Georgia

The International Energy Agency (IEA) conducts in-depth peer reviews of the energy policies of its members and non-member countries. This process supports a holistic approach to energy policy development and encourages the exchange of international best practices and experiences. This report is the first in-depth review conducted by the EU4Energy programme (implemented by the IEA and the European Union) in the 2019-2021 cycle. It updates and extends the analysis of energy policies in the countries of Eastern Europe, Caucasus and Central Asia that the IEA conducted in 2015. Since the 2015 review, Georgia has made solid progress in improving both the security and sustainability of its energy supply. The country entered into the EU-Georgia Association Agreement in 2016 and become a Contracting party of the Energy Community Treaty in 2017. Since then, it has made significant legal and institutional reforms demonstrating the government’s commitment to align its energy sector with EU regulations for electricity and gas markets, security of supply, renewable energy, energy efficiency and statistics. The energy sector has been instrumental in establishing Georgia’s overall economic policy focused on creating a liberalised environment through minimal state interference, deregulation, privatisation, reduced and simplified licensing and taxation, and free trade, earning the country the reputation of a 'star reformer'. Taking advantage of its favourable geographical situation, Georgia plays an important role in the regional trade of electricity, oil and natural gas. Nevertheless, Georgia is still confronted with many challenges in its transition to a more secure, sustainable and affordable energy future. The government recognises most of them and is considering various measures to address them. There is room for the further strengthening of the country’s long-term energy strategy, raising institutional capacity and improving coordination between stakeholders to develop policies based on solid analysis of supply-demand trends and alternative scenario models. More efforts could be made to develop effective secondary legislation to accelerate the implementation of the EU energy acquis, and to gradually phase out implicit subsidies and cross-subsidies in the electricity and gas sectors. In this report, the IEA provides recommendations for further improvements of Georgia’s policies to help the country guide the transformation of its energy sector.

The SME Policy Index: Eastern Partner Countries 2020 – Assessing the Implementation of the Small Business Act for Europe is a unique benchmarking tool to assess and monitor progress in the design and implementation of SME policies against EU and international best practice. It is structured around the ten principles of the Small Business Act for Europe (SBA), which provide a wide range of pro-enterprise measures to guide the design and implementation of SME policies. This report marks the third edition in this series, following assessments in 2012 and 2016. It provides a comprehensive overview of the state of play in the implementation of the ten SBA principles, and monitors progress made since 2016. It also identifies remaining challenges affecting SMEs in the Eastern Partnership (EaP) countries and provides recommendations to address them based on EU and international good practice examples. The 2020 edition also features a novelty: An assessment of three new dimensions going beyond core SME policy (competition, contract enforcement and business integrity) looking at key structural reform priorities that are critical to establishing a level playing field for enterprises of all sizes and ownership types.

Small and medium-sized enterprises (SMEs) play an important role in Georgia’s economy. SMEs provide more than 67% of employment and about 62% of gross value added. Although the environmental footprint of individual SMEs may be low, their aggregate impact in many respects exceeds that of large businesses. Commercial banks have an important role to play in providing access to green finance, particularly for SMEs. This report reviews the experience with green lending in the SME sector in Georgia. The analysis identifies the main challenges with lending to SMEs for green projects and discusses possible solutions. The report, in particular, looks at the role of the government and the policy instruments it can use to stimulate higher demand for green lending in the SME sector.

Georgia has made remarkable progress in expanding education access and improving education quality. Nevertheless, the majority of children in Georgia leave school without mastering the basic competencies for life and work. Moreover, students’ background is becoming a greater influence on their achievement. This review, developed in partnership with UNICEF, provides Georgia with recommendations to strengthen its evaluation and assessment system to focus on helping students learn. It will be of interest to countries that wish to strengthen their own evaluation and assessment systems and, in turn, improve educational outcomes.

This report analyses planned infrastructure projects, decision-making frameworks related to infrastructure development and strategic planning documents in eight countries in Central Asia and the Caucasus: Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan and Uzbekistan. It compares current investment flows with countries' national development objectives to identify misalignments and provides policy-makers with recommendations to improve the integration of climate change and other environmental concerns into infrastucture development decision-making processes. The report presents a comprehensive overview of infrastructure investment, primarily in the transport and energy sectors, throughout the region and identifies the risks and opportunities emerging from current investment patterns.

This study assesses the use of economic instruments for water resources management in Georgia and considers options for reform following the 2014 signature of an Association Agreement with the EU committing to alignment with the EU’s Water Framework Directive. This includes the systematic use of economic instruments, including water pricing, to recover the cost of water services provided to households, industry and farmers, among other measures. Three main economic instruments are recommended in this study: 1) the introduction of a licensing regime and charges for both surface water and groundwater abstraction, 2) the restoration of a licencing and charging regime for all forms of water pollution, and 3) more rigorous enforcement of these measures, including more active monitoring and higher fines for offenders. Implementing these measures will be greatly facilitated by the enactment of the new Water Law now being examined by the government of Georgia.