I. Budget reliability
Scores by Dimension
Overall Indicator Score
1. Aggregate expenditure outturn
C
Notes:
1.1 Aggregate expenditure outturn
C
Notes:
The expenditure outturn (current and capital) compared to the original budget was 103.7% in 2019, 113.7% in 2020, and 110.3% in 2021.
2. Expenditure composition outturn
B+
Notes:
2.1 Expenditure composition outturn by function
B
Notes:
The deviation in the expenditure composition outturn by functional classification was 5.6% in 2019, and 9.5% in 2021, but 13.7% in 2020.
2.2 Expenditure composition outturn by economic type
B
Notes:
The deviation in the expenditure composition outturn by economic classification was 6.2% in 2019, and 5.3% in 2021, but 12.6% in 2020.
2.3 Expenditure from contingency reserves
A
Notes:
Actual expenditure allocated from the contingency funds averaged 0.4% in the assessment period.
Notes:
3.1 Aggregate revenue outturn
C
Notes:
Aggregate deviation was between 92% and 116% in two of the three years. 101.7% in 2019, 93.4% in 2020, 114.1% in 2021.
3.2 Revenue composition outturn
B
Notes:
Variance in revenue collection was less than 10% in two of the three fiscal years. 6.7% in 2019, 11.7% in 2020 and 5.9% in 2021.
II. Transparency of public finances
Scores by Dimension
Overall Indicator Score
4. Budget classification
A
Notes:
4.1 Budget classification
A
Notes:
Budget formulation, execution, and reporting are based on every level of economic and functional classification (10 functions) using GFS/COFOG standards.
Notes:
5.1 Budget documentation
A
Notes:
10 out of 12 applicable elements (four basic and six additional elements) are fulfilled.
6. Central government operations outside financial reports
A
Notes:
6.1 Expenditure outside financial reports
A
Notes:
All expenditures are included in financial reports.
6.2 Revenue outside financial reports
A
Notes:
All revenues are included in financial reports.
6.3 Financial reports of extrabudgetary units
NA
Notes:
There are no extrabudgetary units.
7. Transfers to subnational governments
B+
Notes:
7.1 System for allocating transfers
B
Notes:
The horizontal distribution of 82.4% of the amount allocated by the central government to the local government is determined by transparent, rule-based systems.
7.2 Timeliness of information on transfers
A
Notes:
Local self-government bodies will be provided with detailed information on the annual volume of transfers not less than 6 weeks prior to the start of the year to be planned.
8. Performance information for service delivery
A
Notes:
8.1 Performance plans for service delivery
A
Notes:
Information is annually prepared and published according to program objectives of ministries, their performance indicators, outputs and outcomes.
8.2 Performance achieved for service delivery
A
Notes:
Information about intermediate and final results of the programs /sub-programs implemented by ministries relating to outputs and outcomes within the priorities.
8.3 Resources received by service delivery units
A
Notes:
The information on the resources received by the service providers is collected and recorded in the TSA at the service delivery unit.
8.4 Performance evaluation for service delivery
A
Notes:
Assessment of efficiency and effectiveness of service delivery has been prepared and published by the State Audit Office in respect of activities of most ministries over the past three years.
9. Public access to fiscal information
A
Notes:
9.1 Public access to fiscal information
A
Notes:
The government provides access to all types of information listed.
III. Management of assets and liabilities
Scores by Dimension
Overall Indicator Score
10. Fiscal risk reporting
B
Notes:
10.1 Monitoring of public corporations
C
Notes:
Audited annual financial statements for most public corporations are published within ten months of the end of the fiscal year.
10.2 Monitoring of subnational governments
C
Notes:
Annual consolidated financial statements for local governments are published within 4 months of the end of the year (end of April) but are not audited on an annual basis.
10.3 Contingent liabilities and other fiscal risks
A
Notes:
A report on all central government contingent liabilities, including their quantification, and other fiscal risks is submitted to Parliament annually and published.
11. Public investment management
A
Notes:
11.1 Economic analysis of investment proposals
A
Notes:
New projects require economic analysis and that this analysis to be independently reviewed. The new projects in the 2021 budget followed this process.
11.2 Investment project selection
A
Notes:
There is a process for selecting projects based on a defined criteria and procedures using feasibility studies and an inter-agency commission.
11.3 Investment project costing
A
Notes:
The budget reflects the timetable for completing projects and the annual allocation of costs as well as the provision for recurrent cost of implementation if the project is completed during the MTEF period.
11.4 Investment project monitoring
A
Notes:
For each project there is an initial plan which covers project execution and its financing/payment schedule on a quarterly basis.
12. Public asset management
B
Notes:
12.1 Financial asset monitoring
B
Notes:
The government maintains a record of its holdings in all categories of financial assets, which are recognized at their acquisition cost and in rare cases at real (market) value.
12.2 Nonfinancial asset monitoring
C
Notes:
The government maintains a register of its holdings of nonfinancial assets and collects partial information on their usage and age. Financial information on nonfinancial assets (initial cost, accumulated depreciation / amortization, accumulated impairment / impairment loss, carrying amount, etc.) is based on the IPSAS standards and the Government Finance Statistics Manual 2014 (GFSM 2014) and is reflected in the financial statements prepared by the units financed by the state and local budgets.
12.3 Transparency of asset disposal
A
Notes:
Procedures for disposal / management / transfer of assets are established and the relevant information is registered in the LEPL National Agency of State Property.
Notes:
13.1 Recording and reporting of debt and guarantees
A
Notes:
Domestic and foreign debt and guaranteed debt records are complete, accurate, updated, and reconciled monthly. Comprehensive management and statistical reports covering debt service, stock, and operations are produced monthly.
13.2 Approval of debt and guarantees
A
Notes:
Primary legislation grants authorization to borrow, issue new debt and issue loan guarantees on behalf of the central government to the Ministry of Finance (as represented by the Minister.
13.3 Debt management strategy
A
Notes:
The MoF has developed, and the government approved the government Debt Management Strategy Document. The strategy defines the directions of the debt management policy, the main target indicators and sets the plan for their achievement.
IV. Policy-based fiscal strategy and budgeting
Scores by Dimension
Overall Indicator Score
14. Macroeconomic and fiscal forecasting
A
Notes:
14.1 Macroeconomic forecasts
A
Notes:
The government prepares forecasts of key macroeconomic indicators, which, together with the underlying assumptions, are included in budget documentation submitted to the legislature.
Notes:
The government prepares forecasts of the main fiscal indicators, including revenues (by type), disaggregated expenditure, and the budget balance, for the budget year and three following fiscal years.
14.3 Macrofiscal sensitivity analysis
A
Notes:
The government prepares scenarios of fiscal forecasts on the basis of alternative macroeconomic assumptions, and these scenarios are reflected in the published budget documentation together with forecasts.
Notes:
15.1 Fiscal impact of policy proposals
D
Notes:
The government has prepared estimates of the fiscal impact of all proposed changes in revenues and expenditures (90% and more) for the planned and subsequent 3 years for 2020 and 2012 but not in 2019.
15.2 Fiscal strategy adoption
A
Notes:
The fiscal strategy (BDD) is adopted by the government. The document is published and includes quantitative and qualitative goals and objectives of the year to be planned and of the next three following years.
15.3 Reporting on fiscal outcomes
A
Notes:
The state budget performance report submitted to the Parliament, includes information on the implementation of fiscal policy objectives (fiscal rules) and relevant explanations, in case of differences as well as actions to be taken.
16. Medium-term perspective in expenditure budgeting
B+
Notes:
16.1 Medium-term expenditure estimates
A
Notes:
The annual budget presents an estimate of expenditure for the budget year and three following fiscal years allocated by economic and program classification.
16.2 Medium-term expenditure ceilings
A
Notes:
Expenditure ceilings are set for budgetary units for the budget year and three following fiscal years, which are approved and communicated to budgetary units by the government before their preparation of budget submissions.
16.3 Alignment of strategic plans and medium-term budgets
A
Notes:
Medium-term action plans are prepared and costed by all ministries and are in line with the annual budget law and the BDD.
16.4 Consistency of budgets with previous year’s estimates
C
Notes:
The deviation analysis of medium-term forecasts is prepared at the aggregate level, attached to the draft state budget and submitted to the Parliament of Georgia.
17. Budget preparation process
A
Notes:
Notes:
The budget calendar allows budgetary units to start working on the budget at least 6 weeks before the budget is submitted.
17.2 Guidance on budget preparation
A
Notes:
The level of information included in the BDD is clear and comprehensive. It covers total expenditure of central government for the fiscal year and contains expenditure ceilings for all the budgetary units.
17.3 Budget submission to the legislature
A
Notes:
The draft annual budget is submitted to the legislature over 3 months before the beginning of the year.
18. Legislative scrutiny of budgets
A
Notes:
18.1 Scope of budget scrutiny
A
Notes:
Parliament reviewed fiscal policies, medium term fiscal forecasts, medium term priorities and details of revenue and expenditure in compliance with the requirements of the Rules of Procedure.
18.2 Legislative procedures for budget scrutiny
A
Notes:
The review of the 2022 state budget was carried out within the timeframes and procedures established by law.
18.3 Timing of budget approval
A
Notes:
During the last three fiscal years the legislative body approved the annual budget law before the start of the fiscal year.
18.4 Rules for budget adjustment by the executive
A
Notes:
Reallocation of funds between programs and sub-programs of budgetary units may be carried out by the Ministry of Finance without requiring amendments to the law and approval of the Parliament.
V. Predictability and control in budget execution
Scores by Dimension
Overall Indicator Score
19. Revenue administration
B+
Notes:
19.1 Rights and obligations for revenue measures
A
Notes:
GRS collects all revenues. It uses multiple updated channels to provide payers with easy access to comprehensive and up-to-date information on the main revenue obligation areas and on rights including, minimum, redress processes and procedures.
19.2 Revenue risk management
A
Notes:
GRS uses a comprehensive, structured and systematic approach for assessing and prioritizing compliance risks for all categories of revenue and has a focus on large taxpayers and their needs.
19.3 Revenue audit and investigation
A
Notes:
GRS has an audit plan for both domestic taxes and import taxes which are determined by a comprehensive audit plan based on risk assessment.
19.4 Revenue arrears monitoring
D
Notes:
The stock of total arrears at the end of 2021 is 36 per cent of total tax revenue collected in 2021 but the revenue arrears older than 12 months is 89 per cent of total revenue arrears.
20. Accounting for revenue
A
Notes:
20.1 Information on revenue collections
A
Notes:
GRS produces a report on revenue data daily basis and is part of the budget execution report that is consolidated monthly. This information is broken down by revenue type.
20.2 Transfer of revenue collections
A
Notes:
Payments are made into a treasury account in commercial banks by the taxpayer. The bank transfers these payments to the TSA daily.
20.3 Revenue accounts reconciliation
A
Notes:
Accounts of taxpayers can be reconciled daily with respect to assessments and taxes paid and arrears. Reconciliation of transfers to the TSA is made daily.
21. Predictability of in-year resource allocation
A
Notes:
21.1 Consolidation of cash balances
A
Notes:
The consolidated information about all bank and cash balances is available at the official website of the Treasury on a daily basis.
21.2 Cash forecasting and monitoring
A
Notes:
A cash flow forecast is prepared annually, broken down by month and is updated at least monthly on the basis of actual inflows and outflows.
21.3 Information on commitment ceilings
A
Notes:
Budgetary units are able to plan and commit expenditure for twelve months in advance in accordance with the budgeted appropriations.
21.4 Significance of in-year budget adjustments
A
Notes:
Adjustments to budget allocations were made twice in 2021 in accordance with the rules established by law.
Notes:
22.1 Stock of expenditure arrears
A
Notes:
Amount of expenditure arrears did not exceed 2% during 2019–2021.
22.2 Expenditure arrears monitoring
A
Notes:
In the e-Treasury System, it is possible to generate data on overdue debt of any budgetary units in real time. In addition, payments that are not processed before the due date specified in the contract are monitored.
Notes:
23.1 Integration of payroll and personnel records
A
Notes:
The budgetary units maintain their respective personnel databases under the E-Treasury (payroll module) system that is managed by Treasury.
23.2 Management of payroll changes
A
Notes:
Personal records are updated monthly in time for the month’s payments. Updates are real-time and reflected in the payroll module of the E- Treasury system. In addition, retroactive changes to the existing data in the system are not allowed.
23.3 Internal control of payroll
A
Notes:
Changes to the payroll records, are restricted to only authorized persons in the budgetary units in accordance with the labor legislation. The changes are certified and then approved by the relevant authorities.
Notes:
The State Audit Office conducts payroll audits in all budgetary organizations operating at the central government level. This is a mandatory audit procedure to be performed during the financial and compliance audit process.
Notes:
24.1 Procurement monitoring
A
Notes:
Databases or records are maintained for all procurement transactions, for all tenders or contracts including data on what has been procured, value of procurement, and who has been awarded contracts.
24.2 Procurement methods
B
Notes:
As per public procurement legislation, for the procurement of homogenous goods / services worth up to 5000 GEL (equivalent to approximately USD 1600) an open competition / tender is conducted, which is a default method of procurement.
24.3 Public access to procurement information
A
Notes:
All the key procurement information is made available to the public. These include but are not limited to: (1) legal and regulatory framework for procurement; (2) Annual public procurement plans; (3) bidding opportunities; (4) contract awards; (5) data on resolution of procurement complaints; (6) annual procurement statistics, etc.
24.4 Procurement complaints management
A
Notes:
The activities of the Board are carried out on the basis of the equality of all persons involved in the dispute under the law and the Board, as well as in accordance with the principles of publicity and the independence of the members of the Board.
25. Internal controls on nonsalary expenditure
A
Notes:
25.1 Segregation of duties
A
Notes:
Segregation of duties is prescribed throughout the expenditure process with responsibilities clearly laid out at different levels in the Public Financial Management Information System (PFMIS), in accordance with Order of the Minister of Finance of July 6, 2012, on the approval of instructions for the Treasury Electronic Service System.
25.2 Effectiveness of expenditure commitment controls
A
Notes:
Commitment control applies to all payments made from the Treasury single account. Actual expenditures incurred are in line with approved budget allocations and does not exceed committed amounts and projected available cash resources.
25.3 Compliance with payment rules and procedures
A
Notes:
Compliance with payment rules and procedures is very high.
Notes:
26.1 Coverage of internal audit
A
Notes:
Internal Audit Unit covers all central ministries (11 ministries) and all LEPLs defined by the decree of the government, where the internal audit was to be established. The coverage of revenue and expenditure is almost 100%.
26.2 Nature of audits and standards applied
A
Notes:
System and performance audits have been added to the audits of compliance and effectiveness of internal controls. External evaluations of the quality of activities of internal auditors, conducted during the reporting period, revealed that the level of general compliance with the standards is high.
26.3 Implementation of internal audits and reporting
A
Notes:
All internal audit entities implement strategic and annual planning that is agreed upon by the institution. The subjects also draw up an annual report and submit it to the head of the institution as well as to the Harmonization Center of the MoF.
26.4 Response to internal audits
A
Notes:
There is a comprehensive follow up on recommendations made in all internal audit reports which are summarized in an annual internal audit report. All the entities produce an annual report.
VI. Accounting and reporting
Scores by Dimension
Overall Indicator Score
27. Financial data integrity
A
Notes:
27.1 Bank account reconciliation
A
Notes:
Treasury under Ministry of Finance reconciles all its balances daily with the TSA sub-accounts and other bank accounts in the NBG.
Notes:
There is neither expenditure nor revenue suspense accounts under the TSA. During fiscal years 2019-2021, revenue deposits were properly coded and accounted for, with no suspense accounts arising.
Notes:
All advance accounts are cleared in a timely manner. Amounts paid in advance are controlled in real time. The existence of unverified advance accounts limits the organization’s subsequent payments.
27.4 Financial data integrity processes
A
Notes:
Access and changes to records is restricted and recorded, and results in an audit trail. Financial data integrity is done by Treasury, which reviews financial information from budgetary units and its IT department monitors unauthorized systems access.
28. In-year budget reports
B+
Notes:
28.1 Coverage and comparability of reports
A
Notes:
Coverage and classification of data in the budget performance reports allows direct comparison to the original budget or budgets of previous years.
28.2 Timing of in-year budget reports
B
Notes:
Budget performance reports are prepared quarterly and submitted to Parliament and published on the website of the Ministry of Finance within four weeks of the end of the quarter, while monthly reports are prepared within 20 days of the end of the month and published on the Treasury website.
28.3 Accuracy of in-year budget reports
A
Notes:
Integrated electronic systems and unified budget classification ensure data accuracy at both the commitment and payment stages and are contained in in-year reports. There are no substantive comments regarding the accuracy of the data in the reports of the State Audit Office.
29. Annual financial reports
C+
Notes:
29.1 Completeness of annual financial reports
A
Notes:
Consolidated financial statements for state and local budgets mainly include information on revenues, expenditures, nonfinancial assets, financial assets and liabilities (including guarantees and long-term liabilities), equity, as well as reconciled cash flows and balances.
29.2 Submission of reports for external audit
C
Notes:
The Treasury annually prepares consolidated financial statements at the state budget level, which, for accountability purposes, are published on the Treasury`s website www.treasury.ge within 6 months of the end of the reporting year.
29.3 Accounting standards
B
Notes:
The current Accounting and Financial Reporting Guidelines on the Chart of Accounts and Financial Reporting Forms are in line with both the GFSM 2014 methodology and the Georgian Budget Classification, and include the requirements of the following accrual based standards: IPSAS 1, IPSAS 2, IPSAS 3, IPSAS 4, IPSAS 5, IPSAS 9, IPSAS 12, IPSAS 13, IPSAS 14, IPSAS 16, IPSAS 17, IPSAS 19, IPSAS 20, IPSAS 21, IPSAS 23, IPSAS 24, IPSAS 26, IPSAS 31, IPSAS 32, IPSAS 34, IPSAS 35, IPSAS 36, IPSAS 37 and IPSAS 39.
VII. External scrutiny and audit
Scores by Dimension
Overall Indicator Score
Notes:
30.1 Audit coverage and standards
A
Notes:
The financial statements of all central government budgetary units (including revenue, expenditure, assets and liabilities), as well as the annual report on state budget performance are audited using International Standards of Supreme Audit Institutions (ISSAI) for the last three fiscal years. The audits identify / highlight all relevant material issues and systemic or control risks.
30.2 Submission of audit reports to the legislature
A
Notes:
During the last three completed fiscal years, the State Audit Office submitted the annual report on state budget performance to the legislative body within 3 months after receipt of the report by the State Audit Office.
30.3 External audit follow-up
A
Notes:
There is an effective system for monitoring and follow up of recommendations. According to the organic law on the State Audit Office, within 30 calendar days after the approval of the audit report, the auditee submits to the State Audit Office an action plan on the measures already taken and / or to be taken for implementation of recommendation (relevant activities, deadlines and responsible persons).
30.4 Supreme Audit Institution independence
A
Notes:
The State Audit Office is independent from the executive with respect to procedures for appointment and removal of the Auditor General, the planning of audit engagements, arrangements for publicizing reports, and the approval and execution of the SAO’s budget.
31. Legislative scrutiny of audit reports
A
Notes:
31.1 Timing of audit report scrutiny
A
Notes:
The Audit Group under the Budget and Finance Committee scrutinized the audited budget execution report annually.
31.2 Hearings on audit findings
A
Notes:
All audit reports that have a qualified or adverse or disclaimer audit opinion are subject to in-depth hearings and are attended by responsible officers as appropriate.
31.3 Recommendations on audit by the legislature
A
Notes:
There is systematic follow up of recommendation issued on actions which endorses the position of the SAO.
31.4 Transparency of legislative scrutiny of audit reports
A
Notes:
All hearings are conducted in public. The budget execution reports and qualified audit reports are debated in the full chamber. All reports are published.