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Republic of Kosovo

Kosovo, which is the youngest independent state in Europe, covers an area of approximately 10 000 km2 and has around 1.8 million inhabitants. Over 90% of the population is Albanian, and the Serb minority represents 5.3%. The other minority populations are Bosnian, Gorani, Roma, Ashkali, Egyptian and Turkish. It is estimated that 800 000 Kosovars live outside Kosovo (mainly in diasporas in the EU).

Although Kosovo has made significant progress in the transition towards a market economy and macroeconomic stability, it is still very much dependent on the international community (approximately 10% of GDP) and the diaspora (approximately 15 % of GDP) for financial and technical assistance.

The economy is dominated by the trade and services sectors, with agriculture and construction also showing remarkable development. From 2008 Kosovo enjoyed five successive years of economic growth (with an average of 4.5% per annum). However, poverty remains a serious problem with 12.1% of the population living in extreme poverty and 34.5% in relative poverty.

High unemployment encourages emigration and stimulates an extensive informal economy. The challenge of youth employment in Kosovo is even more critical given the high proportion of young people: men and women under 25 represent over half of the population. Indeed, Kosovo's population is the youngest in Europe with an average age of approximately 26.

Kosovo is part of the Stabilisation and Association Agreement (SAA) within the framework of the EU pre-accession strategy. The SAA has three objectives: stabilisation and swift transition to a market economy; promoting regional cooperation; and the prospect of joining the EU.

Since 2000, the Luxembourg Development Cooperation has helped to mitigate the effects of the prolonged crisis in the Balkans and in Kosovo in particular.

On 23 April 2013, the government of Kosovo signed a bilateral agreement and a memorandum of understanding with the Grand Duchy of Luxembourg. The documents define the terms for continuing with the Luxembourg Development Cooperation in Kosovo for 2013-2016 in three areas of intervention: health, education and water & sanitation.

LuxDev, which is considered as the operational pillar of Luxembourg’s bilateral development cooperation, has the resources to implement projects that will consolidate the gains of the previous programmes in these areas.

In spite of the progress and political developments observed in recent years, the health sector in Kosovo still faces major challenges. Health reform is one of the main objectives of the new government that was named in December 2014. LuxDev runs a structuring programme in support of the process for reforming the health sector on behalf of the Luxembourg Development Cooperation.

Kosovo has a well-developed health system but faces critical bottlenecks. Action plans and policies have been put in place, and innovative reforms are in progress. However, the standards are not always drawn up properly and quality of care remains problematic.

Spending on public health is the lowest in the region and the allocation is often poorly managed. Private funding of healthcare is very high, representing approximately 40 % of all health funds. This is a significant barrier to equitable access to health care.

Even before independence was declared in 2008, education was first on the list of priority areas for Kosovo. It was clearly identified as a key sector for revitalising the economy of the young republic and ensuring long-term sustainability.

Around 30 000 new jobseekers enter the labour market ever year, but current economic growth generates no more than 15 000 new jobs per annum. More than a third of young Kosovars do not have a job or training – a category that could be designated as “the lost generation”.

It is for these reasons that the Luxembourg Development Cooperation is backing the Kosovo Ministry of Education, Science and Technology. It is helping to modernise the formal education system through reforms in vocational training, where LuxDev is playing a crucial role in supporting the implementation of these investments.

Decades of under-investment in the water sector in Kosovo (during the breakup of Yugoslavia and the subsequent conflict in Kosovo), and in particular in the north of the country, mean that significant investment is required to rebuild the dilapidated assets and restore the capacity of service providers.

As part of an overall attempt to rehabilitate the regional network and increase the capacity of the water supply in the Mitrovica region, LuxDev is supporting the implementation of a decentralised water supply project. Luxembourg is financing the upgrading of the equipment under the supervision of the regional operator, and strengthening its operational and management capabilities.

The number and value of LuxDev’s interventions continues to be significant, and is contributing to the development of the three mentioned sectors abo

Evolution of activities in Kosovo (in thousand EUR)

Distribution of the 2019 disbursements by sector

All projects in Kosovo