A Comparison Of Kosovo On The World Bank's 2011 Options Study Projections Of Generation Usage
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A comparison of Kosovo’s reported actual generation for the period 2004-2014 compared to the World Bank’s 2011 Options Study projections of generation usage shows that the World Bank overestimated electricity usage for the period 2010-2014 by on average 14 percent annually. During the five-year period for which data is available, the spread between actual and projected generation increased in greater amounts in years three through five than in years one and two.
If the economy does not grow as anticipated, the demand for electricity will not be as great as projected. This could reduce the use of the New Kosovo Power Plant (or some other component of Kosovo’s electricity system), causing the price of electricity from the plant to rise as…show more content… Figure 9 below shows that Kosovo’s commercial banks had $2.6 billion on deposit at the end of 2014. Its loan-to-deposit ratio was approximately 76 percent, but slipped to 81 percent as of February 2015.
Figure 9: Kosovo Commercial Banks Deposits and Loans: December 2009 – February 2015 Source: The World Bank Group in Kosovo, “Country Snapshot, April 2015,” Figure 3.
Adding the New Kosovo Power Plant to the commercial loan levels of Kosovo’s banking institutions would increase loan levels from €2.08 billion to €3.0 billion, pushing the loan-to-deposit ratio over 100 percent. This one transaction would increase macroeconomic risk for the country. First, it would concentrate risk in an economy that is small and is already struggling with risk diversification. Second, it would exceed the standard set by independent bank examiners to maintain an 80 percent loan-to-deposit ratio. Third, it would add to political tensions in the country on a range of issues related to domestic and foreign banking. Fourth, it is likely to place credit constraints on other sectors at a time when the private economy is vulnerable; according to the World Bank, the current growth model for private development in Kosovo is already unsustainable.
The likely scenarios put forth thus far regarding the structure of the loan, including an interest rate subsidy from a consortium of public and private lenders, would place long-term pressure on Kosovo’s