SUPPORT TO PUBLIC FINANCE MANAGEMENT REFORM IN GEORGIA FINDINGS AND LESSONS LEARNT

1. DESK PHASE A desk review of documentation available up to the end of 2008; No interviews with participants; The purpose was to establish the main picture and identify questions for further investigation.

2. FIELD PHASE The purpose was to verify and update findings during the desk phase; and Make an overall assessment of the SPSP.

Findings 1. The 7 KAAs had not been fully assessed. A PFM Reform policy existed, but no overall strategy had ever been formalised; Too many separate “Partner Organisations” involved, not 1 as had been originally thought; There was no centralised leadership of the PFM reform process; Government-led donor & sector coordination systems did not exist; A Government-led performance monitoring and evaluation system was expected to be in place only from 2012; Government PFM HR development programmes required considerable further donor support.

Findings 2. Discrepancies between the TAPs and Policy Matrix; Indicators did not always support results and sometimes were inconsistent; TA was offered to the MoF to be used as it decided – but the Mof rejected it, and no alternative was proposed; Minimal compliance with disbursement conditions but acceptance by EC; Lack of sufficiently qualified personnel was a major weakness of the whole PFM Reform Process

Lessons Learnt 1. SPSP is an instrument with enormous potential; Therefore its design should aim to maximise this potential; Assessment of the 7 KAAs is crucial; Without the Assessment the SPSP is “blind”. 7 KAAs needed not only for basic decision making but as a basis for the design and setting conditionalities.

Lessons Learnt 2. Thorough Assessment of the 7 KAAs helps to focus the design on priority areas where help is most needed; Facilitates the development of relevant and realistic disbursement conditions; TA should be used as a tool to enhance the effectiveness of the SPSP. Therefore can support them with better specific indicators.

Lessons Learnt 3. Effective consultation with partners is vital; Disbursement conditions must be developed so that they respond to results actually achieved, Are not an incentive to achieve results. Thoroughly analyse the responsibilities, powers and functions of the partner organisations, and the importance and influence of beneficiaries and stakeholders; If more than one partner organisation, ALL must be thoroughly consulted; Details of their participation, disbursement conditions and establishment of clear, meaningful, and achievable indicators must be agreed WITH EACH OF THEM.

Impact. There appears to be a better understanding of the realities and benefits of PFM reform at all levels. The SPSP helped MoF interact productively with other ministries and agencies, not only at senior level, but also at day-to-day working levels. The shortage of donor resources (economic crisis) provides greater incentives to demonstrate achievement of results and transparency.

CONCLUSION SPSP is an instrument with enormous potential; It did not make full use of its opportunities by directing TA to where it was most needed; A thorough assessment of the seven KAAs might have significantly changed the design, and led to a better policy matrix with more appropriate conditions and indicators, and a better targeted supporting TA component.