Support to Public Finance Policy Reform (PFM)

Project Description:

The overall objective of the project is to improve transparency, accountability and effectiveness of public finance policy and management in Georgia. More specifically, it should provide efficient and effective assistance to the Ministry of Finance, State Audit Office and the Budget and Finance Committee and the Budget Office of the Parliament, according to the demands and needs identified; to support the European Union Delegation to Georgia and the beneficiary institutions to monitor the Public Finance Policy Reform program; and to promote and raise awareness of public finance policy and management reforms, particularly the EU’s assistance in the field.

The project will support the on-going reforms within the PFM in Georgia through the provision of policy advice, and support to institutional and human resource capacity building. In particular, the project will provide an efficient and effective “on demand” facility in terms of measures, resources and contents, to respond to strategic and emerging needs and priorities in support of the Government’s PFM reform efforts.

PMCG, along with other consortium members, will organize three components with related activities as indicated:

• Provide technical assistance in order to respond to needs and demands of the Ministry of Finance of Georgia, State Audit Office of Georgia, and the Parliament of Georgia
• Regular reporting on PFM reforms and trends
• Increase awareness and knowledge of the EU’s contribution to public finance reforms

In order to achieve these objectives, PMCG will provide the following services:

• Policy and strategy advice
• Technical assistance in institutional development
• Identify needs and provide assistance to the beneficiary institutions and civil servants involved the Public Finance Policy and Management field
• Provide reporting on reforms and trends in the macroeconomic sector and PFM in Georgia
• Support raising of awareness and knowledge of the EU’s contribution to public finance reforms among Civil Society Organizations and the EU’s international partners

Background information:

Over the past years, Georgia has undertaken significant economic, social and governance reforms resulting, inter alia, in progress being made in reducing petty corruption and crime rates, and in developing a more favorable business environment. The Government has pursued sound fiscal and monetary policies underpinned by structural reforms. Despite the shocks caused by the 2008 Russian invasion, the global economic downturn and a sharp decrease in foreign investments, Georgia has recovered macroeconomic stability and real GDP has grown steadily (6.2% in 2012 and 3.2% in 2013), and the budget deficit has been reduced from 6.6% of GDP in 2010 to approximately 3.0% in 2013. Despite evident progress, the economy remains vulnerable to external shocks. There are still concerns regarding the current account and trade deficits, and the decline in Foreign Direct Investment (FDI) during 2012-2013 (a reduction of more than 30% compared to the 2008-2011 period), which may challenge macroeconomic stability in the medium term.

The EU began giving large scale assistance to the PFM sector from 2007 via the first sector policy support program with total investment of €16 million. Progress has been impressive and since 2008, with support from the EU, WB and other donors, a basic set of systems has been put in place for the development of full-scale strategic budget planning, programme budgeting, treasury operations and internal financial control and audit. Significant progress was achieved in the area of simplifying tax and customs procedures and creating a business-friendly environment. Against this background, the EU continues to support the PFM reforms in Georgia.

Follow the links below for more related information

Sharing Experience of Public-Private Dialogue in EU Integration Process for Moldova and Georgia
Assessment of Non-Technical Drivers of PFM Reforms in Georgia
Strengthening the System of Parliamentary Democracy in Georgia
Sharing Experience of Georgian Reforms and Visegrad Countries’ EU Economic Integration for Albania and Kosovo
Support to Approximation of Georgian VAT Rules with EU VAT Legislation