TIRANA, Oct. 27 – In its audit report, the Albanian Supreme State Audit Institution (KLSH) revealed that the central government owes an amount of 116 million euros to the local government. Based on legislation, if not fully spent within a year, the unconditional funds that the local authorities receive annually from the central government can be used in the following year. However, in this case the central government was found to have used the remaining funds for expenses unrelated to the local government and therefore has become indebted to the latter.
The report also discovered that the amount of unused funds by the local governance units was double the amount of what the central authorities owed to third parties.According to data provided by the Ministry of Finance, the central government’s financial obligations towards third parties amounted to 55 million euros by the end of 2018. Yet, the KLSH reported that these numbers are much lower when compared to the debt towards the local government authorities which amounted to 116 million euros.
The distribution of these funds to other authorities which do not share the same competences with the local government units, was made possible through the violation of the Budget Law and the Law On Local Self-Government. Not only did this allocation cause more government arrears, precisely by 55 thousand euros according to the Local Finances Directorate, but it also breached the principles of the local government autonomy. According to the KLSH, this led to a halt in expenditures and the accumulation of debts.
The Law On Local Self-Government stipulates that the obligation to allocate funds to the local government units is at 1 percent of the GDP. On the other hand, the rights of local government units to receive unconditional annual funds by the central government and keep any unused funds, both those received by the central units and those it has gathered in its own, through unconditional transfers for the following year, are defined by the Organic Budget Law and Law On Local Self-Government. The initial plan showed that the detailed plan for the local budget was indeed at 1 percent of the GDP, therefore in accordance with the budget law. However, the unconditional transfers of the unused funds were not at all in compliance with the initial budget law, regardless of the legal framework demanding that these funds are allocated to the local government units.
