At the end of last year, the European Union (EU) has granted EUR 20.87 million (approximately GEL 60 million) of non-reimbursable aid to Georgia in support of reforms ongoing in several sectors: economic and business development, skills development and labour market reform, regional development, agriculture, rural development, and food safety.
After assessing the state of play of reforms implementation in each sector, the EU has drawn the following conclusions:
1. Economic and Business Development: Overall the Government of Georgia has made good progress in the implementation of the small and medium-sized enterprise (SME) strategy. However, several indicators could not be fulfilled due to delays in the adoption of key legislation in earlier years (particularly the Enforcement code and the Motor Third Party Vehicle Liability Law).
Disbursement: EUR 5.67 million (out of maximum of EUR 12 million).
2. Skills Development and Matching for Labour Market Needs (Skills4Jobs): Very good progress has been achieved in reforming the labour market; this is evident, for example, in the 114% increase of the number of job placements facilitated by the Social Service Agency. Good progress was also observed in the increase of both state funding and enrolment of students. Due to a delay in the development of the methodology for monitoring the availability of job vacancies on the local level, a small share of the disbursement could however not be transferred.
Disbursement: EUR 7 million (out of maximum of EUR 7.5 million).
3. EU 4 Integrated Territorial Development: This joint regional development programme between the EU and Georgia supports the government’s Pilot Integrated Regional Development Programme (PIRDP). The programme has achieved very good results, including the disbursement of a significant amount of grants for municipalities to help develop both local infrastructure and local business in four focal regions (Kakheti, Imereti, Guria, Racha-Lechkhumi and Kvemo Svaneti).
Full disbursement: EUR 5 million.
4. European Neighbourhood Programme for Rural Development and Agriculture (ENPARD IV): Good progress has been made to further improve the lives of people and communities living in rural areas. Substantial progress was achieved in the work of community centres, restoration of forest area and use of certified seeds in agricultural production. One indicator related to the certification of nurseries was not fully met, which resulted in a partial disbursement.
Disbursement: EUR 3.2 million (out of maximum of EUR 4.4 million).
Background: Budget Support
Budget support is an instrument for the EU's cooperation with partner countries. It involves direct financial transfers to the state budget of the partner country. It is performance related - it is only disbursed when agreed conditions for results are met – for example targets in SME development, education, public financial management. The EU's budget support depends on continuous satisfactory track record of implementing macroeconomic policies, public financial management and budget transparency.
Most budget support for Georgia is part of wider support to specific sectors and is combined with complementary support that would further stimulate the reforms, for example grants and technical help for rural citizens under ENPARD or for small regional business under the EU’s regional development programme.
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