Publication: Georgia Public Expenditure Review: Building a Sustainable Future
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2017-06
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2017-06
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This Public Expenditure Review (PER) was prepared at the request of the Ministry of Finance of Georgia; its analysis of public spending is designed to inform the Georgian authorities on the fiscal policies that support growth and equity. As Georgia strives to meet the challenges of a fluid global economic environment, this PER is intended to support the government’s efforts to secure macroeconomic and fiscal sustainability to promote growth and equity. This is a testing time for Georgia’s public finances, as the country faces slowing growth and a difficult regional context.This Public Expenditure Review (PER) is organized in two chapters; the first focusing on the overarching macro-fiscal challenges facing Georgia, and the second “zooming in” to the challenges for public spending in the health sector. In particular, the PER provides an overview of the recent macroeconomic and fiscal developments highlighting major drivers of rising spending, and analyzes potential revenue gains that could be derived from eliminating tax expenditures (Chapter 1). The second part of the report carries out a detailed review of the health spending in Georgia, providing both the context and rationale for implementing the much needed Universal Healthcare (UHC) program in 2013, while highlighting the need for properly managing the existing short-term cost pressures, as well further improving the system’s long-term efficiency and sustainability. This PER is an integral part of the programmatic series of PERs (2012, 2014, and 2015) providing new analyses and recommendations that are complementary to the existing ones. The PER (2012) analyzed the rising expenditure pressures on social and capital spending, and presented options for fiscal consolidation, including measures to improve selectivity in capital expenditures, enhance the sustainability of the pension program, and the coverage of targeted social assistance. The PER (2014) examined the spending on social protection, health, and education, and provided recommendations including strengthening the Social Service Agency, increasing the UHC drug coverage, strengthening preschool education, and improving general and vocational education. It also analyzed quasi-fiscal spending and intergovernmental fiscal relations. A special volume of the PER (2014) studied Georgia’s Public Investment Management and how it could be further enhanced to improve the efficiency of public investment. The PER (2015) highlighted the presence of spending pressures from social programs and analyzed spending efficiency, which led to policy options to direct the redistribution policies towards greater equity, improve agriculture subsidy programs and local government spending.This PER, as a continuation of the series, while focusing its analyses and recommendations strategically on new and specific challenges, it also draws a selected number of recommendations from previous PERs, notwithstanding that most issues covered in previous PERs remain crucial and need to be addressed in parallel.
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“World Bank. 2017. Georgia Public Expenditure Review: Building a Sustainable Future. © World Bank. http://hdl.handle.net/10986/27138 License: CC BY 3.0 IGO.”
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Publication Georgia - Public Expenditure Review : Managing Expenditure Pressures for Sustainability and Growth(Washington, DC, 2012-11)Economic growth has rebounded strongly in Georgia during 2010-12 and commendable fiscal consolidation has been implemented, although considerable medium-term macro-fiscal challenges remain. This public expenditure review (PER) considers possible sources of expenditure pressure that may affect the fiscal consolidation program and suggests options to manage them. This PER presents a number of options for consideration to manage fiscal consolidation, which can contribute toward greater selectivity in capital expenditures, enhanced sustainability of the road investment program, and containing medium-term social expenditure pressures. The rest of this synthesis report is in five chapters. Chapter first summarizes the macroeconomic context and assesses trade-offs associated in balancing the overall composition of public expenditures. The second and third chapters illustrate policy options and implications associated with containing social expenditure pressures and improving effectiveness of health expenditures, respectively. Chapter fourth reviews the international experience in strengthening capital budgeting and provides options for consideration for Georgia. Finally, the fifth chapter discusses options associated with rebalancing road sector expenditures.Publication Georgia - Public Expenditure and Financial Accountability (PEFA) : Joint World Bank-European Commission Public Financial Management Assessment, Programmatic Public Finance Policy Review(Washington, DC, 2008-11)This Public Expenditure and Financial Accountability (PEFA) assessment provides an updated and systematic diagnostic of the Public Financial Management (PFM) system in Georgia and provides mid-2007 as a base line for complementing the Government's efforts to monitor progress in the PFM reforms going forward. 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The assessment will also serve the donor community in directing its assistance programs in those areas of public financial management where the Government's PFM strategy can be further strengthened.Publication Georgia - Managing Expenditure Pressures for Sustainability and Growth : Public Expenditure Review(Washington, DC, 2012-11)Economic growth has rebounded strongly in Georgia during 2010-12 and commendable fiscal consolidation has been implemented, although considerable medium-term macro-fiscal challenges remain. To meet the challenge of generating rapid and sustainable growth in an uncertain global environment, Georgia will need to continue to implement and potentially deepen its fiscal consolidation program. This public expenditure review (PER) considers possible sources of expenditure pressure that could undermine the fiscal consolidation program and suggests options to manage them. Social expenditure pressures arise from the need to provide adequate old-age income to an aging population that relies primarily on the publicly funded pension benefit, as well as from needs to improve social assistance coverage of the poor, and improve health outcomes. Capital expenditure pressures arise from the need to rehabilitate a large backlog of the secondary and local road network in poor condition, continued improvement the East-West Highway, and from new investment needs in energy, water, agriculture, and regional development. The PER presents a number of options for consideration to manage fiscal consolidation, which can contribute toward greater selectivity in capital expenditures, enhanced sustainability of the road investment program, and containing medium-term social expenditure pressures. The specific policy options discussed above could collectively curtail expenditure pressures estimated at about 2.8 percent of GDP by 2015, thus enabling Georgia to meet its fiscal consolidation targets.Publication Georgia : Public Expenditure Review(Washington, DC, 2002-11-25)Like other low-income countries, Georgia's ability to reduce poverty and meet the Millennium Development Goals (MDGs) by 2015 will depend crucially on its ability to sustain per-capita GDP growth and to use effectively and efficiently its scarce public resources. Indeed, increased public expenditures will not result in improved social outcomes unless current productivity levels are improved. This report shows that weaknesses in Georgia's public expenditure management systems have led to serious inefficiencies and inequities in the use of public resources and have prevented the necessary restructuring in public expenditures. 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Given that identified weaknesses cannot all be addressed at once, the PER offers an approach to sequence expenditure management reforms in phases.Publication Georgia Public Expenditure Review(World Bank, Washington, DC, 2015-06)Georgia has an impressive growth record but social vulnerabilities persist. The current government has therefore made spending on social sectors and agriculture a high priority and has launched a decentralization reform to support regional inclusive growth. It remains a challenge to tackle social vulnerabilities within a sustained macroeconomic framework. The government has intensified its efforts to reduce social vulnerability, as evidenced by the increase in social spending from 7.1 percent of gross domestic product (GDP) in 2012, to 9.6 percent in 2014. As a result, the fiscal deficit widened from 2.8 percent of GDP in 2012 to 3.0 percent in 2014. This public expenditure review (PER) analyzes the impact of recent reforms including the social programs that were either introduced or scaled up in 2013. It gives an overview of the recent macroeconomic and fiscal developments, including the fiscal implications of the social programs in chapter one. As requested by the government, it addresses three questions in the rest of the report: (1) has the realignment of spending toward social sectors resulted in better distributional outcomes; (2) have the agriculture support programs been targeted at productivity growth to support real incomes in poor rural regions; and (3) what is the fiscal and equity impact of the ongoing decentralization process? The first question is addressed by combining micro household survey data with administrative fiscal data to analyze the distributional impact of both taxes and government spending on poverty and inequality in Georgia in chapter two. The second question is addressed by comparing the cost of new agriculture programs with their estimated impact on agricultural productivity in chapter three. Finally, the issue of regional inequalities is partially addressed in this report by discussing three different aspects of the current decentralization process: the expected fiscal impact of decentralization, the need to rationalize current capital grant programs to make public investment more effective, and the implications of introducing free preschool education administered at the local government level in chapter four.
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