Local finances, 12 municipalities with financial problems, 4 in difficulty in 2022

2023-12-15 07:30:00, Ekonomi CNA

Local finances, 12 municipalities with financial problems, 4 in difficulty in

Since the Territorial Reform of 2015, the local government is facing more financial difficulties that have arisen from weaknesses in management and debts inherited from former municipalities.

In 2022, out of 61 municipalities across the country, 12 of them had financial problems and four of them were in great difficulty according to the data that the High State Control provided during an audit at the Ministry of Finance.

According to the data from the table below, the municipalities of Dimal, Cërrik, Vorë and Kavajë are in financial difficulties as the arrears exceed 25% of annual expenses by 2022, while the other 8 municipalities, Poliçan, Dibër, Tropojë, Pogradec, Devoll, Libohovo, Delvinë and Peqin have financial problems as arrears amount to 15-23% of total expenses by 2022.

The Municipality of Kavaja, whose obligations last year amounted to 65.7% of the year's budget, was in a more difficult situation, while the Municipality of Vora comes next, whose obligations in 2022 were equal to 39% of the year's expenses.

Referring to the law no. 68/2017 "On the finances of local self-government", four different levels of cases of financial difficulties of the local self-government unit are identified.

At the first level, the local self-government unit is considered to have financial problems when, in a given month of the budget year, there are delays of more than 30 days in the liquidation of financial obligations to third parties and when the ascertained and unpaid obligations amount to 15 percent of approved annual expenses.

At the second level, the local self-government unit is considered in financial difficulty when delays in the liquidation of financial obligations to third parties are found even in the following month of the specified month and the value of the stock of unpaid obligations to third parties increases progressively above the level of 25 percent of approved annual expenditures

At the third level, the local self-government unit is considered to be in serious financial difficulty when long-term debts and unpaid obligations to third parties constitute more than 80 percent of the approved annual expenses, ascertaining the situation of serious financial difficulty, 66 the head of the local self-government unit immediately informs the council of the unit and the Ministry of Finance.

At the fourth level, the local self-government unit is considered in a situation of incapacity to pay if it fails to implement the financial rehabilitation plan and/or if the ratio of long-term debts and unpaid obligations to approved annual expenditures is higher than 1.3.

The Directorate of Local Finances, for the first time in the 2022 financial status report, has also analyzed the financial situation for the counties. According to the report, for the year 2022, 9 districts were classified without financial problems, the district of Gjirokastra was classified with financial problems, while the districts of Durrës and Berat were classified as having financial difficulties.

Gjirokastër District has a level of arrears at the level of 15.88% of approved annual expenditures and is classified as having financial problems. The most serious situation is presented for the Durrës district, where the level of arrears appears at the level of 31.86% of the approved annual expenses, and for the Berat district, the level of arrears appears at the level of 53.53% of the approved annual expenses./ Monitor Magazine

Local finances, 12 municipalities with financial problems, 4 in difficulty in