How did the reform change the financial capacities of municipalities? - Report/ The difference between the units deepened. Human resources, a "challenge" for services
The 2014 administrative-territorial reform is estimated to have had a strong positive impact on increasing the financial capacities of municipalities.
According to the local finance report, the local budget tripled, from 34 billion lek to 92.4 billion lek during 2015–2025.
The share of the local budget to GDP increased from 2.4% in 2015 to 3.5% in 2025.
While its own revenues from taxes and fees increased by 248%, going from 11.7 billion to around 40.9 billion lek. On the other hand, unconditional transfers doubled, increasing by 13.9 billion lek (2025 compared to 2015).
The report highlights that the reform created a much more stable fiscal base and increased the financial autonomy of local governments, although not equally among municipalities.
Thus, according to the document, investments increased, but the territorial distribution remains uneven. Investment expenditures from own resources increased from 12 billion lek to 23.2 billion lek, but only 18–20% of the total budget is used for investments in most municipalities.
The municipality of Tirana alone reaches about 40% of the budget for investments, while many small municipalities remain below 10%.
Also, revenues from local taxes and fees are higher mainly in large municipalities. Specifically, the Municipality of Tirana collects 40% of the country's own revenues (17.6 billion lekë); 47 municipalities provide only 0–1% of total local revenues, while Municipalities under 50,000 inhabitants have very low fiscal capacity (most under 1%).
As long as the fiscal capacity of small municipalities is limited, the differences between them and large municipalities have deepened.
The report highlights that dependence on central government remains high in a large number of small municipalities; the majority of small municipalities fail to generate sufficient revenues to cover basic functions and real fiscal autonomy has not yet been achieved for a large part of the territory.
On the other hand, it is concluded that public services have improved in urban areas, but have remained weak in rural areas. While large municipalities provide quality services and greater investments, rural municipalities face: lack of investments; limited human capacities; strong financial dependence on the central budget; difficulties in managing assets and territory.
Human capacities remain a challenge as small units lack specialists and weak administration, resulting in a lack of qualified staff that reduces the ability to collect revenue and provide services.
While the new division of Albania is currently being discussed, the analysis concludes that the administrative-territorial reform has brought about a significant increase in the financial capacities of local governments, increasing the budgets and revenues of municipalities. However, the reform has not fully achieved the objective of full financial autonomy, as many municipalities remain dependent on central government transfers and a large part of the budget is used for operational expenses.
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