186
Beyond the Annual Budget
Efforts to link policy and program development to resource allocation and management through the MTEF have achieved only limited success. Strategies and plans have been developed without adequately taking into account resource constraints. New policy priorities have not been reflected in the budget planning process. Over time, the MoF has increased the pressure on spending agencies to ensure meaningful compliance with the requirements of the MTEF process. However, the results of budget reforms have been mixed, and the improvements in quality have not always been sustained. In education, transport, and public works, the quality of the budget presentations has improved considerably. However, since 2008 and the global economic crisis, the reluctance of government to accept the slowdown of the Albanian economy has led to even more optimistic revenue forecasts, and budget ceilings subsequently have had to be cut heavily in the middle of budget implementation, undermining the process of MTBF preparation.
Influences The economic transition in Albania was characterized by short-lived economic collapse followed by sustained economic recovery. In the aftermath of the 1997 crisis, several governments initiated a recovery program of structural and fiscal reforms. Implementation of the program facilitated strong economic performance until 2008. However, the failure to acknowledge the impact of the global economic slowdown on macroeconomic projections is putting at risk the positive achievements of the past. With regard to political support for fiscal reform in general and the MTEF in particular, the strong commitment and active involvement of the minister of finance has facilitated implementation of the MTEF and coordination with spending agencies. However, political support for the MTEF has been inconsistent and fragmented. The MTEF and budget planning processes have not effectively linked resource allocations to strategic policy and program priorities. Significant weaknesses remain in budget execution, especially in cash management and procurement. Substantial budgetary reallocation and underexecution during implementation have undercut the government’s efforts to consolidate the budget as a predictable tool for policy implementation and seriously undermined the integrity of the budget and the efficiency of public spending. In addition, audit and parliamentary oversight have been severely limited by capacity constraints. PEFA scores suggest that budget credibility remains an issue.