Budget indicators for the medium-term period 2025–2029 clearly show that the governance model remains based mainly on capital investments, roads, buildings, infrastructure works, and much less on investment in human capital, i.e. education and health.
According to the new Macroeconomic Framework 2027–2029, capital expenditures will move in a very high range of 6–6.5% of GDP per year over the medium term. In 2026, they reach 6.5% of GDP, a level that places Albania significantly above the European Union average, where public investments typically hover around 3–3.5% of GDP.
This makes Albania one of the most public investment-oriented economies in the region and in Europe, reflecting a development strategy that relies heavily on construction and infrastructure as engines of economic growth.
In stark contrast, funding for education and health remains significantly lower.
Health spending, mainly represented by the health insurance scheme, fluctuates from 2.4% of GDP in 2025–2026, to gradually decrease to 2.1% in 2029. This means that, in relative terms, health is losing weight in the economy, even though the needs for health services increase with the aging of the population and the emigration of medical personnel.
Funds for education will also decrease in relation to both GDP and budget expenditures, according to projections in the 2026–2028 medium-term budget. Public spending on education in 2022 was only 2.9% of GDP, while this year it is expected to reach 2.4% of GDP and in 2028 it will be only 2.1% of GDP. This shows that as the economy grows, fewer funds are allocated to education.
The budget structure shows that economic growth is being sought through physical investments and not through improving labor productivity, the quality of education, or the health of the workforce.
In the short term, this approach could support growth through construction and employment in infrastructure-related sectors. But in the long term, we will have an economy with many construction sites but an increasing shortage of teachers, doctors, and qualified professionals.
Despite this high level of public investment spending from the state budget, the country continues to suffer from a lack of basic infrastructure where the population, economic activity, and urban pressure are concentrated, in large centers, especially in Tirana and the surrounding metropolitan area.
Instead of public capital being directed where the social and economic return is highest, it is dispersed into hundreds of small projects, disconnected from each other, without synergy and without a territorial vision of development.
This budget fragmentation has a double negative effect: on the one hand, no project receives sufficient funding to become truly transformative, and on the other hand, an ideal breeding ground for abuses, contract renegotiations, funding increases, and deliberate shifting of priorities is created.
The consequences are already visible. The center of the country, where over half of the population lives and works and where the vast majority of GDP is produced, remains underfunded in urban infrastructure, public transport, water supply, sewage, schools, hospitals, public spaces, housing./ Monitor
