The Minister of State for Local Government, Ervin Demo, held a press conference today with journalists, where he outlined 2026 as a key moment for the future of municipalities, as well as for reforms and new instruments aimed at strengthening local government institutionally, financially, and technologically.

Full Statement by Minister Ervin Demo:

2026 is a very important year for local government as a whole, due to the many initiatives that are transformative in nature. It is a crossroads year for the future of municipalities in the country. Several major processes are overlapping. The EU integration process is one of them, but there are also many other initiatives underway. At the same time, we must not forget that 2026 is the year in which the territorial reform process has begun and, in a way, serves as the “capstone” that brings together all these initiatives to ensure a healthy foundation for the development of municipalities in the years and decades ahead.

If I were to choose one key word to describe the initiatives undertaken in recent months, it would be the strengthening of municipalities. This encompasses both capacity-building and institutional strengthening through concrete initiatives, such as the Local Government Academy, which represents a historic moment for municipalities in the country. For the first time, municipalities will have a structure focused on their specific needs. It is a structure directly owned by municipalities themselves, as municipalities finance 50% of the Academy’s costs, while the remaining 50% is financed by the central government.

The Academy will also serve as a platform where municipalities can share best practices consolidated at the local level, particularly in addressing the day-to-day challenges that territories face—challenges that vary significantly from one municipality to another. While some municipalities face considerable difficulties in fulfilling certain functions, every municipality demonstrates commendable performance in specific areas. Simply sharing experience and creating a sustainable platform for exchanging best practices makes the Academy a powerful instrument for local government.

At the same time, the Academy will naturally evolve into a hub where all partners and donors working closely with municipalities will not only continue their support—as they clearly have to date, starting with the Strong Municipalities Programme—but will also find a sustainable framework for providing assistance to local authorities. I would particularly like to acknowledge the support of our Swedish and Swiss partners in this regard.

Within the first ten days of February, the first training sessions under the Academy will begin. Capacities are being built, the structure is being consolidated, and the full regulatory and legal framework necessary for the Academy’s operation has been approved. This will be a major success and, more importantly, an instrument that municipalities will have at their side as they navigate future challenges, ensuring better services across their territories.

2025 was also an important year for the Performance-Based Grant, as it was applied at the local level for the first time. The grant was financed 50% by donors, including the Swiss Embassy, and 50% by the state budget. Approximately €4 million were allocated to municipalities based on clear, primarily regulatory performance indicators. In 2026, our objective is to deepen the concept of the Performance-Based Grant. Municipalities that perform better and deliver higher-quality services to citizens should have access to greater funding, turning the grant into a genuine motivational instrument for improving service delivery.

2026 will therefore mark a significant shift for the Performance-Based Grant—from assessing largely procedural indicators to measuring concrete services delivered in the territory and specific municipal functions.

At the same time, 2026 will be crucial because technology will play a central role in strengthening municipal institutions. One major initiative is AFMIS, a system developed in cooperation with the Ministry of Finance, ensuring nationally unified standards and practices, transparency, and clearer planning. Above all, it enables a more accurate measurement of performance indicators. AFMIS goes beyond financial reporting; it is a comprehensive management system for financial resources, investment planning, service quality, and revenue generation. It represents a major positive innovation.

Another transformative project is the digitalisation of local services. The aim is to integrate local services into a single platform—similar to e-Albania for central government services—creating one unified portal for all services citizens need, at both central and local levels. Supported by the World Bank, this project has already begun and requires significant effort and proactive engagement from all municipalities, which have a direct interest in building a sustainable digital framework that expands service quality and diversity year after year.

In terms of financial strengthening and economic development, a normative act for 2025 has been approved, allocating 1.2 billion ALL (approximately €12 million) to municipalities to address accumulated liabilities. Financial sustainability is essential not only for medium-term planning but also for creating fiscal space to improve local services. This support has now been finalised and will help municipalities manage their outstanding obligations more sustainably.

In 2026, municipalities will, for the first time, administer over €1 billion at the local level, including own-source revenues, state budget transfers, and territorial investments implemented by line ministries. Total municipal benefit will reach approximately €1.2 billion—an unprecedented level of financial support that brings with it increased responsibility and higher expectations from citizens.

We are fully aware that each municipality faces specific challenges based on size, financial situation, demographics, and geographic scope. Nevertheless, we are steadily creating the conditions and institutions necessary to address these challenges effectively.

Another positive development for 2026 is a €20 million grant from the United Arab Emirates, dedicated to strengthening municipalities. This support will focus on equipment and logistics, particularly for agricultural infrastructure, as well as preparedness for natural disasters such as floods, enabling municipalities to respond more effectively to emergencies.

Regarding economic development, the concept of entrepreneurial municipalities is crucial. While municipalities are key institutional actors in territorial management, their economic role remains underdeveloped. Strengthening their participation in economic value chains will stimulate development and increase municipal revenues. In cooperation with the Ministry of Economy, this entrepreneurial approach will be extended to the local level, enabling municipalities to better manage their assets and generate sustainable income.

From a regulatory perspective, 2026 will also see legislative initiatives concerning Municipal Police, the Inspectorate for Territorial Protection (IMT), and the Law on the Prefect, aiming to improve coordination and establish national standards, particularly for municipal policing, ensuring transparency, meritocracy, and consistent training.

Finally, EU integration will bring significant regulatory challenges for municipalities. With an ambitious goal to close negotiation chapters by 2027, new standards and responsibilities will emerge. Through instruments such as the Academy, performance-based financing, and digitalisation, we are preparing municipalities to absorb these responsibilities and compete effectively for EU funding, particularly under Cohesion Policy (Chapter 22).

Territorial reform—the “elephant in the room”—is a critical instrument to ensure municipalities have the assets, capacities, and economic potential needed to face future challenges. This reform must be data-driven, inclusive, and forward-looking, reflecting demographic and economic changes over the past decade and anticipating those to come.

I therefore call on all actors—municipalities, civil society, partners, and political institutions—to engage proactively in this process. This reform is not merely administrative; it is about how we manage territory, deliver services, and prepare local government for the future.