Georgia Public Expenditure Review

Georgia has an impressive growth record
but social vulnerabilities persist. It remains a challenge
to tackle social vulnerabilities within a sustained
macroeconomic framework. This programmatic public
expenditure review (PER) assesses the alignment of selected
fiscal programs with the government’s social objectives.
Building on the analysis and recommendations of the 2014
PER, this 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. 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 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.