Annual Financial Report

Republika e Kosovës Republika Kosova Republic of Kosovo Qeveria - Vlada - Government Ministria e Ekonomisë dhe Financave / Ministarstvo Privrede i Finansija / Ministry of Economy and Finance Thesari/Trezor/Treasury Annual Financial Report Kosovo Consolidated Budget For the Year Ended 31 December 2009 Address: New Government Building, Floor 10, Mother Theresa Str -10000 Prishtina-Kosovo Telefon/Faks: +381 38 200 34 005 / +381 38 212 362 www.mfe-ks.org

Table of Contents Table of Contents...2 Definitions...5 FINANCIAL STATEMENTS OF THE GOVERNMENT OF KOSOVO...6 Consolidated Statement of Comparison of Budget and Actual Amounts for the Government of Kosovo For the Year Ended 31 December, 2009...8 Consolidated Statement of Cash Assets and Fund Balances for the Government of Kosovo...9 Notes to Financial Statements... 10 Note 1 Summary of Significant Accounting Policies... 10 1.1 Basis of Preparation... 10 1.2 Accounting Policy... 10 1.3 Reporting Entity... 11 1.4 Payments by Third Parties... 11 1.5 Cash... 11 1.6 Refunds of Previous Year Expenditures (payments)... 11 1.7 Reporting Currency... 11 1.8 Reporting Amounts... 11 1.0 Authorization Date... 11 Note 2 Customs... 11 3.1 Presumptive Tax... 13 3.2 Profit Tax... 13 3.3 Corporate Tax... 13 3.4 Personal Income Tax... 14 3.5 Value Added Tax Domestic VAT... 14 Note 4 Municipal Own Source Revenues... 15 Note 5 Central Budget Organization Own Source Revenues... 16 Note 6 Designated Donor Grants... 16 Note 7 Deposit Fund... 18 Note 8 Fines and Fees... 18 Note 8.1 Administrative Fees... 19 Note 8.2 Fines... 19 Note 8.3 License Revenues... 21 Note 8.4 Revenues from Sale of Services... 22 Note 9 Interest... 22 Note 10 PTK Dividend... 22 Note 11 Other Receipts... 22 Note 11.1 Revenues from Previous Year... 23 Note 11.2 Interdepartmental Revenues... 23 Note 12 Wages and Salaries... 24 Note 13 Goods and Services... 25 Note 14 Utilities... 26 Note 15 Subsidies and Transfers... 27 Note 16 Capital Outlays... 28 Note 17 Debt Servicing... 29 Page 2 of 78

Note 18 Loans to Public Enterprises... 29 Note 19 Payments for Membership to IFIs... 29 Note 20 Deposit Refunds... 29 Note 21 Cash... 30 Note 22 Budgetary Comparisons... 31 Note 23 Funds with the Central Bank of Kosovo... 31 Note 24 Deposits in Commercial Banks PTK Dividend... 33 Note 25 Cash in Transit... 33 Note 26 Embassy Accounts... 33 Note 27 Cash on Hand (Cashbox)... 34 Note 28 Designated Donor Fund... 35 Note 29 Own Source Revenues... 36 Note 30 Other Funds... 36 Note 30.1 Lottery Games Deposits... 36 Note 30.2 DJA Deposits... 36 Note 30.3 Minority Trust Salaries... 36 Note 30.4 Prisoners Deposits... 37 Note 30.5 Kosovo Property Agency Deposits... 37 Note 31 KTA/PAK Fund... 37 REPORT OF THE KOSOVO CONSOLIDATED BUDGET 2009... 39 Receipts... 40 Payments... 41 ANNEX 2. Expenditures by budget organizations... 52 ANNEX 3. Designated Donors Grant Report 2009... 62 ANNEX 4 Revenues to be Carried Forward 2009... 64 ANNEX 5. Loan Report... 66 ANNEX 6 Budget Organizations Non-Financial Assets Report... 67 ANNEX 7 Outstanding Invoices Report by Budget Organizations... 69 ANNEX 8 Unjustified Advances by Budget Organizations 2009... 72 ANNEX 9 Cash in Transit... 73 ANNEX 10 Data on Transfers of Reserves... 74 ANNEX 11. Employment data... 76 Page 3 of 78

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Definitions The following abbreviations and acronyms used in the present Financial Statements shall have the following meanings: AGL AI B.A. BEP BKP BKT BO BpB BRK CBK CEC CMZB CUCK DC DJA GFS IFI IMF IPSAS KCB KCF KFMIS KPA KPS KSB KTA KTA/PAK LPFMA MEF Note OPM PCB PPRC PR RBKO SRSG TAK TRA VAT 0 Amounts <500 Euros Accounts General Ledger KFMIS Administrative Instruction Bank Accounts Banka Ekonomike e Prishtinës Banka Kreditore e Prishtinës Banka Kombëtare Tregtare Budget Organization Banka Private e Biznesit Banka e Re e Kosovës Central Bank of Kosova Central Election Commission CommerzBank Clinical University Center of Kosovo District Department of Judicial Administration Government Finance Statistics International Financial Institutions International Monetary Fund International Public Sector Accounting Standards Kosovo Consolidated Budget Kosovo Consolidated Fund Kosovo Financial Management and Information System Kosovo Property Agency Kosovo Police Service Kasabank Kosovo Trust Agency Kosovo Trust Agency/Privatization Agency of Kosovo Law on Public Financial Management and Accountability Ministry of Economy and Finance Line item explanation Office of the Prime Minister ProCredit Bank Public Procurement Regulatory Commission Prishtina Raiffeisen Bank Kosovo Special Representative of the Secretary General Tax Administration of Kosovo Telecom Regulatory Authority Value Added Tax Page 5 of 78

FINANCIAL STATEMENTS OF THE GOVERNMENT OF KOSOVO IN ACCORDANCE WITH THE CASH BASIS INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS Page 6 of 78

Statement of Cash Receipts and Payments for the Government of Kosovo For the Year Ended 31 December, 2009 2009 2008 2007 Managed by Government of Kosovo Payments by Third Parties Managed by Government of Kosovo Payments by Third Parties Managed by Government of Kosovo Payments by Third Parties Note '000 '000 '000 '000 '000 '000 RECEIPTS Tax Customs 2 634,146 604,196-531,591 - Tax Administration 3 181,659 200,834-182,542-815,805 805,030-714,133 - Own Source Revenues Municipalities 4 48,293-42,784-29,237 - Central Budget Organizations 5 29,657-29,066-25,724-77,950-71,850-54,961 - Grants and Assistance Designated Donor Grants 6 13,880 5,012 12,832 4,854 11,643 3,242 Budget Support Grants 0 13 - - - 13,880 12,845 4,854 11,643 3,242 Other Receipts Deposit Fund 7 996 3,009-5,045 - Fines and Fees 8 43,209 42,541-110,622 - Bank Interest 9 5,432 17,268-11,332 - PTK Dividend 10 200,000 30,761 0 249,637 93,578 126,998 Other 11 3,425 5,823-7,147 - Total Receipts 1,160,697 5,012 989,126 4,854 914,882 3,242 PAYMENTS Operations Wages and Salaries 12 268,925 228,059 208,923 Goods and Services 13 154,739 5,012 144,583 4,854 132,877 3,242 Utilities 14 19,234 18,489 17,903 442,898 391,131 359,703 Transfers Subsidies and Transfers 15 257,767 210,006 154,552 Capital Expenditures 16 Property, Plant and Equipment 406,382 351,651 159,208 Other Payments Debt Servicing 17 43,815 - - Loans to Public Enterprises 18 78,829 8,711 - Membership to IFI 19 17,030 - - Refunds from Deposit Funds 20 5,627 1,885 2,624 Other - - - Total Payments 1,252,348 5,012 963,384 4,854 676,086 3,242 Increase/(Decrease) in Cash (91,652) - 25,743 238,796 Cash at Year Beginning 21 475,505 449,762 210,966 Cash at Year End 21 383,853-475,505 449,762 Page 7 of 78

Consolidated Statement of Comparison of Budget and Actual Amounts for the Government of Kosovo For the Year Ended 31 December, 2009 Approved Budget on a Cash Basis (Classification of Payments by Economic Classification) 2009 2008 2007 Original Budget Final Budget Actual Variance Actual Actual A B C D=C-B C Note '000 '000 '000 '000 '000 '000 CASH INFLOWS Tax 840,800 821,000 815,805 (5,195) 805,030 714,133 Own Source Revenues 57,200 85,500 77,950 (7,550) 71,850 54,961 One -off Revenue - PTK Dividend - 200,000 200,000 - - - Other 58,500 50,000 53,062 3,062 65,645 133,904 Total Inflows 956,500 1,156,500 1,146,817 (9,683) 942,525 902,998 CASH OUTFLOWS Wages and Salaries 258,244 279,722 264,396 (15,326) 227,091 208,513 Goods and Services 163,888 178,497 151,763 (26,734) 139,371 127,018 Utilities 21,215 22,573 19,225 (3,348) 18,481 17,893 Subsidies and Transfers 223,080 263,128 256,901 (6,227) 209,769 153,018 Capital Expenditures 408,289 498,489 400,380 (98,109) 347,103 154,767 Reserves 64,682 9,520 - (9,520) - Other 80,400 172,000 139,674 (32,326) 8,711 - Total Outflows 23 1,219,799 1,423,929 1,232,339 (191,590) 950,526 661,208 (85,523) (8,001) 241,790

Consolidated Statement of Cash Assets and Fund Balances for the Government of Kosovo For the Year Ended 31 December, 2009 2009 2008 2007 Cash Assets Managed by the Governmen t of Kosovo Managed by the Government of Kosovo Managed by the Government of Kosovo Note '000 '000 '000 Central Bank of Kosovo 23 88,311 202,603 445,126 Government Securities - 266,477 - Commerzbank AG - Frankfurt - - - Term Deposits in CBK 23.1 125,000 Term Deposits in Commercial Banks 24 163,922 Accounts in Commercial Banks - - 446 Cash in Transit 25 5,793 5,812 4,151 Embassy Accounts 26 557 Cash on Hand 27 270 613 39 Total Cash Assets 383,853 475,505 449,763 Funds Balances Special Purpose Designated Donor Grants 28 8,561 12,798 11,267 Own Source Revenues 29 25,128 35,690 28,725 Other 30 8,233 12,956 12,626 41,922 187,133 52,618 Undistributed 341,930 288,372 397,144 Total Balance of Funds 21 383,853 475,505 449,762

Notes to Financial Statements Note 1 Summary of Significant Accounting Policies 1.1 Basis of Preparation The Financial Statements have been prepared in accordance with the LPFMA (03/L-048) and Cash Basis IPSAS - Financial Reporting Under the Cash Basis of Accounting. The notes to the Financial Statements form an integral part to understanding the statements and shall be read in conjunction with the statements. 1.2 Accounting Policy The basis of accounting and reporting in the Government of Kosovo in accordance with the LPFMA is the Cash Basis. Under the cash basis, information presented in these Financial Statements represent cash receipts and cash payments and movements of cash balances Cash management is organized through a Treasury Single Account system. The Treasury Single Account is a system of bank accounts used for collection of revenues and execution of payments controlled by a single institution the Treasury Department. Receipts are recognized when they are received in the Treasury Single Account, in commercial banks and in the form of cash in budget organization offices. Payments are recognized when cash flows out of the main account of the TSA, except for cash advances which are recognized as expenditures when justified with invoices. LPFMA envisages additional requirements for presentation of nonfinancial assets and liabilities in the explanatory notes to Financial Statements, in accordance with Part 2 of the Cash Basis IPSAS. Assets presented under Annex 6 are based on information from KFMIS, and include assets at a value of over 1,000 Euro and minimum life expectancy of 12 months in accordance with Administrative Instruction 2005/11. Despite the fact that depreciation is not recognized as expenditure in accordance with the cash basis of reporting, the list of financial assets has been presented at a net value, after deduction of accumulated depreciation as per the rates under AI 2009/21. Liabilities presented are based on information declared in the budget organizations financial statements. Expenditures are categorized by economic classification that reflects the IMF's Government Finance Statistics (GFS), being a modified version of the cash based GFS 1986 that includes elements of GFS 2001. In year 2009 a change of accounting policy was applied with regard to the KTA/PAK fund. On basis of the definition of public money in the LPFMA, privatization funds were not presented in the primary financial statements and comparative information of previous years were adjusted to reflect this change. You may find information on the KTA/PAK fund, including expenditures and revenues, under Explanatory Note No 31. The accounting policies have been applied consistently throughout the period. Page 10 of 78

1.3 Reporting Entity The Financial Statements encompass the reporting entity as specified in the Law on Public Financial Management and Accountability (03/L-048) and are comprised of the following: (i) All budget organizations (ministries, reserve powers, municipalities), and (ii) Kosovo Trust Agency/Privatization Agency of Kosovo 1.4 Payments by Third Parties The Government also benefits from goods and services purchased as a result of cash payments made by third parties during the reporting period. The payments made by the third parties do not constitute cash receipts or payments but do benefit the Government. They are disclosed in the Payments by 3rd Parties column in the Consolidated Statement of Cash Receipts and Payments. 1.5 Cash Cash means funds mainly kept in the Central Bank of Kosovo, Commercial Banks and cash in cashboxes of BOs, and cash equivalents. 1.6 Refunds of Previous Year Expenditures (payments) Expenditures refunded to the KCB from previous years are recorded as receipts in the current year. 1.7 Reporting Currency The reporting currency is Euro ( ). 1.8 Reporting Amounts The reporting amounts are in `000 (thousand) Euros ( ), whereas in the Annexes the amounts are in Euro units ( ). 1.0 Authorization Date The Financial Statements were authorized on 31 March, 2010. Note 2 Customs Receipts from Customs have been collected in accordance with legislation in force. The 2009 Customs receipts amount to 635,214,000, whereas the tax refunds amount to 1.068.000

2009 2008 2007 Description '000 '000 '000 External Border Excise 150,694.49 132,498 129,395 Import Customs Tax, cigarette, etc 56,222.90 70,817 61,988 Import Customs Tax 98,312.00 93,350 81,208 Border VAT 327,661.73 304,760 255,039 Various Customs Tax 0 168 1,513 Penalties Revenues 809.62 647 558 Goods Sale 415.07 1,217 742 Other Customs Tax 339.57 - - Administrative Fees - - Damage compens. from insurance comp 18.50 - - Banderolls 324.70 542 650 External Customs Control 325.18 805 2,555 Fast-Customs 90.35 174 107 Revenues 635,214 604,979 533,755 VAT Refund (373.95) (362) (279) Excise Refund (337.23) (114) (272) Customs Refund (263.28) (233) (208) Various Customs Tax Refund (93.37) -75-1,405 Refunds -1,068-783 -2,164 Net revenues 634,146 604,196 531,591 Page 12 of 78

Note 3 Tax Administration The receipts from the Tax Administration have been collected based on the legislation on power. The 2009 TAK receipts amount to 206,469,000, whereas tax refunds amount to 24,810,090. 2009 2008 2007 Description Note '000 '000 '000 Presumptive Tax 3.1 2,793.67 1,328 997 Profit Tax 3.2 8,407.04 4,425 3,441 Corporate Tax 3.3 55,355.23 64,982 53,728 Personal Income Tax 3.4 39,227.00 43,524 33,968 Value Added Tax 3.5 75,825.28 59,023 58,783 Individual Business Tax 3.6 20,566.46 18,752 16,034 Interest, Dividents, Rent, Lottery Games Tax 2,905.83 1,793 1,966 Extra Profit Tax 3.7 0 26,474 16,612 Unspecified Tax 1,388 1,855 6,317 Receipts 206,469 222,158 191,845 Value Added Tax Refunds (24,810.09) (21,324) (9,303) Refunds (24,810) -21,324-9,303 Net Receipts 181,659 200,834 182,542 3.1 Presumptive Tax This type of tax is gradually being removed following the entry into force of the corporate profit tax as of 1 April, 2002 (see Note below), except for insurance companies, which still pay the presumptive tax at a rate of 7% in gross receipts. The presumptive tax collected during 2009 amounts to 2,793,670. 3.2 Profit Tax TAK has collected profit tax in accordance with the legislation on power. The receipts from profit tax collected in the year that ends on 31, December, 2009 amount to 8,407,040. 3.3 Corporate Tax TAK has collected the corporate tax in accordance with the legislation on power. The amount of corporate tax collected in 2009 is 55,355,230. Page 13 of 78

3.4 Personal Income Tax TAK has collected the personal income tax in accordance with the legislation on power. The amount of personal income tax collected in 2009 is 39,227,000. 3.5 Value Added Tax Domestic VAT The 2008 domestic tax receipts amount to 75,825,280. This amount is of domestic VAT because the import VAT is included within customs taxes (see note 2) Page 14 of 78

Note 4 Municipal Own Source Revenues The municipal revenues comprise all own source revenues collected through activities performed by the municipalities. The revenues noted below do include revenues from fines, as they are registered as nontax revenues of the central level and are later allocated to municipalities. 2009 2008 2007 Description '000 '000 '000 Drenas 679.53 639 438 Fushë Kosovë 1,125.39 983 687 Lipjan 1,358.84 1,305 927 Obiliq 507.25 530 481 Podujevë 1,116.02 975 630 Prishtinë 18,300.61 16,116 10,485 Shtime 240.21 243 175 Dragash 357.57 286 219 Prizren 4,342.30 4,014 2,992 Rahovec 711.44 684 515 Suharekë 1,124.53 1,103 830 Malishevë 548.64 479 486 Mamushë 32.37 44 13 Deçan 427.22 383 290 Gjakovë 2,316.21 2,446 1,108 Istog 780.34 611 522 Klinë 1,038.45 682 567 Pejë 2,282.76 2,240 1,344 Junik 56.13 45 33 Leposaviq 0.27-5 Mitrovicë 1,715.18 1,354 1,138 Skenderaj 564.15 533 432 Vushtrri 905.54 831 672 Zubin Potok 0.03 - - Zveçan 0.02 - - Gjilan 2,607.73 2,344 1,365 Kaqanik 444.61 440 237 Kamenicë 677.95 586 393 Novo Berdo 24.52 18 6 Shterpc 74.47 11 37 Ferizaj 2,965.23 2,232 1,813 Viti 750.41 524 350 Hani i Elezit 216.61 102 47 Total 48,293 42,784 29,237 Page 15 of 78

Note 5 Central Budget Organization Own Source Revenues This category includes receipts collected in accordance with the Budget Law and Memorandums of Understanding. The total amount of these receipts collected in 2009 is 29,657,000.. 2009 2008 2007 Description '000 '000 '000 Administrative Fees Revenues 5,385 3,919 203 Fines - Penalties Revenues 1,822 1,101 3,745 Licence Revenues 3,922 6,266 4,111 Services/Assets Revenues 2,494 2,205 2,124 Participation Revenues 11,303 10,704 10,869 Inspection Revenues 4,711 4,853 4,659 Bank Interest Revenues - 2 1 Public Premises Rent Revenues 22 18 12 Total 29,657 29,066 25,724 Note 6 Designated Donor Grants These are grants received from various donors who specifically indicate the purpose for which the funds are to be used. The following table presents details of the 2009 receipts by donors. Page 16 of 78

2009 2008 2007 Description '000 '000 '000 Internal Grants 2,413 2,544 3,131 Insurance Company for MEM - - - Insurance Company Dukagjini for MEM - - - ProCredit Bank 1 8 - Banka e re e Kosoves for MEM - - - Swiss Caritas - - 13 United Arab Emirates - - - Salbatring international 20 Red Cross 4 World Bank 1,732 1,193 1,299 Austrian Government 19 3 6 British Government 399 753 983 Save the Children 4-2 Danish Government 1,056 30 8 Dutch Government 147 European Union 2,553 1,613 188 German Government 47 488 474 Irish Government - - - Italian Government 70 720 6 Italian Caritas - - - Norway Government 235-914 Japan Government - 68 - Swiss Government 33 626 248 Swedish Government 47 95 - Turkish Government - - - International Civil Office - ICO 36 UNDP 2,017 498 1,694 UNICEF 87 141 93 USA 549 528 37 GTZ 59 5 55 EAR - 591 1,396 OSCE 13 33 80 USAID - - - DFID 20 - - SIDA 833 755 - IOM - 12 8 ILO 7 4 11 Care internatinal - - 6 UNMIK - 4 15 Global Fund 929 1,052 512 CIDA Canadian 121 292 178 Greece - - - Liechtenstein - - - Belgium Government - 115 42 WHO 3-59 Council of Europe 22 2 3 State Foreign Secretary - - - Slovenia Government - 406 - Tempus 402 109 5 French KFOR - - - Danish KFOR - - - WORLD VISION - - - Other Receipts - 43 30 Total 13,880 12,731 11,496 Page 17 of 78

Note 7 Deposit Fund These are receipts kept in trust on behalf of third parties and are to be kept in trust until a decision in made. These funds are kept in Kosovo Consolidated Fund Accounts. 2009 2008 2007 Description '000 '000 '000 Lottery Games Deposits 150 2,154 - Regulative Committee Deposits 8 17 Political Entities Deposits 248-71 Deposits - Procurement review body 10 DJA Deposits 174 569 130 Special Chamber Deposits 10 3 11 Wrong Payments Deposits - 222 Pensions Trust Fund - - Prisoners Deposits 14 18 5 Public auctions deposits 0 Swiss Office Deposits 380 Minorities Trust Salaries - 4,020 Kosovo Property Agency 11 40 KPA Deposits 56 122 KPA -Inventory Rent 10 177 16 Trust Account Prishtina Municipality 6 215 Trust Account Prishtina Municipality 5 175 Total 996 3,009 5,045 Note 8 Fines and Fees These receipts are collected by central level Budget Organizations. The total amount of such receipts in 2009 is 43,209,000.

2009 2008 2007 Description Note '000 '000 '000 Revenue from Administrative Fees 8.1 36,123 29,652 27,375 Revenue from Fines and Penalties 8.2 159 6,141 4,224 Revenue from Licenses 8.3 5,706 6,035 78,583 Revenue from Services/Assets 8.4 1,201 530 160 Revenue from Copayments (*) - - - Revenue from Inspection - 14 - Revenue from Civil Aviation - - - Revenue from Bank Interest - - - Revenue from Rent of Public Buildings - - 34 Revenue from Insurance Policies - - 34 Revenue from Rent - - - Other Non-Tax Revenues 21 103 211 Revenue from Previous Years - - - Reconciliation Account - - - Interdepartmental Revenues - 66 - Total 43,209 42,541 110,622 Note 8.1 Administrative Fees The Administrative Fees collected during 2009 amount to 36,123,000, presented in the table below. 2009 2008 2007 Description Note '000 '000 '000 Vehicle Registration Fee 6,433 6,670 5,859 Road Fee 10,248 10,052 9,126 Travel Document Fee 12,202 8,043 5,501 ID Fee 1,572 235 218 Driving License Fee 4,175 3,219 2,676 Authentification of Various Documents 811 709 688 Administrative Fee on Requests 207 575 145 Tender Participation 245 130 84 Court Fees 16 18 3,079 Citizenship Fee 214 Marriage Certificates - - Other Certificates - Court fees Refund - - Total 36,123 29,651 27,376 Note 8.2 Fines The receipts of this category collected during 2009 amount to 159,000. The table below shows details by fine types. Page 19 of 78

2009 2008 2007 Description '000 '000 '000 Traffic Fines - 3,505 2,624 Court Fines - 2,427 951 Inspectorate Fines 63 112 8 Other Fines 1 93 12 Damage compens. from insurance comp. 90 Financial Institutions Fines 5-604 Unspecified Court Revenues 3 25 Media Penalties - - Total 159 6,141 4,224 Page 20 of 78

Note 8.3 License Revenues During 2009, the receipts collected from licenses amount to 5,706,000, presented analytically in the table below. 2009 2008 2007 Description '000 '000 '000 License for leisure and individual activities 190 115 358 License for quarries and mines 4,261 4,446 1,884 License for business registration 311 181 294 License for technical acceptance of premises 191 152 122 License for professional services 205 647 4 License for games - 470 License for using forests 143 - License for medical products - - License for big service shops - - Construction License 301 139 66 Laboratory License - 3 Design License 3 12 Hotel License 9 11 7 Travel Agency License 23 17 14 License for Radio and TV 57 - Other business license (*) - 75,002 License for petroleum and fuel import 49 63 67 Petroleum and fuel retail license 130 40 146 Petroleum and fuel wholesale license 7 6 31 LPG Gas sale license 19 5 10 Oil services license 5 4 6 Deposit licenses 7 6 25 Mazout import license - 10 Licence for importing solar - 8 Industrial oil import license - 10 LPG import license - 4 Oil import license - 29 Unidentified licenses - - License for auditor - - Work permit license - - Total 5,706 6,035 78,583 Note: (*) In Year 2007 an amount of 75,000,000 Euro was received for licensing the second mobile telephony operator. Page 21 of 78

Note 8.4 Revenues from Sale of Services This category is composed of revenues from sale of services of different budget organizations to third parties. These revenues are collected in the relevant account with economic codes, see table below. 2009 2008 2007 Description '000 '000 '000 Sale of services 205 216 133 Sale of forms for standard reimburs 3 Various police services - - Goods sale 203 162 23 Official Gazette - OPM 28 12 1 Property Usage 8 125 - Education - Health Participations 1 1 0 Rent from public facilities 3 Assembly Canteen Revenues 2 11 3 Revenues - scrap sale 4 Concession revenues 736 Rent revenues from housing objects 3 Accreditation Fee 5 3 Total 1,200.6 530 160 Note 9 Interest Interest receipts comprise interest earned from CBK accounts and from the investment of public money. The public money investment started in June 2007. Interests from bank accounts and investments are presented in below table. 2009 2008 2007 Description '000 '000 '000 Revenue from KCF Interest 5,432 17,268 11,332 Note 10 PTK Dividend In accordance with Decision no 03/74 of the Government of Kosovo, PTK has declared a dividend of 200,000,000 Euro and paid to its sole shareholder, the Government of Kosovo. PTK dividend at the amount of 200,000,000 Euro has been received in 2009 and is presented as a special item of receipts. Note 11 Other Receipts These are receipts received in the Treasury Main Account. These receipts amount to 3,425,000

2009 2008 2007 Description '000 '000 '000 Revenues from previous year 11.1 3,348 5,622 6,492 Return of advances from previous year 65 76 7 Suspense Account 0 Other Unidentified Revenues - 12 6 Reconciliation Account - - - Payments returned from KEK - - 547 Interdepartmental Revenues 11.2 12-95 Refunds from CEC - 113 - Total 3,425 5,823 7,147 Note 11.1 Revenues from Previous Year Pursuant to the Law on Public Financial Management and Accountability, the previous years expenditures refunded into the KCB shall be recorded as current year receipts and not as reduction of expenditures. These revenues amount to 3,348,000. Note 11.2 Interdepartmental Revenues Interdepartmental revenues include receipts of budget organizations from other budget organizations. Such interdepartmental transactions have not been consolidated in order to maintain consistency with financial statements of budget organizations which report such revenues. Page 23 of 78

Note 12 Wages and Salaries The wages and salaries paid during 2009 amount to 268,925,000. This includes 264,396,000 from the General Fund, and 4,529,000 from the Designated Donor Grants. The following table shows payments by economic categories. 2009 2008 2007 Description '000 '000 '000 Payments from KCB Net salaries 221,560 184,164 170,677 Personal Incomes Tax 8,967 9,581 8,173 Employee pensions contribution 12,548 10,799 9,910 Total Gross Salaries 243,076 204,545 188,760 Employer pensions contribution 12,732 10,807 9,909 UITUK Unions Payment -0.10% to 0.50% 770 523 348 Over time payments (*) 4,903 8,881 7,477 Per diems of parliament members and committees 2,453 1,577 917 Contract Salaries 463 758 1,103-264,396 227,091 208,513 Payments from Grants Net salaries 1,282 175 208 Personal Incomes Tax 311 115 - Employee pensions contribution 215 44 - Employer pensions contribution 41 25 - Over time payments 41 19 11 Contract payment(not from payroll) 2,639 Per diems of parliament members and committees 4 - Contract Salaries 586 191 4,529 968 410 Total 268,925 228,059 208,923 Note (*) The overtime payment category comprises: secondary wages, on-call duty, committee payments, overtime payment, employee incentives. Page 24 of 78

Note 13 Goods and Services The goods and services paid during 2009 amount to 154,739,000. This includes 1from the General Fund, and 2,976,000 from the Designated Donor Fund. The direct payments of the World Bank are not included in this disclosure. 2009 2008 2007 Description '000 '000 '000 Payments from KCB Travel Expenses 4,998 4,124 4,417 Telecommunication Expenses 3,445 2,814 3,735 Contracted Services (*) 30,880 19,161 22,424 Furniture and Equipment 7,034 8,861 7,716 Other Expenditures (**) 45,455 44,393 35,955 Fuel 17,822 23,127 19,312 Advances 795 756 320 Financial Services 94 93 92 Registration and Insurance 3,089 3,464 3,013 Maintenance and Repairs (***) 24,815 22,868 20,440 Rent 5,526 4,881 4,654 Marketing 5,467 3,357 3,323 Representation 2,328 1,663 1,554 Court Decisions 14 Deficit in Cashbox - 1 Other unauthorized expenses 68 64 151,763 139,631 127,018 Expenditure from Grants Travel Expenses 160 113 203 Telecommunication Expenses 57 44 31 Contracted Services 1,050 1,163 3,101 Furniture and Equipment 319 634 573 Other Goods and Services 421 Other Expenses - 578 549 Fuel 28 33 13 Advances 671 2,212 938 Financial Services 0 - - Registration and Insurance 16 10 7 Maintenance and Repairs 56 41 314 Rent 72 40 24 Marketing 84 53 78 Representation 41 30 28 2,976 4,951 5,859 Total 154,739 144,583 132,877 Note: (*) The contractual expenditures category includes the following: education and training services, representation and lawyer services, health services, advisory services, printing services, software maintenance, court order compensation, etc. (**) The other expenditure category includes: medical supply expenditures, cleaning supplies, accommodation, ammunition and fire arms supply, food and drinks supply, office supply, status related expenditures, purchase of seals, banderols, etc. (***) The maintenance and repair category includes: vehicle maintenance and repair, building maintenance, road infrastructure maintenance, IT maintenance, furniture and equipment maintenance etc. Page 25 of 78

Note 14 Utilities Utilities paid during 2009 amount to 19,234,000. This includes 19,225,000 from the General Fund, and 9,000 from the Designated Donor Grants. 2009 2008 2007 Description '000 '000 '000 Payments from KCB Electricity 8,374 7,774 7,196 Water 3,351 3,253 2,989 Waste 2,493 2,033 2,027 District Heating 2,165 2,307 1,851 Telephone 2,509 3,106 3,832 Other 333 8-19,225 18,481 17,893 Payments from Grants Electricity 2 3 6 Water 0 0 - Telephone 6 6 4 Other - - 9 9 9 Total 19,234 18,489 17,903 Page 26 of 78

Note 15 Subsidies and Transfers Subsidies and transfers paid during 2009 amount to 257,767,000, including 256,901,000 from the General Fund and 866,000 from the Designated Donor Grants, as presented in the table below. 2009 2008 2007 Description '000 '000 '000 Payments from KCB Subsidies 82,455 - - Subsidies to POEs - 60,090 30,016 External Support - 90 2 Sub. to Cultural Public Entities 3,429 2,537 1,771 Subsidies to non-public entities 14,835 8,662 4,278 Transfers to other Governments 1 11 122 UNOPS - Admin. Project KPA - 500 516 Payments to individual beneficiaries 7,739 3,371 2,380 Basic Pension 86,140 77,589 64,119 Disabled Pension 11,554 10,110 10,217 Social Assistance 28,219 26,050 27,933 KPC pensions 444 War invalids payments 19,363 17,850 8,596 Payments for civil individuals 1 0 Payments to families of war victims 42 87 206 Trepça employees pensions 2,585 2,785 2,839 Court Orders 95 37 23 256,901 209,770 153,018 Payments from Grants Subsidies - - - Subsidies to POEs - 183 776 Sub. to Cultural Public Entities - 14 134 Subsidies to public entities 359 Subsidies to non-public entities 500 30 122 Transfers for other Governments - 0 UNOPS - Admin. Project KPA - - 500 Payments to individual beneficiaries 7 9 2 866 236 1,535 Total 257,767 210,006 154,552 Page 27 of 78

Note 16 Capital Outlays Capital Outlays during 2009 amount to 406,382,000, including 400,380,000 from the General Fund and 6,002,000 from the Designated Donor Grants, as presented in the table below by economic categories. 2009 2008 2007 Description '000 '000 '000 Payments from KCB Buildings 120,423 58,417 31,195 Other structures - 70,863 13,767 Road construction 159,066 131,944 32,001 Waste water system 8,842 2,596 2,362 Water supply system 6,496 3,254 1,634 Electricity, generation, and transmission supply 2,765 642 519 IT equipment 18,021 6,555 2,437 Transportation vehicles 7,913 8,487 7,144 Machinery 2,822 2,439 3,383 Other capital (*) 57,151 21,510 10,321 Investment Advance(**) - 20,346 90 Pasuritëe paprekshme 19 Land 949 365 485 Capital transfers -Public Entities (***) 13,305 19,386 49,429 Capital transfers - non Public Entities (***) 195 Court Orders 2,413 299-400,380 347,103 154,767 Payments from Grants Buildings 1,986 105 373 Other structures - 427 750 Road construction 1,698 2,467 1,895 Waste water system 384 370 400 Water supply system 142 125 412 Electricity, generation, and transmission supply 31 29 188 IT equipment 1,505 92 71 Transportation vehicles 142-69 Investment Advance - 32 Land - 5 Machinery - - Other capital 108 243 246 Capital Transfers -public entities 6 Capital Transfers - Non-public entities 0 690-6,002 4,548 4,441 Totali 406,382 351,651 159,208 Note: (*) The Other Capital Category includes: working tool expenses, building repair and renovation, mines equipment, afforestation expenses, PC purchase, software development, etc. (**) The Investment Advance category includes: road maintenance advance, bridge maintenance advance, school construction, square construction, etc. (***) The capital transfers to POEs relate to KEK, District Heating, KOSST, Railways, etc.. Page 28 of 78

Note 17 Debt Servicing In 2009 payments of government debt were made at the amount of 43,814,897. In addition to this amount paid from Kosovo Consolidated Budget, US Government and the European Commission have paid a part of the Kosovo government debt in the form of a grant. A table with details is presented below: Consolidated Debt Payments in 2009 Total Debt 381,208,965.90 Principal 43,077,684.68 Interest 737,212.24 Total paid from KCB 43,814,896.92 Principal, paid by US Government 84,118,438.76 Principal, paid by EC 5,000,000.00 Total paid by donors 89,118,438.76 Remaining Debt as of end 2009 248,275,630.22 Note 18 Loans to Public Enterprises In accordance with Loan Agreements between KEK and the Ministry of Finance, loan disbursements to KEK have been made in year 2009 at a total amount of 78,829,174.74. Note 19 Payments for Membership to IFIs Membership to International Financial Institutions Payments in 2009 International Monetary Fund 15,504,911.53 World Bank Group International Bank for Reconstruction and Development - IBRD 373,889.04 International Development Association - IDA 48,732.55 Multilateral Investment Guarantee Agency - MIGA 74,936.58 International Finance Corporation - IFC 1,049,021.73 Exchange Rate Difference -21,404.15 Total paid from KCB 17,030,087.28 Note 20 Deposit Refunds Below is a summary of those refunds in 2009. These payments are not considered in the yearly appropriation process as they are refunds of trust funds. The total of refunds is 5,627,000.

2009 2008 2007 Description '000 '000 '000 Lottery Games Deposits Refund - - 1550 Wrong Payments Obligations 0 244 - Revenues Refund 31-2 Trust Deposits - Minorities Salaries 4,954 1266 - Political Entities Deposits - 40 - KPA Deposits 40 - - Donation Refund 601 335 1072 Total 5,627 1,885 2,624 Note 21 Cash Cash is comprised of funds mainly kept with the Central Bank of Kosovo, and commercial banks, cash held in cashboxes of BOs, and cash equivalents. The Consolidated Statement of Cash Assets and Fund Balances highlights the main categories of cash assets managed by the Government. Notes 24 through 31provide details of those balances. These funds include special purpose funds, including Designated Donor Funds, Own Source Revenues carried forward and trust funds. These cash balances are discussed in Notes 29, 20 and 31, with an overview in the table below. 2009 2008 2007 Description '000 '000 '000 Total Funds 383,853 475,505 449,762 Undistributed Funds (341,930) 414,061 (397,144) Designated Funds 41,922 61,444 52,618 Designated Funds Designated Donor Grants 8,561 12,798 11,267 Own Source Revenues carried forward 25,128 35,690 28,725 Other 8,233 12,956 12,626 41,922 61,444 52,618 Page 30 of 78

Note 22 Budgetary Comparisons During the year there have been different adjustments to the original appropriations. These adjustments are based on the legal authorizations given under the LPFMA. These adjustments are summarized in the Budget Report and Annexes 1 and 2. The Budget Report does not include receipts and payments from Designated Donor Grants. Note 23 Funds with the Central Bank of Kosovo The Government manages its funds by using the Treasury Single Account (TSA). The vast majority of accounts are kept with the Central Bank of Kosovo (CBK) (see tables below). 2009 2008 2007 Account number Account name `000 Euro `000 Euro `000 Euro 1000400070000180 Main Account- BK 83,659 149,033 425,750 1000400070001150 Ministry of Agriculture - - 1000400070001247 Kosovo Police - 1000400070001630 Independent Media Commission 68 2 1000400070002023 Ministry of Public Administration - 1000400070002120 Ministry of Environment - 1000400070002217 Regulative office of Civil Aviation 0 1000400070002314 Ministry of Economy and Finance - 1000400070002411 Ministry of Trade and Industry 0 1000400070002508 Ministry of Health 0 1000400070002605 Ministry of Education - 1000400070002702 Reserve Trust Fund for the Debt Servicing 864 1000400070002896 Office of Prime Minister - 1000410070001295 Customs Services - - 1000420070000179 Ministry of Internal Affairs - - 1000400070003187 Ministry of KSF 153 1000400070003284 Fines against financial institutions 5 1000420070000373 Tax Administration of Kosovo 0-1000430070000227 Salaries of Civil Servants 195 285 224 1000430070000518 Kosovo Judicial Council - - 1000430070000615 Special Chamber of Supreme Court - Receipts - - 1000430070000712 Special Chamber of Supreme Court - Deposits 83 52 47 1000430070003622 Pensions and social schemes 1129 335 316 1000430070003719 Ministry of Transport - - 1000430070004398 Central Election Commission 50 90 1000430070005077 I.C.U Portfolio Sale 3,013 2,927 1000430070005756 Prucurement Review Body 37 28 1000430070005950 Commission for Mines and Minerals - - 1000430070006047 Ministry of Culture Youth and Sports 0-1000430070006241 R. Office for Water and Waste - - 1000430070006532 Ministry of Labor and Social Welfare 288 130 1000430070006629 Deposits of Games of Chance 3,816 1,579 1000430070007017 Trust Funds - DC Dubrave 113 95 101 1000430070007114 Detention Center- Prizren 13 13 12 1000430070007211 Detention Center- Gjilan 6 17 6 1000430070007308 Detention Center- Lipjan 16 13 7 1000430070007405 Trust Funds - DC Lipjan 9 8 7 1000430070007502 Detention Center- Peje 8 10-1000430070007696 Detention Center- Mitrovice 2 1 5 1000430070007793 Detention Center- Prishtine 10 7 8 1000430070008084 Minority salaries Trust 2439 7,212 8,355 1000430070008181 Grant for youth development 53 424 311

2009 2008 2007 Account number Account name `000 Euro `000 Euro `000 Euro 1000430070008375 Energy regulatory office 5-1000430070008472 KPA Kosovo Property Agency 70 60 48 1000430070008569 KPA Deposits 182 191 131 1000430070008763 KPA Inventory Rents 165 195 17 1000438870000180 University of Prishtina - - 1000450000000273 Reg. Authority of telecom - - 1000500660704955 KTA SOE BATLLAVA NORVEGIAN AID 8 1000500662002621 KTA POE PTK DIVIDEND 31,191 1000650010000090 Municipality of Decani 31 21 1000650020000014 Municipality of Dramatist 28 13 1000650030000035 Municipality of Ferizaji 400 302 1000650040000056 Municipality of Fushe Kosoves 96 45 1000650050000077 Municipality of Gjakoves 340 114 1000650060000098 Municipality of Gjilanit 214 95 1000650070000022 Municipality of Gllogocit 67 40 1000650080000043 Municipality of Hanit te Elezit 19 9 1000650090000064 Municipality of Istogut 69 65 1000650100000085 Municipality of Junikut 4 1 1000650110000009 Municipality of Kamenices 67 44 1000650120000030 Municipality of Kaqanikut 45 34 1000650130000051 Municipality of Klines 52 35 1000650140000072 Municipality of Leposaviqit (0) - 1000650150000190 Municipality of Lipjanit 161 78 1000650160000017 Municipality of Malisheves 55 32 1000650170000038 Municipality of Mamushes 9 2 1000650180000059 Municipality of Mitrovices 153 89 1000650190000080 Municipality of Novo Berdes 10 1 1000650200000004 Municipality of Obiliqit 74 52 1000650210000025 Municipality of Pejes 248 254 1000650220000046 Municipality of Podujeves 105 63 1000650230000067 Municipality of Prishtines 1,452 902 1000650240000088 Municipality of Prizrenit 726 279 1000650250000012 Municipality of Rahovecit 60 48 1000650260000033 Municipality of Shterpces 2 2 1000650270000054 Municipality of Shtimes 37 19 1000650280000075 Municipality of Skenderajit 79 78 1000650290000096 Municipality of Suharekes 146 53 1000650300000020 Municipality of Vitise 71 24 1000650310000041 Municipality of Vushtrrise 93 43 1000650320000062 Municipality of Zubin Potokut (0) - 1000650330000083 Municipality of Zveqanit 0-1000651910000297 KCF Municipality of Prishtina 221 215 1000651910000103 KCF Municipality of Prishtina Trust 180 175 1000430070003428 General Payment - - 1000400070001344 Pensions account - 1000400070001538 War invalids account - - 1000410070000228 KCF MF Custom Mitrovica Euro - 1000420070000276 TRAVEL DOC. reven. - - 1000430070003816 Direc. Of Rural affar.reven. - - 1000430070003137 MPS DAL SCS revenues - - 1000400070001441 UN Trust fund - - 1000400070100187 Forigen special account - - 1000400070001829 MSLW Disability Pensions - - 1000420070000567 DoJ - Receipts - 1,793 1000420070000470 Road Toll - - 1000430070006144 Kosovo Agency for Medicinal Products - 7 1000438870000277 Receipts of med students in Tetovo University - - 1000430070006338 MTI Licenses - - 1000430070008278 WB Escrow Kosovo Social Prot.Prog. - Total of accrual account 88,311 202,604 445,126 1000400071000357 Government Valuable papers 0 266,477-1000400070003090 Account of termed deposits 125,000 - - Total of KCB fund 213,311 469,081 445,126 Page 32 of 78

Note 24 Deposits in Commercial Banks PTK Dividend As of December 31, 2009, the balance of term deposits in commercial banks from PTK dividend fund was 163,922,000 Euro, and is broken down by commercial banks as follows. 2009 Bank Name '000 Raiffeisen Bank Kosovë 48,050 Banka Private e Biznesit 13,300 Pro Kredit Bank Kosovë 34,906 TEB 19,015 Banka Ekonomike 11,400 NLB Prishtina 21,251 Banka Kombëtare Tregtare 16,000 Total 163,922 Note 25 Cash in Transit This relates to cash received through commercial banks as 2009 receipts but which were not swept to the Treasury account with CBK as of 31.12.2009. The amount of cash in transit kept with commercial banks is summarized below. 2009 2008 2007 Bank Name '000 '000 '000 Raiffeisen Bank 972 483 1,217 Banka Private e Biznesit 369 403 400 NLB Prishtina 2,769 3,450 417 Banka Kombëtare Tregtare 47 38 3 ProCredit Bank 850 644 1,690 Banka Ekonomike 369 681 403 KEP-i - Vllesa - - 22 TEB-i 417 112 - Total 5,793 5,812 4,151 Note 26 Embassy Accounts These accounts are opened in commercial banks in the countries where republic of Kosovo Government has opened its embassies, in accordance with administrative instruction for embassies accounts, with the purpose to provide bank services for embassies and consulates in these countries. Fund balance is shown in table below.

2009 Description '000 Embassy in Albania 0 Embassy in the United Kingdom 29 Embassy in Germany 399 Embassy in Switzerland 13 Embassy in France 15 Embassy in Austria 8 Embassy in Italy 15 Embassy in Turkey 12 Embassy in the United States 21 Embassy in Belgium 35 Consolidated Embassy Account (RBKO) 10 Total 557 Note 27 Cash on Hand (Cashbox) This amount represents petty cash held by budget organizations, which were not spent nor deposited into the main account with CBK as of 31.12.2009. 2009 2008 2007 Name '000 '000 '000 Cash 270 613 39 Total 270 613 39 The following table represents the budget organizations that have kept those funds. Page 34 of 78

2009 2008 2007 Description '000 '000 '000 Ministry of Economy and Finances - 6 6 Ministry of Health 5 4 2 Ministry of Culture Youth and Sports 7 5 6 Ministry of Education Science and Tech 4 3 3 Ministry of Labor and Social Welfare 12 11 6 Ministry of Returns and Communities 3 3 3 Ministry of Internal Affairs 1 1 1 Ministry of Justice 10 10 10 Reconstruction Fund 2 2 2 Central Election Commission - - 3 sity 1 - - KPC Office of Coordinator 1 - - Kosovo Police 8 - - Kosovo Property Agency 3 - - Prishtina 1 - - Peja 0 - - Klinë 1 Prizreni 0 Mamushë 0 Hani i Elezit 0 0 0 Ministry of Foreign Affairs 214 570 - Total 270 613 39 Note 28 Designated Donor Fund The Designated Donor Grants can only be spent in accordance with the terms and conditions of the grant agreement. Please refer to Annex 3 for a detailed analysis of donor fund balances. Code Description 2009 2008 2007 '000 '000 '000 1 Carried Forward Grants Balan 12,676 11,274 12,949 2 Grants Received 13,880 12,731 11,496 3 Interest from Grants 7 14 3 4 EU Portfolio Sale - 87 144 5 Direct Payments 5,012 4,854 3,242 6=(2+3+4+5) Total Grants Received 18,899 17,685 14,885 7=(6+1) Total 31,575 28,959 27,834 8 KCB transfer (3,020) 0 0 9 Grants Expenditures (19,395) -15,826-15,496 10 Grants Refund (600) -335-1,070 11=(7+8+9+1Unspent Grants 8,561 12,798 11,267 Page 35 of 78

Note 29 Own Source Revenues The carried forward Own Source Revenues are collected revenues that were not spent by municipalities and central BOs by the 31.12.2009. See Annex 4 for details on own source revenues to be carried forward to 2010. Note 30 Other Funds Other funds represent trust funds. The following table represents details of the fund s composition. 2009 2008 2007 Description Note '000 '000 '000 Student Fees - - Debt Service Reserve Trust Fund - 864 - Tetovo Students Deposits - - - Lottery Games Deposits 30.1 3,822 3,816 1,579 Public Procurement Regulatory Committee 35-28 Independent Media Commisionrt - - 2 DJA Deposits 30.2 872 52 1,841 Deposits of Special Chamber 24 - - CEC - Political Entities Deposits 248-90 Trust Minorities Salaries 30.3 2,258 7,212 8,355 Prisoners Deposits 30.4 188 164 146 Kosovo Property Agency Deposits 30.5 405 446 195 Trust Account - Prishtina Municipality - 401 390 Deposits of Swiss Office 380 - - Total 8,233 12,956 12,626 Note 30.1 Lottery Games Deposits These are deposits paid in accordance with the legislation on lottery games. Note 30.2 DJA Deposits The DJA deposits are funds paid by third parties for realizing their rights, deposited by. Note 30.3 Minority Trust Salaries The Government of Kosovo took a decision to establish the Minorities Salary Trust Fund composed of salaries refused by minority civil servants. In 2009, these fund amounts to 2,258,000.

Note 30.4 Prisoners Deposits These deposits represent money deposited for the prisoners into relevant bank accounts of prisons located in Kosovo regions. These deposits are later refunded to prisoners when freed. These deposits amount to 188,000. See table below with details by regions: 2009 2008 2007 Description '000 '000 '000 Trust Account - Dubrava 115 95 - Detention Centre Peja 9 10 0 Detention Centre Dubravë - 101 Detention Centre Prizren 15 13 12 Detention Centre Prishtine 11 7 8 Trust Account Lipjan 17 8 7 Detention Centre Gjilan 7 17 6 Detention Centre Mitrovice 3 1 5 Trust Account - Lipjan 10 Detention Centre - Lipjan 13 7 Total 188 164 146 Note 30.5 Kosovo Property Agency Deposits These are deposits paid by third parties to the KPA for the rent and safety of the properties they use until a decision is undertaken by the KPA. These deposits amount to 405,000. 2009 2008 2007 Description '000 '000 '000 Rent - Kosovo Property Agency 68 60 48 Deposits - Kosovo Property Agency 175 195 131 Inventory Rent - Kosovo Property Agency 163 191 17 405 446 195 Note 31 KTA/PAK Fund Until June 2008, the Privatization Fund was administered by the Kosovo Trust Agency (KTA). Pursuant to Article 65(1) of the Constitution of the Republic of Kosovo, the Assembly of the Republic of Kosovo adopted the Law on the Privatization Agency of Kosovo (03/L-067), established as the successor of the Kosovo Trust Agency regulated by UNMIK Regulation 2002/12, as amended, and all assets and liabilities of the latter shall be assets and liabilities of PAK, except the Publicly Owned Enterprises. The Agency is authorized to administer, authorize for sale, transfer and/or liquidate enterprises and assets as defined in the Law on the Privatization Agency of Kosovo (03L-067).

KTA fund has not been treated as public money because in accordance with the Law on Public Financial Management and Accountability, article 2.8, cash and financial assets held in trust by the KTA/PAK under the authority of a Law or UNMIK Regulation shall not be public money. Opening Payments Balance as of Balance 2009 Receipts 2009 2009 31.12.2009 Description million million million million Central Bank of Kosovo 403,313 124,437 (76,709) 451,041 ProCredit Bank 233 57 (167) 123 RBKO 0 0 (0) 0 Total 403,546 124,495 (76,877) 451,164 Note: Data from PAK Financial Statements for year 2009 submitted to Treasury. Page 38 of 78

REPORT OF THE KOSOVO CONSOLIDATED BUDGET 2009 Budget Law 03/L-105 sets forth the original appropriations for 2009. This Law also includes the changes to those appropriations during the course of the year, including: Carried forward appropriation of municipal own-source revenues not spent during 2008; Appropriation of some types of own-source revenues collected by Central Budget Organizations; Appropriation of municipal own-source revenues collected during 2009; Transfer of appropriations from SRSG and Minister of Economy and Finances Reserves to specific Budget Organizations. Transfer of appropriations among budgetary lines, within the limits and approvals provided for in the regulation. Annex 1 displays the original budget appropriations, the mid-year review appropriations, and the final appropriations in the Treasury Financial Management System for each budget organization and for each economic category. Appropriations: A (Law 03/L-105) B (Law 03/L-167) C (KFMIS) A B C Description '000 '000 '000 Central Government Budget 2009 976,799 1,111,000 1,109,104 General Grant for Municipalities 2009 206,000 204,100 215,115 Municipal Own Source Revenues 2009 37,000 49,900 48,757 Municipal Own Source Revenues Carried Forward from 2008 - - 24,943 Central Own Source Revenues 2008 - - 18,326 Central Own Source Revenues Carried Forward from 2008 - - 6,112 Total Appropriations 2009 1,219,799 1,365,000 1,422,356 Page 39 of 78

Receipts The revenues collected during 2009, not including the Designated Donor Grants, amount to 1,146,817,000, and represent 99.2 percent of the total annual planned revenues. This indicates an increase of 22% percent of the annual revenues compared to last year. Please see the table below for more details: Budget Plan Revenues Compared Progress to previous Receipts Receipts 2009 2009 against plan year 2008 2007 '000 '000 në,% në,% '000 '000 Receipts A B C=(A/B) D=(B/E) E Customs 644,100 634,146 98% 5.0% 604,196 531,591 Tax Administration 176,900 181,659 103% -9.5% 200,834 182,542 Municipality Own Source Revenues 49,900 48,293 97% 12.9% 42,784 29,237 Central Own Source Revenues 35,600 29,657 83% 2.0% 29,066 25,724 Central Non-Tax Revenues 50,000 53,062 106% -19.2% 65,645 58,904 One time revenues - PTK Dividend 200,000 200,000 100% 0.0% 0.0% - Total Receipts 1,156,500 1,146,817 99.2% 22% 942,525 827,998 Annual Revenues 2009 Budget Plan 2009 Revenues 2009 700000 600000 500000 400000 300000 200000 100000 0 Customs Tax Administ Munic Own source revenues Own sour revenuescentral level Non tax reven-centr level One time revenues- PTK divid Page 40 of 78