{"id":15620,"date":"2023-05-06T07:45:13","date_gmt":"2023-05-06T05:45:13","guid":{"rendered":"https:\/\/altax.al\/?p=15620"},"modified":"2023-05-04T14:06:41","modified_gmt":"2023-05-04T12:06:41","slug":"performance-of-local-economies-progress-of-opportunities-and-constraints-impact","status":"publish","type":"post","link":"https:\/\/altax.al\/en\/performance-of-local-economies-progress-of-opportunities-and-constraints-impact\/","title":{"rendered":"Performance of Local Economies: Progress of Opportunities and Constraints Impact"},"content":{"rendered":"

The average score of the economic indicator fell slightly in 2020 to rise again in 2021 and again withdrawing in 2022, partly due to the slow recovery or the dependence of the development of the economy on the agricultural base and trade.<\/p>\n

Multiple and overlapping crises, starting from the health one and continuing with the security one, have led to a delay and in certain sectors even to the inhibition of the progress of the objectives for sustainable development and increased productivity.<\/p>\n

    \n
  1. The performance of the local economies<\/strong> remains at pre-pandemic levels. This is influenced both by the lack of diversification of the economy into more dynamic and expanded businesses over the years, the low level of credit, the reduction of the supply of employees, the skills of employees not properly matched with market requirements, but also by the regulatory quality, which poses challenges for governance at both levels.<\/li>\n<\/ol>\n

    Meanwhile, access to and training with technology ranks Albania, including the monitored municipalities, in the last place in the region, along with the low value of productivity from exports.<\/p>\n

    Investments made in recent years are oriented according to development programs towards the urban environment, road infrastructure, water, and sewerage and in a moderate way towards agriculture, but not towards promoting the market, orientation of new activities and an approach to mitigate the factors influencing migration and emigration.<\/p>\n

    This situation of business segmentation, where the space for employment is quite small, where the problem of migration is felt even more in local businesses in 2022, due to the departure of various specialists in the private sector who require a high payment of their skills in the foreign market affects the dimming of policies and the reduction of the pace of economic performance.<\/p>\n

    The local tax revenue indicator has an administration advancement rate at above average levels, but far from the realization of the budget objectives and PBA forecasts. The local budget, which depends on transfers from the state budget, is also affected by the still unfulfilled objectives of the 2019-2022 SMPF and sectoral strategies that weigh on the performance of Municipalities’ budget planning.<\/em><\/p>\n

    This is a big obstacle, especially considering that after the pandemic, the pressure for higher incomes is increased due to social spending that is required to increase more than before.<\/p>\n

    Meanwhile, it is calculated that the local tax burden is low and similar in other municipalities. This increases the need to smartly strengthen the administration of tax and fee collection by expanding the foundations and good practices we have mentioned on effective management based on compliance.<\/p>\n

    Progress on spending targets is also slow, especially on investment spending. While the budget that was approved in 2023 prioritizes the urban environment, waste, cleaning the city and increasing greenery, the surveyed citizens demand more social protection, but also spending on the market and the stimulation of the local economy, which the municipalities are trying to turn into budget priority.<\/p>\n

    In this direction, the assistance of civil expertise is necessary, due to the lack of capacities found by the social audit in the last two years.<\/p>\n

    One of the topics that ALTAX has opened as a debate for discussion and analysis is the effect and impact of investments on the economy and employment.<\/p>\n

    Although the territorial development plan is in process, the restoration of unfulfilled programs and the acceleration of the progress of projects that have more added value than agriculture should be analyzed to be integrated into future programs. This should consider the inclusion of the poorest and most vulnerable groups as a top priority of recovery plans and reforms in the financial system of regional development.<\/p>\n

    Municipalities are facing two interrelated challenges:<\/p>\n

    The level of youth employment is still low, and<\/strong>
    \nAddressing the issues surrounding the reasons for migration and the mismatch of employee skills with the demands of the labor market.<\/strong><\/p>\n

    Meanwhile, the experience of the period of the Covid-19 pandemic and after it has influenced businesses to adopt for the promotion of new forms of work, the support of intensive short-term employment, flexibility in work, digital solutions, and the highlighting of new professions. In addition to strengthening the competitiveness of the private sector in dealing with these issues, it is equally necessary that the legislation in the field of work better reflects the needs in this direction.<\/p>\n

    The increase in average income per capita meets the minimum level of annual income. But with the level of family expenses increasing, this income cannot exceed a living that is based on the minimum standard of living.<\/p>\n

    The current moment is needed to think that, beyond the national objective for economic growth, each region should set its own economic growth objectives, as this directly affects the focus and mobilization of resources for enabling the economy towards productivity.<\/em><\/p>\n

      \n
    1. The local policy is based on the law on consultation by implementing the consultation calendar<\/strong>, as an obligation for open governance and budget discussion processes with public participation. However, in the stages of consultation, civil expertise is missing and there is no opposition or analytical reinforcement<\/strong> of the citizen’s voice and concerns, a situation that is also found to be lacking in the municipal staff. ALTAX and other organizations have called for a consultation based on higher parameters of citizen discussion and an even more inclusive process. But he has not yet received any call from the Municipal Councils for a different possibility. The participation of the citizens asked for by ALTAX shows that there is little consideration of the citizens’ proposal.<\/li>\n<\/ol>\n

      Citizens perceive fiscal transparency to be lacking. This is ascertained from the survey that we carried out at the beginning of 2023, but with a continuity of response the same as last year.<\/p>\n

      Fiscal responsibility and in general the keeping of commitments during the election process, but also according to the political program (which is partially transformed into a governing program) needs to contain a full accountability mechanism based on transparency and debate.<\/p>\n

      The adoption of new acts to modify an unimplemented legal practice is a strong reason for the amended law never to be fully applicable, ignoring the accountability for the level of performance and the fulfillment of the program to the citizens.<\/p>\n

      The level of corruption would be easier to prevent if there was more local autonomy.
      \nIn our analysis, we focus on two moments that should be objectives in the work of the Municipalities. Setting the budget objectives of income\/expenditure and anti-evasion should be above the reality of local capacities, in order not to create pressure for maximizing income, which leads to a climate of corruption. Based on the lack of periodic measurement of the level of local corruption, the CSO, the Anticorruption Directorate, or the donors should be requested to modify the action plan for the creation of the regional corruption index<\/strong>, and on this ranking, objectives should be set for reducing the municipalities in the ranking. with the same methodology as for the national index.<\/p>\n

        \n
      1. A comprehensive and group plan for financing environmental objectives is needed<\/strong>. Achieving them is an agenda of investment in physical infrastructure (UK, including renewable energy), waste management and progressively tiered pollution charging, as well as human capital funding.<\/li>\n<\/ol>\n

        But municipalities lack access to the capital market with acceptable conditions. First<\/em>, the Municipalities, beyond party politics, must clearly and unequivocally declare their commitment to channel much greater funding flows towards the environment within the scope of the local finance law. Secondly<\/em>, the Municipalities themselves should start thinking about designing programs within medium-term programs and in dialogue with MFE to increase lending capacity. The original approach should be aimed at municipal bonds, just like government bonds, as a remarkably effective instrument of direct financing of the local budget and increasing financial independence from the state budget. Third<\/em>, Municipalities and MFEs should redesign their debt sustainability assessments, considering the growth potential and their need for much greater capital accumulation. Fourth<\/em>, working together with partners, donors and MFE, Municipalities should strengthen debt management and creditworthiness by integrating borrowing policies with tax policies, export policies and liquidity management, all to prevent liquidity crises in the future.<\/p>\n

          \n
        1. Every year for health,<\/strong> the Ministry of Health and subordinate institutions conduct studies about the efforts, to monitor how the goals are integrated into the programs, national plans, budgets, and monitoring systems. Municipalities also need to compile metrics to assess the alignment of national objectives and investments with health challenges.\n

          Samples to be selected for municipalities that have performed better in public health indicators should be used as short-term targets. This can help the Municipalities, beyond monitoring the performance of the MoH directorates, to achieve better results in the coming years through interaction, but also leaving space for CSOs and donors.<\/p>\n

          The legacy industry and the current damaged environment generate negative health impacts, especially through unsustainable consumption and the inability to cover health costs. Continuous calculation serves the dialogue with citizens and a risk transfer for coverage from the budget and donors or finding additional resources.<\/li>\n<\/ol>\n

            \n
          1. Education<\/strong> and the creation of a work culture with standards is the key to the future prosperity of Albania.\n

            According to the 2022 Competitiveness Report, Albania is ranked last in the region for the low level of employees with secondary and higher education, but also for the truncated number of professionals and technicians, giving influence also in the ranking for work productivity for employees. Meanwhile, the compatibility of the employee’s skills with the workplace ranks Albania in the last place.<\/li>\n<\/ol>\n

            If we go down to the level of Municipalities, the indicators are like the positioning at the national level. Although the challenges for education are great, the exposure of the problems should be accompanied by in-depth studies and actions with the recently approved strategic objectives, but with corrections based on the local situation.<\/p>\n

            As difficult as the current economic crisis is, it is important not to lose focus on the importance of education and begin addressing some of the problems that have long plagued the nation’s cultural and educational system. The reforms carried out in the past years should be rigorously evaluated by the public inside and outside the country.<\/p>\n

            Some results have started to appear, but the educational system still suffers from the lack of consolidation of the education chain and its quality. Success cannot depend only on continued reforms but on full implementation. This is true and essential for educational reforms.<\/p>\n

            On the other hand, this model of education, even though it is often mentioned that it is seen as connected to the labor market, the results do not show that a proper product is expected to have potential.<\/p>\n

            The cornerstones of a policy framework for developing an appropriately skilled workforce are being laid. But the widespread availability of good quality education as a basis for future training is lacking.<\/p>\n

              \n
            1. More recent data suggest that public investment has not brought high returns of benefits to the economy<\/strong>, as the size of the initial stock of public capital is lower. Also, the basic quality, quantity and interconnection of the infrastructure are still insufficient to be considered effective according to the planned expectation. The impact of inflation on infrastructure is one more reason for the smart and comprehensive Anti-Inflation Plan.<\/li>\n<\/ol>\n

              The entire economic and social situation in 2022<\/strong> appears to us with sufficient indicators to analyze that anti-crisis measures and efforts to recover the economy have not succeeded in creating a climate of confidence in stronger consumption than two years ago. Even the level of incoming investments in the economy has not changed in qualitative growth, since the causes that have created this situation have not been cured and addressed for solutions.<\/p>\n

              A main cause is the strengthening of the positions of inequality by stimulating the concentration of wealth in a few individuals and groups, to the disadvantage of most individuals and families with little disposable income for consumption and savings.<\/p>\n

              Reducing inflation is essential, as inflation is a tax on the poor. The current inflation trend is driven by external factors, namely high food and fuel prices and supply disruptions, some of which date back to before the crisis, but with strengthening of internal ones.<\/p>\n

              While we are powerless to change the external influence, the approach of influencing the internal influencing factors is the right decision and political action to influence the reduction of inflation in Albania. This action is the speed and efficiency of current policy in pursuing reforms that have stalled, or are not performing effectively, to increase resilience to shocks and address the underlying drivers of inequality. This approach has the same value for the economy as not abandoning the investments that have started, since they also lose the invested value if they are not completed according to the program.<\/p>\n

              Fiscal policy has a key role to play currently, to change and correct the mistakes of previous policies and by adopting some initiated budget policies for income redistribution (increasing public wages and social funds). For example, policies to increase funding in social welfare can help level the playing field before people enter the labor market by providing better public vocational education, better age-specific and lower-cost health services, such as and the further allocation of budget funds beyond the basic infrastructure that is being realized in this last decade. Funds for capital investments are out of balance with those for social welfare.<\/p>\n

              While the redistribution of social funds should begin to receive increasing funds from the budget in relation to capital investments, even though it seems like a paradox in the conditions of the infrastructure emergency in the country. A large discussion and lobbying by the government in the medium term should be the promotion of the second and third columns of pension funds, which are in the public interest to be strengthened today to minimize the insolvency crisis of the current scheme tomorrow.<\/p>\n

              The government is responsible for addressing the future, since the reform it approved in the Assembly in 2015 has had a sufficient impact on deepening the budget deficit to cover the increased costs for pensions, but without clearly ensuring the funding sources of this reform for periods long term.<\/p>\n

              Meanwhile, redistributive policies that can further help correct inequalities, for example, through progressive income tax and social assistance to help people cope with life events must be complemented with all the necessary instruments.<\/p>\n","protected":false},"excerpt":{"rendered":"

              The average score of the economic indicator fell slightly in 2020 to rise again in 2021 and again withdrawing in 2022, partly due to the slow recovery or the dependence […]<\/p>\n","protected":false},"author":2,"featured_media":15617,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[9756],"tags":[9917,8835,8241,9639,8299,11862,11125,9638,11861,11864,11701,11200,9910,10813,11860,11863,8432],"class_list":["post-15620","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-altax-en-2","tag-budget","tag-economy","tag-education","tag-employment","tag-environmental-objectives","tag-expertise","tag-health","tag-higher-returns","tag-local-economies","tag-migration","tag-public-consultation","tag-public-investment-en-2","tag-social-audit","tag-social-situation","tag-sustainable-development-objectives","tag-tax-burden"],"featured_image_src":{"landsacpe":["https:\/\/altax.al\/wp-content\/uploads\/2023\/05\/WEALTH-512x445.png",512,445,true],"list":["https:\/\/altax.al\/wp-content\/uploads\/2023\/05\/WEALTH-463x348.png",463,348,true],"medium":["https:\/\/altax.al\/wp-content\/uploads\/2023\/05\/WEALTH-300x300.png",300,300,true],"full":["https:\/\/altax.al\/wp-content\/uploads\/2023\/05\/WEALTH.png",512,512,false]},"yoast_head":"\nPerformance of Local Economies: Progress of Opportunities and Constraints Impact - 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