FEATURE STORY

Support for Georgia and its Economy

May 10, 2012

As Georgia cushions the impact of crises on the poor and pushes through an ambitious reform agenda, the World Bank has supported the government since 2009 with a series of three Development Policy Operation totaling $175 million.

World Bank Group

Times were tough for many in Georgia in the aftermath of the August 2008 conflict and the global economic downturn. As the country regains its economic footing by undertaking reforms backed by the World Bank's Development Policy Operation series (DPO), it has been helping thousands of the poorest Georgians to stay afloat and healthy. Despite a budget crunch, Georgia has upped the number of people receiving social assistance, increased payments for larger families and introduced health vouchers for the vulnerable to obtain medical care.

Grigol Beruchashvili and Medea Darchia are a poor and elderly couple with many health problems. The government's DPO-backed targeted social assistance and medical insurance program have helped them. Their combined pension is less than $100 a month. They spend most of the winter bundled in coats and hats in their small apartment heated with a wood stove. Since the death of their only son, survival has been a struggle. "The voucher prolonged my life. I'm alive today only thanks to this voucher," says Beruchashvili. Vouchers paid for surgeries the couple could not afford. A soup kitchen provides free, hot meals, and social assistance covers most of the electricity and gas bills.


" This year (2011), we will receive the third budget support installment of the DPO series totaling $40 million on highly concessional IDA terms, in recognition of the significant strides made in strengthening the social assistance programs, upgrading customs infrastructure, and further streamlining customs procedures. "

Dimitri Gvindadze

Minister of Finance

Close to a quarter of Georgia's population is poor. Social workers now visit homes to make sure the poorest obtain assistance. A fair and transparent system helps to build public trust in civil agencies once rife with corruption. And the share of the poor receiving subsidized health care increased from about 20 percent in 2007 to more than 35 percent in 2010. The share of the poorest tenth receiving targeted social assistance increased from about 32 percent to about 40 percent in 2009.

Just like Beruchashvili and Darchia, Manana Malatsidze also has a tiny pension and health problems. For the past few years, she has received health vouchers and cash. "In my case it's only a modest sum of 30 GEL (Georgian Lari, about US$ 20), but this is in addition to free medical treatment I have been getting, which was a huge support. So I was able to cover utility bills with this amount."

As Georgia cushions the impact of crises on the poor and pushes through an ambitious reform agenda, the World Bank has supported the government since 2009 with a series of three DPOs totaling $175 million. In addition to supporting reforms of health and social assistance,the DPO has supported tax, customs, and trade-related reforms. These are strengthening competitiveness and bolstering investor confidence while a prudent fiscal policy has ensured macroeconomic stability.

"This year, we will receive the third budget support installment of the DPO series totaling $40 million on highly concessional IDA terms, in recognition of the significant strides made in strengthening the social assistance programs, upgrading customs infrastructure, and further streamlining customs procedures," Minister of Finance, Dimitri Gvindadze, said.

Customs reform was crucial and overdue. In the past, laws were complicated and underpaid officials often supplemented meager salaries by asking for bribes. Crossing Georgia 's 400 kilometers could be a three day ordeal. Things are different now. Simpler customs procedures make it faster and easier to move goods through Georgia.

Fewer and smaller import tariffs are making the country a better place to do business. And they're making imports cheaper, which mean better prices for Georgians and better sales for Georgian businesses. The country is continuing to push forward with reforms to further simplify customs procedures.

And as effects of the reform take hold, Georgia is improving its competitiveness and strengthening its economy, working to insure a strong and sustained recovery.


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