Spanca presents 2025 audit: State debt exceeds 1.8 billion euros

Total state debt exceeded 1.8 billion euros at the end of 2025, Auditor General of the National Audit Office (ZKA) Vlora Spanca said while presenting the Annual Audit Report on the Budget of the Republic of Kosovo. Compared with the previous year, debt rose by 80 million euros, or 4.6 percent. Of the total, 856 million euros was external debt and 961 million euros was domestic debt.

According to the report, state debt stands at around 10.6 percent of gross domestic product (GDP), remaining relatively low compared with the 40 percent limit set by the Law on State Debt.

Spanca said the 2025 budget deficit remained within legal limits. While an overall deficit of 224 million euros, equivalent to 2 percent of GDP, had been planned, the final budget outcome brought it to around 7.8 million euros, or 0.07 percent of GDP.

Compared with 2024, revenue increased by 278 million euros, or around 9 percent, while spending in 2025 was 291 million euros, or 9 percent, higher. Ninety-one percent of the final budget was spent.

Although financial reporting has improved year after year and complies with the relevant standards and legal framework, the ZKA issued a qualified opinion on the government’s financial report. Spanca explained that, despite the issues underlying that opinion, the report presents a true picture in all material respects under the financial reporting framework. She identified five main issues that affected the opinion.

One shortcoming concerns the improper classification of 77.4 million euros in spending, which affected the reporting of transactions and the presentation of public institutions’ financial position. Spanca cited 58 million euros in payments made pursuant to court decisions from inappropriate budget categories, mainly for obligations arising from collective agreements at the municipal level. She said municipalities had not taken advantage of an option created by the Ministry of Finance to budget for these funds in the reserve category to avoid incorrect classification.

She also identified 4.5 million euros in misclassification resulting from improper budgeting, as well as 40.4 million euros in misclassification attributable to the budget organizations themselves. Other issues affecting the opinion included an overstatement of assets by 33.5 million euros, an understatement of accounts receivable by 4.4 million euros, an overstatement of unpaid liabilities by 2.8 million euros and an overstatement of contingent liabilities by nearly 30 million euros.

According to Spanca, inaccuracies in the classification of spending and shortcomings in records of assets, accounts receivable and liabilities undermine the reliability of financial reporting. She therefore called for stronger internal controls in budget organizations and improved accounting records.

Another challenge identified was the low use of available external loans for public projects. During 2025, budget organizations drew down 147 million euros for projects financed by international debt. The largest amounts were drawn from creditors including the IMF, ANZH and the World Bank. Spanca attributed delays in drawing down and using the funds to poor planning, procurement delays, changes in market prices and limited institutional capacity to use borrowed funds promptly and effectively.

Regarding recommendations for the government and the Ministry of Finance arising from the audit of the government’s Annual Financial Report, the article gives two figures: it first says the ZKA issued a total of 73 recommendations to address shortcomings and improve the management of public money, but later quotes Spanca as saying that 70 recommendations were issued.

For the 2025–2026 audit season, the ZKA conducted 131 audits of public institutions, significant projects and areas of interest to citizens. Of these, 99 were financial and compliance audits of budget organizations and public enterprises, 15 were performance audits, 11 were special compliance audits and six were audits of projects financed by the World Bank.

Spanca said that, despite improvements in recent years, audits continue to reveal institutions with shortcomings in compliance with legislation, financial reporting and the achievement of objectives intended to improve citizens’ lives. She called for stronger controls and adherence to the rules governing the spending and management of public funds, citing activities and transactions contrary to the law, incorrect classification of spending, problems with recording and managing assets, management of unpaid liabilities and rising accounts receivable.

The auditor general described the practice of signing contracts for capital projects before securing the necessary funds or approvals as worrying, saying it is increasing in some cases. According to her, these contracts harm the budget balance, bring unforeseen additional costs and increase the risk of mismanagement of public money.