Albania is a developing country with a backward economy compared with other western countries, which needs investments and expenditure budget good management more funding in the sector where population needs more. In this task will present an analysis of budget expenditures in a time period from 2000-2008. We will see performance budget deficit in these years and the situation in 2008. Will analyze total budget expenditures for these years and will focus more in 2008 which will give total funds for each ministry, and will present the biggest spending budget for this year. In our office will handle in theoretical understanding of the state budget in Albania, analysis of state budget situation in 2008 and his situation in time segment 2000-2008. Will focus on the costs by providing the definition of their respective division. It will also talk about general spending from 2000-2008 with their first performance. Later in 2008 will focus on providing the distribution of budget expenditures by line ministries. Will analyze costs MPWTT (Ministry of Public Works, Transport and Telecommunications) and field where she spends more. Seeing that the network of national road took the highest percentage of MPWTT will analyze the costs for road Durres-Kukes-Morine

2-Understanding of budget

In literature we have a lot of definitions of budget.

“The budget is acconto-legal act, which is approved by representative bodies and which are provided and approved revenues and expenditures of social-political community for the realization of collective goals in the next period”.

“The budget is the financial plan and legal act which approves the assembly, namely socio-political community, in which certain planned revenues of socio-political community, according to sources and amounts, to be relevant in this year in budget, and on the other hand, expenses decides bodies and community organizations, socio-political and other authorized persons can make in the overall volume by designation in the budget year.

The word budget is derived from the medieval English and French, “bouggette” which means leather bag.

The state budget is a financial plan showing income and expenses for a period of time. State budget is in three forms:

  1. -Surplus
  2. -Balance
  3. -Deficit

Surplus is budget condition when expenses exceed income.

Balance is the state budget when revenues are equal to expenses.

Deficit when we are spending greater than the budget income.

The first two conditions rarely encountered in reality and the deficit situation is most common. For rating depth than the budget deficit of a country, calculated the ratio of it's gross domestic product (GDP). This value indicates what proportion of GDP budget deficit the state occupies. To cover the government deficit to take domestic loans, foreign loans, increased taxes, etc…

Table 2.1 State of the Albanian state budget in 2008-in % of GDP


Amount in %







Source: Ministry of Finance 2008, our calculation

Albanian state budget deficit in 2008 is that 13.4%, that because costs exceed revenues. So the government has been capable of all expenditures funded budget provided by its current income.
As in 2008 the Albanian state budget is in deficit will examine the situation from 2000-2008. To better reflect the present chart below.
From 2000-2008, the budget deficit Albanian state there have been changes. See from the chart above that in the years 2000-2005 time deficit has suffered flexible improvement, this because there has been a reduction of capital expenditure and current. Mainly an increase in non-discretionary spending hardened which include debt obligations, wages, salaries and transfers of securities which have increased by 57% of the budget in 2000 to 63% in 2005.

In 2000 the value of the deficit has been about 8% and in 2005 was reduced by 3% which is lower and the value of the deficit in this segment limit. After 2005 the deficit is further deepened by 2007 where we have an increase in low and only have a 2007-2008 time interval deficit increased by 8%, from 5% has gone to 13.5%. In this period we had a slaw revenue growth and expenditure growth. So in the time segment 2000-2008 is the highest deficit in 2008.

3-Expenditures and their separation

Convergence real in relation to European Union countries require budgetary expenditures and growing capital investment for priority sector such as energy, infrastructure, education, health etc … On the other hand the development of these sectors requires budget revenue growth rate higher than expenditure in order to have an adjustment and fiscal consolidation contributes to a reduction in fiscal deficit and nominal convergence meeting.

But understand what the cost? As they shared ?

“Expenses” are all committed within the state payments to found the state budget approved, with the exception of principal of loans.

Two main divisions of the state budget expenditures are:

  1. 1-Capital expenditures
  2. 2-Current expenditures

Capital expenditures include the following subcategory: construction, purchases of capital assets and capital transfers.

Current expenditures are actual expenditures, which include the subcategory: salaries, personal costs, operating and maintenance costs, bonuses and subsides, expenditures for social and health insurance, transfers, local costs and expenses for other goods and services.

The government project the initial budget, prior to planned funding for each voice above expenses. Then the government made a budget review after any of the subcategories may need more additional funds or may not be well planned ones. We also have actual budget, which represent total expenditures committed in each category.

4-General expenses in year 2000-2008

In this graphic will review what has been the percentage of spending in this segment of time.

In the chart above it seems clear that the percentage of expenditure in 2000-2008 time frame has been since its fluctuations. Lower percentage has since 2000, about 3%. A year on after looking at the costs have increased approximately 9%. By 2005 the pace of change is low cost because the government of Albanian has not spend a lot of for reasons it wanted to have a budget deficit improvement which we analyzed above.

In these year we have mainly to payment of the interest rate, wage and salary.After 2005 we see that an increase in spending reaching peak in 2008, with 31%. This increase in spending has come as a result of an increase in public expenditure and mainly as a result of capital investment.

Trend after 2005 years regarding the report growing expenditures appear real risk of the fiscal deficit even though in the period is to minimize the growth of income.As we saw in the figure 1 in 2008 had a deepening deficit because this look at increased costs.

5-General expenses in 2008

To better analyze expenditures for 2008 will present the chart below where we have to give performance of distribution of budget expenditures by appropriate ministry (monthly data in %)

In the chart above to see the Ministry of Tourism, Culture, Youth and Sports and Ministry of Agriculture and Food have almost uniformity in the allocation of funds for the period from march to december, 2008. For these two ministry have gone lower funding the state budget. For Health Ministry and Ministry of Education and Science have a similar allocation during this period with some minor fluctuations. In the Ministry of Health are investing less money in comparison with Ministry of Education and Science. For the Ministry of Labor, Social Affairs and Equal Affairs and Ministry of Public Works, Transport and Telecommunications (MPWTT) have received greater funding from the government leaving the first place each other through the months under review. Scanning the Ministry of Labor, Social Affairs and Equal Affairs see that in the months from march to april this ministry has received the highest funding for this period has occurred tragedy in Gerdec for which funds have gone to. In the coming months we have uniformity in funding last month by december, were we have an increase in funds for

this month by the Council of Ministers, persons who receive social support budget funds have received additional compensation on a monthly payment as usual and to cover any gap and backward.

MPWTT has been a completely different story allocation budgetary expenditure during this period that is analyze. Budget year 2008, started with an allocation that is gradually increased until june and was highlighted by april, because it started investments in mega project “Track Nation”, so for highway Durres-Kukes-Morine. After month of june have a declining value of the funds spent, that continues to decline in september. This decline is justifiable the fast that these are months of and work normally falls, especially the pace of investment in roads to the impossibility of performing the works and the for a lot of movement in it. After september we have a gradual increase in the months following which reaches peak in december.

As you see from the chart most of the funds of the Albania state budget has gone slightly more in comparison with the MPWTT above.

5.1-Stucture of actual expenditures for 2008 under programs MPWTT

As above we punctuated MPWTT has received most of the state budget funds for 2008. But as this ministry has distributed funds? In its sector, which invests more it? For you answered these questions present the following table where we present the percentage of fund that each sector has its

Table 5.1 General expenditures under MPWTT in % of total

Expenditures of MPWTT

Expenditures in %

managerial planning administration


national road network


transport management


maritime transport


rail transport


air transport


water and sewer


housing and urban planning


public services


As you see in the table above most of the cost by about 80.3% occupy sector national road network. The rest of the funds is distributed uniformly among others sectors. Smaller percentage of about 0.1% occupy transport management. As mentioned above most factual in this ministry occupied the national road network, namely road Durres-Kukes-Morine.

5.2-Way costs for the Durres-Kukes-Morine

This road has started drilling in april 2008 and for which investment is gone most of the expenses for the year 2008. To give a full picture of investment committed in this project in order to present the following summary table.

Table 5.2 Costs for the Durres-Kukes-Morine highway of total


Denomination expenditures ( in milion lek )

Total exenditures


Capital expenditures


Internal financing which


Durres-Kukes road


External financing which


Durres-Kukes road


Total: Durres-Kukes road


As you see from the table, during the year 2008, from the state budget for this road are invested 39,394 million lek. This funding is provided: 11,161 million lek or 28.3% of its funding while the rest of interior 28,233 million lek or 71.7% of secured foreign financing. Investing this way occupied 41.6% of capital expenditure committed for this year and 11% of total budget expenditures. So a single investment project such as high way Durres-Kukes-Morine has been a considerable amount of funding applied to it.

Given that Albania is a developing country where the number of unemployment is up, in comes are so few people that can not provide a living, which lacks much needed state budget spends most of the revenue to this mega project.


State budget situation in Albania in 2008 was in deficit by 13.4%. The time frame of time since the 2000-2008 state budget is in deficit with higher values in 2008 and lower in 2005 to 3%.

State budget expenditures are divided into two main categories which are:

  1. -Capital expenditures
  2. -Currente expenditures

Scanning over all expenditures from 2000-2008, we noticed that higher costs are in 2008 and the lowest value in 2000. Focusing in 2008 by analysis of general expenses under several ministry we see that greater costs are incurred for MPWTT and lowest for the Ministry of Culture, Youth and Sports. The ministry has committed to spending some of its areas, where costs have gone larger network of national road about 80.3%. Mega project the highway Durres-Kukes-Morine occupies most of the costs not only in national road network but in all government expenditures.

Source: Essay UK - http://doghouse.net/free-essays/economics/albania-is-a-developing-country.php

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