Municipalities increase personnel expenses, reduce investments in 5 months

2025-07-16 08:09:00, Ekonomi CNA

Local government expenditures for the first 5 months of 2025 show a significant shift towards personnel expenditures and a further contraction of capital expenditures in relation to total expenditures.

Personnel accounted for 56% of total municipal expenditures in the first five months of 2025, up from 52% in the same period last year.

Official data from the Ministry of Finance show that expenses for salaries and associated contributions reached 16,454 million lekë, or about 25% more than a year earlier.

Meanwhile, capital expenditures accounted for 14% of total expenditures in the first five months of 2025, down from 16.6% in 2024.

The 25% increase in personnel costs in 2025 came from salary increases.

On the other hand, capital expenditures, the main measure of public investment in infrastructure, services and new assets, have remained practically unchanged at the level of 4.1 billion lek, almost the same level as a year ago.

While personnel costs have "eaten" a larger piece of the spending pie, the space for development projects has not expanded, and has actually narrowed, if the effects of inflation are taken into account.

The contrast between the pace of wage growth and the freeze in investments is reducing the productivity of local budgets, with most funds being used primarily for daily operations, not for increasing capacities or improving services.

10 years since the implementation of the territorial reform began, instead of increasing services for citizens, they have worsened them. The competencies and territories of municipalities have expanded significantly after the territorial reform of 2015, as have their financial capacities.

The reform merged 373 local units into 61 municipalities, while funds have doubled and the power of municipalities is extensive in the communities they manage, from housing to social care, agriculture, rural infrastructure and preschool education, which if managed as required by law, can affect the quality of life, just as much as central government policies.

But in reality, the quality of services has not only not changed since the reform, but in most cases, their cost has increased, as Albania's regions are being emptied of population, especially young people.

Rural communities are facing major shortages in services and infrastructure, while the country's municipalities are unable to implement and realize their small budgets in the face of great needs.

BB: Territorial reform left the village without services and worsened their quality in the city

Official data from the Ministry of Finance shows that in 2024, local governments implemented only 43 percent of the investment program. Of the planned 46.3 billion lek, only 19.9 billion lek were invested, or less than half of the program./ Monitor Magazine