Strengthening subnational public finance management, phase II
This project supports the Government of Albania in improving subnational public financial management (PFM), with the overarching goal of promoting fiscal discipline, the efficient use of public funds, and improved service delivery. It works directly with all 61 municipalities and the Ministry of Finance (MoF) to develop and implement key PFM processes while strengthening institutional and leadership capacities at the local level. A core objective of the project is to enhance the effectiveness and efficiency of municipal revenue collection, budget planning and execution, financial oversight, and reporting systems. It also aims to increase transparency and accountability by reinforcing internal control mechanisms and promoting stronger audit and performance management functions. The project additionally places emphasis on supporting change management and leadership development within both municipalities and the MoF, enabling local actors to drive reforms sustainably.
The project is structured around three interlinked components. The first focuses on strengthening PFM systems in municipalities. The project team provides support in strategic planning and budget management, revenue administration, and financial control. Municipalities are guided to adopt and operationalise a new Medium-Term Budget Programme (MTBP) methodology, supported by a web-based software tool that improves the quality, performance orientation, and cost realism of local budgets. Key outcomes include improved links between municipal strategies and financial plans, as well as enhanced reporting of expenditures by function. This component also aims to improve revenue management through better forecasting tools, the use of the fiscal cadastre for property tax reforms, and strengthened oversight of tax collection and arrears. Municipalities also benefit from reinforced internal control frameworks and risk-based internal auditing practices, along with more accurate and actionable financial reporting.
The second component promotes knowledge exchange and capacity development. It fosters peer learning and institutional cooperation through a combination of training, mentoring, coaching, and seminars, often in collaboration with institutions such as ASPA and the national associations of municipalities. In doing so, it strengthens technical expertise and embeds a culture of learning and innovation within local administrations. Particular emphasis is placed on building change management and leadership skills among key staff in municipalities, the MoF, and other relevant actors.
The third component focuses on strengthening the Ministry of Finance’s capacity to oversee and support local PFM systems. This includes enhanced ability to monitor the implementation of the Law on Local Finances and to provide municipalities with strategic guidance and technical support.
Through this comprehensive approach, the project contributes to building a more transparent, accountable, and performance-driven public finance system in Albania.
PROJECT IS PART OF
