First Programmatic Inclusive Growth Development Policy Operation

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The first Inclusive Growth Development Policy Operation (DPO) in Georgia will support the government in its efforts to improve public service delivery and strengthen fiscal oversight. These objectives will be achieved through reforms in the areas of public financial management, social sectors and the framework for civil services. The proposed policy actions are anchored in the Country Partnership Strategy (CPS) for 2014-17 and are consistent with the government’s new development strategy. This is the first operation in the programmatic series of three operations spanning 2015-17, in the amount of US$60 million. The main development challenge faced by the country is achieving more inclusive growth which will require investments in human capital and improvements in private sector competitiveness. There has been a significant progress in poverty reduction and shared prosperity in recent years, but it has been driven by factors other than net job creation. The operation supports the government in improving its public service delivery and fiscal management to make growth more inclusive. Pillar one supports greater fiscal oversight of public institutions (including municipalities, legal entities of public law, nonprofit legal entities and state-owned enterprises), and improvements in budgeting and the framework for civil services. Pillar two supports improvements in the coverage and targeting of social expenditures, quality of education and healthcare services, and monitoring of outcomes. Reforms supported by this operation will help both in inclusion and inclusive growth. While private sector development, which is being supported by another DPO series in Georgia, will help create more jobs, this DPO series will help build human capital and support macroeconomic stability and effective policy making. The policy matrix reflects reforms on multiple fronts and at various stages.