For 2020, municipalities in the country have felt the impact of the pandemic and also the earthquake.
A report by the Ministry of Finance and Economy analyzes the situation of municipalities during the pandemic period and the effects that the post-earthquake situation had on their budgets.
The “Local Finances” project, funded by SECO (Secretariat for Economic Cooperation of the Swiss Government), aims to improve the performance of municipalities by improving their skills in the revenue collection process (including a forecast as close to realistic as possible) , improving the management of expenditures and budget programs and the internal control of their work.
Its local revenues in relation to total public revenues have increased slightly, which is evidence of the improved fiscal consolidation process. The report shows that there is a significant improvement from 2015 where own revenues were as much as 3.09% of total public revenues, to 5.16% in 2020.
Meanwhile, tax revenues from local government collected for 2020 were 21.9 billion ALL or about 90% of total revenues. However, these revenues have shrunk by 5.1% compared to a year ago, showing a decrease due to the pandemic situation and also the effects of the earthquake.
Local taxes have also had a downward trend compared to 2019, the Income Statements analyzed by the experts of the Local Finance project, underline that they had a decrease of 5.3% less than in 2019 (about ALL 17.6 billion). While local tariffs for 2020 have decreased by 5.7% compared to 2019.
The item that has the largest weight in the collection of revenues in local revenues is related to the “Infrastructure Impact Tax” which according to the report is the engine that attracts revenues. According to the data, it results that 80% of the total of this item is collected from the Municipality of Tirana, which during 2020 has collected 6.3 billion ALL from this item, a value of 45% of the total income of this municipality.
In addition to revenues, it seems that municipal expenditure programs have been affected as a result of the same factors. From the macro data it can be seen that GDP has had a decline and this has been accompanied by a relatively small increase in budget expenditures.
The ratio of local government expenditures to total public expenditures during 2020 has resulted in a value of about 9.59% which is a value of 1.8% lower than a year ago. The decline in this ratio during 2020 is due to the fact that the growth of general public expenditures has had a higher rate than the growth of local government expenditures.
During 2020, local government has also been significantly affected in spending due to the pandemic. Not only expenditures by economic nature have changed, but also those at the level of function of the local self-government unit.
In total expenditures, municipalities seem to have spent 8% less than a year ago. The downward trend has also affected the realization of projects with its own revenues, fulfilling only 32% of the programmed expenditures (17 billion ALL).
Detailed in items it turns out that 51% of the total expenditures belong to those expenditures with resources central budget transfers while the rest is covered by municipal revenues. The lion’s share is taken by the functions “General Public Services” and “Education”, respectively at the rate of 22% and 20% of the total local expenditures
While there were significant reductions in Social Protection and Housing. According to the data, the decrease of these items was by 32.7% in the budgets of the municipalities. For the reconstruction from the earthquake at the local level, from the planned fund of 29 billion ALL from the budget expenditures, for 2020 are allocated 14.9 billion ALL in the form of unconditional transfer to the Local Self-Government Units, which have been realized in the amount of 56 percent, or ALL 8.3 billion./Monitor