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Decentralization of local governance is a relatively new process in Albania, progressing at a different pace in its political, administrative, and fiscal/financial dimensions. The year 2015 marks a turning point for decentralization in Albania, where several defining changes were implemented aimed at deepening decentralization in Albania, improving the efficiency and effectiveness of local public service provision in all 61 municipalities in the country. Since then, municipalities have become responsible for a series of services with a wide impact on the quality of life of citizens, and in the process, a transparent and predictable intergovernmental transfer system was introduced. Own source revenues from taxes and fees also have been subject to changes since 2015, but yet their contribution to total financial resources remains low suggesting for a limited fiscal capacity of municipalities. While the size of total available financial resources being spent by municipalities has widened from 1.8% in 2015 to 3.1% of nominal GDP in 2019, municipalities in Albania are assessed as lacking financial autonomy or being highly dependent on intergovernmental transfers (Toska & Bejko, 2018; Co-PLAN, 2020; Toska & Shutina, 2020). This study aims at providing a critical view on decentralization reform in Albania, outlining the achievements, challenges, and perspectives following the COVID-19 pandemic. Our findings suggest that the decentralizing reforms and the decentralization model implemented failed to produce the intended results, especially in terms of fiscal/financial autonomy of municipalities.

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