World Bank: Fewer people living in poverty in Georgia

The number of people living in poverty in Georgia is reducing but the country’s government must do more to tackle major social issues, says a new report released by the World Bank today.

Addressing social vulnerabilities within a sustainable macroeconomic framework was Georgia’s biggest macroeconomic challenge, said the Public Expenditures: Selected Fiscal Issues report.

The report pointed out that the Government needed to continue with its good progress in consolidating fiscal expenditures, while it needed to increase the effectiveness of spending and sustain the current progress of continued spending in capital, healthcare and education to enhance sustained growth and ensure job creation to reduce poverty.

Thousands of families in Georgia currently live in poverty but this number was decreasing, said World Bank Regional Director for the South Caucasus Hentry Kerali.

"Georgia has an impressive growth record but social vulnerabilities persist. The reduction in poverty over the past decade is mainly attributable to government transfers, food disinflation and increased earnings. Despite this reduction, large urban-rural disparities persist with rural poverty being nearly double that of urban areas,” said Kerali.

The government has, therefore, made spending on social sectors and agriculture a high priority and has launched a decentralisation reform program to support inclusive growth. This latest Public Expenditure Review assesses the alignment of selected fiscal programs with the government’s social objectives,” he added.

The report showed Georgia’s overall fiscal policy contributed to reducing poverty and improving equity, while the impact of different programs varied. It also showed agriculture programs had generated benefits but there was still plenty to improve on. Furthermore, the country’s decentralisation reform had significant implications for subnational fiscal policies; and the Public Expenditure Review suggested policy recommendations in these areas.

"The Public Expenditure Review has shown that the increased social spending by the Government has had the positive impact on the poverty level. The targeted social assistance in Georgia is working well. It is helping to reduce poverty, particularly for people in the bottom percentage of the income profile,” said Kerali.

"The second part of the review also looked at our expanding in agriculture. It found that the agriculture programs overall have a positive impact on incomes in the rural areas, particularly since we know that 50 percent of Georgia’s population is actually in the agriculture sector. Nevertheless, it found that there could be some improvements to the agriculture programs to make it more efficient.”

The third part of the Public Expenditure Review looked at subnational programs and it found that the Bank needed to support the Government to better target its spending, particularly to increase the effectiveness of preschool education but also to insure that the subnational Government maintained the minimum level of spending on capital expenditures, particularly infrastructure, noted Kerali.

We also looked at poverty figures and we see that poverty in general in Georgia has been decreasing. Nevertheless, there could be more ways to increase the spending towards poor, for example by better targeting taxes,” he added.

The report stated the key champion of expenditure reforms was Georgia’s Ministry of Finance, but the role of line ministries and their capacity to align sectoral strategies with development priorities and the fiscal envelope was "crucial”. It was also important to recognise that different kinds of reform required varying lengths of time for preparation and implementation, said the report.