Budget Revisions during the State of Natural Disasters, 2020-2021

Open Data Albania is conducting a research regarding the State Budget Revisions for the management of two natural disasters: the November 2019 Earthquake and the Covid-19 Pandemic. The purpose of this article is to record these events’ financial effects on the State Budget 2020 and 2021. The data for this article has been retrieved from the Ministry of Finance budget charts, which refer to the legal acts adopted. A special Reconstruction Fund has been set up to manage the earthquake reconstruction process. Meanwhile, for the management of the Pandemic, the budget in the Healthcare and Defense sectors increased, as well as the Council of Ministers Reserve Fund in order to cover other necessary and unforeseen expenditures. The article will analyze the amendments to the Law on the Budget 2020 and 2021, more specifically the Revisions in the Reserve Fund, the Reconstruction Fund and the budget of the Health and the Defense sectors, which are among the main funds used to cover the earthquake and Pandemic costs.

During 2020, four Normative Acts were adopted to amend the 2020 Law on the Budget, in which the initial expenditures were planned at 549.37 Billion Lek and the final planning resulted in the addition of another 30 billion Lek.
Normative Act no.6 dated 21.03.2020  – Total Budget Expenditure increased by 1.6% ending up in 558.37 Billion Lek.
Normative Act no.15 dated 15.04.2020 – Total Budget Expenditures did not change.
Normative Act no.28 dated 02.07.2020 – Total Budget Expenditures increased to ALL 579.53 billion (five hundred and seventy nine billion), or 3.8% higher than the amount approved in NA no. 6.
Normative Act no.34 dated 16.12.2020 – Total Budget Expenditures did not change.
During 2020, the Reserve Fund increased from ALL 1.7 billion in the original plan to ALL 16.2 billion in the amended plan. The additional 14.5 billion Lek of the Reserve Fund, i.e. 48% increase in Total Expenditure, was allocated as follows: 13.5 billion Lek as a Contingency Fund for the AntiCovid Social Package, plus 1 billion Lek for Emergency Management of Anti-covid measures, the latter also carrying the costs of vaccine acquisition.
The Contingency Fund for the AntiCovid Social Package was established as part of the Reserve Fund in Normative Act no. 6 in March 2020, in the amount of 7.5 billion Lek. This fund further increased to 13.5 billion Lek, through Normative Act no. 15, and was distributed through 2 financial packages for social support to citizens and businesses: (i) The first package provided support for small business and citizens, through financial assistance in the amount of 26 thousand Lek per month for employees in business entities with annual income up to 14 million Lek, for the period after the cessation of economic activity. It also entailed double economic assistance and unemployment benefits; (ii) The second package provided support for entrepreneurship and employees, through a 40 thousand Lek subsidy for dismissed employees and employees of businesses closed by order of the Minister of Health and Social Protection; subsidy for employees of businesses with incomes below 14 million Lek, so-called “war salary” subsidy for employees of accommodation structures in the tourism; support for Ballsh Refinery employees; financial aid for economic aid applicants.

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

The Ministry of Health and Social Protection Budget Revisions, 2020

In the original plan, the Budget for Health, and Social Protection (MHSP) was about 62.969 billion ALL. After the approval of the first Normative Act no. 6 in March 2020, the Ministry of Health expenditures increased by 1.2 billion Lek, resulting in 64.169 billion Lek overall. After the approval of the third Normative Act no. 28, the Ministry of Health expenditures increased by 1.22 billion Lek, with the overall expenditure amounting to 65,395 billion. The fourth Normative Act marked an addition of620 million Lek, bringing the overall amount for the Ministry of Health expenditure in 66.015 billion Lek. As a consequence of the 2020 Law on the Budget amendments, through the four normative acts, there was an increase in Total Budget Expenditure 2020 by about thirty billion Lek or 5.5 percent more than the initial plan. Of the later, only 10 % or three billion Lek, were allocated as additional budget for the Ministry of Health and Social Protection, which were then used for pandemic management and strengthening the health system. The Ministry of Health and Social Protection’s final expenditures resulted in 4.8 percent higher than originally planned.

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

Reconstruction Fund Revisions 2020

For the management of another disaster such as the earthquake at the end of 2019, a special fund was set up to manage the new reconstruction programs, the Reconstruction Fund. In the 2020s Law on the Budget, this fund was planned in the amount of 20 billion lek, i.e. as much as 3.6% of the total Budget Expenditures, or 1.1% of the Gross Domestic Product. In July 2020, it increased to 34 billion Lek or 6% of total expenditures. Meanwhile, with the Budget Revision in December 2020 there was a contraction of 2 billion Lek. Therefore, during 2020, the Reconstruction Fund increased overall by plus 12 billion ALL or 40% of the increase in Total Budget Expenditures.

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

Budget Revisions 2021
The 2021 budget continued to be designed in support of and about the management of two natural disasters, the November 26, 2019 earthquake, and the COVID-19 Pandemic, through employment promotion schemes, pro-active business support, and preventive measures for the further spread of COVID-19. Due to the dynamic situation and unpredictable expenditures for Pandemic management, the 2021 Budget plan needed to be revised. Until August 2021, four Normative Acts were approved, amending Law no.137 dated 16.12.2020 – On the 2021 Budget, – 3 of which, but the first act in February, – amended the Reserve Fund for financing the expenses for vaccines against COVID 19. As a result of the 2021 Law on the Budget amendments, there was an increase in the overall Budget Expenditures 2021 by about 17 (seventeen) billion Lek, almost 3 % more than initially planned.
Normative Act No. 4 dated 05.02.2021, the purpose of this normative act was to finance the additional needs of the electoral process.
Normative Act no.8 dated 22.03.2021, which enabled a reallocation of 1 billion ALL within the items of the reserve fund of the Council of Ministers. The purpose of this normative act was to provide the necessary funds for the purchase of the vaccine against Covid-19.
Normative Act no.18 dated 12.04.2021, which supported the vaccination process, increasing by 2 billion ALL the expenditures in the reserve fund of the Council of Ministers, through the increase by the same value of tax revenues.
Normative Act No. 26 dated 22.06.2021, aims to support the vaccination process against COVID-19, to achieve full immunization of the population. Expenditures of the State Budget Reserve Fund are increased by 2 billion Lek, of which 1 billion is intended to finance the vaccination campaign expenditures. This fund was provided by the reallocation of the unused COVID-19 home treatment reimbursement fund.

Reserve Fund Revisions 2021
The revised Reserve Fund increased by 5 billion Lek overall, while the Council of Ministers’ Reserve Fund increased by 6 billion Lek, of which 1 billion was due to a reallocation of an item from the Total Reserve Fund. From this additional 6 billion Lek, 5 billion or 30% of the added budget expenditures, was added to the Covid-19 vaccine fund.

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

MHSP Budget Revisions 2021
The Health Budget was amended, upon the issuance of the first Normative Act in February 2021, by an additional 5 billion Lek, going from 66,142 billion to 71,452 billion Lek, generating an increase in the financial support for the Primary, Secondary Care and Social Care Services. However, the Primary Care Service experienced a contraction with the June Budget Revisions, returning to the original planned levels. In contrast, in June there was a significant increase in planned expenditures for management and administration in the Ministry of Health and Social Protection. Overall, the amendments incurred by the 4 Normative Acts in 2021, resulted in an increase by 4.3 billion Lek in the health budget, i.e. 25% of the additional budget expenditures during 2021. It further resulted in a 0.6% increase in Primary Care expenditures, a 9% increase in Secondary Care, 7% in Social Care and 75% in management and administration expenditures. On the other hand, there was a decrease in the initial planned expenditure for Public Health and the National Emergency Service.

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

The Reconstruction Fund 2021 Revisions
In the 2021’s original Budget, the Reconstruction Fund was predicted in the amount of 28 billion Lek, ie 4.7% of total budget expenditures or 1.7% of Gross Domestic Product. Despite the continuous Budget Revisions during this time, the fund was not affected.

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

Source: MFE (2021), accessed on September 5th, 2021
Comments and Analyses: Open Data Albania

For more information and articles on budget Revisions during the Covid 19 Pandemic or Reconstruction, you can access the ODA Articles section.

Download excel: Budget Revisions during the State of Natural Disasters, 2020-2021
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Translated by: Rezarta Caushaj