Incentive Issues Underlying the Budget Process in Albania

Author:Saimir Sallaku
Position:University of Tirana
Pages:152-156
Vo
l.
6
N
o
.
3
N
ovem
b
er
,
2020
A
cademic Journal o
f
Business,
A
dministration, Law and Social Science
s
II
PCCL Publishin
g
, Graz-
A
ustri
a
I
SSN 2410-391
8
A
cces online at www.ii
p
ccl.or
g
1
52
Incentive Issues Un
d
er
ly
ing t
h
e Bu
d
get Process in A
lb
ani
a
PhD
C.
Saimir Sallak
U
niversity o
f
Tirana
Ab
str
a
c
t
A
lbania has been reforming its policy, planning and budgeting systems since the end o
f
communism and now, in principle, has sound public expenditure management (P
E
M) systems
and procedures within an
I
ntegrated Planning System (
I
PS).
I
n practice, the P
E
M system has
y
et to operate fully as intended. Such reforms take time to implement properly, especially
where incentives to implement remain weak or perverse.
The 1998
O
rganic Budget Law created an enabling framework for the budget process that
permi ed, but did not explicitly require, an output focussed system based on medium term
planning. Formal rules and regulations explicitly requiring such a system now exist (under
t
he Law on Management of the Budgetary System (LMBS)) but the budget process continues
t
o have weak planning during budget preparation and retains excessive exibility during
b
udget implementation. There is a vicious circle: weak planning leads to chaotic budget
i
mplementation which requires excessive exibility in execution to compensate; the exibility
i
n practice is a key disincentive for implementation of the intended P
E
M system.
I
t also
produces an opaque policy, planning and budgeting process
.
There are four categories of incentives in uencing the extent and pace of achievement of the
i
deal system
:
P
olitical commitment to implementing the ideal system.
C
ivil service commitment to implementing the ideal system
.
The ability of both the political and technical strata to manage the change from the emerging
system to implementation of the ideal system
.
E
xternal in uences on the implementation of the ideal system
.
The
I
ntegrated Planning System is a sound one.
I
f applied as intended P
E
M performance will
b
e strong. Some of the incentives for application are weak. The
I
PS design includes the means
o
f strengthening most of these incentives so continued implementation should bring positive
r
esults in P
E
M performance. The
I
PS design does not deal with the detail of performance
m
anagement incentives (job descriptions and organisation missions re ecting service delivery
performance measurement, career development, personal performance appraisal) and these
need particular intention. The critical incentives are those for good management not just good
b
ud
g
etin
g
. Good mana
g
ement will deliver
g
ood bud
g
etin
g
.
K
e
y
words:
I
ncentive
I
ssues, Bud
g
et Process,
A
lbani
a
.
I
ntr
oduc
t
io
n
The re
f
ormed started its im
p
lementation
f
ollowing the introduction o
f
an
O
rganic
B
udget Law in 1998 (
O
BL98).
O
BL98
p
rovided an enabling
f
ramework
f
or the budget
p
rocess which s
p
eci
ed two ke
y
s dates
f
or budget
p
re
p
aration: Jul
y
10th (issuing o
f
t
he Budget Guidelines document which marked the beginning o
f
budget
p
re
p
aration);
and November 20th (submission o
f
the dra
A
nnual Bud
g
et Law to Parliament).
A
s a resu
l
t
,
t
h
is enabling
f
ramewor
k
allowed for a range of approaches to budgeting,
k

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