The World Bank’s Board of Executive Directors approved today the Social Assistance System Reform Project for Kosovo, which aims to improve the equity and adaptability of the country’s social assistance and social protection programs.
The financial support approved for the project is EUR 47 million ($55.9 million equivalent), a concessional loan from the International Development Association (IDA), which is the part of the World Bank that helps the world’s poorest countries by lending them money with very low interest charge and long repayment periods. The credit repayment period for this project is 30 years, including a 5-year grace period.
“Kosovo allocates an important portion of its budget to social protection programs, but the efficiency and redistributive impacts of these programs could be improved, especially in the context of COVID-19,” said Massimiliano Paolucci, World Bank Country Manager for Kosovo and North Macedonia. “The World Bank supports Kosovo’s efforts to reform the Social Assistance Scheme so that it is more equitable, efficient and flexible, and thereby better equipped to respond to future crises,” he added.
Specifically, the project will support the Government in (a) reforming the design of the Social Assistance Scheme (SAS), (b) making investments in the delivery systems of the SAS, and (c) increasing the value of the SAS benefit to mitigate the economic effects of the COVID-19 pandemic.
An important aspect of the reform of the SAS is the selection of beneficiaries based on poverty status (rather than categories), provision of more adequate benefits, including an increase in the per capita benefit received by larger households, and ensuring that beneficiaries who are able to work benefit from activation measures.
Following the approval by the Board of Directors, a project financing agreement will be signed between the Government of Kosovo and the World Bank. Ratification of the project agreement by the Parliament of Kosovo, with at least two-thirds of all votes, will be needed for the project funds to become available for disbursement for the benefit of the citizens of Kosovo.
The project will be implemented by the Ministry of Finance, Labor and Transfers over a period of five years.