EU and World Bank Release Subnational Public Expenditure and Financial Accountability Assessments for Georgian Municipalities
The European Union and the World Bank have released Public Expenditure and Financial Accountability (PEFA) assessments for three Georgian municipalities: Tbilisi, Batumi, and Martvili. These assessments evaluate the effectiveness and efficiency of public finance management (PFM) systems at the subnational level.
The assessments were conducted at the request of the Ministry of Finance and were initiated in August 2022, concluding in November of the same year. In February 2023, the PEFA Secretariat confirmed that all quality standards had been met, and the dissemination workshop of the assessments was held on April 20, 2023.
The assessments follow Georgia's 2022 National PEFA assessment, which was released in December 2022. The findings of the PEFA assessment of 18 local administrations are synthesized in a PEFA Municipality Synthesis Report, which highlights the strengths and weaknesses of their public finance systems. This report serves as a basis for making recommendations to strengthen Georgia's PFM strategy and action plans for 2023-2026.
The 18 local governments that were assessed are Tbilisi, Batumi, Martvili, Akhmeta, Ambrolauri, Baghdadi, Chkhorotsku, Keda, Kharagauli, Tetritskaro, Khulo, Tsalenjikha, Vani, Dmanisi, Lentekhi, Tkibuli, Tsageri, and Khelvachauri.
The PEFA assessments evaluate the PFM systems in these municipalities and cities, which are primarily responsible for critical services such as pre-school education, housing, utilities, and communal services. The assessments review seven pillars of PFM system performance, including 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.
According to the 2022 Georgia national PEFA assessment, the country has improved its PFM systems compared to the 2018 assessment. When compared with 59 countries that had conducted their assessments based on the 2016 PEFA methodology, Georgia ranked first according to the 2022 PEFA Global Report. The 2021 Open Budget Survey, conducted by the International Budget Partnership, also ranked Georgia first among 120 countries in budget transparency.
The PEFA assessments for Tbilisi, Batumi, and Martvili reflect improvements compared to their 2018 assessments, with progress made in transparency of public finances. However, areas of improvement include public consultations on the budget, management of assets and liabilities, policy-based fiscal strategy and budgeting, predictability and control in budget execution, accounting and reporting, audit and scrutiny, and budget reliability.
The European Union and the World Bank express their gratitude for the cooperation of the Municipality of Martvili and Cities of Tbilisi and Batumi, as well as state institutions led by the Ministry of Finance that participated in the assessment. The assessments serve as a tool to ensure that resources are effectively and efficiently utilized, making local administration a more stable and transparent industry for investment.
Title: EU and World Bank Conduct PEFA Assessments to Evaluate Public Finance Management Systems in Georgian Municipalities.