Albania, towards a more effective financing mechanism for regional development [Drejt një mekanizmi më efektiv për financimin e zhvillimit rajonal në Shqipëri]

With the approval of the National Strategy for Development and Integration (NSDI) 2015-2020 in 20161, Albania has made a significant step in establishing a proper legal/institutional framework for regional development (RD). There are, however, still important steps to be made before RD can work to reduce disparities in the territory and promote economic, social, and territorial cohesion. The legal framework on RD is not in place yet, and the institutional set up remains unclear. Four ‘Regional Development Areas’ have been designated and while they are not administrative divisions, their status is currently being discussed. The European Commission (EC) values the progress made so far by the Government of Albania (GoA) in terms of regional development and ranking policies as ‘moderate’; To date, only a few regional projects have been identified on the basis of national priorities, donor funding allocation, and other factors. The only mechanism for financing regional development in Albania has been the Regional Development Fund (RDF). This fund is allocated by line ministries on a yearly basis and finances projects according to an operational programme. The main problem with the RDF is a lack of vision and clear policy that guides investment and functions as a monitoring framework for guiding the interventions undertaken. In practice, some issues hamper the RDF to function as an effective mechanism to support development, such as: the unpredictability of investment priorities, political involvement in allocating investments, and the fragmentation of the funding into many smallscale interventions. The RDF has the potential of being developed and equipped with a programme-based approach and performance indicators to contribute to domestic regional development policy and complement EU support for regional development. So far, the system that has been established for the RDF is quite complex and is not yet compatible with EU-requirements in terms of both prior to and following the accession funds. This contribution discusses the RDF by addressing the way it is distributed and which reforms are needed.