Budget Deficit – Its Impact on the Albanian Regional Economy and Influencing Factors

A budget deficit occurs when government expenditures exceed revenues within a given fiscal period and is a common feature of modern economies. Albania recorded a government budget deficit equal to 1.40 percent of GDP in 2023, while historically the deficit averaged -5.58 percent of GDP between 1993 and 2023. Persistent and elevated budget deficits pose significant challenges to economic stability, often leading to rising public debt and constrained fiscal capacity. This study analyzes the causes of budget deficits and their impact on the Albanian regional economy, with particular emphasis on macroeconomic effects such as economic growth, inflation, and unemployment. By examining influencing factors and international case examples, the paper highlights strategies for managing and reducing fiscal imbalances. The findings aim to provide practical recommendations for policymakers and researchers to strengthen fiscal governance and mitigate the adverse effects of prolonged budget deficits.