For the first time, “Faktoje” has collected and reviewed all Decisions of the Council of Ministers regarding Reconstruction, which can be found on the interactive database at https://faktoje.al/data/ . In 2020, the Albanian Government allocated ALL 78,471 billion, thus exceeding the budget by ALL 46.5 billion (or approximately EUR 381 million). These funds were allocated by Decisions of the Council of Ministers for individual and collective dwellings, public schools and infrastructure, etc. During 2021, the Albanian Government continued allocating through new DCMs amounting to a total of ALL 99.666 billion in reconstruction investments compared to the adopted budget of ALL 66 billion. According to this review, it results that today the Albanian Government has adopted a fund of ALL 33.7 billion (or approximately EUR 276 million) unsupported by budgetary funds, thus posing a risk of it becoming concealed debt and directly affecting the observance of reconstruction deadlines, as well as creating arrears.
The Government of Albania undertook to carry out reconstruction funds “pursuant to the provisions of the legislation in force on the management of the budget system and the relevant law on annual budget.” Based on the review of Council of Ministers Decisions allocating reconstruction funds and allowing contract conclusion and works to begin, it was discovered that, since 2020, the allocated amount had exceeded the annual and 3-year budgets adopted by the Albanian Parliament, resulting in an expenditure invoice that was not reflected in fiscal indicators. In 2020, the Government allocated an amount of ALL 46.5 billion (or roughly EUR 381 million) through DCMs for establishing work sites, therefore exceeding the relevant budget. The same took place in 2021, a year during which funds adopted by new DCMs have continued and are unsupported by budgetary funds. Despite smaller, the amount unsupported by budgetary funds is ALL 33.7 billion (or approximately EUR 276 million). Such allocations unsupported by budgetary funds risk becoming concealed debt and directly affecting the observance of reconstruction deadlines, as well as creating arrears.
Photo of the interactive database on Faktoje.al
The reconstruction fund is provided for in Law No. 88/2019 “On the 2020 Budget,” wherein Article 7 initially specifies the amount of ALL 20 billion, the competence of the Council of Ministers in terms of the manner of use, budgetary programs to which the fund would be allocated, and implementing institutions; and the carryover of unspent funds into the following year and their use for the same purpose.
The Normative Act No. 28, dated 02.07.2020 changed the reconstruction fund amount to ALL 34 billion, divided into ALL 3 billion in grants and ALL 31 billion in state budget expenditures, resulting in a total increase of ALL 14 billion.
The Normative Act No. 34, dated 16.12.2020 changed the reconstruction fund amount to ALL 32 billion, divided into ALL 3 billion in grants and ALL 29 billion in state budget expenditures, resulting in a total decrease of ALL 2 billion reflected in state budget expenditures.
As shown in the attached tables (Table 4 – fiscal consolidated budget indicators of Law No. 88/2019 “On the 2020 Budget”) of the said law, only funds for 2020 have been foreseen, with no funds foreseen for 2021 and 2022, and the estimated reconstruction fund budget for 2020 according to the changes by Normative Acts is shown in the following table:
The realization of the reconstruction fund for the budgetary year 2020, according to the report of the Ministry of Finance and Economy in the consolidated fiscal indicators, amounts to ALL 16,591 million, at a lower realization rate or 52% of the plan amended.
In the documentation of the draft Law “On the Adoption of the 2020 Factual Budget”, table “Analytical table of the use of the 2020 ReconstructionFund” shows the list of DCMs issued during that year on reconstruction fund use, including an allocated amount of ALL 28,079 million. The review of these DCMs, for which the database containing all DCMs issued in 2020 was created, found that the total estimated cost of fund realization is ALL 78,471 million, of which just the amount allocated for 2020 is ALL 28,079 million. The remaining amount not supported by funds is foreseen in the upcoming budgetary years, while according to Table 4 in Law No. 88/2019 “On the 2020 Budget”, no funds for the upcoming budgetary years have been included.
In Law No. 137, dated 16.12.2020 “On the 2021 Budget”, in Table 4 – consolidated budget fiscal indicators of the Law the reconstruction fund has been estimated at ALL 28 billion for 2021, ALL 6 billion for 2022, and ALL 0 for 2023. This estimated amount for financing the reconstruction fund in 2021 and in the two upcoming budgetary years has not been changed by the normative acts that changed the 2020 budget, as shown in the following table:
Although the realization of the estimated fund for 2020 was only about 50% (ALL 16,591 million out of ALL 32,000 million planned for 2020), the remaining amount due to DCMs issued in 2020 (in the amount of ALL 78,471 million), has not been budgeted in the adopted budget for 2021-2023 (ALL 28,000 million for 2021 and ALL 6,000 million for 2022).
During 2021, other DCMs on the reconstruction fund have been adopted, which:
-changed the amount of DCMs allocating funds in 2020 and;
-allocated new funds during 2021.
The effect of the 2020 DCM update in 2021 is reflected by the fund increase from ALL 78,470 million to ALL 80,511 million (updated until 30.09.2021, according to https://qbz.gov.al/search). Thus, the fund increase amounts to approximately ALL 2,041 million.
The effect of new DCMs issued in 2021 that do not change the 2020 DCMs, but instead allocate funds for the first time to beneficiary units, is estimated to be ALL 19,155 million.
In total, according to DCMs updated until 30.09.2021, since 01.01.2020, the reconstruction fund disbursed by DCMs is estimated at ALL 99,666 million. The budgeted amount in 2020, as previously stated, is ALL 28,078 million, the allocated amount in 2021 is ALL 23,781 million (for the 2020 and 2021 DCMs), thus leading to the remaining amount to be financed for 2022 and thereafter being calculated as difference in the amount of ALL 47,808 million.
The budgetary fund coverage in 2021 according to the 2021 budget law is ALL 28 billion for 2021, ALL 6 billion for 2022, and ALL 0 for 2023, thus not covering the DCM allocation with funds stipulated in the law. The following tables provide an overview of the DCM effect and the provisions of Law No. 137, dated 16.12.2020 “On the 2021 Budget”:
Total DCM amount for the reconstruction process by year in ALL
The following shows the comparison of the total DCM-allocated amount for reconstruction according to DCMs updated until 30.09.2021 to the budget planned in the Annual Budget Laws for the 3-year period according to which the 2021-2023 budget is adopted, and the estimated amounts in the 2022-2024 Draft Budget:
Comparison to the 2021-2023 Budget
The DCM-allocated amount of ALL 99,666 million, considering the 2020 realization rate amounting to ALL 16,591 million, has not been disbursed in 2021-2023 because the difference in the amount of ALL 83,075 million (ALL 99,666 million – ALL 16,591 million) is greater than the 2021-2023 budgeted amount of ALL 34,000 million.
Comparison to the 2022-2024 Budget
The same occurs in the 2022-2024 estimations if we were to consider the 2020 realization rate (ALL 16,591 million) and at the same time supposing that the entire 2021 estimated fund will be realized (ALL 28,000 million), where the difference amounting to ALL 55,075 million (ALL 99,666 million – ALL 16,591 million – ALL 28,000 million) is greater than the 2022-2024 estimated amount of ALL 20,000 million.
The lack of required funds, in addition to putting pressure on increasing amounts based on yearly estimates, jeopardizes the process completion within established deadlines.
For further information about the Decisions of the Council of Ministers on reconstruction process funds, please click: