“The current political situation in Kosovo is fragile, since the assembly, in the middle of the COVID-19 crisis, dismissed the government of Prime Minister Albin Kurti in a no-confidence vote on March 25, 2020, triggering a huge political crisis in the country,” says Fisnik Salihu, Partner at the RPHS Law Firm in Pristina. The government was dismissed, he says, “mainly after a dispute between coalition partners over whether to declare a state of emergency and the way the dialogue with Serbia should be handled in the future.”
Nonetheless, Salihu says, the government has been handling the COVID-19 crisis well. “Only two days after the first confirmed case, on March 15, the government put measures in place, such as quarantine arrangements and border control, and closed schools and businesses, except for essential ones.” However, some of these decisions did not fare as well as others, and on March 23 the country's Constitutional Court found that the anti-movement measure was not constitutional, as the “piece of legislation the government cited as the source of this restriction was not powerful enough.”
“The former coalition political party, LDK, has initiated negotiations with other opposition political parties to form a government within the existing composition of Kosovo’s Parliament,” Salihu explains. However, that process isn't going smoothly. “There is a political debate as to whether the parties can form a new government without elections after a no-confidence vote was successful,“ he says. “As a result, the attempt to form a new government has transformed into a constitutional debate, and ultimately has become subject to constitutional review from the Constitutional Court.” Indeed, the Court issued an interim measure, which expires on May 28, suspending the vote in Kosovo’s Parliament for a new government until it rules on the merits.
The COVID-19 crisis itself is bound to leave a mark on Kosovo’s economy, Salihu says, noting that “according to the World Bank's projections, the country's GDP will contract by 4.5% but rebound in 2021." The direct effect will be felt in investments, exports, and remittances. “The Government has approved an initial fiscal stimulus package of EUR 170 million,“ Salihu reports. “This package includes covering monthly salaries up to EUR 170 for April and May for those who were affected by the crisis, as well as backing SME lending activities by guaranteeing 80% of unpaid loans and subsidizing 50% of interest payments.” Nonetheless, he isn't convinced that even that stimulus will be sufficient, considering the full impact on the economy, and even with tax payment deadlines being extended and a three-month loan repayment moratorium placed by the Central Bank.
“The business community was quite proactive during this period, proposing measures to the government and developing innovative plans and strategies to handle the crisis,” Salihu says. “The crisis has led to the rapid development of online retail and e-commerce in Kosovo, and even restaurants, stores, and other non-essential businesses have started to rethink online sales and e-commerce.” He says that the legal market had to adapt as well, adding that “law firms have also started to rethink their business models and enquire about ways to accommodate some of the services remotely.” He says that thanks to IT solutions and resources, the market was able to adapt to the “new way of doing business” during this time.