Delegation of the European Union to Georgia

EU transfers GEL 110 million (EUR 36.8 million) to Georgia in support of reforms

17/01/2019 - 10:56
News

EU funds are transferred in exchange for Government progress in 2017 and 2018 in areas of agriculture and rural development, justice, public administration reform, legal approximation and business support, and education and labour market policies.

The European Union (EU) has transferred GEL 110 million (EUR 36.8 million) to the Government of Georgia in acknowledgement of Government reform progress in the areas of agriculture and rural development, justice, public administration reform, legal approximation and business support, and education and labour market policies. These reforms were conducted in 2017 and 2018.

All reform targets are commonly agreed in advance, and assessment of their achievement is based on independent reports. The EU transfers are grants and do not need to be reimbursed by the Government.

EU Ambassador to Georgia, Carl Hartzell: "EU cooperation with the Government through our sector reform performance contracts allows the Government to achieve results that would not be possible without our funding. Our annual assessments show the substantial impact these programmes achieve, as for example the improved access to legal aid, increasing compliance with EU standards in food and labour safety, and extended support to business development. This support is creating tangible improvements in the lives of Georgians and I look forward to continuing cooperation in the years to come."

 

The specific achievements by sector are as follows:

Agriculture and Rural Development - The EU welcomes the following achievements by the Government in 2017:

  • Strengthening the Agriculture sector in Georgia by:
    • Initiating electronic data collection for agricultural surveys allowing efficient collection, storage and use of data;
    • Conducting an awareness campaign on sustainable and resilient agriculture amongst farmers throughout Georgia, with publications, videos and trainings;
    • Ensuring that 88% of seed lots of wheat and barley are registered for certified production in line with Seed Law;
  • Improving food safety standards in Georgia through:
    • Ensuring a significant portion (over 21,000) of Food Business Operators are registered in Register of Economic Activities and with the National Food Agency (NFA) allowing easier monitoring;
    • Training over half of NFA inspectors according to EU requirements;
    • Equipping Poti Border Crossing Point (BCP) so it can to provide SPS controls in compliance with EU standards;
    • Putting special units in place at all Georgian BCPs ensuring EU compliant procedures for border control of food of non-animal origins;
    • Supporting a certification system for bio/organic producers in Georgia (66 farmers/FBO certified to date);
    • Providing over 200 tests in line with EU and international standards at the Laboratory of the Ministry of Agriculture;
  • Increasing employment and improving living conditions in rural areas through:
    • Developing 6 new state programmes to promote non-farm diversification in 2017/2018. These new programmes include: "Young entrepreneurship support programme in rural areas”, “Imereti Agro Zone”, “Plant the Future”, as well as new elements to existing programmes "Preferential Agrocredit", “Development of agricultural cooperative infrastructure”, and “State programme of rational use of pastures in mountain regions";
    • Presenting a 2018-2020 National Rural Development Action Plan and Rural Development Strategy along with a budget to stakeholders, and including it in the BDD submitted to Parliament in 2017.

The EU also welcomes the Government's decision to merge the Strategy for Agricultural Development and the Rural Development Strategy after 2020, and recommends accelerating key reforms including the establishment of a structured and dynamic common monitoring and evaluation system within MEPA allowing for improved reporting on the sectoral strategies' implementation.

Not all the agreed targets were met. The training center of the Ministry of Agriculture and Environmental Protection was not fully developed as originally forseen by the indicator and the ministerial laboratory did not fully reach the target of 75% of its tests being EU accredited.

Public Administration - The EU welcomes the following achievements of the Government in 2017:

  • Ensuring that more than 60% of the Government action plans adopted in 2017 are aligned with the multiannual policy and expenditure framework, making government planning more efficient;
  • Successfully completing functional reviews of all ministries that contributed to Government institutional restructuring;
  • Ensuring more efficient human resources in the Government by:
    • Introducing uniform rules for human resource management under increased oversight by the Civil Service Bureau (CSB);
    • Managing all recruitments in public institutions through the "e-HRM" CSB platform;
    • Applying transparent and fair remuneration systems across all public institutions following the entry into force of the Law on Remuneration in the Public Service entered on 1 January 2018;
    • Conducting functional monitoring for assets declarations of public officials;
  • Improving Georgians' access to public services by operating 54 community centres in rural areas and 51 municipalities using modern municipal management systems and ensuring high customer satisfaction.

However, certain conditions linked to policy planning, civil service reform and access to information were not fully met. In particular, not all Government monitoring reports in the selected areas met the requirement of the new Policy planning framework. Pending formal accreditation of public servant training centres means that the new staff training system is not fully established yet. Georgia's scoring on International Right to Information rating has not improved as the new draft Law on Freedom of Information has not been presented to the Parliament yet.

 

Justice - The EU welcomes the following achievements by the Government in 2017:

  • Improving access to legal aid for citizens through a 10% increased funding and a 22% increase in number of beneficiaries of the state legal aid service;
  • Developing a more child friendly justice system through a high (64%) diversion rate for first time offenders and a 24% decrease in pre-trial detention rates of juveniles;
  • Aligning closer to European Human Rights Standards with 13.4% reduction of pre-trial detention rates for adults (exceptionally excluding domestic violence cases) and establishing a prosecution council and advisory body at the prosecutors' office;
  • Improving conditions in prisons by conducting risk and needs assessments across all prisons, sustaining the amount of inmates (893) participating in vocational education programmes, lowering prison mortality and disease transmission rates, as well as enhanced reviews and use of the pre-release mechanism for prisoners.

However the EU notes that several targets were not met. In particular, no new prison facility was built for juveniles and young offenders, the independent mechanism to investigate wrongdoings of law enforcement officials was not established, and there were not enough land plots registered in a systematic way in pilot regions, although sporadic registrations progressed rapidly.

 

Trade and private sector development - The EU welcomes the following achievements of the Government in 2017:

  • Bringing Georgia closer to the full DCFTA compliance by adopting 17 national legislative acts in the area of SPS in line with timetable set out in DCFTA Annual Action Plan for 2017;
  • Improving market surveillance in Georgia by:
    • establishing a department for market surveillance of consumer products;
    • Conducting inspections of boilers, pressure vessels, lifts and cableways;
    • Organising awareness raising events with targeted business and consumer organisations on market surveillance;
    • Submitting amendments to the “Law of Georgia – Product Safety and Free Movement Code” to ensure EU compliant product inspection procedures and sanctions drafted and submitted to Parliament;
  • Working towards more transparent and efficient public procurement in Georgia by:
    • introducing new or amended secondary legislation to the new Law of Georgia on State Procurement in line with EU and international standards;
    • Issuing instruction manuals and training employees of procuring entities, contracting authorities, economic operators and other stakeholders;
    • Upgrading the Unified Electronic System for e-procurement and providing aggregated information on tender procedures as well as information on individual procurements on the newly created http://opendata.spa.ge/.
  • Developing SMEs in Georgia through:
    • A draft Law on Insolvency Proceedings;
    • Training 5694 entrepreneurs on financial literacy;
    • Employing 1778 persons (out of 8433) following training and retraining;
    • Providing more than 1000 entrepreneurs with consultation services, DCFTA related meetings with experts in the regions, or training;
    • Delivering 140 small-scale grants to start-ups in order to facilitate innovation.
  • Conducting four meetings of the Public/Private Platform (PPP) to address business regulatory issues;
  • Improving the efficiency of the Technical and Construction Supervision Agency (TCSA) by implementing activities laid out in the 2017 TCSA Institutional Reform Plan;
  • Improving the efficiency of the Competition Agency (CA) by implementing the 2017 CA Training Plan;
  • Providing over 300 SMEs with DCFTA-related advisory services and training via Enterprise Georgia in 2017 (38% more than in 2016);
  • Conducting two sector studies for ICT and Furniture by Enterprise Georgia with EU support.

The only condition not fully met was the implementation of actions envisaged in the Roadmap of Public Procurement for 2017, in particular a public procurement review body is aligned with DCFTA requirements is not in yet in place.

 

Payments under new programmes - Continued implementation in 2018 of Government sector strategies in the areas of Vocational Education and Training and Labour Market, and Agriculture and Rural Development by also permitted initial payments under new programmes in Skills Development and Matching for Labour Needs, and Agriculture and Rural Development (addition to already ongoing programmes in this sector), respectively.

In addition, the Government maintained a satisfactory track record of macroeconomic stability, public financial management, and budget transparency, which permitted payments under all the programmes.

 

Background:

Sector reform performance contracts are an EU cooperation instrument which involves direct financial transfers to the state budget of the partner country. The EU transfers funds annually when commonly agreed results are met by the Government. In particular, Government is required to maintain a satisfactory track record of implementing macroeconomic policies, public financial management, and budget transparency for all payments, and in addition specific targets are included in various policy areas, such as SME development, education, public financial management, etc. If the EU 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. Most sector reform performance contracts for Georgia are part of a wider support package to a specific sector and is combined with funding for accompanying projects, for example grants and technical help for cooperatives under the ENPARD Programme. 

 

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