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IMF shelves last loan payment to Kosovo due to lack of government

PRISTINA (Reuters) - The International Monetary Fund will shelve a final review of its loan deal with Kosovo before its expiry next week and put off disbursing remaining funds due to an absence of a government there, the IMF said on Friday.

Kosovo agreed a 184-million-euro ($215.83 million), two-year funding package with the Washington-based global lender in July 2015 and the final review was expected to take place in June.

But it was postponed due to snap elections the same month in which no party or coalition came out a clear winner.

Kosovo's new parliament will convene for the first time on Aug. 3 but it is unclear when a new government will be appointed as parties are still struggling to secure coalition partners.

In an e-mail to Reuters, a IMF representative to Kosovo said the fund was "not unilaterally cancelling the program" but that as the deal expires on Aug. 4, there would be no time for a final review given the lack of a government.

"The expiration of the program means that the final disbursement of about 15 million euros will not take place," Ruud Vermeulen, the IMF Resident Representative in Kosovo, said.

The small, impoverished Balkan country, which declared independence from Serbia in 2008 after a late 1990s war, has so far received 169 million euros in three tranches of the loan.

Vermuelen also said that Kosovo's fiscal situation had considerably improved and the financial sector remains strong.

Both Kosovo authorities and the IMF expect strong growth for the country of 1.8 million people at around 4 percent this year, up from 3.5 percent in 2016, driven mainly by infrastructural investment and remittances from Kosovars working overseas.

Unemployment in Kosovo remains high at 27.5 percent, though that is an improvement from 35 percent in 2014.

($1 = 0.8525 euros)

(Reporting by Fatos Bytyci; Editing by Aleksandar Vasovic and Mark Heinrich)