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Budget Deficits, Public Debt and Irregular Receipts: Kosovo case

Lutfi Zharku ()
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Lutfi Zharku: University “Kadri Zeka” Gjilan

Acta Universitatis Danubius. OEconomica, 2018, issue 14(5), 268-285

Abstract: The aim of this paper is analyze the impact of irregular receipts (one-time receipts such as dividends from public companies and privatization proceeds) in budget deficits that are partially financed by public debt (internal and external) in Kosovo. Kosovo is experiencing both a budget deficit and public debt burden, so it is important to analyze the very beginnings of these tendencies. There is extensive literature on the causes of a budget deficit, its definition and measurement. The literature review method is adopted for this study, and research is refined by including empirical and theoretical studies of budget deficits and public debts. Using this line of reasoning, we have defined and measured special-purpose deficits, so-called “regular” budget deficits that consider only regular receipts and outlays. This analysis leads to the conclusion that irregular receipts used by government to engage in large infrastructure projects and/or politically motivated increases of wage and salary bills and social transfers created future liabilities that had to be financed through public debt. This is a case study of Kosovo. Research has been carried out using primary data drawn from Kosovo’s annual financial reports and annual bulletins on public debt. Budget deficits in Kosovo are results of continuous 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 implications of this paper will be of high importance for policy-makers and academics. This is a unique approach to the issues of Kosovo's budget deficit and debt.

Keywords: Budget deficit; public debt; fiscal rule; irregular receipts; political budget cycles (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:dug:actaec:y:2018:i:5:p:268-285