IMF recognizes Kosovo, begins to weigh membership

WASHINGTON Tue Jul 15, 2008 2:02pm EDT

Related Topics

WASHINGTON (Reuters) - The International Monetary Fund said on Tuesday it recognized Kosovo's secession from Serbia and will consider its membership application "in due course" as a sovereign Balkan state.

The IMF's acknowledgment of Kosovo's independence is the first by a premier international institution and a boost for Kosovo's legitimacy, although there is no guarantee that its membership will be approved, with Serbia and ally Russia expected to try and block it.

Kosovo broke away from Serbia in February in defiance of Belgrade and Moscow, but it has been recognized by 43 mostly Western governments including the United States and many European countries, which have a majority voting power in the

IMF.

"It has been determined that Kosovo has seceded from Serbia as a new independent state and that Serbia is the continuing state," the IMF said in a statement.

"Serbia continues its membership in the International Monetary Fund and retains all of its quota in the fund, and all assets in, and liabilities to, the IMF," the fund added.

IMF staff sources said the decision to recognize Kosovo's secession from Serbia was made by the IMF's management following consultation with countries and not by a formal sitting of the IMF's 24-member executive board that includes Russia.

Sources said a majority of countries supported the move based on voting power.

In its statement, the IMF said Kosovo's application must first be investigated by the executive board, which will also determine its subscription to the fund, which will determine how much it can borrow from the institution.

A final decision on membership will be decided by a simple majority of votes by the IMF's board of governors, made up of finance ministers and central bankers from the fund's 185 member countries.

For decades the poorest part of Yugoslavia, Kosovo is still weighed down by the destruction of the 1998-99 war -- when NATO waged a bombing campaign to drive out Serb forces engaged in ethnic cleansing -- and a legacy of waste and corruption under international stewardship.

IMF membership would give Kosovo access to millions of dollars in IMF-backed loans and a legitimacy among donors and investors who have been put off by its limbo status.

Kosovo has also applied to the World Bank for membership and that is now expected to be considered following the IMF's decision. The membership process typically takes a minimum of six to nine months.

(Reporting by Lesley Wroughton; Editing by Chizu Nomiyama and Cynthia Osterman)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.