Delegation of the European Union to Georgia

The European Union transfers EUR 43.95 million to Georgian treasury in support of reforms

Tbilisi, 09/01/2017 - 08:13, UNIQUE ID: 170109_4
Press releases

The European Union (EU) has just granted EUR 43.95 million of non-reimbursable aid to Georgia in support of reform progress in several sectors: trade and business development, vocational education and employment, agriculture, and integration of internally displaced people (IDPs). Payments were also made for Georgia's justice sector, public administration, public finance management and regional development policy.

After assessing the situation in each sector, the EU has concluded that progress was achieved in the following areas:

  1. Support to EU-Georgia Deep and Comprehensive Free Trade Area (DCFTA) and Small and Medium sized Enterprises (SMEs): EUR 6 million are paid to Georgia's state budget in support of implementation of Georgia's free trade agreement with the EU (DCFTA) and to help Georgian businesses seize the trade potential with the EU.

  2. Employment and Vocational Education and Training (EVET): The EUR 3.75 million payment is made to enhance reforms in employment, vocational education and training. This budget support is part of wider EU sectoral assistance, which aims to improve the transition from training to employment, so that people get better job opportunities.

  3. Agriculture (ENPARD I): EUR 6.5 million are transferred to Georgia's state budget in support of agriculture and rural development as last part of budget support under the first stage of ENPARD in Georgia. ENPARD I focused on the establishment of cooperatives, extension services at district level, capacity building for small farmers and promotion of rural development initiatives at grassroots level. ENPARD I also supported the Ministry of Agriculture in implementation of the Strategy for Agricultural Development, as well as other institutions involved in agriculture.

  4. Support to conflict-affected/displaced population and its host communities in Georgia: This EUR 3 million payment into Georgia's state budget is a last phase of EU's Programme dedicated to integration of internally displaced people (IDPs) from Abkhazia and South Ossetia. The Programme focused on providing housing and grant support to IDPs to help them develop their livelihoods as independent sources of income, which in turn would reduce their dependency on the host communities. Part of funding was directed to help Georgia with reconstruction works after Tbilisi floods in 2015.

  5. Support to reforms in the Justice sector: This EUR 5.5 million payment adds to an earlier EUR 3 million paid in the third quarter of 2016 and aims to improve people's access to justice and step up support to child-friendly institutions and processes. Additionally, EU assistance aims to modernize prosecution and investigation services, as well as promote resocialization of prisoners and probationers. Finally, this contribution shall also help develop proper registration of land plots in Georgia. 

  6. Public Administration Reform: EUR 4 million are paid into the state budget to improve efficiency, accountability and transparency of the public administration in Georgia. This is a first payment under an EU Programme dedicated to better policy making, professional merit-based civil service, increased accountability and transparency in the public sector, better services to citizens and businesses, as well as improvement of local governance.  

  7. Support to Public Finance Policy Reforms (PFPR) in Georgia: EUR 6.2 million shall support implementation of reforms in public finance management. Specifically, this payment focuses on progress in policy-based budgeting, fiscal governance, strengthened accountability of the government, improved public internal financial control and audit, strengthened mandate and performance of the State Audit Office, as well as improved oversight and communication of the budget.

  8. Support to Regional development policy implementation in Georgia: EUR 9 million are paid into Georgia's state budget in promotion of regional cohesion, strengthening policy framework at national and local levels, enforcement of financial management and control and improved management capacities and information systems.

Background:

Budget support is an instrument for EU's cooperation with partner countries. It involves direct financial transfers to the state budget of the partner country. It is conditional in a sense that the partner country's government must show progress in policy dialogue, performance assessment and capacity building in a given sector.

EU's budget support depends on continuous satisfactory track record of implementing macroeconomic policies, public financial management and budget transparency. It is performance related - it is only disbursed when agreed conditions for results are met – for example targets in SME development, education, public financial management, etc.
If the Commission considers performance on any of these points is insufficient, it withholds a part or the whole disbursement until credible reassurances or measures have been established.
This is a way of fostering partner countries' ownership of development policies and reforms, and addressing the source, not the symptoms, of underdevelopment.

Around 30% of all EU's budget support goes to the Neighborhood countries, including Georgia. Most budget support for Georgia is part of wider support to specific sectors and is combined with grants to specific projects, for example grants and technical help for cooperatives under the ENPARD Programme.

 

For more information, please contact:

Tamriko Mikadze, press and information officer, EU Delegation to Georgia

Tamriko.mikadze@eeas.europa.eu

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