”Investments on paper”: how municipal project data is being distorted in Kosovo
Today, the GAP Institute published a brief analysis titled “Inaccurate Reporting of Municipal Capital Investment Implementation: Implications for Transparency and Monitoring,” which raises concerns that municipal capital expenditures are not accurately reflected in the financial reports of the Treasury of Kosovo.
According to GAP, given the drastic increase in payments for judicial and enforcement obligations in Kosovo’s municipalities—mainly stemming from obligations arising from collective agreements in education and healthcare—Kosovo’s Treasury has, in many cases, executed these payments from all available budget lines, including those for capital investments.
The problem lies in the fact that these funds are being reported in the financial statements as expenditures for the capital investments themselves, distorting the actual level of public project implementation and preventing accurate monitoring of municipal work, the statement reads.
GAP Institute recommends that the Treasury’s financial reports be updated with new categories that accurately reflect the level of spending by purpose and distinguish actual project expenditures from enforcement-related payments. Additionally, the Ministry of Local Government Administration should reconsider the minimum criteria within the framework of the Performance Grant rules. This is because many municipalities are being disqualified from the Grant due to an unfavorable opinion from the National Audit Office (NAO) regarding their financial reports—an opinion that largely stems from expenditures related to enforcement obligations arising from collective agreements and salary supplements, even though the municipalities did not draft the laws or agreements from which these obligations originate.
Specifically, since 2024, the minimum criteria have failed to reflect the core purpose of the Grant: supporting municipalities with better performance. In practice, they favor only municipalities with fewer enforcement cases linked to collective agreements.
The full analysis can be found attached to this email or by clicking here.