The Effect Of Covid-19 Pandemic in Kosovo Prishtina OWN-SOURCE REVENUES The fiscal capacity of local governments in Kosovo, which accounts for the capacity to collect revenues to assure the functioning of the governments, has decreased during the pandemic crisis management. Due to weakened economic activity and changes in tax policies, the gap between collected revenues and required expenditures to address the pandemic has increased. Consequently, this damaged fiscal balance has left local government with insufficient means to tackle the crisis and highly depended on the central level. The high reliance of local own-source revenues on taxes has become a particular risk. With the decision of the Ministry of Finance and Transfers (Regulation No. 05/2020) to suspend property tax payments, the collection of revenues from property tax will fall short. Coupled with the decreased activity in the construction sector, consequently the decrease proceeds from business licenses and construction permits, this will result in a sharp decline on own-source revenues in the year 2020. According to the data from the Ministry of Finance and Transfers, there has been a significant drop in own-source revenues in the first half of the year 2020. The collected revenues in the year 2020, account for about 5.8 million Euro, which in comparison to those of the year 2019 are approximately 9.3 million Euros less for the same period.(Chart1). Chart 2. Changes in Financial Outlook; First Quarter 2019 And 2020 Source: MoF Data, Kosovo Treasury 12