Fiscal Decentralization in Albania: Trends and Challenges at the Dawn of Territorial Reform

Decentralization reforms in Albania started very late compared with other countries of the Western Balkans. Only in early the 2000s were important fiscal decentralization reforms undertaken in Albania. The objective of this paper is to analyse the evolution of decentralization in terms of its legal and institutional paths, with a focus on the governance of intergovernmental transfers. Local government in Albania has inherited a fragmented legal foundation that results in an unclear division of functions and responsibilities between levels of government. The performance of the local governments has been hampered by a non-transparent system of grants distribution, as confirmed by this study. Accordingly a strong monitoring and evaluation system and active stakeholder involvement are crucial.