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Reinforcing Dialogue on Local Government Finance Reform

An open and inclusive dialogue based on timely, accurate and reliable data between the national government and local self-governments is key to improving both service delivery to citizens and the efficiency of the overall central and local public administrations. Under such auspices, PLGP, in partnership with the Ministry of Finance and Economy (MoFE), has developed and published a report on Local Government Finance Indicators for fiscal year 2018. This is the first official report produced by the MoFE entirely dedicated to analyzing the status, trends, and performance of local government revenues and expenditures. The report was prepared as part of the MoFE’s efforts towards evidence-based and data-driven policy reforms to increase transparency and accountability and result in more effective use of local public financial resources. It provides an opportunity for both the central and local governments of Albania to better understand and improve policies in an informed manner based on measurable patterns. In addition, by providing user-friendly information on sources of funds and how they are utilized by municipalities, the report benefits citizens and special interest groups who seek to improve their understanding of their municipality’s financial management, further facilitating their participation in local decision-making.

The Report is an excellent document providing an opportunity to analyze and support discussions on achievements, lessons learned, challenges and the next steps necessary to improve the financing of municipalities every year. It is the first time that the MoFE prepares such a report and we hereby commit to preparing it on an annual basis, together with a National Conference which shall serve as an open platform for consultation in future years. Actually, this is a great example of how things should be done also for the national government’s budget.” – Erjon Luçi, Deputy Minister of Finance and Economy.

To nurture evidence-based dialogue the PLGP and the MoFE hosted a National Conference “Reinforcing Dialogue on Local Government Finance: Challenges, Opportunities, Transparency and Accountability” on May 23rd, 2019, bringing together more than 160 representatives from the MoFE, mayors, deputy mayors, local practitioners and experts, civil society organizations, and the donor community. This Conference came at a critical moment, coinciding with the fourth anniversary of the implementation of the territorial and administrative reform and the second anniversary of the implementation of the Law on Local Self-Government Finance, both of which constitute major milestones in Albania’s path towards stronger local governance. From this perspective, the Conference provided an excellent opportunity for mayors, deputy mayors and local government practitioners to raise their voices regarding the continued need for improving the financing of local government responsibilities, accelerating the process of property tax reform, implementing the sharing of revenues from personal income tax with local governments, and establishing more appropriate financing instruments for local economic development, thereby increasing the opportunities for people in more remote areas.

Recognizing the importance of continuing a data-driven, informed dialogue, the MoFE committed to continue publishing the Report on Local Government Finance Indicators and conduct a Consultative Conference on an annual basis to reflect on past achievements and challenges ahead to improve the financing system. PLGP is proud to have supported the MoFE in institutionalizing an open intergovernmental dialogue with local governments by setting these new standards for data availability, transparency, and informed policy-making.

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