2012年-世界发展银行全球_Georgia_-_Managing_Expenditure_Pressures_for_Sustainability_and_Growth___Public_Expenditure_Review_120页_1mb

Summary of Georgia Public Expenditure Review (Report No. 73701-GE)

Core Content

This Public Expenditure Review (PER) evaluates the fiscal consolidation efforts in Georgia and suggests policy options to manage expenditure pressures while supporting sustainable growth. The report outlines strategies for reducing the overall fiscal deficit, improving the efficiency of public spending, and addressing the needs of an aging population, social assistance, and infrastructure development.

Main Points

1. Macroeconomic Context and Fiscal Adjustment

• Economic Growth: Georgia experienced strong economic growth from 2010 to 2011, reaching 6.7% annually.
• Fiscal Consolidation: The fiscal deficit was reduced from 9.2% of GDP in 2009 to 3.6% in 2011.
• Challenges: Despite progress, Georgia faces medium-term macro-fiscal challenges, including a large external current account deficit (11.8% of GDP in 2011) and significant external repayment obligations (about $2.5 billion for 2012–14 or 5% of GDP per year).
• Global Vulnerability: The country remains vulnerable to global economic downturns, especially due to the euro-zone crisis.
• National Savings: National savings are insufficient to finance necessary investments and exports have not yet become a growth engine.

2. Social Protection Expenditures

• Pension System: The basic publicly funded pension benefit is a major source of social expenditure, with a flat rate for all recipients.
• Social Assistance: There is a need to improve coverage and effectiveness of social assistance (TSA) programs for the poor.
• Health Expenditures: Health spending is necessary to improve outcomes and financial protection against out-of-pocket payments.
• Policy Options:
  • Limit pension growth to the rate of inflation to avoid unsustainable increases.
  • Develop voluntary savings mechanisms to ease pressure on the basic pension benefit.
  • Improve targeting and coverage of social assistance and health insurance programs.
  • Link social assistance recipients to employment and human capital investments.

3. Capital Budgeting and Infrastructure

• Capital Expenditures: These are essential for addressing infrastructure needs, especially in roads, water, and energy.
• Road Sector: The main East-West Highway needs continued investment, while the secondary and local road network requires rehabilitation.
• Efficiency and Sustainability: The report suggests improving the efficiency and sustainability of the road investment program through institutional arrangements and maintenance focus.

4. Policy Options for Expenditure Management

5. Fiscal Adjustment and Expenditure Composition

• Fiscal Adjustment: In 2010–11, fiscal adjustment was mainly through current expenditure consolidation, reducing it from 30% to 23.3% of GDP.
• Capital Expenditure: Capital expenditure remained at 8.5–9% of GDP, but is expected to decline to 7.2% by 2015.
• Future Strategy: Continued fiscal consolidation will require balancing infrastructure and social spending, with a focus on selectivity and efficiency in capital expenditures.

6. Key Challenges

• Aging Population: The aging population puts pressure on the pension system and social expenditures.
• Low National Savings: National savings are low, at 14% of GDP in 2011, and the real exchange rate has appreciated, potentially reducing competitiveness of tradables.
• Infrastructure Needs: Significant infrastructure development is required, particularly in roads, water, and rural areas.
• Social Expenditure Pressures: High unemployment and the need to improve health outcomes and social assistance coverage add to the pressure.

Key Information

• Fiscal Deficit: Projected to decrease from 3.6% of GDP in 2011 to 2.1% by 2015.
• Current Expenditures: Expected to decline from 23.3% to 21.8% of GDP by 2015.
• Capital Expenditures: Expected to decline from 8.9% to 7.2% of GDP by 2015.
• Social Expenditures: Pension expenditures account for 3.3% of GDP in 2011 and could rise to over 7% of GDP in the medium term without adjustments.
• Policy Impact: The proposed options could reduce expenditure pressures by about 2.8% of GDP by 2015, preventing overall expenditures from rising to 31.8% instead of 29%.
• Public Cooperation: The report was prepared in collaboration with government officials and benefits from input and review by various experts and institutions.

Conclusion

The PER emphasizes the importance of continued fiscal consolidation and suggests a range of policy options to manage expenditure pressures effectively. These options aim to improve the sustainability and efficiency of public spending, particularly in the road and social sectors, while ensuring that the fiscal adjustment supports long-term growth and development outcomes.