Benefits and Challenges of the
Regulatory Reforms in Georgia
Zaal Lomtadze, Deputy Minister of Environment
11 October 2007, Belgrade
1
Reform and Development Program of
the Government for 2004-2009
Among the government’s reform priorities:
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Improving the business environment
Cutting state intervention to a minimum (deregulation)
Establishment of “compact, competent and properly
motivated public service”
Cutting bureaucracy in both numbers and influence
Promotion of public input in decision making
Enforcement of high standards for the protection and
sustainable use of natural resources
Georgia has achieved significant progress in cutting red
tape and increasing economic freedom.
2
MEPNR Medium-term Priorities
Institutional reform (2005–2007)
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procedural development
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budget increase
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obligatory medium-term expenditure framework planning
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staff training
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better targeted technical assistance programs of donors & IFIs
Reform of instruments of natural resources use
(2005–2008)
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Reform of instruments of environmental protection
(2005–2010)
3
Situation before the Reform (2003-2004)
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Low authority of the environment ministry within the
government
Shortage of resources: budget for little more than salaries
Weak environmental planning and implementation
High turnover of professionals: private sector demand,
low wages, low motivation
Management and decision-making processes isolated
from other stakeholders
Inefficient monitoring systems
Weak law enforcement
Performance measured by output indicators only: number
of new legislative acts adopted, of inspections carried out
4
MEPNR Staff Optimization
3000
8000
2500
7000
6000
2000
5000
1500
4000
3000
1000
2000
500
1000
0
0
2003
2005
Employees, total
2007
Employees, central apparatus
2003
2005
2007
Annual average salary, total
Annual average salary, c.app.
5
Creation of Environmental Inspectorate
2005 - Established based on the Law “On State Control of
Environment Protection”
Main responsibilities:
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Identification of the regulated community
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Compliance monitoring
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Registration, enforcement, and analysis of violations
of environmental and natural resource regulations
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Preparation of proposals
encourage compliance
for
mechanisms
to
6
Is There a Deterrent Against Violations?
Deterrence condition – complete removal of illegal benefit;
true if:
D×P×F>B
D – probability of detection of a violation
P – probability of prosecution of a detected violation
F – the amount of fine imposed (and actually paid)
B – benefit from an illegal activity
In Georgia:
• D increased sharply, but only in the natural resource sector
• P also improved radically
• F – some progress, not across the board
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Reform Progress as of 2007
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The MEPNR authority has increased, mainly due to the
importance attached to natural resources management
(government priority)
Much better budget funding: salaries are competitive
with the private sector
Mixed progress in reforming the legislation: as
enforcement improves, some serious gaps emerge
Stakeholder cooperation has improved but the priorities
are dictated by the government’s economic agenda
The use of integrated approaches in permitting and
inspection has widened and procedures of inspection
were updated and better documented
Increased transparency and reduced corruption
No clear progress in performance measurement
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New Risks to Regulatory Reforms
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Better, but selective application of rules due to pressure
to support economic growth
No place for environment protection in the government’s
short-term agenda and no long-term vision
Lowering “barriers to investment” may go too far,
resulting in a kind of anti-environmental protectionism?
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Key Lessons Learned
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It helps when environmental regulatory reforms are part of
a bigger package providing institutional and financial
support.
It is impractical to attack all problems at once: priority
planning is necessary.
There have to be smart ways to minimize damage from
interest groups’ lobbying.
A long-term commitment to reform is necessary but is
hard to institutionalize in a convincing way (MDGs?
PRSPs? SD strategies?)
Although international support can be instrumental in
recognizing the need for reforms and partially supporting
them…
Reforms have a chance ONLY when domestically driven.
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