FISCAL DECENTRALIZATION LEVEL IN ALBANIA

Fran Brahimi, Mariel Frroku and Monika Brahimi

Economy & Business Journal, 2024, vol. 18, issue 1, 273-288

Abstract: This study analyzes Albania's fiscal decentralization level, taking into consideration fiscal decentralization measures using both combined and separate indicators, vertical imbalances, dependency ratios, etc. The study highlights fiscal decentralization data from various European countries and analyzes Albania's fiscal decentralization from 2014 to 2023. This analysis investigates the impact of fiscal decentralization measures and reforms undertaken in Albania, particularly following the administrative-territorial reform, on the enhancement and improvement of local government revenues and expenditures. Additionally, the study explores and analyzes the evolving relationship between central and local governments and their dynamics since 2014. Based on the analysis carried out through statistical and comparative methods, it has been observed that while autonomous revenue for local governments has increased, there has been a parallel rise in transfers and grants from the central government. Local expenditures have grown at a rate consistent with the overall budgetary expenditures and GDP, significantly contributing to the local deficit. The study also examined various associations between decentralization indices and different variables. It is recommended that in the future, the types and size of taxes be determined through cooperation between local self-government units and business communities. This will help increase the pace of local revenue collection. As a result, it will contribute to the reduction of the local fiscal deficit and will simultaneously affect the reduction of the financial gap between the transfer of functions and powers to the local government and the financial resources required to exercise them.

Keywords: local taxes; local revenues; fiscal decentralization index; fiscal autonomy; gross domestic product; local expenditure (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:isp:journl:v:18:y:2024:i:1:p:273-288

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