Local Government Borrowing Issues in Central and Eastern Europe. The case of Albania

During the last two decades the process of decentralization has been extended worldwide. This process has taken place in developed countries. Nowadays, this process is also being applied in developing countries in order to challenge the monopoly of centralized decision making of governments. The decentralization process has had different objectives in different countries, depending on the democratic tradition and the level of socio-economic development. In addition the recent financial crisis has make policy makers more sensitive regarding the stock of public debt. Under this framework local borrowing is becoming increasingly important as Central and Eastern Europe consider the legal and institutional restrictions on local borrowing as part of the restrictions on total public debt. This paper argues about the major issues central and Eastern European countries are facing regarding local borrowing with a focus on the current situation in Albania where the local borrowing law is recent.