Kosovo’s prolonged political deadlock has slowed down the pace of reforms and delayed progress under the Growth Plan, leaving the country in a transitional period ahead of the December 28 elections, according to PRI Legal & Partners Partner Festa Stavileci.
“Since the national elections in February, parties have struggled to reach consensus in forming institutions. The country has effectively been in political deadlock, with a caretaker government in place since March 2025. The situation has constrained opportunities to amend existing legislation or introduce new laws that require voting in the Parliament.”
At the same time, Stavileci adds that since October 2024, “Kosovo has adopted its Reform Agenda, which outlines essential structural reforms needed to bring Kosovo’s market economy closer to the standards of the EU’s internal market. While the groundwork for implementing these reforms is largely in place, the legislative freeze has slowed down the preparations Kosovo needs to undertake to move forward with the progress targeted by the Reform Agenda.” According to her, “Kosovo has not yet ratified the Facility Agreement and the Loan Agreement, as preconditions for fund distributions under the Growth Plan. Kosovo will now hold extraordinary national elections on December 28. This leaves the outlook somewhat uncertain, particularly regarding when a new government will be in place.”
Despite that, Stavileci believes that one of the items on the agenda for businesses is preparing in advance for when the institutions are formed. “Once the agreements are ratified, the Growth Plan reform implementation is likely to move quickly,” Stavileci notes. “Businesses, therefore, should take steps to prepare now, even while many EU regulatory requirements are not yet mandatory for companies operating in Kosovo. Given the Growth Plan and EU accession prospects, it is important to keep in mind that domestic legislation will be increasingly approximated with the EU acquis. Starting preparations to operate in conformity with EU regulatory requirements as early as possible can offer these companies a notable head start when the legislation is harmonized at a more advanced stage. Reacting only once these requirements become compulsory might put these companies at a competitive disadvantage compared to those that have prepared in advance.”
Stavileci draws attention to two areas that are particularly important for businesses. “The first one is corporate compliance and transparency. With expected increased and stricter oversight and reporting procedures in place, companies will need to maintain orderly accounting and reporting systems, well-documented and digitized internal processes. As a result, informal arrangements will increasingly become both difficult to sustain and a significant liability. Phasing out informal practices and ensuring robust, transparent corporate governance will be essential.”
Second, Stavileci highlights digital compliance and the digital economy. “Under the Growth Plan, and in the broader context of EU accession efforts, instruments such as the EU Data Act, Digital Markets Act, the AI Act, the Digital Services Act, and the NIS2 Directive will become increasingly relevant for Kosovo companies,” she notes. “These frameworks already pose implementation challenges even for EU Member States, so there is substantial work ahead. As Kosovo approximates this body of rules, companies will find that having reliable cybersecurity and digital compliance systems in place will be a key factor in engaging with international investors and EU counterparties. Early adoption and internalization of these frameworks will provide a competitive edge.” Once Kosovo starts exporting more goods and services to the EU, “complying with these requirements will be highly important,” she concludes.
