give also responsibilities to other Institutions such as MH, MTI, and

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MAFRD to undertake the necessary steps for assuring the control of the export and import of the chemicals. By the Article 22 of the Law on Chemicals (02/L-116) sets the conditions for production placing on market and use of chemicals. Furthermore, Article 24 gives the MESPs Inspectorate full competences to conduct the inspections. Additionally by the Article 2 of the Law on Chemicals, Kosovo Customs are responsible for monitoring and control of movement of dangerous chemical substances. This legislation has not yet been completed so far, mainly to the lack of capacity for professional staff. For monitoring, control of movement, placing on the market and use of dangerous chemicals, according to article 22 of the Law on Chemicals is competent MESP through Environmental Inspectorate and in border Kosovo Customs. 3.9.9.2.8. Climate Change -Have national climate change policy, strategies, action plans and measures been adopted? If not, when will those be prepared and adopted? What would be their scope (mitigation, adaptation, mainstreaming, sectors, which greenhouse gases, time horizon)? There is no climate change strategy and Action Plan. However, the Article 20 of the Law on Air Protection from pollution specifies that the monitoring of greenhouse gas emissions and reducing the quantity of these gases as well as stimulation of clean development measures are to be addressed by MESP. Currently Kosovo is working on completion of the GHG Inventory which will be finalized by the end of June 2012. There is no timeline set for the adoption of the climate change Strategy or complementary documents. - Are there additional policies and measures on climate change currently under preparation? If yes, when will they be adopted and implemented? There is a Feasibility Study in place which defines the sectors that will be part of GHG Inventory and provides all the relevant data that will be part of GHG Inventory and further planning. There are no additional policies and measures on climate change. Currently MAFRD as well as MED are working toward assessing the impact of their sectors in regard to climate change. - Has a national system for greenhouse gas monitoring and reporting been established? If yes, how is it organised? If not, when will it be set up? The national system of greenhouse gas monitoring and reporting has not been established yet.

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Since 2008 KEPA regularly reports the greenhouse gas data to the European Environmental Agency for the sector of industry, energy and transport according to the UNFCCC Framework Convention. - Have national inventories of greenhouse gas (GHG) emissions been prepared and adopted? What are their main findings? If not, when will they be set up? The national inventory of greenhouse gas emissions will be finalized by the end of June 2012. However the available data till now are presented below: Greenhouse gases - based calculations for gases CO2, CH4, and N2O for the years 2008 and 2009, are presented in the table no. 12. The Energy sector is the largest source of greenhouse gases. There are no calculated data about the e amount of greenhouse gases from agriculture and municipal waste generation. Table 128. Sources of greenhouse gases according to sector for 2008 and 2009 Source of greenhouse gases

Unit Gg (Giga Gram) 2008 2009 CO2 CH4 N2O CO2 CH4 N2O

Energy 6,221,976.11 5,388.79 252.56 7,040,831.31 5,578.54 269.94 Industry 11,054.45 1.32 0.18 11,474.52 1.37 0.18 Transport 1,073.30 0.15 0.07 1,110.44 0.15 0.07 - Are there estimates on the expected future greenhouse gas emissions per sector? Based on the fact that the energy production in Kosovo is based on coal, and according to the strategy on Energy 2009-2018 (approved on 08.04.2010) there is a planned increase of new capacities, then it could be said that there is an expectation of increase of greenhouse gas emissions. - Which measures have been undertaken to transpose and implement EU acquis (the EU emissions trading system (EU ETS), greenhouse gas (GHG) reductions for non-ETS sectors, fluorinated gases, ozone depleting substances, vehicle efficiency standards, fuel quality standards, carbon capture and storage as well as monitoring and reporting of GHG emissions)? MESP is working on the Administrative Instruction on "Substances that damage the ozone layer", which is sent to the European Commission for compliance check and which, after c compliance checking will be submitted to the Government for adoption. By the end of 2012 Administrative Instruction On the method and methodology for conducting the greenhouse gas emissions, and Administrative Instruction "On the Cadastre of greenhouse gases polluters within the territory of Kosovo” will be in place. - Which ministries and/or Governmental agencies are responsible for the development, implementation and monitoring of climate change policies and measures? Do they have clear mandates to perform these tasks? Do they have sufficient human and material resources? Have these resources been strengthened in recent years and what plans exist for further strengthening? The article 5 of the Law on the Environment Protection (03/L-025) requires the decrease of the certain activities which have negative impact on the environment

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and climate change. MESP is the responsible authority to undertake concrete measures through its structures in this regard. With regard to data monitoring for GHG the responsible institution is KEPA under MESP. KEPA within the cooperation with EEA has one National Reference Centre for Climate Change. With regard to human and capital resources, Kosovo is facing huge challenges when combating the climate change. - Do you have sufficient institutional capacity to efficiently develop, implement and monitor climate policies and measures? There are no sufficient capacities to address the implementation and monitoring of the climate change policies and measures. - Do the EU Member States, other countries, UN organisations or other donors fund capacity building activities to implement climate policies and measures? The Climate Change sector is also included within the RENA program supported by the EU. During the implementation of this project workshops were held concerning specific topics in this area. UNDP Kosovo is supporting the project for preparing the inventory of greenhouse gases which facilitates presentations on the techniques for the preparation of this inventory. The implementation of the Twinning Project "Support to Environmental Sector" (IPA 2009) is ongoing, which includes the capacity building of KEPA officials for reporting the emission of green house gases.