The FINANCIAL — A presentation of the findings of the Georgia Public Expenditure and Financial Accountability (PEFA) Assessment for Municipality of Martvili and Cities of Tbilisi and Batumi was held on November 21. These assessments were launched on May 17 by the World Bank and the European Union at the request of Ministry of Finance and finalized on October 23, 2018 when the PEFA Secretariat confirmed that all quality standards had been met by issuing what is known as “PEFA CHECK”.
Government expenditure at sub-national level is high at six percent of GDP and it accounts for about a fifth of consolidated government expenditures. Local administrations in Georgia are primarily responsible for critical services that include provision of housing, utilities and communal services.
“The PEFA has identified strengths and weaknesses in the municipality systems such that improvements can be made to ensure that resources are effectively and efficiently utilized such that there is more fiscal space for service provision. The PEFA assessment will also provide a solid basis for making recommendations to strengthen Georgia’s PFM Strategy and Action plans for 2018-2021”, said Mercy Tembon, World Bank Regional Director for the South Caucasus.
The PEFA methodology is drawn from international standards and good practices identified by experienced practitioners. To date, close to 600 assessments have been done in 150 countries. The assessment reviews seven pillars of performance of a PFM system that includes: budget reliability; transparency of public finances; management of assets and liabilities; policy-based fiscal strategy and budgeting; predictability and control in budget execution; accounting and reporting; and external scrutiny and audit. These pillars are measured using 31 indicators that contain 94 dimensions.
Sub-National PEFA assessments use the same indicators as the national government PEFA assessments, with some adaptation, plus an additional indicator, “HLG-1,” for assessing transfers and earmarked grants to subnational governments from higher-level governments.
“Today’s event brings an opportunity to discuss strengths and weaknesses of PFM systems at sub-national level that is verified by PEFA methodology. This should enable the national and local authorities to outline medium-term reform priorities being it programme budgeting, medium term planning and intergovernmental fiscal relations, internal controls, project planning and investment management, etc. The PEFA findings should also contribute to the Decentralization Strategy of Georgian that is in the process of finalization”, said Vincent Rey, Head of Cooperation, Delegation of the European Union to Georgia.
A total of 15 municipalities and cities in Georgia have had their PEFA assessments done in 2017 and 2018 . Twelve of these assessments were done by GIZ and three by the World Bank. During the dissemination workshop of the assessment reports for Tbilisi, Batumi and Martvili, a presentation of the Municipality Synthesis Report that analyses the results of the 15 PEFA assessments to identify key strengths and weaknesses has also taken place.
Release by Delegation of the European Union to Georgia