Public spending in Albania remains lower than in other countries in the region and has not undergone major changes over the last decade, according to a recent analysis of public finances conducted by the World Bank.
The WB Public Finance Report 2025 shows that in the period 2014–2024, average public spending reached 30.1 percent of Gross Domestic Product, a level lower than that of comparator countries. A temporary increase was recorded during the COVID-19 pandemic, but by 2023 spending had returned to medium- and long-term sustainable levels.
According to the data, transfers constitute the largest category of expenditure, accounting for about a third of the budget and just over 11 percent of GDP over the past decade. Within this category, pensions dominate, absorbing about a quarter of the entire budget and exceeding both the public sector wage bill and other forms of social assistance. Capital expenditure is the second largest item, at about 20 percent of the total, a level that exceeds other countries in the region by 1.2 to 1.6 percentage points of GDP.
At the same time, Albania spends less on human capital compared to other countries. Expenditure on health, education and social protection together accounted for just over 50 percent of the budget during 2015–2024, while this share was 56 percent in the Western Balkans, 64 percent in Central and Eastern Europe, and 71 percent in the European Union.
The report notes that Albania allocated 9.5 percent of GDP to social protection in this period, compared with 11.4 percent in the Western Balkans, 14.5 percent in Central and Eastern Europe, and 16.7 percent in the EU. Even within this sector, pensions account for almost 80 percent of social spending. Meanwhile, spending on education and health, which together represent about 10 percent of total spending, has remained low and almost unchanged, with the bulk of the education budget focused on primary education.
On the other hand, Albania spends significantly on transport infrastructure and energy projects, the document states.
Transport spending accounts for about 7.5 percent of the total budget, a higher level than most comparator countries, while almost 80 percent of this budget, or about 6 percent of total spending in the period 2015–2024, is focused on roads. Meanwhile, energy spending represents about 0.7 percent of the total.
The public sector in Albania remains relatively small, with a lower share of public employment and wage bill compared to other countries. Furthermore, public sector employment has fallen from 16.0 percent in 2021 to 15.1 percent in 2023, as a result of fiscal consolidation and digitalization policies, but also of labor market developments.
However, the report highlights that progress has been made in gender balance, providing more job security for women and integrating gender-sensitive budgeting into the public financial system.
The structure of public spending has remained generally unchanged over the years, due to high budgetary rigidity, which is mainly related to spending on salaries, pensions, basic services and interest payments.
Although this rigidity has decreased from 21.8 percent of GDP in 2015 to 19.8 percent in 2024, it remains higher than in most countries in the region. One of the main reasons is the relatively high share of spending on basic services, which amounts to 0.9 percent of GDP, and on debt interest, which constitutes 2.1 percent of GDP during the period 2015–2024, as a result of the fiscal deficit and dependence on domestic and external borrowing, the report concludes./ekofin.al/
