According to the Constitution of Georgia, the separation of powers between the state government and self-governing units is based on the principle of subsidiarity. This means that the problems and needs of citizens should be addressed by the governing body closest to them. Consequently, all issues that can be managed more efficiently at the subnational level should fall under the competence of elected local governments rather than the central government. Furthermore, the acquisition of political autonomy and authority must be accompanied by adequate financial guarantees. The state is obliged to ensure that the financial resources of a self-governing unit correspond to its mandates.[1] Thus, the transfer of powers and responsibilities from the central government to self-governing units encompasses three components: political, administrative, and fiscal decentralization.

Under the 2020-2025 Decentralization Strategy, the creation of full-fledged local self-governance (viewed as a primary democratic institution) was declared a key objective of the reform of Georgia’s governance system. The document linked decentralization to the realization of fundamental citizen rights at the local level and set three strategic goals: 1. Increasing the role of local self-government in managing a significant portion of public affairs; 2. Providing local self-government with appropriate material and financial resources; 3. Establishing reliable, accountable, transparent, and result-oriented local self-government.[2] According to an interim assessment report by the Ministry of Regional Development and Infrastructure of Georgia, the indicators measuring the results under all three strategic objectives were assessed as achieved at an average rate of 68%.[3] Nevertheless, these indicators do not fundamentally change the level of decentralization in the country, as the non-essential nature of delegated powers and insufficient financial autonomy remain persistent challenges. For instance, one of the indicators for the first strategic goal - increasing local government powers based on the subsidiarity principle - was the transfer of five powers to municipalities. According to the assessment, this was 80% completed with the transfer of four powers: financing capital expenditures of public schools, transporting students, managing local forests, and responsibilities in the field of child rights protection.

International monitoring reports also highlight the insufficient level of decentralization in Georgia’s governance system. According to a study by the Council of European Municipalities and Regions (CEMR), Georgia ranks ahead of only 7 states (Malta, Cyprus, Greece, Turkey, Hungary, Bosnia-Herzegovina, and Montenegro) out of 40 countries in terms of decentralization, measured by the subnational share of total government expenditure. It is noteworthy that among these, only Turkey, Greece, and Hungary exceed Georgia in size and population.[4] The study indicates that Georgia, along with Hungary, is one of the countries where the share of local self-government spending decreased most significantly between 2010 and 2020.[5] A report by the European Commission’s Directorate-General for Regional and Urban Policy further points to decentralization issues, placing Georgia 32^nd out of 57 EU, Council of Europe, and OECD member countries on the Local Autonomy Index. The country lags particularly in fiscal autonomy and financial self-sufficiency.[6] In contrast to subnational entities, the excessive concentration of financial resources and responsibilities in the central government weakens the role of local self-government and hinders both the sustainable socio-economic development of regions and the balanced distribution of power between the center and the periphery.

To ensure that Georgia’s governance system adequately responds to public needs and secures citizen participation in decision-making, effective decentralization reforms are essential. The redistribution of governing powers and resources between central and local authorities must be based on an adequate and impartial analysis of existing problems. Accordingly, this policy document reviews the main challenges regarding political, administrative, and fiscal decentralization in Georgia and presents a long-term vision for their resolution.

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