Public Investments with Foreign and Domestic Financing: The level of Budgetary Planning non-consolidation, Revisions and actual Consolidation 2018 – 2024

Open Data Albania is going through the data on budget capital expenditures, for the years 2018-2024. 

Capital expenditures are the expenditures made by a certain budget unit for the provision of new public assets or the repair of the previous ones  – and whose life expectancy goes beyond a single fiscal year, – as well as for capital transfers. Capital expenditure is financed from internal and external sources, pooled towards public investments. The ability of a government to benefit from foreign aid or foreign guarantee instruments, as well as the consistency to successfully implement a project financed by said sources are important details of budgeting and financial management. 

These expenditures make up no more than a fifth of the state budget, since the main part, about 75 percent, consists of the so-called Current Expenditures. 

In this analysis we will be examining consolidated data for the last five budgetary years, along with the 2023 and 2024 Plan. 

Over the last five years, Capital Expenditures have increased from ALL 78.4 to ALL 112 billion or an extra 43 percent. Whereas, the expenditures regarding internal financing have increased by 24 percent from ALL 51.5 billion to ALL 63.7 billion, the expenses with foreign financing have fallen by 29 percent in 2022 compared to 2018, respectively at ALL 18.7 billion or ALL 7.5 billion less than in 2018. Capital Expenditures in the 2024  Plan (ALL 128.5 billion ) are less than the most recent 2023 Plan, as amended by Normative Act (ALL 136.6 billion), however, foreign financing expenditures are higher, more specifically at ALL 44 billion in 2024 from ALL 32.5 billion in 2023. 

Source: Ministry of Economy and Finance, annual consolidated fiscal tables
Comments and Analyses: Open Data Albania

Capital Expenditures are dominated by internally financed expenditures. In 2018, the expenditure for investments with foreign financing constituted almost one third of the total Capital Expenditures (33 percent), but this share has decreased in the following years to 26 percent in 2021 and 17 percent in 2022. The drastic decrease in the latter mainly comes as a result of the Reconstruction Fund being registered in the category of Capital Expenditures, which has a significant weight with about a quarter of the total. Such fund, until 2021, was registered as a separate category, but after many recommendations from international parties, the change was lastly reflected in the 2022 budget. In 2024, the weight of investments with foreign financing is planned to increase, specifically up to 34 percent of Capital Expenditures. 

Source: Ministry of Economy and Finance, annual consolidated fiscal tables
Comments and Analyses: Open Data Albania

In general, investment expenditures are not fully consolidated in any of the budget years, but these five years an average of 91 percent of budget plans were realized. However, the most problematic are those with foreign financing, consolidated at an average of 83 percent, while those with internal financing are realized at around 96 percent of the plan. Expenditures for investments with internal financing have a faster surge in the month of December, that is, before the end of the fiscal year, where almost a third of the expenditures generally realized that month. Meanwhile, expenditures with foreign financing marked a weak performance in 2019, in which only 76 percent of the amended plan was consolidated. Compared to the initial plan, the results are even weaker in 2022, with about 54 percent. 

Comments and Analyses: Open Data Albania

What is observed throughout these budgetary years is also the intervention of the government aiming to reduce investments with foreign financing and to increase those with internal investment, specifically using Normative Acts to revise the law of the initial budget,  constantly changing these categories of expenditures. More specifically, in 2019, the amount of expenditure with foreign financing was reduced from ALL 45.6 billion to ALL 31 billion, i.e. 32 percent less. In 2020, there is a reduction of 20 percent, in 2021 lesser reduction with 10 percent and in 2022 there is a bigger reduction from ALL 34.5 billion to ALL 22 billion, or 36 percent less. Reductions were also planned for 2023, specifically by 29 percent or ALL 13.1 billion less, reflecting the progress of project works, mainly in the infrastructure sector with a ALL 9 billion reduction planned.  

Comments and Analyses: Open Data Albania

The list of public investments, detailing the source of funding, domestic or foreign, accompanies the Law on the Budget in the Parliament, but does not pass to the latter for approval, as part of the budget package. Similarly, during the approval of the actual budget, no information is reported or forwarded on the list of these projects and their progress.  

Download excel: Public Investments with Foreign and Domestic Financing: The level of Budgetary Planning non-consolidation, Revisions and actual Consolidation 2018 – 2024
Comments and Analyses: Open Data Albania
Contributed by: B.Gjaci
Translated by: Rezarta Cushaj