Report No. 73701-GE Georgia Public Expenditure Review Managing Expenditure Pressures for Sustainability and Growth November, 2012 Poverty Reduction and Economic Management Unit Europe and Central Asia Region Document of the World Bank CURRENCY EQUIVALENTS È‹ š…ŠƒÂ?‰‡ ƒ–‡ ĥ ‘ˆ ‘˜‡Â?„‡” ͳͷǡ ʹͲͳʹȌ Currency Unit Georgian Lari ̈́ͳǤͲͲ ͳǤ͸͸͸ʹ  Weights and MeasuresÇ£ ‡–”‹… ›•–‡Â? ABBREVIATIONS AND ACRONYMS  ‡Â?‡ˆ‹–Ǧ ‘•– ƒ–‹‘  Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‘Â?‡–ƒ”› —Â?† ƒ•‹… ƒ–ƒ ƒÂ?† ‹”‡…–‹‘Â?•  ‹˜‹Â?‰ –ƒÂ?†ƒ”†• ‡ƒ•—”‡Â?‡Â?– —”˜‡› —””‡Â?– ……‘—Â?– ‡ˆ‹…‹–   ‡†‹…ƒŽ Â?•—”ƒÂ?…‡ ŽƒÂ? ‘•–Ǧ ‡Â?‡ˆ‹– Â?ƒŽ›•‹•   ƒÂ?ƒ‰‡Â?‡Â?– Â?ˆ‘”Â?ƒ–‹‘Â? ›•–‡Â? ‘•– ˆˆ‡…–‹˜‡Â?॥ Â?ƒŽ›•‹• ‘ ‹Â?‹•–”› ‘ˆ ‹Â?ƒÂ?…‡ —”ƒ–‹‘ Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‘—Â?†ƒ–‹‘Â? ‘  ‹Â?‹•–”› ‘ˆ ƒ„‘”ǡ ‡ƒŽ–Šǡ ƒÂ?† ‘…‹ƒŽ ˆˆƒ‹”•  ‡•‹‰Â?Ǧ —‹Ž†Ǧ’‡”ƒ–‡Ǧƒ‹Â?–ƒ‹Â? ƒÂ?†  ‹Â?‹•–”› ‘ˆ ‡‰‹‘Â?ƒŽ ‡˜‡Ž‘’Â?‡Â?– Ƭ ”ƒÂ?•ˆ‡” Â?ˆ”ƒ•–”—…–—”‡  ‡˜‡Ž‘’Â?‡Â?– ‘Ž‹…› ’‡”ƒ–‹‘Â?  ‡†‹—Â? ‡”Â? š’‡Â?†‹–—”‡ ”ƒÂ?‡Ǧ ™‘”Â?  —”‘’‡ƒÂ? ƒÂ?Â? ˆ‘” ‡…‘Â?•–”—…–‹‘Â? ƒÂ?†  —–Ǧ‘ˆǦ’‘…Â?‡– ƒ›Â?‡Â?– ‡˜‡Ž‘’Â?‡Â?– —”‘’‡ƒÂ? ‘Â?Â?‹••‹‘Â?   —„Ž‹… š’‡Â?†‹–—”‡ ‡˜‹‡™  —”‘’‡ƒÂ? Â?‹‘Â?   ‘ƒ† ••‡– ƒÂ?ƒ‰‡Â?‡Â?– ›•–‡Â? ‘”‡‹‰Â? ‹”‡…– Â?˜‡•–Â?‡Â?–  ‘ƒ† ‡’ƒ”–Â?‡Â?–  ”‘•• ‘Â?‡•–‹… ”‘†—…–  ‡‰”‡••‹‘Â? ‹•…‘Â?–‹Â?—‹–› ‡•‹‰Â?  ‡‘”‰‹ƒÂ? ƒ”‹   ‡’”‘†—…–‹˜‡ ‡ƒŽ–Š —”˜‡›  —ƒ”ƒÂ?–‡‡† ‹Â?‹Â?—Â? Â?…‘Â?‡  • –ƒ–‡Ǧ™Â?‡† Â?–‡”’”‹•‡•  ‘—•‡Š‘Ž† —†‰‡– —”˜‡›  ‘…‹ƒŽ ‡”˜‹…‡• ‰‡Â?…›  ‹‰Š™ƒ› ‡˜‡Ž‘’Â?‡Â?– ƒÂ?† ƒÂ?ƒ‰‡Â?‡Â?–  ƒ”‰‡–‡† ‘…‹ƒŽ ••‹•–ƒÂ?…‡ ‘†‡Ž   ‡ƒŽ–Š –‹Ž‹œƒ–‹‘Â? ƒÂ?† š’‡Â?†‹–—”‡ —”˜‡›   ƒŽ—‡ ††‡† ƒš Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‡˜‡Ž‘’Â?‡Â?– ••‘…‹ƒ–‹‘Â?   ‘”Ž† ‡ƒŽ–Š ”‰ƒÂ?‹œƒ–‹‘Â? • Â?–‡”Â?ƒŽŽ› ‹•’Žƒ…‡† ‡”•‘Â?• ‹…‡ ”‡•‹†‡Â?–ǣ Š‹Ž‹’’‡ ‡ ‘—±”‘— ‘—Â?–”› ‹”‡…–‘”ǣ ‡Â?”› ‡”ƒŽ‹ ‡…–‘” ‹”‡…–‘”ǣ ˜‘Â?Â?‡ •‹Â?ƒ–ƒ ‡…–‘” ƒÂ?ƒ‰‡”ǣ ˜ƒ‹Ž‘ œ˜‘”•Â?‹ ĥÂ? ‡ƒÂ? ‡ƒ†‡”ǣ ƒ”—Â? ŠƒÂ? Table of Contents ”‡ˆƒ…‡ ǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǥǤǥǤǥǥǥǥǥǥǥǤ‹˜ š‡…—–‹˜‡ —Â?Â?ƒ”› ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤ˜ Chapter 1. Macroeconomic Context and Expenditure Composition............................................... 1 ͳǤͳ Ǥ Â?–”‘†—…–‹‘Â? ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤ ͳ ͳǤʹ Ǥ ƒ…”‘‡…‘Â?‘Â?‹… ‘Â?–‡š–ǣ Š› ‹• ‹•…ƒŽ †Œ—•–Â?‡Â?– •‘ Â?’‘”–ƒÂ?–ǫ ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤ Í´ ͳǤ͵ Ǥ š’‡Â?†‹–—”‡ ‘Â?’‘•‹–‹‘Â? ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤ Í» ͳǤͶ Ǥ ‘Â?…Ž—•‹‘Â?Ç£ –Š‡ ™ƒ› ˆ‘”™ƒ”† ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͳ͹ Chapter 2. Social Protection Expenditures........................................................................................... 19 ʹǤͳ Ǥ Â?–”‘†—…–‹‘Â? ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͳͻ ʹǤʹ Ǥ ˜‡”˜‹‡™ ‘ˆ ‘…‹ƒŽ ’‡Â?†‹Â?‰ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤʹͲ ʹǤ͵ Ǥ ‡Â?•‹‘Â? ›•–‡Â?ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤʹʹ ʹǤͶ Ǥ ‘…‹ƒŽ ••‹•–ƒÂ?…‡ ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤ͵ʹ ʹǤͷ Ǥ ‘Â?‡ ”‘••Ǧ —––‹Â?‰ Š‡Â?‡• ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͶͲ ʹǤ͸ Ǥ ‘Â?…Ž—•‹‘Â?Ç£ –Š‡ ™ƒ› ˆ‘”™ƒ”† ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͶͲ Chapter 3. Health Expenditures................................................................................................................ 42 ͵Ǥͳ Ǥ Â?–”‘†—…–‹‘Â? ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͶʹ ͵Ǥʹ Ǥ ˜‡”˜‹‡™ ‘ˆ Š‡ƒŽ–Š •’‡Â?†‹Â?‰ ‹Â? ‡‘”‰‹ƒ ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͶ͵ ͵Ǥ͵ Ǥ ‡ƒŽ–Š ’‡Â?†‹Â?‰ ƒÂ?† ‡ƒŽ–Š —–…‘Â?‡• ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͶͶ ͵ǤͶ Ǥ ‡ƒŽ–Š •’‡Â?†‹Â?‰ ƒÂ?† ˆ‹Â?ƒÂ?…‹ƒŽ ’”‘–‡…–‹‘Â? ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͶͺ ͵Ǥͷ Ǥ ‘Ž‹…› ••—‡•ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͷͳ ͵Ǥ͸ Ǥ ‘Â?…Ž—•‹‘Â?Ç£ –Š‡ ™ƒ› ˆ‘”™ƒ”† ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͷͻ Chapter 4. Capital Budgeting Systems.................................................................................................... 60 ͶǤͳ Ǥ Â?–”‘†—…–‹‘Â? ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤ͸Ͳ ͶǤʹ Ǥ Â?’”‘˜‹Â?‰ –Š‡ ‘Â?–‡Â?– ƒÂ?† ”‡•‡Â?–ƒ–‹‘Â? ‘ˆ ‡‘”‰‹ƒǯ• ƒ’‹–ƒŽ —†‰‡– ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤ͸ʹ ͶǤ͵ Ǥ –”‡Â?‰–Š‡Â?‹Â?‰ –Š‡ ”‘ƒ†‡” ƒ’‹–ƒŽ —†‰‡–‹Â?‰ ›•–‡Â?ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤ͹Ͳ ͶǤͶ Ǥ ‘Â?…Ž—•‹‘Â?Ç£ –Š‡ ™ƒ› ˆ‘”™ƒ”† ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͺ͵ Chapter 5. Road Sector Expenditures..................................................................................................... 84 ͷǤͳ Ǥ Â?–”‘†—…–‹‘Â? ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͺͶ ͷǤʹ Ǥ ‡› ••—‡• ‹Â? —•–ƒ‹Â?ƒ„‹Ž‹–› ƒÂ?† ˆˆ‹…‹‡Â?…› ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͺͷ ͷǤ͵ Ǥ Š‡ ‘ƒ† ‡–™‘”Â?ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͺ͹ ͷǤͶ Ǥ ‘ƒ† š’‡Â?†‹–—”‡• ƒÂ?† —–’—–• –‘ †ƒ–‡ ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͺͻ ͷǤͷ Ǥ Š‡ ‡†‹—Â? ‡”Â? ‘ƒ† Â?˜‡•–Â?‡Â?– ”‘‰”ƒÂ?ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͻ͵ ͷǤ͸ Ǥ Â?•–‹–—–‹‘Â?ƒŽ ””ƒÂ?‰‡Â?‡Â?–• ˆ‘” Â?’”‘˜‡† ˆˆ‹…‹‡Â?…›ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤͻͻ ͷǤ͹ Ǥ ‘Â?…Ž—•‹‘Â?Ç£ –Š‡ ™ƒ› ˆ‘”™ƒ”† ǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤǤ ͳͲͳ ‹‹‹ Preface Š‹• ’—„Ž‹… ‡š’‡Â?†‹–—”‡ ”‡˜‹‡™ È‹ ÈŒ ‹• –Š‡ ”‡•—Ž– ‘ˆ ƒ „‘†› ‘ˆ ’”‘‰”ƒÂ?Â?ƒ–‹… ˆ‹•…ƒŽ ™‘”Â? †‹”‡…–‡† ƒ– ‹†‡Â?–‹ˆ›‹Â?‰ ’‘Ž‹…› ‘’–‹‘Â?• –‘ Â?ƒÂ?ƒ‰‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‹Â? ‡‘”‰‹ƒǤ Š‡ ’”‘‰”ƒÂ?Â?ƒ–‹… ˆ‹•…ƒŽ ƒÂ?ƒŽ›•‹• Šƒ• „‡‡Â? …‘Â?†—…–‡† ‹Â? …Ž‘•‡ …‘‘”†‹Â?ƒ–‹‘Â? ™‹–Š ‘˜‡”Â?Â?‡Â?– …‘—Â?–‡”’ƒ”–•ǡ ƒÂ?† Šƒ• —•‡† ‹Â?–‡”Â?‡†‹ƒ–‡ ‘—–’—–• ‘ˆ –Š‡ ‘Â?‰‘‹Â?‰ ƒÂ?ƒŽ›•‡•ǡ ‹Â?…Ž—†‹Â?‰ ’‘™‡”Ǧ’‘‹Â?– ’”‡•‡Â?–ƒ–‹‘Â?•ǡ Œ—•–Ǧ‹Â?Ǧ–‹Â?‡ ’‘Ž‹…› Â?‘–‡•ǡ ƒÂ?† Â?‹••‹‘Â?• ĥ ‹Â?’—–• ‹Â?–‘ ƒ …‘Â?–‹Â?—‘—• †‹ƒŽ‘‰—‡ ‘Â? –Š‡ ‘˜‡”Â?Â?‡Â?–ǯ• ˆ‹Â?‡Ǧ–—Â?‹Â?‰ ‘ˆ ‹–• ’—„Ž‹… ‡š’‡Â?†‹–—”‡ ’‘Ž‹…›Ǥ ’‡…‹ˆ‹… ‡šƒÂ?’Ž‡• ‘ˆ ‹Â?’—–• ‹Â?–‘ –Š‹• †‹ƒŽ‘‰—‡ ‹Â?…Ž—†‡ ƒ ’‘Ž‹…› Â?‘–‡ ƒÂ?† ’”‡•‡Â?–ƒ–‹‘Â? ‘Â? Strengthening Capital Budgeting in Georgia –‘ ‹Â?ˆ‘”Â? ’”‡’ƒ”ƒ–‹‘Â? ‘ˆ –Š‡ ʹͲͳͳ …ƒ’‹–ƒŽ „—†‰‡–Ǣ ƒ ’‘Ž‹…› Â?‘–‡ ƒÂ?† ’”‡•‡Â?–ƒ–‹‘Â? ‘Â? ’‡Â?•‹‘Â? ”‡ˆ‘”Â? –‘ ‹Â?ˆ‘”Â? –Š‡ ‘˜‡”Â?Â?‡Â?–ǯ• †‡Ž‹„‡”ƒ–‹‘Â?• ‹Â? ʹͲͳͳ ‘Â? ‘’–‹‘Â?• –‘ ”ƒ‹•‡ ’‡Â?•‹‘Â?•Ǣ ƒÂ?† ƒ ’”‡•‡Â?–ƒ–‹‘Â? ‘Â? Â?‡› ˆ‹Â?†‹Â?‰• ƒÂ?† Â?‡••ƒ‰‡• ‘ˆ –Š‡   –‘ ‹Â?ˆ‘”Â? –Š‡ ʹͲͳʹ „—†‰‡– ’”‡’ƒ”ƒ–‹‘Â?Ç¢ ƒÂ?† ƒÂ? ‡ƒ”Ž‹‡” ’”‡•‡Â?–ƒ–‹‘Â? ‘Â? ’‘Ž‹…› ‘’–‹‘Â?• ˆ‘” ”‡ˆ‹Â?ƒÂ?…‹Â?‰ ‡‘”‰‹ƒǯ• —”‘„‘Â?†Ǥ Š‡ ’”‘‰”ƒÂ?Â?ƒ–‹… ˆ‹•…ƒŽ ™‘”Â? Šƒ• …‘Â?’Ž‡Â?‡Â?–‡† –Š‡ †‹ƒŽ‘‰—‡ ‘Â? –Š‡ ’”‘‰”ƒÂ?Â?ƒ–‹… ‡˜‡Ž‘’Â?‡Â?– ‘Ž‹…› ’‡”ƒ–‹‘Â? È‹ ÈŒ •‡”‹‡•Ǥ Š‹•   ™ƒ• ’”‡’ƒ”‡† „› ƒ ƒÂ?Â? –‡ƒÂ? …‘Â?’”‹•‹Â?‰ ƒ”—Â? ŠƒÂ? È‹ĥÂ? –‡ƒÂ? Ž‡ƒ†‡”Ȍǡ ™‡Â? Â?‹–Šǡ Â?‹–ƒ …Š™ƒ”œǡ ‹Â?‘Â? ”‘‘Â?Ç¡ ‹”–Šƒ ‘Â?‘”Â?›ǡ Ž‡Â?‡ Â?Â?ƒ†œ‡ǡ ƒ”‹ƒÂ? ‘Ž‹†œ‡ǡ ‡”‰‹› ‹Ž‡–•Â?››ǡ ‹Â?‘ ‘”‘•ŠÂ?‹Â?ƒǡ Ž‹œƒ„‡–Š —””‹‡ǡ ƒÂ?† Š‘”†—” ‘Â?ƒ••‘Â?Ǥ Š‡ ’”‹Â?ƒ”› ƒ—–Š‘”• ‘ˆ –Š‡ ”‡’‘”– ƒ”‡ ƒ”—Â? ŠƒÂ? ȋ…Šƒ’–‡” ͳǡ ™‹–Š ‹Â?’—–• ˆ”‘Â? ƒ”‹ƒÂ? ‘Ž‹†œ‡Ȍǡ ™‡Â? Â?‹–Š ȋ…Šƒ’–‡”• Í´ ƒÂ?† ͵Ȍǡ Â?‹–ƒ …Š™ƒ”œ ȋ’‡Â?•‹‘Â? ’ƒ”– ‘ˆ …Šƒ’–‡” ʹȌǡ ‹Â?‘Â? ”‘‘Â? ȋ…Šƒ’–‡” ͶȌǡ ƒÂ?† ‹”–Šƒ ‘Â?‘”Â?› ȋ…Šƒ’–‡” ͷȌǤ Š‡ ”‡’‘”– ƒŽ•‘ „‡Â?‡ˆ‹–‡† ˆ”‘Â? …‘Â?Â?‡Â?–• ƒÂ?† •—‰‰‡•–‹‘Â?• ”‡…‡‹˜‡† ˆ”‘Â? ‡ƒÂ?Ǧ ”ƒÂ?…‘‹• ƒ”–‡ƒ—ǡ ‡Â?ŒƒÂ?‹Â? ‡”‹…Â?‡ǡ ‘•‡’Š ‡Ž‹–ƒ—”‹ǡ ‘†”‹‰‘ ”…Š‘Â?†‘Ǧ ƒŽŽƒ‘ǡ ƒÂ?ƒ”ƒ —Ž—Â?Š‹ƒǡ ŠÂ?‡† ‹™‡‹†ƒǡ ƒÂ?›ƒ —Â?†ƒ”ƒÂ?Ç¡ ‡•Â?‡”‡Â? —Žƒ–—ǡ ƒ•ŠÂ?‹ ŠƒÂ?Â?ƒ”ǡ ƒÂ?† ‡†”‘ ‘†”‹‰—‡œǤ ƒÂ?‹ƒ ‡Â?ƒ‹‡Â?Ǧ ‘™”‘—œ ƒ••‹•–‡† ™‹–Š ˆ‘”Â?ƒ––‹Â?‰ –Š‡ ”‡’‘”–Ǥ Š‡ –‡ƒÂ? Šƒ• „‡Â?‡ˆ‹–‡† ˆ”‘Â? –Š‡ ‰—‹†ƒÂ?…‡ ‘ˆ ‡Â?”› ‡”ƒŽ‹ È‹ ‘—Â?–”› ‹”‡…–‘”Ȍǡ •ƒ† ŽƒÂ? ȋˆ‘”Â?‡” ‘—Â?–”› ‹”‡…–‘”Ȍǡ ˜‘Â?Â?‡ •‹Â?ƒ–ƒ È‹‡…–‘” ‹”‡…–‘”Ȍǡ ƒÂ?† ˜ƒ‹Ž‘ œ˜‘”•Â?‹ È‹‡…–‘” ƒÂ?ƒ‰‡”ȌǤ ƒœ‹ ƒ–‹Â? ’”‘˜‹†‡† ‰—‹†ƒÂ?…‡ ƒ– ‡ƒ”Ž‹‡” •–ƒ‰‡• ‘ˆ –Š‡ ƒÂ?ƒŽ›•‹•Ǥ Š‡ ’‡‡” ”‡˜‹‡™‡”• ™‡”‡ ƒÂ?‡• ”—Â?„› ƒÂ?† ƒ”‹ŒÂ? ‡”Š‘‡˜‡Â?Ǥ Šƒ„‹Š ‘Š‹„ ƒÂ?† ‘•ƒ ƒ”‹ƒ Ž‘Â?•‘ ‡”Â?‡ ’”‘˜‹†‡† …‘Â?Â?‡Â?–• ƒ– …‘Â?…‡’– •–ƒ‰‡Ǥ Š‡ –‡ƒÂ? ‹• ‰”ƒ–‡ˆ—Ž –‘ ‰‘˜‡”Â?Â?‡Â?– ‘ˆˆ‹…‹ƒŽ• ˆ”‘Â? –Š‡ ‹Â?‹•–”› ‘ˆ ‹Â?ƒÂ?…‡ǡ ‹Â?‹•–”› ‘ˆ ƒ„‘”ǡ ‡ƒŽ–Šǡ ƒÂ?† ‘…‹ƒŽ ˆˆƒ‹”•ǡ ‹Â?‹•–”› ‘ˆ Â?ˆ”ƒ•–”—…–—”‡ǡ –Š‡ ‘ƒ†• ‡’ƒ”–Â?‡Â?–ǡ –Š‡ ƒ–‹‘Â?ƒŽ ƒÂ?Â? ‘ˆ ‡‘”‰‹ƒǡ ƒÂ?† ‘–Š‡” „”ƒÂ?…Š‡• ‘ˆ ‰‘˜‡”Â?Â?‡Â?– ˆ‘” –Š‡‹” …‘‘’‡”ƒ–‹‘Â? ‹Â? …‘Â?†—…–‹Â?‰ –Š‡ ƒÂ?ƒŽ›•‹• ƒÂ?† ˆ‘” –Š‡‹” …‘Â?Â?‡Â?–• ƒÂ?† •—‰‰‡•–‹‘Â?• ‘Â? ˜ƒ”‹‘—• †”ƒˆ–• ‘ˆ –Š‡ ™‘”Â?Ǥ ‹˜ Executive Summary ͳǤ Economic growth has rebounded strongly in Georgia during 2010Ǧ12 and commendable fiscal consolidation has been implemented, although considerable mediumǦ term macroǦfiscal challenges remain. ”‘™–Š ”‡„‘—Â?†‡† •–”‘Â?‰Ž› –‘ ͸Ǥ͹ ’‡”…‡Â?– ƒ ›‡ƒ” †—”‹Â?‰ ʹͲͳͲǦͳͳǡ „—– –Š‡ ‡š–‡”Â?ƒŽ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– ”‡Â?ƒ‹Â?• Žƒ”‰‡ ƒ– ͳͳǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǤ š–‡”Â?ƒŽ ”‡’ƒ›Â?‡Â?– ‘„Ž‹‰ƒ–‹‘Â?• †—”‹Â?‰ ʹͲͳʹǦͳͶ ƒ”‡ •‹‰Â?‹ˆ‹…ƒÂ?–ǡ ƒŽ–Š‘—‰Š –Š‡ ƒ—–Š‘”‹–‹‡• Šƒ˜‡ „—‹Ž– ˆ‹•…ƒŽ „—ˆˆ‡”• –‘ Š‡Ž’ Â?ƒÂ?ƒ‰‡ –Š‡ ’ƒ›Â?‡Â?–• †—‡Ǥ ‡‘”‰‹ƒ ƒŽ•‘ ”‡Â?ƒ‹Â?• ˜—ŽÂ?‡”ƒ„Ž‡ –‘ –Š‡ ’‘••‹„‹Ž‹–› ‘ˆ ƒ •Šƒ”’‡” ‰Ž‘„ƒŽ †‘™Â?–—”Â? ”‡Žƒ–‡† –‘ –Š‡ ‡˜‘Ž˜‹Â?‰ ‡—”‘Ǧœ‘Â?‡ …”‹•‹•Ǥ Â? ƒ††‹–‹‘Â?Ç¡ Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰• ƒ”‡ ‹Â?•—ˆˆ‹…‹‡Â?– –‘ ˆ‹Â?ƒÂ?…‡ –Š‡ Â?‡…‡••ƒ”› ‹Â?˜‡•–Â?‡Â?– ƒÂ?† ‡š’‘”–• ƒÂ?† –”ƒ†ƒ„Ž‡• Šƒ˜‡ Â?‘– ›‡– „‡‰—Â? –‘ •‡”˜‡ ĥ –Š‡ ‡Â?‰‹Â?‡ ‘ˆ ”ƒ’‹† ‡…‘Â?‘Â?‹… ‰”‘™–ŠǤ Â? –Š‹• …‘Â?–‡š–ǡ –Š‡ ƒ—–Š‘”‹–‹‡• Šƒ˜‡ ‹Â?’Ž‡Â?‡Â?–‡† ƒ …‘Â?Â?‡Â?†ƒ„Ž‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ?Ç¡ ™‹–Š –Š‡ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹– †‘™Â? ˆ”‘Â? ͻǤʹ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ –‘ ͵Ǥ͸ ’‡”…‡Â?– ‹Â? ʹͲͳͳǡ –‘ •‡”˜‡ ĥ ƒ …‘”Â?‡”•–‘Â?‡ ‘ˆ •—•–ƒ‹Â?ƒ„‹Ž‹–›Ǥ ʹǤ 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. ††”‡••‹Â?‰ –Š‡ ‰”‘™–Š ƒÂ?† •—•–ƒ‹Â?ƒ„‹Ž‹–› …ŠƒŽŽ‡Â?‰‡• Â?‘–‡† ƒ„‘˜‡ ™‹ŽŽ ”‡“—‹”‡ ˆ—”–Š‡” ”‡†—…‹Â?‰ –Š‡ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹– ˆ”‘Â? ͵Ǥ͸ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǤ Š‹• ™‹ŽŽ …”‡ƒ–‡ ƒ††‹–‹‘Â?ƒŽ •’ƒ…‡ ˆ‘” ƒ ˆ‹•…ƒŽ ”‡•’‘Â?•‡ ‹Â? –Š‡ ‡˜‡Â?– ‘ˆ ƒ •Šƒ”’ ‰Ž‘„ƒŽ ‡…‘Â?‘Â?‹… •Š‘…Â? ƒÂ?† ƒŽ•‘ ˆ—”–Š‡” „‘Ž•–‡” †‡„– •—•–ƒ‹Â?ƒ„‹Ž‹–›Ǥ —”–Š‡”Â?‘”‡ǡ ‹Â? –Š‡ ‡˜‡Â?– ‘ˆ ƒÂ? —’•‹†‡ ‰”‘™–Š •…‡Â?ƒ”‹‘ ™‹–Š Š‹‰Š‡” ˆ‘”‡‹‰Â? †‹”‡…– ‹Â?˜‡•–Â?‡Â?– ƒÂ?† …ƒ’‹–ƒŽ ‹Â?ˆŽ‘™•ǡ †‡‡’‡Â?‹Â?‰ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‹• ƒÂ? ‘’–‹‘Â? –Šƒ– Â?ƒ› Š‡Ž’ ’”‡˜‡Â?– ‡”‘•‹‘Â? ‘ˆ Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰•ǡ ƒ˜‘‹† ƒ ™‹†‡Â?‹Â?‰ ‘ˆ –Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹–ǡ ƒÂ?† ”‡•‹•– ”‡ƒŽ ‡š…ŠƒÂ?‰‡ ”ƒ–‡ ƒ’’”‡…‹ƒ–‹‘Â? ’”‡••—”‡•Ǥ ͵Ǥ This public expenditure review (PER) considers possible sources of expenditure pressure that may affect the fiscal consolidation program and suggests options to manage them. Š‡”‡ ‹• „”‘ƒ† …‘Â?•‡Â?•—•ǡ —Â?†‡”’‹Â?Â?‡† „› –Š‡ ‰‘˜‡”Â?Â?‡Â?–ǯ• Â?‡†‹—Â? –‡”Â? Â?ƒ…”‘Ǧˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â?Ç¡ –Šƒ– ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ™‹ŽŽ ”‡“—‹”‡ ”‡†—…‹Â?‰ ‘˜‡”ƒŽŽ ‡š’‡Â?†‹–—”‡• „› ƒ„‘—– ͵ ’‡”…‡Â?–ƒ‰‡ ’‘‹Â?–• ‘ˆ  –Š”‘—‰Š ʹͲͳͷǤ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ …‘Â?•‹†‡”ƒ„Ž‡ •‘…‹ƒŽ ƒÂ?† ‹Â?ˆ”ƒ•–”—…–—”‡ Â?‡‡†• ”‡Â?ƒ‹Â? ‹Â? ƒÂ? ‡Â?˜‹”‘Â?Â?‡Â?– ™Š‡”‡ –Š‡ ‘’’‘”–—Â?‹–‹‡• –‘ ‡š–”ƒ…– ˆ‹•…ƒŽ •’ƒ…‡ ˆ”‘Â? ‘–Š‡” ƒ”‡ƒ• Šƒ• †‹Â?‹Â?‹•Š‡†Ǥ ‘…‹ƒŽ ‡š’‡Â?†‹–—”‡ ’”‡••—”‡• ƒ”‹•‡ ˆ”‘Â? –Š‡ Â?‡‡† –‘ ’”‘˜‹†‡ ƒ†‡“—ƒ–‡ ‘Ž†Ǧƒ‰‡ ‹Â?…‘Â?‡ –‘ ƒÂ? ƒ‰‹Â?‰ ’‘’—Žƒ–‹‘Â? –Šƒ– ”‡Ž‹‡• ’”‹Â?ƒ”‹Ž› ‘Â? –Š‡ „ƒ•‹… ’—„Ž‹…Ž› ˆ—Â?†‡† ’‡Â?•‹‘Â? „‡Â?‡ˆ‹–Ǥ ††‹–‹‘Â?ƒŽ ’”‡••—”‡• ƒ”‹•‡ ˆ”‘Â? –Š‡ Â?‡‡† –‘ ‹Â?’”‘˜‡ •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ ’‘‘” ƒÂ?† ˆ”‘Â? –Š‡ Â?‡‡† –‘ ‹Â?’”‘˜‡ Š‡ƒŽ–Š ‘—–…‘Â?‡• ƒÂ?† ˆ‹Â?ƒÂ?…‹ƒŽ ’”‘–‡…–‹‘Â? ƒ‰ƒ‹Â?•– ‹Â?’‘˜‡”‹•Š‹Â?‰ ‘—– ‘ˆ ’‘…Â?‡– Š‡ƒŽ–Š ’ƒ›Â?‡Â?–•Ǥ ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ’”‡••—”‡• ƒ”‹•‡ ˆ”‘Â? –Š‡ Â?‡‡† –‘ ”‡Šƒ„‹Ž‹–ƒ–‡ ƒÂ?† ”‡…‘Â?•–”—…– ƒ Žƒ”‰‡ „ƒ…Â?Ž‘‰ ‘ˆ –Š‡ •‡…‘Â?†ƒ”› ƒÂ?† Ž‘…ƒŽ ”‘ƒ† Â?‡–™‘”Â? ‹Â? ’‘‘” …‘Â?†‹–‹‘Â?Ç¡ ĥ ™‡ŽŽ ĥ ˆ”‘Â? …‘Â?–‹Â?—‡† ‹Â?’”‘˜‡Â?‡Â?– ‘ˆ –Š‡ Â?ƒ‹Â? ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒ•–Ǧ‡•– ‹‰Š™ƒ›Ǥ ††‹–‹‘Â?ƒŽ ’”‡••—”‡• ƒ”‹•‡ ˆ”‘Â? Â?‡™ ‹Â?˜‡•–Â?‡Â?– Â?‡‡†• ‹Â? –Š‡ ‡Â?‡”‰›ǡ ™ƒ–‡”ǡ ƒ‰”‹…—Ž–—”‡ǡ ƒÂ?† ”‡‰‹‘Â?ƒŽ †‡˜‡Ž‘’Â?‡Â?– ƒ”‡ƒ•Ǥ ‘Â?–‹Â?—‡† ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ‘ˆ –Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ? ™‹ŽŽ ”‡“—‹”‡ Â?ƒÂ?ƒ‰‹Â?‰ –Š‡•‡ —Â?†‡”Ž›‹Â?‰ ’”‡••—”‡• ‹Â? ƒ •›•–‡Â?ƒ–‹… ˆƒ•Š‹‘Â?Ç¡ •‘ –Šƒ– ‡š’‡Â?†‹–—”‡• †‘ Â?‘– ‡š…‡‡† …—””‡Â?–Ž› ‡Â?˜‹•ƒ‰‡† Ž‡˜‡Ž•Ǥ ͶǤ 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 mediumǦterm social expenditure pressures. Š‡ •’‡…‹ˆ‹… ‘’–‹‘Â?• ˆ‘” …‘Â?•‹†‡”ƒ–‹‘Â? ƒ”‡ ‘—–Ž‹Â?‡† ‹Â? ƒ„Ž‡ ͳǤ Â? –Š‡ ‡˜‡Â?– ‘ˆ ƒÂ? —’•‹†‡ ‰”‘™–Š •…‡Â?ƒ”‹‘ǡ †‡‡’‡Â?‹Â?‰ –Š‡ ’ŽƒÂ?Â?‡† ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? „› •ƒ˜‹Â?‰ ƒ ’ƒ”– ‘ˆ –Š‡ ƒ††‹–‹‘Â?ƒŽ ”‡˜‡Â?—‡• …ƒÂ? ’”‡˜‡Â?– ‡”‘•‹‘Â? ‘ˆ Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰• ƒÂ?† Â?‡‡’ ‡š–‡”Â?ƒŽ ‹Â?„ƒŽƒÂ?…‡• ‹Â? ˜ …Š‡…Â?Ç¡ ™Š‹Ž‡ ‡Â?…‘—”ƒ‰‹Â?‰ ƒ •Š‹ˆ– –‘™ƒ”† ƒ •—•–ƒ‹Â?ƒ„Ž‡ ‰”‘™–Š ’ƒ–Š †”‹˜‡Â? „› –”ƒ†ƒ„Ž‡•Ǥ ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• …ƒÂ? Â?ƒÂ?‡ ƒ ‰”‡ƒ–‡” …‘Â?–”‹„—–‹‘Â? –‘ ƒ†Œ—•–Â?‡Â?– ‰‘‹Â?‰ ˆ‘”™ƒ”†ǡ ™‹–Š Â?‘•– ƒ†Œ—•–Â?‡Â?– –‘ †ƒ–‡ …‘Â?‹Â?‰ ˆ”‘Â? …—””‡Â?– ‡š’‡Â?†‹–—”‡•Ǥ Š‡ ’‡Â?•‹‘Â? ‘’–‹‘Â?• ƒ‹Â? –‘ ƒ˜‡”– Žƒ”‰‡ —Â?•—•–ƒ‹Â?ƒ„Ž‡ Œ—Â?’• ‹Â? ’‡Â?•‹‘Â? …‘•–•ǡ •‡– ‡š’‡…–ƒ–‹‘Â?• ƒ– •—•–ƒ‹Â?ƒ„Ž‡ Ž‡˜‡Ž•ǡ ƒÂ?† ‡ƒ•‡ ’”‡••—”‡ ‘Â? –Š‡ „ƒ•‹… „‡Â?‡ˆ‹–Ǥ Â? •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ǡ –Š‡ ‘’–‹‘Â?• ƒ‹Â? –‘ ‹Â?’”‘˜‡ ‡ˆˆ‡…–‹˜‡Â?॥ ‘ˆ ‘˜‡”ƒŽŽ •‘…‹ƒŽ „‡Â?‡ˆ‹–• ƒÂ?† ”‡†—…‡ ’”‡••—”‡ ‘Â? –Š‡ –ƒ”‰‡–‡† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ È‹ ÈŒ ’”‘‰”ƒÂ? ‹Â? –Š‡ Â?‡†‹—Â? –‡”Â?Ǥ Â? Š‡ƒŽ–Šǡ –Š‡ ‘’–‹‘Â?• •‡‡Â? –‘ ‹Â?’”‘˜‡ Š‡ƒŽ–Š ‘—–…‘Â?‡• ƒÂ?† ˆ‹Â?ƒÂ?…‹ƒŽ ’”‘–‡…–‹‘Â? ƒ‰ƒ‹Â?•– ‹Â?’‘˜‡”‹•Š‹Â?‰ ‘—–Ǧ‘ˆǦ ’‘…Â?‡– ’ƒ›Â?‡Â?–•Ǥ Š‡ ‘’–‹‘Â?• –‘ •–”‡Â?‰–Š‡Â? …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •‡‡Â? –‘ Â?‘•– ‡ˆˆ‡…–‹˜‡Ž› Â?ƒÂ?ƒ‰‡ –Š‡ ‰”‘™‹Â?‰ ’‹’‡Ž‹Â?‡ ‘ˆ ‹Â?ˆ”ƒ•–”—…–—”‡ ’”‘Œ‡…– Â?‡‡†• ™‹–Š‹Â? –Š‡ ˆ‹•…ƒŽ ‡Â?˜‡Ž‘’‡ „› ‹Â?’”‘˜‹Â?‰ –”ƒÂ?•’ƒ”‡Â?…› ƒÂ?† „› ‹Â?’”‘˜‹Â?‰ •…”‡‡Â?‹Â?‰ ƒÂ?† •‡Ž‡…–‹‘Â? ‘ˆ ’”‘Œ‡…–•Ǥ Š‡ ‘’–‹‘Â?• ‹Â? –Š‡ ”‘ƒ† •‡…–‘” •‡‡Â? –‘ ˆ—”–Š‡” ‹Â?’”‘˜‡ Ž‘Â?‰ ”—Â? ‡ˆˆ‹…‹‡Â?…› ƒÂ?† •—•–ƒ‹Â?ƒ„‹Ž‹–› ‘ˆ –Š‡ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ?Ǥ ‘ŽŽ‡…–‹˜‡Ž›ǡ –Š‹• •‡– ‘ˆ •—‰‰‡•–‡† Â?‡ƒ•—”‡• …ƒÂ? Š‡Ž’ ‡‘”‰‹ƒ Â?ƒÂ?ƒ‰‡ –Š‡ ‡š’‡Â?†‹–—”‡ ’”‡••—”‡• ’‡”–ƒ‹Â?‹Â?‰ –‘ –Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ?Ç¡ –Š—• Â?‹–‹‰ƒ–‹Â?‰ –Š‡ ”‹•Â? ‘ˆ ‡š’‡Â?†‹–—”‡• ‡š…‡‡†‹Â?‰ ‡Â?˜‹•ƒ‰‡† Ž‡˜‡Ž• ™Š‹Ž‡ •—’’‘”–‹Â?‰ ‹Â?’”‘˜‡† †‡˜‡Ž‘’Â?‡Â?– ‘—–…‘Â?‡•Ǥ Table 1. Policy Options for Consideration to Manage Fiscal Expenditure Pressures ‘Ž‹…› ”‡ƒ ’–‹‘Â? ˆ‘” ‘Â?•‹†‡”ƒ–‹‘Â? ‡“—‡Â?…‹Â?‰ š’‡…–‡† Â?’ƒ…– ƒ‹Â?–ƒ‹Â? ˆ‹•…ƒŽ †‹•…‹’Ž‹Â?‡ „› ˆ—”–Š‡” ”‡†—…‹Â?‰ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ ”‡ƒ–‡ ƒ††‹–‹‘Â?ƒŽ ˆ‹•…ƒŽ †‡ˆ‹…‹– ˆ”‘Â? ͵Ǥ͸ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ –Š”‘—‰Š ˆ—”–Š‡” Š‘”–Ȁ •’ƒ…‡ ˆ‘” ”‡•’‘Â?•‡ –‘ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‘ˆ ‡š’‡Â?†‹–—”‡• „› ͵ ’‡”…‡Â?–ƒ‰‡ ’‘‹Â?–• ‘ˆ ‡†‹—Â? –‡”Â? ‰Ž‘„ƒŽ •Š‘…Â?•Ǣ ’”‡˜‡Â?– ƒ…”‘Ǧ  „› ʹͲͳͷ ‡”‘•‹‘Â? ‘ˆ Â?ƒ–‹‘Â?ƒŽ ‹•…ƒŽ Â? ‡˜‡Â?– ‘ˆ —’•‹†‡ ‰”‘™–Š •…‡Â?ƒ”‹‘ ˆ”‘Â? Š‹‰Š‡” ƒÂ?† •ƒ˜‹Â?‰• ƒÂ?† ™‹†‡Â?‹Â?‰ Š‘”–Ȁ …ƒ’‹–ƒŽ ‹Â?ˆŽ‘™•ǡ †‡‡’‡Â? ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? „› •ƒ˜‹Â?‰ ‘ˆ …—””‡Â?– ƒ……‘—Â?– ‡†‹—Â? –‡”Â? ƒ††‹–‹‘Â?ƒŽ ”‡˜‡Â?—‡• ƒÂ?† „‘Ž•–‡”‹Â?‰ ˆ‹•…ƒŽ „—ˆˆ‡”• †‡ˆ‹…‹– ‘ŽŽ‡…–‹˜‡ Â?ƒ„Ž‡ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• –‘ Â?ƒÂ?‡ ƒ …‘Â?–”‹„—–‹‘Â? –‘ ‹Â?’ƒ…– ‘Â? ‡š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‰‘‹Â?‰ ˆ‘”™ƒ”†ǡ ’ƒ”–‹…—Žƒ”Ž› ĥ ‡š’‡Â?†‹–—”‡ ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ’‹…Â?• —’ͳ ƒ‹Â?–ƒ‹Â? „ƒŽƒÂ?…‡ ’”‡••—”‡• š’‡Â?†‹–—”‡ ƒÂ?ƒ‰‡ ‡š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? –Š”‘—‰Š ‰”‡ƒ–‡” Š‘”–Ȁ „‡–™‡‡Â? •‘…‹ƒŽ ƒÂ?† ‹Â? ʹͲͳͷǣ ‘Â?’‘•‹–‹‘Â? •‡Ž‡…–‹˜‹–› ‹Â? …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡•ǡ …‘Â?–ƒ‹Â?‹Â?‰ Â?‡†‹—Â? ‡†‹—Â? –‡”Â? …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ –‡”Â? •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡ ’”‡••—”‡•ǡ ƒÂ?† ‡Â?ŠƒÂ?…‹Â?‰ Â?‡‡†• ǦʹǤͺΨ ‘ˆ  •—•–ƒ‹Â?ƒ„‹Ž‹–› ‘ˆ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? ȋ‰”‡ƒ–‡” †‡–ƒ‹Ž È‹ ”‡ƒÂ?†‘™Â? ‘Â? ‡ƒ…Š „‡Ž‘™Ȍ „‡Ž‘™Ȍ ˜‘‹† Œ—Â?Â’ ‹Â? ˆ‹•…ƒŽ ‡Ž‡…–‹˜‡Ž› –ƒ”‰‡– ƒÂ?› ˆ—”–Š‡” •‹‰Â?‹ˆ‹…ƒÂ?– ‘Â?‡Ǧ–‹Â?‡ Œ—Â?’• ‹Â? Š‘”– –‡”Â? …‘•–• ƒÂ?† ‡Â?ŠƒÂ?…‡ –Š‡ „ƒ•‹… ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ‡“—‹–› ”‘–‡…– ’—”…Šƒ•‹Â?‰ š’Ž‘”‡ Â?‡…ŠƒÂ?‹•Â? –‘ Ž‹Â?‹– Â?‡†‹—Â?Ǧ–‡”Â? ‰”‘™–Š ‘ˆ –Š‡ ’‘™‡” ƒÂ?† •‡– ‡†‹—Â? –‡”Â? ‡Â?•‹‘Â?• „ƒ•‹… ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– –‘ Â?‘ Â?‘”‡ –ŠƒÂ? –Š‡ ”ƒ–‡ ‘ˆ ‹Â?ˆŽƒ–‹‘Â? ‡š’‡…–ƒ–‹‘Â?• ƒ– Ǧ͵ǤʹΨ ‘ˆ  •—•–ƒ‹Â?ƒ„Ž‡ Ž‡˜‡Ž• ‡˜‡Ž‘’ ˜‘Ž—Â?–ƒ”› •ƒ˜‹Â?‰• ˆ‘” ”‡–‹”‡Â?‡Â?– „› —Â?†‡”–ƒÂ?‹Â?‰ ƒ•‡ ’”‡••—”‡ ˆ‘” Ġ †‹ƒ‰Â?‘•–‹… ‘ˆ ‹Â?’‡†‹Â?‡Â?–• ƒÂ?† ’‘Ž‹…› ‹Â?‹–‹ƒ–‹˜‡• ‹Â? –Š‡ ‡†‹—Â? –‡”Â? Š‘… ƒÂ?† —Â?•—•–ƒ‹Â?ƒ„Ž‡ ƒ”‡ƒ• ‘ˆ –ƒš –”‡ƒ–Â?‡Â?–ǡ ‘’–Ǧ‘—– ˜•Ǥ ‘’–Ǧ‹Â?Ç¡ ƒÂ?† ˆ‹Â?ƒÂ?…‹ƒŽ „‡Â?‡ˆ‹– ‹Â?…”‡ƒ•‡• ‹Â?•–”—Â?‡Â?–• Â?’”‘˜‡  …‘˜‡”ƒ‰‡ ‘ˆ ’‘‘” –Š”‘—‰Š ‹Â?’”‘˜‡† ‘—–”‡ƒ…Š ƒÂ?† ’”‘š›ǦÂ?‡ƒÂ?• ˆ‘”Â?—Žƒ Â?ŠƒÂ?…‡ ‡“—‹–› ‘ˆ ”‹‘”‹–‹œ‡  ‘˜‡” —Â?‹˜‡”•ƒŽ ’”‘‰”ƒÂ?• ȋ‡Ǥ‰Ǥǡ ’‡Â?•‹‘Â?• ƒÂ?† Š‘”– –‡”Â? ‘…‹ƒŽ ‘˜‡”ƒŽŽ •‘…‹ƒŽ „‡Â?‡ˆ‹–• ‡Â?‡”‰› ˜‘—…Š‡”•Ȍ ˆ‘” ƒÂ?› ƒ††‹–‹‘Â?ƒŽ •‘…‹ƒŽ •’‡Â?†‹Â?‰ ΪͲǤʹΨ ‘ˆ  ••‹•–ƒÂ?…‡ ‹Â?…”‡ƒ•‡• ‹Â?Â?  ”‡…‹’‹‡Â?–• –‘ ‡Â?’Ž‘›Â?‡Â?– ‘’’‘”–—Â?‹–‹‡• ƒÂ?† ‡†—…‡ ’”‡••—”‡ ‘Â? ‡†‹—Â? –‡”Â? Š—Â?ƒÂ? …ƒ’‹–ƒŽ ‹Â?˜‡•–Â?‡Â?–•  ‹Â? Â?‡†‹—Â? –‡”Â? ͳ Š‡ Žƒ–‡•– ƒ’’”‘˜‡† ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â? ‡Â?˜‹•ƒ‰‡• ƒ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‘ˆ ‘˜‡”ƒŽŽ ‡š’‡Â?†‹–—”‡• „› ͵ ’‡”…‡Â?–ƒ‰‡ ’‘‹Â?–• ‘ˆ  ˆ”‘Â? ʹͲͳͳ –‘ ʹͲͳͷǡ ™‹–Š ’ƒ”– ‘ˆ –Š‹• …‘Â?‹Â?‰ ˆ”‘Â? …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡•Ǥ Š‡ ƒ—–Š‘”‹–‹‡• Šƒ˜‡ Â?‘–‡† –Šƒ– –Š‡ Ž‡˜‡Ž ƒÂ?† …‘Â?’‘•‹–‹‘Â? ‘ˆ –Š‡ ‡š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’ƒ–Š Â?‡‡†• –‘ „‡ –ƒ‹Ž‘”‡† –‘ –Š‡ ‡˜‘Ž˜‹Â?‰ Ž‘…ƒŽ …‘Â?–‡š–ǡ ™‹–Š –Š‡ ‘˜‡”ƒŽŽ ‰‘ƒŽ ‘ˆ •–ƒ›‹Â?‰ ‘Â? –”ƒ…Â? ™‹–Š ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â?Ǥ Š‡ ƒ˜ƒ‹Žƒ„‹Ž‹–› ‘ˆ …‘Â?…‡••‹‘Â?ƒŽ ˆ‹Â?ƒÂ?…‹Â?‰ ƒÂ?† ‡˜‘Ž˜‹Â?‰ Â?‡‡†• ˆ‘” …‘Â?’‡–‹–‹˜‡Â?॥ ‡Â?ŠƒÂ?…‹Â?‰ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ƒ”‡ ‹Â?’‘”–ƒÂ?– …‘Â?•‹†‡”ƒ–‹‘Â?• ˆ‘” Â?ƒ‹Â?–ƒ‹Â?‹Â?‰ ˆ‹•…ƒŽ •–ƒ„‹Ž‹–› ƒÂ?† ‰”‘™–ŠǤ ˜‹ ‡†—…‡ Š‹‰Š ‘—–Ǧ‘ˆǦ’‘…Â?‡– ’Šƒ”Â?ƒ…‡—–‹…ƒŽ •’‡Â?†‹Â?‰ „› Š‘”– –‡”Â? Â?’”‘˜‡ Š‡ƒŽ–Š ’”‘Â?‘–‹Â?‰ —•‡ ‘ˆ ‰‡Â?‡”‹…• ‘—–…‘Â?‡• ƒÂ?† ”‡†—…‡ ‡ƒŽ–Š ††”‡•• ™‡ƒÂ?Â?‡••‡• ‹Â? •—’’Ž› ‘ˆ Â?‡†‹…ƒŽ …ƒ”‡ǡ ™‹–Š ˆ‘…—• ‹Â?’‘˜‡”‹•Š‹Â?‰ ‘—– ‘ˆ ΪͲǤ͵Ψ ‘ˆ  ‡†‹—Â? –‡”Â? ‘Â? ’”‹Â?ƒ”› …ƒ”‡ ’‘…Â?‡– Š‡ƒŽ–Š š’ƒÂ?† •–ƒ–‡Ǧˆ—Â?†‡† Š‡ƒŽ–Š ‹Â?•—”ƒÂ?…‡ …‘˜‡”ƒ‰‡ ™‹–Š ˆ‘…—• ’ƒ›Â?‡Â?–• ‡†‹—Â? –‡”Â? ‘Â? Ž‘™‡” †‡…‹Ž‡• ‘Â? ’‘’—Žƒ–‹‘Â? —”–Š‡” ‹Â?’”‘˜‡ …‘Â?–‡Â?– ƒÂ?† ’”‡•‡Â?–ƒ–‹‘Â? ‘ˆ …ƒ’‹–ƒŽ ”ƒÂ?•’ƒ”‡Â?…›Ȁƒ……‘—Â?– „—†‰‡– „› ‡š–‡Â?†‹Â?‰ …‘˜‡”ƒ‰‡ǡ †‡Â?‘Â?•–”ƒ–‹Â?‰ …‘Â?•‹•–‡Â?…› ƒ„‹Ž‹–›Ǣ •–”‡Â?‰–Š‡Â? Š‘”– –‡”Â? ‹Â? ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â?Ç¡ ƒÂ?† †‡‡’‡Â?‹Â?‰ Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ‹Â?ˆ‘”Â?ƒ–‹‘Â? ’”‘‰”ƒÂ?Â?‹Â?‰ Â?–”‘†—…‡ ƒ •›•–‡Â?ƒ–‹… ’”‡Ž‹Â?‹Â?ƒ”› ƒ••‡••Â?‡Â?– ƒÂ?† ƒ’‹–ƒŽ ‡†‹—Â? –‡”Â? ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ’”‘…‡•• –”‡Â?‰–Š‡Â? •…”‡‡Â?‹Â?‰ ǦͲǤͺΨ ‘ˆ  —†‰‡–‹Â?‰ ‡˜‡Ž‘’ —Â?‹ˆ‘”Â? Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†ƒÂ?…‡ ‘Â? ƒ’’”ƒ‹•ƒŽ ƒÂ?† •‡Ž‡…–‹‘Â? ƒÂ?‘Â?‰ ‡†‹—Â? –‡”Â? –‡…ŠÂ?‹“—‡• …‘Â?’‡–‹Â?‰ ’—„Ž‹… –”‡Â?‰–Š‡Â? •–”ƒ–‡‰‹… ‰—‹†ƒÂ?…‡ ‡†‹—Â? –‡”Â? ‹Â?˜‡•–Â?‡Â?– ’”‘Œ‡…– ‡˜‡Ž‘’ •›•–‡Â?ƒ–‹… …‘Â?’”‡Š‡Â?•‹˜‡ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ ’”‘’‘•ƒŽ• ‡†‹—Â? –‡”Â? •›•–‡Â? ‰—‹†‡Ž‹Â?‡• Â?…”‡ƒ•‡ ”‘—–‹Â?‡ ƒÂ?† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡• ‹Â? Ž‹Â?‡ ™‹–Š  ”‡…‘Â?Â?‡Â?†ƒ–‹‘Â?•ǡ ĥ ƒŽŽ‘™‡† „› Š‘”– –‡”Â? ”‡•‘—”…‡ …‘Â?•–”ƒ‹Â?–• •  ‹‰Š™ƒ› ‹Â?˜‡•–Â?‡Â?– ™‹Â?†• †‘™Â?Ç¡ ’Šƒ•‡ ‹Â? ”‡„ƒŽƒÂ?…‹Â?‰ ‘ˆ ‘—–Žƒ›• ˆ‘” ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† Â?‡™ Â?’”‘˜‡ Ž‘Â?‰ ”—Â? ‡†‹—Â? –‡”Â? •—•–ƒ‹Â?ƒ„‹Ž‹–› ƒÂ?† ‘ƒ† ‡…–‘” …‘Â?•–”—…–‹‘Â? –‘ ”‡†—…‡ „ƒ…Â?Ž‘‰ ‘ˆ •‡…‘Â?†ƒ”› Â?‡–™‘”Â? ‹Â? ΪͲǤ͹Ψ ‘ˆ  ’‘‘” …‘Â?†‹–‹‘Â? ‡ˆˆ‹…‹‡Â?…› ‘ˆ ”‘ƒ† ‡˜‡Ž‘’ ƒ ˜‹ƒ„Ž‡ •›•–‡Â? ˆ‘” ƒ––‡Â?†‹Â?‰ –‘ Â?‡‡†• ‘ˆ Ž‘…ƒŽ ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? Š‘”– –‡”Â? ”‘ƒ† Â?‡–™‘”Â? „› ‹Â?‹–‹ƒ–‹Â?‰ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ –ƒ”‰‡– •—„•‡– —– ‹Â? ’Žƒ…‡ ‹Â?•–‹–—–‹‘Â?ƒŽ ƒ””ƒÂ?‰‡Â?‡Â?–• –‘ ‹Â?’”‘˜‡ ”‘ƒ† Š‘”–Ȁ‡†‹— ‡š’‡Â?†‹–—”‡ ‡ˆˆ‹…‹‡Â?…› Â? –‡”Â? ͷǤ The policy options discussed above could collectively curtail expenditure pressures estimated at about 2.8 percent of GDP by 2015. Â? ‘–Š‡” ™‘”†•ǡ ™‹–Š‘—– –Š‡ ’‘Ž‹…› ‘’–‹‘Â?•ǡ –Š‡ —Â?†‡”Ž›‹Â?‰ ’”‡••—”‡• …‘—Ž† ’‘–‡Â?–‹ƒŽŽ› ’—•Š ‘˜‡”ƒŽŽ ‡š’‡Â?†‹–—”‡• ‹Â? ʹͲͳͷ –‘ ͵ͳǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â?•–‡ƒ† ‘ˆ –Š‡ …—””‡Â?–Ž› ‡Â?˜‹•ƒ‰‡† Í´Í» ’‡”…‡Â?–Ǥ Š‹Ž‡ –Š‡ ‡šƒ…– Â?ƒ‰Â?‹–—†‡ ‘ˆ –Š‡ ‹Â?’ƒ…– ™‘—Ž† †‡’‡Â?† ‘Â? –Š‡ ‡š–‡Â?– ‘ˆ –Š‡ —Â?†‡”Ž›‹Â?‰ ’”‡••—”‡• ƒÂ?† –Š‡ ‡ˆˆ‹…ƒ…› ‘ˆ –Š‡ •’‡…‹ˆ‹… ‘’–‹‘Â?• ƒ†‘’–‡† –‘ …—”–ƒ‹Ž –Š‡Â?Ç¡ –Š‡ ‹Â?’ƒ…– ™‘—Ž† …‘Â?‡ ˆ”‘Â? –Š‡ ˆ‘ŽŽ‘™‹Â?‰ •‘—”…‡•Ǥ Žƒ”‰‡ ’ƒ”– ‘ˆ –Š‡ •ƒ˜‹Â?‰• ȋ͵Ǥʹ ’‡”…‡Â?– ‘ˆ ÈŒ ™‘—Ž† …‘Â?‡ ˆ”‘Â? ƒ˜‡”–‹Â?‰ Žƒ”‰‡ Ġ Š‘… Œ—Â?’• ‹Â? –Š‡ „ƒ•‹… ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– „› Ž‹Â?‹–‹Â?‰ ‹–• Â?‡†‹—Â? ‰”‘™–Š –‘ Â?‘ ‰”‡ƒ–‡” –ŠƒÂ? –Š‡ ”ƒ–‡ ‘ˆ ‹Â?ˆŽƒ–‹‘Â?Ç¡ ™Š‹Ž‡ †‡˜‡Ž‘’‹Â?‰ ˜‘Ž—Â?–ƒ”› •ƒ˜‹Â?‰• ˆ‘” ”‡–‹”‡Â?‡Â?–Ǥ ‘–Š ‘ˆ –Š‡•‡ Â?‡ƒ•—”‡• ™‘—Ž† ‡ƒ•‡ ‡š’‡…–ƒ–‹‘Â?• ˆ”‘Â? ƒ ‰”‘™‹Â?‰ ‘Ž† ƒ‰‡ ’‘’—Žƒ–‹‘Â? ˆ‘” ƒ Š‹‰Š‡” ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ˆ”‘Â? –Š‡ „ƒ•‹… „‡Â?‡ˆ‹–Ǥʹ Š‡ ‘’–‹‘Â?• –‘ ‹Â?’”‘˜‡ …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ –ƒ”‰‡–‡† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ƒÂ?† Â?‡†‹…ƒŽ ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ?• ™‘—Ž† …‘•– ƒ„‘—– ͲǤʹ ’‡”…‡Â?– ƒÂ?† ͲǤ͵ ’‡”…‡Â?– ‘ˆ Ç¡ ”‡•’‡…–‹˜‡Ž›ǡ ‹Â? ʹͲͳͷǤ͵ Š‡ Â?‡ƒ•—”‡• –‘ ‹Â?†—…‡ ‰”‡ƒ–‡” •‡Ž‡…–‹˜‹–› ƒÂ?† ‡ˆˆ‹…‹‡Â?…› ‹Â? …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ ƒ”‡ ‡•–‹Â?ƒ–‡† –‘ •ƒ˜‡ ͲǤͺ ’‡”…‡Â?– ‘ˆ  ȋƒ••—Â?‹Â?‰ ƒ ͳͲ ’‡”…‡Â?– ‹Â?’”‘˜‡Â?‡Â?– ‹Â? ‡ˆˆ‹…‹‡Â?…› ™‹–Š‘—– ‹Â?’ƒ…–‹Â?‰ ‰”‘™–Š ’”‘•’‡…–•ȌǤ ‹Â?ƒŽŽ›ǡ –Š‡ Â?‡ƒ•—”‡• –‘ ‹Â?’”‘˜‡ •—•–ƒ‹Â?ƒ„‹Ž‹–› ƒÂ?† ‡ˆˆ‹…‹‡Â?…› ‘ˆ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ƒ”‡ ‡•–‹Â?ƒ–‡† –‘ …‘•– ƒ„‘—– ͲǤ͹ ’‡”…‡Â?– ‘ˆ Ç¡ ™‹–Š Š‹‰Š‡” ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡• ˆ‘” •‡…‘Â?†ƒ”› ƒÂ?† Ž‘…ƒŽ ”‘ƒ†• ‘ˆˆ•‡– ‹Â? ’ƒ”– „› ’Šƒ•‡† ™‹Â?†‹Â?‰ †‘™Â? ‘ˆ Â?‡™ …‘Â?•–”—…–‹‘Â? ‡š’‡Â?†‹–—”‡• „› ʹͲͳͷǤ Í´ Â? –Š‡ …‘—Â?–‡”ˆƒ…–—ƒŽ •…‡Â?ƒ”‹‘ǡ –Š‡ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ”‹•‡• –‘ ƒ„‘—– ʹͶ ’‡”…‡Â?– ‘ˆ –Š‡ ”‡ƒŽ ™ƒ‰‡ „› ʹͲͳͷ ȋ‡“—‹˜ƒŽ‡Â?– –‘ –Š‡ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ‹ˆ –Š‡ „‡Â?‡ˆ‹– Šƒ† ‹Â?…”‡ƒ•‡† –‘  ͳ͸ͷ ˆ‘” ƒŽŽ ˆ”‘Â? ‡’–‡Â?„‡” ʹͲͳʹȌǡ ™Š‹Ž‡ –Š‡ •…‡Â?ƒ”‹‘ ˆ‘” –Š‡ ”‡…‘Â?Â?‡Â?†‡† ”‡ˆ‘”Â?• ‹• –‘ ‹Â?†‡š –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– ˆ”‘Â? Â?‘Â?‹Â?ƒŽ Ž‡˜‡Ž• ƒÂ?Â?‘—Â?…‡† ˆ‘” ‡’–‡Â?„‡” ʹͲͳʹ È‹  ͳͲͲ ˆ‘” ƒŽŽ ƒÂ?†  ͳʹͷ ˆ‘” –Š‘•‡ ƒ‰‡ ͸͹ ƒÂ?† ‘˜‡”ȌǤ ͵ ‘”  Ç¡ –Š‹• ƒ••—Â?‡• ƒ ʹͲ ’‡”…‡Â?– ‹Â?…”‡ƒ•‡ ‹Â? …‘˜‡”ƒ‰‡ ƒÂ?† ͳͲ ’‡”…‡Â?– ‹Â?…”‡ƒ•‡ ‹Â? „‡Â?‡ˆ‹–•Ǣ ˆ‘”  Ç¡ ‹– ƒ••—Â?‡• ƒ Í´Í· ’‡”…‡Â?– ‹Â?…”‡ƒ•‡ ‹Â? …‘˜‡”ƒ‰‡ ƒÂ?† Í´Í· ’‡”…‡Â?– Š‹‰Š‡” ’”‡Â?‹—Â?• ĥ —–‹Ž‹œƒ–‹‘Â? •–ƒ”–• –‘ ”‹•‡Ǥ ˜‹‹ MacroǦfiscal context ͸Ǥ Georgia has established a record of sound macroeconomic management since 2004 that has contributed to robust growth and declining public debt levels. ‘ŽŽ‘™‹Â?‰ –Š‡ ‘•‡ ‡˜‘Ž—–‹‘Â? ‹Â? ʹͲͲ͵ǡ ˆƒ”Ǧ”‡ƒ…Š‹Â?‰ •–”—…–—”ƒŽ ”‡ˆ‘”Â?• –‘ •–”‡Â?‰–Š‡Â? ’—„Ž‹… ˆ‹Â?ƒÂ?…‡• ƒÂ?† ‹Â?’”‘˜‡ –Š‡ „—•‹Â?॥ ‡Â?˜‹”‘Â?Â?‡Â?– Š‡Ž’‡† „‘‘•– ‰”‘™–Š –‘ ͻǤ͵ ’‡”…‡Â?– ’‡” ›‡ƒ” †—”‹Â?‰ ʹͲͲͶǦͲ͹Ǥ ƒš ”‡˜‡Â?—‡• ‹Â?…”‡ƒ•‡† ˆ”‘Â? ͳͶǤ͸ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͵ –‘ ʹͷǤͺ ’‡”…‡Â?– ‹Â? ʹͲͲ͹ ƒÂ?† ƒŽ–Š‘—‰Š –Š‡ ˆ‹•…ƒŽ †‡ˆ‹…‹– ”‘•‡ †—”‹Â?‰ –Š‹• ’‡”‹‘†ǡ ‹– ™ƒ• Â?‘”‡ –ŠƒÂ? ˆ—ŽŽ› ˆ‹Â?ƒÂ?…‡† „› Š‹‰Š‡” ’”‹˜ƒ–‹œƒ–‹‘Â? ”‡…‡‹’–•Ǥ š–‡”Â?ƒŽ ’—„Ž‹… †‡„– †‡…Ž‹Â?‡† ˆ”‘Â? Ͷͷ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͵ –‘ ͳ͸Ǥͺ ’‡”…‡Â?– ‹Â? ʹͲͲ͹Ǥ • –Š‡ †—ƒŽ •Š‘…Â?• ‘ˆ –Š‡ —‰—•– ʹͲͲͺ …‘Â?ˆŽ‹…– ƒÂ?† –Š‡ ‰Ž‘„ƒŽ ˆ‹Â?ƒÂ?…‹ƒŽ …”‹•‹• ”‡•—Ž–‡† ‹Â? ƒ •Šƒ”’ †‘™Â?–—”Â? ‹Â? ‰”‘™–Šǡ –Š‡ ƒ—–Š‘”‹–‹‡• ”‡•’‘Â?†‡† ™‹–Š ƒ …‘—Â?–‡”…›…Ž‹…ƒŽ ˆ‹•…ƒŽ •–‹Â?—Ž—• –‘ ”‡•–‘”‡ …‘Â?ˆ‹†‡Â?…‡ ƒÂ?† •—’’‘”– ‡…‘Â?‘Â?‹… ”‡…‘˜‡”›Ǥ ”‘™–Š ”‡„‘—Â?†‡† •–”‘Â?‰Ž› –‘ ͸Ǥ͵ ’‡”…‡Â?– ‹Â? ʹͲͳͲ ƒÂ?† ͹ ’‡”…‡Â?– ‹Â? ʹͲͳͳǡ ƒÂ?† ˆ‹•…ƒŽ ƒ†Œ—•–Â?‡Â?– ™ƒ• ‹Â?’Ž‡Â?‡Â?–‡† –‘ •ƒˆ‡‰—ƒ”† •—•–ƒ‹Â?ƒ„‹Ž‹–›Ǥ Š‡ ˆ‹•…ƒŽ †‡ˆ‹…‹– †‡…Ž‹Â?‡† ˆ”‘Â? ͻǤʹ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ –‘ ͵Ǥ͸ ’‡”…‡Â?– ‹Â? ʹͲͳͳ ƒÂ?† ‡š–‡”Â?ƒŽ ’—„Ž‹… †‡„– †‡…Ž‹Â?‡† –‘ Í´Í» ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ ˆ”‘Â? ƒ ’‡ƒÂ? ‘ˆ ͵͵Ǥ͸ ’‡”…‡Â?– ‹Â? ʹͲͳͲǤ Figure 1: GDP Growth, Investment, Savings Figure 2: External Debt, Current Account ȋ‹Â? ’‡”…‡Â?– ƒÂ?† ’‡”…‡Â?– ‘ˆ ÈŒ ȋ‹Â? ’‡”…‡Â?– ‘ˆ ÈŒ 35.0 70 Ͳ25.0 30.0 60 25.0 Ͳ20.0 50 20.0 40 15.0 Ͳ15.0 30 10.0 20 5.0 Ͳ10.0 0.0 10 Ͳ5.0 0 Ͳ5.0 2005 2006 2007 2008 2009 2010 2011 2003 2004 2005 2006 2007 2008 2009 2010 2011 GDP Growth, Left Axis Natl Savings (% GDP), Left Axis External Public Debt, Left Axis Total External Debt, Left Axis Investment (% GDP), Left Axis Curr Acct Bal., Right Axis SourceÇ£ ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• ƒÂ?† ‘”Ž† ƒÂ?Â? •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͹Ǥ Notwithstanding the sound record, Georgia faces macroeconomic challenges on two fronts – sustainability and growth – and addressing both will require continued implementation and potential deepening of the commendable fiscal consolidation program. Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– Šƒ• †‡…Ž‹Â?‡† ˆ”‘Â? ƒ ’‡ƒÂ? ‘ˆ ʹͳǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͺǡ „—– ”‡Â?ƒ‹Â?• Š‹‰Š ƒ– ͳͳǤͺ ’‡”…‡Â?– ‹Â? ʹͲͳͳǤ —”–Š‡”Â?‘”‡ǡ ™Š‹Ž‡ •—……‡••ˆ—Ž ”‡ˆ‹Â?ƒÂ?…‹Â?‰ ‘ˆ ‡‘”‰‹ƒǯ• —”‘„‘Â?† Š‡Ž’‡† •Â?‘‘–Š ‘—– ‹–• ’—„Ž‹… †‡„– ”‡’ƒ›Â?‡Â?– •…Š‡†—Ž‡ǡ –‘–ƒŽ ’—„Ž‹… ƒÂ?† ’”‹˜ƒ–‡ ”‡’ƒ›Â?‡Â?– ‘„Ž‹‰ƒ–‹‘Â?• ”‡Â?ƒ‹Â? •‹‰Â?‹ˆ‹…ƒÂ?– ƒ– ƒ„‘—– ̈́ʹǤͷ „‹ŽŽ‹‘Â? ˆ‘” ʹͲͳʹǦͳͶ ‘” ƒ„‘—– Í· ’‡”…‡Â?– ‘ˆ  ’‡” ›‡ƒ”ǡ ƒÂ?† –‘–ƒŽ ‡š–‡”Â?ƒŽ †‡„– ”‡Â?ƒ‹Â?‡† ”‡Žƒ–‹˜‡Ž› Š‹‰Š ƒ– ͷͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǤͶ „”‘ƒ†‡” †‡–‡”‹‘”ƒ–‹‘Â? ‹Â? –Š‡ ‰Ž‘„ƒŽ ‡…‘Â?‘Â?‹… ‘—–Ž‘‘Â? …‘—Ž† Â?‡‰ƒ–‹˜‡Ž› ƒˆˆ‡…– ‡š’‘”–•ǡ Ç¡ ƒÂ?† ‘–Š‡” …ƒ’‹–ƒŽ ‹Â?ˆŽ‘™• –Šƒ– •—’’‘”– ‰”‘™–Š ‹Â? ‡‘”‰‹ƒǤ Â? –Š‹• …‘Â?–‡š–ǡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘˜‹†‡• –Š‡ Â?‡› ƒÂ?…Š‘” ‘ˆ •—•–ƒ‹Â?ƒ„‹Ž‹–› „› …”‡ƒ–‹Â?‰ ƒ††‹–‹‘Â?ƒŽ ˆ‹•…ƒŽ •’ƒ…‡ ˆ‘” ”‡’ƒ›Â?‡Â?–• ƒÂ?† ƒÂ?› Â?‡…‡••ƒ”› ”‡•’‘Â?•‡ –‘ ƒ ™‹†‡” ‰Ž‘„ƒŽ •Š‘…Â?Ǥ Š‡ ‘˜‡”Â?Â?‡Â?–ǯ• ‡Â? ‘‹Â?– –”ƒ–‡‰‹… ‡˜‡Ž‘’Â?‡Â?– ŽƒÂ? –ƒ”‰‡–• •—•–ƒ‹Â?‹Â?‰ ”ƒ’‹† ‰”‘™–Š ƒÂ?† ”‡†—…‹Â?‰ –Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– „› ʹͲͳͷǤ ‘™‡˜‡”ǡ Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰• ”‡Â?ƒ‹Â?• Ž‘™ ƒ– ͳͶ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ ƒÂ?† –Š‡ ”‡ƒŽ ‡š…ŠƒÂ?‰‡ ”ƒ–‡ ƒ’’”‡…‹ƒ–‡† „› ƒ„‘—– ͳͷ ’‡”…‡Â?– „‡–™‡‡Â? —Ž› ʹͲͳͲ ƒÂ?† ’”‹Ž ʹͲͳʹǡ –Š—• ’‘–‡Â?–‹ƒŽŽ› ‡”‘†‹Â?‰ –Š‡ …‘Â?’‡–‹–‹˜‡Â?॥ ‘ˆ –”ƒ†ƒ„Ž‡• –Šƒ– ‹• Ͷ š–‡”Â?ƒŽ ’—„Ž‹… †‡„– ”‡’ƒ›Â?‡Â?–• ƒ”‡ Ž‘™‡” ƒÂ?† –Š‡ ƒ—–Š‘”‹–‹‡• Šƒ˜‡ „—‹Ž– ˆ‹•…ƒŽ „—ˆˆ‡”• –‘ Š‡Ž’ Â?ƒÂ?ƒ‰‡ –Š‡•‡ ‘„Ž‹‰ƒ–‹‘Â?•Ǥ ˜‹‹‹ ‡••‡Â?–‹ƒŽ ˆ‘” ‰”‘™–ŠǤ Â? —’•‹†‡ ‰”‘™–Š •…‡Â?ƒ”‹‘ ™‹–Š Š‹‰Š‡” ƒÂ?† …ƒ’‹–ƒŽ ˆŽ‘™• ™‘—Ž† Ž‹Â?‡Ž› ‡šƒ…‡”„ƒ–‡ –Š‡•‡ ’”‡••—”‡•ǡ ™Š‹…Š …‘—Ž† „‡ …‘Â?–ƒ‹Â?‡† „› †‡‡’‡Â?‹Â?‰ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? „› •ƒ˜‹Â?‰ ’ƒ”– ‘ˆ –Š‡ ƒ††‹–‹‘Â?ƒŽ ”‡˜‡Â?—‡•ǡ –Š—• „”‹Â?‰‹Â?‰ ƒ„‘—– ƒÂ? ƒ……‡Ž‡”ƒ–‡† ”‡†—…–‹‘Â? ‹Â? –Š‡ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹–Ǥ ͺǤ Implementing further fiscal consolidation will require skillful management in balancing important infrastructure development and social expenditure needs. ‡‘”‰‹ƒ ˆƒ…‡• ‹Â?’‘”–ƒÂ?– ‹Â?ˆ”ƒ•–”—…–—”‡ †‡˜‡Ž‘’Â?‡Â?– ’”‹‘”‹–‹‡• ‹Â? –Š‡ ƒ”‡ƒ• ‘ˆ ”‘ƒ†•ǡ ™ƒ–‡”ǡ ƒÂ?† ”—”ƒŽ †‡˜‡Ž‘’Â?‡Â?– –‘ …ƒ–ƒŽ›œ‡ ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ƒÂ?† –‘ …”‡ƒ–‡ –Š‡ …‘Â?†‹–‹‘Â?• ˆ‘” •–”‘Â?‰ ‰”‘™–Š ‹Â? –Š‡ Ž‘Â?‰ ”—Â?Ǥ Â? ƒ††‹–‹‘Â?Ç¡ •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡ ’”‡••—”‡• ™‹ŽŽ „‡ •—„•–ƒÂ?–‹ƒŽ †—‡ –‘ –Š‡ ƒ‰‹Â?‰ ’‘’—Žƒ–‹‘Â?Ç¡ –Š‡ Â?‡‡† –‘ ‹Â?’”‘˜‡ ‘˜‡”ƒŽŽ Š‡ƒŽ–Š ‘—–…‘Â?‡•ǡ ƒÂ?† –Š‡ Â?‡‡† –‘ ‹Â?’”‘˜‡ …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ ’‘‘” ™Š‹Ž‡ —Â?‡Â?’Ž‘›Â?‡Â?– ”‡Â?ƒ‹Â?• Š‹‰ŠǤ Identifying and illustrating the implications of policy options to balance these competing priorities is the subject of this public expenditure review (PER) for Georgia. Â?’Ž‡Â?‡Â?–‹Â?‰ ˆ—”–Š‡” ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‹Â? ƒÂ? ‡Â?˜‹”‘Â?Â?‡Â?– ™‹–Š ’ƒ”Ž‹ƒÂ?‡Â?–ƒ”› ƒÂ?† ’”‡•‹†‡Â?–‹ƒŽ ‡Ž‡…–‹‘Â?• •…Š‡†—Ž‡† ˆ‘” ʹͲͳʹ ƒÂ?† ʹͲͳ͵ǡ ”‡•’‡…–‹˜‡Ž›ǡ ™‹ŽŽ ”‡“—‹”‡ ’ƒ”–‹…—Žƒ”Ž› …ƒ—–‹‘—• ƒÂ?† ’”ƒ‰Â?ƒ–‹… Â?ƒÂ?ƒ‰‡Â?‡Â?– ‘ˆ ’—„Ž‹… ‡š’‡Â?†‹–—”‡ ’”‹‘”‹–‹‡•Ǥ ͻǤ Fiscal stimulus in 2008Ǧ09 was associated with a substantial rebalancing of the composition of public expenditures. ‘…‹ƒŽ ‡š’‡Â?†‹–—”‡• ƒÂ?† ‹Â?ˆ”ƒ•–”—…–—”‡ ‹Â?˜‡•–Â?‡Â?– ™‡”‡ •…ƒŽ‡† —’ ĥ ’ƒ”– ‘ˆ –Š‡ ˆ‹•…ƒŽ •–‹Â?—Ž—• –‘ Â?‹–‹‰ƒ–‡ –Š‡ ‹Â?’ƒ…– ‘ˆ –Š‡ …”‹•‹• ƒÂ?† •—’’‘”– ‡…‘Â?‘Â?‹… ”‡…‘˜‡”›Ǥ Š‡ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ™ƒ• ”ƒ‹•‡† ˆ”‘Â?  ͵ͺ ’‡” Â?‘Â?–Š ‹Â? ʹͲͲ͹ –‘  ͹Ͳ ‹Â? ʹͲͲͻ ƒÂ?† …‘˜‡”ƒ‰‡ ƒÂ?† „‡Â?‡ˆ‹–• ™‡”‡ ƒŽ•‘ ”ƒ‹•‡† ˆ‘” –Š‡ –ƒ”‰‡–‡† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ È‹ ÈŒ ƒÂ?† Â?‡†‹…ƒŽ ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ?• È‹ ȌǤ —„Ž‹… ‹Â?˜‡•–Â?‡Â?– ™ƒ• •…ƒŽ‡† —’ ‹Â? ”‘ƒ†•ǡ Â?—Â?‹…‹’ƒŽ ‹Â?ˆ”ƒ•–”—…–—”‡ǡ ƒÂ?† Š‘—•‹Â?‰ ˆ‘” ‹Â?–‡”Â?ƒŽŽ› †‹•’Žƒ…‡† ’‡”•‘Â?• È‹ •ȌǤ ‹•…ƒŽ •’ƒ…‡ ˆ‘” –Š‡ •–‹Â?—Ž—• ‡š’‡Â?†‹–—”‡• ™ƒ• ‰‡Â?‡”ƒ–‡† –Š”‘—‰Š ƒ Â?ƒ”Â?‡† ”‡†—…–‹‘Â? ‹Â? †‡ˆ‡Â?•‡ǡ ‹Â?–‡”Â?ƒŽ •‡…—”‹–›ǡ ƒÂ?† ‘–Š‡” ”‡…—””‡Â?– ‡š’‡Â?†‹–—”‡•Ǥ —””‡Â?– ‡š’‡Â?†‹–—”‡ ‹Â?…”‡ƒ•‡† ˆ”‘Â? Í´Í· ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹ –‘ ͵Ͳ ’‡”…‡Â?– ‹Â? ʹͲͲͻǡ ™Š‹Ž‡ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ”‡Â?ƒ‹Â?‡† Š‹‰Š ƒ– ͺǤͷǦͻ ’‡”…‡Â?– ‘ˆ Ç¡ „—– ™ƒ• ƒ……‘Â?’ƒÂ?‹‡† „› ƒ •‹‰Â?‹ˆ‹…ƒÂ?– ”‡‘”‹‡Â?–ƒ–‹‘Â? ˆ”‘Â? †‡ˆ‡Â?•‡ ƒÂ?† ‹Â?–‡”Â?ƒŽ •‡…—”‹–› ‹Â?˜‡•–Â?‡Â?–• –‘™ƒ”† ”‘ƒ† ƒÂ?† Š‘—•‹Â?‰ ‹Â?˜‡•–Â?‡Â?–•Ǥ Š‡ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹– ‹Â?…”‡ƒ•‡† ˆ”‘Â? ͶǤ͹ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹ –‘ ͻǤʹ ’‡”…‡Â?– ‹Â? ʹͲͲͻ ƒÂ?† ™ƒ• ˆ‹Â?ƒÂ?…‡† ‹Â? Žƒ”‰‡ ’ƒ”– –Š”‘—‰Š Š‹‰Š‡” †‘Â?‘” ƒ••‹•–ƒÂ?…‡ ‘Â? …‘Â?…‡••‹‘Â?ƒŽ –‡”Â?•Ǥ Figure 3: Fiscal Framework Figure 4: Composition of Public Expenditures ȋ‹Â? ’‡”…‡Â?– ‘ˆ Ç¡ ʹͲͲ͹ǦͳͷȌ ȋ‹Â? ’‡”…‡Â?– ‘ˆ Ç¡ ʹͲͲ͹ǦͳͷȌ 40 38.4 35 34.9 35 30.1 32.1 30.9 30.3 30 29.7 29.0 30 29.3 25.0 28.3 28.5 25 23.3 27.4 27.3 27.1 26.9 25 21.8 25.4 24.7 24.7 24.7 24.7 24.4 23.5 20 20 15 15 9.2 9.0 10 10 8.4 8.9 6.6 7.2 3.6 3.5 3.0 2.7 5 2.0 5 0 2009 2010 2011 2012 2013 2014 2015 0 Current expenditure Capital Expenditures Total Expenditures Revenues & Grants Tax Revenues Overall fiscal deficit 2007 2008 2009 2010 2011 2012 2013 2014 2015 SourceÇ£ ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• ƒÂ?† ‘”Ž† ƒÂ?Â? •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͳͲǤ Fiscal adjustment in 2010Ǧ11 was associated with a further rebalancing of the composition of expenditures. • –Š‡ ‡…‘Â?‘Â?› ”‡„‘—Â?†‡† •–”‘Â?‰Ž› ‹Â? ʹͲͳͲǦͳͳǡ •‹‰Â?‹ˆ‹…ƒÂ?– ˆ‹•…ƒŽ ƒ†Œ—•–Â?‡Â?– ™ƒ• ‹Â?’Ž‡Â?‡Â?–‡† ’”‹Â?ƒ”‹Ž› –Š”‘—‰Š –Š‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‘ˆ …—””‡Â?– ‡š’‡Â?†‹–—”‡•ǡ ™‹–Š –Š‡ ‹š ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹– †‡…Ž‹Â?‹Â?‰ –‘ ͵Ǥ͸ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǤ —””‡Â?– ‡š’‡Â?†‹–—”‡• †‡…Ž‹Â?‡† ˆ”‘Â? ͵Ͳ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ –‘ ʹ͵Ǥ͵ ’‡”…‡Â?– ‹Â? ʹͲͳͳ ĥ †‡ˆ‡Â?•‡ǡ ‹Â?–‡”Â?ƒŽ •‡…—”‹–›ǡ ƒÂ?† ‰‡Â?‡”ƒŽ ĠÂ?‹Â?‹•–”ƒ–‹˜‡ ‡š’‡Â?†‹–—”‡• ™‡”‡ …‘Â?•‘Ž‹†ƒ–‡† ˆ—”–Š‡”Ǥ ‘…‹ƒŽ ‡š’‡Â?†‹–—”‡• ƒŽ•‘ ‡š’‡”‹‡Â?…‡† •‘Â?‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? †—”‹Â?‰ –Š‹• ’‡”‹‘†Ǥ Š‡ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ™ƒ• ”ƒ‹•‡† ˆ—”–Š‡” –‘  ͺͲ ‹Â? ʹͲͳͲ ƒÂ?†  ͳͲͲ ‹Â? ʹͲͳͳǡ ™Š‹Ž‡ •‘Â?‡ •ƒ˜‹Â?‰• ™‡”‡ ”‡ƒŽ‹œ‡† –Š”‘—‰Š ‹Â?’”‘˜‡† –ƒ”‰‡–‹Â?‰ ‘ˆ  ƒÂ?† ”‡Â?‡‰‘–‹ƒ–‹‘Â? ‘ˆ ’”‡Â?‹—Â?• ‘ˆ –Š‡  Ǥ ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ™‡”‡ Â?ƒ‹Â?–ƒ‹Â?‡† ƒ– ͺǤͷǦͻ ’‡”…‡Â?– ‘ˆ  ĥ ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ƒÂ?† ‹Â?ˆŽ‘™• ”‡Â?ƒ‹Â?‡† ™‡ƒÂ?Ǥ ‡™ ‹Â?˜‡•–Â?‡Â?–• ‹Â? ™ƒ–‡” ƒÂ?† ‡Â?‡”‰› –”ƒÂ?•Â?‹••‹‘Â? Šƒ˜‡ „‡‡Â? ƒ††‡† –‘ …‘Â?–‹Â?—‹Â?‰ ’”‹‘”‹–› ‹Â?˜‡•–Â?‡Â?–• ‹Â? ”‘ƒ†•ǡ  Š‘—•‹Â?‰ǡ ƒÂ?† ”‡‰‹‘Â?ƒŽ ƒÂ?† Â?—Â?‹…‹’ƒŽ ‹Â?ˆ”ƒ•–”—…–—”‡Ǥ Â? ʹͲͳͳǡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ƒŽ•‘ „‡Â?‡ˆ‹–‡† ˆ”‘Â? ƒÂ? ‹Â?…”‡ƒ•‡ ‹Â? –ƒš ”‡˜‡Â?—‡• ˆ”‘Â? ʹ͵Ǥͷ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͲ –‘ ʹͷǤͶ ’‡”…‡Â?– ‹Â? ʹͲͳͳǡ ™‹–Š ƒ„‘—– ŠƒŽˆ ‘ˆ –Š‡ ‹Â?…”‡ƒ•‡ †—‡ –‘ ‘Â?‡–‹Â?‡ …Ž‡ƒ”ƒÂ?…‡ ‘ˆ ƒ””‡ƒ”• „› ƒ …‘—’Ž‡ ‘ˆ •–ƒ–‡ ‘™Â?‡† ‡Â?–‡”’”‹•‡•Ǥ ͳͳǤ Continued implementation of the fiscal consolidation program going forward will have to rely on further expenditure consolidation. Š‡ ‘˜‡”Â?Â?‡Â?–ǯ• Â?‘•– ”‡…‡Â?–Ž› ƒ’’”‘˜‡† Â?‡†‹—Â? –‡”Â? ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â? ’”‘Œ‡…–• ƒ ”‡†—…–‹‘Â? ‹Â? –Š‡ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹– –‘ ʹǤͳ ’‡”…‡Â?– ‘ˆ  „› ʹͲͳͷ ˆ”‘Â? ͵Ǥ͸ ’‡”…‡Â?– ‹Â? ʹͲͳͳǤ ‘–ƒŽ ”‡˜‡Â?—‡• ƒ”‡ ’”‘Œ‡…–‡† –‘ †‡…Ž‹Â?‡ –‘ ʹ͸Ǥͻ ’‡”…‡Â?– ‘ˆ  „› ʹͲͳͷ ˆ”‘Â? ʹͺǤͷ ’‡”…‡Â?– ‹Â? ʹͲͳͳ †—‡ –‘ ƒ ™‹Â?†‹Â?‰ †‘™Â? ‘ˆ ‰”ƒÂ?–•ǡ Â?‘Â?Ǧ–ƒš ”‡˜‡Â?—‡•ǡ ƒÂ?† ‘Â?‡Ǧ‘ˆˆ –ƒš •‡––Ž‡Â?‡Â?–•Ǥ ‹˜‡Â? –ƒš ”ƒ–‡•ǡ …‘ŽŽ‡…–‹‘Â?• ƒ”‡ “—‹–‡ Š‹‰Š ‹Â? ‡‘”‰‹ƒ ƒÂ?† ‡š‡Â?’–‹‘Â?• ƒ”‡ ˆ‡™ǡ •‘ –Šƒ– –Š‡ ”‘‘Â? ˆ‘” ˆ—”–Š‡” ‹Â?…”‡ƒ•‹Â?‰ –Š‡ ’”‘†—…–‹˜‹–› ‘ˆ …‘ŽŽ‡…–‹‘Â?• ‹• Ž‹Â?‹–‡†Ǥ —”–Š‡”Â?‘”‡ǡ –Š‡ ƒ’’‡–‹–‡ ˆ‘” Š‹‰Š‡” –ƒš ”ƒ–‡• ‹• Ž‘™ ƒÂ?† ”‡•–”‹…–‡† •‘Â?‡™Šƒ– „› –Š‡ ’”‘˜‹•‹‘Â?• ‘ˆ –Š‡ …‘Â?‘Â?‹… ‹„‡”–› …–Ǥ š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? ™‹ŽŽǡ –Š‡”‡ˆ‘”‡ǡ Â?‡‡† –‘ Â?ƒÂ?‡ ƒ ‰”‡ƒ–‡” –ŠƒÂ? ‘Â?‡Ǧˆ‘”Ǧ‘Â?‡ …‘Â?–”‹„—–‹‘Â? –‘ –Š‡ ”‡†—…–‹‘Â? ‘ˆ –Š‡ ˆ‹•…ƒŽ †‡ˆ‹…‹– ‰‘‹Â?‰ ˆ‘”™ƒ”†ǡ ™‹–Š –Š‡ Â?‡†‹—Â? –‡”Â? ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â? ’”‘Œ‡…–‹Â?‰ ƒ †‡…Ž‹Â?‡ ‹Â? –‘–ƒŽ ‡š’‡Â?†‹–—”‡• ˆ”‘Â? ͵ʹǤͳ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ –‘ ʹͻǤͲ ’‡”…‡Â?– „› ʹͲͳͷǤ ͳʹǤ Capital expenditures can make a contribution to fiscal consolidation during 2012Ǧ15. • ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ”‡…‘˜‡”•ǡ –Š‡ ’”‡••—”‡• –‘ Â?ƒ‹Â?–ƒ‹Â? Š‹‰Š Ž‡˜‡Ž• ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– •Š‘—Ž† ƒ„ƒ–‡Ǥ Š‹• •Š‘—Ž† ‡Â?ƒ„Ž‡ •‘Â?‡ ™‹Â?†‹Â?‰ †‘™Â? ‘ˆ –Š‡ Š—Â?Â’ ‹Â? ’‘•–Ǧ…”‹•‹• …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡•Ǥ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ ‰‹˜‡Â? •‹‰Â?‹ˆ‹…ƒÂ?– ‹Â?ˆ”ƒ•–”—…–—”‡ †‡˜‡Ž‘’Â?‡Â?– Â?‡‡†•ǡ …‘Â?–ƒ‹Â?‹Â?‰ …—””‡Â?– ‡š’‡Â?†‹–—”‡ ’”‡••—”‡• ™‹ŽŽ ƒŽ•‘ „‡ ‹Â?’‘”–ƒÂ?–Ǥ Š‡ Â?‘•– ”‡…‡Â?–Ž› ƒ’’”‘˜‡† Â?‡†‹—Â? –‡”Â? ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â? ’”‘Œ‡…–• –Šƒ– …—””‡Â?– ƒÂ?† …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ™‹ŽŽ Â?ƒÂ?‡ •‹Â?‹Žƒ” …‘Â?–”‹„—–‹‘Â?• –‘ ƒ†Œ—•–Â?‡Â?– ‘˜‡” –Š‡ Â?‡š– –Š”‡‡ ›‡ƒ”•ǡ ™‹–Š …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• †‡…Ž‹Â?‹Â?‰ ˆ”‘Â? ͺǤͻ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ –‘ ͹Ǥʹ ’‡”…‡Â?– „› ʹͲͳͷ ƒÂ?† …—””‡Â?– ‡š’‡Â?†‹–—”‡• †‡…Ž‹Â?‹Â?‰ ˆ”‘Â? ʹ͵Ǥ͵ –‘ ʹͳǤͺ ’‡”…‡Â?– †—”‹Â?‰ –Š‹• ’‡”‹‘†Ǥ ͳ͵Ǥ Key options for further expenditure consolidation include greater selectivity in capital expenditures, containing mediumǦterm social expenditure pressures, and enhancing the sustainability of the road investment program. ƒ‹Â?–ƒ‹Â?‹Â?‰ ’‡Â?•‹‘Â? ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡• ˆ‘” ƒÂ? ƒ‰‹Â?‰ ’‘’—Žƒ–‹‘Â? ”‡’”‡•‡Â?–• –Š‡ Â?‡› •‘—”…‡ ‘ˆ ’”‡••—”‡ ‘Â? •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡• ƒÂ?† –Š‹• …ƒÂ? „‡ …‘Â?–ƒ‹Â?‡† „› …‘Â?„‹Â?‹Â?‰ Ž‹Â?‹–‡† ‰”‘™–Š ‘ˆ –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– ™‹–Š ‡š’Ž‘”‹Â?‰ Â?‡ƒ•—”‡• –‘ †‡˜‡Ž‘’ ’”‹˜ƒ–‡ •ƒ˜‹Â?‰• ˆ‘” ”‡–‹”‡Â?‡Â?–Ǥ Â? ƒ††‹–‹‘Â?Ç¡ ‹Â?’”‘˜‡† …‘˜‡”ƒ‰‡ ƒÂ?† –ƒ”‰‡–‹Â?‰ ‘ˆ –Š‡  ƒÂ?†   ’”‘‰”ƒÂ?• …ƒÂ? „‡ …‘Â?„‹Â?‡† ™‹–Š Â?‡ƒ•—”‡• –‘ …‘Â?Â?‡…–  ”‡…‹’‹‡Â?–• ™‹–Š ‡Â?’Ž‘›Â?‡Â?– ‘’’‘”–—Â?‹–‹‡• ƒÂ?† ‹Â?’”‘˜‡ ƒ……‡•• –‘ ’Šƒ”Â?ƒ…‡—–‹…ƒŽ• ƒÂ?† ’”‡˜‡Â?–ƒ–‹˜‡ –”‡ƒ–Â?‡Â?–• ˆ‘” –Š‡ ’‘’—Žƒ–‹‘Â?Ǥ ’–‹‘Â?• ˆ‘” ‹Â?•–‹ŽŽ‹Â?‰ ‰”‡ƒ–‡” •‡Ž‡…–‹˜‹–› ‹Â? …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ‹Â?…Ž—†‡ ˆ—”–Š‡” ‹Â?’”‘˜‹Â?‰ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ‹Â?…Ž—†‹Â?‰ ƒ …‘Â?•‹•–‡Â?– ƒÂ?† …‘Â?’”‡Š‡Â?•‹˜‡ ’”‡•‡Â?–ƒ–‹‘Â? ‘ˆ ’—„Ž‹… ˆ—Â?†‹Â?‰ ˆ‘” ‹Â?˜‡•–Â?‡Â?–ǡ ĥ ™‡ŽŽ ĥ •–”‡Â?‰–Š‡Â?‹Â?‰ –Š‡ „”‘ƒ†‡” …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?•ǡ ‹Â?…Ž—†‹Â?‰ •›•–‡Â?ƒ–‹œ‹Â?‰ –Š‡ ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ’”‘…‡•• ƒÂ?† †‡˜‡Ž‘’‹Â?‰ Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†ƒÂ?…‡ ˆ‘” …‘•–Ǧ „‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹•Ǥ ’–‹‘Â?• –‘ ‡Â?ŠƒÂ?…‡ •—•–ƒ‹Â?ƒ„‹Ž‹–› ‘ˆ –Š‡ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? ‹Â?…Ž—†‡ ƒ ’Šƒ•‡†Ǧ‹Â? ”‡„ƒŽƒÂ?…‹Â?‰ ‘ˆ ”‘ƒ† ‡š’‡Â?†‹–—”‡• –‘™ƒ”† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒÂ?† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ĥ ‹Â?˜‡•–Â?‡Â?– ‹Â? –Š‡ Â?ƒ‹Â? ƒ•–Ǧ‡•– Š‹‰Š™ƒ› ™‹Â?†• †‘™Â?Ç¡ ƒŽ‘Â?‰ ™‹–Š ‹Â?•–‹–—–‹‘Â?ƒŽ Â?‡ƒ•—”‡• –‘ ‡Â?ŠƒÂ?…‡ –Š‡ ‡ˆˆ‹…‹‡Â?…› ‘ˆ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?–•Ǥ š Social Expenditures ͳͶǤ Georgia’s oldǦage pension benefit has a large povertyǦmitigating impact, but maintaining replacement rates for all recipients will entail higher fiscal costs over time given demographic trends. ‡‘”‰‹ƒǯ• ’‘’—Žƒ–‹‘Â? ‹• ƒ‰‹Â?‰ ƒÂ?† ”‡Ž‹‡• Â?‘•–Ž› ‘Â? –Š‡ ’—„Ž‹…Ž› ˆ—Â?†‡† „ƒ•‹… „‡Â?‡ˆ‹– ˆ‘” ‘Ž†Ǧƒ‰‡ ‹Â?…‘Â?‡Ǥ Š‹• •‹–—ƒ–‹‘Â? ’”‡•‡Â?–• ƒ –”ƒ†‡Ǧ‘ˆˆǣ ‡‹–Š‡” –Š‡ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ‘ˆ –Š‡ „ƒ•‹… ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ™‹ŽŽ ‡”‘†‡ ‘” ‹–• ˆ‹•…ƒŽ …‘•–• ™‹ŽŽ ”‹•‡ •‹‰Â?‹ˆ‹…ƒÂ?–Ž› ‘˜‡” –‹Â?‡Ǥ Š‡ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ‹Â? ‡‘”‰‹ƒ ‹• ƒ ˆŽƒ– „‡Â?‡ˆ‹– ’ƒ‹† ‘—– ‘ˆ ‰‡Â?‡”ƒŽ ”‡˜‡Â?—‡• –‘ ƒŽŽ Â?‡Â? ͸ͷ ›‡ƒ”• ‘ˆ ƒ‰‡ ‘” ‘Ž†‡” ƒÂ?† ƒŽŽ ™‘Â?‡Â? ͸Ͳ ›‡ƒ”• ‘ˆ ƒ‰‡ ‘” ‘Ž†‡”ǡ ™‹–Š ’‡Â?•‹‘Â? ‡š’‡Â?†‹–—”‡• ƒÂ?‘—Â?–‹Â?‰ –‘ ͵Ǥ͵ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǤ Š‡ ’‡Â?•‹‘Â? ’”‘‰”ƒÂ? ’Žƒ›• ƒ Â?ƒŒ‘” ”‘Ž‡ ‹Â? ”‡†—…‹Â?‰ –Š‡ ‹Â?…‹†‡Â?…‡ ‘ˆ ’‘˜‡”–› ‹Â? ‡‘”‰‹ƒǡ ™‹–Š •‹Â?—Žƒ–‹‘Â?• ‹Â?†‹…ƒ–‹Â?‰ –Šƒ– –Š‡ ’‘˜‡”–› Š‡ƒ†…‘—Â?– ‹Â? ʹͲͲͻ ™‘—Ž† Šƒ˜‡ „‡‡Â? ͵ͺǤͳ ’‡”…‡Â?– ‹Â?•–‡ƒ† ‘ˆ ʹͷǤ͹ ’‡”…‡Â?– ™‹–Š‘—– –Š‡ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹–Ǥ Š‹Ž‡ –Š‡ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ‹• —Â?Ǧ‹Â?†‡š‡†ǡ ‹– Šƒ• ’‡”‹‘†‹…ƒŽŽ› „‡‡Â? ‹Â?…”‡ƒ•‡†ǡ ™‹–Š –Š‡ ‡ˆˆ‡…– –Šƒ– –Š‡ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ Šƒ• ‡ˆˆ‡…–‹˜‡Ž› „‡‡Â? Â?ƒ‹Â?–ƒ‹Â?‡† ƒ– ƒ„‘—– ͳ͵ ’‡”…‡Â?– ‘ˆ –Š‡ ƒ˜‡”ƒ‰‡ ”‡ƒŽ ™ƒ‰‡Ǥ —„Ž‹… ‡š’‡…–ƒ–‹‘Â?• Â?ƒÂ?‡ ‹– †‹ˆˆ‹…—Ž– –‘ ƒŽŽ‘™ –Š‡ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ –‘ ‡”‘†‡ …‘Â?•‹†‡”ƒ„Ž› ‘˜‡” –‹Â?‡Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ ƒ Žƒ”‰‡ ‘Â?‡Ǧ–‹Â?‡ Œ—Â?Â’ ‹Â? –Š‡ „‡Â?‡ˆ‹– …‘—Ž† •‡”˜‡ –‘ ”ƒ‹•‡ ’—„Ž‹… ‡š’‡…–ƒ–‹‘Â?• ˆ‘” ƒ Š‹‰Š‡” ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡Ǥ ‹‰—”‡ ͸ •Š‘™• –Šƒ– ƒ Žƒ”‰‡ ‘Â?‡Ǧ–‹Â?‡ ‹Â?…”‡ƒ•‡ǡ ˆ‘ŽŽ‘™‡† „› ’‡”‹‘†‹… ‹Â?…”‡ƒ•‡• –‘ Â?ƒ‹Â?–ƒ‹Â? –Š‡ Š‹‰Š‡” ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ǡ …‘—Ž† ‹Â?…”‡ƒ•‡ –Š‡ ˆ‹•…ƒŽ …‘•– ‘ˆ ’‡Â?•‹‘Â?• –‘ ‘˜‡” ͹ ’‡”…‡Â?– ‘ˆ  ‹Â? –Š‡ Â?‡†‹—Â? –‡”Â?Ǥ Â? ƒŽŽ •…‡Â?ƒ”‹‘• ™Š‡”‡ –Š‡ „‡Â?‡ˆ‹– ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ‹• Š‡Ž† …‘Â?•–ƒÂ?–ǡ –Š‡ ˆ‹•…ƒŽ …‘•– ”‹•‡• ‘˜‡” –‹Â?‡ „‡…ƒ—•‡ ‘ˆ †‡Â?‘‰”ƒ’Š‹… ’”‡••—”‡• ‘ˆ ƒÂ? ƒ‰‹Â?‰ ’‘’—Žƒ–‹‘Â?Ǥ Figure 5: Dependency Ratios in Georgia Figure 6: Pension Costs with Constant ȋ‹Â? †‡’‡Â?†‡Â?–• ’‡” ͳͲͲ ’‡”•‘Â?• ‘ˆ ™‘”Â?‹Â?‰ ƒ‰‡Ȍ Replacement Rate ȋ‹Â? ’‡”…‡Â?– ‘ˆ ÈŒ 70 10% Dependents / 100 persons of working age 9% 60 8% Pension spending as share of GDP 50 7% 6% 40 5% 30 4% GEL 100 for all 3% GEL 100 + GEL 125 if 67+ 20 Raise female retirement under Scenario 2 2% GEL 100 + GEL 125 if score<100k 10 1% GEL 165 for all from Sept. 2012 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 0% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Total dependency ratio Child dependency ratio OldͲage dependency ratio Source:  ƒÂ?† ‘”Ž† ƒÂ?Â? •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͳͷǤ Options to manage the pension tradeǦoff include a combination of setting expectations for the replacement rate at affordable levels and exploring measures to develop voluntary savings for retirement to ease pressure on the basic benefit. Â? –Š‡ •Š‘”– –‡”Â?Ç¡ ƒ Žƒ”‰‡ ‘Â?‡Ǧ–‹Â?‡ Œ—Â?Â’ ‹Â? –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– Ž‡ƒ†• –‘ ƒ Œ—Â?Â’ ‹Â? ˆ‹•…ƒŽ …‘•–• –Šƒ– …ƒÂ? „‡ …‘Â?–ƒ‹Â?‡† „› •‡Ž‡…–‹˜‡Ž› –ƒ”‰‡–‹Â?‰ –Š‡ Š‹‰Š‡” „‡Â?‡ˆ‹–ǡ ĥ ™ƒ• †‘Â?‡ †—”‹Â?‰ –Š‡ „‡Â?‡ˆ‹– ‹Â?…”‡ƒ•‡ –Šƒ– –‘‘Â? ‡ˆˆ‡…– ‹Â? ‡’–‡Â?„‡” ʹͲͳʹǤ Â? ƒ††‹–‹‘Â?Ç¡ ƒ Â?‡…ŠƒÂ?‹•Â? –‘ Ž‹Â?‹– Â?‡†‹—Â? –‡”Â? ‰”‘™–Š ‘ˆ –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– –‘ Â?‘ Â?‘”‡ –ŠƒÂ? –Š‡ ”ƒ–‡ ‘ˆ ‹Â?ˆŽƒ–‹‘Â? …‘—Ž† Š‡Ž’ –‘ •‡– ‡š’‡…–ƒ–‹‘Â?• ƒ– ƒˆˆ‘”†ƒ„Ž‡ Ž‡˜‡Ž•ǡ ™Š‹Ž‡ ƒŽ•‘ ’”‘–‡…–‹Â?‰ –Š‡ ’—”…Šƒ•‹Â?‰ ’‘™‡” ‘ˆ –Š‡ „‡Â?‡ˆ‹–Ǥͷ —”–Š‡”Â?‘”‡ǡ Â?‡ƒ•—”‡• –‘ ‡Â?…‘—”ƒ‰‡ ’”‹˜ƒ–‡ Í·Š‡ ‘’–‹‘Â? —Â?†‡” …‘Â?•‹†‡”ƒ–‹‘Â? ‹• ƒ Â?‡…ŠƒÂ?‹•Â? –‘ Ž‹Â?‹– ‰”‘™–Š ‘ˆ –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– over the medium term –‘ Â?‘ Â?‘”‡ –ŠƒÂ? –Š‡ ”ƒ–‡ ‘ˆ ‹Â?ˆŽƒ–‹‘Â?Ç¡ ”ƒ–Š‡” –ŠƒÂ? ‡š’Ž‹…‹– ‹Â?†‡šƒ–‹‘Â? ‘ˆ –Š‡ „‡Â?‡ˆ‹–Ǥ Š‡ ƒ—–Š‘”‹–‹‡• …‘Â?•‹†‡” –Šƒ– š‹ •ƒ˜‹Â?‰• ˆ‘” ”‡–‹”‡Â?‡Â?– …ƒÂ? ‡ƒ•‡ ’”‡••—”‡ ˆ‘” Ġ Š‘… ƒÂ?† —Â?•—•–ƒ‹Â?ƒ„Ž‡ ‹Â?…”‡ƒ•‡• ‹Â? –Š‡ „ƒ•‹… ’—„Ž‹… „‡Â?‡ˆ‹–Ǥ ‹Â?—Žƒ–‹‘Â?• •—‰‰‡•– –Šƒ– …‘Â?„‹Â?‹Â?‰ ƒ „ƒ•‹… ’‡Â?•‹‘Â? ‰”‘™‹Â?‰ ƒ– ƒÂ? ƒˆˆ‘”†ƒ„Ž‡ ”ƒ–‡ ™‹–Š ƒ •—’’Ž‡Â?‡Â?–ƒ”› ’”‹˜ƒ–‡ ’‡Â?•‹‘Â? †‡”‹˜‡† ˆ”‘Â? ˜‘Ž—Â?–ƒ”› •ƒ˜‹Â?‰• …‘—Ž† •–ƒ„‹Ž‹œ‡ –Š‡ ‘˜‡”ƒŽŽ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ˆ‘” ‘Ž†Ǧƒ‰‡ ‹Â?…‘Â?‡ ‘˜‡” –‹Â?‡Ǥ ͳ͸Ǥ The TSA program supports consumption among poor households, but coverage of the poor can improve further and “second generationâ€? reforms can help link TSA recipients with job opportunities.  „‡Â?‡ˆ‹…‹ƒ”› Š‘—•‡Š‘Ž†• ™Š‹…Š Â?‡‡– –Š‡ …”‹–‡”‹ƒ ‘ˆ ƒ ’”‘š›ǦÂ?‡ƒÂ?• –‡•–‹Â?‰ ˆ‘”Â?—Žƒ ”‡…‡‹˜‡  ͵Ͳ Â?‘Â?–ŠŽ› ĥ ƒ „ƒ•‡ „‡Â?‡ˆ‹– ’Ž—•  ʹͶ ˆ‘” ‡ƒ…Š ƒ††‹–‹‘Â?ƒŽ Š‘—•‡Š‘Ž† Â?‡Â?„‡”Ǥ Â? ʹͲͳͳǡ ƒ”‘—Â?† ͶͳͷǡͲͲͲ ‹Â?†‹˜‹†—ƒŽ• ȋ‘” ͳͲ ’‡”…‡Â?– ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â?ÈŒ ”‡…‡‹˜‡†  ˆ‘” ƒ –‘–ƒŽ „—†‰‡– ‘ˆ ƒ„‘—–  ͳͷͲ Â?‹ŽŽ‹‘Â? ȋ‘” ͲǤ͹ ’‡”…‡Â?– ‘ˆ ȌǤ ‹Â?—Žƒ–‹‘Â?• ‹Â?†‹…ƒ–‡ –Šƒ– –Š‡ ’‘˜‡”–› Š‡ƒ†…‘—Â?– ™‘—Ž† Šƒ˜‡ „‡‡Â? Í´ ’‡”…‡Â?–ƒ‰‡ ’‘‹Â?–• Š‹‰Š‡” ‹Â? ʹͲͲͻ ™‹–Š‘—–  Ǥ ‘Â?’ƒ”‡† –‘ ‘–Š‡” •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ’”‘‰”ƒÂ?• ‹Â? –Š‡ ”‡‰‹‘Â?Ç¡ ‡‘”‰‹ƒǯ•  ‹• ƒÂ? ƒ˜‡”ƒ‰‡ ’‡”ˆ‘”Â?‡” ™‹–Š ”‡•’‡…– –‘ –ƒ”‰‡–‹Â?‰ ƒÂ?† ƒ„‘˜‡ ƒ˜‡”ƒ‰‡ ‹Â? –‡”Â?• ‘ˆ …‘˜‡”ƒ‰‡Ǥ –‹ŽŽǡ ‘˜‡” ͶͲ ’‡”…‡Â?– ‘ˆ –Š‡ „‘––‘Â? †‡…‹Ž‡ †‘‡• Â?‘– ”‡…‡‹˜‡  Ç¡ ƒÂ?† –Š—• ˆ—”–Š‡” ‡š’ƒÂ?†‹Â?‰ …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ „‘––‘Â? †‡…‹Ž‡ ”‡Â?ƒ‹Â?• ƒ Â?‡› …ŠƒŽŽ‡Â?‰‡Ǥ Â?‘–Š‡” ’‘–‡Â?–‹ƒŽ ’”‹‘”‹–› ‰‘‹Â?‰ ˆ‘”™ƒ”† ‹• –‘ „‡––‡” Ž‹Â?Â?  ”‡…‹’‹‡Â?–• ™‹–Š Œ‘„ ‘’’‘”–—Â?‹–‹‡• ƒÂ?† Š—Â?ƒÂ? …ƒ’‹–ƒŽ ‹Â?˜‡•–Â?‡Â?–• Â?‘”‡ „”‘ƒ†Ž›Ǥ Ž–Š‘—‰Š –Š‡”‡ ‹• Ž‹––Ž‡ ‡˜‹†‡Â?…‡ –Šƒ–  †‹•…‘—”ƒ‰‡• „‡Â?‡ˆ‹…‹ƒ”‹‡• ˆ”‘Â? •‡‡Â?‹Â?‰ ™‘”Â?Ç¡ Â?‡‹–Š‡” †‘‡• ‹– ƒ…–‹˜‡Ž› Š‡Ž’ –Š‡Â? ˆ‹Â?† ‡Â?’Ž‘›Â?‡Â?–Ǥ Figure 7: Coverage of MIP Figure 8: Govt and OOP Health Spending in ECA ȋ‹Â? ’‡”…‡Â?– ‘ˆ ‡ƒ…Š †‡…‹Ž‡ ”‡…‡‹˜‹Â?‰  ÈŒ ȋ‹Â? •Šƒ”‡ ‘ˆ –‘–ƒŽ ƒÂ?† ’‡”…‡Â?– ‘ˆ ÈŒ 50 80 45 Georgia 70 Out of pocket spending as share of total 40 60 35 50 30 25 40 2009 20 30 2011 15 20 10 10 5 0 0 1 2 3 4 5 6 7 8 9 10 0 2 4 6 8 10 Decile Government health spending as % of GDP Source: WHO and HUES SourceÇ£  Ǥ SourceÇ£   ƒÂ?†  Ǥ ͳ͹Ǥ Health spending in Georgia is better targeted to the poor than in many other countries, but challenges remain in improving health outcomes and financial protection against impoverishing outǦofǦpocket payments. Š‡ ‡†‹…ƒŽ Â?•—”ƒÂ?…‡ ”‘‰”ƒÂ?Ç¡ ™Š‹…Š ‘ˆˆ‡”• ƒ …‘Â?’”‡Š‡Â?•‹˜‡ ’ƒ…Â?ƒ‰‡ ‘ˆ Š‡ƒŽ–Š „‡Â?‡ˆ‹–• –‘ ’‘‘” Š‘—•‡Š‘Ž†• Â?‡‡–‹Â?‰ –Š‡ ’”‘š›ǦÂ?‡ƒÂ?• –‡•– …”‹–‡”‹ƒǡ ‹• ”‡…‡‹˜‡† „› ƒ„‘—– ͻͲͲǡͲͲͲ ‹Â?†‹˜‹†—ƒŽ• ȋʹͲ ’‡”…‡Â?– ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â?ȌǤ Š‡   „—†‰‡– ƒ……‘—Â?–• ˆ‘” ƒ„‘—– ƒ ŠƒŽˆ ‘ˆ ’—„Ž‹… Š‡ƒŽ–Š ‡š’‡Â?†‹–—”‡• ƒÂ?† ‹• –Š‡ ”‡ƒ•‘Â? ™Š› ‡‘”‰‹ƒǯ• Š‡ƒŽ–Š •’‡Â?†‹Â?‰ ‹• „‡––‡” –ƒ”‰‡–‡† –‘ –Š‡ ’‘‘” –ŠƒÂ? ‹Â? Â?ƒÂ?› ‘–Š‡” …‘—Â?–”‹‡•Ǥ   ƒŽ•‘ Šƒ• ƒ Â?ƒŒ‘” ‹Â?’ƒ…– ‹Â? ”‡†—…‹Â?‰ ‘—–Ǧ‘ˆǦ’‘…Â?‡– •’‡Â?†‹Â?‰ ƒÂ?‘Â?‰ „‡Â?‡ˆ‹…‹ƒ”‹‡•Ǥ Â? –‡”Â?• ‘ˆ Â?‡› Š‡ƒŽ–Š •‡…–‘” ‘„Œ‡…–‹˜‡•ǡ Š‘™‡˜‡”ǡ Š‡ƒŽ–Š ‘—–…‘Â?‡• ƒŽ‘Â?‰ •‡˜‡”ƒŽ †‹Â?‡Â?•‹‘Â?• Šƒ˜‡ •‡‡Â? Ž‹Â?‹–‡† ‹Â?’”‘˜‡Â?‡Â?–Ǥ ‡› ‹Â?†‹…ƒ–‘”• ‘ˆ ˆ‹Â?ƒÂ?…‹ƒŽ ’”‘–‡…–‹‘Â? ƒ‰ƒ‹Â?•– ‹Â?’‘˜‡”‹•Š‹Â?‰ ‘—– ‘ˆ ’‘…Â?‡– ’ƒ›Â?‡Â?–• ƒŽ•‘ ”‡Â?ƒ‹Â? ”‡Žƒ–‹˜‡Ž› ™‡ƒÂ? ‹Â? …‘Â?’ƒ”‹•‘Â? –‘ ’‡‡” …‘—Â?–”‹‡•ǡ ™‹–Š Ž‘™ ’—„Ž‹… Š‡ƒŽ–Š •’‡Â?†‹Â?‰ ƒÂ?† Š‹‰Š ’”‹˜ƒ–‡ •’‡Â?†‹Â?‰ ‘Â? ’Šƒ”Â?ƒ…‡—–‹…ƒŽ• ƒÂ?‘Â?‰ –Š‡ Â?‡› …ƒ—•‡• ‘ˆ –Š‹• ’ƒ––‡”Â?Ǥ ††”‡••‹Â?‰ –Š‡•‡ …ŠƒŽŽ‡Â?‰‡• ™‹ŽŽ ”‡“—‹”‡ ”ƒ‹•‹Â?‰ …‘˜‡”ƒ‰‡ ƒÂ?† —–‹Ž‹œƒ–‹‘Â? ‘ˆ Â?‡†‹…ƒŽ …ƒ”‡Ǥ Â? •’‹–‡ ‘ˆ –Š‡ •—……‡•• ‘ˆ –Š‡  Ç¡ ‡š’Ž‹…‹– ‹Â?†‡šƒ–‹‘Â? ™‘—Ž† ”‡†—…‡ –Š‡ ˆŽ‡š‹„‹Ž‹–› ‘ˆ –Š‡ ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â? „› •—„Œ‡…–‹Â?‰ ƒ Žƒ”‰‡ ’ƒ”– ‘ˆ •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡• –‘ •Š‘”–Ǧ–‡”Â? •™‹Â?‰• ‹Â? –Š‡ ”ƒ–‡ ‘ˆ ‹Â?ˆŽƒ–‹‘Â? –Šƒ– …ƒÂ? „‡ ƒˆˆ‡…–‡† „› ƒ Š‘•– ‘ˆ ‡š‘‰‡Â?‘—• ˆƒ…–‘”•Ǥ š‹‹ Â?ƒÂ?› Ž‘™Ǧ‹Â?…‘Â?‡ Š‘—•‡Š‘Ž†• •–‹ŽŽ †‘ Â?‘– Šƒ˜‡ ƒ†‡“—ƒ–‡ …‘˜‡”ƒ‰‡ ‘ˆ Š‡ƒŽ–Š …ƒ”‡Ǥ Â? –Š‹• …‘Â?–‡š–ǡ –Š‡ ’ŽƒÂ?Â?‡† ‡š–‡Â?•‹‘Â? ‘ˆ ‹Â?•—”ƒÂ?…‡ „‡Â?‡ˆ‹–• –‘ –Š‡ ‡Ž†‡”Ž› ’‘’—Žƒ–‹‘Â? ‹Â? ʹͲͳʹ ‹• ƒ ™‡Ž…‘Â?‡ •–‡’ ˆ‘”™ƒ”† ƒÂ?† …ƒÂ? „‡ ˆ‘ŽŽ‘™‡† —’ „› ‡š’ƒÂ?†‡† …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ •–‹ŽŽ —Â?…‘˜‡”‡† ’‘‘” Š‘—•‡Š‘Ž†•Ǥ ƒ”– ‘ˆ –Š‡ ’”‘„Ž‡Â? ‘ˆ ‡š…‡••‹˜‡ ’”‹˜ƒ–‡ •’‡Â?†‹Â?‰ ‘Â? †”—‰• …ƒÂ? „‡ ƒ††”‡••‡† „› ’”‘Â?‘–‹Â?‰ –Š‡ —•‡ ‘ˆ ‰‡Â?‡”‹…•ǡ „—– ‹– ™‹ŽŽ ƒŽ•‘ ”‡“—‹”‡ ”‡†—…‹Â?‰ •‡ŽˆǦ–”‡ƒ–Â?‡Â?– „› ‹Â?…”‡ƒ•‹Â?‰ —–‹Ž‹œƒ–‹‘Â? ƒÂ?† ‡š–‡Â?†‹Â?‰ –Š‡ ’—„Ž‹… †”—‰ „‡Â?‡ˆ‹– –‘ –ƒÂ?‡ ƒ†˜ƒÂ?–ƒ‰‡ ‘ˆ ’—„Ž‹… ’—”…Šƒ•‹Â?‰ ’‘™‡” –‘ ”‡†—…‡ †”—‰ ’”‹…‡ Â?ƒ”Â?—’•Ǥ ††”‡••‹Â?‰ ™‡ƒÂ?Â?‡••‡• ‹Â? –Š‡ •—’’Ž› ‘ˆ Â?‡†‹…ƒŽ …ƒ”‡ǡ ™‹–Š ƒ ˆ‘…—• ‘Â? ’”‹Â?ƒ”› ƒÂ?† ’”‡˜‡Â?–ƒ–‹˜‡ …ƒ”‡ǡ ‹• ƒÂ?‘–Š‡” ‹Â?’‘”–ƒÂ?– ’”‹‘”‹–› ‹Â? ƒ††”‡••‹Â?‰ ‡‘”‰‹ƒǯ• Š‡ƒŽ–Š •‡…–‘” …ŠƒŽŽ‡Â?‰‡•Ǥ Table 2: Strengthening Capital Budgeting: International Practice in Identification, Preparation, and Appraisal Dimension Chile South Korea Ireland United Kingdom Coverage of PIM —„Ž‹… ‹Â?˜‡•–Â?‡Â?– ’”‘Œ‡…–• ‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?– ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?– System ƒ– ƒŽŽ Ž‡˜‡Ž• ‘ˆ ‰‘˜‡”Â?Â?‡Â?– ’”‘Œ‡…–• ƒÂ?† –‘ Ž‘…ƒŽ ’”‘’‘•ƒŽ• ‹Â? –Š‡ ‘Â?Ž› ƒÂ?† –‘ ‹Â?˜‡•–Â?‡Â?– ‰‘˜‡”Â?Â?‡Â?– ’”‘Œ‡…–• ’—„Ž‹… •‡…–‘” ’”‘’‘•ƒŽ• ˆ”‘Â? •–ƒ–‡ ”‡…‡‹˜‹Â?‰ …‡Â?–”ƒŽ ‡Â?–‡”’”‹•‡• ‰‘˜‡”Â?Â?‡Â?– •—„•‹†‹‡• Prominent assessment È€ ƒÂ?†  ‹Â?‰Ž‡ ”‹–‡”‹‘Â? È€ ƒÂ?†  tools Â?ƒŽ›•‹•ǡ  ƒÂ?† È€ Proportionality in ‘ ‡• ‡• ‘ application of tools. Requirement for ‡• ‡• È‚ ˆ‘” ’”‘Œ‡…–• ε̈́ͷͲ ‡• ‡• preliminary Â? assessment before commencing preparation Project screening by ‡• È‚ „—– †‡Ǧ…‘Â?…‡Â?–”ƒ–‡† ‡• Ǧ ‘ Â?Ž› ˆ‘” ˜‡”› Žƒ”‰‡ central agency •–”—…–—”‡ ‘ˆ ƒ—–‘Â?‘Â?‘—• ’”‘Œ‡…–•ǡ ‡Ǥ‰Ǥǡ ”‘ƒ† ’”‘˜‹Â?…‹ƒŽ ‘ˆˆ‹…‡• •…Š‡Â?‡• ε͉ͷͲͲ Â?‹ŽŽ‹‘Â? Project selection ‡• ‡• ‡• ‡• delegated to sector spending agencies Ǧ within budget ceilings Involvement of central ‡• È‚ ‹Â?‹•–”› ‘ˆ ŽƒÂ?Â?‹Â?‰ ‡• È‚   ‘”‰ƒÂ?‹•‡• ‘ ‘ agencies other than ”‡•’‘Â?•‹„Ž‡ ˆ‘” ’”‡Ǧ ’”‡Ž‹Â?‹Â?ƒ”› ˆ‡ƒ•‹„‹Ž‹–› the finance ministry ‹Â?˜‡•–Â?‡Â?– ’Šƒ•‡ •–—†‹‡• ˆ‘” ‹Â?‹•–”› ‘ˆ ŽƒÂ?Â?‹Â?‰ ƒÂ?† —†‰‡–Ǥ Central agencies issue ‡• Ȃ•‡…–‘” •’‡…‹ˆ‹… ‡• È‚ •‡…–‘” •’‡…‹ˆ‹… ‡• È‚ ‰‡Â?‡”ƒŽ ‡• È‚ ‰‡Â?‡”ƒŽ ‰—‹†‡Ž‹Â?‡• guidelines on project ‰—‹†‡Ž‹Â?‡• ‰—‹†‡Ž‹Â?‡• ‰—‹†‡Ž‹Â?‡• planning SourceÇ£   ƒ…Â?‰”‘—Â?† ‘–‡ ‘Â? –”‡Â?‰–Š‡Â?‹Â?‰ ƒ’‹–ƒŽ —†‰‡–‹Â?‰ ‹Â? ‡‘”‰‹ƒ ‘–‡ǣ È‚ …‘•– „‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹•Ǣ È‚ …‘•– ‡ˆˆ‡…–‹˜‡Â?॥ ƒÂ?ƒŽ›•‹• Strengthening Capital Budgeting ͳͺǤ Public investment consolidation going forward will require bringing capital budgeting systems in Georgia closer to international best practices. • Â?‘–‡†ǡ ƒ Â?‡› …ŠƒŽŽ‡Â?‰‡ ˆƒ…‡† „› ‡‘”‰‹ƒ ‹• –Šƒ– ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– …‘Â?•‘Ž‹†ƒ–‹‘Â? ™‹ŽŽ Šƒ˜‡ –‘ Â?ƒÂ?‡ ƒÂ? ‹Â?’‘”–ƒÂ?– …‘Â?–”‹„—–‹‘Â? –‘ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? †—”‹Â?‰ ʹͲͳʹǦʹͲͳͷ ™Š‹Ž‡ ƒ– –Š‡ •ƒÂ?‡ –‹Â?‡ ƒ††”‡••‹Â?‰ Â?‡› ‹Â?ˆ”ƒ•–”—…–—”‡ †‡˜‡Ž‘’Â?‡Â?– Â?‡‡†•Ǥ Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‡š’‡”‹‡Â?…‡ Šƒ• •Š‘™Â? –Šƒ– •–”‡Â?‰–Š‡Â?‹Â?‰ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?• …ƒÂ? •‡”˜‡ ĥ ƒ Â?‡› ‹Â?•–”—Â?‡Â?– –‘™ƒ”† ƒ…Š‹‡˜‹Â?‰ ‰”‡ƒ–‡” •‡Ž‡…–‹˜‹–› ƒÂ?† ‹Â?’”‘˜‡† ‡ˆˆ‹…‹‡Â?…› ‹Â? …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡•Ǥ ”‘‰”‡•• –‘ †ƒ–‡ǡ •—’’‘”–‡† „› –Š‡ ‘”Ž† ƒÂ?Â?ǯ• ‡˜‡Ž‘’Â?‡Â?– ‘Ž‹…› ’‡”ƒ–‹‘Â? È‹ ÈŒ •‡”‹‡•ǡ Žƒ”‰‡Ž› ˆ‘…—•‡† ‘Â? ‹Â?’”‘˜‡† ’”‡•‡Â?–ƒ–‹‘Â? ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡–Ǥ Š‡•‡ ”‡ˆ‘”Â?• ‹Â?…Ž—†‡ •—„Â?‹••‹‘Â? ‘ˆ ƒ …ƒ’‹–ƒŽ „—†‰‡– ĥ ƒ …‘Â?•‹•–‡Â?– ƒÂ?Â?‡š –‘ –Š‡ š‹‹‹ ƒÂ?Â?—ƒŽ „—†‰‡– Žƒ™ǡ ‹Â?…”‡ƒ•‡† …‘˜‡”ƒ‰‡ –‘ ƒ Â?ƒŒ‘”‹–› ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?–ǡ –Š‡ …‘Â?’Ž‡–‡ –‹Â?‡ ’”‘ˆ‹Ž‡ ‘ˆ ’”‘Œ‡…– ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â?Ç¡ Â?‘Â?ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? –‘ ‹Â?…Ž—†‡ •—Â?Â?ƒ”› ’”‘Œ‡…– Œ—•–‹ˆ‹…ƒ–‹‘Â?•ǡ ƒÂ?† Â?‘Â?‹–‘”‹Â?‰ ƒÂ?† ”‡’‘”–‹Â?‰ ™‹–Š ’Š›•‹…ƒŽ Â?‘Â?‹–‘”‹Â?‰ ‹Â?†‹…ƒ–‘”•Ǥ ͳͻǤ Options going forward to strengthen capital budgeting include both further improving content of the capital budget, as well as strengthening the broader capital budgeting system. Š‡ …ƒ’‹–ƒŽ „—†‰‡– ’”‡•‡Â?–ƒ–‹‘Â? …ƒÂ? „‡Â?‡ˆ‹– ˆ”‘Â? ˆ—”–Š‡” ‹Â?’”‘˜‹Â?‰ ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ƒÂ?† …‘˜‡”ƒ‰‡ ȋ‹Â?…Ž—†‹Â?‰ Â?‘”‡ †‘Â?‡•–‹…ƒŽŽ› ˆ‹Â?ƒÂ?…‡† ’”‘Œ‡…–•ǡ ‹Â?…Ž—†‹Â?‰ ‘”‰ƒÂ?‹œƒ–‹‘Â?ƒŽ …Žƒ••‹ˆ‹…ƒ–‹‘Â?Ç¡ ƒÂ?† †‡Â?‘Â?•–”ƒ–‹Â?‰ …‘Â?•‹•–‡Â?…› ™‹–Š ˆ‹‰—”‡• ‹Â? –Š‡ Â?ƒ‹Â? „—†‰‡–Ǥ Â?‡› ’”‹‘”‹–› Š‡”‡ ‹• –‘ ƒ…Š‹‡˜‡ ƒ …‘Â?’”‡Š‡Â?•‹˜‡ ƒÂ?† …‘Â?•‹•–‡Â?– ’”‡•‡Â?–ƒ–‹‘Â? ‘ˆ ’—„Ž‹… ˆ—Â?†‹Â?‰ ˆ‘” ‹Â?˜‡•–Â?‡Â?–Ǥ Š‹Ž‡ –Š‹• …ƒÂ? ‹Â?…Ž—†‡ ‹Â?˜‡•–Â?‡Â?– —Â?†‡”–ƒÂ?‡Â? „› •–ƒ–‡ ‘™Â?‡† ‡Â?–‡”’”‹•‡• È‹ •Ȍǡ ‹– ™‘—Ž† Â?‡‡† –‘ …Žƒ”‹ˆ› –Š‡ •‡’ƒ”ƒ–‹‘Â? ‘ˆ –Š‡ ‰‘˜‡”Â?Â?‡Â?–ǯ• „ƒŽƒÂ?…‡ •Š‡‡– ˆ”‘Â? –Šƒ– ‘ˆ  •Ǥ – ’”‡•‡Â?–ǡ –Š‡”‡ ƒ”‡ •‡˜‡”ƒŽ †‹ˆˆ‡”‡Â?– •‘—”…‡• ‘ˆ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‘Â? ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– –Šƒ– ƒ”‡ Â?‘– ˆ—ŽŽ› …‘Â?•‹•–‡Â?–ǡ ‹Â?…Ž—†‹Â?‰ –Š‡ ‹Â?…”‡ƒ•‡ ‹Â? Â?‘Â?ˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ‹Â? „—†‰‡–ǡ –Š‡ Ž‹•–• ‘ˆ ’”‘Œ‡…–• ‹Â? „—†‰‡–ǡ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ƒÂ?Â?‡š …‘˜‡”‹Â?‰ ’”‹Â?ƒ”‹Ž› †‘Â?‘” ˆ—Â?†‡† ’”‘Œ‡…–•ǡ –Š‡ ƒ•‹… ƒ–ƒ ƒÂ?† ‹”‡…–‹‘Â?• È‹ ÈŒ †‘…—Â?‡Â?–ǡ ƒÂ?† ‹Â?˜‡•–Â?‡Â?–• –Š”‘—‰Š ‘Â?ǦŽ‡Â?†‹Â?‰ –‘  •Ǥ ʹͲǤ Options in strengthening the broader capital budgeting system in Georgia include systematizing the project identification process and developing methodological guidelines for costǦbenefit analysis. Š‡”‡ ƒ”‡ Â?ƒÂ?› ’‘•‹–‹˜‡ ˆ‡ƒ–—”‡• ‘ˆ ‡‘”‰‹ƒǯ• …—””‡Â?– ƒ’’”‘ƒ…Š –‘ „—†‰‡–‹Â?‰ ˆ‘” …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ǡ ‹Â?…Ž—†‹Â?‰ ƒ …Ž‡ƒ” •‡Â?•‡ ‘ˆ ‹Â?ˆ”ƒ•–”—…–—”‡ ’”‹‘”‹–‹‡•ǡ ƒ †‹•…‹’Ž‹Â?‡† „—†‰‡– ’”‘…‡•• ĥ •‡– ‘—– ‹Â? –Š‡ —†‰‡– ‘†‡ǡ ‹Â?’”‘˜‹Â?‰ ’”‘…—”‡Â?‡Â?– ™‹–Š ‘’‡Â? ƒÂ?† …‘Â?’‡–‹–‹˜‡ „‹††‹Â?‰ǡ ƒÂ?† ƒ†‡“—ƒ–‡ ‹Â?–‡”Â?ƒŽ …‘Â?–”‘Ž ƒÂ?† ”‡’‘”–‹Â?‰ Â?‡…ŠƒÂ?‹•Â?•Ǥ Â? –Š‡ Â?‡‰ƒ–‹˜‡ •‹†‡ǡ —Â?‹ˆ‹‡† Â?ƒ–‹‘Â?ƒŽ ’”‘…‡†—”‡• ˆ‘” ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â?Ç¡ ’”‡’ƒ”ƒ–‹‘Â? ƒÂ?† ƒ’’”ƒ‹•ƒŽ ƒ”‡ Â?‹••‹Â?‰ǡ ƒÂ?† –Š‡”‡ ‹• Â?‘ ‡š’Ž‹…‹– …ƒŽ‡Â?†ƒ” Ž‹Â?Â?‹Â?‰ ƒ…–‹˜‹–‹‡• ‹Â? –Š‡ ’”‘Œ‡…– …›…Ž‡ –‘ –Š‡ „—†‰‡–‹Â?‰ ƒÂ?† •–”ƒ–‡‰‹… ’ŽƒÂ?Â?‹Â?‰ …›…Ž‡•Ǥ Š‹• •—‰‰‡•–• –Šƒ– ƒÂ?› ”‡‹Â?ˆ‘”…‡Â?‡Â?– ‡‘”‰‹ƒǯ• …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â? •Š‘—Ž† ˆ‘…—• ‘Â? Dz—’•–”‡ƒÂ?dz ‡Ž‡Â?‡Â?–• –Šƒ– ‡Â?’Šƒ•‹œ‡ Â?‘˜‹Â?‰ ƒ™ƒ› ˆ”‘Â? Ġ Š‘… †‡…‹•‹‘Â?ǦÂ?ƒÂ?‹Â?‰ ƒÂ?† ‹Â?ˆ‘”Â?ƒŽ‹–› –‘ ƒ •›•–‡Â? ™‹–Š ’”‘…‡†—”ƒŽŽ› †‡–‡”Â?‹Â?‡† †‡…‹•‹‘Â?Ǧ’‘‹Â?–•ǡ ƒÂ? ‘ˆˆ‹…‹ƒŽ …ƒŽ‡Â?†ƒ”ǡ ƒÂ?† •‘—Â?† ‰—‹†ƒÂ?…‡ ‘Â? ƒÂ?ƒŽ›–‹…ƒŽ Â?‡–Š‘†•Ǥ Â? –Š‹• …‘Â?–‡š–ǡ ƒ •›•–‡Â?ƒ–‹… ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ’”‘…‡•• ™‹–Š ƒ ’”‡Ž‹Â?‹Â?ƒ”› ’”‘Œ‡…– ƒ••‡••Â?‡Â?– •–‡’ …‘—Ž† •‡”˜‡ –‘ •…”‡‡Â? ’”‘Œ‡…–• „‡ˆ‘”‡ –Š‡› ‡Â?–‡” –Š‡ ’”‡’ƒ”ƒ–‹‘Â? •–ƒ‰‡Ǥ ”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ™‘—Ž† „‡•– „‡ …‘‘”†‹Â?ƒ–‡† ™‹–Š ‡ƒ”Ž› •–ƒ‰‡• ‘ˆ ’”‘…‡•• ȋ„‡ˆ‘”‡ „—†‰‡–ƒ”› …‡‹Ž‹Â?‰• ƒ”‡ •‡–ȌǤ —”–Š‡”Â?‘”‡ǡ †‡˜‡Ž‘’‹Â?‰ Â?ƒ–‹‘Â?ƒŽ Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†ƒÂ?…‡ ‘Â? …‘•–Ǧ „‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹• ˆ‘” —•‡ „› Â?ƒŒ‘” ’”‘Œ‡…–• –Šƒ– Šƒ˜‡ ’ƒ••‡† ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ™‘—Ž† ’”‘˜‹†‡ ƒ —Â?‹ˆ‘”Â? •‡– ‘ˆ …”‹–‡”‹ƒ ˆ‘” ’”‘Œ‡…– ƒ’’”ƒ‹•ƒŽ ƒÂ?† ‡˜ƒŽ—ƒ–‹‘Â? ƒ…”‘•• •‡…–‘”• ƒÂ?† ”‡‰ƒ”†Ž‡•• ‘ˆ •‘—”…‡ ‘ˆ ˆ‹Â?ƒÂ?…‹Â?‰Ǥ͸ Road Sector Investment ʹͳǤ Georgia faces significant road improvement needs and investment has accordingly increased significantly in recent years, but there is room to improve the sustainability of the overall road investment program. Â?’”‘˜‡Â?‡Â?– ‘ˆ –Š‡ ”‘ƒ† Â?‡–™‘”Â? ‹• …”‹–‹…ƒŽ –‘ ‡‘”‰‹ƒǯ• †‡˜‡Ž‘’Â?‡Â?– ’”‹‘”‹–‹‡•ǡ ‹Â?…Ž—†‹Â?‰ Š‹‰Š‡” …‘Â?’‡–‹–‹˜‡Â?॥ –Š”‘—‰Š „‡––‡” …‘Â?Â?‡…–‹˜‹–› ™‹–Š ”‡‰‹‘Â?ƒŽ ƒÂ?† ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ Â?ƒ”Â?‡–•ǡ †‡˜‡Ž‘’‹Â?‰ ‡‘”‰‹ƒǯ• ’‘–‡Â?–‹ƒŽ ĥ ƒ ”‡‰‹‘Â?ƒŽ –”ƒÂ?•‹– ƒÂ?† Ž‘‰‹•–‹…• Š—„ǡ ƒÂ?† ‡Â?ŠƒÂ?…‹Â?‰ ”—”ƒŽ ƒ……‡•• –‘ Â?ƒ”Â?‡–•ǡ ‡†—…ƒ–‹‘Â?Ç¡ ƒÂ?† Š‡ƒŽ–ŠǤ Â? Â?‡‡–‹Â?‰ –Š‡•‡ ’”‹‘”‹–‹‡•ǡ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– Šƒ• ‹Â?…”‡ƒ•‡† •‹‰Â?‹ˆ‹…ƒÂ?–Ž› ‹Â? ”‡…‡Â?– ›‡ƒ”• ƒÂ?† –Š‡ ‘˜‡”Â?Â?‡Â?– Šƒ• Â?ƒ†‡ Â?—…Š ’”‘‰”‡•• –‘™ƒ”† —’‰”ƒ†‹Â?‰ ‹Â?ˆ”ƒ•–”—…–—”‡ ƒÂ?† ƒ––ƒ‹Â?‹Â?‰ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ •–ƒÂ?†ƒ”†• ‘ˆ •‡”˜‹…‡ƒ„‹Ž‹–›Ǥ ͸ Â? ‹Â?’‘”–ƒÂ?– …‘Â?•‹†‡”ƒ–‹‘Â? ‹Â? †‡•‹‰Â?‹Â?‰ ”‡‹Â?ˆ‘”…‡Â?‡Â?–• –‘ –Š‡ „”‘ƒ†‡” …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â? ‹• –‘ ‡Â?•—”‡ –Šƒ– –Š‡ ’”‘…‡†—”‡• ƒ”‡ Dz•‹Â?’Ž‡ ƒÂ?† Ž‹‰Š–dzǡ •‘ –Šƒ– –Š‡ ‹Â?’ƒ…– ‘Â? –‹Â?‡ ƒÂ?† …‘•– ‘ˆ ’”‘Œ‡…– ’”‡’ƒ”ƒ–‹‘Â? ƒÂ?† ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ƒ”‡ Â?‹Â?‹Â?‹œ‡†Ǥ Š‡•‡ ”‡‹Â?ˆ‘”…‡Â?‡Â?–• …ƒÂ? ƒŽ•‘ „‡ ’Šƒ•‡† ‹Â? ‘˜‡” –‹Â?‡Ǥ š‹˜ Â?‡› ‘„Œ‡…–‹˜‡ Šƒ• „‡‡Â? –‘ —’‰”ƒ†‡ –Š‡ ƒ•–Ǧ‡•– Š‹‰Š™ƒ›ǡ ™‹–Š –Š‡ ”‡•—Ž– –Šƒ– –Š‡ …‘Â?†‹–‹‘Â? ‘ˆ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ† Â?‡–™‘”Â? Šƒ• ‹Â?’”‘˜‡† Â?ƒ”Â?‡†Ž› ˆ”‘Â? ͵Ͷ ’‡”…‡Â?– ‹Â? ‰‘‘† ‘” ˆƒ‹” …‘Â?†‹–‹‘Â? ‹Â? ʹͲͲͶ –‘ ͹͸ ’‡”…‡Â?– ‹Â? ʹͲͳͲǤ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ –Š‡ Â?ƒŒ‘”‹–› ‘ˆ •‡…‘Â?†ƒ”› ƒÂ?† Ž‘…ƒŽ ”‘ƒ†• ”‡Â?ƒ‹Â? ‹Â? ’‘‘” …‘Â?†‹–‹‘Â?Ç¡ ™‹–Š ‘Â?Ž› ͵Ͳ ’‡”…‡Â?– ‘ˆ •‡…‘Â?†ƒ”› ”‘ƒ†• ƒÂ?† ͳͷ ’‡”…‡Â?– ‘ˆ Ž‘…ƒŽ ”‘ƒ†• ‹Â? ‰‘‘† –‘ ˆƒ‹” …‘Â?†‹–‹‘Â? ‹Â? ʹͲͳͲǤ —”–Š‡”Â?‘”‡ǡ ™Š‹Ž‡ ”‘—–‹Â?‡ ƒÂ?† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡• Šƒ˜‡ ‹Â?…”‡ƒ•‡† ‹Â? ”‡…‡Â?– ›‡ƒ”•ǡ –Š‡› ”‡Â?ƒ‹Â? ‹Â?ƒ†‡“—ƒ–‡ ƒÂ?† –Š—• ƒ†† –‘ –Š‡ Ž‘Â?‰ ”—Â? …‘•–• ‘ˆ †‡˜‡Ž‘’‹Â?‰ –Š‡ ”‘ƒ† Â?‡–™‘”Â?Ǥ Table 3: Road Network in Georgia in International Context ȋ‹Â? Â?Â? ’‡” •“ Â?Â? ƒÂ?† Â?Â? ’‡” ͳͲͲͲ ’‡‘’Ž‡ ÈŒ ‘ƒ† Â?ȀͳͲͲͲ •“ Â?Â? ‘ƒ† Â?ȀͳͲͲͲ ’‡‘’Ž‡ œ‡”„ƒ‹ŒƒÂ? ʹͺͺ ʹǤͻ ›”‰›œ•–ƒÂ? ͳ͹Ͳ ͸Ǥ͵ ƒœƒÂ?Š•–ƒÂ? ͶͲ ͹Ǥͳ Georgia 291 4.57 •–‘Â?‹ƒ ͳ͵ʹͲ ͶͳǤʹ —Â?‰ƒ”› ͳ͹͵͵ ͳͷǤ͹  ‘ˆ ƒ…‡†‘Â?‹ƒ ͵Ͷʹ ͶǤ͵ ‡”„‹ƒ Ƭ ‘Â?–‡Â?‡‰”‘ ͶͻͶ ͶǤͺ Ž‘˜‡Â?‹ƒ ͳͲͲ͹ ͳͲǤʹ Ž„ƒÂ?‹ƒ ͸ͷ͹ ͵Ǥͷ —”‘’‡ ƒÂ?† ‡Â?–”ƒŽ •‹ƒ ͷͺͲ ͺǤ͸ ’’‡” ‹††Ž‡ Â?…‘Â?‡ ͳͲ͹͸ ͻǤʹ ‘™‡” Â?…‘Â?‡ ͵ʹͺ ͶǤͻ SourceÇ£  ƒÂ?† †ƒ–ƒ „ƒ•‡•Ǥ Figure 9: Road Network in Georgia Over Time ȋ‹Â? •Šƒ”‡ ‘ˆ ”‡•’‡…–‹˜‡ Â?‡–™‘”Â?ÈŒ International Road Network Condition Secondary Road Network Condition 70% 80% 54% 34% 26% 23% 18% 25% 13% 12% 8% 11% 13% 4% 3% 6% 2009 2004 2009 2004 GOOD FAIR POOR BAD GOOD FAIR POOR BAD SourceÇ£ ‘ƒ†• ‡’ƒ”–Â?‡Â?– ‘ˆ ‡‘”‰‹ƒǡ  Ç¡ ƒÂ?† †ƒ–ƒ „ƒ•‡• ʹʹǤ An important option for improving the long run sustainability of the road investment program is for the budget to include provisions for adequate levels of periodic and routine maintenance. Â? ʹͲͳͲǡ ƒ…–—ƒŽ ’‡”‹‘†‹… ƒÂ?† ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡ ƒÂ?‘—Â?–‡† –‘  ͵ʹ Â?‹ŽŽ‹‘Â?Ǥ Â? …‘Â?–”ƒ•–ǡ –Š‡ ‡•–‹Â?ƒ–‡† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ Â?‡‡† ™ƒ•  ͳʹ͵ Â?‹ŽŽ‹‘Â? ƒÂ?† –Š‡ ‡•–‹Â?ƒ–‡† ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ Â?‡‡† ™ƒ•  Ͷ͵ Â?‹ŽŽ‹‘Â?Ǥ —…Š —Â?†‡”Ǧ’”‘˜‹•‹‘Â? ‘ˆ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡ ”‡•—Ž–• ‹Â? ’”‘‰”‡••‹˜‡ †‡–‡”‹‘”ƒ–‹‘Â? ‹Â? …‘Â?†‹–‹‘Â? ‘ˆ ƒ •‹‰Â?‹ˆ‹…ƒÂ?– ’ƒ”– ‘ˆ ”‘ƒ† Â?‡–™‘”Â? ƒÂ?† ‹Â?…”‡ƒ•‡• Ž‘Â?‰ ”—Â? …‘•–• ‘ˆ Â?ƒ‹Â?–ƒ‹Â?‹Â?‰ ƒÂ?† —’‰”ƒ†‹Â?‰ –Š‡ ”‘ƒ† Â?‡–™‘”Â?Ǥ ‡‰Ž‡…–‹Â?‰ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒŽ•‘ ”‡•—Ž–• ‹Â? Š‹‰Š‡” ‡…‘Â?‘Â?‹… …‘•–• ‹Â? –Š‡ ˆ‘”Â? ‘ˆ ‹Â?…”‡ƒ•‡† ˜‡Š‹…Ž‡ ‘’‡”ƒ–‹Â?‰ …‘•–•Ǥ †‡“—ƒ–‡ ’”‘˜‹•‹‘Â? ‘ˆ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡• ‹• –Š—• ƒÂ? ‹Â?’‘”–ƒÂ?– ‘’–‹‘Â? ˆ‘” …‘Â?•‹†‡”ƒ–‹‘Â?Ǥ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ ‹– •Š‘—Ž† „‡ Â?‘–‡† –Šƒ– •‹Â?…‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‹• Â?‘•–Ž› ˆ‹Â?ƒÂ?…‡† ˆ”‘Â? †‘Â?‡•–‹… š˜ ”‡•‘—”…‡• ™Š‹Ž‡ ‹Â?˜‡•–Â?‡Â?– ‹• Â?‘•–Ž› ˆ‹Â?ƒÂ?…‡† ˆ”‘Â? ‡š–‡”Â?ƒŽ ”‡•‘—”…‡•ǡ –Š‡ ”‡Žƒ–‹˜‡ ƒŽŽ‘…ƒ–‹‘Â? ‹• ƒˆˆ‡…–‡† „› –Š‡ ƒ˜ƒ‹Žƒ„‹Ž‹–› ‘ˆ ”‡•‘—”…‡• ˆ”‘Â? †‘Â?‡•–‹… ƒÂ?† ‡š–‡”Â?ƒŽ •‘—”…‡•Ǥ ʹ͵Ǥ A second option in improving long run sustainability of road investment is to phase in a rebalancing of outlays for new construction and rehabilitation over time in order to reduce backlog of the network in poor condition. Š‹• …ƒÂ? ‹Â?˜‘Ž˜‡ ‹Â?…”‡Â?‡Â?–ƒŽŽ› ‹Â?–”‘†—…‹Â?‰ ƒ ’”‘‰”ƒÂ? ‘ˆ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‘ˆ –Š‡ Žƒ”‰‡ ƒÂ?† Â?‡‰Ž‡…–‡† •‡…‘Â?†ƒ”› ƒÂ?† Ž‘…ƒŽ ”‘ƒ† Â?‡–™‘”Â?Ç¡ •‘ –Šƒ– ”‘ƒ† •‡…–‘” ’”‹‘”‹–‹‡• „ƒŽƒÂ?…‡ …ƒ’ƒ…‹–› ‡š’ƒÂ?•‹‘Â? ™‹–Š ƒ†‡“—ƒ–‡ ‡Â?’Šƒ•‹• ‘Â? ’”‡•‡”˜ƒ–‹‘Â? ƒÂ?† ‹Â?’”‘˜‡Â?‡Â?–Ǥ ‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‡š’‡Â?†‹–—”‡• Šƒ˜‡ ‹Â?…”‡ƒ•‡† ‹Â? ”‡…‡Â?– ›‡ƒ”• „—– ”‡Â?ƒ‹Â? „‡Ž‘™ Ž‡˜‡Ž• ”‡…‘Â?Â?‡Â?†‡† „› –Š‡  È‹ ‹‰Š™ƒ› ‡˜‡Ž‘’Â?‡Â?– ƒÂ?† ƒÂ?ƒ‰‡Â?‡Â?–Ȍ Â?‘†‡ŽǤ —”–Š‡”Â?‘”‡ǡ –Š‡ ‡…‘Â?‘Â?‹… ”ƒ–‡ ‘ˆ ”‡–—”Â? ‘ˆ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ȋ̱ʹͲǦ͵ͷΨȌ ‹• –›’‹…ƒŽŽ› •‹‰Â?‹ˆ‹…ƒÂ?–Ž› ‰”‡ƒ–‡” –ŠƒÂ? –Šƒ– ‘ˆ …ƒ’ƒ…‹–› ‡š’ƒÂ?•‹‘Â? ȋ̱ͳͲǦͳͶΨȌ –Š”‘—‰Šǡ ˆ‘” ‡šƒÂ?’Ž‡ǡ ™‹†‡Â?‹Â?‰Ǥ ‹–Š –Š‡ Žƒ”‰‡ǡ Š‹‰ŠǦ’”‹‘”‹–› ‹Â?˜‡•–Â?‡Â?– ‹Â? –Š‡ ƒ•–Ǧ‡•– ‹‰Š™ƒ› …‘Â?–‹Â?—‹Â?‰ ˆ‘” –Š‡ Â?‡š– ˆ‡™ ›‡ƒ”•ǡ –Š‡•‡ ”‡…‘Â?Â?‡Â?†ƒ–‹‘Â? …ƒÂ? „‡ ’ŽƒÂ?Â?‡† –‘ „‡ ’Šƒ•‡† ‹Â? ‘˜‡” ƒ ’‡”‹‘† ‘ˆ –‹Â?‡Ǥ ʹͶǤ A third option in enhancing road investment sustainability is to implement a range of efficiencyǦenhancing institutional measures. Š‡•‡ Â?‡ƒ•—”‡• …ƒÂ? ‹Â?…Ž—†‡ǣ ȋ‹Ȍ Â?‘˜‹Â?‰ –‘™ƒ”† –Š‡ ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ‘ˆ ƒ …‘Â?’”‡Š‡Â?•‹˜‡ ‘ƒ† ••‡– ƒÂ?ƒ‰‡Â?‡Â?– ›•–‡Â? È‹ ȌǢ ȋ‹‹Ȍ ‹Â?–”‘†—…‹Â?‰ ƒÂ?† ‡š’ƒÂ?†‹Â?‰ –Š‡ —•‡ ‘ˆ Â?‘”‡ ‡ˆˆ‹…‹‡Â?– …‘Â?–”ƒ…–‹Â?‰ Â?‡…ŠƒÂ?‹•Â?• Ž‹Â?‡ǡ ‡•‹‰Â?Ǧ —‹Ž† ƒÂ?† ‡”ˆ‘”Â?ƒÂ?…‡Ǧ„ƒ•‡† …‘Â?–”ƒ…–‹Â?‰ „ƒ•‡† ‘Â? ‡•‹‰Â?Ǧ —‹Ž†Ǧ’‡”ƒ–‡Ǧƒ‹Â?–ƒ‹Â? ƒÂ?† ”ƒÂ?•ˆ‡” È‹ ÈŒ ’”‹Â?…‹’Ž‡•Ǣ ȋ‹‹‹Ȍ †‡˜‡Ž‘’‹Â?‰ ƒÂ?† ‹Â?’Ž‡Â?‡Â?–‹Â?‰ ƒ ˜‹ƒ„Ž‡ •›•–‡Â? ˆ‘” ƒ––‡Â?†‹Â?‰ –‘ –Š‡ Â?‡‡†• ‘ˆ Ž‘…ƒŽ ”‘ƒ†•Ǣ ƒÂ?† ȋ‹˜Ȍ ‹Â?’”‘˜‹Â?‰ ‘ƒ† ‡’ƒ”–Â?‡Â?– …ƒ’ƒ…‹–› –‘ ƒ••‡•• ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? „‡Â?‡ˆ‹–•ǡ ‹Â?…Ž—†‹Â?‰ Â?—Ž–‹Ǧ…”‹–‡”‹ƒ ƒ••‡••Â?‡Â?– ™‹–Š ˆ”‡‹‰Š–ǡ ‡ˆˆ‹…‹‡Â?– ˜‡Š‹…Ž‡ ”‘—–‹Â?‰ǡ •ƒˆ‡–›ǡ ƒ……‡•• ˆ‘” ‹Â?†—•–”›ǡ „‡Â?‡ˆ‹–Ǧ …‘•– ”ƒ–‹‘ È‹ Ȍǡ …‘Â?Â?—Â?‹–› ƒ……‡•• –‘ ‡••‡Â?–‹ƒŽ •‡”˜‹…‡•ǡ ‡Â?‡”‰‡Â?…› ƒ……‡••ǡ ‡Â?˜‹”‘Â?Â?‡Â?–ƒŽ •—•–ƒ‹Â?ƒ„‹Ž‹–›ǡ ƒÂ?† ƒ‰‡Â?…› ”‹•Â?Ǥ Structure of Report ʹͷǤ Š‡ ”‡•– ‘ˆ –Š‹• •›Â?–Š‡•‹• ”‡’‘”– ‹• ‹Â? ˆ‹˜‡ …Šƒ’–‡”•Ǥ Šƒ’–‡” ͳ •—Â?Â?ƒ”‹œ‡• –Š‡ Â?ƒ…”‘‡…‘Â?‘Â?‹… …‘Â?–‡š– ƒÂ?† ƒ••‡••‡• –”ƒ†‡Ǧ‘ˆˆ• ƒ••‘…‹ƒ–‡† ‹Â? „ƒŽƒÂ?…‹Â?‰ –Š‡ ‘˜‡”ƒŽŽ …‘Â?’‘•‹–‹‘Â? ‘ˆ ’—„Ž‹… ‡š’‡Â?†‹–—”‡•Ǥ Š‡ •‡…‘Â?† ƒÂ?† –Š‹”† …Šƒ’–‡”• ‹ŽŽ—•–”ƒ–‡ ’‘Ž‹…› ‘’–‹‘Â?• ƒÂ?† ‹Â?’Ž‹…ƒ–‹‘Â?• ƒ••‘…‹ƒ–‡† ™‹–Š …‘Â?–ƒ‹Â?‹Â?‰ •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡ ’”‡••—”‡• ƒÂ?† ‹Â?’”‘˜‹Â?‰ ‡ˆˆ‡…–‹˜‡Â?॥ ‘ˆ Š‡ƒŽ–Š ‡š’‡Â?†‹–—”‡•ǡ ”‡•’‡…–‹˜‡Ž›Ǥ Šƒ’–‡” Ͷ ”‡˜‹‡™• –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‡š’‡”‹‡Â?…‡ ‹Â? •–”‡Â?‰–Š‡Â?‹Â?‰ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ ƒÂ?† ’”‘˜‹†‡• ‘’–‹‘Â?• ˆ‘” …‘Â?•‹†‡”ƒ–‹‘Â? ˆ‘” ‡‘”‰‹ƒǤ Š‡ ˆ‹ˆ–Š …Šƒ’–‡” †‹•…—••‡• ‘’–‹‘Â?• ƒ••‘…‹ƒ–‡† ™‹–Š ”‡„ƒŽƒÂ?…‹Â?‰ ”‘ƒ† •‡…–‘” ‡š’‡Â?†‹–—”‡•Ǥ š˜‹ Chapter 1. Macroeconomic Context and Expenditure Composition 1.1 Introduction ͳǤͳǤ Georgia faces dual macroeconomic challenges of generating rapid growth with sustainability in an uncertain global environment and addressing both will require continued implementation and potential deepening of the fiscal consolidation program. Â? •—•–ƒ‹Â?ƒ„‹Ž‹–›ǡ –Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– Šƒ• Â?ƒ””‘™‡† „› ƒ„‘—– ŠƒŽˆ ˆ”‘Â? ƒ ’‡ƒÂ? ‘ˆ ʹͳǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͺ „—– ”‡Â?ƒ‹Â?• ƒÂ?‘Â?‰ –Š‡ Š‹‰Š‡•– ‹Â? –Š‡ ”‡‰‹‘Â? ƒ– ͳͳǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǤ ‡‘”‰‹ƒ ƒŽ•‘ ˆƒ…‡• ‡š–‡”Â?ƒŽ †‡„– ”‡’ƒ›Â?‡Â?– ‘„Ž‹‰ƒ–‹‘Â?• ‘ˆ ƒ„‘—– Í· ’‡”…‡Â?– ‘ˆ  ’‡” ›‡ƒ” †—”‹Â?‰ ʹͲͳʹǦͳͶ ƒÂ?† –‘–ƒŽ ‡š–‡”Â?ƒŽ †‡„– ™ƒ• ”‡Žƒ–‹˜‡Ž› Š‹‰Š ƒ– ͷͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǤ͹ Š‡ ‰Ž‘„ƒŽ ‡…‘Â?‘Â?‹… ‘—–Ž‘‘Â? ”‡Â?ƒ‹Â?• —Â?…‡”–ƒ‹Â? ƒÂ?† ƒ Â?‘”‡ ™‹†‡•’”‡ƒ† †‘™Â?–—”Â? …‘—Ž† ƒ†˜‡”•‡Ž› ‹Â?’ƒ…– ‡š’‘”–•ǡ Ç¡ ƒÂ?† ‘–Š‡” …ƒ’‹–ƒŽ ‹Â?ˆŽ‘™•Ǥ Â? ‰”‘™–Šǡ –Š‡ ‡…‘Â?‘Â?› Šƒ• ”‡„‘—Â?†‡† •–”‘Â?‰Ž› „› ͸Ǥ͹ ’‡”…‡Â?– †—”‹Â?‰ ʹͲͳͲǦͳͳǡ ƒŽ–Š‘—‰Š ‹Â?˜‡•–Â?‡Â?– ”‡Â?ƒ‹Â?• Ž‘™‡” –ŠƒÂ? ’”‡Ǧ…”‹•‹• Ž‡˜‡Ž• ƒÂ?† Š‹‰Š‡” ‹Â?˜‡•–Â?‡Â?– ™‹–Š‘—– ˆ—”–Š‡” ™‹†‡Â?‹Â?‰ –Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– ™‹ŽŽ ”‡“—‹”‡ ”ƒ‹•‹Â?‰ Ž‘™ Ž‡˜‡Ž• ‘ˆ Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰•Ǥ Š‡ ‡š’‘”– •Šƒ”‡ ‘ˆ  ”‡Â?ƒ‹Â?• Ž‘™ ƒÂ?† ƒÂ? ƒ’’”‡…‹ƒ–‹Â?‰ ”‡ƒŽ ‡š…ŠƒÂ?‰‡ ”ƒ–‡ †‘‡• Â?‘– Š‡Ž’ ‡Â?…‘—”ƒ‰‡ ƒ •Š‹ˆ– ‹Â? –Š‡ †”‹˜‡”• ‘ˆ ‰”‘™–Š –‘™ƒ”† –Š‡ –”ƒ†ƒ„Ž‡ •‡…–‘”•Ǥ ‹˜‡Â? –Š‡•‡ …ŠƒŽŽ‡Â?‰‡•ǡ …‘Â?–‹Â?—‡† ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ‘ˆ –Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ? ™‘—Ž† …”‡ƒ–‡ ƒ††‹–‹‘Â?ƒŽ •’ƒ…‡ ˆ‘” ˆ‹•…ƒŽ ”‡•’‘Â?•‡ –‘ •Šƒ”’ ‰Ž‘„ƒŽ •Š‘…Â? ƒÂ?† ˆ—”–Š‡” „‘Ž•–‡” †‡„– •—•–ƒ‹Â?ƒ„‹Ž‹–›Ǥ Â? –Š‡ ‡˜‡Â?– ‘ˆ ƒÂ? —’•‹†‡ ‰”‘™–Š •…‡Â?ƒ”‹‘ ™‹–Š Š‹‰Š‡” ƒÂ?† ‘–Š‡” …ƒ’‹–ƒŽ ˆŽ‘™•ǡ Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰• …‘—Ž† ‡”‘†‡ ˆ—”–Š‡”ǡ –Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– …‘—Ž† ™‹†‡Â?Ç¡ ƒÂ?† –Š‡   …‘—Ž† ƒ’’”‡…‹ƒ–‡ ˆ—”–Š‡”Ǥ Â? –Š‹• ‡˜‡Â?–ǡ –Š‡•‡ ’”‡••—”‡• …‘—Ž† „‡ …‘—Â?–‡”‡† „› †‡‡’‡Â?‹Â?‰ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? –Š”‘—‰Š ƒ Â?‘”‡ ƒ……‡Ž‡”ƒ–‡† ”‡†—…–‹‘Â? ‹Â? –Š‡ ’ƒ–Š ‘ˆ –Š‡ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹–Ǥ ˆ –Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ? ‰‘‡• ‘ˆˆ –”ƒ…Â?Ç¡ ‡‘”‰‹ƒ …ƒÂ? “—‹…Â?Ž› ”‡–—”Â? –‘ –Š‡ ’”‡Ǧ…”‹•‹• ‹Â?„ƒŽƒÂ?…‡• ‘ˆ Žƒ”‰‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹–• ƒÂ?† —Â?•—•–ƒ‹Â?ƒ„Ž‡ ‰”‘™–Š †”‹˜‡Â? „› Â?‘Â?–”ƒ†ƒ„Ž‡•Ǥ ͳǤʹǤ Continued implementation of fiscal consolidation will require managing a growing body of competing social and infrastructure expenditure pressures in an environment where opportunities to extract fiscal space from other areas has diminished. Š‡ …‘Â?’‘•‹–‹‘Â? ‘ˆ ‡š’‡Â?†‹–—”‡• Šƒ• •Š‹ˆ–‡† …‘Â?•‹†‡”ƒ„Ž› ‹Â? –Š‡ ›‡ƒ”• •‹Â?…‡ –Š‡ …”‹•‹•Ǥ Â?’‘”–ƒÂ?– •‘…‹ƒŽ ’”‘–‡…–‹‘Â?Ç¡ Š‡ƒŽ–Šǡ ƒÂ?† ‹Â?ˆ”ƒ•–”—…–—”‡ ‡š’‡Â?†‹–—”‡• Šƒ˜‡ „‡‡Â? •…ƒŽ‡† —’ ™‹–Š ˆ‹•…ƒŽ •’ƒ…‡ …‘Â?‹Â?‰ ˆ”‘Â? ƒ ”‡†—…–‹‘Â? ‘ˆ †‡ˆ‡Â?•‡ ƒÂ?† ‹Â?–‡”Â?ƒŽ •‡…—”‹–› ‡š’‡Â?†‹–—”‡•Ǥ Š‡ ‘’’‘”–—Â?‹–‹‡• ˆ‘” ‰‡Â?‡”ƒ–‹Â?‰ ˆ‹•…ƒŽ •’ƒ…‡ ˆ”‘Â? ˆ—”–Š‡” ‡š’‡Â?†‹–—”‡ ”‡†—…–‹‘Â?• ‹Â? †‡ˆ‡Â?•‡ ƒÂ?† ‹Â?–‡”Â?ƒŽ •‡…—”‹–› Šƒ˜‡ †‹Â?‹Â?‹•Š‡†Ǥ ‘‹Â?‰ ˆ‘”™ƒ”†ǡ ‡‘”‰‹ƒ ˆƒ…‡• ˆ—”–Š‡” ‹Â?’‘”–ƒÂ?– ‹Â?ˆ”ƒ•–”—…–—”‡ †‡˜‡Ž‘’Â?‡Â?– Â?‡‡†• ‹Â? –Š‡ ƒ”‡ƒ• ‘ˆ ”‘ƒ†•ǡ ”‡‰‹‘Â?ƒŽ †‡˜‡Ž‘’Â?‡Â?–ǡ ™ƒ–‡”ǡ ‡Â?‡”‰›ǡ ƒÂ?† ƒ‰”‹…—Ž–—”‡Ǥ ‘…‹ƒŽ ‡š’‡Â?†‹–—”‡ ’”‡••—”‡• …‘Â?‡ ˆ”‘Â? Â?‡‡†• ‘Â? Â?—Ž–‹’Ž‡ ˆ”‘Â?–•ǡ ‹Â?…Ž—†‹Â?‰ ’”‘˜‹†‹Â?‰ ƒ†‡“—ƒ–‡ ’‡Â?•‹‘Â?• –‘ ƒÂ? ƒ‰‹Â?‰ ’‘’—Žƒ–‹‘Â?Ç¡ ‹Â?’”‘˜‹Â?‰ •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ ’‘‘”ǡ ƒÂ?† ‹Â?’”‘˜‹Â?‰ Š‡ƒŽ–Š ‘—–…‘Â?‡•Ǥ ƒÂ?ƒ‰‹Â?‰ –Š‡•‡ …‘Â?’‡–‹Â?‰ Â?‡‡†• ™‹–Š‹Â? –Š‡ …‘Â?–‡š– ‘ˆ –Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ? ‹• ƒ Â?‡› ’—„Ž‹… ˆ‹Â?ƒÂ?…‡ …ŠƒŽŽ‡Â?‰‡ ˆƒ…‹Â?‰ ‡‘”‰‹ƒǤ ‡Â?…ŠÂ?ƒ”Â?‹Â?‰ ƒ‰ƒ‹Â?•– ”‡‰‹‘Â?ƒŽ …‘Â?’ƒ”ƒ–‘”• •Š‘™• –Šƒ– ‡‘”‰‹ƒ •’‡Â?†• ƒ ‰”‡ƒ–‡” •Šƒ”‡ ‘ˆ –‘–ƒŽ ‘—–Žƒ›• ‘Â? …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ƒÂ?† ƒ Ž‡••‡” •Šƒ”‡ ‘Â? ‡†—…ƒ–‹‘Â?Ç¡ Š‡ƒŽ–Šǡ ƒÂ?† •‘…‹ƒŽ ’”‘–‡…–‹‘Â?Ǥ š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? –‘ †ƒ–‡ Šƒ• ƒŽ•‘ ‡Â?’Šƒ•‹œ‡† …—””‡Â?– •’‡Â?†‹Â?‰Ǥ ÂŽÂŽ –Š‹• •—‰‰‡•–• –Šƒ– …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• …ƒÂ? Â?ƒÂ?‡ ƒ ‰”‡ƒ–‡” …‘Â?–”‹„—–‹‘Â? –‘ ƒ†Œ—•–Â?‡Â?– ‰‘‹Â?‰ ˆ‘”™ƒ”†Ǥ ͳǤ͵Ǥ In order to address the challenges facing the macroeconomic framework and the composition of expenditures, this chapter discusses the following options for consideration: ͹ š–‡”Â?ƒŽ ’—„Ž‹… †‡„– ”‡’ƒ›Â?‡Â?–• ƒ”‡ Ž‘™‡” ƒÂ?† –Š‡ ƒ—–Š‘”‹–‹‡• Šƒ˜‡ „—‹Ž– ˆ‹•…ƒŽ „—ˆˆ‡”• –‘ Š‡Ž’ Â?ƒÂ?ƒ‰‡ –Š‡•‡ ‘„Ž‹‰ƒ–‹‘Â?•Ǥ ͳ x ƒ‹Â?–ƒ‹Â? †‹•…‹’Ž‹Â?‡ ‹Â? ‹Â?’Ž‡Â?‡Â?–‹Â?‰ –Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ? „› ”‡†—…‹Â?‰ –Š‡ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹– ˆ”‘Â? ͵Ǥ͸ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ –‘ Í´ ’‡”…‡Â?– „› ʹͲͳͷǡ –Š”‘—‰Š ƒ ˆ—”–Š‡” …‘Â?•‘Ž‹†ƒ–‹‘Â? ‘ˆ ‡š’‡Â?†‹–—”‡• „› ͵ ’‡”…‡Â?–ƒ‰‡ ’‘‹Â?–• ‘ˆ  „› ʹͲͳͷ x Â? –Š‡ ‡˜‡Â?– ‘ˆ ƒÂ? —’•‹†‡ ‰”‘™–Š •…‡Â?ƒ”‹‘ †‡”‹˜‹Â?‰ ˆ”‘Â? Š‹‰Š‡” ƒÂ?† …ƒ’‹–ƒŽ ‹Â?ˆŽ‘™•ǡ †‡‡’‡Â? ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? „› •ƒ˜‹Â?‰ ’ƒ”– ‘ˆ –Š‡ ƒ††‹–‹‘Â?ƒŽ ”‡˜‡Â?—‡• ƒÂ?† „‘Ž•–‡”‹Â?‰ ˆ‹•…ƒŽ „—ˆˆ‡”• x Â?ƒ„Ž‡ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• –‘ Â?ƒÂ?‡ ƒ …‘Â?–”‹„—–‹‘Â? –‘ ‡š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‰‘‹Â?‰ ˆ‘”™ƒ”†ǡ ’ƒ”–‹…—Žƒ”Ž› ĥ ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ’‹…Â?• —’ x ƒÂ?ƒ‰‡ ‡š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? „› ‹Â?•–‹ŽŽ‹Â?‰ ‰”‡ƒ–‡” •‡Ž‡…–‹˜‹–› ‹Â? …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡•ǡ …‘Â?–ƒ‹Â?‹Â?‰ Â?‡†‹—Â? –‡”Â? •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡ ’”‡••—”‡•ǡ ƒÂ?† ‡Â?ŠƒÂ?…‹Â?‰ •—•–ƒ‹Â?ƒ„‹Ž‹–› ‘ˆ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? ȋ‰”‡ƒ–‡” †‡–ƒ‹Ž ‘Â? ‡ƒ…Š ‹Â? •—„•‡“—‡Â?– •‡…–‘” …Šƒ’–‡”•Ȍ ͳǤͶǤ The structure of this chapter is as follows. Š‡ ˆ‹”•– •‡…–‹‘Â? ‡š’Ž‘”‡• –Š‡ Â?ƒ…”‘‡…‘Â?‘Â?‹… …ŠƒŽŽ‡Â?‰‡• ˆƒ…‹Â?‰ ‡‘”‰‹ƒ ‘Â? –™‘ ˆ”‘Â?–•ǣ •—•–ƒ‹Â?ƒ„‹Ž‹–› ƒÂ?† ‰”‘™–ŠǤ Š‡ •‡…–‹‘Â? ‡•–ƒ„Ž‹•Š‡• –Š‡ …ƒ•‡ ˆ‘” ™Š› •—•–ƒ‹Â?‹Â?‰ ƒÂ?† ’‘–‡Â?–‹ƒŽŽ› †‡‡’‡Â?‹Â?‰ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‹• ‹Â?’‘”–ƒÂ?– –‘ ƒ††”‡•• –Š‡•‡ …ŠƒŽŽ‡Â?‰‡•Ǥ Š‡ •‡…‘Â?† •‡…–‹‘Â? ‡š’Ž‘”‡• Š‘™ –Š‡ …‘Â?’‘•‹–‹‘Â? ‘ˆ ‡š’‡Â?†‹–—”‡• Šƒ• ‡˜‘Ž˜‡† ‹Â? ‡‘”‰‹ƒ ‘˜‡” –‹Â?‡Ǥ Š‹• Š‡Ž’• •Š‡† Ž‹‰Š– ƒ– ƒ „”‘ƒ† Ž‡˜‡Ž ‘Â? Š‘™ ‡‘”‰‹ƒ …ƒÂ? „ƒŽƒÂ?…‡ ‡š’‡Â?†‹–—”‡ Â?‡‡†• ‹Â? …‘Â?’‡–‹Â?‰ ƒ”‡ƒ• ‹Â? ‘”†‡” –‘ •—……‡••ˆ—ŽŽ› ƒ†Š‡”‡ –‘ –Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ?Ǥ 1.2 Macroeconomic Context: Why is Fiscal Consolidation so Important? ͳǤͷǤ Georgia has succeeded in generating strong growth with declining public debt, with fiscal stimulus in 2008Ǧ09 being followed by adjustment in 2010Ǧ11. ƒ”Ǧ”‡ƒ…Š‹Â?‰ ”‡ˆ‘”Â?• ˆ‘ŽŽ‘™‹Â?‰ –Š‡ ‘•‡ ‡˜‘Ž—–‹‘Â?Ç¡ ƒŽ‘Â?‰ ™‹–Š ƒ ˆƒ˜‘”ƒ„Ž‡ ‡š–‡”Â?ƒŽ ‡Â?˜‹”‘Â?Â?‡Â?–ǡ Š‡Ž’‡† •–‹Â?—Žƒ–‡ ˆ‘”‡‹‰Â? †‹”‡…– ‹Â?˜‡•–Â?‡Â?– È‹ ÈŒ ƒÂ?† ƒ……‡Ž‡”ƒ–‡ ‡…‘Â?‘Â?‹… ‰”‘™–Š ‹Â? ‡‘”‰‹ƒǤ ”‘™–Š ƒ˜‡”ƒ‰‡† ͻǤ͵ ’‡”…‡Â?– ’‡” ›‡ƒ” †—”‹Â?‰ ʹͲͲͶǦͲ͹ ƒÂ?† ƒˆ–‡” ƒ …”‹•‹•Ǧ”‡Žƒ–‡† †‘™Â?–—”Â?Ç¡ ”‡„‘—Â?†‡† ƒ‰ƒ‹Â? –‘ ͸Ǥ͹ ’‡”…‡Â?– †—”‹Â?‰ ʹͲͳͲǦͳͳǤ Š‡ ‡š–‡”Â?ƒŽ ’—„Ž‹… †‡„– ”ƒ–‹‘ †‡…Ž‹Â?‡† •‹‰Â?‹ˆ‹…ƒÂ?–Ž› †—”‹Â?‰ ʹͲͲͶǦͲ͹ ĥ ”‡ˆ‘”Â?• –‘ •–”‡ƒÂ?Ž‹Â?‡ –Š‡ –ƒš ”‡‰‹Â?‡ ƒÂ?† ”‘‘– ‘—– …‘””—’–‹‘Â? ”‡•—Ž–‡† ‹Â? …‘Â?•‹†‡”ƒ„Ž› Š‹‰Š‡” –ƒš ”‡˜‡Â?—‡•Ǥ • ‰‘˜‡”Â?Â?‡Â?– „‘””‘™‹Â?‰ ‹Â?…”‡ƒ•‡† –‘ ˆ‹Â?ƒÂ?…‡ ƒ ˆ‹•…ƒŽ •–‹Â?—Ž—• †—”‹Â?‰ –Š‡ ʹͲͲͺǦͲͻ …”‹•‹•ǡ ‡š–‡”Â?ƒŽ ’—„Ž‹… †‡„– ‹Â?…”‡ƒ•‡† „‡ˆ‘”‡ „‡‰‹Â?Â?‹Â?‰ –‘ †‡…Ž‹Â?‡ ƒ‰ƒ‹Â? ‹Â? ʹͲͳͳǤ Š‡ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹– ”‘•‡ –‘ ͻǤʹ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ „‡ˆ‘”‡ ˆ‹•…ƒŽ ƒ†Œ—•–Â?‡Â?– Š‡Ž’‡† Ž‘™‡” –Š‡ †‡ˆ‹…‹– –‘ ͵Ǥ͸ ’‡”…‡Â?– ‹Â? ʹͲͳͳǤ ͳǤ͸Ǥ Addressing remaining challenges in narrowing the current account deficit and growing the tradable sector in an uncertain global environment will require continued implementation of the fiscal consolidation program. ‡‘”‰‹ƒǯ• ‡š–‡”Â?ƒŽ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– ”‡Â?ƒ‹Â?‡† ƒÂ?‘Â?‰ –Š‡ Š‹‰Š‡•– ‹Â? –Š‡ ”‡‰‹‘Â? ‹Â? ʹͲͳͳ ƒ– ͳͳǤͺ ’‡”…‡Â?– ‘ˆ Ç¡ –Š—• ”ƒ‹•‹Â?‰ …‘Â?…‡”Â?• ƒ„‘—– •—•–ƒ‹Â?ƒ„‹Ž‹–›Ǥ š–‡”Â?ƒŽ †‡„– ”‡’ƒ›Â?‡Â?–• ‹Â? ʹͲͳʹǦͳͶ ”‡Â?ƒ‹Â? …‘Â?•‹†‡”ƒ„Ž‡ ƒÂ?† ƒ •Šƒ”’‡” ‰Ž‘„ƒŽ ‡…‘Â?‘Â?‹… †‘™Â?–—”Â? …‘—Ž† ‹Â?’ƒ…– ‡‘”‰‹ƒǯ• ‡š’‘”–•ǡ Ç¡ ƒÂ?† ˆ‹Â?ƒÂ?…‹Â?‰ …‘•–•Ǥ Â? –Š‹• …‘Â?–‡š–ǡ …‘Â?–‹Â?—‡† ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ‘ˆ –Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ? ’”‘˜‹†‡• ƒ Â?‡› ƒÂ?…Š‘” ‘ˆ •—•–ƒ‹Â?ƒ„‹Ž‹–› „› …”‡ƒ–‹Â?‰ •’ƒ…‡ ˆ‘” ƒ ˆ‹•…ƒŽ ”‡•’‘Â?•‡ –‘ ‰Ž‘„ƒŽ •Š‘…Â?• ƒÂ?† ˆƒ…‹Ž‹–ƒ–‹Â?‰ ˆ—”–Š‡” ”‡†—…–‹‘Â? ‹Â? –Š‡ ’ƒ–Š ‘ˆ ’—„Ž‹… †‡„–Ǥ ‡Â?‡”ƒ–‹Â?‰ ”ƒ’‹† ‰”‘™–Š ‹Â? ‡‘”‰‹ƒ ™‹ŽŽ ƒŽ•‘ ”‡“—‹”‡ ‡Â?‰‹Â?‡‡”‹Â?‰ ƒ •Š‹ˆ– ‹Â? –Š‡ ‰”‘™–Š Â?‘†‡Ž –‘™ƒ”† ‘Â?‡ ˆ‹Â?ƒÂ?…‡† Â?‘”‡ ‘—– ‘ˆ †‘Â?‡•–‹… •ƒ˜‹Â?‰• ƒÂ?† †”‹˜‡Â? Â?‘”‡ „› –Š‡ –”ƒ†ƒ„Ž‡ •‡…–‘”•Ǥ ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰• ƒ– ͳͶ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ ”‡Â?ƒ‹Â?• –‘‘ Ž‘™ –‘ •—•–ƒ‹Â? –Š‡ ‹Â?˜‡•–Â?‡Â?– Â?‡…‡••ƒ”› ˆ‘” ”ƒ’‹† ‰”‘™–ŠǤ ‹–Š ‡š’‘”–• ƒ– ͵͸Ǥ͸ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǡ –Š‡ –”ƒ†ƒ„Ž‡ •‡…–‘”• Šƒ˜‡ ’Žƒ›‡† ƒ Â?—…Š •Â?ƒŽŽ‡” ”‘Ž‡ ‹Â? †”‹˜‹Â?‰ ‰”‘™–Š ‹Â? ‡‘”‰‹ƒ –ŠƒÂ? ‹Â? ”‡‰‹‘Â?ƒŽ ƒÂ?† ‰Ž‘„ƒŽ …‘Â?’ƒ”ƒ–‘”•Ǥ ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‹• ‹Â?’‘”–ƒÂ?– ‹Â? ƒ††”‡••‹Â?‰ –Š‡ ‰”‘™–Š …ŠƒŽŽ‡Â?‰‡ –‘ ’”‡˜‡Â?– ˆ—”–Š‡” ‡”‘•‹‘Â? ‘ˆ Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰• ƒÂ?† …‘Â?–ƒ‹Â? ˆ—”–Š‡” ”‡ƒŽ ‡š…ŠƒÂ?‰‡ ”ƒ–‡ ƒ’’”‡…‹ƒ–‹‘Â? Í´ ’”‡••—”‡•Ǥ ‹˜‡Â? –Š‡ Ž‘™ ƒ’’‡–‹–‡ ˆ‘” Š‹‰Š‡” –ƒš ”ƒ–‡• ƒÂ?† –Š‡ Š‹‰Š ’”‘†—…–‹˜‹–› ‘ˆ …‘ŽŽ‡…–‹‘Â?•ǡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ™‹ŽŽ Â?‡‡† –‘ ”‡Ž› ‘Â? ˆ—”–Š‡” ‡š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â?Ǥ Â? –Š‡ ‡˜‡Â?– ‘ˆ ƒÂ? —’•‹†‡ ‰”‘™–Š •…‡Â?ƒ”‹‘ ‹Â?†—…‡† „› Š‹‰Š‡” ƒÂ?† ‘–Š‡” …ƒ’‹–ƒŽ ˆŽ‘™•ǡ •ƒ˜‹Â?‰ ’ƒ”– ‘ˆ –Š‡ ƒ††‹–‹‘Â?ƒŽ ”‡˜‡Â?—‡• ”‡ƒŽ‹œ‡† …ƒÂ? ’”‡˜‡Â?– ƒ ”‡–—”Â? –‘ –Š‡ Žƒ”‰‡ Â?ƒ…”‘‡…‘Â?‘Â?‹… ‹Â?„ƒŽƒÂ?…‡• ‘ˆ –Š‡ ’”‡Ǧ…”‹•‹• ’‡”‹‘†Ǥ Figure 1.1: GDP Growth, Exports, and Imports Figure 1.2: CA Deficit, Investment, FDI, Savings ȋ‹Â? ’‡”…‡Â?– ƒÂ?† ’‡”…‡Â?– ‘ˆ ÈŒ ȋΨ ‘ˆ ÈŒ 14 70 35 12 60 30 10 50 Exports, Imports (% of GDP) 25 8 40 GDP Growth (%) 6 30 20 4 20 15 2 10 10 0 0 Ͳ2 Ͳ10 5 Ͳ4 Ͳ20 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 GDP Growth Imports Exports CA Deficit Investment FDI Inflows Natl Savings Source: ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• PreǦcrisis Developments, 2004Ǧ07 ͳǤ͹Ǥ Georgia experienced strong growth from 2004 through midǦ2008 facilitated by farǦ reaching reforms and large foreign direct investment (FDI) inflows. ‘ŽŽ‘™‹Â?‰ –Š‡ ‘•‡ ‡˜‘Ž—–‹‘Â? ƒ– ‡Â?†ǦʹͲͲ͵ǡ ”‡ˆ‘”Â?• ™‡”‡ —Â?†‡”–ƒÂ?‡Â? –‘ •–”‡Â?‰–Š‡Â? ’—„Ž‹… ˆ‹Â?ƒÂ?…‡•ǡ ‹Â?’”‘˜‡ –Š‡ „—•‹Â?॥ ‡Â?˜‹”‘Â?Â?‡Â?–ǡ —’‰”ƒ†‡ ‹Â?ˆ”ƒ•–”—…–—”‡ •‡”˜‹…‡•ǡ Ž‹„‡”ƒŽ‹œ‡ –”ƒ†‡ǡ ƒÂ?† ‹Â?’”‘˜‡ •‘…‹ƒŽ •‡”˜‹…‡•Ǥ • ƒ ”‡•—Ž– ‘ˆ –Š‡ ”‡ˆ‘”Â?• ƒÂ?† ƒ ˆƒ˜‘”ƒ„Ž‡ ‰Ž‘„ƒŽ ‡Â?˜‹”‘Â?Â?‡Â?–ǡ ‡…‘Â?‘Â?‹… ‰”‘™–Š ƒ˜‡”ƒ‰‡† ͻǤ͵ ’‡”…‡Â?– ’‡” ›‡ƒ” †—”‹Â?‰ ʹͲͲͶǦͲ͹Ǥ Â?‡› †”‹˜‡” ‘ˆ –Š‹• ‰”‘™–Š ™ƒ• •—„•–ƒÂ?–‹ƒŽ ‹Â?ˆŽ‘™• ‘ˆ Ç¡ ™Š‹…Š ‹Â?…”‡ƒ•‡† ˆ”‘Â? ̈́͵͵ͳ Â?‹ŽŽ‹‘Â? ȋͺǤ͵ ’‡”…‡Â?– ‘ˆ ÈŒ ‹Â? ʹͲͲ͵ –‘ ̈́ͳǤ͸͹ „‹ŽŽ‹‘Â? ȋͳ͸ǤͶ ’‡”…‡Â?– ‘ˆ ÈŒ ‹Â? ʹͲͲ͹Ǥ ͳǤͺǤ Growth during 2004Ǧ07 was associated with a significant widening of the current account deficit. š’‘”–• ”‡Â?ƒ‹Â?‡† ƒ”‘—Â?† ͵ͳǦ͵Ͷ ’‡”…‡Â?– ‘ˆ  †—”‹Â?‰ ʹͲͲͶǦͲ͹ǡ •—‰‰‡•–‹Â?‰ –Šƒ– ‰”‘™–Š †—”‹Â?‰ –Š‹• ’‡”‹‘† ™ƒ• Â?‘– ƒ••‘…‹ƒ–‡† ™‹–Š ƒ •—„•–ƒÂ?–‹ƒŽ ‡š’ƒÂ?•‹‘Â? ‘ˆ –Š‡ ‡š’‘”– ƒÂ?† –”ƒ†ƒ„Ž‡ •‡…–‘”•Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ –Š‡ Žƒ”‰‡ …ƒ’‹–ƒŽ ‹Â?ˆŽ‘™•ǡ ƒŽ‘Â?‰ ™‹–Š ”ƒ’‹† …”‡†‹– ‰”‘™–Šǡ ˆ—‡Ž‡† ƒÂ? ‡š’ƒÂ?•‹‘Â? ‘ˆ ‹Â?’‘”–•Ǥ ‰‰”‡‰ƒ–‡ †‡Â?ƒÂ?† ™ƒ• †”‹˜‡Â? ‹Â? Žƒ”‰‡ ’ƒ”– „› –Š‡ ‰”‘™–Š ‘ˆ …‘Â?•—Â?’–‹‘Â?Ç¡ ’ƒ”–‹…—Žƒ”Ž› ”ƒ’‹†Ž› ‰”‘™‹Â?‰ ‰‘˜‡”Â?Â?‡Â?– …‘Â?•—Â?’–‹‘Â?Ǥ ‘Â?•‡“—‡Â?–Ž›ǡ –Š‡ ‡š–‡”Â?ƒŽ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– ™‹†‡Â?‡† ˆ”‘Â? ͹ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͶ –‘ ʹͳǤͺ ’‡”…‡Â?– „› ʹͲͲͺǡ ”ƒ‹•‹Â?‰ …‘Â?…‡”Â?• ƒ„‘—– •—•–ƒ‹Â?ƒ„‹Ž‹–›Ǥ Š‡ ”‡ƒŽ ‡š…ŠƒÂ?‰‡ ”ƒ–‡ ƒ’’”‡…‹ƒ–‡† „› ƒ„‘—– ͶͲ ’‡”…‡Â?– „‡–™‡‡Â? ʹͲͲͶ –‘ Â?‹†ǦʹͲͲͺǡ –Š—• ‹Â?’ƒ…–‹Â?‰ –Š‡ …‘Â?’‡–‹–‹˜‡Â?॥ ‘ˆ –”ƒ†ƒ„Ž‡•Ǥ ”‘•• Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰• ˆ‡ŽŽ ˆ”‘Â? Í´Í· ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͶ –‘ ͳʹǤͶ ’‡”…‡Â?– ‹Â? ʹͲͲ͹ ƒÂ?† ͵Ǥ͵ ’‡”…‡Â?– ‹Â? ʹͲͲͺǡ –Š—• •Š‹ˆ–‹Â?‰ –Š‡ „—”†‡Â? ‘ˆ ˆ‹Â?ƒÂ?…‹Â?‰ ‹Â?˜‡•–Â?‡Â?– ƒÂ?† ‰”‘™–Š Žƒ”‰‡Ž› –‘ ˆ‘”‡‹‰Â? …ƒ’‹–ƒŽ ‹Â?ˆŽ‘™•Ǥ ͳǤͻǤ Tax reforms were highly successful in raising revenue, while lowering rates and streamlining administration. Š‡ –ƒš ”‡‰‹Â?‡ ™ƒ• •–”‡ƒÂ?Ž‹Â?‡† „› ”‡†—…‹Â?‰ „‘–Š –Š‡ Â?—Â?„‡” ‘ˆ –ƒš‡• ƒÂ?† Â?‡› –ƒš ”ƒ–‡•Ǥ • ƒ ”‡•—Ž–ǡ –ƒš ”‡˜‡Â?—‡• ‹Â?…”‡ƒ•‡† ˆ”‘Â? ͳͶǤ͸ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͵ –‘ ʹͷǤͺ ’‡”…‡Â?– ‹Â? ʹͲͲ͹Ǥ ‘‰‡–Š‡” ™‹–Š Â?‘Â?–ƒš ”‡˜‡Â?—‡• ƒÂ?† ‰”ƒÂ?–•ǡ –‘–ƒŽ ”‡˜‡Â?—‡• ‹Â?…”‡ƒ•‡† ˆ”‘Â? ͳ͸ ͵ –‘ ʹͻǤ͵ ’‡”…‡Â?– ‘ˆ  †—”‹Â?‰ –Š‹• ’‡”‹‘†Ǥ Š‡ Â?—Â?„‡” ‘ˆ –ƒš‡• ™ƒ• ”‡†—…‡† ˆ”‘Â? ʹͳ ‹Â? ʹͲͲͶ –‘ ͹ ‹Â? ʹͲͲͷ ƒÂ?† –ƒš ”ƒ–‡• ™‡”‡ ”‡†—…‡† ƒ…”‘•• –Š‡ „‘ƒ”†Ǥ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ –Š‡ –ƒš „ƒ•‡ ™ƒ• „”‘ƒ†‡Â?‡† „› ‡Ž‹Â?‹Â?ƒ–‹Â?‰ •‡˜‡”ƒŽ ‡š‡Â?’–‹‘Â?• ƒÂ?† •’‡…‹ƒŽ ”‡‰‹Â?‡•Ǥ Š‡•‡ –ƒš ’‘Ž‹…› ”‡ˆ‘”Â?• ™‡”‡ •—’’‘”–‡† „› Â?‡› ‹Â?•–‹–—–‹‘Â?ƒŽ ”‡ˆ‘”Â?• –‘ •–”‡Â?‰–Š‡Â? –ƒš ƒÂ?† …—•–‘Â?• ĠÂ?‹Â?‹•–”ƒ–‹‘Â? ƒÂ?† ‡Â?ˆ‘”…‡Â?‡Â?–Ǥ ƒ”‰‡ Â?—Â?„‡”• ‘ˆ –ƒš ƒÂ?† …—•–‘Â?• ‘ˆˆ‹…‹ƒŽ• ™‡”‡ †‹•Â?‹••‡† ƒÂ?† Â?‡™ •–ƒˆˆ ™ƒ• Š‹”‡† ™‹–Š Š‹‰Š‡” ™ƒ‰‡•ǡ –”ƒ‹Â?‹Â?‰ǡ ƒÂ?† …‡”–‹ˆ‹…ƒ–‹‘Â? –‡•–•Ǥ ‡™ ”—Ž‡• ”‡‹Â?ˆ‘”…‡† ’”‘ˆ‡••‹‘Â?ƒŽ „‡Šƒ˜‹‘” ƒÂ?† †‡–‡””‡† …‘””—’–‹‘Â? „› ‹Â?’‘•‹Â?‰ •‡˜‡”‡ ’‡Â?ƒŽ–‹‡• ˆ‘” Â?‹•…‘Â?†—…– ƒÂ?† ‹Â?–”‘†—…‹Â?‰ „‘Â?—•‡• ˆ‘” ”‡’‘”–‹Â?‰ ˆ”ƒ—† ƒÂ?† …‘””—’–‹‘Â?Ǥ ͳǤͳͲǤ The public debt ratio declined during 2004Ǧ07 as higher revenues and privatization proceeds more than fully financed a substantial increase in public expenditures. Ž‘Â?‰ ™‹–Š –Š‡ ”‹•‡ ‹Â? –ƒš ”‡˜‡Â?—‡•ǡ –‘–ƒŽ ’—„Ž‹… ‡š’‡Â?†‹–—”‡• ‹Â?…”‡ƒ•‡† Â?‘”‡ –ŠƒÂ? ’”‘’‘”–‹‘Â?ƒŽŽ› ˆ”‘Â? ͳ͹Ǥͷ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͵ –‘ ͵Ͷ ’‡”…‡Â?– ‹Â? ʹͲͲ͹Ǥ • ƒ ”‡•—Ž–ǡ –Š‡ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹– ‹Â?…”‡ƒ•‡† ˆ”‘Â? ͳǤͷ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͵ –‘ ͶǤ͹ ’‡”…‡Â?– ‹Â? ʹͲͲ͹ǡ „—– ™ƒ• ˆ‹Â?ƒÂ?…‡† –Š”‘—‰Š Š‹‰Š‡” ’”‹˜ƒ–‹œƒ–‹‘Â? ”‡…‡‹’–• ™Š‹…Š ƒÂ?‘—Â?–‡† –‘ ͷǤʹ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹Ǥ ‹–Š –Š‡ †‡ˆ‹…‹– ˆ—ŽŽ› ˆ‹Â?ƒÂ?…‡† ˆ”‘Â? …—””‡Â?– ’”‘…‡‡†•ǡ •–”‘Â?‰ ‡…‘Â?‘Â?‹… ‰”‘™–Š Ž‡† –‘ •–‡ƒ†› ‹Â?’”‘˜‡Â?‡Â?– ‹Â? ’—„Ž‹… †‡„– „—”†‡Â? ‹Â?†‹…ƒ–‘”•Ǥ š–‡”Â?ƒŽ ’—„Ž‹… †‡„– †‡…Ž‹Â?‡† ˆ”‘Â? Ͷͷ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͵ –‘ ͳ͸Ǥͺ ’‡”…‡Â?– ‹Â? ʹͲͲ͹Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ ’”‹˜ƒ–‡ ‡š–‡”Â?ƒŽ †‡„– ‹Â?…”‡ƒ•‡† …‘Â?•‹†‡”ƒ„Ž› ˆ”‘Â? ͷǤͷ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͵ –‘ ʹͳ ’‡”…‡Â?– ‹Â? ʹͲͲ͹ ĥ –Š‡ …‘”’‘”ƒ–‡ ƒÂ?† ˆ‹Â?ƒÂ?…‹ƒŽ •‡…–‘” –‘‘Â? ƒ†˜ƒÂ?–ƒ‰‡ ‘ˆ ƒ˜ƒ‹Žƒ„Ž‡ ˆ‘”‡‹‰Â? …ƒ’‹–ƒŽ ˆ‘” –Š‡‹” Â?‡†‹—Â? ƒÂ?† Ž‘Â?‰ –‡”Â?Ç¡ ĥ ™‡ŽŽ ĥ •Š‘”– –‡”Â?Ç¡ „‘””‘™‹Â?‰ Â?‡‡†•Ǥ Crisis and Response ͳǤͳͳǤ The shocks from the August 2008 conflict and the global financial crisis resulted in a sharp downturn in economic growth and adjustment of the current account deficit. Š‡ †‘—„Ž‡ •Š‘…Â?• Ž‡† –‘ †‡–‡”‹‘”ƒ–‹‘Â? ‹Â? ‹Â?˜‡•–‘” ƒÂ?† …‘Â?•—Â?‡” …‘Â?ˆ‹†‡Â?…‡ǡ …‘Â?–”ƒ…–‹‘Â? ‹Â? Ç¡ ‡š’‘”–•ǡ ƒÂ?† ”‡Â?‹––ƒÂ?…‡•ǡ ƒÂ?† ƒ …—–„ƒ…Â? ‹Â? „ƒÂ?Â? Ž‡Â?†‹Â?‰Ǥ Š‡ ‡…‘Â?‘Â?› ‰”‡™ „› ʹǤ͵ ’‡”…‡Â?– ‹Â? ʹͲͲͺ ƒÂ?† …‘Â?–”ƒ…–‡† „› ͵Ǥͺ ’‡”…‡Â?– ‹Â? ʹͲͲͻǡ ™Š‹…Š ™ƒ• ƒ •Šƒ”’ •Ž‘™†‘™Â? ˆ”‘Â? ‰”‘™–Š ‹Â? ‡š…‡•• ‘ˆ Í» ’‡”…‡Â?– †—”‹Â?‰ –Š‡ ’”‡…‡†‹Â?‰ ˆ‘—” ›‡ƒ”•Ǥ ‹Â?ˆŽ‘™• …‘ŽŽƒ’•‡† ˆ”‘Â? ̈́ͳǤ͸͹ „‹ŽŽ‹‘Â? ȋͳ͸ǤͶ ’‡”…‡Â?– ‘ˆ ÈŒ ‹Â? ʹͲͲ͹ –‘ ̈́͸ͷͺ Â?‹ŽŽ‹‘Â? ȋ͸Ǥͳ ’‡”…‡Â?– ‘ˆ ÈŒ ‹Â? ʹͲͲͻǡ ™Š‹Ž‡ ‡š’‘”–• ˆ‡ŽŽ ˆ”‘Â? ͵ͳ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹ –‘ ʹͻǤͺ ’‡”…‡Â?– ‹Â? ʹͲͲͻǤ ‹–Š –Š‡ ˆƒŽŽ ‹Â? ƒÂ?† ‘–Š‡” ’”‹˜ƒ–‡ ‹Â?ˆŽ‘™•ǡ –Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– ƒ†Œ—•–‡† ˆ”‘Â? ʹͳǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͺ –‘ ͳͲǤ͸ ’‡”…‡Â?– ‹Â? ʹͲͲͻ ĥ ‹Â?’‘”–• ˆ‡ŽŽ „› ͳͲ ’‡”…‡Â?–ƒ‰‡ ’‘‹Â?–• ‘ˆ  ‹Â? ʹͲͲͻǤ Š‡ Žƒ”‰‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ …”‹•‹• ƒ••‹•–ƒÂ?…‡ ’ƒ…Â?ƒ‰‡ –‘ ‡‘”‰‹ƒ ‡Â?ƒ„Ž‡† ‹– –‘ ƒ˜‡”– –Š‡ ‡˜‡Â? •Šƒ”’‡” ƒ†Œ—•–Â?‡Â?–• ‡š’‡”‹‡Â?…‡† „› ‘–Š‡” …‘—Â?–”‹‡• ™‹–Š ‡“—ƒŽŽ› Žƒ”‰‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹–• ‘Â? –Š‡ ‡˜‡ ‘ˆ –Š‡ …”‹•‹•Ǥ • …‘Â?•—Â?’–‹‘Â? ™ƒ• •Â?‘‘–Š‡† •‘Â?‡™Šƒ– ‹Â? –Š‡ ˆƒ…‡ ‘ˆ ˆƒŽŽ‹Â?‰ ‹Â?…‘Â?‡•ǡ Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰• ’Ž—Â?Â?‡–‡† ˆ”‘Â? ͳʹǤͶ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹ –‘ ʹǤͶ ’‡”…‡Â?– ‹Â? ʹͲͲͻǤ ͳǤͳʹǤ As the authorities responded with a fiscal stimulus to mitigate the downturn and restore confidence, the fiscal deficit and public debt ratio increased during 2008Ǧ09. —„Ž‹… ‡š’‡Â?†‹–—”‡• ‹Â?…”‡ƒ•‡† ˆ”‘Â? ͵Ͷ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹ –‘ ͵ͺǤͶ ’‡”…‡Â?– ‹Â? ʹͲͲͻǡ ™Š‹Ž‡ –ƒš ”‡˜‡Â?—‡• †‡…Ž‹Â?‡† ˆ”‘Â? ʹͷǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹ –‘ ʹͶǤͶ ’‡”…‡Â?– ‹Â? ʹͲͲͻǤ • ƒ ”‡•—Ž–ǡ –Š‡ ˆ‹•…ƒŽ †‡ˆ‹…‹– ™‹†‡Â?‡† ˆ”‘Â? ͶǤ͹ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹ –‘ ͻǤʹ ’‡”…‡Â?– ‹Â? ʹͲͲͻǤ Š‡ Š‹‰Š‡” ˆ‹•…ƒŽ †‡ˆ‹…‹–• ™‡”‡ ˆ‹Â?ƒÂ?…‡† ’”‹Â?ƒ”‹Ž› –Š”‘—‰Š ‹Â?…”‡ƒ•‡† †‘Â?‘” •—’’‘”–ǡ ™‹–Š –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ …‘Â?Â?—Â?‹–› ’Ž‡†‰‹Â?‰ ̈́ͶǤͷ „‹ŽŽ‹‘Â? ‹Â? ’‘•–Ǧ…”‹•‹• ƒ••‹•–ƒÂ?…‡ –‘ ‡‘”‰‹ƒ ‘˜‡” –Š”‡‡ ›‡ƒ”•ǡ ‹Â? ƒ††‹–‹‘Â? –‘ ƒ ̈́ͳǤͳͷ „‹ŽŽ‹‘Â?  –ƒÂ?†„› ””ƒÂ?‰‡Â?‡Â?–Ǥ • ƒ ”‡•—Ž–ǡ ‡š–‡”Â?ƒŽ ’—„Ž‹… †‡„– ‹Â?…”‡ƒ•‡† ˆ”‘Â? ͳ͸Ǥͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹ –‘ ͵ͳǤͶ ’‡”…‡Â?– ‹Â? ʹͲͲͻǤ Ͷ Table 1.1: Georgia: Selected Economic Indicators, 2003Ǧ2015 ȋ‹Â? ’‡”…‡Â?– ‘ˆ Ç¡ ‡š…‡’– ™Š‡”‡ Â?‘–‡†Ȍ 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012p 2013p 2014p 2015p GNI per capita (US$, atlas method) 860.0 1050.0 1320.0 1,680 2,090 2,460 2,540 2,700 2,880 3,050 3,220 3,400 3,590 Unemployment Rate 11.5 12.6 13.8 13.6 13.3 16.5 16.9 16.3 15.8 15.3 14.8 14.3 13.8 GDP Growth Rate 11.1 5.9 9.6 9.4 12.3 2.3 -3.8 6.3 7.0 6.5 5.5 5.5 5.5 CPI (e.o.p.) 7.0 7.5 6.2 8.8 11.0 5.5 3.0 11.2 2.0 5.0 6.0 6.0 6.0 Investment (% GDP) 31.3 31.9 33.5 30.9 32.1 26.0 13.0 21.6 25.7 25.6 24.2 23.7 23.7 Gross National Savings (% GDP) 21.7 25.0 22.4 15.7 12.4 3.3 2.4 11.3 14.0 13.0 13.0 14.7 15.9 percent of GDP, except where noted Fiscal Revenues and Grants 16.0 23.1 24.2 26.8 29.3 30.7 29.3 28.3 28.5 27.4 27.3 27.1 26.9 Tax Revenues 14.6 19.7 20.8 22.8 25.8 24.9 24.4 23.5 25.4 24.7 24.7 24.7 24.7 Expenditure and Net Lending 17.5 20.7 26.0 29.8 34.0 37.0 38.4 34.9 32.1 30.9 30.3 29.7 29.0 Current Expenditure 14.7 15.8 20.1 22.2 25.0 28.5 30.1 26.0 23.3 22.5 22.3 22.1 21.8 Capital Expenditure and Net Lending 2.8 4.9 5.9 7.6 9.0 8.6 8.4 8.8 8.9 8.4 8.0 7.6 7.2 Overall Fiscal Balance -1.5 2.4 -1.8 -3.0 -4.7 -6.3 -9.2 -6.6 -3.6 -3.5 -3.0 -2.7 -2.1 Privatization Receipts 0.4 0.7 3.6 5.2 5.2 3.7 2.0 1.1 1.6 0.5 0.2 0.2 0.2 External External Current Account Balance -9.6 -6.9 -11.1 -15.1 -19.7 -21.9 -10.6 -10.3 -11.8 -12.6 -11.2 -9.0 -7.8 Exports of Goods and Services 32.3 32.1 34.1 32.8 31.1 28.7 29.8 34.9 36.6 39.2 42.2 46.5 50.2 Imports of Goods and Services 46.7 48.6 51.8 56.8 57.9 58.3 48.9 52.7 55.4 56.5 57.7 59.0 60.5 FDI Inflows (% GDP) 8.3 9.4 8.5 15.3 16.4 11.8 6.1 7.0 6.8 6.1 6.0 6.0 6.0 FDI Inflows (M US$) 331 483 542 1,186 1,675 1,523 658 817 973 964 1,032 1,095 1,190 Intl Reserves (M o of Impts of G&S) 1.2 1.8 1.7 2.4 2.8 2.4 4.8 4.4 4.3 3.6 3.1 2.9 2.8 Intl Reserves (M US$) 191 383 474 881 1,361 1,480 2,111 2,265 2,818 2,734 2,528 2,590 2,752 Debt External Public Debt 1/ 44.9 34.5 26.6 21.9 17.5 20.9 31.4 33.6 29.0 27.7 25.3 24.2 23.2 Total Public Debt 55.2 43.6 34.0 27.9 22.3 25.0 37.0 39.1 33.9 32.7 30.9 30.1 29.4 External Private Debt 5.5 5.6 15.9 21.0 23.1 26.6 28.2 28.8 26.9 26.3 25.9 23.8 Total External Debt 40.0 32.3 37.9 38.5 44.0 58.0 61.8 58.1 54.5 51.6 50.1 47.0 Notes: p=projected; 1/ public and publicly guaranteed Source: Georgian authorities and World Bank staff estimates Í· Figure 1.3: Fiscal Framework Figure 1.4: Fiscal Framework ȋ‹Â? ’‡”…‡Â?– ‘ˆ Ç¡ ʹͲͲ͵ǦͳͳȌ È‹‡ƒŽ ʹͲͳͲ ƒ”‹ǡ ‹ŽŽ‹‘Â?•Ȍ 40 38.4 8000 37.0 34.0 34.9 35 7000 32.1 29.7 30 30.7 6000 26.0 29.3 29.3 28.5 28.3 26.7 5000 25 24.4 20.7 23.1 25.8 24.9 25.4 24.4 23.5 4000 20 17.5 22.9 20.8 19.7 3000 15 16.0 1961 1777 1740 1634 1834 2000 1582 14.6 9.2 10 950 6.3 6.6 725 1000 394 4.7 3.0 3.6 5 1.5 1.6 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total Expenditures Revenues & Grants Total Expenditures Revenues & Grants Tax Revenues Current expenditure Tax Revenues Overall fiscal deficit Capital Expenditures Source: ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• Economic Rebound and Fiscal Adjustment ͳǤͳ͵Ǥ Economic growth rebounded strongly by 6.7 percent in 2010Ǧ11, supported by public investment, strengthening confidence, and a rebound in both merchandise and services exports. Š‡ ‡…‘Â?‘Â?› ”‡„‘—Â?†‡† „› ͸Ǥ͵ ’‡”…‡Â?– ‹Â? ʹͲͳͲ ƒÂ?† ͹ ’‡”…‡Â?– ‹Â? ʹͲͳͳǤ ƒ”–‹…‹’ƒ–‹‘Â? „› •‡…–‘”• ‹Â? –Š‡ ”‡„‘—Â?† ™ƒ• „”‘ƒ† „ƒ•‡†ǡ ™‹–Š Â?ƒÂ?—ˆƒ…–—”‹Â?‰ ƒÂ?† •‡”˜‹…‡• Â?ƒÂ?‹Â?‰ ’ƒ”–‹…—Žƒ”Ž› •–”‘Â?‰ …‘Â?–”‹„—–‹‘Â?•Ǥ Š‡ ”‡…‘˜‡”› „‡Â?‡ˆ‹–‡† ˆ”‘Â? ƒ ’‹…Â?—’ ‹Â? ‡š’‘”–•ǡ –‘—”‹•Â?Ç¡ „ƒÂ?Â? Ž‡Â?†‹Â?‰ǡ ƒÂ?† …‘Â?–‹Â?—‡† Š‹‰Š Ž‡˜‡Ž• ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?–Ǥ Š‡ ”‡„‘—Â?† ‹Â? „‘–Š Â?‡”…ŠƒÂ?†‹•‡ ƒÂ?† •‡”˜‹…‡• ‡š’‘”–• Šƒ˜‡ ’Žƒ›‡† ƒ Â?ƒŒ‘” ”‘Ž‡ ‹Â? –Š‡ ‡…‘Â?‘Â?‹… ”‡…‘˜‡”›Ǥ š’‘”–• ‘ˆ ‰‘‘†• ƒÂ?† •‡”˜‹…‡• ™‡”‡ —’ –‘ ͵͸Ǥ͸ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ ˆ”‘Â? ʹͻǤͺ ’‡”…‡Â?– ‹Â? ʹͲͲͻǤ ‡”…ŠƒÂ?†‹•‡ ‡š’‘”–• ȋ—’ ͵ͻ ’‡”…‡Â?– ’‡” ›‡ƒ” ‹Â? ʹͲͳͲǦͳͳȌ ™‡”‡ …‘Â?’‘•‡† ’”‹Â?ƒ”‹Ž› ‘ˆ Â?‡–ƒŽ• ƒÂ?† Â?‡–ƒŽ ’”‘†—…–•ǡ ”‡’ƒ‹”‡† ƒÂ?† ”‡Â?ƒÂ?—ˆƒ…–—”‡† ˜‡Š‹…Ž‡•ǡ ™‹Â?‡• ƒÂ?† „‡˜‡”ƒ‰‡•ǡ ˆ‡”–‹Ž‹œ‡”•ǡ ƒÂ?† ˆ”—‹–• ƒÂ?† Â?—–• ȋ–‘‰‡–Š‡” ƒ……‘—Â?–‹Â?‰ ˆ‘” ƒ„‘—– ͸Ͳ ’‡”…‡Â?–ȌǤ Š‡ •‡”˜‹…‡• •‡…–‘” „‡Â?‡ˆ‹–‡† ˆ”‘Â? ˜‹‰‘”‘—• ‡š’ƒÂ?•‹‘Â? ‹Â? –‘—”‹•– ƒ””‹˜ƒŽ• ƒÂ?† ‰”‘™–Š ‹Â? –”ƒÂ?•‹– –”ƒ†‡ –Š”‘—‰Š ‡‘”‰‹ƒǤ Š‡ Â?—Â?„‡” ‘ˆ –‘—”‹•–• ‹Â?…”‡ƒ•‡† „› ͵͹ ’‡”…‡Â?– ’‡” ›‡ƒ” ‹Â? ʹͲͳͲǦͳͳǡ ™‹–Š –Š‡ „—ŽÂ? ‘ˆ ˜‹•‹–‘”• ˆ”‘Â? ”Â?‡Â?‹ƒǡ œ‡”„ƒ‹ŒƒÂ?Ç¡ —”Â?‡›ǡ ƒÂ?† Â?”ƒ‹Â?‡Ǥ œ‡”„ƒ‹ŒƒÂ? ƒÂ?† ”Â?‡Â?‹ƒ ƒ……‘—Â?–‡† ˆ‘” –Š‡ „—ŽÂ? ‘ˆ –”ƒÂ?•‹– –”ƒ†‡ –Š”‘—‰Š ‡‘”‰‹ƒǡ ™‹–Š ’”‘…‡‡†• ˆ”‘Â? ‡š’‘”–• ‘ˆ –”ƒÂ?•’‘”– •‡”˜‹…‡• —’ ͳ͵ ’‡”…‡Â?– ’‡” ›‡ƒ” ‹Â? ʹͲͳͲǦͳͳǤ ͳǤͳͶǤ The current account deficit widened to 11.8 percent of GDP in 2011, driven by strong growth of imports and higher capital inflows. Â?’‘”–• ‰”‡™ •–”‘Â?‰Ž› „› ͵ͶǤͷ ’‡”…‡Â?– ‹Â? ʹͲͳͳǡ †”‹˜‡Â? „› Š‹‰Š‡” ˆ‘‘† ƒÂ?† ‘‹Ž ’”‹…‡•ǡ ĥ ™‡ŽŽ ĥ Š‹‰Š‡” †‡Â?ƒÂ?† ˆ”‘Â? ‹Â?’”‘˜‡† ‡…‘Â?‘Â?‹… ’‡”ˆ‘”Â?ƒÂ?…‡Ǥ ”‡Â?ƒ‹Â?‡† •–ƒ„Ž‡ ƒ– ƒ„‘—– ͸Ǥͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǡ ™Š‹Ž‡ ‘–Š‡” ’”‹˜ƒ–‡ ‹Â?ˆŽ‘™• ‹Â?…”‡ƒ•‡†ǡ Â?‘•– Â?‘–ƒ„Ž› Â?‘Â?Ǧ”‡•‹†‡Â?– †‡’‘•‹–• ‹Â? –Š‡ „ƒÂ?Â?‹Â?‰ •‡…–‘” ĥ ™‡ŽŽ ĥ •Š‘”– –‡”Â? „‘””‘™‹Â?‰ „› „ƒÂ?Â?•Ǥ ˆˆ‹…‹ƒŽ „‘””‘™‹Â?‰ ƒŽ•‘ …‘Â?–”‹„—–‡† –‘ ˆ‹Â?ƒÂ?…‹Â?‰ –Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹–Ǥ ͳǤͳͷǤ The authorities have implemented fiscal adjustment in 2010Ǧ11 as recovery has taken hold. • –Š‡ ‡…‘Â?‘Â?› ”‡„‘—Â?†‡† ‹Â? ʹͲͳͲǦͳͳǡ ˆ‹•…ƒŽ ƒ†Œ—•–Â?‡Â?– ™ƒ• ‹Â?’Ž‡Â?‡Â?–‡† ’”‹Â?ƒ”‹Ž› –Š”‘—‰Š –Š‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‘ˆ …—””‡Â?– ‡š’‡Â?†‹–—”‡•Ǥ ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ™‡”‡ Â?ƒ‹Â?–ƒ‹Â?‡† ƒ– ͺǤͷǦͻ ’‡”…‡Â?– ‘ˆ  ĥ ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ƒÂ?† ”‡Â?ƒ‹Â?‡† ™‡ƒÂ?Ǥ ‘–ƒŽ ‡š’‡Â?†‹–—”‡• †‡…Ž‹Â?‡† ˆ”‘Â? ͵ͺǤͶ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ –‘ ͵ʹǤͳ ’‡”…‡Â?– ‹Â? ʹͲͳͳǤ • ƒ ”‡•—Ž–ǡ –Š‡ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹– †‡…Ž‹Â?‡† ˆ”‘Â? ͻǤʹ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ –‘ ͵Ǥ͸ ’‡”…‡Â?– ‹Â? ʹͲͳͳǤ ƒš ”‡˜‡Â?—‡• ‡†‰‡† —’ ˆ”‘Â? ʹͶǤͶ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ –‘ ʹͷǤͶ ’‡”…‡Â?– ‹Â? ʹͲͳͳǡ ƒŽ–Š‘—‰Š –Š‹• „‡Â?‡ˆ‹–‡† ˆ”‘Â? ‘Â?‡Ǧ‘ˆˆ ‹–‡Â?• …‘ŽŽ‡…–‡† ‹Â? ͸ ʹͲͳͳǤ ‹–Š ƒ †‡…Ž‹Â?‡ ‹Â? Â?‘Â?Ǧ–ƒš ”‡˜‡Â?—‡• ƒÂ?† ‰”ƒÂ?–•ǡ –‘–ƒŽ ”‡˜‡Â?—‡• †‡…Ž‹Â?‡† ˆ”‘Â? ʹͻǤ͵ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ –‘ ʹͺǤͷ ’‡”…‡Â?– ‹Â? ʹͲͳͳǤ Table 1.2: Georgia: External Financing 2007Ǧ15 ȋ‹Â? ’‡”…‡Â?– ‘ˆ ÈŒ 2007 2008 2009 2010 2011* 2012p 2013p 2014p 2015p Financing Needs Current Account Deficit -19.7 -21.9 -10.6 -10.3 -11.8 -12.5 -11.2 -9.0 -7.8 Repayment of M LT Debt -2.6 -2.8 -4.7 -3.9 -4.0 -4.8 -5.9 -5.0 -4.0 Total Financing Requirement -22.3 -24.8 -15.4 -14.2 -15.8 -17.3 -17.2 -14.0 -11.8 Financing S ources Public Sector flows 1.3 6.2 8.1 5.1 3.5 4.0 2.2 1.9 1.4 Foreign Direct Investment 17.1 12.2 6.1 7.0 6.8 5.9 6.1 6.0 5.9 Private Sector M LT Borrowing 8.3 5.9 5.3 3.4 4.8 4.0 4.3 4.1 3.9 Other Private flows -0.8 -0.2 -0.2 -1.8 3.8 3.3 3.2 1.9 1.6 IM F 0.4 2.0 3.2 2.6 0.0 0.0 0.0 0.0 0.0 Adjustments -0.3 -0.3 -1.4 -0.3 0.8 0.0 0.0 0.0 0.0 Use of Reserves -3.7 -1.0 -5.7 -1.8 -4.0 0.2 1.4 0.1 -1.1 Total Financing Sources 22.3 24.8 15.4 14.2 15.8 17.3 17.2 14.0 11.8 Notes: *=preliminary; p=projections; Source: Georgian authorities and Bank, IM F Staff estimates Source: ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• ƒÂ?†  È€  •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͳǤͳ͸Ǥ External public debt declined to 29 percent of GDP in 2011 after peaking at 33.6 percent in 2010. Š‡ ƒ—–Š‘”‹–‹‡• Šƒ˜‡ ˆ‹Â?ƒÂ?…‡† –Š‡ ˆ‹•…ƒŽ †‡ˆ‹…‹– Â?‘•–Ž› –Š”‘—‰Š …‘Â?…‡••‹‘Â?ƒŽ ‡š–‡”Â?ƒŽ „‘””‘™‹Â?‰ ƒÂ?† •Â?ƒŽŽ ˜‘Ž—Â?‡• ‘ˆ †‘Â?‡•–‹… Ǧ„‹ŽŽ ‹••—ƒÂ?…‡•Ǥ • –Š‡ ˆ‹•…ƒŽ †‡ˆ‹…‹– Šƒ• Â?ƒ””‘™‡† ƒÂ?† –Š‡ ‰”‘™–Š ”‡„‘—Â?† Šƒ• „‡‡Â? •—•–ƒ‹Â?‡†ǡ ‡š–‡”Â?ƒŽ ’—„Ž‹… †‡„– †‡…Ž‹Â?‡† –‘ Í´Í» ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǤ ‡™ Ǧ„‹ŽŽ ‹••—ƒÂ?…‡• ƒÂ?‘—Â?–‡† –‘ ‘Â?Ž›  ͻͳ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͳͳǡ …‘Â?’ƒ”‡† –‘  ʹ͸Ͳ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͻ ƒÂ?†  ͳ͹ʹ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͳͲǤ ‘Â?•‡“—‡Â?–Ž›ǡ –‘–ƒŽ ’—„Ž‹… †‡„– ƒŽ•‘ †‡…Ž‹Â?‡† –‘ ͵ͶǤ͵ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ ˆ”‘Â? ͵ͻǤ͵ ’‡”…‡Â?– ‹Â? ʹͲͳͲǤ Š‹Ž‡ ’”‹˜ƒ–‡ ‡š–‡”Â?ƒŽ †‡„– Šƒ• ‹Â?…”‡ƒ•‡† „› ƒ„‘—– Í„ ͷͷͲ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͳͲǦͳͳǡ –Š‡ ‰”‘™–Š ‘ˆ Â?‘Â?‹Â?ƒŽ  Šƒ• Â?‡ƒÂ?– –Šƒ– ’”‹˜ƒ–‡ ‡š–‡”Â?ƒŽ †‡„– ‡†‰‡† —’ ‘Â?Ž› •Ž‹‰Š–Ž› –‘ ʹͺǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ ˆ”‘Â? ʹͺǤʹ ’‡”…‡Â?– ‹Â? ʹͲͳͲǤ • ƒ ”‡•—Ž–ǡ –‘–ƒŽ ‡š–‡”Â?ƒŽ †‡„– †‡…Ž‹Â?‡† –‘ ͷͺǤͳ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ ˆ”‘Â? ƒ ’‡ƒÂ? ‘ˆ ͸ʹ ’‡”…‡Â?– ‹Â? ʹͲͳͲǤ Challenges ͳǤͳ͹Ǥ With external exposure significant in Georgia, continued implementation of fiscal consolidation provides the key anchor of sustainability in an increasingly uncertain global economic environment. ‡‘”‰‹ƒǯ• …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– ‹• ƒÂ?‘Â?‰ –Š‡ Š‹‰Š‡•– ‹Â? –Š‡ ”‡‰‹‘Â? ƒ– ͳͳǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǤ Š‡ ƒ˜‡”ƒ‰‡ ˆ‘” Â?‘Â?Ǧ‘‹Ž …‘—Â?–”‹‡• ™ƒ• ƒ„‘—– ͷǤͷ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǡ ™‹–Š ‘Â?Ž› Ž„ƒÂ?‹ƒǡ ”Â?‡Â?‹ƒǡ ƒÂ?† ‡Žƒ”—• Šƒ˜‹Â?‰ • –Šƒ– ™‡”‡ •‹Â?‹Žƒ” ‹Â? ‘”†‡” ‘ˆ Â?ƒ‰Â?‹–—†‡ –‘ –Šƒ– ‘ˆ ‡‘”‰‹ƒǤ Š‹• Ž‡ƒ˜‡• ‡‘”‰‹ƒ ’ƒ”–‹…—Žƒ”Ž› ‡š’‘•‡† –‘ ƒ „”‘ƒ†‡” ‰Ž‘„ƒŽ ‡…‘Â?‘Â?‹… •Š‘…Â?Ǥ Š‹Ž‡ ‡…‘Â?‘Â?‹… ƒ…–‹˜‹–› ‹Â? ‡‘”‰‹ƒ Šƒ• Â?‘– ›‡– „‡‡Â? ‹Â?’ƒ…–‡† „› –Š‡ ‡˜‘Ž˜‹Â?‰ ‡—”‘Ǧœ‘Â?‡ …”‹•‹•ǡ ƒ „”‘ƒ†‡” ‰Ž‘„ƒŽ †‘™Â?–—”Â? ƒˆˆ‡…–‹Â?‰ ‡‘”‰‹ƒǯ• Â?ƒ‹Â? ‡…‘Â?‘Â?‹… ’ƒ”–Â?‡”• ™‘—Ž† Ž‹Â?‡Ž› ƒˆˆ‡…– ‹–• ‡š’‘”–•ǡ –‘—”‹•Â? ‹Â?ˆŽ‘™•ǡ Ç¡ ƒÂ?† ˆ‹Â?ƒÂ?…‹Â?‰ …‘•–•Ǥ ‘Â?–‹Â?—‡† ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ‘ˆ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ™Š‹Ž‡ –Š‡ ‰”‘™–Š ‘—–Ž‘‘Â? ”‡Â?ƒ‹Â?• •–”‘Â?‰ ‹• ‹Â?’‘”–ƒÂ?– –‘ …”‡ƒ–‡ •’ƒ…‡ ˆ‘” ƒ ˆ‹•…ƒŽ ’‘Ž‹…› ”‡•’‘Â?•‡ ‹Â? –Š‡ ‡˜‡Â?– ‘ˆ ƒ †‘™Â?–—”Â?Ǥ Š‡ ƒ•– •‹ƒÂ? ‡š’‡”‹‡Â?…‡ ƒŽ•‘ ‘ˆˆ‡”• Ž‡••‘Â?• ˆ‘” ‡‘”‰‹ƒ ‹Â? –Š‹• ”‡‰ƒ”†Ǥ Š‡ ”‡‰‹‘Â? ‹–•‡Žˆ ‘ˆˆ‡”• ƒ •Šƒ”’ …‘Â?–”ƒ•– –‘ ƒ•– •‹ƒ ™Š‡”‡ …—””‡Â?– ƒ……‘—Â?– •—”’Ž—•‡• Šƒ˜‡ „‡‡Â? Â?ƒ‹Â?–ƒ‹Â?‡† ‘Â? ƒ˜‡”ƒ‰‡ ˆ‘ŽŽ‘™‹Â?‰ –Š‡ ˆ‹Â?ƒÂ?…‹ƒŽ …”‹•‹• ‘ˆ ͳͻͻ͹Ǥ Š‡ ͳͻͻ͹ …”‹•‹• Ž‡† Â?ƒÂ?› •‹ƒÂ? ‰‘˜‡”Â?Â?‡Â?–• –‘ …‘Â?•‹†‡”ƒ„Ž› –‹‰Š–‡Â? ‰‘˜‡”Â?Â?‡Â?– „—†‰‡–•ǡ ‹Â? ƒ††‹–‹‘Â? –‘ „—‹Ž†‹Â?‰ Žƒ”‰‡ ”‡•‡”˜‡ „—ˆˆ‡”• ƒÂ?† –‹‰Š–Ž› •—’‡”˜‹•‹Â?‰ „ƒÂ?Â?• ƒÂ?† ˆ‹Â?ƒÂ?…‡ …‘Â?’ƒÂ?‹‡•Ǥ ͳǤͳͺǤ Georgia also faces external debt repayment obligations of about 5 percent of GDP per year during 2012Ǧ14. Š‹Ž‡ –Š‡ •—……‡••ˆ—Ž ”‡ˆ‹Â?ƒÂ?…‹Â?‰ ‘ˆ ‡‘”‰‹ƒǯ• —”‘„‘Â?† ‹Â? ’”‹Ž ʹͲͳͳ ͹ Š‡Ž’‡† •Â?‘‘–Š ‘—– ‹–• ’—„Ž‹… †‡„– ”‡’ƒ›Â?‡Â?– •…Š‡†—Ž‡ǡ –‘–ƒŽ ’—„Ž‹… ƒÂ?† ’”‹˜ƒ–‡ ”‡’ƒ›Â?‡Â?– ‘„Ž‹‰ƒ–‹‘Â?• ”‡Â?ƒ‹Â? •‹‰Â?‹ˆ‹…ƒÂ?– ƒ– ƒ„‘—– ̈́ʹǤͷ „‹ŽŽ‹‘Â? ˆ‘” ʹͲͳʹǦͳͶ ‘” ƒ„‘—– Í· ’‡”…‡Â?– ‘ˆ  ’‡” ›‡ƒ”Ǥ ‘–ƒŽ ”‡’ƒ›Â?‡Â?–• †—‡ –‘ –Š‡  †—”‹Â?‰ –Š‹• ’‡”‹‘† ƒÂ?‘—Â?– –‘ ƒ„‘—– ̈́ͺͺͷ Â?‹ŽŽ‹‘Â?Ǥ ‹–Š –Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– ’”‘Œ‡…–‡† –‘ ƒ˜‡”ƒ‰‡ ƒ”‘—Â?† ͺǤ͹ ’‡”…‡Â?– ‘ˆ  †—”‹Â?‰ ʹͲͳʹǦͳͶǡ ‡‘”‰‹ƒǯ• ‡š–‡”Â?ƒŽ ˆ‹Â?ƒÂ?…‹Â?‰ Â?‡‡†• †—”‹Â?‰ –Š‹• ’‡”‹‘† ƒ˜‡”ƒ‰‡ ƒ„‘—– ͳͶ ’‡”…‡Â?– ‘ˆ  ’‡” ›‡ƒ”Ǥ Š‡ ˆ‹Â?ƒÂ?…‹Â?‰ ’ŽƒÂ? ”‡Ž‹‡• ‘Â? …‘Â?–‹Â?—‡† ’—„Ž‹… •‡…–‘” ˆŽ‘™• ȋ͵Ǥʹ ’‡”…‡Â?– ‘ˆ Ȍǡ ȋ͸ ’‡”…‡Â?– ‘ˆ Ȍǡ ‘–Š‡” ’”‹˜ƒ–‡ …ƒ’‹–ƒŽ ‹Â?ˆŽ‘™• ȋͶǤͻ ’‡”…‡Â?– ‘ˆ Ȍǡ ƒÂ?† –Š‡ —•‡ ‘ˆ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‡•‡”˜‡• ȋͲǤͶ ’‡”…‡Â?– ‘ˆ ȌǤ Â? ƒÂ? ‡Â?˜‹”‘Â?Â?‡Â?– ‘ˆ —Â?…‡”–ƒ‹Â? ‰Ž‘„ƒŽ …ƒ’‹–ƒŽ ˆŽ‘™•ǡ •—•–ƒ‹Â?‹Â?‰ ƒÂ?† ’‘–‡Â?–‹ƒŽŽ› †‡‡’‡Â?‹Â?‰ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ™‘—Ž† ’”‘˜‹†‡ ƒ††‹–‹‘Â?ƒŽ •’ƒ…‡ ˆ‘” Â?‡‡–‹Â?‰ ”‡’ƒ›Â?‡Â?– ‘„Ž‹‰ƒ–‹‘Â?• ‹Â? ʹͲͳʹǦͳͶ ƒÂ?† •‡”˜‡ ĥ ƒ Â?‡› ƒÂ?…Š‘” ‘ˆ •—•–ƒ‹Â?ƒ„‹Ž‹–›Ǥ ͳǤͳͻǤ Fiscal consolidation is also important for sustaining strong economic growth in Georgia. –”‘Â?‰ ƒÂ?† •—•–ƒ‹Â?‡† ‡…‘Â?‘Â?‹… ‰”‘™–Š ™‹ŽŽ ”‡“—‹”‡ ‡Â?‰‹Â?‡‡”‹Â?‰ ƒ •Š‹ˆ– ‹Â? –Š‡ ‰”‘™–Š Â?‘†‡Ž ƒ™ƒ› ˆ”‘Â? ‘Â?‡ ˆ‹Â?ƒÂ?…‡† „› ‹Â?ˆŽ‘™• ƒÂ?† †”‹˜‡Â? „› Â?‘Â?–”ƒ†ƒ„Ž‡• ƒÂ?† –‘™ƒ”† ‘Â?‡ ˆ‹Â?ƒÂ?…‡† Â?‘”‡ „› †‘Â?‡•–‹… •ƒ˜‹Â?‰• ƒÂ?† †”‹˜‡Â? „› –”ƒ†ƒ„Ž‡•Ǥ Â?˜‡•–Â?‡Â?– ƒ– ʹͷǤ͹ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ ”‡Â?ƒ‹Â?• •‹‰Â?‹ˆ‹…ƒÂ?–Ž› „‡Ž‘™ ’”‡Ǧ…”‹•‹• Ž‡˜‡Ž• ȋ͵ʹ ’‡”…‡Â?– ‹Â? ʹͲͲ͹ȌǤ ‹Â?ƒÂ?…‹Â?‰ Š‹‰Š‡” ‹Â?˜‡•–Â?‡Â?– ™‹–Š‘—– ™‹†‡Â?‹Â?‰ –Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– ™‹ŽŽ ”‡“—‹”‡ Š‹‰Š‡” Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰•ǡ ™Š‹…Š ”‡Â?ƒ‹Â?‡† Ž‘™ ƒ– ͳͶ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǤ Ž–Š‘—‰Š ’—„Ž‹… •ƒ˜‹Â?‰• ”‡…‘˜‡”‡† –‘ ͷǤʹ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǡ ‹– •–‹ŽŽ ”‡Â?ƒ‹Â?• „‡Ž‘™ –Š‡ ’”‡Ǧ…”‹•‹• ’‡ƒÂ? ‘ˆ ͹Ǥ͵ ’‡”…‡Â?– ‹Â? ʹͲͲͶǡ ƒÂ?† …ƒÂ? •‡”˜‡ –‘ ˆ—”–Š‡” „‘Ž•–‡” Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰• ‹Â? ƒÂ? ‡Â?˜‹”‘Â?Â?‡Â?– ™Š‡”‡ ’”‹˜ƒ–‡ •ƒ˜‹Â?‰• ”‡Â?ƒ‹Â?• „‡Ž‘™ Ž‡˜‡Ž• Â?‡‡†‡† –‘ ˆ‹Â?ƒÂ?…‡ •–”‘Â?‰ ‹Â?˜‡•–Â?‡Â?– ƒÂ?† ‰”‘™–ŠǤ ‡›‘Â?† –Š‡ ˆ‹Â?ƒÂ?…‹Â?‰ ‘ˆ Š‹‰Š‡” ‹Â?˜‡•–Â?‡Â?–ǡ •—•–ƒ‹Â?‹Â?‰ ”ƒ’‹† ‡…‘Â?‘Â?‹… ‰”‘™–Š ™‹ŽŽ ƒŽ•‘ ”‡“—‹”‡ ƒ •Š‹ˆ– –‘™ƒ”† Š‹‰Š‡” ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ‹Â? –”ƒ†ƒ„Ž‡•Ǥ ”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ƒÂ?‘—Â?–‡† –‘ ‘Â?Ž› ͳ͸Ǥͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳǡ ™‹–Š ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ‹Â? Â?‘•–Ž› ‹Â?ˆ”ƒ•–”—…–—”‡ ƒ††‹Â?‰ ƒÂ?‘–Š‡” Í» ’‡”…‡Â?– ‘ˆ Ǥ Š‡ ‡š’‘”– •Šƒ”‡ ”‡Â?ƒ‹Â?• Ž‘™ ƒ– ͵͹ ’‡”…‡Â?– ƒÂ?† –Š‡ ”‡ƒŽ ‡š…ŠƒÂ?‰‡ ”ƒ–‡ ƒ’’”‡…‹ƒ–‡† „› ƒ„‘—– ͳ͸ ’‡”…‡Â?– •‹Â?…‡ —Ž› ʹͲͳͲǤ —•–ƒ‹Â?‹Â?‰ ƒÂ?† ’‘–‡Â?–‹ƒŽŽ› †‡‡’‡Â?‹Â?‰ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‹• ‡••‡Â?–‹ƒŽ –‘ …‘Â?–ƒ‹Â? ”‡ƒŽ ‡š…ŠƒÂ?‰‡ ”ƒ–‡ ƒ’’”‡…‹ƒ–‹‘Â? ’”‡••—”‡• ƒÂ?† ‡Â?‰‹Â?‡‡” ƒ •Š‹ˆ– –‘™ƒ”† Š‹‰Š‡” ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ‹Â? –”ƒ†ƒ„Ž‡• ĥ ’ƒ”– ‘ˆ ƒ •–”ƒ–‡‰› –‘ ‰‡Â?‡”ƒ–‡ •—•–ƒ‹Â?‡† ƒÂ?† ”ƒ’‹† ‡…‘Â?‘Â?‹… ‰”‘™–Š ‹Â? ‡‘”‰‹ƒǤ Figure 1.5: National, Public, and Private Savings Figure 1.6: Real Effective Exchange Rate ȋ‹Â? ’‡”…‡Â?– ‘ˆ ÈŒ È‹ ‡… ͳͻͻͷαͳͲͲȌ 25 Real Effective Exchange Rate È‹ ‡… ͳͻͻͷαͳͲͲǤ Â?…”‡ƒ•‡ Â?‡ƒÂ?• ƒ’’”‡…‹ƒ–‹‘Â?ÈŒ 20 ͳ͵ͷ ͳ͵Ͳ 15 ͳʹͷ ͳʹͲ 10 ͳͳͷ ͳͳͲ 5 ͳͲͷ ͳͲͲ 0 ͻͷ ͻͲ Ͳ5 ͺͷ 2003 2004 2005 2006 2007 2008 2009 2010 2011 ƒÂ?Ǧ ƒÂ?Ǧ ƒÂ?Ǧ ƒÂ?Ǧ ƒÂ?Ǧ ƒÂ?Ǧ ƒÂ?Ǧ ƒÂ?Ǧ ƒÂ?Ǧ ƒÂ?Ǧ ƒÂ?Ǧ ƒÂ?Ǧ Natl Savings Public Savings Private Savings ͲͲ Ͳͳ Ͳʹ Ͳ͵ ͲͶ Ͳͷ Ͳ͸ Ͳ͹ Ͳͺ Ͳͻ ͳͲ ͳͳ Source: ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͳǤʹͲǤ Fiscal consolidation going forward will have to rely on further expenditure consolidation. Š‡ ‘˜‡”Â?Â?‡Â?–ǯ• Â?‡†‹—Â? –‡”Â? ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â? ’”‘Œ‡…–• ƒ ”‡†—…–‹‘Â? ‹Â? –Š‡ ‘˜‡”ƒŽŽ ˆ‹•…ƒŽ †‡ˆ‹…‹– –‘ ʹǤͳ ’‡”…‡Â?– ‘ˆ  „› ʹͲͳͷ ˆ”‘Â? ͵Ǥ͸ ’‡”…‡Â?– ‹Â? ʹͲͳͳǤ ‘–ƒŽ ”‡˜‡Â?—‡• ƒ”‡ ’”‘Œ‡…–‡† –‘ †‡…Ž‹Â?‡ –‘ ʹ͸Ǥͻ ’‡”…‡Â?– ‘ˆ  „› ʹͲͳͷ ˆ”‘Â? ʹͺǤͷ ’‡”…‡Â?– ‹Â? ʹͲͳͳ †—‡ –‘ ƒ ™‹Â?†‹Â?‰ ͺ †‘™Â? ‘ˆ ‰”ƒÂ?–•ǡ Â?‘Â?Ǧ–ƒš ”‡˜‡Â?—‡•ǡ ƒÂ?† ‘Â?‡Ǧ‘ˆˆ –ƒš •‡––Ž‡Â?‡Â?–•Ǥ ‹˜‡Â? –ƒš ”ƒ–‡•ǡ …‘ŽŽ‡…–‹‘Â?• ƒ”‡ “—‹–‡ Š‹‰Š ‹Â? ‡‘”‰‹ƒ ƒÂ?† ‡š‡Â?’–‹‘Â?• ƒ”‡ ˆ‡™ǡ •‘ –Šƒ– –Š‡ ”‘‘Â? ˆ‘” ˆ—”–Š‡” ‹Â?…”‡ƒ•‹Â?‰ –Š‡ ’”‘†—…–‹˜‹–› ‘ˆ …‘ŽŽ‡…–‹‘Â?• ‹• Ž‹Â?‹–‡†Ǥ —”–Š‡”Â?‘”‡ǡ –Š‡ ƒ’’‡–‹–‡ ˆ‘” Š‹‰Š‡” –ƒš ”ƒ–‡• ‹• Ž‘™ ƒÂ?† ”‡•–”‹…–‡† •‘Â?‡™Šƒ– „› –Š‡ ’”‘˜‹•‹‘Â?• ‘ˆ –Š‡ …‘Â?‘Â?‹… ‹„‡”–› …–Ǥ š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? ™‹ŽŽǡ –Š‡”‡ˆ‘”‡ǡ Â?‡‡† –‘ Â?ƒÂ?‡ ƒ ‰”‡ƒ–‡” –ŠƒÂ? ‘Â?‡Ǧˆ‘”Ǧ‘Â?‡ …‘Â?–”‹„—–‹‘Â? –‘ –Š‡ ”‡†—…–‹‘Â? ‘ˆ –Š‡ ˆ‹•…ƒŽ †‡ˆ‹…‹– ‰‘‹Â?‰ ˆ‘”™ƒ”†ǡ ™‹–Š –Š‡ Â?‘•– ”‡…‡Â?–Ž› ƒ’’”‘˜‡† Â?‡†‹—Â? –‡”Â? ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â? ’”‘Œ‡…–‹Â?‰ ƒ †‡…Ž‹Â?‡ ‹Â? –‘–ƒŽ ‡š’‡Â?†‹–—”‡• ˆ”‘Â? ͵ʹǤͳ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ –‘ ʹͻǤͲ ’‡”…‡Â?– „› ʹͲͳͷǤ ͳǤʹͳǤ Deepening fiscal consolidation will be particularly important in the event of an upside scenario with higher FDI and capital inflows. ”‡˜‡Â?–‹Â?‰ ƒ ”‡–—”Â? –‘ –Š‡ Žƒ”‰‡ Â?ƒ…”‘‡…‘Â?‘Â?‹… ‹Â?„ƒŽƒÂ?…‡• ‘ˆ ’”‡Ǧ…”‹•‹• ’‡”‹‘† ‹• ƒÂ? ‹Â?’‘”–ƒÂ?– ’”‹‘”‹–›Ǥ Â? –Š‡ ‡˜‡Â?– ‘ˆ ƒÂ? —’•‹†‡ •…‡Â?ƒ”‹‘ ™‹–Š Š‹‰Š‡” ƒÂ?† …ƒ’‹–ƒŽ ‹Â?ˆŽ‘™•ǡ –Š‡ ”‡ƒŽ ‡š…ŠƒÂ?‰‡ ”ƒ–‡ …‘—Ž† ƒ’’”‡…‹ƒ–‡ ˆ—”–Š‡”ǡ ‹Â?’‘”–• …‘—Ž† ‡š’ƒÂ?†ǡ ƒÂ?† –Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹– …‘—Ž† ™‹†‡Â?Ǥ Â? •—…Š ƒ •…‡Â?ƒ”‹‘ǡ ƒ……‡Ž‡”ƒ–‹Â?‰ ˆ‹•…ƒŽ ƒ†Œ—•–Â?‡Â?– „› •ƒ˜‹Â?‰ ”ƒ–Š‡” –ŠƒÂ? •’‡Â?†‹Â?‰ ’ƒ”– ‘ˆ –Š‡ ƒ††‹–‹‘Â?ƒŽ ”‡˜‡Â?—‡• …ƒÂ? „‡ ‹Â?’‘”–ƒÂ?– ‹Â? ’”‡˜‡Â?–‹Â?‰ ƒ ”‡–—”Â? –‘ –Š‡ ’”‡Ǧ…”‹•‹• ‹Â?„ƒŽƒÂ?…‡•Ǥ 1.3. Expenditure Composition ͳǤʹʹǤ Maintaining and potentially deepening fiscal consolidation will require skillful management in balancing and prioritizing expenditure needs in different areas. ‡‘”‰‹ƒ ˆƒ…‡• •—„•–ƒÂ?–‹ƒŽ •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡ ’”‡••—”‡• ƒ”‹•‹Â?‰ ˆ”‘Â? ‹–• ƒ‰‹Â?‰ ’‘’—Žƒ–‹‘Â?Ç¡ –Š‡ Â?‡‡† –‘ ‹Â?’”‘˜‡ ‘˜‡”ƒŽŽ Š‡ƒŽ–Š ‘—–…‘Â?‡•ǡ ƒÂ?† –Š‡ Â?‡‡† –‘ ‹Â?’”‘˜‡ •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ ’‘‘” ™Š‹Ž‡ —Â?‡Â?’Ž‘›Â?‡Â?– ”‡Â?ƒ‹Â?• Š‹‰ŠǤ Â? ƒ††‹–‹‘Â?Ç¡ ‹Â?ˆ”ƒ•–”—…–—”‡ †‡˜‡Ž‘’Â?‡Â?– ’”‹‘”‹–‹‡• ƒ”‡ •—„•–ƒÂ?–‹ƒŽ ‹Â? –Š‡ ƒ”‡ƒ• ‘ˆ ”‘ƒ†•ǡ ™ƒ–‡”ǡ ƒÂ?† ”—”ƒŽ †‡˜‡Ž‘’Â?‡Â?–ǡ ‹Â? ‘”†‡” –‘ …ƒ–ƒŽ›œ‡ ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ƒÂ?† –‘ …”‡ƒ–‡ –Š‡ …‘Â?†‹–‹‘Â?• ˆ‘” •–”‘Â?‰ ‰”‘™–Š ‹Â? –Š‡ Ž‘Â?‰ ”—Â?Ǥ ƒŽƒÂ?…‹Â?‰ ƒÂ?† ’”‹‘”‹–‹œ‹Â?‰ –Š‡•‡ …‘Â?’‡–‹Â?‰ ‡š’‡Â?†‹–—”‡ Â?‡‡†•ǡ ™Š‹Ž‡ ‹†‡Â?–‹ˆ›‹Â?‰ ‡š’‡Â?†‹–—”‡ •ƒ˜‹Â?‰• ˆ”‘Â? ‘–Š‡” ƒ”‡ƒ•ǡ ‹• ƒ– –Š‡ Š‡ƒ”– ‘ˆ …‘Â?–‹Â?—‡† ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ‘ˆ –Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ?Ǥ …Š‹‡˜‹Â?‰ –Š‡•‡ ‘„Œ‡…–‹˜‡• ‹Â? ƒÂ? ‡Â?˜‹”‘Â?Â?‡Â?– ™‹–Š ’ƒ”Ž‹ƒÂ?‡Â?–ƒ”› ƒÂ?† ’”‡•‹†‡Â?–‹ƒŽ ‡Ž‡…–‹‘Â?• •…Š‡†—Ž‡† ˆ‘” ʹͲͳʹ ƒÂ?† ʹͲͳ͵ǡ ”‡•’‡…–‹˜‡Ž›ǡ ™‹ŽŽ ”‡“—‹”‡ •Â?‹ŽŽˆ—Ž Â?ƒÂ?ƒ‰‡Â?‡Â?– ‘ˆ ’—„Ž‹… ‡š’‡Â?†‹–—”‡ ’”‹‘”‹–‹‡•Ǥ ͳǤʹ͵Ǥ The composition of public expenditures has evolved considerably in three stages since 2004. Â? –Š‡ ’”‡Ǧ…”‹•‹• ’‡”‹‘† ȋʹͲͲͶǦͲ͹Ȍǡ ĥ –Š‡ Â?‡™ ‰‘˜‡”Â?Â?‡Â?– Â?‘˜‡† –‘ ”‡•–‘”‡ ƒÂ?† ”‡‹Â?ˆ‘”…‡ ‡••‡Â?–‹ƒŽ ˆ—Â?…–‹‘Â?• ‘ˆ –Š‡ •–ƒ–‡ǡ ’—„Ž‹… ‡š’‡Â?†‹–—”‡• ‹Â?…”‡ƒ•‡† ƒ…”‘•• –Š‡ „‘ƒ”†ǡ ™‹–Š ’ƒ”–‹…—Žƒ”Ž› •Šƒ”’ ‹Â?…”‡ƒ•‡• ‹Â? Â?ƒ–‹‘Â?ƒŽ ƒÂ?† ‹Â?–‡”Â?ƒŽ •‡…—”‹–› •’‡Â?†‹Â?‰ǡ „—– ƒŽ•‘ ‹Â?…Ž—†‹Â?‰ ‹Â?…”‡ƒ•‡• ‹Â? •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡• ƒÂ?† „ƒ•‹… ‹Â?ˆ”ƒ•–”—…–—”‡ ‹Â?˜‡•–Â?‡Â?–•Ǥ • –Š‡ ƒ—–Š‘”‹–‹‡• ‹Â?’Ž‡Â?‡Â?–‡† ƒ …‘—Â?–‡”…›…Ž‹…ƒŽ ˆ‹•…ƒŽ •–‹Â?—Ž—• ȋʹͲͲͺǦͲͻȌ ˆ‘ŽŽ‘™‹Â?‰ –Š‡ –™‹Â? •Š‘…Â?• ‘ˆ –Š‡ —‰—•– ʹͲͲͺ …‘Â?ˆŽ‹…– ƒÂ?† –Š‡ ‰Ž‘„ƒŽ ˆ‹Â?ƒÂ?…‹ƒŽ …”‹•‹•ǡ –Š‡ …‘Â?’‘•‹–‹‘Â? ‘ˆ ‡š’‡Â?†‹–—”‡• —Â?†‡”™‡Â?– ƒ Â?ƒ”Â?‡† •Š‹ˆ–Ǥ ‡Ž‡…– •‘…‹ƒŽ ƒÂ?† …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ™‡”‡ •…ƒŽ‡† —’ –‘ Â?‹–‹‰ƒ–‡ –Š‡ ‹Â?’ƒ…– ‘Â? –Š‡ ’‘‘” ƒÂ?† ˜—ŽÂ?‡”ƒ„Ž‡ ƒÂ?† –‘ •—’’‘”– ‹Â?˜‡•–Â?‡Â?– ƒÂ?† ‡…‘Â?‘Â?‹… ‰”‘™–Šǡ ™Š‹Ž‡ ˆ‹•…ƒŽ •’ƒ…‡ ™ƒ• ‰‡Â?‡”ƒ–‡† –Š”‘—‰Š ƒ Â?ƒ”Â?‡† ”‡†—…–‹‘Â? ‹Â? †‡ˆ‡Â?•‡ǡ ‹Â?–‡”Â?ƒŽ •‡…—”‹–› ‡š’‡Â?†‹–—”‡•ǡ ƒÂ?† ‘–Š‡” ”‡…—””‡Â?–Ǥ ‹–Š ‡…‘Â?‘Â?‹… ”‡…‘˜‡”› –ƒÂ?‹Â?‰ Š‘Ž†ǡ ˆ‹•…ƒŽ ƒ†Œ—•–Â?‡Â?– ȋʹͲͳͲǦͳͳȌ Šƒ• „‡‡Â? ƒ••‘…‹ƒ–‡† ™‹–Š ˆ—”–Š‡” •Š‹ˆ–• ‹Â? ‡š’‡Â?†‹–—”‡ …‘Â?’‘•‹–‹‘Â? ĥ ’”‹‘”‹–› …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• …‘Â?–‹Â?—‡† –‘ ‰”‘™ ƒ– –Š‡ •ƒÂ?‡ ”ƒ–‡ ĥ ”‡ƒŽ Ç¡ •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡• ™‡”‡ Š‡Ž† •–‡ƒ†› ‹Â? ”‡ƒŽ –‡”Â?•ǡ ƒÂ?† •’‡Â?†‹Â?‰ ‘Â? †‡ˆ‡Â?•‡ ƒÂ?† ‹Â?–‡”Â?ƒŽ •‡…—”‹–› ™‡”‡ …‘Â?•‘Ž‹†ƒ–‡† ˆ—”–Š‡”Ǥ …Ž‘•‡” ‡šƒÂ?‹Â?ƒ–‹‘Â? ‘ˆ –Š‡ •Š‹ˆ–• ‹Â? ‡š’‡Â?†‹–—”‡ …‘Â?’‘•‹–‹‘Â? ‘˜‡” –‹Â?‡ǡ ĥ ™‡ŽŽ ĥ „‡Â?…ŠÂ?ƒ”Â?‹Â?‰ ƒ‰ƒ‹Â?•– ”‡‰‹‘Â?ƒŽ …‘Â?’ƒ”ƒ–‘”•ǡ …ƒÂ? ’”‘˜‹†‡ —•‡ˆ—Ž ‹Â?ˆ‘”Â?ƒ–‹‘Â? –‘ ’‘Ž‹…›Â?ƒÂ?‡”• •‡‡Â?‹Â?‰ –‘ •—•–ƒ‹Â? ƒÂ?† †‡‡’‡Â? ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‹Â? ‡‘”‰‹ƒǤ Í» Table 1.3: Georgia: Composition of Medium Term Expenditure Framework (2011Ǧ15) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012p 2013p 2014p 2015p percent of GDP Revenues & Grants 16.0 23.1 24.4 26.7 29.3 30.7 29.3 28.3 28.5 27.4 27.3 27.1 26.9 Tax Revenues 14.6 19.7 20.8 22.9 25.8 24.9 24.4 23.5 25.4 24.7 24.7 24.7 24.7 Grants 0.6 1.3 0.9 1.2 0.6 3.2 2.2 2.3 0.9 0.9 0.9 0.6 0.4 Other revenues 0.8 2.1 2.8 2.6 2.8 2.5 2.7 2.5 2.1 1.7 1.7 1.7 1.7 Total Expenditures 17.5 20.7 26.0 29.7 34.0 37.0 38.4 34.9 32.1 30.9 30.3 29.7 29.0 Current expenditure 14.7 15.8 20.1 20.7 25.0 28.5 30.1 26.0 23.3 22.5 22.3 22.1 21.8 Wages & Salaries 3.4 4.2 4.7 4.1 4.0 5.3 5.8 5.5 4.7 4.6 4.5 4.5 4.5 Goods & Services 3.6 3.3 4.9 5.6 9.3 8.4 6.1 5.2 5.0 4.4 4.4 4.4 4.4 Subsidies 1.2 2.2 3.8 2.8 2.3 2.7 2.3 1.8 1.8 1.6 1.6 1.6 1.5 Grants 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Social expenditure 4.5 4.4 4.8 5.1 5.0 7.2 8.4 7.8 6.9 6.8 7.0 6.8 6.6 Other expenditure 0.0 0.2 0.9 2.3 3.7 4.1 6.3 4.7 3.7 3.7 3.6 3.6 3.6 Interests 2.0 1.4 1.0 0.8 0.6 0.6 1.0 1.0 1.2 1.3 1.1 1.1 1.1 Capital Expenditures 2.8 4.9 5.9 9.0 9.0 8.6 8.4 8.8 8.9 8.4 8.0 7.6 7.2 Capital 2.2 4.3 5.7 7.8 8.6 8.0 8.0 8.2 7.7 7.5 7.4 7.3 7.0 Net lending 0.6 0.6 0.2 1.2 0.3 0.6 0.3 0.6 1.1 0.9 0.6 0.3 0.1 Overall fiscal deficit 1.5 -2.4 1.6 3.0 4.7 6.3 9.2 6.6 3.6 3.5 3.0 2.7 2.0 Real 2010 Lari, millions Revenues & Grants 2219 3394 3937 4703 5796 6227 5713 5866 6303 6421 6771 7073 7423 Tax Revenues 2028 2893 3345 4031 5117 5055 4763 4867 5628 5807 6127 6465 6821 Grants 79 187 145 215 119 656 422 473 202 215 211 151 119 Other revenues 112 314 446 457 560 515 529 526 473 399 433 457 482 Total Expenditures 2433 3048 4197 5240 6736 7512 7502 7232 7110 7249 7513 7768 7988 Current expenditure 2040 2323 3247 3658 4959 5772 5868 5399 5150 5274 5533 5777 6008 Wages & Salaries 468 621 762 723 788 1072 1138 1138 1042 1070 1126 1180 1231 Goods & Services 506 492 794 989 1842 1709 1199 1086 1111 1044 1096 1156 1209 Subsidies 171 325 605 494 465 545 456 372 389 379 400 414 425 Grants 0 0 7 9 16 13 16 13 12 13 14 16 15 Social expenditure 621 650 774 906 992 1466 1634 1612 1519 1599 1738 1782 1828 Other expenditure 0 24 139 405 741 839 1239 972 813 864 884 933 984 Interests 274 211 167 132 114 128 186 206 264 306 275 296 316 Capital Expenditures 394 725 950 1582 1777 1740 1634 1834 1961 1975 1980 1991 1980 Capital 307 637 916 1368 1708 1621 1567 1706 1715 1765 1823 1909 1939 Net lending 87 88 34 214 69 118 67 128 246 210 157 82 41 Overall fiscal deficit -214 346 -261 -538 -940 -1285 -1789 -1366 -807 -828 -742 -694 -565 Source: Georgian authorities and Bank/IMF staff estimates; p=projected ͳͲ Figure 1.7: Expenditure Composition, Functional Figure 1.8: Expenditure Composition, Functional ȋ‹Â? ’‡”…‡Â?– ‘ˆ Ç¡ ‡Â?‡”ƒŽ ‘˜‡”Â?Â?‡Â?–Ȍ ȋ‹Â? ’‡”…‡Â?– ‘ˆ Ç¡ ‡Â?‡”ƒŽ ‘˜‡”Â?Â?‡Â?–Ȍ 14 3000 13.4 13.1 13.0 2,726 12 12.0 2,600 2500 2,532 2,488 2,498 11.3 10.9 10 2,204 9.8 9.5 9.4 2000 9.0 1,904 8.4 1,789 8 1,650 7.3 7.4 1,542 1500 1,527 6.5 1,430 6 6.3 5.8 5.8 1,242 1,285 5.4 1,131 1,110 4.6 1000 1,022 4.4 4.4 939 900 4 3.9 870 880 3.7 3.6 573 592 627 500 2 2.0 2.0 1.2 284 291 173 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2003 2004 2005 2006 2007 2008 2009 2010 2011 Defense, Internal affairs Education, Health, Social Prot Defense, Internal affairs Education, Health, Social Prot General public services Economic Affairs General public services Economic Affairs Source: ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• PreǦCrisis Developments, 2004Ǧ07 ͳǤʹͶǤ Following the Rose Revolution, important functions of the state were restored and made credible, with public spending increasing across the board during 2004Ǧ07. ‘–ƒŽ ’—„Ž‹… ‡š’‡Â?†‹–—”‡• ‹Â?…”‡ƒ•‡† „› ͳ͸Ǥͷ ’‡”…‡Â?– ‘ˆ  ȋˆ”‘Â? ͳ͹Ǥͷ ’‡”…‡Â?– ‹Â? ʹͲͲ͵ –‘ ͵Ͷ ’‡”…‡Â?– ‹Â? ʹͲͲ͹Ȍ †—”‹Â?‰ –Š‹• ’‡”‹‘†ǡ ™Š‹…Š ƒÂ?‘—Â?–• –‘ ƒ ͳ͹͹ ’‡”…‡Â?– ‹Â?…”‡ƒ•‡ ‹Â? ”‡ƒŽ –‡”Â?• ȋˆ”‘Â?  ʹǡͶ͵͵ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲ͵ –‘  ͸ǡ͹͵͸ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲ͵ǡ ‹Â? ʹͲͳͲ ’”‹…‡•ȌǤ Š‹• ”‹•‡ ‹Â? ’—„Ž‹… •’‡Â?†‹Â?‰ ™ƒ• †”‹˜‡Â? ‹Â? Žƒ”‰‡ ’ƒ”– „› …‘Â?•‹†‡”ƒ„Ž‡ ‹Â?…”‡ƒ•‡• ‹Â? †‡ˆ‡Â?•‡ ƒÂ?† ‹Â?–‡”Â?ƒŽ •‡…—”‹–› ‡š’‡Â?†‹–—”‡•ǡ ™Š‹…Š –‘‰‡–Š‡” ”‘•‡ „› ͳͳǤͳ ’‡”…‡Â?– ‘ˆ  ‘” „› ͺͳͷ ’‡”…‡Â?– ‹Â? ”‡ƒŽ –‡”Â?•ǡ ˆ”‘Â?  ʹͺͶ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲ͵ –‘  ʹǡ͸ͲͲ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲ͹ͺǤ ͳǤʹͷǤ The effectiveness of education, health, and social benefit spending improved considerably during this period and expenditures in these sectors increased from 6.3 percent of GDP in 2003 to 9 percent in 2007. Š‹• ƒÂ?‘—Â?–‡† –‘ ƒ ͳͲ͸ ’‡”…‡Â?– ‹Â?…”‡ƒ•‡ ‹Â? •‘…‹ƒŽ •’‡Â?†‹Â?‰ ‹Â? ”‡ƒŽ –‡”Â?•Ǥ ‘”‡ ‹Â?’‘”–ƒÂ?–Ž›ǡ …‘Â?•‹†‡”ƒ„Ž‡ ‹Â?’”‘˜‡Â?‡Â?–• ™‡”‡ Â?ƒ†‡ ‹Â? –Š‡ ‡ˆˆ‡…–‹˜‡Â?॥ ƒÂ?† –ƒ”‰‡–‹Â?‰ ‘ˆ •‘…‹ƒŽ •’‡Â?†‹Â?‰ †—”‹Â?‰ –Š‹• ’‡”‹‘†Ǥ – –Š‡ ‡Â?† ‘ˆ ʹͲͲ͵ǡ •‘…‹ƒŽ ’”‘‰”ƒÂ?• ™‡”‡ …Šƒ”ƒ…–‡”‹œ‡† „› Â?ƒŒ‘” ‰‘˜‡”Â?ƒÂ?…‡ ƒÂ?† ‹Â?•–‹–—–‹‘Â?ƒŽ ’”‘„Ž‡Â?•ǡ Â?‘Â?’ƒ›Â?‡Â?– ‘ˆ „‡Â?‡ˆ‹–•ǡ ƒÂ?† ƒ……—Â?—Žƒ–‹‘Â? ‘ˆ Žƒ”‰‡ ƒ””‡ƒ”•Ǥ Š‡ ‡†—…ƒ–‹‘Â? ‹Â?ˆ”ƒ•–”—…–—”‡ ™ƒ• ‹Â? †‹•”‡’ƒ‹”ǡ –Š‡ –‡ƒ…Š‹Â?‰ ˆ‘”…‡ ’‘‘”Ž› ’ƒ‹†ǡ ƒÂ?† …—””‹…—Žƒ ƒÂ?† –‡ƒ…Š‹Â?‰ Â?‡–Š‘†• ™‡”‡ ‘—–†ƒ–‡†Ǥ Š‡ Š‡ƒŽ–Š •‡…–‘” ™ƒ• …Šƒ”ƒ…–‡”‹œ‡† „› ‘˜‡”…ƒ’ƒ…‹–›ǡ ’‘‘” •‡”˜‹…‡ “—ƒŽ‹–› ƒÂ?† ‹Â?ˆ”ƒ•–”—…–—”‡ǡ ƒÂ?† Ž‘™ —–‹Ž‹œƒ–‹‘Â? ‘ˆ Š‡ƒŽ–Š •‡”˜‹…‡•ǡ –Š‡ Ž‘™‡•– ‹Â? –Š‡ ”‡‰‹‘Â?Ǥ ‹Â?…‡ ʹͲͲͶǡ –Š‡ Â?‡™ ‰‘˜‡”Â?Â?‡Â?– …Ž‡ƒ”‡† ’‡Â?•‹‘Â? ƒ””‡ƒ”•ǡ ‡•–ƒ„Ž‹•Š‡† ‘Â?Ǧ–‹Â?‡ ’ƒ›Â?‡Â?–ǡ ƒÂ?† ‹Â?…”‡ƒ•‡† –Š‡ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ˆ”‘Â?  ͳͶ ’‡” Â?‘Â?–Š ‹Â? ʹͲͲ͵ –‘  ͵ͺ ’‡” Â?‘Â?–Š ȋ‹Â? Â?‘Â?‹Â?ƒŽ –‡”Â?•Ȍ ‹Â? ʹͲͲ͹Ǥ Š‡ –ƒ”‰‡–‡† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ È‹ ÈŒ ’”‘‰”ƒÂ? ™ƒ• ‹Â?–”‘†—…‡† ‹Â? ʹͲͲ͸ ƒÂ?† ’”‘˜‹†‡† –Š‡ ‡š–”‡Â?‡ ’‘‘” ™‹–Š ƒ ˜‹–ƒŽ •ƒˆ‡–› Â?‡–Ǥ Â? Š‡ƒŽ–Šǡ ƒ Â?‡†‹…ƒŽ ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ? –ƒ”‰‡–‡† –‘ –Š‡ ’‘‘” ƒÂ?† ’”‘˜‹†‹Â?‰ ƒ …‘Â?’”‡Š‡Â?•‹˜‡ •‡– ‘ˆ „‡Â?‡ˆ‹–• ™ƒ• ‹Â?–”‘†—…‡† ‹Â? ʹͲͲ͸Ǥ Â? ‡†—…ƒ–‹‘Â?Ç¡ ƒ ’‡”Ǧ…ƒ’‹–ƒ ˆ‹Â?ƒÂ?…‹Â?‰ •…Š‡Â?‡ ™ƒ• ‹Â?–”‘†—…‡†ǡ …‘””—’–‹‘Â? ‹Â? Â?ƒ–‹‘Â?™‹†‡ ‡Â?–”ƒÂ?…‡ ‡šƒÂ?‹Â?ƒ–‹‘Â?• ™ƒ• ‡Ž‹Â?‹Â?ƒ–‡†ǡ ƒÂ?† –Š‡ Â?‘Â?‹–‘”‹Â?‰ ‘ˆ •…Š‘‘Ž ’‡”ˆ‘”Â?ƒÂ?…‡ ™ƒ• ͺ ÂŽÂŽ ”‡ƒŽ ˜ƒŽ—‡• ƒ”‡ ‡š’”‡••‡† ‹Â? ʹͲͳͲ ƒ”‹Ǥ ͳͳ •–”‡Â?‰–Š‡Â?‡†Ǥ • ƒ ”‡•—Ž– ‘ˆ –Š‡•‡ ‹Â?’”‘˜‡Â?‡Â?–•ǡ –Š‡ “—ƒŽ‹–› ‘ˆ •’‡Â?†‹Â?‰ ‹Â? –Š‡•‡ •‡…–‘”• ‹Â?’”‘˜‡† …‘Â?•‹†‡”ƒ„Ž›Ǥ Figure 1.9Ç£ š’‡Â?†‹–—”‡ ‘Â?’‘•‹–‹‘Â? Figure 1.10Ç£ š’‡Â?†‹–—”‡ ‘Â?’‘•‹–‹‘Â? È‹ …‘Â?‘Â?‹… Žƒ••‹ˆ‹…ƒ–‹‘Â?Ç¡ ‹Â? ’‡”…‡Â?– ‘ˆ ÈŒ È‹ …‘Â?‘Â?‹… Žƒ••‹ˆ‹…ƒ–‹‘Â?Ç¡ ‹Â? ‡ƒŽ ʹͲͳͲ ƒ”‹Ȍ 10 2000 9 1800 1600 8 1400 7 1200 6 1000 5 800 4 600 3 400 2 200 2003 2004 2005 2006 2007 2008 2009 2010 2011 2003 2004 2005 2006 2007 2008 2009 2010 2011 Capital Expenditures Social expenditure Capital Expenditures Social expenditure Goods & Services Wages & Salaries Goods & Services Wages & Salaries SourceÇ£ ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͳǤʹ͸Ǥ Public capital expenditures increased from 2.8 percent of GDP in 2003 to 9 percent in 2007, reflecting a 350 percent increase in real terms. Žƒ”‰‡ ’ƒ”– ‘ˆ –Š‡ ‹Â?…”‡ƒ•‡ ‹Â? …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• –‘‘Â? ’Žƒ…‡ ‹Â? –Š‡ †‡ˆ‡Â?•‡ ƒÂ?† ‹Â?–‡”Â?ƒŽ •‡…—”‹–› •‡…–‘”•Ǥ ‘™‡˜‡”ǡ –Š‡”‡ ™‡”‡ ƒŽ•‘ …‘Â?•‹†‡”ƒ„Ž‡ ‹Â?…”‡ƒ•‡• ‹Â? ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ‹Â? „ƒ•‹… ‡Â?‡”‰› ƒÂ?† –”ƒÂ?•’‘”– ‹Â?ˆ”ƒ•–”—…–—”‡Ǥ – –Š‡ ‡Â?† ‘ˆ ʹͲͲ͵ǡ ‡Ž‡…–”‹…‹–› •‡”˜‹…‡ ™ƒ• Ž‹Â?‹–‡† –‘ •‡˜‡Â? Š‘—”• ’‡” †ƒ›ǡ …‘ŽŽ‡…–‹‘Â? ”ƒ–‡• ™‡”‡ ƒ”‘—Â?† ͵ͷ ’‡”…‡Â?–ǡ ƒÂ?† Žƒ”‰‡ ’ƒ”–• ‘ˆ –Š‡ ”‘ƒ† ‹Â?ˆ”ƒ•–”—…–—”‡ ™‡”‡ ‹Â? …‘Â?•‹†‡”ƒ„Ž‡ †‹•”‡’ƒ‹”Ǥ Â? –Š‡ ‡Â?‡”‰› •‡…–‘”ǡ –Š‡ ‰‘˜‡”Â?Â?‡Â?– ‹Â?˜‡•–‡† ‹Â? ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ ‰‡Â?‡”ƒ–‹‘Â? …ƒ’ƒ…‹–›ǡ ƒÂ?† …‘—’Ž‡† –Š‡•‡ ‹Â?˜‡•–Â?‡Â?–• ™‹–Š ”‡ˆ‘”Â?• –‘ —Â?„—Â?†Ž‡ ƒÂ?† ’”‹˜ƒ–‹œ‡ ‡Ž‡…–”‹…‹–› •‡”˜‹…‡•Ǥ › ʹͲͲ͹ǡ ‡Ž‡…–”‹…‹–› •‡”˜‹…‡ ƒ’’”‘ƒ…Š‡† ʹͶȀ͹ ˆ‘” ƒŽŽ ’ƒ›‹Â?‰ …—•–‘Â?‡”• ƒÂ?† …‘ŽŽ‡…–‹‘Â? ”ƒ–‡• ‹Â?’”‘˜‡† –‘ Â?‘”‡ –ŠƒÂ? ͻͲ ’‡”…‡Â?–Ǥ Â? –Š‡ ”‘ƒ† •‡…–‘”ǡ –Š‡ ‰‘˜‡”Â?Â?‡Â?– ‹Â?˜‡•–‡† ‹Â? ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› Â?‡–™‘”Â?Ç¡ ™‹–Š –‘–ƒŽ •’‡Â?†‹Â?‰ ‘Â? Â?‡™ …‘Â?•–”—…–‹‘Â? ƒÂ?† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› Â?‡–™‘”Â? ‹Â?…”‡ƒ•‹Â?‰ ˆ”‘Â?  ͸͹ Â?‹ŽŽ‹‘Â? ȋͲǤ͹ ’‡”…‡Â?– ‘ˆ ÈŒ ‹Â? ʹͲͲ͵ –‘  ʹ͹ͳ Â?‹ŽŽ‹‘Â? ȋͳǤ͸ ’‡”…‡Â?– ‘ˆ ÈŒ ‹Â? ʹͲͲ͹Ǥ • ƒ ”‡•—Ž–ǡ –Š‡ •Šƒ”‡ ‘ˆ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ† Â?‡–™‘”Â? ‹Â? Dz‰‘‘†dz ‘” Dzˆƒ‹”dz …‘Â?†‹–‹‘Â? ‹Â?’”‘˜‡† …‘Â?•‹†‡”ƒ„Ž›Ǥ Crisis and Fiscal Stimulus, 2008Ǧ09 ͳǤʹ͹Ǥ The strategic objectives of the fiscal stimulus during 2008Ǧ09 were to support economic recovery and to mitigate the impact of the downturn on the poor and vulnerable. ‹–Š ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– †‘™Â? •Šƒ”’Ž› ˆ‘ŽŽ‘™‹Â?‰ –Š‡ †—ƒŽ •Š‘…Â?• –‘ –Š‡ ‡…‘Â?‘Â?›ǡ –Š‡ ƒ—–Š‘”‹–‹‡• •‘—‰Š– –‘ •—’’‘”– ‰”‘™–Š ƒÂ?† ‡Â?’Ž‘›Â?‡Â?– „› •…ƒŽ‹Â?‰ —’ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ‹Â? •‡Ž‡…– ƒ”‡ƒ•Ǥ Â?‘–Š‡” ‰‘ƒŽ ‘ˆ –Š‡ •–‹Â?—Ž—• ‡š’‡Â?†‹–—”‡• ™ƒ• –‘ ‡Â?•—”‡ –Šƒ– –Š‡ ‹Â?˜‡•–Â?‡Â?–• ™‡”‡ •—’’‘”–‹˜‡ ‘ˆ Ž‘Â?‰ ”—Â? ‰”‘™–Š ƒÂ?† ‡Â?’Ž‘›Â?‡Â?– ‰‡Â?‡”ƒ–‹‘Â?Ǥ ‘™ƒ”† –Š‹• ‡Â?†ǡ •–ƒ–‡ ‰‘˜‡”Â?Â?‡Â?– ‹Â?˜‡•–Â?‡Â?– ‹Â? …‘Â?•–”—…–‹‘Â? ƒÂ?† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ†• ™ƒ• •…ƒŽ‡† —’ ˆ”‘Â?  ʹ͹ͳ Â?‹ŽŽ‹‘Â? ȋͳǤ͸ ’‡”…‡Â?– ‘ˆ ÈŒ ‹Â? ʹͲͲ͹ –‘  ͷͲͻ Â?‹ŽŽ‹‘Â? ȋʹǤͺ ’‡”…‡Â?– ‘ˆ ÈŒ ‹Â? ʹͲͲͻǤ Š‹• ™ƒ• …‘Â?’Ž‡Â?‡Â?–‡† ™‹–Š ‹Â?˜‡•–Â?‡Â?–• ‹Â? Â?—Â?‹…‹’ƒŽ ‹Â?ˆ”ƒ•–”—…–—”‡ ȋ”‘ƒ†•ǡ ™ƒ–‡”ǡ ™ƒ•–‡ Â?ƒÂ?ƒ‰‡Â?‡Â?–ǡ —”„ƒÂ? ”‡•–‘”ƒ–‹‘Â?ÈŒ ƒÂ?† ‹Â? Š‘—•‹Â?‰ ˆ‘” Â?‡™ ‹Â?–‡”Â?ƒŽŽ› †‹•’Žƒ…‡† ’‡”•‘Â?• È‹ •Ȍ ˆ”‘Â? –Š‡ —‰—•– ʹͲͲͺ …‘Â?ˆŽ‹…–Ǥ ˜‡”ƒŽŽǡ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ƒ…–—ƒŽŽ› †‡…Ž‹Â?‡† ˆ”‘Â? Í» ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹ –‘ ͺǤͶ ͳʹ ’‡”…‡Â?– ‹Â? ʹͲͲͻ ȋˆ”‘Â?  ͳǡ͹͹͹ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲ͹ –‘  ͳǡ͸͵Ͷ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͻ ‹Â? ”‡ƒŽ –‡”Â?•Ȍǡ ƒŽ–Š‘—‰Š –Š‡ …‘Â?’‘•‹–‹‘Â? ‘ˆ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• …ŠƒÂ?‰‡† …‘Â?•‹†‡”ƒ„Ž›Ǥ Š‡ •Šƒ”‡ ‘ˆ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ‰‘‹Â?‰ –‘ †‡ˆ‡Â?•‡ ƒÂ?† ‹Â?–‡”Â?ƒŽ •‡…—”‹–› †‡…Ž‹Â?‡† ˆ”‘Â? ͸Ͳ ’‡”…‡Â?– ‹Â? ʹͲͲͺ –‘ ͵͸ ’‡”…‡Â?– ‹Â? ʹͲͲͻǡ ™Š‹Ž‡ –Š‡ •Šƒ”‡ ‰‘‹Â?‰ –‘ –Š‡ –”ƒÂ?•’‘”– •‡…–‘” ‹Â?…”‡ƒ•‡† ˆ”‘Â? ʹͳǤͷ ’‡”…‡Â?– ‹Â? ʹͲͲͺ –‘ ͶͷǤ͸ ’‡”…‡Â?– ‹Â? ʹͲͲͻǤ Figure 1.11: Public Capital Expenditures Figure 1.12: Public Capital Expenditures È‹ —Â?…–‹‘Â?ƒŽ Žƒ••‹ˆ‹…ƒ–‹‘Â?Ç¡ ‹Â? ’‡”…‡Â?– ‘ˆ –‘–ƒŽȌ ȋ…‘Â?’‘•‹–‹‘Â?Ç¡ ‹Â? ’‡”…‡Â?– ‘ˆ –‘–ƒŽȌ 2008 2009 2010 2011 50 General public services 5.7 9.2 11.7 9.9 Defense 23.3 15.9 9.2 6.4 40 Public order and safety 36.6 19.9 13.1 9.3 Economic Affairs 23.8 43.1 55.0 60.3 30 of which: Transport (principally roads) 21.5 36.9 45.6 46.5 23.3 Energy 0.3 0.1 0.5 1.3 20 Environmental protection 15.9 0.6 1.3 0.2 1.0 Housing and community amenities 0.5 0.1 0.0 0.0 10 9.2 Health 2.5 2.0 4.3 5.0 6.4 Recreation, culture and religion 1.4 2.8 2.4 1.3 0 Education 5.4 3.1 3.5 6.5 2008 2009 2010 2011 Social Protection 0.3 2.7 0.7 0.4 Transport (principally roads) Public order and safety Total 100.0 100.0 100.0 100.0 Defense General public services SourceÇ£ ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͳǤʹͺǤ The fiscal stimulus during 2008Ǧ09 resulted in an increase in expenditures by 4.4 percent of GDP and although real increases were limited, the composition of expenditures shifted markedly. ‘–ƒŽ ‡š’‡Â?†‹–—”‡• ‹Â?…”‡ƒ•‡† „› ͳͳǤͶ ’‡”…‡Â?– ‹Â? ”‡ƒŽ –‡”Â?• ˆ”‘Â?  ͸ǡ͹͵͸ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲ͹ –‘  ͹ǡͷͲʹ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͻ „—– —Â?†‡”Ž›‹Â?‰ –Š‹• Ž‹Â?‹–‡† ‹Â?…”‡ƒ•‡ ™ƒ• ƒ Â?ƒ”Â?‡† ”‡‘”‹‡Â?–ƒ–‹‘Â? ‹Â? –Š‡ …‘Â?’‘•‹–‹‘Â? ‘ˆ ’—„Ž‹… ‡š’‡Â?†‹–—”‡•Ǥ †—…ƒ–‹‘Â?Ç¡ Š‡ƒŽ–Š ƒÂ?† •‘…‹ƒŽ „‡Â?‡ˆ‹– ‡š’‡Â?†‹–—”‡• ‹Â?…”‡ƒ•‡† ˆ”‘Â? Í» ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹ –‘ ͳ͵ ’‡”…‡Â?– ‹Â? ʹͲͲͻǡ ™Š‹…Š ƒÂ?‘—Â?–• –‘ ƒ Ͷʹ ’‡”…‡Â?– ‹Â?…”‡ƒ•‡ ‹Â? ”‡ƒŽ –‡”Â?• ˆ”‘Â?  ͳǡ͹ͺͻ Â?‹ŽŽ‹‘Â? –‘  ʹǡͷ͵ʹ Â?‹ŽŽ‹‘Â?Ǥ ‹•…ƒŽ •’ƒ…‡ ˆ‘” –Š‡•‡ ‹Â?…”‡ƒ•‡• …ƒÂ?‡ ˆ”‘Â? ƒ †‡…Ž‹Â?‡ ‹Â? †‡ˆ‡Â?•‡ ƒÂ?† ‹Â?–‡”Â?ƒŽ •‡…—”‹–› •’‡Â?†‹Â?‰ ˆ”‘Â? ͳ͵Ǥͳ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͹ –‘ ͻǤͺ ’‡”…‡Â?– ‹Â? ʹͲͲͻǤ ‘˜‡”ƒ‰‡ ƒÂ?† „‡Â?‡ˆ‹–• ™‡”‡ ‹Â?…”‡ƒ•‡† ˆ‘” ’‡Â?•‹‘Â?•ǡ –ƒ”‰‡–‡† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ È‹ Ȍǡ ƒÂ?† –Š‡ Â?‡†‹…ƒŽ ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ? È‹ ȌǤ Š‡ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ™ƒ• ‹Â?…”‡ƒ•‡† ˆ”‘Â?  ͵ͺ ’‡” Â?‘Â?–Š ‹Â? ʹͲͲ͹ –‘  ͹Ͳ ’‡” Â?‘Â?–Š ‹Â? ʹͲͲͻǡ •‘ –Šƒ– –Š‡ ’‡Â?•‹‘Â? „—†‰‡– ‹Â?…”‡ƒ•‡† ˆ”‘Â?  Ͷͷͷ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲ͹ –‘  ͺʹͳ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͻ ‹Â? Â?‘Â?‹Â?ƒŽ –‡”Â?•Ǥ Š‡  „‡Â?‡ˆ‹– ˆ‘” ƒ††‹–‹‘Â?ƒŽ ˆƒÂ?‹Ž› Â?‡Â?„‡”• ™ƒ• ‹Â?…”‡ƒ•‡† ˆ”‘Â?  ͳʹ ’‡” Â?‘Â?–Š –‘  ʹͶ ’‡” Â?‘Â?–Š ‹Â? ʹͲͲͻ ƒÂ?† ƒ††‹–‹‘Â?ƒŽ ˜—ŽÂ?‡”ƒ„Ž‡ Š‘—•‡Š‘Ž†• ™‡”‡ ƒ……‘Â?Â?‘†ƒ–‡† ‹Â?–‘ –Š‡ ’”‘‰”ƒÂ?Ç¡ •‘ –Šƒ– –Š‡  „—†‰‡– ‹Â?…”‡ƒ•‡† ˆ”‘Â?  ͺ͵ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲ͹ –‘  ͳ͸Ͳ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͻǤ Š‡ …‘˜‡”ƒ‰‡ ‘ˆ –Š‡   ™ƒ• ƒŽ•‘ ‹Â?…”‡ƒ•‡† ˆ”‘Â? ͹ͲͲǡͲͲͲ –‘ ͻͲͲǡͲͲͲ ‹Â?†‹˜‹†—ƒŽ• ƒÂ?† ’”‡Â?‹—Â?• ™‡”‡ ‹Â?…”‡ƒ•‡†ǡ •‘ –Šƒ– –Š‡   „—†‰‡– ‹Â?…”‡ƒ•‡† ˆ”‘Â?  ͵͹ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲ͹ –‘  ͳ͵͵ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͻǤ Recovery and Fiscal Adjustment, 2010Ǧ11 ͳǤʹͻǤ The strategic objectives of fiscal adjustment during 2010Ǧ11 were to augment priority infrastructure investments, hold the line on social expenditures in real terms, and continue to consolidate expenditures in other areas. • ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ƒÂ?† ”‡Â?ƒ‹Â?‡† ™‡ƒÂ? ƒÂ?† •‹‰Â?‹ˆ‹…ƒÂ?–Ž› „‡Ž‘™ ’”‡Ǧ…”‹•‹• Ž‡˜‡Ž•ǡ –Š‡ ƒ—–Š‘”‹–‹‡• •‘—‰Š– –‘ …‘Â?–‹Â?—‡ –‘ •—’’‘”– ”‡…‘˜‡”› ƒÂ?† ‰”‘™–Š „› ƒ—‰Â?‡Â?–‹Â?‰ ’”‹‘”‹–› ‹Â?ˆ”ƒ•–”—…–—”‡ ‹Â?˜‡•–Â?‡Â?–•Ǥ ‘Â?–‹Â?—‹Â?‰ ‹Â?˜‡•–Â?‡Â?– ƒ”‡ƒ• ‹Â?…Ž—†‡† …‘Â?•–”—…–‹‘Â? ƒÂ?† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ† Â?‡–™‘”Â?Ç¡ ͳ͵ ”‡‰‹‘Â?ƒŽ ƒÂ?† Â?—Â?‹…‹’ƒŽ ‹Â?ˆ”ƒ•–”—…–—”‡ǡ  Š‘—•‹Â?‰ǡ ƒÂ?† —”„ƒÂ? ”‡•–‘”ƒ–‹‘Â?Ǥ ‡™ ‹Â?˜‡•–Â?‡Â?– ƒ”‡ƒ• …‘Â?‹Â?‰ ‘Â? •–”‡ƒÂ? ‹Â? ʹͲͳͲǦͳͳ ‹Â?…Ž—†‡† ‡Â?‡”‰› –”ƒÂ?•Â?‹••‹‘Â? ƒÂ?† ™ƒ–‡”Ǥ ‘–ƒŽ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ‹Â?…”‡ƒ•‡† ˆ”‘Â? ͺǤͶ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ –‘ ͺǤͺ ’‡”…‡Â?– ‹Â? ʹͲͳͳǡ ™Š‹…Š ”‡ˆŽ‡…–‡† ƒ ʹͲ ’‡”…‡Â?– ‹Â?…”‡ƒ•‡ ‹Â? ”‡ƒŽ –‡”Â?• ˆ”‘Â?  ͳǡ͸͵Ͷ Â?‹ŽŽ‹‘Â? –‘  ͳǡͻ͸ͳ Â?‹ŽŽ‹‘Â?Ǥ Â?†‡”Ž›‹Â?‰ –Š‹• ‘˜‡”ƒŽŽ ‹Â?…”‡ƒ•‡ǡ Š‘™‡˜‡”ǡ ™ƒ• ˆ—”–Š‡” •Š‹ˆ–• ‹Â? –Š‡ …‘Â?’‘•‹–‹‘Â? ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?–Ǥ Š‡ •Šƒ”‡ ‘ˆ •–ƒ–‡ ‰‘˜‡”Â?Â?‡Â?– ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ‹Â? †‡ˆ‡Â?•‡ ƒÂ?† ‹Â?–‡”Â?ƒŽ •‡…—”‹–› †‡…Ž‹Â?‡† ˆ”‘Â? ͵͸ ’‡”…‡Â?– ‹Â? ʹͲͲͻ –‘ ͳͷǤ͹ ’‡”…‡Â?– ‹Â? ʹͲͳͳǡ ™Š‹Ž‡ –Š‡ •Šƒ”‡ ‹Â? –”ƒÂ?•’‘”– ȋ’”‹Â?…‹’ƒŽŽ› ”‘ƒ†•Ȍ ‹Â?…”‡ƒ•‡† ˆ”‘Â? ͵͹ ’‡”…‡Â?– ‹Â? ʹͲͲͻ –‘ Ͷ͹ ’‡”…‡Â?– ‹Â? ʹͲͳͳǤ ͳǤ͵ͲǤ Total public expenditures declined in real terms for the first time during 2010Ǧ11 as social expenditures held steady in real terms while expenditures in other areas were reduced. ‘–ƒŽ ’—„Ž‹… ‡š’‡Â?†‹–—”‡• †‡…Ž‹Â?‡† ˆ”‘Â? ͵ͺǤͶ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ –‘ ͵ʹǤͳ ’‡”…‡Â?– ‹Â? ʹͲͳͳǡ ™Š‹…Š ”‡ˆŽ‡…–• ƒ Í· ’‡”…‡Â?– †‡…Ž‹Â?‡ ‹Â? ”‡ƒŽ –‡”Â?• ˆ”‘Â?  ͹ǡͷͲʹ Â?‹ŽŽ‹‘Â? –‘  ͹ǡͳͳͲ Â?‹ŽŽ‹‘Â?Ǥ ‡ˆ‡Â?•‡ ƒÂ?† ‹Â?–‡”Â?ƒŽ •‡…—”‹–› •’‡Â?†‹Â?‰ ™ƒ• ”‡†—…‡† ˆ—”–Š‡” ˆ”‘Â? ͻǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ –‘ ͸Ǥͷ ’‡”…‡Â?– ‹Â? ʹͲͳͳǡ ™Š‹…Š ”‡ˆŽ‡…–• ƒ Í´Í· ”‡†—…–‹‘Â? ‹Â? ”‡ƒŽ –‡”Â?• ˆ”‘Â?  ͳǡͻͲͶ Â?‹ŽŽ‹‘Â? –‘  ͳǡͶ͵Ͳ Â?‹ŽŽ‹‘Â?Ǥ ‰ƒ‹Â?•– –Š‹• „ƒ…Â?†”‘’ ‘ˆ ‘˜‡”ƒŽŽ ‡š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â?Ç¡ •’‡Â?†‹Â?‰ ‘Â? ‡†—…ƒ–‹‘Â?Ç¡ Š‡ƒŽ–Šǡ ƒÂ?† •‘…‹ƒŽ „‡Â?‡ˆ‹–• Š‡Ž† •–‡ƒ†› ƒ– ƒ„‘—–  ʹǡͷͲͲ Â?‹ŽŽ‹‘Â? ‹Â? ”‡ƒŽ –‡”Â?• †—”‹Â?‰ –Š‹• ’‡”‹‘†Ǥ ˜‡”ƒŽŽǡ –Š‡ ‹Â?’”‘˜‡† …‘˜‡”ƒ‰‡ ƒÂ?† „‡Â?‡ˆ‹–• ‘ˆ •‘…‹ƒŽ ’”‘‰”ƒÂ?• ™ƒ• Â?ƒ‹Â?–ƒ‹Â?‡†ǡ „—– •‘Â?‡ •ƒ˜‹Â?‰• ™‡”‡ ”‡ƒŽ‹œ‡† –Š”‘—‰Š ‹Â?’”‘˜‡† ‡ˆˆ‹…‹‡Â?…› ƒÂ?† –ƒ”‰‡–‹Â?‰Ǥ ‡Â?•‹‘Â? „‡Â?‡ˆ‹–• ™‡”‡ ƒ…–—ƒŽŽ› ”ƒ‹•‡† ‹Â? Â?‘Â?‹Â?ƒŽ –‡”Â?• ˆ”‘Â?  ͹Ͳ ’‡” Â?‘Â?–Š ‹Â? ʹͲͲͻ –‘  ͺͲ ’‡” Â?‘Â?–Š ‹Â? ʹͲͳͲ ƒÂ?†  ͳͲͲ ’‡” Â?‘Â?–Š ‹Â? ʹͲͳͳǤ ‘˜‡”ƒ‰‡ ‘ˆ –Š‡ –ƒ”‰‡–‡† Â?‡†‹…ƒŽ ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ? ™ƒ• Š‡Ž† •–‡ƒ†› ƒ– ƒ„‘—– ͻͲͲǡͲͲͲ „‡Â?‡ˆ‹…‹ƒ”‹‡• ƒÂ?† ƒ †”—‰ „‡Â?‡ˆ‹– ™ƒ• ƒ††‡† –‘ –Š‡ ’ƒ…Â?ƒ‰‡ǡ „—– •ƒ˜‹Â?‰• ™‡”‡ ”‡ƒŽ‹œ‡† ˆ”‘Â? ƒ ”‡Â?‡‰‘–‹ƒ–‹‘Â? ‘ˆ ’”‡Â?‹—Â?• ™‹–Š ‹Â?•—”ƒÂ?…‡ …‘Â?’ƒÂ?‹‡•Ǥ  …‘˜‡”ƒ‰‡ ™ƒ• Â?ƒ‹Â?–ƒ‹Â?‡† ƒ”‘—Â?† ͶͶͲǡͲͲͲ „‡Â?‡ˆ‹…‹ƒ”‹‡•ǡ „—– –Š‡ –ƒ”‰‡–‹Â?‰ ‘ˆ –Š‡ ’‘‘” ™ƒ• ‹Â?’”‘˜‡† „› ’”‘ƒ…–‹˜‡Ž› ‹†‡Â?–‹ˆ›‹Â?‰ ƒÂ?† ”‡Â?‘˜‹Â?‰ ‹Â?‡Ž‹‰‹„Ž‡ „‡Â?‡ˆ‹…‹ƒ”‹‡• ˆ”‘Â? –Š‡ ’‘‘ŽǤ Benchmarking Expenditure Levels and Composition ͳǤ͵ͳǤ Total public expenditure levels in Figure 1.13: Current and Capital Expenditures Georgia are lower than in most ECA Georgia and Selected Countries, 2010 countries but higher than in most ȋ‹Â? ’‡”…‡Â?– ‘ˆ ÈŒ comparators in East Asia and Latin 50 America. Â? ʹͲͳͲǡ –‘–ƒŽ ‡š’‡Â?†‹–—”‡• ‘ˆ 45 ͵ͶǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ‡‘”‰‹ƒ ™‡”‡ Ž‘™‡” 40 –ŠƒÂ? ‹Â? Â?‘•– …‘—Â?–”‹‡•ǡ ‡š…‡’– ˆ‘” 35 ‹–Š—ƒÂ?‹ƒ ƒÂ?† ƒ…‡†‘Â?‹ƒ ™Š‹…Š Šƒ† •‹Â?‹Žƒ” 30 ‡š’‡Â?†‹–—”‡ Ž‡˜‡Ž• •‹Â?‹Žƒ” –‘ ‡‘”‰‹ƒǡ ƒÂ?† 25 ”Â?‡Â?‹ƒ ™Š‹…Š Šƒ† Ž‘™‡” ‡š’‡Â?†‹–—”‡ 20 Ž‡˜‡Ž• –ŠƒÂ? ‡‘”‰‹ƒǤ ‘•– ‘–Š‡” …‘Â?’ƒ”ƒ–‘”• ‹Â? –Š‡ ”‡‰‹‘Â? Šƒ† –‘–ƒŽ 15 ‡š’‡Â?†‹–—”‡ Ž‡˜‡Ž• ‹Â? ‡š…‡•• ‘ˆ ͶͲ ’‡”…‡Â?– 10 ‘ˆ Ç¡ ™‹–Š Â?”ƒ‹Â?‡ ƒÂ?† Ž‘˜‡Â?‹ƒ –Š‡ 5 Š‹‰Š‡•– ƒ– ƒ„‘—– ͷͲ ’‡”…‡Â?– ‘ˆ Ǥ Š‡ 0 CHILE SLOVAKIA COLOMBIA MOLDOVA CROATIA TURKEY ROMANIA THAILAND UKRAINE MACEDONIA ESTONIA LITHUANIA S. AFRICA BULGARIA GEORGIA SLOVENIA VIETNAM ARMENIA COSTA RICA INDONESIA •‘—”…‡ ‘ˆ –Š‡ †‹ˆˆ‡”‡Â?…‡ ™ƒ• …—””‡Â?– ‡š’‡Â?†‹–—”‡•ǡ ™Š‡”‡ ‡‘”‰‹ƒ ȋʹ͸ ’‡”…‡Â?– ‘ˆ ÈŒ •’‡Â?– †‡…‹†‡†Ž› Ž‡•• –ŠƒÂ? Â?‘•– …‘—Â?–”‹‡• ‹Â? –Š‡ ”‡‰‹‘Â? ‘–Š‡” –ŠƒÂ? ”Â?‡Â?‹ƒǤ Current Expenditure Capital Expenditure Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ ™Š‡Â? …‘Â?’ƒ”‹Â?‰ ™‹–Š SourceÇ£ ‘”Ž† ƒÂ?Â?È€  ‹•…ƒŽ ƒ–ƒ„ƒ•‡• …‘—Â?–”‹‡• ‹Â? ƒ•– •‹ƒ ƒÂ?† ƒ–‹Â? Â?‡”‹…ƒǡ –‘–ƒŽ ‡š’‡Â?†‹–—”‡• ‹Â? ‡‘”‰‹ƒ ™‡”‡ ‰‡Â?‡”ƒŽŽ› Š‹‰Š‡”Ǥ —””‡Â?– ‡š’‡Â?†‹–—”‡• ‹Â? Â?†‘Â?‡•‹ƒǡ Šƒ‹ŽƒÂ?†ǡ ͳͶ ƒÂ?† ‹‡–Â?ƒÂ? ™‡”‡ „‡–™‡‡Â? ͳ͹ǦʹͲ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͲǡ ™Š‹Ž‡ Ž‡˜‡Ž• ‹Â? ‘Ž‘Â?„‹ƒǡ Š‹Ž‡ǡ ƒÂ?† ‘•–ƒ ™‡”‡ „‡–™‡‡Â? ʹͳǦʹ͵ ’‡”…‡Â?– ‘ˆ Ǥ ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ‹Â? Â?‘•– ƒ•– •‹ƒÂ?È€ƒ–‹Â? Â?‡”‹…ƒÂ? …‘Â?’ƒ”ƒ–‘”• ™‡”‡ ƒŽ•‘ Ž‘™‡” –ŠƒÂ? ‹Â? ‡‘”‰‹ƒǡ ‡š…‡’– ˆ‘” ‹‡–Â?ƒÂ? ™Š‡”‡ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ƒÂ?‘—Â?–‡† –‘ Â?‘”‡ –ŠƒÂ? ͳ͵ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͲǤ Figure 1.14: Composition of Expenditures, Economic Classification, Georgia and Selected Countries ȋ‹Â? ’‡”…‡Â?– ‘ˆ –‘–ƒŽ ‡š’‡Â?†‹–—”‡•Ȍ Comp of Employees (% Total Exps) Goods and Services (% Total Exps) 35.0 35.0 30.0 30.0 25.0 25.0 20.0 20.0 15.0 15.0 10.0 10.0 5.0 5.0 0.0 0.0 2007 2009 2011 2007 2009 2011 Capital Expenditures (% Total Exps) Social Benefits (% Total Exps) 30.0 50.0 45.0 25.0 40.0 35.0 20.0 30.0 15.0 25.0 20.0 10.0 15.0 10.0 5.0 5.0 0.0 0.0 2007 2009 2011 2007 2009 2011 SourceÇ£ ‘”Ž† ƒÂ?Â? ‹•…ƒŽ ƒ–ƒ„ƒ•‡ ͳǤ͵ʹǤ Comparing with other regional economies, Georgia directs a greater share of public expenditures to investment and lower shares to social benefits and compensation of employees. Â? ʹͲͳͳǡ –Š‡ •Šƒ”‡ ‘ˆ ‡š’‡Â?†‹–—”‡• ‰‘‹Â?‰ –‘ •‘…‹ƒŽ „‡Â?‡ˆ‹–• ™ƒ• ʹʹǤʹ ’‡”…‡Â?– ‹Â? ‡‘”‰‹ƒǡ …‘Â?•‹†‡”ƒ„Ž› „‡Ž‘™ ”‡‰‹‘Â?ƒŽ …‘Â?’ƒ”ƒ–‘”• ™Š‹…Š —•‡ „‡–™‡‡Â? ͵ͷǦͶͷ ’‡”…‡Â?– ‘ˆ ‡š’‡Â?†‹–—”‡• ‘Â? ’ƒ›‹Â?‰ •‘…‹ƒŽ „‡Â?‡ˆ‹–•Ǥ Š‡ Š‹‰Š •‘…‹ƒŽ „‡Â?‡ˆ‹– •Šƒ”‡ ‘ˆ ‡š’‡Â?†‹–—”‡• ƒ…”‘•• –Š‡ ”‡‰‹‘Â? ‹• ƒ ”‡•—Ž– ‘ˆ ƒ‰‹Â?‰ ’‘’—Žƒ–‹‘Â?• ĥ ™‡ŽŽ ĥ ƒ •‘…‹ƒŽ …‘Â?–”ƒ…– –Šƒ– ’”‘˜‹†‡• ˆ‘” ”‡Žƒ–‹˜‡Ž› ‰‡Â?‡”‘—• ƒÂ?† —Â?‹˜‡”•ƒŽ ’—„Ž‹…Ž› ˆ—Â?†‡† ‘Ž†Ǧƒ‰‡ „‡Â?‡ˆ‹–•Ǥ ‘” ‡šƒÂ?’Ž‡ǡ –Š‡ •Šƒ”‡ ‘ˆ –Š‡ ‡Ž†‡”Ž› ”‡…‡‹˜‹Â?‰ ƒ ’—„Ž‹… ’‡Â?•‹‘Â? ‹• ͻ͵ ’‡”…‡Â?– ‹Â? ‡Â?‡”‰‹Â?‰ —”‘’‡ ˜‡”•—• ʹ͸ ’‡”…‡Â?– ‹Â? ‡Â?‡”‰‹Â?‰ •‹ƒ ƒÂ?† Í·Í» ’‡”…‡Â?– ‹Â? ƒ–‹Â? Â?‡”‹…ƒǤ Â? •‡˜‡”ƒŽ …‘—Â?–”‹‡•ǡ •—…Š ĥ Â?”ƒ‹Â?‡ǡ –Š‡ Š‹‰Š •‘…‹ƒŽ „‡Â?‡ˆ‹– •Šƒ”‡ ‘ˆ ‡š’‡Â?†‹–—”‡• …‘Â?•‹†‡”ƒ„Ž› ”‡†—…‡• ˆ‹•…ƒŽ •’ƒ…‡ ˆ‘” ‡š’‡Â?†‹–—”‡• ‹Â? ‘–Š‡” ’”‘†—…–‹˜‡ ƒ”‡ƒ• ƒÂ?† ‰‡Â?‡”ƒŽŽ› Â?ƒÂ?‡• ˆ‹•…ƒŽ ’‘Ž‹…› Â?—…Š Ž‡•• ƒ„Ž‡ –‘ ”‡•’‘Â?† ˆŽ‡š‹„Ž› –‘ ‡…‘Â?‘Â?‹… •Š‘…Â?•Ǥ Š‹Ž‡ ‡‘”‰‹ƒ Šƒ• ƒ˜‘‹†‡† –Š‹• ˆƒ–‡ǡ –Š‡ ‡š’‡”‹‡Â?…‡ ‘ˆ ‘–Š‡” …‘—Â?–”‹‡• ‹Â? –Š‡ ”‡‰‹‘Â? ’”‘˜‹†‡• ‡‘”‰‹ƒ ™‹–Š ƒ ”‡Â?‹Â?†‡” ‘ˆ ’‹–ˆƒŽŽ• –‘ ƒ˜‘‹† ‹Â? Â?ƒÂ?ƒ‰‹Â?‰ –Š‡ •‘…‹ƒŽ „‡Â?‡ˆ‹– •›•–‡Â? ˆ‘” ƒÂ? ƒ‰‹Â?‰ ’‘’—Žƒ–‹‘Â?Ǥ Â? ƒ††‹–‹‘Â?Ç¡ –Š‡ •Šƒ”‡ ‘ˆ •’‡Â?†‹Â?‰ ‰‘‹Â?‰ –‘ ‡Â?’Ž‘›‡‡ …‘Â?’‡Â?•ƒ–‹‘Â? ‹Â? ‡‘”‰‹ƒ ™ƒ• ͳͷ ’‡”…‡Â?– ‹Â? ʹͲͳͳǡ …‘Â?•‹†‡”ƒ„Ž› Ž‡•• –ŠƒÂ? ‹Â? Â?‘•– ”‡‰‹‘Â?ƒŽ …‘Â?’ƒ”ƒ–‘”• ™Š‡”‡ ‡Â?’Ž‘›‡‡ …‘Â?’‡Â?•ƒ–‹‘Â? ƒ……‘—Â?–‡† ˆ‘” ƒ”‘—Â?† ʹʹǦʹͺ ͳͷ ’‡”…‡Â?– ‘ˆ •’‡Â?†‹Â?‰Ǥ Š‹• ‹• ’”‹Â?ƒ”‹Ž› ƒ ”‡•—Ž– ‘ˆ –Š‡ •‹‰Â?‹ˆ‹…ƒÂ?– …‘Â?•‘Ž‹†ƒ–‹‘Â? ‘ˆ ’—„Ž‹… •‡…–‘” ‡Â?’Ž‘›Â?‡Â?– ‹Â? ‡‘”‰‹ƒ •‹Â?…‡ –Š‡ ‘•‡ ‡˜‘Ž—–‹‘Â?Ǥ ͳǤ͵͵Ǥ In 2011, the share of public expenditures going toward investment was 22.5 percent in Georgia, substantially higher than other nonǦoil emerging economies in the ECA region. Â?‘Â?‰ …‘Â?’ƒ”ƒ–‘”•ǡ —Ž‰ƒ”‹ƒǡ ‘Â?ƒÂ?‹ƒǡ ƒ…‡†‘Â?‹ƒǡ •–‘Â?‹ƒǡ ‹–Š—ƒÂ?‹ƒǡ ƒÂ?† ‘Ž†‘˜ƒ ‹Â?˜‡•–‡† „‡–™‡‡Â? ͳͳǦͳͷ ’‡”…‡Â?– ‘ˆ ’—„Ž‹… ‡š’‡Â?†‹–—”‡•ǡ ™Š‹Ž‡ Â?”ƒ‹Â?‡ǡ ”‘ƒ–‹ƒǡ ƒÂ?† Ž‘˜ƒÂ?‹ƒ ‹Â?˜‡•–‡† ƒ ’ƒ”–‹…—Žƒ”Ž› Ž‘™ ͶǦͷ ’‡”…‡Â?– ‘ˆ ’—„Ž‹… ‡š’‡Â?†‹–—”‡•Ǥ Â? Â?”ƒ‹Â?‡ǡ ”‘ƒ–‹ƒǡ ƒÂ?† Ž‘˜‡Â?‹ƒǡ –Š‡ ‹Â?˜‡•–Â?‡Â?– •Šƒ”‡ ‘ˆ ‡š’‡Â?†‹–—”‡• Šƒ• †‡…Ž‹Â?‡† …‘Â?•‹†‡”ƒ„Ž› •‹Â?…‡ –Š‡ ‘Â?•‡– ‘ˆ –Š‡ …”‹•‹•ǡ ™Š‹Ž‡ ‹Â? ‡‘”‰‹ƒ ‹– Šƒ• ”‡Â?ƒ‹Â?‡† ”‡Žƒ–‹˜‡Ž› •–‡ƒ†›Ǥ —”–Š‡”Â?‘”‡ǡ ĥ †‹•…—••‡†ǡ –Š‡ •Šƒ”‡ ‘ˆ ‡š’‡Â?†‹–—”‡• ‰‘‹Â?‰ –‘ Â?‘Â?Ǧ†‡ˆ‡Â?•‡ ‹Â?˜‡•–Â?‡Â?– Šƒ• ƒ…–—ƒŽŽ› ”‹•‡Â? …‘Â?•‹†‡”ƒ„Ž› ‹Â? ‡‘”‰‹ƒ ‘˜‡” –Š‡ Žƒ•– ˆ‘—” ›‡ƒ”• ȋʹͲͲͺǦͳͳȌǤ ‹–Š ‹Â?…‘Â?‡ Ž‡˜‡Ž• ƒÂ?† ‹Â?ˆ”ƒ•–”—…–—”‡ “—ƒŽ‹–› ƒÂ?† “—ƒÂ?–‹–› ‹Â? ‡‘”‰‹ƒ •‹‰Â?‹ˆ‹…ƒÂ?–Ž› „‡Ž‘™ –Š‘•‡ ‹Â? ‘–Š‡” ‡Â?–”ƒŽ ƒÂ?† ƒ•–‡”Â? —”‘’‡ƒÂ? ‡…‘Â?‘Â?‹‡•ǡ ƒ Š‹‰Š‡” ‹Â?˜‡•–Â?‡Â?– •Šƒ”‡ ‘ˆ ‡š’‡Â?†‹–—”‡• ‹Â? Â?‘– —Â?™ƒ””ƒÂ?–‡† ˆ‘” ‡‘”‰‹ƒǤ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ –Š‡ Žƒ”‰‡” ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? ‹Â? ‡‘”‰‹ƒ ƒŽ•‘ ”ƒ‹•‡• –Š‡ ‹Â?’‘”–ƒÂ?…‡ ‘ˆ •–”‡Â?‰–Š‡Â?‹Â?‰ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?• –‘ ‡Â?ŠƒÂ?…‡ •‡Ž‡…–‹˜‹–›ǡ ‡ˆˆ‹…‹‡Â?…›ǡ ƒÂ?† •—•–ƒ‹Â?ƒ„‹Ž‹–› ‘ˆ –Š‡ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ?Ǥ Figure 1.15: Composition of Expenditures, Functional Classification, Georgia and Selected Countries ȋ‹Â? ’‡”…‡Â?– ‘ˆ –‘–ƒŽ ‡š’‡Â?†‹–—”‡•Ȍ Defense (% Total Exps) Educ, Health, Social Prot. (% Total Exps) 30.0 80.0 70.0 25.0 60.0 20.0 50.0 15.0 40.0 10.0 30.0 20.0 5.0 10.0 0.0 0.0 2007 2009 2011 2007 2009 2011 SourceÇ£ ‘”Ž† ƒÂ?Â? ‹•…ƒŽ ƒ–ƒ„ƒ•‡ ͳǤ͵ͶǤ Although the share of defense expenditures in Georgia has declined decidedly (and with it, the opportunities to readily generate further fiscal space), it still remains considerably higher than in regional comparators. Š‡ •Šƒ”‡ ‘ˆ †‡ˆ‡Â?•‡ ˆ‡ŽŽ ˆ”‘Â? ʹ͸ ’‡”…‡Â?– ‘ˆ –‘–ƒŽ ‡š’‡Â?†‹–—”‡• ‹Â? ʹͲͲ͹ –‘ ͻǤͷ ’‡”…‡Â?– ‹Â? ʹͲͳͳǤ Š‹• ”‡Â?ƒ‹Â?• …‘Â?•‹†‡”ƒ„Ž› Š‹‰Š‡” –ŠƒÂ? ‹Â? Â?‘•– …‘Â?’ƒ”ƒ–‘”• ™Š‡”‡ †‡ˆ‡Â?•‡ ƒ……‘—Â?–‡† ˆ‘” „‡–™‡‡Â? ͵Ǧͷ ’‡”…‡Â?– ‘ˆ –‘–ƒŽ •’‡Â?†‹Â?‰ ‹Â? ʹͲͳͳǤ ‘Â?’ƒ”‡† –‘ ‡‘”‰‹ƒǡ ‘Â?Ž› ”Â?‡Â?‹ƒ •’‡Â?– ƒ ‰”‡ƒ–‡” •Šƒ”‡ ‘ˆ –‘–ƒŽ ‡š’‡Â?†‹–—”‡• ȋͳ͵Ǥͷ ’‡”…‡Â?–Ȍ ‘Â? †‡ˆ‡Â?•‡ ‹Â? ʹͲͳͳǤ Š‡ ˆ‹‰—”‡ ˆ‘” —”Â?‡› ™ƒ• ͷǤʹ ’‡”…‡Â?–Ǥ ‹–Š –Š‡ †‡…Ž‹Â?‡ ‘ˆ †‡ˆ‡Â?•‡ ‡š’‡Â?†‹–—”‡• ‹Â? ‡‘”‰‹ƒ „‡–™‡‡Â? ʹͲͲ͹Ǧͳͳǡ –Š‡ ‘’’‘”–—Â?‹–‹‡• –‘ ”‡ƒ†‹Ž› ‰‡Â?‡”ƒ–‡ ˆ‹•…ƒŽ •’ƒ…‡ Šƒ˜‡ †‹Â?‹Â?‹•Š‡†Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ –Š‡ •–‹ŽŽ Š‹‰Š •Šƒ”‡ ‰‘‹Â?‰ –‘ †‡ˆ‡Â?•‡ ‹Â? ‡‘”‰‹ƒ •—‰‰‡•–• –Šƒ– †‡’‡Â?†‹Â?‰ ‘Â? ‹–• •‡…—”‹–› Â?‡‡†•ǡ ˆ—”–Š‡” ‘’’‘”–—Â?‹–› –‘ ‰‡Â?‡”ƒ–‡ ˆ‹•…ƒŽ •’ƒ…‡ –Š”‘—‰Š ƒ ”‡†—…–‹‘Â? ‹Â? †‡ˆ‡Â?•‡ ‡š’‡Â?†‹–—”‡• Â?ƒ› ‡š‹•–Ǥ Š‹• ‹Â?†‹…ƒ–‹‘Â? ‹• „‘Ž•–‡”‡† „› ƒ …”‘•• …‘Â?’ƒ”‹•‘Â? ‘ˆ –Š‡ •Šƒ”‡ ‰‘‹Â?‰ –‘ †‡ˆ‡Â?•‡ ™‹–Š –Šƒ– ‰‘‹Â?‰ –‘ ‡†—…ƒ–‹‘Â?Ç¡ Š‡ƒŽ–Šǡ ƒÂ?† •‘…‹ƒŽ ’”‘–‡…–‹‘Â?Ǥ Š‡ •Šƒ”‡ ‘ˆ –‘–ƒŽ •’‡Â?†‹Â?‰ ‰‘‹Â?‰ –‘ ‡†—…ƒ–‹‘Â?Ç¡ Š‡ƒŽ–Šǡ ƒÂ?† •‘…‹ƒŽ ’”‘–‡…–‹‘Â? ‹• Ž‡•• ‹Â? ‡‘”‰‹ƒ –ŠƒÂ? ‹Â? Â?‘•– ”‡‰‹‘Â?ƒŽ …‘Â?’ƒ”ƒ–‘”•Ǥ Š‹Ž‡ ’ƒ”– ‘ˆ –Š‹• †‹ˆˆ‡”‡Â?…‡ ‹• †—‡ –‘ Â?‘”‡ ‰‡Â?‡”‘—• ȋƒÂ?† ‘ˆ–‡Â? —Â?•—•–ƒ‹Â?ƒ„Ž‡Ȍ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹–• ‹Â? Â?ƒÂ?› …‘—Â?–”‹‡• ȋ‡Ǥ‰Ǥ Â?”ƒ‹Â?‡Ȍǡ ‡‘”‰‹ƒ ƒŽ•‘ •’‡Â?†• ƒ Ž‘™‡” •Šƒ”‡ ‘ˆ ‡š’‡Â?†‹–—”‡• ‘Â? ‡†—…ƒ–‹‘Â? ƒÂ?† Š‡ƒŽ–Š –ŠƒÂ? ‹Â? ”‡‰‹‘Â?ƒŽ …‘Â?’ƒ”ƒ–‘”•Ǥ ͳ͸ Continued implementation of fiscal consolidation, 2012Ǧ15 ͳǤ͵ͷǤ Going forward, capital expenditure consolidation can make a greater contribution to fiscal consolidation than it has so far. • ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ”‡…‘˜‡”•ǡ –Š‡ ’”‡••—”‡• –‘ Â?ƒ‹Â?–ƒ‹Â? Š‹‰Š Ž‡˜‡Ž• ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– •Š‘—Ž† ƒ„ƒ–‡Ǥ Š‹• •Š‘—Ž† ‡Â?ƒ„Ž‡ •‘Â?‡ ™‹Â?†‹Â?‰ †‘™Â? ‘ˆ –Š‡ Š—Â?Â’ ‹Â? ’‘•–Ǧ…”‹•‹• …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡•Ǥ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ ‰‹˜‡Â? •‹‰Â?‹ˆ‹…ƒÂ?– ‹Â?ˆ”ƒ•–”—…–—”‡ †‡˜‡Ž‘’Â?‡Â?– Â?‡‡†•ǡ …‘Â?–ƒ‹Â?‹Â?‰ …—””‡Â?– ‡š’‡Â?†‹–—”‡ ’”‡••—”‡• ™‹ŽŽ ƒŽ•‘ „‡ ‹Â?’‘”–ƒÂ?–Ǥ ‘…‹ƒŽ ‡š’‡Â?†‹–—”‡ ’”‡••—”‡• ™‹ŽŽ ”‡Â?ƒ‹Â? …‘Â?•‹†‡”ƒ„Ž‡ ‹Â? –Š‡ Â?‡†‹—Â? –‡”Â?Ç£ –Š‡ ƒ‰‹Â?‰ ’‘’—Žƒ–‹‘Â? ƒÂ?† ‡š’‡…–ƒ–‹‘Â?• ˆ‘” Â?ƒ‹Â?–ƒ‹Â?‹Â?‰ –Š‡ „‡Â?‡ˆ‹– ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ™‹ŽŽ …”‡ƒ–‡ ’”‡••—”‡• ˆ‘” •—•–ƒ‹Â?‡† ‹Â?…”‡ƒ•‡• ‹Â? ’‡Â?•‹‘Â? ‡š’‡Â?†‹–—”‡•Ǣ ‘˜‡”ƒŽŽ Š‡ƒŽ–Š ‘—–…‘Â?‡• ™‹ŽŽ Â?‡‡† ˆ—”–Š‡” ‹Â?’”‘˜‡Â?‡Â?–Ǣ ƒÂ?† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ ’‘‘” …ƒÂ? ‹Â?…”‡ƒ•‡ ˆ—”–Š‡” ™Š‹Ž‡ —Â?‡Â?’Ž‘›Â?‡Â?– ”‡Â?ƒ‹Â?• Š‹‰ŠǤ Š‡ Â?‡†‹—Â? –‡”Â? ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â? ’”‘Œ‡…–• –Šƒ– …—””‡Â?– ƒÂ?† …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ™‹ŽŽ Â?ƒÂ?‡ •‹Â?‹Žƒ” …‘Â?–”‹„—–‹‘Â?• –‘ ƒ†Œ—•–Â?‡Â?– ‘˜‡” –Š‡ Â?‡š– –Š”‡‡ ›‡ƒ”•ǡ ™‹–Š …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• †‡…Ž‹Â?‹Â?‰ ˆ”‘Â? ͺǤͻ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ –‘ ͹Ǥʹ ’‡”…‡Â?– „› ʹͲͳͷ ƒÂ?† …—””‡Â?– ‡š’‡Â?†‹–—”‡• †‡…Ž‹Â?‹Â?‰ ˆ”‘Â? ʹ͵Ǥ͵ –‘ ʹͳǤͺ ’‡”…‡Â?– †—”‹Â?‰ –Š‹• ’‡”‹‘†Ǥ ‘…‹ƒŽ „‡Â?‡ˆ‹– ‡š’‡Â?†‹–—”‡• ƒ”‡ ’”‘Œ‡…–‡† –‘ ‹Â?…”‡ƒ•‡ ƒ– –Š‡ ”ƒ–‡ ‘ˆ ”‡ƒŽ Ç¡ ™Š‹Ž‡ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ƒ”‡ ’”‘Œ‡…–‡† –‘ ”‡Â?ƒ‹Â? …‘Â?•–ƒÂ?– ‹Â? ”‡ƒŽ –‡”Â?• †—”‹Â?‰ ʹͲͳʹǦͳͷǡ ƒ– ƒ„‘—–  ͳǡͻͺͲ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͳͲ ’”‹…‡•Ǥ ͳǤ͵͸Ǥ Key options for further expenditure consolidation include instilling greater selectivity in capital expenditures, containing medium term social expenditure pressures, and enhancing sustainability of the road investment program. ƒ‹Â?–ƒ‹Â?‹Â?‰ ’‡Â?•‹‘Â? ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡• ˆ‘” ƒÂ? ƒ‰‹Â?‰ ’‘’—Žƒ–‹‘Â? ”‡’”‡•‡Â?–• –Š‡ Â?‡› •‘—”…‡ ‘ˆ ’”‡••—”‡ ‘Â? •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡•Ǥ Š‹• …ƒÂ? „‡ …‘Â?–ƒ‹Â?‡† ‘˜‡” –Š‡ Â?‡†‹—Â? –‡”Â? „› …‘Â?„‹Â?‹Â?‰ Ž‹Â?‹–‡† ‰”‘™–Š ‘ˆ –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– ™‹–Š Â?‡ƒ•—”‡• –‘ †‡˜‡Ž‘’ ’”‹˜ƒ–‡ •ƒ˜‹Â?‰• ˆ‘” ”‡–‹”‡Â?‡Â?–Ǥ Â? ƒ††‹–‹‘Â?Ç¡ ‹Â?’”‘˜‡† …‘˜‡”ƒ‰‡ ƒÂ?† –ƒ”‰‡–‹Â?‰ ‘ˆ –Š‡  ƒÂ?†   ’”‘‰”ƒÂ?• …ƒÂ? „‡ …‘Â?„‹Â?‡† ™‹–Š Â?‡ƒ•—”‡• –‘ …‘Â?Â?‡…–  ”‡…‹’‹‡Â?–• ™‹–Š ‡Â?’Ž‘›Â?‡Â?– ‘’’‘”–—Â?‹–‹‡• ƒÂ?† ‹Â?’”‘˜‡ ƒ……‡•• –‘ ’Šƒ”Â?ƒ…‡—–‹…ƒŽ• ƒÂ?† ’”‡˜‡Â?–ƒ–‹˜‡ –”‡ƒ–Â?‡Â?–• ˆ‘” –Š‡ ’‘’—Žƒ–‹‘Â?Ǥ ’–‹‘Â? –‘ ‹Â?•–‹ŽŽ ‰”‡ƒ–‡” •‡Ž‡…–‹˜‹–› ‹Â? …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ‹Â?…Ž—†‡ ˆ—”–Š‡” ‹Â?’”‘˜‹Â?‰ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ‹Â?…Ž—†‹Â?‰ ƒ …‘Â?•‹•–‡Â?– ƒÂ?† …‘Â?’”‡Š‡Â?•‹˜‡ ’”‡•‡Â?–ƒ–‹‘Â? ‘ˆ ’—„Ž‹… ˆ—Â?†‹Â?‰ ˆ‘” ‹Â?˜‡•–Â?‡Â?–ǡ ĥ ™‡ŽŽ ĥ •–”‡Â?‰–Š‡Â?‹Â?‰ –Š‡ „”‘ƒ†‡” …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?•ǡ ‹Â?…Ž—†‹Â?‰ •›•–‡Â?ƒ–‹œ‹Â?‰ –Š‡ ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ’”‘…‡•• ƒÂ?† †‡˜‡Ž‘’‹Â?‰ Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†ƒÂ?…‡ ˆ‘” …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹•Ǥ Â? –Š‹• …‘Â?–‡š–ǡ †‡˜‡Ž‘’‹Â?‰ ƒ ˆ”ƒÂ?‡™‘”Â? –‘ ƒ˜‘‹† ˆ‹•…ƒŽ Ž‹ƒ„‹Ž‹–‹‡• ˆ”‘Â? •–ƒ–‡Ǧ‘™Â?‡† ‡Â?–‡”’”‹•‡• ƒÂ?† ’—„Ž‹…Ǧ’”‹˜ƒ–‡ ’ƒ”–Â?‡”•Š‹’• …ƒÂ? „‡ ’ƒ”–‹…—Žƒ”Ž› ‹Â?’‘”–ƒÂ?–Ǥ ’–‹‘Â?• –‘ ‡Â?ŠƒÂ?…‡ •—•–ƒ‹Â?ƒ„‹Ž‹–› ‘ˆ –Š‡ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? ‹Â?…Ž—†‡ ƒ ’Šƒ•‡†Ǧ‹Â? ”‡„ƒŽƒÂ?…‹Â?‰ ‘ˆ ”‘ƒ† ‡š’‡Â?†‹–—”‡• –‘™ƒ”† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒÂ?† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ĥ ‹Â?˜‡•–Â?‡Â?– ‹Â? –Š‡ Â?ƒ‹Â? ƒ•–Ǧ‡•– Š‹‰Š™ƒ› ƒ’’”‘ƒ…Š‡• ™‹Â?†• †‘™Â?Ç¡ ƒŽ‘Â?‰ ™‹–Š ‹Â?•–‹–—–‹‘Â?ƒŽ Â?‡ƒ•—”‡• –‘ ‡Â?ŠƒÂ?…‡ –Š‡ ‡ˆˆ‹…‹‡Â?…› ‘ˆ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?–•Ǥ 1.4. Conclusion: the way forward ͳǤ͵͹Ǥ The analysis in this chapter suggests that Georgia could move forward along one of several paths depending on the fiscal choices that it makes. Â?‡ –Š‡ ‘Â?‡ ŠƒÂ?† ‹• –Š‡ ’ƒ–Š ‘ˆ ƒ ‰”‘™‹Â?‰ „‘†› ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ƒÂ?† Ġ Š‘… ‹Â?…”‡ƒ•‡• ‹Â? —Â?–ƒ”‰‡–‡† ’‡Â?•‹‘Â? ƒÂ?† ‘–Š‡” •‘…‹ƒŽ „‡Â?‡ˆ‹–• ’”‘‰”‡••‹˜‡Ž› ˆ‹Â?†‹Â?‰ –Š‡‹” ™ƒ› ‹Â?–‘ –Š‡ ƒÂ?Â?—ƒŽ „—†‰‡–Ǥ —”–Š‡” ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ™‘—Ž† „‡ †‡Žƒ›‡† ƒÂ?† ‡˜‡Â? ĥ …ƒ’‹–ƒŽ ‹Â?ˆŽ‘™•ǡ ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?–ǡ ƒÂ?† ‰”‘™–Š ’‹…Â? —’ǡ ƒ††‹–‹‘Â?ƒŽ ”‡˜‡Â?—‡• ™‘—Ž† „‡ —•‡† –‘ ˆ‹Â?ƒÂ?…‡ –Š‡ ’”‘‰”‡••‹˜‡Ž› Š‹‰Š‡” •’‡Â?†‹Â?‰Ǥ Š‹• ’ƒ–Š …‘—Ž† Ž‡ƒ† ‡‘”‰‹ƒ „ƒ…Â? –‘ ƒÂ? —Â?•—•–ƒ‹Â?ƒ„Ž‡ ‰”‘™–Š ’ƒ–Š †”‹˜‡Â? „› Â?‘Â?–”ƒ†ƒ„Ž‡•ǡ ™‹†‡Â? ‡š–‡”Â?ƒŽ ‹Â?„ƒŽƒÂ?…‡•ǡ ƒÂ?† ”ƒ‹•‡ ˆ‹Â?ƒÂ?…‹Â?‰ …‘•–• ‹Â? ƒÂ? —Â?…‡”–ƒ‹Â? ‰Ž‘„ƒŽ ‡Â?˜‹”‘Â?Â?‡Â?–Ǥ Â?‡ –Š‡ ‘–Š‡” ŠƒÂ?† ‹• –Š‡ ’ƒ–Š ‘ˆ Â?ƒ‹Â?–ƒ‹Â?‹Â?‰ †‹•…‹’Ž‹Â?‡ ‹Â? ‹Â?’Ž‡Â?‡Â?–‹Â?‰ ˆ—”–Š‡” ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ƒÂ?† ‹Â? –Š‡ ‡˜‡Â?– ‘ˆ ƒÂ? —’•‹†‡ •…‡Â?ƒ”‹‘ ™‹–Š Š‹‰Š‡” ‰”‘™–Š ƒÂ?† …ƒ’‹–ƒŽ ‹Â?ˆŽ‘™•ǡ ƒ……‡Ž‡”ƒ–‹Â?‰ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? „› •ƒ˜‹Â?‰ ’ƒ”– ‘ˆ –Š‡ ƒ††‹–‹‘Â?ƒŽ ”‡˜‡Â?—‡•Ǥ Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’ƒ–Š ™‘—Ž† ‹Â?˜‘Ž˜‡ ‡Â?ƒ„Ž‹Â?‰ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– –‘ Â?ƒÂ?‡ ƒ ͳ͹ …‘Â?–”‹„—–‹‘Â? –‘ ‡š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‰‘‹Â?‰ ˆ‘”™ƒ”†ǡ ’ƒ”–‹…—Žƒ”Ž› ĥ ’”‹˜ƒ–‡ ‹Â?˜‡•–Â?‡Â?– ’‹…Â?• —’ǡ ƒÂ?† ‡š’Ž‘”‹Â?‰ ‘’’‘”–—Â?‹–‹‡• ˆ‘” ˆ—”–Š‡” …‘Â?•‘Ž‹†ƒ–‹‘Â? ‘ˆ †‡ˆ‡Â?•‡ ‡š’‡Â?†‹–—”‡• ĥ •‡…—”‹–› Â?‡‡†• ’‡”Â?‹–Ǥ Š‹• ’ƒ–Š ™‘—Ž† Ž‡ƒ† –‘™ƒ”† ƒ Â?ƒ””‘™‹Â?‰ ‘ˆ –Š‡ …—””‡Â?– ƒ……‘—Â?– †‡ˆ‹…‹–ǡ ˆ—”–Š‡” „‘Ž•–‡” †‡„– •—•–ƒ‹Â?ƒ„‹Ž‹–›ǡ ƒÂ?† ‡Â?…‘—”ƒ‰‡ ƒ •Š‹ˆ– –‘™ƒ”† ƒ •—•–ƒ‹Â?ƒ„Ž‡ ‰”‘™–Š Â?‘†‡Ž ˆ‹Â?ƒÂ?…‡† Â?‘”‡ ‘—– ‘ˆ Â?ƒ–‹‘Â?ƒŽ •ƒ˜‹Â?‰• ƒÂ?† †”‹˜‡Â? Â?‘”‡ „› –”ƒ†ƒ„Ž‡•Ǥ – ™‘—Ž† ƒŽ•‘ Š‡Ž’ ‡Â?•—”‡ –Šƒ– …‘Â?•‹†‡”ƒ„Ž‡ Â?‡‡†• ‹Â? ‡†—…ƒ–‹‘Â?Ç¡ Š‡ƒŽ–Šǡ ƒÂ?† –ƒ”‰‡–‡† •‘…‹ƒŽ ’”‘–‡…–‹‘Â? ƒ”‡ Â?‘– …”‘™†‡† ‘—– „› ‹Â?ƒ†‡“—ƒ–‡ •…”‡‡Â?‹Â?‰ ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ƒÂ?† ”ƒ’‹† ‰”‘™–Š ‘ˆ —Â?–ƒ”‰‡–‡† ’‡Â?•‹‘Â? •’‡Â?†‹Â?‰Ǥ ͳͺ Chapter 2. Social Protection Expenditures 2.1. Introduction ʹǤͳǤ Against the backdrop of fiscal consolidation, a key challenge for Georgia is to manage social expenditure pressures while providing adequate pension income support for an aging population and improving social assistance coverage of the poor. Š‡ Â?‘•– ”‡…‡Â?–Ž› ƒ’’”‘˜‡† ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â? ‡Â?˜‹•ƒ‰‡• …—””‡Â?– ‡š’‡Â?†‹–—”‡• ˆƒŽŽ‹Â?‰ ƒÂ?† •‘…‹ƒŽ ’”‘–‡…–‹‘Â? ‡š’‡Â?†‹–—”‡• ”‡Â?ƒ‹Â?‹Â?‰ ˆŽƒ– ĥ ƒ •Šƒ”‡ ‘ˆ  †—”‹Â?‰ ʹͲͳͳǦͳͷǤ ‘•– ‘ˆ –Š‡ ’”‘‰”ƒÂ?Â?‡† ”‡ƒŽ ‹Â?…”‡ƒ•‡ ‹Â? •‘…‹ƒŽ ’”‘–‡…–‹‘Â? ‡š’‡Â?†‹–—”‡• †—”‹Â?‰ –Š‹• ’‡”‹‘† ™‹ŽŽ ‰‘ –‘™ƒ”† –Š‡ ‘Â?‡Ǧ–‹Â?‡ ‹Â?…”‡ƒ•‡ ‹Â? ’‡Â?•‹‘Â?• ˆ”‘Â? ‡’–‡Â?„‡” ʹͲͳʹǤ ‰ƒ‹Â?•– –Š‹• „ƒ…Â?†”‘’ǡ ‡‘”‰‹ƒ ˆƒ…‡• …‘Â?•‹†‡”ƒ„Ž‡ •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡ ’”‡••—”‡• ‹Â? –Š‡ Â?‡†‹—Â? –‡”Â?Ǥ ‹–Š –Š‡ ‘Ž†Ǧƒ‰‡ ’‘’—Žƒ–‹‘Â? ”‹•‹Â?‰ ”ƒ’‹†Ž› ƒÂ?† Â?‘•– ‘ˆ –Š‡ ‡Ž†‡”Ž› ’‘’—Žƒ–‹‘Â? ”‡Ž›‹Â?‰ ‘Â? –Š‡ „ƒ•‹… ’—„Ž‹… ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ˆ‘” ‘Ž†Ǧƒ‰‡ ‹Â?…‘Â?‡ •—’’‘”–ǡ –Š‡ ’‡Â?•‹‘Â? ’”‘‰”ƒÂ? ™‹ŽŽ …‘Â?–‹Â?—‡ –‘ ‡š‡”– ’”‡••—”‡ ‘Â? •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡•Ǥ ‹–Š‘—– ’”‹˜ƒ–‡ •ƒ˜‹Â?‰ ˆ‘” ”‡–‹”‡Â?‡Â?–ǡ Â?ƒ‹Â?–ƒ‹Â?‹Â?‰ –Š‡ ’‡Â?•‹‘Â? ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ™‹ŽŽ Ž‡ƒ† –‘ Š‹‰Š‡” ˆ‹•…ƒŽ …‘•–• ‘˜‡” –‹Â?‡Ǥ Š‹Ž‡ Â?ƒ‹Â?–ƒ‹Â?‹Â?‰ ƒ– Ž‡ƒ•– –Š‡ ’—”…Šƒ•‹Â?‰ ’‘™‡” ‘ˆ –Š‡ „‡Â?‡ˆ‹– ™‹ŽŽ „‡ ‹Â?’‘”–ƒÂ?– ‰‹˜‡Â? ‹–• ’‘˜‡”–› Â?‹–‹‰ƒ–‹Â?‰ ‹Â?’ƒ…–ǡ ‡˜‡Â? ˆƒ•–‡” ‰”‘™–Š ‘ˆ –Š‡ ’—„Ž‹… ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– …‘—Ž† ’‘–‡Â?–‹ƒŽŽ› …”‘™† ‘—– Â?‡…‡••ƒ”› ‹Â?…”‡ƒ•‡• ‹Â? –ƒ”‰‡–‡† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ È‹ ȌǤ Š‹Ž‡ –Š‡  ’”‘‰”ƒÂ? †‘‡• ƒ ‰‘‘† Œ‘„ ‘ˆ •—’’‘”–‹Â?‰ …‘Â?•—Â?’–‹‘Â? ƒÂ?‘Â?‰ –Š‡ ‡š–”‡Â?‡ ’‘‘”ǡ Â?‘”‡ –ŠƒÂ? ͶͲ ’‡”…‡Â?– ‘ˆ –Š‡ ’‘‘”‡•– †‡…‹Ž‡ †‘‡• Â?‘– ”‡…‡‹˜‡  Ǥ Â? ‡š’ƒÂ?•‹‘Â? ‘ˆ  …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ „‘––‘Â? †‡…‹Ž‡• ™‘—Ž† ‡š‡”– •‘Â?‡ ˆ—”–Š‡” ’”‡••—”‡ ‘Â? •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡• „—– ™‘—Ž† „‡ „‡––‡” –ƒ”‰‡–‡† –ŠƒÂ? Š‹‰Š‡” ’‡Â?•‹‘Â? „‡Â?‡ˆ‹–•Ǥ ʹǤʹǤ In order to address the challenges facing social protection expenditures in Georgia, the analysis in this chapter discusses the following options for consideration: x —”–Š‡” •‹‰Â?‹ˆ‹…ƒÂ?– ‘Â?‡Ǧ–‹Â?‡ Œ—Â?’• ‹Â? –Š‡ „ƒ•‹… ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– …ƒÂ? „‡ •‡Ž‡…–‹˜‡Ž› –ƒ”‰‡–‡†ǡ „‘–Š ‹Â? ‘”†‡” –‘ ƒ˜‘‹† ƒ Žƒ”‰‡ Œ—Â?Â’ ‹Â? ˆ‹•…ƒŽ …‘•–• ƒÂ?† †—‡ –‘ ‡“—‹–› …‘Â?•‹†‡”ƒ–‹‘Â?•Ǥ È‹shortǦ termÈŒ x Â?‡…ŠƒÂ?‹•Â? –‘ Ž‹Â?‹– Â?‡†‹—Â? –‡”Â? ‰”‘™–Š ‘ˆ –Š‡ „ƒ•‹… ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– –‘ Â?‘ Â?‘”‡ –ŠƒÂ? –Š‡ ”ƒ–‡ ‘ˆ ‹Â?ˆŽƒ–‹‘Â? …ƒÂ? „‡ ‡š’Ž‘”‡†ǡ „‘–Š –‘ ’”‘–‡…– ’—”…Šƒ•‹Â?‰ ’‘™‡” ƒÂ?† –‘ •‡– ‡š’‡…–ƒ–‹‘Â?• ƒ– ƒˆˆ‘”†ƒ„Ž‡ Ž‡˜‡Ž•Ǥ È‹medium termÈŒ x š’Ž‘”‹Â?‰ Â?‡ƒ•—”‡• –‘ †‡˜‡Ž‘’‹Â?‰ ˜‘Ž—Â?–ƒ”› •ƒ˜‹Â?‰• ‹Â? –Š‡ Â?‡†‹—Â?Ǧ–‡”Â? …ƒÂ? ‡ƒ•‡ ’”‡••—”‡ ‘Â? –Š‡ „ƒ•‹… ’—„Ž‹…Ž› ˆ—Â?†‡† „‡Â?‡ˆ‹–Ǥ Š‹• …ƒÂ? „‡‰‹Â? ™‹–Š ƒ †‹ƒ‰Â?‘•–‹… ‘Â? …‘Â?•–”ƒ‹Â?–• –‘ ’”‹˜ƒ–‡ ”‡–‹”‡Â?‡Â?– •ƒ˜‹Â?‰• ‹Â? ‡‘”‰‹ƒǤ ’‡…‹ˆ‹… ’‘Ž‹…› ‹Â?‹–‹ƒ–‹˜‡• ˆ‘” …‘Â?•‹†‡”ƒ–‹‘Â? ‹Â?…Ž—†‡ ƒÂ? ‘’–Ǧ‘—– ˜‡”•—• ‘’–Ǧ‹Â? ’”‘‰”ƒÂ?Ç¡ –ƒš –”‡ƒ–Â?‡Â?– ‘ˆ ”‡–‹”‡Â?‡Â?– •ƒ˜‹Â?‰•ǡ ƒÂ?† ‹†‡Â?–‹ˆ›‹Â?‰ ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?•–”—Â?‡Â?–• ˆ‘” Ž‘Â?‰Ǧ–‡”Â? ”‡–‹”‡Â?‡Â?– •ƒ˜‹Â?‰•Ǥ È‹medium termÈŒ x Â?’”‘˜‹Â?‰  …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ ’‘‘” ‹• ƒÂ? ‹Â?’‘”–ƒÂ?– ’”‹‘”‹–›Ǥ Š‹• ™‹ŽŽ ”‡“—‹”‡ ‹Â?’”‘˜‡† ‘—–”‡ƒ…Š –‘ –Š‘•‡ ‘ˆ –Š‡ ’‘‘” ™Š‘ Šƒ˜‡ Â?‘– ƒ’’Ž‹‡† ˆ‘” –Š‡ „‡Â?‡ˆ‹–ǡ ĥ ™‡ŽŽ ĥ ‹Â?’”‘˜‡Â?‡Â?–• –‘ –Š‡ ’”‘š›ǦÂ?‡ƒÂ?• –‡•–‹Â?‰ ’”‘…‡•• –‘ ”‡†—…‡ †‡Â?‹ƒŽ• ˆ‘” –Š‡ ’‘‘” ™Š‘ Šƒ˜‡ ƒ’’Ž‹‡†Ǥ È‹shortǦ termÈŒ x  …ƒÂ? „‡ ’”‹‘”‹–‹œ‡† ‘˜‡” —Â?‹˜‡”•ƒŽ –”ƒÂ?•ˆ‡”• ȋ‡Ǥ‰Ǥǡ ’‡Â?•‹‘Â?• ƒÂ?† ‡Â?‡”‰› ˜‘—…Š‡”•Ȍ ˆ‘” ƒÂ?› ƒ††‹–‹‘Â?ƒŽ •‘…‹ƒŽ •’‡Â?†‹Â?‰ǡ –‘ ‡Â?ŠƒÂ?…‡ ‘˜‡”ƒŽŽ ‡“—‹–› ‘ˆ •‘…‹ƒŽ ’”‘–‡…–‹‘Â? ‡š’‡Â?†‹–—”‡•Ǥ È‹short termÈŒ x  ”‡…‹’‹‡Â?–• …ƒÂ? „‡ Ž‹Â?Â?‡† ™‹–Š ‡Â?’Ž‘›Â?‡Â?– ‘’’‘”–—Â?‹–‹‡• ƒÂ?† Š—Â?ƒÂ? …ƒ’‹–ƒŽ ‹Â?˜‡•–Â?‡Â?–• Â?‘”‡ „”‘ƒ†Ž› –‘ ”‡†—…‡ †‡’‡Â?†‡Â?…› ‘Â? –Š‡ ’”‘‰”ƒÂ?Ç¡ ™‹–Š ˆ—”–Š‡” †‹ƒ‰Â?‘•–‹… Â?‡‡†‡† ‘ˆ •’‡…‹ˆ‹… Â?‡…ŠƒÂ?‹•Â?• –‘ ƒ…Š‹‡˜‡ –Š‹•Ǥ Ž–Š‘—‰Š –Š‡”‡ ‹• Ž‹––Ž‡ ‡˜‹†‡Â?…‡ –Šƒ–  ͳͻ †‹•…‘—”ƒ‰‡• „‡Â?‡ˆ‹…‹ƒ”‹‡• ˆ”‘Â? •‡‡Â?‹Â?‰ ™‘”Â?Ç¡ Â?‘” †‘‡• ‹– ƒ…–‹˜‡Ž› ’”‘Â?‘–‡ Â?‘”‡ •‡…—”‡ Ž‹˜‡Ž‹Š‘‘†• È‹medium termÈŒ ʹǤ͵Ǥ The structure of this chapter is as follows. Š‡ Â?‡š– •‡…–‹‘Â? ’”‘˜‹†‡• ƒÂ? ‘˜‡”˜‹‡™ ‘ˆ –Š‡ …‘Â?’‘•‹–‹‘Â? ƒÂ?† Ž‡˜‡Ž• ‘ˆ •‘…‹ƒŽ ’”‘–‡…–‹‘Â? ‡š’‡Â?†‹–—”‡• ‹Â? ‡‘”‰‹ƒǤ Š‡ –Š‹”† •‡…–‹‘Â? Ž‘‘Â?• ‹Â? †‡’–Š ƒ– –Š‡ ’‡Â?•‹‘Â? •›•–‡Â? ‹Â? ‡‘”‰‹ƒ ƒÂ?† •Š‘™• –Šƒ– ™Š‹Ž‡ ‹– Šƒ• „‡‡Â? ‡ˆˆ‡…–‹˜‡ ‹Â? ’”‘˜‹†‹Â?‰ ‘Ž†Ǧ ƒ‰‡ ‹Â?…‘Â?‡ •—’’‘”– ƒÂ?† Â?‹–‹‰ƒ–‹Â?‰ ’‘˜‡”–›ǡ Â?ƒ‹Â?–ƒ‹Â?‹Â?‰ –Š‡ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ‘ˆ –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– ™‹ŽŽ Ž‡ƒ† –‘ Š‹‰Š‡” ˆ‹•…ƒŽ …‘•–• ‘˜‡” –‹Â?‡Ǥ Š‡ •‡…–‹‘Â? –Š‡Â? ‰‘‡• ‘Â? –‘ …‘Â?•‹†‡” ‘’–‹‘Â?• –‘ ‡Â?…‘—”ƒ‰‡ ’”‹˜ƒ–‡ •ƒ˜‹Â?‰• ˆ‘” ”‡–‹”‡Â?‡Â?– –‘ •—’’Ž‡Â?‡Â?– –Š‡ „ƒ•‹… ’‡Â?•‹‘Â?Ǥ Š‡ ˆ‘—”–Š •‡…–‹‘Â? Ž‘‘Â?• ƒ– –Š‡  ’”‘‰”ƒÂ? ƒÂ?† •Š‘™• –Šƒ– ™Š‹Ž‡ ‹– Šƒ• Â?ƒ†‡ ‹Â?’‘”–ƒÂ?– •–”‹†‡• ™‹–Š ”‡‰ƒ”† –‘ Dzˆ‹”•–Ǧ‰‡Â?‡”ƒ–‹‘Â?dz ”‡ˆ‘”Â?• •—…Š ĥ „‡Â?‡ˆ‹– …‘Â?•‘Ž‹†ƒ–‹‘Â?Ç¡ „‡Â?‡ˆ‹–• ĠÂ?‹Â?‹•–”ƒ–‹‘Â?Ç¡ ƒÂ?† –ƒ”‰‡–‹Â?‰ ‡ˆˆ‡…–‹˜‡Â?‡••ǡ …ŠƒŽŽ‡Â?‰‡• ”‡Â?ƒ‹Â? ‹Â? ‡š’ƒÂ?†‹Â?‰ …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ „‘––‘Â? †‡…‹Ž‡ ƒÂ?† „‡––‡” …‘Â?Â?‡…–‹Â?‰ „‡Â?‡ˆ‹…‹ƒ”‹‡• –‘ Œ‘„ ‘’’‘”–—Â?‹–‹‡•Ǥ Š‡ ˆ‹Â?ƒŽ •‡…–‹‘Â? …‘Â?•‹†‡”• •‘Â?‡ …”‘••Ǧ…—––‹Â?‰ –Š‡Â?‡• ‘Â? –Š‡ ”‡Žƒ–‹˜‡ ‹Â?’Ž‹…ƒ–‹‘Â?• ‘ˆ –Š‡ ’‡Â?•‹‘Â?• ƒÂ?†  ’”‘‰”ƒÂ?• ‘Â? ’‘˜‡”–› ”‡†—…–‹‘Â?Ç¡ Žƒ„‘” ˆ‘”…‡ ‹Â?’ƒ…–ǡ ƒÂ?† †‡Â?‘‰”ƒ’Š›Ǥ 2.2. Overview of Social Protection Spending ʹǤͶǤ Social protection and health expenditures in Georgia, comprising primarily pensions, targeted social assistance, and health programs, account for a major share of the overall budget. ƒ„Ž‡ ʹǤͳ •Š‘™• ƒ „—†‰‡– „”‡ƒÂ?†‘™Â? ˆ‘” –Š‡ ‹Â?‹•–”› ‘ˆ ƒ„‘”ǡ ‡ƒŽ–Šǡ ƒÂ?† ‘…‹ƒŽ ˆˆƒ‹”•ǡ ™Š‹…Š ƒ……‘—Â?–• ˆ‘” ƒ„‘—– Í´Í· ’‡”…‡Â?– ‘ˆ –Š‡ •–ƒ–‡ ‰‘˜‡”Â?Â?‡Â?– „—†‰‡– ƒÂ?† ”‡’”‡•‡Â?–• –Š‡ ˜ƒ•– Â?ƒŒ‘”‹–› ‘ˆ •‘…‹ƒŽ •’‡Â?†‹Â?‰ ‹Â? ‡‘”‰‹ƒǤ ‘…‹ƒŽ •’‡Â?†‹Â?‰ „› Ž‘…ƒŽ ‰‘˜‡”Â?Â?‡Â?–•ǡ ĥ ™‡ŽŽ ĥ •‘Â?‡ •Â?ƒŽŽ ’”‘‰”ƒÂ?• —Â?†‡” ‘–Š‡” ‹Â?‹•–”‹‡•ǡ ‹• Â?‘– ”‡ˆŽ‡…–‡† ‹Â? –Š‡ –ƒ„Ž‡Ǥ Š‡ Â?ƒŒ‘” •’‡Â?†‹Â?‰ …ƒ–‡‰‘”‹‡• —Â?†‡” •‘…‹ƒŽ ’”‘–‡…–‹‘Â? ƒ”‡ ’‡Â?•‹‘Â?• ȋ‘Ž†Ǧƒ‰‡ ƒÂ?† †‹•ƒ„‹Ž‹–›Ȍ ƒÂ?† –ƒ”‰‡–‡† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ǡ ™‹–Š ’‡Â?•‹‘Â?• ƒ……‘—Â?–‹Â?‰ ˆ‘” –Š‡ Žƒ”‰‡•– …ƒ–‡‰‘”› ‘ˆ •‘…‹ƒŽ •’‡Â?†‹Â?‰ ‹Â? ‡‘”‰‹ƒǤ Š‡ „—†‰‡– ˆ‘” „‘–Š ‘ˆ –Š‡•‡ ’”‘‰”ƒÂ?• …ƒÂ? „‡ —Â?†‡”•–‘‘† •‹Â?’Ž› ĥ ƒ Â?‘Â?–ŠŽ› „‡Â?‡ˆ‹– –‹Â?‡• –Š‡ Â?—Â?„‡” ‘ˆ ‡Ž‹‰‹„Ž‡ „‡Â?‡ˆ‹…‹ƒ”‹‡•Ǥ ‡ƒ”Ž› ŠƒŽˆ ‘ˆ –Š‡ Š‡ƒŽ–Š „—†‰‡– ‹• –Š‡ ‡†‹…ƒŽ Â?•—”ƒÂ?…‡ ”‘‰”ƒÂ? ˆ‘” –Š‡ ’‘‘” ȋƒ ’”‡Â?‹—Â? ƒŽŽ‘…ƒ–‡† –‘ ’”‹˜ƒ–‡ ‹Â?•—”‡”• –‹Â?‡• –Š‡ Â?—Â?„‡” ‘ˆ ‡Ž‹‰‹„Ž‡ „‡Â?‡ˆ‹…‹ƒ”‹‡•Ȍ ƒÂ?† –Š‡ ”‡Â?ƒ‹Â?†‡” ‹• Â?‘•–Ž› †‹•‡ƒ•‡ •’‡…‹ˆ‹… ’”‘‰”ƒÂ?• ȋ‡Ǥ‰Ǥǡ ˆ‘” –—„‡”…—Ž‘•‹•ǡ †‹ƒ„‡–‡•ǡ ‘Â?…‘Ž‘‰›ǡ ‡–…ǤȌǤ Table 2.1: Overview of Social Spending in Georgia, 2008Ǧ11 ȋ‹Â? Â?‹ŽŽ‹‘Â?• ‘ˆ Žƒ”‹ ƒÂ?† ’‡”…‡Â?– ‘ˆ ÈŒ 2008 2009 2010 2011 ‹Â?‹•–”› ‘ˆ ƒ„‘”ǡ ‡ƒŽ–Šǡ ƒÂ?† ‘…‹ƒŽ ˆˆƒ‹”• ͳǡʹͻ͵ ͳǡͷͲ͵ ͳǡ͸Ͳͷ ͳǡ͸͸͸ % of GDP 6.8% 8.4% 7.7% 6.9% ‘…‹ƒŽ ’”‘–‡…–‹‘Â? ’”‘‰”ƒÂ?• ͻͻͲ ͳǡͳ͵͹ ͳǡͲ͹Ͳ ͳǡͳ͵ͻ % of GDP 5.2% 6.3% 5.2% 4.7% Of which: ‡Â?•‹‘Â?• ͹ʹ͹ ͺͻͷ ͻʹͶ ͻͺ͹ Ž†Ǧƒ‰‡ ’‡Â?•‹‘Â?• ͷͲͻ ͸ͲͲ ͸͵ͷ ͸ͻͲ ‹•ƒ„‹Ž‹–› ’‡Â?•‹‘Â?• ͳͲʹ ͳͳͶ ͳʹ͵ ͳͳͻ ƒ”‰‡–‡† ‘…‹ƒŽ ••‹•–ƒÂ?…‡ ͻͳ ͳͶ͹ ͳͶ͹ ͳͶͲ ‡ƒŽ–Š ’”‘‰”ƒÂ?• ʹʹ͸ ʹͻͳ ͵ʹͻ ʹ͹͹ % of GDP 1.2% 1.6% 1.6% 1.1% Of which: ‡†‹…ƒŽ Â?•—”ƒÂ?…‡ ”‘‰”ƒÂ? ͺͲ ͳ͵͵ ͳͶ͹ ͳʹͳ –Š‡” È‹Â?ƒ‹Â?Ž› †‹•‡ƒ•‡Ǧ•’‡…‹ˆ‹…Ȍ ͳͶ͵ ͳͷͺ ͳͺʹ ͳͷ͸ SourceÇ£ ‘ ƒÂ?†  Ǥ ‹‰—”‡• †‘ Â?‘– ƒŽ™ƒ›• ƒ†† —’ ĥ •‘Â?‡ •Â?ƒŽŽ •—„Ǧ …ƒ–‡‰‘”‹‡• ‡š…Ž—†‡†Ǥ ʹͲ ʹǤͷǤ Social protection spending in Georgia is relatively low by international standards, although it is somewhat closer to the norm among countries at similar income levels. ‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ •’‡Â?†‹Â?‰ǡ ƒ– ƒ„‘—– ͳ ’‡”…‡Â?– ‘ˆ Ç¡ ‹• –›’‹…ƒŽ ‘ˆ –Š‡ ”‡‰‹‘Â?Ǥ ‡Â?•‹‘Â? •’‡Â?†‹Â?‰ ‹Â? ‡‘”‰‹ƒ ‹• Ž‘™‡” –ŠƒÂ? ƒ˜‡”ƒ‰‡ǡ „—– Â?‘•– ‘ˆ –Š‡ Š‹‰Š‡” •’‡Â?†‡”• ƒ”‡ ƒŽ•‘ ”‹…Š‡” …‘—Â?–”‹‡•ǡ Â?ƒÂ?› ‘ˆ ™Š‹…Š ƒ”‡ •ƒ††Ž‡† ™‹–Š —Â?•—•–ƒ‹Â?ƒ„Ž‡ ’‡Â?•‹‘Â? ‘„Ž‹‰ƒ–‹‘Â?•Ǥ Â?Ž‹Â?‡ Â?‘•– ‘–Š‡” …‘—Â?–”‹‡•ǡ ‡‘”‰‹ƒ †‘‡• Â?‘– Šƒ˜‡ Žƒ„‘” Â?ƒ”Â?‡– ’”‘‰”ƒÂ?• ȋ‡Ǥ‰Ǥǡ —Â?‡Â?’Ž‘›Â?‡Â?– ‹Â?•—”ƒÂ?…‡Ȍǡ ƒŽ–Š‘—‰Š ‹– ƒŽ•‘ Šƒ• ƒ Žƒ”‰‡ ”—”ƒŽ •‡…–‘”Ǥ ‡‘”‰‹ƒ ‹• ƒ …Ž‡ƒ” ‘—–Ž‹‡” ‹Â? –‡”Â?• ‘ˆ Š‡ƒŽ–Š •’‡Â?†‹Â?‰ È‹Â?‘– •Š‘™Â?Ç¡ „—– †‹•…—••‡† ‹Â? –Š‡ Â?‡š– …Šƒ’–‡”Ȍǡ ™Š‹…Š ƒ– Ž‡•• –ŠƒÂ? Í´ ’‡”…‡Â?– ‘ˆ  ‹• ƒ„‘—– ŠƒŽˆ –Š‡ ”‡‰‹‘Â?ƒŽ ƒ˜‡”ƒ‰‡ ƒÂ?† ƒŽ•‘ Ž‘™ „› ‰Ž‘„ƒŽ •–ƒÂ?†ƒ”†•Ǥ Figure 2.1: Social Protection Spending in Georgia and Region ȋ‹Â? ’‡”…‡Â?– ‘ˆ ÈŒ ‘—”…‡ǣ  †ƒ–ƒ„ƒ•‡ Figure 2.2: Poverty Trends in Georgia, 2003Ǧ09 ȋ‹Â? ’‡”…‡Â?– ‘ˆ ’‘’—Žƒ–‹‘Â?ÈŒ Overall poverty, % Extreme poverty, % 30 28.5 14 12.9 23.4 24.7 25 22.7 12 10 9.2 8.7 20 8 7.3 15 6 10 4 5 2 0 0 2003 2007 2008 2009 2003 2007 2008 2009 SourceÇ£ •–‹Â?ƒ–‡• „ƒ•‡† ‘Â? ʹͲͲ͹ Ç¡ ʹͲͲ͵ Ç¡ ƒÂ?† ʹͲͲͺǦͲͻ Ǥ ʹǤ͸Ǥ Social safety net programs have contributed to poverty reduction in Georgia. ‹Â?…‡ ʹͲͲͶǡ ‡‘”‰‹ƒ Šƒ• ‡•–ƒ„Ž‹•Š‡† ƒ ˜‹ƒ„Ž‡ •‘…‹ƒŽ •ƒˆ‡–› Â?‡– „› …Ž‡ƒ”‹Â?‰ ’‡Â?•‹‘Â? ƒ””‡ƒ”•ǡ ‹Â?…”‡ƒ•‹Â?‰ „‡Â?‡ˆ‹–•ǡ ƒÂ?† „› ’—––‹Â?‰ ‹Â? ’Žƒ…‡ –Š‡ –ƒ”‰‡–‡† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ƒÂ?† Â?‡†‹…ƒŽ ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ?•Ǥ –”‘Â?‰ ‰”‘™–Š †—”‹Â?‰ ʹͲͲͶǦͲ͹ ™ƒ• Â?‘– ƒ••‘…‹ƒ–‡† ™‹–Š Ž‘™‡” —Â?‡Â?’Ž‘›Â?‡Â?– †—‡ –‘ •‹‰Â?‹ˆ‹…ƒÂ?– ‡…‘Â?‘Â?‹… ”‡•–”—…–—”‹Â?‰Ǥ –‹ŽŽǡ …‘Â?’ƒ”‹•‘Â?• „ƒ•‡† ‘Â? –Š‡ ƒÂ?Â?—ƒŽ Â?ƒ–‹‘Â?ƒŽ ‘—•‡Š‘Ž† —†‰‡– —”˜‡› È‹ ÈŒ •—‰‰‡•– ƒ ”‡†—…–‹‘Â? ‹Â? –Š‡ ’‘˜‡”–› Š‡ƒ†…‘—Â?– †—”‹Â?‰ –Š‹• ’‡”‹‘†ǡ ˆ”‘Â? ʹͺǤͷ ’‡”…‡Â?– ‹Â? ʹͲͲ͵ –‘ ʹʹǤ͹ ’‡”…‡Â?– ‹Â? ʹͲͲͺ ȋˆ‹‰—”‡ ʹǤʹȌǤ Š‡ †‡…Ž‹Â?‡ ‹Â? ’‘˜‡”–› ‹• ’ƒ”–Ž› †—‡ –‘ –Š‡ •‘…‹ƒŽ •ƒˆ‡–› Â?‡– ’”‘‰”ƒÂ?• ’—– ‹Â? ’Žƒ…‡ †—”‹Â?‰ –Š‹• ’‡”‹‘†ǡ ĥ ‹Â?†‹…ƒ–‡† „› •—”˜‡›Ǧ„ƒ•‡† •‹Â?—Žƒ–‹‘Â?• †‹•…—••‡† ‹Â? ‰”‡ƒ–‡” †‡–ƒ‹Ž „‡Ž‘™Ǥ ‘ŽŽ‘™‹Â?‰ –Š‡ ‡…‘Â?‘Â?‹… …”‹•‹•ǡ ’‘˜‡”–› ”‘•‡ –‘ ʹͶǤ͹ ’‡”…‡Â?– ‹Â? ʹͲͲͻ ȋͳͺǤͶ ʹͳ ’‡”…‡Â?– ‹Â? —”„ƒÂ? ƒ”‡ƒ• ƒÂ?† ͵ͲǤ͹ ’‡”…‡Â?– ‹Â? ”—”ƒŽ ƒ”‡ƒ•ȌǤ Â?‡“—ƒŽ‹–› ƒŽ•‘ ˆ‘ŽŽ‘™‡† ƒ •‹Â?‹Žƒ” ’ƒ––‡”Â?Ç¡ ™‹–Š –Š‡ ‹Â?‹ …‘‡ˆˆ‹…‹‡Â?– †‡…Ž‹Â?‹Â?‰ ˆ”‘Â? ͵ͺǤͲ ‹Â? ʹͲͲ͵ –‘ ͵͵Ǥͺ ‹Â? ʹͲͲͺǡ „‡ˆ‘”‡ ”‹•‹Â?‰ –‘ ͵ͶǤͳ ‹Â? ʹͲͲͻǤ 2.3. Pension System Overview ʹǤ͹Ǥ Georgia’s old age pensions represent the largest category of social spending, accounting for well over half of total social protection expenditures. ‹Â?…‡ ʹͲͲͶ Žƒ”‰‡ ƒ””‡ƒ”• ‹Â? –Š‡ ’‡Â?•‹‘Â? •›•–‡Â? Šƒ˜‡ „‡‡Â? …Ž‡ƒ”‡†ǡ Â?‹Â?‹Â?—Â? …‘Â?–”‹„—–‹‘Â?• Šƒ˜‡ „‡‡Â? ƒ„‘Ž‹•Š‡†ǡ …ƒ–‡‰‘”‹‡• ™‡”‡ •–”‡ƒÂ?Ž‹Â?‡†ǡ ƒÂ?† „‡Â?‡ˆ‹– Ž‡˜‡Ž• •‹‰Â?‹ˆ‹…ƒÂ?–Ž› ‹Â?…”‡ƒ•‡†Ǥ • ‘ˆ Â?‹†ǦʹͲͳʹǡ ƒŽŽ Â?‡Â? ‘˜‡” –Š‡ ƒ‰‡ ‘ˆ ͸ͷ ƒÂ?† ™‘Â?‡Â? ‘˜‡” ͸Ͳ ”‡…‡‹˜‡  ͳͲͲ ’‡” Â?‘Â?–ŠǤ Š‡ –‘–ƒŽ Â?—Â?„‡” ‘ˆ „‡Â?‡ˆ‹…‹ƒ”‹‡• ‹• …—””‡Â?–Ž› ƒ„‘—– ͸͸ͲǡͲͲͲǡ ‘” ͳͷ ’‡”…‡Â?– ‘ˆ ƒ –‘–ƒŽ ’‘’—Žƒ–‹‘Â? ‘ˆ ͶǤͶ Â?‹ŽŽ‹‘Â?Ǥ Ž‹‰‹„‹Ž‹–› ‹• „ƒ•‡† ‡š…Ž—•‹˜‡Ž› ‘Â? ƒ‰‡ ƒÂ?† ‹• Â?‘– Ž‹Â?Â?‡† –‘ ’ƒ•– ™‘”Â? Š‹•–‘”›Ǥ •Â?ƒŽŽ –‘’Ǧ—’ ”ƒÂ?‰‹Â?‰ „‡–™‡‡Â?  Í´ –‘ ͳͲ ’‡” Â?‘Â?–Š ‡š‹•–• ˆ‘” •‘Â?‡ ’‡Â?•‹‘Â?‡”• ĥ ƒ DzŽ‘Â?‰Ǧ•‡”˜‹…‡ „‘Â?—•dzǡ „—– –Š‹• ƒ……‘—Â?–• ˆ‘” ‘Â?Ž› ƒ •Â?ƒŽŽ •Šƒ”‡ ‘ˆ –Š‡ –‘–ƒŽ ’‡Â?•‹‘Â? „—†‰‡–Ǥ Š‡”‡ ‹• ƒŽ•‘ ƒ Žƒ”‰‡” Dz•–ƒ–‡ …‘Â?’‡Â?•ƒ–‹‘Â?dz ’”‘‰”ƒÂ? –‹‡† –‘ •‡”˜‹…‡ǡ ’ƒ”–‹…—Žƒ”Ž› ˆ‘” ”‡–‹”‡† ’‘Ž‹…‡ǡ Â?‹Ž‹–ƒ”›ǡ ƒÂ?† ’‘Ž‹–‹…‹ƒÂ?•Ǥ Š‡ ‘Ž†Ǧƒ‰‡ ’‡Â?•‹‘Â? ‹• ˆ‹Â?ƒÂ?…‡† –Š”‘—‰Š ‰‡Â?‡”ƒŽ –ƒš ”‡˜‡Â?—‡•ǡ ĥ –Š‡ ’”‡˜‹‘—• ’ƒ›”‘ŽŽ –ƒš Â?‡…ŠƒÂ?‹•Â? ™ƒ• ƒ„‘Ž‹•Š‡† ‹Â? ʹͲͲͺǤ • ƒ Â?‘Â?Ǧ …‘Â?–”‹„—–‘”›ǡ ˆŽƒ– •‘…‹ƒŽ ’‡Â?•‹‘Â?Ç¡ –Š‹• –›’‡ ‘ˆ •›•–‡Â? ‹• •‘Â?‡–‹Â?‡• ”‡ˆ‡””‡† –‘ ĥ ƒ Dzœ‡”‘ ’‹ŽŽƒ”dz ‹Â? –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ Ž‹–‡”ƒ–—”‡Ǥ Š‡”‡ ‹• Â?‘ Â?ƒÂ?†ƒ–‘”› ȋ’ƒ›Ǧƒ•Ǧ›‘—Ǧ‰‘Ȍ ˆ‹”•– ‘” ȋˆ—ŽŽ›Ǧˆ—Â?†‡†Ȍ •‡…‘Â?† ’‹ŽŽƒ” ’‡Â?•‹‘Â? •›•–‡Â? ‹Â? ‡‘”‰‹ƒǤ Š‡”‡ ‹• ƒŽ•‘ ƒ †‹•ƒ„‹Ž‹–› ’‡Â?•‹‘Â? ’”‘‰”ƒÂ? È‹  ͹ͲǦͳͲͲ ’‡” Â?‘Â?–Š ˆ‘” ƒ„‘—– ͳ͵ͷǡͲͲͲ „‡Â?‡ˆ‹…‹ƒ”‹‡•Ȍ ƒÂ?† •Â?ƒŽŽ‡” •—”˜‹˜‘” ƒÂ?† ’‘Ž‹–‹…ƒŽ ’‡Â?•‹‘Â? ’”‘‰”ƒÂ?•Ǥ ƒ„Ž‡ ʹǤʹ Šƒ• ˆ—”–Š‡” †‡–ƒ‹Ž•Ǥ Table 2.2: OldǦage Pensions Accounts for the Bulk of Social Spending ȋ‹Â? —Â?‹–• ĥ Â?‘–‡†Ȍ Program Eligibility Monthly benefit (GEL) 2011 # eligible Total annual payment Share of 2010 GDP Age pensioners ƒŽ‡ ͸ͷΪǡ ‡Â?ƒŽ‡ ͸ͲΪ ͺͲǢ ͳͲͲ ‹Â? ‡’–Ǥ ͸͸ʹǡ͵ͷͲ ͸͵ͷǡͺͷ͸ǡͲͲͲ ͵ǤͳΨ ™‘ „‡Â?‡ˆ‹– Ž‡˜‡Ž•Ǣ …—””‡Â?–Ž› ͹Ͳ ͳͳͲǡͶ͹ʹ ͻʹǡ͹ͻ͸ǡͶͺͲ ͲǤͶΨ Disability pension Â?‘•– ƒ”‡ δ͸Ͳ ›”• ͺͲ ʹͷǡͷͷͲ ʹͶǡͷʹͺǡͲͲͲ ͲǤͳΨ Survivor pension ‘” δͳͺ ›” ‘Ž† ‹ˆ ’ƒ”‡Â?– †‹‡• Í·Í· ͵ͳǡ͹ͲͲ ʹͲǡͻʹʹǡͲͲͲ ͲǤͳΨ Political pension ’‡…‹ƒŽ …ƒ–‡‰‘”› Í·Í· ʹǡͶͻͷ ͳǡ͸Ͷ͸ǡ͹ͲͲ ͲǤͲΨ ̱ͳͲ ȋ’”‡Â?‹—Â?ÈŒ ̱ͳͻͲǡͲͲͲ ’‡Â?•‹‘Â?‡”• ʹʹǡͺͲͲǡͲͲͲ ͲǤͳΨ MIP Ž‹‰‹„‹Ž‹–› „› ’”‘š› Â?‡ƒÂ?• ̱ͳͲ ȋ’”‡Â?‹—Â?ÈŒ ̱͹ͳͲǡͲͲͲ Â?‘Â?Ǧ’‡Â?•Ǥ ͺͷǡʹͲͲǡͲͲͲ ͲǤͶΨ ͵ͲΪʹͶ ̱ͳͳͷǡͲͲͲ ’‡Â?•‹‘Â?‡”• ͵ͺǡ͸ͶͲǡͲͲͲ ͲǤʹΨ TSA Ž‹‰‹„‹Ž‹–› „› ’”‘š› Â?‡ƒÂ?• ͵ͲΪʹͶ ̱͵ʹͷǡͲͲͲ Â?‘Â?Ǧ’‡Â?•Ǥ ͳͲͻǡʹͲͲǡͲͲͲ ͲǤͷΨ SourceÇ£  ƒÂ?†  ʹǤͺǤ The monthly oldǦage benefit is not indexed at present, and recent increments have been done on a frequent but adǦhoc basis. †Œ—•–Â?‡Â?–• Šƒ˜‡ ‰‡Â?‡”ƒŽŽ› „‡‡Â? †‘Â?‡ ƒÂ?Â?—ƒŽŽ›ǡ ƒÂ?† Šƒ˜‡ Â?ƒ‹Â?–ƒ‹Â?‡† –Š‡ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ È‹Â?‘Â?–ŠŽ› ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ĥ ƒ ’‡”…‡Â?– ‘ˆ –Š‡ ƒ˜‡”ƒ‰‡ ™ƒ‰‡Ȍ ƒ– ƒ„‘—– ͳͲǦͳͷ ’‡”…‡Â?– È‹ ‹‰—”‡ ʹǤ͵ȌǤ —”–Š‡” ‹Â?…”‡ƒ•‡• ‹Â? –Š‡ Â?‘Â?–ŠŽ› „‡Â?‡ˆ‹– Šƒ˜‡ „‡‡Â? ƒÂ?Â?‘—Â?…‡†ǡ –‘  ͳʹͷ ˆ‘” –Š‘•‡ ‘ˆ ƒ‰‡ ͸͹ ƒÂ?† ‘˜‡”ǡ ˆ”‘Â? ‡’–‡Â?„‡” ʹͲͳʹǤ Š‡•‡ …ŠƒÂ?‰‡• ƒ”‡ †‹•…—••‡† ˆ—”–Š‡” „‡Ž‘™Ǥ ʹǤͻǤ Georgia’s pensions play a major role in reducing the incidence of oldǦage poverty. •–‹Â?ƒ–‡• ‘ˆ –Š‡ ’‘˜‡”–› Š‡ƒ†…‘—Â?– ™‹–Š ƒÂ?† ™‹–Š‘—– –Š‡  ͳͲͲ Â?‘Â?–ŠŽ› ’‡Â?•‹‘Â? ƒ”‡ •Š‘™Â? ‹Â? ƒ„Ž‡ ʹǤ͵Ǥ Š‡ ’‘˜‡”–› ”ƒ–‡ ‹• Ž‘™‡”‡† „› ‘˜‡” ͳͷ ’‡”…‡Â?–ƒ‰‡ ’‘‹Â?–• †—‡ –‘ ’‡Â?•‹‘Â?•Ǥ ‘”‡‘˜‡”ǡ –Š‡ ’‘˜‡”–›Ǧ”‡†—…‹Â?‰ ‹Â?’ƒ…– ‹• ˆ‡Ž– ™‡ŽŽ „‡›‘Â?† –Š‡ ‡Ž†‡”Ž›ǡ ĥ ƒ Š‹‰Š ”ƒ–‡ ‘ˆ ‹Â?–‡”Ǧ‰‡Â?‡”ƒ–‹‘Â?ƒŽ Ž‹˜‹Â?‰ Â?‡ƒÂ?• –Šƒ– ƒ„‘—– Í·Í´ ’‡”…‡Â?– ‘ˆ ‡‘”‰‹ƒÂ? Š‘—•‡Š‘Ž†• ‹Â?…Ž—†‡ ƒ– Ž‡ƒ•– ‘Â?‡ ’‡Â?•‹‘Â?‡”Ǥ Í´Í´ Figure 2.3: Pension trends in Georgia ȋ‹Â? ƒ”‹ ƒÂ?† ‹Â? ’‡”…‡Â?– ‘ˆ ƒ˜‡”ƒ‰‡ ™ƒ‰‡Ȍ ‘Â?–ŠŽ› ’‡Â?•‹‘Â? „‡Â?‡ˆ‹–ǡ ʹͲͲ͵ǦʹͲͳͳ ‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ǡ Ψ ‘ˆ ƒ˜‡”ƒ‰‡ ™ƒ‰‡ǡ ʹͲͲͶǦʹͲͳͲ 120 16% 13.7% 100 14% 13.4% 12.6% 100 11.9% 12% 11.5% 80 10.3% 10.3% 80 70 10% 60 55 8% 38 6% 40 33 28 4% 14 18 20 2% 0 0% 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2011 SourceÇ£  ƒÂ?† ‡‘–ƒ–Ǥ Table 2.3: Poverty Rate in Georgia with and without OldǦage Pensions ȋ‹Â? ’‡”…‡Â?– ‘ˆ ‘˜‡”ƒŽŽ ’‘’—Žƒ–‹‘Â?ÈŒ ‹–Š  ͳͲͲ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ‹–Š‘—–  ͳͲͲ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ˜‡”ƒŽŽ ’‘˜‡”–› Š‡ƒ†…‘—Â?– ʹʹǤͻ ͵ͺǤͳ Urban 17.7 29.5 Rural 28.2 46.9 SourceÇ£ –ƒˆˆ ‡•–‹Â?ƒ–‡• „ƒ•‡† ‘Â? ʹͲͲͻ  Ǥ Figure 2.4: Poverty Implications of Increases in Monthly Pension Benefit ȋ‹Â? ’‡”…‡Â?– ‘ˆ ’‘’—Žƒ–‹‘Â?ÈŒ 80 80 GEL pension 100 GEL pension 70 125 GEL pension for 67+ 60 % of Population 50 40 30 20 10 0 0 50 100 150 200 250 Monthly consumption per adult equivalent (GEL 2009) Source: WB staff calculations using UNICEF WMS 2009 SourceÇ£  •–ƒˆˆ ‡•–‹Â?ƒ–‡• ʹǤͳͲǤ Additional pension increases currently planned would further reduce poverty. ‹‰—”‡ ʹǤͶ •Š‘™• –Š‡ …—Â?—Žƒ–‹˜‡ ’‡”…‡Â?– ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â? ȋ‘Â? ˜‡”–‹…ƒŽ ƒš‹•Ȍ ˆƒŽŽ‹Â?‰ „‡Ž‘™ ’‘˜‡”–› ȋ”‡† Ž‹Â?‡Ȍ —Â?†‡” ƒŽ–‡”Â?ƒ–‹˜‡ „‡Â?‡ˆ‹– Ž‡˜‡Ž•Ǥ Š‡ „‡Â?‡ˆ‹– ‹Â?…”‡ƒ•‡ ˆ”‘Â?  ͺͲ –‘  ͳͲͲ ˆ‘” –Š‡ ‡Ž†‡”Ž› ™‘—Ž† ”‡†—…‡ –Š‡ ’‘˜‡”–› Š‡ƒ†…‘—Â?– ˆ”‘Â? ʹͷǤ͹ ’‡”…‡Â?– †‘™Â? –‘ ʹʹǤͻ ’‡”…‡Â?–ǡ ™Š‹Ž‡ ƒÂ? ‹Â?…”‡ƒ•‡ –‘  ͳʹͷ ˆ‘” –Š‡ ‘˜‡”Ǧ͸͹ ’‘’—Žƒ–‹‘Â? ™‘—Ž† ‹Â?’Ž› ƒ ’‘˜‡”–› ”ƒ–‡ ‘ˆ ʹͲǤ͵ ’‡”…‡Â?–Ǥͻ – ‹• ‹Â?’‘”–ƒÂ?– –‘ Â?‘–‡ǡ Š‘™‡˜‡”ǡ –Šƒ– ‰”‡ƒ–‡” ’‘˜‡”–› ”‡†—…–‹‘Â? ’‡”  …ƒÂ? „‡ ƒ…Š‹‡˜‡† –Š”‘—‰Š –Š‡  ’”‘‰”ƒÂ?Ç¡ ĥ †‹•…—••‡† „‡Ž‘™Ǥ Í» Â?’Ž‹…‹– ƒ••—Â?’–‹‘Â?• ƒ”‡ –Šƒ– ȋƒȌ –Š‡ ˆ—ŽŽ ’‡Â?•‹‘Â? ƒÂ?‘—Â?– ‹• ƒŽŽ‘…ƒ–‡† –‘ …‘Â?•—Â?’–‹‘Â?Ç¡ ƒÂ?† ȋ„Ȍ ‹ˆ ’‡Â?•‹‘Â? ‹Â?…‘Â?‡ ‹• Ž‘•– –Š‡Â? ‹– ‹• Â?‘– ”‡’Žƒ…‡† „› ‘–Š‡” ‹Â?…‘Â?‡ •—…Š ĥ ’”‹˜ƒ–‡ –”ƒÂ?•ˆ‡”• ‘” ‡Â?’Ž‘›Â?‡Â?–Ǥ ʹ͵ ʹǤͳͳǤ The fiscal burden imposed by Georgia’s pension system is affordable at 2011 nominal benefit levels, but will require close monitoring due to an aging population and expectations for increased benefit levels in the future. ‡Â?•‹‘Â? •’‡Â?†‹Â?‰ ĥ ƒ •Šƒ”‡ ‘ˆ  ‹• …—””‡Â?–Ž› ƒ„‘—– ͵Ǥͷ ’‡”…‡Â?– ‹Â? ‡‘”‰‹ƒǡ ‘Â?‡ ‘ˆ –Š‡ Ž‘™‡•– ‹Â? —”‘’‡ ƒÂ?† ‡Â?–”ƒŽ •‹ƒ È‹ ‹‰—”‡ ʹǤͳȌǤ ‡‘”‰‹ƒ ‹•ǡ Š‘™‡˜‡”ǡ ƒ– ƒ …‘Â?•‹†‡”ƒ„Ž› Ž‘™‡” ‹Â?…‘Â?‡ Ž‡˜‡Ž –ŠƒÂ? Â?‘•– ‘ˆ –Š‡ …‘—Â?–”‹‡• ™‹–Š Š‹‰Š‡” ’‡Â?•‹‘Â? „—”†‡Â?•ǡ ƒÂ?† ‹– Šƒ• ƒÂ? ‘Ž†‡” ’‘’—Žƒ–‹‘Â? •–”—…–—”‡ –ŠƒÂ? –Š‘•‡ ȋ‡Ǥ‰Ǥǡ ”Â?‡Â?‹ƒ ƒÂ?† œ‡”„ƒ‹ŒƒÂ?ÈŒ ™‹–Š •‹Â?‹Žƒ” Ž‡˜‡Ž• ‘ˆ ’‡Â?•‹‘Â? •’‡Â?†‹Â?‰Ǥ • ƒ ”‡•—Ž–ǡ Â?ƒ‹Â?–ƒ‹Â?‹Â?‰ ƒ •—•–ƒ‹Â?ƒ„Ž‡ ’‡Â?•‹‘Â? ’”‘‰”ƒÂ? ™‹ŽŽ ”‡Â?ƒ‹Â? ƒ Â?‡› ‹Â?’‡”ƒ–‹˜‡Ǥ Figure 2.5: Demographic trends in Georgia , 1990Ǧ2050 ȋ‹Â? Â?—Â?„‡” ‘ˆ ’‡”•‘Â?• ƒÂ?† ‹Â? ’‡”…‡Â?– ‘ˆ ’‘’—Žƒ–‹‘Â?ÈŒ SourceÇ£  ʹǤͳʹǤ The oldǦage dependency ratio is projected to rise considerably in Georgia. ˜‡” –‹Â?‡ –Š‡ ’‘’—Žƒ–‹‘Â? •Šƒ”‡ ‘ˆ …Š‹Ž†”‡Â? ƒÂ?† ™‘”Â?‹Â?‰Ǧƒ‰‡ ƒ†—Ž–• ‹• ‡š’‡…–‡† –‘ •Š”‹Â?Â?Ç¡ ™Š‹Ž‡ –Š‡ Â?—Â?„‡” ‘ˆ ‡Ž†‡”Ž› ™‹ŽŽ •–‡ƒ†‹Ž› ‹Â?…”‡ƒ•‡ ȋˆ‹‰—”‡ ʹǤͷȌǤ ‡‘”‰‹ƒǯ• ‘Ž† ƒ‰‡ †‡’‡Â?†‡Â?…› ”ƒ–‹‘ ‹• Š‹‰Š‡” –ŠƒÂ? ”Â?‡Â?‹ƒǡ œ‡”„ƒ‹ŒƒÂ?Ç¡ ‘Ž†‘˜ƒǡ ‘ŽƒÂ?†ǡ ƒÂ?† —••‹ƒǡ „—– Ž‘™‡” –ŠƒÂ? Â?”ƒ‹Â?‡ǡ –Š‡ ƒŽ–‹…•ǡ ‘–Š‡” Â?‡™  Â?‡Â?„‡”•ǡ ƒÂ?† Â?‘•– ‘ˆ ‡•–‡”Â? —”‘’‡Ǥ Strengthening the Current Basic Pension System ʹǤͳ͵Ǥ While Georgia’s basic pension achieves significant poverty reduction at affordable cost, significant shortǦterm and mediumǦterm challenges lie ahead. Â? –Š‡ •Š‘”–Ǧ–‡”Â?Ç¡ –Š‡ ‘Ž†Ǧ ƒ‰‡ „‡Â?‡ˆ‹– ‘ˆ  ͳͲͲ ’‡” Â?‘Â?–Š ‹• ˜‹‡™‡† „› Â?ƒÂ?› ĥ ‹Â?ƒ†‡“—ƒ–‡ ˆ‘” –Š‘•‡ ‡Ž†‡”Ž› ™‹–Š‘—– ‘–Š‡” ‹Â?…‘Â?‡ ‘” •ƒ˜‹Â?‰Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ ˆ—”–Š‡” •‹‰Â?‹ˆ‹…ƒÂ?– ‹Â?…”‡ƒ•‡• ‹Â? –Š‡ „‡Â?‡ˆ‹– Ž‡˜‡Ž ‹Â?˜‘Ž˜‡ Žƒ”‰‡ ˆ‹•…ƒŽ …‘•–• –Šƒ– …‘—Ž† ’‘–‡Â?–‹ƒŽŽ› …”‘™† ‘—– Â?‘”‡ –ƒ”‰‡–‡† ‡š’‡Â?†‹–—”‡•Ǥ Š‡ Â?ƒŒ‘” Â?‡†‹—Â? –‘ Ž‘Â?‰Ǧ–‡”Â? …ŠƒŽŽ‡Â?‰‡ ‹• –‘ „ƒŽƒÂ?…‡ ˆ‹•…ƒŽ ƒˆˆ‘”†ƒ„‹Ž‹–› ™‹–Š ƒ†‡“—ƒ–‡ Ž‹˜‹Â?‰ •–ƒÂ?†ƒ”†• ˆ‘” –Š‡ ‡Ž†‡”Ž› ‰‹˜‡Â? –Šƒ– –Š‡ …—””‡Â?– Â?‘Â?Ǧ‹Â?†‡š‡† „‡Â?‡ˆ‹– ™‹ŽŽ ‡”‘†‡ ˜‹•ǦÂ?Ǧ˜‹• ‹Â?ˆŽƒ–‹‘Â? ƒÂ?† ”‡ƒŽ ™ƒ‰‡• ‘˜‡” –‹Â?‡Ǥ ˆ ’‡Â?•‹‘Â?‡”• ‡š’‡…– –Šƒ– –Š‡ „‡Â?‡ˆ‹– ™‹ŽŽ „‡ ’‡”‹‘†‹…ƒŽŽ› ‹Â?…”‡ƒ•‡† –‘ Â?ƒ‹Â?–ƒ‹Â? –Š‡ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ǡ ™Š‹Ž‡ –Š‡ ’‘’—Žƒ–‹‘Â? …‘Â?–‹Â?—‡• –‘ ƒ‰‡ǡ ˆ‹•…ƒŽ …‘•–• …‘—Ž† ”‹•‡ …‘Â?•‹†‡”ƒ„Ž› ‘˜‡” –‹Â?‡Ǥ Š‡ Â?‡š– ʹͶ •‡…–‹‘Â? …‘Â?•‹†‡”• Š‘™ –‘ …”‡ƒ–‡ ƒÂ? ‡Â?˜‹”‘Â?Â?‡Â?– –Šƒ– ‡Â?…‘—”ƒ‰‡• ’”‹˜ƒ–‡ •ƒ˜‹Â?‰• ˆ‘” ”‡–‹”‡Â?‡Â?– –‘ •—’’Ž‡Â?‡Â?– –Š‡ „ƒ•‹… ’‡Â?•‹‘Â?Ǥ ʹǤͳͶǤ The shortǦterm challenge has been addressed in part by targeting the increased benefit in 2012 to a subset of the elderly. • ƒÂ?Â?‘—Â?…‡† „› –Š‡ ƒ—–Š‘”‹–‹‡•ǡ –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– Šƒ• „‡‡Â? ”ƒ‹•‡† –‘  ͳʹͷ ˆ‘” –Š‘•‡ ‘˜‡” –Š‡ ƒ‰‡ ‘ˆ ͸͹ ĥ ‘ˆ ‡’–‡Â?„‡” ʹͲͳʹǡ –‘ „‡ ƒ……‘Â?’ƒÂ?‹‡† „› ƒ Š‡ƒŽ–Š ‹Â?•—”ƒÂ?…‡ ’ƒ…Â?ƒ‰‡ ˆ‘” ƒŽŽ ’‡Â?•‹‘Â?‡”•Ǥ Š‡ ‹Â?…”‡ƒ•‡ –‘  ͳʹͷ ‹• ‡š’‡…–‡† –‘ ‹Â?’‘•‡ ƒÂ? ƒ††‹–‹‘Â?ƒŽ ˆ‹•…ƒŽ …‘•– ‘ˆ ƒ„‘—– ͲǤ͸ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳ͵ǡ ™Š‹…Š ‹• Â?ƒÂ?ƒ‰‡ƒ„Ž‡ ™‹–Š‹Â? –Š‡ …‘Â?–‡š– ‘ˆ –Š‡ ‰‘˜‡”Â?Â?‡Â?–ǯ• Â?‡†‹—Â? –‡”Â? ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ?Ǥ ʹǤͳͷǤ A smaller, targeted increase in the pension benefit generates significant cost savings. ‹‰—”‡ ʹǤ͸ •Š‘™• –Š‡ …‘•– ‘ˆ –Š‡ ‘Ž†Ǧƒ‰‡ ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ĥ ƒ •Šƒ”‡ ‘ˆ Ç¡ ĥ ™‡ŽŽ ĥ –Š‡ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ǡ —Â?†‡” ˆ‹˜‡ †‹ˆˆ‡”‡Â?– •…‡Â?ƒ”‹‘•ǤͳͲ Š‡ ˆ‹”•– –™‘ •…‡Â?ƒ”‹‘• •Š‘™ –Š‡ ‹Â?’Ž‹…ƒ–‹‘Â?• ‘ˆ –Š‡  ͳͲͲ ˆ‘” ƒŽŽ ƒÂ?† –Š‡  ͳʹͷ ˆ‘” ƒŽŽ ‘˜‡” ƒ‰‡ ͸͹ Â?‘Â?–ŠŽ› „‡Â?‡ˆ‹–•ǡ ”‡•’‡…–‹˜‡Ž›ǡ ™Š‹Ž‡ –Š‡ ˆ‹Â?ƒŽ •…‡Â?ƒ”‹‘ •Š‘™• –Š‡ ‹Â?’Ž‹…ƒ–‹‘Â?• ‘ˆ ƒ Žƒ”‰‡” ‹Â?…”‡ƒ•‡ –‘  ͳ͸ͷ ȋ̈́ͳͲͲȌ ˆ‘” ƒŽŽ ’‡Â?•‹‘Â?‡”•Ǥ Š‡ –ƒ”‰‡–‡† ‹Â?…”‡ƒ•‡ –‘  ͳʹͷ …‘•–• ƒ’’”‘š‹Â?ƒ–‡Ž› ƒÂ? ƒ††‹–‹‘Â?ƒŽ ͲǤ͸ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳ͵ǡ ™Š‹…Š ”‡•—Ž–• ‹Â? •‹‰Â?‹ˆ‹…ƒÂ?– •ƒ˜‹Â?‰• …‘Â?’ƒ”‡† –‘ ƒ Žƒ”‰‡” —Â?–ƒ”‰‡–‡† ‹Â?…”‡ƒ•‡ –Šƒ– ™‘—Ž† …‘•– ƒÂ? ƒ††‹–‹‘Â?ƒŽ Í´ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳ͵Ǥ ™‘ ‘–Š‡” ‘’–‹‘Â?• ˆ‘” …‘Â?–ƒ‹Â?‹Â?‰ ˆ‹•…ƒŽ …‘•–• ƒ”‡ ƒŽ•‘ …‘Â?•‹†‡”‡†Ǥ Â? –Š‡ –Š‹”† •…‡Â?ƒ”‹‘ǡ –Š‡ Š‹‰Š‡” ƒ‰‡Ǧ–ƒ”‰‡–‡†  ͳʹͷ ‹• Â?ƒ‹Â?–ƒ‹Â?‡†ǡ „—– ˆ‹•…ƒŽ …‘•–• ƒ”‡ †‡ˆ”ƒ›‡† „› ‹Â?…”‡ƒ•‹Â?‰ –Š‡ ˆ‡Â?ƒŽ‡ ”‡–‹”‡Â?‡Â?– ƒ‰‡ ‰”ƒ†—ƒŽŽ› ˆ”‘Â? ͸Ͳ –‘ ͸ͷ „› ʹͲʹͲǡ –Š‡”‡„› ‡“—ƒŽ‹œ‹Â?‰ ‹– ™‹–Š –Š‡ Â?ƒŽ‡ ”‡–‹”‡Â?‡Â?– ƒ‰‡Ǥͳͳ …‡Â?ƒ”‹‘ Ͷ –ƒ”‰‡–• –Š‡ ‹Â?…”‡ƒ•‡ –‘  ͳʹͷ ‹Â?•–‡ƒ† –‘ –Š‡ Â?‘”‡ Â?‡‡†› ‡Ž†‡”Ž›ǡ ĥ †‡–‡”Â?‹Â?‡† „› –Š‘•‡ ™‹–Š ƒ ’”‘š› Â?‡ƒÂ?• –‡•– •…‘”‡ „‡Ž‘™ ͳͲͲǡͲͲͲǤ Š‹• ‹• ƒ •Â?ƒŽŽ‡” ‰”‘—’ –ŠƒÂ? –Š‡ ‡Â?–‹”‡ ‘˜‡”Ǧ͸͹ …‘Š‘”–ǡ ƒÂ?† –Š—• ‹– ‹• •‘Â?‡™Šƒ– Ž‡•• …‘•–Ž›Ǥ Figure 2.6: Pension Indicators under Alternative Scenarios, Without Indexation ‡Â?•‹‘Â? •’‡Â?†‹Â?‰ ĥ Ψ ‘ˆ  ‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ǡ Ψ ‘ˆ ƒ˜‡”ƒ‰‡ ™ƒ‰‡ 7% 25% GEL 100 for all GEL 100 for all GEL 100 + GEL 125 if 67+ GEL 100 + GEL 125 if 67+ 6% Average pension as % of average wage Raise female retirement under Scenario 2 20% Raise female retirement under Scenario 2 Pension spending as share of GDP 5% GEL 100 + GEL 125 if score<100k GEL 100 + GEL 125 if score<100k GEL 165 for all from 9/2012 GEL 165 for all from Sept. 2012 15% 4% 3% 10% 2% 5% 1% 0% 0% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 SourceÇ£  •–ƒˆˆ ‡•–‹Â?ƒ–‡•Ǥ ʹǤͳ͸Ǥ The targeted increases are a more costǦeffective way to reach those in greater need. ƒ”‰‡–‹Â?‰ ‘Â? –Š‡ „ƒ•‹• ‘ˆ –Š‡ ’”‘š› Â?‡ƒÂ?• –‡•– ™‘—Ž† Šƒ˜‡ ƒ ‰”‡ƒ–‡” ‹Â?’ƒ…– ‘Â? ’‘˜‡”–›ǡ ™Š‹Ž‡ ƒ’’Ž›‹Â?‰ –Š‡ ƒ‰‡ …”‹–‡”‹‘Â? ™‘—Ž† „‡ ‡ƒ•‹‡” –‘ ‹Â?’Ž‡Â?‡Â?– ˆ”‘Â? ƒÂ? ĠÂ?‹Â?‹•–”ƒ–‹˜‡ •–ƒÂ?†’‘‹Â?– ƒÂ?† ™‘—Ž† ƒŽŽ‘™ ƒŽŽ ‹Â?†‹˜‹†—ƒŽ• –‘ „‡Â?‡ˆ‹– ˆ”‘Â? –Š‡ Š‹‰Š‡” ’‡Â?•‹‘Â? ĥ –Š‡› ƒ‰‡Ǥ ‹Â?…‡ Ž‹˜‹Â?‰ …‘•–• ˆ‘” –Š‡ ‡Ž†‡”Ž›ǡ ‹Â?…Ž—†‹Â?‰ Â?‡†‹…ƒŽ …ƒ”‡ ƒÂ?† ƒ••‹•–ƒÂ?…‡ ˆ”‘Â? ƒ …ƒ”‡‰‹˜‡”ǡ –‡Â?† –‘ ‹Â?…”‡ƒ•‡ ĥ ‹Â?†‹˜‹†—ƒŽ• ƒ‰‡ǡ ™Š‹Ž‡ –Š‡ ƒ„‹Ž‹–› –‘ ‰‡Â?‡”ƒ–‡ ‹Â?…‘Â?‡ †‡…Ž‹Â?‡•ǡ ‹Â?…”‡ƒ•‹Â?‰ –Š‡ „‡Â?‡ˆ‹– ‘Â?Ž› ˆ‘” –Š‡ ‘Ž†‡•– ‘ˆ –Š‡ ‡Ž†‡”Ž› ͳͲ ÂŽÂŽ •…‡Â?ƒ”‹‘• ƒ••—Â?‡ ƒÂ? ƒ˜‡”ƒ‰‡ Í· ’‡”…‡Â?– ”‡ƒŽ  ƒÂ?† ”‡ƒŽ ™ƒ‰‡ ‰”‘™–Šǡ ƒÂ?† Í· ’‡”…‡Â?–  Ǥ ͳͳ Â?‹ˆ›‹Â?‰ Â?ƒŽ‡ ƒÂ?† ˆ‡Â?ƒŽ‡ ”‡–‹”‡Â?‡Â?– ƒ‰‡• ‹• ‹Â?…”‡ƒ•‹Â?‰Ž› …‘Â?Â?‘Â? ‹Â? ‘–Š‡” …‘—Â?–”‹‡•ǡ ’ƒ”–‹…—Žƒ”Ž› ĥ ˆ‡Â?ƒŽ‡ Ž‹ˆ‡ ‡š’‡…–ƒÂ?…› ‹• –›’‹…ƒŽŽ› •‘Â?‡™Šƒ– Ž‘Â?‰‡” –ŠƒÂ? ˆ‘” Â?‡Â? ȋ‹Â? ‡‘”‰‹ƒ –Š‡ ‰ƒ’ ‹• Â?‹Â?‡ ›‡ƒ”•ȌǤ Í´Í· …‘—Ž† „‡ •‡‡Â? ĥ ’”‘˜‹†‹Â?‰ ƒ††‹–‹‘Â?ƒŽ Â?‡‡†‡† ƒ••‹•–ƒÂ?…‡Ǥ ˜‡” –Š‡ Ž‘Â?‰‡”Ǧ–‡”Â?Ç¡ –Š‡ —•–”ƒŽ‹ƒÂ? Â?‘†‡Ž È‚ ™Š‡”‡„› –Š‡ ”‹…Š‡•– ʹͲ ’‡”…‡Â?– ȋƒ’’”‘š‹Â?ƒ–‡Ž›Ȍ ƒ”‡ Â?‘– ‡Ž‹‰‹„Ž‡ ˆ‘” –Š‡ „ƒ•‹… •‘…‹ƒŽ ’‡Â?•‹‘Â? È‚ …‘—Ž† ƒŽ•‘ „‡ …‘Â?•‹†‡”‡† ĥ ƒÂ? ‘’–‹‘Â? ˆ‘” ‡‘”‰‹ƒǤ Figure 2.7: Pension Indicators under Alternative Scenarios, With Price Indexation ‡Â?•‹‘Â? •’‡Â?†‹Â?‰ ĥ Ψ ‘ˆ  ‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ǡ Ψ ‘ˆ ƒ˜‡”ƒ‰‡ ™ƒ‰‡ 7% 25% GEL 100 for all GEL 100 for all GEL 100 + GEL 125 if 67+ GEL 100 + GEL 125 if 67+ 6% Raise female retirement under Scenario 2 Average pension as % of average wage 20% Raise female retirement under Scenario 2 Pension spending as share of GDP 5% GEL 100 + GEL 125 if score<100k GEL 100 + GEL 125 if score<100k GEL 165 for all from Sept. 2012 15% GEL 165 for all from Sept. 2012 4% 3% 10% 2% 5% 1% 0% 0% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 SourceÇ£  •–ƒˆˆ ‡•–‹Â?ƒ–‡•Ǥ Figure 2.8: Pension Indicators under Alternative Scenarios, With Wage Indexation ‡Â?•‹‘Â? •’‡Â?†‹Â?‰ ĥ Ψ ‘ˆ  ‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ǡ Ψ ‘ˆ ƒ˜‡”ƒ‰‡ ™ƒ‰‡ 10% 30% 9% 25% Average pension as % of average wage 8% Pension spending as share of GDP 7% 20% 6% 5% 15% GEL 100 for all 4% GEL 100 for all 10% GEL 100 + GEL 125 if 67+ 3% GEL 100 + GEL 125 if 67+ Raise female retirement under Scenario 2 Raise female retirement under Scenario 2 2% 5% GEL 100 + GEL 125 if score<100k GEL 100 + GEL 125 if score<100k 1% GEL 165 for all from Sept. 2012 GEL 165 for all from Sept. 2012 0% 0% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 SourceÇ£  •–ƒˆˆ ‡•–‹Â?ƒ–‡•Ǥ ʹǤͳ͹Ǥ An additional challenge is that in the absence of indexation (or future ad hoc increases in the monthly benefit), the replacement rate (the benefit as a percentage of the average wage) falls to inadequate levels quite soon. †‡“—ƒ…› ‹Â? ’‡Â?•‹‘Â? •›•–‡Â?• ‹• –›’‹…ƒŽŽ› Â?‡ƒ•—”‡† „› ‘Â?‡ ‘ˆ –™‘ Â?‡–”‹…•ǡ ƒ„•‘Ž—–‡ ‘” ”‡Žƒ–‹˜‡Ǥ Š‡ ƒ„•‘Ž—–‡ Â?‡ƒ•—”‡ •‡‡Â?• –‘ ’”‘˜‹†‡ –Š‡ ‡Ž†‡”Ž› ™‹–Š ‡Â?‘—‰Š ‹Â?…‘Â?‡ –‘ ƒˆˆ‘”† ƒ ˆ‹š‡† …‘Â?•—Â?’–‹‘Â? „ƒ•Â?‡– ‹Â? ‘Ž† ƒ‰‡Ǥ Â?†‡š‹Â?‰ –Š‡ „‡Â?‡ˆ‹– –‘ –Š‡ ’”‹…‡ ‘ˆ –Šƒ– „ƒ•Â?‡– ‘” –‘ –Š‡ …‘Â?•—Â?‡” ’”‹…‡ ‹Â?†‡š ™‘—Ž† Â?ƒ‹Â?–ƒ‹Â? –Š‹• Â?‡ƒ•—”‡ ‘ˆ ƒ†‡“—ƒ…›Ǥ ‘Â?…‘Â?–”‹„—–‘”› ’‡Â?•‹‘Â? •›•–‡Â?• •—…Š ĥ ‡‘”‰‹ƒǯ• –›’‹…ƒŽŽ› ˆ‘…—• ‘Â? –Š‹• Â?‡–”‹…Ǥ Â? ƒŽ–‡”Â?ƒ–‹˜‡ ”‡Žƒ–‹˜‡ Â?‡ƒ•—”‡ ‘ˆ ƒ†‡“—ƒ…› ’”‘˜‹†‡• ’‡Â?•‹‘Â?‡”• ™‹–Š ‹Â?…‘Â?‡ –‘ Â?ƒ‹Â?–ƒ‹Â? •‘Â?‡ ’‡”…‡Â?–ƒ‰‡ ‘ˆ –Š‡ Ž‹˜‹Â?‰ •–ƒÂ?†ƒ”† ‘ˆ ™‘”Â?‹Â?‰Ǧƒ‰‡ ‹Â?†‹˜‹†—ƒŽ•Ǥ Â?†‡š‹Â?‰ ’‡Â?•‹‘Â? ‹Â?…”‡ƒ•‡• –‘ ƒ˜‡”ƒ‰‡ ™ƒ‰‡ ‰”‘™–Š Šƒ• ’”‘˜‡† –‘ „‡ –‘‘ …‘•–Ž› ‹Â? Â?‘•– …‘—Â?–”‹‡•ǡ ’ƒ”–‹…—Žƒ”Ž› –Š‘•‡ ‹Â? ™Š‹…Š ƒ‰‹Â?‰ ‹• ™‡ŽŽ ƒ†˜ƒÂ?…‡†ǡ —Â?Ž‡•• „‡Â?‡ˆ‹– Ž‡˜‡Ž• ƒ”‡ Â?‘†‡•– ”‡Žƒ–‹˜‡ –‘ ƒ˜‡”ƒ‰‡ ™ƒ‰‡Ǥ Ž–‡”Â?ƒ–‹˜‡Ž›ǡ ”‡–‹”‡Â?‡Â?– „‡Â?‡ˆ‹– Ž‡˜‡Ž• ‹Â? …‘Â?–”‹„—–‘”› •›•–‡Â?• ƒ”‡ ‘ˆ–‡Â? ”‡Žƒ–‡† –‘ –Š‡ ™‘”Â?‡”ǯ• ‡ƒ”Â?‹Â?‰ Š‹•–‘”› ƒÂ?† –Š‡Â? ‹Â?†‡š‡† ˆ‘”™ƒ”† ™‹–Š ‹Â?ˆŽƒ–‹‘Â? –‘ Â?ƒ‹Â?–ƒ‹Â? –Š‡ ’—”…Šƒ•‹Â?‰ ’‘™‡” ‘ˆ –Š‡ ˆ‹”•– ’‡Â?•‹‘Â? ”‡…‡‹˜‡† „› ƒ ”‡–‹”‡‡Ǥ Š‹• Â?‹š ʹ͸ ™‘—Ž† „‡ Â?‘”‡ †‹ˆˆ‹…—Ž– –‘ ‹Â?’Ž‡Â?‡Â?– ‹Â? –Š‡ ‡‘”‰‹ƒÂ? …‘Â?–‡š–Ǥ ‘™‡˜‡”ǡ ƒ …‘Â?’Ž‡–‡ ƒ„•‡Â?…‡ ‘ˆ ‹Â?†‡šƒ–‹‘Â?Ç¡ ĥ ‹• …—””‡Â?–Ž› –Š‡ …ƒ•‡ ‹Â? ‡‘”‰‹ƒǡ …ƒÂ? Ž‡ƒ† –‘ …‘Â?•–ƒÂ?– ’‘Ž‹–‹…ƒŽ ’”‡••—”‡ ˆ‘” Ġ Š‘… ‹Â?…”‡ƒ•‡• ‹Â? –Š‡ „‡Â?‡ˆ‹– Ž‡˜‡ŽǤ Â?‡ ‘’–‹‘Â? –‘ Â?ƒÂ?ƒ‰‡ –Š‡ –”ƒ†‡Ǧ‘ˆˆ ‹• –‘ †‡˜‹•‡ ƒ Â?‡…ŠƒÂ?‹•Â? –‘ Ž‹Â?‹– Â?‡†‹—Â? –‡”Â? ‰”‘™–Š ‘ˆ –Š‡ „ƒ•‹… ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– –‘ Â?‘ Â?‘”‡ –ŠƒÂ? –Š‡ ”ƒ–‡ ‘ˆ ‹Â?ˆŽƒ–‹‘Â?Ǥ —…Š ƒ Â?‡…ŠƒÂ?‹•Â? …‘—Ž† „‡ ’Šƒ•‡† ‹Â? ‘˜‡” –‹Â?‡Ǥ ‹‰—”‡ ʹǤ͹ •Š‘™• –Šƒ– •—…Š ƒ Â?‡…ŠƒÂ?‹•Â? ™‘—Ž† „‡ ˆ‹•…ƒŽŽ› ƒˆˆ‘”†ƒ„Ž‡ ™Š‹Ž‡ ƒŽ•‘ ’”‘–‡…–‹Â?‰ –Š‡ ’—”…Šƒ•‹Â?‰ ’‘™‡” ‘ˆ –Š‡ „ƒ•‹… „‡Â?‡ˆ‹–Ǥ ʹǤͳͺǤ If expectations develop that ad hoc benefit increases will preserve a constant replacement rate, the fiscal costs of the flat old age benefit could rise considerably over time. ‹‰—”‡ ʹǤͺ †‡’‹…–• –Š‡ ˆ‹˜‡ •…‡Â?ƒ”‹‘• …‘Â?•‹†‡”‡† ‡ƒ”Ž‹‡”ǡ ‡š…‡’– ™‹–Š ™ƒ‰‡ ‹Â?†‡šƒ–‹‘Â? –‘ ’”‡•‡”˜‡ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡• ‹Â? ‡ƒ…Š …ƒ•‡Ǥͳʹ Š‡ •‹Â?—Žƒ–‹‘Â?• •Š‘™ –Šƒ– ‹Â? …‘Â?–”ƒ•– –‘ –Š‡ ’”‡˜‹‘—• …ƒ•‡ǡ ™ƒ‰‡ ‹Â?†‡šƒ–‹‘Â? ™‘—Ž† Ž‡ƒ† –‘ ƒÂ? ‹Â?…”‡ƒ•‹Â?‰ ’‡Â?•‹‘Â? „—”†‡Â? ĥ ƒ •Šƒ”‡ ‘ˆ Ç¡ ™Š‹…Š ™‘—Ž† „‡ —Â?•—•–ƒ‹Â?ƒ„Ž‡ ™‹–Š‹Â? –Š‡ …—””‡Â?– ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â?Ǥ Š‡ …—””‡Â?– ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ‘ˆ ƒ„‘—– ͳͷ ’‡”…‡Â?– ‹• Ž‘™ „› ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ •–ƒÂ?†ƒ”†•Ǥ ˆ Ġ Š‘… „‡Â?‡ˆ‹– ‹Â?…”‡ƒ•‡• ”ƒ‹•‡† ‡š’‡…–ƒ–‹‘Â?• –‘ ƒ Í´Í· ’‡”…‡Â?– ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ǡ –Š‡ Ž‘Â?‰ –‡”Â? ’‡Â?•‹‘Â? „—”†‡Â? …‘—Ž† ƒ’’”‘ƒ…Š Í» ’‡”…‡Â?– ‘ˆ Ǥ Â? „”‹‡ˆǡ –Š‡ …—””‡Â?– œ‡”‘ ’‹ŽŽƒ” •›•–‡Â? „› ‹–•‡Žˆ ‹• —Â?Ž‹Â?‡Ž› –‘ •ƒ–‹•ˆ› ’‘’—Žƒ–‹‘Â? ‡š’‡…–ƒ–‹‘Â?• ˆ‘” ”‡–‹”‡Â?‡Â?– ‹Â?…‘Â?‡ ™Š‹Ž‡ Â?ƒ‹Â?–ƒ‹Â?‹Â?‰ ˆ‹•…ƒŽ ƒˆˆ‘”†ƒ„‹Ž‹–› ‘˜‡” –‹Â?‡ǡ –Š—• ’‘‹Â?–‹Â?‰ –‘ –Š‡ ‹Â?’‘”–ƒÂ?…‡ ‘ˆ …‘Â?’Ž‡Â?‡Â?–‹Â?‰ ‹– „› ‡Â?…‘—”ƒ‰‹Â?‰ ’”‹˜ƒ–‡ •ƒ˜‹Â?‰• ˆ‘” ”‡–‹”‡Â?‡Â?–ǡ ĥ †‹•…—••‡† „‡Ž‘™Ǥ Creating the right incentives for supplementary pension savings ʹǤͳͻǤ The key longerǦterm issue for Georgia’s pension system is how to ensure adequate pensions for the elderly without undue fiscal stress. Šƒ– ’‡Â?•‹‘Â? Ž‡˜‡Ž ‹• Ǯƒ†‡“—ƒ–‡ǯ Â?ƒ› „‡ •‘Â?‡™Šƒ– •—„Œ‡…–‹˜‡Ǥ Š‡ Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒ„‘” ”‰ƒÂ?‹œƒ–‹‘Â? ”‡…‘Â?Â?‡Â?†• –Šƒ– ”‡–‹”‡‡• Šƒ˜‡ ͶͲ ’‡”…‡Â?– ‘ˆ –Š‡ ƒ˜‡”ƒ‰‡ ™ƒ‰‡ ‡ƒ”Â?‡† †—”‹Â?‰ –Š‡‹” Ž‹ˆ‡–‹Â?‡ ĥ ”‡–‹”‡Â?‡Â?– ‹Â?…‘Â?‡Ǥ Š‹Ž‡ –Š‡ ƒ˜‡”ƒ‰‡ ™ƒ‰‡ ‡ƒ”Â?‡† ‘˜‡” ƒ ”‡–‹”‡‡ǯ• ™‘”Â?‹Â?‰ Ž‹ˆ‡ ‹• Ž‹Â?‡Ž› –‘ „‡ Ž‘™‡” –ŠƒÂ? –‘†ƒ›ǯ• ƒ˜‡”ƒ‰‡ ™ƒ‰‡ǡ –Š‡ ͳͷ ’‡”…‡Â?– ”‡’Žƒ…‡Â?‡Â?– ‹Â? ‡‘”‰‹ƒ ’‡Â?•‹‘Â?‡”• ‹• ”‡Žƒ–‹˜‡Ž› Ž‘™ǡ ƒÂ?† ™‹ŽŽ ‡‹–Š‡” ˆƒŽŽ ‡˜‡Â? Ž‘™‡” ‘˜‡” –‹Â?‡ ‘” Ž‡ƒ† –‘ Š‹‰Š‡” ˆ‹•…ƒŽ …‘•–•Ǥ Â?‡ ƒ’’”‘ƒ…Š –‘ Â?ƒÂ?ƒ‰‹Â?‰ –Š‡ –”ƒ†‡Ǧ‘ˆˆ ‹Â? ƒ ˆ‹•…ƒŽŽ› ƒˆˆ‘”†ƒ„Ž‡ Â?ƒÂ?Â?‡” ™‘—Ž† „‡ –‘ ˆ‘…—• –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– ‘Â? ƒŽŽ‡˜‹ƒ–‹Â?‰ ’‘˜‡”–› ƒÂ?† –‘ ‡Â?…‘—”ƒ‰‡ ‹Â?†‹˜‹†—ƒŽ• –‘ •ƒ˜‡ †—”‹Â?‰ –Š‡‹” ™‘”Â?‹Â?‰ ›‡ƒ”• –‘ …‘˜‡” –Š‡ †‹ˆˆ‡”‡Â?…‡ „‡–™‡‡Â? –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– ƒÂ?† –Š‡‹” †‡•‹”‡† Ž‡˜‡ŽǤ ‹‰—”‡ ʹǤͻ •Š‘™• –Šƒ– ƒ …‘Â?„‹Â?ƒ–‹‘Â? ‘ˆ ƒ „ƒ•‹… ƒÂ?† •—’’Ž‡Â?‡Â?–ƒ”› ’‡Â?•‹‘Â? …ƒÂ? •–ƒ„‹Ž‹œ‡ –Š‡ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ‘˜‡” –‹Â?‡Ǥ Š‡ •…‡Â?ƒ”‹‘ ƒ••—Â?‡• –Šƒ– –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– ”‡ƒ…Š‡•  ͳ͸ͷ ȋƒ„‘—– ̈́ͳͲͲȌǡ ‹• ‹Â?†‡š‡† –‘ ‹Â?ˆŽƒ–‹‘Â?Ç¡ ƒÂ?† ‹• •—’’Ž‡Â?‡Â?–‡† „› ƒ …‘Â?–”‹„—–‹‘Â? ‘ˆ Í· ’‡”…‡Â?– ‘ˆ ™ƒ‰‡•Ǥ Â?Ž‹Â?‡ –Š‡ •…‡Â?ƒ”‹‘• ’”‡•‡Â?–‡† ƒ„‘˜‡ǡ –Š‡ …‘Â?„‹Â?‡† ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ˆŽƒ––‡Â?• ‘—– ‘˜‡” –‹Â?‡Ǥ ʹǤʹͲǤ While the need for a supplementary pension system in Georgia is clear, the timing of adoption and key design issues raise a number of questions and challenges. ‡› ‹••—‡• ™‘—Ž† ‹Â?…Ž—†‡ ™Š‡–Š‡” –Š‡ Â?‡™ •ƒ˜‹Â?‰• ˜‡Š‹…Ž‡ ‹• Â?ƒÂ?†ƒ–‘”› ‘” Â?‘–Ǣ –Š‡ ’‘–‡Â?–‹ƒŽ ‹Â?’ƒ…– ‘ˆ ƒÂ?› Â?‡™ –ƒš ‘Â? Žƒ„‘” Â?ƒ”Â?‡–•Ǣ ™Š‡”‡ –‘ ‹Â?˜‡•– –Š‡ ˆ—Â?†• ȋ‡Ǥ‰Ǥǡ „ƒÂ?Â?• ˜•Ǥ „‘Â?†•Ǣ Š‘Â?‡ ˜•Ǥ ƒ„”‘ƒ†ȌǢ –Š‡ ”‡ƒ†‹Â?॥ ‘ˆ ”‡‰—Žƒ–‘”› ƒÂ?† •—’‡”˜‹•‘”› ƒ—–Š‘”‹–‹‡• –‘ ‘˜‡”•‡‡ ‹Â?˜‡•–Â?‡Â?–•Ǣ –Š‡ –ƒš –”‡ƒ–Â?‡Â?– ‘ˆ ’‡Â?•‹‘Â? •ƒ˜‹Â?‰•Ǣ ™Š‡–Š‡” –Š‡”‡ ™‘—Ž† „‡ ƒ •‹Â?‰Ž‡ ‘” Â?—Ž–‹’Ž‡ ’‡Â?•‹‘Â? ˆ—Â?†•ǡ ’—„Ž‹…Ž› ‘” ’”‹˜ƒ–‡Ž› Â?ƒÂ?ƒ‰‡†Ǣ ™Š‡–Š‡” –‘ ’”‘˜‹†‡ ƒ ’—„Ž‹… ‰—ƒ”ƒÂ?–‡‡ ‘” Â?‘–Ǣ ƒÂ?† ‘–Š‡” ‹••—‡•Ǥ ʹǤʹͳǤ A mandatory second pillar system may be premature for Georgia at present. ƒÂ?†ƒ–‘”› •›•–‡Â?• ‰‡Â?‡”ƒŽŽ› ”‡“—‹”‡ ‰”‡ƒ–‡” •—’‡”˜‹•‹‘Â?Ç¡ ”‡‰—Žƒ–‹‘Â?Ç¡ ƒÂ?† ƒ˜ƒ‹Žƒ„‹Ž‹–› ‘ˆ ‹Â?˜‡•–Â?‡Â?– ‹Â?•–”—Â?‡Â?–•Ǥ —”–Š‡”Â?‘”‡ǡ ‹Â? …‘—Â?–”‹‡• Ž‹Â?‡ ‡‘”‰‹ƒ ™Š‡”‡ •‹‰Â?‹ˆ‹…ƒÂ?– ‡…‘Â?‘Â?‹… ƒ…–‹˜‹–› –ƒÂ?‡• ’Žƒ…‡ ‘—–•‹†‡ ‘ˆ ˆ‘”Â?ƒŽ ™ƒ‰‡ ‡Â?’Ž‘›Â?‡Â?–ǡ ’‡‘’Ž‡ …ƒÂ? ƒ˜‘‹† ˆ‘”Â?ƒŽ •‡…–‘” Œ‘„• ™Š‡”‡ •ƒ˜‹Â?‰ ™‘—Ž† „‡ Â?ƒÂ?†ƒ–‘”›ǡ –Š—• Â?ƒÂ?‹Â?‰ ‹– ‡••‡Â?–‹ƒŽŽ› ˜‘Ž—Â?–ƒ”›Ǥ ‹Â?ƒŽŽ›ǡ –Š‡ …‘ŽŽ‡…–‹‘Â? ‘ˆ ƒ ’ƒ›”‘ŽŽ –ƒš –‘ ˆ—Â?† ͳʹ Š‡ ƒ˜‡”ƒ‰‡ ™ƒ‰‡ ”ƒ–‡ ‹• ƒ••—Â?‡† –‘ ‰”‘™ ƒ– Í· ’‡”…‡Â?– ’‡” ƒÂ?Â?—Â?Ç¡ ‡“—ƒŽ –‘ –Š‡ ‰”‘™–Š ”ƒ–‡ ‘ˆ ”‡ƒŽ Ǥ ʹ͹ •‘…‹ƒŽ ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ?• ™ƒ• ƒ„ƒÂ?†‘Â?‡† ‹Â? ʹͲͲͺ ĥ ƒ ”‡•—Ž– ‘ˆ –Š‡ †‹ˆˆ‹…—Ž–‹‡• ƒ••‘…‹ƒ–‡† ™‹–Š ‡Â?ˆ‘”…‹Â?‰ …‘ŽŽ‡…–‹‘Â? ƒÂ?† –Š‡ Â?‡‡† ˆ‘” ƒ •‹Â?’Ž‹ˆ‹…ƒ–‹‘Â? ‘ˆ –Š‡ –ƒš •›•–‡Â?Ǥ ‡‹Â?•–ƒ–‹Â?‰ ƒ Žƒ„‘” –ƒš ‘Â? ƒ Â?ƒÂ?†ƒ–‘”› „ƒ•‹•ǡ ‡˜‡Â? ‹ˆ ‹– ‹• —•‡† –‘ ˆ‹Â?ƒÂ?…‡ ’‡Â?•‹‘Â?• ˆ‘” –‘†ƒ›ǯ• ™‘”Â?‡”•ǡ ™‘—Ž† ”‡•—Ž– ‹Â? ƒ ”‡–—”Â? –‘ –Š‡ ’”‘„Ž‡Â?• ‡š’‡”‹‡Â?…‡† ‡ƒ”Ž‹‡”Ǥ Figure 2.9Ç£ Pension Indicators with Combined Basic And Supplementary Pension Programs ‡Â?•‹‘Â? ƒÂ?‘—Â?– ”‡…‡‹˜‡†ǡ ”‡ƒŽ  ‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ Pension Received by those who Pension as % of Average Wage contribute 5% of wage since 2015 35.0% 30.0% 1000 25.0% 800 20.0% Basic Pension 600 Real GEL Basic Pension 15.0% Contributory Pension 400 Contributory pension 10.0% Total Pension 200 Total Pension 5.0% 0.0% 0 2013 2018 2023 2028 2033 2038 2043 2048 2053 2058 2063 2068 2073 2013 2018 2023 2028 2033 2038 2043 2048 2053 2058 2063 2068 2073 SourceÇ£  •–ƒˆˆ ‡•–‹Â?ƒ–‡•Ǥ ʹǤʹʹǤ An alternative approach would be to initiate pension reform by building on what is currently an underǦdeveloped third pillar pension environment. Š‡”‡ ƒ”‡ ’”‡•‡Â?–Ž› ‘Â?Ž› –Š”‡‡ Â?ƒ‹Â? ’”‹˜ƒ–‡ ’‡Â?•‹‘Â? ˆ—Â?†•ǡ –‘–ƒŽ Ž‹ƒ„‹Ž‹–‹‡• ƒ”‡ ”‡’‘”–‡†Ž› Ž‡•• –ŠƒÂ?  ͳͲ Â?‹ŽŽ‹‘Â?Ç¡ ƒÂ?† –Š‡”‡ ƒ”‡ ˆ‡™‡” –ŠƒÂ? ʹͷǡͲͲͲ …—””‡Â?– …‘Â?–”‹„—–‘”•Ǥ Š‡”‡ ƒ”‡ Â?‘ –ƒš ‹Â?…‡Â?–‹˜‡• –‘ •ƒ˜‡ǡ •‘ –Šƒ– ’‡Â?•‹‘Â? ˆ—Â?†• ƒ”‡ ‘ˆ–‡Â? Â?‘ Â?‘”‡ ƒ––”ƒ…–‹˜‡ ĥ ƒ •ƒ˜‹Â?‰• ˜‡Š‹…Ž‡ –ŠƒÂ? „ƒÂ?Â? †‡’‘•‹–•Ǥ ‘•– ˆ—Â?†• ƒ”‡ ‹Â?˜‡•–‡† ‹Â? „ƒÂ?Â? †‡’‘•‹–• ƒÂ?›™ƒ›Ǥ ʹǤʹ͵Ǥ A key step towards encouraging voluntary savings for retirement would be to announce that in the future the basic pension will grow at a rate no greater than inflation, so that any higher retirement income will need to come from a worker’s own savings. • Ž‘Â?‰ ĥ ‹Â?†‹˜‹†—ƒŽ• „‡Ž‹‡˜‡ –Šƒ– ’‡Â?•‹‘Â? „‡Â?‡ˆ‹–• ™‹ŽŽ „‡ ”ƒ‹•‡† ’‡”‹‘†‹…ƒŽŽ› –‘ Â?ƒ‹Â?–ƒ‹Â? ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡•ǡ –Š‡› ™‹ŽŽ „‡ ”‡Ž—…–ƒÂ?– –‘ ‡Â?‰ƒ‰‡ ‹Â? ’”‹˜ƒ–‡ •ƒ˜‹Â?‰•Ǥ – Â?‡‡†• –‘ „‡ ™‹†‡Ž› ƒ†˜‡”–‹•‡† –Šƒ– ’‘Ž‹–‹…‹ƒÂ?• ™‹ŽŽ Â?‘ Ž‘Â?‰‡” „‡ ‹Â? ƒ ’‘•‹–‹‘Â? –‘ ”ƒ‹•‡ „ƒ•‹… ’‡Â?•‹‘Â? „‡Â?‡ˆ‹–• ˆƒ•–‡” –ŠƒÂ? ‹Â?ˆŽƒ–‹‘Â?Ç¡ ƒÂ?† –Šƒ– ‹Â?†‹˜‹†—ƒŽ• ™‹ŽŽ Â?‡‡† –‘ „‡ …‘Â?–‡Â?– ™‹–Š –Š‡ „ƒ•‹… ’‡Â?•‹‘Â? ‘” Â?—•– •ƒ˜‡ ’”‹˜ƒ–‡Ž› ˆ‘” –Š‡‹” ”‡–‹”‡Â?‡Â?–Ǥ ʹǤʹͶǤ Targeting the basic pension to the poor can save fiscal resources, although withdrawing the basic pension for those who save can also result in disincentives to save. • –Š‡ ’‘’—Žƒ–‹‘Â? ƒ‰‡•ǡ –Š‡ „ƒ•‹… ’‡Â?•‹‘Â? ™‹ŽŽ ”‡’”‡•‡Â?– ƒ ‰”‘™‹Â?‰ ˆ‹•…ƒŽ „—”†‡Â?Ǥ Š‡ …‘•– ‹Â?’Ž‹…ƒ–‹‘Â?• ‘ˆ ƒ Â?‘”‡ –ƒ”‰‡–‡† ’‡Â?•‹‘Â? ™‡”‡ ‹ŽŽ—•–”ƒ–‡† ‹Â? –Š‡ •…‡Â?ƒ”‹‘• ƒ„‘˜‡Ǥ › ‡Â?…‘—”ƒ‰‹Â?‰ –Š‘•‡ ™Š‘ …ƒÂ? •ƒ˜‡ –‘ †‘ •‘ ƒÂ?† –ƒ”‰‡–‹Â?‰ –Š‡ „ƒ•‹… ’‡Â?•‹‘Â? –‘ –Š‘•‡ ™Š‘ …ƒÂ?Â?‘–ǡ –Š‡ ‰‘˜‡”Â?Â?‡Â?– …ƒÂ? „‡––‡” –ƒ”‰‡– Ž‹Â?‹–‡† ˆ‹•…ƒŽ ”‡•‘—”…‡•Ǥ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ –Š‡ Œ—š–ƒ’‘•‹–‹‘Â? ‘ˆ „ƒ•‹… ƒÂ?† •—’’Ž‡Â?‡Â?–ƒ”› ’‡Â?•‹‘Â? ‹Â?…‘Â?‡ …ƒÂ? Ž‡ƒ† –‘ †‹•‹Â?…‡Â?–‹˜‡• ˆ‘” ‹Â?†‹˜‹†—ƒŽ• –‘ •ƒ˜‡ ‘” …‘Â?–”‹„—–‡ǡ ’ƒ”–‹…—Žƒ”Ž› Ž‘™‡” Â?‹††Ž‡Ǧ ‹Â?…‘Â?‡ ‹Â?†‹˜‹†—ƒŽ•ǡ •‹Â?…‡ –Š‡› Â?Â?‘™ –Š‡› ™‹ŽŽ ”‡…‡‹˜‡ –Š‡ •‘…‹ƒŽ ’‡Â?•‹‘Â? ‡˜‡Â? ‹ˆ –Š‡› †‘ Â?‘– Â?ƒÂ?‡ …‘Â?–”‹„—–‹‘Â?•Ǥ Š‹• ‹• ’ƒ”–‹…—Žƒ”Ž› –”—‡ ‹ˆ –Š‡› „‡Ž‹‡˜‡ –Šƒ– –Š‡ Ž‹Â?‡Ž‹Š‘‘† ‘ˆ ƒ…Š‹‡˜‹Â?‰ ƒ Š‹‰Š‡” ’‡Â?•‹‘Â? –ŠƒÂ? –Š‡ •‘…‹ƒŽ ‘Â?‡ ‹• Â?‘– …‡”–ƒ‹Â?Ç¡ ‹Â? ™Š‹…Š …ƒ•‡ –Š‡› Â?ƒ› „‡ „‡––‡” ‘ˆˆ Â?‘– •ƒ˜‹Â?‰ ”ƒ–Š‡” –ŠƒÂ? Šƒ˜‹Â?‰ Dz™ƒ•–‡†dz –Š‡‹” Â?‘Â?‡› „› •ƒ˜‹Â?‰ ™Š‡Â? –Š‡› …‘—Ž† ”‡…‡‹˜‡ –Š‡ •ƒÂ?‡ „‡Â?‡ˆ‹– ‹Â? ‡‹–Š‡” …ƒ•‡Ǥ ʹͺ ʹǤʹͷǤ A recent innovation in Chile in 2008 offers one potential solution for harmonizing incentives under basic and supplementary pension schemes. Š‹Ž‡ Šƒ• ƒ Â?ƒÂ?†ƒ–‘”› •‡…‘Â?† ’‹ŽŽƒ”ǡ ƒŽ–Š‘—‰Š –Š‡”‡ ƒ”‡ Â?ƒÂ?› ’‡‘’Ž‡ ‹Â? –Š‡ ‹Â?ˆ‘”Â?ƒŽ •‡…–‘” ™Š‘ †‘ Â?‘– Â?ƒÂ?‡ ”‡‰—Žƒ” …‘Â?–”‹„—–‹‘Â?•Ǥ Â?…‡Â?–‹˜‡• ƒ”‡ ‡˜‡Â? Â?‘”‡ ‹Â?’‘”–ƒÂ?– ‹Â? ƒ ˜‘Ž—Â?–ƒ”› •›•–‡Â?Ç¡ •—…Š ĥ –Š‡ ‘Â?‡ ‡‘”‰‹ƒ Â?ƒ› …‘Â?•‹†‡”ǡ „‡…ƒ—•‡ –Š‡”‡ ™‘—Ž† „‡ Â?‘ ”‡“—‹”‡Â?‡Â?–• –‘ …‘Â?–”‹„—–‡Ǥ Â? Š‹Ž‡ǡ ƒ •‘…‹ƒŽ ’‡Â?•‹‘Â? ™ƒ• ‡•–ƒ„Ž‹•Š‡† ƒ– ƒ …‡”–ƒ‹Â? Ž‡˜‡Ž ˆ‘” ‹Â?†‹˜‹†—ƒŽ• ™Š‘ Â?‡˜‡” …‘Â?–”‹„—–‡† –‘ –Š‡ ’‡Â?•‹‘Â? •›•–‡Â?Ç¡ ƒÂ?† ƒ Š‹‰Š‡” –Š”‡•Š‘Ž† ‘ˆ ’‡Â?•‹‘Â? ‹Â?…‘Â?‡ ™ƒ• •‡– ƒ– ™Š‹…Š ’‘‹Â?– Â?‘ •‘…‹ƒŽ ’‡Â?•‹‘Â? ™‘—Ž† „‡ ’”‘˜‹†‡†Ǥ Â? „‡–™‡‡Â? –Š‡•‡ –™‘ ’‘‹Â?–•ǡ –Š‡ •‘…‹ƒŽ ’‡Â?•‹‘Â? ’”‘˜‹†‡† ‹• ‰”ƒ†—ƒŽŽ› ™‹–Š†”ƒ™Â?Ǥ Š—•ǡ ˆ‘” ‡ƒ…Š …‘Â?–”‹„—–‹‘Â? Â?ƒ†‡ǡ ’‡Â?•‹‘Â? ‹Â?…‘Â?‡ ‹• Š‹‰Š‡” –ŠƒÂ? ‹ˆ –Š‡ …‘Â?–”‹„—–‹‘Â? Šƒ† Â?‘– „‡‡Â? Â?ƒ†‡ǡ –Š—• ’”‘˜‹†‹Â?‰ ‹Â?…‡Â?–‹˜‡• ˆ‘” ‹Â?†‹˜‹†—ƒŽ …‘Â?–”‹„—–‹‘Â?•Ǥ Figure 2.10: Incentivizing Voluntary Savings In The Presence Of a Basic Pension ȋ‹Â? ƒ”‹ ’‡” Â?‘Â?–ŠȌ 375 Total Pension 125 Social Pension 45° SelfͲFinanced Pension ʹǤʹ͸Ǥ Figure 2.10 shows how the Chilean example could be applied in the Georgian context. ˆ –Š‡ •‘…‹ƒŽ ’‡Â?•‹‘Â? ‹• •‡– ƒ–  ͳʹͷ ’‡” Â?‘Â?–Šǡ –Š‡Â? ƒ ȋ–Š”‡‡Ǧˆ‘Ž†Ȍ Š‹‰Š‡” –Š”‡•Š‘Ž† ‘ˆ  ͵͹ͷ ’‡” Â?‘Â?–Š …‘—Ž† „‡ •‡– ĥ –Š‡ Ž‡˜‡Ž ‘ˆ ’‡Â?•‹‘Â? ‹Â?…‘Â?‡ „‡›‘Â?† ™Š‹…Š ƒÂ? ‹Â?†‹˜‹†—ƒŽ ‹• Â?‘ Ž‘Â?‰‡” ‡Â?–‹–Ž‡† –‘ ƒÂ?› ƒÂ?‘—Â?– ‘ˆ •‘…‹ƒŽ ’‡Â?•‹‘Â?Ǥ Š‡ ƒ…–—ƒŽ ’‡Â?•‹‘Â? ”‡…‡‹˜‡† „› ‹Â?†‹˜‹†—ƒŽ• ™‘—Ž† ƒŽ™ƒ›• ‹Â?…”‡ƒ•‡ ™‹–Š ‡˜‡”› ƒ††‹–‹‘Â?ƒŽ Žƒ”‹ ‘ˆ …‘Â?–”‹„—–‹‘Â?Ǥ Â? –Š‡ ‡šƒÂ?’Ž‡ •Š‘™Â?Ç¡ ˆ‘” ‡˜‡”›  ͳͲ –Šƒ– ƒÂ? ‹Â?†‹˜‹†—ƒŽ ‡ƒ”Â?• ĥ ƒ ’‡Â?•‹‘Â? ˆ”‘Â? ˜‘Ž—Â?–ƒ”› •ƒ˜‹Â?‰•ǡ ”‘—‰ŠŽ›  ͵ ‘ˆ –Š‡ •‘…‹ƒŽ ’‡Â?•‹‘Â? ‹• ”‡†—…‡†Ǥ Š‡”‡ •–‹ŽŽ ‹• ƒÂ? ‹Â?’Ž‹…‹– –ƒš ‘ˆ ͵͵ ’‡”…‡Â?– ‘Â? •ƒ˜‹Â?‰• „‡–™‡‡Â?  ͳʹͷ ƒÂ?†  ͵͹ͷ ’‡” Â?‘Â?–Š ‘ˆ ’‡Â?•‹‘Â? ‹Â?…‘Â?‡ǡ „—– ‹Â?†‹˜‹†—ƒŽ• •–‹ŽŽ †‘ „‡––‡” „› •ƒ˜‹Â?‰ ƒ– ƒŽŽ ‹Â?…‘Â?‡ Ž‡˜‡Ž•Ǥ Š‹• •…Š‡Â?‡ ’”‘˜‹†‡• „‡––‡” …‘Â?–”‹„—–‹‘Â? ‹Â?…‡Â?–‹˜‡• –ŠƒÂ? ™‹–Š†”ƒ™‹Â?‰ –Š‡ ‡Â?–‹”‡ •‘…‹ƒŽ ’‡Â?•‹‘Â? ˆ”‘Â? –Š‘•‡ ™Š‘ …‘Â?–”‹„—–‡ ƒÂ?› ƒÂ?‘—Â?–Ǥ Š‡ –”ƒ†‡Ǧ‘ˆˆ ‹• „‡–™‡‡Â? Ž‹Â?‹–‹Â?‰ •ƒ˜‹Â?‰ †‹•‹Â?…‡Â?–‹˜‡• ƒÂ?† Ž‘™‡”‹Â?‰ –Š‡ …‘•– ‘ˆ –Š‡ •‘…‹ƒŽ ’‡Â?•‹‘Â?Ç¡ ƒÂ?† –Š‡ ˆƒ•–‡” –Š‡ •‘…‹ƒŽ ’‡Â?•‹‘Â? ‹• ™‹–Š†”ƒ™Â?Ç¡ –Š‡ ‰”‡ƒ–‡” –Š‡ •ƒ˜‹Â?‰ †‹•‹Â?…‡Â?–‹˜‡Ǥ •‘…‹ƒŽ ’‡Â?•‹‘Â? –‘ ƒŽŽ Ž‡ƒ†• –‘ –Š‡ Š‹‰Š‡•– ˆ‹•…ƒŽ …‘•– ƒÂ?† Ž‘™‡•– •ƒ˜‹Â?‰• †‹•‹Â?…‡Â?–‹˜‡•ǡ ™Š‹Ž‡ ”‡Â?‘˜‹Â?‰ –Š‡ •‘…‹ƒŽ ’‡Â?•‹‘Â? ˆ‘” ƒÂ?›‘Â?‡ ™Š‘ •ƒ˜‡• Ž‡ƒ†• –‘ –Š‡ Ž‘™‡•– ˆ‹•…ƒŽ …‘•–• ™‹–Š ‰”‡ƒ–‡•– •ƒ˜‹Â?‰ †‹•‹Â?…‡Â?–‹˜‡•Ǥ Š‡ •…Š‡Â?‡ •—‰‰‡•–‡† Š‡”‡ ”‡’”‡•‡Â?–• ƒ ’‘–‡Â?–‹ƒŽ Â?‹††Ž‡ ’ƒ–ŠǤ ʹǤʹ͹Ǥ Another scheme to enhance participation in voluntary savings is automatic enrollment with the option of not participating (“optǦoutâ€?) rather than having individuals explicitly make the decision to join the system (“optǦinâ€?). ˜‹†‡Â?…‡ ˆ”‘Â? ƒ…–—ƒŽ …ƒ•‡• •—‰‰‡•–• –Šƒ– —Â?†‡” ‘’–Ǧ‹Â?Ç¡ •‘Â?‡ ͶͲ –‘ ͹Ͳ ’‡”…‡Â?– ‘ˆ ™‘”Â?‡”• ’ƒ”–‹…‹’ƒ–‡ǡ ™Š‹Ž‡ —Â?†‡” ‘’–Ǧ‘—–ǡ ĥ Â?ƒÂ?› ĥ ͺͷ –‘ ͻͷ ’‡”…‡Â?– ’ƒ”–‹…‹’ƒ–‡Ǥ Â?—Â?„‡” ‘ˆ „‡Šƒ˜‹‘”ƒŽ ”‡ƒ•‘Â?• …ƒÂ? Š‡Ž’ ‡š’Žƒ‹Â? –Š‹•Ǥ ‹”•–ǡ ™Š‡Â? ’‡‘’Ž‡ Í´Í» ‘’–Ǧ‹Â? –‘ ƒ ’ŽƒÂ?Ç¡ –Š‡› ƒ”‡ ”‡“—‹”‡† –‘ …Š‘‘•‡ ƒ …‘Â?–”‹„—–‹‘Â? ”ƒ–‡ ȋ‡Ǥ‰Ǥ ƒÂ?›™Š‡”‡ ˆ”‘Â? ͳ –‘ ͳͷ ’‡”…‡Â?–Ȍǡ ĥ ™‡ŽŽ ĥ ‹Â?˜‡•–Â?‡Â?– ƒ••‡– ‘’–‹‘Â?•Ǥ ˜‹†‡Â?…‡ ˆ”‘Â? ’•›…Š‘Ž‘‰› Ž‹–‡”ƒ–—”‡ •Š‘™• –Šƒ– ’‡‘’Ž‡ ƒ”‡ Â?‘”‡ Ž‹Â?‡Ž› –‘ ’—– ‘ˆˆ Â?ƒÂ?‹Â?‰ †‡…‹•‹‘Â?• ĥ –Š‡ ’”‘…‡•• „‡…‘Â?‡• Â?‘”‡ …‘Â?’Ž‡šǤ Š‡ ‡˜‹†‡Â?…‡ ƒŽ•‘ •—‰‰‡•–• –Šƒ– –Š‡ †‹ˆˆ‡”‡Â?…‡ ‹Â? ’ƒ”–‹…‹’ƒ–‹‘Â? „‡–™‡‡Â? ‘’–Ǧ‹Â? ƒÂ?† ‘’–Ǧ‘—– ‹• –Š‡ ‰”‡ƒ–‡•– ˆ‘” –Š‘•‡ ™Š‘ ƒ”‡ Ž‡ƒ•– Â?Â?‘™Ž‡†‰‡ƒ„Ž‡ ƒ„‘—– –Š‡ ˆ‹Â?ƒÂ?…‹ƒŽ •‡…–‘”ǡ –Š‘•‡ ™Š‘ ƒ”‡ ›‘—Â?‰ǡ ƒÂ?† –Š‘•‡ ™Š‘ ‡ƒ”Â? Ž‘™‡” ‹Â?…‘Â?‡•Ǥͳ͵ ’–Ǧ‘—– ’”‘˜‹†‡• ƒ ‰‡Â?—‹Â?‡ …Š‘‹…‡ ˆ‘” ’‡‘’Ž‡ ™Š‘ †‘ Â?‘– ™ƒÂ?– –‘ ’ƒ”–‹…‹’ƒ–‡ǡ „—– ƒŽŽ‘™• –Š‡ ‹Â?…Ž—•‹‘Â? ‘ˆ –Š‘•‡ ™Š‘ ™ƒÂ?– –‘ ’ƒ”–‹…‹’ƒ–‡ ȋ„—– ™‘—Ž† Â?‘– Šƒ˜‡ ‘–Š‡”™‹•‡ †—‡ –‘ ‹Â?‡”–‹ƒ ‘” Žƒ…Â? ‘ˆ Â?Â?‘™Ž‡†‰‡ȌǤ ‹Â?ƒŽŽ›ǡ Â?ƒÂ?› ’‡‘’Ž‡ ƒ”‡ —Â?†‡…‹†‡† ƒÂ?† Ž‘‘Â? ˆ‘” ƒ ”‡…‘Â?Â?‡Â?†ƒ–‹‘Â? ‘Â? ™Šƒ– –‘ †‘Ǥ Š‡› ˜‹‡™ ƒÂ? ‘’–Ǧ‘—– ĥ ƒ ‰‘˜‡”Â?Â?‡Â?– ”‡…‘Â?Â?‡Â?†ƒ–‹‘Â? –Šƒ– –Š‡› •Š‘—Ž† ’ƒ”–‹…‹’ƒ–‡ǡ ƒÂ?† –Š‡”‡ˆ‘”‡ Œ‘‹Â? ‹Â? ĥ ™‡ŽŽǤ ʹǤʹͺǤ In addition to the optǦin vs. optǦout decision, there are several other areas related to retirement savings where default options are useful. Â?‡ ‹• –Š‡ …‘Â?–”‹„—–‹‘Â? ”ƒ–‡Ǥ ‘” ”‡ƒ•‘Â?• …‹–‡† ƒ„‘˜‡ǡ ‹ˆ –Š‡ †‡ˆƒ—Ž– …‘Â?–”‹„—–‹‘Â? ”ƒ–‡ ‹• •‡– ƒ– ͵ ’‡”…‡Â?–ǡ ƒ Žƒ”‰‡ •Šƒ”‡ ‘ˆ ‡Â?’Ž‘›‡‡•ǡ ĥ Â?ƒÂ?› ĥ ͸Ͳ ’‡”…‡Â?–ǡ ™‹ŽŽ ”‡Â?ƒ‹Â? ƒ– –Šƒ– Ž‡˜‡ŽǤ Â?‡ ”‡ƒ•‘Â? ˆ‘” •–ƒ”–‹Â?‰ ™‹–Š ƒ Ž‘™ …‘Â?–”‹„—–‹‘Â? ”ƒ–‡ ‹• –Šƒ– ›‘—Â?‰‡” ™‘”Â?‡”• Šƒ˜‡ ”‡Žƒ–‹˜‡Ž› Ž‘™ •ƒŽƒ”‹‡• ƒÂ?† Â?ƒ› Â?‡‡† ”‡•‘—”…‡• ˆ‘” Ž—Â?’› ‹Â?˜‡•–Â?‡Â?–• ȋ‡Ǥ‰Ǥ ƒ …ƒ” ‘” ’”‘’‡”–›ȌǤ • ƒ ”‡•—Ž–ǡ –Š‡› Â?ƒ› „‡ Â?‘”‡ Ž‹Â?‡Ž› –‘ ‘’– ‘—– ‹ˆ –Š‡ …‘Â?–”‹„—–‹‘Â? ”ƒ–‡ ‹• •‡– –‘‘ Š‹‰ŠǤ ˜‡” –‹Â?‡ǡ Š‘™‡˜‡”ǡ ƒ Ž‘™ …‘Â?–”‹„—–‹‘Â? ”ƒ–‡ ™‹ŽŽ Â?‘– ‰‡Â?‡”ƒ–‡ •—ˆˆ‹…‹‡Â?– ”‡–‹”‡Â?‡Â?– •ƒ˜‹Â?‰•Ǥ ‘” –Š‹• ”‡ƒ•‘Â?Ç¡ •‘Â?‡ ˜‘Ž—Â?–ƒ”› ’ŽƒÂ?• Šƒ˜‡ ƒÂ? Dzƒ—–‘Â?ƒ–‹… ‡•…ƒŽƒ–‘”dz …Žƒ—•‡ ™Š‹…Š ”ƒ‹•‡• –Š‡ …‘Â?–”‹„—–‹‘Â? ”ƒ–‡ ƒÂ?Â?—ƒŽŽ› —Â?Ž‡•• –Š‡ ‹Â?†‹˜‹†—ƒŽ ‘’–• ‘—– ‘ˆ –Š‹• ˆ‡ƒ–—”‡Ǥ —–‘Â?ƒ–‹… ‡•…ƒŽƒ–‘” …Žƒ—•‡• —•—ƒŽŽ› Šƒ˜‡ •‘Â?‡ †‡ˆƒ—Ž– …‡‹Ž‹Â?‰ ƒ„‘˜‡ ™Š‹…Š –Š‡ ‹Â?†‹˜‹†—ƒŽ …ƒÂ? ‘’– ˆ‘” ‡˜‡Â? Š‹‰Š‡” …‘Â?–”‹„—–‹‘Â?•ǡ „—– ™Š‹…Š ™‹ŽŽ Â?‘– Šƒ’’‡Â? ƒ—–‘Â?ƒ–‹…ƒŽŽ›Ǥ ʹǤʹͻǤ Another choice that an individual participating in a voluntary pension plan might need to make is the choice of portfolio. ‰ƒ‹Â?Ç¡ •‹Â?…‡ ’‡‘’Ž‡ ƒ”‡ Â?‘– Ž‹Â?‡Ž› –‘ Â?ƒÂ?‡ ’”‘Ǧƒ…–‹˜‡ …Š‘‹…‡•ǡ ‹– ‹• ‹Â?’‘”–ƒÂ?– –‘ †‡•‹‰Â? ƒ †‡ˆƒ—Ž– ’‘”–ˆ‘Ž‹‘ǡ ‹†‡ƒŽŽ› ‘Â?‡ ™Š‹…Š Â?‘˜‡• ™‹–Š –Š‡ Ž‹ˆ‡Ǧ…›…Ž‡Ǥ ‘” ‡šƒÂ?’Ž‡ǡ ƒ ʹͷǦ›‡ƒ” ‘Ž† …ƒÂ? „‡ †‡ˆƒ—Ž–‡† ‹Â?–‘ ƒ ’‘”–ˆ‘Ž‹‘ ™‹–Š ƒÂ? ͺͲȀʹͲ ‡“—‹–›Ȁˆ‹š‡† ‹Â?…‘Â?‡ ƒ••‡– Â?‹šǡ •Š‹ˆ–‹Â?‰ ‘˜‡” –‹Â?‡ •—…Š –Šƒ– „› ƒ‰‡ ͸ͷǡ –Š‡ ’‘”–ˆ‘Ž‹‘ ™‘—Ž† „‡ …‘Â?’‘•‡† ‡Â?–‹”‡Ž› ‘ˆ ˆ‹š‡†Ǧ ‹Â?…‘Â?‡ ƒ••‡–•Ǥ ʹǤ͵ͲǤ Default options can also be helpful at the payout stage. Â?†‹˜‹†—ƒŽ• …‘—Ž† „‡ ‡Â?…‘—”ƒ‰‡† –‘ ƒÂ?Â?—‹–‹œ‡ –Š‡‹” ƒ……‘—Â?–• ”ƒ–Š‡” –ŠƒÂ? –ƒÂ?‹Â?‰ Ž—Â?Â’ •—Â?• „› Â?ƒÂ?‹Â?‰ –Š‡ ƒÂ?Â?—‹–› –Š‡ †‡ˆƒ—Ž–ǡ ™‹–Š –Š‡ ‘’–‹‘Â? –‘ –ƒÂ?‡ ƒ Ž—Â?Â’ •—Â?Ǥ Š‡ Ž—Â?Â’ •—Â? ‹• ‰‡Â?‡”ƒŽŽ› ‹Â?ˆ‡”‹‘” –‘ ƒÂ? ƒÂ?Â?—‹–› ‹Â? –‡”Â?• ‘ˆ ’‘˜‡”–› ’”‘–‡…–‹‘Â?Ç¡ •‹Â?…‡ ‹– …‘—Ž† „‡ ‡šŠƒ—•–‡† ’”‡Â?ƒ–—”‡Ž›Ǥ Ž–Š‘—‰Š –Š‡”‡ ƒ”‡ •‘Â?‡ …‹”…—Â?•–ƒÂ?…‡• —Â?†‡” ™Š‹…Š ƒ ”‡–‹”‡‡ ™‘—Ž† ’”‡ˆ‡” ƒ Ž—Â?Â’ •—Â? ȋ‡Ǥ‰Ǥǡ –‘ ‹Â?˜‡•– ‹Â? ƒ „—•‹Â?॥ ™Š‹…Š …‘—Ž† –Š‡Â? ‰‡Â?‡”ƒ–‡ ”‡–—”Â?• –‘ …‘˜‡” –Š‡ ”‡–‹”‡Â?‡Â?– ’‡”‹‘†Ȍǡ ˆ‘” –Š‡ Â?ƒŒ‘”‹–› ‹– ™‘—Ž† „‡ „‡––‡” –‘ Â?ƒÂ?‡ –Š‡ ƒÂ?Â?—‹–› ƒ †‡ˆƒ—Ž– ‘’–‹‘Â?Ǥ ‹Â?‹Žƒ”Ž›ǡ ƒÂ?Â?—‹–‹‡• …ƒÂ? „‡ ’ƒ‹† ĥ ‹Â?†‹˜‹†—ƒŽ ƒÂ?Â?—‹–‹‡•ǡ ‰‘‘† ‘Â?Ž› ĥ Ž‘Â?‰ ĥ –Šƒ– ‹Â?†‹˜‹†—ƒŽ ‹• ƒŽ‹˜‡ǡ ‘” ĥ Œ‘‹Â?– ƒÂ?Â?—‹–‹‡•ǡ ™Š‹…Š …‘˜‡” –Š‡ Ž‹˜‡• ‘ˆ „‘–Š Â?‡Â?„‡”• ‘ˆ ƒ …‘—’Ž‡Ǥ Š‡ †‡ˆƒ—Ž– …‘—Ž† „‡ ˆ‘” ƒ Œ‘‹Â?– ƒÂ?Â?—‹–›ǡ ™‹–Š ƒÂ? ‘’–Ǧ‘—– ˆ‘” –Š‘•‡ ’”‡ˆ‡””‹Â?‰ ‘–Š‡” ƒ””ƒÂ?‰‡Â?‡Â?–•Ǥ ʹǤ͵ͳǤ In sum, default options can help overcome incentive problems at every stage of the voluntary pension process. ‹˜‡Â? –Š‡ …‘Â?’Ž‡š‹–› ‘ˆ –Š‡•‡ ‹••—‡•ǡ ’”‘˜‹†‹Â?‰ ƒ •‡Â?•‹„Ž‡ †‡ˆƒ—Ž– ‘’–‹‘Â? ™Š‹…Š ’”‘˜‹†‡• –Š‡ „‡•– ‘’–‹‘Â? ˆ‘” –Š‡ Â?ƒŒ‘”‹–› ‘ˆ ’‡‘’Ž‡ Â?ƒ› ”‡•—Ž– ‹Â? Â?‘”‡ ‘’–‹Â?ƒŽ ’ƒ”–‹…‹’ƒ–‹‘Â? ƒÂ?† …‘Â?–”‹„—–‹‘Â? ”ƒ–‡• –‘ ‡Â?•—”‡ Â?‘”‡ ƒ†‡“—ƒ–‡ ”‡–—”Â?•ǡ ’‘”–ˆ‘Ž‹‘ …Š‘‹…‡• ™Š‹…Š ƒ†ƒ’– –‘ ƒ’’”‘’”‹ƒ–‡ ƒ‰‡ ’”‘ˆ‹Ž‡•ǡ ƒÂ?† –Š‡ „‡•– •‘…‹ƒŽ ’”‘–‡…–‹‘Â? ‘˜‡” –Š‡ ”‡–‹”‡Â?‡Â?– ’‡”‹‘†ǡ ™Š‹Ž‡ ƒŽŽ‘™‹Â?‰ ˜‘Ž—Â?–ƒ”› …Š‘‹…‡ ƒÂ?† ˆŽ‡š‹„‹Ž‹–›Ǥ ͳ͵ ‡•Š‡ƒ”•ǡ Š‘‹ǡ ƒ‹„•‘Â?Ç¡ ƒÂ?† ƒ†”‹ƒÂ?Ç¡ DzŠ‡ Â?’‘”–ƒÂ?…‡ ‘ˆ ‡ˆƒ—Ž– ’–‹‘Â?• ˆ‘” ‡–‹”‡Â?‡Â?– ƒ˜‹Â?‰ —–…‘Â?‡•ǣ ˜‹†‡Â?…‡ ˆ”‘Â? –Š‡ Â?‹–‡† –ƒ–‡•ǡdz ‹Â? ‡••‘Â?• ˆ”‘Â? ‡Â?•‹‘Â? ‡ˆ‘”Â? ‹Â? –Š‡ Â?‡”‹…ƒ•ǡ šˆ‘”† Â?‹˜‡”•‹–› ”‡••ǡ ʹͲͲͺǤ ͵Ͳ ʹǤ͵ʹǤ Another area where incentive issues can be important in relation to voluntary pension schemes is the tax treatment of pension savings. Š‹• ‹• ƒ††”‡••‡† ‹Â? ‘š ʹǤͳǤ Box 2.1: Tax Treatment For Funded Pension Systems ‡Â?•‹‘Â? •›•–‡Â?• –›’‹…ƒŽŽ› ’”‘˜‹†‡ •‘Â?‡ –›’‡ ‘ˆ –ƒš ‹Â?…‡Â?–‹˜‡•ǡ „‘–Š –‘ …‘Â?–”‹„—–‡ ƒÂ?† –‘ Â?‡‡’ –Š‡ •ƒ˜‹Â?‰• ‹Â? –Š‡ ƒ……‘—Â?–• —Â?–‹Ž –Š‡› ”‡ƒ…Š ”‡–‹”‡Â?‡Â?– ƒ‰‡Ǥ Š‹Ž‡ –ƒš ‹Â?…‡Â?–‹˜‡ †‘‡• ”‡•—Ž– ‹Â? Ž‘•• ‘ˆ ”‡˜‡Â?—‡ǡ –Š‡ ”ƒ–‹‘Â?ƒŽ‡ ‹• –™‘ˆ‘Ž†ǣ ȋ‹Ȍ Ž‘Â?‰ –‡”Â? •ƒ˜‹Â?‰• …ƒÂ? „‡ —•‡† ˆ‘” Ž‘Â?‰‡” –‡”Â? ‹Â?˜‡•–Â?‡Â?– ’”‘Œ‡…–• –Šƒ– „‡Â?‡ˆ‹– •‘…‹‡–› ĥ ƒ ™Š‘Ž‡Ǣ ƒÂ?† ȋ‹‹Ȍ ’”‹˜ƒ–‡ ”‡–‹”‡Â?‡Â?– •ƒ˜‹Â?‰ Ž‘™‡”• –Š‡ ’”‘„ƒ„‹Ž‹–› ‘ˆ ‘Ž† ƒ‰‡ ’‘˜‡”–› ƒÂ?† –Š—• –Š‡ Â?‡‡† ˆ‘” ‰‘˜‡”Â?Â?‡Â?– ”‡•‘—”…‡• –‘ •—’’‘”– –Š‡ ‡Ž†‡”Ž›Ǥ ›’‹…ƒŽŽ›ǡ ™Š‡Â? ‹Â?†‹˜‹†—ƒŽ• •ƒ˜‡ –Š”‘—‰Š ƒ •ƒ˜‹Â?‰• ƒ……‘—Â?–ǡ –Š‡› ’ƒ› –ƒš ‘Â? –Š‡ ‹Â?…‘Â?‡ ‹Â?‹–‹ƒŽŽ› ‡ƒ”Â?‡† ƒÂ?† ‘Â? ‹Â?–‡”‡•– ƒ……—Â?—Žƒ–‡†ǡ „—– Â?‘– ‘Â? –Š‡ •ƒ˜‹Â?‰• ƒ……‘—Â?– „ƒŽƒÂ?…‡ ƒ– –Š‡ –‹Â?‡ ‘ˆ ™‹–Š†”ƒ™ƒŽǤ Â?‡ ƒ’’”‘ƒ…Š –‘ –ƒšƒ–‹‘Â? ‘ˆ ’‡Â?•‹‘Â? •ƒ˜‹Â?‰• ‹• •‹Â?‹Žƒ”ǡ ™‹–Š ‹Â?†‹˜‹†—ƒŽ• …‘Â?–”‹„—–‹Â?‰ –ƒš‡† ‹Â?…‘Â?‡ –‘ –Š‡ ’‡Â?•‹‘Â? ƒ……‘—Â?–ǡ „—– –Š‡ ‹Â?–‡”‡•– ‡ƒ”Â?‡† ‹• Â?‘– –ƒšƒ„Ž‡ǡ ƒÂ?† –Š‡ ‡˜‡Â?–—ƒŽ „‡Â?‡ˆ‹–• ™‹–Š†”ƒ™ƒŽ• ƒ”‡ Â?‘– –ƒšƒ„Ž‡Ǥ Â?’Ž‘›‡” …‘Â?–”‹„—–‹‘Â?• –‘ –Š‡ ’‡Â?•‹‘Â? ƒ……‘—Â?–ǡ Š‘™‡˜‡”ǡ ƒ”‡ –›’‹…ƒŽŽ› Â?‘– –ƒš‡†ǡ •‘ –Šƒ– –Š‡ ‡Â?’Ž‘›‡‡ ’ƒ›• –ƒš ‘Â? ™‹–Š†”ƒ™ƒŽ• ˆ‘ŽŽ‘™‹Â?‰ ”‡–‹”‡Â?‡Â?–Ǥ ˆ–‡Â? ™‹–Š†”ƒ™ƒŽ• ƒ”‡ –ƒÂ?‡Â? ĥ ƒÂ? ƒÂ?Â?—‹–›ǡ ™‹–Š –ƒš ‹• ’ƒ‹† ‘Â? ƒÂ?Â?—‹–‹œ‡† ™‹–Š†”ƒ™ƒŽ•Ǥ Š‹• –ƒš †‡ˆ‡””ƒŽ ‹• ˆƒ˜‘”ƒ„Ž‡ –‘ –Š‡ ‡Â?’Ž‘›‡‡ „‡…ƒ—•‡ –ƒš‡• ’ƒ‹† ‹Â? –Š‡ ˆ—–—”‡ ƒ”‡ ƒŽ™ƒ›• Â?‘”‡ „‡Â?‡ˆ‹…‹ƒŽ –ŠƒÂ? –ƒš‡• ™Š‹…Š Šƒ˜‡ –‘ „‡ ’ƒ‹† Â?‘™ǡ „—– ‡˜‡Â? Â?‘”‡ •‘ ™‹–Š ƒ ’”‘‰”‡••‹˜‡ –ƒš …‘†‡ •‹Â?…‡ ‹Â?…‘Â?‡ ‹• –›’‹…ƒŽŽ› Ž‘™‡” †—”‹Â?‰ ”‡–‹”‡Â?‡Â?– ›‡ƒ”•Ǥ Š‡Â? „‘–Š ‡Â?’Ž‘›‡”• ƒÂ?† ‡Â?’Ž‘›‡‡• …‘Â?–”‹„—–‡ –‘ –Š‡ •ƒÂ?‡ ’‡Â?•‹‘Â? ƒ……‘—Â?–ǡ ‘Â?‡ ‘’–‹‘Â? ™‘—Ž† „‡ ˆ‘” –Š‡ ‡Â?’Ž‘›‡‡ –‘ ’ƒ› –ƒš ‘Â? –Š‡ ‡Â?’Ž‘›‡” …‘Â?–”‹„—–‹‘Â? ƒÂ?† –Š‡Â? Ž‡– –Š‡ ‹Â?–‡”‡•– ƒÂ?† ™‹–Š†”ƒ™ƒŽ• ‘Â? –Š‡ ƒ……‘—Â?– ”‡Â?ƒ‹Â? –ƒš ˆ”‡‡Ǥ Š‡ †‹•ƒ†˜ƒÂ?–ƒ‰‡ ‘ˆ –Š‹• ƒ’’”‘ƒ…Š ‹• –Šƒ– ‡Â?’Ž‘›‡” …‘Â?–”‹„—–‹‘Â?• ƒ”‡ –›’‹…ƒŽŽ› ”‡‰ƒ”†‡† ĥ „‡Â?‡ˆ‹–•ǡ Â?‘– ĥ ‹Â?…‘Â?‡ǡ ƒÂ?† ‹ˆ ‹Â?†‹˜‹†—ƒŽ• Šƒ˜‡ –‘ ’ƒ› –ƒš ‘Â? –Š‡ ‹Â?…‘Â?‡ ƒÂ?›™ƒ›ǡ –Š‡› Â?ƒ› „‡ ‹Â?…Ž‹Â?‡† –‘ ™‹–Š†”ƒ™ ‹– ‡ƒ”Ž› ƒÂ?† •’‡Â?† ‹–Ǥ Â? ƒŽ–‡”Â?ƒ–‹˜‡ ™‘—Ž† „‡ –‘ Â?‘– –ƒš –Š‡ ‡Â?’Ž‘›‡” …‘Â?–”‹„—–‹‘Â?Ç¡ „—– ˆ‘” –Š‡ ”‡–‹”‡‡ –‘ ’ƒ› –ƒš ‘Â? •‘Â?‡ ’‘”–‹‘Â? ‘ˆ –Š‡ ™‹–Š†”ƒ™ƒŽǡ ‹Â? ’”‘’‘”–‹‘Â? –‘ –Š‡ ‡Â?’Ž‘›‡” …‘Â?–”‹„—–‹‘Â?Ǥ Š‹• ƒ’’”‘ƒ…Š –›’‹…ƒŽŽ› ™‘”Â?• ‹Â? Â?ƒÂ?†ƒ–‘”› •›•–‡Â?• ™Š‡”‡ –Š‡ …‘Â?–”‹„—–‹‘Â? ”ƒ–‡• „› ‡Â?’Ž‘›‡” ƒÂ?† ‡Â?’Ž‘›‡‡ ƒ”‡ ™‡ŽŽ †‡ˆ‹Â?‡†Ǥ Š‡Â? ‹Â?†‹˜‹†—ƒŽ• …ƒÂ? ˜ƒ”› –Š‡‹” ‘™Â? …‘Â?–”‹„—–‹‘Â?• ˆ”‘Â? ›‡ƒ” –‘ ›‡ƒ”ǡ •‘”– ‘—– –Š‡ –ƒšƒ„Ž‡ ’‘”–‹‘Â? ‘ˆ –Š‡ ™‹–Š†”ƒ™ƒŽ• „‡…‘Â?‡• Â?‘”‡ †‹ˆˆ‹…—Ž–Ǥ ˆ‹Â?ƒŽ ƒ’’”‘ƒ…Š —•‡† –›’‹…ƒŽŽ› ˆ‘” ˜‘Ž—Â?–ƒ”› ’‡Â?•‹‘Â? •ƒ˜‹Â?‰• ‹• –Šƒ– „‘–Š ‡Â?’Ž‘›‡” ƒÂ?† ‡Â?’Ž‘›‡‡ …‘Â?–”‹„—–‹‘Â?• ƒ”‡ ‡š‡Â?’– ˆ”‘Â? –ƒšǡ ™‹–Š ™‹–Š†”ƒ™ƒŽ• ˆ‘ŽŽ‘™‹Â?‰ ”‡–‹”‡Â?‡Â?– •—„Œ‡…– –‘ –ƒšǤ Š‹• ƒ’’”‘ƒ…Š Šƒ• –™‘ ƒ†˜ƒÂ?–ƒ‰‡•Ǥ ‹”•–ǡ ‹– ’”‘˜‹†‡• •‘Â?‡ ‡Â?…‘—”ƒ‰‡Â?‡Â?– ˆ‘” ˜‘Ž—Â?–ƒ”› •ƒ˜‹Â?‰• ĥ ‹– Ž‘™‡”• –ƒš‡• †—”‹Â?‰ ™‘”Â?‹Â?‰ ›‡ƒ”•Ǥ • „‡ˆ‘”‡ǡ ’”‘‰”‡••‹˜‡ ‹Â?…‘Â?‡ –ƒš ”ƒ–‡• ‘” ‡š‡Â?’–‹‘Â? –Š”‡•Š‘Ž†• Â?ƒÂ?‡ –Š‹• ‡˜‡Â? Â?‘”‡ ƒ––”ƒ…–‹˜‡Ǥ ‡…‘Â?†ǡ ‹– ”‡Â?‘˜‡• –Š‡ ’‘Ž‹…› —Â?…‡”–ƒ‹Â?–› –Šƒ– –Š‡ ’”‘Â?‹•‡ ‘ˆ –ƒšǦˆ”‡‡ ™‹–Š†”ƒ™ƒŽ• Â?ƒ› Â?‘– „‡ Š‘Â?‘”‡† „› ˆ—–—”‡ ‰‘˜‡”Â?Â?‡Â?–•Ǥ –Š‡” †‡•‹‰Â? ‹••—‡• ˆ‘” –Š‡ –ƒš –”‡ƒ–Â?‡Â?– ‘ˆ ’‡Â?•‹‘Â?• ƒ”‡ ĥ ˆ‘ŽŽ‘™•ǣ Restrictions on early withdrawal. Â? ƒ††‹–‹‘Â? –‘ –ƒš‡• –Šƒ– ™‹ŽŽ Â?‡‡† –‘ „‡ ’ƒ‹† ‘Â? –Š‡ ˆ—ŽŽ ƒÂ?‘—Â?– Â?‘– ’”‡˜‹‘—•Ž› –ƒš‡†ǡ ‡ƒ”Ž› ™‹–Š†”ƒ™ƒŽ• ƒ”‡ ˆ”‡“—‡Â?–Ž› ƒ••‘…‹ƒ–‡† ™‹–Š ƒ††‹–‹‘Â?ƒŽ ’‡Â?ƒŽ–‹‡•Ǥ šƒÂ?’Ž‡• ‘ˆ ‡š…‡’–‹‘Â?• –‘ –Š‡ ’‡Â?ƒŽ–‹‡• ‘ˆ–‡Â? ‹Â?…Ž—†‡ •‹‰Â?‹ˆ‹…ƒÂ?– Â?‡†‹…ƒŽ Šƒ”†•Š‹’ǡ †‹•ƒ„‹Ž‹–›ǡ ƒÂ?† ‘……ƒ•‹‘Â?ƒŽŽ› –Š‡ ’—”…Šƒ•‡ ‘ˆ ƒ ˆ‹”•– Š‘—•‡Ǥ Â? ‡ƒ…Š ‘ˆ –Š‡•‡ …ƒ•‡•ǡ –Š‡ ‡š…‡’–‹‘Â?• ƒ”‡ Â?‘– ƒ—–‘Â?ƒ–‹… ƒÂ?† –›’‹…ƒŽŽ› ‹Â?˜‘Ž˜‡ –Š‡ ‹Â?†‹˜‹†—ƒŽ ’‡–‹–‹‘Â?‹Â?‰ –Š‡ –ƒš ƒ—–Š‘”‹–‹‡• ˆ‘” –Š‡ ‡š…‡’–‹‘Â?Ǥ Limits on Contributions Subject to Favorable Treatment. ‘Ž—Â?–ƒ”› ’‡Â?•‹‘Â? •ƒ˜‹Â?‰• •…Š‡Â?‡• ƒ”‡ –›’‹…ƒŽŽ› Šƒ˜‡ ƒ Ž‹Â?‹– ‘Â? –Š‡ ƒÂ?‘—Â?– ‘ˆ …‘Â?–”‹„—–‹‘Â?• ”‡…‡‹˜‹Â?‰ ˆƒ˜‘”ƒ„Ž‡ –ƒš –”‡ƒ–Â?‡Â?–Ǥ Š‡ Ž‹Â?‹–•ǡ –›’‹…ƒŽŽ› ‡š’”‡••‡† ĥ ’‡”…‡Â?–ƒ‰‡• ‘ˆ ƒ˜‡”ƒ‰‡ ‡…‘Â?‘Â?› ™‹†‡ ™ƒ‰‡ ‘” ĥ ƒ ’‡”…‡Â?–ƒ‰‡ ‘ˆ ‘™Â? ™ƒ‰‡ǡ ƒ”‡ Â?‡ƒÂ?– –‘ ”‡†—…‡ –Š‡ Ž‘•• ‘ˆ –ƒš ”‡˜‡Â?—‡ „› ”‡†—…‹Â?‰ –Š‡ ‡š–‡Â?– ‘ˆ ˆƒ˜‘”ƒ„Ž‡ –”‡ƒ–Â?‡Â?– ˆ‘” Š‹‰Š‡” ‹Â?…‘Â?‡ ‹Â?†‹˜‹†—ƒŽ• ™Š‘ ƒ”‡ Ž‡•• Ž‹Â?‡Ž› –‘ ˆƒŽŽ ‹Â?–‘ ‘Ž† ƒ‰‡ ’‘˜‡”–› ƒÂ?† Â?‘”‡ Ž‹Â?‡Ž› –‘ •ƒ˜‡ ƒ •‹‰Â?‹ˆ‹…ƒÂ?– ’‘”–‹‘Â? ‘ˆ –Š‡‹” ‹Â?…‘Â?‡ ‡˜‡Â? ™‹–Š‘—– ‹Â?…‡Â?–‹˜‡•Ǥ ͵ͳ Matching Contributions. Â? ƒŽ–‡”Â?ƒ–‹˜‡ –‘ ˆƒ˜‘”ƒ„Ž‡ –ƒš –”‡ƒ–Â?‡Â?– ‹• ’”‘˜‹†‹Â?‰ ‡š’Ž‹…‹– Â?ƒ–…Š‹Â?‰ …‘Â?–”‹„—–‹‘Â?• ˆ”‘Â? –Š‡ ‰‘˜‡”Â?Â?‡Â?–Ǥ Š‡ ‹†‡ƒ ‹• –Šƒ– –Š‡ ‰‘˜‡”Â?Â?‡Â?– …Šƒ”‰‡• –ƒš ‘Â? –Š‡ ‹Â?…‘Â?‡ —•‡† ˆ‘” –Š‡ …‘Â?–”‹„—–‹‘Â?Ç¡ „—– –Š‡Â? —•‡• –Šƒ– Â?‘Â?‡› –‘ Â?ƒÂ?‡ ƒ †‹”‡…– …‘Â?–”‹„—–‹‘Â? –‘ –Š‡ ‹Â?†‹˜‹†—ƒŽǯ• ƒ……‘—Â?– ‹Â? ’”‘’‘”–‹‘Â? –‘ –Š‡ …‘Â?–”‹„—–‹‘Â? Â?ƒ†‡ǡ •‘ –Šƒ– –Š‡ ‡Â?–‹”‡ ˆ‘”‰‘Â?‡ Dz–ƒš ”‡„ƒ–‡dz ‰‡–• •ƒ˜‡†Ǥ Š‹• ‹• ƒ ’ƒ”–‹…—Žƒ”Ž› —•‡ˆ—Ž ƒŽ–‡”Â?ƒ–‹˜‡ —Â?†‡” ’”‘‰”‡••‹˜‡ ‹Â?…‘Â?‡ –ƒš ”ƒ–‡•ǡ ™Š‡”‡ –Š‡ ‰‘˜‡”Â?Â?‡Â?– Â?‹‰Š– Â?‘– ™ƒÂ?– –‘ ”‡™ƒ”† Š‹‰Š‡” ‹Â?…‘Â?‡ ’‡‘’Ž‡ ™Š‘ Šƒ˜‡ Â?ƒ”‰‹Â?ƒŽ –ƒš ”ƒ–‡• Â?‘”‡ –ŠƒÂ? Ž‘™‡” ‹Â?…‘Â?‡ ’‡‘’Ž‡ ™Š‘ Šƒ˜‡ Ž‘™‡” Â?ƒ”‰‹Â?ƒŽ –ƒš ”ƒ–‡• ˆ‘” –Š‡ •ƒÂ?‡ „‡Šƒ˜‹‘”Ǥ International Practice and Georgia. Â? ’”ƒ…–‹…‡ǡ Â?‘•– …‘—Â?–”‹‡• ƒŽŽ‘™ –ƒš ‡š‡Â?’– …‘Â?–”‹„—–‹‘Â?• ƒÂ?† ‹Â?•–‡ƒ† –ƒš ™‹–Š†”ƒ™ƒŽ• ˆ‘ŽŽ‘™‹Â?‰ ”‡–‹”‡Â?‡Â?–ǤͳͶ Â? –Š‡ …ƒ•‡ ‘ˆ ‡‘”‰‹ƒǡ –Š‡”‡ ‹• Â?‘ ’”‡ˆ‡”‡Â?–‹ƒŽ –ƒš –”‡ƒ–Â?‡Â?– ‘ˆ ’‡Â?•‹‘Â? …‘Â?–”‹„—–‹‘Â?•Ǥ ÂŽÂŽ …‘Â?–”‹„—–‹‘Â?• ƒ”‡ Â?ƒ†‡ „ƒ•‡† ‘Â? ƒˆ–‡”Ǧ–ƒš ‹Â?…‘Â?‡Ǥ —”–Š‡”Â?‘”‡ǡ ‹Â?–‡”‡•– ƒÂ?† ‘–Š‡” ”‡–—”Â?• ‡ƒ”Â?‡† ‘Â? ’‡Â?•‹‘Â? ˆ—Â?†• ƒ”‡ ƒŽ•‘ •—„Œ‡…– –‘ –ƒšƒ–‹‘Â?Ç¡ ™Š‡”‡ƒ• ‹Â?–‡”‡•– ‡ƒ”Â?‡† ‘Â? ƒ •ƒ˜‹Â?‰• ƒ……‘—Â?– ‹• ‘Â?Ž› •—„Œ‡…– –‘ Í· ’‡”…‡Â?– ™‹–ŠŠ‘Ž†‹Â?‰Ǥ ‘” –Š‹• ”‡ƒ•‘Â?Ç¡ –Š‡”‡ Â?ƒ› ‹Â? ˆƒ…– „‡ ƒ –ƒš †‹•‹Â?…‡Â?–‹˜‡ –‘ •ƒ˜‹Â?‰ –Š”‘—‰Š ’‡Â?•‹‘Â? ˆ—Â?†•Ǥ ‡Â?‘˜‹Â?‰ ƒÂ?› •—…Š –ƒš †‹•‹Â?…‡Â?–‹˜‡ •Š‘—Ž† „‡ ƒ ˆ‹”•– •–‡’ ‹Â? ‡Â?…‘—”ƒ‰‹Â?‰ Ž‘Â?‰ –‡”Â? •ƒ˜‹Â?‰• ˆ‘” ”‡–‹”‡Â?‡Â?– ‹Â? ‡‘”‰‹ƒǤ ʹǤ͵͵Ǥ A final area that requires attention in voluntary pension schemes is the availability of sound long term investment instruments. Š‡ Žƒ…Â? ‘ˆ Ž‘Â?‰ –‡”Â? ‹Â?˜‡•–Â?‡Â?– ‹Â?•–”—Â?‡Â?–• ‹• ’ƒ”–‹…—Žƒ”Ž› ƒ…—–‡ ‹Â? ‡‘”‰‹ƒǡ ƒÂ?† …—””‡Â?– ’‡Â?•‹‘Â? ˆ—Â?†• ‡ƒ”Â? Ž‘™ ”‡–—”Â?•Ǥ Š‹• Žƒ…Â? ‘ˆ ˆ‹Â?ƒÂ?…‹ƒŽ †‡˜‡Ž‘’Â?‡Â?– Â?ƒ› „‡ †—‡ –‘ ƒÂ? ‹Â?•—ˆˆ‹…‹‡Â?– ’‘‘Ž ‘ˆ Ž‘Â?‰ –‡”Â? •ƒ˜‹Â?‰•ǡ –Š—• •—‰‰‡•–‹Â?‰ ƒ …Š‹…Â?‡Â? ƒÂ?† ‡‰‰ ’”‘„Ž‡Â?Ǥ Š‡ Žƒ…Â? ‘ˆ Ž‘Â?‰ –‡”Â? •ƒ˜‹Â?‰• Â?ƒ› ”‡ˆŽ‡…– ƒ Ž‘™ Ž‡˜‡Ž ‘ˆ –”—•– ‹Â? †‘Â?‡•–‹… ˆ‹Â?ƒÂ?…‹ƒŽ Â?ƒ”Â?‡–•Ǥ ††”‡••‹Â?‰ –Š‹• ™‹ŽŽ ”‡“—‹”‡ ƒÂ? ‡š–‡Â?†‡† ’‡”‹‘† ‘ˆ ˆ‹Â?ƒÂ?…‹ƒŽ •–ƒ„‹Ž‹–›ǡ „—– ‹– ™‹ŽŽ ƒŽ•‘ ”‡“—‹”‡ ‡ˆˆ‘”–• –‘ ‹†‡Â?–‹ˆ› •‘—Â?† ‹Â?•–”—Â?‡Â?–• ˆ‘” Ž‘Â?‰ –‡”Â? ”‡–‹”‡Â?‡Â?– •ƒ˜‹Â?‰• ‹Â? ‡‘”‰‹ƒǤ 2.4. Social Assistance ʹǤ͵ͶǤ Social assistance to poor and vulnerable households in Georgia comprises targeted social assistance (TSA) and several categorical benefits. Š‡ Žƒ––‡” ‹Â?…Ž—†‡ –Š‡ Š‘—•‡Š‘Ž† ƒŽŽ‘™ƒÂ?…‡ǡ ™Š‹…Š Â?‘Â?‡–‹œ‡• ’ƒ•– ‹Â?ǦÂ?‹Â?† „‡Â?‡ˆ‹–• –‘ …‡”–ƒ‹Â? ‰”‘—’• È‹Â?ƒ‹Â?Ž› ™ƒ” ˜‡–‡”ƒÂ?• ƒÂ?† –Š‡‹” •—”˜‹˜‘”•Ȍǡ ƒÂ?† –Š‡ ˆƒÂ?‹Ž› ƒŽŽ‘™ƒÂ?…‡ ȋˆ‘” ’‘‘” ’‡Â?•‹‘Â?‡”•ǡ ‘”’ŠƒÂ?•ǡ †‹•ƒ„Ž‡† …Š‹Ž†”‡Â?Ç¡ –Š‡ „Ž‹Â?†ǡ ƒÂ?† Žƒ”‰‡ ˆƒÂ?‹Ž‹‡•ȌǤ ‘•– …ƒ–‡‰‘”‹…ƒŽ „‡Â?‡ˆ‹–• ƒ”‡ „‡‹Â?‰ ’Šƒ•‡† ‘—– ƒÂ?† ƒ”‡ ‡š’‡…–‡† –‘ „‡ ‰”ƒ†—ƒŽŽ› ”‡’Žƒ…‡† „›  ȋ‡Ǥ‰Ǥǡ –Š‡ ˆƒÂ?‹Ž› ƒŽŽ‘™ƒÂ?…‡ …ƒÂ?Â?‘– „‡ ”‡…‡‹˜‡† Œ‘‹Â?–Ž› ™‹–Š  ȌǤ ʹǤ͵ͷǤ Social assistance programs are common around the world and typically have multiple objectives. Š‡•‡ ƒ”‡ •‘Â?‡–‹Â?‡• ‰”‘—’‡† ‹Â?–‘ –Š”‡‡ …ƒ–‡‰‘”‹‡•ǡ Dz’”‡˜‡Â?–‹‘Â?dz ȋƒ‰ƒ‹Â?•– ‹Â?…‘Â?‡ ƒÂ?† ‡š’‡Â?†‹–—”‡ •Š‘…Â?•ǡ •—…Š ĥ –Š”‘—‰Š —Â?‡Â?’Ž‘›Â?‡Â?– ‘” †‹•ƒ„‹Ž‹–› ‹Â?•—”ƒÂ?…‡ȌǢ Dz’”‘–‡…–‹‘Â?dz ȋˆ”‘Â? †‡•–‹–—–‹‘Â? ƒÂ?† …ƒ–ƒ•–”‘’Š‹… Š—Â?ƒÂ? …ƒ’‹–ƒŽ Ž‘••ǡ •—…Š ĥ –Š”‘—‰Š …ƒ•Š ‘” ‹Â?ǦÂ?‹Â?† –”ƒÂ?•ˆ‡”• ‘” •—„•‹†‹‡•ȌǢ ƒÂ?† Dz’”‘Â?‘–‹‘Â?dz ȋ‘ˆ ‹Â?’”‘˜‡† ‘’’‘”–—Â?‹–‹‡•ǡ Ž‹˜‡Ž‹Š‘‘†•ǡ ƒÂ?† „‡––‡” Œ‘„•ǡ •—…Š ĥ –Š”‘—‰Š •Â?‹ŽŽ•Ǧ„—‹Ž†‹Â?‰ ’”‘‰”ƒÂ?• ƒÂ?† †‡Â?ƒÂ?† ‡Â?ŠƒÂ?…‡Â?‡Â?– ˆ‘” ‡†—…ƒ–‹‘Â? ƒÂ?†Ȁ‘” Â?—–”‹–‹‘Â? ’”‘‰”ƒÂ?• ˜‹ƒ …‘Â?†‹–‹‘Â?ƒŽ …ƒ•Š –”ƒÂ?•ˆ‡”•ȌǤ Š‹• …Šƒ’–‡” ƒ••‡••‡• –Š‡ ’‡”ˆ‘”Â?ƒÂ?…‡ ‘ˆ ‡‘”‰‹ƒǯ• •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ’”‘‰”ƒÂ?• ™‹–Š ”‡ˆ‡”‡Â?…‡ –‘ ƒ ”ƒÂ?‰‡ ‘ˆ ‹Â?†‹…ƒ–‘”• –Šƒ– ”‡ˆŽ‡…– –Š‡•‡ ‘„Œ‡…–‹˜‡•Ǥ Š‡•‡ ‹Â?…Ž—†‡ ƒ†‡“—ƒ…› ȋ’”‘‰”ƒÂ? …‘˜‡”ƒ‰‡ ƒÂ?† ‰‡Â?‡”‘•‹–›Ȍǡ ‡“—‹–ƒ„‹Ž‹–› ȋ–ƒ”‰‡–‹Â?‰ ‘ˆ ‹Â?–‡Â?†‡† ‰”‘—’•Ȍǡ •—•–ƒ‹Â?ƒ„‹Ž‹–›ǡ ƒÂ?† ‹Â?…‡Â?–‹˜‡ …‘Â?’ƒ–‹„‹Ž‹–› ȋƒ˜‘‹†‹Â?‰ —Â?‹Â?–‡Â?†‡† „‡Šƒ˜‹‘” …ŠƒÂ?‰‡• „› „‡Â?‡ˆ‹…‹ƒ”› Š‘—•‡Š‘Ž†•ȌǤ Georgia’s TSA program: Design, Coverage, and Poverty Impact ͳͶ —”–Š‡” †‡–ƒ‹Ž• ƒ”‡ ƒ˜ƒ‹Žƒ„Ž‡ ‹Â? Š‹–‡Š‘—•‡ǡ ƒš ”‡ƒ–Â?‡Â?– ‘ˆ —Â?†‡† ‡Â?•‹‘Â?•ǡ ‘…‹ƒŽ ”‘–‡…–‹‘Â? ‘”Â?‹Â?‰ ƒ’‡” ‘Ǥ ͻͻͳͲǡ ‘”Ž† ƒÂ?Â?Ç¡ ͳͻͻͻ ƒÂ?† ‘ŽœÂ?ƒÂ?Â? ƒÂ?† —˜‡Â?Ç¡ †‡“—ƒ…› ‘ˆ ‡–‹”‡Â?‡Â?– Â?…‘Â?‡ ƒˆ–‡” ‡Â?•‹‘Â? ‡ˆ‘”Â?• ‹Â? ‡Â?–”ƒŽǡ ƒ•–‡”Â?Ç¡ ƒÂ?† ‘—–Š‡”Â? —”‘’‡ǡ ‘”Ž† ƒÂ?Â?Ç¡ ʹͲͲͻǤ ͵ʹ ʹǤ͵͸Ǥ TSA is aimed at providing income support and consumption smoothing among the very poor households in Georgia. – ™ƒ• Žƒ—Â?…Š‡† ‹Â? —Ž› ʹͲͲ͸ǡ ƒˆ–‡” ͳͺ Â?‘Â?–Š• ‘ˆ ‹Â?–‡Â?•‡ ’”‡’ƒ”ƒ–‹‘Â?Ç¡ ‹Â?…Ž—†‹Â?‰ †‡˜‡Ž‘’‹Â?‰ ƒÂ?† –‡•–‹Â?‰ ƒ ’”‘š› Â?‡ƒÂ?• –ƒ”‰‡–‹Â?‰ Â?‡…ŠƒÂ?‹•Â?Ç¡ †‡•‹‰Â?‹Â?‰ ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ’”‘…‡†—”‡•ǡ ‡•–ƒ„Ž‹•Š‹Â?‰ ƒÂ? ƒ‰‡Â?…›ǡ Š‹”‹Â?‰ ƒÂ?† –”ƒ‹Â?‹Â?‰ ‘ˆ •–ƒˆˆǡ †‡˜‡Ž‘’‹Â?‰ ƒÂ? ƒ—–‘Â?ƒ–‡† Â?ƒÂ?ƒ‰‡Â?‡Â?– ‹Â?ˆ‘”Â?ƒ–‹‘Â? •›•–‡Â? È‹ Ȍǡ ƒÂ?† ”‡…‡‹˜‹Â?‰ ƒ’’Ž‹…ƒ–‹‘Â?• ƒÂ?† …‘ŽŽ‡…–‹Â?‰ ƒÂ?† ’”‘…‡••‹Â?‰ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‘Â? Â?‘”‡ –ŠƒÂ? ʹͲͲǡͲͲͲ ƒ’’Ž‹…ƒÂ?– Š‘—•‡Š‘Ž†• ˆ”‘Â? ƒŽŽ ‘˜‡” ‡‘”‰‹ƒǤ Š‡ ’”‘š› Â?‡ƒÂ?•Ǧ–‡•–‹Â?‰ Â?‡…ŠƒÂ?‹•Â? ™ƒ• …Š‘•‡Â? ĥ •—‹–ƒ„Ž‡ ˆ‘” ‡‘”‰‹ƒ „‡…ƒ—•‡ ‹Â?…‘Â?‡ ˆ”‘Â? ˆ‘”Â?ƒŽ •‘—”…‡• ‹• ƒ Ž‡•• ƒ……—”ƒ–‡ ‹Â?†‹…ƒ–‘” ‘ˆ Š‘—•‡Š‘Ž† ™‡Žˆƒ”‡Ǥ ÂŽÂŽ Š‘—•‡Š‘Ž†• ƒ”‡ ‡Â?–‹–Ž‡† –‘ ƒ’’Ž› ˆ‘”  Ǥ ʹǤ͵͹Ǥ TSA beneficiary households receive GEL 30 monthly as a base benefit plus GEL 24 for each additional household member. ‘–Š ‡Â?”‘ŽÂ?‡Â?– ƒÂ?† ‡š’‡Â?†‹–—”‡• Šƒ˜‡ „‡‡Â? ”‡Žƒ–‹˜‡Ž› •–ƒ„Ž‡ †—”‹Â?‰ –Š‡ ’ƒ•– –™‘ ›‡ƒ”•Ǥ • ‘ˆ Â?‹†ǦʹͲͳͳǡ –Š‡”‡ ™‡”‡ ƒ„‘—– Ͷ͵ͲǡͲͲͲ ”‡…‹’‹‡Â?–• ‘—– ‘ˆ ƒ –‘–ƒŽ ͳǤ͹ Â?‹ŽŽ‹‘Â? ‹Â?†‹˜‹†—ƒŽ• ”‡‰‹•–‡”‡† ‹Â? –Š‡ †ƒ–ƒ„ƒ•‡ ȋƒ„‘—– ͶͲ ’‡”…‡Â?– ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â? ‘ˆ ‡‘”‰‹ƒȌǤ  …‘˜‡”ƒ‰‡ ‹• ƒ„‘—– ͳͲ ’‡”…‡Â?– ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â?Ç¡ ”‘—‰ŠŽ› …‘””‡•’‘Â?†‹Â?‰ –‘ –Š‡ ‡•–‹Â?ƒ–‡† ‡š–”‡Â?‡ ’‘˜‡”–› Š‡ƒ†…‘—Â?– ‹Â? ‡‘”‰‹ƒǤ Â? ʹͲͳͳ –Š‡  „—†‰‡– ™ƒ• Œ—•– —Â?†‡”  ͳͷͲ Â?‹ŽŽ‹‘Â? ƒÂ?Â?—ƒŽŽ›ǡ ‘” ƒ„‘—– ͲǤ͹ ’‡”…‡Â?– ‘ˆ Ç¡ ™Š‹…Š ‹• •‹Â?‹Žƒ” –‘ •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ’”‘‰”ƒÂ?• ‡Ž•‡™Š‡”‡ ‹Â? –Š‡ ”‡‰‹‘Â?Ǥ ‹‰—”‡ ʹǤͳͳ Šƒ• ˆ—”–Š‡” †‡–ƒ‹Ž•Ǥ Figure 2.11: TSA in Georgia  ‡Â?”‘ŽÂ?‡Â?–ǡ ʹͲͲͺǦͳͳ ‘Â?–ŠŽ›  ‡š’‡Â?†‹–—”‡•ǡ ʹͲͲͺǦͳͳ È‹Â?—Â?„‡” ‘ˆ ’‡”•‘Â?•Ȍ ȋ‹Â? ƒ”‹ ’‡” Â?‘Â?–ŠȌ 14,000,000 Population in database TSA recipients 2,000,000 12,000,000 1,800,000 1,600,000 10,000,000 1,400,000 8,000,000 1,200,000 1,000,000 6,000,000 800,000 600,000 4,000,000 400,000 200,000 2,000,000 Ͳ 0 Source:  Ǥ ʹǤ͵ͺǤ The TSA program played a helpful role in mitigating the impact of the recent financial crisis on poverty in Georgia. Â? ʹͲͲͻǡ –Š‡  Â?‘Â?–ŠŽ› –‘’Ǧ—’ ’‡” ƒ††‹–‹‘Â?ƒŽ ˆƒÂ?‹Ž› Â?‡Â?„‡” ™ƒ• †‘—„Ž‡† ˆ”‘Â?  ͳʹ –‘  ʹͶǡ ”‡•—Ž–‹Â?‰ ‹Â? ƒ •Šƒ”’ ”‹•‡ ‹Â? ‡š’‡Â?†‹–—”‡•Ǥ  …‘˜‡”ƒ‰‡ ƒŽ•‘ ‡š’ƒÂ?†‡†ǡ ƒŽ–Š‘—‰Š Â?‘”‡ Â?‘†‡•–Ž›ǡ ˆ”‘Â? ƒ„‘—– ͶͲͲǡͲͲͲ „‡Â?‡ˆ‹…‹ƒ”‹‡• ‹Â? —Ž› ʹͲͲͺ –‘ ƒ„‘—– Ͷ͹ͷǡͲͲͲ ‹Â? —Ž› ʹͲͲͻǤ Ž”‡ƒ†› Šƒ˜‹Â?‰ ƒ –ƒ”‰‡–‡† •ƒˆ‡–› Â?‡– ’”‘‰”ƒÂ? ‹Â? ’Žƒ…‡ …Ž‡ƒ”Ž› ˆƒ…‹Ž‹–ƒ–‡† –Š‹• ’‘Ž‹…› ”‡•’‘Â?•‡ǡ ƒÂ?† ‰ƒ˜‡ ‡‘”‰‹ƒ ƒ Š‡ƒ† •–ƒ”– ‹Â? ƒ††”‡••‹Â?‰ –Š‡ ‹Â?’ƒ…– ‘ˆ –Š‡ …”‹•‹• ‘Â? ˜—ŽÂ?‡”ƒ„Ž‡ Š‘—•‡Š‘Ž†•Ǥ Š‡  ’”‘‰”ƒÂ? ‹Â? ‡‘”‰‹ƒ ’”‘˜‡† –‘ „‡ ‘Â?‡ ‘ˆ –Š‡ „‡––‡” ’‡”ˆ‘”Â?‡”• ‹Â? –Š‡ ”‡‰‹‘Â? ‹Â? –Š‹• ”‡•’‡…–Ǥ ‘™‡˜‡”ǡ ƒ ”‡Žƒ–‹˜‡ •Š‘”–…‘Â?‹Â?‰ ‹Â? ‡‘”‰‹ƒǯ• …”‹•‹• ”‡•’‘Â?•‡ †‡”‹˜‡† ˆ”‘Â? –Š‡ ƒ„•‡Â?…‡ ‘ˆ Dz•‡ŽˆǦƒ†Œ—•–‹Â?‰dz ’”‘‰”ƒÂ?• •—…Š ĥ ’—„Ž‹… ™‘”Â?• ‘” —Â?‡Â?’Ž‘›Â?‡Â?– ‹Â?•—”ƒÂ?…‡ǡ ™Š‹…Š ‡Ž•‡™Š‡”‡ ‹Â? –Š‡ ”‡‰‹‘Â? ™ƒ• ‘Â?‡ ‘ˆ –Š‡ Â?ƒ‹Â? Dzƒ—–‘Â?ƒ–‹… •–ƒ„‹Ž‹œ‡”•dz ȋ‡š’ƒÂ?†‹Â?‰ ‹Â? Šƒ”† –‹Â?‡• ƒÂ?† …‘Â?–”ƒ…–‹Â?‰ ͵͵ ™Š‡Â? –Š‡ ‡…‘Â?‘Â?› ‹Â?’”‘˜‡•Ȍ ƒÂ?‘Â?‰ –Š‡ –‘‘Ž• ƒ˜ƒ‹Žƒ„Ž‡ –‘ ’‘Ž‹…›ǦÂ?ƒÂ?‡”•Ǥͳͷ ‡Ž›‹Â?‰ ‘Â? –Š‡  ’”‘‰”ƒÂ? ȋ‘” ‹Â?†‡‡† ’‡Â?•‹‘Â? „‡Â?‡ˆ‹–•ǡ ™Š‹…Š ™‡”‡ ‹Â?…”‡ƒ•‡† ˆ”‘Â?  ͹Ͳ –‘ ͺͲ ’‡” Â?‘Â?–Š †—”‹Â?‰ –Š‡ …”‹•‹•Ȍ ”‡“—‹”‡• …‘Â?Â?‹––‹Â?‰ ƒ††‹–‹‘Â?ƒŽ ȋƒÂ?† •…ƒ”…‡Ȍ ˆ‹•…ƒŽ ”‡•‘—”…‡• –Šƒ– …ƒÂ?Â?‘– „‡ ‡ƒ•‹Ž› •…ƒŽ‡† „ƒ…Â? ‘Â?…‡ ‡…‘Â?‘Â?‹… ‰”‘™–Š ”‡•—Â?‡•Ǥ Figure 2.12: TSA Targeting and Coverage By Decile, 2009Ǧ11 Ψ ‘ˆ –‘–ƒŽ  „‡Â?‡ˆ‹–• ”‡…‡‹˜‡† „› ‡ƒ…Š †‡…‹Ž‡ Ψ ‘ˆ ‡ƒ…Š †‡…‹Ž‡ ”‡…‡‹˜‹Â?‰  70% 70% 60% 60% 50% 50% 40% 40% 30% 2009 30% 2009 2011 2011 20% 20% 10% 10% 0% 0% 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Decile Decile Source: –ƒˆˆ ‡•–‹Â?ƒ–‡• „ƒ•‡† ‘Â?   ʹͲͲͻǦʹͲͳͳǤ Figure 2.13: Coverage and Targeting of TSA in International Context ȋ’‡”…‡Â?– ‘ˆ „‡Â?‡ˆ‹–• –‘ Ž‘™‡•– “—‹Â?–‹Ž‡ ƒÂ?† ’‡”…‡Â?– ‘ˆ Ž‘™‡•– “—‹Â?–‹Ž‡ ”‡…‡‹˜‹Â?‰ „‡Â?‡ˆ‹–•Ȍ Georgia's TSA: Coverage and targeting in international context 100 90 Targeting (% of benefits going to lowest quintile) Romania GMI 80 Kosovo SA 70 Georgia TSA 60 Armenia FPB 50 Serbia CA 40 Latvia GMI 30 20 10 0 0 5 10 15 20 25 30 35 40 45 50 Source: WB ECA SP database Coverage (% of lowest quintile receiving benefits) Note: ‡ˆ‡”• –‘ Â?ƒ‹Â? Žƒ•–Ǧ”‡•‘”– •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ’”‘‰”ƒÂ?• SourceÇ£  •‘…‹ƒŽ ’”‘–‡…–‹‘Â? †ƒ–ƒ„ƒ•‡ ʹǤ͵ͻǤ Targeting and coverage represent two of the most common performance indicators used to assess social assistance programs around the world. ƒ”‰‡–‹Â?‰ ‹• ƒ Â?‡ƒ•—”‡ ‘ˆ Š‘™ ‡“—‹–ƒ„Ž‡ ƒ ’”‘‰”ƒÂ? ‹•ǡ ƒÂ?† …ƒÂ? „‡ …ƒ’–—”‡† „› –Š‡ ’‡”…‡Â?– ‘ˆ –‘–ƒŽ „‡Â?‡ˆ‹–• ”‡…‡‹˜‡† „› ‡ƒ…Š …‘Â?•—Â?’–‹‘Â? †‡…‹Ž‡ È‹Â?‡ƒ•—”‡† Â?‡– ‘ˆ –Š‡ –”ƒÂ?•ˆ‡”ȌǤ ‹Â?…‡ –Š‡ Â?ƒ‹Â? ‘„Œ‡…–‹˜‡ ‘ˆ  ‹• –‘ ’”‘˜‹†‡ ‹Â?…‘Â?‡ •—’’‘”– –‘ –Š‘•‡ Ž‹˜‹Â?‰ ‹Â? ‡š–”‡Â?‡ ’‘˜‡”–›ǡ –ƒ”‰‡–‹Â?‰ ‹• ƒ Â?‡› ‹Â?†‹…ƒ–‘”Ǥ ‹‰—”‡ ʹǤͳʹ ‹Â?†‹…ƒ–‡• –Šƒ– Â?‡ƒ”Ž› ͷͲ ’‡”…‡Â?– ‘ˆ  „‡Â?‡ˆ‹–• ”‡ƒ…Š –Š‡ „‘––‘Â? †‡…‹Ž‡ ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â?Ç¡ ƒÂ?† ‘˜‡” ͳͷ‡‡ ‘”Ž† ƒÂ?Â? ȋʹͲͳͳƒȌǡ DzŠ‡ ‘„• ”‹•‹•dz ƒÂ?† ‘”Ž† ƒÂ?Â? ȋʹͲͳͳ„Ȍǡ Dz ‘ ‘…‹ƒŽ ‡Â?‡ˆ‹–• ‡•’‘Â?† –‘ ”‹•‡•ǫ ˜‹†‡Â?…‡ ˆ”‘Â? —”‘’‡ ƒÂ?† ‡Â?–”ƒŽ •‹ƒdz ȋ†”ƒˆ–ȌǤ ͵Ͷ –™‘Ǧ–Š‹”†• –‘ –Š‡ „‘––‘Â? “—‹Â?–‹Ž‡Ǥ ‘ Â?‘”‡ –ŠƒÂ? ͳͷ ’‡”…‡Â?– ‘ˆ –‘–ƒŽ ”‡•‘—”…‡• ‰‘ –‘ –Š‡ –‘’ ŠƒŽˆ ‘ˆ –Š‡ †‹•–”‹„—–‹‘Â?Ǥ Š‹• ‹• ”‡Žƒ–‹˜‡Ž› —Â?…ŠƒÂ?‰‡† •‹Â?…‡ ʹͲͲͻǤ ‘˜‡”ƒ‰‡ ‹• ƒÂ? ‹Â?†‹…ƒ–‘” ‘ˆ ƒ ’”‘‰”ƒÂ?ǯ• ‘˜‡”ƒŽŽ ƒ†‡“—ƒ…› ȋƒÂ? ƒŽ–‡”Â?ƒ–‹˜‡ ‹Â?†‹…ƒ–‘”ǡ ‰‡Â?‡”‘•‹–› ‘ˆ –Š‡ –”ƒÂ?•ˆ‡” –‘ ‹Â?†‹˜‹†—ƒŽ Š‘—•‡Š‘Ž†•ǡ ‹• †‹•…—••‡† „‡Ž‘™Ȍǡ ƒÂ?† …ƒÂ? „‡ Â?‡ƒ•—”‡† ĥ –Š‡ ’‡”…‡Â?– ‘ˆ ‡ƒ…Š …‘Â?•—Â?’–‹‘Â? †‡…‹Ž‡ ”‡…‡‹˜‹Â?‰  Ǥ Š‹• ‹• •Š‘™Â? ‹Â? –Š‡ ”‹‰Š–ǦŠƒÂ?† ’ƒÂ?‡Ž ‘ˆ ‹‰—”‡ ʹǤͳʹǤ ÂŽÂ?‘•– ͸Ͳ ’‡”…‡Â?– ‘ˆ –Š‡ „‘––‘Â? †‡…‹Ž‡ ‹• …‘˜‡”‡† „›  Ç¡ ƒÂ?† ƒ„‘—– ʹͲ ’‡”…‡Â?– ‘ˆ –Š‡ •‡…‘Â?† †‡…‹Ž‡Ǥ ‘˜‡”ƒ‰‡ ‘ˆ –Š‡ ’‘‘” Šƒ• –Š—• ‹Â?’”‘˜‡† •‹Â?…‡ ʹͲͲͻ ȋƒŽ–Š‘—‰Š •ƒÂ?’Ž‡ ƒ––”‹–‹‘Â? ’‘•‡• ƒ …ŠƒŽŽ‡Â?‰‡ –‘ ’”‡…‹•‡ ‡•–‹Â?ƒ–‹‘Â?ȌǤ ʹǤͶͲǤ Compared to other social assistance programs in the region, Georgia’s TSA is an average performer with respect to targeting and well above average in terms of coverage. ‘™‡˜‡”ǡ  ‹• ‘Â?‡ ‘ˆ –Š‡ •–”‘Â?‰‡” ’”‘‰”ƒÂ?• ‹Â? –Š‡ ”‡‰‹‘Â? ‹ˆ –ƒ”‰‡–‹Â?‰ ƒÂ?† …‘˜‡”ƒ‰‡ ƒ”‡ ƒ••‡••‡† Œ‘‹Â?–Ž›ǡ ĥ ‹Â? ‹‰—”‡ ʹǤͳ͵Ǥ Â? ‰‡Â?‡”ƒŽǡ ‹– ‹• ‡ƒ•‹‡” –‘ ƒ…Š‹‡˜‡ ‰‘‘† –ƒ”‰‡–‹Â?‰ ‹Â? •Â?ƒŽŽ‡” ’”‘‰”ƒÂ?• ȋ‹Ǥ‡Ǥǡ ™‹–Š Ž‡•• …‘˜‡”ƒ‰‡Ȍǡ ƒÂ?† ‡ƒ•‹‡” –‘ ƒ…Š‹‡˜‡ Š‹‰Š‡” …‘˜‡”ƒ‰‡ „› –‘Ž‡”ƒ–‹Â?‰ ™‡ƒÂ?‡” –ƒ”‰‡–‹Â?‰Ǥ Ž‘Â?‰ ™‹–Š ’”‘‰”ƒÂ?• ‹Â? ”Â?‡Â?‹ƒ ƒÂ?† ‘•‘˜‘ǡ ‡‘”‰‹ƒǯ•  Â?ƒÂ?ƒ‰‡• –‘ ƒ…Š‹‡˜‡ ƒ ‰‘‘† …‘Â?„‹Â?ƒ–‹‘Â? ™‹–Š ”‡‰ƒ”† –‘ „‘–Š ’‡”ˆ‘”Â?ƒÂ?…‡ ‹Â?†‹…ƒ–‘”• ȋ‹Ǥ‡Ǥǡ ‹– ‹• ‹Â? –Š‡ —’’‡”Ǧ”‹‰Š– “—ƒ†”ƒÂ?– ‘ˆ –Š‡ •…ƒ––‡”Ǧ’Ž‘–ȌǤ – •Š‘—Ž† „‡ Â?‘–‡† –Šƒ– –Š‡•‡ …‘Â?’ƒ”‹•‘Â?• Ž‘‘Â? ƒ– ’‡”ˆ‘”Â?ƒÂ?…‡ ‘ˆ –Š‡ Â?ƒ‹Â? Žƒ•–Ǧ”‡•‘”– •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ’”‘‰”ƒÂ? ‹Â? ‡ƒ…Š …‘—Â?–”›Ǥ Ž•‡™Š‡”‡ ‹Â? –Š‡ ”‡‰‹‘Â? –Š‡”‡ Â?ƒ› „‡ Â?ƒÂ?› ƒ††‹–‹‘Â?ƒŽ ’”‘‰”ƒÂ?• ȋ‡Ǥ‰Ǥǡ ™‹–Š …ƒ–‡‰‘”‹…ƒŽ ‹Â?•–‡ƒ† ‘ˆ Â?‡ƒÂ?•Ǧ–‡•–‡† „‡Â?‡ˆ‹–•Ȍǡ ‹Â? ™Š‹…Š …ƒ•‡ ‘˜‡”ƒŽŽ …‘˜‡”ƒ‰‡ ™‘—Ž† „‡ Š‹‰Š‡”Ǥ ʹǤͶͳǤ An ongoing challenge is to improve upon the current TSA coverage of the bottom decile of the population, even while acknowledging that it already compares favorably with other countries. • •Š‘™Â? ‹Â? ‹‰—”‡ ʹǤͳʹǡ ‹Â? ‡š…‡•• ‘ˆ ͶͲ ’‡”…‡Â?– ‘ˆ –Š‡ „‘––‘Â? †‡…‹Ž‡ǡ ™Š‘ •Š‘—Ž† ‹Â? ’”‹Â?…‹’Ž‡ ”‡…‡‹˜‡  Ç¡ ‹• …—””‡Â?–Ž› Â?‘– „‡Â?‡ˆ‹–‹Â?‰Ǥ ƒ”‹‘—• ”‡ƒ•‘Â?• Â?ƒ› ‡š’Žƒ‹Â? –Š‹•ǡ ‹Â?…Ž—†‹Â?‰ ƒ Žƒ…Â? ‘ˆ ƒ™ƒ”‡Â?‡••ǡ Žƒ…Â? ‘ˆ —Â?†‡”•–ƒÂ?†‹Â?‰ ‘ˆ Š‘™ –Š‡ ’”‘‰”ƒÂ? ™‘”Â?•ǡ ‘” –Š‡ ‹Â?…‘””‡…– ‡š…Ž—•‹‘Â? ‘ˆ –Š‘•‡ ™Š‘ †‘ ƒ’’Ž›Ǥ  Šƒ• —Â?†‡”–ƒÂ?‡Â? ƒ •–—†› ‘ˆ „ƒ””‹‡”• –‘ ƒ……‡••Ǥ Š‡› ˆ‘—Â?† –Šƒ– Â?‡ƒ”Ž› ƒŽŽ Š‘—•‡Š‘Ž†• ‹Â? –Š‡ „‘––‘Â? “—‹Â?–‹Ž‡ ƒ”‡ ƒ™ƒ”‡ ‘ˆ  Ç¡ ƒÂ?† ƒ„‘—– ͹ʹ ’‡”…‡Â?– ‘ˆ –Š‡Â? Šƒ˜‡ ƒ’’Ž‹‡†Ǥ Â?‘Â?‰ –Š‘•‡ ™Š‘ Šƒ˜‡ Â?‘– ƒ’’Ž‹‡†ǡ ƒ„‘—– ͹͸ ’‡”…‡Â?– †‹† Â?‘– Â?Â?‘™ ™Š‡”‡ –‘ ƒ’’Ž›ǡ •—‰‰‡•–‹Â?‰ …‘Â?–‹Â?—‡† Â?‡‡† ˆ‘” „‡––‡” ‹Â?ˆ‘”Â?ƒ–‹‘Â? ƒÂ?† …‘Â?Â?—Â?‹…ƒ–‹‘Â? ƒ„‘—–  Ǥ Â?‘Â?‰ –Š‘•‡ ™Š‘ Šƒ˜‡ ƒ’’Ž‹‡†ǡ ˆ‡™ ”‡’‘”–‡† „ƒ””‹‡”• „—– Â?ƒÂ?› •ƒ‹† –Š‡ ’”‘…‡•• ™ƒ• …‘Â?’Ž‡šǤ – ‹• …Ž‡ƒ”ǡ Š‘™‡˜‡”ǡ –Šƒ– Â?ƒÂ?› ™Š‘ ƒ’’Ž‹‡† ™‡”‡ †‡Â?‹‡† …‘˜‡”ƒ‰‡ǡ ƒÂ?† –Š—• ‹Â?’”‘˜‹Â?‰ –Š‡ Â?‡ƒÂ?• –‡•–‹Â?‰ ’”‘…‡•• ”‡Â?ƒ‹Â?• ƒ …‘Â?–‹Â?—‹Â?‰ …ŠƒŽŽ‡Â?‰‡Ǥ Figure 2.14: Cumulative Distribution of Consumption With And Without TSA ȋ‹Â? ’‡”…‡Â?– ‘ˆ ’‘’—Žƒ–‹‘Â?ÈŒ SourceÇ£  •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͵ͷ ʹǤͶʹǤ Good program targeting and coverage in turn translates into poverty reduction. —‡ –‘ –Š‡ ˆƒ…– –Šƒ–  –ƒ”‰‡–• –Š‡ ’‘‘”‡•– Š‘—•‡Š‘Ž†•ǡ Â?‘•– ‘ˆ  ǯ• ’‘˜‡”–› ”‡†—…–‹‘Â? ‹Â?’ƒ…– ‹• •‡‡Â? ‹Â? –Š‡ ’‘˜‡”–› ‰ƒ’ǡ Â?‘– –Š‡ ’‘˜‡”–› Š‡ƒ†…‘—Â?–Ǥ Š‹• †‡’‡Â?†•ǡ ‘ˆ …‘—”•‡ǡ ‘Â? –Š‡ ’‘˜‡”–› Ž‹Â?‡ –Šƒ– ‹• …Š‘•‡Â?Ǥ ‹‰—”‡ ʹǤͳͶ •Š‘™• –Š‡ …—Â?—Žƒ–‹˜‡ †‹•–”‹„—–‹‘Â? ‘ˆ …‘Â?•—Â?’–‹‘Â?Ç¡ ‘” ’‘˜‡”–› ‹Â?…‹†‡Â?…‡ …—”˜‡ǡ ˆ‘” ‡‘”‰‹ƒ —•‹Â?‰ –Š‡ ʹͲͲͻ  †ƒ–ƒǤ Š‡ ˜‡”–‹…ƒŽ Ž‹Â?‡ ‹• –Š‡ ‡‘”‰‹ƒ Â?ƒ–‹‘Â?ƒŽ ’‘˜‡”–› Ž‹Â?‡ ‘ˆ ͺͻǤ͹  ’‡” ƒ†—Ž– ‡“—‹˜ƒŽ‡Â?– ’‡” Â?‘Â?–ŠǤ – –Šƒ– ’‘˜‡”–› Ž‹Â?‡ǡ –Š‡ ’‘˜‡”–› Š‡ƒ†…‘—Â?– ™‹–Š‘—–  ‹• ƒŽÂ?‘•– –™‘ ’‡”…‡Â?–ƒ‰‡ ’‘‹Â?–• Š‹‰Š‡” –ŠƒÂ? –Š‡ Š‡ƒ†…‘—Â?– ™‹–Š  ȋʹ͹Ǥͷ ˜‡”•—• ʹͷǤ͹ȌǤͳ͸ Š‡ †‹ˆˆ‡”‡Â?…‡ ‹Â? –Š‡ ’‘˜‡”–› ‰ƒ’ ‹• •Ž‹‰Š–Ž› ‰”‡ƒ–‡” –ŠƒÂ? –™‘ ’‡”…‡Â?–ƒ‰‡ ’‘‹Â?–• ȋͻǤ͸ ˜‡”•—• ͹ǤͷȌǤ Table 2.4: Incidence of TSA by area (rural/urban) ȋ‹Â? ’‡”…‡Â?– ‘ˆ ’‘’—Žƒ–‹‘Â?ÈŒ Rural Urban Total Households receiving TSA (%ÈŒ ͳʹǤͷ ͵Ǥͺ ͺǤͳ ˜‡”ƒ‰‡ ƒÂ?‘—Â?– ”‡…‡‹˜‡† ’‡” ”‡…‹’‹‡Â?– Š‘—•‡Š‘Ž† ͺͳ ͹ͳ ͹ͺ È‹ È€Â?‘Â?–ŠȌ ‘˜‡”–› Š‡ƒ†…‘—Â?– ȋ—•‹Â?‰ ͺͻǤ͹  ’‘˜‡”–› Ž‹Â?‡Ȍ ‘Â?•—Â?’–‹‘Â? ͵ͳǤͷ ʹͲǤͳ ʹͷǤ͹ ‘Â?•—Â?’–‹‘Â? Â?‹Â?—•  ͵ͶǤ͵ ʹͲǤͻ ʹ͹Ǥͷ ‘˜‡”–› ‰ƒ’ ȋ—•‹Â?‰ ͺͻǤ͹  ’‘˜‡”–› Ž‹Â?‡Ȍ ‘Â?•—Â?’–‹‘Â? ͺǤ͵ ͸Ǥͺ ͹Ǥͷ ‘Â?•—Â?’–‹‘Â? Â?‹Â?—•  ͳͳǤͶ ͹Ǥͻ ͻǤ͸ SourceÇ£ ‘”Ž† ƒÂ?Â? •–ƒˆˆ …ƒŽ…—Žƒ–‹‘Â?• ˆ”‘Â?  ʹͲͲͻ †ƒ–ƒǤ ʹǤͶ͵Ǥ Coverage of TSA is higher in rural areas, with a correspondingly larger effect on poverty reduction. • •Š‘™Â? ‹Â? ƒ„Ž‡ ʹǤͶǡ ”—”ƒŽ Š‘—•‡Š‘Ž†• ƒ”‡ Â?‘”‡ Ž‹Â?‡Ž› –ŠƒÂ? —”„ƒÂ? Š‘—•‡Š‘Ž†• –‘ ”‡…‡‹˜‡  Ǥ Š‡ ƒ˜‡”ƒ‰‡ ƒÂ?‘—Â?– ‘ˆ  ”‡…‡‹˜‡† ‹• Š‹‰Š‡” ‹Â? ”—”ƒŽ ƒ”‡ƒ•Ǥ ‡…ƒ—•‡ ‘ˆ –Š‡ Š‹‰Š‡” ”—”ƒŽ …‘˜‡”ƒ‰‡ǡ  Š‡Ž’• Â?‡‡’ ƒ Š‹‰Š‡” ’‡”…‡Â?–ƒ‰‡ ‘ˆ ”—”ƒŽ Š‘—•‡Š‘Ž†• ˆ”‘Â? ˆƒŽŽ‹Â?‰ „‡Ž‘™ –Š‡ ’‘˜‡”–› Ž‹Â?‡ǡ ĥ ™‡ŽŽ ĥ ”‡†—…‹Â?‰ –Š‡ ’‘˜‡”–› ‰ƒ’Ǥ  –Š—• ƒŽ•‘ ”‡†—…‡• ”—”ƒŽǦ—”„ƒÂ? ‹Â?‡“—ƒŽ‹–›Ǥ ʹǤͶͶǤ Ongoing reforms have been implemented in order to further improve the effectiveness of the TSA program. Â? Â?‹†ǦʹͲͳͲǡ …ŠƒÂ?‰‡• –‘ –Š‡ ’”‘š› Â?‡ƒÂ?• –‡•– Â?‡–Š‘†‘Ž‘‰› ™‡”‡ ƒ†‘’–‡† „ƒ•‡† ‘Â? –Š‡ ˆ‹Â?†‹Â?‰• ‘ˆ ƒ Â?‘Â?‹–‘”‹Â?‰ •—”˜‡› ƒÂ?† …‘Â?•—Ž–ƒ–‹‘Â?• ™‹–Š ˜ƒ”‹‘—• •–ƒÂ?‡Š‘Ž†‡”•Ǥ ‡™ Â?‡ƒ•—”‡• ‹Â?…Ž—†‡ ƒ ‰”‡ƒ–‡” ”‘Ž‡ ˆ‘” …‘Â?Â?—Â?‹–‹‡• ‹Â? ”‡˜‹‡™‹Â?‰ ‡Ž‹‰‹„‹Ž‹–›ǡ ƒÂ?† –Š‡ ‡š…Ž—•‹‘Â? ‘ˆ …‡”–ƒ‹Â? ƒ••‡–• ˆ”‘Â? –Š‡ ’”‘š›ǦÂ?‡ƒÂ?• –‡•–‹Â?‰ ˆ‘”Â?—ŽƒǤ Â? ƒ††‹–‹‘Â?Ç¡ ƒÂ?† ‘Â? ƒÂ? ‘Â?‰‘‹Â?‰ „ƒ•‹•ǡ  …‘Â?–‹Â?—‡• –‘ ‹Â?’”‘˜‡ ‹–• „—•‹Â?॥ ’”‘…‡••‡• ‘Â? •‡˜‡”ƒŽ ˆ”‘Â?–•ǡ ‹Â?…Ž—†‹Â?‰ Â?‡–™‘”Â?Ç¡ •‘ˆ–™ƒ”‡ǡ ƒÂ?† Šƒ”†™ƒ”‡ †‡˜‡Ž‘’Â?‡Â?–ǡ ”‡Šƒ„‹Ž‹–ƒ–‹Â?‰ Ž‘…ƒŽ ‘ˆˆ‹…‡•ǡ ƒÂ?† •‹Â?’Ž‹ˆ›‹Â?‰ ’”‘…‡†—”‡• ˆ‘” •‘…‹ƒŽ ™‘”Â?‡” ‡˜ƒŽ—ƒ–‹‘Â? ‘ˆ ƒ’’Ž‹…ƒÂ?– Š‘—•‡Š‘Ž†•ǡ ™‹–Š –Š‡ ”‡•—Ž– –Šƒ– ™ƒ‹–‹Â?‰ –‹Â?‡• „‡–™‡‡Â? ƒ’’Ž‹…ƒ–‹‘Â? ƒÂ?† ”‡…‡‹’– ‘ˆ „‡Â?‡ˆ‹–• Šƒ˜‡ „‡‡Â? …—– ‹Â? ŠƒŽˆǡ ˆ”‘Â? •‹š –‘ –Š”‡‡ Â?‘Â?–Š•Ǥ —”–Š‡”Â?‘”‡ǡ  Šƒ• …‘Â?†—…–‡† Â?—Â?‡”‘—• ‘Â?‰‘‹Â?‰ ‘—–”‡ƒ…Š ƒ…–‹˜‹–‹‡•ǡ ‹Â?…Ž—†‹Â?‰ †‡˜‡Ž‘’‹Â?‰  ƒÂ?† ”ƒ†‹‘ ’”‘‰”ƒÂ?• –‘ ‹Â?ˆ‘”Â? –Š‡ ’—„Ž‹… ƒÂ?† ‡˜‡Â?–• ‹Â? ”ƒ›‘Â?• –‘ ‡š’Žƒ‹Â? ’”‘‰”ƒÂ?• –‘ –Š‡ ’—„Ž‹…ǡ ™‹–Š ƒÂ? ‡Â?’Šƒ•‹• ‘Â? –”ƒÂ?•’ƒ”‡Â?…› ‘ˆ –Š‡ †ƒ–ƒ„ƒ•‡ ƒÂ?† ƒ’’Ž‹…ƒ–‹‘Â? ’”‘…‡†—”‡•Ǥ ‘ Â?‡‡’ –Š‡ †ƒ–ƒ„ƒ•‡ —’Ǧ–‘Ǧ †ƒ–‡ǡ ‘Â?‰‘‹Â?‰ ”‡Ǧ…‡”–‹ˆ‹…ƒ–‹‘Â? ‘ˆ „‡Â?‡ˆ‹…‹ƒ”‹‡• ‹• …ƒ””‹‡† ‘—– ‘Â? ƒ ”‘ŽŽ‹Â?‰ „ƒ•‹• ƒÂ?† ‹• „‡‹Â?‰ —Â?†‡”–ƒÂ?‡Â? ‘Â? ƒ ™ƒ˜‡Ǧ„›Ǧ™ƒ˜‡ ƒÂ?† ”‡‰‹‘Â?Ǧ„›Ǧ”‡‰‹‘Â? „ƒ•‹•ǡ ™‹–Š  Â?‘™ ”‡Ǧ…‡”–‹ˆ›‹Â?‰ „‡Â?‡ˆ‹…‹ƒ”‹‡• ƒˆ–‡” ˆ‘—” ›‡ƒ”•Ǥ ‹Â?ƒŽŽ›ǡ •‹Â?…‡ Â?‹†ǦʹͲͳͲǡ –Š‡ ‰‘˜‡”Â?Â?‡Â?– •–ƒ”–‡† –‘ ”‡˜‹‡™ –Š‡ ͳ͸ Â?’Ž‹…‹– ƒ••—Â?’–‹‘Â?• ƒ”‡ –Šƒ– ȋƒȌ  ”‡…‡‹’–• ƒ”‡ ƒŽŽ ƒŽŽ‘…ƒ–‡† –‘ …‘Â?•—Â?’–‹‘Â?Ç¡ ƒÂ?† ȋ„Ȍ ‹ˆ  ‹Â?…‘Â?‡ ‹• Ž‘•– –Š‡Â? ‹– ‹• Â?‘– ”‡’Žƒ…‡† „› ‘–Š‡” ‹Â?…‘Â?‡ •—…Š ĥ ’”‹˜ƒ–‡ –”ƒÂ?•ˆ‡”• ‘” ‡Â?’Ž‘›Â?‡Â?–Ǥ ͵͸ ‡Ž‹‰‹„‹Ž‹–› •–ƒ–—• ‘ˆ  „‡Â?‡ˆ‹…‹ƒ”‹‡• „› …”‘••Ǧ…Š‡…Â?‹Â?‰ ”‡•’‘Â?•‡• –‘  ‹Â?–‡”˜‹‡™‡”• ™‹–Š –Š‡ †ƒ–ƒ ‘ˆ ‘–Š‡” ‰‘˜‡”Â?Â?‡Â?– ƒ‰‡Â?…‹‡• ”‡Žƒ–‡† –‘ ‹Â?…‘Â?‡ –ƒšǡ ’”‘’‡”–›ǡ ƒÂ?† ˜‡Š‹…Ž‡ ”‡‰‹•–”ƒ–‹‘Â?Ǥ Š‹• Šƒ• Š‡Ž’‡† ‹†‡Â?–‹ˆ› ƒ •‹‰Â?‹ˆ‹…ƒÂ?– Â?—Â?„‡” ‘ˆ ‹Â?‡Ž‹‰‹„Ž‡ „‡Â?‡ˆ‹…‹ƒ”‹‡• ™Š‘ Šƒ˜‡ „‡‡Â? †‡Â?‹‡† ˆ—”–Š‡” „‡Â?‡ˆ‹–• ĥ ƒ ”‡•—Ž–ǡ ™Š‹…Š •Š‘—Ž† ˆ—”–Š‡” ‹Â?’”‘˜‡ –ƒ”‰‡–‹Â?‰ ‡ˆˆ‡…–‹˜‡Â?‡••Ǥ ”‡Ž‹Â?‹Â?ƒ”› ˆ‹‰—”‡• ‹Â?†‹…ƒ–‡ –Šƒ– –Š‡•‡ Â?‡ƒ•—”‡• Šƒ˜‡ ”‡•—Ž–‡† ‹Â? ‹Â?’”‘˜‡† …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ „‘––‘Â? †‡…‹Ž‡• •‹Â?…‡ ʹͲͲͻǤ ʹǤͶͷǤ In sum, Georgia’s TSA program has been successful on several fronts, and progress on most “firstǦgenerationâ€? social assistance reforms has been strong. Š‡•‡ ‹Â?…Ž—†‡ „‡Â?‡ˆ‹– …‘Â?•‘Ž‹†ƒ–‹‘Â?Ç¡ †ƒ–ƒ„ƒ•‡ †‡˜‡Ž‘’Â?‡Â?–ǡ ƒÂ?† –ƒ”‰‡–‹Â?‰ ‡ˆˆ‡…–‹˜‡Â?‡••Ǥ ’”‹‘”‹–› ‰‘‹Â?‰ ˆ‘”™ƒ”† ™‹ŽŽ „‡ –‘ ‡š’Ž‘”‡ ’‘–‡Â?–‹ƒŽ ‘’–‹‘Â?• –‘ ‡š’ƒÂ?† ’”‘‰”ƒÂ? …‘˜‡”ƒ‰‡ǡ ’ƒ”–‹…—Žƒ”Ž› ™‹–Š‹Â? –Š‡ Ž‘™‡•– †‡…‹Ž‡ ƒÂ?† “—‹Â?–‹Ž‡Ǥ Š‡ Â?‡š– •‡…–‹‘Â? Ž‘‘Â?• ƒ– Dz•‡…‘Â?† ‰‡Â?‡”ƒ–‹‘Â?dz …ŠƒŽŽ‡Â?‰‡• ’‡”–ƒ‹Â?‹Â?‰ –‘ Ž‹Â?Â?ƒ‰‡• „‡–™‡‡Â?  ƒÂ?† –Š‡ Žƒ„‘” Â?ƒ”Â?‡–Ǥ Georgia’s TSA program and the labor market ʹǤͶ͸Ǥ A common issue raised in the context of assessing the impact of a social assistance program is whether it discourages labor market participation and creates a culture of dependency. ’‹Â?‹‘Â? ’‘ŽŽ• †‘ Â?‘– ’”‘˜‹†‡ Â?—…Š •—’’‘”– ˆ‘” –Š‹• ˜‹‡™ ‹Â? ‡‘”‰‹ƒǡ ĥ ‘Â?Ž› ͺǤͷ ’‡”…‡Â?– ‘ˆ ”‡•’‘Â?†‡Â?–• ƒ––”‹„—–‡† –Š‡ ‡š‹•–‡Â?…‡ ‘ˆ ’‘˜‡”–› –‘ DzŽƒœ‹Â?॥ ƒÂ?† Žƒ…Â? ‘ˆ ™‹ŽŽ’‘™‡”dzǡ ™Š‡”‡ƒ• Í·Í» ’‡”…‡Â?– ’‘‹Â?–‡† –‘ Dz‹Â?Œ—•–‹…‡ ‹Â? •‘…‹‡–›dz ‘” „‡‹Â?‰ Dz—Â?Ž—…Â?›dzǤͳ͹ Š‡ Â?‘”‡ ˆ‘”Â?ƒŽ †ƒ–ƒ ƒ˜ƒ‹Žƒ„Ž‡ǡ ”‡˜‹‡™‡† ‹Â? –Š‹• •‡…–‹‘Â?Ç¡ ‹Â?†‹…ƒ–‡• –Šƒ– –Š‡”‡ ‹• Ž‹––Ž‡ ‡˜‹†‡Â?…‡ –Šƒ– ‡‘”‰‹ƒǯ•  ‹• ‹Â? ˆƒ…– †‹•…‘—”ƒ‰‹Â?‰ Žƒ„‘” ˆ‘”…‡ ’ƒ”–‹…‹’ƒ–‹‘Â?Ǥ Š‹• •‡…–‹‘Â? ƒŽ•‘ ‹Â?–”‘†—…‡• •‘Â?‡ ‘–Š‡” …‘Â?•‹†‡”ƒ–‹‘Â?• ƒ„‘—– –Š‡ Ž‹Â?Â? „‡–™‡‡Â?  ƒÂ?† –Š‡ Žƒ„‘” Â?ƒ”Â?‡–Ǥ ʹǤͶ͹Ǥ A number of considerations can offer a preliminary indication of the likelihood that a social assistance program is discouraging labor force participation. Â?‡ ‹• ‰‡Â?‡”‘•‹–›ǣ –Šƒ– ‹•ǡ ‘Â? ƒ˜‡”ƒ‰‡ ™Šƒ– •Šƒ”‡ ‘ˆ ƒ Š‘—•‡Š‘Ž†ǯ• –‘–ƒŽ ‹Â?…‘Â?‡ ‹• ƒ……‘—Â?–‡† ˆ‘” „› –Š‡ …ƒ•Š ’”‘‰”ƒÂ?Ç« •‡…‘Â?† ‹• –Š‡ Â?ƒ”‰‹Â?ƒŽ –ƒš ”ƒ–‡ ‘ˆ ‰”‘•• ‡ƒ”Â?‹Â?‰• ‘ˆ „‡Â?‡ˆ‹…‹ƒ”‹‡•ǣ –‘ ™Šƒ– ‡š–‡Â?– ™‘—Ž† ƒ „‡Â?‡ˆ‹…‹ƒ”›ǯ• ‹Â?…‘Â?‡ „‡ Ǯ…Žƒ™‡† „ƒ…Â?ǯ –Š”‘—‰Š –ƒš‡• ‘” ”‡†—…‡† „‡Â?‡ˆ‹–•ǫ –Š‹”† …‘Â?•‹†‡”ƒ–‹‘Â? ’‡”–ƒ‹Â?• –‘ –Š‡ †‡Â?‘‰”ƒ’Š‹… ’”‘ˆ‹Ž‡ ‘ˆ „‡Â?‡ˆ‹…‹ƒ”› Š‘—•‡Š‘Ž†• ™‹–Š ”‡‰ƒ”† –‘ –Š‡‹” ’‘–‡Â?–‹ƒŽ –‘ Œ‘‹Â? –Š‡ Žƒ„‘” Â?ƒ”Â?‡–ǣ ˆ‘” ‡šƒÂ?’Ž‡ǡ ƒ”‡ –Š‡› Â?‘•–Ž› ›‘—Â?‰ǡ ‘Ž†ǡ †‹•ƒ„Ž‡†ǡ …ƒ”‡Ǧ‰‹˜‡”•ǡ ‘” ‘–Š‡”™‹•‡ǫ Figure 2.15Ç£ Generosity of Georgia’s TSA VisǦaǦ Vis Other Social Assistance Programs ȋ’‡”…‡Â?– ‘ˆ Š‘—•‡Š‘Ž† …‘Â?•—Â?’–‹‘Â?ÈŒ 35.0 Average transfer as share of total household consumption 30.0 25.0 20.0 15.0 10.0 5.0 0.0 WB ECA SP database SourceÇ£  •‘…‹ƒŽ ’”‘–‡…–‹‘Â? †ƒ–ƒ„ƒ•‡ ͳ͹ ‘”Ž† ƒÂ?Â?Ǧ  ‹ˆ‡ ‹Â? ”ƒÂ?•‹–‹‘Â? —”˜‡›ǡ ʹͲͲ͹Ǥ ͵͹ ʹǤͶͺǤ Georgia’s TSA program for vulnerable families is one of the most generous such programs in the region. – Šƒ• ƒ …ƒ•Š „‡Â?‡ˆ‹– ‘ˆ  ͵Ͳ ’‡” Â?‘Â?–Š ˆ‘” –Š‡ Š‘—•‡Š‘Ž† Š‡ƒ†ǡ ƒÂ?†  ʹͶ ’‡” Â?‘Â?–Š ˆ‘” ƒ††‹–‹‘Â?ƒŽ Š‘—•‡Š‘Ž† Â?‡Â?„‡”•Ǥ Š‡ –›’‹…ƒŽ „‡Â?‡ˆ‹…‹ƒ”› Š‘—•‡Š‘Ž† ”‡…‡‹˜‡•  ͹ͺ ’‡” Â?‘Â?–Šǡ ™Š‹…Š ƒÂ?‘—Â?–• –‘ ƒÂ? ƒ˜‡”ƒ‰‡ ‘ˆ ƒ„‘—– ʹͺ ’‡”…‡Â?– ‘ˆ ”‡…‹’‹‡Â?–•ǯ –‘–ƒŽ Š‘—•‡Š‘Ž† …‘Â?•—Â?’–‹‘Â?Ǥ • •Š‘™Â? ‹Â? ‹‰—”‡ ʹǤͳͷǡ –Š‹• ‹• –Š‡ •‡…‘Â?† Š‹‰Š‡•– •—…Š Ž‡˜‡Ž ƒÂ?‘Â?‰ ͳͻ •‹Â?‹Žƒ” ’”‘‰”ƒÂ?• ƒ…”‘•• –Š‡ ”‡‰‹‘Â?Ǥ ‡Žƒ–‹˜‡ –‘ –Š‡•‡ ‘–Š‡” ’”‘‰”ƒÂ?•ǡ –Š‡”‡ˆ‘”‡ǡ –Š‡  Â?‹‰Š– ‹Â? ’”‹Â?…‹’Ž‡ •‡”˜‡ ĥ ƒ †‹•‹Â?…‡Â?–‹˜‡ ˆ‘” ˆ‹Â?†‹Â?‰ ƒ ȋˆ‘”Â?ƒŽȌ Œ‘„ ‘” ™‘”Â?‹Â?‰ Ž‘Â?‰‡” Š‘—”•Ǥ Â?Ž‹Â?‡ …‡”–ƒ‹Â? ‰—ƒ”ƒÂ?–‡‡† Â?‹Â?‹Â?—Â? ‹Â?…‘Â?‡ È‹  ÈŒ ’”‘‰”ƒÂ?• ‡š‹•–‹Â?‰ ‡Ž•‡™Š‡”‡ǡ Š‘™‡˜‡”ǡ –Š‡ ‰”‘•• ‡ƒ”Â?‹Â?‰• ‘ˆ ”‡…‹’‹‡Â?–• ‘ˆ ‡‘”‰‹ƒǯ•  ‹• Â?‘– •—„Œ‡…– –‘ ƒ ˜‡”› Š‹‰Š Â?ƒ”‰‹Â?ƒŽ –ƒš ”ƒ–‡Ǥ ʹǤͶͻǤ The demographic profile of TSA recipients suggests that the program is not discouraging work. • •Š‘™Â? ‹Â? ‹‰—”‡ ʹǤͳ͸ǡ Œ—•– ‘˜‡” ŠƒŽˆ ‘ˆ  „‡Â?‡ˆ‹…‹ƒ”‹‡• ƒ”‡ ‘ˆ ™‘”Â?‹Â?‰ ƒ‰‡ ȋ†‡ˆ‹Â?‡† Š‡”‡ ĥ ͳ͸Ǧ͸Ͷ ˆ‘” Â?‡Â? ƒÂ?† ͳ͸Ǧͷͻ ˆ‘” ™‘Â?‡Â?ȌǤ Â?‘Â?‰ –Š‘•‡ ™Š‘ ƒ”‡ ‘ˆ ™‘”Â?‹Â?‰ ƒ‰‡ǡ ƒ„‘—– ͸ʹ ’‡”…‡Â?– ƒ”‡ ‡‹–Š‡” ™‘”Â?‹Â?‰ ‘” Ž‘‘Â?‹Â?‰ ˆ‘” ™‘”Â? È‹ ‹‰—”‡ ʹǤͳ͹ȌǤ Â?‘Â?‰ –Š‘•‡ ™Š‘ ƒ”‡ Â?‡‹–Š‡” ™‘”Â?‹Â?‰ Â?‘” Ž‘‘Â?‹Â?‰ ˆ‘” ƒ Œ‘„ǡ Â?‘•– •ƒ› –Š‹• ‹• „‡…ƒ—•‡ –Š‡› ƒ”‡ ƒ •–—†‡Â?–ǡ ’‡Â?•‹‘Â?‡”ǡ Š‘—•‡™‹ˆ‡ǡ †‹•ƒ„Ž‡†ǡ ‘” …ƒ”‡Ǧ‰‹˜‡”Ǥ „‘—– ƒ “—ƒ”–‡” ‘ˆ –Š‘•‡ Â?‘– ™‘”Â?‹Â?‰ ‘” Ž‘‘Â?‹Â?‰ ˆ‘” ™‘”Â? •ƒ‹† –Š‹• ™ƒ• „‡…ƒ—•‡ –Š‡› Dz™‘—Ž† Â?‘– „‡ ƒ„Ž‡ –‘ ˆ‹Â?†dz ™‘”Â?Ç¡ ‘” „‡…ƒ—•‡ –Š‡› Dz†‘ Â?‘– ™ƒÂ?– –‘ ™‘”Â?dzǤ ‘™‡˜‡”ǡ –Š‡•‡ ‰”‘—’• ‘Â?Ž› ƒ……‘—Â?– ˆ‘” ƒ„‘—– Í· ’‡”…‡Â?– ‘ˆ ƒŽŽ  „‡Â?‡ˆ‹…‹ƒ”‹‡• ȋ‹Ǥ‡Ǥǡ ‹Â?…Ž—†‹Â?‰ ’‡Â?•‹‘Â?‡”• ƒÂ?† –Š‘•‡ —Â?†‡” ͳͷȌǤ Š‡•‡ ”‡•’‘Â?•‡• ƒ”‡ •‡ŽˆǦ”‡’‘”–‡† ’‡”…‡’–‹‘Â?•ǡ ƒÂ?† –Š‡› …‘Â?•‹†‡” –Š‡ †‡…‹•‹‘Â? –‘ ™‘”Â? ƒÂ?† Â?‘– –Š‡ Â?—Â?„‡” ‘ˆ Š‘—”• ™‘”Â?‡†ǡ „—– Â?‡˜‡”–Š‡Ž‡•• –Š‡› †‘ Â?‘– •—‰‰‡•– –Šƒ–  „‡Â?‡ˆ‹–• ƒ”‡ †‹•…‘—”ƒ‰‹Â?‰ ™‘”Â?Ǥ Figure 2.16: Age Distribution of TSA Figure 2.17: Labor Force Status of TSA’s Working Beneficiaries, 2009 Age Beneficiaries ȋ‹Â? ’‡”…‡Â?– ‘ˆ ’‘’—Žƒ–‹‘Â?ÈŒ ȋ‹Â? ’‡”…‡Â?– ‘ˆ „‡Â?‡ˆ‹…‹ƒ‹”‡•Ȍ 60% 54.8% 50% Not working but looking for job Working 40% Reasons notlooking for but Not working looking: Student Housewife Neither Pensioner 30% working Disabled nor looking Due to illness 24.0% for job CareͲgiver 21.3% Has a job, temporarily not working 20% Does not want to work Would not be able to find Other Working 10% 0% Under 15 Working age Pensioners Source: UNICEF WMS SourceÇ£  ‡•–‹Â?ƒ–‡• „ƒ•‡† ‘Â?   SourceÇ£  ‡•–‹Â?ƒ–‡• „ƒ•‡† ‘Â?   ʹǤͷͲǤ It is also possible to more rigorously evaluate the potential impact of TSA on labor force participation. Â? ʹͲͲ͹ǡ –Š‡ ‹˜‹Â?‰ –ƒÂ?†ƒ”†• ‡ƒ•—”‡Â?‡Â?– —”˜‡› È‹ÈŒ …ƒ””‹‡† ‘—– ‹Â? ‡‘”‰‹ƒ ‹Â?…Ž—†‡† ƒÂ? ‡š–”ƒ •ƒÂ?’Ž‡ ‘ˆ ƒ’’”‘š‹Â?ƒ–‡Ž› ʹͲͲͲ Š‘—•‡Š‘Ž†• …Ž—•–‡”‡† ƒ”‘—Â?† –Š‡  ‡Ž‹‰‹„‹Ž‹–› –Š”‡•Š‘Ž† ȋƒ– –Š‡ –‹Â?‡ǡ –Š‹• ™ƒ• ͷʹǡͲͲͲǢ ‹– Šƒ• •‹Â?…‡ „‡‡Â? ”ƒ‹•‡† –‘ ͷ͹ǡͲͲͲȌǤ ‘”‡ ’”‡…‹•‡Ž›ǡ ƒŽŽ Š‘—•‡Š‘Ž†• Šƒ† •…‘”‡• „‡–™‡‡Â? ͷͲǡ͹ͲͲ ƒÂ?† ͷ͵ǡͲͲͲǤ ‡…ƒ—•‡ –Š‹• ‹• ƒ Â?ƒ””‘™ ”ƒÂ?‰‡ǡ ‹– Ž‡Â?†• ‹–•‡Žˆ –‘ ƒÂ?ƒŽ›•‹• …‘Â?’ƒ”‹Â?‰  „‡Â?‡ˆ‹…‹ƒ”‹‡• ƒÂ?† Â?‘Â?Ǧ„‡Â?‡ˆ‹…‹ƒ”‹‡• ‘Â? –Š‡ ƒ••—Â?’–‹‘Â? –Šƒ– –Š‡•‡ Š‘—•‡Š‘Ž†• ƒ”‡ ‘Â? ƒ˜‡”ƒ‰‡ Dz–Š‡ •ƒÂ?‡dz ȋ‹Ǥ‡Ǥǡ ”‡‰”‡••‹‘Â? †‹•…‘Â?–‹Â?—‹–› †‡•‹‰Â?Ç¡ ‘”  Ȍǡ ‡š…‡’– ˆ‘” –Š‡‹”  „‡Â?‡ˆ‹…‹ƒ”› •–ƒ–—•Ǥ Â?†‡‡† Â?‘ †‹ˆˆ‡”‡Â?…‡• ™‡”‡ †‡–‡…–‡† „‡–™‡‡Â? –Š‡ –™‘ ‰”‘—’• ™‹–Š ”‡‰ƒ”† –‘ „ƒ•‹… †‡Â?‘‰”ƒ’Š‹… ˜ƒ”‹ƒ„Ž‡• ȋ‡Ǥ‰Ǥǡ ƒ‰‡ǡ ‰‡Â?†‡”ǡ ‡†—…ƒ–‹‘Â? Ž‡˜‡Žǡ ‡–…ǤȌǤ Š‹• ƒŽŽ‘™• —• –‘ ͵ͺ ‹•‘Žƒ–‡ –Š‡ ‹Â?’ƒ…– ‘ˆ –Š‡  ’”‘‰”ƒÂ? ‘Â? ˜ƒ”‹ƒ„Ž‡• ‘ˆ ‹Â?–‡”‡•– ˆ”‘Â? ‘–Š‡” ’‘–‡Â?–‹ƒŽ …‘Â?ˆ‘—Â?†‹Â?‰ ‹Â?ˆŽ—‡Â?…‡•Ǥ – •Š‘—Ž† „‡ Â?‘–‡† –Šƒ– ‹Â? ʹͲͲ͹ǡ –Š‡  „‡Â?‡ˆ‹– ˆ‘” ƒ††‹–‹‘Â?ƒŽ Š‘—•‡Š‘Ž† Â?‡Â?„‡”• ™ƒ• ‘Â?Ž›  ͳʹ ’‡” Â?‘Â?–Šǡ Â?‘–  ʹͶ ĥ ‹– ‹• Â?‘™ ȋ–Š‡ „ƒ•‡ ’ƒ›Â?‡Â?– ‘ˆ  ͵Ͳ ™ƒ• –Š‡ •ƒÂ?‡ ĥ ƒ– ’”‡•‡Â?–ȌǤ Š—•ǡ –Š‡ ƒ˜‡”ƒ‰‡ Š‘—•‡Š‘Ž† –”ƒÂ?•ˆ‡” ™ƒ• ƒ„‘—– ‘Â?‡Ǧ–Š‹”† Ž‡•• ƒ– –Š‡ –‹Â?‡ǡ ’‘–‡Â?–‹ƒŽŽ› Â?‹–‹‰ƒ–‹Â?‰ –Š‡ †‹•‹Â?…‡Â?–‹˜‡ ‡ˆˆ‡…– ‘ˆ  Ǥ Figure 2.18: No Impact of TSA Receipt On Labor Force Participation, 2007 .5 .45 Probability of working .25 .3.2 .15 .1 .35 .4 ȋ‹Â? ’‡”…‡Â?– ‘ˆ „‡Â?‡ˆ‹…‹ƒ”‹‡•Ȍ 50750 51000 51250 51500 51750 52000 52250 52500 52750 53000 TSA score Source:  •–ƒˆˆ ‡•–‹Â?ƒ–‡• „ƒ•‡† ‘Â?  ʹͲͲ͹ ʹǤͷͳǤ No differences in labor force participation were detected between TSA beneficiaries and nonǦbeneficiaries using the 2007 data. Š‡”‡ ™ƒ• Â?‘ •–ƒ–‹•–‹…ƒŽŽ› •‹‰Â?‹ˆ‹…ƒÂ?– †‹ˆˆ‡”‡Â?…‡ ˆ‘” ‡‹–Š‡” –Š‡ ’”‘„ƒ„‹Ž‹–› ‘ˆ ™‘”Â?‹Â?‰ ‘” –Š‡ ’”‘„ƒ„‹Ž‹–› ‘ˆ Ž‘‘Â?‹Â?‰ ˆ‘” ™‘”Â?Ç¡ „ƒ•‡† ‘Â? ƒ …‘Â?’ƒ”‹•‘Â? ‘ˆ Â?‡ƒÂ?•Ǥ Š‡Â? ƒ ˆ—ŽŽ‡” ”‡‰”‡••‹‘Â? ƒÂ?ƒŽ›•‹• ™ƒ• —Â?†‡”–ƒÂ?‡Â?Ç¡ ‹Â?…Ž—†‹Â?‰ –Š‡ ’”‘š› Â?‡ƒÂ?• –‡•– •…‘”‡ǡ ƒ‰‡ǡ ƒ‰‡Ǧ•“—ƒ”‡†ǡ ‰‡Â?†‡”ǡ ƒÂ?† ‡†—…ƒ–‹‘Â?ƒŽ ƒ––ƒ‹Â?Â?‡Â?–ǡ –Š‡ ˜ƒ”‹ƒ„Ž‡ ˆ‘” „‡Â?‡ˆ‹…‹ƒ”› •–ƒ–—• ™ƒ• Â?‘– •–ƒ–‹•–‹…ƒŽŽ› •‹‰Â?‹ˆ‹…ƒÂ?–Ǥ Š‡ •ƒÂ?‡ ”‡•—Ž– ™ƒ• ˆ‘—Â?† —•‹Â?‰ Â?‘”‡ —’†ƒ–‡† ʹͲͲͻ †ƒ–ƒ „—– ™‹–Š ƒ Â?—…Š ™‹†‡” ”ƒÂ?‰‡ ‘ˆ •…‘”‡•ǣ ƒ •‹Â?’Ž‡ …‘Â?’ƒ”‹•‘Â? ‘ˆ Žƒ„‘” Â?ƒ”Â?‡– ’ƒ”–‹…‹’ƒ–‹‘Â? „› –Š‘•‡ ™Š‘ ”‡…‡‹˜‡ –Š‡  ȋ‹Ǥ‡Ǥǡ ™‹–Š ƒ ’”‘š› Â?‡ƒÂ?• –‡•– •…‘”‡ „‡Ž‘™ ͷ͹ǡͲͲͲȌ ™‹–Š –Š‘•‡ ™Š‘ †‘ Â?‘– ‰‡–  „—– †‘ ”‡…‡‹˜‡ Â?‡†‹…ƒŽ ‹Â?•—”ƒÂ?…‡ ˆ‘” –Š‡ ’‘‘” ȋ‹Ǥ‡Ǥǡ –Š‘•‡ ™‹–Š ƒ •…‘”‡ „‡–™‡‡Â? ͷ͹ǡͲͲͳ ƒÂ?† ͹ͲǡͲͲͲȌ †‹† Â?‘– †‡–‡…– ƒÂ?› •‹‰Â?‹ˆ‹…ƒÂ?– †‹ˆˆ‡”‡Â?…‡Ǥ ʹǤͷʹǤ While there is no evidence that Georgia’s TSA discourages recipients from work, an important future reform agenda could embrace “activationâ€?, or explicit measures designed to promote better job prospects for program beneficiaries. Š‡•‡ ƒ”‡ •‘Ǧ…ƒŽŽ‡† Dz•‡…‘Â?†Ǧ ‰‡Â?‡”ƒ–‹‘Â?dz ”‡ˆ‘”Â?• –‘ •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ’”‘‰”ƒÂ?• –Šƒ– ƒ”‡ ‹Â?…”‡ƒ•‹Â?‰Ž› …‘Â?Â?‘Â? ‡Ž•‡™Š‡”‡ ‹Â? —”‘’‡Ǥ Š‡› ™‘—Ž† ‡Â?–ƒ‹Ž •–”‡Â?‰–Š‡Â?‹Â?‰ Ž‹Â?Â?ƒ‰‡• „‡–™‡‡Â? •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ’”‘‰”ƒÂ?• •—…Š ĥ  ƒÂ?† Š—Â?ƒÂ? …ƒ’‹–ƒŽ †‡˜‡Ž‘’Â?‡Â?–ǡ ‹Â?…Ž—†‹Â?‰ •Â?‹ŽŽ• †‡˜‡Ž‘’Â?‡Â?–ǡ ƒ…–‹˜ƒ–‹‘Â?Ç¡ –Š‡ Œ‘„• ƒ‰‡Â?†ƒǡ ƒÂ?† ’‘••‹„Ž› …‘Â?†‹–‹‘Â?ƒŽ …ƒ•Š –”ƒÂ?•ˆ‡”• Ž‹Â?Â?‡† –‘ Š‡ƒŽ–Š ƒÂ?† ‡†—…ƒ–‹‘Â?Ǥ Š‹• ‹• –Š‡ Dz’”‘Â?‘–‹‘Â?dz ȋƒ• ‘’’‘•‡† –‘ Dz’”‘–‡…–‹‘Â?dzȌ ƒ•’‡…– ‘ˆ ™‡ŽŽǦ’‡”ˆ‘”Â?‹Â?‰ •‘…‹ƒŽ •ƒˆ‡–› Â?‡–•Ǥ Š‹Ž‡ ‡‘”‰‹ƒ Šƒ• ‘’–‡† ƒ‰ƒ‹Â?•– ’—”•—‹Â?‰ ƒÂ? ƒ…–‹˜‡ Žƒ„‘” Â?ƒ”Â?‡– ƒ‰‡Â?†ƒ ‹Â? ”‡…‡Â?– ›‡ƒ”•ǡ ĥ ‹–• •‘…‹ƒŽ ’‘Ž‹…› ‡˜‘Ž˜‡•ǡ ƒ ˆ—ŽŽ ”ƒÂ?‰‡ ‘ˆ ’‘Ž‹…› ‘’–‹‘Â?• Â?ƒ› „‡ ”‡˜‹•‹–‡†Ǥ • ƒ …‘Â?…”‡–‡ ˆ‹”•– •–‡’ ‹Â? ƒÂ? ƒ‰‡Â?†ƒ ‘ˆ „”‹Â?‰‹Â?‰ Â?‘”‡ ’‡‘’Ž‡ ‹Â?–‘ ™‘”Â?Ç¡ ‹– Â?ƒ› „‡ ’‘••‹„Ž‡ –‘ …ƒ’‹–ƒŽ‹œ‡ ‘Â? –Š‡ •–”‘Â?‰ ƒ…Š‹‡˜‡Â?‡Â?–• ‹Â? ‡•–ƒ„Ž‹•Š‹Â?‰ Ž‘…ƒŽ ͵ͻ  …‡Â?–‡”• „› —•‹Â?‰ –Š‡•‡ –‘ Ž‹Â?Â? –Š‡ ’‘‘” È‹ „‡Â?‡ˆ‹…‹ƒ”‹‡•Ȍ ™‹–Š Œ‘„ ‘’‡Â?‹Â?‰• ƒÂ?† –”ƒ‹Â?‹Â?‰ ’‘••‹„‹Ž‹–‹‡•Ǥ 2.5. Some CrossǦCutting Themes ʹǤͷ͵Ǥ While the discussion in this chapter has largely focused on pensions and TSA programs in isolation, some crossǦcutting issues warrant attention. ‘–Š ’‡Â?•‹‘Â?• ƒÂ?†  Šƒ˜‡ ’‘–‡Â?–‹ƒŽ ‹Â?’Ž‹…ƒ–‹‘Â?• ˆ‘” ’‘˜‡”–› ”‡†—…–‹‘Â?Ç¡ Žƒ„‘” ˆ‘”…‡ ’ƒ”–‹…‹’ƒ–‹‘Â?Ç¡ ƒÂ?† †‡Â?‘‰”ƒ’Š‹… …‘Â?•‹†‡”ƒ–‹‘Â?•ǡ ĥ •—Â?Â?ƒ”‹œ‡† „”‹‡ˆŽ› Š‡”‡ǣ x Poverty reductionÇ£ Š‹Ž‡ ’‡Â?•‹‘Â?• Šƒ˜‡ ƒ ‰”‡ƒ–‡” ’‘˜‡”–›Ǧ”‡†—…‹Â?‰ ‹Â?’ƒ…–ǡ –Š‹• ‹• †—‡ –‘ –Š‡ Žƒ”‰‡ •‹œ‡ ‘ˆ –Š‡ ’”‘‰”ƒÂ?Ǥ ‹Â?…‡  ‹• –ƒ”‰‡–‡† –‘ –Š‡ ’‘‘” ”ƒ–Š‡” –ŠƒÂ? ƒ …ƒ–‡‰‘”‹…ƒŽ ƒ‰‡ ‰”‘—’ǡ ‹– ‘ˆˆ‡”• „‡––‡” ˜ƒŽ—‡Ǧˆ‘”ǦÂ?‘Â?‡› –ŠƒÂ? ’‡Â?•‹‘Â?• ‹Â? –‡”Â?• ‘ˆ ƒ…Š‹‡˜‹Â?‰ ’‘˜‡”–› ”‡†—…–‹‘Â? ƒ– Ž‡ƒ•– …‘•–Ǥ Š‡ •ƒÂ?‡ ƒ’’Ž‹‡• –‘ ‘–Š‡” Â?‘Â?Ǧ–ƒ”‰‡–‡† •’‡Â?†‹Â?‰ ’”‘‰”ƒÂ?•ǡ •—…Š ĥ –Š‡ —Â?‹˜‡”•ƒŽ ˆ‘‘† ƒÂ?† ‡Ž‡…–”‹…‹–› ˜‘—…Š‡”• †‹•„—”•‡† ‹Â? ʹͲͳͳ ƒÂ?† ‡ƒ”Ž› ʹͲͳʹǤ ‹‰Š‡” ’‘˜‡”–› ”‡†—…–‹‘Â? …‘—Ž† „‡ ƒ…Š‹‡˜‡† ‹ˆ –Š‡•‡ Šƒ† „‡‡Â? –ƒ”‰‡–‡†Ǥͳͺ x Labor force impactÇ£ • †‹•…—••‡†ǡ –Š‡”‡ ‹• ƒ …‘Â?Â?‘Â? …‘Â?…‡”Â? ™‹–Š •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ’”‘‰”ƒÂ?• –Šƒ– –Š‡› †‡–‡” Žƒ„‘” ˆ‘”…‡ ’ƒ”–‹…‹’ƒ–‹‘Â? „› „‡Â?‡ˆ‹…‹ƒ”‹‡•Ǥ • ƒ„‘˜‡ǡ –Š‡”‡ ‹• Â?‘ ‡˜‹†‡Â?…‡ –Š‹• ‹• –Š‡ …ƒ•‡ ƒ– ’”‡•‡Â?– ™‹–Š ‡‘”‰‹ƒǯ•  Ǥ ‘™‡˜‡”ǡ ‹– ‹• Â?‘–‡™‘”–Š› –Šƒ– –Š‹• …‘Â?…‡”Â? ‹• ƒ”‰—ƒ„Ž› Â?‘”‡ ’”‘Â?‹Â?‡Â?– ˆ‘” –Š‡ ‘Ž†Ǧƒ‰‡ ’‡Â?•‹‘Â?•ǡ „‡…ƒ—•‡ ‘˜‡” ŠƒŽˆ ‘ˆ ƒŽŽ ‡‘”‰‹ƒÂ? Š‘—•‡Š‘Ž†• ‹Â?…Ž—†‡ ƒ ’‡Â?•‹‘Â?‡” ƒÂ?† ™‘”Â?‹Â?‰Ǧƒ‰‡ Š‘—•‡Š‘Ž† Â?‡Â?„‡”• Â?ƒ› „‡ †‡–‡””‡† ˆ”‘Â? ™‘”Â?‹Â?‰ †—‡ –‘ Š‘—•‡Š‘Ž† ’‡Â?•‹‘Â? ”‡…‡‹’–Ǥ ‘Â?‡ Â?‘†‡•– ‡˜‹†‡Â?…‡ –Šƒ– –Š‹• ‹• –”—‡ Šƒ• „‡‡Â? ˆ‘—Â?† ‹Â? –Š‡ …ƒ•‡ ‘ˆ –Š‘•‡ ™Š‘ Ž‹˜‡ ™‹–Š ‡Ž†‡”Ž› ˆ‡Â?ƒŽ‡ ’‡Â?•‹‘Â?‡”• ‹Â? ‡‘”‰‹ƒǤͳͻ ƒŽƒÂ?…‹Â?‰ ˆ—–—”‡ ‹Â?…”‡ƒ•‡• ‹Â? Â?‘Â?–ŠŽ›  ƒÂ?† ’‡Â?•‹‘Â? „‡Â?‡ˆ‹–• •Š‘—Ž† „‡ƒ” –Š‹• ‹Â? Â?‹Â?†Ǥ x DemographyÇ£ Â? ƒÂ?ƒŽ›•‹• ‘ˆ –Š‡ ƒ‰‡ †‹•–”‹„—–‹‘Â? ‘ˆ •‘…‹ƒŽ •’‡Â?†‹Â?‰ ‹Â? ‡‘”‰‹ƒ ‹Â?†‹…ƒ–‡• –Šƒ– ƒ Žƒ”‰‡ Â?ƒŒ‘”‹–› ‹• ”‡…‡‹˜‡† „› –Š‡ ‡Ž†‡”Ž›Ǥ Š‹• ‹• –›’‹…ƒŽ ‘ˆ Â?‘•– …‘—Â?–”‹‡•ǡ †—‡ –‘ –Š‡ ‹Â?’‘”–ƒÂ?…‡ ‘ˆ ’‡Â?•‹‘Â?•Ǥ ‘™‡˜‡”ǡ ‹– ‹• ƒŽ•‘ Â?‘–‡™‘”–Š› –Šƒ– –Š‡ ƒ‰‡ ‰”‘—’ –Šƒ– ”‡…‡‹˜‡• –Š‡ •Â?ƒŽŽ‡•– ’‡”Ǧ…ƒ’‹–ƒ •’‡Â?†‹Â?‰ ƒÂ?‘—Â?– ‹• –Š‡ Ͳ –‘ Í· ƒ‰‡ ‰”‘—’Ǥ Š‹• Â?ƒ› ™ƒ””ƒÂ?– ˆ—–—”‡ ƒ––‡Â?–‹‘Â?Ç¡ •‹Â?…‡ ‡“—ƒŽ‹–› ‘ˆ ‘’’‘”–—Â?‹–› ‹• ƒ”‰—ƒ„Ž› „‡•– ƒ…Š‹‡˜‡† –Š”‘—‰Š ‹Â?–‡”˜‡Â?–‹‘Â?• ƒ– –Š‹• •–ƒ‰‡ ‘ˆ –Š‡ Ž‹ˆ‡ …›…Ž‡ǤʹͲ 2.6. Conclusion: the way forward ʹǤͷͶǤ The analysis in this chapter suggests that the profile of social protection programs in Georgia could move forward along one of several paths depending on the choices that are made. Â? –Š‡ ‘Â?‡ ŠƒÂ?† ‹• –Š‡ ’ƒ–Š ‘ˆ …‘Â?–‹Â?—‡† Ġ Š‘… ‹Â?…”‡ƒ•‡• ‹Â? –Š‡ „ƒ•‹… ’‡Â?•‹‘Â? „‡Â?‡ˆ‹– ™‹–Š ‡š’‡…–ƒ–‹‘Â?• „‡‹Â?‰ ”‡‹Â?ˆ‘”…‡† –Šƒ– –Š‡ ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡ ™‹ŽŽ „‡ Â?ƒ‹Â?–ƒ‹Â?‡†Ǥ ‘•– ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â? ™‘—Ž† ‡š’‡…– –‘ ”‡Ž› ‘Â? –Š‡ ’—„Ž‹…Ž› ’”‘˜‹†‡† ’‡Â?•‹‘Â? ˆ‘” ‘Ž†Ǧƒ‰‡ ‹Â?…‘Â?‡ ƒÂ?† ™‘—Ž† –Š—• Šƒ˜‡ Ž‹––Ž‡ ‹Â?…‡Â?–‹˜‡ –‘ •ƒ˜‡Ǥ —„Ž‹… ‡š’‡Â?†‹–—”‡ ‘Â? ’‡Â?•‹‘Â?• ™‘—Ž† ‰”‘™ ĥ ƒ •Šƒ”‡ ‘ˆ  ‘˜‡” –‹Â?‡ ĥ –Š‡ ’‘’—Žƒ–‹‘Â? ƒ‰‡• ƒÂ?† –Š‹• ™‘—Ž† ’‘•‡ ƒ •‡”‹‘—• …ŠƒŽŽ‡Â?‰‡ –‘ –Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ?Ǥ ”‘Ǧ ’‘‘” ’”‘‰”ƒÂ?• •—…Š ĥ –ƒ”‰‡–‡† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ™‘—Ž† „‡ …”‘™†‡† ‘—– ĥ Â?ƒÂ?› Â?‘Â?Ǧ‡Ž†‡”Ž› ’‘‘” …‘Â?–‹Â?—‡ –‘ ˆ‹Â?† –Š‡Â?•‡Ž˜‡• ™‹–Š‘—– ƒÂ?› •‘…‹ƒŽ •—„•‹•–‡Â?…‡ „‡Â?‡ˆ‹– –‘ •—’’‘”– …‘Â?•—Â?’–‹‘Â?Ǥ Â? –Š‡ ͳͺ DzÂ?‹˜‡”•ƒŽ ˜‘—…Š‡”• ‘” –ƒ”‰‡–‡† ‹Â?–‡”˜‡Â?–‹‘Â?•ǫ ˜ƒŽ—ƒ–‹Â?‰ ‹Â?’ƒ…– ‘Â? ’‘˜‡”–› ‹Â? ‡‘”‰‹ƒ „› –›’‡ ‘ˆ ‹Â?–‡”˜‡Â?–‹‘Â?dzǤ ‘”Ž† ƒÂ?Â? ȋʹͲͳʹȌǤ ͳͻ Dz ‡Â?‘‰”ƒ’Š‹… ŠƒÂ?‰‡ ‹Â? ‡‘”‰‹ƒǣ Â?’Ž‹…ƒ–‹‘Â?• ˆ‘” •‘…‹ƒŽ ’”‘‰”ƒÂ?• ƒÂ?† ’‘˜‡”–›dzǤ ‘”Ž† ƒÂ?Â? ȋʹͲͳͳȌǤ ʹͲ „‹†Ǥ ͶͲ ‘–Š‡” ŠƒÂ?† ‹• –Š‡ ’ƒ–Š ™Š‡”‡ ˆ—”–Š‡” ’‡Â?•‹‘Â? ‹Â?…”‡ƒ•‡• ƒ”‡ Â?‘†‡•– ƒÂ?† •‡Ž‡…–‹˜‡Ž› –ƒ”‰‡–‡† –‘ –Š‡ ’‘’—Žƒ–‹‘Â? ‹Â? ‰”‡ƒ–‡•– Â?‡‡†Ǥ Â?‡…ŠƒÂ?‹•Â? –‘ Ž‹Â?‹– ‰”‘™–Š ‘ˆ –Š‡ „‡Â?‡ˆ‹– –‘ Â?‘ Â?‘”‡ –ŠƒÂ? –Š‡ ”ƒ–‡ ‘ˆ ‹Â?ˆŽƒ–‹‘Â? …‘—Ž† „‡ †‡˜‡Ž‘’‡† –‘ •‡– ‡š’‡…–ƒ–‹‘Â?• –Šƒ– ’‡Â?•‹‘Â? ‹Â?…”‡ƒ•‡• ™‘—Ž† •‡”˜‡ ’”‹Â?ƒ”‹Ž› –‘ Â?ƒ‹Â?–ƒ‹Â? –Š‡ ’—”…Šƒ•‹Â?‰ ’‘™‡” ‘ˆ –Š‡ …—””‡Â?– „‡Â?‡ˆ‹–Ǥ Š‹• ™‘—Ž† ‡Â?…‘—”ƒ‰‡ –Š‡ …—””‡Â?– ™‘”Â?‹Â?‰ ’‘’—Žƒ–‹‘Â? –‘ •ƒ˜‡ ˆ‘” –Š‡‹” ”‡–‹”‡Â?‡Â?– ‹Â? ‡š’‡…–ƒ–‹‘Â? ‘ˆ Â?‘”‡ Â?‘†‡•– ”‡’Žƒ…‡Â?‡Â?– ”ƒ–‡• ˆ”‘Â? –Š‡ „ƒ•‹… „‡Â?‡ˆ‹– ‹Â? –Š‡ ˆ—–—”‡Ǥ ††‹–‹‘Â?ƒŽ ‹Â?‹–‹ƒ–‹˜‡• ‹Â? –Š‡ ƒ”‡ƒ• ‘ˆ ‹Â?’”‘˜‡† –ƒš –”‡ƒ–Â?‡Â?–ǡ Â?‘”‡ ƒ––”ƒ…–‹˜‡ ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?•–”—Â?‡Â?–• ˆ‘” Ž‘Â?‰ –‡”Â? •ƒ˜‹Â?‰•ǡ ĥ ™‡ŽŽ ĥ ƒÂ? ‘’–Ǧ‘—– ‡Â?”‘ŽŽÂ?‡Â?– ’”‘…‡••ǡ ™‘—Ž† ˆ—”–Š‡” ‡Â?…‘—”ƒ‰‡ ’”‹˜ƒ–‡ •ƒ˜‹Â?‰• ˆ‘” ”‡–‹”‡Â?‡Â?–Ǥ Š‡ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ’”‘‰”ƒÂ? ™‘—Ž† ”‡Â?ƒ‹Â? ‘Â? –”ƒ…Â? ‹Â? –Š‡ Â?‡†‹—Â? –‡”Â? ƒÂ?† ˆ‹•…ƒŽ •’ƒ…‡ ™‘—Ž† „‡ ƒ˜ƒ‹Žƒ„Ž‡ ˆ‘” –Š‡  ’”‘‰”ƒÂ?Ǥ • ƒ ”‡•—Ž–ǡ ƒÂ? ‹Â?…”‡ƒ•‹Â?‰ •Šƒ”‡ ‘ˆ –Š‡ ’‘‘” ƒÂ?† ‡š–”‡Â?‡ ’‘‘” ™‘—Ž† ”‡…‡‹˜‡ –ƒ”‰‡–‡† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ ‘˜‡” –‹Â?‡Ǥ Š‹• –”‡Â?† ™‘—Ž† „‡ ˆ—”–Š‡” ‡Â?ŠƒÂ?…‡† ĥ  „‡Â?‡ˆ‹…‹ƒ”‹‡• ƒ”‡ Â?ƒ–…Š‡† ™‹–Š Š—Â?ƒÂ? …ƒ’‹–ƒŽ ‹Â?˜‡•–Â?‡Â?–• ƒÂ?† ‡Â?’Ž‘›Â?‡Â?– ‘’’‘”–—Â?‹–‹‡• ‘˜‡” –‹Â?‡Ǥ Ͷͳ Chapter 3. Health Expenditures 3.1. Introduction ͵ǤͳǤ Health spending is well targeted to the poor in Georgia, but key challenges remain in further improving health outcomes and financial protection against impoverishing outǦofǦ pocket payments, which will likely require higher levels of public health spending. ‡‘”‰‹ƒǯ• Š‡ƒŽ–Š ”‡ˆ‘”Â?• ‹Â? ”‡…‡Â?– ›‡ƒ”• Šƒ˜‡ Ž‡† –‘ ƒ Â?—Â?„‡” ‘ˆ •‹‰Â?‹ˆ‹…ƒÂ?– ƒ…Š‹‡˜‡Â?‡Â?–•Ǥ Š‡ ‡†‹…ƒŽ Â?•—”ƒÂ?…‡ ”‘‰”ƒÂ?Ç¡ ™Š‹…Š ‘ˆˆ‡”• ƒ …‘Â?’”‡Š‡Â?•‹˜‡ ’ƒ…Â?ƒ‰‡ ‘ˆ Š‡ƒŽ–Š „‡Â?‡ˆ‹–• –‘ ’‘‘” Š‘—•‡Š‘Ž†• Â?‡‡–‹Â?‰ –Š‡ ’”‘š›ǦÂ?‡ƒÂ?• –‡•– …”‹–‡”‹ƒǡ Šƒ• Â?‡ƒÂ?– –Šƒ– ‡‘”‰‹ƒǯ• Š‡ƒŽ–Š •’‡Â?†‹Â?‰ ‹• ™‡ŽŽ –ƒ”‰‡–‡† –‘ –Š‡ ’‘‘”Ǥ Š‡   ƒŽ•‘ Šƒ• ƒ Â?ƒŒ‘” ‹Â?’ƒ…– ‹Â? ”‡†—…‹Â?‰ ‘—–Ǧ‘ˆǦ’‘…Â?‡– •’‡Â?†‹Â?‰ ƒÂ?‘Â?‰ „‡Â?‡ˆ‹…‹ƒ”‹‡•Ǥ ˜‡” –‹Â?‡ǡ •–”‘Â?‰ ”‡•—Ž–• Šƒ˜‡ „‡‡Â? ƒ…Š‹‡˜‡† ‹Â? –Š‡ ƒ”‡ƒ ‘ˆ Â?ƒ–‡”Â?ƒŽ ƒÂ?† …Š‹Ž† Š‡ƒŽ–ŠǤ ˜‡”ƒŽŽǡ Š‘™‡˜‡”ǡ …‘Â?•‹†‡”ƒ„Ž‡ …ŠƒŽŽ‡Â?‰‡• ”‡Â?ƒ‹Â? ‹Â? –Š‡ Š‡ƒŽ–Š •‡…–‘” ˆ‘” ‡‘”‰‹ƒǤ ‹Â?‡ ‘–Š‡” …‘—Â?–”‹‡• ‹Â? –Š‡ ”‡‰‹‘Â? „—– ‹Â? …‘Â?–”ƒ•– –‘ ‰Ž‘„ƒŽ –”‡Â?†•ǡ •‡˜‡”ƒŽ †‹Â?‡Â?•‹‘Â?• ‘ˆ ’‘’—Žƒ–‹‘Â? Š‡ƒŽ–Š ‘—–…‘Â?‡• Šƒ˜‡ •‡‡Â? ”‡Žƒ–‹˜‡Ž› Ž‹––Ž‡ ‹Â?’”‘˜‡Â?‡Â?– ‘˜‡” –Š‡ Ž‘Â?‰ –‡”Â?Ǥ Â? ‹Â?’‘”–ƒÂ?– ”‡ƒ•‘Â? ‹• –Š‡ Ž‘™ Ž‡˜‡Ž ‘ˆ …‘˜‡”ƒ‰‡ ƒÂ?† —–‹Ž‹œƒ–‹‘Â? ‘ˆ Â?‡†‹…ƒŽ …ƒ”‡ ‹Â? ‡‘”‰‹ƒǤ Â? •’‹–‡ ‘ˆ –Š‡ •—……‡•• ‘ˆ  Ç¡ Â?ƒÂ?› Ž‘™Ǧ‹Â?…‘Â?‡ Š‘—•‡Š‘Ž†• •–‹ŽŽ †‘ Â?‘– Šƒ˜‡ ƒ†‡“—ƒ–‡ …‘˜‡”ƒ‰‡ ‘ˆ Š‡ƒŽ–Š …ƒ”‡Ǥ Â? ƒ††‹–‹‘Â?Ç¡ …‘Â?Â?‘Â? ‹Â?†‹…ƒ–‘”• ‘ˆ ˆ‹Â?ƒÂ?…‹ƒŽ ’”‘–‡…–‹‘Â? ƒ‰ƒ‹Â?•– ‹Â?’‘˜‡”‹•Š‹Â?‰ ‘—–Ǧ‘ˆǦ’‘…Â?‡– ’ƒ›Â?‡Â?–• ”‡Â?ƒ‹Â? ™‡ƒÂ? ‹Â? …‘Â?’ƒ”‹•‘Â? –‘ Â?‘•– …‘—Â?–”‹‡•ǡ ™‹–Š Ž‘™ ’—„Ž‹… Š‡ƒŽ–Š •’‡Â?†‹Â?‰ ƒÂ?† Š‹‰Š ’”‹˜ƒ–‡ •’‡Â?†‹Â?‰ ‘Â? ’Šƒ”Â?ƒ…‡—–‹…ƒŽ• ƒÂ?‘Â?‰ –Š‡ Â?‡› …ƒ—•‡• ‘ˆ –Š‹• ’ƒ––‡”Â?Ǥ ͵ǤʹǤ Public health expenditures may be analyzed with reference to the two major objectives of any health system: (i) to improve health outcomes and (ii) to protect against impoverishing outǦofǦpocket payments for health care. Š‡ ˆ‹”•– ‘„Œ‡…–‹˜‡ ‡Â?„”ƒ…‡• –Š‡ ‰‘ƒŽ ‘ˆ ”‡†—…‹Â?‰ Â?‘”–ƒŽ‹–› ƒÂ?† Â?‘”„‹†‹–›ǡ —•—ƒŽŽ› ™‹–Š ƒ ’ƒ”–‹…—Žƒ” ˆ‘…—• ‘Â? –Š‡ Š‡ƒŽ–Š ‘—–…‘Â?‡• ‘ˆ –Š‡ ’‘‘”‡•– •‡‰Â?‡Â?– ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â?Ǥ Š‡ •‡…‘Â?† ‘„Œ‡…–‹˜‡ ƒ††”‡••‡• –Š‡ ‰‘ƒŽ ‘ˆ ‡Â?•—”‹Â?‰ –Šƒ– ’‡‘’Ž‡ †‘ Â?‘– ˆƒ…‡ Â?‡†‹…ƒŽ ‡š’‡Â?†‹–—”‡• –Šƒ– ƒ”‡ ‡‹–Š‡” Ǯ‹Â?’‘˜‡”‹•Š‹Â?‰ǯ ȋ†”‹˜‹Â?‰ –Š‡Â? „‡Ž‘™ –Š‡ ’‘˜‡”–› Ž‹Â?‡Ȍ ‘” Ǯ…ƒ–ƒ•–”‘’Š‹…ǯ ȋ‡š…‡‡†‹Â?‰ •‘Â?‡ –Š”‡•Š‘Ž† ‘ˆ Š‘—•‡Š‘Ž† ”‡•‘—”…‡•Ȍ ĥ ƒ ”‡•—Ž– ‘ˆ ƒÂ? ‡’‹•‘†‡ ‘ˆ ‹ŽŽ Š‡ƒŽ–ŠǤ Š‡•‡ –™‘ ‘˜‡”ƒ”…Š‹Â?‰ Š‡ƒŽ–Š •›•–‡Â? ‰‘ƒŽ• ƒŽ•‘ …‘””‡•’‘Â?† –‘ –Š‡ ‘„Œ‡…–‹˜‡• Š‹‰ŠŽ‹‰Š–‡† ‹Â? Â?ƒŒ‘” ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‡’‘”–•Ǥͳ Figure 3.1Ç£ Population Priorities for Government ͵Ǥ͵Ǥ The health sector is perceived as an Investment In Georgia, 2010 important priority by the population of ȋ‹Â? ’‡”…‡Â?– ‘ˆ ”‡•’‘Â?†‡Â?–•Ȍ Georgia. Š‡ ‘”Ž† ƒÂ?Â?Ǧ  Life in 70 2nd priority Transition Survey ĥÂ?‡† Š‘—•‡Š‘Ž†• –‘ ‹†‡Â?–‹ˆ› 60 1st priority –Š‡‹” –‘’ –™‘ ’”‹‘”‹–‹‡• ˆ‘” ‰‘˜‡”Â?Â?‡Â?– ‹Â?˜‡•–Â?‡Â?–Ǥ Š‡ Š‡ƒŽ–Š •‡…–‘” ™ƒ• –Š‡ Â?‘•– 50 …‘Â?Â?‘Â? ”‡•’‘Â?•‡ ƒÂ?‘Â?‰ ͳͲͲͲ ”‡•’‘Â?†‡Â?–•ǡ % of population ĥ •Š‘™Â? ‹Â? ‹‰—”‡ ͵ǤͳǤ –Š‡” ’‘••‹„Ž‡ ƒÂ?•™‡”• 40 ‹Â?…Ž—†‡† ‡†—…ƒ–‹‘Â?Ç¡ Š‡Ž’‹Â?‰ –Š‡ ’‘‘”ǡ ’‡Â?•‹‘Â?•ǡ 30 Š‘—•‹Â?‰ǡ ‹Â?ˆ”ƒ•–”—…–—”‡ǡ ƒÂ?† –Š‡ ‡Â?˜‹”‘Â?Â?‡Â?–Ǥ Š‡ ’”‹‘”‹–› ƒ……‘”†‡† –‘ –Š‡ Š‡ƒŽ–Š •‡…–‘” ƒŽ•‘ 20 ƒ’’‡ƒ”• –‘ „‡ ƒÂ? ‡Â?†—”‹Â?‰ •‡Â?–‹Â?‡Â?–ǡ ĥ ƒ 10 •‹Â?‹Žƒ” ’‹…–—”‡ ‡Â?‡”‰‡† ‹Â? –™‘ •‡’ƒ”ƒ–‡ ™ƒ˜‡• ‘ˆ –Š‡ •—”˜‡› ȋʹͲͲ͸ ƒÂ?† ʹͲͳͲȌǡ †‡•’‹–‡ –Š‡ 0 ‹Â?–‡”˜‡Â?‹Â?‰ ‡…‘Â?‘Â?‹… …”‹•‹•Ǥ ˆ …‘—”•‡ǡ –Š‡ Source: LiTSͲ2 Health Helping poor Education Pensions Housing Environment Infrastructure ’—”•—‹– ‘ˆ Š‡ƒŽ–Š ‘„Œ‡…–‹˜‡• ™‹ŽŽ Â?‡‡† –‘ –ƒÂ?‡ SourceÇ£ ‘”Ž† ƒÂ?Â?Ǧ  ‹ˆ‡ ‹Â? ”ƒÂ?•‹–‹‘Â? —”˜‡›Ǥ ͳ ‘” ‡šƒÂ?’Ž‡ǡ –Š‡  ǯ• ‘”Ž† ‡ƒŽ–Š ‡’‘”– ȋʹͲͲͲȌ ƒÂ?† –Š‡ ‘”Ž† ƒÂ?Â?ǯ• ‡ƒŽ–Šǡ —–”‹–‹‘Â?Ç¡ ƒÂ?† ‘’—Žƒ–‹‘Â? •‡…–‘” •–”ƒ–‡‰› ȋʹͲͲ͹ȌǤ Ͷʹ ’Žƒ…‡ ™‹–Š‹Â? –Š‡ „”‘ƒ†‡” ‡…‘Â?‘Â?‹… ƒÂ?† ˆ‹•…ƒŽ …‘Â?–‡š–ǡ ™Š‹…Š …ƒŽŽ• ˆ‘” ‡Â?•—”‹Â?‰ ˜ƒŽ—‡ ˆ‘” Â?‘Â?‡› ƒÂ?† ‡ˆˆ‹…‹‡Â?…› ‘ˆ Š‡ƒŽ–Š •‡…–‘” •’‡Â?†‹Â?‰Ǥ ͵ǤͶǤ In order to address the challenges facing health expenditures in Georgia, the analysis in this chapter discusses the following options for consideration: x —”•—‡ ‹Â?‹–‹ƒ–‹˜‡• –‘ ”‡†—…‡ Š‹‰Š ‘—– ‘ˆ ’‘…Â?‡– ’Šƒ”Â?ƒ…‡—–‹…ƒŽ •’‡Â?†‹Â?‰ „› ’”‘Â?‘–‹Â?‰ —•‡ ‘ˆ ‰‡Â?‡”‹…• ƒÂ?† ‡Â?ŠƒÂ?…‹Â?‰ ’—„Ž‹… ’—”…Šƒ•‹Â?‰ ’‘™‡” ‘˜‡” ’Šƒ”Â?ƒ…‡—–‹…ƒŽ• È‹shortǦtermÈŒ x Â?ŠƒÂ?…‡ ƒ……‡•• –‘ Â?‡› Â?‡†‹…ƒŽ ‹Â?–‡”˜‡Â?–‹‘Â?• ȋ’”‡˜‡Â?–ƒ–‹˜‡ …ƒ”‡ ƒÂ?† Â?‡› ’Šƒ”Â?ƒ…‡—–‹…ƒŽ•Ȍ ‹Â? ‘”†‡” –‘ ‹Â?…”‡ƒ•‡ —–‹Ž‹œƒ–‹‘Â? ƒÂ?† ‹Â?’”‘˜‡ Š‡ƒŽ–Š ‘—–…‘Â?‡• È‹shortǦtermÈŒ x ††”‡•• ™‡ƒÂ?Â?‡••‡• ‹Â? •—’’Ž› ‘ˆ Â?‡†‹…ƒŽ …ƒ”‡ǡ ™‹–Š ƒ •’‡…‹ˆ‹… ˆ‘…—• ‘Â? ’”‹Â?ƒ”› …ƒ”‡ǡ ‹Â? ‘”†‡” –‘ ‹Â?’”‘˜‡ Ž‘™ Ž‡˜‡Ž• ‘ˆ —–‹Ž‹œƒ–‹‘Â? ƒÂ?† —Ž–‹Â?ƒ–‡Ž› Š‡ƒŽ–Š ‘—–…‘Â?‡• È‹medium termÈŒ x š’ƒÂ?† …‘˜‡”ƒ‰‡ ‘ˆ •–ƒ–‡ ˆ—Â?†‡† Š‡ƒŽ–Š ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ?•ǡ ™‹–Š ƒ ˆ‘…—• ‘Â? •–‹ŽŽ —Â?…‘˜‡”‡† ’‘‘” Š‘—•‡Š‘Ž†•ǡ ƒÂ?† ‡š’ƒÂ?† †”—‰ „‡Â?‡ˆ‹– ‹Â?   –‘ ”‡†—…‡ ‡š…‡••‹˜‡ ’Šƒ”Â?ƒ…‡—–‹…ƒŽ  È‹medium termÈŒ ͵ǤͷǤ This chapter reviews health expenditure patterns in Georgia through the lens of the major sector objectives, followed by a discussion of key policy issues. Š‡ …Šƒ’–‡” ‹• •–”—…–—”‡† ĥ ˆ‘ŽŽ‘™•Ǥ ‡…–‹‘Â? Í´ ’”‘˜‹†‡• ƒÂ? ‘˜‡”˜‹‡™ ‘ˆ Š‡ƒŽ–Š ‡š’‡Â?†‹–—”‡• ‹Â? ‡‘”‰‹ƒǤ ‡…–‹‘Â? ͵ ˆ‘…—•‡• ‘Â? –Š‡ ƒ…Š‹‡˜‡Â?‡Â?–• ƒÂ?† •Š‘”–…‘Â?‹Â?‰• ‘ˆ Š‡ƒŽ–Š ‡š’‡Â?†‹–—”‡• ™‹–Š ”‡‰ƒ”† –‘ Ž‘Â?‰Ǧ–‡”Â? –”‡Â?†• ‹Â? Š‡ƒŽ–Š ‘—–…‘Â?‡•Ǥ ‡…–‹‘Â? Ͷ ‡šƒÂ?‹Â?‡• –Š‡ ‹Â?’ƒ…– ‘ˆ ‰‘˜‡”Â?Â?‡Â?– Š‡ƒŽ–Š •’‡Â?†‹Â?‰ ‘Â? –Š‡ †‡‰”‡‡ –‘ ™Š‹…Š Š‘—•‡Š‘Ž†• ƒ”‡ ’”‘–‡…–‡† ƒ‰ƒ‹Â?•– ‹Â?’‘˜‡”‹•Š‹Â?‰ ‘—–Ǧ‘ˆǦ’‘…Â?‡– •’‡Â?†‹Â?‰Ǥ ‡…–‹‘Â? Í· ƒ††”‡••‡• Â?‡› ’‘Ž‹…› ‹••—‡•ǡ Â?ƒÂ?‡Ž› ȋ‹Ȍ –Š‡ ’‡”ˆ‘”Â?ƒÂ?…‡ ‘ˆ –Š‡ ‡†‹…ƒŽ Â?•—”ƒÂ?…‡ ”‘‰”ƒÂ? ˆ‘” –Š‡ ’‘‘”Ǣ ȋ‹‹Ȍ ’Šƒ”Â?ƒ…‡—–‹…ƒŽ ’”‹…‡•Ǣ ƒÂ?† ȋ‹‹‹Ȍ •–”‡Â?‰–Š‡Â?‹Â?‰ ’”‹Â?ƒ”› …ƒ”‡Ǥ 3.2. Overview of health spending in Georgia ͵Ǥ͸Ǥ Public health spending in Georgia is drawn from general tax revenues and allocated to various programs by the Ministry of Labor, Health, and Social Affairs. ˜‡”ƒŽŽǡ ‡‘”‰‹ƒ •’‡Â?– ƒ„‘—– ͳǤͻ ’‡”…‡Â?– ‘ˆ  ‘Â? Š‡ƒŽ–Š ƒ– –Š‡ ‰‡Â?‡”ƒŽ ‰‘˜‡”Â?Â?‡Â?– Ž‡˜‡Ž ‹Â? ʹͲͳͳǡ ‘ˆ ™Š‹…Š ƒ„‘—– ŠƒŽˆ ™ƒ• •’‡Â?– ‘Â? ’—„Ž‹…Ž› ˆ—Â?†‡† Š‡ƒŽ–Š ‹Â?•—”ƒÂ?…‡ ƒÂ?† –Š‡ ‘–Š‡” ŠƒŽˆ ‘Â? ƒ ”ƒÂ?‰‡ ‘ˆ †‹•‡ƒ•‡Ǧ•’‡…‹ˆ‹… Š‡ƒŽ–Š ’”‘‰”ƒÂ?•Ǥ ‡ƒ”Ž› ŠƒŽˆ –Š‡ –‘–ƒŽ Š‡ƒŽ–Š „—†‰‡– ‹• ƒ……‘—Â?–‡† ˆ‘” „› –Š‡ ‡†‹…ƒŽ Â?•—”ƒÂ?…‡ ”‘‰”ƒÂ? È‹ ÈŒ ˆ‘” –Š‡ ’‘‘”ǡ ™Š‹…Š –ƒ”‰‡–• –Š‡ ’‘‘”‡•– ʹͲ ’‡”…‡Â?– ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â? ȋƒ„‘—– ͻͲͲǡͲͲͲ ‹Â?†‹˜‹†—ƒŽ•Ȍ „ƒ•‡† ‘Â? –Š‡ •ƒÂ?‡ ’”‘š› Â?‡ƒÂ?• –‡•– –Šƒ– ‹• —•‡† ˆ‘” –Š‡ ƒ”‰‡–‡† ‘…‹ƒŽ ••‹•–ƒÂ?…‡ È‹ ÈŒ ’”‘‰”ƒÂ?Ǥ Š‡   –Š‡Â? –”ƒÂ?•ˆ‡”• ƒ ˆ‹š‡† Â?‘Â?–ŠŽ› ’”‡Â?‹—Â? ȋƒ„‘—–  ͳͳ ’‡” …ƒ’‹–ƒȌ –‘ ’”‹˜ƒ–‡ ‹Â?•—”ƒÂ?…‡ …‘Â?’ƒÂ?‹‡•ǡ ™Š‘ ƒ”‡ ”‡•’‘Â?•‹„Ž‡ ˆ‘” ’—”…Šƒ•‹Â?‰ •‡”˜‹…‡• ˆ”‘Â? ’”‘˜‹†‡”• ƒ……‘”†‹Â?‰ –‘ –Š‡ „‡Â?‡ˆ‹– ’ƒ…Â?ƒ‰‡Ǥ ‘•– ‘–Š‡” Š‡ƒŽ–Š ’”‘‰”ƒÂ?• ƒ”‡ ˆ‘” •’‡…‹ˆ‹… †‹•‡ƒ•‡• ȋ‡Ǥ‰Ǥǡ …ƒ”†‹‘Ž‘‰›ǡ –—„‡”…—Ž‘•‹•Ȍ ‘” ’‘’—Žƒ–‹‘Â? ‰”‘—’• ȋ‡Ǥ‰Ǥǡ …Š‹Ž†”‡Â? ‘” ’”‡‰Â?ƒÂ?– ™‘Â?‡Â?ȌǤ ‘” Â?ƒÂ?› ‘ˆ –Š‡•‡ ’”‘‰”ƒÂ?•ǡ ƒ ˜‘—…Š‡” •…Š‡Â?‡ ™ƒ• ‹Â?–”‘†—…‡† ‹Â? ʹͲͳͳ –‘ Š‡Ž’ ƒŽŽ‘…ƒ–‡ ˆ—Â?†• ƒ……‘”†‹Â?‰ –‘ ’‘’—Žƒ–‹‘Â? …Š‘‹…‡• ”ƒ–Š‡” –ŠƒÂ? ˆ‘” •’‡…‹ˆ‹… ’”‘˜‹†‡”•Ǥ ͵Ǥ͹Ǥ Total health spending in Georgia is at the upper end of the range commonly seen in lowerǦmiddle income countries around the world, but it is an outlier with respect to the balance between public and private sources. ÂŽÂ?‘•– ƒŽŽ Ž‘™ ƒÂ?† Â?‹††Ž‡Ǧ‹Â?…‘Â?‡ …‘—Â?–”‹‡• •’‡Â?† ƒ„‘—– Ͷ –‘ ͺ ’‡”…‡Â?– ‘ˆ  ‘Â? Š‡ƒŽ–Š ‹Â? –‘–ƒŽ ȋ’—„Ž‹… ƒÂ?† ’”‹˜ƒ–‡Ȍǡ ĥ ’‘’—Žƒ–‹‘Â?• ‡˜‡”›™Š‡”‡ †‡Â?ƒÂ?† ƒ …‡”–ƒ‹Â? Ž‡˜‡Ž ‘ˆ Š‡ƒŽ–Š …ƒ”‡ ‰‘‘†• ƒÂ?† •‡”˜‹…‡•Ǥ ‹–Š –‘–ƒŽ Š‡ƒŽ–Š •’‡Â?†‹Â?‰ ‘ˆ ƒ„‘—– ͺ ’‡”…‡Â?– ‘ˆ Ç¡ ‡‘”‰‹ƒ ‹• ƒ– –Š‡ Š‹‰Š ‡Â?† ‘ˆ –Š‡ –›’‹…ƒŽ ”ƒÂ?‰‡Ǥ ‡‘”‰‹ƒ ‹• ƒ Â?‘–ƒ„Ž‡ ‘—–Ž‹‡”ǡ Š‘™‡˜‡”ǡ ™‹–Š ”‡•’‡…– –‘ –Š‡ •Šƒ”‡ ‘ˆ –‘–ƒŽ Š‡ƒŽ–Š ˆ‹Â?ƒÂ?…‹Â?‰ –Šƒ– ‹• ˆ”‘Â? ’”‹˜ƒ–‡ ‘—–Ǧ‘ˆǦ’‘…Â?‡– •‘—”…‡•ǡ ™Š‹…Š Ͷ͵ ƒ– ‘˜‡” ͹Ͳ ’‡”…‡Â?– ‹• –Š‡ Š‹‰Š‡•– ‹Â? —”‘’‡ ƒÂ?† Â?‡ƒ”Ž› –™‹…‡ –Š‡ Â?‘”Â? ƒÂ?‘Â?‰ Ž‘™‡”ǦÂ?‹††Ž‡ ‹Â?…‘Â?‡ …‘—Â?–”‹‡• ‹Â? –Š‡ ”‡‰‹‘Â?Ǥ ‹‰—”‡ ͵Ǥʹ •Š‘™• •‘Â?‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ …‘Â?’ƒ”‹•‘Â?•Ǥ Figure 3.2: Public and Private Health Spending, Figure 3.3: Govt and OutǦOfǦPocket Spending on Europe and Georgia Health in Europe and Georgia (2010) ȋ‹Â? ’‡”…‡Â?– ‘ˆ ÈŒ ȋ‹Â? ’‡”…‡Â?– ‘ˆ –‘–ƒŽ ƒÂ?† ’‡”…‡Â?– ‘ˆ ÈŒ 12% 80 Private Public Georgia 70 Out of pocket spending as share of total 10% 60 2.2% 8% 50 40 % of GDP 6% 1.7% 30 5.8% 2.3% 20 4% 7.5% 10 2% 4.7% 0 3.2% 2.0% 0 2 4 6 8 10 0% Government health spending as % of GDP Source: WHO and HUES EUͲ15 EUͲ10 CIS Georgia Source: WHO and HUES Source: WHO and HUES Source: WHO and HUES ͵ǤͺǤ Georgia’s health spending profile is part of a global pattern whereby the share of health spending that is not covered by the government budget will be mostly outǦofǦpocket (OOP). ‹‰—”‡ ͵Ǥ͵ †‡’‹…–• –Š‹• ”‡Žƒ–‹‘Â?•Š‹’ ‹Â? –Š‡ —”‘’‡ƒÂ? ”‡‰‹‘Â?Ǥ Š‹• ”‡ˆŽ‡…–• –Š‡ ˆƒ…– –Šƒ– ƒŽÂ?‘•– Â?‘ Ž‘™ ‘” Â?‹††Ž‡ ‹Â?…‘Â?‡ …‘—Â?–”› Šƒ• •—……‡••ˆ—ŽŽ› ˆ—Â?†‡† ƒ •‹‰Â?‹ˆ‹…ƒÂ?– •Šƒ”‡ ‘ˆ Š‡ƒŽ–Š •’‡Â?†‹Â?‰ –Š”‘—‰Š ’”‹˜ƒ–‡ ˜‘Ž—Â?–ƒ”› ‹Â?•—”ƒÂ?…‡ǡ ‹Â? Žƒ”‰‡ ’ƒ”– †—‡ –‘ –Š‡ ’‡”˜ƒ•‹˜‡ Â?ƒ”Â?‡– ˆƒ‹Ž—”‡• ‹Â? –Š‹• ƒ”‡ƒǤ Š‡ ‘Â?Ž› ‡š…‡’–‹‘Â? ‹• –Š‡ –›’‹…ƒŽŽ› ˆ‘”Â?ƒŽŽ› ‡Â?’Ž‘›‡† –‘’ “—‹Â?–‹Ž‡ ‘ˆ –Š‡ ‹Â?…‘Â?‡ †‹•–”‹„—–‹‘Â?Ç¡ ™Š‡”‡ ‡Â?’Ž‘›‡”• Â?ƒ› Š‡Ž’ ’‘‘Ž ˆ—Â?†• ˆ‘” Š‡ƒŽ–ŠǤ ƒ„Ž‡ ͵Ǥͳ ’”‘˜‹†‡• ƒ „”‡ƒÂ?†‘™Â? ‘ˆ ‘—–Ǧ‘ˆǦ’‘…Â?‡– •’‡Â?†‹Â?‰ …ƒ–‡‰‘”‹‡• ĥ ‘ˆ ʹͲͳͲǤ Table 3.1: Average Annual Per Capita OutǦOfǦPocket Payments, By Category (2010) ȋ‹Â? Žƒ”‹Ȍ Category GEL Â?’ƒ–‹‡Â?– —”ƒ–‹˜‡ ƒ”‡ ʹͺǤͺ —–’ƒ–‹‡Â?– —”ƒ–‹˜‡ ƒ”‡ ͸͵Ǥ͵ Â?…‹ŽŽƒ”› •‡”˜‹…‡• ȋŽƒ„ǡ †‹ƒ‰Â?‘•–‹…•ǡ ‡–…ǤȌ ʹͷǤͺ Šƒ”Â?ƒ…‡—–‹…ƒŽ• ȋƒÂ?† ‘–Š‡” Â?‡†‹…ƒŽ Â?‘Â?Ǧ†—”ƒ„Ž‡•Ȍ ͳͻͶǤ͵ –Š‡” ͷǤͶ Total 317.7 SourceÇ£   ʹͲͳͲǤ 3.3. Health Spending and Health Outcomes ͵ǤͻǤ With regard to the major objective of improving health outcomes, Georgia and neighboring countries have performed poorly in recent decades relative to other regions of the world. ‹‰—”‡ ͵ǤͶ •Š‘™• –Š‡ Š‹•–‘”‹…ƒŽ –”‡Â?†• ‘ˆ Ž‹ˆ‡ ‡š’‡…–ƒÂ?…› ‹Â? ‡‘”‰‹ƒ ƒÂ?† •‡Ž‡…–‡† …‘Â?’ƒ”ƒ–‘” ”‡‰‹‘Â?•Ǥ Â? ͳͻ͹Ͳǡ Ž‹ˆ‡ ‡š’‡…–ƒÂ?…› ‹Â? ‡‘”‰‹ƒ ™ƒ• Â?‘– ˆƒ” „‡Š‹Â?† –Š‡ Ž‡˜‡Ž ‹Â? ‡•–‡”Â? —”‘’‡ ƒÂ?† –Š‡ Â?‹–‡† –ƒ–‡•ǡ ƒÂ?† ™‡ŽŽ ƒŠ‡ƒ† ‘ˆ ƒ•– •‹ƒǡ ƒ–‹Â? Â?‡”‹…ƒǡ ƒÂ?† –Š‡ ‹††Ž‡ ƒ•–Ǥ ‘™‡˜‡”ǡ •‹Â?…‡ –Š‡Â?Ç¡ ‘—–…‘Â?‡• ‹Â? ‡‘”‰‹ƒ Šƒ˜‡ ‹Â?’”‘˜‡† ‘Â?Ž› •Ž‹‰Š–Ž›ǡ ™Š‹Ž‡ –Š‡ Â?‹††Ž‡Ǧ‹Â?…‘Â?‡ ”‡‰‹‘Â?• Šƒ˜‡ …ƒ—‰Š– —’ ƒÂ?† ‡•–‡”Â? —”‘’‡ ƒÂ?† –Š‡ ǤǤ Šƒ˜‡ …‘Â?–‹Â?—‡† –‘ Â?ƒÂ?‡ •–‡ƒ†› ’”‘‰”‡••Ǥ ‹Â?‡ ‡‘”‰‹ƒǡ ƒ •‹Â?‹Žƒ” –”‡Â?† ‘ˆ •Ž‘™ ’”‘‰”‡•• ‹Â? ‹Â?’”‘˜‹Â?‰ •‡˜‡”ƒŽ †‹Â?‡Â?•‹‘Â?• ‘ˆ Š‡ƒŽ–Š ‘—–…‘Â?‡• ͶͶ ‹• ˜‹•‹„Ž‡ ‹Â? ‘–Š‡” …‘—Â?–”‹‡• ‘ˆ –Š‡ ”‡‰‹‘Â?Ǥ ‘”‡‘˜‡”ǡ Š‡ƒŽ–Š ‘—–…‘Â?‡• –‡Â?† –‘ „‡ ™‘”•‡ ƒÂ?‘Â?‰ –Š‡ ’‘‘”‡” •‡‰Â?‡Â?–• ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â?Ǥ – •Š‘—Ž† „‡ Â?‘–‡† –Šƒ– ƒŽ–Š‘—‰Š –Š‡”‡ ‹• •‘Â?‡ —Â?…‡”–ƒ‹Â?–› ƒ„‘—– –Š‡ ‡šƒ…– Ž‡˜‡Ž ‘ˆ Â?‘”–ƒŽ‹–› ‹Â? ‡‘”‰‹ƒǡʹ –Š‡ ‘˜‡”ƒŽŽ •Ž‘™ ”ƒ–‡ ‘ˆ ’”‘‰”‡•• ‹• “—‹–‡ …Ž‡ƒ”Ǥ Figure 3.4: Life Expectancy at Birth, Georgia And The World, 1970Ǧ2008 ȋ‹Â? ›‡ƒ”•Ȍ 85 80 75 70 Life expectancy at birth EU 65 US Latin America East Asia 60 Middle East Russia 55 Georgia 50 45 40 Source:  ͵ǤͳͲǤ The burden of disease in Georgia is similar to that of most European nations. ‘Â?Ǧ …‘Â?Â?—Â?‹…ƒ„Ž‡ †‹•‡ƒ•‡• ƒ……‘—Â?– ˆ‘” ƒ’’”‘š‹Â?ƒ–‡Ž› ͻͲ ’‡”…‡Â?– ‘ˆ Â?‘”–ƒŽ‹–›Ǥ „‘—– ŠƒŽˆ ‘ˆ ƒŽŽ †‡ƒ–Š• ƒ”‡ †—‡ –‘ …‹”…—Žƒ–‘”› †‹•‡ƒ•‡•ǡ ƒÂ?† ƒ ˆ—”–Š‡” ʹͲ ’‡”…‡Â?– †—‡ –‘ Â?ƒŽ‹‰Â?ƒÂ?– Â?‡‘’Žƒ•Â?•Ǥ ‡•’‹”ƒ–‘”› ‹ŽŽÂ?‡••‡• ƒ……‘—Â?– ˆ‘” ƒÂ? ‹Â?’‘”–ƒÂ?– •Šƒ”‡ ‘ˆ Â?‘”„‹†‹–›Ǥ ͵ǤͳͳǤ Although they do not represent a large share of the disease burden, Georgia has made steady progress with regard to health outcomes in the area of maternal and child health. ……‘”†‹Â?‰ –‘ –Š‡ ʹͲͳͲ ‡’”‘†—…–‹˜‡ ‡ƒŽ–Š —”˜‡› È‹ Ȍǡ ͻͺ ’‡”…‡Â?– ‘ˆ ’”‡‰Â?ƒÂ?– ™‘Â?‡Â? Šƒ† ƒ– Ž‡ƒ•– ‘Â?‡ ƒÂ?–‡ǦÂ?ƒ–ƒŽ ˜‹•‹–ǡ ƒÂ?† ͻͲ ’‡”…‡Â?– Šƒ† ƒ– Ž‡ƒ•– ˆ‘—” •—…Š ˜‹•‹–•Ǥ Š‡ ‹Â?ˆƒÂ?– Â?‘”–ƒŽ‹–› ”ƒ–‡ †‡…Ž‹Â?‡† ˆ”‘Â? ͶͳǤ͸ ’‡” ͳͲͲͲ ‹Â? ͳͻͻͷǦͻͻ –‘ ʹͳǤͳ ‹Â? ʹͲͲͲǦͲͶ ƒÂ?† ͳͶǤͳ ‹Â? ʹͲͲͷǦͲͻǤ Â?†‡”Ǧͷ Â?‘”–ƒŽ‹–› Šƒ• ˆƒŽŽ‡Â? „› Â?‡ƒ”Ž› ͸Ͷ ’‡”…‡Â?– ‘˜‡” –Š‡ •ƒÂ?‡ –‹Â?‡ Š‘”‹œ‘Â?Ǥ —–—”‡ ’”‘‰”‡•• ‘Â? –Š‡•‡ ‹Â?†‹…ƒ–‘”• ™‹ŽŽ ‹Â?…”‡ƒ•‹Â?‰Ž› ”‡“—‹”‡ ”‡†—…–‹‘Â?• ‘ˆ Â?‡‘ǦÂ?ƒ–ƒŽ …ƒ”‡ ȋˆ‹”•– ʹͺ †ƒ›•ȌǤ ˜‡”ƒŽŽǡ ‡‘”‰‹ƒ …‘Â?’ƒ”‡• ˆƒ˜‘”ƒ„Ž› –‘ ‘–Š‡” …‘—Â?–”‹‡• ™‹–Š ”‡‰ƒ”† –‘ ƒ…Š‹‡˜‡Â?‡Â?– ‘ˆ ‹ŽŽ‡Â?Â?‹—Â? ‡˜‡Ž‘’Â?‡Â?– ‘ƒŽ• È‹ •ȌǤ ͵ǤͳʹǤ International experience suggests that medical care becomes an increasingly important contributor to improved health outcomes in middle and higherǦincome countries. – ‡ƒ”Ž‹‡” •–ƒ‰‡• ‘ˆ †‡˜‡Ž‘’Â?‡Â?–ǡ Â?ƒŒ‘” Š‡ƒŽ–Š ‰ƒ‹Â?• –›’‹…ƒŽŽ› ƒ”‹•‡ ˆ”‘Â? Â?—–”‹–‹‘Â?Ç¡ …Ž‡ƒÂ? ™ƒ–‡” ƒÂ?† •ƒÂ?‹–ƒ–‹‘Â?Ç¡ •ƒˆ‡ …Š‹Ž† †‡Ž‹˜‡”›ǡ ƒÂ?† ‹Â?Â?—Â?‹œƒ–‹‘Â?Ǥ ‡‘”‰‹ƒ Šƒ† Â?ƒ†‡ •‹‰Â?‹ˆ‹…ƒÂ?– ƒ…Š‹‡˜‡Â?‡Â?–• ‘Â? –Š‡•‡ ‹Â?–‡”˜‡Â?–‹‘Â?• „› –Š‡ ͳͻ͸Ͳ•Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ Â?‘•– ‘ˆ –Š‡ ‹Â?’”‘˜‡Â?‡Â?–• ‹Â? Š‡ƒŽ–Š ‘—–…‘Â?‡• †—”‹Â?‰ –Š‡ Žƒ–‡ ʹͲ–Š …‡Â?–—”› ‹Â? ‡•–‡”Â? —”‘’‡ ƒÂ?† –Š‡  Šƒ˜‡ „‡‡Â? †—‡ –‘ –‘„ƒ……‘ …‡••ƒ–‹‘Â? ƒÂ?† ‡•’‡…‹ƒŽŽ› ‹Â?’”‘˜‡† Â?‡†‹…ƒŽ …ƒ”‡ ‹Â? –Š‡ ƒ”‡ƒ ‘ˆ …ƒ”†‹‘˜ƒ•…—Žƒ” †‹•‡ƒ•‡ǡ Â?‡‘ǦÂ?ƒ–ƒŽ Š‡ƒŽ–Šǡ ƒÂ?† …‡”–ƒ‹Â? …ƒÂ?…‡”•Ǥ͵ ͵Ǥͳ͵Ǥ While higher national income levels can help facilitate these advances, the evidence indicates that rising income alone does not cause mortality reduction. ‡˜‡”ƒŽ ‡šƒÂ?’Ž‡• ‹ŽŽ—•–”ƒ–‡ –Š‹•Ǥ Â? ”‹…Š …‘—Â?–”‹‡•ǡ Š‡ƒŽ–Š ‘—–…‘Â?‡• –‡Â?† –‘ •—ˆˆ‡” †—”‹Â?‰ ‡…‘Â?‘Â?‹… „‘‘Â?•ǡ ƒÂ?† Í´ —–Š‡ ‡– ƒŽǤ ȋʹͲͳͲȌǤ ͵ —–Ž‡”ǡ Ǥǡ Ǥ ‡ƒ–‘Â?Ç¡ ƒÂ?† Ǥ Ž‡”ƒ•Ǧ—Â?‡› ȋʹͲͲ͸ȌǤ Ͷͷ ‹Â?’”‘˜‡ †—”‹Â?‰ ”‡…‡••‹‘Â?•Ǥ Â? Š‹Â?ƒǡ Â?ƒÂ?› ‰ƒ‹Â?• ‹Â? Š‡ƒŽ–Š ™‡”‡ ƒ…Š‹‡˜‡† „‡ˆ‘”‡ ‡…‘Â?‘Â?‹… ‰”‘™–Š –‘‘Â? ‘ˆˆ ‹Â? ͳͻ͹ͺǤ ˜‡” ”‡…‡Â?– †‡…ƒ†‡•ǡ –Š‡ –”‡Â?† ‹Â? Â?‘•– ‰Ž‘„ƒŽ Š‡ƒŽ–Š ‹Â?†‹…ƒ–‘”• Šƒ• „‡‡Â? –‘™ƒ”†• …‘Â?˜‡”‰‡Â?…‡ǡ ™Š‹Ž‡ ‹Â?…‘Â?‡ ’‡” …ƒ’‹–ƒ Šƒ• ‰‡Â?‡”ƒŽŽ› „‡‡Â? …Šƒ”ƒ…–‡”‹œ‡† „› †‹˜‡”‰‡Â?…‡ǤͶ —”‹Â?‰ –”ƒÂ?•‹–‹‘Â? ‹Â? Ç¡ –Š‡ ’ƒ––‡”Â? Šƒ• „‡‡Â? –Š‡ ‘’’‘•‹–‡ǣ •‘Â?‡ …‘Â?˜‡”‰‡Â?…‡ ‹Â?  ’‡” …ƒ’‹–ƒǡ „—– †‹˜‡”‰‡Â?…‡ ‹Â? Š‡ƒŽ–Š ‘—–…‘Â?‡• ĥ ‹Â? ‹‰—”‡ ͵ǤͶ ƒ„‘˜‡Ǥ Â? „”‹‡ˆǡ –Š‡ ‡˜‹†‡Â?…‡ •—‰‰‡•–• –Šƒ– …‘—Â?–”‹‡• •—…Š ĥ ‡‘”‰‹ƒ …ƒÂ?Â?‘– ‡š’‡…– ‹Â?’”‘˜‡† Š‡ƒŽ–Š ‘—–…‘Â?‡• –‘ ˆ‘ŽŽ‘™ ƒ—–‘Â?ƒ–‹…ƒŽŽ› ˆ”‘Â? Š‹‰Š‡” ‹Â?…‘Â?‡•Ǣ ”‡ˆ‘”Â?• Â?ƒ› „‡ Â?‡‡†‡† –‘ ‹Â?’”‘˜‡ ƒ……‡•• –‘ǡ ƒÂ?† ƒ’’Ž‹…ƒ–‹‘Â? ‘ˆǡ „‡––‡” Â?Â?‘™Ž‡†‰‡ ƒÂ?† –‡…ŠÂ?‘Ž‘‰› ‹Â? –Š‡ Š‡ƒŽ–Š …ƒ”‡ ƒ”‡Â?ƒǤ ͵ǤͳͶǤ Against this background, a key Table 3.2: Utilization Rates in Georgia Are Low (2010) link between low public spending on ȋ‹Â? Â?—Â?„‡” ‘ˆ ˜‹•‹–• ’‡” ’‡”•‘Â?ÈŒ health in Georgia and the challenge of Country Number of outǦpatient improving health outcomes can be seen contacts per capita in the low levels of health care ‡‘”‰‹ƒ ʹǤͲ utilization. ˜‡”ƒŽŽ —–‹Ž‹œƒ–‹‘Â? ”ƒ–‡• ‹Â? ‡™  Â?‡Â?„‡” •–ƒ–‡• ͹Ǥ͸ ‡‘”‰‹ƒǡ ™Š‡–Š‡” Â?‡ƒ•—”‡† ĥ ‘—–’ƒ–‹‡Â?–  ”‡‰‹‘Â? ͺǤ͸ …‘Â?–ƒ…–• ’‡” ’‡”•‘Â? ‘” ƒ…—–‡ …ƒ”‡ Š‘•’‹–ƒŽ SourceÇ£   ‡ƒŽ–Š ˆ‘” ÂŽÂŽ †ƒ–ƒ„ƒ•‡Ǥ ĠÂ?‹••‹‘Â?• ’‡” ͳͲͲ ’‘’—Žƒ–‹‘Â?Ç¡ ƒ”‡ Ž‡•• –ŠƒÂ? ŠƒŽˆ –Š‡ Ž‡˜‡Ž ‘„•‡”˜‡† ‹Â? ‡•–‡”Â? ƒÂ?† ƒ•–‡”Â? —”‘’‡ ‘” –Š‡  ȋƒŽ–Š‘—‰Š —–‹Ž‹œƒ–‹‘Â? ‹Â? –Š‡ Žƒ––‡” Â?ƒ› „‡ –‘‘ Š‹‰ŠȌǤͷ ƒ„Ž‡ ͵Ǥʹ Šƒ• †‡–ƒ‹Ž•Ǥ Š‡ Š‹‰Š ”‡Ž‹ƒÂ?…‡ ‘Â? ‘—–Ǧ‘ˆǦ’‘…Â?‡– ’ƒ›Â?‡Â?–• ˆ‘” Â?‡†‹…ƒŽ …ƒ”‡ ‹• ‘Â?‡ ˆƒ…–‘” „‡Š‹Â?† –Š‡ Ž‘™ Ž‡˜‡Ž• ‘ˆ —–‹Ž‹œƒ–‹‘Â?Ǥ ͵ǤͳͷǤ With regard to specific interventions, Table 3.3 shows the currently low coverage levels in Georgia of the five interventions that have had the largest impact on improved life expectancy in the West since the 1960s. Ž–Š‘—‰Š Â?‘– ƒŽŽ ‘ˆ –Š‡•‡ ‹Â?–‡”˜‡Â?–‹‘Â?• È‚ •—…Š ĥ ™‹†‡ …‘˜‡”ƒ‰‡ ‘ˆ Š‡ƒ”– „›’ƒ•• ‘’‡”ƒ–‹‘Â?• È‚ Â?ƒ› „‡ ƒˆˆ‘”†ƒ„Ž‡ ˆ‘” ‡‘”‰‹ƒ ƒ– ’”‡•‡Â?–ǡ Â?ƒÂ?› ‘ˆ –Š‡ ‘–Š‡”• ȋ‡Ǥ‰Ǥǡ „ƒ•‹… ’Šƒ”Â?ƒ…‡—–‹…ƒŽ•Ȍ …‘—Ž† „‡ …‘˜‡”‡† ™‹–Š‹Â? ƒ Â?‘†‡”ƒ–‡Ž› ‡š’ƒÂ?†‡† —Â?‹˜‡”•ƒŽ „‡Â?‡ˆ‹– ’ƒ…Â?ƒ‰‡Ǥ Š‹• ‹• †‹•…—••‡† ˆ—”–Š‡” „‡Ž‘™Ǥ Table 3.3: Coverage of Key Health Interventions in Georgia is Low Five interventions that have had largest Assessment of implementation in Georgia impact on life expectancy in West AntiǦtobacco policies ‹‰ƒ”‡––‡ –ƒš ȋƒ• Ψ ‘ˆ ’”‹…‡Ȍ ‹• Š‹‰Š‡” –ŠƒÂ? Â?‘•–  (cigarette taxes, smoking bans, etc.) …‘—Â?–”‹‡• „—– Ž‘™‡” –ŠƒÂ? Â?‘•– ‘ˆ Ç¢ ƒ†˜‡”–‹•‹Â?‰ „ƒÂ?• ƒÂ?† …‡••ƒ–‹‘Â? ’”‘‰”ƒÂ?• …‘—Ž† „‡ •–”‡Â?‰–Š‡Â?‡† Cardiovascular disease drugs „‘—– ͻͲΨ ‘ˆ –‘–ƒŽ †”—‰ •’‡Â?†‹Â?‰ ‹• ‘—–Ǧ‘ˆǦ’‘…Â?‡–Ǣ (ACEǦinhibitors, betaǦblockers, statins) ƒ„‘—– ͳͶΨ ‘ˆ Š›’‡”–‡Â?•‹‘Â? …ƒ•‡• ƒ”‡ …‘Â?–”‘ŽŽ‡†Ǣ –‡•–‹Â?‰ ‘ˆ …Š‘Ž‡•–‡”‘Ž Ž‡˜‡Ž• ‹• ”ƒ”‡ Cardiac surgeries Â?Â?Â?‘™Â? Â?—Â?„‡” ‘ˆ ’‡‘’Ž‡ …‘˜‡”‡† ‹Â? ʹͲͲͻǡ „—– (angioplasty, bypass) ’”‡•—Â?‡† –‘ „‡ ƒ •Â?ƒŽŽ ˆ”ƒ…–‹‘Â? ‘ˆ –‘–ƒŽ Â?‡‡† Early diagnosis and treatment of breast and ‹––Ž‡ …‘˜‡”ƒ‰‡ ‘ˆ †‹ƒ‰Â?‘•–‹… –‡•–• ˆ‘” Â?‘Â?Ǧ  colon cancer ‹Â?†‹˜‹†—ƒŽ•Ǣ ’‹Ž‘– ’”‘‰”ƒÂ? ˆ‘” „”‡ƒ•– …ƒÂ?…‡” —Â?†‡”™ƒ› NeoǦnatal intensive care Â?Â?Â?‘™Â? …ƒ’ƒ…‹–› ‘—–•‹†‡ ‘ˆ ƒ ˆ‡™ Â?ƒŒ‘” Š‘•’‹–ƒŽ•Ǣ Š‹‰Š  „› ˆƒÂ?‹Ž› ‹• ‘ˆ–‡Â? ”‡“—‹”‡† ͵Ǥͳ͸Ǥ Cigarette taxation (measured as total taxes as a share of the pack price) is higher in Georgia than among most of its neighbors, but lower than in the EU (Figure 3.5). Â?‘Â?‹Â?‰ Ͷ „‹†Ǥǡ ƒÂ?† ‡…Â?‡”ǡ Ǥǡ Ǥ —”’Š›ǡ ƒÂ?† Ǥ ‘ƒ”‡• ȋʹͲͲͷȌǤ Í·   ‡ƒŽ–Š ˆ‘” ÂŽÂŽ †ƒ–ƒ„ƒ•‡ǡ ʹͲͳͳǤ Ͷ͸ ’”‡˜ƒŽ‡Â?…‡ ƒÂ?‘Â?‰ ƒ†—Ž–• ͳͷ ƒÂ?† ‘˜‡” ‹Â? ‡‘”‰‹ƒ ‹• ‡•–‹Â?ƒ–‡† ƒ– ʹ͹ ’‡”…‡Â?– ȋƒ„‘—– Í·Í· ’‡”…‡Â?– ƒÂ?‘Â?‰ Â?‡Â? ƒÂ?† Í· ’‡”…‡Â?– ƒÂ?‘Â?‰ ™‘Â?‡Â?ȌǢ ƒ„‘—– –Š”‡‡Ǧ“—ƒ”–‡”• ‘ˆ –Š‡Â? •–ƒ–‡ –Šƒ– –Š‡› ™‘—Ž† Ž‹Â?‡ –‘ “—‹–ǡ ƒÂ?† ŠƒŽˆ Šƒ˜‡ –”‹‡† –‘ “—‹– ƒ– Ž‡ƒ•– ‘Â?…‡ †—”‹Â?‰ –Š‡ ’ƒ•– ›‡ƒ”Ǥ ††‹–‹‘Â?ƒŽ Â?‡ƒ•—”‡• •—…Š ĥ „ƒÂ?• ‘Â? ƒ†˜‡”–‹œ‹Â?‰ ‘” •Â?‘Â?‹Â?‰ ‹Â? …‡”–ƒ‹Â? ’—„Ž‹… ’Žƒ…‡• …‘—Ž† ƒŽ•‘ „‡ ƒ†‘’–‡†Ǥ Figure 3.5: Cigarette Taxes in Georgia and Europe, 2009 ȋ‹Â? ’‡”…‡Â?–Ȍ 100 90 80 Total taxes as % of cigarette pack price 70 60 50 40 30 20 10 0 Serbia Luxembourg Greece Georgia Armenia Belarus Austria Macedonia Albania Ireland Netherlands Montenegro Slovenia Croatia Turkey United Kingdom Belgium Cyprus Sweden Azerbijan Israel Estonia Romania Latvia France Lithuania Malta Bosnia Ukraine Moldova Italy Poland Iceland Bulgaria Portugal Switzerland Slovakia Denmark Russia Hungary Germany Czech Rep Finland Spain Uzbekistan Norway Kyrgyzstan Turkmenistan Kazakhstan Source: WHO Source: WHO Figure 3.6: Coverage of Preventive Care Services, Georgia Vs. Comparators ȋ‹Â? ’‡”…‡Â?–Ȍ ‡…‡‹˜‡† ƒ …Š‘Ž‡•–‡”‘Ž –‡•–ǡ Žƒ•– ͳʹ Â?‘Â?–Š• Ž‘‘† ’”‡••—”‡ —Â?†‡” …‘Â?–”‘Žǡ Ψ ‘ˆ Š›’‡”–‡Â?•‹˜‡• 100% 92% 100% 93% 90% 90% 90% 86% 75% 77% 80% 80% 62% 60% 60% 50%50% Yes Yes 38% 40% No 40% No 23% 21% 20% 10% 20% 14% 8% 10% 10% 7% 0% 0% Georgia Azerbaijan Moldova Russia EU Georgia Azerbaijan Moldova Russia US ‡…‡‹˜‡† ƒ Â?ƒÂ?Â?‘‰”ƒÂ?Ç¡ Žƒ•– ͳʹ Â?‘Â?–Š• ‡…‡‹˜‡† ˆŽ— ˜ƒ……‹Â?‡ǡ ‘˜‡”Ǧ͸ͷ ’‘’—Žƒ–‹‘Â? 100% 93% 92% 100% 96% 95% 90% 88% 88% 82% 80% 80% 68% 60% 60% 56% Yes Yes 44% 40% 31% No 40% No 20% 15% 7% 8% 9% 20% 12% 12% 4% 5% 0% 0% Georgia Azerbaijan Moldova Russia EU Georgia Azerbaijan Moldova Russia EU Source:  ƒÂ?† —”‘„ƒ”‘Â?‡–‡” Ͷ͹ ͵Ǥͳ͹Ǥ Turning to several indicators of preventative care, EU citizens are four to five times more likely to have received a cholesterol test or breast cancer screening for women during the past 12 months (Figure 3.6). ‹Â?…‡ –Š‡•‡ ƒ”‡ ƒ”‡ƒ• ™Š‡”‡ Â?‡†‹…ƒŽ …ƒ”‡ Šƒ• Â?ƒ†‡ ƒ •—„•–ƒÂ?–‹ƒŽ …‘Â?–”‹„—–‹‘Â? –‘ ‹Â?…”‡ƒ•‡† Ž‘Â?‰‡˜‹–› ‹Â? –Š‡ Ç¡ –Š‡•‡ ‰ƒ’• ™‘—Ž† Â?‡‡† –‘ Â?ƒ””‘™ •‹‰Â?‹ˆ‹…ƒÂ?–Ž› ‘˜‡” –‹Â?‡ ‹Â? ‘”†‡” –‘ •–ƒ”– ‘Â? ƒ •‹Â?‹Žƒ” ’ƒ–Š ‘ˆ ‹Â?’”‘˜‡† Ž‹ˆ‡ ‡š’‡…–ƒÂ?…› ‹Â? ‡‘”‰‹ƒǤ Ž–Š‘—‰Š œ‡”„ƒ‹ŒƒÂ?Ç¡ ‘Ž†‘˜ƒǡ ƒÂ?† —••‹ƒ ƒŽ•‘ Žƒ‰ –Š‡  ƒŽ‘Â?‰ –Š‡•‡ ‹Â?†‹…ƒ–‘”• ‘ˆ ’”‡˜‡Â?–ƒ–‹˜‡ …ƒ”‡ǡ –Š‡› ‘—–Ǧ’‡”ˆ‘”Â? ‡‘”‰‹ƒ –‘ •‘Â?‡ ‡š–‡Â?– ‘Â? –Š”‡‡ ‘ˆ –Š‡ ˆ‘—” ‹Â?†‹…ƒ–‘”•Ǥ ͵ǤͳͺǤ In sum, addressing the challenge of improving health outcomes in Georgia will require higher utilization, broader population coverage, and an expanded benefit package to provide greater access to key interventions. Â?‡› ’—„Ž‹… •’‡Â?†‹Â?‰ ’”‹‘”‹–› ˆ‘” …‘Â?•‹†‡”ƒ–‹‘Â? ‰‘‹Â?‰ ˆ‘”™ƒ”† ‹Â? –Š‡ Š‡ƒŽ–Š •‡…–‘”ǡ •—„Œ‡…– –‘ „—†‰‡– ƒ˜ƒ‹Žƒ„‹Ž‹–›ǡ …‘—Ž† „‡ –‘ ƒ…Š‹‡˜‡ ‡š’ƒÂ?†‡† …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ ‹Â?–‡”˜‡Â?–‹‘Â?• †‹•…—••‡† ƒ„‘˜‡ –Šƒ– ƒ”‡ Ž‹Â?‡Ž› –‘ Šƒ˜‡ –Š‡ Žƒ”‰‡•– ‹Â?’ƒ…– ‘Â? Š‡ƒŽ–Š ‘—–…‘Â?‡•Ǥ Š‹• ‹• ’ƒ”–‹…—Žƒ”Ž› ƒ’’Ž‹…ƒ„Ž‡ –‘ –Š‡ •–”‡Â?‰–Š‡Â?‹Â?‰ ‘ˆ ’”‹Â?ƒ”› …ƒ”‡ǡ ĥ †‹•…—••‡† „‡Ž‘™Ǥ 3.4. Health spending and financial protection ͵ǤͳͻǤ This section looks at public expenditures through the lens of the second major objective of a health system: to provide households with financial protection against ‘impoverishing’ or ‘catastrophic’ health payments in the event that they fall ill. • •Š‘™Â? ‹Â? ƒ„Ž‡ ͵Ǥͳ ƒ„‘˜‡ǡ –Š‡ Žƒ”‰‡•– •Šƒ”‡ ‘ˆ ‘—–Ǧ‘ˆǦ’‘…Â?‡– •’‡Â?†‹Â?‰ ˆ‘” Š‡ƒŽ–Š ‹Â? ‡‘”‰‹ƒ ‹• •’‡Â?– ‘Â? †”—‰• ȋƒ„‘—– ͸ͳ ’‡”…‡Â?–Ȍǡ ™Š‹Ž‡ –Š‡ ”‡Â?ƒ‹Â?†‡” ‹• •’‡Â?– Â?ƒ‹Â?Ž› ‘Â? ‹Â?’ƒ–‹‡Â?– ƒÂ?† ‡•’‡…‹ƒŽŽ› ‘—–’ƒ–‹‡Â?– …ƒ”‡Ǥ ’”‡…‹•‡ „”‡ƒÂ?†‘™Â? ‘ˆ ˆ‘”Â?ƒŽ ˜•Ǥ ‹Â?ˆ‘”Â?ƒŽ ’ƒ›Â?‡Â?–• ‹• †‹ˆˆ‹…—Ž– –‘ ‡•–‹Â?ƒ–‡ ˆ‘” ƒ ”ƒÂ?‰‡ ‘ˆ ”‡ƒ•‘Â?•ǡ ‹Â?…Ž—†‹Â?‰ ƒ Žƒ…Â? ‘ˆ ˆ—ŽŽ —Â?†‡”•–ƒÂ?†‹Â?‰ „› –Š‡ ’‘’—Žƒ–‹‘Â? ȋƒÂ?† •‘Â?‡–‹Â?‡• ’”‘˜‹†‡”•Ȍ ƒ„‘—– ™Šƒ– •‡”˜‹…‡• ƒ”‡ …‘˜‡”‡† „› •–ƒ–‡ ’”‘‰”ƒÂ?•Ǥ Figure 3.7: The Impact of Household Spending On Health On Poverty, 2010 ȋ‹Â? Žƒ”‹ ’‡” Â?‘Â?–ŠȌ 1000 900 800 Household consumption per adult equivalent 700 600 500 400 300 200 100 0 1 251 501 751 1001 1251 1501 1751 2001 2251 2501 2751 3001 Households ranked in ascending order of total consumption Source: HUES Source: HUES ͵ǤʹͲǤ Concerns about large household expenditures for health care stem from the fact that such spending is typically different from most other household purchases. – Ž‡ƒ•– –Š”‡‡ ”‡ƒ•‘Â?• •–ƒÂ?† ‘—–Ǥ ‹”•–ǡ –Š‡ •’‡Â?†‹Â?‰ ‹• ‘ˆ–‡Â? Â?‘– Ǯ˜‘Ž—Â?–ƒ”›ǯ ȋˆ‘” ‡šƒÂ?’Ž‡ǡ ‹ˆ ƒ”‹•‹Â?‰ †—‡ –‘ ƒÂ? —Â?™ƒÂ?–‡† Š‡ƒŽ–Š •Š‘…Â?Ȍǡ ƒÂ?† Â?ƒ› Šƒ˜‡ Â?‘”‡ –‘ †‘ ™‹–Š ‘˜‡”…‘Â?‹Â?‰ ‹ŽŽÂ?॥ –ŠƒÂ? ƒ††‹Â?‰ –‘ ƒ Ͷͺ Š‘—•‡Š‘Ž†ǯ• ‘˜‡”ƒŽŽ …‘Â?•—Â?’–‹‘Â? ‘” Ž‹˜‹Â?‰ •–ƒÂ?†ƒ”†•ǡ ĥ ‹• —•—ƒŽŽ› –Š‡ …ƒ•‡ ™‹–Š ‘–Š‡” ‰‘‘†•Ǥ ‡…‘Â?†ǡ –Š‡ —Â?…‡”–ƒ‹Â?–› ƒÂ?† ’‘–‡Â?–‹ƒŽŽ› Š‹‰Š …‘•– ƒ••‘…‹ƒ–‡† ™‹–Š Š‡ƒŽ–Š ‡š’‡Â?†‹–—”‡• ȋ™‡ ‘ˆ–‡Â? †‘ Â?‘– Â?Â?‘™ ™Š‡Â? ™‡ ™‹ŽŽ „‡…‘Â?‡ •‹…Â? ƒÂ?† Š‘™ Â?—…Š ‹– ™‹ŽŽ …‘•– ‹ˆ ™‡ †‘Ȍ Â?ƒÂ?‡ –Š‡Â? ƒÂ?‡Â?ƒ„Ž‡ –‘ ’”‡’ƒ›Â?‡Â?– ƒÂ?† ”‹•Â?Ǧ’‘‘Ž‹Â?‰ ƒ””ƒÂ?‰‡Â?‡Â?–•Ǥ Š‹”†ǡ ƒ……‡•• –‘ Š‡ƒŽ–Š …ƒ”‡ ‹• ‘ˆ–‡Â? ˜‹‡™‡† ĥ ƒ Ç®Â?‡”‹– ‰‘‘†ǯ ™Š‹…Š •Š‘—Ž† Â?‘– „‡ †‡–‡”Â?‹Â?‡† ’”‹Â?ƒ”‹Ž› „› ƒ„‹Ž‹–› –‘ ’ƒ›Ǥ ‘” –Š‡•‡ ”‡ƒ•‘Â?•ǡ ƒ Â?‘”‡ †‡•‹”ƒ„Ž‡ …‘—Â?–‡”ˆƒ…–—ƒŽ –‘ Š‹‰Š ‘—–Ǧ‘ˆǦ’‘…Â?‡– •’‡Â?†‹Â?‰ ‘Â? Š‡ƒŽ–Š ™‘—Ž† „‡ •‘Â?‡ ˆ‘”Â? ‘ˆ ’‘‘Ž‹Â?‰ Â?‡…ŠƒÂ?‹•Â? ȋ™Š‡–Š‡” –Š”‘—‰Š ‰‡Â?‡”ƒŽ –ƒš‡• ‘” ƒ …‘Â?–”‹„—–‘”› ‹Â?•—”ƒÂ?…‡ •…Š‡Â?‡Ȍǡ ĥ ™‡ŽŽ ĥ …”‘••Ǧ •—„•‹†‹œƒ–‹‘Â?Ç¡ –‘ ’”‘˜‹†‡ ˆ‹Â?ƒÂ?…‹ƒŽ ’”‘–‡…–‹‘Â? ƒ‰ƒ‹Â?•– Š‡ƒŽ–Š •Š‘…Â?•Ǥ Š‹• Šƒ• „‡‡Â? ƒ…Š‹‡˜‡† ‹Â? Â?ƒÂ?› …‘—Â?–”‹‡•ǡ „—– Â?‘– ›‡– ‹Â? ‡‘”‰‹ƒ ˆ‘” –Š‘•‡ ™Š‘ †‘ Â?‘– „‡Â?‡ˆ‹– ˆ”‘Â? •–ƒ–‡Ǧˆ—Â?†‡† ‹Â?•—”ƒÂ?…‡Ǥ ͵ǤʹͳǤ High outǦofǦpocket payments for health can also cause a household to fall below the poverty line – that is, they can be “impoverishingâ€?. ˆ ƒ Š‘—•‡Š‘Ž† Šƒ• –‘–ƒŽ …‘Â?•—Â?’–‹‘Â? ‡š’‡Â?†‹–—”‡• ȋ‹Â?…Ž—†‹Â?‰ ÈŒ ƒ„‘˜‡ –Š‡ ’‘˜‡”–› Ž‹Â?‡ǡ „—– –Š‡‹” –‘–ƒŽ Â?‘Â?ǦÂ?‡†‹…ƒŽ •’‡Â?†‹Â?‰ ȋ‡š…Ž—†‹Â?‰ ÈŒ ‹• „‡Ž‘™ –Š‡ ’‘˜‡”–› Ž‹Â?‡ǡ –Š‡› …‘—Ž† „‡ …‘Â?•‹†‡”‡† –‘ Šƒ˜‡ •—ˆˆ‡”‡† ‹Â?’‘˜‡”‹•ŠÂ?‡Â?– †—‡ –‘  ˆ‘” Š‡ƒŽ–ŠǤ ‹‰—”‡ ͵Ǥ͹ •Š‘™• –Š‹• ‰”ƒ’Š‹…ƒŽŽ› „ƒ•‡† ‘Â? ʹͲͳͲ †ƒ–ƒǤ ‘—•‡Š‘Ž†• ƒ”‡ ”ƒÂ?Â?‡† ƒŽ‘Â?‰ –Š‡ Š‘”‹œ‘Â?–ƒŽ ƒš‹• „› –‘–ƒŽ …‘Â?•—Â?’–‹‘Â?Ǥ Š‡ ˜‡”–‹…ƒŽ †”‹’ Ž‹Â?‡• ”‡’”‡•‡Â?–  ˆ‘” Š‡ƒŽ–Šǡ ƒÂ?† –Š‡ ’‘˜‡”–› –Š”‡•Š‘Ž† ‹• ‹Â?†‹…ƒ–‡† „› –Š‡ Š‘”‹œ‘Â?–ƒŽ Ž‹Â?‡Ǥ ’’Ž›‹Â?‰ –Š‹• ƒ’’”‘ƒ…Š –‘ ʹͲͳͳ Š‘—•‡Š‘Ž† •—”˜‡› †ƒ–ƒ ƒÂ?† —•‹Â?‰ ƒÂ? ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ’‘˜‡”–› Ž‹Â?‡ ‘ˆ ̈́ͷȀ†ƒ›ǡ ‹– Šƒ• „‡‡Â? ‡•–‹Â?ƒ–‡† –Šƒ– ƒÂ? ƒ††‹–‹‘Â?ƒŽ Í» ’‡”…‡Â?– ‘ˆ ‡‘”‰‹ƒÂ? Š‘—•‡Š‘Ž†• ™‡”‡ ’‘‘” ĥ ƒ ”‡•—Ž– ‘ˆ  ˆ‘” Š‡ƒŽ–ŠǤ͸ ‘Â?•‹•–‡Â?– ™‹–Š ‡‘”‰‹ƒǯ• Š‹‰Š ”‡Ž‹ƒÂ?…‡ ‘Â?  ĥ •Š‘™Â? ƒ„‘˜‡ǡ –Š‹• Ž‡˜‡Ž ‘ˆ ’‘˜‡”–› ‹Â?’ƒ…– ‹• Â?‘–ƒ„Ž› Š‹‰Š‡” –ŠƒÂ? Â?‘•– ‘–Š‡” …‘—Â?–”‹‡• ‹Â? –Š‡ ”‡‰‹‘Â? ‘” ƒ”‘—Â?† –Š‡ ™‘”Ž†Ǥ ͵ǤʹʹǤ An alternative approach for highlighting the impact of OOP on households is to measure the extent to which they are “catastrophic.â€? Â?’‘˜‡”‹•Š‹Â?‰  ’—–• –Š‡ ‡Â?’Šƒ•‹• ‘Â? …”‘••‹Â?‰ –Š‡ ’‘˜‡”–› Ž‹Â?‡ ‹””‡•’‡…–‹˜‡ ‘ˆ –Š‡ •‹œ‡ ‘ˆ ’ƒ›Â?‡Â?–•Ǥ ƒ–ƒ•–”‘’Š‹… Š‡ƒŽ–Š ‡š’‡Â?†‹–—”‡• ‘……—” ™Š‡Â? –Š‡› ‡š…‡‡† •‘Â?‡ –Š”‡•Š‘Ž† ‘ˆ ‡‹–Š‡” –‘–ƒŽ ‘” Â?‘Â?Ǧˆ‘‘† ‡š’‡Â?†‹–—”‡Ǥ Š‡ …Š‘‹…‡ ‘ˆ –Š”‡•Š‘Ž† ‹• •‘Â?‡™Šƒ– ƒ”„‹–”ƒ”›ǡ „—– Í´Í· ’‡”…‡Â?– ‘ˆ –‘–ƒŽ ‡š’‡Â?†‹–—”‡ ‹• …‘Â?Â?‘Â?Ž› —•‡†Ǥ ‡ƒ”Ž› ʹͲ ’‡”…‡Â?– ‘ˆ Š‘—•‡Š‘Ž†• ‹Â? ‡‘”‰‹ƒ ‡š…‡‡† –Š‹• ”ƒ–‹‘ǡ –Š‡ Š‹‰Š‡•– ‹Â? –Š‡ ”‡‰‹‘Â? È‹ ‹‰—”‡ ͵ǤͺȌǤ ͵Ǥʹ͵Ǥ A high reliance on OOP also results in significant inequalities in utilization of health care by socioeconomic status. ”‘••Ǧ…‘—Â?–”› †ƒ–ƒ ‹Â?†‹…ƒ–‡ –Šƒ– ‡‘”‰‹ƒ Šƒ• Š‹‰Š‡” ‹Â?‡“—ƒŽ‹–› ‹Â? „‘–Š ‘—–Ǧ’ƒ–‹‡Â?– ƒÂ?† ‹Â?Ǧ’ƒ–‹‡Â?– •‡”˜‹…‡ —•‡ –ŠƒÂ? Â?‘•– …‘—Â?–”‹‡•ǡ „—– Â?‘– ĥ Š‹‰Š ĥ ™‘—Ž† „‡ ’”‡†‹…–‡† „ƒ•‡† ‘Â? ‹–•  Ž‡˜‡Ž•Ǣ –Š‹• Â?ƒ› ”‡ˆŽ‡…– –Š‡ ‡“—ƒŽ‹œ‹Â?‰ ‡ˆˆ‡…– ‘ˆ   ‘Â? Š‡ƒŽ–Š …ƒ”‡ —•‡ „› “—‹Â?–‹Ž‡ È‹ ‹‰—”‡ ͵ǤͺȌǤ Š‡ Ž‘™ —–‹Ž‹œƒ–‹‘Â? ”ƒ–‡• ‘ˆ Š‡ƒŽ–Š …ƒ”‡ Â?‘–‡† ‡ƒ”Ž‹‡” ƒ”‡ ”‘‘–‡† –‘ ƒ •‹‰Â?‹ˆ‹…ƒÂ?– ‡š–‡Â?– ‹Â? –Š‡ Š‹‰Š ”‡Ž‹ƒÂ?…‡ ‘Â? Ǥ ͵ǤʹͶǤ Addressing the problems associated with high outǦofǦpocket spending for health in Georgia will require tackling the major causes, including the relatively low level of the government budget for health. • †‹•…—••‡† ‹Â? ‡…–‹‘Â? Í´Ç¡ –‘–ƒŽ Š‡ƒŽ–Š •’‡Â?†‹Â?‰ ‹• –›’‹…ƒŽŽ› ƒ„‘—– Ͷ –‘ ͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ƒŽŽ Ž‘™ ƒÂ?† Â?‹††Ž‡Ǧ‹Â?…‘Â?‡ …‘—Â?–”‹‡•Ǣ –Š‡ •Šƒ”‡ –Šƒ– ‹• Â?‘– …‘˜‡”‡† „› ’—„Ž‹… •’‡Â?†‹Â?‰ ™‹ŽŽ Žƒ”‰‡Ž› „‡ ˆ‹Â?ƒÂ?…‡† –Š”‘—‰Š  †—‡ –‘ –Š‡ Â?ƒ”Â?‡– ˆƒ‹Ž—”‡• –Šƒ– ’‡”˜ƒ†‡ Š‡ƒŽ–Š ‹Â?•—”ƒÂ?…‡Ǥ – –Š‡ Â?‹…”‘ Ž‡˜‡Žǡ –Š‹• Â?‡ƒÂ?• –Šƒ– ”‡‹Â?„—”•‡Â?‡Â?– ‘ˆ •‡”˜‹…‡• …‘˜‡”‡† —Â?†‡” •–ƒ–‡ ’”‘‰”ƒÂ?• •Š‘—Ž† ƒŽŽ‘™ ’”‘˜‹†‡”• ȋ‡Ǥ‰Ǥǡ Š‘•’‹–ƒŽ• ƒÂ?† †‘…–‘”•Ȍ –‘ ƒ…Š‹‡˜‡ …‘•– ”‡…‘˜‡”›Ǥ Â? ƒ††‹–‹‘Â? ͸ Š‡–Š‡” –Š‹• ‹• ƒÂ? ƒ……—”ƒ–‡ ™ƒ› –‘ ‡˜ƒŽ—ƒ–‡ –Š‡ –”—‡ ’‘˜‡”–› ‹Â?’ƒ…– ‘ˆ  ‹• ƒ Â?ƒ––‡” ˆ‘” †‡„ƒ–‡ǡ •‹Â?…‡ ‹Â? ”‡ƒŽ‹–› Š‘—•‡Š‘Ž†• ƒ”‡ Ž‹Â?‡Ž› –‘ †”ƒ™ ‘Â? •‡˜‡”ƒŽ ’‘••‹„Ž‡ …‘’‹Â?‰ Â?‡…ŠƒÂ?‹•Â?• –Šƒ– ™‘—Ž† ƒŽŽ‘™ ˆ‘” …‘Â?•—Â?’–‹‘Â? •Â?‘‘–Š‹Â?‰ǡ •—…Š ĥ †”ƒ™‹Â?‰ †‘™Â? •ƒ˜‹Â?‰•ǡ „‘””‘™‹Â?‰ǡ ‘” •‡ŽŽ‹Â?‰ ƒ••‡–•Ǥ Š—•ǡ ƒ …‘•–Ž› ‹ŽŽÂ?॥ ‡’‹•‘†‡ ‹Â? ‘Â?‡ ’‡”‹‘† ™‘—Ž† Â?‘– Â?‡…‡••ƒ”‹Ž› Šƒ˜‡ ƒÂ? ‹Â?Â?‡†‹ƒ–‡ ƒÂ?† …‘Â?Â?‡Â?•—”ƒ–‡ ‹Â?’ƒ…– ‘Â? –‘–ƒŽ …‘Â?•—Â?’–‹‘Â? ‹Â? –Š‡ •ƒÂ?‡ ’‡”‹‘†Ǥ ‡˜‡”–Š‡Ž‡••ǡ –Š‡ …‘Â?…‡’– …ƒÂ? „‡ —•‡ˆ—Ž ˆ‘” ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ …‘Â?’ƒ”‹•‘Â?• ‘ˆ ˆ‹Â?ƒÂ?…‹ƒŽ ’”‘–‡…–‹‘Â?Ǥ Ͷͻ –‘ –Š‡ •‘Â?‡–‹Â?‡• Ž‘™ ”‡‹Â?„—”•‡Â?‡Â?– ‘ˆ •‡”˜‹…‡•ǡ  ƒŽ•‘ ‘……—”• „‡…ƒ—•‡ –Š‡ ’‘’—Žƒ–‹‘Â? †‡Â?ƒÂ?†• Š‡ƒŽ–Š ‰‘‘†• ƒÂ?† •‡”˜‹…‡• –Šƒ– ƒ”‡ Â?‘– ‹Â?…Ž—†‡† ‹Â? –Š‡ Â?‘Â?Ǧ  •–ƒ–‡ ’”‘‰”ƒÂ?•ǡ •—…Š ĥ ‘—–Ǧ’ƒ–‹‡Â?– ’Šƒ”Â?ƒ…‡—–‹…ƒŽ•Ǥ Â? „‘–Š …ƒ•‡•ǡ –Š‡ ™ƒ› –‘ ƒ††”‡•• –Š‹• •‘—”…‡ ‘ˆ  ‹• –Š”‘—‰Š ƒ Žƒ”‰‡” Š‡ƒŽ–Š „—†‰‡–ǡ •—„Œ‡…– –‘ –Š‡ ƒ˜ƒ‹Žƒ„‹Ž‹–› ‘ˆ ƒ††‹–‹‘Â?ƒŽ ˆ—Â?†• ‹Â? ƒ †‹ˆˆ‹…—Ž– ˆ‹•…ƒŽ ‡Â?˜‹”‘Â?Â?‡Â?–Ǥ ͵ǤʹͷǤ An additional reason for outǦofǦpocket spending in some cases is rentǦseeking by providers. Â? ƒÂ?› Š‡ƒŽ–Š •›•–‡Â?Ç¡ ‹Â?†‹˜‹†—ƒŽ ’ƒ–‹‡Â?–• ƒ”‡ —•—ƒŽŽ› ‹Â? ƒ ™‡ƒÂ? ’‘•‹–‹‘Â? –‘ Â?‡‰‘–‹ƒ–‡ ™‹–Š Š‘•’‹–ƒŽ• ‘” †‘…–‘”•ǡ „‡…ƒ—•‡ ȋ‹Ȍ –Š‡› –›’‹…ƒŽŽ› †‘ Â?‘– Šƒ˜‡ –Š‡ Â?Â?‘™Ž‡†‰‡ ‘” ‡š’‡”–‹•‡ –‘ †‹ƒ‰Â?‘•‡ ƒÂ?† –”‡ƒ– –Š‡‹” ‹ŽŽÂ?‡••ǡ Â?‘” –‘ Œ—†‰‡ –Š‡ “—ƒŽ‹–› ‘ˆ …ƒ”‡ ”‡…‡‹˜‡†Ǣ ƒÂ?† ȋ‹‹Ȍ ‹Â? ƒ •–ƒ–‡ ‘ˆ ‹ŽŽÂ?॥ –Š‡› ƒ”‡ —•—ƒŽŽ› Â?‘– ‹Â? ƒ ’‘•‹–‹‘Â? –‘ •Š‘’ ƒ”‘—Â?† ˆ‘” Ž‘™‡” ’”‹…‡•Ǥ • ƒ ”‡•—Ž–ǡ ’”‘˜‹†‡”• …ƒÂ? –ƒÂ?‡ ƒ†˜ƒÂ?–ƒ‰‡ ‘ˆ –Š‡‹” •—’‡”‹‘” Â?Â?‘™Ž‡†‰‡ ƒÂ?† ƒ†˜ƒÂ?–ƒ‰‡‘—• ’‘•‹–‹‘Â? –‘ ‡š–”ƒ…– Š‹‰Š‡” ’ƒ›Â?‡Â?–• ˆ”‘Â? ‹Â?†‹˜‹†—ƒŽ ’ƒ–‹‡Â?–•Ǥ Figure 3.8: Financial Protection and Equity Indicators, Georgia and ECA Comparators ȋ‹Â? ’‡”…‡Â?– ‘ˆ Š‘—•‡Š‘Ž†• ƒÂ?† …‘Â?…‡Â?–”ƒ–‹‘Â? ‹Â?†‡šȌ OOP exceeds 10% of total household consumption OOP exceeds 25% of total household consumption 50 25 GEO 20 40 GEO UKR 15 30 AZB Headcount Headcount AZB 10 20 TAJ BUL UKR MOL ARM ALB RUS ARM 5 TAJ ALB 10 SRB KYR MOL RUS BUL EU15 EU15 SRB KYR 0 0 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 Government health spending as % of GDP Government health spending as % of GDP Source: WB Inequality of out-patient utilization Inequality of in-patient utilization 0.4 0.4 AZB AZB 0.3 Concentration index of out-patient use Concentration index of in-patient use 0.3 ARM ARM UKR 0.2 GEO 0.2 MOL TAJ ALB GEO ALB TAJ UKR 0.1 KYR MOL RUS 0.1 RUS KYR 0.0 SRB SRB BUL 0.0 EU15 EU15 BUL 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 Government health spending as % of GDP Government health spending as % of GDP Source: WB SourceÇ£  •–ƒˆˆ …ƒŽ…—Žƒ–‹‘Â?•Ǥ ͷͲ ͵Ǥʹ͸Ǥ There are a number of possible approaches to address rentǦseeking by providers. Â?‡ ’‘••‹„Ž‡ ‹Â?‹–‹ƒŽ •–‡’ ™‘—Ž† •‹Â?’Ž› „‡ –‘ ‰ƒ–Š‡” „‡––‡” ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‘Â? †‘…–‘” ƒÂ?† Š‘•’‹–ƒŽ ˆ‹Â?ƒÂ?…‡•Ǥ •‡…‘Â?† ƒ’’”‘ƒ…Š ‹• „› ’”‘˜‹†‹Â?‰ „‡––‡” ‹Â?ˆ‘”Â?ƒ–‹‘Â? –‘ ’ƒ–‹‡Â?–• –Š‡Â?•‡Ž˜‡•ǡ –‘ ‡Â?•—”‡ –Šƒ– –Š‡› ƒ”‡ ƒ™ƒ”‡ ‘ˆ –Š‡‹” ”‹‰Š–• ƒÂ?† ƒ”‡ Â?‘– ‘˜‡”Ǧ…Šƒ”‰‡† ˆ‘” •‡”˜‹…‡• …‘˜‡”‡† —Â?†‡” •–ƒ–‡ ’”‘‰”ƒÂ?•Ǥ Š‹”†Ž›ǡ ”‡Â?–Ǧ•‡‡Â?‹Â?‰ „› Š‡ƒŽ–Š …ƒ”‡ ’”‘˜‹†‡”• ‹• ƒ††”‡••‡† de facto ‹Â? Â?ƒ–—”‡ Š‡ƒŽ–Š •›•–‡Â?• –Š”‘—‰Š ’—”…Šƒ•‹Â?‰ ’‘™‡”ǣ „› ’‘‘Ž‹Â?‰ ”‡•‘—”…‡• ˆ‘” Š‡ƒŽ–Š …ƒ”‡ ’—”…Šƒ•‹Â?‰ „› –Š‡ ‰‘˜‡”Â?Â?‡Â?– ƒÂ?† ƒ ˆ‡™ ’”‹˜ƒ–‡ ‹Â?•—”‡”•ǡ –Š‡ ƒ„‹Ž‹–› ‘ˆ ’”‘˜‹†‡”• –‘ ‡š–”ƒ…– Š‹‰Š‡” ’”‹…‡• ˆ‘” –Š‡‹” •‡”˜‹…‡• ™‹ŽŽ „‡ ™‡ƒÂ?‡Â?‡†Ǥ ͵Ǥʹ͹Ǥ In sum, there is strong evidence pointing to a lack of financial protection in health in Georgia. —– ‘ˆ ’‘…Â?‡– ’ƒ›Â?‡Â?–• ˆ‘” Š‡ƒŽ–Š ƒ”‡ Š‹‰Š ™Š‡–Š‡” Â?‡ƒ•—”‡† ”‡Žƒ–‹˜‡ –‘ –‘–ƒŽ Š‘—•‡Š‘Ž† …‘Â?•—Â?’–‹‘Â? ‘” „› ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ •–ƒÂ?†ƒ”†•Ǥ ††”‡••‹Â?‰ –Š‹• ’”‘„Ž‡Â? ™‹ŽŽ ”‡“—‹”‡ ƒ –™‘Ǧ’”‘Â?‰‡† ƒ’’”‘ƒ…Šǡ …‘Â?„‹Â?‹Â?‰ ƒÂ? ‡š’ƒÂ?†‡† ’‘’—Žƒ–‹‘Â? …‘˜‡”ƒ‰‡ ƒÂ?† „‡Â?‡ˆ‹– ’ƒ…Â?ƒ‰‡ ȋƒÂ?† ’‘••‹„Ž› Š‹‰Š‡” ”‡‹Â?„—”•‡Â?‡Â?– ”ƒ–‡• ˆ‘” •‡”˜‹…‡• …‘˜‡”‡†Ȍ ™‹–Š Â?‡ƒ•—”‡• –‘ ™‡ƒÂ?‡Â? –Š‡ ƒ„‹Ž‹–› ‘ˆ ’”‘˜‹†‡”• –‘ —Â?†‡”–ƒÂ?‡ ”‡Â?–Ǧ•‡‡Â?‹Â?‰ ™Š‹Ž‡ †‡Ž‹˜‡”‹Â?‰ …ƒ”‡ ȋ‹Â?…Ž—†‹Â?‰ ‹Â? –Š‡ …ƒ•‡ ‘ˆ ’Šƒ”Â?ƒ…‡—–‹…ƒŽ•ȌǤ 3.5. Policy Issues ͵ǤʹͺǤ A vision for the health sector was recently elaborated in the form of the Georgia National Health Care Strategy 2011Ǧ15, entitled “Affordable and Quality Health Careâ€?. Š‹• ‹• „ƒ•‡† ‘Â? •‡˜‡Â? Â?‡› ’”‹Â?…‹’Ž‡•ǡ ĥ ˆ‘ŽŽ‘™•ǣ ȋ‹Ȍ ‡“—ƒŽ ƒ……‡••Ǣ ȋ‹‹Ȍ ’ƒ–‹‡Â?–Ǧˆ‘…—•‡† Š‡ƒŽ–Š …ƒ”‡ •›•–‡Â?Ç¢ ȋ‹‹‹Ȍ ƒˆˆ‘”†ƒ„Ž‡ ƒÂ?† ‡ˆˆ‹…‹‡Â?– Š‡ƒŽ–Š …ƒ”‡Ǣ ȋ‹˜Ȍ ’—„Ž‹…Ǧ’”‹˜ƒ–‡ ’ƒ”–Â?‡”•Š‹’• ƒÂ?† ‡Â?ŠƒÂ?…‹Â?‰ ˆ”‡‡ …‘Â?’‡–‹–‹‘Â?Ç¢ ȋ˜Ȍ –”ƒÂ?•’ƒ”‡Â?…› ƒÂ?† ’—„Ž‹… ‹Â?˜‘Ž˜‡Â?‡Â?–Ǣ ȋ˜‹Ȍ ƒ†‡“—ƒ…› ‘ˆ ”‡•‘—”…‡• ”‡Žƒ–‹˜‡ –‘ Â?‡‡†•Ǣ ƒÂ?† ȋ˜‹‹Ȍ ƒÂ? ‹Â?–‡”Ǧ•‡…–‘”ƒŽ ƒ’’”‘ƒ…ŠǤ Â? –Š‹• •‡…–‹‘Â? ™‡ ’”‘˜‹†‡ ƒÂ? ‘˜‡”˜‹‡™ ‘ˆ ’‘–‡Â?–‹ƒŽ ’‘Ž‹…› ’”‹‘”‹–‹‡• ˆ‘” ƒ…Š‹‡˜‹Â?‰ –Š‹• ˜‹•‹‘Â?Ǥ Medical Insurance Program and other stateǦfunded insurance programs ͵ǤʹͻǤ Georgia’s Medical Insurance Program for the poor was launched in 2006 and has been revised several times since then. Š‡ ’”‘‰”ƒÂ? ‘ˆˆ‡”• ƒ …‘Â?’”‡Š‡Â?•‹˜‡ „‡Â?‡ˆ‹– ’ƒ…Â?ƒ‰‡ –‘ ‡Ž‹‰‹„Ž‡ Š‘—•‡Š‘Ž†•Ǥ ‘•– ‡Â?‡”‰‡Â?…› ‘—–Ǧ’ƒ–‹‡Â?– …ƒ”‡ ƒÂ?† ’ŽƒÂ?Â?‡† ‘” ‡Â?‡”‰‡Â?…› ‹Â?Ǧ’ƒ–‹‡Â?– …ƒ”‡ ‹• ‹Â?…Ž—†‡†ǡ ™‹–Š ˆ‡™ …‘˜‡”ƒ‰‡ Ž‹Â?‹–• ƒÂ?† Â?‘ …‘Ǧ’ƒ›Â?‡Â?–•Ǥ ‘•– ‘ˆ –Š‡ Â?‘Â?Ǧ  ’‘’—Žƒ–‹‘Â? ‘Â?Ž› Šƒ• ƒ……‡•• –‘ –Š‡ —Â?‹˜‡”•ƒŽ „ƒ•‹… ’ƒ…Â?ƒ‰‡Ǥ Š‹• ‘ˆˆ‡”• ƒ Â?‘”‡ Ž‹Â?‹–‡† ’ƒ…Â?ƒ‰‡ ‘ˆ •‡”˜‹…‡• ™‹–Š •‹‰Â?‹ˆ‹…ƒÂ?– …‘Ǧ’ƒ›Â?‡Â?–•ǡ „—– •—ˆˆ‡”• ˆ”‘Â? ƒ Žƒ…Â? ‘ˆ …Ž‡ƒ” †‡ˆ‹Â?‹–‹‘Â?•ǡ …Š”‘Â?‹… —Â?†‡”Ǧˆ—Â?†‹Â?‰ǡ ƒÂ?† ™‹†‡•’”‡ƒ† ‹Â?ˆ‘”Â?ƒŽ ’ƒ›Â?‡Â?–•Ǥ – ‹• …—””‡Â?–Ž› —Â?†‡”‰‘‹Â?‰ •‹‰Â?‹ˆ‹…ƒÂ?– ”‡ˆ‘”Â?• ‹–•‡Žˆǡ ‹Â?…Ž—†‹Â?‰ –Š‡ ‹Â?–”‘†—…–‹‘Â? ‘ˆ ’ƒ–‹‡Â?– ˜‘—…Š‡”• ‹Â?•–‡ƒ† ‘ˆ †‹”‡…– ‹Â?•–‹–—–‹‘Â?ƒŽ ˆ—Â?†‹Â?‰Ǥ Ž‹‰‹„‹Ž‹–› ˆ‘” –Š‡   ’”‘‰”ƒÂ? ‹• †‡–‡”Â?‹Â?‡† „› –Š‡ •ƒÂ?‡ ’”‘š› Â?‡ƒÂ?• –‡•– È‹ÈŒ —•‡† ˆ‘” –Š‡ –ƒ”‰‡–‡† •‘…‹ƒŽ ƒ••‹•–ƒÂ?…‡ È‹ ÈŒ ’”‘‰”ƒÂ?Ç¡ „—– ™‹–Š ƒ Š‹‰Š‡” ‡Ž‹‰‹„‹Ž‹–› –Š”‡•Š‘Ž†Ǥ Š‡  ‹Â?…Ž—†‡• ‘˜‡” ͳͲͲ ‹Â?†‹…ƒ–‘”• ƒÂ?† ‹• ĠÂ?‹Â?‹•–‡”‡† „› –Š‡  –‘ ƒÂ?› Š‘—•‡Š‘Ž† –Šƒ– ƒ’’Ž‹‡• ȋƒ„‘—– ͶͲ ’‡”…‡Â?– ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â? Šƒ• †‘Â?‡ •‘ȌǤ Š‡ •–ƒ–‡ „—†‰‡– …‘˜‡”• ƒŽŽ Š‘—•‡Š‘Ž†• —’ –‘ ƒ •…‘”‡ ‘ˆ ͹ͲǡͲͲͲǡ ™Š‹Ž‡ „‹Ž‹•‹ ƒŽ•‘ …‘˜‡”• Š‘—•‡Š‘Ž†• ™‹–Š •…‘”‡• „‡–™‡‡Â? ͹ͲǡͲͲͲ ƒÂ?† ͳͲͲǡͲͲͲǤ Â? ʹͲͳͳ –Š‡   …‘˜‡”‡† ͻͲͲǡͲͲͲ „‡Â?‡ˆ‹…‹ƒ”‹‡• È‚ ƒ„‘—– ʹͲ ’‡”…‡Â?– ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â? È‚ ƒÂ?† Šƒ† ƒ „—†‰‡– ‘ˆ  ͳ͵͸Â?Ç¡ ‘” •‘Â?‡™Šƒ– Ž‡•• –ŠƒÂ? ŠƒŽˆ –Š‡ •–ƒ–‡ Š‡ƒŽ–Š „—†‰‡–Ǥ ͵Ǥ͵ͲǤ There have been ongoing expansions of MIP and other stateǦfunded health insurance programs in recent years along several dimensions. ‹”•–ǡ ‹Â? ʹͲͲͻǡ …‘˜‡”ƒ‰‡ ‘ˆ   ‹Â?…”‡ƒ•‡† ˆ”‘Â? ͹ͷͲǡͲͲͲ –‘ ͻͲͲǡͲͲͲ ’‡”•‘Â?•Ǥ ‡…‘Â?†ǡ ‹Â? ʹͲͳͲǡ ƒ •Â?ƒŽŽ ‘—–’ƒ–‹‡Â?– †”—‰ „‡Â?‡ˆ‹– ™ƒ• ƒ††‡† –‘ –Š‡ ’”‘‰”ƒÂ?Ǥ Š‹”†ǡ ĥ ‘ˆ ‡’–‡Â?„‡” ʹͲͳʹǡ ƒŽŽ ’‡Â?•‹‘Â?‡”• ȋ‹Ǥ‡Ǥ ƒŽŽ ™‘Â?‡Â? ‘˜‡” ͸Ͳ ƒÂ?† ƒŽŽ Â?‡Â? ‘˜‡” ͸ͷȌǡ …Š‹Ž†”‡Â? ͲǦͷ ›‡ƒ”• ‘ˆ ƒ‰‡ǡ •–—†‡Â?–•ǡ ƒÂ?† ’‡”•‘Â?• ™‹–Š †‹•ƒ„‹Ž‹–‹‡•ǡ ™‹ŽŽ Šƒ˜‡ ƒ……‡•• –‘ ƒ •–ƒ–‡Ǧ ͷͳ ˆ—Â?†‡† Š‡ƒŽ–Š ‹Â?•—”ƒÂ?…‡ ’ƒ…Â?ƒ‰‡Ǥ Š‡ ’”‡Â?‹—Â? ™‹ŽŽ „‡ ƒ„‘—–  ͳͷ ’‡” Â?‘Â?–ŠǤ Š‡ „‡Â?‡ˆ‹– ’ƒ…Â?ƒ‰‡ ™‹ŽŽ ”‡’Žƒ…‡ ƒÂ?† ‡š’ƒÂ?† ‘Â? •‘Â?‡ ‘ˆ –Š‡ …—””‡Â?– †‹•‡ƒ•‡Ǧ•’‡…‹ˆ‹… ’”‘‰”ƒÂ?• ƒ‹Â?‡† ƒ– –Š‡ ‡Ž†‡”Ž› ’‘’—Žƒ–‹‘Â?Ǥ —””‡Â?– ’ŽƒÂ?• •—‰‰‡•– –Š‡ •–ƒ–‡ ™‹ŽŽ …‘˜‡” ͺͲΨ ‘ˆ ’ŽƒÂ?Â?‡† ‘’‡”ƒ–‹‘Â?• ƒÂ?† —”‰‡Â?– ‘’‡”ƒ–‹‘Â?•ǡ ĥ ™‡ŽŽ ĥ ͷͲΨ ‘ˆ Â?‡†‹…‹Â?‡• —’ –‘ ƒ  ʹͲͲ Ž‹Â?‹–Ǣ –Š—• ‹– ‹• Ž‡•• ‰‡Â?‡”‘—• –ŠƒÂ?   ‹Â? •‘Â?‡ ƒ”‡ƒ• „—– Â?‘”‡ ‰‡Â?‡”‘—• ‹Â? ‘–Š‡”•Ǥ ͵Ǥ͵ͳǤ One of the strongest features of MIP to date is the explicit targeting of the poor. Š‹• Â?ƒÂ?‡• –Š‡ „‡Â?‡ˆ‹– ‹Â?…‹†‡Â?…‡ ‘ˆ –Š‡ ‡‘”‰‹ƒÂ? Š‡ƒŽ–Š „—†‰‡– Â?‘”‡ ˆƒ˜‘”ƒ„Ž‡ –‘ –Š‘•‡ ™‹–Š Ž‘™‡” •‘…‹‘Ǧ‡…‘Â?‘Â?‹… •–ƒ–—•Ǥ ‹‰—”‡ ͵Ǥͻ •Š‘™• –Šƒ– Â?‘•– ”‡…‹’‹‡Â?–• ‘ˆ   ƒ”‡ …‘Â?…‡Â?–”ƒ–‡† ‹Â? –Š‡ „‘––‘Â? ˆ‡™ †‡…‹Ž‡• ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â?Ǥ Š‹Ž‡ –Š‹• ”‡•—Ž–• ‹Â? ’”‘Ǧ’‘‘” …‘˜‡”ƒ‰‡ǡ –Š‡”‡ ‹• •–‹ŽŽ ™‡ŽŽ ‘˜‡” ŠƒŽˆ ‘ˆ –Š‡ „‘––‘Â? “—‹Â?–‹Ž‡ ™Š‘ †‘ Â?‘– „‡Â?‡ˆ‹– ˆ”‘Â?  Ǥ Š‹• ‹• ‹Â? ’ƒ”– „‡…ƒ—•‡ –Š‡ ’”‘š› Â?‡ƒÂ?• –‡•– —•‡† –‘ †‡–‡”Â?‹Â?‡   ‡Ž‹‰‹„‹Ž‹–› ™ƒ• ‘”‹‰‹Â?ƒŽŽ› †‡˜‡Ž‘’‡† ˆ‘” –Š‡  ’”‘‰”ƒÂ?Ç¡ Â?‡ƒÂ?‹Â?‰ –Šƒ– ‹– ™ƒ• ‹Â?–‡Â?†‡† –‘ ‹†‡Â?–‹ˆ› –Š‡ ‡š–”‡Â?‡ ’‘‘” ȋ‹– ‹• „—†‰‡–‡† –‘ …‘˜‡” ƒ„‘—– ͶͷͲǡͲͲͲ „‡Â?‡ˆ‹…‹ƒ”‹‡•Ȍǡ ”ƒ–Š‡” –ŠƒÂ? –‘ ‹†‡Â?–‹ˆ› ƒ Â?—…Š Žƒ”‰‡” ‰”‘—’ ‘ˆ „‡Â?‡ˆ‹…‹ƒ”‹‡• ĥ ‹Â? –Š‡ …ƒ•‡ ‘ˆ   ȋ™Š‹…Š ‹• „—†‰‡–‡† –‘ …‘˜‡” ‘˜‡” ͻͲͲǡͲͲͲ ‹Â?†‹˜‹†—ƒŽ•ȌǤ Â?‘–Š‡” ˆƒ…–‘” ‹• –Šƒ– ‘Â?Ž› ͶͲ ’‡”…‡Â?– ‘ˆ –Š‡ ‡‘”‰‹ƒÂ? ’‘’—Žƒ–‹‘Â? Šƒ• ƒ’’Ž‹‡† ˆ‘” ‹Â?…Ž—•‹‘Â? ‹Â? –Š‡ †ƒ–ƒ„ƒ•‡ ‘ˆ •‘…‹ƒŽŽ› ˜—ŽÂ?‡”ƒ„Ž‡ ˆƒÂ?‹Ž‹‡•Ǥ „‡––‡” —Â?†‡”•–ƒÂ?†‹Â?‰ ‘ˆ ™Š› Â?ƒÂ?› ’‘‘” Š‘—•‡Š‘Ž†• Šƒ˜‡ Â?‘– ƒ’’Ž‹‡† Â?ƒ› ƒŽ•‘ Ž‡ƒ† –‘ „‡––‡” …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ Ž‘™‡•– “—‹Â?–‹Ž‡Ǥ Â?’”‘˜‡† …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ ’‘‘” ‹Â?   ‹• ƒÂ? ‹Â?’‘”–ƒÂ?– ’”‹‘”‹–› ‰‘‹Â?‰ ˆ‘”™ƒ”†Ǥ ‘™‡˜‡”ǡ –ƒ”‰‡–‹Â?‰ ƒÂ?† …‘˜‡”ƒ‰‡ Šƒ˜‡ ‹Â?’”‘˜‡† „‡–™‡‡Â? ʹͲͲͻ ƒÂ?† ʹͲͳͳǡ ’‘–‡Â?–‹ƒŽŽ› ”‡ˆŽ‡…–‹Â?‰ –Š‡ Â?‡–Š‘†‘Ž‘‰‹…ƒŽ …ŠƒÂ?‰‡• –‘ –Š‡  Â?‘–‡† ‹Â? Šƒ’–‡” ʹǤ Figure 3.9: Coverage and Targeting Of MIP, 2009Ǧ11   …‘˜‡”ƒ‰‡   –ƒ”‰‡–‹Â?‰ ȋ‹Â? ’‡”…‡Â?– ‘ˆ †‡…‹Ž‡ ”‡…‡‹˜‹Â?‰ „‡Â?‡ˆ‹–Ȍ ȋ‹Â? ’‡”…‡Â?– ‘ˆ „‡Â?‡ˆ‹– ‰‘‹Â?‰ –‘ ‡ƒ…Š †‡…‹Ž‡Ȍ 50 25 45 40 20 35 30 15 25 2009 2009 20 10 2011 2011 15 10 5 5 0 0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 Decile Decile Source:  •–ƒˆˆ ‡•–‹Â?ƒ–‡• „ƒ•‡† ‘Â?   ͵Ǥ͵ʹǤ To assess the impact of MIP on key outcomes of interest, an impact evaluation was undertaken in 2009. Š‡ •ƒÂ?’Ž‡ ™ƒ• ƒ„‘—– ‡˜‡Â?Ž› †‹˜‹†‡† ‹Â?–‘   ƒÂ?† Â?‘Â?Ǧ  „‡Â?‡ˆ‹…‹ƒ”‹‡•Ǥ Â? ‘”†‡” –‘ ‡Â?•—”‡ –Šƒ– –Š‡   ’ƒ”–‹…‹’ƒÂ?–• ™Š‘ ™‡”‡ •—”˜‡›‡† È‚ –Š‡ Dz–”‡ƒ–Â?‡Â?–dz ‰”‘—’ È‚ …‘—Ž† „‡ …‘Â?’ƒ”‡† ™‹–Š –Š‡ Â?‘•– •‹Â?‹Žƒ” ’‘••‹„Ž‡ Dz…‘Â?–”‘Ždz ‰”‘—’ ‘ˆ Â?‘Â?Ǧ  Š‘—•‡Š‘Ž†•ǡ –Š‡ •—”˜‡› ‘Â?Ž› …‘ŽŽ‡…–‡† †ƒ–ƒ ‘Â? Š‘—•‡Š‘Ž†• Œ—•– ƒ„‘˜‡ ƒÂ?† Œ—•– „‡Ž‘™ –Š‡ ‡Ž‹‰‹„‹Ž‹–› –Š”‡•Š‘Ž†• ‘ˆ ͹ͲǡͲͲͲ ‘” ͳͲͲǡͲͲͲ ȋ”‡‰”‡••‹‘Â? †‹•…‘Â?–‹Â?—‹–› †‡•‹‰Â?ȌǤ ͵Ǥ͵͵Ǥ MIP has a significant impact on reducing outǦofǦpocket expenditures for health care. • •Š‘™Â? ‹Â? ‹‰—”‡ ͵ǤͳͲǡ ˆ‘” ‘—–’ƒ–‹‡Â?– …ƒ”‡ ‹Â? †Œƒ”ƒ ƒÂ?† „‹Ž‹•‹ǡ ƒÂ?† ‹Â?’ƒ–‹‡Â?– …ƒ”‡ ‹Â? ƒŽŽ ”‡‰‹‘Â?•ǡ   „‡Â?‡ˆ‹…‹ƒ”‹‡• ’ƒ› ƒ’’”‘š‹Â?ƒ–‡Ž› ͷͲ ’‡”…‡Â?– Ž‡•• –ŠƒÂ? Â?‘Â?Ǧ„‡Â?‡ˆ‹…‹ƒ”‹‡• ȋ–Š‡”‡ ‹• Â?‘ •–ƒ–‹•–‹…ƒŽŽ› •‹‰Â?‹ˆ‹…ƒÂ?– †‹ˆˆ‡”‡Â?…‡ ˆ‘” ‘—–’ƒ–‹‡Â?– …ƒ”‡ ‹Â? –Š‡ ”‡‰‹‘Â?• ™‹–Š ƒ …—–Ǧ‘ˆˆ •…‘”‡ ‘ˆ ͹ͲǡͲͲͲȌǤ Š‡ •—”˜‡› ƒŽ•‘ ˆ‘—Â?† –Šƒ–   „‡Â?‡ˆ‹…‹ƒ”‹‡• ™‡”‡ Â?‘”‡ Ž‹Â?‡Ž› –‘ ”‡’‘”– ”‡…‡‹˜‹Â?‰ ˆ”‡‡ ‘” ”‡†—…‡†Ǧ’”‹…‡ …ƒ”‡ Í·Í´ „‡…ƒ—•‡ ‘ˆ ‹Â?•—”ƒÂ?…‡ǡ ƒÂ?† Ž‡•• Ž‹Â?‡Ž› –‘ ”‡’‘”– –Šƒ– –Š‡› …‘—Ž† Â?‘– ’ƒ› ˆ‘” –Š‡ …‘•–• ‘ˆ …ƒ”‡ ‘—– ‘ˆ –Š‡‹” —•—ƒŽ ‹Â?…‘Â?‡Ǥ ‘‰‡–Š‡” –Š‡•‡ ˆ‹Â?†‹Â?‰• ‹Â?†‹…ƒ–‡ –Šƒ–   Šƒ• Â?ƒ†‡ ƒ Â?ƒŒ‘” …‘Â?–”‹„—–‹‘Â? –‘ ”‡†—…‹Â?‰ ‘—–Ǧ‘ˆǦ’‘…Â?‡– •’‡Â?†‹Â?‰ ƒÂ?‘Â?‰ ‹–• „‡Â?‡ˆ‹…‹ƒ”‹‡•ǡ ƒÂ?† ‹• –Š‡”‡ˆ‘”‡ ƒ…Š‹‡˜‹Â?‰ ‘Â?‡ ‘ˆ ‹–• Â?‡› ’”‘‰”ƒÂ? ‰‘ƒŽ•Ǥ Figure 3.10: OutǦofǦPocket Spending per Episode, ͵Ǥ͵ͶǤ The main reason why outǦofǦ ȋ‹Â? Žƒ”‹Ȍ 700 pocket spending has not fallen to zero among MIP members is because of drug 600 596 expenditures. Š‡ •–—†› ™ƒ• —Â?†‡”–ƒÂ?‡Â? 500 ’”‹‘” –‘ –Š‡ ”‡…‡Â?– ‹Â?–”‘†—…–‹‘Â? ‘ˆ ƒÂ? ‘—–Ǧ 431 ’ƒ–‹‡Â?– †”—‰ „‡Â?‡ˆ‹– ĥ ’ƒ”– ‘ˆ  Ǥ ‘™‡˜‡”ǡ 400 •‘Â?‡ ”‡•’‘Â?†‡Â?–• ƒŽ•‘ ”‡’‘”–‡† ’ƒ›‹Â?‰ ˆ‘” GEL …‡”–ƒ‹Â? •‡”˜‹…‡• –Šƒ– ƒ”‡ •—’’‘•‡† –‘ „‡ 300 233 221 …‘˜‡”‡† „›  Ç¡ ‹Â?†‹…ƒ–‹Â?‰ –Šƒ– ‹Â?ˆ‘”Â?ƒŽ 200 ’ƒ›Â?‡Â?–• Â?ƒ› ’‡”•‹•– ƒÂ?† –Š‡”‡ ‹• •…‘’‡ –‘ 85.2 ‹Â?’”‘˜‡ Â?Â?‘™Ž‡†‰‡ ‘ˆ –Š‡ „‡Â?‡ˆ‹– ’ƒ…Â?ƒ‰‡Ǥ 100 63.6 52.2 43.6 0 ͵Ǥ͵ͷǤ The survey results also indicated, OutͲpatient 70,000 InͲpatient 70,000 OutͲpatient 100,000 InͲpatient 100,000 MIP NonͲMIP Source: Bauhoff, Hotchkiss, and Smith, 2010 however, that the program has not had any impact on utilization. Š‹Ž‡ ‹– ‹• Source: Bauhoff, Hotchkiss, and Smith 2011 †‹ˆˆ‹…—Ž– –‘ ’‹Â?’‘‹Â?– ƒ •‹Â?‰Ž‡ Â?ƒŒ‘” ‡š’ŽƒÂ?ƒ–‹‘Â? ˆ‘” –Š‹• ˆ‹Â?†‹Â?‰ǡ ˜ƒ”‹‘—• ”‡ƒ•‘Â?• ƒ”‡ ’‘••‹„Ž‡Ǥ ‹”•–ǡ Â?ƒÂ?› Š‘—•‡Š‘Ž†• ”‡’‘”–‡† –Šƒ– –Š‡› ™‡”‡ Â?‘– ƒ™ƒ”‡ ‘ˆ –Š‡‹” „‡Â?‡ˆ‹…‹ƒ”› •–ƒ–—•ǡ ƒÂ?† –Š—• ˜ƒ”‹‘—• Â?‡ƒ•—”‡• Šƒ˜‡ „‡‡Â? –ƒÂ?‡Â? –‘ ‹Â?’”‘˜‡ ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ȋ‹Â?…Ž—†‹Â?‰ …ƒÂ?…‡ŽŽƒ–‹‘Â? ‘ˆ –Š‡ ˜‘—…Š‡” Â?‡…ŠƒÂ?‹•Â? ‹Â? ˆƒ˜‘” ‘ˆ …‘Â?’‡–‹–‹˜‡ „‹††‹Â?‰ ˆ‘” ”‡‰‹‘Â?ƒŽ ’ƒ…Â?ƒ‰‡•ȌǤ ‡…‘Â?†ǡ Ž‘™ “—ƒŽ‹–› ‘ˆ …ƒ”‡ ‹• ’”‘„ƒ„Ž› ƒÂ? ‹Â?’‘”–ƒÂ?– ”‡ƒ•‘Â?Ç¡ ƒÂ?† –Š‡ …—””‡Â?– ‡ˆˆ‘”–• –‘ ‹Â?’”‘˜‡ –Š‡ •—’’Ž›Ǧ•‹†‡ ȋ‹Â?…Ž—†‹Â?‰ Â?‡™ Š‘•’‹–ƒŽ …‘Â?•–”—…–‹‘Â? ’”‘‰”ƒÂ? ĥ ’ƒ”– ‘ˆ  ÈŒ •Š‘—Ž† Š‡Ž’ ‹Â? –Š‹• ”‡‰ƒ”†Ǥ Š‹”†ǡ –Š‡ ƒ„•‡Â?…‡ ‘ˆ ƒ ’Šƒ”Â?ƒ…‡—–‹…ƒŽ „‡Â?‡ˆ‹– ƒ– –Š‡ –‹Â?‡ ‘ˆ –Š‡ ‡˜ƒŽ—ƒ–‹‘Â? ȋ‹Â?–”‘†—…‡† ‹Â? ƒ› ʹͲͳͲȌ Â?ƒ› Šƒ˜‡ ”‡†—…‡† –Š‡ Â?‘–‹˜ƒ–‹‘Â? ˆ‘” –Š‡ „‡Â?‡ˆ‹…‹ƒ”› ’‘’—Žƒ–‹‘Â? –‘ •‡‡Â? …ƒ”‡ ˆ”‘Â? –Š‡‹” †‘…–‘”Ǥ ͵Ǥ͵͸Ǥ More upǦtoǦdate analysis is needed to monitor how these trends have evolved since 2009. Š‡ ‡ƒŽ–Š –‹Ž‹œƒ–‹‘Â? ƒÂ?† š’‡Â?†‹–—”‡ —”˜‡› È‹  ÈŒ —Â?†‡”–ƒÂ?‡Â? ‹Â? ʹͲͳͲ ’”‘˜‹†‡• Â?‹š‡† ‡˜‹†‡Â?…‡ ‘Â? †‹ˆˆ‡”‡Â?…‡• ‹Â? —–‹Ž‹œƒ–‹‘Â? „‡–™‡‡Â?   ƒÂ?† Â?‘Â?Ǧ  ‰”‘—’•Ǥ ‘” ‡šƒÂ?’Ž‡ǡ ͸ʹǤʹ ’‡”…‡Â?– ‘ˆ   „‡Â?‡ˆ‹…‹ƒ”‹‡• ƒÂ?† ͷͻǤ͸ ’‡”…‡Â?– ‘ˆ Â?‘Â?Ǧ  „‡Â?‡ˆ‹…‹ƒ”‹‡• ™Š‘ ”‡’‘”–‡† –‘ „‡ •‹…Â? ‹Â? Žƒ•– ͸ Â?‘Â?–Š• …‘Â?•—Ž–‡† ƒ Š‡ƒŽ–Š…ƒ”‡ ’”‘˜‹†‡”Ǥ —– ͸͵Ǥ͹ ’‡”…‡Â?– ‘ˆ   „‡Â?‡ˆ‹…‹ƒ”‹‡• ƒÂ?† ͹ʹǤͳ ’‡”…‡Â?– ‘ˆ Â?‘Â?Ǧ  ‹Â?†‹˜‹†—ƒŽ• …‘Â?•—Ž–‡† ƒ Š‡ƒŽ–Š …ƒ”‡ ’”‘˜‹†‡” ‹Â? ‡’‹•‘†‡• ‘ˆ ƒ…—–‡ •‹…Â?Â?॥ ‹Â? –Š‡ ’ƒ•– ͵Ͳ †ƒ›•Ǥ ”‡Ž‹Â?‹Â?ƒ”› ‡˜‹†‡Â?…‡ ˆ”‘Â? ʹͲͳͳ ‹Â?†‹…ƒ–‡• –Šƒ–   „‡Â?‡ˆ‹…‹ƒ”‹‡• ƒ”‡ —•‹Â?‰ Š‡ƒŽ–Š …ƒ”‡ •‡”˜‹…‡• Â?‘”‡ –ŠƒÂ? Â?‘Â?Ǧ  ‹Â?†‹˜‹†—ƒŽ•Ǥ ÂŽÂŽ –Š‡•‡ ”‡•—Ž–• …‘Â?’ƒ”‡ ˆ—ŽŽ ’‘’—Žƒ–‹‘Â?• ‘ˆ   ƒÂ?† Â?‘Â?Ǧ   ‹Â?†‹˜‹†—ƒŽ•ǡ ƒÂ?† –Š‡”‡ˆ‘”‡ †‘ Â?‘– ‹•‘Žƒ–‡ –Š‡ …ƒ—•ƒŽ ‡ˆˆ‡…– ‘ˆ   ‘Â? ‘—–…‘Â?‡• ‘ˆ ‹Â?–‡”‡•–Ǥ ’”‘’‘•‡† •–—†› ‹Â? ʹͲͳʹ …‘—Ž† —’†ƒ–‡ –Š‡ ʹͲͲͻ ”‡•—Ž–• ‹Â? –Š‹• ”‡•’‡…–Ǥ ͵Ǥ͵͹Ǥ Recent reform initiatives related to MIP and the broader health system have focused on partnership with the private sector to strengthen the hospital infrastructure. Š‘•’‹–ƒŽ …‘Â?•–”—…–‹‘Â? ’”‘‰”ƒÂ? ˆ‹Â?ƒÂ?…‡† –‘ ƒ •‹‰Â?‹ˆ‹…ƒÂ?– ‡š–‡Â?– –Š”‘—‰Š ‰‘˜‡”Â?Â?‡Â?– …‘Â?–”ƒ…–• ™‹–Š ‹Â?•—”ƒÂ?…‡ …‘Â?’ƒÂ?‹‡• —Â?†‡” –Š‡   ’”‘‰”ƒÂ? ‹• ‡š’‡…–‡† –‘ ”‡•—Ž– ‹Â? ƒ„‘—– ͳͷͲ ˆ—ŽŽ›Ǧˆ—Â?…–‹‘Â?‹Â?‰ǡ Â?‡™ ‘” ”‡ˆ—”„‹•Š‡† Š‘•’‹–ƒŽ• ™‹–Š ‘—–Ǧ’ƒ–‹‡Â?– †‡’ƒ”–Â?‡Â?–• „› –Š‡ ‡Â?† ‘ˆ ʹͲͳ͵Ǥ Š‹Ž‡ ƒ Â?‡™ Š‘•’‹–ƒŽ ‹Â?ˆ”ƒ•–”—…–—”‡ ‹• ƒÂ? ‹Â?’‘”–ƒÂ?– •–‡’ ˆ‘”™ƒ”†ǡ ‹– ™‹ŽŽ Â?‘– „‡ •—ˆˆ‹…‹‡Â?– –‘ ‰—ƒ”ƒÂ?–‡‡ Š‹‰Š “—ƒŽ‹–› Š‡ƒŽ–Š …ƒ”‡ •‡”˜‹…‡•Ǥ Š‡ “—ƒŽ‹–› ‘ˆ …ƒ”‡ ‹• ƒ Ž‘Â?‰Ǧ•–ƒÂ?†‹Â?‰ …‘Â?…‡”Â? ‹Â? ‡‘”‰‹ƒǯ• Š‡ƒŽ–Š …ƒ”‡ •›•–‡Â?Ǥ ‘ ƒ††”‡•• –Š‹• …ŠƒŽŽ‡Â?‰‡ ™‹ŽŽ ”‡“—‹”‡ •–”‘Â?‰‡” ‹Â?’—–• ƒÂ?† ‹Â?…‡Â?–‹˜‡• ‘Â? –Š‡ Š—Â?ƒÂ? ”‡•‘—”…‡ •‹†‡Ǥ ͷ͵ ͵Ǥ͵ͺǤ Several mediumǦterm issues related to strengthening MIP loom on the horizon, including in the area of the efficiency of spending. ”‹˜ƒ–‡ ‹Â?•—”‡”• ”‡…‡‹˜‡ ’”‡Â?‹—Â? ”‡˜‡Â?—‡ ˆ”‘Â? –Š‡ ‰‘˜‡”Â?Â?‡Â?– ƒÂ?† –›’‹…ƒŽŽ› Šƒ˜‡ ˆ‘—” ’‘–‡Â?–‹ƒŽ Dz—•‡•dz ˆ‘” –Š‡•‡ ˆ—Â?†•ǣ ȋ‹Ȍ ”‡‹Â?„—”•‡Â?‡Â?– ‘ˆ Â?‡†‹…ƒŽ •‡”˜‹…‡• ȋ–Š‹• •Šƒ”‡ ‹• ‘ˆ–‡Â? –‡”Â?‡† –Š‡ DzŽ‘•• ”ƒ–‹‘dzȌǢ ȋ‹‹Ȍ Â?ƒ”Â?‡–‹Â?‰ …‘•–•Ǣ ȋ‹‹‹Ȍ ĠÂ?‹Â?‹•–”ƒ–‹˜‡ …‘•–•Ǣ ƒÂ?† ȋ‹˜Ȍ ’”‘ˆ‹–•Ǥ ƒ…Š ‘ˆ –Š‡•‡ ‹–‡Â?• ”ƒ‹•‡• ’‘Ž‹…› ‹••—‡• ˆ‘” –Š‡ •—……‡••ˆ—Ž ‘’‡”ƒ–‹‘Â? ‘ˆ   ‹Â? –Š‡ ›‡ƒ”• –‘ …‘Â?‡Ǥ ͵Ǥ͵ͻǤ Medical care costs: Â? ’”‹Â?…‹’Ž‡ –Š‡ ’”‹˜ƒ–‡ ‹Â?•—”‡”• …‘—Ž† Â?‡‡’ ”‡‹Â?„—”•‡Â?‡Â?– …‘•–• †‘™Â? –Š”‘—‰Š •Â?ƒ”– ‘” Dzƒ…–‹˜‡ ’—”…Šƒ•‹Â?‰dz ‘ˆ Š‡ƒŽ–Š …ƒ”‡ •‡”˜‹…‡•ǡ ƒÂ?† –Š‹• Â?ƒ› „‡ ˆƒ…‹Ž‹–ƒ–‡† „‡…ƒ—•‡ –Š‡› ƒ”‡ ‹Â?…”‡ƒ•‹Â?‰Ž› ‹Â?–‡‰”ƒ–‡† ™‹–Š –Š‡ Š‘•’‹–ƒŽ •›•–‡Â? È‹ Ǧ•–›Ž‡ȌǤ Â? ‘–Š‡” •›•–‡Â?• ™‹–Š Â?—Ž–‹’Ž‡ ‹Â?•—”‡”• ȋ‡Ǥ‰Ǥǡ –Š‡ Ȍǡ ’”‹…‡• ‘ˆ Š‡ƒŽ–Š •‡”˜‹…‡• –‡Â?† –‘ „‡ higher „‡…ƒ—•‡ –Š‡ ˆ”ƒ‰Â?‡Â?–ƒ–‹‘Â? ‘ˆ ’—”…Šƒ•‹Â?‰ ‰‹˜‡• ‰”‡ƒ–‡” „ƒ”‰ƒ‹Â?‹Â?‰ ’‘™‡” –‘ –Š‡ ’”‘˜‹†‡”• ȋ‡•’‡…‹ƒŽŽ› Š‘•’‹–ƒŽ•ǡ ™Š‹…Š –›’‹…ƒŽŽ› ‡Â?Œ‘› •—„•–ƒÂ?–‹ƒŽ Â?ƒ”Â?‡– ’‘™‡”ȌǤ Š‹• Â?ƒ› „‡ Â?‹–‹‰ƒ–‡† ‹Â? ‡‘”‰‹ƒ †—‡ –‘ –Š‡ Â?‘Â?Ǧ …‘Â?’‡–‹–‹‘Â? ‘ˆ ‹Â?•—”‡”• ™‹–Š‹Â? ƒ ‰‡‘‰”ƒ’Š‹…ƒŽ ƒ”‡ƒ ‘Â?…‡   …‘Â?–”ƒ…–• Šƒ˜‡ „‡‡Â? •‹‰Â?‡†ǡ ƒÂ?† „‡…ƒ—•‡ ‘ˆ –Š‡ ‰”‘™‹Â?‰ ‹Â?–‡‰”ƒ–‹‘Â? ‘ˆ ‹Â?•—”‡”• ƒÂ?† ’”‘˜‹†‡”•Ǥ —– –Š‡ ‰‘˜‡”Â?Â?‡Â?– ƒÂ?†   „‡Â?‡ˆ‹…‹ƒ”‹‡• –‘‰‡–Š‡” ™‹ŽŽ Â?‡‡† –‘ Â?‘Â?‹–‘” –Š‹• ‹Â? ‘”†‡” –‘ ‡Â?•—”‡ ƒ……‘—Â?–ƒ„‹Ž‹–› „‘–Š ™‹–Š ”‡‰ƒ”† –‘ …‘˜‡”‹Â?‰ –Š‡   „‡Â?‡ˆ‹– ’ƒ…Â?ƒ‰‡ ĥ ”‡“—‹”‡† ĥ ™‡ŽŽ ĥ ’”‘˜‹†‹Â?‰ Š‹‰Š “—ƒŽ‹–› ‘ˆ …ƒ”‡Ǥ Š‡ ‡ƒŽ–Š Â?•—”ƒÂ?…‡ ‡†‹ƒ–‹‘Â? ‡”˜‹…‡ È‹ ÈŒ ƒÂ?† ‘Â?‰‘‹Â?‰  ‹Â?˜‡•–Â?‡Â?–• „›  …ƒÂ? Š‡Ž’ ‹Â? –Š‹• ”‡‰ƒ”†Ǥ Â? ‹Â?’‘”–ƒÂ?– …‘Â?…‡”Â? Š‡”‡ ‹• ‹ˆ Â?‡‡’‹Â?‰ …‘•–• †‘™Â? ”‡•—Ž–• ‹Â? –Š‡ Ž‘™‡” ’”‘˜‹•‹‘Â? ‘ˆ DzÂ?‡…‡••ƒ”›dz …ƒ”‡ǡ ‹Â?…Ž—†‹Â?‰ ’”‡˜‡Â?–‹˜‡ …ƒ”‡Ǥ Â?‡ Â?‡› …‘Â?•‹†‡”ƒ–‹‘Â? ‹• –Š‡ ‡š’‡…–‡† †—”ƒ–‹‘Â? ‘ˆ –Š‡ ”‡Žƒ–‹‘Â?•Š‹’ „‡–™‡‡Â? –Š‡ ‹Â?•—”ƒÂ?…‡ …‘Â?’ƒÂ?› ƒÂ?† –Š‡ ’ƒ–‹‡Â?–ǣ ‹Â? –Š‡ Ç¡ ™Š‡”‡ –Š‡”‡ ‹• Š‹‰Š –—”Â?‘˜‡” ‹Â? –Š‡ Â?ƒ”Â?‡–ǡ –Š‡”‡ ‹• ‡˜‹†‡Â?…‡ –Šƒ– ‹Â?•—”‡”• Â?‡‰Ž‡…– Â?ƒÂ?› ’”‡˜‡Â?–‹˜‡ •‡”˜‹…‡• „‡…ƒ—•‡ –Š‡› †‘ Â?‘– ‡š’‡…– –‘ „‡ …‘˜‡”‹Â?‰ –Š‡ ’ƒ–‹‡Â?– ‹Â? Í· ‘” ͳͲ ›‡ƒ”• ™Š‡Â? ƒ Š‡ƒŽ–Š …‘Â?†‹–‹‘Â? Â?ƒ› „‡…‘Â?‡ Â?‘”‡ •‡”‹‘—• ƒÂ?† –Š‡”‡ˆ‘”‡ …‘•–Ž›Ǥ ͵ǤͶͲǤ Marketing costs: Š‡•‡ ™‡”‡ “—‹–‡ Š‹‰Š ™Š‡Â? …‘Â?’‡–‹–‹‘Â? –‘‘Â? ’Žƒ…‡ –Š”‘—‰Š ˜‘—…Š‡”• ˆ‘” „‡Â?‡ˆ‹…‹ƒ”‹‡• ’”‹‘” –‘ ʹͲͳͲǡ ĥ ‹Â?•—”‡”• ™‡Â?– –‘ ‰”‡ƒ– ‡ˆˆ‘”– –‘ ƒ––”ƒ…– …—•–‘Â?‡”•Ǥ Š‡ •Š‹ˆ– –‘ …‘Â?’‡–‹–‹˜‡ –‡Â?†‡”‹Â?‰ ˆ‘” –Š”‡‡Ǧ›‡ƒ” …‘Â?–”ƒ…–• Šƒ• ”‡†—…‡† –Š‹• …‘•– ’”‡••—”‡Ǥ ͵ǤͶͳǤ Administrative costs: Š‡ ƒ’’”‘ƒ…Š ‘ˆ Â?—Ž–‹’Ž‡ ’”‹˜ƒ–‡ ‹Â?•—”‡”• Šƒ• Ž‡† –‘ ˜‡”› Š‹‰Š ĠÂ?‹Â?‹•–”ƒ–‹˜‡ …‘•–• ‹Â? •‘Â?‡ ‘–Š‡” …‘—Â?–”‹‡• ȋ‡Ǥ‰Ǥǡ –Š‡ Ȍǡ †—‡ –‘ ‹Â?…‘Â?•‹•–‡Â?– ’”‘…‡†—”‡•ǡ †—’Ž‹…ƒ–‹‘Â?Ç¡ ƒÂ?† ƒ ’”‘Ž‹ˆ‡”ƒ–‹‘Â? ‘ˆ ’ƒ’‡”™‘”Â?Ǥ ‡‘”‰‹ƒǯ• ”‡…‡Â?– ‡ˆˆ‘”–• –‘ ‡•–ƒ„Ž‹•Š ƒ •–”‘Â?‰ ‹Â?ˆ‘”Â?ƒ–‹‘Â? –‡…ŠÂ?‘Ž‘‰› ’Žƒ–ˆ‘”Â?Ç¡ ‹Â?…Ž—†‹Â?‰ •–ƒÂ?†ƒ”†‹œƒ–‹‘Â? ‘ˆ ”‡’‘”–‹Â?‰ ’”‘…‡†—”‡•ǡ ‹• ƒ ’‘•‹–‹˜‡ •–‡’Ǥ • ‡‘”‰‹ƒǯ• ‹Â?•—”ƒÂ?…‡ ‹Â?†—•–”› ‹• ”‡Žƒ–‹˜‡Ž› ›‘—Â?‰ǡ ‹– ‹• Â?ƒ–—”ƒŽ –‘ ‡š’‡…– Š‹‰Š‡” ˆ‹š‡† ‹Â?˜‡•–Â?‡Â?–• „› ‹Â?•—”‡”• ‹Â?  ƒÂ?† ‘–Š‡” •›•–‡Â?• –ŠƒÂ? ‹Â? –Š‡ Ž‘Â?‰Ǧ–‡”Â?Ǥ ͵ǤͶʹǤ Profits: ‘Â?‡ Â?—Ž–‹’Ž‡ ‹Â?•—”ƒÂ?…‡ •›•–‡Â?• ƒŽŽ‘™ ’”‘ˆ‹–• ȋ‡Ǥ‰Ǥǡ Ç¡ Š‹Ž‡Ȍ ™Š‹Ž‡ ‘–Š‡”• †‘ Â?‘– ȋ‡Ǥ‰Ǥǡ ‡”Â?ƒÂ?›ǡ ƒÂ?† ™‹–œ‡”ŽƒÂ?† ‘Â? –Š‡ „ƒ•‹… ’ƒ…Â?ƒ‰‡Ȍ ƒÂ?† ›‡– ‘–Š‡”• ƒ”‡ Â?‹š‡† „‡–™‡‡Â? ˆ‘”Ǧ’”‘ˆ‹– ƒÂ?† Â?‘Â?Ǧ’”‘ˆ‹– ‹Â?•—”‡”• ȋ‡Ǥ‰Ǥǡ ‡–Š‡”ŽƒÂ?†•ȌǤ …Ž‡ƒ” ’‹…–—”‡ ‘Â? …—””‡Â?– ‹Â?•—”‡” ’”‘ˆ‹–• ‹Â? ‡‘”‰‹ƒ ‹• Â?‘– ƒ˜ƒ‹Žƒ„Ž‡ǡ ƒŽ–Š‘—‰Š –Š‡”‡ ‹• •‘Â?‡ ‡˜‹†‡Â?…‡ –Šƒ– –Š‡ Ž‘•• ”ƒ–‹‘ È‹Â?‡†‹…ƒŽ …ƒ”‡ ‡š’‡Â?•‡• †‹˜‹†‡† „› ’”‡Â?‹—Â? ”‡˜‡Â?—‡Ȍ Šƒ• ”‹•‡Â? ˆ”‘Â? ƒ„‘—– ͷͲ ’‡”…‡Â?– ‹Â? ‡ƒ”Ž‹‡” ›‡ƒ”• –‘ ƒ„‘—– ͺͲ ’‡”…‡Â?– ƒ– ’”‡•‡Â?–Ǥ Â? –Š‡ Ç¡ –Š‡”‡ Šƒ• „‡‡Â? ”‡…‡Â?– –ƒŽÂ? ‘ˆ Â?ƒÂ?†ƒ–‹Â?‰ ƒ Ž‘•• ”ƒ–‹‘ ‘ˆ Â?‘ Ž‘™‡” –ŠƒÂ? ͺͷ ’‡”…‡Â?–Ǥ ‹‰Š ‹Â?•—”‡” ’”‘ˆ‹–• ƒÂ?† …‘Â?…‡”Â?• ƒ„‘—– …‘ŽŽ—•‹‘Â? Šƒ˜‡ „‡‡Â? ƒ •‘—”…‡ ‘ˆ †‡„ƒ–‡ ‹Â? Š‹Ž‡Ǥ Â? ‰‡Â?‡”ƒŽǡ ƒ Ž‘™ Ž‘•• ”ƒ–‹‘ •Š‘—Ž† ”ƒ‹•‡ …‘Â?…‡”Â?• –Šƒ– ƒÂ? ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ? ‹• ‰‡––‹Â?‰ ’‘‘” ˜ƒŽ—‡ ˆ‘” Â?‘Â?‡› ™‹–Š –Š‡ –ƒš’ƒ›‡”ǯ• Š‡ƒŽ–Š †‘ŽŽƒ”•ǤǤ ͵ǤͶ͵Ǥ The renewal of MIP contracts expected in 2013 provides an opportunity for reviewing many of these issues. Â?‡› Ž‘Â?‰‡”Ǧ–‡”Â? ‹••—‡ ˆƒ…‹Â?‰   ‹• –Šƒ– ‹ˆ ƒÂ?† ™Š‡Â? —–‹Ž‹œƒ–‹‘Â? ‘ˆ •‡”˜‹…‡• „› „‡Â?‡ˆ‹…‹ƒ”‹‡• •–ƒ”–• –‘ ”‹•‡ǡ –Š‡”‡ ™‹ŽŽ „‡ ‹Â?’‘”–ƒÂ?– ‹Â?’Ž‹…ƒ–‹‘Â?• ˆ‘” –Š‡ ”‡“—‹”‡† ’”‡Â?‹—Â? ’ƒ‹† –‘ ‹Â?•—”ƒÂ?…‡ …‘Â?’ƒÂ?‹‡•ǡ ƒÂ?† –Š‡”‡ˆ‘”‡ ˆ‘” –Š‡ Š‡ƒŽ–Š „—†‰‡–Ǥ Â? –Š‡ Ž‘Â?‰Ǧ–‡”Â?Ç¡ „”‘ƒ† ͷͶ ’‘’—Žƒ–‹‘Â? …‘˜‡”ƒ‰‡ —Â?†‡” ˜ƒ”‹‘—• Š‡ƒŽ–Š ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ?• ™‹ŽŽ „‡ ƒ Â?‡› ”‡“—‹”‡Â?‡Â?– ˆ‘” ƒ…Š‹‡˜‹Â?‰ Š‡ƒŽ–Š •‡…–‘” ‘„Œ‡…–‹˜‡•Ǥ Pharmaceutical prices ͵ǤͶͶǤ As noted, expenditures on pharmaceuticals account for about 60 percent of total outǦ ofǦpocket spending in Georgia, and an even greater share among the poorest quintile. Š‡ •Šƒ”‡ ‘ˆ –‘–ƒŽ Š‡ƒŽ–Š ‡š’‡Â?†‹–—”‡• •’‡Â?– ‘Â? †”—‰• ‹• –Š‡”‡ˆ‘”‡ ƒ„‘—– ͵ͷǦͶͲ ’‡”…‡Â?– ȋ–Š‡ ‰‘˜‡”Â?Â?‡Â?– ƒŽ•‘ •’‡Â?†• ƒ •Â?ƒŽŽ ƒÂ?‘—Â?– ‘Â? †”—‰• ˆ‘” •’‡…‹ˆ‹… ’”‘‰”ƒÂ?•Ȍǡ ™Š‹…Š ‹• ™‡ŽŽ ‘˜‡” –™‹…‡ ĥ Š‹‰Š ĥ –Š‡ …‘””‡•’‘Â?†‹Â?‰ ”ƒ–‡ ƒÂ?‘Â?‰ Â?‘•–  …‘—Â?–”‹‡• ȋ–›’‹…ƒŽŽ› ƒ„‘—– ͳͷ ’‡”…‡Â?–ȌǤ͹ ……‘”†‹Â?‰ –‘ –Š‡   •—”˜‡›ǡ ‡‘”‰‹ƒÂ? Š‘—•‡Š‘Ž†• •’‡Â?– ƒ –‘–ƒŽ ‘ˆ ƒ„‘—–  ͹ͲͲÂ? ƒÂ?Â?—ƒŽŽ› ‘Â? †”—‰•ǡ ‘” ‹Â? ‡š…‡•• ‘ˆ ͵ ’‡”…‡Â?– ‘ˆ Ç¡ ™Š‹…Š ‹• ƒŽ•‘ –™‹…‡ ĥ Š‹‰Š ĥ –Š‡  ƒ˜‡”ƒ‰‡Ǥ ‡– Â?‘– Â?—…Š ‹• ‰ƒ‹Â?‡† ‹Â? ”‡–—”Â?Ç£ ĥ Â?‘–‡†ǡ …‘˜‡”ƒ‰‡ ‘ˆ „ƒ•‹… …‘•–Ǧ‡ˆˆ‡…–‹˜‡ –”‡ƒ–Â?‡Â?–• ƒ‰ƒ‹Â?•– …ƒ”†‹‘˜ƒ•…—Žƒ” †‹•‡ƒ•‡• ƒ”‡ Ž‘™Ǥ ͵ǤͶͷǤ High OOP on drugs reflects several factors. Š‹• ‹• ’ƒ”–Ž› †—‡ –‘ Š‹‰Š Ž‡˜‡Ž• ‘ˆ •‡ŽˆǦ –”‡ƒ–Â?‡Â?–ǡ ĥ –Š‡ ’‘’—Žƒ–‹‘Â? †‹”‡…–Ž› ˜‹•‹–• ’Šƒ”Â?ƒ…‹‡• ‹Â? ‘”†‡” –‘ ƒ˜‘‹† ’ƒ›‹Â?‰ ‘—–Ǧ‘ˆǦ’‘…Â?‡– ƒ– Š‡ƒŽ–Š ˆƒ…‹Ž‹–‹‡• ™‹–Š Ž‘™ “—ƒŽ‹–› ‘ˆ …ƒ”‡Ǥ Ž•‘ǡ ‹– ‹• ”‡’‘”–‡† –Šƒ– ˜‹–ƒÂ?‹Â?• ƒÂ?† ˆ‘‘† •—’’Ž‡Â?‡Â?–• ƒ”‡ ƒÂ?‘Â?‰ –Š‡ –‘’ •‡ŽŽ‹Â?‰ ’Šƒ”Â?ƒ…‡—–‹…ƒŽ•ǡ ‘ˆ–‡Â? ™‹–Š —Â?…‡”–ƒ‹Â? –Š‡”ƒ’‡—–‹… „‡Â?‡ˆ‹–•Ǥ —– Š‹‰Š ’”‹…‡• ƒ”‡ ƒŽÂ?‘•– …‡”–ƒ‹Â?Ž› ƒ ’ƒ”– ‘ˆ –Š‡ ’‹…–—”‡ ĥ ™‡ŽŽǤ ͵ǤͶ͸Ǥ The level of drug prices in Georgia has been a focus of public debate in recent years. ……‡•• –‘ ƒˆˆ‘”†ƒ„Ž‡ Â?‡†‹…‹Â?‡• ‹• ƒÂ? ‹••—‡ ˆ‘” –Š‡ ™Š‘Ž‡ ’‘’—Žƒ–‹‘Â?Ç¡ ĥ Â?‘•– ‘—–Ǧ’ƒ–‹‡Â?– †”—‰• ƒ”‡ Â?‘– …‘˜‡”‡† „› –Š‡ —Â?‹˜‡”•ƒŽ •–ƒ–‡ Š‡ƒŽ–Š ’”‘‰”ƒÂ?•ǡ ƒÂ?† ™‡”‡ ‘Â?Ž› ƒ††‡† –‘   ‹Â? ʹͲͳͲ ȋƒÂ?† ™‹–Š ƒ …‡‹Ž‹Â?‰ ‘Â? ”‡‹Â?„—”•‡Â?‡Â?–ȌǤ ‹‰Š  •’‡Â?†‹Â?‰ ˆ‘” †”—‰• ‹• –Š—• ƒ Â?‡› ˆƒ…–‘” —Â?†‡”Ž›‹Â?‰ ‡‘”‰‹ƒǯ• ™‡ƒÂ? ’‡”ˆ‘”Â?ƒÂ?…‡ ‘Â? ˆ‹Â?ƒÂ?…‹ƒŽ ’”‘–‡…–‹‘Â? †‡•…”‹„‡† ‹Â? –Š‡ ’”‡˜‹‘—• •‡…–‹‘Â?Ǥ ‡ƒÂ?™Š‹Ž‡ǡ ĥ Â?‘–‡†ǡ ‡˜‹†‡Â?…‡ ˆ”‘Â? ƒ†˜ƒÂ?…‡† …‘—Â?–”‹‡• •—‰‰‡•–• –Šƒ– ’Šƒ”Â?ƒ…‡—–‹…ƒŽ• Šƒ˜‡ ’Žƒ›‡† ƒ Â?ƒŒ‘” ”‘Ž‡ ‹Â? ‡š–‡Â?†‹Â?‰ Ž‹ˆ‡ ‡š’‡…–ƒÂ?…›Ǥ Š—•ǡ ƒ……‡•• –‘ Â?‡†‹…‹Â?‡• ‹• ƒÂ? ‹••—‡ ™‹–Š ”‡Ž‡˜ƒÂ?…‡ –‘ „‘–Š Š‡ƒŽ–Š ‘—–…‘Â?‡• ƒÂ?† ˆ‹Â?ƒÂ?…‹ƒŽ ’”‘–‡…–‹‘Â?Ǥ ͵ǤͶ͹Ǥ The government has begun to take proǦactive measures to address the issue of pharmaceutical prices. Â? ‘˜‡Â?„‡” ʹͲͲͻǡ ƒ Žƒ™ ™ƒ• ’ƒ••‡† ™Š‹…Š ƒ‹Â?‡† –‘ ”‡ˆ‘”Â? …‡”–ƒ‹Â? ƒ•’‡…–• ‘ˆ ’Šƒ”Â?ƒ…‡—–‹…ƒŽ ’‘Ž‹…› ‹Â? ‡‘”‰‹ƒǤ Š‹• ‹Â?…Ž—†‡† –Š”‡‡ Â?ƒ‹Â? ‘„Œ‡…–‹˜‡•ǣ ȋ‹Ȍ –‘ ‡ƒ•‡ –Š‡ ’”‘…‡†—”‡• ˆ‘” ‹Â?’‘”–‹Â?‰ †”—‰• ƒŽ”‡ƒ†› ‹Â?…Ž—†‡† ‘Â? –Š‡ ƒ’’”‘˜‡† Ž‹•–• ‹Â? ƒ†˜ƒÂ?…‡† …‘—Â?–”‹‡•Ǣ ȋ‹‹Ȍ –‘ Â?ƒÂ?‡ ‹– ‡ƒ•‹‡” ˆ‘” Â?‡™ Â?ƒ”Â?‡– ƒ…–‘”• –‘ ‹Â?’‘”– †”—‰• †‹”‡…–Ž› ȋ‡Ǥ‰Ǥǡ Š‘•’‹–ƒŽ•ǡ ‹Â?•—”‡”•ǡ ‡–…ǤȌǢ ƒÂ?† ȋ‹‹‹Ȍ –‘ Ž‘‘•‡Â? –Š‡ ”‡“—‹”‡Â?‡Â?–• ˆ‘” ”‡–ƒ‹Ž ’Šƒ”Â?ƒ…› •’ƒ…‡ ȋ‡Ǥ‰Ǥǡ ‡Â?ƒ„Ž‹Â?‰ •—’‡”Â?ƒ”Â?‡–• ƒÂ?† ‘–Š‡”• –‘ •‡ŽŽ Â?‡†‹…‹Â?‡•ȌǤ Š‡ ‹Â?’ƒ…– ‘ˆ –Š‡•‡ Â?‡ƒ•—”‡• ‘Â? ’Šƒ”Â?ƒ…‡—–‹…ƒŽ ’”‹…‡• ‹• Â?‘™ „‡‰‹Â?Â?‹Â?‰ –‘ ‡Â?‡”‰‡Ǥ ͵ǤͶͺǤ Against this background, two rounds of a survey of retail pharmacy prices and availability for 50 common drugs was conducted in December 2009 and June 2011 with World Bank support. –‘–ƒŽ ‘ˆ ͳͶ͸ ’Šƒ”Â?ƒ…‹‡• ™‡”‡ •—”˜‡›‡† ƒ…”‘•• •‹š ”‡‰‹‘Â?• ‘ˆ ‡‘”‰‹ƒ È‹„‹Ž‹•‹ǡ ƒ–—Â?‹ǡ ƒÂ?Š‡–‹ǡ ƒÂ?‡‰”‡Ž‘ǡ ˜‡Â?‘ ƒ”–Ž‹ǡ ƒÂ?† Â?‡”‡–‹ȌǤ – ‹Â?…Ž—†‡† ’Šƒ”Â?ƒ…‹‡• ‹Â? –Š‡ Â?ƒŒ‘” ’Šƒ”Â?ƒ…› Â?‡–™‘”Â?•ǡ ‹Â?†‡’‡Â?†‡Â?– ’Šƒ”Â?ƒ…‹‡•ǡ ƒÂ?† Š‘•’‹–ƒŽ ’Šƒ”Â?ƒ…‹‡•Ǥ ”‹…‡ †ƒ–ƒ ™ƒ• …‘ŽŽ‡…–‡† ˆ‘” „‘–Š ‘”‹‰‹Â?ƒ–‘” „”ƒÂ?† È‹ ÈŒ ƒÂ?† –Š‡‹” Ž‘™‡•– ’”‹…‡ ‰‡Â?‡”‹… È‹ ÈŒ ‡“—‹˜ƒŽ‡Â?–•Ǥ ‘Â?‡ •—Â?Â?ƒ”› ”‡•—Ž–• ƒ”‡ •Š‘™Â? ‹Â? ‹‰—”‡ ͵ǤͳͳǤ ͹  ‡ƒŽ–Š ƒ– ƒ ‰ŽƒÂ?…‡ ʹͲͲͻǤ Í·Í· Figure 3.11Ç£ Pharmaceutical Price and Availability Trends, 2009Ǧ2011 ȋ‹Â? ’‡”…‡Â?– ƒÂ?† Žƒ”‹ǡ ĥ Â?‘–‡†Ȍ Drug availability (%) Median price changes, 2009Ͳ2011 (%) 70 64 64 15 11.1 61 60 56 10 52 52 52 50 47 5 2.8 41 0.9 40 0 32 29 29 Brand Ͳ5 Ͳ1.6 Brand 30 Generic Ͳ10 Generic 20 Ͳ15 10 Ͳ20 Ͳ17.8 0 Ͳ19.5 Batumi Samegrelo Imereti Kakheti Tbilisi Kvemo Ͳ25 Kartli 2009Ͳ2010 2010Ͳ2011 2009Ͳ2011 Median markͲups (%) Standard treatment prices (GEL) 120 45 41.20 103 39.30 40 100 90 86 35 80 30 25 60 2009 Brand 20 2011 13.50 Generic 40 34 15 10.05 10 8.40 20 5.67 5 3.40 2.25 0 0 Brand Generic Arthritis Hypertension ARI Peptic ulcer SourceÇ£  È€ •—”˜‡›Ǥ ͵ǤͶͻǤ The evidence indicates a mixed picture on trends between 2009 and 2011. ‹”•–ǡ –Š‡”‡ Šƒ• „‡‡Â? ƒÂ? ‹Â?’”‘˜‡Â?‡Â?– ‹Â? –Š‡ ƒ˜ƒ‹Žƒ„‹Ž‹–› ‘ˆ ƒŽŽ †”—‰• È‹Í· ’‡”…‡Â?–ƒ‰‡ ’‘‹Â?–• ˆ‘” ‰‡Â?‡”‹…•ǡ ͳͶ ’‡”…‡Â?–ƒ‰‡ ’‘‹Â?–• ˆ‘” „”ƒÂ?†•Ȍǡ „—– –Š‡ Ž‡˜‡Ž• ”‡Â?ƒ‹Â? “—‹–‡ Ž‘™ ȋ–‘’ Ž‡ˆ– ’ƒÂ?‡ŽȌǤ ‡…‘Â?†ǡ –Š‡ ’”‹…‡• ‘ˆ „”ƒÂ?† Â?ƒÂ?‡ †”—‰• Šƒ˜‡ ˆƒŽŽ‡Â? •‹‰Â?‹ˆ‹…ƒÂ?–Ž› „‡–™‡‡Â? ‡…‡Â?„‡” ʹͲͲͻ ƒÂ?† —Â?‡ ʹͲͳͳǡ ™Š‹Ž‡ ‰‡Â?‡”‹… ’”‹…‡• Šƒ˜‡ Â?‘–Ǥ ’‡…‹ˆ‹…ƒŽŽ›ǡ –Š‡ ƒ˜‡”ƒ‰‡ ’”‹…‡ …ŠƒÂ?‰‡ ˆ‘” „”ƒÂ?† Â?ƒÂ?‡ †”—‰• †—”‹Â?‰ –Š‹• –‹Â?‡ ™ƒ• Ǧ ͳͺ ’‡”…‡Â?– ȋ‹Â?  –‡”Â?•Ȍǡ ™Š‹Ž‡ –Š‡ ƒ˜‡”ƒ‰‡ ’”‹…‡ …ŠƒÂ?‰‡ ˆ‘” ‰‡Â?‡”‹… †”—‰• ™ƒ• Ϊͳ ’‡”…‡Â?– ȋ–‘’ ”‹‰Š– ’ƒÂ?‡ŽȌǤ ‹Â?…‡ …‘Â?•—Â?‡” ’”‹…‡ ‹Â?ˆŽƒ–‹‘Â? ‘˜‡” –Š‡ •ƒÂ?‡ ’‡”‹‘† ™ƒ• ƒ„‘—– ͳʹ ’‡”…‡Â?–ǡ –Š‹• ”‡’”‡•‡Â?–• ƒ ’‘•‹–‹˜‡ ‘—–…‘Â?‡Ǥ ‘™‡˜‡”ǡ –Š‡ …‘•– ƒÂ?† ƒ˜ƒ‹Žƒ„‹Ž‹–› ‘ˆ ‰‡Â?‡”‹… †”—‰• ”‡Â?ƒ‹Â?• ƒ Â?‡› …‘Â?…‡”Â?Ǥ Ž•‘ǡ Ž‘™‡” „”ƒÂ?† ’”‹…‡• …‘—Ž† „‡ –”ƒÂ?•‹–‘”› ‹ˆ –Š‡› ”‡ˆŽ‡…– ƒ Dz’”‹…‡ ™ƒ”dz –Šƒ– ”‡•—Ž–• ‹Â? –Š‡ ˆƒ‹Ž—”‡ ‘ˆ Â?‡™ ‡Â?–”ƒÂ?–•ǡ ˆ‘ŽŽ‘™‡† „› ƒ ”‡˜‡”•‹‘Â? –‘ –Š‡ Š‹‰Š ’”‹…‡• ‘ˆ –Š‡ ’ƒ•–Ǥ ‡ƒÂ?™Š‹Ž‡ǡ ”‡–ƒ‹Ž Â?ƒ”Â?Ǧ—’• Šƒ˜‡ †‡…”‡ƒ•‡† •‹‰Â?‹ˆ‹…ƒÂ?–Ž› ȋ„‘––‘Â? Ž‡ˆ– ’ƒÂ?‡ŽȌǡ „—– –Š‡”‡ ‹• •–‹ŽŽ ”‘‘Â? ˆ‘” ˆ—”–Š‡” †‡…Ž‹Â?‡ǡ ĥ †‹•…—••‡† „‡Ž‘™Ǥ ƒ•–Ž›ǡ –Š‡ …‘•–• ‘ˆ •–ƒÂ?†ƒ”† –”‡ƒ–Â?‡Â?–• ˆ‘” …‘Â?Â?‘Â? ƒ‹ŽÂ?‡Â?–• ƒ”‡ •‹‰Â?‹ˆ‹…ƒÂ?–Ž› Ž‘™‡” ˆ‘” ‰‡Â?‡”‹… †”—‰• ȋ„‘––‘Â? ”‹‰Š– ’ƒÂ?‡ŽȌǡ ĥ ‹• —•—ƒŽǤ Š‹• •‡”˜‡• –‘ Š‹‰ŠŽ‹‰Š– ™Š› ˆ—”–Š‡” ‹Â?’”‘˜‡Â?‡Â?– ‹Â? ‰‡Â?‡”‹… ƒ˜ƒ‹Žƒ„‹Ž‹–› ‹• ‹Â?’‘”–ƒÂ?– ˆ”‘Â? ƒ ’‘’—Žƒ–‹‘Â? Š‡ƒŽ–Š •–ƒÂ?†’‘‹Â?–Ǥ ͵ǤͷͲǤ To provide an international benchmark using the endǦ2009 data, price comparison data for a list of 20 of those drugs was obtained for six European Union countries. ˜‡” ͻͲ ’‡”…‡Â?– ‘ˆ ’Šƒ”Â?ƒ…‡—–‹…ƒŽ• ‹Â? ‡‘”‰‹ƒ ƒ”‡ ‹Â?’‘”–‡†Ǥ ‹‰—”‡ ͵Ǥͳʹ •Š‘™• •‘Â?‡ ‹Â?†‹…ƒ–‹˜‡ ”‡•—Ž–• ˆ‘” Â?‡– ’Šƒ”Â?ƒ…› ”‡–ƒ‹Ž ’”‹…‡• È‹Â?‘•–  …‘—Â?–”‹‡• ƒ’’Ž› ƒ   –‘ †”—‰•ǡ „—– ‡‘”‰‹ƒ †‘‡• Â?‘–ȌǤ Ž‡ƒ”Ž› •ƒŽƒ”› ƒÂ?† ”‡–ƒ‹Ž ’”‘’‡”–› …‘•–• ™‘—Ž† „‡ Â?‘”‡ ‡š’‡Â?•‹˜‡ ‹Â? –Š‡ ȋ”‡Žƒ–‹˜‡Ž› ”‹…ŠȌ  …‘—Â?–”‹‡•Ǥ Š‡ Â?—Â?„‡”• •—‰‰‡•– –Š‡”‡ ‹• ™‹†‡ ˜ƒ”‹ƒ–‹‘Â? ‹Â? ’”‹…‡ †‹ˆˆ‡”‡Â?…‡• „‡–™‡‡Â? ‡‘”‰‹ƒ ƒÂ?† –Š‡  …‘—Â?–”‹‡• È‹ ”‡‡…‡ǡ –ƒŽ›ǡ œ‡…Š ‡’—„Ž‹…ǡ —Â?‰ƒ”›ǡ ƒÂ?† ‘ŽƒÂ?†ȌǤ ‰‡Â?‡”ƒŽ ’ƒ––‡”Â?Ç¡ Š‘™‡˜‡”ǡ ‹• –Šƒ– ‘”‹‰‹Â?ƒŽ ȋ‘” ”‡ˆ‡”‡Â?…‡ „”ƒÂ?†Ȍ †”—‰• ƒ”‡ –›’‹…ƒŽŽ› Â?‘”‡ ‡š’‡Â?•‹˜‡ ‹Â? ‡‘”‰‹ƒ –ŠƒÂ? ‹Â? –Š‡ Ç¡ ‘ˆ–‡Â? „› ƒ ™‹†‡ ͷ͸ Figure 3.12: Brand and Generic Drug Prices, Georgia and EU ȋ‹Â? ’‡”…‡Â?–Ȍ ”ƒÂ?† †”—‰• ‡Â?‡”‹… †”—‰• 150% 150% 100% 100% 50% 50% 0% 0% -50% -50% -100% -100% SourceÇ£  È€ •—”˜‡› ƒÂ?†  Â?ƒ”‰‹Â?Ç¡ ™Š‹Ž‡ Â?‘•– ‰‡Â?‡”‹… †”—‰• ƒ”‡ …Š‡ƒ’‡” ‹Â? ‡‘”‰‹ƒǤ Š‹• ‹• …‘Â?•‹•–‡Â?– ™‹–Š ”‡’‘”–• –Šƒ– „‘–Š ’”‹Â?ƒ”› …ƒ”‡ †‘…–‘”• ƒÂ?† ’Šƒ”Â?ƒ…‹•–• ”‡…‡‹˜‡ ’ƒ›Â?‡Â?–• ˆ”‘Â? –Š‡ ’Šƒ”Â?ƒ…‡—–‹…ƒŽ …‘Â?’ƒÂ?‹‡• ‹Â? ‘”†‡” –‘ ‡Â?…‘—”ƒ‰‡ –Š‡ ’‘’—Žƒ–‹‘Â? –‘ ’—”…Šƒ•‡ •’‡…‹ˆ‹… ȋŠ‹‰Š‡”Ǧ…‘•–Ȍ †”—‰•ǡ ƒŽ–Š‘—‰Š –Š‡”‡ Šƒ˜‡ „‡‡Â? Ž‡‰ƒŽ ‡ˆˆ‘”–• –‘ ’”‘Š‹„‹– –Š‹•Ǥ Š‡ ’‘’—Žƒ–‹‘Â?Ç¡ Â?‡ƒÂ?™Š‹Ž‡ǡ Â?ƒ› †‹•–”—•– Ž‘™‡”Ǧ…‘•– †”—‰•Ǥ ͵ǤͷͳǤ In addition to price comparisons, Figure 3.13Ç£ Estimated Average Combined an analysis of markǦups along the supply Wholesale and Retail Margins, Georgia and Selected chain also provides important insights EU Countries ȋ‹Â? ’‡”…‡Â?–Ȍ into market dynamics. ‹‰—”‡ ͵Ǥͳ͵ •Š‘™• 120% ‡•–‹Â?ƒ–‡• ‘ˆ –Š‡ …‘Â?„‹Â?‡† ™Š‘Ž‡•ƒŽ‡ ƒÂ?† ”‡–ƒ‹Ž Â?ƒ”‰‹Â?• ˆ‘” ‡‘”‰‹ƒ ƒÂ?† ˆ‹˜‡  100% 102% …‘—Â?–”‹‡• ĥ ‘ˆ ƒÂ?—ƒ”› ʹͲͳͲǤ Š‡ ‡‘”‰‹ƒÂ? †ƒ–ƒ ‹• „ƒ•‡† ‘Â? ƒÂ?ƒŽ›•‹• ‘ˆ …—•–‘Â?• †ƒ–ƒǡ 80% ™Š‹Ž‡  †ƒ–ƒ ”‡ˆŽ‡…–• ƒ…–—ƒŽ ‡šǦˆƒ…–‘”›ǡ % margin ™Š‘Ž‡•ƒŽ‡ǡ ƒÂ?† ”‡–ƒ‹Ž ’”‹…‡• ‘„–ƒ‹Â?‡† ˆ”‘Â? 60% 49%  È€ Ǥ Š‡ ‡‘”‰‹ƒÂ? ƒ˜‡”ƒ‰‡ ‹• …Ž‡ƒ”Ž› 46% Â?—…Š Š‹‰Š‡” –ŠƒÂ? ‹Â? ‘–Š‡” …‘—Â?–”‹‡•Ǥ 40% 35% 32% 27% ‡…ƒ—•‡ †”—‰• ƒ”‡ Š‹‰ŠǦ˜ƒŽ—‡ǡ Ž‘™Ǧ˜‘Ž—Â?‡ 20% ’”‘†—…–•ǡ –Š‡•‡ Žƒ”‰‡ †‹ˆˆ‡”‡Â?…‡• ƒ”‡ —Â?Ž‹Â?‡Ž› –‘ „‡ …ƒ—•‡† „› ‹Â?‡ˆˆ‹…‹‡Â?…‹‡• ‹Â? –Š‡ 0% †‹•–”‹„—–‹‘Â? •›•–‡Â?Ǥ Š‡ ‡‘”‰‹ƒÂ? ”‡–ƒ‹Ž Georgia Czech Rep. Greece Hungary Italy Poland Country Â?ƒ”‰‹Â? ‹• ”‡’‘”–‡†Ž› “—‹–‡ •Â?ƒŽŽǡ ĥ –Š‡› ƒ”‡ Source: WB survey and OBIG ”‡†—…‡† –‘ ƒ Â?‹Â?‹Â?—Â? „› ™Š‘Ž‡•ƒŽ‡”• SourceÇ£  È€ •—”˜‡› ƒÂ?†  ȋ™Š‡”‡ –Š‡ Â?ƒ”Â?‡– ‹• Â?‘•– …‘Â?…‡Â?–”ƒ–‡†ȌǤ Â?ƒŒ‘” ˆƒ…–‘” „‡Š‹Â?† –Š‡•‡ ”‡•—Ž–• ‹• –Šƒ– ’Šƒ”Â?ƒ…› Â?ƒ”‰‹Â?• ȋ‹Â? •‘Â?‡ …ƒ•‡• „‘–Š ™Š‘Ž‡•ƒŽ‡ ƒÂ?† ”‡–ƒ‹ŽȌ ƒ”‡ ”‡‰—Žƒ–‡† ‹Â? ƒŽŽ ʹ͹  Â?‡Â?„‡” •–ƒ–‡•Ǥ ›’‹…ƒŽŽ› –Š‡› –ƒÂ?‡ –Š‡ ˆ‘”Â? ‘ˆ ‡‹–Š‡” ƒ Ž‹Â?‡ƒ” Â?ƒ”Â?Ǧ—’ ‘” ƒ ”‡‰”‡••‹˜‡ •…Š‡Â?‡ ȋŠ‹‰Š‡” Â?ƒ”Â?Ǧ—’• ˆ‘” …Š‡ƒ’‡” †”—‰•ǡ –‘ ‡Â?…‘—”ƒ‰‡ ’Šƒ”Â?ƒ…‹•–• –‘ †‹•’‡Â?•‡ Ž‘™‡”Ǧ…‘•– ˆ‘”Â?—Žƒ•ȌǤ Š‡ ”‡•—Ž–• ‹Â? ‹‰—”‡ ͷ͹ ͳͳ ˆ‘” –Š‡  …‘—Â?–”‹‡• ”‡ˆŽ‡…– •—…Š ’‘Ž‹…‹‡•Ǥ ‘™‡˜‡”ǡ –Š‡•‡ ƒ”‡ ‹Â?†‹…ƒ–‹˜‡ ”‡•—Ž–• ˆ‘” ˆ‡™‡” –ŠƒÂ? ͷͲ †”—‰•ǡ ƒÂ?† –Š—• ”‡’”‡•‡Â?– ƒ •—„Ǧ•‡– ‘ˆ –Š‡ Â?ƒ”Â?‡– ”‡“—‹”‹Â?‰ ˆ—”–Š‡” ‡š’Ž‘”ƒ–‹‘Â?Ǥ ͵ǤͷʹǤ Overall, a significant policy agenda remains in the area of access to pharmaceuticals. ‘–‡Â?–‹ƒŽ ’‘Ž‹…› ƒ…–‹‘Â?• ‘Â? –Š‡ •—’’Ž› •‹†‡ ‹Â?…Ž—†‡ ”‡ˆ‡”‡Â?…‡ ’”‹…‹Â?‰ ƒÂ?† …‘Â?–”‘Ž• ‘Â? Â?ƒ”Â?Ǧ—’• ȋˆ‘” ‡šƒÂ?’Ž‡ǡ Š‹‰Š‡” Â?ƒ”‰‹Â?• ‘Â? …Š‡ƒ’‡” ‰‡Â?‡”‹… †”—‰•ǡ –Š‡”‡„› Â?‘–‹˜ƒ–‹Â?‰ Â?‘”‡ †‹•’‡Â?•‹Â?‰ ‘ˆ ‰‡Â?‡”‹…•ȌǤ Â? –Š‡ †‡Â?ƒÂ?† •‹†‡ǡ Â?‡ƒ•—”‡• …‘—Ž† ‹Â?…Ž—†‡ ‡š’ƒÂ?†‡† …‘˜‡”ƒ‰‡ ‘ˆ †”—‰• ƒÂ?† •—„•‡“—‡Â?– —•‡ ‘ˆ ’—”…Šƒ•‹Â?‰ ’‘™‡” –‘ ‘„–ƒ‹Â? Ž‘™‡” ’”‹…‡•Ǣ †‡ˆ‹Â?‹Â?‰ Ž‹•–• ˆ‘” ‹Â?•—”ƒÂ?…‡ ”‡‹Â?„—”•‡Â?‡Â?–•Ǣ ’”‘Â?‘–‹Â?‰ ƒ ‰‡Â?‡”‹… •—„•–‹–—–‹‘Â? ’‘Ž‹…›Ǣ ‹Â?ˆŽ—‡Â?…‹Â?‰ †‡Â?ƒÂ?† ‘ˆ ‹Â?•—”‡† ’ƒ–‹‡Â?–• –Š”‘—‰Š Š‹‰Š‡” …‘•–Ǧ•Šƒ”‹Â?‰ ˆ‘” „”ƒÂ?† †”—‰• ƒÂ?† Â?‘Â?‡ ˆ‘” ‰‡Â?‡”‹…•Ǣ ƒÂ?† •–”‹…–‡” …‘Â?–”‘Ž• ‘Â? †”—‰ ’”‘Â?‘–‹‘Â?Ç¡ Â?ƒ”Â?‡–‹Â?‰ǡ ‡†—…ƒ–‹‘Â? ƒÂ?† •’‘Â?•‘”•Š‹’ ‰‹ˆ–• –‘ †‘…–‘”•Ǥͺ Primary Care ͵Ǥͷ͵Ǥ A final topic for strengthening health sector outcomes in Georgia relates to primary and preventive care, which is currently suffering from underǦperformance. ……‘”†‹Â?‰ –‘ –Š‡   ʹͲͳͲǡ ͹ ’‡”…‡Â?– ‘ˆ  ˜‹•‹–• ™‡”‡ –‘ ’”‹Â?ƒ”› …ƒ”‡ …Ž‹Â?‹…• ‘” ˆƒÂ?‹Ž› Â?‡†‹…‹Â?‡ …‡Â?–‡”•ǡ ƒÂ?† ‘Â?Ž› ͳͶ ’‡”…‡Â?– ‘ˆ ™‘Â?‡Â? ”‡’‘”– –Šƒ– ƒ ’”‹Â?ƒ”› Š‡ƒŽ–Š …ƒ”‡ ˆƒ…‹Ž‹–› ‹• –Š‡‹” —•—ƒŽ ’Žƒ…‡ ˆ‘” •‡‡Â?‹Â?‰ …ƒ”‡Ǥ ‹Â?‹Žƒ”Ž›ǡ ƒ……‘”†‹Â?‰ –‘ –Š‡   ʹͲͳͲǡ ƒ ˆ—ŽŽ ͸ͺ ’‡”…‡Â?– ‘ˆ ”‡•’‘Â?†‡Â?–• ”‡’‘”–‡† –Šƒ– –Š‡‹” ˆ‹”•– ’Žƒ…‡ ‘ˆ …‘Â?–ƒ…– ™Š‡Â? •‹…Â? ™ƒ• ™‹–Š ƒ •’‡…‹ƒŽ‹•–ǡ …‘Â?’ƒ”‡† –‘ ͳͺ ’‡”…‡Â?– ˆ‘” ™Š‘Â? –Š‡ …‘Â?–ƒ…– ™ƒ• ™‹–Š ƒ †‹•–”‹…– ‘” ˆƒÂ?‹Ž› †‘…–‘” ȋ—Â?…ŠƒÂ?‰‡† •‹Â?…‡ –Š‡ ʹͲͲ͹ •—”˜‡›ȌǤ ƒ–‹‡Â?–• Â?ƒ› „‡ Dz˜‘–‹Â?‰ ™‹–Š –Š‡‹” ˆ‡‡–dz ƒÂ?† ‰‘‹Â?‰ –‘ –Š‡ ˆƒ…‹Ž‹–‹‡• ™Š‡”‡ –Š‡› „‡Ž‹‡˜‡ –Š‡ “—ƒŽ‹–› ‘ˆ …ƒ”‡ ‹• „‡––‡”Ǥ —– ƒ††”‡••‹Â?‰ –Š‡ ™‡ƒÂ?Â?॥ ‘ˆ –Š‡ ’”‹Â?ƒ”› …ƒ”‡ •›•–‡Â? ™‹ŽŽ „‡ ƒ Â?‡› Ž‘Â?‰Ǧ–‡”Â? …ŠƒŽŽ‡Â?‰‡ ˆ‘” ‹Â?’”‘˜‹Â?‰ Š‡ƒŽ–Š ‘—–…‘Â?‡•Ǥ Figure 3.14: First Place of Contact When Ill, Georgia and Regional Comparators ȋ‹Â? ’‡”…‡Â?–Ȍ Azerbaijan Georgia Moldova 75 51.6 46.0 44.3 50 25 18.1 18.3 13.9 13.5 13.9 8.4 8.7 9.1 4.8 8.0 7.2 3.9 4.6 2.8 5.4 4.7 4.1 4.2 2.7 percent 0.9 1.0 0 Russia Tajikistan Uzbekistan 75 45.2 45.5 50 41.9 35.3 23.8 25 15.9 11.8 10.2 11.6 6.6 3.5 5.8 7.8 5.9 5.5 3.2 2.3 1.5 2.4 2.2 5.5 3.1 0.6 2.9 0 Nurse/feldsher Family doctor Polyclinic specialist Private doctor Hospital doctor Pharmacist Treat myself at home Other Source:  •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͺ —”ƒ–‹‘ Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‘—Â?†ƒ–‹‘Â?Ç¡ Dzƒ‹Â? ‹‰ŠŽ‹‰Š–• ‘ˆ Šƒ”Â?ƒ…‡—–‹…ƒŽ ”‹…‡ ƒÂ?† ˜ƒ‹Žƒ„‹Ž‹–› ‹Â? ‡‘”‰‹ƒǡ ʹͲͲͻǦʹͲͳͳdzǤ ”‡•‡Â?–ƒ–‹‘Â?Ǥ ͷͺ ͵ǤͷͶǤ International comparisons also highlight the neglect of primary care in Georgia. …”‘•• •‹š …‘—Â?–”‹‡•ǡ •—”˜‡› ”‡•’‘Â?†‡Â?–• ™‡”‡ ĥÂ?‡† –Š‡ ˆ‘ŽŽ‘™‹Â?‰ “—‡•–‹‘Â?Ç£ Dz ˆ ›‘— Šƒ˜‡ „‡‡Â? ˆ‡‡Ž‹Â?‰ —Â?™‡ŽŽ ˆ‘” ƒ ˆ‡™ †ƒ›•ǡ ™Š‘ †‘ ›‘— …‘Â?–ƒ…– ˆ‹”•– ™Š‡Â? ›‘— „‡…‘Â?‡ ‹ŽŽǫdz Š‡ ”‡•—Ž–• ƒ”‡ •Š‘™Â? ‹Â? ‹‰—”‡ ͵ǤͳͶǤ Â? ‡‘”‰‹ƒǡ ‘Â?Ž› ͺ ’‡”…‡Â?– Â?‡Â?–‹‘Â?‡† ƒ ˆƒÂ?‹Ž› †‘…–‘”ǡ …‘Â?’ƒ”‡† –‘ ‘˜‡” ͶͲ ’‡”…‡Â?– ‹Â? ‘Ž†‘˜ƒǡ —••‹ƒǡ ƒŒ‹Â?‹•–ƒÂ?Ç¡ ƒÂ?† œ„‡Â?‹•–ƒÂ?Ǥ ͵ǤͷͷǤ Indicators of the coverage of specific preventive care services shown earlier reinforce this message. • Â?‘–‡†ǡ –Š‡ •Šƒ”‡ ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â? ‹Â? ‡‘”‰‹ƒ –Šƒ– Šƒ• ”‡…‡‹˜‡† ƒ …Š‘Ž‡•–‡”‘Ž –‡•–ǡ ˆŽ— ˜ƒ……‹Â?‡ǡ „”‡ƒ•– ƒÂ?† …‡”˜‹…ƒŽ …ƒÂ?…‡” •…”‡‡Â?‹Â?‰ǡ ƒÂ?† Š‡ƒ”– …Š‡…Â?Ǧ—’ ‹• Ž‘™‡” –ŠƒÂ? ‹Â? œ‡”„ƒ‹ŒƒÂ?Ç¡ ‘Ž†‘˜ƒǡ ƒÂ?† —••‹ƒǡ ƒÂ?† ˆƒ” „‡Š‹Â?† –Š‡ ƒŽ–‹… …‘—Â?–”‹‡• ƒÂ?† ‡•–‡”Â? —”‘’‡Ǥ ͵Ǥͷ͸Ǥ A strong primary care system is essential for longǦterm improvements of health outcomes and overall health system efficiency. Š‡ ‘—–Ǧ’ƒ–‹‡Â?– Â?ƒÂ?ƒ‰‡Â?‡Â?– ‘ˆ …Š”‘Â?‹… Â?‘Â?Ǧ …‘Â?Â?—Â?‹…ƒ„Ž‡ †‹•‡ƒ•‡• ™‹ŽŽ „‡ –Š‡ Â?‘•– ‹Â?’‘”–ƒÂ?– ‹Â?‰”‡†‹‡Â?– –‘ ‘„–ƒ‹Â? Ž‘™‡” Â?‘”–ƒŽ‹–› ƒÂ?† Â?‘”„‹†‹–› ‹Â? –Š‡ ˆ—–—”‡Ǥ ‘™ Ž‡˜‡Ž• ‘ˆ ’”‹Â?ƒ”› …ƒ”‡ —•‡ Â?ƒ› ƒŽ•‘ Š‡Ž’ ‡š’Žƒ‹Â? –Š‡ Š‹‰Š Ž‡˜‡Ž• ‘ˆ •‡ŽˆǦ –”‡ƒ–Â?‡Â?– ƒÂ?† ”‡•—Ž–‹Â?‰ ™ƒ•–‡ˆ—Ž ’Šƒ”Â?ƒ…‡—–‹…ƒŽ ‡š’‡Â?†‹–—”‡ ‹Â? ‡‘”‰‹ƒǤ 3.6. Conclusion: the way forward ͵Ǥͷ͹Ǥ The analysis in this chapter suggests that health programs and outcomes in Georgia could move forward along one of several paths depending on the choices that are made. Â? –Š‡ ‘Â?‡ ŠƒÂ?† ‹• –Š‡ ’ƒ–Š ™‹–Š Ž‹Â?‹–‡† ˆ—”–Š‡” ‹Â?’”‘˜‡Â?‡Â?– ‹Â? Š‡ƒŽ–Š ‘—–…‘Â?‡• ƒÂ?† ™‡ƒÂ? ˆ‹Â?ƒÂ?…‹ƒŽ ’”‘–‡…–‹‘Â? „› ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ •–ƒÂ?†ƒ”†•Ǥ Š‹• ’ƒ–Š ™‘—Ž† „‡ …Šƒ”ƒ…–‡”‹œ‡† „› ƒ ”‡Žƒ–‹˜‡Ž› —Â?†‡”ˆ—Â?†‡† Š‡ƒŽ–Š •‡…–‘”ǡ ™‹–Š …‘Â?–‹Â?—‡† ”‡•—Ž–‹Â?‰ Ž‘™ …‘˜‡”ƒ‰‡ ‘ˆ Â?‡› ‹Â?–‡”˜‡Â?–‹‘Â?• ȋ‡Ǥ‰Ǥ …ƒ”†‹‘˜ƒ•…—Žƒ” †”—‰•Ȍ ƒÂ?† Ž‹Â?‹–‡† ˆ—”–Š‡” ‹Â?’”‘˜‡Â?‡Â?– ‹Â? Â?‡› Š‡ƒŽ–Š ‘—–…‘Â?‡• ȋ‡Ǥ‰Ǥǡ Ž‹ˆ‡ ‡š’‡…–ƒÂ?…›ȌǤ ƒ–‡• ‘ˆ —–‹Ž‹œƒ–‹‘Â? ‘ˆ Â?‡†‹…ƒŽ …ƒ”‡ ™‘—Ž† ”‡Â?ƒ‹Â? Ž‘™ ƒÂ?† Š‹‰Š Ž‡˜‡Ž• ‘ˆ •‡ŽˆǦ–”‡ƒ–Â?‡Â?– ƒÂ?† ”‡Â?–Ǧ•‡‡Â?‹Â?‰ „› ’”‘˜‹†‡”• ƒÂ?† ’Šƒ”Â?ƒ…‡—–‹…ƒŽ …‘Â?’ƒÂ?‹‡• ™‘—Ž† …‘Â?–‹Â?—‡ –‘ ˆ—‡Ž Š‹‰Š ‘—–Ǧ‘ˆǦ ’‘…Â?‡– ’ƒ›Â?‡Â?–•Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?† ‹• –Š‡ ’ƒ–Š ‘ˆ ‡š’ƒÂ?†‡† …‘˜‡”ƒ‰‡ ‘ˆ •–ƒ–‡ ˆ—Â?†‡† Š‡ƒŽ–Š ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ?•Ǥ Š‡ ’ŽƒÂ?Â?‡† ‡š’ƒÂ?•‹‘Â? ĥ ‘ˆ ‡’–‡Â?„‡” ʹͲͳʹ –‘ ‹Â?…Ž—†‡ –Š‡ ‡Ž†‡”Ž›ǡ …Š‹Ž†”‡Â? ͲǦͷ ›‡ƒ”• ‘ˆ ƒ‰‡ǡ •–—†‡Â?–•ǡ ƒÂ?† †‹•ƒ„Ž‡† ’‡”•‘Â?• ‹• ƒÂ? ‹Â?’‘”–ƒÂ?– •–‡’ ‹Â? –Š‹• ”‡‰ƒ”† ƒÂ?† …‘—Ž† „‡ ˆ‘ŽŽ‘™‡† —’ „› ‡š’ƒÂ?†‡† …‘˜‡”ƒ‰‡ ‘ˆ –Š‘•‡ ƒÂ?‘Â?‰ –Š‡ ’‘‘”‡” •‡‰Â?‡Â?–• ‘ˆ –Š‡ ’‘’—Žƒ–‹‘Â? ™Š‘ †‘ Â?‘– …—””‡Â?–Ž› ”‡…‡‹˜‡  Ǥ –”ƒ–‡‰‹‡• ˆ‘” ‰”ƒ†—ƒŽ ‹Â?…Ž—•‹‘Â? ‘ˆ ƒ††‹–‹‘Â?ƒŽ ’‘’—Žƒ–‹‘Â? ‰”‘—’• …‘—Ž† „‡ ƒ…Š‹‡˜‡† –Š”‘—‰Šǡ ˆ‘” ‡šƒÂ?’Ž‡ǡ „‡––‡” –ƒ‹Ž‘”‹Â?‰ –Š‡ ’”‘š›ǦÂ?‡ƒÂ?• –‡•–‹Â?‰ ˆ‘”Â?—Žƒ —•‡† ˆ‘”   –‘ ˆ—”–Š‡” ‹Â?’”‘˜‡ –ƒ”‰‡–‹Â?‰ǡ ƒÂ?† ”ƒ‹•‹Â?‰ –Š‡ ‡Ž‹‰‹„‹Ž‹–› –Š”‡•Š‘Ž† •…‘”‡ –‘ †”ƒ™ Â?‡™ „‡Â?‡ˆ‹…‹ƒ”‹‡• ˆ”‘Â? Ž‘™‡” •‘…‹‘‡…‘Â?‘Â?‹… ‰”‘—’•Ǥ Š‡ ‘˜‡”ƒŽŽ ‡ˆˆ‹…‹‡Â?…› ‘ˆ •–ƒ–‡Ǧˆ—Â?†‡† Š‡ƒŽ–Š ‹Â?•—”ƒÂ?…‡ ’”‘‰”ƒÂ?• ™‘—Ž† „‡ •–”‡Â?‰–Š‡Â?‡† –Š”‘—‰Š …Ž‘•‡ Â?‘Â?‹–‘”‹Â?‰ ƒÂ?† •—’‡”˜‹•‹‘Â? ‘ˆ Š‡ƒŽ–Š ‹Â?•—”‡”•Ǥ ˜‡” –‹Â?‡ǡ Â?‘”‡ ƒÂ?† „‡––‡” “—ƒŽ‹–› ’—„Ž‹… •’‡Â?†‹Â?‰ ‘Â? Š‡ƒŽ–Š …ƒ”‡ ™‘—Ž† Š‡Ž’ ‹Â?’”‘˜‡ Š‡ƒŽ–Š ‘—–…‘Â?‡• ‹Â? Ž‹Â?‡ ™‹–Š ‰Ž‘„ƒŽ –”‡Â?†• ƒÂ?† ”‡†—…‡ ‹Â?’‘˜‡”‹•Š‹Â?‰ • –‘ Ž‡˜‡Ž• –Šƒ– ƒ”‡ …Ž‘•‡” ‹Â? Ž‹Â?‡ ™‹–Š ”‡‰‹‘Â?ƒŽ ƒ˜‡”ƒ‰‡•Ǥ Í·Í» Chapter 4. Capital Budgeting Systems 4.1 Introduction ͶǤͳǤ Georgia faces an important need to strengthen its capital budgeting systems, with public investment up markedly in recent years, new infrastructure investments coming on stream, and a fiscal framework that calls for capital expenditure consolidation going forward. —„Ž‹… ‹Â?˜‡•–Â?‡Â?– Šƒ• ‹Â?…”‡ƒ•‡† Â?ƒ”Â?‡†Ž› ‹Â? ”‡…‡Â?– ›‡ƒ”•ǡ ˆ”‘Â? ʹǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲ͵ –‘ ͺǤͷǦͻ ’‡”…‡Â?– †—”‹Â?‰ ʹͲͲ͹ǦͳͳǤ ‹Â?…‡ –Š‡ …”‹•‹•ǡ –Š‡ …‘Â?’‘•‹–‹‘Â? ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– Šƒ• •Š‹ˆ–‡† …‘Â?•‹†‡”ƒ„Ž›ǡ ƒ™ƒ› ˆ”‘Â? †‡ˆ‡Â?•‡ ”‡Žƒ–‡† …ƒ’‹–ƒŽ •’‡Â?†‹Â?‰ –‘™ƒ”† ‹Â?ˆ”ƒ•–”—…–—”‡ ‹Â?˜‡•–Â?‡Â?–• „”‘ƒ†Ž› •—’’‘”–‹˜‡ ‘ˆ ‰”‘™–ŠǤ ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• Šƒ˜‡ „‡‡Â? •…ƒŽ‡† —’ ‹Â? ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ†•ǡ Â?—Â?‹…‹’ƒŽ ‹Â?ˆ”ƒ•–”—…–—”‡ǡ Š‘—•‹Â?‰ ˆ‘” ‹Â?–‡”Â?ƒŽŽ› †‹•’Žƒ…‡† ’‡”•‘Â?• È‹ •Ȍǡ ƒÂ?† —”„ƒÂ? ”‡‰‡Â?‡”ƒ–‹‘Â? –‘ •—’’‘”– ‡…‘Â?‘Â?‹… ”‡…‘˜‡”›Ǥ ‘”‡‘˜‡”ǡ •‹‰Â?‹ˆ‹…ƒÂ?– Â?‡™ ‹Â?˜‡•–Â?‡Â?–• ƒ”‡ …‘Â?‹Â?‰ ‘Â? •–”‡ƒÂ?Ç¡ ‹Â? ‡Â?‡”‰› –”ƒÂ?•Â?‹••‹‘Â? ƒÂ?† ™ƒ–‡”ǡ ƒÂ?† –Š‡ ’‹’‡Ž‹Â?‡ ‘ˆ ’”‘Œ‡…–• …‘—Ž† ‰”‘™–Š ˆ—”–Š‡” –‘ ƒ††”‡•• ‹Â?’‘”–ƒÂ?– ‹Â?ˆ”ƒ•–”—…–—”‡ †‡˜‡Ž‘’Â?‡Â?– Â?‡‡†•Ǥͳ Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‡š’‡”‹‡Â?…‡ Šƒ• ƒŽ•‘ •Š‘™Â? –Šƒ– ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ’”‡••—”‡• ‹Â?–‡Â?•‹ˆ› †—”‹Â?‰ ‡Ž‡…–‹‘Â? ’‡”‹‘†• •—…Š ĥ –Š‡ ‘Â?‡ ‡‘”‰‹ƒ ‹• …—””‡Â?–Ž› ‡Â?–‡”‹Â?‰Ǥ ‰ƒ‹Â?•– –Š‹• „ƒ…Â?†”‘’ǡ –Š‡ Â?‘•– ”‡…‡Â?–Ž› ƒ’’”‘˜‡† Â?‡†‹—Â? –‡”Â? ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â? …ƒŽŽ• ˆ‘” …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• –‘ Â?ƒÂ?‡ ƒÂ? ‹Â?’‘”–ƒÂ?– …‘Â?–”‹„—–‹‘Â? –‘ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‰‘‹Â?‰ ˆ‘”™ƒ”†ǡ ™‹–Š …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ’”‘Œ‡…–‡† –‘ †‡…Ž‹Â?‡ ˆ”‘Â? ͺǤͻ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͳ –‘ ͹Ǥʹ ’‡”…‡Â?– „› ʹͲͳͷǤ –”‡Â?‰–Š‡Â?‹Â?‰ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?• –‘ ‹Â?’”‘˜‡ –Š‡ ‡ˆˆ‹…‹‡Â?…› ƒÂ?† ‡ˆˆ‡…–‹˜‡Â?॥ ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ‹• –Š—• ƒÂ? ‹Â?’‘”–ƒÂ?– Â?‡‡† ‹Â? ‡‘”‰‹ƒǤ ͶǤʹǤ Strengthening capital budgeting systems can serve as a key instrument of public investment consolidation by most effectively managing the growing pipeline of infrastructure project needs within the fiscal envelope. Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‡š’‡”‹‡Â?…‡ ’‘‹Â?–• –‘™ƒ”† •‡˜‡”ƒŽ ‹Â?’‘”–ƒÂ?– …‘Â?’‘Â?‡Â?–• ‘ˆ ƒ •‘—Â?† …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?Ç¡ ‹Â?…Ž—†‹Â?‰ǣ •–”ƒ–‡‰‹… ‰—‹†ƒÂ?…‡Ǣ ’”‘Œ‡…– •…”‡‡Â?‹Â?‰ ƒÂ?† ƒ’’”ƒ‹•ƒŽǢ „—†‰‡– ˆ‘”Â?—Žƒ–‹‘Â? ƒÂ?† ’”‘Œ‡…– •‡Ž‡…–‹‘Â?Ç¢ ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ƒÂ?† Â?‘Â?‹–‘”‹Â?‰Ǣ ƒÂ?† ‡˜ƒŽ—ƒ–‹‘Â? ƒÂ?† ƒ—†‹–Ǥʹ Â? ‡‘”‰‹ƒǡ ˆƒ‹”Ž› •–”‘Â?‰ •–”ƒ–‡‰‹… ‰—‹†ƒÂ?…‡ ‘Â? ‹Â?ˆ”ƒ•–”—…–—”‡ ’”‹‘”‹–‹‡• ‹• ’”‘˜‹†‡† „› –Š‡ ‰‘˜‡”Â?Â?‡Â?– ƒÂ?† ’”‘Œ‡…– ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? Â?‘•–Ž› ’”‘…‡‡†• ‹Â? ƒ •Â?‘‘–Šǡ ‡ˆˆ‹…‹‡Â?–ǡ ƒÂ?† –‹Â?‡Ž› Â?ƒÂ?Â?‡”Ǥ Â? ƒ††‹–‹‘Â?Ç¡ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ ”‡ˆ‘”Â?• –‘ †ƒ–‡ Šƒ˜‡ Â?ƒ†‡ •‘Â?‡ ’”‘‰”‡•• –‘™ƒ”† ‹Â?’”‘˜‹Â?‰ –Š‡ …‘Â?–‡Â?– ƒÂ?† ’”‡•‡Â?–ƒ–‹‘Â? ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡–Ǥ Building on the reforms to date, this chapter discusses a two pronged approach to further strengthening capital budgeting systems in Georgia: x Š‡ ˆ‹”•– ‹• –‘ ˆ—”–Š‡” ‹Â?’”‘˜‡ –Š‡ …‘Â?–‡Â?– ƒÂ?† ’”‡•‡Â?–ƒ–‹‘Â? ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡–Ǥ Š‹• ™‘—Ž† Š‡Ž’ –‘ ˆ—”–Š‡” •–”‡Â?‰–Š‡Â? –Š‡ ’”‘‰”ƒÂ?Â?‹Â?‰ ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ‘˜‡” ƒ Â?‡†‹—Â? –‡”Â? Š‘”‹œ‘Â?Ç¡ ĥ ™‡ŽŽ ĥ –‘ ‡Â?ŠƒÂ?…‡ –”ƒÂ?•’ƒ”‡Â?…› ƒÂ?† ƒ……‘—Â?–ƒ„‹Ž‹–›ǡ –Š—• ‡Â?„‡††‹Â?‰ ‹Â?…‡Â?–‹˜‡• ˆ‘” ‹Â?’”‘˜‡Â?‡Â?–• ‹Â? –Š‡ ‘˜‡”ƒŽŽ “—ƒŽ‹–› ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?–Ǥ x Š‡ •‡…‘Â?† ‹• Dzƒ •‹Â?’Ž‡ ƒÂ?† Ž‹‰Š– ƒ’’”‘ƒ…Šdz –‘ •–”‡Â?‰–Š‡Â? –Š‡ „”‘ƒ†‡” …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?Ç¡ ‹Â?…Ž—†‹Â?‰ •’‡…‹ˆ‹…ƒŽŽ› ’”‘…‡†—”‡• ˆ‘” ’”‡Ž‹Â?‹Â?ƒ”› ƒ••‡••Â?‡Â?– ƒÂ?† ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ‘ˆ ’”‘Œ‡…–•ǡ ĥ ™‡ŽŽ ĥ —Â?‹ˆ‘”Â? Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†‡Ž‹Â?‡• ‘Â? …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹• ˆ‘” —•‡ ‹Â? ’”‘Œ‡…– ƒ’’”ƒ‹•ƒŽǤ ͳ Š‡ Â?‡š– …Šƒ’–‡” •Š‘™• –Šƒ– ‡‘”‰‹ƒ ™‹ŽŽ …‘Â?–‹Â?—‡ –‘ ˆƒ…‡ …‘Â?•‹†‡”ƒ„Ž‡ ”‘ƒ† ‹Â?ˆ”ƒ•–”—…–—”‡ •’‡Â?†‹Â?‰ Â?‡‡†• ‹Â? –Š‡ ›‡ƒ”• ƒŠ‡ƒ†ǡ ‹Â?…”‡ƒ•‹Â?‰Ž› ‹Â? –Š‡ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‘ˆ ‹–• •‡…‘Â?†ƒ”› ƒÂ?† Ž‘…ƒŽ Â?‡–™‘”Â?Ç¡ „—– ƒŽ•‘ ‹Â? –Š‡ Â?ƒ‹Â? ƒ•–Ǧ‡•– ‹‰Š™ƒ› ™Š‹…Š ”‡Â?ƒ‹Â?• ƒ Š‹‰Š ’”‹‘”‹–› ˆ‘” –Š‡ ƒ—–Š‘”‹–‹‡•Ǥ Í´ Š‡ ƒÂ?ƒŽ›–‹…ƒŽ ˆ”ƒÂ?‡™‘”Â? —•‡† ‹Â? –Š‹• …Šƒ’–‡” ‹• „ƒ•‡† ‘Â? ƒŒƒ”ƒÂ?Ç¡ ‡ǡ ‹Ž‡–•Â?ƒǡ ƒÂ?† ”—Â?„› ȋʹͲͳͲȌǡ Dz ‹ƒ‰Â?‘•–‹… ”ƒÂ?‡™‘”Â? ˆ‘” ••‡••‹Â?‰ —„Ž‹… Â?˜‡•–Â?‡Â?– ƒÂ?ƒ‰‡Â?‡Â?–dzǤ ͸Ͳ ‘–Š ‘ˆ –Š‡•‡ ”‡ˆ‘”Â? ’”‘Â?‰• ™‹ŽŽ ƒŽ•‘ „‡…‘Â?‡ ‹Â?…”‡ƒ•‹Â?‰Ž› ‹Â?’‘”–ƒÂ?– ĥ –Š‡ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? ‹Â? ‡‘”‰‹ƒ ”‡†—…‡• ‹–• †‡’‡Â?†‡Â?…‡ ‘Â? †‘Â?‘” ˆ‹Â?ƒÂ?…‹Â?‰ ƒÂ?† ƒ’’”ƒ‹•ƒŽ Â?‡–Š‘†•Ǥ ͶǤ͵Ǥ Specific options to further improve the content and presentation of the capital budget include the following: x ‘˜‡”ƒ‰‡ǣ —”–Š‡” ‡š–‡Â?† …‘˜‡”ƒ‰‡ –‘ ƒŽŽ …ƒ’‹–ƒŽ ’”‘Œ‡…–•ǡ „› ‹Â?…Ž—†‹Â?‰ ƒŽŽ †‘Â?‡•–‹…ƒŽŽ› ˆ‹Â?ƒÂ?…‡† ’”‘Œ‡…–• ƒÂ?† ƒŽŽ ’”‘Œ‡…–• ˆ—Â?†‡† –Š”‘—‰Š –Š‡ •–ƒ–‡ „—†‰‡–ǡ ”‡‰ƒ”†Ž‡•• ‘ˆ ™Š‡–Š‡” ‘” Â?‘– –Š‡› …‘Â?–”‹„—–‡ –‘ Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ‘ˆ –Š‡ …‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?–ǡ Ž‘…ƒŽ ‰‘˜‡”Â?Â?‡Â?–•ǡ Ž‡‰ƒŽ ‡Â?–‹–‹‡• ‘ˆ ’—„Ž‹… Žƒ™ È‹ •Ȍǡ ‘” •–ƒ–‡Ǧ‘™Â?‡† ‡Â?–‡”’”‹•‡• È‹ •ȌǤ x ‹Â?ƒÂ?…‹ƒŽ Â?ˆ‘”Â?ƒ–‹‘Â?Ç£ ‡Â?‘Â?•–”ƒ–‡ …‘Â?•‹•–‡Â?…› „‡–™‡‡Â? –Š‡ ˆ‹‰—”‡• ‹Â? –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ™‹–Š –Š‘•‡ ‹Â? –Š‡ Â?ƒ‹Â? „—†‰‡–ǡ ’”‘‰”ƒÂ? „—†‰‡–ǡ ƒÂ?† –Š”‘—‰Š …”‘•• –ƒ„—Žƒ–‹‘Â?•Ǥ —”–Š‡” ‹Â?’”‘˜‡ ’”‘Œ‡…– ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? „› ‹Â?…‘”’‘”ƒ–‹Â?‰ ‘”‰ƒÂ?‹œƒ–‹‘Â?ƒŽ ƒÂ?† ˆ—Â?…–‹‘Â?ƒŽ …Žƒ••‹ˆ‹…ƒ–‹‘Â? ƒÂ?† †‹•–‹Â?‰—‹•Š‹Â?‰ „‡–™‡‡Â? ‘Â?‰‘‹Â?‰ ƒÂ?† Â?‡™ ’”‘Œ‡…–•Ǥ x ‘Â?ˆ‹Â?ƒÂ?…‹ƒŽ Â?ˆ‘”Â?ƒ–‹‘Â?Ç£ Â?–”‘†—…‡ †‡‡’‡” ƒÂ?† Â?‘”‡ •›•–‡Â?ƒ–‹… Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‘Â? ’”‘Œ‡…– ”ƒ–‹‘Â?ƒŽ‡ ƒÂ?† Œ—•–‹ˆ‹…ƒ–‹‘Â? ˆ‘” Â?ƒŒ‘” ’”‘Œ‡…–•ǡ ‹Â?…Ž—†‹Â?‰ •—Â?Â?ƒ”› ”‡•—Ž–• ‘ˆ …‘•–Ǧ „‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‡•ǡ ƒÂ?› ƒ˜ƒ‹Žƒ„Ž‡ ‹Â?’ƒ…– ƒ••‡••Â?‡Â?–•ǡ ƒÂ?† ’”‘Œ‡…– …‘Â?–”‹„—–‹‘Â?• –‘ ’‘Ž‹…› ‘„Œ‡…–‹˜‡• ‹Â? ƒÂ?† ’”‘‰”ƒÂ? „—†‰‡–•Ǥ —”–Š‡” ‡š–‡Â?† ƒÂ?† †‡‡’‡Â? ’Š›•‹…ƒŽ Â?‘Â?‹–‘”‹Â?‰ ‹Â?†‹…ƒ–‘”• ƒÂ?† ’”‘˜‹†‡ ‡•–‹Â?ƒ–‡• ‘ˆ ”‡…—””‡Â?– ‡š’‡Â?†‹–—”‡ ‹Â?’Ž‹…ƒ–‹‘Â?•Ǥ ͶǤͶǤ Specific options on a “simple and light approachâ€? to further strengthen the broader capital budgeting system include: x ”‡Ž‹Â?‹Â?ƒ”› ••‡••Â?‡Â?– ƒÂ?† †‡Â?–‹ˆ‹…ƒ–‹‘Â?Ç£ Â?–”‘†—…‡ ƒ •›•–‡Â?ƒ–‹… ’”‡Ž‹Â?‹Â?ƒ”› ƒ••‡••Â?‡Â?– ƒÂ?† ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ’”‘…‡•• ȋ„‡•– …‘‘”†‹Â?ƒ–‡† ™‹–Š ‡ƒ”Ž› •–ƒ‰‡• ‘ˆ ’”‘…‡••ǡ „‡ˆ‘”‡ „—†‰‡–ƒ”› …‡‹Ž‹Â?‰• ƒ”‡ •‡–Ȍ –‘ •…”‡‡Â? ’”‘Œ‡…–• „‡ˆ‘”‡ –Š‡› ‡Â?–‡” –Š‡ ’”‡’ƒ”ƒ–‹‘Â? •–ƒ‰‡Ǥ x Â?‹ˆ‘”Â? Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†ƒÂ?…‡ ‘Â? …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹•ǣ ‡˜‡Ž‘’ Â?ƒ–‹‘Â?ƒŽ Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†ƒÂ?…‡ ‘Â? …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹• ˆ‘” —•‡ „› Â?ƒŒ‘” ’”‘Œ‡…–• –Šƒ– Šƒ˜‡ ’ƒ••‡† ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â?Ç¡ –‘ ’”‘˜‹†‡ ƒ —Â?‹ˆ‘”Â? •‡– ‘ˆ …”‹–‡”‹ƒ ˆ‘” ’”‘Œ‡…– ƒ’’”ƒ‹•ƒŽ ƒÂ?† ‡˜ƒŽ—ƒ–‹‘Â? ƒ…”‘•• •‡…–‘”• ƒÂ?† ”‡‰ƒ”†Ž‡•• ‘ˆ •‘—”…‡ ‘ˆ ˆ‹Â?ƒÂ?…‹Â?‰Ǥ ͶǤͷǤ In the medium term, the measures to strengthen the capital budget as well as the wider capital budgeting system, should deliver higher efficiency and effectiveness of capital spending through a number of channels. Š‡•‡ ‹Â?…Ž—†‡ Ž‹ˆ–‹Â?‰ –Š‡ “—ƒŽ‹–› ‘ˆ …ƒ’‹–ƒŽ ’”‘Œ‡…–• ’”‘’‘•‡† ˆ‘” „—†‰‡– ˆ—Â?†‹Â?‰ •‘ –Šƒ– ˜ƒŽ—‡ ˆ‘” Â?‘Â?‡› ƒÂ?† …‘Â?•‹•–‡Â?…› ™‹–Š ‰‘˜‡”Â?Â?‡Â?– ’‘Ž‹…› ’”‹‘”‹–‹‡• ‹Â?’”‘˜‡•Ǥ ‡…‘Â?†ǡ ‹Â?’”‘˜‹Â?‰ ‡ˆˆ‹…‹‡Â?…› ‹Â? –Š‡ ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ‘ˆ ’”‘Œ‡…–• •‡Ž‡…–‡†ǡ –Š”‘—‰Š ™‡ŽŽ †‡•‹‰Â?‡† ’”‘…—”‡Â?‡Â?–ǡ Â?ƒÂ?ƒ‰‡Â?‡Â?– ƒÂ?† Â?‘Â?‹–‘”‹Â?‰ ƒ””ƒÂ?‰‡Â?‡Â?–•Ǥ Š‹”†ǡ ˆ‡‡†‹Â?‰ –‹Â?‡Ž› ‹Â?ˆ‘”Â?ƒ–‹‘Â? ƒÂ?† ƒÂ?ƒŽ›•‹• ‘Â? …ƒ’‹–ƒŽ „—†‰‡– ‡š‡…—–‹‘Â? ƒÂ?† ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ’‡”ˆ‘”Â?ƒÂ?…‡ „ƒ…Â? ‹Â?–‘ „—†‰‡– ’”‡’ƒ”ƒ–‹‘Â?Ǥ ‘—”–Šǡ •›•–‡Â?ƒ–‹… —•‡ ‘ˆ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‘Â? –Š‡ ’‡”ˆ‘”Â?ƒÂ?…‡ ‘ˆ …‘Â?’Ž‡–‡† ’”‘Œ‡…–• ‹Â? •–”ƒ–‡‰‹… ’ŽƒÂ?Â?‹Â?‰ǡ ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ƒÂ?† ’”‘Œ‡…– †‡•‹‰Â?Ǥ ͶǤ͸Ǥ A significant challenge in strengthening capital budgeting in Georgia is the informal and fragmented nature of the institutional arrangements. Š‹• ‹• ’ƒ”–‹…—Žƒ”Ž› –”—‡ ˆ‘” ‹Â?•–‹–—–‹‘Â?ƒŽ ƒ””ƒÂ?‰‡Â?‡Â?–• ”‡Žƒ–‹Â?‰ –‘ ’”‘Œ‡…– •…”‡‡Â?‹Â?‰ ƒÂ?† •‡Ž‡…–‹‘Â?Ç¡ ™Š‹…Š …ƒÂ? –ƒÂ?‡ ’Žƒ…‡ ‹Â? ƒÂ? Ġ Š‘… Â?ƒÂ?Â?‡”ǡ ™‹–Š †‡…‹•‹‘Â?• ‘Â? Â?ƒŒ‘” ‹Â?˜‡•–Â?‡Â?–• •‘Â?‡–‹Â?‡• ƒŽ”‡ƒ†› Â?ƒ†‡ „‡ˆ‘”‡ „—†‰‡– ’”‡•‡Â?–ƒ–‹‘Â?Ǥ Š‹Ž‡ ‡‘”‰‹ƒ Šƒ• ƒ †‹•…‹’Ž‹Â?‡† „—†‰‡– ’”‘…‡•• ĥ •‡– ‘—– ‹Â? –Š‡ —†‰‡– ‘†‡ǡ ™‹–Š ͸ͳ –Š‡ …‘Â?–‡Â?– ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ‹Â?’”‘˜‹Â?‰ ‘˜‡” –‹Â?‡ǡ Ž‹Â?‹–‡† —•‡ ‹• „‡‹Â?‰ Â?ƒ†‡ ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ‹Â? ƒ…–—ƒŽ †‡…‹•‹‘Â? Â?ƒÂ?‹Â?‰Ǥ Â? ‡š’Ž‹…‹– …ƒŽ‡Â?†ƒ” Ž‹Â?Â?‹Â?‰ ˆ‘”Â?ƒŽ †‡…‹•‹‘Â? ’‘‹Â?–• ‹Â? –Š‡ ’”‘Œ‡…– …›…Ž‡ –‘ –Š‡ „—†‰‡–‹Â?‰ ƒÂ?† •–”ƒ–‡‰‹… ’ŽƒÂ?Â?‹Â?‰ …›…Ž‡•ǡ ™‹–Š …Ž‡ƒ”Ž› †‡ˆ‹Â?‡† ”‘Ž‡• ƒÂ?† ”‡•’‘Â?•‹„‹Ž‹–‹‡• ˆ‘” Â?ƒ‹Â? ’ƒ”–‹…‹’ƒÂ?–•ǡ ‹• ƒŽ•‘ Žƒ…Â?‹Â?‰Ǥ –”‡Â?‰–Š‡Â?‹Â?‰ ‹Â?•–‹–—–‹‘Â?ƒŽ ƒ””ƒÂ?‰‡Â?‡Â?–• ‹• ƒ††”‡••‡† ‹Â? –Š‡ •‡…‘Â?† ’ƒ”– ‘ˆ –Š‹• …Šƒ’–‡”ǡ ’ƒ”–‹…—Žƒ”Ž› ‹Â? –Š‡ •—„•‡…–‹‘Â? ‘Â? •›•–‡Â?ƒ–‹œƒ–‹‘Â? ‘ˆ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ ’”‘…‡†—”‡•Ǥ Â?‡ƒÂ?‹Â?‰ˆ—Ž •–”‡Â?‰–Š‡Â?‹Â?‰ ‘ˆ ‹Â?•–‹–—–‹‘Â?ƒŽ ƒ””ƒÂ?‰‡Â?‡Â?–• ™‹ŽŽ ƒŽ•‘ ”‡“—‹”‡ …‘Â?Â?‹–Â?‡Â?– ˆ”‘Â? Š‹‰Š Ž‡˜‡Ž• ‘ˆ ‰‘˜‡”Â?Â?‡Â?– –‘ —–‹Ž‹œ‡ –Š‡ ’”‘…‡†—”‡• †‡˜‡Ž‘’‡† ‹Â? ƒ…–—ƒŽ †‡…‹•‹‘Â? Â?ƒÂ?‹Â?‰Ǥ ͶǤ͹Ǥ The structure of this chapter is as follows. Š‡ ˆ‹”•– ’ƒ”– ‘ˆ –Š‹• …Šƒ’–‡” „‡‰‹Â?• „› †‡•…”‹„‹Â?‰ –Š‡ ’”‘‰”‡•• ‘ˆ ”‡…‡Â?– ”‡ˆ‘”Â?• –Šƒ– Šƒ˜‡ „‡‡Â? ˆ‘…—•‡† ‘Â? ‹Â?’”‘˜‹Â?‰ –Š‡ …‘Â?–‡Â?– ƒÂ?† ’”‡•‡Â?–ƒ–‹‘Â? ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ƒÂ?† ‰‘‡• ‘Â? –‘ ‹†‡Â?–‹ˆ› ”‡Â?ƒ‹Â?‹Â?‰ …ŠƒŽŽ‡Â?‰‡• ƒŽ‘Â?‰ –Š‹• †‹Â?‡Â?•‹‘Â?Ǥ Š‡ •‡…‘Â?† ’ƒ”– ‘ˆ –Š‡ …Šƒ’–‡” Ž‘‘Â?• ƒ– –Š‡ „”‘ƒ†‡” …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?Ç¡ ‹Â?…Ž—†‹Â?‰ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‡š’‡”‹‡Â?…‡ ƒÂ?† –Š‡ …ƒ•‡ ‘ˆ ‡‘”‰‹ƒǡ ƒÂ?† •—‰‰‡•–• ™ƒ›• ‹Â? ™Š‹…Š ‡‘”‰‹ƒ Â?‹‰Š– Â?ƒÂ?‡ ‹Â?’”‘˜‡Â?‡Â?–• ƒŽ‘Â?‰ –Š‹• †‹Â?‡Â?•‹‘Â? –‘ ƒ••‹•– ‹Â? Â?‘”‡ ‡ˆˆ‡…–‹˜‡ ’”‘Œ‡…– •…”‡‡Â?‹Â?‰ ƒÂ?† •‡Ž‡…–‹‘Â?Ǥ Â? –Š‹• …‘Â?–‡š–ǡ –Š‡ …Šƒ’–‡” •‡–• ‘—– •Š‘”– –‡”Â? ƒÂ?† Â?‡†‹—Â? –‡”Â? ”‡ˆ‘”Â? ‘’–‹‘Â?• –Šƒ– …ƒÂ? „‡ —•‡† „› –Š‡ ƒ—–Š‘”‹–‹‡• –‘ ˆ—”–Š‡” †‡˜‡Ž‘’ –Š‡‹” „Ž—‡’”‹Â?– –‘ •–”‡Â?‰–Š‡Â? …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ ‹Â? ‡‘”‰‹ƒǤ 4.2 Improving the Content and Presentation of Georgia’s Capital Budget ͶǤͺǤ Together with the introduction of program budgeting, capital budgeting has become a focus of attention in the Government of Georgia’s PFM reform agenda. Š‡ Â?‡™ —†‰‡– ‘†‡ǡ ™Š‹…Š …ƒÂ?‡ ‹Â?–‘ ˆ‘”…‡ ‘Â? ͳ ƒÂ?—ƒ”› ʹͲͳͲǡ ”‡ˆŽ‡…–• –Š‹• ‡Â?’Šƒ•‹• ƒÂ?† Šƒ• „‡‡Â? –Š‡ ‹Â?’‡–—• ˆ‘” –Š‡ ‹Â?–”‘†—…–‹‘Â? ‘ˆ ”‡ˆ‘”Â?•Ǥ ”–‹…Ž‡ Í» Â?ƒÂ?‡• ‡š’Ž‹…‹– ”‡ˆ‡”‡Â?…‡ –‘ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– È‚ †‡ˆ‹Â?‡† ĥ DzƒÂ? ‹Â?˜‡•–Â?‡Â?–Ǧ–›’‡ ’”‘‰”ƒÂ? „—†‰‡–dz Ǧ ƒÂ?† –‘ –Š‡ ƒ’’”‘˜ƒŽ ‘ˆ ƒ DzÂ?‡–Š‘†‘Ž‘‰› ”‡“—‹”‡† ˆ‘” †”ƒˆ–‹Â?‰ ’”‘‰”ƒÂ? ƒÂ?† …ƒ’‹–ƒŽ „—†‰‡–•dzǤ ”–‹…Ž‡• ͵͸ ƒÂ?† ͵ͺ •’‡…‹ˆ› –Šƒ– „—†‰‡–ƒ”› ”‡“—‡•–• ƒÂ?† –Š‡ †”ƒˆ– •–ƒ–‡ „—†‰‡– ™‹ŽŽ ‹Â?…Ž—†‡ „‘–Š ’”‘‰”ƒÂ? ƒÂ?† …ƒ’‹–ƒŽ „—†‰‡–•ǡ ™‹–Š ͳ ƒÂ?—ƒ”› ʹͲͳʹ •‡– ĥ –Š‡ †ƒ–‡ ™Š‡Â? –Š‹• ”‡“—‹”‡Â?‡Â?– …‘Â?‡• ‹Â?–‘ ‡ˆˆ‡…– È‹ ”–‹…Ž‡ ͳͳ͸ȌǤ Box 4.1: Rationale for Introducing a ‘Capital Budget’ A ‘capital budget’ is a medium term capital spending plan consistent with (but more detailed than) capital expenditures in the annual budget and the medium term budget framework. Š‹Ž‡ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ȋ‹Â?…”‡ƒ•‡ ‹Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ‹Â? Ž‹Â?‡ ™‹–Š  ʹͲͲͳȌ ƒ”‡ ƒŽ”‡ƒ†› ƒ ’ƒ”– ‘ˆ ‡‘”‰‹ƒǯ• ƒÂ?Â?—ƒŽ „—†‰‡– ƒÂ?† Â?‡†‹—Â? –‡”Â? ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â?Ç¡ •—’’Ž‡Â?‡Â?–ƒ”› ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‹Â? –Š‡ ˆ‘”Â? ‘ˆ ƒ Ǯ…ƒ’‹–ƒŽ „—†‰‡–ǯ …ƒÂ? Š‡Ž’ †‹•…‹’Ž‹Â?‡ ’”‘Œ‡…– •‡Ž‡…–‹‘Â? ƒÂ?† ˆƒ…‹Ž‹–ƒ–‡ •…”—–‹Â?› ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ‡ˆˆ‹…‹‡Â?…›Ǥ ‘•– …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ‹• ‹Â?’Ž‡Â?‡Â?–‡† –Š”‘—‰Š Â?—Ž–‹Ǧ›‡ƒ” ’”‘Œ‡…–• ƒÂ?† †‡…‹•‹‘Â?ǦÂ?ƒÂ?‡”• Â?‡‡† –‘ „‡ ƒ„Ž‡ –‘ •‡‡ –Š‡ Ž‹Â?‡Ž› •’‡Â?†‹Â?‰ ‹Â?’Ž‹…ƒ–‹‘Â?• ˆ‘” ˆ—–—”‡ „—†‰‡–• ‘ˆ –Š‹• ›‡ƒ”ǯ• „—†‰‡– †‡…‹•‹‘Â?•Ǥ Â?ˆ‘”Â?ƒ–‹‘Â? ‘Â? ˆ‘”™ƒ”† •’‡Â?†‹Â?‰ •Š‘—Ž† ƒŽ•‘ „‡ ƒÂ? ‹Â?’‘”–ƒÂ?– ‹Â?’—– ‹Â?–‘ ”‡•‘—”…‡ ƒŽŽ‘…ƒ–‹‘Â? †‡…‹•‹‘Â?• ˆ‘” –Š‡ ˆ‘ŽŽ‘™‹Â?‰ ›‡ƒ”ǯ• Â?‡†‹—Â? –‡”Â? ‡š’‡Â?†‹–—”‡ ’ŽƒÂ?• ȋƒ• …‘Â?–ƒ‹Â?‡† ‹Â? ‡‘”‰‹ƒǯ• ÈŒ ĥ ‹– ™‹ŽŽ Š‡Ž’ ‹Â? ‹†‡Â?–‹ˆ›‹Â?‰ –Š‡ ˆ‹•…ƒŽ •’ƒ…‡ ˆ‘” Â?‡™ ’”‘Œ‡…–• ƒÂ?†ǡ –Š—•ǡ ‹Â? •‡––‹Â?‰ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ …‡‹Ž‹Â?‰•Ǥ Â? ƒ††‹–‹‘Â?Ç¡ ‘Â?‡ ›‡ƒ”ǯ• •’‡Â?†‹Â?‰ ‘Â? ƒÂ? ‘Â?‰‘‹Â?‰ ’”‘Œ‡…– Â?‡‡†• –‘ „‡ •‡‡Â? ‹Â? –Š‡ …‘Â?–‡š– ‘ˆ –Š‡ –‘–ƒŽ …‘•– ‘ˆ –Šƒ– ’”‘Œ‡…– •‘ –Šƒ– –Š‡”‡ ‹• –”ƒÂ?•’ƒ”‡Â?…›ǡ ƒÂ?› …‘•– ‹Â?…”‡ƒ•‡• ƒ”‡ •…”—–‹Â?‹œ‡† „› †‡…‹•‹‘Â? Â?ƒÂ?‡”•ǡ ƒÂ?† ƒ…–‹‘Â? …ƒÂ? „‡ –ƒÂ?‡Â? ‹ˆ …‘•– ‡•…ƒŽƒ–‹‘Â? „‡…‘Â?‡• ‡š…‡••‹˜‡Ǥ The capital budget can also provide a more comprehensive view of publicly funded investment. ‘Â?‡ „—†‰‡–Ǧˆ—Â?†‡† ‹Â?˜‡•–Â?‡Â?–• †‘ Â?‘– •Š‘™ —’ ĥ ‹Â?…”‡ƒ•‡ ‹Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–•ǡ „—– ƒ”‡ …Žƒ••‹ˆ‹‡† ĥ …ƒ’‹–ƒŽ –”ƒÂ?•ˆ‡”• ‘” ‘Â?ǦŽ‡Â?†‹Â?‰ ȋ‹Ǥ‡Ǥǡ ‹Â?…”‡ƒ•‡• ‹Â? ˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–•Ȍ ‹Â? …ƒ•‡• ™Š‡”‡ ‘™Â?‡”•Š‹’ ‘ˆ –Š‡ …ƒ’‹–ƒŽ ƒ••‡– …”‡ƒ–‡† †‘‡• Â?‘– ˆƒŽŽ —Â?†‡” ƒ „—†‰‡– ‹Â?•–‹–—–‹‘Â?Ǥ Š‡ …ƒ’‹–ƒŽ „—†‰‡– ’”‡•‡Â?–ƒ–‹‘Â? •Š‘—Ž† …ƒ’–—”‡ –Š‡•‡ǡ ƒÂ?† ’”‘˜‹†‡ ƒ …‘Â?’”‡Š‡Â?•‹˜‡ ‘˜‡”˜‹‡™ ‘ˆ „—†‰‡–Ǧˆ—Â?†‡† …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ˆ‘” †‡…‹•‹‘Â?ǦÂ?ƒÂ?‡”•Ǥ Š‹• †‹•…—••‹‘Â? ‹Â?†‹…ƒ–‡• –Šƒ– –Š‡ …ƒ’‹–ƒŽ „—†‰‡– •—’’Ž‡Â?‡Â?–• ”ƒ–Š‡” –ŠƒÂ? •—’’ŽƒÂ?–‹Â?‰ –Š‡ …ƒ’‹–ƒŽ …‘Â?’‘Â?‡Â?– ‘ˆ –Š‡ Â?ƒ‹Â? „—†‰‡– †‘…—Â?‡Â?– ƒÂ?† ‘ˆ –Š‡ Ç¡ ƒÂ?† ‹• Â?‘–Š‹Â?‰ –‘ †‘ ͸ʹ ™‹–Š †—ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?• ȋ™Š‹…Š ƒ”‡ ‰‡Â?‡”ƒŽŽ› ˆ”‘™Â?‡† —’‘Â?ȌǤ Š‡ …ƒ’‹–ƒŽ „—†‰‡– ’”‡•‡Â?–ƒ–‹‘Â? ‹• –Š‡”‡ˆ‘”‡ ƒ …‘Â?’‘Â?‡Â?– ‘ˆ ƒÂ? ‹Â?–‡‰”ƒ–‡† ƒÂ?Â?—ƒŽ „—†‰‡–‹Â?‰ ƒÂ?† Â?‡†‹—Â? –‡”Â? ‡š’‡Â?†‹–—”‡ ’ŽƒÂ?Â?‹Â?‰ ’”‘…‡••Ǥ – ƒŽ•‘ Â?‡‡†• –‘ „‡ …‘Â?•‹•–‡Â?– ™‹–Š –Š‡ ’”‘‰”ƒÂ? „—†‰‡– ’”‡•‡Â?–ƒ–‹‘Â?Ǥ A number of special features of capital expenditures call for capital spending decisions to be supported by an additional fuller set of analytical information than is the case for current expenditures. Š‡•‡ •’‡…‹ƒŽ ˆ‡ƒ–—”‡• ‘ˆ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ‹Â?…Ž—†‡ǣ x …ƒŽ‡ǣ …ƒ’‹–ƒŽ •’‡Â?†‹Â?‰ –‡Â?†• –‘ „‡ Žƒ”‰‡Ǧ•…ƒŽ‡ ƒÂ?† ̵Ž—Â?’›̵ǡ ‹Ǥ‡Ǥǡ Â?‘– •…ƒŽƒ„Ž‡ǡ •‘ Â?‹•–ƒÂ?‡• ƒ”‡ …‘•–Ž›Ǣ x ””‡˜‡”•‹„‹Ž‹–›ǣ —Â?Ž‹Â?‡ ƒ ”‡…—””‡Â?– ‡š’‡Â?†‹–—”‡ †‡…‹•‹‘Â?Ç¡ ƒ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ †‡…‹•‹‘Â? …ƒÂ?Â?‘– „‡ ”‡˜‡”•‡† ‘Â?…‡ ‹Â?’Ž‡Â?‡Â?–‡†Ǣ x ’ˆ”‘Â?– …‘•–• ƒÂ?† Ž‘Â?‰ ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ’‡”‹‘†•ǣ –‹Â?‹Â?‰ ‘ˆ †‡…‹•‹‘Â? ‹• –Š‡”‡ˆ‘”‡ Â?‘”‡ …”‹–‹…ƒŽǢ x Â?–‡”Ǧ‰‡Â?‡”ƒ–‹‘Â?ƒŽ ‹••—‡•ǣ „‡Â?‡ˆ‹–• ƒ”‡ •’”‡ƒ† –Š”‘—‰Š –‹Â?‡ ƒÂ?† –Š‘•‡ ™Š‘ ’ƒ› Â?ƒ› Â?‘– „‡ –Š‡ •ƒÂ?‡ ĥ –Š‘•‡ ™Š‘ „‡Â?‡ˆ‹–Ǣ x ‘…‹‘Ǧ‡…‘Â?‘Â?‹… ‹Â?’ƒ…–•ǣ …ƒ’‹–ƒŽ ‹Â?˜‡•–Â?‡Â?– …ƒÂ? Šƒ˜‡ ƒ ’‘–‡Â?–‹ƒŽŽ› •‹‰Â?‹ˆ‹…ƒÂ?– ‹Â?’ƒ…– ‘Â? ƒ ‰‘˜‡”Â?Â?‡Â?–̵• „”‘ƒ†‡” •‘…‹ƒŽ ƒÂ?† ‡…‘Â?‘Â?‹… †‡˜‡Ž‘’Â?‡Â?– ‘„Œ‡…–‹˜‡•Ǥ ͶǤͻǤ Reforms to date, supported by the World Bank’s Development Policy Operation (DPO) series, have largely focused on improving the content and presentation of the capital budget. • ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– Šƒ• ‹Â?…”‡ƒ•‡† …‘Â?•‹†‡”ƒ„Ž› ‹Â? ‡‘”‰‹ƒ ‹Â? ”‡…‡Â?– ›‡ƒ”•ǡ –Š‡ Â?‡‡† ˆ‘” ƒ †‡–ƒ‹Ž‡† Â?‡†‹—Â? –‡”Â? …ƒ’‹–ƒŽ „—†‰‡– Šƒ• „‡…‘Â?‡ ‹Â?…”‡ƒ•‹Â?‰Ž› ƒ’’ƒ”‡Â?–Ǥ Š‡ ˆ‘…—• ‘ˆ –Š‡ ”‡ˆ‘”Â? –‘ †ƒ–‡ Šƒ• „‡‡Â? –‘ †‡˜‡Ž‘’ ƒÂ?† •—„Â?‹– ƒ …ƒ’‹–ƒŽ „—†‰‡– ĥ ƒÂ? ƒÂ?Â?‡š –‘ –Š‡ ƒÂ?Â?—ƒŽ „—†‰‡– Žƒ™ǡ ƒÂ?† –‘ ‹Â?’”‘˜‡ ‹–• …‘Â?–‡Â?– ƒÂ?† ’”‡•‡Â?–ƒ–‹‘Â? ‘˜‡” –‹Â?‡Ǥ Â?‡ ‘ˆ –Š‡ ˆ‹”•– •–‡’• ™ƒ• –‘ †‡˜‡Ž‘’ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ƒÂ?Â?‡š –‘ –Š‡ ʹͲͳͲ ƒÂ?Â?—ƒŽ „—†‰‡–Ǥ Š‡ „—†‰‡– …‹”…—Žƒ” ˆ‘” ’”‡’ƒ”ƒ–‹‘Â? ‘ˆ –Š‡ ʹͲͳͲ „—†‰‡– ™ƒ• ”‡˜‹•‡† –‘ ‹Â?…Ž—†‡ǡ ˆ‘” –Š‡ ˆ‹”•– –‹Â?‡ǡ ˆ‘”Â?• †‡†‹…ƒ–‡† –‘ ’”‡’ƒ”‹Â?‰ …ƒ’‹–ƒŽ „—†‰‡–• ƒÂ?† ‹Â?…Ž—†‡† ‰—‹†‡Ž‹Â?‡• ˆ‘” ’”‡’ƒ”‹Â?‰ǡ •—„Â?‹––‹Â?‰ǡ ƒÂ?† •‡Ž‡…–‹Â?‰ ’”‘Œ‡…– ’”‘’‘•ƒŽ• ƒ„‘˜‡ ƒ †‡ˆ‹Â?‡† –Š”‡•Š‘Ž†Ǥ • ƒ ”‡•—Ž–ǡ –Š‡ Â?Â?—ƒŽ –ƒ–‡ —†‰‡– Ī ˆ‘” ʹͲͳͲ ™ƒ• ƒ……‘Â?’ƒÂ?‹‡† „› ƒÂ? Â?ˆ‘”Â?ƒ–‹‘Â? Â?Â?‡š ‘Â? –Š‡ …ƒ’‹–ƒŽ „—†‰‡–• ˆ‘” –™‘ •’‡Â?†‹Â?‰ —Â?‹–• ȋ–Š‡ ‘ƒ†• ‡’ƒ”–Â?‡Â?– ƒÂ?† –Š‡ ‹Â?‹•–”› ‘ˆ ‹Â?ƒÂ?…‡ȌǤ Initial Recommendations for Improving Content and Presentation of the Capital Budget ͶǤͳͲǤ As part of the World Bank’s programmatic fiscal work, a Policy Note on Strengthening Capital Budgeting in Georgia was presented to the authorities in 2010. Š‡ …ƒ’‹–ƒŽ „—†‰‡– ƒÂ?Â?‡š ƒ……‘Â?’ƒÂ?›‹Â?‰ –Š‡ ʹͲͳͲ „—†‰‡– ’”‘˜‹†‡† ˜ƒŽ—ƒ„Ž‡ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ˆ‘” †‡…‹•‹‘Â?ǦÂ?ƒÂ?‡”•ǡ ƒŽ–Š‘—‰Š –Š‡”‡ ™ƒ• …‘Â?•‹†‡”ƒ„Ž‡ ”‘‘Â? ˆ‘” ˆ—”–Š‡” ‹Â?’”‘˜‡Â?‡Â?–Ǥ Š‡ Policy Note •‡– ‘—– ˆ—”–Š‡” ‹Â?’”‘˜‡Â?‡Â?–• –Šƒ– …‘—Ž† „‡ ‹Â?–”‘†—…‡† ‘Â? –Š‡ ™ƒ› –‘ Â?‡‡–‹Â?‰ –Š‡ Ž‡‰ƒŽ ”‡“—‹”‡Â?‡Â?– ˆ‘” …‘Â?’”‡Š‡Â?•‹˜‡ ‹Â?–”‘†—…–‹‘Â? ‘ˆ …ƒ’‹–ƒŽ „—†‰‡–• ˆ”‘Â? ʹͲͳʹǤ Â? ƒ††‹–‹‘Â? –‘ ”‡…‘Â?Â?‡Â?†‹Â?‰ ƒÂ? ‡š–‡Â?•‹‘Â? ‘ˆ …‘˜‡”ƒ‰‡ ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡–ǡ ”‡…‘Â?Â?‡Â?†ƒ–‹‘Â?• ™‡”‡ Â?ƒ†‡ –‘ ‹Â?’”‘˜‡ –Š‡ …‘Â?–‡Â?– ƒÂ?† ’”‡•‡Â?–ƒ–‹‘Â? ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ‹Â? ˆ‘—” ƒ”‡ƒ•ǣ ‹Ǥ Extending the financial information on multiǦyear capital projectsÇ¢ Š‡ ˆ‹”•– ’”‘’‘•ƒŽ ‹Â?˜‘Ž˜‡† ‡š–‡Â?†‹Â?‰ –Š‡ ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? –‘ ‹Â?…Ž—†‡ǣ –‘–ƒŽ ‡•–‹Â?ƒ–‡† …‘•– ˆ‘” Â?—Ž–‹Ǧ›‡ƒ” ’”‘Œ‡…–•Ǣ …—Â?—Žƒ–‹˜‡ ‡š’‡Â?†‹–—”‡• ‘Â? ‘Â?‰‘‹Â?‰ ’”‘Œ‡…–•Ǣ ƒÂ?† „ƒŽƒÂ?…‡ –‘ …‘Â?’Ž‡–‡ ƒ– –Š‡ ‡Â?† ‘ˆ –Š‡ Â?‡†‹—Â?Ǧ–‡”Â? „—†‰‡–‹Â?‰ Š‘”‹œ‘Â?Ǥ Š‹• ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‹• Â?‡…‡••ƒ”› ˆ‘” ƒÂ? ƒ†‡“—ƒ–‡ —Â?†‡”•–ƒÂ?†‹Â?‰ ‘ˆ –Š‡ ˆ—ŽŽ ‹Â?’Ž‹…ƒ–‹‘Â?• ‘ˆ ‡š’‡Â?†‹–—”‡ ’”‘’‘•ƒŽ• ƒÂ?† ™ƒ• Â?‹••‹Â?‰ ˆ”‘Â? –Š‡ ʹͲͳͲ ’‹Ž‘– …ƒ’‹–ƒŽ „—†‰‡–•Ǥ ‹‹Ǥ Deepening the nonǦfinancial information on the justification for projectsÇ¢ —’’‘”–‹Â?‰ –Š‡ •‡…‘Â?† ’”‘’‘•ƒŽǡ ƒÂ? ‡š–‡Â?†‡† ˆ‘”Â? ™ƒ• †‡•‹‰Â?‡† ’”‘˜‹†‹Â?‰ Â?‘”‡ ‹Â?Ǧ†‡’–Š Œ—•–‹ˆ‹…ƒ–‹‘Â? ˆ‘” ’”‘’‘•‡† È‹Â?ƒŒ‘”Ȍ …ƒ’‹–ƒŽ ’”‘Œ‡…–•ǡ ‹Â?…Ž—†‹Â?‰ –Š‡ ’”‘Œ‡…– ”ƒ–‹‘Â?ƒŽ‡ ƒÂ?† †‡Â?ƒÂ?†ǡ …‘Â?•‹•–‡Â?…› ™‹–Š •–”ƒ–‡‰‹… ‘„Œ‡…–‹˜‡•ǡ ƒ’’”ƒ‹•ƒŽ ”‡•—Ž–• ȋ‹ˆ ƒÂ?›Ȍ ƒÂ?† ƒ••—Â?’–‹‘Â?• ͸͵ ƒÂ?† ”‹•Â?•Ǥ Â?ˆ‘”Â?ƒ–‹‘Â? ‘Â? –Š‡ ”‡…—””‡Â?– ‡š’‡Â?†‹–—”‡ ‹Â?’Ž‹…ƒ–‹‘Â?• ‘ˆ –Š‡ …‘Â?’Ž‡–‡† ’”‘Œ‡…– ƒÂ?† ‘Â? ’Š›•‹…ƒŽ Â?‘Â?‹–‘”‹Â?‰ ‹Â?†‹…ƒ–‘”• ȋ‹Ǥ‡Ǥǡ ’”‘Œ‡…– †‡Ž‹˜‡”ƒ„Ž‡•Ȍ ™‘—Ž† ƒŽ•‘ Šƒ˜‡ „‡‡Â? …ƒ’–—”‡† „› –Š‡ ˆ‘”Â?Ǥ ‹‹‹Ǥ Monitoring the capital budget and using the information in budgetingÇ¢ ’Ǧ–‘Ǧ†ƒ–‡ Â?‘Â?‹–‘”‹Â?‰ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‘Â? ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ’”‘‰”‡•• ‹• ‹Â?’‘”–ƒÂ?– ƒ– „—†‰‡– –‹Â?‡ –‘ Â?ƒÂ?‡ ‹Â?ˆ‘”Â?‡† †‡…‹•‹‘Â?•ǡ Š‡Â?…‡ –Š‡ –Š‹”† ’”‘’‘•ƒŽǤ Š‹• ‹Â?ˆ‘”Â?ƒ–‹‘Â? •Š‘—Ž† „‡ …ƒ’–—”‡† ‹Â? …ƒ’‹–ƒŽ „—†‰‡– •—„Â?‹••‹‘Â?•ǡ ™Š‹…Š •Š‘—Ž† ‹†‡ƒŽŽ›ǣ x †‡Â?–‹ˆ› †‹ˆˆ‡”‡Â?…‡• „‡–™‡‡Â? ’ŽƒÂ?Â?‡† ƒÂ?† ƒ…–—ƒŽ ‡š’‡Â?†‹–—”‡•Ǣ x š’Žƒ‹Â? Â?ƒ‹Â? †‡˜‹ƒ–‹‘Â?•Ǣ x ••‡•• –Š‡ ‹Â?’Ž‹…ƒ–‹‘Â?• ˆ‘” –Š‡ ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ’”‘ˆ‹Ž‡ ƒÂ?† –‘–ƒŽ ‡•–‹Â?ƒ–‡† …‘•– ‘ˆ ’”‘Œ‡…–•Ǣ ƒÂ?† x ‘Â?’ƒ”‡ ’Š›•‹…ƒŽ ’”‘‰”‡•• –‘ –ƒ”‰‡–• ƒÂ?† ˆ‹Â?ƒÂ?…‹ƒŽ ’”‘‰”‡••Ǥ ‹˜Ǥ Tightening definitions of capital expenditure and projectsǤ ‹Â?ƒŽŽ›ǡ ‹Â?’”‘˜‡Â?‡Â?–• –‘ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ ‰—‹†‡Ž‹Â?‡• ™‡”‡ ’”‘’‘•‡† –‘ ‡Â?•—”‡ …‘Â?•‹•–‡Â?…› ™‹–Š  ʹͲͲͳ †‡ˆ‹Â?‹–‹‘Â?• ‘ˆ …ƒ’‹–ƒŽ ȋ–Š—• ‡š…Ž—†‹Â?‰ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒÂ?† ”‡’ƒ‹” ˆ”‘Â? …ƒ’‹–ƒŽ „—†‰‡–•Ȍ ƒÂ?† –‘ ƒ••‹•– Ž‹Â?‡ Â?‹Â?‹•–”‹‡• ‹Â? •…‘’‹Â?‰ ’”‘Œ‡…–• ƒ’’”‘’”‹ƒ–‡Ž› ˆ‘” •–”ƒ–‡‰‹… †‡…‹•‹‘Â?ǦÂ?ƒÂ?‹Â?‰Ǥ Improvements to date in the 2011 and 2012 Capital Budget Annex ͶǤͳͳǤ The Policy Note recommendations were taken up selectively and resulted in several important improvements to the 2011 and 2012 Capital Budget Annexes, while still leaving room for further progress. ’‡…‹ˆ‹…ƒŽŽ›ǡ –Š‡ Â?‘•– Â?‘–ƒ„Ž‡ ‹Â?’”‘˜‡Â?‡Â?–• –‘ –Š‡ ʹͲͳͳ ƒÂ?† ʹͲͳʹ …ƒ’‹–ƒŽ „—†‰‡– ƒÂ?Â?‡š‡• ™‡”‡ –Š‡ ˆ‘ŽŽ‘™‹Â?‰ǣ ‡š–‡Â?•‹‘Â? ‘ˆ ‘˜‡”ƒŽŽ …‘˜‡”ƒ‰‡ǡ ‹Â?’”‘˜‡Â?‡Â?– ‹Â? ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? –‘ ‹Â?…Ž—†‡ –Š‡ …‘Â?’Ž‡–‡ –‹Â?‡ ’”‘ˆ‹Ž‡ ‘ˆ ’”‘Œ‡…– …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡•Ǣ Â?‘Â?ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? –‘ ‹Â?…Ž—†‡ •—Â?Â?ƒ”› ’”‘Œ‡…– Œ—•–‹ˆ‹…ƒ–‹‘Â?• ƒÂ?† ’Š›•‹…ƒŽ Â?‘Â?‹–‘”‹Â?‰ ‹Â?†‹…ƒ–‘”•Ǣ ƒÂ?† ’—„Ž‹… ”‡’‘”–‹Â?‰ ‘Â? ƒ…–—ƒŽ ˜‡”•—• ’ŽƒÂ?Â?‡† ’”‘Œ‡…– ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ˆ‘” ʹͲͳͲǤ —”–Š‡”Â?‘”‡ǡ –Š‡ ”‡“—‹”‡Â?‡Â?–• ˆ‘” –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ƒÂ?Â?‡š Šƒ˜‡ „‡‡Â? ˆ‘”Â?ƒŽ‹œ‡† ĥ ’ƒ”– ‘ˆ –Š‡ ’”‘‰”ƒÂ? „—†‰‡–‹Â?‰ Â?‡–Š‘†‘Ž‘‰› ‹••—‡† „› †‡…”‡‡ ‘ˆ –Š‡ ‹Â?‹•–‡” ‘ˆ ‹Â?ƒÂ?…‡ ‹Â? —Ž› ʹͲͳͳǤ ͶǤͳʹǤ The coverage of the 2011Ǧ12 capital budgets have improved somewhat but remain short of comprehensiveǤ Â? ˜ƒŽ—‡ –‡”Â?•ǡ –Š‡ ʹͲͳͳǦͳʹ …ƒ’‹–ƒŽ „—†‰‡– ƒÂ?Â?‡š‡• ”‡’”‡•‡Â?– ƒÂ? ‡š–‡Â?•‹‘Â? ‘ˆ …‘˜‡”ƒ‰‡ …‘Â?’ƒ”‡† –‘ ʹͲͳͲǣ –‘–ƒŽ ‡š’‡Â?†‹–—”‡• ”‡ˆŽ‡…–‡† ‹Â? –Š‡ ʹͲͳͳ …ƒ’‹–ƒŽ „—†‰‡– ”‡’”‡•‡Â?–‡† ƒ„‘—– ͹͸ ’‡”…‡Â?– ‘ˆ ‡•–‹Â?ƒ–‡† „—†‰‡–Ǧˆ—Â?†‡† …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ȋƒ• ‡•–‹Â?ƒ–‡† ‹Â? ‘š Í´ „‡Ž‘™ȌǤ Â? –‡”Â?• ‘ˆ Â?‹Â?‹•–”‹‡• …‘˜‡”‡†ǡ –Š‡ ʹͲͳͳ …ƒ’‹–ƒŽ „—†‰‡– ™ƒ• Ž‹Â?‹–‡† –‘ ’”‘Œ‡…–• —Â?†‡” –Š‡ ‹Â?‹•–”› ‘ˆ ‡‰‹‘Â?ƒŽ ‡˜‡Ž‘’Â?‡Â?– Ƭ Â?ˆ”ƒ•–”—…–—”‡ È‹ ÈŒ ƒÂ?† –Š‡ ‹Â?‹•–”› ‘ˆ Â?‡”‰›ǡ ™Š‹…Š ƒ……‘—Â?– ˆ‘” –Š‡ Žƒ”‰‡•– •Šƒ”‡ ‘ˆ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡•ǡ ™Š‹Ž‡ –Š‡ ʹͲͳʹ …ƒ’‹–ƒŽ „—†‰‡– ƒŽ•‘ ‡š–‡Â?†‡† …‘˜‡”ƒ‰‡ –‘ •‡˜‡Â? ‘–Š‡” Â?‹Â?‹•–”‹‡•Ǥ ͵ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ –Š‡ …ƒ’‹–ƒŽ „—†‰‡–• Šƒ˜‡ „‡‡Â? ’”‡†‘Â?‹Â?ƒÂ?–Ž› †‡†‹…ƒ–‡† –‘ ”‡…‘”†‹Â?‰ †‘Â?‘”Ǧˆ—Â?†‡† ’”‘Œ‡…–• ȋƒÂ?† ƒ••‘…‹ƒ–‡† …‘Ǧˆ—Â?†‹Â?‰ ˆ”‘Â? †‘Â?‡•–‹… •‘—”…‡•ȌǤ Ž–Š‘—‰Š †‘Â?‘” ˆ—Â?†‡† ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ‹• ƒ Žƒ”‰‡ •Šƒ”‡ ‘ˆ –‘–ƒŽ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ‹Â? ‡‘”‰‹ƒǡ †‘Â?‡•–‹…ƒŽŽ› ˆ—Â?†‡† ‹Â?˜‡•–Â?‡Â?– ‡š’‡Â?†‹–—”‡ ‹• Â?‘– ‹Â?•‹‰Â?‹ˆ‹…ƒÂ?– ƒÂ?† –Š‡ „—†‰‡– ‹Â?•–”—…–‹‘Â?• ‰‹˜‡ Â?‘ ‹Â?†‹…ƒ–‹‘Â? –Šƒ– –Š‡ …ƒ’‹–ƒŽ „—†‰‡–• •Š‘—Ž† ‡š…Ž—†‡ ‹–Ǥ ͶǤͳ͵Ǥ The comprehensiveness of financial information on individual projects included in the capital budget annex has improved significantly compared to 2010. Š‹• ™ƒ• ‹Â? Ž‹Â?‡ ™‹–Š ͵Š‡ •‡˜‡Â? ƒ††‹–‹‘Â?ƒŽ Â?‹Â?‹•–”‹‡• ‹Â?…Ž—†‡ǣ ‹Â?ƒÂ?…‡Ǣ —•–‹…‡Ǣ ”‹•‘Â?Ç¡ ”‘„ƒ–‹‘Â? Ƭ ‡‰ƒŽ ••‹•–ƒÂ?…‡Ǣ †—…ƒ–‹‘Â? Ƭ …‹‡Â?…‡Ǣ —Ž–—”‡Ǣ ‡ƒŽ–Šǡ ƒ„‘” Ƭ ‘…‹ƒŽ ˆˆƒ‹”•Ǣ •Ǥ ͸Ͷ •—‰‰‡•–‹‘Â?• ‹Â? –Š‡ Policy Note4 ƒÂ?† •Š‘—Ž† Š‡Ž’ ‹Â?’”‘˜‡ –”ƒÂ?•’ƒ”‡Â?…› ƒÂ?† –Š‡ “—ƒŽ‹–› ‘ˆ „—†‰‡– ’ŽƒÂ?Â?‹Â?‰Ǥ ‹Â?…‡ ʹͲͳͳǡ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– Šƒ• ‹Â?…Ž—†‡† ƒ ˆƒ‹”Ž› …‘Â?’Ž‡–‡ ’‹…–—”‡ ‘ˆ –‘–ƒŽ ’”‘Œ‡…– ‡š’‡Â?†‹–—”‡ …‘˜‡”‹Â?‰ǣ ȋ‹Ȍ ‘–ƒŽ ’”‘Œ‡…– …‘•– ˆ—Â?†‡† –Š”‘—‰Š –Š‡ –ƒ–‡ —†‰‡–Ǣ ȋ‹‹Ȍ —Â?—Žƒ–‹˜‡ ‡š’‡Â?†‹–—”‡ –‘ ‡Â?† ‘ˆ ’”‹‘” ›‡ƒ”Ǣ ȋ‹‹‹Ȍ ŽƒÂ?Â?‡† ‡š’‡Â?†‹–—”‡ ˆ‘” …—””‡Â?– ›‡ƒ” ƒÂ?† „—†‰‡–‡† ›‡ƒ”Ǣ ȋ‹˜Ȍ ‘”‡…ƒ•– ˆ‘” ‡ƒ…Š ‘ˆ Â?‡š– ͵ ›‡ƒ”• ƒˆ–‡” –Š‡ „—†‰‡– ›‡ƒ”Ǣ ȋ˜Ȍ ƒŽƒÂ?…‡ –‘ …‘Â?’Ž‡–‡ ƒˆ–‡” ͵Ǧ›‡ƒ” Â?‡†‹—Â? –‡”Â? Š‘”‹œ‘Â? ȋ†”‘’’‡† ˆ”‘Â? ʹͲͳʹȌǤͷ ͶǤͳͶǤ The extent of nonǦfinancial information on projects has improved compared to 2010, but remain less detailed than desirable, especially for nationally significant capital projects. —Â?Â?ƒ”› ’”‘Œ‡…– Œ—•–‹ˆ‹…ƒ–‹‘Â?• ƒ”‡ ’”‡•‡Â?–‡†ǡ ‹Â?…Ž—†‹Â?‰ ƒ •–ƒ–‡Â?‡Â?– ‘ˆ –Š‡ ’”‘Œ‡…– ‰‘ƒŽ ƒÂ?† ‡š’‡…–‡† ”‡•—Ž–ǡ ƒÂ?† •‘Â?‡ ˆ‘”‡…ƒ•–• ‘ˆ ’Š›•‹…ƒŽ ™‘”Â?• –‘ „‡ …‘Â?’Ž‡–‡† †—”‹Â?‰ –Š‡ „—†‰‡– ›‡ƒ” ƒ”‡ ‰‹˜‡Â?Ǥ Š‡•‡ ’Š›•‹…ƒŽ ‹Â?†‹…ƒ–‘”• ‘ˆ ™‘”Â?• ƒ”‡ …”‹–‹…ƒŽ ˆ‘” Â?‘Â?‹–‘”‹Â?‰ ’—”’‘•‡• ƒÂ?† •Š‘—Ž† Šƒ˜‡ ’”‘˜‹†‡ ƒ ˆ‹”Â?‡” „ƒ•‹• ˆ‘” ”‡’‘”–‹Â?‰ ‘Â? ’”‘‰”‡•• †—”‹Â?‰ ʹͲͳͳ ȋƒŽ–Š‘—‰Š ‹– •‡‡Â?• —Â?Ž‹Â?‡Ž› –Šƒ– –Š‹• ƒ…–—ƒŽŽ› Šƒ’’‡Â?‡†ȌǤ Š‹Ž‡ –Š‡”‡ Šƒ˜‡ „‡‡Â? •‘Â?‡ ‡˜‹†‡Â?– ‹Â?’”‘˜‡Â?‡Â?–• ‹Â? –Š‡ Â?‘Â?ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â?Ç¡ ‹– ”‡Â?ƒ‹Â?• –‘‘ Ž‹Â?‹–‡†ǡ ’ƒ”–‹…—Žƒ”Ž› ™‹–Š ”‡‰ƒ”† –‘ •—Â?Â?ƒ”› “—ƒÂ?–‹–ƒ–‹˜‡ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‘Â? •—…Š –Š‹Â?‰• ĥ „ƒ•‹… †‡•‹‰Â? •–ƒÂ?†ƒ”†•ǡ ’ŽƒÂ?Â?‡† …ƒ’ƒ…‹–‹‡•ǡ ‡š’‡…–‡† †‡Â?ƒÂ?†ǡ ‡•–‹Â?ƒ–‡† „‡Â?‡ˆ‹–• ƒÂ?† ‡…‘Â?‘Â?‹… ”ƒ–‡• ‘ˆ ”‡–—”Â?͸Ǥ ‹–Š Â?ƒÂ?› ’”‘Œ‡…–• †‘Â?‘”Ǧˆ‹Â?ƒÂ?…‡† ƒÂ?† ƒŽÂ?‘•– …‡”–ƒ‹Â? –‘ Šƒ˜‡ „‡‡Â? •—„Œ‡…– –‘ ˆ—ŽŽ ˆ‡ƒ•‹„‹Ž‹–› •–—†‹‡• ƒÂ?† ‹Â?’ƒ…– ƒ••‡••Â?‡Â?–•ǡ •—…Š “—ƒÂ?–‹–ƒ–‹˜‡ ‹Â?ˆ‘”Â?ƒ–‹‘Â? •Š‘—Ž† „‡ ”‡Žƒ–‹˜‡Ž› ‡ƒ•› –‘ ‘„–ƒ‹Â?Ǥ Š‡ ’”‘Œ‡…– †‡•…”‹’–‹‘Â?• ‹Â? –Š‡ ʹͲͳʹ …ƒ’‹–ƒŽ „—†‰‡– ƒ”‡ Â?‘”‡ …‘Â?•‹•–‡Â?–Ž› ‹Â?ˆ‘”Â?ƒ–‹˜‡ –ŠƒÂ? –Š‘•‡ ‹Â? ʹͲͳͳǡ ™‹–Š Ž‹Â?Â?• –‘ ‰‘˜‡”Â?Â?‡Â?– Ǯ’”‹‘”‹–› ƒ”‡ƒ•ǯ Â?‘”‡ …‘Â?•‹•–‡Â?–Ž› Â?ƒ†‡ ȋƒŽ–Š‘—‰Š –Š‡ ’”‹‘”‹–‹‡• –Š‡Â?•‡Ž˜‡• •—ˆˆ‡” ˆ”‘Â? „‡‹Â?‰ †‡ˆ‹Â?‡† ‹Â? ”ƒ–Š‡” ‰‡Â?‡”ƒŽ –‡”Â?•ȌǤ ͶǤͳͷǤ The definition of capital spending in the budget instructions excludes maintenance and repair of assets, although some shortcomings remain. ‘Â?•‹•–‡Â?– ™‹–Š  ʹͲͲͳǡ –Š‡ „—†‰‡– ‹Â?•–”—…–‹‘Â?• †‡ˆ‹Â?‡ ƒ …ƒ’‹–ƒŽ ’”‘Œ‡…– –‘ Ǯ‹Â?…”‡ƒ•‡ ‘ˆ ƒ••‡–•ǯ …‘˜‡”‹Â?‰ Ç®Â?‡™ …‘Â?•–”—…–‹‘Â?Ç¡ ”‡Â?‘˜ƒ–‹‘Â? ƒÂ?† ”‡’Žƒ…‡Â?‡Â?– ‘ˆ ‡š‹•–‹Â?‰ ƒ••‡–•ǯǤ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ –Š‡ ‹Â?…Ž—•‹‘Â? ‘ˆ ƒ ”‘ƒ† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ’”‘Œ‡…– ‹Â? –Š‡ …ƒ’‹–ƒŽ „—†‰‡– •—‰‰‡•–• –Š‡”‡ ”‡Â?ƒ‹Â?• •‘Â?‡ …‘Â?ˆ—•‹‘Â? ƒ„‘—– –Š‡ †‡ˆ‹Â?‹–‹‘Â? ‘ˆ …ƒ’‹–ƒŽǤ Žƒ••‹ˆ‹…ƒ–‹‘Â? ‹••—‡• ”‡Žƒ–‹Â?‰ –‘ ”‘—–‹Â?‡ ƒÂ?† ’‡”‹‘†‹… ”‘ƒ† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡• ƒŽ•‘ †‘ Â?‘– •‡‡Â? –‘ Šƒ˜‡ „‡‡Â? ”‡•‘Ž˜‡†Ǥ ͶǤͳ͸Ǥ The requirements for the capital budget annex have now been formalized as part of the program budgeting methodology issued by decree of the Minister of Finance in July 2011Ǥ Š‹• Â?‡–Š‘†‘Ž‘‰› Â?ƒÂ?‡• Â?‘”‡ ’‡”Â?ƒÂ?‡Â?– –Š‡ ”‡“—‹”‡Â?‡Â?–• •‡– ‘—– ‹Â? –Š‡ ƒÂ?Â?—ƒŽ „—†‰‡– ‹Â?•–”—…–‹‘Â?•Ǥ Â? …‘˜‡”ƒ‰‡ǡ –Š‡ Â?‡–Š‘†‘Ž‘‰› …‘Â?ˆ‹”Â?• –Šƒ– –Š‡ …ƒ’‹–ƒŽ „—†‰‡– …ƒÂ? ‹Â?…Ž—†‡ ’”‘Œ‡…–• Â?‘– …Žƒ••‹ˆ‹‡† —Â?†‡” Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–•ǡ •—…Š ĥ –Š‘•‡ …Žƒ••‹ˆ‹‡† ĥ …ƒ’‹–ƒŽ –”ƒÂ?•ˆ‡”• ƒÂ?† ‹Â?…”‡ƒ•‡• ‹Â? ˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–•Ǥ ÂŽÂŽ ‹Â?˜‡•–Â?‡Â?– ’”‘Œ‡…–• ‹Â?˜‘Ž˜‹Â?‰ ˆ—ŽŽ ‘” ’ƒ”–‹ƒŽ ˆ—Â?†‹Â?‰ ˆ”‘Â? –Š‡ –ƒ–‡ —†‰‡– ƒ”‡ –‘ „‡ …‘˜‡”‡† „› –Š‡ …ƒ’‹–ƒŽ „—†‰‡–ǡ ‹Â?…Ž—†‹Â?‰ ’—„Ž‹…Ǧ’”‹˜ƒ–‡ ’ƒ”–Â?‡”•Š‹’•Ǥ ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ”‡“—‹”‡Â?‡Â?–• ‹Â?…Ž—†‡ –Š‡ ˆ—ŽŽ –‹Â?‡ ’”‘ˆ‹Ž‡ ‘ˆ ’”‘Œ‡…– …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡•ǡ ĥ ™ƒ• –Š‡ …ƒ•‡ ‹Â? –Š‡ ʹͲͳͳ „—†‰‡– ‹Â?•–”—…–‹‘Â?•Ǥ ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‹• ”‡“—‹”‡† „› ’”‘Œ‡…– ƒÂ?† „› •—„Ǧ ’”‘Œ‡…–Ǥ Ž•‘ ‹Â? Ž‹Â?‡ ™‹–Š –Š‡ ʹͲͳͳ „—†‰‡– ‹Â?•–”—…–‹‘Â?•ǡ Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ”‡“—‹”‡† ‹Â?…Ž—†‡•ǣ ‰‘˜‡”Â?Â?‡Â?– ’”‹‘”‹–› –‘ ™Š‹…Š –Š‡ ’”‘Œ‡…– ”‡Žƒ–‡•Ǣ ’”‘Œ‡…– ‹Â?’Ž‡Â?‡Â?–‹Â?‰ ƒ‰‡Â?…›Ǣ ‡š’‡…–‡† Ͷ ‘” ‡ƒ•‡ ‘ˆ ‹Â?–‡”’”‡–ƒ–‹‘Â? ƒÂ?† –”ƒÂ?•’ƒ”‡Â?…›ǡ ‹– Â?‹‰Š– Šƒ˜‡ „‡‡Â? —•‡ˆ—Ž –‘ Šƒ˜‡ ‹Â?…Ž—†‡† ƒ …‘Ž—Â?Â? Ç® •–‹Â?ƒ–‡ ‘ˆ „ƒŽƒÂ?…‡ –‘ …‘Â?’Ž‡–‡ ’‘•–ǦʹͲͳͲǯ ˆ‘” ‘Â?‰‘‹Â?‰ ’”‘Œ‡…–•ǡ „—– –Š‹• ‹• Â?‘– …”‹–‹…ƒŽ •‹Â?…‡ –Š‹• •Š‘—Ž† „‡ –Š‡ •—Â? ‘ˆ –Š‡ Žƒ•– Í· …‘Ž—Â?Â?• ‘ˆ –Š‡ „—†‰‡– –ƒ„Ž‡Ǥ Í· Â?ˆ‘”–—Â?ƒ–‡Ž›ǡ ƒ ˜ƒŽ—‡ ˆ‘” –Š‡ „ƒŽƒÂ?…‡ –‘ …‘Â?’Ž‡–‡ ƒ ’”‘Œ‡…– ƒ– –Š‡ ‡Â?† ‘ˆ –Š‡ Â?‡†‹—Â?Ǧ–‡”Â? ˆ”ƒÂ?‡™‘”Â? ™ƒ• Â?‘ Ž‘Â?‰‡” ’”‡•‡Â?–‡† ‹Â? –Š‡ ʹͲͳʹ …ƒ’‹–ƒŽ „—†‰‡–ǡ ‡˜‡Â? –Š‘—‰Š –Š‹• ‹• ”‡“—‹”‡† ‹Â? –Š‡ ‹Â?•–”—…–‹‘Â?•Ǥ Š‡ ‡š’‡…–‡† …‘Â?’Ž‡–‹‘Â? †ƒ–‡ ˆ‘” ’”‘Œ‡…–• ‹• ƒŽ•‘ Â?‘– •›•–‡Â?ƒ–‹…ƒŽŽ› ‰‹˜‡Â?Ǥ ͸ Š‡ Policy Note •—‰‰‡•–‡† ƒ ˆ‘”Â?ƒ– ˆ‘” ’”‡•‡Â?–‹Â?‰ Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‘Â? ’”‘Œ‡…–• È‹ƒ„Ž‡ Í´ È‚ Format for Summarising Project RationaleȌǡ „—– –Š‡  ™ƒ• …‘Â?…‡”Â?‡† –Šƒ– –Š‡ Â?‹Â?‹•–”‹‡• ™‘—Ž† Â?‘– „‡ ƒ„Ž‡ –‘ ’”‘˜‹†‡ –Š‡ Ž‡˜‡Ž ‘ˆ †‡–ƒ‹Ž• ”‡“—‹”‡†Ǥ ͸ͷ ”‡•—Ž– ‘ˆ –Š‡ ’”‘Œ‡…–Ǣ –‘–ƒŽ ˜ƒŽ—‡ ‘ˆ –Š‡ ’”‘Œ‡…– ȋ™Š‹…Š ™‹ŽŽ ‡š…‡‡† –Š‡ ˆ‹‰—”‡ ‹Â? –Š‡ ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‹ˆ –Š‡ •–ƒ–‡ „—†‰‡– ‹• …‘ˆ‹Â?ƒÂ?…‹Â?‰ ™‹–Š ƒÂ?‘–Š‡” •‘—”…‡ǡ •—…Š ĥ ƒ ȌǢ ’”‘Œ‡…– ˆ‹Â?ƒÂ?…‹Â?‰ •‘—”…‡•Ǣ ƒÂ?† Â?ƒŒ‘” ƒ…–‹˜‹–‹‡• ˆ‘” –Š‡ ’ŽƒÂ?Â?‹Â?‰ ›‡ƒ”Ǥ Remaining Challenges in Improving Content and Presentation of the Capital Budget ͶǤͳ͹Ǥ Coverage of the capital budget, as well as comprehensiveness and consistency and of the financial information, remains a significant challenge, with different information sources not easily reconcilableǤ Š‹• ‹• ‹Â? •’‹–‡ ‘ˆ ‹Â?’”‘˜‡Â?‡Â?–• ‹Â?–”‘†—…‡† ˆ‘” ʹͲͳͳǦͳʹǤ Š‡•‡ •‘—”…‡• ‘ˆ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ƒ”‡ǣ ‹Ǥ ‹‰—”‡• ˆ‘” ‹Â?…”‡ƒ•‡ ‹Â? …‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?–Ǧ‘™Â?‡† Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ȋ„‘–Š ’”‘Œ‡…– ƒÂ?† Â?‘Â?Ǧ’”‘Œ‡…–Ȍ ‹Â? –Š‡ „—†‰‡– ƒÂ?† ‡š‡…—–‹‘Â? ”‡’‘”–•Ǣ ‹‹Ǥ ‹‰—”‡• ˆ‘” ‡š’‡Â?†‹–—”‡• ‘Â? Â?ƒÂ?‡† ’”‘Œ‡…–• ‹Â? –Š‡ ƒÂ?Â?—ƒŽ „—†‰‡– ȋƒÂ?† ‡š‡…—–‹‘Â? ”‡’‘”–•ȌǤ ‘Â?‡ ‘ˆ –Š‡•‡ ’”‘Œ‡…–• ƒ”‡ ‹Â?…Ž—†‡† ‹Â? ȋ‹Ȍǡ ™Š‹Ž‡ ‘–Š‡”• ‹Â?˜‘Ž˜‹Â?‰ …ƒ’‹–ƒŽ –”ƒÂ?•ˆ‡”• –‘ Ž‘…ƒŽ ‰‘˜‡”Â?Â?‡Â?– ‘” ‘Â?ǦŽ‡Â?†‹Â?‰ –‘  • ƒ”‡ Â?‘–Ǥ Š‡ –™‘ •‡–• ‘ˆ ˆ‹‰—”‡• ƒ”‡ Â?‘– †‹”‡…–Ž› …‘Â?’ƒ”ƒ„Ž‡ „‡…ƒ—•‡ •‘Â?‡ Â?‘Â?Ǧ…ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ‹• ƒŽ•‘ ‹Â?…Ž—†‡† ‹Â? ’”‘Œ‡…– …‘•–• ‹Â? ȋ‹‹ȌǤ ‹‹‹Ǥ Š‡ …ƒ’‹–ƒŽ „—†‰‡–ǡ ™Š‹…Š …‘Â?’Ž‡Â?‡Â?–• ȋ‹‹Ȍ „› ’”‘˜‹†‹Â?‰ ƒ Â?‡†‹—Â?Ǧ–‡”Â? ’‡”•’‡…–‹˜‡ǡ †‘‡• Â?‘– Â?‡…‡••ƒ”‹Ž› ‹Â?…Ž—†‡ –Š‡ •ƒÂ?‡ •‡– ‘ˆ ’”‘Œ‡…–•ǡ ƒÂ?† ’ƒ”–‹…—Žƒ”Ž› Â?‹••‡• ™Š‘ŽŽ› †‘Â?‡•–‹…ƒŽŽ› ˆ‹Â?ƒÂ?…‡† ’”‘Œ‡…–•Ǥ ‹˜Ǥ Š‡ ™Š‹…Š ’”‘˜‹†‡• Â?‡†‹—Â? –‡”Â? …ƒ’‹–ƒŽ •’‡Â?†‹Â?‰ Ž‹Â?‹–• „› Â?‹Â?‹•–”› ƒÂ?† Â?ƒŒ‘” ’”‘Œ‡…– †‘‡• Â?‘– Â?‡…‡••ƒ”‹Ž› ƒ‰”‡‡ ™‹–Š –Š‘•‡ ’”‡•‡Â?–‡† ‹Â? –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ƒÂ?† ƒŽ•‘ Â?ƒ› Â?‘– Â?‡…‡••ƒ”‹Ž› „‡ …‘Â?•‹•–‡Â?– ˆ”‘Â? ›‡ƒ” –‘ ›‡ƒ”ǡ ™‹–Š ˆ‹‰—”‡• ˆ‘” ‘—–‡” ›‡ƒ”• ˆ‘—Â?† ’ƒ”–‹…—Žƒ”Ž› Žƒ…Â?‹Â?‰Ǥ ƒ„Ž‡ ͶǤͳ ‹ŽŽ—•–”ƒ–‡• –Š‡ •‹‰Â?‹ˆ‹…ƒÂ?– †‹ˆˆ‡”‡Â?…‡• „‡–™‡‡Â? ˆ‹‰—”‡• ˆ”‘Â? –Š‡ ˆ‹”•– –Š”‡‡ •‘—”…‡• ˆ‘” –Š‡ ’‡”‹‘† ʹͲͲͺǦʹͲͳʹǤ Table 4.1: Alternative Figures for Capital Expenditure from State Budget È‹Â?‹ŽŽ‹‘Â?• ‘ˆ Žƒ”‹Ȍ 2008 2009 2010 2011 2012 Actual Actual Actual Actual Budget Total Increase in NonǦFinancial Assets ͺͻ͵ǤͶ ͻͲ͹Ǥͳ ͳǡͲʹͲǤ͵ ͳǡͲ͵ͻǤͳ ͺͳʹǤͲ Total Value of Named Projects in Budget# ͵ͺʹǤͶ ͳǡʹͲͳǤͲ ͳǡʹ͸ʹǤͳ ͳǡ͸ʹͲǤͻ Â?Ȁƒ 2011 & 2012 Capital Budget Annex* Â?Ȁƒ Â?Ȁƒ ͺ͹ͷǤͷ ͳǡͲͶͻǤͻ ͳǡ͵ͲʹǤͲ SourceÇ£ ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• Í“ Â?…Ž—†‡• …ƒ’‹–ƒŽ ’”‘Œ‡…–• …‘Â?–”‹„—–‹Â?‰ –‘ ‹Â?…”‡ƒ•‹Â?‰ ȋ…‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?–Ȍ Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ƒÂ?† ‘–Š‡”• –Šƒ– †‘ Â?‘–Ǥ È— ‹Â?‹•–”‹‡• ‘ˆ Â?ˆ”ƒ•–”—…–—”‡ ƒÂ?† Â?‡”‰› ‘Â?Ž› ‹Â? ʹͲͳͳǤ ʹͲͳͲ ˆ‹‰—”‡ ‹• ’ŽƒÂ?Â?‡† ‡š’‡Â?†‹–—”‡Ǥ ʹͲͳͳ ˆ‹‰—”‡ ‹• ‘”‹‰‹Â?ƒŽ „—†‰‡–Ǥ ͶǤͳͺǤ The difficulty in reconciling the different sources of information on public investments is illustrated in Box 4.2. Š‹• ’”‡•‡Â?–• ƒÂ? ƒ’’”‘š‹Â?ƒ–‡ ‡•–‹Â?ƒ–‡ ‘ˆ –‘–ƒŽ •–ƒ–‡ „—†‰‡–Ǧˆ—Â?†‡† …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ƒÂ?† ‹–• ˆ—Â?…–‹‘Â?ƒŽ …‘Â?’‘•‹–‹‘Â? „ƒ•‡† ‘Â? ƒÂ? ƒÂ?ƒŽ‰ƒÂ?ƒ–‹‘Â? ‘ˆ ‡š‡…—–‹‘Â? †ƒ–ƒ ˆ‘” ‡š’‡Â?†‹–—”‡ ‘Â? ‹Â?…”‡ƒ•‡• ‹Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ȋ•‘—”…‡ ‹Ǥ ƒ„‘˜‡Ȍ ƒÂ?† ˆ‘” …ƒ’‹–ƒŽ ’”‘Œ‡…–• Â?‘– …Žƒ••‹ˆ‹‡† ĥ ƒ††‹Â?‰ –‘ …‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?–ǯ• Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ȋƒ •—„•‡– ‘ˆ ‹‹Ǥ ƒ„‘˜‡ȌǤ Š‡ ˆ‹‰—”‡• •—‰‰‡•– –Šƒ– –‘–ƒŽ ’—„Ž‹… …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ Šƒ• ‡š…‡‡†‡† –Š‡ ‹Â?…”‡ƒ•‡ ‹Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• „› ƒ •‹‰Â?‹ˆ‹…ƒÂ?– Â?ƒ”‰‹Â?Ç¡ „‡…ƒ—•‡ ‘ˆ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ˆ—Â?†‡† –Š”‘—‰Š …ƒ’‹–ƒŽ –”ƒÂ?•ˆ‡”• ƒÂ?† ƒ…“—‹•‹–‹‘Â? ‘ˆ ˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–•Ǥ – ƒŽ•‘ •Š‘™• –Šƒ– –ƒÂ?‹Â?‰ ƒ……‘—Â?– ‘ˆ –Š‹• …‘Â?’‘Â?‡Â?– ‘ˆ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ •‹‰Â?‹ˆ‹…ƒÂ?–Ž› ƒŽ–‡”• –Š‡ ‘˜‡”ƒŽŽ ˆ—Â?…–‹‘Â?ƒŽ …‘Â?’‘•‹–‹‘Â?Ǥ ͸͸ Box 4.2: A More Comprehensive Estimate of State BudgetǦFunded Capital Expenditure Š‡ ˆ‹‰—”‡• ‘Â? –Š‡ Ž‡ˆ– ŠƒŽˆ ‘ˆ –Š‡ –ƒ„Ž‡ „‡Ž‘™ ‰‹˜‡ –Š‡ ˆ—Â?…–‹‘Â?ƒŽ „”‡ƒÂ?†‘™Â? ‘ˆ ‹Â?…”‡ƒ•‡ ‹Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ĥ ”‡…‘”†‡† ‹Â? „—†‰‡– ‡š‡…—–‹‘Â? †ƒ–ƒ ˆ‘” ʹͲͲͻǦʹͲͳͳǤ Š‡•‡ ˆ‹‰—”‡• ‹Â?…Ž—†‡ „‘–Š ’”‘Œ‡…– ƒÂ?† Â?‘Â?Ǧ ’”‘Œ‡…– ‡š’‡Â?†‹–—”‡•Ǥ ’‡…‹ˆ‹… ’”‘Œ‡…–• ƒÂ?† ”‡Žƒ–‡† ƒÂ?Â?—ƒŽ ‡š’‡Â?†‹–—”‡• ƒ”‡ Ž‹•–‡† ‹Â? –Š‡ ƒÂ?Â?—ƒŽ „—†‰‡– ĥ ƒ Ž‡˜‡Ž ™‹–Š‹Â? –Š‡ ‘”‰ƒÂ?‹œƒ–‹‘Â?ƒŽ …Žƒ••‹ˆ‹…ƒ–‹‘Â?Ǥ ”‘Â? –Š‡•‡ Ž‹•–‹Â?‰• ƒÂ?† „› …”‘••Ǧ–ƒ„—Žƒ–‹Â?‰ ƒ‰ƒ‹Â?•– ‡š’‡Â?†‹–—”‡ ‘Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–•ǡ ‹– ‹• ’‘••‹„Ž‡ –‘ ‹†‡Â?–‹ˆ› –Š‘•‡ ’”‘Œ‡…–• –Šƒ– ™‹ŽŽ Â?‘– Šƒ˜‡ „‡‡Â? …‘—Â?–‡† ĥ ƒ††‹Â?‰ –‘ –Š‡ …‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?–ǯ• Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–•Ǥ ‘Â?„‹Â?‹Â?‰ ‡š’‡Â?†‹–—”‡• ˆ‘” –Š‡•‡ ’”‘Œ‡…–• ™‹–Š –Š‡ ˜ƒŽ—‡• –Šƒ– ˆ‘”Â? –Š‡ „ƒ•‹• ˆ‘” –Š‡ ˆ‹‰—”‡• ‹Â? –Š‡ Ž‡ˆ– ŠƒŽˆ ‘ˆ –Š‡ –ƒ„Ž‡ „‡Ž‘™ǡ ›‹‡Ž†• ƒÂ? ‡•–‹Â?ƒ–‡ ‘ˆ –‘–ƒŽ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ˆ—Â?†‡† –Š”‘—‰Š –Š‡ –ƒ–‡ —†‰‡–Ǥ Š‡•‡ ‡•–‹Â?ƒ–‡• ƒ”‡ ‰‹˜‡Â? ‹Â? –Š‡ ”‹‰Š– ŠƒŽˆ ‘ˆ –Š‡ –ƒ„Ž‡ –‘‰‡–Š‡” ™‹–Š –Š‡ ˆ—Â?…–‹‘Â?ƒŽ „”‡ƒÂ?†‘™Â?Ǥ Table 1: Estimates of Total Capital Expenditure and its Functional Distribution ȋ‹Â? ’‡”…‡Â?– ‘ˆ Ç¡ ‡š…‡’– ™Š‡”‡ Â?‘–‡†Ȍ Increase in NonǦFinancial Estimated Total Capital Assets Expenditure Function 2009 2010 2011 2009 2010 2011 Actual Actual Actual Actual Actual Actual ‡Â?‡”ƒŽ ’—„Ž‹… •‡”˜‹…‡• ͻǤʹ ͳͳǤ͹ ͻǤͻ ͸Ǥͺ ͺǤ͸ ͸Ǥͻ ‡ˆ‡Â?•‡ ͳͷǤͻ ͻǤʹ ͸ǤͶ ͳͳǤͺ ͸Ǥͺ ͶǤͷ —„Ž‹… ‘”†‡” ƒÂ?† •ƒˆ‡–› ͳͻǤͻ ͳ͵Ǥͳ ͻǤ͵ ͳͶǤͺ ͻǤ͹ ͸Ǥͷ …‘Â?‘Â?‹… ƒˆˆƒ‹”• Ͷ͵Ǥͳ ͷͷǤͲ ͸ͲǤ͵ Ͷ͵Ǥ͵ ͸ͲǤʹ ͸ͲǤͻ of which Transport (mainly Roads) 36.9 45.6 46.5 ʹͺǤͷ ͵ͶǤ͹ ͵ͶǤͺ Energy 0.1 0.5 1.3 ͷǤ͸ ͳ͵Ǥ͹ ͳͷǤ͸ Other 6.1 8.9 12.5 ͻǤͳ ͳͳǤͶ ͳͲǤ͸ Â?˜‹”‘Â?Â?‡Â?–ƒŽ ’”‘–‡…–‹‘Â? ͳǤ͵ ͲǤʹ ͳǤͲ ͲǤͻ ͲǤͳ ͲǤ͹ ‘—•‹Â?‰ ƒÂ?† …‘Â?Â?—Â?‹–› ƒÂ?‡Â?‹–‹‡• ͲǤͳ ͲǤͲ ͲǤͲ ͳͶǤͶ ͸Ǥ͸ ͳͳǤ͵ ‡ƒŽ–Š ʹǤͲ ͶǤ͵ ͷǤͲ ͳǤͷ ͵Ǥʹ ͵Ǥͷ ‡…”‡ƒ–‹‘Â?Ç¡ …—Ž–—”‡ ƒÂ?† ”‡Ž‹‰‹‘Â? ʹǤͺ ʹǤͶ ͳǤ͵ ʹǤͳ ͳǤͺ ͲǤͻ †—…ƒ–‹‘Â? ͵Ǥͳ ͵Ǥͷ ͸Ǥͷ ʹǤ͵ ʹǤ͸ ͶǤͷ ‘…‹ƒŽ ”‘–‡…–‹‘Â? ʹǤ͹ ͲǤ͹ ͲǤͶ ʹǤͲ ͲǤͷ ͲǤ͵ Total 100.0 100.0 100.0 100.0 100.0 100.0 Total (GEL million) 907.1 1,020.3 1,039.1 1219.8 1382.9 1483.8 SourceÇ£ ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• Š‡•‡ ƒ”‡ ƒ’’”‘š‹Â?ƒ–‡ ‡•–‹Â?ƒ–‡• ‘Â?Ž› „‡…ƒ—•‡ •‘Â?‡ ’”‘Œ‡…–• ™‹ŽŽ ’”‘„ƒ„Ž› Šƒ˜‡ „‡‡Â? Â?‹••‡† ƒÂ?† „‡…ƒ—•‡ •‘Â?‡ ’”‘Œ‡…– …‘•–• ‹Â?…Ž—†‡ ‡Ž‡Â?‡Â?–• ‘ˆ Ç®Â?‘Â?Ǧ…ƒ’‹–ƒŽǯ ‡š’‡Â?†‹–—”‡•Ǥ Š‡ ˆ‹‰—”‡• ƒ”‡ Â?‡˜‡”–Š‡Ž‡•• ”‡˜‡ƒŽ‹Â?‰Ǥ Š‡› •Š‘™ –Šƒ– …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ‹• •‹‰Â?‹ˆ‹…ƒÂ?–Ž› Š‹‰Š‡” –ŠƒÂ? ‹• ‹Â?†‹…ƒ–‡† „› Ž‘‘Â?‹Â?‰ ƒ– –Š‡ ˆ‹‰—”‡ ˆ‘” ‹Â?…”‡ƒ•‡ ‹Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ƒŽ‘Â?‡ǡ „› ‘˜‡” ͶͲΨ ‹Â? ʹͲͳͳǤ Š‡› ƒŽ•‘ •Š‘™ –Šƒ– –Š‡ ˆ—Â?…–‹‘Â?ƒŽ „”‡ƒÂ?†‘™Â? ‘ˆ ‡š’‡Â?†‹–—”‡ ‹• „ƒ†Ž› †‹•–‘”–‡† „› Ž‘‘Â?‹Â?‰ Â?ƒ””‘™Ž› ƒ– –Š‡ ‹Â?…”‡ƒ•‡ ‹Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–•ǣ ‹Â? –Š‡ „‹‰‰‡” ’‹…–—”‡ǡ Â?‡”‰› ƒÂ?† ‘—•‹Â?‰ Ƭ ‘Â?Â?—Â?‹–› ˆˆƒ‹”• ȋ™Š‹…Š ‹Â?…Ž—†‡• ™ƒ–‡” •—’’Ž›Ȍ ƒ”‡ Â?—…Š Â?‘”‡ ‹Â?’‘”–ƒÂ?–ǡ ”‡’”‡•‡Â?–‹Â?‰ ͳ͸Ψ ƒÂ?† ͳͳΨ ‘ˆ –‘–ƒŽ •’‡Â?†‹Â?‰ ‹Â? ʹͲͳͳǡ …‘Â?’ƒ”‡† –‘ ƒ Â?‡‰Ž‹‰‹„Ž‡ ͸͹ ͶǤͳͻǤ Specific options to extend coverage and improve the financial information in the capital budget include the followingÇ£ x Â?•—”‡ …‘Â?’”‡Š‡Â?•‹˜‡ …‘˜‡”ƒ‰‡ ‘ˆ ƒŽŽ …ƒ’‹–ƒŽ ’”‘Œ‡…–• ˆ—Â?†‡† –Š”‘—‰Š –Š‡ •–ƒ–‡ „—†‰‡–ǡ ”‡‰ƒ”†Ž‡•• ‘ˆ ™Š‡–Š‡” –Š‡› …‘Â?–”‹„—–‡ –‘ Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ‘ˆ –Š‡ …‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?–ǡ Ž‘…ƒŽ ‰‘˜‡”Â?Â?‡Â?–•ǡ  •ǡ ‘”  • ƒÂ?† ”‡‰ƒ”†Ž‡•• ‘ˆ ™Š‡–Š‡” –Š‡› ƒ”‡ ˆ‘”‡‹‰Â?Ǧˆ‹Â?ƒÂ?…‡† ‘” †‘Â?‡•–‹…ƒŽŽ› ˆ‹Â?ƒÂ?…‡†Ǥ Š‡”‡ Šƒ• „‡‡Â? •‘Â?‡ ’”‘‰”‡•• ƒŽ‘Â?‰ –Š‹• †‹Â?‡Â?•‹‘Â? ‹Â? –Š‡ ʹͲͳʹ …ƒ’‹–ƒŽ „—†‰‡–Ǥ x ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‘Â? ’”‘Œ‡…–• •Š‘—Ž† ‹Â?…Ž—†‡ ‘”‰ƒÂ?‹œƒ–‹‘Â?ƒŽ ƒÂ?† ˆ—Â?…–‹‘Â?ƒŽ …Žƒ••‹ˆ‹…ƒ–‹‘Â? ƒÂ?† †‹•–‹Â?‰—‹•Š „‡–™‡‡Â? ‘Â?‰‘‹Â?‰ ƒÂ?† Â?‡™ ’”‘Œ‡…–•ǡ ™‹–Š •—„–‘–ƒŽ• ˆ‘” „‘–Š …ƒ•‡•Ǥ Š‡ …ƒ’‹–ƒŽ „—†‰‡– ƒÂ?Â?‡š †‘‡• Â?‘– ‹†‡Â?–‹ˆ› ‡š’Ž‹…‹–Ž› –Š‡ ‘”‰ƒÂ?‹œƒ–‹‘Â?• ”‡•’‘Â?•‹„Ž‡ ˆ‘” ’”‘Œ‡…–• ƒÂ?† Â?ƒÂ?‡• Â?‘ †‹•–‹Â?…–‹‘Â? „‡–™‡‡Â? …‘Â?–‹Â?—‹Â?‰ ’”‘Œ‡…–• ƒÂ?† Â?‡™ ’”‘Œ‡…–• –‘ •–ƒ”– ‹Â? –Š‡ ˆ‘”–Š…‘Â?‹Â?‰ „—†‰‡– ›‡ƒ”Ǥ͹ǡͺ ˆ—Â?…–‹‘Â?ƒŽ „”‡ƒÂ?†‘™Â? ‘ˆ –‘–ƒŽ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ˆ—Â?†‡† –Š”‘—‰Š –Š‡ •–ƒ–‡ „—†‰‡– •Š‘—Ž† ƒŽ•‘ „‡ ’”‘˜‹†‡†Ǥ x Š‡ ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?ˆ‘”Â?ƒ–‹‘Â? •Š‘—Ž† †‡Â?‘Â?•–”ƒ–‡ …‘Â?•‹•–‡Â?…› „‡–™‡‡Â? –Š‡ ˆ‹‰—”‡• ‹Â? –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ™‹–Š –Š‘•‡ ‹Â? –Š‡ Â?ƒ‹Â? „—†‰‡–ǡ ’”‘‰”ƒÂ? „—†‰‡–ǡ ƒÂ?† Ǥ Š‹• …ƒÂ? „‡ †‘Â?‡ –Š”‘—‰Š ƒ •‡– ‘ˆ …”‘••Ǧ–ƒ„—Žƒ–‹‘Â?• –Šƒ– Â?ƒÂ?‡ ‹– ’‘••‹„Ž‡ ˆ‘” †‡…‹•‹‘Â?ǦÂ?ƒÂ?‡”• ƒÂ?† –Š‡ ’—„Ž‹… –‘ ”‡…‘Â?…‹Ž‡ –Š‡ ˆ‹‰—”‡• ˆ”‘Â? –Š‡ †‹ˆˆ‡”‡Â?– •‘—”…‡• ‹Â? ƒ —•‡”Ǧˆ”‹‡Â?†Ž› ™ƒ›Ǥ Š‹• ™‹ŽŽ Â?‡ƒÂ? †‹•–‹Â?‰—‹•Š‹Â?‰ Â?ƒŒ‘” ’”‘Œ‡…–• –Šƒ– …‘Â?–”‹„—–‡ –‘ ‹Â?…”‡ƒ•‡ ‹Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ˆ”‘Â? –Š‘•‡ –Šƒ– †‘ Â?‘–Ǣ †‹•–‹Â?‰—‹•Š‹Â?‰ ’”‘Œ‡…– …‘•–• –Šƒ– ƒ”‡ …Žƒ••‹ˆ‹‡† ĥ …‘Â?–”‹„—–‹Â?‰ –‘ ‹Â?…”‡ƒ•‡ ‹Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ˆ”‘Â? –Š‘•‡ –Šƒ– ƒ”‡ Â?‘–Ǣ ’”‘˜‹†‹Â?‰ ƒ‰‰”‡‰ƒ–‡ ˆ‹‰—”‡• ‘Â? Â?‘Â?Ǧ’”‘Œ‡…– ‡š’‡Â?†‹–—”‡ ‘Â? ‹Â?…”‡ƒ•‹Â?‰ ‹Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–•Ǣ ƒÂ?† Â?ƒ’’‹Â?‰ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ƒ‰ƒ‹Â?•– –Š‡ ’”‘‰”ƒÂ?• —•‡† ‹Â? –Š‡ ’”‘‰”ƒÂ? „—†‰‡– —•‹Â?‰ ƒ —Â?‹ˆ‹‡† …Žƒ••‹ˆ‹…ƒ–‹‘Â?Ǥ ͶǤʹͲǤ The definitions of capital expenditures can be tightened further. ‹”•–ǡ –Š‡ treatment of supervision and project management costs is inconsistentǤ Š‡•‡ …‘•–• ƒ”‡ —•—ƒŽŽ› …ƒ’‹–ƒŽ‹œ‡† ƒÂ?† ‹Â?…Ž—†‡† ‹Â? ƒ••‡– ˜ƒŽ—‡• ƒÂ?† –Š‹• •Š‘—Ž† „‡ …Žƒ”‹ˆ‹‡†Ǥ ‡…‘Â?†ǡ ™Š‹Ž‡ –Š‡ „—†‰‡– ‹Â?•–”—…–‹‘Â?• †‹•–‹Â?‰—‹•Š „‡–™‡‡Â? ”‡Šƒ„‹Ž‹–ƒ–‹‘Â?Ç¡ ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ǡ ƒÂ?† ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ǡ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ‹• •–‹ŽŽ Â?‘– …Ž‡ƒ” ‘Â? –Š‹• †‹•–‹Â?…–‹‘Â?Ç¡ ™‹–Š –Š‡ ʹͲͳʹ …ƒ’‹–ƒŽ „—†‰‡– ‹Â?…Ž—†‹Â?‰ ƒ ’”‘Œ‡…– ‘Â? Ǯ”‘ƒ† ”‡…—””‡Â?– Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒÂ?† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â?ǯǤ Š‹”†ǡ ‰”‡ƒ–‡” …‘Â?•‹•–‡Â?…› ‹Â? †‡–‡”Â?‹Â?‹Â?‰ ™Š‡–Š‡” ‘” Â?‘– ƒ …ƒ’‹–ƒŽ ’”‘Œ‡…– ™‹ŽŽ …‘Â?–”‹„—–‡ –‘ …‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?– Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• Â?ƒ› „‡ ”‡“—‹”‡†ǡ ‡Ǥ‰Ǥǡ ™‹–Š ”‡•’‡…– –‘ ™ƒ–‡” •—’’Ž› ’”‘Œ‡…–•ǡ •‘Â?‡ ƒ”‡ ”‡…‘”†‡† ĥ ƒ††‹Â?‰ –‘ •–ƒ–‡ Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ™Š‹Ž‡ ‘–Š‡”• ƒ”‡ Â?‘–Ǥ ͶǤʹͳǤ The project nonǦfinancial information in the capital budget remains too general, limited, and uneven, and falls short of justifying why projects provide the best valueǦforǦ money and fit to strategic priorities. Š‹• †‘‡• Â?‘– ’”‘˜‹†‡ ƒÂ? ƒ†‡“—ƒ–‡ „ƒ•‹• ˆ‘” ‹Â?ˆ‘”Â?‡† †‡…‹•‹‘Â?ǦÂ?ƒÂ?‹Â?‰ ƒ– „—†‰‡– –‹Â?‡ ƒÂ?† ˆ‘” Â?‘Â?‹–‘”‹Â?‰ ƒÂ?† ‡˜ƒŽ—ƒ–‹‘Â?Ǥ Â? ’”‡•‡Â?–‹Â?‰ –Š‡ ”ƒ–‹‘Â?ƒŽ‡ ˆ‘” ƒ ’”‘Œ‡…–ǡ –Š‡ ˆƒ…‹Ž‹–‹‡• …”‡ƒ–‡† ƒ”‡ ‘ˆ–‡Â? ’”‡•‡Â?–‡† ĥ ƒÂ? ‡Â?† ‹Â? –Š‡Â?•‡Ž˜‡• ƒÂ?† –Š‡ Š‹‰Š‡” ‘”†‡” ‘„Œ‡…–‹˜‡ ”‡Žƒ–‹Â?‰ –‘ ‹Â?’”‘˜‡† ’—„Ž‹… •‡”˜‹…‡ †‡Ž‹˜‡”› ‘ˆ–‡Â? ‹‰Â?‘”‡†Ǥ Ž–Š‘—‰Š ƒ…–‹˜‹–‹‡• ƒÂ?† ‘—–’—–• ƒ”‡ ˆ”‡“—‡Â?–Ž› Â?‡Â?–‹‘Â?‡†ǡ –Š‡•‡ ƒ”‡ Â?‘– ‘ˆ–‡Â? “—ƒÂ?–‹ˆ‹‡† ‘” ‰‹˜‡Â? †ƒ–‡• „› ™Š‹…Š –Š‡› ™‹ŽŽ „‡ ƒ…Š‹‡˜‡†Ǥ Š‡ †‡•…”‹’–‹‘Â?• ˆ‘” –™‘ ’”‘Œ‡…–• ˆ”‘Â? –Š‡ ʹͲͳʹ …ƒ’‹–ƒŽ „—†‰‡–ǡ –Š‡ ˆ‹”•– Â?—…Š „‡––‡” –ŠƒÂ? –Š‡ •‡…‘Â?†ǡ ‹ŽŽ—•–”ƒ–‡ –Š‡•‡ ‹••—‡•ǣ ͹ – ‹• ‘ˆ …‘—”•‡ ’‘••‹„Ž‡ –‘ ‹†‡Â?–‹ˆ› ‘Â?‰‘‹Â?‰ ƒÂ?† Â?‡™ ’”‘Œ‡…–•ǣ Â?‡™ ’”‘Œ‡…–• •Š‘™ Â?‘ ‡š’‡Â?†‹–—”‡• ‹Â? ›‡ƒ”• ’”‡…‡†‹Â?‰ –Š‡ „—†‰‡– ›‡ƒ”Ǥ – ‹•ǡ Š‘™‡˜‡”ǡ ‹Â?’‘”–ƒÂ?– ˆ‘” –Š‹• †‹•–‹Â?…–‹‘Â? –‘ „‡ ‡š’Ž‹…‹– ƒÂ?† ˆ‘” –Š‡ •—„Ǧ–‘–ƒŽ• –‘ „‡ ’”‡•‡Â?–‡† •‘ –Šƒ– „ƒ•‡ǦŽ‹Â?‡ ‡š’‡Â?†‹–—”‡ …ƒÂ? „‡ †‹•–‹Â?‰—‹•Š‡† ˆ”‘Â? Â?‡™ ‹Â?‹–‹ƒ–‹˜‡ •’‡Â?†‹Â?‰ ™‹–Š‹Â? –Š‡ ƒ˜ƒ‹Žƒ„Ž‡ ˆ‹•…ƒŽ •’ƒ…‡Ǥ ͺ ‹–Š ”‡•’‡…– –‘ Â?‡™ ’”‘Œ‡…–•ǡ –Š‡ Â?‡–Š‘†‘Ž‘‰› •Š‘—Ž† Â?ƒÂ?‡ …Ž‡ƒ” –Šƒ– –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ‘Â?Ž› ‹Â?…Ž—†‡• Â?‡™ ’”‘Œ‡…–• •–ƒ”–‹Â?‰ ‹Â? –Š‡ ”‡Ž‡˜ƒÂ?– „—†‰‡– ›‡ƒ” ȋƒÂ?† Â?‘– ’”‘Œ‡…–• •–ƒ”–‹Â?‰ ‹Â? ‘—–‡” ›‡ƒ”• ‘ˆ –Š‡ Â?‡†‹—Â?Ǧ–‡”Â? ’‡”•’‡…–‹˜‡ǡ ™Š‹…Š •Š‘—Ž† „‡ …‘˜‡”‡† ‹Â? –Š‡ ȌǤ Š‡ ʹͲͳʹ …ƒ’‹–ƒŽ „—†‰‡– ‹• …‘Â?•‹•–‡Â?– ™‹–Š –Š‹• ƒ’’”‘ƒ…ŠǤ ͸ͺ x Construction of Medical Facilities for Inmates with Tuberculosis To improve living conditions for inmates and avoid overcrowding the prison facilities, Government plans to build new establishments. The new medical facility No19, for medical treatment of inmates with TB will be built by the end of year 2012 to establish penitentiary system in accordance with international standards. The project took off in 2010. To implement the project successfully, in 2010–2011, 7,933.00 million GEL has been allocated. In new, five story building, each inmate will be provided with 8sq.m living space. The building will be equipped with ventilation system and ultraviolet lights. Furthermore, reconstruction of facility yard, as well as expansion of kitchen and dining areas, and reinforcement of safety dams is also planned. Overall, in 2012, 9,000.00 million GEL has been allocated for these refurbishments. x EastǦWest Transit Highway IV The project involves construction and rehabilitation of TbilisiǦSenakiǦLeselidze highway of 96Ǧ143 km section. The project is financed by the World Bank on basis of credit and the total estimated cost is 256 million GEL. WB contribution totaling 196 million GEL, while Georgia’s contribution is – 60 million GEL. The scheme intends reconstruction and replenishment of TbilisiǦSenakiǦLeselidze highway of RuisiǦ Rikoti for the 48km section. Appliance of concrete surface, laying aggregate concrete blocks, installation of safety barriers, building gabions, introducing New Jersey style concrete barriers and concrete cuvettes, placement of traffic signs will be carried out. In addition, top layers of the roads will be covered and drain pipe system works will be arranged on road conjunctions and local roads. ͶǤʹʹǤ Specific options to deepen the nonǦfinancial information on projects in the capital budget include the following: x Žƒ„‘”ƒ–‡ ‘Â? •–”ƒ–‡‰‹… ˆ‹–ǡ ˜ƒŽ—‡ ˆ‘” Â?‘Â?‡›ǡ ƒÂ?† •—•–ƒ‹Â?ƒ„‹Ž‹–› ‘ˆ Â?ƒŒ‘” ’”‘Œ‡…–•Ǥ Š‹• •Š‘—Ž† ‹Â?…Ž—†‡ǣ ’”‘Œ‡…– …‘Â?–”‹„—–‹‘Â? –‘ ƒ…Š‹‡˜‹Â?‰ •–ƒ–‡† ’‘Ž‹…› ‘„Œ‡…–‹˜‡• ȋ”ƒ–Š‡” –ŠƒÂ? „”‘ƒ† Ǯ’”‹‘”‹–› ƒ”‡ƒ•ǯ ĥ ‹• ’”‡•‡Â?–Ž› †‘Â?‡Ȍ ‹Â? –Š‡ ƒÂ?† ’”‘‰”ƒÂ? „—†‰‡–•Ǣ …ƒ’ƒ…‹–‹‡• ‘ˆ –Š‡ ‹Â?ˆ”ƒ•–”—…–—”‡ „‡‹Â?‰ ‰‡Â?‡”ƒ–‡†Ǣ •—Â?Â?ƒ”› ”‡•—Ž–• ‘ˆ …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‡• ‹Â?…Ž—†‹Â?‰ …—””‡Â?– ƒÂ?† ˆ‘”‡…ƒ•– †‡Â?ƒÂ?†ǡ –Š‡ ‡…‘Â?‘Â?‹… ”ƒ–‡• ‘ˆ ”‡–—”Â? ȋ‡Ǥ‰Ǥ ‹Â? –Š‡ …ƒ•‡ ‘ˆ –Š‡ ”‘ƒ† ’”‘Œ‡…–ȌǢ …‘Â?…Ž—•‹‘Â?• ‘ˆ ƒÂ?› ‹Â?’ƒ…– ƒ••‡••Â?‡Â?–• ȋ‡Ǥ‰Ǥǡ ‡Â?˜‹”‘Â?Â?‡Â?–ƒŽ ‘” •‘…‹ƒŽȌǢ ƒÂ?† ‡•–‹Â?ƒ–‡† ˆ—–—”‡ ”‡…—””‡Â?– …‘•– ‘„Ž‹‰ƒ–‹‘Â?•Ǥ – ‹• Â?‘– „‡ Â?‡…‡••ƒ”› –‘ ‰‘ –‘ –Š‡ •ƒÂ?‡ Ž‡˜‡Ž ‘ˆ †‡–ƒ‹Ž ˆ‘” •Â?ƒŽŽ‡” ’”‘Œ‡…–•Ǥ x Â?–”‘†—…‹Â?‰ ƒ Â?‘”‡ •–”—…–—”‡† Š‹‡”ƒ”…Š› ‘ˆ ’‡”ˆ‘”Â?ƒÂ?…‡ –‡”Â?‹Â?‘Ž‘‰› ™‹–Š …Ž‡ƒ” †‡ˆ‹Â?‹–‹‘Â?• …‘—Ž† „‡ Š‡Ž’ˆ—ŽǤ Ž‘‰‹…ƒŽ ˆ”ƒÂ?‡™‘”Â? ƒ’’”‘ƒ…Š –Šƒ– —•‡• –Š‡ ˆ‘ŽŽ‘™‹Â?‰ –‡”Â?•ǡ …‘—Ž† „‡ ƒ’’Ž‹‡† ‹Â? –Š‡ …ƒ•‡ ‘ˆ ‡‘”‰‹ƒǣ • ‘ƒŽǣ Š‹‰Š‡” Ž‡˜‡Ž •–”ƒ–‡‰‹… ‘„Œ‡…–‹˜‡ –‘ ™Š‹…Š –Š‡ ’”‘Œ‡…– …‘Â?–”‹„—–‡• • —”’‘•‡ǣ •—Â?Â?ƒ”› ’”‘Œ‡…– ‹Â?’ƒ…–ǡ —•—ƒŽŽ› ‡š’”‡••‡† ‹Â? –‡”Â?• ‘ˆ „‡Â?‡ˆ‹–• ȋ•‡”˜‹…‡•Ȍ ˆ‘” –Š‡ –ƒ”‰‡– ‰”‘—’Ǥ • ”‘Œ‡…– ‘—–’—–•Ȁ”‡•—Ž–•ǣ ’‡…‹ˆ‹… ‘—–’—–• ˆ‘” ™Š‹…Š ’”‘Œ‡…– Â?ƒÂ?ƒ‰‡Â?‡Â?– …ƒÂ? „‡ Š‡Ž† †‹”‡…–Ž› ƒ……‘—Â?–ƒ„Ž‡ǡ •—…Š ĥ –Š‡ •’‡…‹ˆ‹… ‹Â?ˆ”ƒ•–”—…–—”‡ ˆƒ…‹Ž‹–‹‡• …”‡ƒ–‡†Ǥ • …–‹˜‹–‹‡•ǣ …–‹‘Â?• –‘ „‡ —Â?†‡”–ƒÂ?‡Â? –‘ †‡Ž‹˜‡” –Š‡ ‘—–’—–•Ȁ”‡•—Ž–•Ǥ Š‡ Â?‡™ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ Â?‡–Š‘†‘Ž‘‰› †‘‡• Â?‘– Â?ƒÂ?‡ ƒ …Ž‡ƒ” ‡Â?‘—‰Š †‹•–‹Â?…–‹‘Â? „‡–™‡‡Â? ’”‘Œ‡…– ‘—–’—–•ǡ ’—”’‘•‡ ƒÂ?† ‰‘ƒŽǡ –Š—• Â?ƒÂ?‹Â?‰ ‹– †‹ˆˆ‹…—Ž– –‘ —Â?†‡”•–ƒÂ?† –Š‡ ’”‘Œ‡…– ”ƒ–‹‘Â?ƒŽ‡ ƒÂ?† –‘ Â?‘Â?‹–‘” ƒ…Š‹‡˜‡Â?‡Â?–•Ǥ Š‡ Â?‡–Š‘†‘Ž‘‰› ƒŽ•‘ǡ Â?‹•–ƒÂ?‡Â?Ž›ǡ †‹•Â?‹••‡• –Š‡ Â?‡‡† ˆ‘” ’‡”ˆ‘”Â?ƒÂ?…‡ ‹Â?†‹…ƒ–‘”• ˆ‘” ’”‘Œ‡…–• „‡Ž‹‡˜‹Â?‰ –Šƒ– –Š‡•‡ ™‹ŽŽ „‡ …ƒ’–—”‡† ƒ– –Š‡ ’”‘‰”ƒÂ? ‘” •—„Ǧ’”‘‰”ƒÂ? Ž‡˜‡Ž ‘ˆ –Š‡ ’”‘‰”ƒÂ? „—†‰‡–Ǥ Š‹Ž‡ ‹– ‹• –”—‡ –Šƒ– ’”‘Œ‡…–• •Š‘—Ž† ͸ͻ …‘Â?–”‹„—–‡ –‘ ƒ…Š‹‡˜‹Â?‰ ‹Â?†‹…ƒ–‘”• ƒ– –Š‡ ’”‘‰”ƒÂ?Ȁ•—„Ǧ’”‘‰”ƒÂ? Ž‡˜‡Žǡ ˆ‹Â?‡” ‹Â?†‹…ƒ–‘”• ƒ”‡ —•—ƒŽŽ› ”‡“—‹”‡† ƒ– –Š‡ Ž‡˜‡Ž ‘ˆ ’”‘Œ‡…– ƒ…–‹˜‹–‹‡•ǡ ‘—–’—–• ƒÂ?† ’—”’‘•‡Ǥ ͶǤʹ͵Ǥ Monitoring and reporting of the capital budget along financial and physical dimensions should take place in a regular and systematic manner. ‡’‘”–‹Â?‰ •Š‘—Ž† –ƒÂ?‡ ’Žƒ…‡ ƒ– Â?‡› ’‘‹Â?–• ‹Â? –Š‡ „—†‰‡– ’”‡’ƒ”ƒ–‹‘Â? ƒÂ?† †‡…‹•‹‘Â?ǦÂ?ƒÂ?‹Â?‰ …›…Ž‡ Ǧ ƒÂ?† Â?‘– Œ—•– ƒ– –Š‡ ›‡ƒ”Ǧ ‡Â?† Ǧ •‘ –Šƒ– ‹Â?ˆ‘”Â?‡† †‡…‹•‹‘Â?• …ƒÂ? „‡ –ƒÂ?‡Â?Ǥ ’‡Â?†‹Â?‰ ƒ‰‡Â?…‹‡• •Š‘—Ž† ”‡’‘”– ’”‘‰”‡•• ƒ‰ƒ‹Â?•– …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ’ŽƒÂ?• ‹Â? ‘”†‡” –‘ ‹Â?ˆ‘”Â? „—†‰‡– ’”‡’ƒ”ƒ–‹‘Â?Ǥ ‘Â?‹–‘”‹Â?‰ •Š‘—Ž† „‡ ”‡“—‹”‡† ™‹–Š‹Â? ›‡ƒ” –‘ ‹†‡Â?–‹ˆ› ’”‘„Ž‡Â?• ‡ƒ”Ž› ‘Â? ƒÂ?† ‹Â?’Ž‡Â?‡Â?– –‹Â?‡Ž› ”‡•’‘Â?•‡•Ǥ —†‰‡– ’”‡’ƒ”ƒ–‹‘Â? ‹• ƒ –‹Â?‡ ˆ‘” •–‘…Â? –ƒÂ?‹Â?‰ǡ ™Š‡Â? –Š‡ ˆ‹Â?†‹Â?‰• ˆ”‘Â? Â?‘Â?‹–‘”‹Â?‰ –‘‰‡–Š‡” ™‹–Š —’†ƒ–‡† ˆ‘”‡…ƒ•–• ‘ˆ ‡š’‡Â?†‹–—”‡• …ƒÂ? „‡ —•‡† –‘ ‹Â?ˆ‘”Â? ”‡•‘—”…‡ ƒŽŽ‘…ƒ–‹‘Â? †‡…‹•‹‘Â?•Ǥ Š‡ ”‡’‘”–‹Â?‰ •Š‘—Ž† ‹Â?†‹…ƒ–‡ †‹ˆˆ‡”‡Â?…‡• „‡–™‡‡Â? –Š‡ ’ŽƒÂ?Â?‡† ƒÂ?† ƒ…–—ƒŽ ‡š’‡Â?†‹–—”‡•ǡ ‡š’Žƒ‹Â? ƒÂ?› †‡˜‹ƒ–‹‘Â?•ǡ ƒÂ?† ƒ••‡•• –Š‡ ‹Â?’Ž‹…ƒ–‹‘Â?• ˆ‘” –Š‡ ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ’”‘ˆ‹Ž‡ ƒÂ?† –‘–ƒŽ ‡•–‹Â?ƒ–‡† …‘•– ‘ˆ ƒ ’”‘Œ‡…–Ǥ 4.3 Strengthening the Broader Capital Budgeting System ͶǤʹͶǤ Strengthening the broader capital budgeting system can serve as a key instrument for Georgia to manage its growing pipeline of infrastructure needs by ensuring that all projects financed are screened through a rigorous system. Š‡ ”‡ˆ‘”Â?• ‹Â? –Š‡ ’”‡˜‹‘—• •‡…–‹‘Â? †‡ƒŽ‹Â?‰ ™‹–Š –Š‡ …‘Â?–‡Â?– ƒÂ?† ’”‡•‡Â?–ƒ–‹‘Â? ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ‹Â?–‡Â?†‡† –‘ ‹Â?’”‘˜‡ –Š‡ ’”‘‰”ƒÂ?Â?‹Â?‰ ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ‘˜‡” ƒ Â?‡†‹—Â? –‡”Â? Š‘”‹œ‘Â? ƒÂ?† –‘ ‡Â?ŠƒÂ?…‡ –”ƒÂ?•’ƒ”‡Â?…› ƒÂ?† ƒ……‘—Â?–ƒ„‹Ž‹–›ǡ –Š—• ‡Â?„‡††‹Â?‰ ‹Â?…‡Â?–‹˜‡• ‰”‡ƒ–‡” ‡ˆˆ‹…‹‡Â?…› ƒÂ?† ‡ˆˆ‡…–‹˜‡Â?‡••Ǥ Š‡ „”‘ƒ†‡” …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â? †‡ƒŽ– ™‹–Š ‹Â? –Š‹• •‡…–‹‘Â? ƒ‹Â?• –‘ ‡Â?•—”‡ –Šƒ– ‘Â?Ž› Š‹‰Š “—ƒŽ‹–› ’”‘Œ‡…–•ǡ …‘Â?•‹•–‡Â?– ™‹–Š ‰‘˜‡”Â?Â?‡Â?– ’‘Ž‹…› ’”‹‘”‹–‹‡• ƒÂ?† ”‡’”‡•‡Â?–‹Â?‰ ‰‘‘† ˜ƒŽ—‡ ˆ‘” Â?‘Â?‡›ǡ ƒ”‡ •‡Ž‡…–‡† ˆ‘” ˆ—Â?†‹Â?‰ǡ ‹Â?’Ž‡Â?‡Â?–‡† ‘Â? –‹Â?‡ ƒÂ?† ™‹–Š‹Â? „—†‰‡–ǡ ƒÂ?† –Š‡Â? ‰‘ ‘Â? –‘ †‡Ž‹˜‡” •—•–ƒ‹Â?ƒ„Ž‡ „‡Â?‡ˆ‹–• –‘ ‹Â?–‡Â?†‡† —•‡”•Ǥ 4.3.1 Main features of an effective capital budgeting system ͶǤʹͷǤ An effective capital budgeting system is composed of five main components linked intimately to the project cycle. Š‡•‡ ˆ‹˜‡ …‘Â?’‘Â?‡Â?–• ƒ”‡ǣ •–”ƒ–‡‰‹… ’ŽƒÂ?Â?‹Â?‰Ǣ ’”‘Œ‡…– ’ŽƒÂ?Â?‹Â?‰ ƒÂ?† •…”‡‡Â?‹Â?‰Ǣ …ƒ’‹–ƒŽ „—†‰‡– ˆ‘”Â?—Žƒ–‹‘Â? ƒÂ?† ’”‘Œ‡…– •‡Ž‡…–‹‘Â?Ç¢ …ƒ’‹–ƒŽ „—†‰‡– ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ƒÂ?† Â?‘Â?‹–‘”‹Â?‰Ǣ ƒÂ?† ‡˜ƒŽ—ƒ–‹‘Â? ƒÂ?† ƒ—†‹– ‘ˆ …‘Â?’Ž‡–‡† ’”‘Œ‡…–•Ǥ Š‡ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â? ‹• –Š—• ‹Â?–‹Â?ƒ–‡Ž› Ž‹Â?Â?‡† –‘ –Š‡ ’”‘Œ‡…– …›…Ž‡ ‹ŽŽ—•–”ƒ–‡† ‹Â? ˆ‹‰—”‡ ͶǤͳǡ …‘˜‡”‹Â?‰ •‹š •–‡’• ˆ”‘Â? ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ‘ˆ Â?‡™ ’”‘Œ‡…–• –‘ ‡˜ƒŽ—ƒ–‹‘Â? ƒÂ?† ƒ—†‹– ‘ˆ …‘Â?’Ž‡–‡† ’”‘Œ‡…–•Ǥͻ Š‡ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â? ‡Â?…‘Â?’ƒ••‡• –Š‡ ˆƒÂ?‹Ž‹ƒ” ’”‘Œ‡…– …›…Ž‡ǡ „—– ƒŽ•‘ –Š‡ ’”‘…‡••‡• Ž‹Â?Â?‹Â?‰ ‹– –‘ –Š‡ „—†‰‡– ƒÂ?† •–”ƒ–‡‰‹… ’ŽƒÂ?Â?‹Â?‰ …›…Ž‡•Ǥ Â? ƒ ™‡ŽŽ ˆ—Â?…–‹‘Â?‹Â?‰ …ƒ’‹–ƒŽ „—†‰‡– •›•–‡Â?Ç¡ ƒ …Ž‡ƒ” ƒÂ?† ˆ‘”Â?ƒŽ …ƒŽ‡Â?†ƒ” •‡–• ‘—– –Š‡ Â?‡› †ƒ–‡• ˆ‘” ’”‘Œ‡…–• •—„Â?‹••‹‘Â?• ƒÂ?† ƒ’’”‘˜ƒŽ•Ǥ ‘” ‡šƒÂ?’Ž‡ǡ ™Š‹Ž‡ ‹– ‹• ’‘••‹„Ž‡ ˆ‘” ’”‘Œ‡…– ’”‡’ƒ”ƒ–‹‘Â? ƒ…–‹˜‹–‹‡• –‘ „‡ ’‡”ˆ‘”Â?‡† ‘—–•‹†‡ –Š‡ „—†‰‡– ’”‡’ƒ”ƒ–‹‘Â? …›…Ž‡ǡ ’”‡’ƒ”‡† ’”‘Œ‡…–• Â?—•– „‡ •—„Â?‹––‡† ˆ‘” ƒ’’”ƒ‹•ƒŽ ƒÂ?† ƒ’’”‘˜ƒŽ „› ƒ †ƒ–‡ –Šƒ– ‹• …‘‘”†‹Â?ƒ–‡† ™‹–Š –Š‡ „—†‰‡– …›…Ž‡ ȋ‘–Š‡”™‹•‡ –Š‡› Â?—•– ƒ™ƒ‹– –Š‡ Â?‡š– ƒÂ?Â?—ƒŽ „—†‰‡– …›…Ž‡ȌǤ Š‡ Policy Note on Strengthening Capital Budgeting in Georgia ’”‡’ƒ”‡† ˆ‘” –Š‡ ƒ—–Š‘”‹–‹‡• ‡š’Ž‘”‡† ‹Â? †‡–ƒ‹Ž ™Šƒ– ‡ƒ…Š ‘ˆ –Š‡ ˆ‹˜‡ …‘Â?’‘Â?‡Â?–• ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â? ‡Â?–ƒ‹Ž‡†ǡ ƒÂ?† ’”‘˜‹†‡† •’‡…‹ˆ‹… ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‰‘‘† ’”ƒ…–‹…‡ ‡šƒÂ?’Ž‡•Ǥ Í» ‹ˆˆ‡”‡Â?– …‘—Â?–”‹‡•Ȁ‘”‰ƒÂ?‹•ƒ–‹‘Â?• Šƒ˜‡ •Ž‹‰Š–Ž› †‹ˆˆ‡”‡Â?– ”‡’”‡•‡Â?–ƒ–‹‘Â?• ‘ˆ –Š‡ ’”‘Œ‡…– …›…Ž‡ Ǧ ”‡ŽƒÂ?†ǡ ˆ‘” ‡šƒÂ?’Ž‡ǡ Šƒ• ƒ ˆ‘—” •–‡’ …›…Ž‡ –Šƒ– …‘Â?†‡Â?•‡• •‘Â?‡ ‘ˆ –Š‡ •–‡’• ‹Â? ‹‰—”‡ ͳ Ǧ „—– –Š‡ •ƒÂ?‡ ’”‘…‡••‡• ƒ”‡ ƒŽ™ƒ›• …‘˜‡”‡†Ǥ ͹Ͳ Figure 4.1 The Project Cycle ͶǤʹ͸Ǥ A recent World Bank paper10 identifies the minimum system requirements under each of the five components of an effective capital budgeting system. Š‡•‡ ‹Â?…Ž—†‡ǣ –”ƒ–‡‰‹… ’ŽƒÂ?Â?‹Â?‰ x Authoritative and actionable strategic guidance –‘ ‰—‹†‡ •‡…–‘”ǦŽ‡˜‡Ž †‡…‹•‹‘Â?ǦÂ?ƒÂ?‡”• ‹Â? ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â?Ǥ ŽƒÂ?Â?‹Â?‰ ƒÂ?† •…”‡‡Â?‹Â?‰ ‘ˆ …ƒ’‹–ƒŽ ’”‘Œ‡…–• x Preliminary screening of projects –‘ ‡Â?•—”‡ ’”‘Œ‡…– …‘Â?…‡’–• Â?‡‡– Â?‹Â?‹Â?—Â? …”‹–‡”‹ƒ ‘ˆ …‘Â?•‹•–‡Â?…› ™‹–Š ‰‘˜‡”Â?Â?‡Â?–ǯ• •–”ƒ–‡‰‹… ‘„Œ‡…–‹˜‡• ĥ •‡– ‘—– ‹Â? •–”ƒ–‡‰‹… ‰—‹†ƒÂ?…‡Ǥ x A formal project appraisal processÇ£ ƒ ”‡‰—Žƒ–‡† •‡– ‘ˆ ’”‘Œ‡…– ’”‡’ƒ”ƒ–‹‘Â? •–‡’•ǡ •—…Š ĥ ’”‡Ǧˆ‡ƒ•‹„‹Ž‹–› •–—†› ƒÂ?† ˆ‡ƒ•‹„‹Ž‹–› •–—†›ǡ ‹Â?…Ž—†‹Â?‰ ’”‡Ž‹Â?‹Â?ƒ”› †‡•‹‰Â?Ç¡ ƒÂ?† ‡Â?˜‹”‘Â?Â?‡Â?–ƒŽ ƒÂ?† •‘…‹ƒŽ ‹Â?’ƒ…– ƒ••‡••Â?‡Â?–•ǡ –Šƒ– Â?—•– „‡ …‘Â?’Ž‡–‡† „‡ˆ‘”‡ ƒ ’”‘Œ‡…– …ƒÂ? „‡ ƒ’’”‘˜‡† ĥ ‡Ž‹‰‹„Ž‡ ˆ‘” ˆ—Â?†‹Â?‰Ǥ x Independent review of appraisalÇ£ ƒÂ? ‘„Œ‡…–‹˜‡ ”‡˜‹‡™ „› –Š‡ ˆ‹Â?ƒÂ?…‡ Â?‹Â?‹•–”›ǡ ƒ ’ŽƒÂ?Â?‹Â?‰ Â?‹Â?‹•–”› ‘” ƒÂ? ‹Â?†‡’‡Â?†‡Â?– ƒ‰‡Â?…› ‹• ƒÂ? ‹Â?’‘”–ƒÂ?– ™ƒ› ‘ˆ …‘—Â?–‡”‹Â?‰ ‘’–‹Â?‹•Â? „‹ƒ•ͳͳ ƒÂ?‘Â?‰•– –Š‘•‡ †‡˜‡Ž‘’‹Â?‰ ’”‘Œ‡…– ’”‘’‘•ƒŽ•Ǥ ƒ’‹–ƒŽ „—†‰‡– ˆ‘”Â?—Žƒ–‹‘Â? ƒÂ?† ’”‘Œ‡…– •‡Ž‡…–‹‘Â? x Project selection through a well managed budget processÇ£ Ž‹Â?Â?‹Â?‰ –Š‡ ’”‘…‡•• ‘ˆ ƒ’’”ƒ‹•‹Â?‰ ƒÂ?† •‡Ž‡…–‹Â?‰ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ’”‘Œ‡…–• –‘ –Š‡ „—†‰‡– …›…Ž‡ ‹Â? ƒÂ? ƒ’’”‘’”‹ƒ–‡ ™ƒ› ‡˜‡Â? –Š‘—‰Š –Š‡ ’”‘Œ‡…– ‡˜ƒŽ—ƒ–‹‘Â? …›…Ž‡ Â?ƒ› ˆ‘ŽŽ‘™ ƒ †‹ˆˆ‡”‡Â?– –‹Â?‡–ƒ„Ž‡Ǥ Â?˜‘Ž˜‡• ˜‡”‹ˆ‹…ƒ–‹‘Â? ‘ˆ ’”‘Œ‡…– ‡Ž‹‰‹„‹Ž‹–› ƒÂ?† ’”‹‘”‹–›ǡ ƒÂ?† …Ž‘•‡ •…”—–‹Â?› ‘ˆ ˆ‘”™ƒ”† …‘•–• ƒÂ?† –Š‡‹” ˆ—Â?†‹Â?‰ †—”‹Â?‰ „—†‰‡–‹Â?‰Ǥ ͳͲ Dz ‹ƒ‰Â?‘•–‹… ”ƒÂ?‡™‘”Â? ˆ‘” ••‡••‹Â?‰ —„Ž‹… Â?˜‡•–Â?‡Â?– ƒÂ?ƒ‰‡Â?‡Â?–dzǡ Ǥ ƒŒƒ”ƒÂ?Ç¡ —ƒÂ? ‹Â?Š ‡ǡ Ǥ ‹Ž‡–•Â?ƒ Ƭ Ǥ ”—Â?„›ǡ ‘”Ž† ƒÂ?Â? ‘Ž‹…› ‡•‡ƒ”…Š ‘”Â?‹Â?‰ ƒ’‡” ͷ͵ͻ͹ǡ —‰—•– ʹͲͳͲǤ ͳͳ Š‡ •›•–‡Â?ƒ–‹… —Â?†‡”Ǧ‡•–‹Â?ƒ–‹‘Â? ‘ˆ …‘•–• ƒÂ?† ‘˜‡”Ǧ‡•–‹Â?ƒ–‹‘Â? ‘ˆ „‡Â?‡ˆ‹–• È‚ Ǯ‘’–‹Â?‹•Â? „‹ƒ•ǯ Ǧ ‹• ™‡ŽŽ †‘…—Â?‡Â?–‡† ƒ…”‘•• …‘—Â?–”‹‡•Ǥ ‡‡ ˆ‘” ‡šƒÂ?’Ž‡ǣ Ç®‘Ž‹…› ƒÂ?† ’ŽƒÂ?Â?‹Â?‰ ˆ‘” Žƒ”‰‡Ǧ‹Â?ˆ”ƒ•–”—…–—”‡ ’”‘Œ‡…–•ǣ ’”‘„Ž‡Â?•ǡ …ƒ—•‡• ƒÂ?† …—”‡•ǯǡ ‡Â?– Ž›˜„Œ‡”‰ǡ ʹͲͲ͹ ͹ͳ ƒ’‹–ƒŽ „—†‰‡– ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ƒÂ?† Â?‘Â?‹–‘”‹Â?‰ x Efficient project implementationÇ£ •…”—–‹Â?› ˆ‘” ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ”‡ƒŽ‹•Â?Ç¡ ‹Â?…Ž—†‹Â?‰ ‘”‰ƒÂ?‹•ƒ–‹‘Â?ƒŽ ƒ””ƒÂ?‰‡Â?‡Â?–•ǡ ’”‘…—”‡Â?‡Â?– ’ŽƒÂ?Â?‹Â?‰ ƒÂ?† –‹Â?‡–ƒ„Ž‡Ǣ ƒ†‡“—ƒ–‡ Â?‘Â?‹–‘”‹Â?‰ •›•–‡Â?•Ǣ ƒÂ?† •›•–‡Â?• ˆ‘” Â?ƒÂ?ƒ‰‹Â?‰ –‘–ƒŽ ’”‘Œ‡…– …‘•–•Ǥ x Ability to make project adjustmentsÇ£ ˆŽ‡š‹„‹Ž‹–› –‘ ƒŽŽ‘™ …ŠƒÂ?‰‡• ‹Â? –Š‡ †‹•„—”•‡Â?‡Â?– ’”‘ˆ‹Ž‡ –‘ –ƒÂ?‡ ƒ……‘—Â?– ‘ˆ …ŠƒÂ?‰‡• ‹Â? ’”‘Œ‡…– …‹”…—Â?•–ƒÂ?…‡• ‹†‡Â?–‹ˆ‹‡† –Š”‘—‰Š ”‡•’‘Â?•‹˜‡ Â?‘Â?‹–‘”‹Â?‰Ǥ x Provision for sustainable operation of facilitiesÇ£ ’”‘…‡••‡• –‘ ‡Â?•—”‡ –Šƒ– ƒ Â?‡™ ˆƒ…‹Ž‹–› ‹• ”‡ƒ†› ˆ‘” ‘’‡”ƒ–‹‘Â? ƒÂ?† –Šƒ– –Š‡ ‹Â?–‡Â?†‡† •‡”˜‹…‡• …ƒÂ? „‡ †‡Ž‹˜‡”‡† ‘Â? ƒ •—•–ƒ‹Â?ƒ„Ž‡ „ƒ•‹•Ǥ ‡“—‹”‡• ‡ˆˆ‡…–‹˜‡ ŠƒÂ?†‘˜‡” ‘ˆ Â?ƒÂ?ƒ‰‡Â?‡Â?– ”‡•’‘Â?•‹„‹Ž‹–› ˆ‘” ‘’‡”ƒ–‹‘Â? ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ǡ ƒÂ?† —’Â?‡‡’ ‘ˆ ”‘„—•– ƒÂ?† —’Ǧ–‘Ǧ†ƒ–‡ …ƒ’‹–ƒŽ ƒ••‡– ”‡‰‹•–‡”•ͳʹǤ ˜ƒŽ—ƒ–‹‘Â? ƒÂ?† ƒ—†‹– ‘ˆ …‘Â?’Ž‡–‡† ’”‘Œ‡…–• x Basic completion review and ex post evaluationÇ£ ƒ •›•–‡Â?ƒ–‹… ”‡˜‹‡™ ‘ˆ ƒŽŽ ’”‘Œ‡…–• —’‘Â? …‘Â?’Ž‡–‹‘Â? –‘ ƒ••‡•• ™Š‡–Š‡” ƒ ’”‘Œ‡…– ™ƒ• †‡Ž‹˜‡”‡† ĥ •’‡…‹ˆ‹‡†ǡ ‘Â? –‹Â?‡ ƒÂ?† –‘ „—†‰‡–Ǥ Â?–”‘†—…–‹‘Â? ‘ˆ ƒ Â?‘”‡ •‘’Š‹•–‹…ƒ–‡† ‡š ’‘•– ‡˜ƒŽ—ƒ–‹‘Â? –‘ ƒ••‡•• –Š‡ ’”‘Œ‡…–ǯ• ‘—–’—–• ƒÂ?† ‘—–…‘Â?‡• ƒ‰ƒ‹Â?•– ‘„Œ‡…–‹˜‡• ‡•–ƒ„Ž‹•Š‡† ‹Â? –Š‡ †‡•‹‰Â? •Š‘—Ž† ˆ‘ŽŽ‘™Ǥ 4.3.2 Strengths and Weaknesses of Georgia’s Capital Budgeting System ͶǤʹ͹Ǥ Georgia’s capital budgeting system is characterized by several strengths and weaknesses. ‡‘”‰‹ƒ Šƒ• „‡‡Â? •—……‡••ˆ—ŽŽ› ƒ††”‡••‹Â?‰ …”‹–‹…ƒŽ ‹Â?ˆ”ƒ•–”—…–—”‡ †‡˜‡Ž‘’Â?‡Â?– Â?‡‡†• ‹Â? ”‡…‡Â?– ›‡ƒ”• ƒÂ?† –Š‡ ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? Šƒ• „‡‡Â? †‡Ž‹˜‡”‡† ‹Â? ƒÂ? ‡š’‡†‹–‹‘—• ƒÂ?† ‡ˆˆ‹…‹‡Â?– Â?ƒÂ?Â?‡”Ǥ –”ƒ–‡‰‹… ‰—‹†ƒÂ?…‡ ‘Â? ‘˜‡”ƒŽŽ ‹Â?ˆ”ƒ•–”—…–—”‡ †‡˜‡Ž‘’Â?‡Â?– ’”‹‘”‹–‹‡• ‹• ’”‘˜‹†‡† ˆ”‘Â? –Š‡ Š‹‰Š‡•– Ž‡˜‡Ž• ‘ˆ ‰‘˜‡”Â?Â?‡Â?–Ǥ Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ‘ˆ ’”‘Œ‡…–• —•—ƒŽŽ› ’”‘…‡‡†• ‹Â? ƒ •Â?‘‘–Šǡ ‡ˆˆ‹…‹‡Â?–ǡ ƒÂ?† –‹Â?‡Ž› Â?ƒÂ?Â?‡”ǡ ƒÂ?† ’”‘…—”‡Â?‡Â?– •›•–‡Â?• ƒ”‡ „‡‹Â?‰ ’”‘‰”‡••‹˜‡Ž› ‹Â?’”‘˜‡†Ǥ †‹•…‹’Ž‹Â?‡† „—†‰‡–‹Â?‰ ’”‘…‡•• ‹• •‡– ‘—– ‹Â? –Š‡ —†‰‡– ‘†‡ ƒÂ?† –Š‡ …‘Â?–‡Â?– ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ‹• „‡‹Â?‰ ‹Â?’”‘˜‡† ĥ †‹•…—••‡† ‹Â? –Š‡ ’”‡˜‹‘—• •‡…–‹‘Â?Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ –Š‡ •›•–‡Â?• ‘ˆ ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ƒÂ?† •‡Ž‡…–‹‘Â? ƒ”‡ Žƒ”‰‡Ž› ‹Â?ˆ‘”Â?ƒŽǡ Žƒ…Â?‹Â?‰ ‹Â? Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ƒÂ?† ’”‘…‡†—”ƒŽ ˆ‘—Â?†ƒ–‹‘Â?•ǡ ƒÂ?† Š‡ƒ˜‹Ž› ”‡Ž‹ƒÂ?– ‘Â? †‘Â?‘”• ˆ‘” ƒÂ?ƒŽ›–‹…ƒŽ ™‘”Â? ˆ‘” Â?ƒŒ‘” ’”‘Œ‡…–•Ǥ – ‹• ƒŽ•‘ Â?‘– …Ž‡ƒ” –Šƒ– –Š‡ •›•–‡Â? ™‹ŽŽ „‡ ƒ„Ž‡ –‘ …‘Â?–‹Â?—‡ –‘ †‡Ž‹˜‡” ‹Â? –Š‡ …‘Â?–‡š– ‘ˆ ƒÂ? ‹Â?‡˜‹–ƒ„Ž‡ –‹‰Š–‡Â?‹Â?‰ ‘ˆ ”‡•‘—”…‡ ƒ˜ƒ‹Žƒ„‹Ž‹–› ˆ‘” ‹Â?ˆ”ƒ•–”—…–—”‡ ‹Â?˜‡•–Â?‡Â?–ǡ †‹Â?‹Â?‹•Š‹Â?‰ †‘Â?‘” •—’’‘”–ǡ ƒÂ?† Â?‘—Â?–‹Â?‰ ’”‡••—”‡ –‘ ‡Â?ŠƒÂ?…‡ •‡Ž‡…–‹˜‹–› ƒÂ?† ‡ˆˆ‹…‹‡Â?…› ‘ˆ ƒ ‰”‘™‹Â?‰ ’‹’‡Ž‹Â?‡ ‘ˆ ‹Â?ˆ”ƒ•–”—…–—”‡ †‡˜‡Ž‘’Â?‡Â?– Â?‡‡†•Ǥ ͶǤʹͺǤ Strong strategic guidance on infrastructure priorities comes from high levels of government, although not always firmly grounded in technical analytical work. ‹‰Š Ž‡˜‡Ž •–”ƒ–‡‰‹… ‰—‹†ƒÂ?…‡ ’”‘˜‹†‡• ƒÂ? ‹Â?’‘”–ƒÂ?– ˆ‘—Â?†ƒ–‹‘Â? ˆ‘” ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â?Ǥ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ –Š‡ •–”ƒ–‡‰‹… –Š‹Â?Â?‹Â?‰ Â?ƒ› Â?‘– ƒŽ™ƒ›• „‡ ˆ‹”Â?Ž› ‰”‘—Â?†‡† ‹Â? –‡…ŠÂ?‹…ƒŽ ƒÂ?ƒŽ›–‹…ƒŽ ™‘”Â? ƒÂ?† ‹Â?’‘”–ƒÂ?– –”ƒ†‡Ǧ‘ˆˆ• „‡–™‡‡Â? •‡…–‘”• ƒÂ?† ™‹–Š‹Â? •‡…–‘”• Â?ƒ› Â?‘– „‡ ƒ†‡“—ƒ–‡Ž› ƒ††”‡••‡†Ǥ Š‡ •–”ƒ–‡‰‹… †‹”‡…–‹‘Â? ‹• Â?‘– ˆ‘”Â?ƒŽ‹œ‡† ‹Â? ’—„Ž‹…Ž› ƒ˜ƒ‹Žƒ„Ž‡ •–”ƒ–‡‰‹‡• ‘” ’ŽƒÂ?• ƒÂ?†ǡ –Š‡”‡ˆ‘”‡ǡ ’‘–‡Â?–‹ƒŽŽ› •—„Œ‡…– –‘ ƒ”„‹–”ƒ”› •Š‹ˆ–• ‹Â? †‹”‡…–‹‘Â?Ǥ Š‹Ž‡ –Š‡ ‹• ƒÂ? ‹Â?’‘”–ƒÂ?– –‘‘Ž ˆ‘” •—Â?Â?ƒ”‹œ‹Â?‰ •–”ƒ–‡‰‹… ’”‹‘”‹–‹‡• ƒÂ?† •‡––‹Â?‰ ‘—– –Š‡‹” Â?‡†‹—Â?Ǧ–‡”Â? ˆ‹Â?ƒÂ?…‹ƒŽ ‹Â?’Ž‹…ƒ–‹‘Â?•ǡ ‹– •Š‘—Ž† Â?‘– „‡ •‡‡Â? ĥ ƒ •—„•–‹–—–‡ ˆ‘” †‡˜‡Ž‘’‹Â?‰ –Š‡ Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…–‘” •–”ƒ–‡‰‹‡• –Šƒ– ™‘—Ž† Â?‘”Â?ƒŽŽ› „‡ ‡š’‡…–‡† –‘ —Â?†‡”’‹Â? ƒ Â?‡†‹—Â?Ǧ–‡”Â? …ƒ’‹–ƒŽ ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ?Ǥ Š‡•‡ ‹••—‡• ™‹ŽŽ „‡…‘Â?‡ Â?‘”‡ ͳʹ ‰‘‘† ‹Â?˜‡Â?–‘”› ‘ˆ ‡š‹•–‹Â?‰ …ƒ’‹–ƒŽ ƒ••‡–• •Š‘—Ž† ‹†‡Â?–‹ˆ› ‡ƒ…Š ƒ••‡–ǡ –Š‡ Â?‹Â?‹•–”› ‘™Â?‹Â?‰ ‹–ǡ –Š‡ ’”‘‰”ƒÂ? ‹– •—’’‘”–•ǡ –Š‡ †ƒ–‡ ‹– ‡Â?–‡”‡† •‡”˜‹…‡ ƒÂ?† ‘”‹‰‹Â?ƒŽ …‘Â?•–”—…–‹‘Â? …‘•–ǡ ƒÂ?Â?—ƒŽ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒÂ?† ”‡’ƒ‹” ‡š’‡Â?•‡ Š‹•–‘”›ǡ …—””‡Â?– …‘Â?†‹–‹‘Â?Ç¡ …—””‡Â?– ”‡’Žƒ…‡Â?‡Â?– …‘•–ǡ ƒÂ?† •‹Â?‹Žƒ” †ƒ–ƒǤ ͹ʹ ‹Â?’‘”–ƒÂ?– ĥ –Š‡ Â?‘”‡ ‘„˜‹‘—• ‹Â?˜‡•–Â?‡Â?–• ‘ˆ •–”ƒ–‡‰‹… Â?ƒ–‹‘Â?ƒŽ ‹Â?’‘”–ƒÂ?…‡ …‘Â?‡ –‘ …‘Â?’Ž‡–‹‘Â? ƒÂ?† Â?‘”‡ Â?—ƒÂ?…‡† •–”ƒ–‡‰‹… –Š‹Â?Â?‹Â?‰ „‡…‘Â?‡• Â?‡…‡••ƒ”›Ǥ ͶǤʹͻǤ Georgia benefits from a disciplined budget process as set out in the Budget Code and the content of the capital budget is improving. —†‰‡–‹Â?‰ ‹• …ƒ””‹‡† ‘—– ™‹–Š‹Â? ƒ Â?‡†‹—Â?Ǧ–‡”Â? ’‡”•’‡…–‹˜‡ –Š”‘—‰Š –Š‡ –Šƒ– ‹• ‰”‘™‹Â?‰ ‹Â? …”‡†‹„‹Ž‹–› ƒÂ?† „‡…‘Â?‹Â?‰ Â?‘”‡ ˆ‹”Â?Ž› ‡Â?„‡††‡† ‹Â? –Š‡ ˆ‘”Â?—Žƒ–‹‘Â? ’”‘…‡••Ǥ ‡…‹•‹‘Â?ǦÂ?ƒÂ?‹Â?‰ ‘Â? …—””‡Â?– ƒÂ?† …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ‹•ǡ ‹Â? ’”‹Â?…‹’Ž‡ǡ ‹Â?–‡‰”ƒ–‡† ƒÂ?† ‡š–‡”Â?ƒŽŽ›Ǧˆ—Â?†‡† ’”‘Œ‡…–• ƒ”‡ „‡‹Â?‰ …ƒ’–—”‡† ‹Â? –Š‡ „—†‰‡–Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ –Š‡”‡ ƒ”‡ǡ ĥ ›‡–ǡ Â?‘ •›•–‡Â?ƒ–‹… †‘…—Â?‡Â?–‡† …Š‡…Â?• „› –Š‡ ‹Â?‹•–”› ‘ˆ ‹Â?ƒÂ?…‡ ‘Â? ™Š‡–Š‡” –Š‡ ˜‹ƒ„‹Ž‹–› ‘ˆ ’”‘Œ‡…–• ’”‘’‘•‡† ˆ‘” –Š‡ „—†‰‡– Šƒ• „‡‡Â? ƒ••‡••‡† —•‹Â?‰ ƒ ”‘„—•– Â?‡–Š‘†‘Ž‘‰›Ǥͳ͵ —”–Š‡”Â?‘”‡ǡ –Š‡ …‘Â?–‡Â?– ƒÂ?† ’”‡•‡Â?–ƒ–‹‘Â? ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ‹• „‡‹Â?‰ ‹Â?’”‘˜‡†ǡ ĥ †‹•…—••‡† ‹Â? –Š‡ ’”‡˜‹‘—• •‡…–‹‘Â?Ǥ ͶǤ͵ͲǤ Project implementation systems are reasonably robust and where weaknesses exist, improvements are being introduced. Š‡ ’”‘…—”‡Â?‡Â?– •›•–‡Â? Šƒ• „‡‡Â? ‹Â?’”‘˜‹Â?‰ǡ ƒÂ?† ‘’‡Â?Ç¡ …‘Â?’‡–‹–‹˜‡ „‹††‹Â?‰ Šƒ• „‡…‘Â?‡ –Š‡ Â?‘”Â?Ǥ ”‘Â? ƒ –‡…ŠÂ?‹…ƒŽ ƒÂ?† ‡Â?‰‹Â?‡‡”‹Â?‰ ’‡”•’‡…–‹˜‡ ‹Â?ˆ”ƒ•–”—…–—”‡ ’”‘Œ‡…–• •‡‡Â? –‘ „‡ ™‡ŽŽ ’ŽƒÂ?Â?‡† ƒÂ?† …ƒ’‹–ƒŽ „—†‰‡– ‡š‡…—–‹‘Â? ‹• ”‡Žƒ–‹˜‡Ž› •Â?‘‘–ŠͳͶǡ „‘–Š ˆ”‘Â? –Š‡ ’‡”•’‡…–‹˜‡ ‘ˆ –Š‡ •—’’Ž› ‘ˆ ˆ‹Â?ƒÂ?…‹ƒŽ ”‡•‘—”…‡• ƒÂ?† –Š‡‹” —•‡Ǥ †‡“—ƒ–‡ ‹Â?–‡”Â?ƒŽ ˆ‹Â?ƒÂ?…‹ƒŽ …‘Â?–”‘Ž ’”‘…‡†—”‡• ƒ”‡ ‹Â? ’Žƒ…‡ ƒÂ?† ƒ”‡ „‡‹Â?‰ ˆ‘ŽŽ‘™‡†Ǥ ‡’‘”–‹Â?‰ ƒÂ?† Â?‘Â?‹–‘”‹Â?‰ ‘ˆ ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ’”‘‰”‡•• ‹• †‡…‡Â?–”ƒŽ‹œ‡† –‘ ‹Â?’Ž‡Â?‡Â?–‹Â?‰ ‘”‰ƒÂ?‹œƒ–‹‘Â?•ǡ „—– –Š‡”‡ ƒ”‡ Â?‘ ‘„˜‹‘—• •‹‰Â?• –Šƒ– •›•–‡Â?• ƒ”‡ Â?‘– ™‘”Â?‹Â?‰ ȋƒŽ–Š‘—‰Š –Š‡› ƒ”‡ Â?‘– Â?‡…‡••ƒ”‹Ž› ˆ‡‡†‹Â?‰ ‹Â?–‘ –Š‡ „—†‰‡– ’”‘…‡•• ĥ ’”‡˜‹‘—•Ž› †‹•…—••‡†ȌǤ ‘‘† ’”‘…‡†—”‡• ƒ”‡ ‹Â? ’Žƒ…‡ –‘ …Š‡…Â? –Š‡ “—ƒŽ‹–› ‘ˆ …‘Â?•–”—…–‹‘Â? ™‘”Â?•ǡ „‘–Š †—”‹Â?‰ …‘Â?•–”—…–‹‘Â? ƒÂ?† ƒ– ŠƒÂ?†‘˜‡”Ǥ ͶǤ͵ͳǤ On the negative side, unified national procedures for project identification, preparation and appraisal are missing, and there is no explicit calendar linking activities in the project cycle to the budgeting and strategic planning cycles. Š‡”‡ ƒ”‡ Â?‘ ˆ‘”Â?ƒŽ †‡…‹•‹‘Â? ’‘‹Â?–• ƒ– Â?‡› •–‡’• ‹Â? –Š‡ ’”‘Œ‡…– …›…Ž‡ È‚ ‹Â?…Ž—†‹Â?‰ ƒ ’”‡Ž‹Â?‹Â?ƒ”› •…”‡‡Â?‹Â?‰ †‡…‹•‹‘Â? Ǧ ™Š‡”‡ †‡•‹‰Â?ƒ–‡† †‡…‹•‹‘Â?ǦÂ?ƒÂ?‡”• •‹‰Â?Ǧ‘ˆˆ ƒÂ?† ƒ—–Š‘”‹œ‡ …‘Â?–‹Â?—ƒ–‹‘Â? –‘ –Š‡ Â?‡š– •–‡’Ǥ ”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ‘ˆ–‡Â? –ƒÂ?‡• ’Žƒ…‡ ‹Â? ƒÂ? ad hoc Â?ƒÂ?Â?‡”ǡ ™‹–Š Â?ƒŒ‘” ‹Â?˜‡•–Â?‡Â?– †‡…‹•‹‘Â?• ƒ”‡ ‘ˆ–‡Â? ’”‡•‡Â?–‡† ĥ ƒ fait accompli ƒ– „—†‰‡– –‹Â?‡Ǥ ‡‘”‰‹ƒ †‘‡• Â?‘– ›‡– Šƒ˜‡ ‹–• ‘™Â? Â?ƒ–‹‘Â?ƒŽ –‡…ŠÂ?‹…ƒŽ ‰—‹†ƒÂ?…‡ ‘Â? ’”‘Œ‡…– ƒ’’”ƒ‹•ƒŽ Â?‡–Š‘†• ˆ‘” ƒ••‡••‹Â?‰ ˜ƒŽ—‡ ˆ‘” Â?‘Â?‡› ˆ”‘Â? …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡•Ǥ Â? –Š‹• ”‡•’‡…–ǡ –Š‡”‡ •‡‡Â?• –‘ „‡ ƒ †‹…Š‘–‘Â?› „‡–™‡‡Â? ’”‘…‡••‡• ˆ‘” ‡š–‡”Â?ƒŽŽ›Ǧˆ—Â?†‡† ’”‘Œ‡…–• ƒÂ?† ˆ‘” †‘Â?‡•–‹…ƒŽŽ›Ǧˆ—Â?†‡† ’”‘Œ‡…–•ǣ †‘Â?‡•–‹…ƒŽŽ›Ǧˆ—Â?†‡† …ƒ’‹–ƒŽ ’”‘Œ‡…–• ƒ”‡ Â?‘– •—„Œ‡…– –‘ –Š‡ Â?‘”‡ ”‹‰‘”‘—• ƒ••‡••Â?‡Â?– ‘ˆ ˜ƒŽ—‡ ˆ‘” Â?‘Â?‡› ȋ‹Â?…Ž—†‹Â?‰ …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹•Ȍ –Šƒ– ‹• Â?‘”‡ ‘ˆ–‡Â? –Š‡ …ƒ•‡ ™‹–Š †‘Â?‘”Ǧˆ—Â?†‡† ’”‘Œ‡…–•Ǥ ’’”ƒ‹•ƒŽ Â?‡–Š‘†• ƒŽ•‘ ˜ƒ”› …‘Â?•‹†‡”ƒ„Ž› ƒ…”‘•• ‘”‰ƒÂ?‹œƒ–‹‘Â?Ç¡ •‘ –Šƒ– ™Š‹Ž‡ ‹Â?†‹˜‹†—ƒŽ Â?‹Â?‹•–”‹‡• Â?ƒ› „‡ ƒ’’Ž›‹Â?‰ ‰‘‘† ’”ƒ…–‹…‡•ǡ –Š‡•‡ ’”ƒ…–‹…‡• ƒ”‡ Â?‘– …‘Â?•‹•–‡Â?–Ǥͳͷ ‹Â?ƒŽŽ›ǡ „‡…ƒ—•‡ ‹Â?˜‡•–Â?‡Â?– †‡…‹•‹‘Â?• ƒ”‡ ‘ˆ–‡Â? Â?ƒ†‡ ‘—–•‹†‡ –Š‡ „—†‰‡– ’”‘…‡••ǡ –Š‡› ƒ”‡ Â?ƒ†‡ ‹Â? –Š‡ ƒ„•‡Â?…‡ ‘ˆ ƒ ˆ—ŽŽ …‘Â?•‹†‡”ƒ–‹‘Â? ‘ˆ –Š‡ ”‡…—””‡Â?– …‘•– ‹Â?’Ž‹…ƒ–‹‘Â?•Ǥ ͶǤ͵ʹǤ Once execution has started, there exists no formal process for reassessment of the justification of problem projects during implementation Ǧ ƒÂ?† ƒ†Œ—•–Â?‡Â?– ‹ˆ Â?‡…‡••ƒ”› Ǧ ‹Â? –Š‡ …ƒ•‡ ‘ˆ •‹‰Â?‹ˆ‹…ƒÂ?– …‘•– ‘˜‡””—Â?• ‘” Â?‡‰ƒ–‹˜‡ ˆƒ…–‘”• …ŠƒÂ?‰‹Â?‰ –Š‡ Ž‹Â?‡Ž› •…ƒŽ‡ ‘ˆ „‡Â?‡ˆ‹–•Ǥ ’‘Â? ͳ͵ Š‹• ‹• Â?‘– Â?‡ƒÂ?– –‘ ‹Â?’Ž› ƒ ”‡“—‹”‡Â?‡Â?– ˆ‘” –Š‡  –‘ …ƒ””› ‘—– •—…Š ƒ••‡••Â?‡Â?–•ǡ ƒŽ–Š‘—‰Š ‹– Â?‹‰Š– †‡…‹†‡ –‘ …‘Â?–”ƒ…– ‹Â?†‡’‡Â?†‡Â?– ƒ••‡••Â?‡Â?–• ˆ‘” ’”‘Œ‡…–• ‘ˆ Â?ƒ…”‘‡…‘Â?‘Â?‹… •‹‰Â?‹ˆ‹…ƒÂ?…‡Ǥ ͳͶ ‡’‘”–‡† „—†‰‡– ‡š‡…—–‹‘Â? ”ƒ–‡• ˆ‘” –‘–ƒŽ ‡š’‡Â?†‹–—”‡• ‘Â? ‹Â?…”‡ƒ•‡ ‹Â? Â?‘Â?Ǧˆ‹Â?ƒÂ?…‹ƒŽ ƒ••‡–• ™‡”‡ ͻͺΨǡ ͻͶΨ ƒÂ?† ͻͻΨ ‹Â? ʹͲͲͺǡ ʹͲͲͻ ƒÂ?† ʹͲͳͲǡ ”‡•’‡…–‹˜‡Ž›ǡ ™‹–Š •‘Â?‡ ˜ƒ”‹ƒ–‹‘Â?• „‡–™‡‡Â? •‡…–‘”•Ǥ ͳͷ ‘” ‡šƒÂ?’Ž‡ǡ –Š‡”‡ ƒ”‡ †‹ˆˆ‡”‡Â?– ƒ’’”‘ƒ…Š‡• –‘ ˜ƒŽ—ƒ–‹‘Â? ‹Â? …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹• ƒÂ?† –Š‡”‡ Â?‡‡†• –‘ „‡ ƒ —Â?‹ˆ‘”Â? †‹•…‘—Â?– ”ƒ–‡ ˆ‘” Â?ƒÂ?‹Â?‰ ’”‡•‡Â?– ˜ƒŽ—‡ …ƒŽ…—Žƒ–‹‘Â?• ƒ…”‘•• –Š‡ ’—„Ž‹… •‡…–‘”Ǥ ͹͵ …‘Â?’Ž‡–‹‘Â?Ç¡ ’‘•–Ǧ…‘Â?’Ž‡–‹‘Â? ‡˜ƒŽ—ƒ–‹‘Â? ‘ˆ ’”‘Œ‡…– ”‡•—Ž–• ƒÂ?† Ž‡••‘Â?ǦŽ‡ƒ”Â?‹Â?‰ ƒŽ•‘ •‡‡Â? –‘ „‡ Â?‹••‹Â?‰Ǥ ‹Â?ƒŽŽ› –Š‡”‡ ‹• Â?‘ ex post ’‡”ˆ‘”Â?ƒÂ?…‡ ƒ—†‹– ‘ˆ …ƒ’‹–ƒŽ ’”‘Œ‡…–•ǡ ‡š…‡’– –Šƒ– ’‡”ˆ‘”Â?‡† „› †‘Â?‘”• ƒ……‘”†‹Â?‰ –‘ –Š‡‹” ‘™Â? ’”‘…‡†—”‡•Ǥ ͶǤ͵͵Ǥ The preceding analysis suggests that the focus of any reinforcement of Georgia’s capital budgeting system should be on ‘upstream’ elements such as project identification and appraisal. Š‡ ‡Â?’Šƒ•‹• •Š‘—Ž† „‡ ‘Â? Â?‘˜‹Â?‰ ƒ™ƒ› ˆ”‘Â? ad hoc †‡…‹•‹‘Â?ǦÂ?ƒÂ?‹Â?‰ ƒÂ?† ‹Â?ˆ‘”Â?ƒŽ‹–› –‘ ƒ •›•–‡Â? ™‹–Š ’”‘…‡†—”ƒŽŽ› †‡–‡”Â?‹Â?‡† †‡…‹•‹‘Â?Ǧ’‘‹Â?–•ǡ ƒÂ? ‘ˆˆ‹…‹ƒŽ …ƒŽ‡Â?†ƒ”ǡ •‘—Â?† ‰—‹†ƒÂ?…‡ ‘Â? ƒÂ?ƒŽ›–‹…ƒŽ Â?‡–Š‘†• ƒÂ?† ƒÂ? ƒ—†‹–ƒ„Ž‡ ’ƒ’‡” –”ƒ‹ŽǤ Š‡ ƒ‹Â? ‘ˆ ‹Â?’Ž‡Â?‡Â?–‹Â?‰ •—…Š ‹Â?’”‘˜‡Â?‡Â?–• ™‘—Ž† „‡ –‘ Â?‘˜‡ –‘™ƒ”†• ƒ •›•–‡Â? –Šƒ– ’ƒ••‡• ’”‘Œ‡…– ’”‘’‘•ƒŽ• –Š”‘—‰Š ˆ‹Â?‡” ƒÂ?† ˆ‹Â?‡” ˆ‹Ž–‡”• ‹Â? ‘”†‡” –‘ ƒ””‹˜‡ ƒ– –Š‘•‡ –Šƒ– ƒ”‡ Â?‘•– •—‹–ƒ„Ž‡ –‘ ”‡…‡‹˜‡ „—†‰‡– ˆ—Â?†‹Â?‰ǡ ‹Ǥ‡Ǥǡ –Š‘•‡ ƒŽ‹‰Â?‡† ™‹–Š ‰‘˜‡”Â?Â?‡Â?– ‘„Œ‡…–‹˜‡•ǡ ”‡’”‡•‡Â?–‹Â?‰ ‰‘‘† ˜ƒŽ—‡ ˆ‘” Â?‘Â?‡›ǡ ƒÂ?† …‘Â?•‹•–‡Â?– ™‹–Š ƒ˜ƒ‹Žƒ„Ž‡ ”‡•‘—”…‡•Ǥ Â? ƒ ™‡ŽŽ †‡•‹‰Â?‡† •›•–‡Â?Ç¡ Â?ƒÂ?› ’”‘Œ‡…–• …ƒÂ? „‡ ˆ‹Ž–‡”‡† ‘—– „‡ˆ‘”‡ †‡–ƒ‹Ž‡† ’ŽƒÂ?Â?‹Â?‰ ƒÂ?† ƒÂ?ƒŽ›•‹• „‡‰‹Â?•ǡ –Š—• ƒ˜‘‹†‹Â?‰ –Š‡ Â?‡‡† ˆ‘” ‡Žƒ„‘”ƒ–‡ •–—†‹‡• –‘‘ ‡ƒ”Ž› ‹Â? –Š‡ ’”‘…‡••Ǥ ͶǤ͵ͶǤ The need to strengthen capital budgeting systems in Georgia will become increasingly pressing as dependency on donor assistance declines and selections between competing infrastructure priorities become more nuanced. Â? ”‡…‡Â?– ›‡ƒ”•ǡ ‡‘”‰‹ƒ Šƒ• „‡‡Â? ƒ††”‡••‹Â?‰ ƒÂ? ƒ””ƒ› ‘ˆ ‘„˜‹‘—• ‹Â?ˆ”ƒ•–”—…–—”‡ †‡ˆ‹…‹–• ‹Â? –Š‡ –”ƒÂ?•’‘”–ǡ ‡Â?‡”‰›ǡ ƒÂ?† —–‹Ž‹–› •‡…–‘”•ǡ –Š—• Â?‹–‹‰ƒ–‹Â?‰ –Š‡ —”‰‡Â?…› ‘ˆ †‡˜‡Ž‘’‹Â?‰ ”‹‰‘”‘—• •›•–‡Â?• ‘ˆ ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ƒÂ?† •…”‡‡Â?‹Â?‰Ǥ —”–Š‡”Â?‘”‡ǡ –Š‡ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? Šƒ• „‡‡Â? ˆ‹Â?ƒÂ?…‡† ‹Â? Žƒ”‰‡ ’ƒ”– –Š”‘—‰Š †‘Â?‘” ƒ••‹•–ƒÂ?…‡ǡ ƒ……‘Â?’ƒÂ?‹‡† „› ƒ ”‡ƒ†› ƒ••‘”–Â?‡Â?– ‘ˆ ƒ’’”ƒ‹•ƒŽ –‡…ŠÂ?‹“—‡•Ǥ • –Š‡ ˆ‹•…ƒŽ ŽƒÂ?†•…ƒ’‡ •Š‹ˆ–• …‘Â?•‹†‡”ƒ„Ž› ‹Â? –Š‡ ›‡ƒ”• ƒŠ‡ƒ†ǡ –Š‡ …—””‡Â?– …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â? ™‹ŽŽ „‡…‘Â?‡ —Â?•—•–ƒ‹Â?ƒ„Ž‡Ǥ ‘Â?‘” ƒ••‹•–ƒÂ?…‡ ™‹ŽŽ ƒŽÂ?‘•– ‹Â?‡˜‹–ƒ„Ž› ˆƒŽŽ ĥ ‡‘”‰‹ƒ Â?‘˜‡• ‘—– ‘ˆ –Š‡ ’‘•–Ǧ…‘Â?ˆŽ‹…– ’Šƒ•‡Ǥ —”–Š‡”Â?‘”‡ǡ ‹Â?ˆ”ƒ•–”—…–—”‡ ‹Â?˜‡•–Â?‡Â?– ’”‹‘”‹–‹‡• ™‹ŽŽ Â?‡‡† –‘ „‡ ‹†‡Â?–‹ˆ‹‡† –Š”‘—‰Š ‹Â?…”‡ƒ•‹Â?‰Ž› •›•–‡Â?ƒ–‹… †‡Â?ƒÂ?† ˆ‘”‡…ƒ•–‹Â?‰ͳ͸ǡ ”ƒ–Š‡” –ŠƒÂ? –Š”‘—‰Š –Š‡ Â?‘”‡ ‘„˜‹‘—• •‹‰Â?• ‘ˆ ‡š…‡•• †‡Â?ƒÂ?†ǡ ‡Ǥ‰Ǥǡ ‡Ž‡…–”‹…‹–› „Žƒ…Â?‘—–• ‘” „”‘™Â?Ǧ‘—–•ǡ ‘” ™ƒ–‡” ”ƒ–‹‘Â?‹Â?‰Ǥ –Š‡” ”‡ƒ•‘Â?• ˆ‘” ‰‹˜‹Â?‰ ’”‘Â?‹Â?‡Â?…‡ –‘ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â? ”‡ˆ‘”Â?• ƒ”‡ǣ 4.3.3 Reform Options to Strengthen Georgia’s Capital Budgeting System ͶǤ͵ͷǤ ƒ•‡† ‘Â? –Š‡ ’”‡…‡†‹Â?‰ ƒ••‡••Â?‡Â?–ǡ –Š‹• •‡…–‹‘Â? †‡•…”‹„‡• ƒ •‡“—‡Â?…‡† •‡– ‘ˆ Â?‡†‹—Â?Ǧ–‡”Â? ”‡ˆ‘”Â? ‘’–‹‘Â?• –‘ •–”‡Â?‰–Š‡Â? ‡‘”‰‹ƒǯ• „”‘ƒ†‡” …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?Ǥ Š‡ ˆ‹”•– •‡– ‘ˆ ‘’–‹‘Â?• ‹Â? –Š‡ •‡“—‡Â?…‡ ”‡Žƒ–‡ –‘ ȋ‹Ȍ †‡˜‡Ž‘’‹Â?‰ ƒ •›•–‡Â?ƒ–‹… ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ƒÂ?† ’”‡Ž‹Â?‹Â?ƒ”› •…”‡‡Â?‹Â?‰ ’”‘…‡••Ǣ ƒÂ?† ȋ‹‹Ȍ †‡˜‡Ž‘’‹Â?‰ —Â?‹ˆ‘”Â? Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†ƒÂ?…‡ ‘Â? …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹•Ǥ Š‡ •‡…‘Â?† •‡– ‘ˆ ‘’–‹‘Â?• ‹Â? –Š‡ •‡“—‡Â?…‡ ”‡Žƒ–‡ –‘ •–”‡Â?‰–Š‡Â?‹Â?‰ •–”ƒ–‡‰‹… ‰—‹†ƒÂ?…‡ ƒÂ?† •›•–‡Â?ƒ–‹œƒ–‹‘Â? ‘ˆ –Š‡ ‘˜‡”ƒŽŽ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?Ǥ Introduction of a Systematic Project Identification and Preliminary Screening Process ͶǤ͵͸Ǥ A systematic project identification process involving a “simple and lightâ€? preliminary assessment step can have significant impact in effectively screening a growing pool of infrastructure project needs within the fiscal envelope. Š‡Â? ƒ’’Ž‹‡† •‡”‹‘—•Ž›ǡ •—…Š ƒ •›•–‡Â?ƒ–‹… ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ’”‘…‡•• …ƒÂ? Š‡Ž’ ‹Â? ‡Â?•—”‹Â?‰ –Šƒ– ‘Â?Ž› ƒˆˆ‘”†ƒ„Ž‡ ’”‘Œ‡…–• ™‹–Š –Š‡ ’‘–‡Â?–‹ƒŽ –‘ ‘ˆˆ‡” ‰‘‘† ˜ƒŽ—‡ ˆ‘” Â?‘Â?‡› ƒÂ?† ‹Â? Ž‹Â?‡ ™‹–Š •–”ƒ–‡‰‹… ’‘Ž‹…› ‘„Œ‡…–‹˜‡• ‡Â?–‡” –Š‡ ’”‘Œ‡…– ’‹’‡Ž‹Â?‡ ƒÂ?† ’”‘…‡‡† –‘ Â?‘”‡ †‡–ƒ‹Ž‡† ’”‡’ƒ”ƒ–‹‘Â? ȋƒÂ?† –Š—• –‘ „—†‰‡–‹Â?‰ȌǤ •—‰‰‡•–‡† ˆ‘”Â?ƒ– ˆ‘” ͳ͸ – Ž‡ƒ•– ‹Â? –Š‡ ‡Â?‡”‰› •‡…–‘”ǡ Ž‘Â?‰Ǧ–‡”Â? †‡Â?ƒÂ?† ˆ‘”‡…ƒ•–‹Â?‰ ƒÂ?† ’‘™‡” ’ŽƒÂ?Â?‹Â?‰ ‹• Â?‘– …—””‡Â?–Ž› „‡‹Â?‰ —Â?†‡”–ƒÂ?‡Â?Ǥ Š‡ •‹–—ƒ–‹‘Â? ƒ’’‡ƒ”• –‘ „‡ •‹Â?‹Žƒ” ‹Â? –Š‡ ™ƒ–‡” ƒÂ?† •ƒÂ?‹–ƒ–‹‘Â? •‡…–‘”Ǥ ͹Ͷ ƒ ’”‡Ž‹Â?‹Â?ƒ”› ƒ••‡••Â?‡Â?– ˆ‘” Â?ƒŒ‘”ͳ͹ ’”‘Œ‡…–• ‹• ’”‡•‡Â?–‡† ‹Â? ‘š ͵Ǥ Š‹• ˆ‘”Â? ‹• ‹Â?–‡Â?†‡† –‘ ƒ••‹•– „—†‰‡– ‘”‰ƒÂ?‹œƒ–‹‘Â?• †‡…‹†‡ ™Š‡–Š‡” –‘ ’”‘…‡‡† –‘ †‡–ƒ‹Ž‡† ’”‘Œ‡…– ’”‡’ƒ”ƒ–‹‘Â? ȋˆ‡ƒ•‹„‹Ž‹–› •–—†›Ȍ ƒÂ?† ƒ’’”ƒ‹•ƒŽǤ Š‹• ’”‡Ž‹Â?‹Â?ƒ”› ƒ••‡••Â?‡Â?– –‘‘Ž ‹• „‡•– —•‡† ĥ ƒ „ƒ•‹• ˆ‘” †‹ƒŽ‘‰—‡ „‡–™‡‡Â? •’‡Â?†‹Â?‰ Â?‹Â?‹•–”‹‡• ƒÂ?† –Š‡ ‹Â?‹•–”› ‘ˆ ‹Â?ƒÂ?…‡ǡ ”ƒ–Š‡” –ŠƒÂ? ƒ …‘Â?–”‘Ž –‘‘Žǡ ƒŽ–Š‘—‰Š ˆƒ‹Ž‹Â?‰ –‘ …‘Â?’Ž‡–‡ ƒ ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ˆ‘”Â? ™‘—Ž† •–‹ŽŽ „‡ ƒ ”‡ƒ•‘Â? ˆ‘” †‡Â?›‹Â?‰ „—†‰‡– ˆ—Â?†• ˆ‘” ’”‘Œ‡…– ’”‡’ƒ”ƒ–‹‘Â?Ǥ ”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ‹• ”‡…‘Â?Â?‡Â?†‡† ĥ ƒ •Š‘”–Ǧ–‡”Â? ’”‹‘”‹–› „‡…ƒ—•‡ –Š‡ •‘‘Â?‡” ‹– ‹• ‹Â?–”‘†—…‡†ǡ –Š‡ •‘‘Â?‡” ‹– …ƒÂ? ‹Â?’ƒ…– –Š‡ “—ƒŽ‹–› ‘ˆ –Š‡ ˆ‘”™ƒ”† ’‹’‡Ž‹Â?‡ ‘ˆ ’”‘Œ‡…–•Ǥ ƒ˜‹Â?‰• ‘Â? –Š‡ ’”‡’ƒ”ƒ–‹‘Â? ‘ˆ ™‡ƒÂ?‡” ‘” —Â?ƒˆˆ‘”†ƒ„Ž‡ ’”‘Œ‡…–• ȋ™Š‹…Š …ƒÂ? ‘ˆ–‡Â? ”‡’”‡•‡Â?– —’™ƒ”†• ‘ˆ ͷΨ ‘ˆ ’”‘Œ‡…– …‘•–•ǡ †‡’‡Â?†‹Â?‰ ‘Â? …‘Â?’Ž‡š‹–›Ȍ …ƒÂ? ƒŽ•‘ „‡‰‹Â? –‘ „‡ ”‡ƒŽ‹œ‡†Ǥ ͶǤ͵͹Ǥ The project identification process should be coordinated with the budgetary calendar, so as to be well integrated into the medium term fiscal frameworkǤ Â?Ž› ’”‘Œ‡…–• …‘Â?’Ž‡–‹Â?‰ ’”‡’ƒ”ƒ–‹‘Â? „› …—–Ǧ‘ˆˆ †ƒ–‡ ‡ƒ”Ž› ‹Â? –Š‡ È€ …ƒŽ‡Â?†ƒ” •Š‘—Ž† „‡ ‡Ž‹‰‹„Ž‡ ˆ‘” …‘Â?•‹†‡”ƒ–‹‘Â?Ǥ ”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? …ƒÂ? –ƒÂ?‡ ’Žƒ…‡ ƒ– ƒÂ?› –‹Â?‡ †—”‹Â?‰ –Š‡ ›‡ƒ”ǡ „—– •—„Â?‹••‹‘Â? ‘ˆ Â?‡™ ’”‘Œ‡…– …‘Â?…‡’–• ˆ‘” …‘Â?ˆ‹”Â?ƒ–‹‘Â? –‘ ’”‘…‡‡† –‘ ’”‡’ƒ”ƒ–‹‘Â? ƒÂ?† ƒ’’”ƒ‹•ƒŽ •Š‘—Ž† „‡ Ž‹Â?Â?‡† –‘ –Š‡ Ȁ„—†‰‡– …ƒŽ‡Â?†ƒ” –Š”‘—‰Š ƒ •’‡…‹ˆ‹… …ƒŽ‡Â?†ƒ” ˆ‘” –Š‡ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?Ǥ Š‹• ‹• —•‡ˆ—Ž „‘–Š ‹Â? Š‡Ž’‹Â?‰ –‘ ‡•–ƒ„Ž‹•Š Â?‡†‹—Â?Ǧ–‡”Â? …ƒ’‹–ƒŽ •’‡Â?†‹Â?‰ …‡‹Ž‹Â?‰• ƒÂ?† ‹Â? ‡Â?•—”‹Â?‰ –Šƒ– –Š‡ ’”‘Œ‡…– ’‹’‡Ž‹Â?‡ ”‡Â?ƒ‹Â?• …‘Â?•‹•–‡Â?– ™‹–Š ”‡•‘—”…‡ ƒ˜ƒ‹Žƒ„‹Ž‹–› ‘˜‡” –Š‡ Â?‡†‹—Â?Ǧ–‡”Â?ͳͺǤ Â? –Š‡ ‡‘”‰‹ƒÂ? …‘Â?–‡š–ǡ ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ™‘—Ž† „‡ „‡•– …‘‘”†‹Â?ƒ–‡† ™‹–Š –Š‡ ‡ƒ”Ž› •–ƒ‰‡• ‘ˆ –Š‡ ’”‘…‡•• ȋ„‡ˆ‘”‡ „—†‰‡–ƒ”› …‡‹Ž‹Â?‰• ƒ”‡ •‡–Ȍ ™Š‡Â? †‡…‹•‹‘Â?• ƒ”‡ „‡‹Â?‰ Â?ƒ†‡ ‘Â? ‘˜‡”ƒŽŽ ”‡•‘—”…‡ ƒ˜ƒ‹Žƒ„‹Ž‹–›ǡ ‘Â? –Š‡ ˆ‹•…ƒŽ •’ƒ…‡ ƒ˜ƒ‹Žƒ„Ž‡ ˆ‘” Â?‡™ •’‡Â?†‹Â?‰ ‹Â?‹–‹ƒ–‹˜‡•ǡ ‹Â?…Ž—†‹Â?‰ Â?‡™ …ƒ’‹–ƒŽ •’‡Â?†‹Â?‰ǡ ƒÂ?† ‘Â? –Š‡ ƒŽŽ‘…ƒ–‹‘Â? ‘ˆ –Š‹• ˆ‹•…ƒŽ •’ƒ…‡ „‡–™‡‡Â? …‘Â?’‡–‹Â?‰ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ’”‘’‘•ƒŽ•Ǥ Box 4.3: Proposal for Preliminary Assessment Form for Major Projects 1. Administrative Information and Description Project nameÇ£ [Short name of project] Responsible budgetary institutionÇ£ [FirstǦlevel budget institution with responsibility for the project.] Organization codeÇ£ Project proposer: [Name & title of the senior official with overall responsibility for proposing the project and ensuring that it meets its objectives and delivers the forecast benefits.] Location(s)Ç£ [Geographic location of the project, or locations if it is a programmatic project consisting of a number of similar smaller projects in different locations.] Project descriptionÇ£ [Brief description of the preferred project and its main components, including approximate scale and service delivery capacity (rough estimates only) of the assets to be created] 2. Relationship with Program Budget ProgramÇ£ [Budgetary program to which the project belongs] SubǦprogram(s)Ç£ [Budgetary SubǦprogram or subǦprograms to which the project will contribute] 3. Strategic Case for the Project ͳ͹ ‘ ƒ˜‘‹† —Â?Â?‡…‡••ƒ”› „—”‡ƒ—…”ƒ…› ƒÂ?† ‡…‘Â?‘Â?‹œ‡ ‘Â? Ž‹Â?‹–‡† ƒÂ?ƒŽ›–‹…ƒŽ •Â?‹ŽŽ•ǡ –Š‡ ˆ‘”Â?ƒŽ ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ’”‘…‡•• •Š‘—Ž† ’”‘„ƒ„Ž› „‡ …‘Â?ˆ‹Â?‡† –‘ Â?ƒŒ‘” …ƒ’‹–ƒŽ ’”‘Œ‡…–• ȋƒ• †‡ˆ‹Â?‡† „› –Š‡ ‰‘˜‡”Â?Â?‡Â?–ȌǤ ͳͺ –‡”ƒ–‹‘Â? ‹• —•—ƒŽŽ› ”‡“—‹”‡† „‡–™‡‡Â? …‡‹Ž‹Â?‰ •‡––‹Â?‰ ƒÂ?† –Š‡ …Š‘‹…‡ ‘ˆ ™Š‹…Š ’”‘Œ‡…–• –‘ ’”‘…‡‡† ™‹–ŠǤ Š‹• ’”‘…‡•• ‹• Â?ƒÂ?ƒ‰‡† „› –Š‡ ˆ‹Â?ƒÂ?…‡ Â?‹Â?‹•–”›Ǥ ͹ͷ Strategic objectivesÇ£ [To which strategic objectives of the Government or sector ministry will the project contribute and how? Identify the relevant goals and objectives of the budgetary program and subǦprograms and the quantified indicators of their achievement. How will the project help in achieving these?] Supporting documentationÇ£ [Where are the strategic objectives set down? Identify relevant decrees, strategic plans, BDD, program budget or other documentation.] Risks and assumptionsÇ£ [Main external risks that could affect the success of the project. Main assumptions, including dependencies on actions by other public institutions. What will be the requirements for risk mitigation and coordination measures?] Lessons from similar projectsÇ£ [Are there any relevant lessons from similar completed and ongoing projects that have influenced the strategic approach?] 4. Preliminary Economic Case for the Project Specific problem or constraintÇ£ [What problem or constraint in the community or economy, or capability weakness in the public sector is the project designed to address? This could relate to the condition of existing infrastructure, current capacity constraints, because of excess demand for infrastructure services, or anticipated future growth in demand beyond current capacities. How is the project expected to address the identified problem or capability weakness?] Demand for the project services: [Who are the intended beneficiaries of the project and what is their expected demand for its services (quantified if possible)?] Project costs and benefitsÇ£ [What will be the approximate capital costs of the project (based on the cost of recently completed works of a similar nature or international experience)? What future operating and maintenance costs will be involved (qualitative assessment only required, but quantitative if available)? What are the main sources of project benefits Ǧ financial and economic? Are there likely to be any significant environmental and social costs and benefits? Are the fullǦlife economic benefits of the preferred option expected to exceed the lifeǦcycle economic costs (including operations and maintenance)? What is the basis for this assessment? ] Project alternatives and preferred optionÇ£ [What alternative project (or policy) solutions been considered, including doing nothing, and why is the proposed project to be preferred? Which options should be taken forward for analysis, alongside the preferred option, during project preparation?] Lessons from similar projectsÇ£ È?Lessons from similar completed and ongoing project relevant for the choice of preferred project and its design?] 4. Project Financing, Implementation and Management Project financing: [Set out the proposed sources of finance for the project. Are potential requirements for State Budget funding consistent with medium to long term projections of resource availability? If external financing is involved, what is the status of discussions with potential funding agencies?] ProcurementÇ£ [Briefly outline the intended approach to procurement and contracting. Will the project be implemented through traditional procurement or are there possibilities for PPP arrangements? If PPP is a possibility summarise the potential options, the criteria for going down this route and the assessments that will be required for ensuring value for money.] Project managementÇ£ [Briefly outline the expected arrangements for managing project implementation so that project will be delivered on time, to budget and consistent with the specification. Does the implementing institution have adequate managerial and technical capacity for implementing projects of this nature? If not, what additional measures might be required to ensure this is the case.] 5. Operational Sustainability Asset ownership: [Which entity will own the asset? Does it maintain an upǦtoǦdate asset register?] Operational responsibilitiesÇ£ [Which entity will have responsibility for operating and maintaining the capital asset once completed? Does the institution have experience of managing the operation of similar assets? If not, what measures will be necessary to create the necessary capacities?] Operations and maintenance expenditures: [Are operations of existing assets in the sector/subǦsector currently being funded on a sustainable basis. Explain how the necessary operating and maintenance expenditures for the new asset(s) ͹͸ will be financed. If additional State Budget funding will be required, is this consistent with medium to long projections of resource availability for the operating entity? If other financing mechanisms are expected to be involved, briefly explain how these will work.] ͶǤ͵ͺǤ International good practice examples of capital budgeting systems involve a sound preliminary assessment step before proceeding to project preparation. ƒ„Ž‡ ͶǤʹ ’”‡•‡Â?–• ƒ …‘Â?’ƒ”‹•‘Â? ‘ˆ ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â?Ç¡ •…”‡‡Â?‹Â?‰ǡ ƒÂ?† ƒ’’”ƒ‹•ƒŽ ’”‘…‡†—”‡• ‹Â? Š‹Ž‡ǡ ‘—–Š ‘”‡ƒǡ ”‡ŽƒÂ?† ƒÂ?† –Š‡ Â?‹–‡† ‹Â?‰†‘Â?Ç¡ ™Š‹…Š ƒ”‡ ”‡…‘‰Â?‹œ‡† ĥ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‰‘‘† ’”ƒ…–‹…‡ ‡šƒÂ?’Ž‡• ‘ˆ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?•Ǥ Š‹Ž‡ ƒÂ?† ‘”‡ƒ Šƒ˜‡ •‘Â?‡ •‹Â?‹Žƒ”‹–‹‡•ǡ ’ƒ”–‹…—Žƒ”Ž› –Š‡ †‡‰”‡‡ ‘ˆ †‹”‡…– …‡Â?–”ƒŽ ‹Â?˜‘Ž˜‡Â?‡Â?–ǡ ĥ †‘ ”‡ŽƒÂ?† ƒÂ?† –Š‡ Ç¡ ™Š‡”‡ –Š‡ …‡Â?–”‡ ‹• Ž‡•• ‹Â?˜‘Ž˜‡†ǡ ’”‡ˆ‡””‹Â?‰ –‘ ƒ••‡•• ”‡•—Ž–• ”ƒ–Š‡” –ŠƒÂ? Â?‡ƒÂ?•Ǥ ‘™‡˜‡”ǡ ‹Â? •’‹–‡ ‘ˆ •‘Â?‡ ‹Â?•–‹–—–‹‘Â?ƒŽ †‹ˆˆ‡”‡Â?…‡•ǡ –Š‡ ˆ‘ŽŽ‘™‹Â?‰ ‰‘‘† ’”ƒ…–‹…‡ ˆ‡ƒ–—”‡• ƒ”‡ …‘Â?Â?‘Â? –‘ ƒŽŽ ˆ‘—” …‘—Â?–”‹‡•ǣ –Š‡ •›•–‡Â?ƒ–‹… ƒ’’Ž‹…ƒ–‹‘Â? ‘ˆ ȋ…‘•–Ǧ „‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹•Ȍ ƒÂ?† ȋ…‘•–Ǧ‡ˆˆ‡…–‹˜‡Â?॥ ƒÂ?ƒŽ›•‹•ȌǢ ƒ …‘Â?…‡’–—ƒŽ †‹•–‹Â?…–‹‘Â? „‡–™‡‡Â? ̵•…”‡‡Â?‹Â?‰̵ ƒÂ?† ̵•‡Ž‡…–‹‘Â?̵ ’”‘…‡••‡•Ǣ —•‡ ‘ˆ ’”‡Ž‹Â?‹Â?ƒ”› ƒ••‡••Â?‡Â?–• „‡ˆ‘”‡ Â?‘”‡ †‡–ƒ‹Ž‡† ’”‘Œ‡…– ’”‡’ƒ”ƒ–‹‘Â?Ç¢ ’”‘Œ‡…– •‡Ž‡…–‹‘Â? „› •‡…–‘” •’‡Â?†‹Â?‰ ƒ‰‡Â?…‹‡• ĥ ’ƒ”– ‘ˆ –Š‡ „—†‰‡– ’”‘…‡•• Ǧ ™‹–Š‹Â? †‡ˆ‹Â?‡† …‡‹Ž‹Â?‰•Ǣ ƒÂ?† ‹••—‹Â?‰ ‘ˆ Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†‡Ž‹Â?‡• „› ƒ …‡Â?–”ƒŽ ƒ‰‡Â?…› ȋ—•—ƒŽŽ› –Š‡ ˆ‹Â?ƒÂ?…‡ Â?‹Â?‹•–”›ȌǤ Table 4.2 International Experience in Identification, Screening, and Appraisal Dimension Chile South Korea Ireland United Kingdom Coverage of PIM —„Ž‹… ‹Â?˜‡•–Â?‡Â?– ’”‘Œ‡…–• ‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?– ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?– System ƒ– ƒŽŽ Ž‡˜‡Ž• ‘ˆ ‰‘˜‡”Â?Â?‡Â?– ’”‘Œ‡…–• ƒÂ?† –‘ Ž‘…ƒŽ ’”‘’‘•ƒŽ• ‹Â? –Š‡ ‘Â?Ž› ƒÂ?† –‘ ‹Â?˜‡•–Â?‡Â?– ‰‘˜‡”Â?Â?‡Â?– ’”‘Œ‡…–• ’—„Ž‹… •‡…–‘” ’”‘’‘•ƒŽ• ˆ”‘Â? •–ƒ–‡ ”‡…‡‹˜‹Â?‰ …‡Â?–”ƒŽ ‡Â?–‡”’”‹•‡• ‰‘˜‡”Â?Â?‡Â?– •—„•‹†‹‡• Prominent assessment È€ ƒÂ?†  ‹Â?‰Ž‡ ”‹–‡”‹‘Â? È€ ƒÂ?†  tools Â?ƒŽ›•‹•ǡ  ƒÂ?† È€ Proportionality in ‘ ‡• ‡• ‘ application of tools. Requirement for ‡• ‡• È‚ ˆ‘” ’”‘Œ‡…–• ε̈́ͷͲ ‡• ‡• preliminary Â? assessment before commencing preparation Project screening by ‡• È‚ „—– †‡Ǧ…‘Â?…‡Â?–”ƒ–‡† ‡• Ǧ ‘ Â?Ž› ˆ‘” ˜‡”› Žƒ”‰‡ central agency •–”—…–—”‡ ‘ˆ ƒ—–‘Â?‘Â?‘—• ’”‘Œ‡…–•ǡ ‡Ǥ‰Ǥǡ ”‘ƒ† ’”‘˜‹Â?…‹ƒŽ ‘ˆˆ‹…‡• •…Š‡Â?‡• ε͉ͷͲͲ Â?‹ŽŽ‹‘Â? Project selection ‡• ‡• ‡• ‡• delegated to sector spending agencies Ǧ within budget ceilings Involvement of central ‡• È‚ ‹Â?‹•–”› ‘ˆ ŽƒÂ?Â?‹Â?‰ ‡• È‚   ‘”‰ƒÂ?‹•‡• ‘ ‘ agencies other than ”‡•’‘Â?•‹„Ž‡ ˆ‘” ’”‡Ǧ ’”‡Ž‹Â?‹Â?ƒ”› ˆ‡ƒ•‹„‹Ž‹–› the finance ministry ‹Â?˜‡•–Â?‡Â?– ’Šƒ•‡ •–—†‹‡• ˆ‘” ‹Â?‹•–”› ‘ˆ ŽƒÂ?Â?‹Â?‰ ƒÂ?† —†‰‡–Ǥ Central agencies issue ‡• Ȃ•‡…–‘” •’‡…‹ˆ‹… ‡• È‚ •‡…–‘” •’‡…‹ˆ‹… ‡• È‚ ‰‡Â?‡”ƒŽ ‡• È‚ ‰‡Â?‡”ƒŽ ‰—‹†‡Ž‹Â?‡• guidelines on project ‰—‹†‡Ž‹Â?‡• ‰—‹†‡Ž‹Â?‡• ‰—‹†‡Ž‹Â?‡• planning ‘—”…‡ǣ   ƒ…Â?‰”‘—Â?† ‘Ž‹…› ‘–‡ ‘Â? –”‡Â?‰–Š‡Â?‹Â?‰ ƒ’‹–ƒŽ —†‰‡–‹Â?‰ ‹Â? ‡‘”‰‹ƒ Methodological Guidelines on Project Appraisal Techniques ͶǤ͵ͻǤ Methodological guidelines on project appraisal techniques, including costǦbenefit analysis (but also less sophisticated techniques) are a central requirement of a sound capital budgeting system. ƒŒ‘” ’”‘Œ‡…–• –Šƒ– Šƒ˜‡ ’ƒ••‡† –Š‡ ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? •–ƒ‰‡ •Š‘—Ž† „‡ •—„Œ‡…– –‘ ͹͹ ”‹‰‘”‘—• ƒÂ?† •›•–‡Â?ƒ–‹… ’”‡’ƒ”ƒ–‹‘Â? ƒÂ?† ƒ’’”ƒ‹•ƒŽǤ Š‹• •–‡’ •Š‘—Ž† ‹Â?…Ž—†‡ ‡…‘Â?‘Â?‹… …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹• ȋ‘” …‘•–Ǧ‡ˆˆ‡…–‹˜‡Â?॥ ƒÂ?ƒŽ›•‹• ™Š‡”‡ –Š‹• ‹• Â?‘”‡ ƒ’’”‘’”‹ƒ–‡Ȍ –‘ ˜‡”‹ˆ› –Šƒ– –Š‡ ’”‘Œ‡…– ”‡’”‡•‡Â?–• ƒ ‰‘‘† —•‡ ‘ˆ ’—„Ž‹… Â?‘Â?‡›Ǥ ‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†ƒÂ?…‡ ‹• ƒ ’”‹‘”‹–› „‡…ƒ—•‡ ‹– ‹• —•—ƒŽŽ› ƒ– –Š‡ …‡Â?–”‡ ‘ˆ ƒ Â?ƒ–‹‘Â?ƒŽ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ƒ••‡••Â?‡Â?– •›•–‡Â? ƒÂ?† ‹– –ƒÂ?‡• –‹Â?‡ –‘ †‡˜‡Ž‘’ ƒÂ?† ‡Â?„‡†Ǥ Š‡ •Š‘”– –‡”Â? „‡Â?‡ˆ‹–• Â?ƒ› …‘Â?‡ ‹Â? –Š‡ •Šƒ’‡ ‘ˆ –Š‡ ‹Â?…”‡ƒ•‡† ‹Â?–‡”Â?ƒŽ …‘Â?•‹•–‡Â?…› ‘ˆ –Š‡ ‡š–‡”Â?ƒŽŽ› ˆ‹Â?ƒÂ?…‡† ’ƒ”– ‘ˆ –Š‡ ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ?Ǥ —ŽŽ ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ƒ…”‘•• ƒŽŽ •‹‰Â?‹ˆ‹…ƒÂ?– …ƒ’‹–ƒŽ ’”‘Œ‡…–• Â?ƒ› –ƒÂ?‡ …‘Â?•‹†‡”ƒ„Ž‡ –‹Â?‡ –Š‘—‰Šǡ ’ƒ”–‹…—Žƒ”Ž› ĥ ‹– ™‹ŽŽ ’”‘„ƒ„Ž› ”‡“—‹”‡ •‹‰Â?‹ˆ‹…ƒÂ?– …ƒ’ƒ…‹–› „—‹Ž†‹Â?‰ǡ •‘ –Šƒ– –Š‡ •‘‘Â?‡” –Š‹• •–ƒ”–• –Š‡ „‡––‡”Ǥ ͶǤͶͲǤ Without uniform methodological guidelines on appraisal techniques, Georgia is at risk of uneven standards of scrutiny across projects and weaker standards as heavy reliance on donor funding for public investment phases out. Š‡ Žƒ…Â? ‘ˆ ƒÂ? ƒ’’”‘˜‡† Â?‡–Š‘†‘Ž‘‰› ˆ‘” ‡…‘Â?‘Â?‹… ƒÂ?ƒŽ›•‹• ‘ˆ ’”‘Œ‡…–• ‹• Â?‘– …—””‡Â?–Ž› ˜‹‡™‡† ĥ ƒ Â?ƒŒ‘” †”ƒ™„ƒ…Â? „› –Š‡ ƒ—–Š‘”‹–‹‡• •‹Â?…‡ Â?‘•– Â?ƒŒ‘” ‹Â?˜‡•–Â?‡Â?– ’”‘Œ‡…–• Šƒ˜‡ „‡‡Â? ‡š–‡”Â?ƒŽŽ› ˆ‹Â?ƒÂ?…‡† „› †‘Â?‘”• ƒ’’Ž›‹Â?‰ –Š‡‹” ‘™Â? Â?‡–Š‘†‘Ž‘‰‹‡•Ǥ – •Š‘—Ž† „‡ Â?‘–‡†ǡ Š‘™‡˜‡”ǡ –Šƒ– †‘Â?‘”• ƒ”‡ Â?‘– ƒŽ™ƒ›• ”‹‰‘”‘—• ‹Â? †‡’Ž‘›‹Â?‰ …‘•–Ǧ „‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‡• ƒÂ?† –Š‡‹” ƒÂ?ƒŽ›•‹• …ƒÂ? •‘Â?‡–‹Â?‡• Žƒ…Â? ‘„Œ‡…–‹˜‹–› ‘” „‡ ’‡”ˆ‘”Â?‡† ƒˆ–‡” ƒÂ? ‹Â?˜‡•–Â?‡Â?– †‡…‹•‹‘Â? Šƒ• ƒŽ”‡ƒ†› „‡‡Â? –ƒÂ?‡Â?Ǥ ‘Â?‘”• ƒŽ•‘ —•‡ †‹ˆˆ‡”‡Â?– Â?‡–Š‘†• ƒÂ?† ˜ƒŽ—‡• ˆ‘” Â?‡› ’ƒ”ƒÂ?‡–‡”•ǡ Ž‹Â?‡ –Š‡ †‹•…‘—Â?– ”ƒ–‡ǡ ’”‡•‡Â?–‹Â?‰ †‹ˆˆ‹…—Ž–‹‡• ‹Â? …‘Â?’ƒ”‹Â?‰ ™‹–Š ‘–Š‡” ’”‘Œ‡…–• ‹Â? –Š‡ •ƒÂ?‡ •‡…–‘”Ȁ•—„Ǧ•‡…–‘”Ǥ Â?‡ ‘ˆ –Š‡ Â?ƒ‹Â? ”‡ƒ•‘Â?• ˆ‘” †‡˜‡Ž‘’‹Â?‰ ƒÂ?† ƒ†‘’–‹Â?‰ ƒ Â?ƒ–‹‘Â?ƒŽ ’”‘Œ‡…– ƒ’’”ƒ‹•ƒŽ Â?‡–Š‘†‘Ž‘‰› ‹• –Šƒ– ’”‘Œ‡…–• •Š‘—Ž† „‡ •—„Œ‡…– –‘ –Š‡ •ƒÂ?‡ ƒÂ?ƒŽ›•‹• ƒÂ?† •…”—–‹Â?› ‹””‡•’‡…–‹˜‡ ‘ˆ –Š‡‹” •‘—”…‡ ‘ˆ ˆ—Â?†‹Â?‰Ǥ Š‹• ™‹ŽŽ „‡ ’ƒ”–‹…—Žƒ”Ž› ‹Â?’‘”–ƒÂ?– ‹Â? ‡‘”‰‹ƒ ĥ Š‡ƒ˜› ”‡Ž‹ƒÂ?…‡ ‘Â? †‘Â?‘” ˆ—Â?†‹Â?‰ ˆ‘” …ƒ’‹–ƒŽ ‹Â?˜‡•–Â?‡Â?– ’Šƒ•‡• ‘—– ‘˜‡” –‹Â?‡Ǥ Box 4.4: Examples of methodological guidelines from other countries x Ç® ’’”ƒ‹•ƒŽ ƒÂ?† ‡˜ƒŽ—ƒ–‹‘Â? ‹Â? …‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?–ǯ Ǧ Ç®Š‡ ”‡‡Â? ‘‘Â?ǯǡ  ”‡ƒ•—”›Ǣ x Ç® —‹†‡ –‘ …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹• ‘ˆ ‹Â?˜‡•–Â?‡Â?– ’”‘Œ‡…–•ǯǡ ‹”‡…–‘”ƒ–‡ ‡Â?‡”ƒŽ ˆ‘” ‡‰‹‘Â?ƒŽ ‘Ž‹…›Ǣ x Ç® Â?–”‘†—…–‹‘Â? –‘ …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹• ƒÂ?† ƒŽ–‡”Â?ƒ–‹˜‡ ‡˜ƒŽ—ƒ–‹‘Â? Â?‡–Š‘†‘Ž‘‰‹‡•ǯǡ ‡’ƒ”–Â?‡Â?– ‘ˆ ‹Â?ƒÂ?…‡ Ƭ †Â?‹Â?‹•–”ƒ–‹‘Â?Ç¡ ‘Â?Â?‘Â?™‡ƒŽ–Š ‘ˆ —•–”ƒŽ‹ƒǤ x Ç® ‘•– ‡Â?‡ˆ‹– Â?ƒŽ›•‹• ”‹Â?‡”ǯǡ ‡™ ‡ƒŽƒÂ?† ”‡ƒ•—”› x Ç® —‹†‡Ž‹Â?‡• ƒÂ?† †‹•…‘—Â?– ”ƒ–‡• ˆ‘” „‡Â?‡ˆ‹–Ǧ…‘•– ƒÂ?ƒŽ›•‹• ‘ˆ ˆ‡†‡”ƒŽ ’”‘‰”ƒÂ?•ǯ È‹ ‹”…—Žƒ” ‘Ǥ ǦͻͶ ‡˜‹•‡†Ȍǡ ˆˆ‹…‡ ‘ˆ ƒÂ?ƒ‰‡Â?‡Â?– ƒÂ?† —†‰‡–ǡ  ͶǤͶͳǤ International good practice in methodological guidance for appraisal techniques addresses a set of key issues to ensure economic viability of publicly funded projects. Â? –”ƒÂ?•‹–‹‘Â? …‘—Â?–”‹‡•ǡ ’”‘Œ‡…– ’”‡’ƒ”ƒ–‹‘Â? ‹• ‘ˆ–‡Â? ‹Â?–‡”’”‡–‡† ĥ ƒÂ? ‡Â?‰‹Â?‡‡”‹Â?‰ ƒÂ?ƒŽ›•‹•ǡ ™‹–Š …ƒ’ƒ…‹–› –‘ —Â?†‡”–ƒÂ?‡ •—…Š ƒÂ?ƒŽ›•‹• —•—ƒŽŽ› ™‡ŽŽ †‡˜‡Ž‘’‡†ǡ ™Š‡”‡ƒ• …ƒ’ƒ…‹–‹‡• ‹Â? Â?‹…”‘‡…‘Â?‘Â?‹… ƒÂ?ƒŽ›•‡• ‘ˆ ‡…‘Â?‘Â?‹… ˜‹ƒ„‹Ž‹–› ƒ”‡ ‘ˆ–‡Â? Žƒ…Â?‹Â?‰Ǥ Â? Â?‘”‡ †‡˜‡Ž‘’‡† …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?•ǡ ’”‘Œ‡…– ’”‡’ƒ”ƒ–‹‘Â? ‹Â?˜‘Ž˜‡• ˆ‡ƒ•‹„‹Ž‹–› •–—†‹‡• ‹Â?…Ž—†‹Â?‰ ‡…‘Â?‘Â?‹…ǡ ˆ‹Â?ƒÂ?…‹ƒŽǡ ƒÂ?† –‡…ŠÂ?‹…ƒŽȀ‡Â?‰‹Â?‡‡”‹Â?‰ ƒÂ?ƒŽ›•‡•ǡ ĥ ™‡ŽŽ ĥ ‡Â?˜‹”‘Â?Â?‡Â?–ƒŽ ƒÂ?† •‘…‹ƒŽ ‹Â?’ƒ…– ƒ••‡••Â?‡Â?–•Ǥ ‘” ˆ—ŽŽ ‡…‘Â?‘Â?‹… ˆ‡ƒ•‹„‹Ž‹–› •–—†‹‡•ǡ †‡Â?ƒÂ?† ˆ‘” ’”‘Œ‡…– •‡”˜‹…‡• ‹• ‡•–‹Â?ƒ–‡† ƒÂ?† „‡Â?‡ˆ‹–•ǡ ĥ ™‡ŽŽ ĥ …‘•–•ǡ ƒ”‡ ƒ••‡••‡† ƒÂ?† “—ƒÂ?–‹ˆ‹‡† ‹Â? ƒ …‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹• È‹ ȌǤ ‘š ͶǤͶ ’”‡•‡Â?–• ƒ Â?—Â?„‡” ‘ˆ †‹ˆˆ‡”‡Â?– ‘ˆ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‰‘‘† ’”ƒ…–‹…‡ ‡šƒÂ?’Ž‡• ‘ˆ Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†ƒÂ?…‡ ‘Â? ’”‘Œ‡…– ƒ’’”ƒ‹•ƒŽǤ • ‡™ ‡ƒŽƒÂ?†ǯ• Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†‡Ž‹Â?‡• •–ƒ–‡ǡ –Š‡ ƒ‹Â? ‘ˆ –Š‡ ƒÂ?ƒŽ›•‹• —Â?†‡”–ƒÂ?‡Â? ˆ‘” ’”‘Œ‡…– ƒ’’”ƒ‹•ƒŽ •Š‘—Ž† „‡ –‘ ’”‘˜‹†‡ ƒÂ?•™‡”• –‘ –Š‡ ˆ‘ŽŽ‘™‹Â?‰ “—‡•–‹‘Â?•ǣ x Šƒ– ƒ”‡ –Š‡ •’‡…‹ˆ‹… ‘—–…‘Â?‡• •‘—‰Š– –Š”‘—‰Š –Š‡ ‹Â?˜‡•–Â?‡Â?–ǫ x ”‡ –Š‡”‡ „‡––‡” ™ƒ›• –‘ ƒ…Š‹‡˜‡ –Š‡•‡ ‘—–…‘Â?‡•ǫ x ”‡ –Š‡”‡ „‡––‡” —•‡• ˆ‘” –Š‡•‡ ”‡•‘—”…‡•ǫ x • –Š‹• ƒÂ? ƒ’’”‘’”‹ƒ–‡ ”‘Ž‡ ˆ‘” ‰‘˜‡”Â?Â?‡Â?–ǫ ͹ͺ ͶǤͶʹǤ Good practice in methodological guidance on appraisal includes utilizing different techniques for projects falling under different value thresholds. ‹• ƒÂ? ‹Â?’‘”–ƒÂ?– ƒÂ?† —•‡ˆ—Ž –‘‘Ž ˆ‘” ƒ••‡••‹Â?‰ –Š‡ ˜ƒŽ—‡ ˆ‘” Â?‘Â?‡› ‘ˆ ƒ ’”‘Œ‡…– ’”‘’‘•ƒŽǡ „—– ‹– Šƒ• ‹–• Ž‹Â?‹–ƒ–‹‘Â?•ǡ ‹Â?…Ž—†‹Â?‰ ‹–• Â?‡‡† ˆ‘” •Â?‹ŽŽ‡† ’”ƒ…–‹–‹‘Â?‡”• ƒÂ?† –Š‡ †‹ˆˆ‹…—Ž–› ‘ˆ ƒ’’Ž›‹Â?‰ ‹– ™Š‡”‡ ‹– ‹• Ž‡•• ‡ƒ•› ‘” –‘‘ …‘•–Ž› –‘ ˜ƒŽ—‡ „‡Â?‡ˆ‹–•Ǥ Š‡ Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†ƒÂ?…‡ –Š—• Â?‡‡†• –‘ „‡ •—’’Ž‡ ‡Â?‘—‰Š –‘ ƒŽŽ‘™ –Š‡ —•‡ ‘ˆ •‹Â?’Ž‡” ƒŽ–‡”Â?ƒ–‹˜‡ Â?‡–Š‘†• ȋ‡Ǥ‰Ǥǡ …‘•–Ǧ‡ˆˆ‡…–‹˜‡Â?॥ ƒÂ?ƒŽ›•‹• ‘” Â?—Ž–‹Ǧ…”‹–‡”‹ƒ ƒÂ?ƒŽ›•‹•Ȍ ™Š‡”‡ ƒ’’”‘’”‹ƒ–‡Ǥ ƒ„Ž‡ ͶǤ͵ •Š‘™• –Š‡ ˜ƒŽ—‡ –Š”‡•Š‘Ž†• ˆ‘” †‹ˆˆ‡”‡Â?– ƒ••‡••Â?‡Â?– –‡…ŠÂ?‹“—‡• ‹Â? –Š‡ …ƒ•‡ ‘ˆ ”‡ŽƒÂ?†ǯ• …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?Ǥ Table 4.3: Assessment techniques by project value in Ireland Project Value (Minimum) Type of Assessment δ Í€ ͲǤͷ Â?‹ŽŽ‹‘Â? ‹Â?’Ž‡ ƒ••‡••Â?‡Â?– ˆ‘” Â?‹Â?‘” ’”‘Œ‡…–•ǡ •—…Š ĥ –Š‘•‡ ‹Â?˜‘Ž˜‹Â?‰ Â?‹Â?‘” ”‡ˆ—”„‹•ŠÂ?‡Â?– ™‘”Â?•ǡ ˆ‹–Ǧ‘—–•ǡ ‡–…Ǥ ε Í€ ͲǤͷ Â?‹ŽŽ‹‘Â? δ Í€ ͷǤͲ Â?‹ŽŽ‹‘Â? ‹Â?‰Ž‡ ƒ’’”ƒ‹•ƒŽ ȋ…‘Â?„‹Â?‹Â?‰ ‡Ž‡Â?‡Â?–• ‘ˆ ”‡Ž‹Â?‹Â?ƒ”› ’’”ƒ‹•ƒŽ ƒÂ?† ‡–ƒ‹Ž‡† ’’”ƒ‹•ƒŽȌ ε Í€ ͷǤͲ Â?‹ŽŽ‹‘Â? δ Í€ ͵ͲǤͲ Â?‹ŽŽ‹‘Â? —Ž–‹Ǧ…”‹–‡”‹ƒ ƒÂ?ƒŽ›•‹• ε Í€ ͵ͲǤͲ Â?‹ŽŽ‹‘Â? ‘•–Ǧ„‡Â?‡ˆ‹– ƒÂ?ƒŽ›•‹• SourceÇ£   ƒ…Â?‰”‘—Â?† ’‘Ž‹…› Â?‘–‡ ‘Â? •–”‡Â?‰–Š‡Â?‹Â?‰ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ ‹Â? ‡‘”‰‹ƒ ͶǤͶ͵Ǥ One of the challenges facing methodological guidelines on appraisal is to decide on an appropriate discount rate for use in costǦbenefit analyses. ”‘ƒ†Ž› •’‡ƒÂ?‹Â?‰ǡ –Š‡”‡ ƒ”‡ –™‘ ƒ’’”‘ƒ…Š‡• –‘ •‡––‹Â?‰ –Š‡ †‹•…‘—Â?– ”ƒ–‡ǡ ĥ ™‡ŽŽ ĥ ƒ …‘—’Ž‡ ‘ˆ ˜ƒ”‹ƒÂ?–•Ǥ Â?‡ ‹• –Š‡ Dz•‘…‹ƒŽ ”ƒ–‡ ‘ˆ –‹Â?‡ ’”‡ˆ‡”‡Â?…‡̶ǡ ƒ Â?‘”Â?ƒ–‹˜‡ Â?‘–‹‘Â? ”‡ˆŽ‡…–‹Â?‰ •‘…‹‡–›ǯ• ‡˜ƒŽ—ƒ–‹‘Â? ‘ˆ …—””‡Â?– ˜‡”•—• ˆ—–—”‡ …‘Â?•—Â?’–‹‘Â?Ǥ Š‡ ‘–Š‡” ‹• –Š‡ Dz•‘…‹ƒŽ ‘’’‘”–—Â?‹–› …‘•– ‘ˆ …ƒ’‹–ƒŽdz ™Š‹…Š ‹• ‹Â? ‡ˆˆ‡…– –Š‡ ’”‡Ǧ–ƒš ”ƒ–‡ ‘ˆ ”‡–—”Â? –Šƒ– …ƒÂ? „‡ ‡š’‡…–‡† ˆ”‘Â? ’”‹˜ƒ–‡ •‡…–‘” ‹Â?˜‡•–Â?‡Â?–• ™‹–Š •‹Â?‹Žƒ” ”‹•Â? …Šƒ”ƒ…–‡”‹•–‹…•Ǥ Š‡ †‹ˆˆ‡”‡Â?– ƒ’’”‘ƒ…Š‡• –‘ •‡––‹Â?‰ –Š‡ †‹•…‘—Â?– ”ƒ–‡ ‹ŽŽ—•–”ƒ–‡ –Š‡ ’‘–‡Â?–‹ƒŽ †‹ˆˆ‹…—Ž–‹‡• ‹Â? …‘Â?’ƒ”‹Â?‰ • —•‹Â?‰ †‹ˆˆ‡”‡Â?– –‡…ŠÂ?‹“—‡• ƒÂ?† …ƒŽŽ ˆ‘” —Â?‹ˆ‘”Â? Â?ƒ–‹‘Â?ƒŽ Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ‰—‹†‡Ž‹Â?‡• ‘Â? ƒ’’”ƒ‹•ƒŽǤ Strengthening Strategic Guidance ͶǤͶͶǤ Georgia can begin a process of developing more systematic strategic guidance for capital budgeting based on rigorous analytical work. – ’”‡•‡Â?–ǡ •–”ƒ–‡‰‹… ‰—‹†ƒÂ?…‡ ‘Â? ’”‹‘”‹–› ƒ”‡ƒ• ˆ‘” ‹Â?˜‡•–Â?‡Â?– ‹• ’”‘˜‹†‡† „› –Š‡ ƒÂ?† Š‹‰Š Ž‡˜‡Ž• ‘ˆ ‰‘˜‡”Â?Â?‡Â?–ǡ ƒŽ–Š‘—‰Š –Š‹• ‹• Â?‘– „ƒ…Â?‡† „› •›•–‡Â?ƒ–‹… ƒÂ?† ”‹‰‘”‘—• ƒÂ?ƒŽ›–‹…ƒŽ ™‘”Â?Ǥ Š‹Ž‡ –Š‹• Â?ƒ› Šƒ˜‡ „‡‡Â? ƒ†‡“—ƒ–‡ ™‹–Š ‘„˜‹‘—• ‹Â?ˆ”ƒ•–”—…–—”‡ †‡ˆ‹…‹–•ǡ ƒ Â?‘”‡ •›•–‡Â?ƒ–‹… ƒ’’”‘ƒ…Š „ƒ•‡† ‘Â? •‘Ž‹† –‡…ŠÂ?‹…ƒŽ ™‘”Â? ‹• „‡…‘Â?‹Â?‰ ‹Â?’‘”–ƒÂ?– ĥ Â?‘”‡ Â?—ƒÂ?…‡† …Š‘‹…‡• ‘Â? ‹Â?˜‡•–Â?‡Â?– ƒ”‡ƒ• Â?‡‡† –‘ „‡ Â?ƒ†‡Ǥ ‘—Â?† ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ”‡“—‹”‡• …”‡†‹„Ž‡ǡ ‘’‡”ƒ–‹‘Â?ƒŽ ƒÂ?† ƒ—–Š‘”‹–ƒ–‹˜‡ •–”ƒ–‡‰‹… ‰—‹†ƒÂ?…‡ –Šƒ– ‹• „ƒ•‡† ‘Â? •‘—Â?† –Š‡‘”‡–‹…ƒŽ ˆ‘—Â?†ƒ–‹‘Â?• ‘ˆ –Š‡ ”‘Ž‡ ˆ‘” –Š‡ •–ƒ–‡ ‹Â? ƒ Â?ƒ”Â?‡– ‡…‘Â?‘Â?›ǡͳͻ ĥ ™‡ŽŽ ƒ ”‹‰‘”‘—• ƒÂ?ƒŽ›•‹• ‘ˆ –Š‡ Â?‘•– ‹Â?’‘”–ƒÂ?– Â?‡‡†• ƒ– –Š‡ •‡…–‘” Ž‡˜‡ŽǤ Â? –Š‡ ƒ„•‡Â?…‡ ‘ˆ •—…Š ˆ‹”Â? •–”ƒ–‡‰‹… ‰—‹†ƒÂ?…‡ǡ ‹– ‹• †‹ˆˆ‹…—Ž– –‘ ‹†‡Â?–‹ˆ› ’”‘Œ‡…– …‘Â?…‡’–• –Šƒ– ƒ”‡ •—‹–ƒ„Ž‡ ˆ‘” ˆ—”–Š‡” †‡˜‡Ž‘’Â?‡Â?– ƒÂ?† –‘ ’”‹‘”‹–‹œ‡ ’”‡’ƒ”‡† ’”‘Œ‡…–• ˆ‘” ‹Â?…Ž—•‹‘Â? ‹Â? –Š‡ „—†‰‡–Ǥ ”‘Œ‡…– …‘Â?…‡’–• •Š‘—Ž† ‹†‡ƒŽŽ› ‘”‹‰‹Â?ƒ–‡ ‹Â? ‹Â?˜‡•–Â?‡Â?– •–”ƒ–‡‰‹‡• –Šƒ– ƒ”‡ †‡”‹˜‡† –Š”‘—‰Š ƒ •›•–‡Â?ƒ–‹… •–”ƒ–‡‰‹… ’ŽƒÂ?Â?‹Â?‰ ’”‘…‡•• ˆ‘” ƒ •‡…–‘”Ǥ ͳͻ —•–‹ˆ‹…ƒ–‹‘Â? ˆ‘” •–ƒ–‡ ‹Â?–‡”˜‡Â?–‹‘Â? †‡”‹˜‡• ˆ”‘Â?Ç£ ‹Ȍ ƒ††”‡••‹Â?‰ ‹Â?‡ˆˆ‹…‹‡Â?…‹‡• ‹Â? –Š‡ ‘’‡”ƒ–‹‘Â? ‘ˆ Â?ƒ”Â?‡–• ‘” ‹Â?•–‹–—–‹‘Â?•Ǣ ‘” ‹‹Ȍ ƒ…Š‹‡˜‹Â?‰ ‡“—‹–› ‘„Œ‡…–‹˜‡•Ǥ ͹ͻ ͶǤͶͷǤ Options for Georgia include developing a national infrastructure strategy or reinforcing strategic orientation for investment at the sector level, or some combination of the two. ‘ „‡ ”‡Ž‡˜ƒÂ?–ǡ ‹Â?˜‡•–Â?‡Â?– •–”ƒ–‡‰‹‡• Â?‡‡† –‘ ƒ…Š‹‡˜‡ –Š‡ ”‹‰Š– „Ž‡Â?† ‘ˆ –‡…ŠÂ?‹…ƒŽ ‹Â?’—– ƒÂ?† ’‘Ž‹–‹…ƒŽ ‘™Â?‡”•Š‹’ ƒÂ?† •–”ƒ–‡‰›ǦÂ?ƒÂ?‹Â?‰ Â?‡‡†• –‘ „‡ …Ž‘•‡Ž› Ž‹Â?Â?‡† –‘ –Š‡ Â?‡ƒÂ?• ˆ‘” †‡Ž‹˜‡”‹Â?‰ ’‘Ž‹…‹‡•ǡ ‹Ǥ‡Ǥǡ –Š‡ „—†‰‡–ƒ”› ’”‘…‡••Ǥ Š‹Ž‡ –Š‡ ‘˜‡”ƒ”…Š‹Â?‰ Â?ƒ–‹‘Â?ƒŽ †‡˜‡Ž‘’Â?‡Â?– ’ŽƒÂ? Šƒ• „‡‡Â? ƒ —•‡ˆ—Ž –‘‘Ž ‹Â? ƒ Â?—Â?„‡” ‘ˆ …‘—Â?–”‹‡•ǡ ƒ Â?‘”‡ ǮŽ‹‰Š– –‘—…Šǯ ƒ’’”‘ƒ…Š ˆ‘” ‡‘”‰‹ƒ …‘—Ž† ‹Â?˜‘Ž˜‡ ”‡‹Â?ˆ‘”…‹Â?‰ •‡…–‘”ƒŽ ‹Â?˜‡•–Â?‡Â?– •–”ƒ–‡‰‹‡•Ǥ ƒ–‹‘Â?ƒŽ †‡˜‡Ž‘’Â?‡Â?– ’ŽƒÂ?• ƒ”‡ „› Â?‘ Â?‡ƒÂ?• ‘„Ž‹‰ƒ–‘”›ʹͲǡ „—– ™Š‡”‡ –Š‡•‡ †‘ ‡š‹•–ǡ •‡…–‘” ’ŽƒÂ?Â?‹Â?‰ Â?‡‡†• –‘ „‡ ‹Â?–‡‰”ƒ–‡† ‹Â?–‘ –Š‡ ™‹†‡” ’”‘…‡•• ˆ‘” ’”‡’ƒ”‹Â?‰ ƒÂ?† —’†ƒ–‹Â?‰ –Š‡ Â?ƒ–‹‘Â?ƒŽ †‡˜‡Ž‘’Â?‡Â?– ’ŽƒÂ?Ǥ ͶǤͶ͸Ǥ Sector investment strategies should be developed within a realistic macroǦfiscal framework based on a convincing assessment of potential funding sources for investment plans21. Š‡ •–”ƒ–‡‰‹… ’ŽƒÂ?Â?‹Â?‰ ’”‘…‡•• „‡‰‹Â?• ™‹–Š ƒÂ?ƒŽ›•‹• ‘ˆ –Š‡ Â?‘•– ‹Â?’‘”–ƒÂ?– ’”‘„Ž‡Â?• ˆƒ…‹Â?‰ ƒ •‡…–‘” ƒÂ?† ‡•–ƒ„Ž‹•ŠÂ?‡Â?– ‘ˆ –Š‡ Â?ƒ‹Â? ƒ‹Â?• ȋ‹Â?’”‘˜‡† ˆ—–—”‡ •‹–—ƒ–‹‘Â?•Ȍ ˆ‘” –Š‡ •‡…–‘”Ǥ Ž–‡”Â?ƒ–‹˜‡ •–”ƒ–‡‰‹‡• ˆ‘” ƒ…Š‹‡˜‹Â?‰ –Š‡•‡ ƒ‹Â?• ƒ”‡ –Š‡Â? ƒÂ?ƒŽ›œ‡† ƒÂ?† …‘Â?…‡’–• ˆ‘” Â?ƒŒ‘” ‹Â?˜‡•–Â?‡Â?– ’”‘Œ‡…–• ƒÂ?†Ȁ‘” ’”‹‘”‹–› ƒ”‡ƒ• ˆ‘” ‹Â?˜‡•–Â?‡Â?– ‡Â?‡”‰‡ ĥ ‘Â?‡ •‡– ‘ˆ …‘Â?…”‡–‡ …‘Â?’‘Â?‡Â?–• ‘ˆ –Š‡ ’”‡ˆ‡””‡† •–”ƒ–‡‰›Ǥ Š‡•‡ …‘Â?…‡’–• ƒ”‡ –Š‡Â? ƒÂ?ƒŽ›œ‡† ˆ—”–Š‡” ƒÂ?† ’”‹‘”‹–‹œ‡† –‘ ˆ‘”Â? ƒ •‡…–‘” ‹Â?˜‡•–Â?‡Â?– •–”ƒ–‡‰›Ǥ – ‹• ‹Â?’‘”–ƒÂ?– –‘ ƒ˜‘‹† •–”ƒ–‡‰‹… ’ŽƒÂ?• „‡…‘Â?‹Â?‰ Ž‘Â?‰ ™‹•ŠǦŽ‹•–• ‘ˆ ’”‘Œ‡…–• ™‹–Š Â?‘ ”‡ƒŽ‹•–‹… ’‘••‹„‹Ž‹–› ‘ˆ „‡‹Â?‰ ˆ‹Â?ƒÂ?…‡†ʹʹǤ Š‹• ”‡“—‹”‡• …Ž‘•‡ …‘‘”†‹Â?ƒ–‹‘Â? „‡–™‡‡Â? –Š‡ •‡…–‘” Â?‹Â?‹•–”› ƒÂ?† –Š‡ ˆ‹Â?ƒÂ?…‡ Â?‹Â?‹•–”› †—”‹Â?‰ –Š‡ †‡˜‡Ž‘’Â?‡Â?– ‘ˆ •–”ƒ–‡‰‹… ’ŽƒÂ?• ƒÂ?†ǡ ‹†‡ƒŽŽ›ǡ –Š‡ ’”‡’ƒ”ƒ–‹‘Â? ƒÂ?† ”‘ŽŽǦ‘˜‡” ‘ˆ –Š‡•‡ ’ŽƒÂ?• ™‹–Š‹Â? ƒ Â?‡†‹—Â?Ǧ–‡”Â? ˆ‹•…ƒŽ ƒÂ?† ‡š’‡Â?†‹–—”‡ ˆ”ƒÂ?‡™‘”Â?Ǥ ͶǤͶ͹Ǥ International experience does not point to any one blueprint for developing strategic guidance for capital budgeting. ‘Â?‡ …‘—Â?–”‹‡• Šƒ˜‡ •—……‡••ˆ—ŽŽ› ‹Â?’Ž‡Â?‡Â?–‡† Â?ƒ–‹‘Â?ƒŽ †‡˜‡Ž‘’Â?‡Â?– ’ŽƒÂ?Â?‹Â?‰ ’”‘…‡••‡• È‹ ”‡ŽƒÂ?† ƒÂ?† ‘–•™ƒÂ?ƒȌǡ ™‹–Š ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– •–”ƒ–‡‰‹‡• „‡‹Â?‰ †‡”‹˜‡† ĥ ’ƒ”– ‘ˆ –Š‡•‡ ’ŽƒÂ?•Ǥ ƒÂ?› ‘–Š‡” …‘—Â?–”‹‡• Šƒ˜‡ …Š‘•‡Â? Ž‘‘•‡” ’ŽƒÂ?Â?‹Â?‰ ƒ””ƒÂ?‰‡Â?‡Â?–• ™‹–Š‘—– –Š‡ Â?‡‡† ˆ‘” ‘˜‡”ƒ”…Š‹Â?‰ Â?ƒ–‹‘Â?ƒŽ ’ŽƒÂ?• È‹ȌǤ Â?‘Â?‰•– –Š‡ Žƒ––‡”ǡ –Š‡”‡ †‘‡• ƒ’’‡ƒ” –‘ „‡ ƒ –”‡Â?† –‘™ƒ”†• †‡˜‡Ž‘’‹Â?‰ Â?ƒ–‹‘Â?ƒŽ ‹Â?ˆ”ƒ•–”—…–—”‡ •–”ƒ–‡‰‹‡•Ǥ Š‹• ‹• ’ƒ”–Ž› ƒ ”‡•’‘Â?•‡ –‘ –Š‡ Â?‡‡† –‘ ’”‹‘”‹–‹œ‡ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– Â?‘”‡ …ƒ”‡ˆ—ŽŽ› ‹Â? –Š‡ …—””‡Â?– ‡…‘Â?‘Â?‹… ƒÂ?† ˆ‹•…ƒŽ …Ž‹Â?ƒ–‡ ƒÂ?† ’ƒ”–Ž› ‹Â? ”‡…‘‰Â?‹–‹‘Â? –Šƒ– ‹Â?ˆ”ƒ•–”—…–—”‡ ‹Â?˜‡•–Â?‡Â?– Â?ƒ› Šƒ˜‡ „‡‡Â? ‰‹˜‡Â? –‘‘ Ž‹––Ž‡ ™‡‹‰Š– ‹Â? „—†‰‡–ƒ”› •›•–‡Â?• ™Š‡”‡ ‡š’‡Â?†‹–—”‡ †‡…‹•‹‘Â? Â?ƒÂ?‹Â?‰ Šƒ• Žƒ”‰‡Ž› „‡‡Â? †‡…‡Â?–”ƒŽ‹œ‡† ƒÂ?† ™Š‡”‡ –Š‡”‡ ‹• ƒ Ž‹Â?‹–‡† ”‘Ž‡ ˆ‘” –Š‡ …‡Â?–”‡ ‹Â? †‡…‹†‹Â?‰ –Š‡ „ƒŽƒÂ?…‡ „‡–™‡‡Â? …ƒ’‹–ƒŽ ƒÂ?† ”‡…—””‡Â?– •’‡Â?†‹Â?‰Ǥ šƒÂ?’Ž‡• ƒ”‡ǣ x ƒÂ?ƒ†ƒǯ• Â?ƒ–‹‘Â?ƒŽ ‹Â?ˆ”ƒ•–”—…–—”‡ ’ŽƒÂ? È‚ Ç® —‹Ž†‹Â?‰ ƒÂ?ƒ†ƒǯ x —•–”ƒŽ‹ƒǯ• Ç® —‹Ž†‹Â?‰ ‡†‡”ƒŽ Â?ˆ”ƒ•–”—…–—”‡ ŽƒÂ?ǯ ȋʹͲͲ͹ǦʹͲͳͶȌ x  Ç®–”ƒ–‡‰› ˆ‘” ƒ–‹‘Â?ƒŽ Â?ˆ”ƒ•–”—…–—”‡ǯ Ž„ƒÂ?‹ƒ Šƒ• ”‡…‡Â?–Ž› ‹Â?–”‘†—…‡† ƒ …‘Â?’”‡Š‡Â?•‹˜‡ •–”ƒ–‡‰‹… ’ŽƒÂ?Â?‹Â?‰ ’”‘…‡•• ȋ–Š‡ Â?–‡‰”ƒ–‡† ŽƒÂ?Â?‹Â?‰ ›•–‡Â? ‘” ÈŒ –Šƒ– ‹• ‹Â?–‡‰”ƒ–‡† ™‹–Š Â?‡†‹—Â? –‡”Â? „—†‰‡– ’ŽƒÂ?Â?‹Â?‰ ƒÂ?† ƒÂ?Â?—ƒŽ „—†‰‡– ’”‡’ƒ”ƒ–‹‘Â?Ç¢ ‘–Š‡” …‘—Â?–”‹‡• ‹Â? –Š‡ •ƒÂ?‡ ”‡‰‹‘Â? Šƒ˜‡ „‡‡Â? Ž‡•• •—……‡••ˆ—Ž ƒÂ?† •‘Â?‡ ƒ––‡Â?’–• ƒ– Â?ƒ–‹‘Â?ƒŽ †‡˜‡Ž‘’Â?‡Â?– ’ŽƒÂ?Â?‹Â?‰ Šƒ˜‡ •–ƒŽŽ‡†Ǥ Systematization of Capital Budgeting Procedures ʹͲ š…‡’– ˆ‘” …ƒÂ?†‹†ƒ–‡• ˆ‘”  Â?‡Â?„‡”•Š‹’ǡ ™Š‹…Š Â?—•– ’”‘†—…‡ Â?ƒ–‹‘Â?ƒŽ †‡˜‡Ž‘’Â?‡Â?– ’ŽƒÂ?• –‘ ƒ……‡•• ’”‡Ǧ ƒ……‡••‹‘Â? ˆ—Â?†‹Â?‰Ǥ ʹͳ ‹Â?‹Žƒ”Ž›ǡ Â?ƒ–‹‘Â?ƒŽ †‡˜‡Ž‘’Â?‡Â?– ’ŽƒÂ?• ƒ”‡ ‘Â?Ž› ƒ —•‡ˆ—Ž …‘Â?’‘Â?‡Â?– ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ’ŽƒÂ?Â?‹Â?‰ ™Š‡Â? –Š‡› ƒ”‡ •‡Â?•‹„Ž› …‘•–‡† ƒÂ?† ˆ”ƒÂ?‡† „› ”‡ƒŽ‹•–‹… ‡•–‹Â?ƒ–‡• ‘ˆ ”‡•‘—”…‡ ƒ˜ƒ‹Žƒ„‹Ž‹–›Ǥ ‘Â?‡ …‘—Â?–”‹‡• ’”‡ˆ‡” ‹Â?•–‡ƒ† –‘ ˆ‘…—• ’ŽƒÂ?Â?‹Â?‰ ƒ– –Š‡ •‡…–‘” Ž‡˜‡Ž ƒÂ?† Ž‹Â?Â? •–”ƒ–‡‰‹… ’ŽƒÂ?• –‘ Â?‡†‹—Â? –‡”Â? „—†‰‡– ‡•–‹Â?ƒ–‡•Ǥ Í´Í´ Â? ƒÂ?ƒ†ƒ Â?‘–Š‹Â?‰ …ƒÂ? „‡ …ƒŽŽ‡† ƒ Ǯ’ŽƒÂ?ǯ —Â?Ž‡•• –Š‡ ”‡•‘—”…‡• ˆ‘” ‹–• ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? Šƒ˜‡ „‡‡Â? ƒ’’”‘˜‡†Ǥ ͺͲ ͶǤͶͺǤ A key weakness of Georgia’s capital budgeting system is its informal nature, without clearly defined organizational roles, procedures, and decisionǦpoints integrated into a calendar coordinated with the budget cycle. • ’”‡˜‹‘—•Ž› †‹•…—••‡†ǡ Â?ƒ–‹‘Â?ƒŽ ’”‘…‡†—”‡• ˆ‘” ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â?Ç¡ ’”‡’ƒ”ƒ–‹‘Â? ƒÂ?† ƒ’’”ƒ‹•ƒŽ ƒ”‡ Â?‹••‹Â?‰ǡ ƒÂ?† –Š‡”‡ ‹• Â?‘ ‡š’Ž‹…‹– …ƒŽ‡Â?†ƒ” Ž‹Â?Â?‹Â?‰ ƒ…–‹˜‹–‹‡• ‹Â? –Š‡ ’”‘Œ‡…– …›…Ž‡ –‘ –Š‡ „—†‰‡–‹Â?‰ ƒÂ?† •–”ƒ–‡‰‹… ’ŽƒÂ?Â?‹Â?‰ …›…Ž‡•Ǥ Š‡”‡ ƒ”‡ Â?‘ ˆ‘”Â?ƒŽ †‡…‹•‹‘Â? ’‘‹Â?–• ƒ– Â?‡› •–‡’• ‹Â? –Š‡ ’”‘Œ‡…– …›…Ž‡ È‚ ‹Â?…Ž—†‹Â?‰ ƒ ’”‡Ž‹Â?‹Â?ƒ”› •…”‡‡Â?‹Â?‰ †‡…‹•‹‘Â? Ǧ ™Š‡”‡ †‡•‹‰Â?ƒ–‡† †‡…‹•‹‘Â?ǦÂ?ƒÂ?‡”• •‹‰Â?Ǧ‘ˆˆ ƒÂ?† ƒ—–Š‘”‹œ‡ …‘Â?–‹Â?—ƒ–‹‘Â? –‘ –Š‡ Â?‡š– •–‡’Ǥ ”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ‘ˆ–‡Â? –ƒÂ?‡• ’Žƒ…‡ ‹Â? ƒÂ? ad hoc Â?ƒÂ?Â?‡”ǡ ™‹–Š Â?ƒŒ‘” ‹Â?˜‡•–Â?‡Â?– †‡…‹•‹‘Â?• ƒ”‡ ‘ˆ–‡Â? ’”‡•‡Â?–‡† ĥ ƒ fait accompli ƒ– „—†‰‡– –‹Â?‡Ǥ Box 4.5: Main Contents of US Capital Programming Guide x Â?–”‘†—…–‹‘Â?Ç£ Š‡ —‹†‡ǯ• —”’‘•‡ x ŽƒÂ?Â?‹Â?‰ ƒÂ?† —†‰‡–‹Â?‰ Šƒ•‡ o –”ƒ–‡‰‹… ƒÂ?† ’”‘‰”ƒÂ? ’‡”ˆ‘”Â?ƒÂ?…‡ Ž‹Â?Â?ƒ‰‡ o ‰‡Â?…› ‡Â?–‡”’”‹•‡ ƒ”…Š‹–‡…–—”‡ o —Â?…–‹‘Â?ƒŽ ”‡“—‹”‡Â?‡Â?–• o Ž–‡”Â?ƒ–‹˜‡• –‘ …ƒ’‹–ƒŽ ƒ••‡–• o Š‘‘•‹Â?‰ –Š‡ „‡•– …ƒ’‹–ƒŽ ƒ••‡– o Š‡ ƒ‰‡Â?…› …ƒ’‹–ƒŽ ’ŽƒÂ? o ‰‡Â?…› •—„Â?‹••‹‘Â? ˆ‘” ˆ—Â?†‹Â?‰ ‹Â? –Š‡ „—†‰‡– ›‡ƒ” x …“—‹•‹–‹‘Â? Šƒ•‡ o ƒŽ‹†ƒ–‡ ’ŽƒÂ?Â?‹Â?‰ †‡…‹•‹‘Â? o ƒÂ?ƒ‰‡ –Š‡ ƒ…“—‹•‹–‹‘Â? ”‹•Â? o ‘Â?•‹†‡” –‘‘Ž• o ‡Ž‡…– …‘Â?–”ƒ…– –›’‡ ƒÂ?† ’”‹…‹Â?‰ Â?‡…ŠƒÂ?‹•Â? o ••—‡ –Š‡ •‘Ž‹…‹–ƒ–‹‘Â? o ”‘’‘•ƒŽ ‡˜ƒŽ—ƒ–‹‘Â? ƒÂ?† Â?‡‰‘–‹ƒ–‹‘Â? o ‘Â?–”ƒ…– ƒ™ƒ”† o ‘Â?–”ƒ…– Â?ƒÂ?ƒ‰‡Â?‡Â?– o …“—‹•‹–‹‘Â? ƒÂ?ƒŽ›•‹• o ……‡’–ƒÂ?…‡ x ƒÂ?ƒ‰‡Â?‡Â?– Â?Ǧ•‡ o „Œ‡…–‹˜‡• †—”‹Â?‰ Â?ƒÂ?ƒ‰‡Â?‡Â?– ‹Â?Ǧ—•‡ o ’‡”ƒ–‹‘Â?ƒŽ ƒÂ?ƒŽ›•‹• ‹• ƒ Â?‡› –‘‘Ž ‹Â? Â?ƒÂ?ƒ‰‡Â?‡Â?–Ǧ‹Â?Ǧ—•‡ o ’‡”ƒ–‹‘Â?ƒŽ ƒÂ?ƒŽ›•‹• ’”‘…‡•• ƒÂ?† ‘—–…‘Â?‡ o ••‡– †‹•’‘•‹–‹‘Â? x ‡…ŠÂ?‹…ƒŽ ’’‡Â?†‹…‡• ͶǤͶͻǤ Georgia’s capital budgeting system needs to be put on a sustainable, longǦterm footing through the development of systematic ‘capital budgeting guidelines’ Ǧ –‘ „‡ †‡˜‡Ž‘’‡† „› –Š‡ ‹Â?‹•–”› ‘ˆ ‹Â?ƒÂ?…‡ ƒÂ?† Â?ƒ†‡ ƒ˜ƒ‹Žƒ„Ž‡ –‘ •’‡Â?†‹Â?‰ ƒ‰‡Â?…‹‡•Ǥ Š‡•‡ •Š‘—Ž† •›•–‡Â?ƒ–‹œ‡ –Š‡ ™Š‘Ž‡ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â?Ç¡ ™Š‹Ž‡ ‰‹˜‹Â?‰ ’ƒ”–‹…—Žƒ” ‡Â?’Šƒ•‹• –‘ –Š‡ ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â? ƒÂ?† ƒ’’”ƒ‹•ƒŽ •–ƒ‰‡•ǡ ™Š‹…Š ƒ”‡ –Š‡ …”‹–‹…ƒŽ •–‡’• –‘™ƒ”†• ‡Â?•—”‹Â?‰ –Š‡ ‡ˆˆ‹…‹‡Â?…› ƒÂ?† ‡ˆˆ‡…–‹˜‡Â?॥ ‘ˆ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?–Ǥ Š‡•‡ ’”‘…‡†—”ƒŽ ‰—‹†‡Ž‹Â?‡• ™‘—Ž† ‡š’Žƒ‹Â? Š‘™ –Š‡ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â? ‘’‡”ƒ–‡• ‹Â? ‡‘”‰‹ƒǡ ‹Â?…Ž—†‹Â?‰ ”‡…‘Â?Â?‡Â?†ƒ–‹‘Â?• ‘Â? Â?‡–Š‘†‘Ž‘‰‹…ƒŽ ƒ’’”‘ƒ…Š‡• –‘ ’”‘Œ‡…– ƒ’’”ƒ‹•ƒŽǤ šƒÂ?’Ž‡• ˆ”‘Â? ‘–Š‡” …‘—Â?–”‹‡• ƒ”‡ǣ x ”‡ŽƒÂ?†ǣ ‡’ƒ”–Â?‡Â?– ‘ˆ ‹Â?ƒÂ?…‡ǡ Ç® —‹†‡Ž‹Â?‡• ˆ‘” –Š‡ ƒ’’”ƒ‹•ƒŽ ƒÂ?† Â?ƒÂ?ƒ‰‡Â?‡Â?– ‘ˆ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ’”‘’‘•ƒŽ• ‹Â? –Š‡ ’—„Ž‹… •‡…–‘”ǯǢ ͺͳ x Ž„ƒÂ?‹ƒǣ ‹Â?‹•–”› ‘ˆ ‹Â?ƒÂ?…‡ǡ —„Ž‹… Â?˜‡•–Â?‡Â?– ƒÂ?ƒ‰‡Â?‡Â?– —‹†‡Ž‹Â?‡• ȋƒ• ’ƒ”– ‘ˆ Â?ƒÂ?—ƒŽ ‘Â? ’”‘‰”ƒÂ?Ǧ„ƒ•‡†  ȌǢ ƒÂ?† x ‘—–Š ˆ”‹…ƒǣ ‹Â?‹•–”› ‘ˆ ‹Â?ƒÂ?…‡ ʹͲͳͲ  Ǧ —†‰‡–‹Â?‰ ˆ‘” ‹Â?ˆ”ƒ•–”—…–—”‡ ƒÂ?† …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ ‰—‹†‡Ž‹Â?‡•Ǥ x  Ç£ ˆˆ‹…‡ ‘ˆ —†‰‡– ƒÂ?† ƒÂ?ƒ‰‡Â?‡Â?–ǡ ƒ’‹–ƒŽ ”‘‰”ƒÂ?Â?‹Â?‰ —‹†‡ǡ ‹”…—Žƒ” ‘Ǥ Ǧͳͳ ȋʹͲͳͳȌǡ ‘š ͶǤͷ ‰‹˜‡• –Š‡ Â?ƒ‹Â? …‘Â?–‡Â?–• ‘ˆ –Š‡  ƒ’‹–ƒŽ ”‘‰”ƒÂ?Â?‹Â?‰ —‹†‡ ĥ ‘Â?‡ ‡šƒÂ?’Ž‡ ‘ˆ ™Šƒ– ’”‘…‡†—”‡• …ƒÂ? …‘˜‡”Ǥ ͶǤͷͲǤ A detailed suggested outline of procedural guidelines for capital budgeting in Georgia has been shared with the Georgian authorities. Š‡ ‰—‹†‡Ž‹Â?‡• …‘—Ž† „‡ ’”‡’ƒ”‡† ĥ ƒ •—„•‡– ‘ˆ –Š‡ ‰—‹†‡Ž‹Â?‡• ‘Â? ’”‘‰”ƒÂ? „—†‰‡–‹Â?‰ ƒÂ?† Â?‹‰Š– …‘˜‡” –Š‡ ˆ‘ŽŽ‘™‹Â?‰ǣ x ‘–‹˜ƒ–‹‘Â? ˆ‘” ƒÂ?† •…‘’‡ ‘ˆ ‰—‹†‡Ž‹Â?‡• x ‡ˆ‹Â?‹–‹‘Â?• ‘ˆ –‡”Â?• ƒÂ?† …‘Â?…‡’–• x ƒ•‹… ’”‹Â?…‹’Ž‡• x ‘Ž‡• ƒÂ?† ”‡•’‘Â?•‹„‹Ž‹–‹‡• ‘ˆ Â?ƒ‹Â? ’ƒ”–‹…‹’ƒÂ?–• Ǧ ‡…‹†‡ ‘Â? ‘”‰ƒÂ?‹œƒ–‹‘Â?ƒŽ ƒ””ƒÂ?‰‡Â?‡Â?–• ˆ‘” ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ƒ••‡••Â?‡Â?– •›•–‡Â?Ç£ o ‡…‹•‹‘Â?ǦÂ?ƒÂ?‹Â?‰ ƒ””ƒÂ?‰‡Â?‡Â?–• È‚ ’‘••‹„Ž‡ …”‡ƒ–‹‘Â? ‘ˆ ƒ ƒ„‹Â?‡– …‘Â?Â?‹––‡‡ ˆ‘” †‡…‹•‹‘Â?• ”‡Žƒ–‹Â?‰ –‘ Â?ƒŒ‘” ’”‘Œ‡…–•Ǣ o ‡…ŠÂ?‹…ƒŽ ƒ””ƒÂ?‰‡Â?‡Â?–• È‚ ’‘••‹„Ž‡ …”‡ƒ–‹‘Â? ‘ˆ ƒ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ƒÂ?ƒŽ›•‹• —Â?‹– ‹Â? –Š‡ ‹Â?‹•–”› ‘ˆ ‹Â?ƒÂ?…‡ǡ ƒÂ?‘–Š‡” Â?‹Â?‹•–”›ǡ ‘” ƒÂ? ‹Â?†‡’‡Â?†‡Â?– ƒ‰‡Â?…› ”‡’‘”–‹Â?‰ –‘ –Š‡ ‹Â?‹•–‡” ‘ˆ ‹Â?ƒÂ?…‡ o ŽŽ‘…ƒ–‡ †‡…‹•‹‘Â?ǦÂ?ƒÂ?‹Â?‰ ”‡•’‘Â?•‹„‹Ž‹–‹‡• ˆ‘” …‘Â?Â?‡Â?…‹Â?‰ ’”‘Œ‡…– ’”‡’ƒ”ƒ–‹‘Â? ƒÂ?† ˆ‘” –Š‡ ƒ’’”ƒ‹•ƒŽ †‡…‹•‹‘Â?Ç¡ ‹Â?…Ž—†‹Â?‰ ƒÂ?› †‡Ž‡‰ƒ–‹‘Â? ‘ˆ ”‡•’‘Â?•‹„‹Ž‹–‹‡• ƒ……‘”†‹Â?‰ –‘ ’”‘Œ‡…– •‹œ‡Ǥ x Ž‡Â?‡Â?–• ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â? ‹Â? ‡‘”‰‹ƒ o —–Ž‹Â?‡ ‘ˆ –Š‡ ’”‘Œ‡…– …›…Ž‡Ǥ o ”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â?Ç£ ‹†‡Â?–‹ˆ›‹Â?‰ ‰‘‘† ‹†‡ƒ• ˆ‘” ˆ—”–Š‡” †‡˜‡Ž‘’Â?‡Â?–ǡ —•—ƒŽŽ› –Š”‘—‰Š •–”ƒ–‡‰‹… ’ŽƒÂ?Â?‹Â?‰Ǥ o ”‘Œ‡…– ’”‡’ƒ”ƒ–‹‘Â?Ç£ —Â?†‡”–ƒÂ?‹Â?‰ ˆ‡ƒ•‹„‹Ž‹–› •–—†‹‡• –‘ ƒ‹† †‡…‹•‹‘Â?ǦÂ?ƒÂ?‹Â?‰Ǥ o ’’”ƒ‹•ƒŽ †‡…‹•‹‘Â?Ç£ Â?ƒÂ?‹Â?‰ ƒ †‡…‹•‹‘Â? ‘Â? ™Š‡–Š‡” ƒ ’”‘Œ‡…– Šƒ• –Š‡ ’‘–‡Â?–‹ƒŽ –‘ ”‡’”‡•‡Â?– ƒ ‰‘‘† —•‡ ‘ˆ ’—„Ž‹… Â?‘Â?‡›Ǥ o ƒ’‹–ƒŽ —†‰‡–‹Â?‰ Ç£ ˆ‹Â?ƒÂ?…‹Â?‰ ‘Â?‰‘‹Â?‰ ’”‘Œ‡…–• ƒÂ?† •‡Ž‡…–‹Â?‰ Â?‡™ ’”‘Œ‡…–• ˆ‘” ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â?Ç¢ ’”‘‰”ƒÂ?Â?‹Â?‰ ’”‘Œ‡…–• ™‹–Š‹Â? ƒ Â?‡†‹—Â?Ǧ–‡”Â? ˆ”ƒÂ?‡™‘”Â?Ǥ o Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? Ƭ Â?‘Â?‹–‘”‹Â?‰ǣ ’”‘…—”‡Â?‡Â?– ƒÂ?† ’”‘Œ‡…– Â?ƒÂ?ƒ‰‡Â?‡Â?– ƒ””ƒÂ?‰‡Â?‡Â?–•Ǣ Â?‘Â?‹–‘”‹Â?‰ ’”‘‰”‡•• ƒÂ?† Â?ƒÂ?‹Â?‰ ƒ†Œ—•–Â?‡Â?–•Ǥ o ˜ƒŽ—ƒ–‹‘Â?Ç£ ˜‡”‹ˆ›‹Â?‰ ’”‘Œ‡…– †‡Ž‹˜‡”›ǡ ‡ˆˆ‹…‹‡Â?…› ƒÂ?† ‡ˆˆ‡…–‹˜‡Â?‡••Ǣ Ž‡ƒ”Â?‹Â?‰ Ž‡••‘Â?•Ǥ x ‡› †‡…‹•‹‘Â? ’‘‹Â?–• ‹Â? –Š‡ …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ ƒÂ?† ’”‘Œ‡…– …›…Ž‡• ƒÂ?† ƒŽŽ‘…ƒ–‹‘Â? ‘ˆ ”‘Ž‡• ƒÂ?† ”‡•’‘Â?•‹„‹Ž‹–‹‡• „‡–™‡‡Â? –Š‡ Â?ƒ‹Â? ƒ…–‘”• Š‹• ‰—‹†ƒÂ?…‡ ‹• ‹Â?ˆ‘”Â?‡† „› –Š‡ ‡šƒÂ?’Ž‡• ‘ˆ ‰—‹†‡Ž‹Â?‡• ˆ”‘Â? ”‡ŽƒÂ?†ǡ ‘—–Š ˆ”‹…ƒǡ ‘Ž†‘˜ƒ ȋ†”ƒˆ– ‘Â?Ž›Ȍǡ ƒÂ?† Ž„ƒÂ?‹ƒǤ —‹†‡Ž‹Â?‡• ˆ”‘Â? –Š‡•‡ …‘—Â?–”‹‡• •Š‘™ …‘Â?•‹†‡”ƒ„Ž‡ ˜ƒ”‹ƒ–‹‘Â? ‹Â? –Š‡ Ž‡˜‡Ž ‘ˆ †‡–ƒ‹Ž ƒÂ?† Ž‡Â?‰–Šǡ „—– –Š‡ …‘Â?–‡Â?– ‹• „”‘ƒ†Ž› •‹Â?‹Žƒ”Ǥ ͶǤͷͳǤ One issue of importance that will need to be addressed by the Georgian authorities is the legal status of the capital budgeting guidelines. Â? –Š‹• ”‡•’‡…–ǡ –Š‡”‡ ‡š‹•– ƒ Â?—Â?„‡” ‘ˆ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‰‘‘† ’”ƒ…–‹…‡•Ǥ Š‹Ž‡ǯ• …ƒ’‹–ƒŽ „—†‰‡–‹Â?‰ •›•–‡Â? ‹• ‰‹˜‡Â? ƒ •–”‘Â?‰ Ž‡‰ƒŽ „ƒ•‹•ǡ ĥ ‹• –Šƒ– ‹Â? ƒ”ƒ‰—ƒ›ǡ ™Š‹Ž‡ ƒÂ?† ‹‡–Â?ƒÂ? ‹• ‹Â? –Š‡ ’”‘…‡•• ‘ˆ †‡˜‡Ž‘’‹Â?‰ ƒ —„Ž‹… Â?˜‡•–Â?‡Â?– ƒ™Ǥ – –Š‡ ͺʹ ‘–Š‡” ‡Â?† ‘ˆ –Š‡ ”ƒÂ?‰‡ǡ –Š‡  Šƒ• ƒ Â?‘”‡ ˆŽ‡š‹„Ž‡ ƒ’’”‘ƒ…ŠǤ Š‡ ‹Â?–”‘†—…–‹‘Â? –‘ –Š‡  ƒ’‹–ƒŽ ”‘‰”ƒÂ?Â?‹Â?‰ —‹†‡ •–ƒ–‡• –Šƒ– –Š‡ ’—”’‘•‡ ‘ˆ –Š‡ ‰—‹†‡ ‹• –‘ ’”‘ˆ‡••‹‘Â?ƒŽ• ‹Â? –Š‡ ‡†‡”ƒŽ ‘˜‡”Â?Â?‡Â?– ‰—‹†ƒÂ?…‡ ˆ‘” ƒ †‹•…‹’Ž‹Â?‡† …ƒ’‹–ƒŽ ’”‘‰”ƒÂ?Â?‹Â?‰ ’”‘…‡••ǡ ĥ ™‡ŽŽ ĥ –‡…ŠÂ?‹“—‡• ˆ‘” ’ŽƒÂ?Â?‹Â?‰ ƒÂ?† „—†‰‡–‹Â?‰ǡ ƒ…“—‹•‹–‹‘Â?Ç¡ ƒÂ?† Â?ƒÂ?ƒ‰‡Â?‡Â?– ƒÂ?† †‹•’‘•‹–‹‘Â? ‘ˆ …ƒ’‹–ƒŽ ƒ••‡–•Ǥ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ ƒ‰‡Â?…‹‡• ƒ”‡ ’”‘˜‹†‡† ˆŽ‡š‹„‹Ž‹–› ‹Â? Š‘™ –Š‡› ‹Â?’Ž‡Â?‡Â?– –Š‡ Â?‡› ’”‹Â?…‹’Ž‡• ƒÂ?† …‘Â?…‡’–• †‹•…—••‡†Ǥ 4.4 Conclusion: the way forward ͶǤͷʹǤ The analysis in this chapter indicates that Georgia can move forward along one of several paths in managing the growing body of infrastructure investment needs with which it is faced. Â? –Š‡ ‘Â?‡ ŠƒÂ?† ‹• –Š‡ ’ƒ–Š ‘ˆ …‘Â?–‹Â?—‡† ‹Â?ˆ‘”Â?ƒŽ ƒÂ?† Ġ Š‘… ’”‘Œ‡…– •…”‡‡Â?‹Â?‰ ƒÂ?† •‡Ž‡…–‹‘Â? ƒÂ?† ‹Â?ƒ†‡“—ƒ–‡ …‘˜‡”ƒ‰‡ ƒÂ?† …‘Â?•‹•–‡Â?…› ‘ˆ –Š‡ Â?‡†‹—Â? –‡”Â? …ƒ’‹–ƒŽ „—†‰‡–Ǥ Ž‘Â?‰ –Š‹• ’ƒ–Šǡ †‡…‹•‹‘Â?• ‘Â? Â?‡™ ‹Â?˜‡•–Â?‡Â?–• ’”‘Œ‡…–• ƒ”‡ –ƒÂ?‡Â? ‹Â? ƒ Â?ƒÂ?Â?‡” –Šƒ– ‹• Â?‘– ˆ—ŽŽ› …‘Â?•‹•–‡Â?– ™‹–Š –Š‡ Â?‡†‹—Â? –‡”Â? ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â?Ǥ ‰”‘™‹Â?‰ ’‘‘Ž ‘ˆ ’”‘Œ‡…–• •…”‡‡Â?‡† ƒÂ?† •‡Ž‡…–‡† ™‹–Š‘—– ƒ —Â?‹ˆ‘”Â? •‡– ‘ˆ …”‹–‡”‹ƒ ˆ‹Â?† –Š‡‹” ™ƒ› ‹Â?–‘ –Š‡ „—†‰‡–Ǥ ‘Â?•‘Ž‹†ƒ–‹‘Â? ‘ˆ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ‹• ’”‘‰”‡••‹˜‡Ž› †‡Žƒ›‡†ǡ –Š—• †‡Žƒ›‹Â?‰ ˆ‹•…ƒŽ …‘Â?•‘Ž‹†ƒ–‹‘Â? ƒÂ?† …”‘™†‹Â?‰ ‘—– ‹Â?’‘”–ƒÂ?– •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡•Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?† ‹• –Š‡ ’ƒ–Š ‘ˆ ‹Â?’”‘˜‹Â?‰ –Š‡ …‘Â?–‡Â?– ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ƒÂ?† •–”‡Â?‰–Š‡Â?‹Â?‰ ’”‘…‡†—”‡• ˆ‘” ’”‡Ž‹Â?‹Â?ƒ”› •…”‡‡Â?‹Â?‰ ƒÂ?† •—„•‡“—‡Â?– ƒ’’”ƒ‹•ƒŽ ‘ˆ ’”‘Œ‡…– ’”‘’‘•ƒŽ•Ǥ Ž‘Â?‰ –Š‹• ’ƒ–Šǡ –Š‡ –”ƒÂ?•’ƒ”‡Â?…› ‘ˆ –Š‡ …ƒ’‹–ƒŽ „—†‰‡– ‹• ‡Â?ŠƒÂ?…‡† ƒÂ?† Â?‡†‹—Â? –‡”Â? ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ?Â?‹Â?‰ ‹• ‹Â?’”‘˜‡†Ǥ ‘”‡‘˜‡”ǡ ’”‘Œ‡…– ‹†‡ƒ• ƒ”‡ •…”‡‡Â?‡† ƒÂ?† ƒ’’”ƒ‹•‡† —•‹Â?‰ ƒ —Â?‹ˆ‘”Â? •‡– ‘ˆ ™‡ŽŽǦ†‡ˆ‹Â?‡† …”‹–‡”‹ƒǡ …Ž‘•‡Ž› …‘‘”†‹Â?ƒ–‡† ™‹–Š –Š‡ ƒÂ?Â?—ƒŽ „—†‰‡– …›…Ž‡Ǥ ”‘Œ‡…–• ƒ”‡ •‡Ž‡…–‡† ˆ‘” „—†‰‡–ƒ”› ˆ—Â?†‹Â?‰ ‹Â? ƒ Â?ƒÂ?Â?‡” –Šƒ– ‹• ˆ—ŽŽ› …‘Â?•‹•–‡Â?– ™‹–Š ƒ †‡ˆ‹Â?‡† Â?‡†‹—Â? –‡”Â? ‡š’‡Â?†‹–—”‡ ˆ”ƒÂ?‡™‘”Â?Ǥ Ž‘Â?‰ –Š‹• ’ƒ–Šǡ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‘ˆ ’—„Ž‹… …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ’”‘…‡‡†• ‘Â? •…Š‡†—Ž‡ ƒÂ?† –Š‡ •‡Ž‡…–‡† ’”‘Œ‡…–• ‡ˆˆ‡…–‹˜‡Ž› …‘Â?–”‹„—–‡ –‘ ‡‘”‰‹ƒǯ• ‹Â?ˆ”ƒ•–”—…–—”‡ Â?‡‡†• ˆ‘” ‰”‘™–Šǡ ™Š‹Ž‡ ‹Â?’‘”–ƒÂ?– •‘…‹ƒŽ ‡š’‡Â?†‹–—”‡• ƒ”‡ ƒŽ•‘ Â?‡– ĥ Â?‡‡†‡†Ǥ Š‡ ‘’–‹‘Â?• †‹•…—••‡† ‹Â? –Š‹• …Šƒ’–‡” ƒ”‡ ‹Â?–‡Â?†‡† –‘ Â?‘˜‡ ‡‘”‰‹ƒ †‘™Â? –Š‡ •‡…‘Â?† ’ƒ–Š †‡•…”‹„‡† ƒ„‘˜‡Ǥ ͺ͵ Chapter 5. Road Sector Expenditures 5.1. Introduction ͷǤͳǤ Against the backdrop of fiscal consolidation, the roads sector in Georgia will continue to pose substantial demands on public funding in the years ahead. ‡‘”‰‹ƒ Šƒ• Â?ƒ†‡ …‘Â?•‹†‡”ƒ„Ž‡ ’”‘‰”‡•• ‹Â? —’‰”ƒ†‹Â?‰ ‹–• –”ƒÂ?•’‘”– •‡…–‘” ‹Â? ”‡…‡Â?– ›‡ƒ”•ǣ ’‘”–•ǡ ƒ‹”’‘”–•ǡ ƒÂ?† ”ƒ‹Ž™ƒ›• Šƒ˜‡ „‡‡Â? ‹Â?’”‘˜‡† ƒÂ?† Â?—…Š ‘ˆ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ† Â?‡–™‘”Â? Šƒ• „‡‡Â? ”‡•–‘”‡† –‘ ‰‘‘† ‘” ˆƒ‹” …‘Â?†‹–‹‘Â?Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ –Š‡ Â?ƒŒ‘”‹–› ‘ˆ •‡…‘Â?†ƒ”› ƒÂ?† Ž‘…ƒŽ ”‘ƒ†• ”‡Â?ƒ‹Â? ‹Â? ’‘‘” …‘Â?†‹–‹‘Â? ƒÂ?† ‹Â? Â?‡‡† ‘ˆ …‘Â?•‹†‡”ƒ„Ž‡ ’—„Ž‹… ˆ—Â?†• ˆ‘” ‹Â?’”‘˜‡Â?‡Â?–Ǥ Â?Ž› ͵Ͳ ’‡”…‡Â?– ‘ˆ •‡…‘Â?†ƒ”› ”‘ƒ†• ƒÂ?† ͳͷ ’‡”…‡Â?– ‘ˆ Ž‘…ƒŽ ”‘ƒ†• ™‡”‡ ‹Â? ‰‘‘† –‘ ˆƒ‹” …‘Â?†‹–‹‘Â? ‹Â? ʹͲͳͲǤͷͳ ‡…‘Â?†ƒ”› ƒÂ?† Ž‘…ƒŽ ”‘ƒ†• …‘Â?’”‹•‹Â?‰ –Š‡ „—ŽÂ? ‘ˆ –Š‡ ”‘ƒ† Â?‡–™‘”Â? Šƒ˜‡ ”‡…‡‹˜‡† Ž‹––Ž‡ ‘” Â?‘ ƒ––‡Â?–‹‘Â? ˆ‘” †‡…ƒ†‡• ƒÂ?† ™‹ŽŽ Â?‡‡† …‘Â?’Ž‡–‡ ”‡…‘Â?•–”—…–‹‘Â? ‹Â? Â?ƒÂ?› …ƒ•‡•Ǥ Š‡ Š‹‰Š ’”‹‘”‹–› ƒ•–Ǧ‡•– ‹‰Š™ƒ› ™‹ŽŽ Â?‡‡† ˆ—”–Š‡” ‹Â?˜‡•–Â?‡Â?– –‘ ”‡ƒ…Š …‘Â?’Ž‡–‹‘Â?Ǥ Ž–Š‘—‰Š ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? „—†‰‡–• Šƒ˜‡ ‹Â?…”‡ƒ•‡† –‘ Â?ƒÂ?‡ •‘Â?‡ ’”‘‰”‡•• ‹Â? …Ž‡ƒ”‹Â?‰ –Š‡ Žƒ”‰‡ „ƒ…Â?Ž‘‰ ‘ˆ –Š‡ •‡…‘Â?†ƒ”› Â?‡–™‘”Â? ‹Â? ’‘‘” …‘Â?†‹–‹‘Â?Ç¡ …‘Â?•‹†‡”ƒ„Ž‡ ™‘”Â? Ž‹‡• ƒŠ‡ƒ†Ǥ ‡”‹‘†‹… ƒÂ?† ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ Šƒ• „‡‡Â? …Š”‘Â?‹…ƒŽŽ› —Â?†‡”ˆ—Â?†‡† ƒÂ?† ˆ—”–Š‡” ”‡•‘—”…‡• ™‹ŽŽ „‡ Â?‡‡†‡† –‘ ƒ…Š‹‡˜‡ Ž‘Â?‰ ”—Â? •—•–ƒ‹Â?ƒ„‹Ž‹–› ‘ˆ –Š‡ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ?Ǥ Â?’”‘˜‹Â?‰ ”‘ƒ† Â?‡–™‘”Â?• ™‹ŽŽ „‡ ‹Â?’‘”–ƒÂ?– ‹Â? ƒ…Š‹‡˜‹Â?‰ ‡‘”‰‹ƒǯ• †‡˜‡Ž‘’Â?‡Â?– ‘„Œ‡…–‹˜‡•Ǥ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ –Š‡ •—„•–ƒÂ?–‹ƒŽ †‡Â?ƒÂ?†• ˆ‘” ’—„Ž‹… ˆ—Â?†‹Â?‰ ˆ‘” ”‘ƒ†• ™‹ŽŽ Â?‡‡† –‘ „‡ „ƒŽƒÂ?…‡† ƒ‰ƒ‹Â?•– …‘Â?’‡–‹Â?‰ ’—„Ž‹… ‹Â?˜‡•–Â?‡Â?– Â?‡‡†• ‹Â? –Š‡ ‘–Š‡” ƒ”‡ƒ•ǡ ‹Â?…Ž—†‹Â?‰ ‡Â?‡”‰›ǡ ™ƒ–‡”ǡ ”‡‰‹‘Â?ƒŽ †‡˜‡Ž‘’Â?‡Â?–ǡ ƒÂ?† ƒ‰”‹…—Ž–—”‡Ǥ ÂŽÂŽ –Š‹• Â?‡‡†• –‘ –ƒÂ?‡ ’Žƒ…‡ ™‹–Š‹Â? ƒ ˆ‹•…ƒŽ ˆ”ƒÂ?‡™‘”Â? –Šƒ– …ƒŽŽ• ˆ‘” …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‰‘‹Â?‰ ˆ‘”™ƒ”†Ǥ ͷǤʹǤ Addressing road sector priorities within the fiscal framework will require improving long run sustainability of the road investment program, as well putting in place institutional arrangements for more efficient utilization of resources. ’‡…‹ˆ‹…ƒŽŽ›ǡ –Š‡ ƒÂ?ƒŽ›•‹• ‹Â? –Š‹• …Šƒ’–‡” †‹•…—••‡• –Š‡ ˆ‘ŽŽ‘™‹Â?‰ ‘’–‹‘Â?• ˆ‘” …‘Â?•‹†‡”ƒ–‹‘Â?Ç£ x ††”‡•• –Š‡ …Š”‘Â?‹… —Â?†‡”ˆ—Â?†‹Â?‰ ‘ˆ ”‘—–‹Â?‡ ƒÂ?† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡• „› ’”‘˜‹†‹Â?‰ ˆ—Â?†‹Â?‰ ‹Â? Ž‹Â?‡ ™‹–Š –Š‡  Â?‘†‡Žǡ ĥ ƒŽŽ‘™‡† „› ƒ˜ƒ‹Žƒ„Ž‡ ”‡•‘—”…‡• x • Ž—Â?’› ‹Â?˜‡•–Â?‡Â?– ‹Â? –Š‡  ‹‰Š™ƒ› ™‹Â?†• †‘™Â?Ç¡ ’Šƒ•‡ ‹Â? ƒ ”‡„ƒŽƒÂ?…‹Â?‰ ‘ˆ ‘—–Žƒ›• ˆ‘” Â?‡™ …‘Â?•–”—…–‹‘Â? ƒÂ?† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘˜‡” ƒ ’‡”‹‘† ‘ˆ –‹Â?‡ –‘ ”‡†—…‡ –Š‡ „ƒ…Â?Ž‘‰ ‘ˆ –Š‡ •‡…‘Â?†ƒ”› Â?‡–™‘”Â? ‹Â? ’‘‘” …‘Â?†‹–‹‘Â? x ‡˜‡Ž‘’ ƒ ˜‹ƒ„Ž‡ •›•–‡Â? ˆ‘” ƒ––‡Â?†‹Â?‰ –‘ –Š‡ Â?‡‡†• –‘ –Š‡ Ž‘…ƒŽ ”‘ƒ† Â?‡–™‘”Â? „› ‹Â?‹–‹ƒ–‹Â?‰ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ ƒ –ƒ”‰‡– •—„•‡– ‘ˆ –Š‡ Â?‡–™‘”Â? x —– ‹Â? ’Žƒ…‡ ‹Â?•–‹–—–‹‘Â?ƒŽ ƒ””ƒÂ?‰‡Â?‡Â?–• –‘ ‡Â?ŠƒÂ?…‡ ”‘ƒ† ‡š’‡Â?†‹–—”‡ ‡ˆˆ‹…‹‡Â?…›ǡ ‹Â?…Ž—†‹Â?‰ –Š‡ ”‘ƒ† ƒ••‡– Â?ƒÂ?ƒ‰‡Â?‡Â?– •›•–‡Â? È‹ Ȍǡ —•‡ ‘ˆ Â?‘”‡ ‡ˆˆ‹…‹‡Â?– …‘Â?–”ƒ…–‹Â?‰ –‡…ŠÂ?‘Ž‘‰‹‡•ǡ ƒÂ?† ‹Â?’”‘˜‹Â?‰ …ƒ’ƒ…‹–› ‘ˆ –Š‡ ”‘ƒ†• †‡’ƒ”–Â?‡Â?–Ǥ ͷǤ͵Ǥ The structure of this chapter is as follows. Š‡ Â?‡š– •‡…–‹‘Â? ‡Žƒ„‘”ƒ–‡• ‘Â? –Š‡ Â?‡› ‹••—‡• ƒ••‘…‹ƒ–‡† ™‹–Š •—•–ƒ‹Â?ƒ„‹Ž‹–› ƒÂ?† ‡ˆˆ‹…‹‡Â?…› ‘ˆ –Š‡ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? ‹Â? ‡‘”‰‹ƒǤ Š‡ –Š‹”† •‡…–‹‘Â? ’”‘˜‹†‡• ƒ •—Â?Â?ƒ”› ‘ˆ –Š‡ •–ƒ–‡ ‘ˆ –Š‡ ‘˜‡”ƒŽŽ ”‘ƒ† Â?‡–™‘”Â? ‹Â? ‡‘”‰‹ƒǤ Š‡ ˆ‘—”–Š •‡…–‹‘Â? ’”‘˜‹†‡• ƒÂ? ƒ……‘—Â?– ‘ˆ –Š‡ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ƒÂ?† ‹Â?’”‘˜‡Â?‡Â?–• –‘ †ƒ–‡Ǥ Š‡ ˆ‹ˆ–Š •‡…–‹‘Â? …‘Â?•‹†‡”• ͷͳŠ‡ ‘ƒ†• ‡’ƒ”–Â?‡Â?–ǡ —Â?†‡” –Š‡ ‹Â?‹•–”› ‘ˆ ‡‰‹‘Â?ƒŽ ‡˜‡Ž‘’Â?‡Â?– ƒÂ?† Â?ˆ”ƒ•–”—…–—”‡ È‹ Ȍǡ ‹• ”‡•’‘Â?•‹„Ž‡ ˆ‘” ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ†•ǡ ™Š‹Ž‡ Ž‘…ƒŽ ”‘ƒ†• Šƒ˜‡ „‡‡Â? —Â?†‡” –Š‡ ”‡•’‘Â?•‹„‹Ž‹–› ‘ˆ Â?—Â?‹…‹’ƒŽ‹–‹‡• •‹Â?…‡ ʹͲͲ͹Ǥ ͺͶ –Š‡ ‰‘˜‡”Â?Â?‡Â?–ǯ• Â?‡†‹—Â? –‡”Â? ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? ƒÂ?† ’”‘˜‹†‡• ƒÂ? ƒŽ–‡”Â?ƒ–‹˜‡ ‹ŽŽ—•–”ƒ–‹˜‡ ‘’–‹‘Â? –‘ †‡Â?‘Â?•–”ƒ–‡ ”‡ˆ‘”Â?• –‘ ‹Â?’”‘˜‡ •—•–ƒ‹Â?ƒ„‹Ž‹–› ƒÂ?† ‡ˆˆ‹…‹‡Â?…›Ǥ Š‡ •‹š–Š •‡…–‹‘Â? ’”‘˜‹†‡• ƒÂ? ƒ……‘—Â?– ‘ˆ ‹Â?•–‹–—–‹‘Â?ƒŽ ‹Â?’”‘˜‡Â?‡Â?–• –Šƒ– …ƒÂ? Ž‡ƒ† –‘ ‹Â?’”‘˜‡† ‡ˆˆ‹…‹‡Â?…›Ǥ 5.2. Key Issues in Sustainability and Efficiency ͷǤͶǤ The Government of Georgia’s transport sector strategy aims to upgrade its transport infrastructure to reach international standards of serviceability. Š‡ •–”ƒ–‡‰› •‡‡Â?• –‘ Šƒ”Â?॥ –Š‡ •–”‘Â?‰ …‘””‡Žƒ–‹‘Â? „‡–™‡‡Â? ‹Â?ˆ”ƒ•–”—…–—”‡ †‡˜‡Ž‘’Â?‡Â?– ƒÂ?† ‡…‘Â?‘Â?‹… ‰”‘™–Š „› ‹Â?…”‡ƒ•‹Â?‰ …‘Â?’‡–‹–‹˜‡Â?॥ ‘ˆ ‡‘”‰‹ƒÂ? ‰‘‘†•ǡ „‡––‡” ”‡‰‹‘Â?ƒŽ ‹Â?–‡‰”ƒ–‹‘Â?Ç¡ ƒÂ?† ‡Â?ŠƒÂ?…‡† ƒ……‡•• ‘ˆ –Š‡ ”—”ƒŽ …‘Â?Â?—Â?‹–‹‡• –‘ Â?ƒ”Â?‡–• ƒÂ?† Š‡ƒŽ–Š ƒÂ?† ‡†—…ƒ–‹‘Â? •‡”˜‹…‡•Ǥ Â?†‡”Ž›‹Â?‰ –Š‡ •–”ƒ–‡‰› ‹• –Š‡ ‰‘˜‡”Â?Â?‡Â?–ǯ• Â?‡‡Â? ‹Â?–‡”‡•– ‹Â? ‡š’Ž‘‹–‹Â?‰ ‡‘”‰‹ƒǯ• Â?‡› ‰‡‘‰”ƒ’Š‹… Ž‘…ƒ–‹‘Â? ƒÂ?† ’‘–‡Â?–‹ƒŽ –‘ •‡”˜‡ ĥ ƒ –”ƒÂ?•‹– ƒÂ?† Ž‘‰‹•–‹…• Š—„ ˆ‘” –”ƒ†‡ ”‘—–‡• „‡–™‡‡Â? –Š‡ ‡Â?–”ƒŽ •‹ƒÂ? ‡’—„Ž‹…• ƒÂ?† –Š‡ ƒ” ƒ•– ‘Â? ‘Â?‡ ŠƒÂ?† ƒÂ?† —”‘’‡ ƒÂ?† –Š‡ ‡•–‡”Â? ‘”Ž† ‘Â? –Š‡ ‘–Š‡”Ǥ Š‡ •‹‰Â?‹ˆ‹…ƒÂ?…‡ ‘ˆ –Š‹• ’‘–‡Â?–‹ƒŽ ‹• ‹Â?…”‡ƒ•‹Â?‰ ™‹–Š –Š‡ ”‹•‡ ‹Â? ƒ•’‹ƒÂ? ‘‹Ž ’”‘†—…–‹‘Â? ƒÂ?† Š‹‰Š ”ƒ–‡• ‘ˆ ‡…‘Â?‘Â?‹… ‰”‘™–Š ‘ˆ …‘—Â?–”‹‡• ‹Â? –Š‡ Â?‡‹‰Š„‘”Š‘‘†Ǥ Š‡ ‡‘”‰‹ƒÂ? ƒ—–Š‘”‹–‹‡• Šƒ˜‡ –Š—• ’Žƒ…‡† ƒ ‰‘‘† †‡ƒŽ ‘ˆ ‡Â?’Šƒ•‹• ‘Â? —’‰”ƒ†‹Â?‰ Â?ƒ‹Â? ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ –”ƒ†‡ …‘””‹†‘”•Ǥ ͷǤͷǤ In recent years, substantial progress has been made in implementation of the transport sector strategy, although considerable needs in road improvement remain. Š‡ …‘—Â?–”›ǯ• Â?ƒ‹Â? ’‘”–• ƒÂ?† ƒ‹”’‘”–• ™‡”‡ …‘Â?…‡••‹‘Â?‡† –‘ –Š‡ ’”‹˜ƒ–‡ •‡…–‘” ƒÂ?† ƒ”‡ Â?‘™ ‡••‡Â?–‹ƒŽŽ› ’”‹˜ƒ–‡Ž› ˆ‹Â?ƒÂ?…‡†Ǥ ‡‘”‰‹ƒÂ? ƒ‹Ž™ƒ› ‹• ‰”ƒ†—ƒŽŽ› Â?‘˜‹Â?‰ –‘™ƒ”†• –Š‡ ƒ†‘’–‹‘Â? ‘ˆ Â?‘†‡”Â? Â?ƒ”Â?‡–‹Â?‰ –‡…ŠÂ?‹“—‡•Ǥ —•–‘Â?• Šƒ• „‡‡Â? ”‡ˆ‘”Â?‡† …‘Â?•‹†‡”ƒ„Ž› „› •–”‡ƒÂ?Ž‹Â?‹Â?‰ ’”‘…‡†—”‡•ǡ ‡Ž‹Â?‹Â?ƒ–‹Â?‰ …‘””—’–‹‘Â?Ç¡ ƒÂ?† —’‰”ƒ†‹Â?‰ ‹Â?ˆ”ƒ•–”—…–—”‡Ǥ Š‡ Â?ƒ‹Â? ƒ”–‡”‹ƒŽ ”‘ƒ†• ƒ”‡ „‡‹Â?‰ ‹Â?’”‘˜‡† ƒÂ?† Â?‘•–Ž› „”‘—‰Š– —’ –‘ Â?ƒ‹Â?–ƒ‹Â?ƒ„Ž‡ …‘Â?†‹–‹‘Â?•Ǥ Â?ƒŒ‘” ˆ‘…—• ‘ˆ –Š‡ ”‘ƒ†• ’”‘‰”ƒÂ? Šƒ• „‡‡Â? –Š‡ ͸Ͳ ƒ•–Ǧ‡•– Š‹‰Š™ƒ›ǡ ƒ ͵ͺͲǦÂ?Â? …‘””‹†‘” …‘Â?Â?‡…–‹Â?‰ –Š‡ ‘”– ‘ˆ ‘–‹ ‹Â? –Š‡ ™‡•– –‘ œ‡”„ƒ‹ŒƒÂ? ‹Â? –Š‡ ‡ƒ•–Ǥ Š‡ ‡…‘Â?‘Â?‹… ”ƒ–‡• ‘ˆ ”‡–—”Â? È‹ ÈŒ ‘Â? ‘”Ž† ƒÂ?Â? ˆ‹Â?ƒÂ?…‡† ’”‘Œ‡…–• ‹Â? –Š‡ Ǧ ‹‰Š™ƒ› Šƒ˜‡ „‡‡Â? •–”‘Â?‰ǡ ‹Â? –Š‡ ”ƒÂ?‰‡ ‘ˆ ͳͷǦʹͷΨǡ –ŠƒÂ?Â?• ‹Â? Žƒ”‰‡ ’ƒ”– –‘ –Š‡ Š‹‰Š Ž‡˜‡Ž• ‘ˆ –”ƒˆˆ‹… ‘Â? –Š‹• Â?ƒ‹Â? ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ –”ƒ†‡ …‘””‹†‘” –Š”‘—‰Š ‡‘”‰‹ƒǤ • ƒ ”‡•—Ž– ‘ˆ –Š‡•‡ ƒÂ?† ‘–Š‡” ‹Â?˜‡•–Â?‡Â?–•ǡ –Š‡ …‘Â?†‹–‹‘Â? ‘ˆ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ† Â?‡–™‘”Â? ȋ…‘Â?•–‹–—–‹Â?‰ ͹ ’‡”…‡Â?– ‘ˆ –Š‡ ‘˜‡”ƒŽŽ Â?‡–™‘”Â?ÈŒ Šƒ• ‹Â?’”‘˜‡† Â?ƒ”Â?‡†Ž›ǣ ˆ”‘Â? ͵Ͷ ’‡”…‡Â?– ‹Â? ‰‘‘† ‘” ˆƒ‹” …‘Â?†‹–‹‘Â? ‹Â? ʹͲͲͶ –‘ ͹͸ ’‡”…‡Â?– „› ʹͲͳͲǤ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ ĥ †‹•…—••‡†ǡ –Š‡ ”‘ƒ†• •‡…–‘” ™‹ŽŽ ’‘•‡ •—„•–ƒÂ?–‹ƒŽ †‡Â?ƒÂ?†• ‘Â? ’—„Ž‹… ˆ—Â?†‹Â?‰ ‹Â? –Š‡ ›‡ƒ”• ƒŠ‡ƒ†ǡ ™‹–Š Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡• …Š”‘Â?‹…ƒŽŽ› —Â?†‡”ˆ—Â?†‡†ǡ Â?‘•– ‘ˆ –Š‡ •‡…‘Â?†ƒ”› ƒÂ?† Ž‘…ƒŽ Â?‡–™‘”Â? ‹Â? •‡”‹‘—• Â?‡‡† ‘ˆ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â?Ç¡ ƒÂ?† –Š‡ ˆ—”–Š‡” ™‘”Â? ƒŠ‡ƒ† ‹Â? …‘Â?’Ž‡–‹Â?‰ –Š‡  ‹‰Š™ƒ›Ǥ ͷǤ͸Ǥ Addressing the chronic underfunding of routine and periodic maintenance will be critical to improving sustainability of the road investment program. Š‡ ‰‘˜‡”Â?Â?‡Â?–ǯ• Â?‡†‹—Â? –‡”Â? ”‘ƒ† ‡š’‡Â?†‹–—”‡ ’”‘‰”ƒÂ? È‹ ÈŒ ’”‘˜‹†‡†  ͵ʹ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͳͲ –‘ ”‘—–‹Â?‡ ƒÂ?† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‘ˆ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› Â?‡–™‘”Â?• È‹  ʹͺǤͷ͸ Â?‹ŽŽ‹‘Â? ˆ‘” ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒÂ?†  ͵Ǥͳ Â?‹ŽŽ‹‘Â? ˆ‘” ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ȌǤ Â? …‘Â?–”ƒ•–ǡ –Š‡ ‡•–‹Â?ƒ–‡† Â?‡‡† ˆ‘” ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒŽ‘Â?‡ ƒÂ?‘—Â?–‡† –‘  ͶʹǤ͹ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͳͲǡ „ƒ•‡† ‘Â? —Â?‹– …‘•–• ’‡” Â?Â? ‘ˆ ˆ‘—”ǦŽƒÂ?‡ ƒÂ?† –™‘ǦŽƒÂ?‡ ”‘ƒ†• ‘ˆ  ͳͳǡͲͲͲ ƒÂ?†  ͷǡͷͲͲǡ ”‡•’‡…–‹˜‡Ž›Ǥ Š‡ Â?‡‡† ˆ‘” ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒ’’Ž‹‡† –‘ ‘Â?‡ –‡Â?–Š ‘ˆ –Š‡ Â?‡–™‘”Â? ‡˜‡”› ›‡ƒ” ƒÂ?‘—Â?–‡† –‘  ͳʹ͵Ǥͳʹ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͳͲ ȋƒ••—Â?‹Â?‰ ƒ ”‡•—”ˆƒ…‹Â?‰ …‘•– ‘ˆ  ͵ʹͶǡͲͲͲ ’‡” Â?Â? ˆ‘” ƒ ˆ‘—”ǦŽƒÂ?‡ ”‘ƒ† ƒÂ?†  ͳ͸ʹǡͲͲͲ ’‡” Â?Â? ˆ‘” ƒ –™‘ ŽƒÂ?‡ ’ƒ˜‡† ”‘ƒ†ȌǤ ͷǤ͹Ǥ The financial burden and economic consequences to the country of underfunding maintenance are considerable. ‡‰Ž‡…–‹Â?‰ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ”‡•—Ž–• ‹Â? •—„•–ƒÂ?–‹ƒŽŽ› Š‹‰Š‡” ‡˜‡Â?–—ƒŽ …‘•–• ‘ˆ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘” ”‡•–‘”ƒ–‹‘Â?Ç¡ ™Š‹…Š ™‘—Ž† „‡ ‹Â? –Š‡ ‘”†‡” ‘ˆ  ͳǤͷ Â?‹ŽŽ‹‘Â? ’‡” Â?Â? ‘ˆ ƒ ͺͷ ’ƒ˜‡† ˆ‘—” ŽƒÂ?‡ ”‘ƒ† ƒÂ?†  ͸ͲͲǡͲͲͲ ’‡” Â?Â? ‘ˆ ƒ ’ƒ˜‡† –™‘ ŽƒÂ?‡ ”‘ƒ†Ǥ Š‹• ‹• ʹǤͷ –‘ ͺ –‹Â?‡• Š‹‰Š‡” –ŠƒÂ? –Š‡ …‘•–• ‘ˆ Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ǥ —”–Š‡”Â?‘”‡ǡ Â?‡‰Ž‡…–‹Â?‰ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ –‘ ’Žƒ…‡ ’”‹‘”‹–› ‘Â? Â?‡™ …‘Â?•–”—…–‹‘Â? …ƒÂ? ”‡•—Ž– ‹Â? ƒÂ? ƒ˜‡”ƒ‰‡ ‘ˆ ͵ –‘ Ͷ Â?Â? ‘ˆ ‡š‹•–‹Â?‰ ’‘–‡Â?–‹ƒŽŽ› ‰‘‘† ”‘ƒ†• „‡‹Â?‰ Ž‘•– ˆ‘” ‡˜‡”› Â?Â? ‘ˆ Â?‡™ ”‘ƒ† …‘Â?•–”—…–‡†Ǥ Š‡ ‡…‘Â?‘Â?‹… …‘Â?•‡“—‡Â?…‡• ‘ˆ Â?‡‰Ž‡…–‹Â?‰ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒ”‡ ’”‹Â?ƒ”‹Ž› „‘”Â?‡ „› ’”‹˜ƒ–‡ ”‘ƒ† —•‡”• ‹Â? –Š‡ ˆ‘”Â? ‘ˆ ”‡†—…‡† ’”‘†—…–‹˜‹–› ƒÂ?† ‹Â?…”‡ƒ•‡† ˜‡Š‹…Ž‡ ‘’‡”ƒ–‹Â?‰ …‘•–•Ǥ †‘ŽŽƒ” ‘ˆ Â?‡‰Ž‡…–‡† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡• …ƒÂ? ”‡•—Ž– ‹Â? ƒÂ? ‹Â?…”‡ƒ•‡ ‘ˆ Í„Í´ –‘ ͵ ‹Â? ˜‡Š‹…Ž‡ ‘’‡”ƒ–‹Â?‰ …‘•–• …ƒ—•‡† „› †‡ˆ‘”Â?‡† ƒÂ?† ”‘—‰Š ”‘ƒ† •—”ˆƒ…‡•Ǥ ͷǤͺǤ As lumpy investment in the important EW Highway winds down, a phasedǦin rebalancing of outlays for new construction and rehabilitation can help reduce the backlog of the network in poor conditionǤ Š‡ ƒ”‰—Â?‡Â?–• ‹Â? –Š‡ ’”‡…‡†‹Â?‰ ’ƒ”ƒ‰”ƒ’Š –‘ •—’’‘”– –Š‡ ’”‡•‡”˜ƒ–‹‘Â? ”ƒ–Š‡” –ŠƒÂ? –Š‡ ‡š’ƒÂ?•‹‘Â? ‘ˆ –Š‡ Â?‡–™‘”Â?Ç¡ …ƒÂ? „‡ ˆ—”–Š‡” •–”‡Â?‰–Š‡Â?‡† „› ƒ …‘Â?’ƒ”‹•‘Â? ‘ˆ –Š‡ ‡…‘Â?‘Â?‹… ”ƒ–‡• ‘ˆ ”‡–—”Â? È‹ ÈŒ ‘ˆ ƒ –›’‹…ƒŽ ™‹†‡Â?‹Â?‰ –‘ ˆ‘—” ŽƒÂ?‡• ‘ˆ ƒ ͳͲͲ Â?Â? ”‘ƒ† ™‹–Š ͷͲͲͲ ˜‡Š‹…Ž‡• ’‡” †ƒ› ƒ– ƒ …‘•– ‘ˆ Í„ ͹ͲͲ ͲͲͲ ’‡” Â?Â?Í·Í´Ç¡ ƒÂ?† –Š‡ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ ͳͲͲ Â?Â? ‘ˆ ƒ –™‘ǦŽƒÂ?‡ ”‘ƒ† ™‹–Š ʹͲͲͲ ˜‡Š‹…Ž‡• ’‡” †ƒ› ƒ– ƒ …‘•– ‘ˆ Í„ ʹͲͲǡͲͲͲ ’‡” Â?Â?ͷ͵Ǥ ‡’‡Â?†‹Â?‰ ‘Â? –Š‡ †‹ˆˆ‹…—Ž–› ‘ˆ –Š‡ –‡””ƒ‹Â?Ç¡ –Š‡ ™‹†‡Â?‹Â?‰ ™‹ŽŽ Šƒ˜‡ ƒÂ?  ‹Â? –Š‡ ”ƒÂ?‰‡ ‘ˆ ͳͲǦͳͶ ’‡”…‡Â?– ™Š‹Ž‡ –Š‡ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â?  ™‹ŽŽ „‡ ‹Â? –Š‡ ”ƒÂ?‰‡ ‘ˆ ʹͲǦ͵ͷΨǤ È‹‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ȅ”‡•—”ˆƒ…‹Â?‰ ‘ˆ –Š‡ –™‘ ŽƒÂ?‡ ”‘ƒ†Ȅ™‘—Ž† Šƒ˜‡ ƒÂ?  ‹Â? –Š‡ ‘”†‡” ‘ˆ ͵ͲǦͷͲΨ ƒ– –Š‡ …‘•– ‘ˆ ̈́ͺͲǡͲͲͲ ’‡” Â?Â?ȌǤ Š‡ –™‘ Â?ƒŒ‘” †‘Â?‘” ˆ—Â?†‡† ’”‘‰”ƒÂ?• ˆ‘” ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ȋˆ—Â?†‡† „› –Š‡ ‹ŽŽ‡Â?Â?‹—Â? ŠƒŽŽ‡Â?‰‡ ƒÂ?† „›  È€ –Š”‘—‰Š –Š‡ ‹”•– ‡…‘Â?†ƒ”› ƒÂ?† ‘…ƒŽ ‘ƒ†• ”‘‰”ƒÂ? ÈŒ ™‡”‡ …‘Â?’Ž‡–‡† ‹Â? ʹͲͳͳǤ  È€ ‹• ˆ‘ŽŽ‘™‹Â?‰ ‘Â? ™‹–Š ˆ—”–Š‡” •—’’‘”– ˆ‘” ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? –Š”‘—‰Š –Š‡ ‡…‘Â?†  ƒÂ?† ’ŽƒÂ?Â?‡† ƒ††‹–‹‘Â?ƒŽ ˆ‹Â?ƒÂ?…‹Â?‰ ˆ‘” –Š‡ Š‹”† ƒ•–Ǧ‡•– ‹‰Š™ƒ› Â?’”‘˜‡Â?‡Â?– ”‘Œ‡…–Ǥ ‘™‡˜‡”ǡ „—†‰‡– ƒŽŽ‘…ƒ–‹‘Â?• „‡›‘Â?† ʹͲͳͳ ƒ”‡ Â?‘– •—ˆˆ‹…‹‡Â?– –‘ …‘Â?’‡Â?•ƒ–‡ ˆ‘” –Š‡ ‘˜‡”ƒŽŽ ”‡†—…–‹‘Â? ‹Â? ‡š–‡”Â?ƒŽ ˆ—Â?†‹Â?‰Ǥ ͷǤͻǤ Developing and implementing a viable system for attending to the needs of the local roads network can be important in enhancing access to markets and social services for the rural population. Ž–Š‘—‰Š ”‡Ž‹ƒ„Ž‡ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ‹• •…ƒ”…‡ǡ –Š‡ Ž‘…ƒŽ ”‘ƒ† Â?‡–™‘”Â? ‹• ‡š–‡Â?•‹˜‡ „—– ‹Â? ˜‡”› ’‘‘” …‘Â?†‹–‹‘Â?Ç¡ –Š—• ‹Â?’‡†‹Â?‰ ƒ……‡•• –‘ Â?ƒ”Â?‡–• ƒÂ?† •‘…‹ƒŽ •‡”˜‹…‡• ˆ‘” –Š‡ ”—”ƒŽ ’‘’—Žƒ–‹‘Â?Ǥ – –Š‡ •ƒÂ?‡ –‹Â?‡ǡ ‹Â?’”‘˜‹Â?‰ –Š‡ ‡Â?–‹”‡ Ž‘…ƒŽ ”‘ƒ† Â?‡–™‘”Â? ™‹ŽŽ ’”‘˜‡ „‘–Š —Â?ƒˆˆ‘”†ƒ„Ž‡ ƒÂ?† ‹Â?‡ˆˆ‹…‹‡Â?–Ǥ ††”‡••‹Â?‰ –Š‡ …ŠƒŽŽ‡Â?‰‡ ‘ˆ ‹Â?’”‘˜‹Â?‰ Ž‘…ƒŽ ”‘ƒ†• ™‹ŽŽ ”‡“—‹”‡ ‹†‡Â?–‹ˆ›‹Â?‰ ƒ …‘”‡ Ž‘…ƒŽ ”‘ƒ†• Â?‡–™‘”Â? ™Š‹…Š ’”‘˜‹†‡• ƒ……‡•• –‘ ‡…‘Â?‘Â?‹… …‡Â?–‡”• ƒÂ?† •‘…‹ƒŽ •‡”˜‹…‡• –‘ ƒ Žƒ”‰‡ ’‘’—Žƒ–‹‘Â?Ǥ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ’”‘‰”ƒÂ? ˆ‘” –Š‹• …‘”‡ Â?‡–™‘”Â? •Š‘—Ž† –Š‡Â? „‡ ˆ‘”Â?—Žƒ–‡†Ǥ ‹˜‡Â? –Š‡ —Â?‡˜‡Â? ƒ˜ƒ‹Žƒ„‹Ž‹–› ‘ˆ ”‡•‘—”…‡• ƒ– –Š‡ Ž‘…ƒŽ Ž‡˜‡Ž ˆ‘” ”‘ƒ†•ǡ ‹– ™‘—Ž† „‡ —•‡ˆ—Ž –‘ Â?ƒÂ?ƒ‰‡ ƒÂ?† …‘‘”†‹Â?ƒ–‡ –Š‡ ‹Â?’”‘˜‡Â?‡Â?– ‘ˆ Â?‘Â?Ǧ—”„ƒÂ? Ž‘…ƒŽ ”‘ƒ†• —Â?†‡” –Š‡ ‹Â?‹•–”› ‘ˆ ‡‰‹‘Â?ƒŽ ‡˜‡Ž‘’Â?‡Â?– ƒÂ?† Â?ˆ”ƒ•–”—…–—”‡ È‹ ȌǤ ͷǤͳͲǤ Finally, putting in place improved institutional arrangements to enhance efficiency of road expenditures will be important in the face of limited resources. Â?—Â?„‡” ‘ˆ ”‡ˆ‘”Â?• ƒ”‡ ’ƒ”–‹…—Žƒ”Ž› ‹Â?’‘”–ƒÂ?– ‹Â? –Š‹• ”‡‰ƒ”†Ǥ Š‡ ˆ‹”•– ‹• –‘ Â?‘˜‡ –‘™ƒ”† ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? ‘ˆ ƒ …‘Â?’”‡Š‡Â?•‹˜‡ ‘ƒ† ••‡– ƒÂ?ƒ‰‡Â?‡Â?– ›•–‡Â? È‹ ÈŒ „ƒ•‡† ‘Â? ƒ …‘Â?’”‡Š‡Â?•‹˜‡ †ƒ–ƒ„ƒ•‡ ‘ˆ –Š‡ ‡Â?–‹”‡ ”‘ƒ† Â?‡–™‘”Â?Ç¡ ‹Â?…Ž—†‹Â?‰ Ž‘…ƒŽ ”‘ƒ†•ǡ ĥ ™‡ŽŽ ĥ ƒÂ?ƒŽ›•‹• „ƒ•‡† ‘Â? ‡…‘Â?‘Â?‹… ƒÂ?† •‘…‹ƒŽ …”‹–‡”‹ƒǤ Š‡ •‡…‘Â?† ‹• –‘ ‹Â?–”‘†—…‡ ƒÂ?† ‹Â?…”‡ƒ•‡ –Š‡ —•‡ ‘ˆ Â?‘”‡ ‡ˆˆ‹…‹‡Â?– …‘Â?–”ƒ…–‹Â?‰ –‡…ŠÂ?‘Ž‘‰‹‡• •—…Š ĥ ‡•‹‰Â?Ǧ —‹Ž† ƒÂ?† ’‡”ˆ‘”Â?ƒÂ?…‡Ǧ„ƒ•‡† …‘Â?–”ƒ…–‹Â?‰ „ƒ•‡† ‘Â? –Š‡ ‡•‹‰Â?Ǧ —‹Ž†Ǧ’‡”ƒ–‡Ǧƒ‹Â?–ƒ‹Â?Ǧ ”ƒÂ?•ˆ‡” È‹ ÈŒ –‡…ŠÂ?‘Ž‘‰›Ǥ Š‡ –Š‹”† ‹• –‘ ‹Â?’”‘˜‡ …ƒ’ƒ„‹Ž‹–‹‡• ‘ˆ –Š‡ ‘ƒ†• ‡’ƒ”–Â?‡Â?– ‘Â? ƒ Â?—Â?„‡” ‘ˆ ˆ”‘Â?–•ǡ ‹Â?…Ž—†‹Â?‰ –”ƒ‹Â?‹Â?‰ ‹Â? –Š‡ —•‡ ‘ˆ Â?‘†‡”Â? ƒ••‡– Â?ƒÂ?ƒ‰‡Â?‡Â?– ’”‹Â?…‹’Ž‡•Ǣ …ƒ’ƒ„‹Ž‹–› –‘ ƒ••‡•• „‡Â?‡ˆ‹–• ‹Â? –‡”Â?• ‘ˆ •‡˜‡”ƒŽ …”‹–‡”‹ƒǡ ‹Â?…Ž—†‹Â?‰ „‡Â?‡ˆ‹–Ǧ…‘•– ”ƒ–‹‘•ǡ …‘Â?Â?—Â?‹–› ƒ……‡•• –‘ Í·Í´ Š‹• ‡•–‹Â?ƒ–‡ ‹• „ƒ•‡† ‘Â? –Š‡ ƒ˜‡”ƒ‰‡ …‘•– ’‡” Â?Â? ‘ˆ ™‘”Â?• ‘Â? –Š‡ ƒ•–Ǧ‡•– ‹‰Š™ƒ›Ǥ ͷ͵ Š‹• ‡•–‹Â?ƒ–‡ ‹• „ƒ•‡† ‘Â? –Š‡ ƒ˜‡”ƒ‰‡ …‘•– ’‡” Â?Â? ‘ˆ –Š‡ ™‘”Â?• —Â?†‡” –Š‡ Ǥ ͺ͸ ‡••‡Â?–‹ƒŽ •‡”˜‹…‡•ǡ ‡Â?‡”‰‡Â?…› ƒ……‡••ǡ ‡Â?˜‹”‘Â?Â?‡Â?–ƒŽ •—•–ƒ‹Â?ƒ„‹Ž‹–›ǡ ƒÂ?† ƒ‰‡Â?…› ”‹•Â?Ç¢ ƒÂ?† …ƒ’ƒ„‹Ž‹–› ‹Â? ’”‘…—”‡Â?‡Â?– ƒÂ?† …‘Â?–”ƒ…– Â?‘Â?‹–‘”‹Â?‰Ǥ ͷǤͳͳǤ Š‡ ˆ‘ŽŽ‘™‹Â?‰ •‡…–‹‘Â?• ȋ‹Ȍ ’”‡•‡Â?– ƒÂ? ‘˜‡”˜‹‡™ ‘ˆ –Š‡ ‰‡Â?‡”ƒŽ …Šƒ”ƒ…–‡”‹•–‹…• ƒÂ?† •‹–—ƒ–‹‘Â? ‘ˆ –Š‡ ”‘ƒ† •‡…–‘” ‹Â? ‡‘”‰‹ƒǢ ȋ‹‹Ȍ ƒ••‡•• –Š‡ ‰‘˜‡”Â?Â?‡Â?–ǯ• ’”‘’‘•‡† ‘ƒ† Â?˜‡•–Â?‡Â?– ƒÂ?† ƒ‹Â?–‡Â?ƒÂ?…‡ ’ŽƒÂ? ˆ‘” –Š‡ ʹͲͳͲǦʹͲͳͶ ’‡”‹‘†Ǣ ȋ‹‹‹Ȍ …‘Â?•‹†‡” ƒÂ? ƒŽ–‡”Â?ƒ–‹˜‡ ‹ŽŽ—•–”ƒ–‹˜‡ •…‡Â?ƒ”‹‘ –Šƒ– Š‘Ž†• ‡š’‡Â?†‹–—”‡• •–‡ƒ†› ĥ ƒ ’‡”…‡Â?–ƒ‰‡ ‘ˆ  ƒ– –Š‡ ʹͲͳͳ Ž‡˜‡Ž „—– …‘Â?•‹†‡”• ƒÂ? ƒŽ–‡”Â?ƒ–‹˜‡ …‘Â?•–”—…–‹‘Â?Ȁ”‡Šƒ„‹Ž‹–ƒ–‹‘Â?È€Â?ƒ‹Â?–‡Â?ƒÂ?…‡ •–”—…–—”‡ ƒÂ?† ƒÂ? ‹Â?…”‡ƒ•‡† ‡Â?’Šƒ•‹• ‘Â? Ž‘…ƒŽ ”‘ƒ†•Ǣ ƒÂ?† ȋ‹˜Ȍ †‹•…—•• •’‡…‹ˆ‹… Â?‡ƒ•—”‡• –‘ ‹Â?…”‡ƒ•‡ –Š‡ …‘•– ‡ˆˆ‡…–‹˜‡Â?॥ ‘ˆ ’”‹‘”‹–› ’”‘Œ‡…–•Ǥ 5.3. The Road Network ͷǤͳʹǤ The total length of Table 5.1: Road Network in Georgia Georgia’s road network is ȋ‹Â? Â?‹Ž‘Â?‡–‡”•Ȍ about 20,400 km. Š‡ Â?‡–™‘”Â? Road Class 2 Lane 4 Lane Total ‹• •—„Ǧ†‹˜‹†‡† „› ˆ—Â?…–‹‘Â?ƒŽ Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ†• ͳǡͶͺͶ ͺͲ ͳǡͷ͸Ͷ …Žƒ••‹ˆ‹…ƒ–‹‘Â? ‹Â?–‘ –Š”‡‡ …Žƒ••‡•ǣ ‡…‘Â?†ƒ”› ”‘ƒ†• ͷǡͶ͸͸ Ͳ ͷǡͶ͸͸ ȋƒȌ ͳͷ͸͵Ǥͷ Â?Â? ‘ˆ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‘…ƒŽ ”‘ƒ†• ͳ͵ǡ͵ͺ͸ Ͳ ͳ͵ǡ͵ͺ͸ ”‘ƒ†•Ǣ ȋ‹‹Ȍ ͷǡͶ͸͸ Â?Â? ‘ˆ •‡…‘Â?†ƒ”› ”‘ƒ†•ǡ ƒÂ?† ȋ‹‹‹Ȍ ͳ͵ǡ͵ͺ͸ Â?Â? ‘ˆ Ž‘…ƒŽ ‘–ƒŽ ʹͲǡ͵͵͸ ͺͲ ʹͲǡͶͳ͸ ”‘ƒ†• Ǥ Š‡”‡ ƒ”‡ ˆ‹˜‡ Â?ƒ‹Â? ͷͶ SourceÇ£ ‘ƒ†• ‡’ƒ”–Â?‡Â?– ‘ˆ ‡‘”‰‹ƒ ”‘ƒ†• ƒÂ?† Š‹‰Š™ƒ›•ǡ –‘–ƒŽ‹Â?‰ ͺͷͻ Â?Â?Ç£ ȋ‹Ȍ ‘–‹Ȃ„‹Ž‹•‹Ȃ‡† ”‹†‰‡Ǣ ȋ‹‹Ȍ –•Â?Š‡–ƒȂƒœ„‡‰‹Ȃƒ”•‹Ǣ ȋ‹‹‹Ȍ ƒ”’‹Ȃ ƒ–—Â?‹ȂƒÂ?–”‡†‹ƒǢ ȋ‹˜Ȍ Šƒ•Š—”‹Ȃ Â?ŠƒŽ–•‹Â?Š‡Ȃ—”Â?‹•Š „‘”†‡”Ǣ ƒÂ?† ȋ˜Ȍ „‹Ž‹•‹Ȃƒ”Â?‡—Ž‹Ȃ —‰—–‹Ǥ Š‡”‡ ƒ”‡ –™‘ Â?ƒ‹Â? –”ƒÂ?•‹– …‘””‹†‘”•ǣ –Š‡ ͸Ͳ ƒ•–Ǧ‡•– ‹‰Š™ƒ› È‹‡Â?ƒÂ?‹Ǧ„‹Ž‹•‹Ǧ‡† ”‹†‰‡Ȍ ƒÂ?† –Š‡ ͹Ͳ È‹‡Â?ƒÂ?‹Ǧ‘–‹Ǧ ƒ–—Â?‹Ǧƒ”’‹Ȁ—”Â?‹•Š ‘”†‡”ȌǤ Ž–Š‘—‰Š –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ† Â?‡–™‘”Â? Šƒ• ‹Â?’”‘˜‡† …‘Â?•‹†‡”ƒ„Ž› ‹Â? ”‡…‡Â?– ›‡ƒ”•ǡ –Š‡ ‘ˆ–‡Â? …ŠƒŽŽ‡Â?‰‹Â?‰ –‘’‘‰”ƒ’Š›ǡ ‹Â?ƒ†‡“—ƒ–‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ”‡‰‹Â?‡ǡ ’‘‘” –‡…ŠÂ?‹…ƒŽ •–ƒÂ?†ƒ”†• ‘ˆ ˜‡Š‹…Ž‡•ǡ ƒÂ?† ‘–Š‡” ƒ†˜‡”•‡ …‘Â?†‹–‹‘Â?• Â?‡ƒÂ? –Š‡ –”ƒˆˆ‹… ˆŽ‘™ ‹• •Ž‘™ ƒÂ?† –Š‡ ”‹•Â? ‘ˆ ƒ……‹†‡Â?–• Š‹‰Š ‘Â? Â?—…Š ‘ˆ –Š‡ ‘˜‡”ƒŽŽ Â?‡–™‘”Â?Ǥ Š‡ ƒ„•‡Â?…‡ ‘ˆ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‘ˆ ƒ „—ŽÂ? ‘ˆ –Š‡ •‡…‘Â?†ƒ”› ƒÂ?† Ž‘…ƒŽ ”‘ƒ†• Šƒ• Ž‡† –‘ ˆƒ‹Ž—”‡ ‘ˆ Â?ƒÂ?› ‘ˆ –Š‡•‡ ”‘ƒ†•Ǥ „‘—– ͵Ͷ ’‡”…‡Â?– ‘ˆ –Š‡ Â?‡–™‘”Â? ‹• ’ƒ˜‡†ǡ ™Š‹Ž‡ Í·Í» ’‡”…‡Â?– ‹• ‰”ƒ˜‡Ž ƒÂ?† ͹ ’‡”…‡Â?– ‡ƒ”–Š ”‘ƒ†•Ǥ Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ†• ƒ”‡ Â?ƒÂ?ƒ‰‡† „› –Š‡ ‘ƒ†• ‡’ƒ”–Â?‡Â?– —Â?†‡” –Š‡  Ç¡ ™Š‹Ž‡ Ž‘…ƒŽ ”‘ƒ†• ƒ”‡ Â?ƒÂ?ƒ‰‡† „› Ž‘…ƒŽ Â?—Â?‹…‹’ƒŽ‹–‹‡•Ǥ Â? ʹͲͲ͹ǡ –Š‡ ‘ƒ†• ‡’ƒ”–Â?‡Â?– –”ƒÂ?•ˆ‡””‡† Ž‘…ƒŽ ”‘ƒ†• –‘ ͸ͻ Ž‘…ƒŽ ‰‘˜‡”Â?Â?‡Â?–• ĥ ’ƒ”– ‘ˆ ƒ „”‘ƒ†‡” ’—„Ž‹… •‡…–‘” ”‡ˆ‘”Â? ƒ‹Â?‡† ƒ– †‡…‡Â?–”ƒŽ‹œ‹Â?‰ ‰‘˜‡”Â?Â?‡Â?– ˆ—Â?…–‹‘Â?•Ǥ ͷǤͳ͵Ǥ Although Georgia compares favorably with regional comparators in terms of road density, the condition of the majority of the road network remains poor. ‘ƒ† †‡Â?•‹–› ‹Â? ‡‘”‰‹ƒ ‹• ʹͻͳ Â?Â? ’‡” ͳͲͲͲ •“ Â?Â? ‘” ͶǤͷ͹ Â?Â? ’‡” –Š‘—•ƒÂ?† ’‡‘’Ž‡Ǥ Š‡•‡ Ž‡˜‡Ž• ˆƒŽŽ •Š‘”– ‘ˆ  Ž‡˜‡Ž•ǡ „—– ‹– …‘Â?’ƒ”‡• ˆƒ˜‘”ƒ„Ž› ™‹–Š ”‡•’‡…– –‘ ”‡‰‹‘Â?ƒŽ ’‡‡”• ‹Â? –Š‡ ƒ—…ƒ•—•ǡ ‡Â?–”ƒŽ •‹ƒǡ ƒÂ?† –Š‡ ƒŽÂ?ƒÂ?•Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ –Š‡ …‘Â?†‹–‹‘Â? ‘ˆ –Š‡ Â?ƒŒ‘”‹–› ‘ˆ –Š‡ ”‘ƒ† Â?‡–™‘”Â? ”‡Â?ƒ‹Â?• ’‘‘”ǡ ™‹–Š –Š‡ ‡š…‡’–‹‘Â? ‘ˆ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ†•Ǥ ”ƒÂ?•’‘”– …‘•–• ƒ”‡ Š‹‰Š ƒÂ?† …‘Â?Â?‡…–‹˜‹–› –‘ Â?ƒ”Â?‡–• ’‘‘” †—‡ –‘ †‡‰”ƒ†‡† ”—”ƒŽ ‹Â?ˆ”ƒ•–”—…–—”‡Ǥ Â?Ž› Ͷͳ ’‡”…‡Â?– ‘ˆ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ†• ™‡”‡ ‹Â? ‰‘‘† ‘” ˆƒ‹” …‘Â?†‹–‹‘Â? ‹Â? ʹͲͲͻǤ Š‹• ‹• ™‡ŽŽ „‡Ž‘™ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ „‡Â?…ŠÂ?ƒ”Â? ‘ˆ ƒ„‘—– ͹Ͳ ’‡”…‡Â?– ‘ˆ Â?ƒ‹Â? ”‘ƒ†• ȋ’”‹Â?ƒ”› ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ†•Ȍ ‹Â? †‡˜‡Ž‘’‹Â?‰ …‘—Â?–”‹‡• ‹Â? ‰‘‘† ‘” ˆƒ‹” …‘Â?†‹–‹‘Â?Ǥ Š‹Ž‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ†• ƒ”‡ ‹Â? ”‡Žƒ–‹˜‡Ž› ‰‘‘† …‘Â?†‹–‹‘Â?Ç¡ ™‹–Š ͹͹ ’‡”…‡Â?– ‹Â? ‰‘‘† ‘” ͷͶŠ‡•‡ ˆ‹‰—”‡• ‹Â?…Ž—†‡ ƒ„‘—– ͵ʹ͵ Â?Â? ‘ˆ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ†• ƒÂ?† ͳͳʹͻ Â?Â? ‘ˆ •‡…‘Â?†ƒ”› ”‘ƒ†• ‹Â? –Š‡ ‘……—’‹‡† –‡””‹–‘”‹‡• ‘ˆ „Â?Šƒœ‹ƒ ƒÂ?† ‘—–Š ••‡–‹ƒǤ ͺ͹ ˆƒ‹” …‘Â?†‹–‹‘Â?Ç¡ –Š‡ •ƒÂ?‡ …ƒÂ?Â?‘– „‡ •ƒ‹† ˆ‘” •‡…‘Â?†ƒ”› ”‘ƒ†•ǡ ™‹–Š ‘Â?Ž› ͵Ͳ ’‡”…‡Â?– ‹Â? ‰‘‘† ‘” ˆƒ‹” …‘Â?†‹–‹‘Â?Ǥ Š‹• Šƒ• „‡‡Â? ƒ ”‡•—Ž– ‘ˆ Â?‡‰Ž‡…– ‘ˆ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‘ˆ •‡…‘Â?†ƒ”› ”‘ƒ†• ‹Â? ”‡…‡Â?– ›‡ƒ”• ĥ ’”‹‘”‹–› Šƒ• „‡‡Â? ’Žƒ…‡† ‘Â? ‹Â?’”‘˜‹Â?‰ –Š‡ …‘Â?†‹–‹‘Â? ‘ˆ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ†•Ǥ Table 5.2: Road Coverage in Selected Countries ȋ‹Â? Â?Â? ’‡” •“ Â?Â? ƒÂ?† Â?Â? ’‡” ͳͲͲͲ ’‡‘’Ž‡ ÈŒ ROAD DENSITY ‘ƒ† Â?ȀͳͲͲͲ •“ Â?Â? ‘ƒ† Â?ȀͳͲͲͲ ’‡‘’Ž‡ œ‡”„ƒ‹ŒƒÂ? ʹͺͺ ʹǤͻ ›”‰›œ•–ƒÂ? ͳ͹Ͳ ͸Ǥ͵ ƒœƒÂ?Š•–ƒÂ? ͶͲ ͹Ǥͳ Georgia 291 4.57 •–‘Â?‹ƒ ͳ͵ʹͲ ͶͳǤʹ —Â?‰ƒ”› ͳ͹͵͵ ͳͷǤ͹  ‘ˆ ƒ…‡†‘Â?‹ƒ ͵Ͷʹ ͶǤ͵ ‡”„‹ƒ Ƭ ‘Â?–‡Â?‡‰”‘ ͶͻͶ ͶǤͺ Ž‘˜‡Â?‹ƒ ͳͲͲ͹ ͳͲǤʹ Ž„ƒÂ?‹ƒ ͸ͷ͹ ͵Ǥͷ —”‘’‡ ƒÂ?† ‡Â?–”ƒŽ •‹ƒ ͷͺͲ ͺǤ͸ ’’‡” ‹††Ž‡ Â?…‘Â?‡ ͳͲ͹͸ ͻǤʹ ‘™‡” Â?…‘Â?‡ ͵ʹͺ ͶǤͻ SourceÇ£  ƒÂ?† †ƒ–ƒ „ƒ•‡•Ǥ ͷǤͳͶǤ Traffic load patterns vary considerably by road typeǤ Š‡ ƒ˜‡”ƒ‰‡ ƒÂ?Â?—ƒŽ †ƒ‹Ž› –”ƒˆˆ‹… È‹ ÈŒ ‹• ͵ǡͻͻͻ ˜‡Š‹…Ž‡• ’‡” †ƒ› ȋ˜’†Ȍ ‘Â? ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ†•ǡ ͺʹͷ ˜’† ‘Â? •‡…‘Â?†ƒ”› ”‘ƒ†• ƒÂ?† —’ –‘ ͺͻ ˜’† ‘Â? …‘”‡ Ž‘…ƒŽ ”‘ƒ†•Ǥ ‘–ƒŽ ƒÂ?Â?—ƒŽ ˜‡Š‹…Ž‡ —–‹Ž‹œƒ–‹‘Â? ‹• ‡•–‹Â?ƒ–‡† –‘ „‡ Ͷǡͷʹ͹ Â?‹ŽŽ‹‘Â? ˜‡Š‹…Ž‡ǦÂ?Â? ƒÂ?† ƒŽ–Š‘—‰Š ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ†• ƒ……‘—Â?– ˆ‘” ‘Â?Ž› ͵ʹ ’‡”…‡Â?– ‘ˆ –Š‡ Â?‡–™‘”Â? Ž‡Â?‰–Šǡ –Š‡› …ƒ””› ͺͻ ’‡”…‡Â?– ‘ˆ –‘–ƒŽ –”ƒˆˆ‹… Â?‡ƒ•—”‡† ‹Â? –‡”Â?• ‘ˆ ˜‡Š‹…Ž‡ǦÂ?Â?Ǥ Š‡ Â?—Â?„‡” ‘ˆ ˜‡Š‹…Ž‡• ”‡‰‹•–‡”‡† Šƒ• •—„•–ƒÂ?–‹ƒŽŽ› ‹Â?…”‡ƒ•‡† ‹Â? ”‡…‡Â?– ›‡ƒ”•ǡ ”‡ˆŽ‡…–‹Â?‰ Š‹‰Š ‡…‘Â?‘Â?‹… ‰”‘™–Šǡ ƒŽ–Š‘—‰Š –Š‹• ™ƒ• ‹Â?–‡””—’–‡† –‡Â?’‘”ƒ”‹Ž› †—”‹Â?‰ –Š‡ ‰Ž‘„ƒŽ ‡…‘Â?‘Â?‹… †‘™Â?–—”Â? ‘ˆ ʹͲͲͺǦͲͻǤ ”‘Â? ʹͲͲ͵ –‘ ʹͲͲ͹ǡ –Š‡ ˜‡Š‹…Ž‡ ˆŽ‡‡– ‰”‡™ ƒ– ƒ”‘—Â?† ͳʹ ’‡”…‡Â?– ’‡” ›‡ƒ” –‘ ”‡ƒ…Š ͷͳͳǡͲͲͲ ˜‡Š‹…Ž‡• ‹Â? ʹͲͲ͹ǡ ‘ˆ ™Š‹…Š ͺͳ ’‡”…‡Â?– ƒ”‡ ’ƒ••‡Â?‰‡” …ƒ”•Ǥ ͷǤͳͷǤ Road design standards are inadequate and outdated for the international and secondary network, but excessive for local roads. Ž–Š‘—‰Š Â?ƒÂ?› ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ†• Â?‘™ …ƒ””› –”ƒˆˆ‹… …‘Â?’”‹•‹Â?‰ Š‡ƒ˜› –”—…Â?• ™‹–Š —”‘’‡ƒÂ? †‹Â?‡Â?•‹‘Â?• ƒÂ?† ƒšŽ‡ Ž‘ƒ†• ‘ˆ ͳͳǦͳ͸ –‘Â?• ‘Â? †‘—„Ž‡ ƒšŽ‡•ǡ –Š‡ †‡•‹‰Â? •–ƒÂ?†ƒ”†• ƒ”‡ •–‹ŽŽ „ƒ•‡† ‘Â? Â?ƒš‹Â?—Â? ƒšŽ‡ Ž‘ƒ†• ‘ˆ ͸ –‘Â?•Ǥ Â? ƒ††‹–‹‘Â?Ç¡ ’ƒ˜‡Â?‡Â?– •–ƒÂ?†ƒ”†• ‹Â? ‡‘”‰‹ƒ ƒ”‡ „ƒ•‡† ‘Â? –Š‡ ‘Ž† ‘˜‹‡– †‡•‹‰Â?• –Šƒ– †‘ Â?‘– ”‡“—‹”‡ ˆƒ…–‘”‹Â?‰ ‹Â? ˆ‘”‡…ƒ•– –”ƒˆˆ‹… †‡Â?ƒÂ?† ‘˜‡” –Š‡ †‡•‹‰Â? Ž‹ˆ‡ –‘ †‡–‡”Â?‹Â?‡ ’ƒ˜‡Â?‡Â?– •–”‡Â?‰–ŠǤ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ •–ƒÂ?†ƒ”†• —•‡† –‘ ”‡Šƒ„‹Ž‹–ƒ–‡ Ž‘…ƒŽ ”‘ƒ†• ƒ”‡ Š‹‰Š‡” –ŠƒÂ? Œ—•–‹ˆ‹‡† „› –Š‡ Ž‡˜‡Ž ‘ˆ –”ƒˆˆ‹…ǡ –Š—• ”‡•—Ž–‹Â?‰ ‹Â? ˆ‡™‡” •‡‰Â?‡Â?–• ‘ˆ Ž‘…ƒŽ ”‘ƒ†• „‡‹Â?‰ ”‡Šƒ„‹Ž‹–ƒ–‡† –ŠƒÂ? ™‘—Ž† ‘–Š‡”™‹•‡ Šƒ˜‡ „‡‡Â? –Š‡ …ƒ•‡Ǥ Â? ƒ††‹–‹‘Â?Ç¡ ˆ—Â?†‹Â?‰ ‘ˆ ”‘—–‹Â?‡ ƒÂ?† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‹• ˜‡”› Ž‹Â?‹–‡†ǡ ”‡•—Ž–‹Â?‰ ‹Â? ˆƒ•–‡” –ŠƒÂ? ’ŽƒÂ?Â?‡† †‡–‡”‹‘”ƒ–‹‘Â? ‘ˆ ”‘ƒ† ƒ••‡–•Ǥ Š‹• ƒ’’”‘ƒ…Š ‡Â?†• —’ „‡‹Â?‰ ‡š’‡Â?•‹˜‡ ƒÂ?† —Â?•—•–ƒ‹Â?ƒ„Ž‡ ĥ ‹Â?’”‘˜‡† •‡…–‹‘Â?• ”ƒ’‹†Ž› †‡–‡”‹‘”ƒ–‡ „‡ˆ‘”‡ –Š‡ ”‡•– ‘ˆ –Š‡ Â?‡–™‘”Â? ‹• ‹Â?’”‘˜‡†Ǥ ͺͺ 5.4. Road Expenditures and Outputs to date ͷǤͳ͸Ǥ A review of road expenditures to date shows that while funding has increased considerably in recent years, there is room to improve sustainability and efficiency on several fronts.Í·Í· ’‡…‹ˆ‹…ƒŽŽ›ǡ –Š‡ ”‡˜‹‡™ •Š‘™• –Šƒ–ǣ ȋƒȌ Š‡”‡ Šƒ• „‡‡Â? ƒ Â?ƒ”Â?‡† ‹Â?…”‡ƒ•‡ ‹Â? ˆ—Â?†‹Â?‰ ˆ‘” –Š‡ ‹Â?’”‘˜‡Â?‡Â?– ƒÂ?† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ ƒ”–‡”‹ƒŽ ”‘ƒ†•ǡ ™Š‹…Š Šƒ• ”‡•—Ž–‡† ‹Â? ƒ •—„•–ƒÂ?–‹ƒŽ ‹Â?’”‘˜‡Â?‡Â?– ‘ˆ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› Â?‡–™‘”Â?•Ǥ ȋ„Ȍ ƒ‹Â?–‡Â?ƒÂ?…‡ ƒŽŽ‘…ƒ–‹‘Â?• Šƒ˜‡ ‹Â?…”‡ƒ•‡† ƒŽ–Š‘—‰Š –Š‡ …—””‡Â?– Ž‡˜‡Ž• ƒ”‡ •–‹ŽŽ ‹Â?•—ˆˆ‹…‹‡Â?– –‘ ‡Â?•—”‡ –Š‡ •—•–ƒ‹Â?ƒ„‹Ž‹–› ‘ˆ –Š‡ …‘—Â?–”›ǯ• ”‘ƒ† ƒ••‡–•Ǥ È‹Â…ÈŒ ‘…ƒŽ ”‘ƒ†• ™Š‹…Š …‘Â?Â?‡…– ˜‹ŽŽƒ‰‡• ‹Â? ”—”ƒŽ ƒ”‡ƒ• ƒÂ?† ™‡”‡ –”ƒÂ?•ˆ‡””‡† –‘ Ž‘…ƒŽ ‰‘˜‡”Â?Â?‡Â?–• ‹Â? ʹͲͲ͹ǡ Šƒ˜‡ ”‡…‡‹˜‡† Â?‹Â?‹Â?ƒŽ ƒ––‡Â?–‹‘Â? ƒÂ?† ƒ”‡ Žƒ”‰‡Ž› ‹Â? ’‘‘” …‘Â?†‹–‹‘Â?Ǥ ȋ†Ȍ ”„ƒÂ? ”‘ƒ†• ȋ™Š‹…Š ƒ”‡ ’”‡†‘Â?‹Â?ƒÂ?–Ž› ‹Â? –Š‡ …‹–› ‘ˆ „‹Ž‹•‹Ȍ ƒ”‡ „‡‹Â?‰ ‹Â?’”‘˜‡† ƒ– ƒ Š‡ƒŽ–Š› ”ƒ–‡ „—– Â?‘•–Ž› ‹Â? „‹Ž‹•‹Ǥ ȋ‡Ȍ Š‡”‡ ‹• •—„•–ƒÂ?–‹ƒŽ ’‘–‡Â?–‹ƒŽ ˆ‘” ‹Â?…”‡ƒ•‹Â?‰ –Š‡ ‡ˆˆ‹…‹‡Â?…› ‘ˆ ‹Â?˜‡•–Â?‡Â?– –Š”‘—‰Š ‹Â?’”‘˜‡† †‡•‹‰Â? •–ƒÂ?†ƒ”†•ǡ „‡––‡” ’ŽƒÂ?Â?‹Â?‰ǡ —•‡ ‘ˆ Â?‘”‡ ‡ˆˆ‹…‹‡Â?– …‘Â?–”ƒ…–‹Â?‰ Â?‡–Š‘†‘Ž‘‰‹‡•ǡ ƒÂ?† ‡Â?ŠƒÂ?…‡† •—’‡”˜‹•‹‘Â? ‘ˆ ™‘”Â?•Ǥ Table 5.3: Expenditures on International and Secondary Road Networks (2004Ǧ2010). ȋ‹Â? Â?‹ŽŽ‹‘Â?• ‘ˆ Žƒ”‹ ƒÂ?† ’‡”…‡Â?– ‘ˆ ÈŒ Road Expenditures 2004 2005 2006 2007 2008 2009 2010 New construction Government Budget 0 14.5 52.43 44.65 13.12 30.00 48.20 GDP share % 0.00% 0.12% 0.38% 0.26% 0.07% 0.16% 0.25% Donors 3.16 3.76 0 29.38 54.25 120 183.40 GDP share % 0.03% 0.03% 0.00% 0.17% 0.28% 0.66% 0.96% SubǦtotal 3.16 18.26 52.43 74.03 67.37 150.00 231.60 GDP share % 0.03% 0.16% 0.38% 0.44% 0.35% 0.82% 1.22% Rehabilitation/Periodic Maintenance Government Budget 17.58 59.83 75.85 132.36 125.00 142.00 111.04 MCG 0.00 0.00 0.00 0.00 34.5 121.10 212.10 GDP share % 0.18% 0.51% 0.55% 0.78% 0.66% 0.78% 0.58% Donors 25.09 11.57 18.05 33.03 13.21 63.81 125.00 GDP share % 0.26% 0.10% 0.13% 0.19% 0.07% 0.35% 0.66% Routine Maintenance 21.51 20.52 28.45 32 32 32.32 28.56 GDP share % 0.22% 0.18% 0.21% 0.19% 0.17% 0.18% 0.15% SubǦTotal 64.18 91.92 122.35 197.39 204.71 359.23 476.70 GDP share % 0.65% 0.79% 0.89% 1.16% 1.07% 1.96% 2.50% Total 67.34 110.18 174.78 271.42 272.08 509.23 708.30 GDP share % 0.69% 0.95% 1.27% 1.60% 1.43% 2.78% 3.72% SourceÇ£ ‘ƒ†• ‡’ƒ”–Â?‡Â?– ‘ˆ ‡‘”‰‹ƒ ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• Í·Í·Â?Ž‡•• •–ƒ–‡† ‘–Š‡”™‹•‡ǡ ‡š’‡Â?†‹–—”‡• ”‡ˆ‡” ‘Â?Ž› –‘ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› Â?‡–™‘”Â?•Ǥ ‘…ƒŽ ”‘ƒ†• —Â?†‡” –Š‡ Œ—”‹•†‹…–‹‘Â? ‘ˆ Ž‘…ƒŽ ‰‘˜‡”Â?Â?‡Â?–• ƒÂ?† ˆ‘” ™Š‹…Š •…ƒÂ?– †ƒ–ƒ ‡š‹•– ƒ”‡ –”‡ƒ–‡† •‡’ƒ”ƒ–‡Ž›Ǥ ͺͻ ͷǤͳ͹Ǥ Road investment has risen markedly in recent years, financed in large part by international financial institutions. ƒ„Ž‡ ͷǤ͵ „‡Ž‘™ •Š‘™• ‡š’‡Â?†‹–—”‡• ˆ‘” –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› Â?‡–™‘”Â?• —Â?†‡” –Š‡ ”‡•’‘Â?•‹„‹Ž‹–› ‘ˆ –Š‡ ‘ƒ† ‡’ƒ”–Â?‡Â?– È‹ ÈŒ ˆ‘” –Š‡ ’‡”‹‘† ʹͲͲͶǦʹͲͳͲǤ š’‡Â?†‹–—”‡• ‘Â? –Š‡ Â?ƒ–‹‘Â?ƒŽ ”‘ƒ† Â?‡–™‘”Â? Œ—Â?’‡† ˆ”‘Â? ͲǤͻͷ ’‡”…‡Â?– ‘ˆ  ȋ‘”  ͳͳͲ Â?‹ŽŽ‹‘Â?ÈŒ ‹Â? ʹͲͲͷ –‘ ʹǤ͹ͺ ’‡”…‡Â?– ȋ‘”  ͷͲͻ Â?‹ŽŽ‹‘Â?ÈŒ ‹Â? ʹͲͲͻǡ ™‹–Š –Š‡ „—ŽÂ? ‘ˆ –Š‡ ˆ—Â?†• ‰‘‹Â?‰ –‘ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ†•Ǥ ‘•– ‘ˆ –Š‡ ƒŽŽ‘…ƒ–‹‘Â?• ˆ‘” …‘Â?•–”—…–‹‘Â? ƒ”‡ …‘Â?…‡Â?–”ƒ–‡† ‹Â? —’‰”ƒ†‹Â?‰ ƒÂ?† ‹Â?…”‡ƒ•‹Â?‰ –Š‡ …ƒ’ƒ…‹–› ‘ˆ –Š‡ ƒ•–Ǧ‡•– ‹‰Š™ƒ›ǡ –Š‡ Ž‹ˆ‡ Ž‹Â?‡ ‘ˆ –Š‡ …‘—Â?–”›ǡ Ž‹Â?Â?‹Â?‰ –Š‡ …‹–› ‘ˆ „‹Ž‹•‹ ™‹–Š –Š‡ ‘”– ‘ˆ ‘–‹ ƒÂ?† –Š‡ —”Â?‹•Š „‘”†‡” –‘ –Š‡ ‡•– ƒÂ?† ™‹–Š œ‡”„ƒ‹ŒƒÂ? –‘ –Š‡ ƒ•–Ǥ „‘—– ͹ͷ Â?Â? ‘ˆ –Š‡ ͵ͺͲ Â?Â? …‘””‹†‘” Šƒ• „‡‡Â? ‘” ‹• ‹Â? –Š‡ ’”‘…‡•• ‘ˆ „‡‹Â?‰ —’‰”ƒ†‡† ™‹–Š –Š‡ •—’’‘”– ‘ˆ –Š‡ ‘”Ž† ƒÂ?Â? ƒÂ?† ‘–Š‡” ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ †‘Â?‘”•ǡ ™Š‹Ž‡ ƒ††‹–‹‘Â?ƒŽ ™‘”Â?• ƒ”‡ ’”‘‰”ƒÂ?Â?‡† –‘ •–ƒ”– ‹Â? –Š‡ ›‡ƒ”• ƒŠ‡ƒ†Ǥ ‘–ƒŽ ‡š’‡Â?†‹–—”‡• ‘Â? Â?‡™ …‘Â?•–”—…–‹‘Â? ‹Â?…”‡ƒ•‡† ˆ”‘Â?  ͳͺǤʹ͸ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͷ –‘  ͳͷͲǤͲ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͻǤ „‘—– ͷ͹ ’‡”…‡Â?– ‘ˆ –Š‡ –‘–ƒŽ ‡š’‡Â?†‹–—”‡• ‘Â? Â?‡™ …‘Â?•–”—…–‹‘Â? †—”‹Â?‰ –Šƒ– ’‡”‹‘† ™‡”‡ ˆ‹Â?ƒÂ?…‡† „› „‹Žƒ–‡”ƒŽ ‘” Â?—Ž–‹Žƒ–‡”ƒŽ †‘Â?‘”•Ǥ Figure 5.1: Evolution of Road Expenditures and Outputs ȋ‹Â? Â?‹ŽŽ‹‘Â?• ‘ˆ Žƒ”‹ ƒÂ?† ‹Â? Â?‹Ž‘Â?‡–‡”•Ȍ ͷͷ͵ Â?Â? ͳͲͺ ͷͲͶ Â?Â? ͳͲ „”‹†‰‡• „”‹†‰‡• Í´ ͹ͻ Â?Â? Ͷ͸ „”‹†‰‡• ͸͵Ͳ Â?Â? Ͷͺ Â?Â? ͵͵ͷ Â?Â? ͳͳ Â?Â? ͳͻͻ͸ ʹͲͲͶ ʹͲͲͺ ʹͲͲͻ ʹͲͲͺ ʹͲͲͻ ʹͲͲͺ ʹͲͲͻ BUDGET CONSTRUCTION REHABILITATION SourceÇ£ ‘ƒ†• ‡’ƒ”–Â?‡Â?– ‘ˆ ‡‘”‰‹ƒ ͷǤͳͺǤ Funding for reducing the backlog of international and secondary road rehabilitation has also increased substantially in recent years. ‘–ƒŽ ˆ—Â?†‹Â?‰ ˆ‘” ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‹Â?…”‡ƒ•‡† ˆ”‘Â?  ͹ͳǤͶ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͷ –‘  ͵ʹ͸Ǥͻͳ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͻͷ͸Ǥ Š‡ •–”—…–—”‡ ‘ˆ –Š‡ „—†‰‡– ƒŽ•‘ …ŠƒÂ?‰‡† ‹Â? ʹͲͲͻǡ ‹Â? ’ƒ”–‹…—Žƒ” –Š”‘—‰Š ƒ Œ—Â?Â’ ‹Â? ˆ‘”‡‹‰Â? ˆ—Â?†‹Â?‰ „‘–Š ˆ‘” Â?‡™ …‘Â?•–”—…–‹‘Â? ƒÂ?† ˆ‘” –Š‡ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ –Š‡ Â?‡–™‘”Â?Ǥ Â? ˆƒ…–ǡ ĥ •Š‘™Â? „› ˆ‹‰—”‡ ͷǤͳǡ –Š‡ ʹͲͲͻ „—†‰‡– ˆ‘” Â?ƒ‹Â? ”‘ƒ†• ‡š…‡‡†‡† –Š‡ –‘–ƒŽ …‘Â?„‹Â?‡† „—†‰‡–• ˆ‘” –Š‡ ͳͻͻͺǦʹͲͲͶ ’‡”‹‘†Ǥ Š‡ ˆ‹‰—”‡ǡ ’”‡’ƒ”‡† ƒÂ?† Â?ƒ†‡ ’—„Ž‹… „›  Ç¡ ƒŽ•‘ •Š‘™• –Š‡ ”‡Žƒ–‹‘Â?•Š‹’ „‡–™‡‡Â? ˆ‹Â?ƒÂ?…‹ƒŽ ‘—–Žƒ›• ƒÂ?† ’Š›•‹…ƒŽ ‘—–’—–•Ǥ „‘—– ͷ͹ ’‡”…‡Â?– ‘ˆ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡• ™‡”‡ ˆ‹Â?ƒÂ?…‡† „› †‘Â?‘” ƒÂ?† ‹ŽŽ‡Â?Â?‹—Â? ŠƒŽŽ‡Â?‰‡ ‡‘”‰‹ƒ —Â?† È‹ ÈŒ ‹Â? ʹͲͲͻ ƒÂ?† ͹ͷ ’‡”…‡Â?– …‘Â?Â?‹––‡† ˆ‘” ʹͲͳͲǤ Š‹• ”ƒ‹•‡• –Š‡ ‹••—‡ ‘ˆ –Š‡ •—•–ƒ‹Â?ƒ„‹Ž‹–› ‘ˆ –Š‡ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? „—†‰‡– ‹ˆ  ƒÂ?† ‘–Š‡” †‘Â?‘” ˆ—Â?†• ƒ”‡ Â?‘– ƒ˜ƒ‹Žƒ„Ž‡ ƒˆ–‡” ʹͲͳͲǤ ͷǤͳͻǤ Economic analysis of road projects financed by the World Bank in Georgia shows that the economic rates of return have been strong. Š‡ ‡•–‹Â?ƒ–‡†  ˆ‘” –Š‡ ‹”•–ǡ ‡…‘Â?†ǡ ƒÂ?† Š‹”† ƒ•–Ǧ‡•– ‹‰Š™ƒ› ’”‘Œ‡…–• Šƒ˜‡ „‡‡Â? ʹͶǤ͸Ψǡ ͳͷǤ͵Ψǡ ƒÂ?† ͳ͸Ǥ͵Ψǡ ”‡•’‡…–‹˜‡Ž›ǡ ™Š‹…Š ƒ”‡ ƒ– –Š‡ Š‹‰Š ‡Â?† ‘ˆ –Š‡ ”ƒÂ?‰‡ ‡š’‡…–‡† ˆ‘” ’”‘Œ‡…–• ‘ˆ –Š‹• Â?ƒ–—”‡ ȋ™‹–Š ƒÂ?  ‘ˆ ͳͲǦͳͶΨ „‡‹Â?‰ –›’‹…ƒŽ ˆ‘” Â?‡™ …‘Â?•–”—…–‹‘Â? ’”‘Œ‡…–•ȌǤ Š‹• ‹• ‹Â? Žƒ”‰‡ ’ƒ”– ƒ ”‡•—Ž– ‘ˆ –Š‡ Š‹‰Š –”ƒˆˆ‹… ˜‘Ž—Â?‡•ǡ ‹Â?…Ž—†‹Â?‰ •‹‰Â?‹ˆ‹…ƒÂ?– –”ƒˆˆ‹… ‹Â? …ƒ”‰‘ …ƒ””›‹Â?‰ –”—…Â?•ǡ ‘Â? –Š‹• Â?ƒ‹Â? ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ –”ƒ†‡ …‘””‹†‘” –Š”‘—‰Š ͷ͸ ͵͹ ’‡”…‡Â?– ‘ˆ –Š‡•‡ ‡š’‡Â?†‹–—”‡• ™‡”‡ ˆ—Â?†‡† „› –Š‡  ‰”ƒÂ?–ǡ ™Š‹…Š ™‹ŽŽ Â?‘– „‡ ƒ˜ƒ‹Žƒ„Ž‡ „‡›‘Â?† ʹͲͳͲǤ ͻͲ ‡‘”‰‹ƒǤ • Â?‘–‡†ǡ –Š‡ Ǧ ‹‰Š™ƒ› ‹• ƒ …‡Â?–”ƒŽ ’‹‡…‡ ‹Â? –Š‡ ‰‘˜‡”Â?Â?‡Â?–ǯ• •–”ƒ–‡‰› ‘ˆ –”ƒÂ?•ˆ‘”Â?‹Â?‰ ‡‘”‰‹ƒ ‹Â?–‘ ƒ –”ƒÂ?•’‘”– ƒÂ?† Ž‘‰‹•–‹…• Š—„ ˆ‘” –”ƒ†‡ „‡–™‡‡Â? ‡Â?–”ƒŽ •‹ƒ ƒÂ?† –Š‡ ƒ” ƒ•– ‘Â? –Š‡ ‘Â?‡ ŠƒÂ?† ƒÂ?† —”Â?‡› ƒÂ?† —”‘’‡ ‘Â? –Š‡ ‘–Š‡” ŠƒÂ?†Ǥ Š‡ ‡•–‹Â?ƒ–‡†  ˆ‘” –Š‡ ‡…‘Â?† ‡…‘Â?†ƒ”› ƒÂ?† ‘…ƒŽ ‘ƒ†• ’”‘Œ‡…– ‹• ͳͻǤͺΨ ƒÂ?† –Šƒ– ˆ‘” –Š‡ ƒÂ?Š‡–‹ ‡‰‹‘Â?ƒŽ ‘ƒ†• ’”‘Œ‡…– ‹• ͷͳǤͺΨǡ „‘–Š ‘ˆ ™Š‹…Š ƒ”‡ ‹Â? Ž‹Â?‡ ™‹–Š ™Šƒ– ™‘—Ž† „‡ ‡š’‡…–‡† ˆ‘” ’”‘Œ‡…–• ‘ˆ –Š‹• Â?ƒ–—”‡Ǥ ͷǤʹͲǤ The substantial increases in new investment and rehabilitation has resulted in a major improvement of the international road network. Š‡ •Šƒ”‡ ‘ˆ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ Â?‡–™‘”Â? ‹Â? ‰‘‘† …‘Â?†‹–‹‘Â? ‹Â?’”‘˜‡† ˆ”‘Â? ͵Ͷ ’‡”…‡Â?– ‹Â? ʹͲͲͶ –‘ ƒ„‘—– ͺͲ ’‡”…‡Â?– ƒ– ’”‡•‡Â?–Ǥ Š‡ …‘Â?†‹–‹‘Â? ‘ˆ –Š‡ •‡…‘Â?†ƒ”› Â?‡–™‘”Â? Šƒ• ƒŽ•‘ ‹Â?’”‘˜‡†ǡ ™‹–Š –Š‡ •Šƒ”‡ ‹Â? ‰‘‘† …‘Â?†‹–‹‘Â? ”‹•‹Â?‰ ˆ”‘Â? ͸ ’‡”…‡Â?– ‹Â? ʹͲͲͶ –‘ ʹ͸ ’‡”…‡Â?– ‹Â? ʹͲͲͻǤ ‘™‡˜‡”ǡ –Š‡ Â?ƒŒ‘”‹–› ‘ˆ •‡…‘Â?†ƒ”› ”‘ƒ†• ”‡Â?ƒ‹Â?• ‹Â? ’‘‘” …‘Â?†‹–‹‘Â? ƒÂ?† ƒ”‡ –Š‡ Â?ƒŒ‘” …‘Â?–”‹„—–‘” –‘ –Š‡ ”‡Â?ƒ‹Â?‹Â?‰ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? „ƒ…Â?Ž‘‰ ˆ‘” –Š‡ Â?‡–™‘”Â? —Â?†‡” –Š‡ ‘ƒ†• ‡’ƒ”–Â?‡Â?–ǯ• ”‡•’‘Â?•‹„‹Ž‹–›Ǥ ƒ‹Â?–‡Â?ƒÂ?…‡ ƒÂ?† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ ‡š‹•–‹Â?‰ ”‘ƒ†• ƒ”‡ ‡••‡Â?–‹ƒŽ ‹Â? ‘”†‡” –‘ ƒ˜‘‹† …‘•–Ž› ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† ”‡…‘Â?•–”—…–‹‘Â? …‘•–• ‹Â? –Š‡ ˆ—–—”‡Ǥ Figure 5.2: Condition of the International and Secondary Road Networks ȋ‹Â? ’‡”…‡Â?– ‘ˆ Â?‡–™‘”Â?ÈŒ International Road Network Condition Secondary Road Network Condition 70% 80% 54% 34% 26% 23% 18% 25% 13% 12% 8% 11% 13% 4% 3% 6% 2009 2004 2009 2004 GOOD FAIR POOR BAD GOOD FAIR POOR BAD SourceÇ£ ‘ƒ†• ‡’ƒ”–Â?‡Â?– ‘ˆ ‡‘”‰‹ƒ ͷǤʹͳǤ Routine maintenance, which is fully financed by the government budget, is considerably underfunded compared to estimated need. Â? •’‹–‡ ‘ˆ –Š‡ ‹Â?…”‡ƒ•‡† ƒŽŽ‘…ƒ–‹‘Â? ‘ˆ ˆ—Â?†• ˆ‘” Â?ƒ‹Â?–‡Â?ƒÂ?…‡ǡ ‡‘”‰‹ƒ •’‡Â?†• ƒ„‘—– ͵͵ ’‡”…‡Â?– Ž‡•• ‘Â? ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‘ˆ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› Â?‡–™‘”Â?• –ŠƒÂ? ‹– ‹• ”‡“—‹”‡† –‘ ‡Â?•—”‡ –Šƒ– –Š‡•‡ Â?‡–™‘”Â?• …ƒÂ? „‡ Â?ƒ‹Â?–ƒ‹Â?‡† ‹Â? ƒ Dz•–‡ƒ†› •–ƒ–‡dz ‘” •—•–ƒ‹Â?ƒ„Ž‡ …‘Â?†‹–‹‘Â?Ǥ Š‡ ”‡“—‹”‡† ƒÂ?Â?—ƒŽ ƒÂ?‘—Â?– Šƒ• „‡‡Â? ‡•–‹Â?ƒ–‡† –‘ „‡ ƒ– Ž‡ƒ•–  Ͷ͵ Â?‹ŽŽ‹‘Â? ˆ‘” ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ǡ ƒ••—Â?‹Â?‰ —Â?‹– …‘•–• ‘ˆ ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ’‡” Â?Â? ‘ˆ ˆ‘—”ǦŽƒÂ?‡ ƒÂ?† –™‘ǦŽƒÂ?‡ ”‘ƒ†• ‘ˆ  ͳͳǡͲͲͲ ƒÂ?†  ͷǡͷͲͲǡ ”‡•’‡…–‹˜‡Ž›Ǥ Â? …‘Â?–”ƒ•–ǡ ƒ…–—ƒŽ ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡• ˆ‘” ʹͲͳͲ ™‡”‡ ƒ„‘—–  ʹͺǤͷ Â?‹ŽŽ‹‘Â?Ǥ ͷǤʹʹǤ One of the shortcomings of the road budget is the aggregation of periodic maintenance and rehabilitation under the same category, which has resulted in chronic underfunding for periodic maintenance. Š‡•‡ ‹–‡Â?• ƒ”‡ …‘Â?…‡’–—ƒŽŽ› ˜‡”› †‹ˆˆ‡”‡Â?– ȋ—Â?†‡” ‹†‡ƒŽ …‹”…—Â?•–ƒÂ?…‡• ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ™‘—Ž† Â?‘– „‡ Â?‡…‡••ƒ”›Ȍ ƒÂ?† –Š‡‹” ƒ‰‰”‡‰ƒ–‹‘Â? Â?ĥÂ?• ƒ Â?ƒ”Â?‡† †‡…”‡ƒ•‡ ‹Â? –Š‡ ˆ—Â?†‹Â?‰ ‘ˆ ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ǥ ‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒ’’Ž‹‡† –‘ ‘Â?‡ –‡Â?–Š ‘ˆ –Š‡ Â?‡–™‘”Â? ‡˜‡”› ›‡ƒ” ™‘—Ž† ƒÂ?‘—Â?– –‘  ͳʹ͵Ǥͳʹ Â?‹ŽŽ‹‘Â? ȋƒ••—Â?‹Â?‰ ƒ ”‡•—”ˆƒ…‹Â?‰ …‘•– ‘ˆ  ͵ʹͶǡͲͲͲ ’‡” Â?Â? ˆ‘” ƒ ˆ‘—”ǦŽƒÂ?‡ ”‘ƒ† ƒÂ?†  ͳ͸ʹǡͲͲͲ ’‡” Â?Â? ˆ‘” ƒ –™‘ ŽƒÂ?‡ ’ƒ˜‡† ”‘ƒ†ȌǤ Â? …‘Â?–”ƒ•–ǡ ƒ……‘”†‹Â?‰ –‘ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ’”‘˜‹†‡† „› –Š‡ ”‘ƒ†• †‡’ƒ”–Â?‡Â?–ǡ ‡š’‡Â?†‹–—”‡• ‘Â? ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ †”‘’’‡† ˆ”‘Â?  ʹʹǤͷ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͺ –‘ ͳ͸Ǥ͵ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͲͻ ƒÂ?† –‘ ƒ ’”‘Œ‡…–‡†  ͵Ǥͳ Â?‹ŽŽ‹‘Â? ‹Â? ʹͲͳͲǤ Š‹• ƒÂ?‘—Â?– ”‡’”‡•‡Â?–• Ž‡•• –ŠƒÂ? –‡Â? ’‡”…‡Â?– ‘ˆ –Š‡ ˆ—Â?†• Â?‡…‡••ƒ”› –‘ ’”‘˜‹†‡ ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‹Â?–‡”˜‡Â?–‹‘Â?• –‘ –Š‡ ”‘ƒ†• ‡˜‡”› –‡Â? ›‡ƒ”•Ǥ ͻͳ Figure 5.3: Sharp Decline in Periodic Maintenance Funding in Recent Years ȋ‹Â? Â?‹ŽŽ‹‘Â?• ‘ˆ Žƒ”‹Ȍ ͵Ͳ Í´Í· Í´Í· ʹʹǤͷ ʹͲ ‹ŽŽ‹‘Â? ƒ”‹ ͳ͸Ǥ͵ ͳͷ ͳͲ Í· ͵Ǥͳ Ͳ ʹͲͲ͹ ʹͲͲͺ ʹͲͲͻ ʹͲͳͲ SourceÇ£ ‘ƒ†• ‡’ƒ”–Â?‡Â?– ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͷǤʹ͵Ǥ The local road network is in very poor condition and reliable data on expenditures or conditions is not available. Š‡ ‘”‰ƒÂ?‹… Ī ‘Â? ‘…ƒŽ ‡ŽˆǦ ‘˜‡”Â?Â?‡Â?– È‹ ÈŒ ‡•–ƒ„Ž‹•Š‡† ƒ –™‘ Ž‡˜‡Ž ĠÂ?‹Â?‹•–”ƒ–‹˜‡ ˆ”ƒÂ?‡™‘”Â? ‹Â? ‡‘”‰‹ƒ ‡ˆˆ‡…–‹˜‡ ‘˜‡Â?„‡” ʹͲͲ͸ǡ …‘Â?’”‹•‹Â?‰ –Š‡ …‡Â?–”ƒŽ ‰‘˜‡”Â?Â?‡Â?– ƒÂ?† Ž‘…ƒŽ ‰‘˜‡”Â?Â?‡Â?–•Ǥ Š‡ …ŠƒÂ?‰‡ ”‡•—Ž–‡† ‹Â? –Š‡ …‘Â?•‘Ž‹†ƒ–‹‘Â? ‘ˆ ͳǡͳͲͲ •Â?ƒŽŽ ƒÂ?† ”‡•‘—”…‡Ǧ’‘‘”  —Â?‹–• ‹Â?–‘ ͸ͻ —Â?‹–•Ǥͷ͹ Š‹Ž‡ –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ† Â?‡–™‘”Â?• „‡Â?‡ˆ‹–‡† ˆ”‘Â? –Š‡ ‹Â?…”‡ƒ•‡† ˆ—Â?†‹Â?‰ ‘ˆ –Š‡ Žƒ•– ˆ‘—” ›‡ƒ”•ǡ –Š‡ –‡”–‹ƒ”› ‘” Ž‘…ƒŽ ”‘ƒ†• Â?‡–™‘”Â? …‘Â?–‹Â?—‡• „‡‹Â?‰ Â?‘•–Ž› ‹Â? ˜‡”› ’‘‘” …‘Â?†‹–‹‘Â?Ǥ ‡Ž‹ƒ„Ž‡ †ƒ–ƒ ‘Â? –Š‡ …‘Â?†‹–‹‘Â? ƒÂ?† ‡š’‡Â?†‹–—”‡• ‹Â? Ž‘…ƒŽ ”‘ƒ†• ‹• Â?‘– ƒ˜ƒ‹Žƒ„Ž‡Ǥ Š‡ ‰‘˜‡”Â?Â?‡Â?–ǡ ™‹–Š ‘”Ž† ƒÂ?Â? ˆ‹Â?ƒÂ?…‹Â?‰ǡ Šƒ• •–ƒ”–‡† –Š‡ …‘Â?†‹–‹‘Â? ‹Â?˜‡Â?–‘”› ‘ˆ –Š‡ ͳ͵ǡͲͲͲ Â?Â? Â?‡–™‘”Â? ‘ˆ Ž‘…ƒŽ ”‘ƒ†• ƒÂ?† –Š‡ ’”‡’ƒ”ƒ–‹‘Â? ‘ˆ –Š‡ „ƒ•‹… †ƒ–ƒ „ƒÂ?Â? Â?‡…‡••ƒ”› ˆ‘” ’ŽƒÂ?Â?‹Â?‰ ˆ—–—”‡ ‹Â?–‡”˜‡Â?–‹‘Â?•Ǥ ͷǤʹͶǤ Despite the lack of hard data, government officials and stakeholders agree that local roads are in urgent need of rehabilitation in order to become maintainable. Â? ʹͲͳͲǡ ƒ„‘—– ͳͷ ’‡”…‡Â?– ‘ˆ –Š‡ „—†‰‡– ˆ‘” Ž‘…ƒŽ ‰‘˜‡”Â?Â?‡Â?–• ƒ”‡ ’ŽƒÂ?Â?‡† –‘ „‡ ƒŽŽ‘…ƒ–‡† ˆ‘” ”‘ƒ†•Ǥ Š‡ Ž‹‘Â? •Šƒ”‡ ‘ˆ –Š‡  ʹʹ͸Ǥ͸ Â?‹ŽŽ‹‘Â? ƒŽŽ‘…ƒ–‡† –Š”‘—‰Š Ž‘…ƒŽ „—†‰‡–• ˆ‘” ”‘ƒ†• ‰‘‡• –‘ …‹–› •–”‡‡–• È‹Â?‘•–Ž› „‹Ž‹•‹Ȍ Ž‡ƒ˜‹Â?‰ ƒ„‘—–  ͶͻǤͳ Â?‹ŽŽ‹‘Â? ˆ‘” –Š‡ ͳ͵ǡͲͲͲ Â?Â? ‘ˆ –Š‡ Ž‘…ƒŽ Â?‡–™‘”Â? –Šƒ– …‘Â?Â?‡…–• ˜‹ŽŽƒ‰‡• ‹Â? ”—”ƒŽ ƒ”‡ƒ• ȋ•‡‡ ƒ„Ž‡ ͷǤͶȌǤ Š‹• ƒÂ?‘—Â?–ǡ ‘Â?…‡ –Š‡ …‘•– ‘ˆ „ƒ•‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ȋ‹Â?…Ž—†‹Â?‰ ™‹Â?–‡” Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ȍ –‘ Â?‡‡’ –Š‡ ”‘ƒ†• ’ƒ••ƒ„Ž‡ ‹• •—„–”ƒ…–‡†ǡ ™‘—Ž† ƒŽŽ‘™ ˆ‘” –Š‡ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ Ž‡•• –ŠƒÂ? ͷͲ Â?Â? ‘ˆ ”‘ƒ†• ’‡” ›‡ƒ”Ǥ ͷǤʹͷǤ Urban roads are being improved at a healthy rate, although mostly in TbilisiǤ Š‡ …‹–› ‘ˆ „‹Ž‹•‹ „—†‰‡– ˆ‘” ”‘ƒ†• ‹Â? ʹͲͳͲ ƒÂ?‘—Â?–‡† –‘  ͳ͵͹ Â?‹ŽŽ‹‘Â? ‘ˆ ™Š‹…Š  ͻͷ Â?‹ŽŽ‹‘Â? ™ƒ• ˆ‘” –Š‡ …‡Â?–”ƒŽ „‹Ž‹•‹ ‰‘˜‡”Â?Â?‡Â?– ˆ‘” –Š‡ ‹Â?’”‘˜‡Â?‡Â?– ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‘ˆ –Š‡ Â?ƒ‹Â? ƒ”–‡”‹ƒŽ —”„ƒÂ? ”‘ƒ†• ƒÂ?† –Š‡ ”‡•– –‘ –Š‡ ˆ‹˜‡ „‹Ž‹•‹ †‹•–”‹…–• ™Š‹…Š ƒ”‡ ”‡•’‘Â?•‹„Ž‡ ˆ‘” Ž‡•• –”ƒˆˆ‹…Â?‡† ”‘ƒ†•Ǥ „‘—– Í·Í· ’‡”…‡Â?– ‘ˆ –Š‡ …‡Â?–”ƒŽ ”‘ƒ†• ƒ”‡ ‹Â? ‰‘‘† …‘Â?†‹–‹‘Â?Ç¡ ƒÂ?† „‹Ž‹•‹ ‘ˆˆ‹…‹ƒŽ• ’ŽƒÂ? –‘ …‘Â?’Ž‡–‡ –Š‡ –‘–ƒŽ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ –Š‡ …‡Â?–”ƒŽ Â?‡–™‘”Â? ‹Â? ƒ„‘—– ˆ‘—” ›‡ƒ”•Ǥ Â?…‡ –Š‡ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ’”‘…‡•• ‹• …‘Â?’Ž‡–‡†ǡ ‹– ‹• ‡•–‹Â?ƒ–‡† –Šƒ– –Š‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‘ˆ –Š‡ Â?ƒ‹Â? …‹–› Ž‹Â?Â?• ™‹ŽŽ ”‡“—‹”‡ ƒÂ?Â?—ƒŽ „—†‰‡–• ‘ˆ ͷ͹Š‡ ͸ͻ Â?‡™ —Â?‹–• …‘Â?•‹•– ‘ˆ Í·Í» ˆ‘”Â?‡” ƒ›‘Â?•ǡ Ͷ ˆ‘”Â?‡” ‹•–”‹…–•ǡ ƒÂ?† Í· •’‡…‹ƒŽ •–ƒ–—• …‹–‹‡• Ǧ „‹Ž‹•‹ǡ —–ƒ‹•‹ǡ ƒ–—Â?‹ǡ —•–ƒ˜‹ǡ ƒÂ?† ‘–‹Ǥ ‘…ƒŽ …‘—Â?…‹Ž• ƒ”‡ ‡Ž‡…–‡† ‹Â? –Š‡•‡ Ž‘…ƒŽ •‡ŽˆǦ‰‘˜‡”Â?Â?‡Â?–• ™Š‹…Š ‡Â?…‘Â?’ƒ•• ͵ǡ͹͵͸ •‡––Ž‡Â?‡Â?–• ȋ…‹–‹‡•ǡ –‘™Â?• ƒÂ?† ˜‹ŽŽƒ‰‡•ȌǤ ͻʹ ƒ„‘—–  ͳͲǦͳͷ Â?‹ŽŽ‹‘Â?Ǥ Š‡ …‹–› ‘ˆ „‹Ž‹•‹ ƒ……‘—Â?–• ˆ‘” ͺͷ ’‡”…‡Â?– ‘ˆ –Š‡ —”„ƒÂ? ”‘ƒ† Â?‡–™‘”Â? ‘ˆ –Š‡ Žƒ”‰‡•– ˆ‹˜‡ ‡‘”‰‹ƒÂ? …‹–‹‡•Ǥ Table 5.4: State Government Transfers and Expenditures on Local and Urban Roads ȋ‹Â? –Š‘—•ƒÂ?†• ‘ˆ Žƒ”‹Ȍ Total Central Government ....of which expenditures Transfers... on roads Cities 995,952.0 177,492.0 of which Tbilisi 741,940.0 137,000.0 Municipalities 469,712.5 49,117.0 Total 1,465,664.5 226,609.0 SourceÇ£ ‹Â?‹•–”› ‘ˆ ‹Â?ƒÂ?…‡ ‘ˆ ‡‘”‰‹ƒ ͷǤʹ͸Ǥ There is room for improving the efficiency of road sector expenditures. ‡˜‡”ƒŽ ˆƒ…–‘”• ƒ†˜‡”•‡Ž› ‹Â?’ƒ…– –Š‡ “—ƒŽ‹–› ‘ˆ ”‘ƒ† •‡…–‘” ‡š’‡Â?†‹–—”‡•ǡ ‘ˆ ™Š‹…Š –Š‡ Â?‘•– •ƒŽ‹‡Â?– ƒ”‡ǣ ȋ‹Ȍ –Š‡ Žƒ…Â? ‘ˆ ƒ •›•–‡Â?ƒ–‹… ’”‘…‡•• ‘ˆ ’”‘Œ‡…– ‹†‡Â?–‹ˆ‹…ƒ–‹‘Â?Ç¡ •‡Ž‡…–‹‘Â?Ç¡ ’”‡’ƒ”ƒ–‹‘Â?Ç¡ ƒÂ?† ƒ’’”ƒ‹•ƒŽǡ –Š—• Ž‡ƒ†‹Â?‰ ‹Â? •‘Â?‡ …ƒ•‡• –‘ ‹Â?˜‡•–Â?‡Â?– …Š‘‹…‡• ™‹–Š Â?ƒ”‰‹Â?ƒŽ ‡…‘Â?‘Â?‹… Â?‡”‹– ȋ‘” ™‹–Š ”‡†—…‡† ”‡–—”Â?• „‡…ƒ—•‡ ‘ˆ –Š‡ …Š‘‹…‡ ‘ˆ •—„‘’–‹Â?ƒŽ –‡…ŠÂ?‹…ƒŽ •’‡…‹ˆ‹…ƒ–‹‘Â?•ȌǢ ȋ‹‹Ȍ ˆ‘” –Š‡ Š‹‰Š ’”‘ˆ‹Ž‡ ‹Â?˜‡•–Â?‡Â?–•ǡ ’”‡••—”‡ –‘ …ƒ””› ‘—– ™‘”Â?• —Â?†‡” ƒ –‘‘ –‹‰Š– –‹Â?‡ˆ”ƒÂ?‡ …ƒÂ? ƒˆˆ‡…–• –Š‡ “—ƒŽ‹–› ‘ˆ –Š‡ †‡•‹‰Â?Ç¡ Šƒ˜‡ ƒ Â?‡‰ƒ–‹˜‡ ‡ˆˆ‡…– ‘Â? –Š‡ ’”‘…—”‡Â?‡Â?– ’”‘…‡••ǡ ƒÂ?† ‹Â?’‹Â?‰‡ ‘Â? …‘Â?–”ƒ…– …‘•–• ƒÂ?† “—ƒŽ‹–› ‘ˆ ‡š‡…—–‹‘Â?Ç¢ ȋ‹‹‹Ȍ ‹Â?•–‹–—–‹‘Â?ƒŽ ™‡ƒÂ?Â?‡••‡• ƒˆˆ‡…– –Š‡ •—’‡”˜‹•‹‘Â? ‘ˆ ™‘”Â?• ƒÂ?† –Š‡ ‡Â?ˆ‘”…‡Â?‡Â?– ‘ˆ …‘Â?–”ƒ…– …‘Â?†‹–‹‘Â?•Ǣ ȋ‹˜Ȍ ‘„•‘Ž‡–‡ †‡•‹‰Â? •–ƒÂ?†ƒ”†• ‹Â?Š‡”‹–‡† ˆ”‘Â? –Š‡ ‘˜‹‡– –‹Â?‡• ”‡•—Ž– ‹Â? ‘˜‡”†‡•‹‰Â? ‡•’‡…‹ƒŽŽ› ‘Â? –Š‡ Ž‘…ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› Â?‡–™‘”Â?Ç¢ ƒÂ?† ȋ˜Ȍ Žƒ…Â? ‘ˆ •—ˆˆ‹…‹‡Â?– ”‘—–‹Â?‡ǡ ’”‡˜‡Â?–‹˜‡ǡ ƒÂ?† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ …ƒÂ? ”‡•—Ž– ‹Â? –Š‡ •“—ƒÂ?†‡”‹Â?‰ ‘ˆ ‹Â?˜‡•–Â?‡Â?–• ƒÂ?† Š‹‰Š‡” Ž‘Â?‰ ”—Â? ”‘ƒ† •‡…–‘” …‘•–•Ǥ ͷǤʹ͹Ǥ Works on city streets have also been found lacking good urban road design and construction supervision. ›’‹…ƒŽ ’”‘„Ž‡Â?• ‹Â?…Ž—†‡ǣ ȋ‹Ȍ Žƒ…Â? ‘ˆ ƒ Š‘Ž‹•–‹… ƒ’’”‘ƒ…Š –‘ ‹Â?’”‘˜‹Â?‰ ‘˜‡”ƒŽŽ •–”‡‡– …‘Â?†‹–‹‘Â?• ™‹–Š‹Â? –Š‡ •–”‡‡– ”‹‰Š– ‘ˆ ™ƒ›Ǣ ȋ‹‹Ȍ †‡ˆ‹…‹‡Â?– •‹†‡™ƒŽÂ? †‡•‹‰Â?•ǡ ‡•’‡…‹ƒŽŽ› ƒ Žƒ…Â? ‘ˆ ”ƒÂ?’• ƒ– •–”‡‡– …”‘••‹Â?‰ ƒÂ?† †”‹˜‡™ƒ›•Ǣ ȋ‹‹‹Ȍ ’‘‘” †”ƒ‹Â?ƒ‰‡ •‘Ž—–‹‘Â?•Ǣ ȋ‹˜Ȍ …‘•–Ž› ƒÂ?† †‡ˆ‹…‹‡Â?– …—”„ ƒÂ?† ‰—––‡” •‘Ž—–‹‘Â?•Ǣ ȋ˜Ȍ •–”‡‡– ™‹†–Š• Â?‘– ƒ’’”‘’”‹ƒ–‡ ˆ‘” –”ƒˆˆ‹… …‘Â?†‹–‹‘Â?• ȋ‡‹–Š‡” –‘‘ ™‹†‡ ‘” –‘‘ Â?ƒ””‘™ȌǢ ȋ˜‹Ȍ ƒ•’ŠƒŽ– …‘Â?…”‡–‡ ™‹–Š –™‘ǦŽƒ›‡”ǡ –Š‹…Â?Â?॥ ‘ˆ –‘–ƒŽ ͹ǦͳͲ Â…Â? ™ƒ• ƒ†‘’–‡† ‹Â? Â?‘•– …ƒ•‡•ǡ ƒÂ?† Â?‘ ”‘ƒ† Š‹‡”ƒ”…Š› ȋƒ”–‡”‹ƒŽǡ •‡…‘Â?†ƒ”› ƒ”–‡”‹ƒŽ ‘” ƒŽŽ‡›™ƒ›Ȍǡ –”ƒˆˆ‹… È‹ Ȍǡ †‹•–”‡•• …‘Â?†‹–‹‘Â? ‘ˆ ‡š‹•–‹Â?‰ ’ƒ˜‡Â?‡Â?–ǡ ƒÂ?† …‘Â?†‹–‹‘Â?Ȁ•–”‡Â?‰–Š ‘ˆ „ƒ•‡ …‘—”•‡ ™‡”‡ –ƒÂ?‡Â? ‹Â?–‘ ƒ……‘—Â?–Ǥ ’ƒ˜‡Â?‡Â?– †‡…‹•‹‘Â? Â?ƒ–”‹š ™‹–Š ƒ Ž‹•– ‘ˆ ’ƒ˜‡Â?‡Â?– –”‡ƒ–Â?‡Â?– ™‘—Ž† …‘Â?–”‹„—–‡ –‘ ƒ††”‡•• –Š‹• ‹••—‡Ǥ ‹Â?‹Žƒ” ’”‘„Ž‡Â?• Šƒ˜‡ „‡‡Â? ‡Â?…‘—Â?–‡”‡† ‹Â? ˜‹ŽŽƒ‰‡• —Â?†‡” –Š‡ ƒÂ?Â?ǯ• ˆ—Â?†‡† ‡…‘Â?†ƒ”› ƒÂ?† ‘…ƒŽ ‘ƒ†• ”‘‰”ƒÂ?Ç¡ ™‹–Š ‹Â?…‘Â?•‹•–‡Â?– †‡•‹‰Â?Ç¡ ˆ”‡“—‡Â?– ‘˜‡”Ǧ†‡•‹‰Â? ˆ‘” –Š‡ ƒ•’ŠƒŽ– „—– Žƒ…Â? ‘ˆ •‹†‡ ƒÂ?‡Â?‹–‹‡• ƒÂ?† †”ƒ‹Â?ƒ‰‡Ǥ 5.5. The Medium Term Road Investment Program The Government’s Medium Term Road Program 2011Ǧ2014 ͷǤʹͺǤ A review of the government’s medium term road investment program shows a large increase in new construction through 2013, as well inadequate funding for rehabilitation and maintenance. ’‡…‹ˆ‹…ƒŽŽ›ǡ –Š‡ Â?‘•– ”‡Ž‡˜ƒÂ?– ˆ‡ƒ–—”‡• ‘ˆ –Š‡ ’”‘‰”ƒÂ? ƒ”‡ –Š‡ ˆ‘ŽŽ‘™‹Â?‰ǣ ȋƒȌ Š—Â?Â’ ‘ˆ ˆ”‘Â?– Ž‘ƒ†‡† ‡š’‡Â?†‹–—”‡• ‘Â? Â?‡™ …‘Â?•–”—…–‹‘Â?Ç¢ ȋ„Ȍ •Šƒ”’ ‹Â?…”‡ƒ•‡ ‹Â? ‡š’‡Â?†‹–—”‡• ‘Â? Â?‡™ …‘Â?•–”—…–‹‘Â? ™‹–Š …‘Â?–‹Â?—‡† …‘Â?…‡Â?–”ƒ–‹‘Â? ‘Â? –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ Â?‡–™‘”Â?Ç¢ ͻ͵ È‹Â…ÈŒ •‹‰Â?‹ˆ‹…ƒÂ?– †‡…Ž‹Â?‡ ‹Â? ‡š’‡Â?†‹–—”‡• ‘Â? ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ •‹Â?…‡ ʹͲͳͳǢ ȋ†Ȍ •–”‘Â?‰ ”‡Ž‹ƒÂ?…‡ ‘ˆ …ƒ’‹–ƒŽ ‡š’‡Â?†‹–—”‡• ‘Â? …‘Â?Â?‹–Â?‡Â?–• ˆ”‘Â? †‘Â?‘”• ™Š‹…Š ‹Â?’‘•‡• ƒ †‡‰”‡‡ ‘ˆ ”‹‰‹†‹–› ‘Â? –Š‡ Â?‡†‹—Â? –‡”Â? „—†‰‡–Ǥ Table 5.5: Actual and Planned Road Expenditures, 2007Ǧ2014 ȋ‹Â? Â?‹ŽŽ‹‘Â? ‘ˆ Žƒ”‹ ƒÂ?† ’‡”…‡Â?– ‘ˆ ÈŒ 2007 2008 2009 2010 2011 2012 2013 2014 New construction Government Budget 44.65 13.12 30.00 48.20 95.00 104.00 113.00 40.00 GDP share % 0.26% 0.07% 0.16% 0.25% 0.46% 0.45% 0.43% 0.14% Donors 29.38 54.25 120 183.40 380.00 416.00 452.00 160.00 GDP share % 0.17% 0.28% 0.66% 0.96% 1.83% 1.80% 1.72% 0.57% SubǦtotal 74.03 67.37 150.00 231.60 475.00 520.00 565.00 200.00 GDP share % 0.44% 0.35% 0.82% 1.22% 2.28% 2.25% 2.15% 0.71% Rehabilitation/Periodic Maintenance Government Budget 132.36 125.00 142.00 111.04 208.20 216.30 243.45 264.00 MCG 0.00 34.5 121.10 212.10 0.00 0.00 0.00 0.00 GDP share % 0.78% 0.66% 0.78% 0.58% 1.00% 0.93% 0.93% 0.94% Donors 33.03 13.21 63.81 125.00 40.00 0.00 0.00 0.00 GDP share % 0.19% 0.07% 0.35% 0.66% 0.19% 0.00% 0.00% 0.00% Routine Maintenance 32 32 32.32 28.56 37.00 39.50 42.50 44.50 GDP share % 0.19% 0.17% 0.18% 0.15% 0.18% 0.17% 0.16% 0.16% SubǦTotal 197.39 204.71 359.23 476.70 285.20 255.80 285.95 308.50 GDP share % 1.16% 1.07% 1.96% 2.50% 1.37% 1.11% 1.09% 1.10% Total 271.42 272.08 509.23 708.30 760.20 775.80 850.95 508.50 GDP share % 1.60% 1.43% 2.78% 3.72% 3.65% 3.35% 3.24% 1.81% Source: ‘ƒ†• ‡’ƒ”–Â?‡Â?– ‘ˆ ‡‘”‰‹ƒ ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡•. ͷǤʹͻǤ The medium term program features a hump of front loaded expenditures on new construction. ˜‡”ƒŽŽ ‡š’‡Â?†‹–—”‡• ‘Â? ”‘ƒ†• ‹Â?…”‡ƒ•‡† •‹‰Â?‹ˆ‹…ƒÂ?–Ž› ˆ”‘Â? ʹǤͺ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͲͻ –‘ ͵Ǥ͹ ’‡”…‡Â?– ‹Â? ʹͲͳͲǤ Š‡ Â?‡†‹—Â? –‡”Â? ’”‘‰”ƒÂ? ‡Â?˜‹•ƒ‰‡• ‘˜‡”ƒŽŽ ‡š’‡Â?†‹–—”‡• ”‡Â?ƒ‹Â?‹Â?‰ Š‹‰Š ƒ– ƒ”‘—Â?† ͵Ǥͷ ’‡”…‡Â?– ‘ˆ  †—”‹Â?‰ ʹͲͳͳǦͳ͵ „‡ˆ‘”‡ †”‘’’‹Â?‰ “—‹–‡ †”ƒÂ?ƒ–‹…ƒŽŽ› –‘ ͳǤͺ ’‡”…‡Â?– ‹Â? ʹͲͳͶǤ Š‡ •—„•–ƒÂ?–‹ƒŽ ‹Â?…”‡ƒ•‡ ‹Â? ”‡•‘—”…‡• †—”‹Â?‰ –Š‡ ʹͲͳͳǦͳ͵ ’‡”‹‘† ‹• „ƒ•‡† ‘Â? –Š‡ †‡•‹”‡ ‘ˆ ”ƒ’‹†Ž› …‘Â?’Ž‡–‹Â?‰ –Š‡ ‹Â?’”‘˜‡Â?‡Â?– ƒÂ?† ™‹†‡Â?‹Â?‰ ‘ˆ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ†•Ǥ ‘•– ‘ˆ –Š‡ ™‘”Â?• ƒ”‡ ‘Â?‰‘‹Â?‰ —Â?†‡” ‡š‹•–‹Â?‰ Ž‘ƒÂ?•Ǥ Š‡ ‘Â?Ž› Â?ƒŒ‘” ’”‘Œ‡…– ™‹–Š ƒŽ”‡ƒ†› ƒ˜ƒ‹Žƒ„Ž‡ ˆ—Â?†‹Â?‰ –Šƒ– Šƒ• Â?‘– ›‡– •–ƒ”–‡† ‹• –Š‡ …‘Â?•–”—…–‹‘Â? ‘ˆ –Š‡ †Œƒ”ƒ „›Ǧ’ƒ••Ǥ ‡…–‹‘Â?• ‘ˆ –Š‡ ƒ•–Ǧ‡•– ‹‰Š™ƒ› ™‹–Š –”ƒˆˆ‹… Ž‡˜‡Ž• „‡Ž‘™ ͷͲͲͲ ˜‡Š‹…Ž‡• ’‡” †ƒ› ƒÂ?† ˆ‘” ™Š‹…Š –Š‡ ‰‘˜‡”Â?Â?‡Â?– ‹• •‡‡Â?‹Â?‰ ˆ‹Â?ƒÂ?…‹Â?‰ǡ ƒ”‡ ƒŽ•‘ ƒ– –Š‡ ’ŽƒÂ?Â?‹Â?‰ •–ƒ‰‡ „—– ‹Â?–‡Â?†‡† –‘ „‡ …ƒ””‹‡† ‘—– ‹Â? –Š‡ Â?‡š– –™‘ ‘” –Š”‡‡ ›‡ƒ”•Ǥ ͷǤ͵ͲǤ The program also features a sharp increase in resources for capacity expansion. Š‡ Â?‡†‹—Â? –‡”Â? ’”‘‰”ƒÂ? –”‡„Ž‡• ”‡•‘—”…‡• ˆ‘” Â?‡™ …‘Â?•–”—…–‹‘Â? ˆ”‘Â?  ͳͷͲ Â?‹ŽŽ‹‘Â? ȋͲǤͺ ’‡”…‡Â?– ‘ˆ ÈŒ ‹Â? ʹͲͲͻ –‘  ͷ͸ͷ Â?‹ŽŽ‹‘Â? ȋʹǤʹ ’‡”…‡Â?– ‘ˆ ÈŒ ‹Â? ʹͲͳ͵ǡ ™Š‹…Š ‹Â?…Ž—†‡•  ͳͳͷ Â?‹ŽŽ‹‘Â? ‹Â? ‰‘˜‡”Â?Â?‡Â?– ‘™Â? ˆ‹Â?ƒÂ?…‹Â?‰ ‹Â? ʹͲͳ͵Ǥ ‘Â?‡ ’ƒ”– ‘ˆ –Š‡ ‡š–‡”Â?ƒŽ ˆ—Â?†‹Â?‰ ”‡“—‹”‡† ˆ‘” –Š‡ ’ŽƒÂ?Â?‡† ’”‘‰”ƒÂ? Šƒ• Â?‘– ›‡– „‡‡Â? ‘„–ƒ‹Â?‡†Ǥ ͷǤ͵ͳǤ Rehabilitation and maintenance are underfunded in the medium term program. ‡•‘—”…‡• ˆ‘” ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ †‡…Ž‹Â?‡ ‹Â? –Š‡ Â?‡†‹—Â? –‡”Â? ’”‘‰”ƒÂ? ˆ”‘Â? ʹǤͷͲ ͻͶ ’‡”…‡Â?– ‘ˆ  ‹Â? ʹͲͳͲ –‘ ͳǤͳ ’‡”…‡Â?– †—”‹Â?‰ ʹͲͳʹǦͳͶǤ š–‡”Â?ƒŽ ˆ—Â?†‹Â?‰ ˆ‘” ”‘ƒ† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ Šƒ• †‡…Ž‹Â?‡† •‹Â?…‡ ʹͲͳͲǡ ’”‹Â?ƒ”‹Ž› †—‡ –‘ –Š‡ ™‹Â?†‹Â?‰ †‘™Â? ‘ˆ –Š‡  ’”‘‰”ƒÂ?Ǥ Š‡ ƒÂ?Â?Ǧˆ‹Â?ƒÂ?…‡† ‹”•–  ’”‘Œ‡…– ‹• „‡‹Â?‰ ˆ‘ŽŽ‘™‡† „› –Š‡ ‡…‘Â?†  ƒÂ?† •—’’‘”– ˆ”‘Â? ƒŽŽ • ‹• Â?‘– ›‡– ƒŽŽ Â?Â?‘™Â?Ç¡ ƒŽ–Š‘—‰Š ‡š–‡”Â?ƒŽ ˆ—Â?†‹Â?‰ ˆ‘” ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‹• •–‹ŽŽ ’”‘Œ‡…–‡† –‘ †‡…Ž‹Â?‡Ǥ ‡‘”‰‹ƒǯ• …—””‡Â?– Â?ƒ‹Â?–‡Â?ƒÂ?…‡ „ƒ…Â?Ž‘‰ ‹• ƒÂ? ‹Â?†‹…ƒ–‘” ‘ˆ –Š‡ ‰ƒ’ „‡–™‡‡Â? ”‡“—‹”‡† ƒÂ?† …—””‡Â?– •–ƒÂ?†ƒ”†•Ǥ Š‡ ”‡“—‹”‡† •–ƒÂ?†ƒ”† ‹• –Š‡ Â?‡–™‘”Â? …‘Â?†‹–‹‘Â? —Â?†‡” ™Š‹…Š ‹– ‹• Â?ƒ‹Â?–ƒ‹Â?ƒ„Ž‡Ǥ ‹ŽŽ‹Â?‰ –Š‡ ‰ƒ’ ”‡“—‹”‡• ˆ—Â?†• ƒÂ?† ƒ •–”ƒ–‡‰› –Šƒ– —•—ƒŽŽ› ƒ‹Â?• ƒ– ȋƒȌ ”‡†—…‹Â?‰ –Š‡ Ž‡Â?‰–Š ‘ˆ ”‘ƒ†• ‹Â? Ġ ƒÂ?† ‘‘” …‘Â?†‹–‹‘Â? ȋ”‡†—…–‹‘Â? ‘ˆ „ƒ…Â?Ž‘‰ȌǢ ȋ„Ȍ ƒ’’Ž›‹Â?‰ Ž‘™ …‘•– ‹Â?–‡”˜‡Â?–‹‘Â?• –‘ „”‹Â?‰ „ƒ…Â? ”‘ƒ†• ‹Â? ‘‘” ƒÂ?† ƒ‹” –‘ ‘‘† …‘Â?†‹–‹‘Â?Ç¢ ƒÂ?† È‹Â…ÈŒ ’”‡•‡”˜‹Â?‰ ”‘ƒ†• ‹Â? ‘‘† ƒÂ?† ƒ‹” …‘Â?†‹–‹‘Â? –Š”‘—‰Š ’”‡˜‡Â?–‹˜‡ ”‘ƒ†™‘”Â? ƒ…–‹˜‹–‹‡•Ǥ ͷǤ͵ʹǤ Very substantial resources would be needed to eliminate the backlog of the road network in poor condition. ƒ•‡† ‘Â? –Š‡ ʹͲͲͻ ”‘ƒ† …‘Â?†‹–‹‘Â? •—”˜‡› ˆ‘” Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† ‡…‘Â?†ƒ”› ‘ƒ†• ƒÂ?† ™‹–Š –Š‡ Š‡Ž’ ‘ˆ –Š‡ ǦͶ Â?‘†‡Ž —Â?†‡” ƒÂ? —Â?…‘Â?•–”ƒ‹Â?‡† „—†‰‡–  …ƒŽ…—Žƒ–‡† –Šƒ– –Š‡ ‡Ž‹Â?‹Â?ƒ–‹‘Â? ‘ˆ –Š‡ „ƒ…Â?Ž‘‰ ˆ‘” –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› ”‘ƒ†• ™‘—Ž† ”‡“—‹”‡ ƒ„‘—– ͻͲͲ Â?ÂŽÂ? Ǥ Â? –Š‡ …ƒ•‡ ‘ˆ Ž‘…ƒŽ ”‘ƒ†•ǡ †—‡ –‘ Žƒ…Â? ‘ˆ †ƒ–ƒǡ –Š‡ „ƒ…Â?Ž‘‰ ™ƒ• ‡•–‹Â?ƒ–‡† ‘Â? –Š‡ „ƒ•‹• ‘ˆ ‡•–‹Â?ƒ–‡† —Â?‹– …‘•–•Ǥ – ™ƒ• …‘Â?•‡”˜ƒ–‹˜‡Ž› ƒ••—Â?‡† –Šƒ– ƒ„‘—– ͹Ͳ ’‡”…‡Â?– ȋͻǡͳͲͲ Â?Â?ÈŒ ‘ˆ Ž‘…ƒŽ ”‘ƒ†•ǡ ‘ˆ ™Š‹…Š ƒ„‘—– ͸ͷ ’‡”…‡Â?– ƒ”‡ —Â?’ƒ˜‡†ǡ ƒ”‡ ‹Â? ’‘‘” –‘ „ƒ† …‘Â?†‹–‹‘Â?•Ǥ Š‡ ‡•–‹Â?ƒ–‡† …‘•– ‘ˆ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ ’ƒ˜‡† ƒÂ?† —Â?’ƒ˜‡† Ž‘…ƒŽ ”‘ƒ†• –‘ „”‹Â?‰ –Š‡Â? –‘ ƒ Â?ƒ‹Â?–ƒ‹Â?ƒ„Ž‡ …‘Â?†‹–‹‘Â? ‡š…‡‡†•  ͳ „‹ŽŽ‹‘Â?Ǥ • ƒŽ”‡ƒ†› †‹•…—••‡†ǡ ˆ—Â?†‹Â?‰ ˆ‘” –Š‡ Â?‘”‡ Â?‘†‡•– „—– Â?‡› ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ǡ ‹• ƒŽ•‘ —Â?†‡”ˆ—Â?†‡†Ǥ ͷǤ͵͵Ǥ The reliance on international donor commitments induces some rigidity into the road sector capital budget. Š‡ ƒÂ?’Ž‡ •—’’Ž› ‘ˆ Â?—Ž–‹Žƒ–‡”ƒŽ ƒÂ?† „‹Žƒ–‡”ƒŽ ˆ—Â?†‹Â?‰ ˆ‘” –Š‡ •‡…–‘” ƒÂ?† –Š‡ …‘Â?•‡“—‡Â?– ’‘••‹„‹Ž‹–› ‘ˆ •–ƒ”–‹Â?‰ •‡˜‡”ƒŽ „‹‰ ’”‘Œ‡…–• ƒ– –Š‡ •ƒÂ?‡ –‹Â?‡ǡ Ž‡ƒ˜‡• Ž‹Â?‹–‡† ˆŽ‡š‹„‹Ž‹–› ˆ‘” ”‡†—…‹Â?‰ ‰‘˜‡”Â?Â?‡Â?– ‡š’‡Â?†‹–—”‡• ‹ˆ Â?ƒ…”‘‡…‘Â?‘Â?‹… …‘Â?†‹–‹‘Â?• •‘ ”‡“—‹”‡Ǥ ‘Â?Â?‹–Â?‡Â?–• ™‹–Š Ž‡Â?†‡”• ƒ”‡ †‹ˆˆ‹…—Ž– –‘ …ŠƒÂ?‰‡ ƒÂ?† –Š‡ …‘•– ‘ˆ •Ž‘™‹Â?‰ †‘™Â? ‘Â?‰‘‹Â?‰ …‘Â?–”ƒ…–‡† ™‘”Â?• Â?‹‰Š– „‡ Š‹‰ŠǤ Š—•ǡ „—†‰‡– ”‡†—…–‹‘Â?• –”‹‰‰‡”‡† „› Â?ƒ…”‘‡…‘Â?‘Â?‹… …‘Â?•‹†‡”ƒ–‹‘Â?• –‡Â?† –‘ ƒˆˆ‡…– ’”‹Â?ƒ”‹Ž› –Š‡ Š‹‰Š‡” ’”‹‘”‹–› ‡š’‡Â?†‹–—”‡• ‹Â? ”‘ƒ† Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ǥ Table 5.6: Asset Value of Road Network in Georgia ȋ‹Â? Â?‹Ž‘Â?‡–‡”• ƒÂ?† ‹Â? Žƒ”‹Ȍ Estimated 1km Length (km) Value Total Value International Roads ͳǡͶͻͷ ʹǡͲͲͲǡͲͲͲ ʹǡͻͻͲǡͲͲͲǡͲͲͲ Secondary Roads ͷǡͶͶ͸ ͸ͲͲǡͲͲͲ ͵ǡʹ͸͹ǡ͸ͲͲǡͲͲͲ Local Roads (Paved) ͷǡͲͲͲ ʹͲͲǡͲͲͲ ͳǡͲͲͲǡͲͲͲǡͲͲͲ Local Roads (Unpaved) ͳͲǡͲͲͲ ͶͲǡͲͲͲ ͶͲͲǡͲͲͲǡͲͲͲ Total Asset Value ͹ǡ͸ͷ͹ǡ͸ͲͲǡͲͲͲ GDP 2010 ͳͻǡͲͶ͸ǡͲͲͲǡͲͲͲ Road Asset Share ͶͲǤʹͳΨ SourceÇ£ ‘ƒ†• ‡’ƒ”–Â?‡Â?– ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͷǤ͵ͶǤ The asset value of the overall road network is half of what it would have been without the backlog in poor condition, but quite high relative to what can be sustained by the size of the economy. •–‹Â?ƒ–‡• ˆ‘” ‡‘”‰‹ƒ ‹Â?†‹…ƒ–‡ –Šƒ– –Š‡ Â?‡–™‘”Â? Šƒ• ƒ ”‡’Žƒ…‡Â?‡Â?– ˜ƒŽ—‡ •Ž‹‰Š–Ž› ‹Â? ‡š…‡•• ‘ˆ ͶͲ ’‡”…‡Â?– ‘ˆ  È‹ƒ„Ž‡ ͷǤ͸ȌǤ Š‹• ‹• ƒ„‘—– ŠƒŽˆ ‘ˆ ™Šƒ– –Š‡ ƒ••‡– ˜ƒŽ—‡ ™‘—Ž† Šƒ˜‡ „‡‡Â? ‹ˆ –Š‡”‡ ™ƒ• Â?‘ „ƒ…Â?Ž‘‰ ‘ˆ –Š‡ Â?‡–™‘”Â? ‹Â? ’‘‘” …‘Â?†‹–‹‘Â?Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?†ǡ –Š‡ ƒ••‡– ˜ƒŽ—‡ ‹• “—‹–‡ Š‹‰Š ”‡Žƒ–‹˜‡ –‘ ™Šƒ– …ƒÂ? „‡ •—•–ƒ‹Â?‡† „› –Š‡ •‹œ‡ ‘ˆ –Š‡ ‡…‘Â?‘Â?›Ǥ Â? •‹ƒÂ? ‡˜‡Ž‘’Â?‡Â?– ƒÂ?Â? ͻͷ •–—†› ȋʹͲͲ͸Ȍ „ƒ•‡† ‘Â? Â?‡–™‘”Â? •‹œ‡ǡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ •’‡Â?†‹Â?‰ǡ ƒÂ?† –Š‡ Â?‡–™‘”Â? “—ƒŽ‹–› ‹Â? •ƒÂ?’Ž‡ ‘ˆ …‘—Â?–”‹‡• ƒ••‡••‡† –Š‡ •‹œ‡ ‘ˆ –Š‡ ”‘ƒ† Â?‡–™‘”Â? –Šƒ– …‘—Ž† „‡ •—•–ƒ‹Â?ƒ„Ž› Â?ƒ‹Â?–ƒ‹Â?‡† ˆ”‘Â? ’—„Ž‹… •‘—”…‡•Ǥ Š‡ •–—†› ˆ‘—Â?† ƒ Â?‡‰ƒ–‹˜‡ ”‡Žƒ–‹‘Â?•Š‹’ „‡–™‡‡Â? Â?‡–™‘”Â? “—ƒŽ‹–› ƒÂ?† Â?‡–™‘”Â? ”‡’Žƒ…‡Â?‡Â?– ˜ƒŽ—‡ ĥ ƒ •Šƒ”‡ ‘ˆ  ƒÂ?† …‘Â?…Ž—†‡† –Šƒ– –Š‡ ”‘ƒ† Â?‡–™‘”Â? ‘ˆ ƒ …‘—Â?–”› ™ƒ• ‰”‡ƒ–‡” –ŠƒÂ? ‹–• ‡…‘Â?‘Â?› …‘—Ž† •—•–ƒ‹Â? ™Š‡Â? –Š‡ ”‡’Žƒ…‡Â?‡Â?– ˜ƒŽ—‡ ”‡ƒ…Š‡† ͶͲΨ ‘ˆ Ǥ Â?‡ ‘’–‹‘Â? ˆ‘” ‡‘”‰‹ƒ ™‘—Ž† „‡ –‘ ˆ‘…—• ‘Â? ”‡Šƒ„‹Ž‹–ƒ–‹Â?‰ ƒ •‡Ž‡…– •—„•‡– ‘ˆ Ž‘…ƒŽ ”‘ƒ†• –Šƒ– ƒ”‡ –Š‡ Â?‘•– ‹Â?’‘”–ƒÂ?– ‹Â? Ž‹Â?Â?‹Â?‰ ’‘’—Žƒ–‹‘Â?• –‘ Â?ƒ”Â?‡–• ƒÂ?† •‘…‹ƒŽ •‡”˜‹…‡•Ǥ An illustrative alternative scenario for the medium term road program ͷǤ͵ͷǤ An alternative scenario for the medium term road program with adequate resources for rehabilitation and maintenance would require slowing down the pace of new construction (table 5.7). Š‹Ž‡ •—…Š ƒÂ? ƒŽ–‡”Â?ƒ–‹˜‡ Â?ƒ› Â?‘– „‡ ˆ‡ƒ•‹„Ž‡ ™Š‹Ž‡ –Š‡ Š‹‰Š ’”‹‘”‹–›  ‹‰Š™ƒ› ‹• •–‹ŽŽ „‡‹Â?‰ †‡˜‡Ž‘’‡†ǡ ‹– Â?‡˜‡”–Š‡Ž‡•• ’”‘˜‹†‡• ƒ —•‡ˆ—Ž ‹ŽŽ—•–”ƒ–‹‘Â? ‘ˆ –Š‡ ‹Â?’Ž‹…ƒ–‹‘Â?• ‘ˆ •—…Š ƒ ’”‘‰”ƒÂ? –Šƒ– …‘—Ž† „‡ ’Šƒ•‡† ‹Â? ƒˆ–‡” –Š‡ Â?‘•– ‹Â?’‘”–ƒÂ?– Ž—Â?’› ‹Â?˜‡•–Â?‡Â?–• ƒ”‡ …‘Â?’Ž‡–‡†Ǥ ’‡…‹ˆ‹…ƒŽŽ›ǡ •—…Š ƒÂ? ƒŽ–‡”Â?ƒ–‹˜‡ …‘—Ž† ˆ‡ƒ–—”‡ –Š‡ ˆ‘ŽŽ‘™‹Â?‰ǣ ȋ‹Ȍ Â?…”‡ƒ•‹Â?‰ ”‘ƒ† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? –‘ –Š‡ Ž‡˜‡Ž ”‡…‘Â?Â?‡Â?†‡† „› Ǥ ȋ‹‹Ȍ Â?–”‘†—…‹Â?‰ ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‹Â? Ž‹Â?‡ ™‹–Š  ”‡…‘Â?Â?‡Â?†ƒ–‹‘Â?•Ǥ ȋ‹‹‹Ȍ Â?–”‘†—…‹Â?‰ ƒ ’”‘‰”ƒÂ? ˆ‘” ‹Â?–‡Â?•‹˜‡ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘ˆ –Š‡ Ž‘…ƒŽ Â?‡–™‘”Â?Ǥ ȋ‹˜Ȍ Ž‘™ †‘™Â? –Š‡ ’ƒ…‡ ‘ˆ Â?‡™ …‘Â?•–”—…–‹‘Â? „› ˆ‹š‹Â?‰ –Š‡ ‘˜‡”Â?Â?‡Â?–ǯ• „—†‰‡– ƒŽŽ‘…ƒ–‹‘Â? ˆ‘” Â?‡™ …‘Â?•–”—…–‹‘Â? ƒ– ͲǤʹͷΨ ‘ˆ  †—”‹Â?‰ –Š‡ ʹͲͳʹǦͳͷ ȋ–Š‡ ‰‘˜‡”Â?Â?‡Â?–ǯ• ’”‘‰”ƒÂ? ‡Â?˜‹•ƒ‰‡• ƒÂ? ƒŽŽ‘…ƒ–‹‘Â? ‘ˆ ͲǤͶ͵ Ψ ‘ˆ  ˆ‘” ʹͲͳ͵ȌǤ ͷǤ͵͸Ǥ The alternative scenario would increase rehabilitation to adequate levels while slowing down the rate of capacity increase. Š‡ ‰‘˜‡”Â?Â?‡Â?–ǯ• ˆ‹˜‡ ›‡ƒ” ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ’”‘‰”ƒÂ? †‡˜‡Ž‘’‡† —•‹Â?‰ –Š‡  Â?‘†‡Ž •Š‘™• –Šƒ– –Š‡  ‘ˆ –Š‡ ‹Â?˜‡•–Â?‡Â?–• ‹• Â?ƒš‹Â?‹œ‡† „› …ƒ””›‹Â?‰ ‘—– ƒÂ? ‹Â?–‡Â?•‹˜‡ ƒÂ?† ‘˜‡”†—‡ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ’”‘‰”ƒÂ? ‹Â? –Š‡ Â?‡š– –™‘ ›‡ƒ”•Ǥ ‘ ”‡†—…‡ ‹Â?’ƒ…– ‘ˆ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‹Â? –Š‡ ƒŽ”‡ƒ†› ˆ”‘Â?– Ž‘ƒ†‡† ‰‘˜‡”Â?Â?‡Â?– ’”‘‰”ƒÂ?Ç¡ –Š‡ ƒŽ–‡”Â?ƒ–‹˜‡ ’”‘‰”ƒÂ? ’”‘’‘•‡• –‘ …ƒ””› …‘Â?’Ž‡–‡ –Š‡ —”‰‡Â?– ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‹Â? ˆ‹˜‡ ›‡ƒ”•Ǥ ‹•…ƒŽ •’ƒ…‡ ˆ‘” –Š‡ Š‹‰Š‡” ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? Â?‡‡†• ™‘—Ž† Šƒ˜‡ –‘ …‘Â?‡ ˆ”‘Â? •Ž‘™‹Â?‰ †‘™Â? –Š‡ ”ƒ–‡ ‘ˆ …ƒ’ƒ…‹–› ‹Â?…”‡ƒ•‡Ǥ – –Š‡ …—””‡Â?– –‹Â?‡ǡ –Š‹• ™‘—Ž† ”‡“—‹”‡ ’‘•–’‘Â?‹Â?‰ –Š‡ …‘Â?Â?‡Â?…‡Â?‡Â?– ‘ˆ –Š‡ ™‘”Â?• Â?‘– ›‡– •–ƒ”–‡† ƒÂ?† Ž‡ƒ˜‹Â?‰ ˆ‘” Žƒ–‡” ›‡ƒ”• ™‘”Â? ‘Â? ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ Ž‹Â?Â?• ™‹–Š ͷͲͲͲ ˜‡Š‹…Ž‡• ’‡” †ƒ› ‘” Ž‡••Ǥ ͷǤ͵͹Ǥ The alternative scenario would considerably increase resources for routine and periodic maintenance to levels recommended by HDM. †‡“—ƒ–‡ ”‘—–‹Â?‡ ƒÂ?† ’”‡˜‡Â?–‹˜‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‹• –Š‡ ˆ‹”•– ’”‹‘”‹–› ‹Â? ƒÂ?› •‘—Â?† ”‘ƒ† Â?ƒÂ?ƒ‰‡Â?‡Â?– •–”ƒ–‡‰› ƒÂ?† •Š‘—Ž† –ƒÂ?‡ ’”‡…‡†‡Â?…‡ ‘˜‡” ƒÂ?› ‘–Š‡” ’‘••‹„Ž‡ —•‡ ‘ˆ •…ƒ”…‡ ”‡•‘—”…‡•Ǥ Š‡ ƒŽ–‡”Â?ƒ–‹˜‡ ’”‘‰”ƒÂ? ™‘—Ž† „”‹Â?‰ ”‘—–‹Â?‡ ƒÂ?† ’”‡˜‡Â?–‹˜‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ǡ •—…Š ĥ …”ƒ…Â? •‡ƒŽ‹Â?‰ ƒÂ?† ’”‡’ƒ”ƒ–‹‘Â? ‘ˆ –Š‡ Â?‡–™‘”Â? ˆ‘” ™‹Â?–‡”ǡ –‘ ‹–• ’”‘’‡” Ž‡˜‡ŽǤ Š‡ ‹Â?’‘”–ƒÂ?…‡ ‘ˆ ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‹• —Â?†‡”‡•–‹Â?ƒ–‡† ‹Â? ‡‘”‰‹ƒ „ƒ•‡† ‘Â? –Š‡ ˆƒŽŽƒ…› –Šƒ– –Š‡ …‘•– ‘ˆ ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‹• Â?‘– Â?—…Š Ž‡•• –ŠƒÂ? –Šƒ– ‘ˆ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘˜‡” ƒ ʹͲ ›‡ƒ” ’‡”‹‘†Ǥ Š‹• ˆƒŽŽƒ…› Â?‡‰Ž‡…–• –Š‡ •—„•–ƒÂ?–‹ƒŽ …‘•–• –‘ ”‘ƒ† —•‡”• ‘˜‡” –Š‡ ʹͲ ›‡ƒ” ’‡”‹‘† ™Š‡Â? ”‘ƒ†• ƒ”‡ Ž‡ˆ– –‘ †‡–‡”‹‘”ƒ–‡ ƒÂ?† Žƒ–‡” ”‡Šƒ„‹Ž‹–ƒ–‡† ”ƒ–Š‡” –ŠƒÂ? „‡‹Â?‰ •—„Œ‡…– –‘ ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ǥ ‹‰—”‡ ͷǤͶ •Š‘™• ƒ…–—ƒŽ ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ –Š”‘—‰Š ʹͲͳͲ ˜‡”•—• Â?‡‡†• ˆ”‘Â? ʹͲͳͲǤ ‘” ƒ …‘—Â?–”› ™‹–Š ƒ ”‘ƒ† Â?‡–™‘”Â? ƒÂ?† –”ƒˆˆ‹… Ž‡˜‡Ž• ‘ˆ ‡‘”‰‹ƒǡ –Š‡ ‡•–‹Â?ƒ–‡† …‘•– –‘ –Š‡ —•‡”• ‘ˆ Žƒ…Â? ‘ˆ ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ Â?ƒ› „‡ ‹Â? –Š‡ ‘”†‡” ‘ˆ  ͳͶͲ Â?‹ŽŽ‹‘Â? ’‡” ›‡ƒ”Ǥ ͻ͸ Table 5.7: Alternative Illustrative Scenario for the Medium Term Road Program ȋ‹Â? Â?‹ŽŽ‹‘Â? ‘ˆ Žƒ”‹ ƒÂ?† ’‡”…‡Â?– ‘ˆ ÈŒ Proposed Medium Term Investment And Maintenance Program 2010 2011 2012 2013 2014 2015 New Construction Government Budget 48.2 52.0 57.9 65.6 70.2 74.4 GDP share % 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% Donors 183.4 208.0 231.5 262.6 280.9 297.8 GDP share % 0.96% 1.00% 1.00% 1.00% 1.00% 1.00% SubǦtotal 231.6 260.0 289.4 328.2 351.2 372.2 GDP share % 1.22% 1.25% 1.25% 1.25% 1.25% 1.25% Rehabilitation/Periodic Maintenance Government Budget International and Secondary 111.0 242.2 233.9 302.7 343.0 379.9 GDP share % Roads Rehabilitation 0.58% 1.16% 1.01% 1.15% 1.22% 1.28% Donors International and Secondary 337.1 60.0 0.0 0.0 0.0 0.0 GDP share % Roads Rehabilitation 1.77% 0.29% 0.00% 0.00% 0.00% 0.00% Periodic Maintenance International and Secondary 3.1 123.1 123.1 123.1 123.1 123.1 Roads Periodic Maintenance 0.02% 0.59% 0.53% 0.47% 0.44% 0.41% Routine Maintenance International and Secondary 28.6 42.7 42.7 42.7 42.7 42.7 GDP share % Roads Periodic Maintenance 0.15% 0.21% 0.18% 0.16% 0.15% 0.14% Local Roads Rehab Local Roads Rehabilitation 0.0 0.0 106.9 106.9 106.9 106.9 Local Roads Maint. Local Roads Routine+Periodic 0.0 0.0 14.2 15.3 16.3 17.4 SubǦTotal 479.8 468.0 520.9 590.8 632.1 670.0 GDP share % 2.52% 2.25% 2.25% 2.25% 2.25% 2.25% Total 711.4 728.0 810.2 919.0 983.3 1042.3 GDP share % 3.74% 3.50% 3.50% 3.50% 3.50% 3.50% Source: ‘ƒ†• ‡’ƒ”–Â?‡Â?– ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• Figure 5.4: Periodic Maintenance – Actual 2007Ǧ10 versus Need 2010Ǧ19 ȋ‹Â? Â?‹ŽŽ‹‘Â?• ‘ˆ Žƒ”‹Ȍ Periodic Maintenance Actual/Needs 160 140 120 100 mln GEL 80 HDMͲ4 60 40 Actual 20 0 2007 2008 2009 2010 2011 2012 2013 2015 2016 2017 2018 2019 Year SourceÇ£ ‘ƒ†• ‡’ƒ”–Â?‡Â?– ƒÂ?†  –ƒˆˆ ‡•–‹Â?ƒ–‡• ͻ͹ ͷǤ͵ͺǤ The alternative scenario would introduce a comprehensive program of rehabilitation and maintenance of local roads. Š‡ ƒŽ–‡”Â?ƒ–‹˜‡ ‘’–‹‘Â? ™‘—Ž† ‹Â?–”‘†—…‡ Ž‘…ƒŽ ”‘ƒ†• ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ‘Â? –Š‡ •–‡ƒ†› ”ƒ–‡ ‘ˆ ͳͲͲͲ Â?Â? ’‡” ›‡ƒ” †—”‹Â?‰ ͳͲ ›‡ƒ”• •–ƒ”–‹Â?‰ ˆ”‘Â? ʹͲͳʹǤ ‘…ƒŽ ”‘ƒ†• …‘Â?Â?‡…– –Š‡ ’‘‘”‡•– ’‘’—Žƒ–‹‘Â? •‡‰Â?‡Â?–• ƒÂ?† ƒ‰”‹…—Ž–—”ƒŽ ”—”ƒŽ ’‘’—Žƒ–‹‘Â?• –‘ …‡Â?–”‡•ǡ •‡”˜‹…‡•ǡ ƒÂ?† Â?ƒ”Â?‡–•Ǥ —„•–ƒÂ?–‹ƒŽ Ž‡ƒ†Ǧ–‹Â?‡ Â?ƒ› „‡ Â?‡…‡••ƒ”› ˆ‘” ‹Â?‹–‹ƒ–‹Â?‰ ƒ •—•–ƒ‹Â?ƒ„Ž‡ Ž‘…ƒŽ ”‘ƒ†• •–”ƒ–‡‰› „‡…ƒ—•‡ ‘ˆ †‹ˆˆ‹…—Ž–‹‡• ƒ••‘…‹ƒ–‡† ™‹–Šǣ †‡ˆ‹Â?‹Â?‰ ƒ •‘—Â?† †‡…‡Â?–”ƒŽ‹œƒ–‹‘Â? ’”‘‰”ƒÂ?Ç¢ „”‹Â?‰‹Â?‰ –‘‰‡–Š‡” †‹ˆˆ‡”‡Â?– Ž‡˜‡Ž• ‘ˆ ‰‘˜‡”Â?Â?‡Â?–Ǣ –ƒ‹Ž‘”‹Â?‰ ’”‘‰”ƒÂ?• ˆ‘” Ž‘…ƒŽ ‰‘˜‡”Â?Â?‡Â?–• ™‹–Š Â?ƒ”Â?‡† †‹ˆˆ‡”‡Â?…‡• ‹Â? ”‡•‘—”…‡• ƒÂ?† –‡…ŠÂ?‹…ƒŽ …ƒ’ƒ„‹Ž‹–‹‡•Ǣ ‡Â?‰ƒ‰‹Â?‰ …‘Â?Â?—Â?‹–› ’ƒ”–‹…‹’ƒ–‹‘Â? ‹Â? –Š‡ Ž‘Â?‰ –‡”Â? •—•–ƒ‹Â?ƒ„‹Ž‹–› ‘ˆ –Š‡ Â?‡–™‘”Â?Ç¢ Â?ƒš‹Â?‹œ‹Â?‰ –Š‡ ’‘–‡Â?–‹ƒŽ ‘ˆ ƒ ™‡ŽŽ ’ŽƒÂ?Â?‡† ”—”ƒŽ ”‘ƒ† †‡˜‡Ž‘’Â?‡Â?– ’”‘‰”ƒÂ? –‘ ‰‡Â?‡”ƒ–‡ ‡Â?’Ž‘›Â?‡Â?– ƒÂ?†Ȁ‘” –‘ —Â?Ž‡ƒ•Š ‡Â?–”‡’”‡Â?‡—”‹ƒŽ …ƒ’ƒ„‹Ž‹–‹‡• –Š”‘—‰Š –Š‡ …”‡ƒ–‹‘Â? ‘ˆ Â?‹Â?‹Ǧ‡Â?–‡”’”‹•‡• ˆ‘” ”‘ƒ† Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ǥ Figure 5.5: Government Roads Program and Alternative Illustrative Scenario ȋ‹Â? Â?‹ŽŽ‹‘Â?• ‘ˆ Žƒ”‹Ȍ Comparison of Government Capital Expenditure Program and Alternative Illustrative Option 600.0 500.0 400.0 mln GEL 300.0 200.0 100.0 0.0 2008 2009 2010 2011 2012 2013 2014 ConstructionͲAlternative 67.4 190.3 231.6 189.3 210.7 238.9 255.7 RehabilitationͲAlternative 153.3 206.6 249.2 351.5 391.2 443.7 474.8 Construction GB 67.37 150.00 231.60 475.00 520.00 565.00 200.00 Rehabilitation GB 204.71 359.23 476.70 285.20 255.80 285.95 308.50 SourceÇ£ ‘ƒ†• ‡’ƒ”–Â?‡Â?– ƒÂ?†  •–ƒˆˆ ‡•–‹Â?ƒ–‡• ͷǤ͵ͻǤ SocioǦeconomic surveys suggest that upgrading and expanding local roads would be a good instrument to stimulate growth and improve the social wellǦbeing of the poor.ͷͺ Š‡ •—”˜‡›• …‘˜‡” ƒ ”ƒÂ?†‘Â? •ƒÂ?’Ž‡ ‘ˆ ͶͲͲ ’‡”•‘Â?• ‹Â? ˆ‹˜‡ †‹•–”‹…–• È‹ƒÂ?…ŠÂ?Š—–‹ǡ ‘”‹ǡ ƒ•’‹ǡ —”ŒƒƒÂ?‹ ƒÂ?† ‘”Œ‘Â?‹ȌǤ Â? ”ƒ–‹Â?‰ –Š‡ ’”‘„Ž‡Â?• –Š‡› ˆƒ…‡†ǡ –Š‡ …‘Â?†‹–‹‘Â? ‘ˆ ”‘ƒ†• ”ƒÂ?Â?‡† •‡…‘Â?† ‘Â?Ž› –‘ Š‡ƒŽ–Š •‡”˜‹…‡•ǡ ™‹–Š ͻ͵ ’‡”…‡Â?– ‘ˆ ”‡•’‘Â?†‡Â?–• ”ƒ–‹Â?‰ ‹– ƒÂ? ‹Â?’‘”–ƒÂ?– ’”‘„Ž‡Â?Ǥ Š‡› ˆ‡Ž– –Šƒ– ”‡†—…‡† –”ƒÂ?•’‘”– …‘•–• ƒÂ?† „‡––‡” …‘Â?Â?‡…–‹˜‹–› ™‘—Ž† ‹Â?…”‡ƒ•‡ –Š‡ …‘Â?’‡–‹–‹˜‡Â?॥ ‘ˆ Ž‘…ƒŽ ’”‘†—…‡ǡ ‹Â?’”‘˜‡ ƒ……‡•• –‘ •‘…‹ƒŽ •‡”˜‹…‡• ȋ‹Ǥ‡Ǥ •…Š‘‘Ž• ƒÂ?† Â?‡†‹…ƒŽ ˆƒ…‹Ž‹–‹‡•Ȍǡ ƒÂ?† ‘ˆˆ‡” ‡Â?’Ž‘›Â?‡Â?– ‘’’‘”–—Â?‹–‹‡•Ǥ Â? •‘Â?‡ …ƒ•‡• ‹– ™‘—Ž† •’—” –‘—”‹•Â? ™Š‹…Š ‹Â? –Š‡ ’ƒ•– ™ƒ• ƒÂ? ‹Â?’‘”–ƒÂ?– ‡…‘Â?‘Â?‹… •‡…–‘”Ǥ •‘Žƒ–‹‘Â? ’‡”’‡–—ƒ–‡† „› ’‘‘” –”ƒÂ?•’‘”– ”‡•–”ƒ‹Â?• ‡…‘Â?‘Â?‹… ’”‘‰”‡•• ƒÂ?† –”ƒ’• ”—”ƒŽ ’‡‘’Ž‡ ‹Â? ’‘˜‡”–›Ǥ ‘‘” –”ƒÂ?•’‘”– ”‡•–”‹…–• ‘’’‘”–—Â?‹–› ˆ‘” –”ƒ†‡Ǧ‡˜‡Â? ™‹–Š‹Â? Ž‘…ƒŽ Â?ƒ”Â?‡–•Ǥ – ”ƒ‹•‡• –Š‡ …‘•– • ‘ˆ ’”‘†—…–‹‘Â? ƒÂ?† †‹•–”‹„—–‹‘Â?Ç¡ ”‡†—…‡• –Š‡ ’”‘ˆ‹– Â?ƒ”‰‹Â? ‘Â? ’”‘†—…‡ •ƒŽ‡•ǡ ƒÂ?† Ž‹Â?‹–• ’”‘†—…–‹‘Â? ›‹‡Ž†• –‘ Ž‡˜‡Ž• „‡Ž‘™ –Š‡‹” ’‘–‡Â?–‹ƒŽǡ ‹Â?’‡†‹Â?‰ –Š‡ –”ƒÂ?•‹–‹‘Â? ˆ”‘Â? •—„•‹•–‡Â?…‡ –‘ ‹Â?…‘Â?‡Ǧ’”‘†—…‹Â?‰ ƒ‰”‹…—Ž–—”‡Ǥ Š‡ ‡…‘Â?‘Â?‹… ‡ˆˆ‡…–• ‘ˆ „‡––‡” ƒ……‡•• –‘ǡ ˆ”‘Â?Ç¡ ƒÂ?† ͷͺ ‡…‘Â?†ƒ”› ƒÂ?† ‘…ƒŽ ‘ƒ†• …‘Â?‘Â?‹… ˜ƒŽ—ƒ–‹‘Â? ƒÂ?† ‘˜‡”–› Â?’ƒ…– –—†›ǡ   Ç¡ ƒ†”‹†ǡ ʹͲͲͶǤ ͻͺ ™‹–Š‹Â? ”—”ƒŽ ƒ”‡ƒ• …ƒÂ? „‡ …—Â?—Žƒ–‹˜‡ ƒÂ?† ˆƒ” ”‡ƒ…Š‹Â?‰Ǥ ……‡•• –‘ Â?ƒ”Â?‡–• Â?ƒÂ?‡• ‹– ™‘”–Š™Š‹Ž‡ –‘ Â?‘†‡”Â?‹œ‡ ƒ‰”‹…—Ž–—”‡ –Š”‘—‰Š Â?‡…ŠƒÂ?‹œƒ–‹‘Â?Ç¡ ˆ‡”–‹Ž‹œ‡”•ǡ ƒÂ?† Š‹‰ŠǦ›‹‡Ž† ˜ƒ”‹‡–‹‡•Ǥ Š‘•‡ ‹Â?’”‘˜‡Â?‡Â?–• ‹Â?…”‡ƒ•‡ †‡Â?ƒÂ?† ˆ‘” ƒ‰”‹…—Ž–—”ƒŽ ‹Â?’—–• ƒÂ?† ˆ‘” …”‡†‹–Ǥ Š‡Â? Â?‡™ ”‘ƒ†• ”‡ƒ…Š ”‡Â?‘–‡ ”—”ƒŽ ƒ”‡ƒ•ǡ –Š‡ ‡…‘Â?‘Â?‹… ‡ˆˆ‡…– …ƒÂ? „‡ †”ƒÂ?ƒ–‹…Ǥ ͷǤͶͲǤ Figure 5.5 shows the comparison between the government’s program and the alternative illustrative scenario, although other alternative scenarios can also be explored by the authorities. Š‡ ‰‘˜‡”Â?Â?‡Â?– Â?‘™ Šƒ• „‘–Š –Š‡ †ƒ–ƒ ƒÂ?† –Š‡ ‹Â? Š‘—•‡ …ƒ’ƒ…‹–› –‘ ’”‘‰”ƒÂ? ƒŽ–‡”Â?ƒ–‹˜‡ •…‡Â?ƒ”‹‘• –‘ ‘’–‹Â?‹œ‡ „‡Â?‡ˆ‹–• ‘ˆ ‹–• ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ’‘Ž‹…›Ǥ Š‹• ‹• ”‡…‘Â?Â?‡Â?†‡†Ǥ Š‹• ”‡’‘”– ’”‘˜‹†‡• ‘Â?‡ ‹ŽŽ—•–”ƒ–‹˜‡ •…‡Â?ƒ”‹‘ ˆ‘” –Š‡ ’‡”‹‘† ʹͲͳʹǦͳͷǤ Š‡ ‡šƒÂ?’Ž‡ „”‹Â?‰• ‘—– –Š‡ Â?ƒ‹Â? ‹••—‡ –‘ „‡ –ƒ…Â?Ž‡† „› –Š‡ ‰‘˜‡”Â?Â?‡Â?–ǣ –Š‡ ˆ—Â?†‹Â?‰ ‘ˆ –Š‡ Š‹‰Š ’”‹‘”‹–› ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ’”‘‰”ƒÂ? ™‹ŽŽ ”‡“—‹”‡ ƒ •—„•–ƒÂ?–‹ƒŽ ‹Â?…”‡ƒ•‡ ‹Â? „—†‰‡– ”‡•‘—”…‡• ‡˜‡Â? ‹ˆ –Š‡ Â?‡™ …‘Â?•–”—…–‹‘Â? ’”‘‰”ƒÂ? ‹• •Ž‘™‡† †‘™Â?Ǥ Š‡ ‰‘˜‡”Â?Â?‡Â?– •Š‘—Ž† …‘Â?•‹†‡” ƒŽ–‡”Â?ƒ–‹˜‡• –‘ ‰”ƒ†—ƒŽŽ› •Š‹ˆ– †‘Â?‘” ˆ—Â?†‹Â?‰ ƒ™ƒ› ˆ”‘Â? …‘Â?•–”—…–‹‘Â? ƒÂ?† ‹Â?–‘ ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ǥ 5.6. Institutional Arrangements for Improved Efficiency ͷǤͶͳǤ The accomplishments of the Roads Department in improving the management of the road sector during the last few years have been impressive. ƒ•‹… †ƒ–ƒ …‘ŽŽ‡…–‹‘Â? ‹• –ƒÂ?‹Â?‰ ’Žƒ…‡ ’‡”‹‘†‹…ƒŽŽ› ˆ‘” –Š‡ ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ƒÂ?† •‡…‘Â?†ƒ”› Â?‡–™‘”Â?• ƒÂ?† –Š‡ ƒ‰‡Â?…› ‹• ‹Â? –Š‡ ’”‘…‡•• ‘ˆ ‰ƒ–Š‡”‹Â?‰ „ƒ•‹… †ƒ–ƒ ‘Â? –Š‡ Ž‘…ƒŽ ”‘ƒ†•Ǥ Š‡  Â?‘†‡Ž ‹• „‡‹Â?‰ —•‡† –‘ ‹†‡Â?–‹ˆ› ’”‹‘”‹–‹‡• ˆ‘” ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ƒÂ?† ˆ‘” ‡•–‹Â?ƒ–‹Â?‰ –Š‡ ‡…‘Â?‘Â?‹… Â?‡”‹–• ‘ˆ …ƒ’ƒ…‹–› ‡š’ƒÂ?•‹‘Â? ’”‘Œ‡…–•Ǥ ƒ‹Â?–‡Â?ƒÂ?…‡ Šƒ• „‡‡Â? …‘Â?–”ƒ…–‡† –‘ –Š‡ ’”‹˜ƒ–‡ •‡…–‘” ƒÂ?† ‹Â?’‘”–ƒÂ?– ‡Ž‡Â?‡Â?–• ‘ˆ ’‡”ˆ‘”Â?ƒÂ?…‡ Â?ƒÂ?ƒ‰‡Â?‡Â?– ƒÂ?† ƒ……‘—Â?–ƒ„‹Ž‹–› …ƒÂ? „‡ •‡‡Â? ‹Â? ƒ––”ƒ…–‹˜‡ ’—„Ž‹…ƒ–‹‘Â?• Ž‹Â?Â?‹Â?‰ ‡š’‡Â?†‹–—”‡• ™‹–Š ’Š›•‹…ƒŽ ‘—–…‘Â?‡•Ǥ ͷǤͶʹǤ The successful first steps place the Roads Department in an excellent position to tackle a number of key challenges ahead in further improving expenditure efficiency. ‡› ’”‹‘”‹–‹‡• ‰‘‹Â?‰ ˆ‘”™ƒ”† ‹Â?…Ž—†‡ǣ x Move towards the implementation of a comprehensive Asset Management System, ‹Â?…Ž—†‹Â?‰ „‘–Š ‹Â?ˆ‘”Â?ƒ–‹‘Â? ’”‘…‡••‹Â?‰ ƒÂ?† Š—Â?ƒÂ? ”‡•‘—”…‡• ˆ‘” –Š‡ ‹Â?–‡‰”ƒ–‡† Â?ƒÂ?ƒ‰‡Â?‡Â?– ‘ˆ –Š‡ Â?‡–™‘”Â?Ç¡ ‹Â?…Ž—†‹Â?‰ –Š‡ †‡–‡”Â?‹Â?ƒ–‹‘Â? ƒÂ?† ‘’–‹Â?‹•ƒ–‹‘Â? ‘ˆ ‡…‘Â?‘Â?‹…ƒŽŽ› ™ƒ””ƒÂ?–‡† ’”‘Œ‡…–•ǡ ’”‘‰”ƒÂ?Â?‡•ǡ •–”ƒ–‡‰‹‡• ƒÂ?† „—†‰‡–• ˆ‘” „‘–Š Â?‡–™‘”Â? †‡˜‡Ž‘’Â?‡Â?– ƒÂ?† Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ǥ Š‡ Â?‡š– •–‡’ ˆ‘”  †‡˜‡Ž‘’Â?‡Â?– ‹• –‘ •‡– –ƒ”‰‡–• ƒÂ?† –‹Â?‡ ˆ”ƒÂ?‡™‘”Â? ȋ‹Â?…Ž—†‹Â?‰ –”ƒ‹Â?‹Â?‰Ȍ ˆ‘” –Š‡ ‡•–ƒ„Ž‹•ŠÂ?‡Â?– ‘ˆ ƒ ’”‘…‡•• –Šƒ– ‹• …ƒ’ƒ„Ž‡ ‘ˆ ‰‡Â?‡”ƒ–‹Â?‰ ’‘Ž‹…› ’ƒ…Â?ƒ‰‡• ȋ‘’–‹‘Â?•Ȍ ™Š‹…Š ™‘—Ž† Ž‡ƒ† –‘ ‹Â?˜‡•–Â?‡Â?–• –Šƒ– ’”‘˜‹†‡ –Š‡ ‰”‡ƒ–‡•– ‘˜‡”ƒŽŽ ‡…‘Â?‘Â?‹… ƒÂ?† •‘…‹ƒŽ „‡Â?‡ˆ‹–• ȋ‹Ǥ‡Ǥ –Š‡ Š‹‰Š‡•– ‡…‘Â?‘Â?‹…Ȁ•‘…‹ƒŽ ”‡–—”Â?• ’‡” —Â?‹– ‘ˆ ‡š’‡Â?†‹–—”‡•ȌǤ ‘” –Šƒ– –Š‡  Â?‘†‡Žǡ ™Š‹…Š …‘Â?…‡Â?–”ƒ–‡• ‹Â? ’ƒ˜‡Â?‡Â?– Â?ƒÂ?ƒ‰‡Â?‡Â?–ǡ •Š‘—Ž† „‡ ƒ •—„’”‘‰”ƒÂ? ™‹–Š‹Â? ƒÂ? ƒ••‡– Â?ƒÂ?ƒ‰‡Â?‡Â?– ’”‘‰”ƒÂ? –Šƒ– ‹Â?–‡‰”ƒ–‡• ‘–Š‡” ‹Â?ˆ‘”Â?ƒ–‹‘Â? •›•–‡Â?•Ǥ Š‡ Žƒ––‡” •Š‘—Ž† Šƒ˜‡ –Š‡ …ƒ’ƒ„‹Ž‹–› –‘ ƒ••‡•• ‘’–‹‘Â?• –Šƒ– „ƒŽƒÂ?…‡ Â?‘Â?‡–ƒ”› ”‡–—”Â?• ™‹–Š ‘–Š‡” •‘…‹‡–ƒŽ ˜ƒŽ—‡• •—…Š ĥ ‡Â?˜‹”‘Â?Â?‡Â?–ƒŽ ’”‘–‡…–‹‘Â?Ç¡ •‘…‹ƒŽ ‹Â?…Ž—•‹‘Â? ‘” ’‘˜‡”–› ”‡†—…–‹‘Â?Ç¡ ’ƒ”–‹…—Žƒ”Ž› ‹Â? –Š‡ –”‡ƒ–Â?‡Â?– ‘ˆ Ž‘™ ˜‘Ž—Â?‡ ”‘ƒ†• ˆ‘” ™Š‹…Š –Š‡  ‹• Â?‘– ƒÂ? ƒ†‡“—ƒ–‡ –‘‘Ž Š‹• ‹Â?…Ž—†‡•ǣ ȋ‹Ȍ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ƒÂ?† ƒÂ?ƒŽ›•‹• ‘ˆ –Š‡ —•‡ ƒÂ?† ’‡”ˆ‘”Â?ƒÂ?…‡ ‘ˆ –Š‡ …—””‡Â?– Â?‡–™‘”Â?Ç¡ ƒÂ?† ˆ‘”‡…ƒ•–• ‘ˆ ˆ—–—”‡ †‡Â?ƒÂ?† ƒÂ?† ’‡”ˆ‘”Â?ƒÂ?…‡ —Â?†‡” †‹ˆˆ‡”‡Â?– •‘…‹ƒŽǡ ‡Â?˜‹”‘Â?Â?‡Â?–ƒŽǡ ƒÂ?† ‡…‘Â?‘Â?‹… •…‡Â?ƒ”‹‘•Ǣ ȋ‹‹Ȍ Â?‘†‡Ž• ™Š‹…Š ƒŽŽ‘™ ƒ••‡••Â?‡Â?– ‘ˆ –Š‡ …‘•–• ƒÂ?† „‡Â?‡ˆ‹–• ‘ˆ †‹ˆˆ‡”‡Â?– •–ƒÂ?†ƒ”† ‘’–‹‘Â?• ƒÂ?† –Š‡ ˆ—ŽŽ ”ƒÂ?‰‡ ‘ˆ ’‘Ž‹…› ‘’–‹‘Â?• ‘Â? –Š‡ •–”ƒ–‡‰‹… ’”‹‘”‹–› Ž‹Â?Â?•ǡ ȋ‹‹‹Ȍ Â?‡–Š‘†‘Ž‘‰‹‡• ˆ‘” ‡•–‹Â?ƒ–‹Â?‰ǡ ƒÂ?† ™Š‡”‡ ’‘••‹„Ž‡ ’Žƒ…‹Â?‰ ƒ Â?‘Â?‡–ƒ”› ˜ƒŽ—‡ ‘Â?Ç¡ ͻͻ –Š‡ ‹Â?’ƒ…–• ‘ˆ ’‘Ž‹…› ‘’–‹‘Â?• ‘Â? •‘…‹ƒŽǡ ‡Â?˜‹”‘Â?Â?‡Â?–ƒŽ ƒÂ?† ‡…‘Â?‘Â?‹… ‘„Œ‡…–‹˜‡•ǡ ƒÂ?† ȋ‹˜Ȍ ‡˜‹†‡Â?…‡ ‘Â? ™Šƒ– ’‘Ž‹…‹‡• †‡Ž‹˜‡” ‹Â? ’”ƒ…–‹…‡Ǥ x Improve the efficiency of current performance based maintenance contracts. ÂŽÂŽ –Š‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ™‘”Â?• ™‡”‡ …‘Â?–”ƒ…–‡† ‘—– ‹Â? ͳͻͻͻǡ ™Š‡Â? ˆ‘”…‡ ƒ……‘—Â?– ™‘”Â? —Â?‹–• ™‡”‡ ’”‹˜ƒ–‹œ‡†Ǥ ‹Â?…‡ ’”‹Ž ʹͲͲ͹ –Š‡”‡ ƒ”‡ ͵ͷ …‘Â?–”ƒ…–• ™‹–Š †—”ƒ–‹‘Â? ‘ˆ ʹ͹ Â?‘Â?–Š• È‹Í´ ›‡ƒ”• ͵ Â?‘Â?–Š•ȌǤ •—ƒŽŽ› –Š‡”‡ ƒ”‡ ͷǦͳͲ „‹††‡”• ’‡” …‘Â?–”ƒ…– ˆ‘” ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ǡ „—– ‘Â?Ž› ͳǦ͵ ˆ‘” ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ǥ ÂŽÂŽ –Š‡ ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ …‘Â?–”ƒ…–• ™‡”‡ ”‡…‡Â?–Ž› ”‡„‹† ƒÂ?† ƒ™ƒ”†‡† ƒ– –Š‡ •ƒÂ?‡ –‹Â?‡Ǥ ƒ…Š ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ …‘Â?–”ƒ…– …‘˜‡”• ƒ„‘—– ʹͲͲ Â?Â?Ç¡ ™Š‹…Š ‹• ‘Â? –Š‡ •Š‘”– •‹†‡ –‘ …ƒ’–—”‡ ‡…‘Â?‘Â?‹‡• ‘ˆ •…ƒŽ‡Ǥ Š‡ …‘Â?–”ƒ…– Â?‡–™‘”Â? ‹• ƒŽ•‘ –‘‘ •Š‘”– –‘ ƒŽŽ‘™ ˆ‘” •—ˆˆ‹…‹‡Â?– ’”‡†‹…–ƒ„‹Ž‹–› ƒÂ?† ‡Â?…‘—”ƒ‰‡ ‹Â?˜‡•–Â?‡Â?–• ‹Â? Â?‡…‡••ƒ”› ‡“—‹’Â?‡Â?–•Ǥ Â? ‡ƒ•› ™ƒ› –‘ ‡š’ƒÂ?† –Š‡ …‘Â?–”ƒ…–‡† ”‘ƒ† Â?‡–™‘”Â? ™‘—Ž† „‡ –‘ ‹Â?…Ž—†‡ –Š‡ Ž‘…ƒŽ ”‘ƒ†• ‹Â? –Š‡ …‘Â?–”ƒ…–•ǡ –Š—• ‡Â?…‘—”ƒ‰‹Â?‰ –Š‡ „‡Â?‡ˆ‹–• ‘ˆ Š‘”‹œ‘Â?–ƒŽ ‹Â?–‡‰”ƒ–‹‘Â?Ǥ Š‡ •‹œ‡ ƒÂ?† Ž‡Â?‰–Š ‘ˆ –Š‡ …‘Â?–”ƒ…–• †‹•…‘—”ƒ‰‡• …‘Â?’‡–‹–‹‘Â?Ç¡ ƒÂ?† ‘Â?Ž› ‘Â?‡ „‹††‡” ˆ‘” ‡ƒ…Š …‘Â?–”ƒ…– ‹• ˆƒ‹”Ž› …‘Â?Â?‘Â?Ǥ ‘Â?–”ƒ…–‘”• ‘Â? –Š‡ ‘–Š‡” ŠƒÂ?† ™‡”‡ ‘ˆ–‡Â? ’ƒ”– ‘ˆ –Š‡ ”‘ƒ† ƒ‰‡Â?…› ’”‹‘” –‘ ’”‹˜ƒ–‹œƒ–‹‘Â?Ǥ Š—•ǡ –Š‡› ™‡”‡ Â?‘– ‡š’‘•‡† –‘ †‹ˆˆ‡”‡Â?– –‡…ŠÂ?‹“—‡• ƒÂ?† ™ƒ›• ‘ˆ ƒ’’”‘ƒ…Š‹Â?‰ †‹ˆˆ‡”‡Â?– ”‘ƒ† ’”‘„Ž‡Â?•Ǥ ƒ…Â? ‘ˆ –‡…ŠÂ?‹…ƒŽ Â?Â?‘™ǦŠ‘™ǡ ‹Â?ƒ†‡“—ƒ–‡ •–ƒÂ?†ƒ”†• ‹Â?Š‡”‹–‡† ˆ”‘Â? –Š‡ ‘˜‹‡– –‹Â?‡• ƒÂ?† Žƒ…Â? ‘ˆ ˆ‹Â?ƒÂ?…‹Â?‰ ˆƒ…‹Ž‹–‹‡• –‘ Â?‘†‡”Â?‹œ‡ –Š‡ ƒ‰‹Â?‰ ‡“—‹’Â?‡Â?– ˆŽ‡‡– …‘Â?–”‹„—–‡• –‘ •—„‘’–‹Â?ƒŽ ”‘ƒ† Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ǥ Š‡•‡ ‹••—‡• Šƒ˜‡ „‡‡Â? ”‡˜‹‡™‡† ƒ Â?—Â?„‡” ‘ˆ –‹Â?‡• „› ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ …‘Â?•—Ž–ƒÂ?–•ǡ ™Š‹…Š ’”‘’‘•‡† ƒŽ–‡”Â?ƒ–‹˜‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ •–ƒÂ?†ƒ”†• ™Š‹…Š ƒ”‡ ƒ†‡“—ƒ–‡ ƒÂ?† ƒˆˆ‘”†ƒ„Ž‡ ˆ‘” ‡‘”‰‹ƒǤ ‘™‡˜‡” –Š‡ •–ƒÂ?†ƒ”†• Šƒ˜‡ Â?‘– ›‡– „‡‡Â? ƒ’’”‘˜‡†Ǥ —””‡Â?–Ž› –Š‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ™‘”Â?• ƒ”‡ •—’‡”˜‹•‡† „› …‘Â?•—Ž–ƒÂ?–•Ǥ ‘Â?’‡–‡Â?…‡ ‡š‹•–• ˆ‘” –Š‡ •—’‡”˜‹•‹‘Â? ‘ˆ ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ …‘Â?–”ƒ…–•Ǥ Š‹• ‹• ‹Â? ’ƒ”– „‡…ƒ—•‡ ’ƒ˜‡Â?‡Â?– •–ƒÂ?†ƒ”†•ǡ ™Š‹…Š ™‡”‡ ’”‡’ƒ”‡† —Â?†‡” –Š‡ ƒÂ?Â?Ǧˆ‹Â?ƒÂ?…‡† ‹‰Š™ƒ› ”‘Œ‡…–ǡ ƒ”‡ „‡‹Â?‰ —•‡† „—– Â?‘– ˆ‘”Â?ƒŽŽ› ƒ’’”‘˜‡†Ǥ —’‡”˜‹•‹‘Â? ‘ˆ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ™‘”Â?• ‹• ’‘‘” ˆ‘” •‡˜‡”ƒŽ ”‡ƒ•‘Â?• ™Š‹…Š ‹Â?…Ž—†‡ ‰‹˜‹Â?‰ Š‹‰Š‡” ’”‹‘”‹–› –‘ Žƒ”‰‡” ™‘”Â?•ǡ Žƒ…Â? ‘ˆ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ •–ƒÂ?†ƒ”†•Ǣ ƒÂ?† ‹Â?•—ˆˆ‹…‹‡Â?– –‡…ŠÂ?‹…ƒŽ …ƒ’ƒ…‹–›ǡ ‹Â?…Ž—†‹Â?‰ …‘Â?–”ƒ…–‘” …ƒ’ƒ…‹–›Ǥ ˆ ƒ†‡“—ƒ–‡Ž› ˆ—Â?†‡†ǡ –Š‡ ‡š‹•–‡Â?– ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ •—’‡”˜‹•‹Â?‰ …‘Â?’ƒÂ?‹‡• Šƒ˜‡ –Š‡ …‘Â?’‡–‡Â?…‡ –‘ Â?‘˜‡ ‘Â? –‘ •—’‡”˜‹•‹Â?‰ ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡Ǥ ƒ•‡† ‘Â? –Š‡ ƒ„‘˜‡ –Š‡  •Š‘—Ž†ǣ ȋƒȌ †‘’– –Š‡ ”‡…‘Â?Â?‡Â?†‡† Â?ƒ‹Â?–‡Â?ƒÂ?…‡ •–ƒÂ?†ƒ”†• ȋ„Ȍ š–‡Â?† –Š‡ ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ …‘Â?–”ƒ…–• –‘ ͷǦ͹ ›‡ƒ”•ǡ ƒÂ?† †‘ Â?‘– „‹† ƒŽŽ –Š‡ …‘Â?–”ƒ…–• ‹Â? –Š‡ •ƒÂ?‡ ›‡ƒ”Ǥ È‹Â…ÈŒ š’ƒÂ?† –Š‡ ’”‘ˆ‡••‹‘Â?ƒŽ …ƒ’ƒ…‹–› ‹Â? –Š‡ ”‡‰‹‘Â?ƒŽ ‘ˆˆ‹…‡• –‘ „‡ …ƒ’ƒ„Ž‡ ‘ˆ •—’‡”˜‹•‹Â?‰ –Š‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ …‘Â?–”ƒ…–•ǡ ‘” ‘—–•‘—”…‡ •—’‡”˜‹•‹‘Â? ‘ˆ –Š‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ …‘Â?–”ƒ…–•Ǥ ȋ†Ȍ ”ƒ‹Â? –Š‡ ”‡‰‹‘Â?ƒŽ ‘ˆˆ‹…‡• –‘ ƒ••—Â?‡ –Š‡ Â?’Ž‘›‡” ˆ—Â?…–‹‘Â?• ‹Â? –Š‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ …‘Â?–”ƒ…–•Ǥ ȋ‡Ȍ Â?…Ž—†‡ –Š‡ Ž‘…ƒŽ ”‘ƒ†• ‹Â? –Š‡ ”‘—–‹Â?‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ …‘Â?–”ƒ…–•Ǥ Š‹• …‘—Ž† „‡ †‘Â?‡ ‹Â? –™‘ ™ƒ›•ǣ ȋ‹Ȍ Â?‘˜‡ –Š‡ Ž‘…ƒŽ ”‘ƒ†• „ƒ…Â? –‘  ǯ• ĠÂ?‹Â?‹•–”ƒ–‹˜‡ ƒÂ?† Â?ƒÂ?ƒ‰‡Â?‡Â?– ”‡•’‘Â?•‹„‹Ž‹–›Ǣ ‘” ȋ‹‹Ȍ ‡Â?–‡” ‹Â?–‘ Â?ƒÂ?ƒ‰‡Â?‡Â?– …‘Â?–”ƒ…–• „‡–™‡‡Â? –Š‡ Ž‘…ƒŽ ‰‘˜‡”Â?Â?‡Â?–• ƒÂ?†  ˆ‘” Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‘ˆ –Š‡ Ž‘…ƒŽ ”‘ƒ†•Ǥ Š‡ ˆ‘”Â?‡” ™‘—Ž† Šƒ˜‡ –Š‡ ƒ†˜ƒÂ?–ƒ‰‡ ‘ˆ Œ‘‹Â?– ’”‹‘”‹–‹œƒ–‹‘Â? ‘ˆ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ™‘”Â?•ǡ ‰”‡ƒ–‡” ‡ˆˆ‹…‹‡Â?…›ǡ ƒÂ?† ‰”‡ƒ–‡” ‡“—‹–› ‹Â? ˆ—Â?†‹Â?‰Ǥ ͳͲͲ ȋˆȌ ‡˜‹‡™ –Š‡ …—””‡Â?– ”‘ƒ† …Žƒ••‹ˆ‹…ƒ–‹‘Â?Ç¡ ƒÂ?† –Š‡ ’ƒ˜‡Â?‡Â?– ƒÂ?† •–”—…–—”ƒŽ •–ƒÂ?†ƒ”†• –‘ Â?‡‡– ‡‘”‰‹ƒǯ• Â?‡‡†• ƒÂ?† ˆ‹Â?ƒÂ?…‹ƒŽ …ƒ’ƒ…‹–›Ǥ x Introduce further efficiencies with improved contracting methodologies. Š‡ ‘ƒ†• ‡’ƒ”–Â?‡Â?– Šƒ• –Š‡ ‘’’‘”–—Â?‹–› –‘ ƒŽ”‡ƒ†› ‹Â?…”‡ƒ•‡ ‹–• ‡ˆˆ‹…‹‡Â?…› „› ‹Â?–”‘†—…‹Â?‰ ƒÂ?† ƒ’’Ž›‹Â?‰ Â?‘”‡ ‡ˆˆ‹…‹‡Â?– …‘Â?–”ƒ…–‹Â?‰ Â?‡–Š‘†‘Ž‘‰‹‡• ‹Â? –Š‡ ”‘ƒ† •‡…–‘”Ǥ Â?–‡”Â?ƒ–‹‘Â?ƒŽ ‡š’‡”‹‡Â?…‡ •Š‘™• –Šƒ– ”‘ƒ†• …‘Â?–”ƒ…–• „ƒ•‡† ‘Â? ‘—–…‘Â?‡• ȋ’‡”ˆ‘”Â?ƒÂ?…‡Ǧ„ƒ•‡† …‘Â?–”ƒ…–‹Â?‰Ȍ ƒÂ?† Â?‘– ‘—–’—–• ”‡•—Ž– ‹Â? •‹‰Â?‹ˆ‹…ƒÂ?– …‘•– ƒÂ?† ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â? •ƒ˜‹Â?‰•Ǥ Š‡ ƒ„Ž‡ „‡Ž‘™ ‹• ‘Â?‡ ‡šƒÂ?’Ž‡ ‘ˆ ”‡•‡ƒ”…Š †‘Â?‡ ‹Â? Ž‘”‹†ƒǡ  ƒÂ?† …‘Â?’ƒ”‡• –Š‡ ”‡•—Ž– ‘ˆ •‡˜‡”ƒŽ ‘—–…‘Â?‡Ǧ –›’‡ È‹Â?‘Â?Ǧ–”ƒ†‹–‹‘Â?ƒŽȌ …‘Â?–”ƒ…–• –‘ –”ƒ†‹–‹‘Â?ƒŽ ȋ–Š‡ •–ƒÂ?†ƒ”† …‹˜‹Ž ™‘”Â?• …‘Â?–”ƒ…–Ȍ …‘Â?–”ƒ…–• ȋ–ƒ„Ž‡ ͷǤͺȌǤ x Š‡ ƒÂ?Â? ‹• •—’’‘”–‹Â?‰ –Š‡ ˆ‹”•– ‘ˆ –Š‡•‡ …‘Â?–”ƒ…–• ȋ†‡•‹‰Â?Ǧ„—‹Ž† —•‹Â?‰ —–’—– ƒÂ?† ‡”ˆ‘”Â?ƒÂ?…‡Ǧ„ƒ•‡† ‘Â?–”ƒ…–‹Â?‰ Â?‡–Š‘†‘Ž‘‰›Ȍ ƒÂ?†  ‘Â? ƒÂ? ƒ”‡ƒǦ™‹†‡ „ƒ•‹• ‹Â? ƒÂ?Š‡–‹ ”‡‰‹‘Â?ÈŒ ‘Â? ƒ ’‹Ž‘– „ƒ•‹•Ǥ ‘ŽŽ‘™‹Â?‰ •—……‡••ˆ—Ž ‹Â?’Ž‡Â?‡Â?–ƒ–‹‘Â?Ç¡ –Š‡•‡ Â?‡–Š‘†‘Ž‘‰‹‡• …‘—Ž† „‡ ”‘ŽŽ‡† ‘—– ‹Â?–‘ –Š‡ ‰‘˜‡”Â?Â?‡Â?– ’”‘‰”ƒÂ?• ‹Â? ˆ—–—”‡ ›‡ƒ”•ǡ ”‡•—Ž–‹Â?‰ ‹Â? •‹‰Â?‹ˆ‹…ƒÂ?– …‘•– •ƒ˜‹Â?‰•Ǥ Table 5.8: Value for Money: Cost and Time Savings: State of Florida 1997Ǧ1998 ȋ‹Â? †‘ŽŽƒ”•ǡ ’‡”…‡Â?– ƒÂ?† †ƒ›•ǡ ĥ Â?‘–‡†Ȍ NonǦTraditional Percent Percent Number of Construction Contract Contracting Cost Time Contracts Award ($) Days Technique Overrun Overrun Ϊ ȋ…‘•–Ǧ’Ž—•Ǧ–‹Â?‡Ȍ Í» Ͷͺǡͷʹ͹ǡʹͺͲ ͵ǤͷΨ ʹǡʹͺ͵ ͺǤͳΨ ‘Â? š…—•‡ ‘Â?—• ͺ ͵Ͳǡͻͻͳǡͻͳͺ ͹ǤʹΨ ʹǡͳͳͲ ͳǤͷΨ Â?…‡Â?–‹˜‡Ȁ ‹•‹Â?…‡Â?–‹˜‡ ͳʹ ʹͺǡͷ͹͹ǡͺͲͲ ͺǤͶΨ ʹǡͺ͵ͷ ͷǤͺΨ ƒÂ?‡ ‡Â?–ƒŽ ͺ ͳ͸ǡͺͶ͹ǡͲͶͺ ǦͶǤͳΨ ͳǡͷ͵ͷ ͷǤ͹Ψ ‹“—‹†ƒ–‡† ƒ˜‹Â?‰• Í» ͳͺǡͳ͹Ͷǡ͹͹͸ ǦͳǤͺΨ ͳǡͳ͹ͳ ͳ͵ǤʹΨ ܠ ˜‡”ƒ‰‹Â?‰ Í´ ͳ͹ǡʹͲͷǡʹͻ͸ ͶǤͷΨ ͹ͻͲ ͹ǤʹΨ —Â?Â’ —Â? ͺ ͹ǡ͹Ͳ͵ǡͻ͵Ͷ ǦͲǤ͹Ψ ͻͳͷ ͳ͸ǤͲΨ All NonǦTraditional 56 168,028,054 3.6% 11,639 7.1% Contracts Traditional LowǦBid 375 1,162,868,676 12.4% 87,861 30.7% Contracts Source: Batelle, PerformanceǦbased contracting for the Highway Construction Industry, Feb 2003 5.7. Conclusion: the way forward The analysis in this chapter indicates that Georgia can move forward along one of several paths in managing its road investment program. Â? –Š‡ ‘Â?‡ ŠƒÂ?† ‹• –Š‡ ’ƒ–Š ‘ˆ …‘Â?–‹Â?—‡† ‹Â?ƒ†‡“—ƒ–‡ ƒŽŽ‘…ƒ–‹‘Â?• ˆ‘” ”‘—–‹Â?‡ ƒÂ?† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ǡ ™‹–Š –Š‡ „—†‰‡– ˆ‘” –Š‡ Žƒ––‡” Â?‹š‡† ‹Â? ™‹–Š ƒÂ?† –Š—• …”‘™†‡† ‘—– „› –Š‡ „—†‰‡– ˆ‘” ”‡Šƒ„‹Ž‹–ƒ–‹‘Â?Ǥ Š‹• ’ƒ–Š ‹• ƒŽ•‘ ƒ••‘…‹ƒ–‡† ™‹–Š …‘Â?–‹Â?—‡† ˆ‘…—• ‘Â? ‹Â?–‡”Â?ƒ–‹‘Â?ƒŽ ”‘ƒ†•ǡ ™‹–Š Â?‡‰Ž‡…– ‘ˆ –Š‡ •‡…‘Â?†ƒ”› ƒÂ?† Ž‘…ƒŽ Â?‡–™‘”Â?Ǥ Ž‘Â?‰ –Š‹• ’ƒ–Šǡ ‹Â?ƒ†‡“—ƒ–‡ Â?ƒ‹Â?–‡Â?ƒÂ?…‡ Ž‡ƒ†• –‘ ’”‘‰”‡••‹˜‡ †‡–‡”‹‘”ƒ–‹‘Â? ‘ˆ –Š‡ ”‘ƒ† Â?‡–™‘”Â?Ç¡ –Š—• ”‡•—Ž–‹Â?‰ ‹Â? Ž‘™‡” ’”‘†—…–‹˜‹–› ‘ˆ —•‡”• ƒÂ?† Š‹‰Š‡” …‘•–• ˆ”‘Â? Šƒ˜‹Â?‰ –‘ •—„•‡“—‡Â?–Ž› ”‡…‘Â?•–”—…– ‘” ”‡Šƒ„‹Ž‹–ƒ–‡ ”‘ƒ†•Ǥ Ž‘Â?‰ –Š‹• ’ƒ–Šǡ Â?—…Š ‘ˆ –Š‡ •‡…‘Â?†ƒ”› ƒÂ?† Ž‘…ƒŽ Â?‡–™‘”Â? ”‡Â?ƒ‹Â?• ‹Â? ’‘‘” …‘Â?†‹–‹‘Â?Ç¡ –Š—• ‹Â?’‡†‹Â?‰ ‰”‘™–Š ƒÂ?† ‡Â?’Ž‘›Â?‡Â?– ‰‡Â?‡”ƒ–‹‘Â? ‹Â? ”—”ƒŽ ƒ”‡ƒ•Ǥ Â? –Š‡ ‘–Š‡” ŠƒÂ?† ‹• –Š‡ ’ƒ–Š ™Š‡”‡ ”‘—–‹Â?‡ ƒÂ?† ’‡”‹‘†‹… Â?ƒ‹Â?–‡Â?ƒÂ?…‡ ‡š’‡Â?†‹–—”‡• ƒ”‡ ”ƒ‹•‡† –‘ Ž‡˜‡Ž• ”‡…‘Â?Â?‡Â?†‡† „›  ƒÂ?† ‘—–Žƒ›• ˆ‘” Â?‡™ …‘Â?•–”—…–‹‘Â? ƒÂ?† ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒ”‡ ”‡„ƒŽƒÂ?…‡† –‘ ”‡†—…‡ –Š‡ „ƒ…Â?Ž‘‰ ‘ˆ –Š‡ •‡…‘Â?†ƒ”› Â?‡–™‘”Â? ‹Â? ’‘‘” …‘Â?†‹–‹‘Â?Ǥ ’”‹‘”‹–› •—„•‡– ‘ˆ Ž‘…ƒŽ ”‘ƒ†• ‹• ‹†‡Â?–‹ˆ‹‡† ˆ‘” ”‡Šƒ„‹Ž‹–ƒ–‹‘Â? ƒÂ?† –Š‡ Â?‡…‡••ƒ”› ˆ‹Â?ƒÂ?…‹Â?‰ ‹• ’”‘˜‹†‡†Ǥ Ž‘Â?‰ –Š‹• ’ƒ–Šǡ –Š‡ Â?‡†‹—Â? –‘ Ž‘Â?‰ –‡”Â? ͳͲͳ …‘•–• ‘ˆ Â?ƒ‹Â?–ƒ‹Â?‹Â?‰ ƒÂ?† —’‰”ƒ†‹Â?‰ –Š‡ ”‘ƒ† ‹Â?˜‡•–Â?‡Â?– ’”‘‰”ƒÂ? ‹• Ž‘™‡” ƒÂ?† ’”‘†—…–‹˜‹–› ‘ˆ ”‘ƒ† —•‡”• ”‹•‡• –‘ …‘Â?–”‹„—–‡ –‘ ‡‘”‰‹ƒǯ• ‰”‘™–Š ƒÂ?† †‡˜‡Ž‘’Â?‡Â?– ‘„Œ‡…–‹˜‡•Ǥ ……‡•• –‘ ‡†—…ƒ–‹‘Â?Ç¡ •‘…‹ƒŽ „‡Â?‡ˆ‹–•ǡ ƒÂ?† ‡Â?’Ž‘›Â?‡Â?– ‘’’‘”–—Â?‹–‹‡• ‹• ‡Â?ŠƒÂ?…‡† ‹Â? ”—”ƒŽ ƒ”‡ƒ• ƒÂ?† –Š‡ ‰‡‘‰”ƒ’Š› ‘ˆ ‰”‘™–Š †”‹˜‡”• ‹• „”‘ƒ†‡Â?‡† ™‹–Š‹Â? ‡‘”‰‹ƒǤ Š‡ ‘’–‹‘Â?• …‘Â?•‹†‡”‡† ‹Â? –Š‹• …Šƒ’–‡” ƒ”‡ ‹Â?–‡Â?†‡† –‘ Â?‘˜‡ ‡‘”‰‹ƒ †‘™Â? –Š‡ Žƒ––‡” ’ƒ–Š ĥ ‹– Â?ƒÂ?ƒ‰‡• ‹–• ‹Â?’‘”–ƒÂ?– ”‘ƒ† †‡˜‡Ž‘’Â?‡Â?– Â?‡‡†•Ǥ ͳͲʹ