The Institute for Municipalities of Albania has sent its comments and recommendations on the draft 2027 local government budget to Parliament’s Committee on Economy, Employment and Finance. Its main concern is that the proposed funding does not yet reflect the costs and challenges of the territorial reform, which aims to reduce the number of municipalities from 61 to 46.
The Institute welcomes the increase in local government funding and the preservation of basic services, but argues that the 2027 budget cannot be drawn up as an ordinary budget.
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As long as the 61 municipalities continue to carry out their legal functions, their funding must be secured. At the same time, the Institute says the government must calculate the costs of moving to a 46-municipality structure, the expected savings from the reform and how services for citizens will improve.
The Institute’s analysis shows that the total unconditional transfer to local government is expected to reach 49.4 billion lek in 2027, compared with the 47.3 billion lek projected in the 2026 draft budget. This represents an increase of around 2.4%.
According to the document, a nominal increase in funding does not necessarily mean greater financial autonomy, more investment or better services. The Institute therefore calls for a clear distinction between funds covering legal obligations, the impact of salaries and new funding for local autonomy.
The Institute also raises concerns about the formula for distributing funds, which is still based on the existing 61 municipalities. It calls for a simulation for the future 46 municipalities to be published, showing which would benefit and which might receive less funding after the reorganization.
Another shortcoming of the draft budget, according to the Institute, is the lack of a financial assessment of the reform. The documents do not provide a complete picture of consolidation costs, liabilities that will be inherited, administrative reorganization expenses and the potential for actual savings.
To address this gap, the Institute recommends drawing up a Financial Transition Plan for 2027–2029. The plan should include an inventory of assets, contracts, liabilities, personnel, ongoing projects and sources of funding for the reform’s one-off costs.
Regarding local administration, the Institute stresses that merging municipalities should not be limited to changing organizational structures. The process should lead to higher productivity, stronger professional capacity and faster services for citizens.
Its recommendations to Parliament and the Ministry of Finance also include more funding for rural and mountainous areas, concrete standards for sector-specific services and a review of the 200 million lek performance grant so that its distribution criteria reflect the new territorial map.
The Institute calls on the Ministry of Finance and the responsible institutions to report during 2027 on transition costs, savings achieved, staffing changes, investment by territory and the quality of public services.
According to the Institute for Municipalities of Albania, the success of the territorial reform should be measured not only by the reduction in the number of municipalities, but by its tangible impact on the quality, accessibility and cost of services for citizens.
