Acta Universitatis Danubius. Œconomica, Vol 14, No 5 (2018)

Budget deficits, public debt and irregular receipts: Kosovo case

Lutfi Zharku

Abstract


The aim of this paper is to analyze the impact of irregular receipts (one-time receipts such as dividents for public companies and privatisation proceeds) in budget deficits that is partially financed by public debt (internal and external) in Kosovo. Kosovo is experiencing a budget deficits and public debt burden only for e few years so its important to analyze in the very begining their tendencies. There is extensive literature on budget deficit causes, its definition and measurement. The literature review method is adopted for this study, and the research is refined by including selected papers that contained empirical and theoritical  studies on budget deficits and public debts. In this line of reasoning we have defined and measured special-purpose deficit so called ''regular'' budget deifict considering only regular receipts and outlays. This analyze will lead us to the conclusion that iregular receipts used by government to engage on large infrastructure project and/or politically motivated increases of wage and salary bill and social transfer led to creation of future liabilities that had to be financed through public debt. This is a case study for Kosovo and research has been carried out using primary data drawn from Kosovo budget annual financial reports and annual bulletins on public debt. Budget deficits in Kosovo are results of continous outlays based on initially high cash balances and irregular receipts that could not be met later by regular receipts. All this was supported by lack of legal infrastructure or fiscal rules for several years. The implication of this paper will be of high importance for policy makers  as well as for academic issues. This is a unique approach on the issues of Kosovo budget deifict and debt.

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