A COMPARATIVE ANALYSIS OF LOCAL GOVERNMENT FINANCIAL AUTONOMY IN ALBANIA

Year 2018, Volume: 7 Issue: 1, 1 - 9, 30.03.2018

Mariola Kapidani

https://doi.org/10.17261/Pressacademia.2018.790

Abstract

Purpose- The financial aspect of local government autonomy is
considered a very important topic in the public finance literature especially
for the developing countries. Fiscal autonomy empowers the local government
units with the right means to provide better services for the community and to
proper allocate the funds based on the citizens needs. The purpose of this
paper is to study the level of financial autonomy in Albanian municipalities
and compare the characteristics within different units of local government. 

Methodology- In this paper we analyze the financial autonomy of
Albanian municipalities by proposing an index to compare the governmental units
and classify them in four classes according to the degree of autonomy. Seven
quantitative indicators are used in the index, with different importance
coefficients.

Findings- In Albania, while important progress has been made on
advancing the decentralization reform in the last decade, autonomy of local
government still remains a challenge. Local authorities do not have appropriate
financial resources and they are depended on transfers from the central
government budget.

Conclusion- The index results show that only a small share of
local expenditures is covered by local tax revenues, while intergovernmental
transfers constitute an important source of funds for the execution of local
functions and service delivery.

  

Keywords

Local government, fiscal autonomy, intergovernmental transfers, own revenues

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