Albania: Aligning Territorial and Fiscal Decentralisation

Abstract

This chapter provides an overview of decentralisation reforms in Albania over the last 25 years. Although offering a similar bundle of instruments, decentralisation reforms undertaken across four distinct periods differ substantially in terms of scope, incentives, and outcomes. Albania has established the building blocks for effective local governance. Yet, significant challenges remain, in particular in the fiscal dimension of decentralisation. Local tax powers, and thereby local finances, continue to be sacrificed to serve “higher causes” by subsequent national governments which seek to retain control over specific financial instruments to influence capital investments at the local level. Recent reforms offer great opportunities, which might be lost if they are not effectively implemented and complemented by additional measures that remove constraints on local revenue-raising options.