Municipalities invest only 20% of the budget for citizens - 80% of local finances are used for salaries and operating expenses
Although financial resources have increased overall for all municipalities in the country, the structure of expenditures by municipality is problematic. According to the Local Finance Report for 2025, in many small and medium-sized municipalities, salaries and operational expenses account for more than 60% of the budget, while in large municipalities this ratio is lower.
If we refer to the data presenting the structure of expenditures by nature for 2015 and 2025, it is found that currently only 18%-20% of local expenditures go to capital investments, the rest to salaries and operating expenses.
Specifically, municipalities spent a total of 92.4 billion lek in 2025, of which 29.1 billion were operating expenses; 40 billion lek were salaries and insurance, and only 23.2 billion lek were investments.
This shows that a large part of the budget increase has not been used towards local economic development, mainly in small municipalities.
The analysis shows that in 2025, about 40% of the budget of the Tirana municipality was used for investments, while in other municipalities such as Durrës, Elbasan, etc., about 30% of the budget was used for investments. This ratio of investment expenditures is mainly presented in large and medium-sized municipalities.
Investments from own resources have increased from 12 billion lek in 2015 to around 23.2 billion lek in 2025. Investments are mainly focused on: road infrastructure, irrigation-drainage, waste management, urban development.
Regarding salaries/insurance and operational expenses, a significant increase is observed from 2015 to 2025. This results in an increase that is parallel to the increase in local revenues and budgets and the increase in the volume of services for local communities. As a result of the creation of new local units, the new municipalities administer a territory many times larger than before the territorial administrative reform, as a result they have also increased the level of services they provide.
Also, the transfer of functions from line ministries to municipalities in 2015, along with the relevant staff, had a direct impact on the increase in salary expenditures.
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