The World Bank, at the request of Ministry of Finance of Georgia and with the support of the European Union, undertook the Central Government Public Expenditure and Financial Accountability (PEFA) and Gender Responsive Public Financial Management (GRPFM) assessments of Georgia. The two reports identify the strengths and weaknesses of the country’s public finance systems using the PEFA methodology and will feed into Georgia’s PFM Strategy for 2023-2026.
The PEFA report, which assesses the performance of the central government public finance systems, was first a self-assessment by the Government of Georgia and later validated by the World Bank. The GRPFM assessment was conducted by UN Women and reviewed by the World Bank. These activities are part of a broader project on Economic Governance and Fiscal Accountability implemented by the World Bank and supported by the European Union, aimed at providing technical assistance to strengthen Georgia’s PFM systems to enhance fiscal sustainability and service delivery.
Georgia Public Expenditure and Financial Accountability (PEFA) Assessment:
The 2022 PEFA Assessment demonstrates that the public financial management systems in Georgia are strong and have continued to improve since the last PEFA assessment in 2018. While the COVID-19 pandemic had a negative impact on the aggregate expenditure of the budget, there have been an array of improvements in the development, execution, management, and oversight of public finances. According to data in 2022 PEFA Global Report, Georgia continues to maintain its number one status with continuous improvement in its performance when compared to 59 countries that have conducted their PEFA assessments using the 2016 PEFA methodology.
The PEFA’s key highlights include:
27 out of 31 indicators improved or were maintained in 2022 compared to 2018 PEFA scores.
The law on State Procurement recently was modified considerably and made compatible with EU legislation and international good practice.
Significant changes have been made with respect to the procurement complaints procedures.
Increased finance management support for some municipalities.
There is an expansive array of information regarding the finances of the budgetary central government.
Information is included in the budget on a timely basis.
A comprehensive and inclusive process has been implemented in managing the public investment program.
A debt management strategy has been produced and approved which underscores a strong focus on managing debt.
Progress has been made towards a comprehensive medium-term expenditure framework based on a program budgeting for results approach.
There is an effective budget calendar which provides budgetary units adequate time to prepare their budgets as well as the legislature to carry out its scrutiny function.
The internal audit function has improved its coverage reaching virtually all budgetary units; and
The previous weaknesses in competitive bidding in the procurement system with respect to the appeals and dispute process has been addressed, which has positive implications for efficiency in service delivery.
Gender Responsive Public Financial Management (GRPFM) Assessment:
Gender Responsive Public Financial Management (GRPFM) assessment of Georgia was carried out by the Ministry of Finance with technical and financial support from UN Women and the Ministry of Foreign Affairs of Norway. The assessment was carried out from December 2021 to May 2022.
The PEFA’s GRPFM is a set of nine indicators which collect information on gender responsive public financial management practices. The purpose of this assessment is to collect information, in line with the PEFA GRPFM framework indicators, on the degree to which Georgia’s public financial management (PFM) system is gender responsive. This is the first time a gender responsive PFM assessment has been undertaken in Georgia and will set the benchmark for future assessments.
The GRPFM’s key findings include:
Most PEFA indicators that concern PFM tools linked to support and promote gender equality scored A (the highest score) in the PEFA assessment. These enable the integration of a gender perspective in the PFM system of Georgia. However, 6 out of 9 GRPFM indicators need to improve on their gender considerations.
Georgia needs to develop and implement a comprehensive Gender Responsive Budgeting (GRB) framework.
Georgia’s legislation on PFM needs to integrate gender dimensions more proactively.
Gender Responsive budgeting will require capacity strengthening among civil employees and enhancement of coordination and accountability mechanisms for implementing GRB reform in Georgia.
There is significant potential for the Government of Georgia to strengthen gender responsiveness in the PFM system. Reforms such as fiscal transparency, medium-term budgetary frameworks, and public investment management provide a solid foundation upon which GRB reform can build over the medium-term.
The development of the new PFM strategy to be launched by the Government of Georgia in 2022 provides an excellent opportunity to integrate gender equality into the broader public finance management reform agenda.