Public Debt: The Importance of Financing in the Economy and in the Agricultural Sector—The Case of Kosovo

This paper investigates the importance of public debt in the economy and in the agricultural sector, as well as the relationship between public debt and GDP in Kosovo. The purpose of the paper is to determine the empirical relationship between public debt and GDP in Kosovo in macroeconomic terms. So, the main purpose of this paper consists in the analysis of the progress of public debt and financing in the economy and in the agricultural sector in the Republic of Kosovo. In the framework of the paper, the level of public debt and financing in the economy in the Republic of Kosovo is presented. In order to cover the budget deficit, states take the steps to go into debt, which is negatively expressed in economic flows. The countries of the region, including Kosovo with a low level of development, have faced public debt in recent years (Berisha, 2022). In financial theory and practice, public debt is one of the forms of public income for financing the public functions of the state, or public needs (Berisha, 2022). To finalize the paper, the method of analysis and synthesis, tabular and graphic, as well as the comparative method, etc. is mainly used. Through this study, we aim for the given conclusions and recommendations to be taken into consideration and serve those interested in the field of public finance. Empirical studies on debt sustainability in the last decade have been numerous and gained importance after the most recent global financial and debt crisis. Most of these studies address the issue of good management for creating affordable debt. However, studies on public debt and fiscal deficit in Kosovo are scarce, and as such this paper is mainly guided by a literature review of studies that focus on either external public debt or internal public debt and their effects on GDP.