2018年-世界发展银行全球_Country_Partnership_Framework_for_Georgia_for_the_Period_FY19-FY22_110页_2mb

Country Partnership Framework (CPF) for Georgia (FY19-FY22) Summary

Introduction

The World Bank Group (WBG) has developed the FY19-FY22 Country Partnership Framework (CPF) for Georgia to support the government's vision of building a market-based economy that ensures nationwide prosperity and strengthens its regional position. The CPF builds on the previous FY14-FY17 Country Partnership Strategy (CPS) and aims to consolidate gains and address next-generation development challenges. It shifts the focus from infrastructure-heavy programs to expanding human capital, emphasizing inclusive and sustainable growth. The CPF also aims to improve the living conditions of the "Bottom 40"—the poorest 40 percent of Georgians—and ensure that vulnerable groups and lagging regions benefit from growth.

Country Context and Development Agenda

Social and Political Context

Georgia has made significant progress in reducing extreme poverty and improving social policies over the past 25 years. However, marginalized groups such as persons with disabilities, internally displaced persons (IDPs), homeless people, and rural communities still face substantial barriers to employment and economic participation. These groups experience limited access to services and are subject to social stigma.

Georgia ranks 94th in the 2017 World Economic Forum Global Gender Gap Index, behind most EU countries but ahead of its South Caucasus neighbors. Persistent gender inequality in economic opportunities, decision-making power, and endowments remains a challenge. Women's financial dependence hinders their economic contributions and increases vulnerability to gender-based violence.

Politically, Georgia has demonstrated democratic maturity over the last decade, with peaceful transitions of power and a pro-European foreign policy. The Association Agreement (AA) with the EU, signed in 2017, reinforces democratic institutions, rule of law, and trade relations, including the Deep and Comprehensive Free Trade Area (DCFTA). The country has also adopted constitutional reforms, including changes to the electoral system and land ownership rules.

Recent Economic Developments and Outlook

Between 2007 and 2016, Georgia's economy grew at an average annual rate of 4.5 percent, driven by consumption and investment. After the 2008–09 crisis, growth rebounded to 5.8 percent annually, but slowed to 2.8 percent in 2016. In 2017, growth recovered to 5.0 percent, supported by strong exports, fiscal reforms, and the IMF Extended Fund Facility (EFF) program.

Persistent current account deficits and high external debt (reaching 113.5 percent of GDP in 2017) have led to a need for fiscal consolidation. The government has implemented a medium-term fiscal framework aiming to reduce the deficit to 2.4 percent of GDP by 2022. The fiscal deficit was 3.9 and 3.8 percent of GDP in 2016 and 2017, respectively, while public debt-to-GDP rose to 44 percent by 2017.

The banking sector is well-capitalized and profitable, with a capital adequacy ratio of 19.1 percent in 2017. Nonperforming loans (NPLs) have declined, but systemic vulnerabilities remain due to high dollarization, retail loan growth, and concentration in the top two banks. The National Bank of Georgia (NBG) has taken steps to strengthen liquidity management and reduce dollarization.

Poverty and Shared Prosperity

Georgia's poverty rate fell from 37.4 percent in 2007 to 21.3 percent in 2016, largely due to targeted social transfers and economic reforms. However, around one in five Georgians still lives in poverty, and nearly half of the poor population is vulnerable to falling into poverty. Female-headed households have higher poverty rates than male-headed ones, with an average difference of 4 percentage points.

Income inequality remains high in Georgia, with a consumption Gini coefficient of 38.7 percent in 2016, lower than Turkey and Russia but higher than Poland, Armenia, and Kyrgyzstan. The share of the population vulnerable to poverty ranged between 47 and 54 percent from 2009 to 2015.

CPF Focus Areas and Objectives

Focus Area 1: Enhance Inclusive Growth and Competitiveness

• Objective 1.1: Support agricultural modernization and access to markets
• Objective 1.2: Improve connectivity and integration
• Objective 1.3: Diversify sources of finance and strengthen innovation capacity
• Objective 1.4: Increase economic participation in the regions

Focus Area 2: Invest in Human Capital

• Objective 2.1: Support the education system for improved quality and relevance
• Objective 2.2: Enhance efficiency of the health care delivery system

Focus Area 3: Build Resilience

• Objective 3.1: Improve macro-fiscal management and mitigate risks
• Objective 3.2: Strengthen the resilience of households

Strategic Principles and Implementation

The CPF is guided by three engagement principles:

1. Maximizing Finance for Development (MfD): Leverage the private sector for growth and sustainable development.
2. Spatial Equity: Address regional imbalances by focusing on lagging areas.
3. Innovation: Respond to rapid technological changes and digitization to enhance productivity and competitiveness.

The CPF emphasizes a "One World Bank Group" approach, combining the strengths of the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), and Multilateral Investment Guarantee Agency (MIGA). It also incorporates high-quality feedback from citizen engagement and other development partners to guide the selection of interventions.

The program includes a focus on capacity building for institutional development to support governance reforms. The ASA (Advisory Services and Analytics) program will fill knowledge gaps identified in the recent SCD (Systematic Country Diagnostic) and advance second-generation reforms.

Risk Management

The CPF includes a comprehensive risk management strategy to address financial sector vulnerabilities, including high dollarization, concentration of market share in top banks, and weak crisis preparedness. The WBG will work closely with the government to monitor contingent liabilities and implement new laws on public-private partnerships (PPPs).

Conclusion

The CPF for Georgia (FY19-FY22) aims to support the government's vision of inclusive and sustainable growth, reduce poverty, and enhance competitiveness. It focuses on three main areas: inclusive growth and competitiveness, investment in human capital, and building resilience. The framework is based on strategic discussions with the government, private sector, and civil society, and incorporates feedback from citizen engagement and the SCD. The WBG will continue to support Georgia's fiscal consolidation, improve public financial management, and strengthen the financial sector to ensure long-term stability and growth.