Structural Reforms

·                            Assess magnitude and share smuggled goods and those manufactured in informal sector of the econ­omy by various commodity groups

Ministry of Economy, Indus­try and Trade; State Department of Statistics

Support for initiatives to reduce smuggling and the shadow econ­omy

Reduction in smuggling and in the shadow economy

Trade Facilita­tion Project; Private Sector Development Project; Public Sector Reform Project; PRSC in High Case

USAID

Increase in tax revenues, including increase in reve­nues from petroleum prod­ucts and cigarettes to over 2.5% of GDP

·                            Develop proposals to encour­age investment

Ministry of Economy, Indus­try and Trade; Ministry of Fi­nance; Ministry of Justice

Intensified dialogue with Government on reform of the banking system as a means of improving the invest­ment climate

Increase in banks’ capitaliza­tion; better corporate govern­ance principles and internal control systems; expansion of banking networks; real time banking settlement; anti-money-laundering legislation; deposit insurance introduced

Private Sector Development Project; Financial Sector Advi­sory Program; Business Envi­ronment Study

USAID

IMF

FIRST

Minimum capital raised to €3.5m; im­proved confidence in bank­ing system; better access to finance; anti money laun­dering regulations in compli­ance with FATF require­ments

·                            Implement export promo­tion measures

Ministry of Economy, Indus­try and Trade; Ministry of Finance

Support for removal of institutional (govern­ance) obstacles to ful­filling Georgia’s Export Potential

Progress in implementing rec­ommendations of Trade Study/Workshop

Trade and Transport Facili­tation Project; Private Sector Development Project; Business Environment Study; Rural Development Project

USAID

Improved perception of environment for exporters in business surveys

Human Capital Development

Improvement of Health

·                            Revise government commit­ments in healthcare sector to ensure full financing

Ministry of Labor, Health­care and Social Protection; Ministry of finance

Assist government to define health financing strategy focusing on improvements in mobi­lization, allocation and management of public and private resources, help build government capacity in evidence based policy-making, planning, monitoring and evaluation, as well as regulation

Definition of basic benefit package, financing methodol­ogy and co-payments, as well as recurrent costs; improved resource mobilization and allocation, including introduc­tion of incentive-compatible provider payment systems

Health Sector Note, JSDF Grant on community health insurance

JSDF SIDA

DFID WHO

Definition of basic benefit package, financing methodology, co-payments, and recurrent costs; better resource mobilization and allocation, including introduction of incentive-compatible provider payment systems

Improvement of Education

·                            Develop programs for basic education

Ministry of Edu­cation, Ministry of Culture

Improving quality of education and access of the poor

Stakeholders actively engaged in improving education quality and outcomes

Education Project

SOROS

97 percent enrollment in basic education for the poorest quintile; 60% of consolidated education ex­penditures continue to be allocated to pri­mary/secon­dary education

Improvement of Social Risks Management

·                            Definition of nature and periodicity of government commitments in the social sector to ensure full financ­ing

Ministry of La­bor, Healthcare and Social Pro­tection; State Social Security Fund; Ministry of Finance

Timely execution of Government obligations in the social sectors; fiscal affordability and sustainability

No-arrears in social transfers, increased poverty alleviation impact

Public Expen­diture Re­views, PRSC in High Case

No new arrears; poverty incidence decreased by 6 percentage points

·                            Enforce package of draft bills on compulsory social insurance

Ministry of Labor, Health­care and Social Protection, State Social Secu­rity Fund

Support to implemen­tation of social insur­ance system

Better performance of the pen­sion system

Social Protec­tion Reform Project

No pension arrears; financ­ing of social insur­ance/assistance benefits separated

·                            Phased increase of pensions

Ministry of Labor, Health­care and Social Protection, State Social Secu­rity Fund

Dialogue on pension policies

Increase in pensions

Public Expen­diture Re­views; Social Protection Reform Pro­ject

Average real pension in­creased by 20%; extreme poverty among elderly re­duced

·                            Fiscal sustainability of pen­sion system based on com­pulsory social insurance

Ministry of Labor, Health­care and Social Protection, State Social Secu­rity Fund

Dialogue on pension policies

Satisfactory performance of the pension system

Public Expen­diture Re­views; Social Protection Reform Pro­ject

Improved fiscal sustainabil­ity of  pension system

Development of Priority Branches of the Economy

Energy and Infrastructure

·                            Reorganize electricity whole­sale market to resume the functions of financial and technical operator

Ministry of Fuel and Energy

Support for direct con­tracts between genera­tors and large end con­sumers, subject to transparent terms and implementation

Direct contracts between gen­erators and large end consum­ers

EMSP

EBRD

KfW

USAID

Electricity market success­fully reorganized

·                            Amend tariff policy in line with model of wholesale market and consider liber­alization of prices

Ministry of Fuel and Energy; Energy Regula­tory Commis­sion; Ministry of Economy

Tariff policy; adequate appropriations to en­ergy in state budgets

Lower commercial losses; state budgets fully cover en­ergy costs; higher collections by state energy companies in distribution, transmission; improved financial viability

EMSP

EBRD

IMF

KfW

USAID

Cash payment collections at the wholesale electricity market above 65%; dis­semination to public of de­tailed sector performance indicators

·                            Approve strategy to manage energy sector debts

Ministry of Fuel and Energy, Ministry of Fi­nance

Establishment of a pro­fessional Debt Re­structuring Agency for the power sector

Legacy debt no longer a threat to the financial viability of the power sector

EMSP

EBRD

IMF

KfW

USAID

Debt Restructuring Agency led by international experts in full operation; legacy debt issue resolved

·                            Transfer energy sector com­panies, including National Distribution Company, un­der management contract in accordance with existing strategy

Ministry of Fuel and Energy

Georgian Unified Dis­tribution Company (GUDC) under long-term management con­tract

GUDC under long-term man­agement contract

EMSP

EBRD

KfW

USAID

GUDC under long-term management contract; other management contracts fully operational

·                            Improve transport regulatory administration

Ministry of Transport and Communication

MOTC restructuring

Improved functioning of re­structured MOTC

Secondary Roads Project; Transport Fa­cilitation Pro­ject

SDRG restructured and road financing arranged to pro­vide stable source for road funding to maintain and improve roads 

·                            Technical monitoring of emergency conditions, re­store status of premises and constructions of strategic importance and special complexity of the energy, transportation, communica­tion and construction infra­structure as well as those damaged from earthquakes

Ministry of Economy, In­dustry and Trade, Ministry of Fuel-Energy, Ministry of Transportation and Communi­ca­tion, State Department of Highways

Development of road data bank for SDRG to take prompt, cost-ef­fective action in emer­gencies

The data bank is used to pri­oritize annual road program

Secondary Roads Project; Transport Fa­cilitation Pro­ject

Road data bank in use and SDRG expanded to cover local rural roads

·                            Improve implementation of road construction plan, identify strategic projects and sources of financing

State Depart­ment of High­ways

Road construction plan, equipping SDRG with tools to develop and manage the plan

5 year rolling plan a standard procedure in SDRG

Secondary Roads Project; Transport Fa­cilitation Pro­ject

EU, Kuwait Devel­opment Fund

Performance indicators to be developed in Secondary Roads project

·                            Form information network covering the entire country

State Depart­ment of Infor­mation

Improving  rural access to tele­communications services

Better and more affordable access by the rural population to telecommunications

Rural Tele­communica­tions Project

Higher proportion of the rural population having af­fordable access to telecom­munications

Tourism

·                            Prepare special program to attract additional funding from international donor or­ganizations to develop tour­ism

State Depart­ment of Tour­ism and Resorts

Development of com­munity-based tourism

Realistic development strategy for tourism -- especially com­munity-based tourism -- that promotes broad-based local development, reduces admin­istrative barriers to tourism, and supports preservation

Community-based tourism

Realistic development strat­egy for community-based tourism, including reduced administrative barriers and more focus on preservation

Agriculture and Food

·                            Establish water consumer associations in rural areas

Ministry of Agri­culture, Meliora­tion System Man­agement De­partment

Support to establishing new, and strengthening existing, water users associations to manage irrigation facilities

More and better functioning water user associations

Irrigation and Drainage Re­habilitation Project

EU

TA­CIS

Legal framework for WUAs established; number of wa­ter user associations regis­tered increased

·                            Develop unified geographic computer system of land ca­dastre and registration

Ministry of Agri­culture and Food, State Department of Land Man­age­ment

Support to strengthen­ing capacity of State Department of Land Management to  carry out land registration based on cadastre sur­vey

Increased capacity of State Department of Land Manage­ment

Agriculture Development Project

IFAD, USAID KfW

Eleven land registration centers established; satellite imagery used for titling in mountainous regions

·                            Establish private veterinary services

Ministry of Agri­culture and Food, Veteri­nary Depart­ment

Dialogue with Gov­ernment on Veterinary reforms 

Law to establish private vet­erinarians passed

ARET

USAID

Government starts veteri­nary reform process

·                            Structural reorganization of plants protection services

Ministry of Agri­culture and Food, Plant Pro­tection Service

Discussion with MAF on reform of plant pro­tection services 

Follow-up to merging of three agencies into a single plant protection agency

ADP

USAID

Reduced illegal trade of agro-chemicals; relevant laws passed