Budgeting System and Climate Change Governance: Challenges and Opportunities for Sustainable Development in Albania

Abstract

The increasing impact of climate change underscores the need for effective public budgeting systems that integrate sustainability into financial planning and governance. This study examines the challenges and opportunities of incorporating climate-responsive budgeting into Albania’s policy and fiscal framework, addressing key gaps in policy alignment, financial transparency, and institutional coordination. Grounded in public financial management (PFM) theories, green budgeting principles, and sustainability frameworks, this research explores how budgeting systems can enhance climate change governance and contribute to long-term sustainable development goals (SDGs). The study focuses on the research questions:  What are the theoretical foundations that support the integration of budgeting and climate governance? Using a qualitative research approach, the study conducts a comprehensive review of Albania’s national climate policies, budgetary processes, and international commitments. Findings reveal that while Albania has made progress in aligning environmental policies with EU accession goals, significant challenges remain in fiscal planning, multi-sectoral coordination, and long-term climate finance mobilization. The study proposes policy recommendations for strengthening climate-sensitive budgeting, enhancing institutional capacity, and leveraging international funding mechanisms to improve Albania’s climate governance framework. By bridging the gap between theory and practice, this research contributes to the broader discourse on green budgeting, sustainable public finance, and climate governance in developing economies. It further suggests that all these principles to be implemented in public financial management systems in Albania.