Status transition and the real architecture of the public investment portfolio in Albania

The analysis of 30 projects fully aligned between the two Project Planning Documents (DPP 2026–2028 and 2027–2029)[1] provides a clear window into how the public investment system in Albania actually works. This sample, representing about a quarter of the total portfolio, goes beyond statistical snapshots and serves as a dynamic diagnosis of the life cycle of public projects, from conception to maturity and implementation potential.

What immediately stands out is a structural inertia, with 73% of projects not changing status from one period to the next. This high level of stagnation cannot be explained by random factors or isolated technical delays. Rather, it reflects a systemic limitation in the institutional capacity to advance projects through their maturity cycle. Strategic projects such as international railways, major road corridors or major energy investments remain stuck at the same level for years, turning the portfolio from a development instrument into a static inventory of projects.

In contrast to this widespread stagnation, only 20% of projects manage to improve their status. But even here the pattern is selective and significant. Progress occurs mainly in projects with relatively low complexity, such as the digitalization of public services, the expansion of IT networks or intelligent transport management systems. These projects have one common characteristic: they are easier to structure financially, have lower dependence on inter-institutional coordination and require less interaction with external factors such as international agreements or global markets. This suggests that the current system favors “quick-to-implement” projects, but not necessarily those with the highest economic and strategic impact.

At the other end of the spectrum are projects that worsen their status. Although they constitute only 7% of the sample, their importance is disproportionate. The downgrade of projects such as the Vlora TPP or the Vlora–Brindisi HVDC interconnection is not simply an administrative delay. It signals a deeper crisis of strategic feasibility in the energy sector. These projects are exposed to geopolitical uncertainties, changes in international energy markets and the reorientation of policies following the European energy crisis of 2022. Thus, the downgrade is not an operational failure, but a forced correction of an ambition that is no longer supported by economic and strategic reality.

When this analysis of the transition is placed in the broader context of the sectoral structure of the portfolio, the fundamental problem of high concentration in some sectors and neglect of others comes to the fore. Road transport and energy dominate over half of the total value of investments, creating a high exposure to the risks of delays and cost overruns. The energy sector in particular presents a strong contradiction, where on the one hand it is a priority and voluminous, but on the other hand it has the highest level of immature projects, making its pipeline fundamentally uncertain.

In stark contrast is the digitalization sector, where most projects are already fully mature. This sector functions as a “proof of concept” for the system. When projects are clear, well-structured and financially supported, they advance. This means that the problem is not an absolute lack of capacity, but its distribution and ineffective use in projects of high complexity.

Meanwhile, the social sector (education, health and social development) remains chronically underfunded, with a weight much lower than regional standards and sustainable development objectives. This gap is not only a matter of political priorities, but has direct implications for the long-term productivity of the economy and social cohesion.

Another critical dimension is the way new projects are entered into the portfolio. Adding new projects directly to the “immature” status, without going through the full cycle of evaluation and filtering, indicates the existence of an “artificial pipeline”. Institutions continue to produce new projects without a consolidated technical and financial basis, widening the gap between ambition and real capacity. This is particularly evident in energy and innovation projects, where strategic ambition is not accompanied by the necessary institutional and commercial infrastructure.

When all these elements are combined in a financial analysis, the problem becomes even clearer. The total investment portfolio is more than double the country’s real financial capacity. This overprogramming creates an illusion of development, but in practice produces pressure on public debt, increases contingent liabilities and reduces fiscal space for other priority policies.

At the same time, historical execution capacity shows that even mature projects take much longer to complete than anticipated, making current planning fundamentally unrealistic.

At the macroeconomic level, this situation translates into a chain of negative effects. Overprogramming puts pressure on debt, debt growth limits fiscal space, fiscal restraint reduces social investment and ultimately, this negatively affects economic growth and well-being. In parallel, the limited administrative capacity of the state, when overloaded with an overstretched portfolio, creates a “crowding-out” effect, also hindering private investment.

Essentially, the problem lies not only in the quality of individual projects, but in the way the system itself functions. It produces a closed cycle where overprogramming leads to lack of prioritization. Lack of prioritization leads to the entry of immature projects. These projects stall, and their stalling justifies the addition of new projects. The result is a portfolio that grows in volume but not in feasibility. The solution, therefore, cannot be simply technical. It requires a change in the rules of the game by imposing a binding fiscal ceiling on the portfolio, creating a clear distinction between priority and reserve projects, linking each project to a real source of financing, and prohibiting the entry of projects without full feasibility analyses. Equally important is the establishment of an independent institutional capacity for project screening and monitoring, as well as increasing transparency through regular public reporting. International experience shows that these reforms are feasible and deliver results within a relatively short time horizon. But without such structural intervention, the current system will continue to produce more projects than it can deliver, keeping economic development at potential but not real levels.

---

[1] Summary of the report Analysis of the public investment portfolio