Georgia's biggest economic challenge is generating growth and creating jobs, according to a report presented by the World Bank on Wednesday.
"Public Expenditures in Georgia: Strategic Issues and Reform Agenda" reported that fiscal consolidation will be important for the country to generate strong growth with macroeconomic stability.
The report also presents several policy options that could help Georgia reduce its fiscal deficit from 3.7 percent of GDP in 2014 to 2.5 percent in 2018.
"Tackling the growth and jobs agenda in George will require significant investments in human and physical capital and the government has a large role to play here," Henry Kerali, the World Bank regional director for the South Caucasus, said. "However, all these expenditures need to be undertaken with the fiscal consolidation framework of the government, designed to help restore the macroeconomic buffers needed to secure stability and growth in the future."
The World Bank said that Georgia's recent growth performance is due largely to its fiscal policy - recovery following the global economic crisis was driven by a fiscal stimulus that increased the debt and deficit levels, although fiscal consolidation took place from 2010-2012.
"This Public Expenditure Review is the result of a body of programmatic fiscal work directed at identifying policy options to manage fiscal consolidation in Georgia," Mariam Dolidze, the World Bank senior economist for Georgia and the lead author of the report, said. "We believe that this report comes at a critical juncture as Georgia seeks to balance its expenditure priorities across several sectors."
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