Kosovo seeking 80-120 mln euros from IMF-minister

PRISTINA, March 9 Tue Mar 9, 2010 6:56am EST

PRISTINA, March 9 (Reuters) - Kosovo is negotiating with the International Monetary Fund for a loan of 80 to 120 million euros and hopes to conclude a deal next month, the Balkan country's finance and economy minister said on Tuesday.

Ahmet Shala also told Reuters the impoverished country, which has received four billion euros in international aid over the past decade, has no plans to seek eurobonds this year but would rather seek outright grants and cheaper loans.

He also said Kosovo was set to exceed an earlier government and IMF estimate of 4.2 percent economic growth this year.

The IMF ended a two-week visit to Pristina on Friday without concluding a deal with the country, which declared independence from Serbia two years ago.

The fund is set to return at the end of April, although it could still take several months after agreeing any deal for Kosovo to receive the money, Shala said.

Concluding an arrangement with the IMF could also open the way for two grants for budget support, one for 150 million euros from the European Commission and another for 60 million euros from the World Bank, Shala said. An EC mission is also expected in Kosovo next month.

The IMF loan will be used for the country's stabilisation reserve. "We have to have quite thick skin in cold times," Shala said in explaining how Kosovo would use the IMF loan.

In a country with little international investment and unemployment as high as 45 percent, growth is likely to come from public sector investment and private sector development, the minister said.

Landlocked Kosovo is the smallest country geographically in the Balkans with a population of two million.

"Economic growth in 2010 is going to be over five percent, it could even go to six," Shala told Reuters, adding he expected the number to be the best in the region. "In 2011 it could go to six to seven percent."

He also said Kosovo's economy grew 4.4 percent last year, higher than an IMF estimate of four percent.

In the region, Serbia and Bosnia have already concluded deals with the IMF, and several other countries are in talks about possible loans. (Additional reporting by Fatos Bytyci; Editing by Ruth Pitchford)