World Bank2014-07-182014-07-182008-09-02https://hdl.handle.net/10986/18920Albania has undertaken major reforms in its system of local government finance since 2000. What had been a system in which local functions were ambiguous and financing was largely provided through tightly controlled earmarked grants is now one in which functions are relatively clear and local governments have more autonomy over the allocation of funds. A new system of competitive grants for infrastructure investment has been introduced. Parliament has enacted a new law on local borrowing. Within this framework, however, several controversies remain which are addressed in this policy note. In the long term Albania must also grapple with certain organizational issues. One is the role of regional governments, which now lack any major clearly defined function. While the Government's decentralization strategy proposes a range of possible functions for regional governments, most of these roles could be carried out through other means. The other organizational issue is the consolidation of small communes. The Government's decentralization strategy proposes the eventual consolidation of small local governments into larger units. International experience, however, suggests that the efficiency gains of consolidation are limited and may not be sufficient to justify the political costs of doing so. Efforts to consolidate local governments should consider alternative solutions such as inter-municipal agreements and joint service companies before proceeding.en-USCC BY 3.0 IGOADMINISTRATIVE BURDENADMINISTRATIVE COSTSAGGREGATE DEBTARREARSBENEFICIARIESBENEFICIARYBLOCK GRANTSBUDGET CONSTRAINTSBUDGETINGBUSINESS LICENSESBUSINESS TAX REVENUECALCULATIONCAPITAL ALLOCATIONCAPITAL GRANTSCAPITAL INVESTMENTCAPITAL INVESTMENTSCAPITAL MARKETCAPITAL MARKETSCASH PAYMENTSCENTRAL GOVERNMENT GUARANTEESCENTRAL GOVERNMENTSCITIESCOMMUNITY DEVELOPMENTCOMMUNITY SERVICESCONTRACTUAL OBLIGATIONSCONTRIBUTIONCONTRIBUTIONSCURRENT RATEDEBTDEBT LIMITATIONSDEBT SERVICEDEBT STOCKDECENTRALIZATIONDEFICITSDELINQUENT CUSTOMERSDEPRECIATIONECONOMIC DEVELOPMENTECONOMIC MANAGEMENTEQUALIZATIONEXPENDITURE RESPONSIBILITIESEXPENDITURESFINANCIAL ADMINISTRATIONGARBAGE COLLECTIONGENERAL PUBLICGOVERNMENT BORROWINGGOVERNMENT BUDGETGOVERNMENT DEBTGOVERNMENT EXPENDITUREGOVERNMENT EXPENDITURESGOVERNMENT FINANCEGOVERNMENT FUNDINGGOVERNMENT GUARANTEESGOVERNMENT INVESTMENTSGOVERNMENT SUBSIDIESGOVERNMENT SUPPORTGRACE PERIODSGRANT ALLOCATIONGRANT ALLOCATIONSGRANT DISTRIBUTIONGRANT PROGRAMSHEALTH INSURANCEHOUSINGINCOME TAXINFORMATION SYSTEMINFRASTRUCTURE INVESTMENTINSURANCEINTEREST RATESINTERGOVERNMENTAL TRANSFERSINTERNATIONAL BORROWINGINTERNATIONAL MARKETSINVESTMENT DECISIONSINVESTMENT FINANCINGINVESTMENT FUNDSINVESTMENT MANAGEMENTISSUANCELACK OF TRANSPARENCYLAND MANAGEMENTLARGE CITIESLARGE COMPANIESLAWSLEGISLATIONLEVEL OF EDUCATIONLIABILITYLICENSESLOANLOCAL AUTONOMYLOCAL BUSINESSLOCAL FINANCELOCAL GOVERNMENTLOCAL GOVERNMENT BORROWINGLOCAL GOVERNMENT EXPENDITURESLOCAL GOVERNMENT FINANCELOCAL GOVERNMENT REVENUESLOCAL GOVERNMENT SPENDINGLOCAL GOVERNMENTSLOCAL SPENDINGLOCAL TAXESLONG TERM DEBTLOW INCOMEMIGRATIONMUNICIPALMUNICIPAL INFRASTRUCTUREMUNICIPAL REVENUEMUNICIPAL SERVICESMUNICIPALITIESNATIONAL INVESTMENTOPERATING REVENUEOUTREACH PROGRAMOWNERSHIP DATAPAYMENT OF DEBTPAYROLL DEDUCTIONSPENSIONPENSION CONTRIBUTIONSPERSONAL INCOMEPOVERTY RATESPRIVATE BANKSPRIVATE CAPITALPRIVATE FINANCIAL SECTORPROPERTY TAXPROPERTY TAX ADMINISTRATIONPROPERTY TAXESPROVISIONSPUBLICPUBLIC BORROWINGPUBLIC EXPENDITUREPUBLIC INVESTMENTPUBLIC RESOURCESPUBLIC SECTORPUBLIC SERVICESPUBLIC SPENDINGPUBLIC WORKSRAPID GROWTHRATES OF RETURNREAL ESTATERECURRENT COSTRECURRENT COSTSRECURRENT EXPENDITURESREVENUE ASSIGNMENTREVENUE COLLECTIONROADSSALARIESSALESSECONDARY EDUCATIONSECURITIESSENIORSEWERAGE SERVICESSHAREHOLDERSSHORT TERM DEBTSMALL BUSINESSSMALL BUSINESSESSOCIAL ASSISTANCESOCIAL PROTECTIONSOCIAL SECURITYSOCIAL SERVICESSOLID WASTE COLLECTIONSTAKEHOLDERSSTREETSSTRUCTURE OF GOVERNMENTSUBNATIONAL GOVERNMENTSSUPERVISORY BOARDTARIFF REVENUETAXTAX ASSIGNMENTTAX COLLECTIONSTAX RATETAX REVENUETAX REVENUESTAX SHARINGTAXATIONTELECOMMUNICATIONSTRANSPARENCYTRANSPORTTREASURYTURNOVERURBAN DEVELOPMENTURBAN MIGRATIONURBAN PLANNINGURBAN POPULATIONURBAN SERVICESUTILITIESVALUABLEVALUATIONVALUATIONSVARIABLE INTEREST RATESWAGEWAGESWATER SUPPLYWATER SUPPLY SYSTEMSWORTH10.1596/18920