Multi-level governance (MLG) in the Western Balkans has made notable progress over the past decade, with administrations aligning institutional and legal frameworks to European principles and strengthening the role of local governments in democratic governance and public service delivery. Yet, as SIGMA’s 2024 regional assessment makes clear, implementation is uneven and continues to lag behind ambition. Fiscal decentralisation remains limited, consultation between central and local levels is inconsistent, and inter-municipal co-operation is still rare—gaps that undermine policy coherence and weaken trust across government tiers.
Drawing on EU and OECD benchmarks, SIGMA’s paper titled “Implementation and challenges of multi-level governance in the Western Balkans” provides a comprehensive comparative assessment across Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia.
Its core finding is clear: while formal frameworks broadly meet European principles, practical execution remains the region’s main governance challenge.
For our review the key question is whether the legal-administrative frameworks have really been developed in a way so that improved practices will increase local autonomy and lead to efficient public service provision.
Why Multi-Level Governance Matters for the Western Balkans?
Multi-level governance is not only a normative requirement under European integration; it is a functional condition for effective public administration. By distributing responsibilities across levels of government and structuring their interaction, MLG supports policy coordination, service quality, and democratic accountability. In the Western Balkans, its importance is amplified by complex reform agendas, persistent territorial disparities, and growing demands for high quality public services.
Based on earlier monitoring reports this SIGMA paper states, that while EU accession has driven the formal adoption of subsidiarity principles and local autonomy, implementation remains constrained. In practice, central governments retain significant control through fiscal instruments, detailed regulation, discretionary oversight coupled with weak administrative capacity and limited enforcement. This creates a paradox of decentralisation: even when municipalities are legally responsible for service delivery, they often lack sufficient autonomy to shape policies, allocate resources, or manage risks effectively.
The European experience demonstrates that subsidiarity is operational only when supported by clear competences, predictable financing, and proportionate oversight. In the Western Balkans, these enabling conditions remain underdeveloped, resulting in decentralisation systems that are legally compliant but functionally fragile. The SIGMA report evaluates six Western Balkan countries along seven dimensions.
1. Decentralization Strategies: Ambitious Beginnings, Uneven Outcomes
All Western Balkan governments – referred to in this report as “administrations” – have pursued decentralisation reforms over the past two decades, combining ambitious strategic commitments with uneven results in implementation. All administrations have adopted legal frameworks and national strategies to strengthen local self-government, improve service delivery, and promote territorial cohesion. Territorial-administrative reforms in countries such as Albania and North Macedonia aimed to create municipalities of a size considered capable of exercising devolved responsibilities, while Kosovo introduced elements of asymmetric decentralisation linked to minority protection. Serbia and Montenegro have focused on modernising local governance through reform programmes that emphasise efficiency, transparency, and improved fiscal management, although implementation has been partial. In Bosnia and Herzegovina, decentralisation remains shaped by a highly fragmented and complex multi-level governance structure, which continues to challenge policy coherence, coordination, and transparency.
Despite these reforms, persistent implementation gaps are evident across all country cases. Capacity constraints—particularly in smaller or fiscally weaker municipalities, most acutely in Bosnia and Herzegovina and parts of Serbia—limit the effective delivery of decentralised functions. Weak coordination mechanisms between central and local levels, uneven administrative supervision (notably in Montenegro and Bosnia and Herzegovina), and underdeveloped inter-municipal cooperation frameworks (including in North Macedonia) reduce the effectiveness of decentralisation. Fiscal pressures, outstanding municipal debt, and shortcomings in public financial management and intergovernmental finance reforms—highlighted in Montenegro and Serbia—further constrain local autonomy and accountability. Overall, while decentralisation strategies across the region demonstrate broad alignment with European standards, their impact is diluted by inconsistent execution, partial reform implementation, and enduring structural asymmetries between central and local government systems.
The Western Balkan administrations have established comprehensive legal frameworks for MLG, largely harmonised with EU standards through the ratification and implementation of the European Charter of Local Self-Government. Constitutions and laws on local self-government define municipal competences, organisational autonomy, electoral processes, and supervisory mechanisms, providing a formal guarantee of local autonomy across the region. While the principle of subsidiarity is widely recognised, its practical application remains limited due to constrained resources and narrow competency scopes, particularly in Montenegro. Albania and North Macedonia exemplify strong constitutional and legislative safeguards for local self-government, embedding transparency, citizen participation, and intergovernmental coordination. In the Federation of Bosnia and Herzegovina, cantonal authorities frequently appropriate local competencies, reducing operational efficiency at the municipal level. Kosovo, although not a Council of Europe member, aligns its legal framework with the Charter. Serbia and Montenegro retain reservations on key Charter provisions, including subsidiarity, delegated powers, and supervisory arrangements. SIGMA’s 2024 assessment underscores that, despite robust legal and political foundations, implementation gaps—especially in inter-municipal cooperation and effective subsidiarity—persist, highlighting the need for strengthened operationalisation of MLG frameworks to achieve meaningful decentralisation.
2. Political and Organizational Autonomy: From Legal Guarantees to Real Empowerment
Although political and organisational autonomy is formally guaranteed, its practical exercise is constrained. Local organisational powers are under centralised control mechanisms with requirement of central approval for staffing, remuneration, and organisational structures, which limit municipalities’ ability to manage their administrations. Instruments of citizen participation, such as referenda, public assemblies, or civic initiatives, exist legally but are rarely embedded in routine decision-making. From an implementation perspective, the main deficit lies in the absence of enforceable standards for autonomy. Oversight systems focus on compliance with procedures rather than on safeguarding decision-making space for local governments. At the same time, weak internal accountability at the local level reinforces central reluctance to delegate discretion.
Strengthening autonomy therefore requires a dual approach: reducing unnecessary central micromanagement while reinforcing local administrative and accountability systems. Municipal associations can play a critical role in standard-setting, peer review, and capacity-building, but only if supported by stable legal mandates and resources. Practical measures include granting municipalities greater discretion over electoral processes and sub-municipal governance structures, and allowing line ministries to empower local authorities in human resource management—including defining staffing structures, recruitment, and salary levels within broad national standards. Municipal human resource offices should consistently enforce merit-based and transparent recruitment procedures with safeguards against political interference. Additionally, line ministries should enhance legal provisions for direct citizen participation, complemented by municipal associations and training institutes that promote capacity-building and participatory practices. Municipal associations themselves can serve as crucial advocates and partners, integrating local perspectives into reforms, monitoring implementation, and providing peer-learning opportunities. Ultimately, meaningful local autonomy depends not only on formal legal guarantees but on aligning central practice with these guarantees, ensuring that municipalities are empowered to exercise their responsibilities effectively and independently.
3. Who Does What? Aligning Competences with Real Authority
Local governments in the Western Balkans generally exercise a narrower range of functions than their selected EU counterparts. Responsibilities are concentrated in communal services, technical infrastructure, and social care, with limited policy-making authority. Education and healthcare remain largely centralised, and subsidiarity is weakly applied.
To strengthen local governance, legal competences should be aligned with actual decision-making authority, enabling municipalities to design and implement policies effectively. Local governments must have genuine autonomy in planning, budgeting, and service delivery, with central oversight limited to legality and proportionality. A key policy advice of the SIGMA report is that national governments, in consultation with municipal associations, should regularly review the division of responsibilities to adapt to changing needs and improve efficiency. Finally, line ministries should explore expanding municipal roles in education and other key services, drawing on best practices from EU member states.
4. Financing Local Governance: Breaking the Cycle of Dependency
Local governments in the Western Balkans remain heavily dependent on central funding, despite legal guarantees of fiscal autonomy. Own-source revenues vary widely: Montenegro leads with 60% of municipal budgets funded locally, while Kosovo lags at just 16%, making it the most dependent on transfers. Albania stands at 39%, while Serbia relies heavily on shared taxes, with personal income tax accounting for 48% of local revenues. Kosovo is the only administration without a tax-sharing mechanism, a common feature in European systems. Central government grants dominate in North Macedonia (58%) and Kosovo (41%). However, local fiscal autonomy depends not only on the share of central transfer, but primarily on the actual method of grant allocation. Here conditional, specific grants dominate, while sectoral block grants and general grants are less significant.
Oversight of local public finances is similarly constrained. High levels of municipal arrears across several administrations indicate systemic weaknesses in financial management, internal control, and audit follow-up. While formal internal audit frameworks exist, enforcement of recommendations is inconsistent, and corrective mechanisms are weak. Strengthening fiscal implementation requires aligning responsibilities with funding, enhancing own-revenue mobilisation, and reorienting oversight toward early risk detection rather than ex post sanctions. Transparent and comparable financial data are essential for both central supervision and public accountability.
5. Oversight and Dialogue: Building Trust Through Better Governance
Oversight represents one of the most critical implementation bottlenecks in multi-level governance. Although administrative supervision is legally limited to legality checks, enforcement is fragmented across institutions and sectors. Coordination between supervisory bodies is weak, resulting in uneven application of rules and limited learning from systemic failures.
Internal control systems at the local level are unevenly developed, with gaps in risk management, internal audit, and performance monitoring. Oversight remains largely compliance-driven, focusing on procedural correctness rather than on service outcomes or fiscal sustainability.
Consultation mechanisms exist but are often formalistic. In many cases, municipalities are consulted late in the policy cycle, limiting their ability to influence design or implementation. Municipal associations lack sufficient resources and legal guarantees to function as effective intermediaries. Institutionalised consultation at early policy stages is essential to improving both implementation quality and trust.
Reforming oversight requires a shift from fragmented legal control towards integrated supervision, combining legality checks with preventive and advisory measures, also supporting capacity-building.
6. Inter-Municipal Cooperation: The Missing Link for Efficiency
Inter-municipal cooperation (IMC) is widely recognised as a tool for improving efficiency and service delivery. However, it remains underused across the Western Balkans countries with relatively large size municipalities. While all countries have legal provisions for IMC, practical implementation is limited and often dependent on donor funding rather than sustainable national support. Albania has piloted IMC projects, but financial incentives are lacking. Kosovo and Bosnia and Herzegovina show fragmented efforts, while Montenegro and North Macedonia have no significant central support. Serbia stands out slightly, offering some funding and training, but still lacks a comprehensive national strategy.
Challenges include unclear procedures, weak cost-sharing mechanisms, limited administrative capacity, and political competition, while cross-border IMC is mostly donor-driven. To unlock its potential, governments should adopt dedicated strategies, simplify legal frameworks, provide financial and technical incentives, and establish monitoring systems, while local government associations support peer learning, dialogue, and knowledge sharing to build trust and best practices.
7. Trust Deficit and the Road Ahead: Citizens at the Core of Reform
Trust in local governments across the Western Balkans remains modest, reflecting concerns about efficiency, responsiveness, and autonomy. According to the 2024 SIGMA Survey of Citizens, average trust in local governments stands at 39%, with significant variation among administrations. Kosovo and Montenegro report the highest levels of trust (46% and 45%, respectively), while Bosnia and Herzegovina and North Macedonia lag behind, with only about one-third of citizens expressing even partial trust. Albania and Serbia hover around the regional average, though in Albania only 4% of respondents said they “completely trust” their local government.
The survey also reveals strong perceptions of central government interference. In Bosnia and Herzegovina, 51% of citizens believe the central government excessively limits local autonomy—the highest rate in the region—while similar concerns are voiced in North Macedonia (52%) and Serbia (54%). These findings suggest that while legal frameworks for decentralisation exist, citizens perceive a gap between formal autonomy and practical independence, reinforcing the need for deeper reforms.
Turning Frameworks into Action: A Call for Implementation
Multi-level governance in the Western Balkans has come a long way in aligning legal frameworks with European standards, but the real challenge lies in turning these frameworks into practice. The SIGMA assessment makes one point clear: laws and organizational-administrative changes alone do not deliver better governance — implementation does.
Persistent gaps in local powers, management of devolved functions, fiscal autonomy, and uneven consultation, continue to limit the effectiveness of decentralisation. Citizens feel this disconnect: trust in local governments averages just 39%, and more than half of respondents believe central authorities interfere excessively in local affairs.
The SIGMA report emphasizes some areas of decentralization reforms, such as
- Empower local governments with genuine fiscal and functional autonomy.
- Institutionalise dialogue between central and local levels to ensure policy coherence.
- Invest in capacity-building and transparency to strengthen accountability and rebuild trust.
- Unlock the potential of inter-municipal cooperation to achieve economies of scale and improve service delivery.
But the specific policy advice of the paper also identifies other related critical actions along the main chapters of analysis. They call for considering full ratification of the European Charter of Local Self-governments in all countries; greater flexibility in local management and staffing; greater autonomy in policy design and implementation.
The Western Balkans stand at a crossroads: either decentralisation remains a formal exercise, or it becomes a transformative force for democratic resilience and European integration. The SIGMA paper rightly emphasizes that the choice—and the responsibility—rests with policymakers, local leaders, and citizens alike.
Access the full paper:
Kurian, M. (2025), “Implementation and challenges of multi-level governance in the Western Balkans”, SIGMA Papers, No. 75, OECD Publishing, Paris, https://doi.org/10.1787/32891a8f-en.
Note: The Feature Image for this blog post was generated with the help of AI.
