Georgia Public Expenditure Review 2012
4.4. Conclusion: the way forward
The analysis in this chapter indicates that Georgia can move forward along one of several paths in managing the growing body of infrastructure investment needs with which it is faced. On the one hand is the path of continued informal and ad hoc project screening and selection and inadequate coverage and consistency of the medium term capital budget. Along this path, decisions on new investments projects are taken in a manner that is not fully consistent with the medium term fiscal framework. A growing pool of projects screened and selected without a uniform set of criteria find their way into the budget. Consolidation of capital expenditures is progressively delayed, thus delaying fiscal consolidation and crowding out important social expenditures. On the other hand is the path of improving the content of the capital budget and strengthening procedures for preliminary screening and subsequent appraisal of project proposals. Along this path, the transparency of the capital budget is enhanced and medium term public investment programming is improved. Moreover, project ideas are screened and appraised using a uniform set of well-defined criteria, closely coordinated with the annual budget cycle. Projects are selected for budgetary funding in a manner that is fully consistent with a defined medium term expenditure framework. Along this path, consolidation of public capital expenditures proceeds on schedule and the selected projects effectively contribute to Georgia’s infrastructure needs for growth, while important social expenditures are also met as needed. The options discussed in this chapter are intended to move Georgia down the second path described above.
82 | Chapter 4. Capital Budgeting Systems