Georgia: Technical Assistance Report-Enhancing the Fiscal Rules

IMF Staff Country Reports, June 1, 2018

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Canonical URL: Georgia: Technical Assistance Report-Enhancing the Fiscal Rules

This Technical Assistance Report discusses the recommendations made by the IMF mission to assist Georgian authorities in enhancing country’s fiscal rules framework.
Recommended that the fiscal rules should consider both the overall objectives and the economic context in which they are applied.
In Georgia, considerations include:
- the stated primary objective of fiscal sustainability;
- the need for flexibility to respond to economic shocks;
- the transitional nature of the Georgian economy;
- the intension to gradually move toward the European Union fiscal governance framework.
It is also recommended that the fiscal policy targets should factor in potential economic shocks and fiscal risks.

Fiscal rules design should reconcile:
- objective of fiscal sustainability; and
- requirement for flexibility to respond to shocks.
Context-specific features for Georgia emphasized:
- transitional economy dynamics; and
- alignment and gradual convergence with the European Union fiscal governance framework.
Fiscal policy targets must explicitly incorporate potential economic shocks and fiscal risks.

Design fiscal rules that reflect both:
- overall fiscal objectives (primary objective: fiscal sustainability); and
- the economic context in which rules operate (including transitional economy status and EU convergence plans).
Ensure fiscal targets and rules provide sufficient flexibility to respond to economic shocks.
Factor potential fiscal risks into fiscal policy targets.

Subject: Budget planning and preparation; Expenditure; Fiscal policy; Fiscal risks; Fiscal rules; Public debt; Public financial management (PFM); Public investment and public-private partnerships (PPP)
Keywords: Budget planning and preparation; CR; debt ceiling; deficit; deficit rule; expenditures rule; financial asset; Fiscal risks; fiscal rule; Fiscal rules; Global; ISCR; real GDP; rules framework; SOEs.