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Albania, municipalities facing challenges in financial management

2023-05-10 20:04:54, Aktualitet CNA

Albania, municipalities facing challenges in financial management

In Albania, the financial situation of local units presents challenges for the future, even though it has improved compared to 8 years ago, when the territorial-administrative reform was approved. Local government experts state that arrears, which are unpaid payments mainly for investments, are a concern for at least 18 out of 61 municipalities. Many have deepened them in 2022, and for researchers in a pre-election year, this may obscure the intent to influence voters. According to them, some municipalities also have problems with arrears, whose finances are not endangered by these obligations.

In Albania, local elections for mayors and municipal councils are expected to be held on Sunday in 61 municipalities of the country. These are the third elections since the approval of the territorial-administrative reform in 2014, after which the arrears of local units were identified for the first time, which at that time amounted to 12 billion lek, or about 107 million euros. . It is about unpaid payments for the most part for investments, as well as for goods, services and court decisions, among others. After 8 years, the stock of these obligations has come to a progressive decrease, being halved. But according to experts, this is only the general picture.

"If we analyze the figures in total, we have this conclusion, but if we look at individual municipalities, the results differ. We distinguish municipalities that have increased their debt. They are a total of 15 out of 61 municipalities," Aida Cacaj, local government expert at the Institute for Municipalities of Albania, told VOA.

Currently, a little more than 1/3 of the municipalities, results in difficulties and financial problems, due to these unpaid payments, experts explain. But even though they are in serious financial difficulties, 10 of them, according to official data, have increased their stock in 2022, compared to the previous year, most of them have added most of it to the investment item. Experts note that in a pre-electoral year this may be intended to influence voters. According to them, the typical example is the municipality of Pustec. Almost all of its obligation was created in 2022 precisely for investments.

"Liabilities should not be created for a very simple reason, because first the expenses that have been incurred or invoices must be budgeted, and then new projects can be opened. If you start spending more money than you have budgeted, creating arrears, you are automatically influencing the electoral campaign unfairly" - said Azmi Stringa, Lecturer of finance at the University of "New York", Tirana, for the Voice of America.

The arrears of municipalities are considered problematic according to the law on local self-government finances, when they reach a value of 15-80% of the expenses of local units. According to the Institute for Municipalities of Albania, 18 out of 61 municipalities in the country currently belong to this category, among which the most problematic are those of Kavaja, Vora, Dibra and Cërrik. The red alarm sounds for the municipality of Pustec. Its arrears exceed the 80% threshold of expenses, and it is considered by experts to be insolvent. Local government experts see serious problems in other municipalities, whose finances are not threatened by arrears, such as the case of the Municipality of Tirana. This municipality has increased these obligations by 80% for 2022, reaching the figure of 1 billion and 179 million ALL.

What worries the experts is related to the category where these obligations have been increased the most, which according to the official data of the Ministry of Finance are classified under the item "other".

"Expenditures in the item "other" are like a bag of expenses that we cannot decipher from the data made available by the Ministry of Finance" - Merita Toska, public finance expert, Co - PLAN.

According to the Ministry of Finance, in 2022 the Municipality of Tirana has quintupled the arrears included in the item "other." It is about 5 million and 800 thousand euros more than a year ago. The municipality of Kavaja also has a high figure of 4 million and 600 thousand euros in arrears in the same item, or 60% of its total arrears, but unchanged in the last two years.

"I would not like to wait another 20 for such a large part as it is in the case of the Municipality of Tirana, but to have it defined and detailed where the voices are. So this is something that requires transparency and transparency is the main element of accountability" - continued Azmi Stringa, Lecturer of finance at "New York" University, Tirana.

Asked by the Voice of America, what is the reason for the increase in arrears in 2022, their nature and what the word "other" includes, the Municipality of Tirana did not respond until the publication of this material. For its part, the Ministry of Finance clarified that this item includes provisional fuel bills, electricity obligations, but even in its answer there is an "etc". The Ministry says that this item has different descriptions in different municipalities.

The territorial reform, 8 years ago, brought a significant reduction of local units, and according to experts, the arrears of the municipalities were mostly inherited from the municipalities that were merged. But even though these

obligations have been halved in general, only two municipalities, such as that of Këlcyra and Patos, have managed to have no arrears for 2022, while some other municipalities, such as that of Shkodra, Korça, or Kolonje, have negligible figures. Concern for experts remains the creation of new stocks in the future. According to them, this still shows serious weaknesses in the management of finances by local units./ VOA





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