Creating an Equitable, Transparent, and Predictable Unconditional Grant Formula

In 2015, the Government of Albania (GoA) completed a radical program of Territorial and Administrative Reform (TAR) that reduced the number of local government units from 373 to 61. The central objectives of TAR are to improve the efficiency and effectiveness of public administration at both the national and local levels, to improve the quality of local public services, and to encourage more balanced socio-economic development.  To help ensure the achievement of these goals, the GoA requested that USAID support work designed to bring the country’s intergovernmental finance system in alignment with its new local government system. In particular, the GoA asked for recommendations concerning the size and allocation of the Unconditional Grant.
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This policy paper summarizes our findings and recommendations. The modeling tool provided in this document allows policymakers to test different scenarios, permitting them to rapidly test a range of scenarios in a technically sound way, even if the final grant design they choose deviates from our recommendations.

Click to download the Policy Paper on Creating an Equitable, Transparent, and Predictable Unconditional Grant Formula.

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