Abstract: This article aims to examine the budgetary behavior during the electoral cycle in local government in Albania. Using panel data for the period 2017-2023, the paper sheds light on the existence of the political budgetary cycle in the pre-election, election, and post-election years, by analyzing capital and current expenditures, as well as local revenues from local taxes. It also extends the analysis to include other important variables that affect budgetary behavior, such as tenure, political connection, and gender. Furthermore, using interaction terms, it examines the effect of each variable on current expenditures. The analysis results in an opportunistic tendency to increase expenditures and decrease tax revenues during the pre-election and election years, with their growth rate being much higher in the election year. However, there is no reduction in spending or increase in taxes during the post-election year which can be explained as a result of the lack of electoral competition, the low level of financial autonomy, and the fact that in 2020, the only post-election year considered in the analysis, the increase in spending, especially current spending, is related to the mitigation of the negative impact of the covid-19 pandemic. We also find that female mayors have opportunistic behavior for current spending, while political connection affects both current and capital spending. The findings of this paper are important for both policymakers and Albanian citizens, given that the presence of the political budget cycle in the pre-election and post-election years demonstrates the misuse of public funds for electoral purposes, thus undermining accountability and good governance at the local level. In order to mitigate the negative effects of the political budget cycle on the provision of public services, it is necessary to undertake reforms to increase accountability, as well as increase citizen engagement in monitoring local spending to hold local officials accountable.

Keywords: Electoral cycle, Budgetary behavior, Local government, Political connection, Gender, Tenure, Albania

Pages: 197-210