Effective Procedures for Public Investment Management in Albania

Procedures for Public Investment Management in the Republic of Albania PIM Albania 11-13/12/2024 Renald Petriti 1

Procedures on Public Investment Management An investment project includes a set of works, activities or services intended to achieve an indivisible objective, with clearly identified goals, regardless of the source of funding. The total cost of an investment project include all the expenses associated with achieving the intended outcomes, in accordance with all of its components. New projects exceeding the threshold value set by the Minister of Finance are subject to a comprehensive evaluation process and are included in the NSPP. These projects are incorporated into the MTBP or the annual budget only after being included in the NSPP with a 'mature' status and receiving approval from the Council of Ministers. To achieve mature status, projects must demonstrate feasibility and have a feasibility study prepared. The NSPP includes all projects that have strategic and economic importance for the country, regardless of the source of financing. The NSPP is approved by the Council of Ministers by January 31 of each year and is is subject to revie by July 1 if necessary. The NSPP is managed by the agency responsible for strategic programming. 2

Procedures on Public Investment Management Capital expenditures are classified into the following categories: o Administrative capital expenditures; o Capital expenditures for emergencies exceeding 200 million lek and those below 200 million lek; o Capital expenditures for investment projects. During programming, priority is given to ongoing projects. New investment projects must be accompanied by supporting documentation. o Projects exceeding the threshold value are sent for evaluation to the Ministry of Finance and SASPAC. o SASPAC consults every decision on new projects with the Strategic Planning Committee. o Projects in the form of PPPs are also sent for evaluation to ATRAKOS. Assessments by each institution: o The Ministry of Finance provides its opinion on financial affordability and risks related to debt and deficit; o SASPAC assesses the completeness of documentation and its alignment with strategies; o ATRAKOS evaluates the fulfillment of the elements of the feasibility study. 3

Procedures on Public Investment Management The project is considered mature upon approval by the Strategic Planning Committee; SASPAC reflects the change in the maturity status of projects and reassesses their ranking in the NSPP. Projects that do not meet the criteria for approval in the NSPP are evaluated by the Ministry of Finance. Principles on which the MoF, SASPAC and Central Government Units are based for the evaluation and prioritization of projects: o Principle of strategic importance assessment; o Principle of economic and financial assessment; o Principle of environmental and climate impact assessment; o Principle of sustainability assessment; o Principle of gender assessment; o Principle of project management assessment. 4

Procedures on Public Investment Management Multi-year budget commitments: Not less than 20% of the full value of the project in the first year ; Not less than 30% of the full value of the project in the second year; Not less than 30% of the full value of the project in the third year. Except in cases where there are limitations in the feasibility study (determinations that the project is developed in lots, etc.); Foreign-funded projects are regulated according to the relevant agreements. 5

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Unique List of Projects of National Importance (NSPP) Unique List of Projects of National Importance (NSPP) What is the NSPP? o It is a key instrument that identifies and lists public investment projects of strategic importance for the economic and social development of Albania. It includes projects with various sources of financing, which support the policies and priorities of the Albanian Government. Compatibility with National Strategies o Projects that are harmonized with the National Strategy for Development and European Integration (NSDEIE), as well as sectoral and cross-sectoral strategies. Approval process and inclusion of projects in the MTBP or budget: o Projects included in the NSPP may then be included in the Medium-Term Budget Program (MTBP) or the Annual Budget. Approval: o The NSPP is approved annually by the Council of Ministers, no later than January 31, with the option for revision until July 1 Feasibility Study o Projects exceeding the thresholds set by the Minister of Finance require feasibility studies. Projects below the thresholds do not require feasibility studies but must complete the relevant Project Concept Forms. The purpose of the NSPP: o It ensures a rigorous assessment of strategic projects and their alignment with the country's development objectives before approval and financing. 7

Instruction of minister of finance on the financial limit of the full project Instruction of minister of finance on the financial limit of the full project value value Purpose of the Instruction: o It determines the financial limit for the full value of public investment projects, based on the specifics of the relevant sectors. Approving authority: o The Instruction is approved by the Minister of Finance, who determines the manner and procedures for evaluating public investment projects. Provisions on the procedure followed by projects for evaluation and approval: o The guidance defines the evaluation process for projects, ensuring their compliance with the relevant financial rules and standards. Sectors and current financial limit: o Digital - 700 million All - 7 million Euro, o Economic Development - 700 million All - 7 million Euro, o Energy - 1.25 billion All 12.5 million Euro, o Environment - 700 million All - 7 million Euro, o Social - 700 million All - 7 million Euro, o Transport - 2.5 billion All - 25 million Euro. 8

Thank you! Renald Petriti Adresa e-mail: renald.petriti@financa.gov.al Num r kontakti: 0695561305 9