In the next episode of "Confrontation Podcast" on Telegrafi.com, professor and economist Muhamet Mustafa from the RIINVEST Institute spoke about the state of Kosovo's economy, the main challenges and the necessity of urgent reforms.
Mustafa said that Kosovo is facing a difficult year, accompanied by political uncertainty, consecutive elections and a lack of institutional functionality, which has directly affected the economy.
According to him, economic decision-making in Kosovo is not being made based on evidence.
The professor emphasized the biggest structural problem in government decision-making, the lack of professional analysis before making decisions.
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"What is lacking in our politics and economic governance is the lack of evidence-based decision-making. In our country, measures are taken and then we see what happens - this is inexcusable," Mustafa declared on the "Confrontation Podcast" with editor-in-chief Muhamet Hajrullahu.
He cited the example of the liberalization of the energy market, where according to him neither ERO nor the Government have had a clear analysis of the financial impact.
The four sectors that indicate the state of the economy
Mustafa divided the economic challenges into four main sectors, emphasizing that each of them is facing serious problems.
According to him, the real sector, local production and businesses are not in good condition.
"The situation in the real sector, where value is produced, is not in order. Neither consumers have optimistic expectations, nor do businesses," Mustafa declared.
He described the current economic growth as "inertia growth" and not the result of development policies.
In the external sector, Mustafa warned that the trade deficit is constantly deepening and foreign investments are focused on real estate, not on the productive economy.
"The trade deficit is deepening and the import-export ratio is decreasing."
The professor explained that the financial system (banks and lending) is under pressure and lending has slowed significantly.
"There is significant liquidity stress and lending has tightened," he said.
Economist Muhamet Mustafa with the editor-in-chief of Telegraf, Muhamet Hajrullahu in "Përballje Podcast"Photo: Ridvan Slivova
Businesses, according to him, are being forced to use more overdrafts, another indicator of financial stress.
As a fourth point, he mentioned the Kosovo budget. Mustafa criticized the orientation of the state budget, saying that it has been distorted to the detriment of capital investments and key sectors.
"The budget structure has been changed to the detriment of capital investments, education and health. The money is there, but the investments are not being realized. This is misgovernance. The economic growth model is wrong – it needs to be rebuilt," he said.
Mustafa said that Kosovo's growth relies on consumption and imports, a model that, according to him, harms the economy in the long term.
"This growth model, based on consumption and imports, has stunted the country's economic development."
He demanded that after the 2026 elections, the new government build a new economic model based on production, innovation, and investment in the human factor.
Mustafa gave recommendations on where Kosovo should focus in the economy in 2026
"Rebuilding the economic model by local and international experts. Major investments in education, scientific research and innovation. Governance based on evidence and not on improvisation. Increase in domestic production and exports. Political stability and rapid formation of the government," Mustafa added, according to the Telegraph.
Photo: Ridvan Slivova
Mustafa said that Kosovo must enter 2026 with a new approach.
"The focus must return to the economy, development, education and innovation – not to political blockades."
He warned that delays in forming a government risk the loss of hundreds of millions of euros in European funds.. /Telegraph/
