Browsing by Author "Tabatadze, Marina"

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    The economic strategy of decentralization and the features of fiscal policy
    (Ivane Javakhishvili Tbilisi State University Press, 2019) Tabatadze, Marina
    The purpose of fiscal decentralization is to divide functions and responsibilities between levels of government and link them to the source of income.Studying the basic principles of the country's budget system, its structure and formation, identifying the functional and financial dependencies between the budget levels, is one of the top priorities in contemporary research. The purpose of this paper is to justify the role of fiscal decentralization, to study the reforms implemented in Georgia in this direction and to assess their impact on the development of local self-government, to analyze the situation in the municipalities of Georgia. Strengthening local government and increasing the level of decentralization is a challenge that will develop the democratic process and the inclusive economic growth that is the fundamental goal of Georgia's long-term social-economic development strategy "Georgia 2020". The purpose of this paper is to prove the need of fiscal decentralization, assessment of the quality, seek for new ways to improve the current situation, analysis of resource allocation and other recent reforms and its impact on different municipalities of Georgia. The subject of this study is the various macroeconomic problems that prevent the effective implementation of fiscal decentralization. The main results of this study can be summarized as follows: the level of fiscal decentralization revenue-wise is the lowest, while tax-wise its characterized by the highest estimates, VAT rules is an important step towards the fiscal decentralization, but along with the VAT rules it’s important to implement reforms that stimulate the economic activities and support the cooperation between municipalities.
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    Issues of optimizing the use of state budget funds in Georgia
    (Ivane Javakhishvili Tbilisi State University Press, 2024) Tabatadze, Marina
    Effective management of the state budget is an important factor of the country's financial stabilization and correct forecasting, its basis is the introduction of modern management principles of the budget system, the formation of an institutional and legal base corresponding to European standards. The article discusses the role of the budget system in the unified process of managing the economy of Georgia and certain features of its functioning, the issues of optimization of vertical budget segmentation and proper coordination. On the basis of the Law on Budgetary Systems, government reserve funds have been created within the state budget of Georgia since 2005 to cover unforeseen expenses. The operation of this fund is one of the important issues of the state budget, as, along with the fiscal burden, the Reserve Fund plays a significant role in financial support for the main priorities of the state’s social policy. Despite the compliance of the budget system of Georgia with the European standards, the issue of reserve funds still involves a certain problem. The issues of structuring and targeting of reserve funds, its legal and institutional provision require special attention. The problems of formation and effective management of reserve funds are discussed in the presented report. The foundation for the formation of Georgia’s modern budget system was placed by the public financial management reform (2004), which was based on the principles of the Open Government Partnership (OGP) and on the international standards of GFSM-2001. The compliance of the legal norms of the budget system of Georgia with European standards was ensured by the Organic Law “On Economic Freedom” (2011). An important legal basis for the effective administration of the budget structure and public finance management was created by the government decree - “Public Administration Reform” (2019). The legal basis for the process of harmonizing the functions of budgets at individual levels in Georgia is made up by the following regulations: Organic laws “On Local Self-Government and Management” (1997) and “On Local Self-Government” (2007), Laws “On the Budget of Local Self-Government Units” (2006), “On local government bodies “On Property” (2006) and others. According to the budget transparency, which was published in 2021, Georgia was on the first place from 120 countries in the whole world [20]. According to the future forecasts, this success will be further consolidated by the implementation of 85% of the legislative obligations provided for the agreement on a deep and comprehensive free trade zone with the European Union in 2024, in addition to it, all the obligations in the field of public procurement will be fully implemented, as well, as on customs and technical barriers to trade. In accordance with the IMF, the fiscal system of Georgia today is normal and its indicators do not exceed the threshold level of sustainability. The international standards of fiscal security are also observed, while it has identified a number of problems, which are necessary to be considered for the stability of the financial sector and the effective functioning of fiscal mechanisms for regulating the economy. Here is the list of the following problems, such as:  Long-term provision of financial stability  Effective use of reserve funds  Financial management of state-owned enterprises. The IMF has given priority for assessing long-term factors of fiscal sustainability, which are reflected in the international regulatory document - “Multi-year Indicative Program - MTP” (2020). This document about the delegation of powers between government and fiscal institutions, provides the formation of the optimal economic ties, which is only possible while using the conditions of an effective policy of decentralization of public administration. The reserve fund of the Georgian government is subordinate to the executive branch and its volume. According to the state budget for 2024, is set at 80 million laris (an increase of 33.4%). The fund's expense structure contains:  Unforeseen expenses – 28%  Carrying out events of national importance – 26%  Uninterrupted functioning of budgetary organizations – 13%  Social expenses - 7%  Electoral process services – 3%  Financing of European integration events and political parties -2% and others. According to the Georgian legislation, money from the government's reserve is only allocated to finance expenses. But, not provided for the budget, so, in our days , there is a high risk of inefficient use of funds and instability caused by multiple changes in the distribution of the reserve’s fund, which prevents propering the budget planning and effective control of its execution. The process of managing reserve funds of the state budget, is especially problematic. Similar as to justify the intended purpose of expenses; therefore , it is necessary to develop a unified standard, which helps us to control the fund funds instead of unforeseen expenses . In addition to it, it is only recommend to use it in a force majeure situation and finances such an emergency expenses that could not be predicted in advance, this will significantly increase the responsibility of spending organizations for taking into account all the expected expenses when drawing up the budget, which will eliminate the bad practice of requesting additional funds from the reserve fund during the year. Also, in emergency situations, it will be allowed to finance from the reserve fund such unplanned expenses when leaving them without financial support from the state could cause irreparable damage to the country’s international reputation or its propert. The issue of targeting transfers transferred from the reserve fund to local government also requires legal revision, since in some cases, they do not correspond to the purpose of the targeted, capital or special transfers which are existing today. To summarize, strictly formulated targeting system will help departments to plan the budget correctly and determine the exact size of the reserve fund itself, which is an important condition for the sustainability of Georgia’s budget system.
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    Peculiarities of state procurement system functioning in Georgia
    (Ivane Javakhishvili Tbilisi State University Press, 2018) Tabatadze, Marina; Chkholaria, Konstantine
    The article deals with the role of public procurement in the economy as an important macroeconomic instrument that enables the state to influence economic relations and create a healthy environment for the development of the country's economy. It also reviews positive and negative socio-economic consequences, which leads to a market economy. The main purpose of the research is to analyze the current state of affairs, assessment of socioeconomic results caused by corruption and incorrect administration in public procurement. The theory defines theoretical and practical consequences that result in the administration of public procurement. The essence of social policy and the necessity, tasks and directions of its existence. Problems of state procurement in developed and developing countries, corruption and mechanisms to fight against it.The final part of the work, deals with the best solutions and directions regarding the public procurement established in Georgia. The goal of the research is to analyze the current condition of the state procurement, assessment of the factors affecting it and determining the provision of effective procurement by the state. The research serves to study the condition of the state procurement and elaborate system of measures to ensure its efficient provision.
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    State post-crisis strategy
    (Ivane Javakhishvili Tbilisi State University Press, 2024) Tabatadze, Marina
    The monograph discusses modern economic crises and state strategies for the rehabilitation of the economy in the post-crisis period, evaluates the modern governance standards of the economy and strategies for its stable development. The book provides the legal and institutional foundations of the state regulation of crises, the world experience of crisis prevention and management is studied, the impact of the government's anti-crisis policy on the operation of the socio-economic system and the provision of political-economic stabilization is analyzed. For the global world today, the main factor of economic growth is prevention of geopolitical threats and provision of inclusive stability, this actualizes the economic essence of the state, its management concept. The goal of the government is to ensure economic stabilization and predictability, which requires the identification of systemic risks, the determination of the right strategy of the state in relation to risk factors, and the harmonization of national interests with global requirements. Today, the future of countries is determined by their ability to adapt to modern development trends, the ability to correctly position themselves on world markets and respond effectively to economic imbalances. The purpose of the scientific research of the paper is to study the state policy of economic rehabilitation during the crisis and its aftermath. Attention is drawn to the author's study of market balancing in the post-crisis period, integration of countries into a single global anti-crisis strategy, development, inflation and public debt problems. Government scenarios of crisis management, their forecast results in the world and individual countries are discussed in the book. Special attention was paid to the scientific analysis and generalization of the results of the Georgian governmental platform for managing the economy during the crisis and post-crisis period, as our strategy was highly successful and precedent for the whole world. The scientific novelty of the research is the determination of the strategy of stabilization of the economy in the post-crisis period, the study of its mechanisms and the development of regulatory standards. The single unified framework-standard of crisis management drawn up by the author is especially important, which provides different options for combining anti-crisis mechanisms under different shock conditions. The monograph has a scientific and practical value for governmental structures working on anti-crisis issues, researchers, students and the general public interested in crisis management issues.
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    Strategy of state support of the economy in the post-pandemic period
    (Ivane Javakhishvili Tbilisi State University Press, 2023) Tabatadze, Marina
    One of the main economic functions of a state is to prevent developmental risks and to define correct national anti-crisis policies in harmony with global requirements. The last pandemic processes particularly highlighted the importance of state's economic function and of its governing role. This article discusses some strategies for effectively managing integration processes and the economic mechanisms of a state which interfare with the state governance system. To do so, the article analyses the state's economic function during a non-stable development and the impact of anti-crisis policy on socio-economic system and on the stablization of development processes. Among other, the article presents the key topics underlining the state function in crisis management: stabilization strategies of modern world economic processes, correct coordination of the state system in a crisis environment and optimal repartition of function among states, modern concepts of political and economic systems of economic governance after a crisis period, adequation of national anti-crisis reforms with global standards. A significant transformation of state functions takes place in a crisis environment, as the crisis shakes the principles of the gradualist concept of the post-industrial society and causes deformations of existing macroeconomic balance (Tabatadze & Tsanava, 2009). The recent global economic fluctuations and a clearly expressed cyclical nature of development, required significant changes in the neoclassical principles and activated Keynesian approaches to the economic essence of the state (Durcova, 2012). The article analyses the case of Georgia. It examines the outcomes of Georgia’s reforms which aimed at effective management of pandemic crisis. To do so, the article studies the state anti-crisis plan and post-crisis strategies in 2021-2022, their main instruments and actual outcomes. It evaluates the main steps and mechanisms of post-crisis rehabilitation state strategy, the main macroeconomic results of state economic support and the future perspectives of Georgia’s economic development. Georgia showed one of the best results of global crisis management in the world. This experience has become a precedent for other countries. Two billion GEL was allocated from the state budget to the anti-crisis program, which went in two priority directions: Financing of state social projects (granting of allowances, financing of social protection projects of the population, increase of teachers’ salaries, indexation of pensions) and promotion of business (430 million GEL). The increase in state expenditures increased the budget deficit during the pandemic crisis from 2% to 9%, and by 2024 it is planned to restore this parameter to the pre-crisis level. A key success factor can be identified as the government’s attempt to maintain a balance between managing the pandemic and minimizing the economic damage. At the beginning of the crisis, the pandemic caused a sharp decrease in the economy of Georgia and further aggravated the existing problems: exchange rote of GEL, inflation, investment, unemployment and public debt. The largest decrease was recorder in the hotel and restaurants sector – 80%, followed by a 20% decrease in the transport and warehousing sectors, entertainment and leisure sector services decreased by 15%. The regulatory function of the state has significantly increased in the process of risk prevention and development of a complex anti-crisis strategy. As the environmental, social and governance components of a sustainable economy have a significant impact on systemic risk, their regulation required an active involvement of the state and the use of relevant tools. State programs of entrepreneurial support, transfers to domestic forms and social assistance for persons with limited liquid funds showed significant results. Thanks to this new policy Georgia managed to provide a large-scale fiscal support to household in the second phase of the crisis, by expanding the purchase of assets, increasing credit financing, and reducing the interest rate. In the strategy of state support of the economy, a special place was given to the rational spending of state funds and the issue of regulating the state debt. The new policy is derived from the basic requirements of the “EU Fiscal Rule” and aims at four outcomes: control the budget deficit, increase the efficiency of spending of funds, reduce the cyclicality of fiscal policy and prevent its unsustainability. Georgia also changed its priorities in terms of economic policy. The transit and tourism function were defined as the main priorities of the Georgian economy, with the aim to create prerequisites for a stable positioning in the world markets. In 2021, the growth of the Georgian economy amounted up to 10.6%, which was the best result in the region and the second-best result in Europe. IFM predicted to Georgia the highest economic growth in the region and in Europe (34.5%) for a medium-term period (2021-2025). In 2022, compared to the previous year, the volume of PUI doubled and reached an unprecedented level for economic growth (Geostat, 2020). One of the biggest challenges for Georgia during the pandemic and post-pandemic period, was the management of the state debt. Even though the state debt exceeded the safety limit (2020-60.3%, 2021-60.1%), the scale of economic rehabilitation made it possible to return it to the normative framework already in 2022. To ensure macroeconomic balance, it’s important to make a complex study of its indicators. In addition, it is necessary to correctly assess the optimal portfolio of public debt and determine the effect of public debt for the medium and long term. As a result of this above listed state support to prevent the negative effects of the economic crisis, Georgia managed to guarantee that not a single large enterprise stopped operating in the country. At the same time, international reserves increased by 11.5% and local exports by 3.5%, 1,056 million; the trade deficit improved in US dollars and amounted to 4.7 billion USD. In 2021 the international credit rating company fitch kept Georgia in the BB category of the economic stability according to the ease of doing business and the attractiveness of the business environment, maintaining the investment environment, and ensuring resilience to external shocks.