World Bank ranks Georgia first for public finance management system

Georgia has been ranked first among 59 countries for the "continuous improvement" of performance in Public Expenditure and Financial Accountability Assessment, an index compiled by the World Bank, the Ministry of Finance of Georgia announced on Wednesday.

The 2022 PEFA Assessment said the public financial management systems in the country were strong and had continued to improve since the previous assessment in 2018. 

In its assessment, the World Bank said while the Covid-19 pandemic had made a negative impact on the aggregate expenditure of the Georgian budget, there had been an "array of improvements" in the development, execution, management, and oversight of public finances. 

• Open Budget Survey: Georgia 1st in world by budget transparency

The PEFA’s key highlights for Georgia include the following: 

• 27 out of 31 indicators improved or were maintained in 2022 compared to 2018 PEFA scores
• The law on State Procurement recently was modified “considerably” and made compatible with EU legislation and international good practice
• “Significant” changes have been made with respect to the procurement complaints procedures 
• Increased finance management support for some municipalities
• There is an expansive array of information regarding the finances of the budgetary central government 
• Information is included in the budget on a timely basis 
• A “comprehensive and inclusive” process has been implemented in managing the public investment programme  
• A debt management strategy has been produced and approved which underscores a “strong focus” on managing debt 
• Progress has been made towards a comprehensive medium-term expenditure framework based on a programme budgeting for results approach
• There is an effective budget calendar which provides budgetary units adequate time to prepare their budgets as well as the legislature to carry out its scrutiny function  
• The internal audit function has improved its coverage reaching virtually all budgetary units; and 
• The previous weaknesses in competitive bidding in the procurement system with respect to the appeals and dispute process has been addressed, which has positive implications for efficiency in service delivery

Presentation of the reports. Photo: World Bank

In addition to the PEFA, the World bank also reviewed the Gender Responsive Public Financial Management assessments of Georgia, conducted by the UN Women for the first time in the country as a set of indicators collecting information on gender-responsive public financial management practices. 

The key findings included the following:

• Most PEFA indicators that concern PFM tools linked to support and promote gender equality scored A (the highest score) in the PEFA assessment. These enable the integration of a gender perspective in the PFM system of Georgia. However, six out of nine GRPFM indicators need to improve on their gender considerations
• Georgia needs to develop and implement a comprehensive Gender Responsive Budgeting framework 
• Georgia’s legislation on PFM needs to integrate gender dimensions “more proactively” 
• Gender Responsive budgeting will require capacity strengthening among civil employees and enhancement of coordination and accountability mechanisms for implementing GRB reform in Georgia 
• There is “significant” potential for the Government of Georgia to strengthen gender responsiveness in the PFM system. Reforms such as fiscal transparency, medium-term budgetary frameworks, and public investment management provide a “solid foundation” upon which GRB reform can build over the medium-term 
• The development of the new PFM strategy to be launched by the Government of Georgia in 2022 provides an “excellent opportunity” to integrate gender equality into the broader public finance management reform agenda 

Sebastian Molineus said the result was "undoubtedly a very impressive achievement" for Georgia. Photo: World Bank

Sebastian Molineus, the World Bank's Regional Director for the South Caucasus, commented on both assessments by saying the result was "undoubtedly a very impressive achievement" for Georgia.

"Since 2018, we have witnessed very strong progress. Instead of 15 directions, there are already 27 cases of the highest (A) grade. In total, there are 31 directions. This result, in my opinion, indicates a very good improvement”, he said.

“This year, we witnessed something new, as we adapted gender aspects to this tool and evaluated the public finance management system in Georgia in this context as well. As we analyse progress in this area, it is clear that a little more work needs to be done and we are pleased to continue our strong partnership with the Ministry of Finance to improve cooperation in this area", Molineus added.