Albania

Albania - Monitoring report

Date of the monitoring visit: from 12 to 14 December 2012
Report adopted on: 31 October 2013

The present report on local and regional democracy in Albania follows upon Recommendation 201(2006). The report notes with satisfaction that decentralisation of the state power has been a major component of democratisation in Albania and that the legislative framework is in line with the Charter. It also notes, however, that regional authorities appear to be very weak, the local government associations appear fragmented and without a unified voice, and that there are no clear regulations for the process of consultation between the local and central governments. It draws attention to the fact that a territorial reform as well as a comprehensive and intensive fiscal reform could promote local economy.

 

The report recommends that the Albanian Government elaborate a territorial policy which can offer small communes and municipalities the possibility of performing their tasks and benefiting from economies of scale, to enhance local authority competences, to ensure concomitant financing of delegated competences and to clarify and increase regional competences. It encourages the government to develop legislation that will set up clear requirements for the central authorities to consult with local authorities on matters which concern them directly. It also invites the government to work with all the existing associations to achieve the establishment of a body that could represent all local authorities. It invites the authorities to sign and ratify the Additional Protocol to the European Charter of Local Self-Government on the right to participate in the affairs of a local authority (CETS No. 207).

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Article 2
Constitutional and legal foundation for local self government - Article ratified

The principle of local self government shall be recognised in domestic legislation, and where practicable in the constitution.


The organisation and functioning of local government in Albania is guaranteed by the following legal acts:

 

the Albanian Constitution, Part I, Article 13 and Part VI on local government, adopted in 1998;

the European Charter of Local Self-Government, signed on the basis of Decision of Council of Ministers (DCM) No. 203, dated 26.3.1998 and ratified by the Parliament by adopting the Law No. 8548 “On The European Charter of Local Self-Government” dated by11 November 1999;

Law No. 8652, dated 31 July 2000 ‘On the Organisation and Functioning of Local Government in Albania’ as amended;

Law no. 8654, date 31 July 2000, “On the organisation and functioning of the municipality of Tirana”;

Law no. 8653, date 31 July 2000, “On the administrative and territorial division of local government units in Republic of Albania”;

Law No. 8699 dated 23 November 2000 “On the ratification of the Cross-Border Cooperation Framework Convention between municipalities and local authorities, its two protocols and other local governance documents”;

DCM No. 651, dated 29 December 1999 ‘On the Strategy for Decentralisation and Local Autonomy’.

 

Constitutional provisions

 

The fundamental principles of the Constitution of Albania provide the key provisions for the structure and operation of local and regional authorities: separation of powers, supremacy of the sovereignty of the people, right to direct universal suffrage by secret ballot, political pluralism, and guarantee of the fundamental rights and freedoms of citizens.

 

Article 13 of Constitution affirms that the local government in Albania is founded upon the basis of the principle of decentralisation of power and is exercised according to the principle of local autonomy.

 

Articles 108-115 define the principles of local government and authorities. Thus, Article 108(1) establishes that the units of local government are communes, municipalities and regions, while Article 108(2) establishes that the local boundaries cannot be changed without prior consultation of the inhabitants.

 

Article 109 (1) stipulates that, the representative organs of the basic units of local government are councils that are elected every four years in general direct elections by secret ballot. In addition, the mayor of the municipality and the head of the commune as the executive organ of the LGU, are elected directly in the same manner.

 

Article 110 defines that, the region (composed of several basic unit of local government) is the unit in which regional policies are elaborated, implemented and harmonised with state policy.

 

Basic powers and the principle of the right to local fiscal autonomy are listed in Article 113, establishing that the councils of the communes, municipalities and regions regulate and administer local issues, in an independent manner, within their jurisdiction by exercising the rights of ownership, administering all income created local issues, having the right to exercise economic activity and the right to collect and spend the income necessary for the exercise of their functions. According to this Article, local authorities should be entitled to adequate fiscal financial resources, which they may freely dispose within the framework of their powers.

 

 

Primary legislation

 

The Law on the Organisation and Functioning of Local Government, no. 8652 of July 2000 (the Organic Law), is the main law that has been prepared and approved within the framework of the decentralisation reform. It affirms the rights and competences of the LGUs in conformity with the Constitution and the Charter, and establishes the framework of the relations between the central and local governments.

 

The Organic Law is divided into 11 chapters covering general provisions, the rights of the LGUs, the functions and competencies of Communes, Municipalities and Regions, local government finance, the composition, establishment, organisation, authority and tasks of municipal and communal councils, the mayors, territorial subdivisions, the organisation of the regional council and the reorganisation of LGUs.

 

By virtue of this law, municipalities and communes are clearly entitled to a substantial autonomy over a large list of functions in the areas of public services, economic development, social and cultural activities, public order and protection.

 

Other important acts with additional amendments of relevance to local government are:

Law No. 8743 dated 2.22. 2001 ‘On Immovable State Property’ that defines: the immovable properties to be transferred in property or in use to the local governments, the regime of property rights and the administrative management of the transfer process with key steps and respective deadlines;

Law No. 8744, dated 2.22. 2001 “On the Transfer of Immovable State Public Property to Local Government Units”;

Law No. 8653, dated 31 July 2000 ‘On the Territorial and Administrative Division of Local Government Units’, defines the borders of each municipality, commune, district and region;

Law No.8654, dated 31 July 2000 on ‘Organisation and Functioning of Municipality of Tirana’;

Law No. 8752, dated 26.3.2001, ‘On Establishment and Functioning of the Structures for the Administration and Protection of Land’;

Law No. 8927, dated 25.7.2002, ‘On the Prefect’;

Law No. 8934, dated 5.9.2002, ‘On Environmental Protection’;

Law No. 8978, dated 12 December 2002, ‘On the Local Tax for Small Business’;

Law No. 8979, dated 12 December 2002, ‘On some Additions and Amendments to Law No. 8438, dated 28 December 1998, ‘On Income Tax ’;

Law No. 8980, dated 12 December 2002, ‘On Amendments to Law No. 8560, dated 22 December 1999, ‘On Tax Procedures in the Republic Of Albania’’;

Law No. 8982, dated 12 December 2002, ‘On the Local Tax System’;

Law No. 9010, dated 13.2.2003, ‘On the Environmental Administration of Solid Waste’;

Law No. 7850 dated 29.7.1994 ‘The Civil Code’;

Law No 8991, date 23/01/2003, “On some additions and amendments to the Law No 8405, date 17.9.1998, “On urban planning”, amended by the decision No 2, date 25 November 1999 of the Constitutional Court, and by Laws No 8453, date 4.2.1999, No 8501, date 16.6.1999 and No 8682, date 7 November 2000”;

Law No. 9232, date 13 May 2004 “On social programs for housing residents in urban areas”;

Law No. 9632, date 30 October 2006 “On local taxes”;

Law No. 9675, date 13 January2007 “On some amendments to law no. 8417, date 21 October 1998 “Constitution of the Republic of Albania”;

Law No. 9719, date 23 April 2007 “On some changes and amendments to Law no. 9232, date 13 May 2004 “On social programs for housing residents in urban areas”;

Law No. 9745, date 28 May 2007 “On some changes and amendments to Law no. 9632, date 30 October 2006, “On local taxes”;

Law No. 9743, date 28 May 2007 “On some changes and amendments to Law no. 8405, date 17 September 1998 “On urban planning”, amended;

Law No. 9869, date 4.2.2008 “On loans for Local Government”;

Law No. 10 119, date 23.4.2009 “On territory planning”.

 

Article 2 of the Charter stipulates clearly that the “principle of local self-government shall be recognised in domestic legislation and where practicable in the constitution”. The Constitution of Albania (Article 13) recognises the concept of local self-government. Articles 108-115 thereof set up the fundamental rights, functions and power boundaries for the LGUs. The scope of their powers, internal structure and financial guarantees are defined by the organic law; territorial arrangement is established by the law on territorial and administrative division of the LGUs. There are also some 20 legal acts that regulate the local government system in Albania.

 

The Albanian legal system being monistic, the Charter is recognised as an integral part of the legislation and there is a specific law (No. 8548) that sets up the legal mechanisms for the realisation of the principles of the Charter. The Rapporteurs are satisfied to note that the principles of the Charter set forth in Article 2 are fully covered and taken into account by the legal acts of Albania.

 

The rapporteurs would only add that, in many Council of Europe member States, the administrative territorial division and the boundaries of municipalities are an integral part of the organic law on LGUs whereas in Albania, they are the subject of a separate law. This law regulates the structure, roles and responsibilities of both the regional authorities and the LGUs, which creates confusion. In an ideal case, there would be a separate law on regional governments and perhaps, this is a consideration that could be taken up by the legislator in further developing the legislation on local government.

 

It should also be noted that the current procedure for the adoption of normative acts gives the Council of Ministers the right to issue a decision that obtains status of law 40 days after formal adoption by the Parliament. This practice allows the government to make its decisions obligatory for all levels of public administration in the country. The rapporteurs would recommend replacing this procedure with the ordinary practice of adopting normative acts after three readings, giving parliamentary factions more control over the legislative process and improving legislative procedure.

 

Article 3.1
Concept of local self government - Article ratified

Local self-government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population.


Consult reply indicated at article 2

Article 3.2
Concept of local self government - Article ratified

This right shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage, and which may possess executive organs responsible to them. This provision shall in no way affect recourse to assemblies of citizens, referendums or any other form of direct citizen participation where it is permitted by statute.


Consult reply indicated at article 2

Article 4.1
Scope of local self government - Article ratified

The basic powers and responsibilities of local authorities shall be prescribed by the constitution or by statute. However, this provision shall not prevent the attribution to local authorities of powers and responsibilities for specific purposes in accordance with the law.


Basic functions and competencies of local self-government units are prescribed in the Constitution of Albania (Part VI) and in Laws No. 8652 and 8654. Local self-government units have own (exclusive), shared and delegated functions. Local councils have the right to make decisions on all types of powers assigned to them and LGUs of the first tier can delegate their functions to the upper tier of local self-governance. Local government associations are consulted by central authorities on the subject of allocation of new functions to LGUs. The Rapporteurs would say that Albanian legislation is in compliance with paragraph 1 of Article 4 of the Charter, although there are some issues, which need more clarity and coherence (see the following paras. 140 – 143). However, the Rapporteurs would also note that they have heard complaints from the representatives of Albanian communes and municipalities that these consultations have a sporadic nature and local officials are prevented from active participation due to the setting of strict deadlines.

Article 4.2
Scope of local self government - Article ratified

Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority.


Albanian legislation (Law No. 8652) provides that LGUs have full discretion to exercise their own competences and take decisions on matters that are not prohibited for them by legislation. Albania has two tiers of LGUs. The system of village boards and town boroughs allow true proximity with the citizens. Therefore, it can be said that the Albanian system of local government formally corresponds to the requirements paragraphs 2 and 3 of Article 4 of the Charter.

Article 4.3
Scope of local self government - Article ratified

Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy.


Consult reply indicated at article 4.2

Article 4.4
Scope of local self government - Article ratified

Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law.


1. On the other hand, Law No. 8652 distinguishes between "authority" and "functions". “Authority” is synonymous with "competence" (i.e. authority given by law to a certain entity for carrying out a function/task). “Authority” is further divided into four categories (administrative, service, investment and regulatory). Accordingly, LGUs in Albania may have only an “administrative authority” in one sector of municipal economy and “investment and service authorities” in another, while “regulatory authority” may belong to the central government agencies.  Such partitioning of competences contradicts with a basic principle of the Charter according to which, competences of local governments should be full and exclusive. In general, the terminology used in the Albanian legislation is confusing because the terms "own" and "delegated" are used not only for “authority” but also for the “functions”.

 

In practice, the Albanian model of territorial regulation and spatial planning is a vivid example of inconsistency with paragraph 4 of Article 4 of the Charter. This competence, defined as an own “function” of local authorities is, in fact, implemented by a parallel structure that is chaired by the Prime Minister where all decisions are taken within the strict administrative hierarchy. Such a fragmentation of LGU powers does not perfectly fit the requirements of paragraph 4 of Article 4 which stipulates that the powers of local authorities be full and exclusive.

Article 4.5
Scope of local self government - Article ratified

Where powers are delegated to them by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.

 


The Organic Law also states that Albanian municipalities and communes have delegated functions. These are functions of the central government which are, by law or by a contractual agreement, assigned to LGUs. The law provides that the central government guarantee the necessary financial support for the execution of these functions. However, the law does not specify which functions may be delegated to local authorities; the delegation of power is essentially left to line ministries. Therefore, in the rapporteurs’ opinion, it can be said that, in general, Albanian legislation on local government complies with paragraph 5 of Article 4; however delegated competences need to be clearly defined in Law No. 8652.

Article 4.6
Scope of local self government - Article ratified

Local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly.

 


There are no clear regulations and rights for the involvement of the associations in the process of consultation with the central government agencies. No legal act of Albania stipulates what the specific obligations for the central government in process of consultation are. Although the right of LGUs to associate is guaranteed by the Constitution, the Rapporteurs would invite the Government to consider introducing a specific article in Law No. 8652 that will set up clear requirements for the central authorities to consult with LGUs on matters which concerns them directly, as required by paragraph 6 of Article 4 of the Charter and as reiterated in the Recommendation 171 (2005) on consultation of local authorities and Recommendation 328 (2012) on the right of local authorities to be consulted by other levels of government.

Article 5
Protection of local authority boundaries - Article ratified

Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.

 


Albanian Law No. 8652 (Chapter X) defines the procedures for boundary changes to LGUs. It stipulates clearly that a local council should express its opinion on any change to the boundary of its respective LGUs, but the law does not regulate the case when a local council is against such a change. It does not provide any possibility to the local council to oppose the decision of the government and apply to the court against the central government decision. Albanian legislation is not specific enough on the right of a local authority to oppose any changes to its borders, nor does it provide for the use the institution of referendum to validate public support for such changes, Albanian legislation only refers to a general affiliation to the “opinion of community expressed directly or indirectly by various interested subjects”.

 

Such a wide interpretation of the requirement of Article 5 cannot be construed as an example of good practice in honouring the spirit and principles of the Charter. Therefore, in the rapporteurs’ opinion, although Albanian legislation generally recognises the need for consultation with local communities as stipulated in Article 5 of the Charter, there is still need for a clear mechanism of consultation (local referendums or equivalent means) with local communes on LGU boundary changes.

Article 6.1
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

Without prejudice to more general statutory provisions, local authorities shall be able to determine their own internal administrative structures in order to adapt them to local needs and ensure effective management.


Law No. 8652 clearly stipulates that the elected bodies of communes and municipalities have the right to determine their internal structure. In practice, deliberative bodies of communes and municipalities adopt their statutes, which establish the internal structure for municipal administration. Thus, it can be said that both Albanian legislation and practice in this regard are in full compliance with paragraph 1 of Article 6 of the Charter.

Article 6.2
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

The conditions of service of local government employees shall be such as to permit the recruitment of high-quality staff on the basis of merit and competence; to this end adequate training opportunities, remuneration and career prospects shall be provided.


As to paragraph 2 of Article 6, the Rapporteurs think that the Albanian system of local government and civil service is formally in compliance with the Charter. There is a need to create a more comprehensive legal framework for municipal public service, especially with regard to communes and regional councils, where conditions of service and employment are regulated by the labour code of Albania and not by the civil service code. It is critically important for Albania to develop a civil service code that will establish and regulate equal conditions of service in all LGUs of the country.

 

The rapporteurs have been informed that recently, Parliament has approved amendments to the Law on Civil Service, which is a positive development. However, the text not being available to them, the Rapporteurs would abstain from comment on its scope at this stage.

Article 7.1
Conditions under which responsibilities at local level are exercised - Article ratified

The conditions of office of local elected representatives shall provide for free exercise of their functions.


Article 27 of Law No. 8652 establishes the conditions of service for the elected local officials. Members of local deliberative bodies have the right to express their opinion freely, as well as the right to request any information needed for the execution of their mandate. Councillors have the right to receive compensation for the execution of their functions as determined by the legislation.

 

Their term of office is 4 years for all elected officials.

 

Conditions of service for appointed officials in municipalities are determined by the law on civil service, which sets up qualification requirements, procedures for hiring and firing of municipal servants, remuneration schemes and conditions for career development. The status and conditions of work for employees in the communes and regional councils are determined by the labour code of Albania and not by the law on public service. This differentiation between the staff of municipalities and communes is explained by the fact that municipalities (cities) have more qualified human resources than communes and that the application of civil service law to communes would result in a massive loss of personnel.

 

Albanian legislation regulates conditions of work as well as procedures for financial compensation and for avoiding of conflict of interest in a very efficient way, providing proper guarantees to the locally elected officials. The mandate of the mayor of a municipality/commune is verified by a court; this can sometimes take a long period of time. As a conclusion, the rapporteurs would like to state that the Albanian system meets the requirements of Article 7 of the Charter but Albanian lawmakers should nevertheless be invited to think about simplifying the process of validation of credentials for the mayors of communes and municipalities

Article 7.2
Conditions under which responsibilities at local level are exercised - Article ratified

They shall allow for appropriate financial compensation for expenses incurred in the exercise of the office in question as well as, where appropriate, compensation for loss of earnings or remuneration for work done and corresponding social welfare protection.


Consult reply indicated at article 7.1

Article 7.3
Conditions under which responsibilities at local level are exercised - Article ratified

Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles.


Consult reply indicated at article 7.1

Article 8.1
Administrative supervision of local authorities' activities - Article ratified

Any administrative supervision of local authorities may only be exercised according to such procedures and in such cases as are provided for by the constitution or by statute.


Administrative supervision

 

Article 22 of Law No. 8652 establishes the general principle of control aimed at ensuring compliance with the legislation on finance and budgeting. The law on Prefects regulates the supervision of controls of legality for all local government acts.

 

Law No. 8927, dated 25 July 2002, “On the Prefect” as amended, establishes the Prefect’s right of supervision over the legitimacy of decisions and regulations issued by LGUs, which are implemented on the basis of Article 33(6) of the Organic Law. The examination of local government acts by the Prefect does not necessarily lead to suspension of execution of the acts under scrutiny.

 

Each LGU sends all normative acts to the Prefect for supervision within 7 days after adoption. The Prefect examines the legal act during 10 days and if the act corresponds to the legislation, an official notification is sent to the respective LGU. If the Prefect observes a legal inconsistency, the act is sent back to the respective LGU with recommendations to amend the act. A revised version is sent to the Perfect in 7 days and, if irregularities are observed again, the Prefect applies to court for a judicial review and sends notification thereof to the LGU. The law on Prefects stipulates that the Prefect can request a local government only once to revise their legal act. However, Article 14, para. 2, line “c” thereof gives the Prefect the right to send additional recommendations to LGUs on acts that are already before a court. Neither Law No. 8652 nor Law No. 8927 give local authorities the right to apply to the court against the Prefect’s decisions. Moreover, Law No. 8927 stipulates clearly that, based on the recommendation from the Prefect, “the local government organ revises the act” (Article 14, para. 2, line “b”). The Rapporteurs draw attention to the fact that this is an imperative statement which obliges LGUs to revise their act according to the recommendations provided by the Prefect.

 

Albanian legislation does not differentiate between regimes of supervision for own and delegated functions, the procedure being the same for both. In addition, the Prefect enjoys the right to examine citizens’ appeals on the legality of normative and individual acts by LGUs. The Prefect has the right to conduct audits on all normative and individual acts adopted by LGUs every 6 months. If a specific act has not been submitted for supervision by the LGU to the Prefect, the latter requests from the court the invalidation of that act, regardless of its compliance with the national legislation (Law No. 8927, Article 15, para.2).

 

The rapporteurs are of the opinion that, formally, the system of administrative supervision is in compliance with the requirements of the Charter. However, there are some key issues that need clarity and better regulation, namely:

 

It is difficult to understand what type of supervision (a priori or a posteriori) is used as regards the own functions of LGUs. The legislation stipulates that the examination of an act by a Prefect does not lead to suspension of its legal power. However, if the normative act has not been submitted to the Prefect (i.e. it is not registered with the Prefect’s chancellery), the Prefect has the right to request its annulment by the court. Taking into account that Article 14, para.2, line “b” of Law No. 8927 imperatively obliges LGUs “to revise the local act” according to the recommendation of the Prefect, the rapporteurs conclude that the Albanian system of administrative supervision is closer to an a priori than to posteriori supervision, To avoid such a wide interpretation, the Rapporteurs would recommend that Albania introduce, for local acts, the kind of provision the Constitution provides for national legislative acts (Article 117, para.1), when these acts enter into force after their publication in the official journal.

 

Albania uses the same regime of supervision for both delegated and own functions, while the Charter (Article 8, para.2) maintains that supervision over the expediency of decisions must be used for delegated functions. Albanian legislation does not specify a regime for supervision over expediency as it only recognises legal supervision over the decision of local governments. Taking into account that Albanian LGUs have a wide range of delegated and shared functions, it is clear for the Rapporteurs that the country needs to have a clear and applicable regime for supervision with regard to the expediency of decisions taken by communes and municipalities regarding delegated and shared functions.

 

Albanian legislation allows Prefects to examine citizens’ appeals on the illegality of LGU acts. This provision may be viewed as an impediment for local authorities, as it allows a higher administrative body to examine local acts that have already been supervised (as, inter alia, these acts are already in force). Normally, such appeals should be examined by a civil court and not by Prefects.

 

The rapporteurs would also draw attention to a translation issue: Law No. 8927 dated 25 July, 2002 "On the Prefect” as translated, states that the “… prefect checks the realisation of the functions and competences delegated by the central government and the use of the funds contemplated for them, both when they are contemplated by law and when they have been set by joint agreement between a central institution and an organ of local government.” The difficulty lies in the translation of the word ‘kontrol’ from Albanian. This may be rendered as “audit”, “check” or “control” which all signify different degrees of involvement and some of which may indeed involve a ‘control of opportunity” by the Prefect rather than a simple control of legality. This may indeed lead to a direct interference by the Prefect in the exercise of the local authority’s “functions and competences”. So, it would be important to use the proper terminology of the law in official translation.

 

Audit and financial control

 

Article 21 of the Law No. 8652 establishes the conditions for the internal control of LGUs. Each council sets up a finance committee for controlling the local budget during the mandate of the council. Local executives are obliged to report to the finance committee on the execution of the local budget and public expenditure. The committee has free and full access to all financial documents. In case of necessity finance, it may request an external audit.

 

Law No. 8652 stipulates that external audits in LGUs should be conducted by the Supreme State Control, which checks the legality of spending public funds. Additional financial control is carried out by relevant line ministries, such as the Ministry of the Interior and the Ministry of Finance. During the monitoring visit, the delegation has been informed by the representatives of communes and municipalities that the Ministry of Finance performs financial audits regularly according to an adopted calendar. Communes are audited once every two years while municipalities are checked on an annual basis. Municipalities and communes are also audited by the Ministry of the Interior. The 65 municipalities are divided into 6 groups (10 municipalities in each group) and each group is audited once every 2 years. Communes are divided into groups (20 or 25 communes in each group) and each group is audited according to the specific calendar adopted by the Ministry.

Article 8.2
Administrative supervision of local authorities' activities - Article ratified

Any administrative supervision of the activities of the local authorities shall normally aim only at ensuring compliance with the law and with constitutional principles. Administrative supervision may however be exercised with regard to expediency by higher-level authorities in respect of tasks the execution of which is delegated to local authorities.


Administrative supervision

 

Article 22 of Law No. 8652 establishes the general principle of control aimed at ensuring compliance with the legislation on finance and budgeting. The law on Prefects regulates the supervision of controls of legality for all local government acts.

 

Law No. 8927, dated 25 July 2002, “On the Prefect” as amended, establishes the Prefect’s right of supervision over the legitimacy of decisions and regulations issued by LGUs, which are implemented on the basis of Article 33(6) of the Organic Law. The examination of local government acts by the Prefect does not necessarily lead to suspension of execution of the acts under scrutiny.

 

Each LGU sends all normative acts to the Prefect for supervision within 7 days after adoption. The Prefect examines the legal act during 10 days and if the act corresponds to the legislation, an official notification is sent to the respective LGU. If the Prefect observes a legal inconsistency, the act is sent back to the respective LGU with recommendations to amend the act. A revised version is sent to the Perfect in 7 days and, if irregularities are observed again, the Prefect applies to court for a judicial review and sends notification thereof to the LGU. The law on Prefects stipulates that the Prefect can request a local government only once to revise their legal act. However, Article 14, para. 2, line “c” thereof gives the Prefect the right to send additional recommendations to LGUs on acts that are already before a court. Neither Law No. 8652 nor Law No. 8927 give local authorities the right to apply to the court against the Prefect’s decisions. Moreover, Law No. 8927 stipulates clearly that, based on the recommendation from the Prefect, “the local government organ revises the act” (Article 14, para. 2, line “b”). The Rapporteurs draw attention to the fact that this is an imperative statement which obliges LGUs to revise their act according to the recommendations provided by the Prefect.

 

Albanian legislation does not differentiate between regimes of supervision for own and delegated functions, the procedure being the same for both. In addition, the Prefect enjoys the right to examine citizens’ appeals on the legality of normative and individual acts by LGUs. The Prefect has the right to conduct audits on all normative and individual acts adopted by LGUs every 6 months. If a specific act has not been submitted for supervision by the LGU to the Prefect, the latter requests from the court the invalidation of that act, regardless of its compliance with the national legislation (Law No. 8927, Article 15, para.2).

 

The rapporteurs are of the opinion that, formally, the system of administrative supervision is in compliance with the requirements of the Charter. However, there are some key issues that need clarity and better regulation, namely:

 

It is difficult to understand what type of supervision (a priori or a posteriori) is used as regards the own functions of LGUs. The legislation stipulates that the examination of an act by a Prefect does not lead to suspension of its legal power. However, if the normative act has not been submitted to the Prefect (i.e. it is not registered with the Prefect’s chancellery), the Prefect has the right to request its annulment by the court. Taking into account that Article 14, para.2, line “b” of Law No. 8927 imperatively obliges LGUs “to revise the local act” according to the recommendation of the Prefect, the rapporteurs conclude that the Albanian system of administrative supervision is closer to an a priori than to posteriori supervision, To avoid such a wide interpretation, the Rapporteurs would recommend that Albania introduce, for local acts, the kind of provision the Constitution provides for national legislative acts (Article 117, para.1), when these acts enter into force after their publication in the official journal.

 

Albania uses the same regime of supervision for both delegated and own functions, while the Charter (Article 8, para.2) maintains that supervision over the expediency of decisions must be used for delegated functions. Albanian legislation does not specify a regime for supervision over expediency as it only recognises legal supervision over the decision of local governments. Taking into account that Albanian LGUs have a wide range of delegated and shared functions, it is clear for the Rapporteurs that the country needs to have a clear and applicable regime for supervision with regard to the expediency of decisions taken by communes and municipalities regarding delegated and shared functions.

 

Albanian legislation allows Prefects to examine citizens’ appeals on the illegality of LGU acts. This provision may be viewed as an impediment for local authorities, as it allows a higher administrative body to examine local acts that have already been supervised (as, inter alia, these acts are already in force). Normally, such appeals should be examined by a civil court and not by Prefects.

 

The rapporteurs would also draw attention to a translation issue: Law No. 8927 dated 25 July, 2002 "On the Prefect” as translated, states that the “… prefect checks the realisation of the functions and competences delegated by the central government and the use of the funds contemplated for them, both when they are contemplated by law and when they have been set by joint agreement between a central institution and an organ of local government.” The difficulty lies in the translation of the word ‘kontrol’ from Albanian. This may be rendered as “audit”, “check” or “control” which all signify different degrees of involvement and some of which may indeed involve a ‘control of opportunity” by the Prefect rather than a simple control of legality. This may indeed lead to a direct interference by the Prefect in the exercise of the local authority’s “functions and competences”. So, it would be important to use the proper terminology of the law in official translation.

 

Audit and financial control

 

Article 21 of the Law No. 8652 establishes the conditions for the internal control of LGUs. Each council sets up a finance committee for controlling the local budget during the mandate of the council. Local executives are obliged to report to the finance committee on the execution of the local budget and public expenditure. The committee has free and full access to all financial documents. In case of necessity finance, it may request an external audit.

 

Law No. 8652 stipulates that external audits in LGUs should be conducted by the Supreme State Control, which checks the legality of spending public funds. Additional financial control is carried out by relevant line ministries, such as the Ministry of the Interior and the Ministry of Finance. During the monitoring visit, the delegation has been informed by the representatives of communes and municipalities that the Ministry of Finance performs financial audits regularly according to an adopted calendar. Communes are audited once every two years while municipalities are checked on an annual basis. Municipalities and communes are also audited by the Ministry of the Interior. The 65 municipalities are divided into 6 groups (10 municipalities in each group) and each group is audited once every 2 years. Communes are divided into groups (20 or 25 communes in each group) and each group is audited according to the specific calendar adopted by the Ministry.

Article 8.3
Administrative supervision of local authorities' activities - Article ratified

Administrative supervision of local authorities shall be exercised in such a way as to ensure that the intervention of the controlling authority is kept in proportion to the importance of the interests which it is intended to protect.


Administrative supervision

 

Article 22 of Law No. 8652 establishes the general principle of control aimed at ensuring compliance with the legislation on finance and budgeting. The law on Prefects regulates the supervision of controls of legality for all local government acts.

 

Law No. 8927, dated 25 July 2002, “On the Prefect” as amended, establishes the Prefect’s right of supervision over the legitimacy of decisions and regulations issued by LGUs, which are implemented on the basis of Article 33(6) of the Organic Law. The examination of local government acts by the Prefect does not necessarily lead to suspension of execution of the acts under scrutiny.

 

Each LGU sends all normative acts to the Prefect for supervision within 7 days after adoption. The Prefect examines the legal act during 10 days and if the act corresponds to the legislation, an official notification is sent to the respective LGU. If the Prefect observes a legal inconsistency, the act is sent back to the respective LGU with recommendations to amend the act. A revised version is sent to the Perfect in 7 days and, if irregularities are observed again, the Prefect applies to court for a judicial review and sends notification thereof to the LGU. The law on Prefects stipulates that the Prefect can request a local government only once to revise their legal act. However, Article 14, para. 2, line “c” thereof gives the Prefect the right to send additional recommendations to LGUs on acts that are already before a court. Neither Law No. 8652 nor Law No. 8927 give local authorities the right to apply to the court against the Prefect’s decisions. Moreover, Law No. 8927 stipulates clearly that, based on the recommendation from the Prefect, “the local government organ revises the act” (Article 14, para. 2, line “b”). The Rapporteurs draw attention to the fact that this is an imperative statement which obliges LGUs to revise their act according to the recommendations provided by the Prefect.

 

Albanian legislation does not differentiate between regimes of supervision for own and delegated functions, the procedure being the same for both. In addition, the Prefect enjoys the right to examine citizens’ appeals on the legality of normative and individual acts by LGUs. The Prefect has the right to conduct audits on all normative and individual acts adopted by LGUs every 6 months. If a specific act has not been submitted for supervision by the LGU to the Prefect, the latter requests from the court the invalidation of that act, regardless of its compliance with the national legislation (Law No. 8927, Article 15, para.2).

 

The rapporteurs are of the opinion that, formally, the system of administrative supervision is in compliance with the requirements of the Charter. However, there are some key issues that need clarity and better regulation, namely:

 

It is difficult to understand what type of supervision (a priori or a posteriori) is used as regards the own functions of LGUs. The legislation stipulates that the examination of an act by a Prefect does not lead to suspension of its legal power. However, if the normative act has not been submitted to the Prefect (i.e. it is not registered with the Prefect’s chancellery), the Prefect has the right to request its annulment by the court. Taking into account that Article 14, para.2, line “b” of Law No. 8927 imperatively obliges LGUs “to revise the local act” according to the recommendation of the Prefect, the rapporteurs conclude that the Albanian system of administrative supervision is closer to an a priori than to posteriori supervision, To avoid such a wide interpretation, the Rapporteurs would recommend that Albania introduce, for local acts, the kind of provision the Constitution provides for national legislative acts (Article 117, para.1), when these acts enter into force after their publication in the official journal.

 

Albania uses the same regime of supervision for both delegated and own functions, while the Charter (Article 8, para.2) maintains that supervision over the expediency of decisions must be used for delegated functions. Albanian legislation does not specify a regime for supervision over expediency as it only recognises legal supervision over the decision of local governments. Taking into account that Albanian LGUs have a wide range of delegated and shared functions, it is clear for the Rapporteurs that the country needs to have a clear and applicable regime for supervision with regard to the expediency of decisions taken by communes and municipalities regarding delegated and shared functions.

 

Albanian legislation allows Prefects to examine citizens’ appeals on the illegality of LGU acts. This provision may be viewed as an impediment for local authorities, as it allows a higher administrative body to examine local acts that have already been supervised (as, inter alia, these acts are already in force). Normally, such appeals should be examined by a civil court and not by Prefects.

 

The rapporteurs would also draw attention to a translation issue: Law No. 8927 dated 25 July, 2002 "On the Prefect” as translated, states that the “… prefect checks the realisation of the functions and competences delegated by the central government and the use of the funds contemplated for them, both when they are contemplated by law and when they have been set by joint agreement between a central institution and an organ of local government.” The difficulty lies in the translation of the word ‘kontrol’ from Albanian. This may be rendered as “audit”, “check” or “control” which all signify different degrees of involvement and some of which may indeed involve a ‘control of opportunity” by the Prefect rather than a simple control of legality. This may indeed lead to a direct interference by the Prefect in the exercise of the local authority’s “functions and competences”. So, it would be important to use the proper terminology of the law in official translation.

 

Audit and financial control

 

Article 21 of the Law No. 8652 establishes the conditions for the internal control of LGUs. Each council sets up a finance committee for controlling the local budget during the mandate of the council. Local executives are obliged to report to the finance committee on the execution of the local budget and public expenditure. The committee has free and full access to all financial documents. In case of necessity finance, it may request an external audit.

 

Law No. 8652 stipulates that external audits in LGUs should be conducted by the Supreme State Control, which checks the legality of spending public funds. Additional financial control is carried out by relevant line ministries, such as the Ministry of the Interior and the Ministry of Finance. During the monitoring visit, the delegation has been informed by the representatives of communes and municipalities that the Ministry of Finance performs financial audits regularly according to an adopted calendar. Communes are audited once every two years while municipalities are checked on an annual basis. Municipalities and communes are also audited by the Ministry of the Interior. The 65 municipalities are divided into 6 groups (10 municipalities in each group) and each group is audited once every 2 years. Communes are divided into groups (20 or 25 communes in each group) and each group is audited according to the specific calendar adopted by the Ministry.

Article 9.1
Financial resources of local authorities - Article ratified

Local authorities shall be entitled, within national economic policy, to adequate financial resources of their own, of which they may dispose freely within the framework of their powers.


Municipalities and communes have two main sources of local revenue: own revenues (local taxes and fees) and conditional and unconditional transfers from the central government. Based on Law no. 8652 (31 July 2000) “For the organisation and functioning of Local Government” and Law no. 9632 (30 October 2006) “On the system of local taxes”, and also on the annual budget laws, LGU income stems from the State budget (unconditional and conditional transfers), revenues from local taxes and fees and local borrowings and revenues from foreign financing and donors.

 

When local government was first established in Albania after the transition to democracy, its fiscal autonomy was almost non-existent. This can be seen from the fact that transfers from central government constituted almost the entire source of local government revenues (96.30% in 1999) and 86.6% of all revenues were in the form of conditional transfers, that is, where local government had little or no discretion in their use.

 

The share of own revenues in total local budgets has increased dramatically in recent years and constitutes more than 50% thereof. During the global financial crisis of 2008, 47% of local revenues came from the State budget and 53% from taxes and fees. In the 2012 budget, 54% came from local taxes and fees and 46% from the state budget (as an unconditional transfer).

 

Unconditional transfers are given to LGUs from the State budget in grant form, without destination, without interest and without the right to return. This grant is used by the decision of local councils to cover local expenditure for their functions. The conditional transfer is given under the conditional right to cover the costs for delegated functions and shared with the central government, as prescribed in Law No. 8652. These funds are to be used only for the purpose for which they are approved, for example those from the Ministry of Labour for social protection, those from the Ministry of Economy for current expenditure for employees of the National Licensing Centre etc.

 

The council of the municipality or the commune decides for the types of fees, their rate as well as the basic rules for their collection and administration, and determines whether the fees are collected by the municipality and commune structures or by the agent. If it is the agent, the council decides for the basic rules for the agent to use and the mayor or the chairman of the commune selects the agent and signs the contract.

 

A positive development to underline is that the “Regional Development Fund” has been instrumental for financing competitive grants in communes or municipalities to reduce the disparities between various LGUs. The system proved its stability during the world financial crisis. In spite of the fact that unconditional grants were reduced by 15% in 2010 and local government income went from 20.1 million Albanian Lek (ALL) down to 19.5 million ALL, local services were kept at a satisfactory level with only a 3% decrease.

 

In the rapporteurs’ opinion, this should be recognised as a success of the decentralisation policy in Albania. Also taking into account the diversity of local government revenues, it can be said that the financial situation of local authorities in Albania is in line with the requirements of paragraphs 1, 3 and 4 of Article 9 of the Charter.

 

During the visit to Albania, the rapporteurs heard numerous times that, although local authorities enjoy a wide range of own competences, these competences are not always accompanied with adequate financial resources. The share of LGU expenditure in the total public spending in Albania constituted only 7.2% thereof in 2011 and this is one of the lowest figures recorded in Europe. The same is true for the share of LGU expenditure in GDP that fell to 2.1% in 2011. Comparison of this data with the list of LGU functions makes it clear that many functions are unfunded or only partly funded. The substantial part of LGU spending goes to general public services; then come salaries and wages. Capital expenditure reached 42% in 2009 and dropped during the financial crisis.

 

The share of local government spending within total public expenditure remains relatively low and it can be argued (as indeed many local elected officials do) that local revenues are not commensurate with the own and shared functions of local authorities. Such disproportion between the scope of power and available financial resources is in contradiction with the requirements of paragraph 2 of Article 9.

Article 9.2
Financial resources of local authorities - Article ratified

Local authorities' financial resources shall be commensurate with the responsibilities provided for by the constitution and the law.


Consult reply indicated at article 9.1

Article 9.3
Financial resources of local authorities - Article ratified

Part at least of the financial resources of local authorities shall derive from local taxes and charges of which, within the limits of statute, they have the power to determine the rate.


Consult reply indicated at article 9.1

Article 9.4
Financial resources of local authorities - Article ratified

The financial systems on which resources available to local authorities are based shall be of a sufficiently diversified and buoyant nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks.


Consult reply indicated at article 9.1

Article 9.5
Financial resources of local authorities - Article ratified

The protection of financially weaker local authorities calls for the institution of financial equalisation procedures or equivalent measures which are designed to correct the effects of the unequal distribution of potential sources of finance and of the financial burden they must support. Such procedures or measures shall not diminish the discretion local authorities may exercise within their own sphere of responsibility.


Albanian legislation uses unconditional transfers for mitigation of financial disparities between LGUs. Such transfers are made from the State budget in grant form, without destination, without interest and without the right to return. They are used by the decision of local councils to cover local expenditure for their functions, as defined in Law No. 8652.

 

In the context of the consolidation of the decentralisation reform in 2002, the State Budget included for the first time the concept of giving unconditional transfers to local governments through a formula. This formula balances the need for objective criteria related to the costs of local services and provides a measure for equalisation to help the poorest LGUs. The main results of the formula had to do with improving fairness, creating a greater connection between the size of area, population number, and amount of funds received, and providing some equalisation effect. For the first time transfers to LGUs from the State budget became transparent and predictable, which improved the management of budget by local officials. The effects of formula have been evaluated positively under the proportionality criteria, fairness and equalisation (balance) in the distribution of funds.

 

The size of the unconditional transfer is based on the functions transferred to local governments, the respective funds for them and the specific regulations on an annual basis based on the transfer of taxes. The total amount of the unconditional transfer is distributed among LGUs (municipalities, communes and counties); it is based on several criteria and a process involving several steps. The basic steps and criteria of the distribution of the unconditional transfer are explained below.

 

The grant pool is first divided into three sub-pools: a share to the municipalities and communes, one share to the regions, and a reserve in the form of "compensation fund". The share of the municipalities and communes is then divided into two sub-pools: a general grant to be distributed according to a specific formula and another “compensation fund” reserved for municipalities and communes. The formula for the distribution of the unconditional transfer to municipalities and communes is based on the size of the population of the relevant unit and the area of the communes.

 

The formula takes into account the potential fiscal capacity of LGUs which means that units with limited opportunities for generating income from taxes and fees are financed more through unconditional transfers. Part of the unconditional transfers for the regional councils is divided into two sub-pools: the total grant distributed based on a specific formula and ii) the "compensation fund" reserved for regions.

 

The formula for the regions is based on an equal share for all regions, population, geographical indicators for counties (field, hilly and mountainous) and the length of rural roads.

 

Fiscal capacity is calculated only on small business tax (SBT) and on vehicle registration tax. A first adaptation of this allocation is done in accordance with the coefficient of fiscal capacity. Each municipality and commune with revenues per capita higher than the national average contributes 25% of the fiscal equalisation difference, divided with its population. This sum is subtracted from the initial calculation of the grant. Each municipality and commune that is below national average is compensated with 25% of this difference, divided by its population; this sum is added to the initial calculation of the grant.

 

The gross amount of the equalisation fund as well as the specific sum to be transferred to each LGU is calculated on an annual basis and adopted by the Parliament as an appendix to the State budget law. When preparing the draft budget, every municipality and commune can estimate in advance for the following year the amount that it will receive from the State budget in the form of unconditional transfer. However, many representatives of Albanian communes and municipalities expressed concern over the variability, over time, of the formula used for the unconditional grants, making budget planning difficult and uncertain. For a detailed account of the formula used to distribute unconditional transfers, see Appendix III.

 

To promote the socio-economic development of communes and municipalities, the Albanian government uses competitive grants which are managed by the line ministries and given to communes and municipalities on a competitive basis. The total amount of this grant comes from the line ministry fund invested in LGUs and is accumulated in the “Regional Development Fund”, which is an integral part of the State budget. The Fund aims to identify the problems related to local and regional development and to combat poverty through development policies and consists of competitive grants for local infrastructure, basic education, health, cultural facilities, water supply, building agro-food markets, irrigation and drainage and forestation.

 

Selection criteria for successful project applications are based on two basic factors: the project’s social impact and the financial feasibility of public expenditure. A special committee led by the Prime Minister of Albania and composed of representatives of line ministries and local government associations awards these grants.

 

One of the issues is the structure of local budget revenues. The government declares that the majority of LGU revenues are unconditional. However, the conditional grants are the biggest source of funding, and if you add to this the grants provided by various ministries, it becomes obvious that unconditional funds in the local budgets are far less than 50%.

 

The table below makes it evident that LGUs are heavily dependent on financial assistance from the State budget. This, in the rapporteurs’ opinion, should be viewed as a main obstacle to the development of local autonomy in Albania.

 

Furthermore, the rapporteurs were informed that the central government resorts to the practice of cutting unconditional grants in certain cases. This is a violation of Albanian legislation, which recognises the power of discretion LGUs have over the use of unconditional grants. In the Rapporteurs’ opinion, it also contradicts paragraph 5 of Article 9.

Article 9.6
Financial resources of local authorities - Article ratified

Local authorities shall be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them.


The Ministry of Finance organises consultations with the Associations of Local Authorities on the allocation of equalisation grants and specific transfers. The associations also participate in the decision-making process on the competitive grants scheme for communes and municipalities. However, consultations on resources allocated to local authorities have a formal nature, lacking any real influence on the decision-making. Many municipalities and communes complain against the competitive grants scheme but the associations have never officially challenged the fairness and transparency of this scheme. In general, direct consultation with communes and municipalities can be considered rather weak (especially with those controlled by the opposition party), based on the recurrent remarks the Rapporteurs heard from interlocutors during the visit. This raises an issue under paragraph 6 of Article 9 and there is need for establishing more balanced instruments for consultations with local authorities.

Article 9.7
Financial resources of local authorities - Article ratified

As far as possible, grants to local authorities shall not be earmarked for the financing of specific projects. The provision of grants shall not remove the basic freedom of local authorities to exercise policy discretion within their own jurisdiction.


The transfer of unconditional grants to communes and municipalities is also an issue. It happens on a quarterly basis, based on the spending needs for the quarter and availability of own funds (own tax and non-tax revenues) for that quarter. Such a practice increases the danger of direct administrative intervention in local affairs, as well as limiting the discretion of local financial offices to manage their funds independently and under their own responsibility. In the majority of Council of Europe member States, equalisation grants (the equivalent of the Albanian unconditional transfer) are allocated to LGUs, mutatis mutandis, in equal instalments with a sequence defined in national legislation. In the Rapporteurs’ opinion, such an approach would give LGUs more decision-making power on financial matters.

 

The practice of payment of membership fees from the unconditional grant to regional budgets needs more clarity and better legal justification. Regions are not inter-municipal entities owned by municipalities and communes, but a level of sub-national administration per se. Furthermore, Albanian legislation defines the qark as a second tier of local government, which means that:

 

a.      municipalities and communes are territorial administrative units of qarks as defined by the law on territorial-administrative arraignment of Albania;

 

b.      whereas the inclusion of LGUs into qarks is based on public law and not on the free will to associate, the term “membership fee” cannot be applied here;

 

c.      a fee is based, inter alia, on a quid pro quo while revenues of regional budgets are for implementation of public functions exclusively assigned to the regional level of Governance.

 

Thus, based on above listed arguments, it is difficult to understand what category of LGU expenditure these membership fees fall into and what the expediency of such a contribution is, from the perspective of local autonomy. The current practice (i.e. fees are deducted from the unconditional grants and transferred to regions by the Ministry of Finance, leaving municipalities/communes without the right to set conditions or discuss the rate of deduction which was -8.5% in 2011, provides good evidence for the judgment that whereas de jure fiscal decentralisation and autonomy is guaranteed in Albania, de facto financial management is still highly centralised and LGUs have limited rights vis-à-vis the Ministry of Finance when it comes to decision-making and fiscal policy. This goes against the requirements of paragraph 7 of Article 9.

 

The efficiency of Small Business Tax (SBT) is also a topic for future consideration. The subject of this tax are companies with less than 2 million ALL turnover. Once a company’s profits exceed this margin, they become subject to the corporate income tax (CIT) and contribute to the State budget of Albania. Under the current regulations, the SBT cannot be viewed as an efficient fiscal instrument due to the very low margin of annual turnover (equivalent to 14,300 euros) which does not allow municipalities to generate substantial income. Moreover, municipalities lose any incentive they may have to implement a proactive policy for small business development.

 

The vast majority of the local officials interviewed by the delegation made it clear that they would prefer to receive a share of the CIT rather than collect SBT which has a huge administrative cost. Sharing the CIT between the central and local governments might be good solution for guaranteeing local financial autonomy, especially, since Albania has recourse to shared functions between local and central levels. It is quite common in Council of Europe member countries that, if and when shared competences are in place, central and local budgets share the income from personal income tax (PIT) and CIT in proportion to the shared functions assigned to each level.

Article 9.8
Financial resources of local authorities - Article ratified

For the purpose of borrowing for capital investment, local authorities shall have access to the national capital market within the limits of the law.


The Law on Local Government Borrowing No. 9869, dated 4 February 2008, aims to expand LGUs’ financial autonomy. This law allows LGUs to borrow for cash flow and investment purposes from the capital market (financial institutions and banks) and on the domestic and international markets. It can therefore be said that the legislation is in line with paragraph 8 of Article 9.

 

Nevertheless, loans are a limited instrument in local government hands for securing revenues. If LGUs are given broader fiscal autonomy and more competences are transferred to them, loans would significantly strengthen LGU’s financial and economic capacities.

 

Based on the law on borrowing, municipalities’ debt service due in any year on all long-term debt should not exceed 20% of the average total actual revenues of the local government from the unconditional transfer, shared taxes, and local taxes and fees of the last three fiscal years. However, in January 2010, the Public Debt Department of the Ministry of Finance imposed a limit on drawdowns on local borrowing to the equivalent of 5% of 2009 expenditures. As this was applied individually to each local government, it severely constrained the amount of the drawdowns in that year.

 

The National Commercial Bank (BKT) reports that they have responded to 16 loan requests, mainly from municipalities, but also from 3 communes. The LGPA/USAID funded program has assisted the municipalities of Fushë Krujë, Elbasan, Korcë and Lezhë with their applications, while 12 other units have already applied to the second level banks for a long term loan, of which 7 have been successful. Loans taken by successful municipalities have been used essentially for local road improvements. Since the debt of local governments is part of the public debt, limitations have been imposed on local government borrowing by the Ministry of Finance.

 

Conclusions as regards Article 9

 

The rapporteurs conclude with a positive assessment of issues covered by paragraphs 1, 3, 4, 8 of Article 9 of the Charter and consider that there are a number of areas under paragraphs 2, 5, 6, 7, and especially fiscal decentralisation, which raise issues of compliance with the Charter and need further improvements.

 

Regional finances

 

Article 18 of Law No. 8652 identifies the following revenues for regional budgets:

 

unconditional grants, including fees deducted from unconditional grants assigned to communes and municipalities. The percentage is set up by the Ministry of Finance and, for the last three years, it has been fixed at 8.5% of the total pool of unconditional grants;

conditional transfers received from the central government of Albania;

fees from services provided by the regions;

funds received as competitive grant from line ministries.

 

Spending priorities of regional budgets are defined by the State through delegated functions and by the regional council via shares from unconditional grants (membership fees). Regional budgets mainly finance general administrative expenditure, vocational education, environment and agriculture.

 

The qark is recognised as a second tier of local government and in this sense, its power and financial resources should be defined in compliance with the Charter. Article 9 paras.1, 2 and 3 stipulate clearly that each and every level of local self-government should have its own financial resources that are commensurate with the responsibilities provided by the law and that a substantial part of these financial resources should derive from taxes. Where regional budgets are concerned, it is the rapporteurs’ opinion that none of the above listed provisions of the Charter is in place. Consideration should be given to reforming the system of regional finances as a critical part of the overall decentralisation strategy.

 

The financial viability of the regions is another issue. Albanian regions are relatively small compared to European model (NUTS II) and they lack proper economy of scale. The rapporteurs would recommend the Albanian government to consider the consolidation of regions as a promising solution to increase their financial sustainability.

 

Relationship between the Treasury Office and local government units

 

Under Article 8 of Law 9936, dated 26 June 2008 "On budgetary management system in the Republic of Albania”, the LGU receipts and payments are made through the unified treasury account that is held in the Bank of Albania. The Treasury System consists of the Treasury Department in the Ministry of Finance and district Treasury branches. The latter are located in 36 districts. Each LGU has its own account in these branches. LGUs are entitled to benefit from the interest of their monetary assets, temporarily free, in the unified treasury account.

 

Funds allocated to local government units, immediately upon receipt, are deposited in the treasury accounts, according to the rules and procedures as defined in Article 8 of Law no. 9936. Local budget revenues that are left in the treasury accounts from local taxes, unconditional transfers from the State budget and other resources that are not used during the fiscal year, are carried over for the next budget year. Commitments for paying the costs of local government units have to be authorised by the Treasury Branches after all documents have been inspected and approved. Before making a payment, the treasury system checks the existence of the commitment, the basic documentary evidence of the service performed and whether there is sufficient cash for payment.

 

Public Private Partnership (PPP)

 

PPPs are based on agreements for commercial activity between a local government entity and the private sector with the aim of providing services and public investments. The agreement is sanctioned by Law No. 8652, the civil code and other supporting legislation, which allow LGUs to take part in the agreement with their own capital in the form of assets, while the private sector takes the risk of investment and manages the service.

 

Simple traditional forms of PPPs consist of contracts with third parties for the management of services such as cleaning and waste collection street lighting, etc., or lease contracts giving the management of LGU own assets to a private operator, who is in charge of performing key elements of the public service, etc. Most of LGUs have examples of PPPs.

Article 10.1
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, in exercising their powers, to co-operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest.


Article 109 of the Constitution gives LGUs the right to form associations as well as to establish links with similar local authorities in other countries. They may also be represented in international organisations of local authorities. This right has been affirmed in Article 8, Chapter V of the Law no. 8652.

 

Currently, there are three such associations in Albania: the National Association of Municipalities, the National Association of Communes and the National Association of Regions. There is, in addition, a group of Socialist Mayors who split from the Association of Municipalities and established a new organisation named the Association of Local Autonomy in Albania.

 

The rapporteurs welcome the fact that these associations have been consulted by the central authorities in matters concerning local affairs. Associations are involved in the process of allocation of competitive grants, as well as in the process of calculation of conditional grants for communes and municipalities. The rapporteurs would recommend that these consultations become part of an institutional mechanism.

 

However, the local government associations in Albania appear fragmented, without a unified voice for Albanian local authorities at the local level. There is little coordination among the associations and in fact, they appear to be playing a supplementary role to the central government rather than taking a strong stance vis-à-vis the central government, as an active mobiliser of LGUs for the protection of their legitimate interests. The rapporteurs have been informed that such a dialogue involving elected representatives from both political alliances and all associations has been initiated within the framework of the project “Building a sustainable, pluralistic and unified platform of dialogue for local government in Albania”, implemented by the Congress.

 

The rapporteurs have taken note of the partisan approach which appears to mark the relations among local elected representatives and cannot underline enough that these substantially reduce the efficacy of local government associations, given that the consultation process is largely dominated by party politics. The socialist mayors accuse the leadership of the associations of favouritism toward the ruling political party, while the leadership of the associations blame socialist mayors for adopting a partisan approach and sabotaging the work of the associations. Domination of party politics over the institutional interest of local self-government renders the associations weak and gives the process of consultations with LGUs an essentially formal nature.

 

The rapporteurs call on all elected representatives in Albania to take a strong stance in favour of local government interests and to convince their leaders to aim for a unified position, perhaps under an umbrella organisation, in order to defend their interests and raise awareness of the independence of local government issues from national politics.

Article 10.2
Local authorities' right to associate - Article ratified

The entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities shall be recognised in each State.


Consult reply indicated at article 10.1

Article 10.3
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, under such conditions as may be provided for by the law, to co-operate with their counterparts in other States.


Consult reply indicated at article 10.1

Article 11
Legal protection of local selfgovernment - Article ratified

Local authorities shall have the right of recourse to a judicial remedy in order to secure free exercise of their powers and respect for such principles of local self-government as are enshrined in the constitution or domestic legislation.


Local authorities in Albania have the status of a legal person (entity of public law) and have the full right to represent their interests, to enter into agreements, and to have assets and liabilities. Local authorities have their own and delegated functions, financial resources and property. They have the right to apply to civil courts and to the Constitutional Court of Albania for the protection of their interests.

 

Albanian local authorities use legal instruments for the protection of their interests very rarely. Mayors encountered during the visit have told the rapporteurs that legal cases take several months in the Albanian courts and cannot be considered to be an effective legal remedy for the protection of local authorities.

 

The Constitutional Court of Albania exercises overall supervision over the Constitution of Albania and scrutinizes issues related to the protection of constitutional rights and provisions. The Congress delegation learned during the visit that there had been no appeals from the municipalities to the Constitutional Court of Albania.

 

The principles of local self-government are enshrined in the Constitution (Part VI) and in the domestic legislation of Albania. The Charter is recognised as an integral part of Albanian legislation. Local authorities have access to the judiciary for the protection of their rights, including the Constitutional Court of Albania. There have been cases where local authorities have applied to courts to protect their interests. The rapporteurs have heard various comments during the visit to conclude that, although judgments take a long time to be processed, the courts are considered to be an effective mechanism for the legal protection of local authorities by a vast majority of Albanian local representatives. They consider therefore that the legal protection of local authorities in Albania is in compliance with the Charter.

ACCESSION

to the Council of Europe

RATIFICATION

of the European Charter of Local Self-Government

CONSTITUTION | NATIONAL LEGISLATION

The organisation and functioning of local government in Albania is guaranteed by the Albanian Constitution and legal acts.



30Ratified provision(s)
0Provision(s) with reservation(s)
0 Unratified Provision(s)
18Compliant Provision(s)
1Partially Compliant Provision(s)
6Non-compliant Provision(s)