Firstly, when talking about education, it is implied primarily that it finances four main programs: elementary education, secondary education, college education, and after 2005 financing for science programs. Secondly, it implies spending for certain categories like salaries, social contributions, school materials, as well as capital investments for all education departments and its administration.
Source: World Bank, Ministry of Finance, Bank of Albania
Comments and analysis: Open Data Albania
We see that the budget allocated for education has generally been increasing. Currently we spend 5 times more than in 1995, but this is still only 2.8%of the GDP, compared to 3.7% back in 1995. Year 2003 was an important turning point for that year’s budget for education was 25% higher than the previous year, as well as year 2007 when a noticeable increase did start carrying over the following years as well. For these reasons, we have analyzed the ratio of the education budget vs the GDP.
Source: World Bank, Ministry of Finance, Bank of Albania
Comments and analysis: Open Data Albania
Education Budget Spending over the GDP
The share of public spending for education over the GDP is an indicator of the priority given to education in comparison with the allocation of the total resources at disposal. Not all education spending is executed through one institution, e.g. money spent on text books, cost of living for students, etc. This means that society does not spend only the money allocated for education. Nonetheless these categories of spending are excluded from the calculations of the indicator. We only take into account the funds allocated from the central budget.
The share of education spending over GDP has fallen steadily from 5% in 1991, to 3.7% në 1995 and to 2.8% in 2002, a period in which the necessity of financing was really high in order to support quality growth and riorganization of the education system. Until 2009 education represented 3.2% of GDP, and in 2010 it fell once again below 3%, only to fall further in 2011 to 2.8%. it must be pointed out that the budget for education has always been below the average of the OECD countries. In 2004, the OECD average spending on education was 4.5% compared to 3.4% in Albania. The same situation repeats itself in 2007, when the figures were respectively 4.6% vs 3.2%.
Budget for education as a share of the overall Government Budget
The share of education budget in the overall budget demonstrates the importance that a government places on education. The graph shows that there have been huge fluctuations in the size of the “piece of cake” that has been granted to education during these last 16 years. This indicator has been falling during 1995-2001 primarily due to the fiscal constraints after the 90s, and the 1997 crisis.
Afterwards, the government took certain measures to protect education from the impact of fluctuating revenues. In fact, after 2001 the share of education in the overall budget kept growing. 2003 marks the biggest increase going from 11.3% in 2002 to 15.5%. However after 2007 this increase stagnated at around 15%.
Looking at the graph in more depth, it is interesting to analyze the attitude towards education spending after the global crisis. While many countries are responding to the crisis with increased investing in human capital, as a key to mitigating the impact of crisis, our budget for education is shrunk by 3% compared to 2009. Even though for 2011 it is expected that more funding would go towards education, we must wait and see the progress of revenues for the first 6 months, to accurately assess the government’s reaction towards the sectoral spending, including education.
All the information is presented in the table below:
Source: World Bank, Ministry of Finance, Bank of Albania
Comments and analysis: Open Data Albania