World Bank Supports Georgia’s Efforts to Strengthen Competitiveness and Improve Social Spending

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June 26, 2014

WASHINGTON, June 26, 2014 – The World Bank Board of Executive Directors today approved a US$92.7 million Competitiveness and Growth Development Policy Operation (CG DPO) for Georgia. This is the last operation in the programmatic series of three operations spanning 2012-2014.The previous two DPOs were approved on July 19, 2012 and June 27, 2013.                          

The third competitiveness and growth development policy operation in Georgia will help the government in its efforts to strengthen competitiveness and improve social and fiscal outcomes with the ultimate objective of ending extreme poverty and boosting shared prosperity. These objectives will be achieved through reforms in the areas of trade and trade facilitation, the power sector, education, public financial management, and effectiveness of social spending. 

This third Development Policy Operation in the series is designed to support  the government in helping create jobs by advancing further structural reforms and better targeting of social assistance to those who really need it,” said Henry G. Kerali, World Bank Regional Director for the South Caucasus.Strong government ownership of the program has ensured implementation and sustainability of the DPO program supported by the Bank over the past three years. We look forward to starting a new DPO series from next year.”

The reforms were implemented through policy actions that are anchored in the Country Partnership Strategies for Georgia for periods 2010-2013 and 2014-2017, and are consistent with the government’s new Socioeconomic Development Strategy-2020.

The core sectors covered in this operation are well aligned with the priority sectors in the Government’s strategy. The new government has refocused its reforms towards the social sectors, particularly social assistance, education and health,” said Mona Prasad, World Bank Senior Country Economist for Georgia.  It has also indicated its commitment to the growth strategy focused on investments in the tradable sectors and has expressed full ownership of the policy actions under this operation.”

Reform efforts supported by this operation have been grouped in three pillars. The first supports legislation to increase market access to the European Union (EU) and improve customs efficiency, power sector reliability, and the quality of general education. The second pillar supports improvements in the coverage and transparency of the budget. The third pillar supports improvements in the accessibility and quality of healthcare services and efficiency of targeted social programs.

The policy actions supported by this DPO target the government’s most urgent development challenges.  Export promotion and an increase in foreign direct investments (FDI) are essential for productivity growth and are being targeted through the Deep and Comprehensive Free Trade Area (DCFTA) agreement with the EU. An efficient and reliable supply of energy to domestic businesses and consumers is necessary to improve the business environment. A sound education system and increased access to health care will help develop human capital.  Improved public financial management will promote better policy making and fiscal discipline and will contribute to macroeconomic stability. Finally, improved effectiveness of social spending will help increase assistance to the poor.

Previous development policy operations concentrated on crisis mitigation and structural reforms to ensure post-crisis growth.  The reforms were anchored in improvements to public finances, increased social safety nets, and improvements in the business environment. 

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