Georgia : Public Expenditure Review

Abstract

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. The first three
 chapters explore sources of these systemic problems in the
 context of macroeconomic management, revenue policy and
 administration, and budget management systems. Subsequent
 chapters explore the scope for strengthening budget
 management systems in the areas most critical for poverty
 reduction and the attainment of MDGs: local governments and
 social sector spending. These chapters both corroborate and
 supplement with further detail the core constraints on
 public expenditure restructuring seen in the earlier
 chapters, but also map out the complementary components of a
 reform strategy which recognizes the need for parallel
 action by central agencies, line ministries, and local
 governments. Given that identified weaknesses cannot all be
 addressed at once, the PER offers an approach to sequence
 expenditure management reforms in phases.