Page 90 - SE Outlook Regions 2022

to be below the average of the countries in the region, which shows
that, in relation to the size of the economy, there is further room for
expansion of the lending activity.

3.5.3 Industry

The World Bank says that in the medium term, there is a pressing need
to focus policies on tackling constraints to higher productivity growth
and investing in human capital. Kosovo needs to grow beyond its
current potential to achieve higher living standards and more inclusive
development. Thus, reforms should focus on entrenching
macroeconomic stability and sound governance, increasing firm
productivity, raising farm productivity, enhancing human capital and
boosting exports, competition, and private investment, especially
foreign direct investment.

3.5.4 Energy & power

Kosovo relies heavily on electricity generation from thermal power
plants (TPPs), but often faces an energy crisis due to its outdated
TPPs, which constantly need repair. The sector entered 2022 in a state
of crisis, and the government announced on December 24 that the
country will experience 60 days of planned daily power cuts after the
government as part of emergency measures to deal with the energy
crisis.

The government said that due to the significant increase in electricity
consumption, insufficient domestic power generation and the global
energy crisis that has resulted in the enormous increase in electricity
prices on international market, the Kosovan energy system is facing
huge difficulties.

Difficulties in the electricity supply occurred especially during December
2021 due to breakdowns in the Kosova B power plant’s units and a
significant increase in electricity consumption.

Kosovo’s power production from TPPs totalled 1,358 GWh in the third
quarter of 2021, dropping by 11.7% from a year earlier, after going up
15% y/y in the previous quarter. Hydropower production decreased
4.9% y/y to 41.1 GWh in the third quarter of 2021. Coal production in
Kosovo totalled 1.884mn tonnes in the period under review, slightly
down from 1.897mn tonnes a year earlier.

Kosovo’s government is drafting a National Energy Strategy 2020-2031,
that will ensure an energy transition under which it plans
decarbonisation by 2050. This will be the first energy strategy based on
data compiled by experts.

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