By Fatos Bytyci
PRISTINA (Reuters) - Lawmakers in Kosovo on Thursday approved the proposed budget for next year, clearing the first hurdle in a process that could have triggered an early election for a coalition government struggling with an internal rebellion.
A rebel faction within Prime Minister Hashim Thaci Democratic Party of Kosovo has sided with the opposition on several issues over the past months, setting up the possibility the government could have lost the budget vote.
If it had been voted down at the first and second readings, it would have triggered an early election around a year ahead of schedule, a Finance Ministry official said.
Diplomats say Kosovo's Western backers, which supported its 2008 secession from Serbia, are reluctant to see the country go to the polls before it has a chance to reform its electoral legislation to increase the number of constituencies and review voter registration, among other proposals.
In the end, however, the 1.6 billion-euro draft budget - that targets a deficit of 2 percent of national output, which the government plans to fund mainly through treasury bills - was approved by 59 votes to 31 in the 120-seat parliament.
Because of the secret electronic voting system, it was not immediately clear whether any of Thaci's deputies voted against it. Thirty legislators were absent.
The final draft is expected before parliament in the coming days and is now expected to pass.
Under the draft, the government plans to secure a new stand-by arrangement with the International Monetary Fund after the expiry of a 107-million-euro program in December.
The government crisis has stalled parliamentary approval of the 277 million euro ($372.88 million) sale of Kosovo's telecom company, the country's most profitable state-owned enterprise, in a damaging setback for Thaci.
It has also hurt Kosovo's efforts to lure foreign investors to a country where official unemployment stands at 35 percent.
IMF forecast Kosovo's economy to expand by 2.5 percent in 2013 and 4 percent in 2014, driven in part by remittances, foreign aid and construction.
Remittances from an estimated 800,000 Kosovars working in Western Europe account for about 14 percent of gross domestic product, the highest rate in the region.
"Our economy will continue to resist foreign shocks and will have the biggest growth in the region," Finance Minister Besim Beqaj told parliament.
The opposition accuses the government of squandering state money on salaries and road-building, rather than education, health or agriculture. One third of the budget has been earmarked for construction of a new highway to Kosovo's southern neighbor Macedonia and stretches of two other regional roads.
"This is a budget based on consumption and with no perspective, a budget that will sent Kosovo's economy into depression," said lawmaker Naser Osmani of the main opposition party, the Democratic League of Kosovo.
($1 = 0.7428 euros)
(Editing by Matt Robinson and Alison Williams)