Fiscal Implications of Local Self-Government Reform in Georgia

In Georgia, there is a clear policy trade-off between having smaller local self-government units (LSGs), which would be closer to voters and service users, and the higher overall costs of a larger number of LSGs. In November, 2012, the Georgian Ministry of Regional Development and Infrastructure (MRDI) began to design a major policy initiative to reform the existing system of sub-national government in Georgia. One element of this initiative is a territorial reform to increase the number of city/municipal governments. The objective is to support better local governance by creating new cities and dividing existing municipalities into smaller units.

ISET-PI has been selected to analyze the fiscal impact of increasing the number of local self-government units (LSGs) in Georgia.