Budget funds with their destination for economic development, but also increased competitiveness and faster improvement of innovation, start-ups and research - development. Meanwhile, all development and assistance policy destinations for the social and needy are another approach to budget spending through dedicated funding and care agencies.
For the development of the economy in more focused way, several budget funds are already in operation, such as: Regional Development Fund, Owners' Compensation Fund, Competitiveness Fund, Innovation Fund, Start-Up Fund, Creative Business Support Fund, etc.
Meanwhile, budget funds for 2019 with support from the budget for concession / PPP contracts are a total of ALL 12.4 billion. Of these, approximately ALL 6.4 billion are investments and ALL 6 billion are current expenditures. Compared to the actual funds of 2018 in the amount of 8.7 billion Lekë, in 2019 the funds reach up to 42.5% more. The total amount of annual net payments made by the general government units, which result from the concession contract or public-private partnership (PPP), as a rule, should not exceed the limit of 5 percent of the actual tax revenue of the year. budgetary ancestor. In case of exceeding this limit, the Council of Ministers takes corrective measures on the side of budget revenues, necessary and sufficient, to be returned within the allowed limit, during the next two budget years.
The total expenditures of the 2019 budget are 491.9 billion Lekë . According to Table 26, total expenditures are as much as 29.1% of GDP with a difference of 0.1% of GDP compared to 2018. The main destination of expenditures, according to the share of GDP, is distributed in:
Social funds, (including payments for social and health insurance, pensions, the unemployed, economic assistance, former persecuted individuals, families in need, as well as payments to owners), which together account for 40.6% of budget (0.6% more than in 2018). Compared to GDP, these funds in 2019 are as much as 11.8% of it with a difference of 0.2% of GDP compared to 2018.
In second place are expenditures on salaries and insurance contributions of the administration of public institutions (15.6% of total budget expenditures). In contrast to 2018, which have maintained almost the same share these expenditures have taken this position due to the share reduction that investment expenditures have in 2019.
Capital expenditures (for investments) in 2019 are in the third place in the destination of budget use with a share of 15.2% in total budget expenditures, while in 2018 they were as much as 16% of total budget expenditures.
The allocation of funds for local government accounts for 11.4% of total budget expenditures, while in 2018 they were as much as 10% of total budget expenditures.
Funds for good administration and maintenance of public property (or operating and maintenance costs-OPEX) account for 9.5% of total budget expenditures, with a small margin of 0.5% by 2018, when these expenditures accounted for 10% of total budget expenditures.
The distribution of budget funds for government debt and interests’ payments in 2019 amounted to 7.1% of total budget expenditures, while in 2018 these expenditures were at the level of 8% of budget expenditures.
Expenditures on public project expropriations, subsidies and loans in 2019 based on government decisions and those carried over the years account for 0.6% of total budget expenditures.
From the destinations for the distribution of budget funds, it can be seen that the expenditures for investments and operating expenses, as well as those for interest payments on debts received have decreased in 2019 compared to 2018.
In 2019, the budget has paid:
- 40.6% of income for social destinations;
- 25.1% of budget revenues for itself (personnel and operating expenses);
- 15.2% for capital investments that include related contracts that last several budget years, but also new investments according to PPP contracts;
- 11.4% of budget revenues for local government;
- 7.7% of revenues for expenditures for new debts that go for the payment of debt and its interests, as well as for expropriation compensations.
Expenditures for the public administration (15.6% of the budget) are distributed in over 4/5 of them for salaries and close to 1/5 for the payment of social and health insurance contributions.
Social expenditures, which are destined for 6 categories according to Tab.27, reach 11.7% of GDP. Revenues collected from the budget, through labor taxes, amount to 8.5% of GDP.
Only 55% of revenues cover socially targeted spending. In this case, MoFE allocates additional resources from the beginning of budget planning, in order not to affect the implementation of social policies. These additional funds are taken from the tax that should be used for another budget expenditure and allocated to close the entire fund planned by the budget for social policies.
In the table showing the distribution of social funds (11.7% of GDP), according to 6 different destinations, the main weight belongs to the social security fund (7.8%) for the payment of benefits for pensions, maternity leave, work accidents, illness. Another item where these costs are allocated is for the health care fund (2.5%). While economic aid receives 1.2% of GDP. The rest goes to unemployment, compensation for former political persecuted, and compensation for owners (all three together 0.23% of GDP).
In the table showing the distribution of social funds (11.7% of GDP), according to 6 different destinations , the main weight belongs to the social security fund (7.8%) for the payment of benefits for pensions, maternity leave, work accidents, illness. Another item where these costs are allocated is for the health care fund (2.5%). While economic aid receives 1.2% of GDP. The rest goes to unemployment, compensation for former political persecuted, and compensation for owners (all three together 0.23% of GDP).
Capital investments for 2019 have taken into account all contractual obligations for investment projects with foreign and domestic financing. As well as in 2018 and in 2019, financing of ongoing projects has been a priority. The following guidelines have been followed for financing investments:
- Priorities of the Government Program for the period 2017 - 2021;
- European integration priorities;
- Ongoing projects.
- Support at local cost and VAT for projects with foreign funding;
These expenses are financed in 2/3 of them from the budget financing with their own funds and 1/3 with the foreign funds. The year 2019 compared to 2014, as the year before the administrative reform, it is found that there is a change in the structure of expenditures in favor of increasing capital expenditures.
Capital expenditures are a very important item not only for the fact that they make up the bulk of the local budget but also because these expenditures are the ones that directly affect economic growth and improve the quality of life of citizens.
Compared to 2018, investment expenditures in 2019 are increasing, which shows up to the value of about ALL 2.4 billion. Local spending has been rising over the last 5 years, with better local performance and an impact on the growth of public works being applied by local self-government units.
In 2019, there is an increase in the level of operating expenses. They are related to the increased need for maintenance for the functions transferred in 2016, to improve the quality of local public service delivery, as well as to increase the various assets from investments that require maintenance and maintenance costs.
Salary expenditures in the local budget have increased for 2019. This fact is related to the consolidation of the organizational structures of the new local self-government units, and in the absence of a new policy in increasing salaries there is a slight increase compared to one years ago. Also, the increase of local investments requires an increase of personnel expenses in order to provide the service that responds to the additions.
The increase in the share of local government expenditures in relation to the expenditures of the central budget expenditures on gross domestic product is an important indicator of the effort to deepen local fiscal decentralization.
Meanwhile, the part of the transfer from the budget is taken from the taxes paid without a specific destination (eg VAT revenues). In this form of communication of the budget with the destination of expenditures, it is seen that transparency should aim precisely beyond these values. So, the goal for a possible transparency should be to deal with confrontations at the local level, to further achieve the confrontation of expenditures that are carried out at the central level and how much is covered by the income needed to be collected to carry out expenditures.
In dealing with income with the destination of spending that belongs to that income, as well as its coverage with additional funds, due to non-full coverage, it can be seen that the main expenses incurred by the budget cannot be self-financed by tax sources that have the appropriate name. The first signalization is the decrease in the level of expenditure in relation to the income for the expenditure. The most obvious is for social spending as well as debt spending. Both of these cost groups indicate better performance in income dedicated to them, or not, as well as lower costs for public services, as in the case of lowering the cost of debt service, by entering the international markets with Eurobond.
Given the coverage of expenses and the effectiveness of their use, there should be another spirit and will and debate on the fiscal burden. It must begin to be built as a new culture of public opinion. In fact, it should be organized organizations and civil society, which in the framework of the global initiative for open government should aim to receive as their right from the government the budget transfer. This culture should keep the channel of social dialogue with the government open, which on the one hand should be accountable for its decisions and on the other hand the taxpayers should not feel connected to the will of the government for every step of life. Because tax revenues are relatively predictable, governments can plan ahead with greater certainty.
But beyond the analysis of budget indicators, an in-depth verification is needed
(a) quality of expenditure,
(b) non-creation of new debts for future budgets, which means an increase in future burden
(c) and verifying whether expenditures are well-oriented for economic development or represent
clientelistic interests and leave room for abuse of budget funds, and other arguments