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Capital investments at lowest level since 2010

Politiko 2025-05-22 09:27:12

While the needs for investment in infrastructure, education, and health are too great to cover the gap in standards with the EU, Albania is experiencing chronic problems in terms of planning and execution of public investment funds.

Official data for the first quarter of 2025 show that capital investments reached around 14 billion lek, the lowest value since 2010. Funds realized compared to the plan were 33% lower and compared to last year's actuals were 11% lower.

Investment funds are "overspending" because some of the large investments in road infrastructure are being awarded through PPP concessions, while the construction of the New Port in Porto Romano is not progressing according to expectations due to the lack of a winner from the competition yet.

Since 2017, over 60% of capital investments have been covered by domestic revenues, while the stock of signed and undrawn foreign loans exceeded 2 billion euros in the first quarter of 2025.

Foreign-funded projects are becoming increasingly rare. From 34 billion lek in foreign funding in 2012, during 2023-2025 there are only 4-5 billion lek. The only new projects being financed by foreign funds are the Durrës-Rrogozhinë railway (EBRD-EU) and the Tirana-Durrës-Rinas railway.

The sharp decline in capital investments with budget funds is related to canceled tenders and court disputes in the last two years. EU funds are also going through the same, but even more difficult, practices.

The data shows that public investment policy continues to be cyclical, dependent on extreme events such as earthquakes and pandemics more than on a visionary long-term development plan.

In recent years, budget investments have suffered from chronic poor execution. By October 2024, only 30% of the planned capital expenditures for the year had been implemented, an underperformance that is recurring every year. More than half of the funds were disbursed in November-December in previous years.

Ministries plan more projects than they can launch, while the budget is revised several times by normative acts, further complicating the final realization of funds. Most important projects are not supported by feasibility studies.

Administrative capacities remain limited. There are 48 vacancies in procurement agencies. The failure to implement public investments creates negative effects on the country's economic growth with multiple consequences.

Unlike other developing countries, the failure to realize public investments in our country does not come from a lack of funds, but from a lack of efficient projects and procedures./ Monitor