Measuring Social Inequality in the South Caucasus

By Using Balanced Scorecard in Local government

Dr. Eka Gegeshidze

Professor

The University of Georgia,

The working paper presents using Balanced Score card approach research method in Local

Government, and how can be by that method measure, evaluate and treat Social inequality in

South Caucasus.

It is known that in public administration that, Local government is playing central role by

delivering services’ to local population, in short can be said “life is local” and problems of

Social inequality can be treated effectively by improving local government performance. If it

can be possible measuring Social inequality by perspectives of the local government and if it can

measured well, indicting causes of the results of not proper performance and gaps in local

administration body can be made future performance framework and measurement system, and

it can be transform “Measuring for improving system”.

David Norton and Robert S. Kaplan introduced the Balanced Scorecard in a 1992 Harvard

Business Review article. Initially, in 1992, the method was presented for project that studied

performance measurement in companies whose intangible assets played a central role in value

creation. Later the system was adapted by, public, private and nonprofit organization in the word.

By that approach can be assessing evaluate and measure, starting point of the organization

strategy performance. By this method it is possible to estimate the level of social inequality, the

point out social inequality reduction strategies, and evaluate and control the performance by key

performance Indicators.

“The balanced scorecard is a strategic planning and management system that is used extensively in

business and industry, government, and nonprofit organizations worldwide to align business activities to

the vision and strategy of the organization, improve internal and external communications, and monitor

organization performance against strategic goals.”

The methods are widely used for the different public administration body in the government

ageneses of the developed countries. But there is not existing approaches of using balanced

scorecard method for measurement Social Inequality in low middle income or low income

countries.

The Balanced Scorecard by four different perspectives analyzing performance: Customer

Perspective, Internal Perspective, Learning & Growth Perspective, Financial Perspective. The

work presents approaches of the balanced scorecard by nine step doing strategic mapping and

key performance indicators. They are Assessment, Strategy, Objectives, Strategy Map,

Performance Measures, Initiatives, Performance Analysis, Cascading and Evaluation.

Key words: Social Inequality, Local Government, Balanced scorecard, research method,

key performance indicator,

----------------------------------------------------------------------------------------------

Introduction

Local government is main powerful instrument in the regions for implementing different public

policy strategies in the country. Government 's role in modern democratic society is very vital

for delivery services to the citizens. Every citizen has right and should have ability to handle,

regulate and manage local issues by their own responsibility and interests and they elect local

self-government bodes. Local government is the right of citizens to decide certain issues of local

importance. In addition, the possibility of self-government include not only a legal right to

participate in issues of local importance, but also for the possession of relevant resources . These

resources are mostly managed self-governing bodies at the different programs and budgets. The

scale of the powers of local self-government establishes individual country's legislation. But

local governments in democratic country should have following main goals: to improve the

economic and social conditions of the population. supply citizens clean water, energy, healthy

food, apartments, jobs, education and welfare. It should be done by subsidiary Principle which

means that, the power is conducted closest to the citizens standing governance levels. it is

unacceptable implementing things by central governments things which are better done at the

local level because they more effectively can implement that kind of jobs. But there are always

problem by civil society evaluate and measure effectiveness of the governments achievements or

fails in central or local level, methods and strategies of measurement is problematic issue in the

business world as well.

The three republic of the South Caucasus has deferent local government bodies but similar

soviet history and political and economic situation, with problems and perspectives for future.

The region one of the most problematical in the post-Soviet area, and comprises three heavily

dubious areas – Abkhazia and South Ossetia in Georgia, and Nagorno-Karabakh Republic. In the

countries stamped following problems: poverty, income non equality, corruption, non efficient

productivity, Human Rights Violation, ethnic minorities problems and etc.

Armenia’s economic indicators are following GDP of US$ 3,870, Armenia is a lower middle-

income country. Poverty headcount ratio at national poverty line (% of population) 32.4%, CO2

emissions (metric tons per capita) 1,4 School enrollment, primary (% gross) 102%, Improved

water source, rural (% of rural population with access) 100%, Life expectancy at birth, total

(years) 74, GNI per capita, Atlas method (current US$) US$ 3720, Annual GDP Growth (%)

3.2% (2013), Unemployment, total (% of total labor force) (modeled ILO estimate) is 18.5%,

Current account balance as a percentage of GDP for the year -8 %, Inflation, consumer prices

(annual %) 2.6 (2012), CPIA transparency, accountability, and corruption in the public sector

rating (1=low to 6=high) – 3.5.“Remittances from migrant workers play an important role in

Armenia’s economy. The growth of household deposits is strongly supported by an 11 percent

growth in remittances as of June 2013. With exports and remittances dependent on international

prices for commodities, the Armenian economy is vulnerable to adverse shock to terms of trade

from global developments” (Worldbank, 2014).

Azerbaijan economic indicators are following GDP of US$ 7165, Azerbaijan is a upper middle-

income country. Poverty headcount ratio at national poverty line (% of population) 6%, CO2

emissions (metric tons per capita) 5.1, School enrollment, primary (% gross) 98%, Improved

water source, rural (% of rural population with access) 71%, Life expectancy at birth, total

(years) 71, GNI per capita, Atlas method (current US$) US$ 6220, Annual GDP Growth (%)

4.9% (2013), Unemployment, total (% of total labor force) (modeled ILO estimate) is 18.5%,

Current account balance as a percentage of GDP for the year 15,9%, Inflation, consumer prices

(annual %) 1.1% (2012), “CPIA transparency, accountability, and corruption in the public sector

rating (1=low to 6=high) is 2.5. “With a solid rise in income and a reduction in poverty,

Azerbaijan weathered the recent global economic crisis much better than many other countries.

But the post-crisis world is not free of challenges. The country has a unique opportunity to enter

the ranks of higher middle-income countries, evidenced by the decline in the poverty rate from

50 percent in 2001 to 7.6 percent in 2011. While some of this improvement was driven by high

growth rates, a strong increase in wages, and the introduction of a well-targeted social benefit

system, much of it resulted from a jump in oil and gas revenues” (Worldbank, 2014).

Georgia’s economic indicators are following GDP of US$ 3 503, Georgia is a lower middle-

income country. Poverty headcount ratio at national poverty line (% of population) 14.8 %, CO2

emissions (metric tons per capita) 1,4 School enrollment, primary (% gross) 106%, Improved

water source, rural (% of rural population with access) 97%, Life expectancy at birth, total

(years) 74, GNI per capita, Atlas method (current US$) US$ 3290, Annual GDP Growth (%)

2.5% (2013), Unemployment, total (% of total labor force) (modeled ILO estimate) is 15%,

Current account balance as a percentage of GDP for the year -7.5, Inflation, consumer prices

(annual %) -0.9 (2012), CPIA transparency, accountability, and corruption in the public sector

rating (1=low to 6=high) – 3.5. “Located on the shortest route between Europe and Asia,

Georgia’s transport system is a key link in the historic “Silk Road.” The Government’s

commitment to rehabilitating main, secondary and local road networks has intensified in

response to the global economic down-turn, as road rehabilitation will improve access to markets

and services, and create short-term employment through civil works” (Worldbank, 2014).

Comparing each other Azerbaijan has best economic indicators, but in the development

indicators most good results had Georgia with 0.745 HDI index takes 72 place in the world, the

82 place with 0.734 HDI takes Azerbaijan and Armenia is ranked on 87 place with 0.729 HDI.

But in all of the three countries there are situation quite far from Sustainable Economic

Development.

Measuring for improving system

Creation “Measuring for improving system” is very challenging can be very effective system for

evolution self government bodies, it would be useful for: political parties, civil society

organizations, statistical departments, International Organizations, local or central government

and parliament, saying in short it would be useful for every stake holder of the local

government.

Establishing “Measuring for improving system” on base of the Balanced scorecard its gives

possibility building perfect informative systems with e-Governance structure.

David Norton and Robert S. Kaplan introduced the Balanced Scorecard in a 1992 Harvard

Business Review article. Initially, in 1992, the method was presented for project that studied

performance measurement in companies whose intangible assets played a central role in value

creation. Later the system was adapted by, public, private and nonprofit organization in the word.

By that approach can be assessing evaluate and measure, starting point of the organization

strategy performance. By this method it is possible to estimate the level of social inequality, the

point out social inequality reduction strategies, and evaluate and control the performance by key

performance Indicators.

“The balanced scorecard is a strategic planning and management system that is used extensively

in business and industry, government, and nonprofit organizations worldwide to align business

activities to the vision and strategy of the organization, improve internal and external

communications, and monitor organization performance against strategic goals.”

Measuring for improving system will be type of the Performance measurement systems present

multiple roles:

Communicate the Local governments strategic objectives;

Motivate employees to help the Local governments achieve its strategic objectives;

Evaluate the performance of local Council, , employees, and operating units;

Help city or local Council allocate resources to the most effective, efficient and economic

opportunities;

Providing feedback on whether the government is making progress in improving.

During building and researching Performance measurement systems, always big challenge is

finding the right mix Quantitative and qualitative indicators with financial and nonfinancial

measures, and it should be cheap and easy for calculation or installing in the e-Governance body.

Only Financial measurements alone have not be adequate for example if local government

spending per child living in area US$ 1000 for preschool education, it would not Enough

information for evaluating it is good or bed for children or parents, because there can be other

circumstances: kindergartens are far from communities and parents prefer do not send children

to kindergartens and only 10% of children of the kindergarten age is attending in the everyday

basis and teacher are receiving salary anyway, the Benefits from that US$ 1000 in the

community is really, US$ 100 because only 10% using kindergarten.

Performance measurement systems can carry out several roles:

Communicate the local governments strategic objectives to the citizens and other

stakeholders

Motivate employees of the local government to help the local authorities achieve its

strategic objectives

Evaluate the performance of local authorities, employees, and operating departments of

the local government bodies

Help the local authorities allocate resources to the most cost effective, productive,

outcome, output and for reaching best Influence, impact to the beneficiary.

Performance measurement systems has tremendous opportunities for democratization

processes in the country, Make available feedback on whether the local Government is

making progress in improving processes and meeting the expectations of citizens and

stakeholders

by good Performance measurement systems can evaluate and measure

Loyal, Faithful, unfriendly or antagonistic Voters relationships;

Local government service delivery High-quality processes;

Innovative products and services which can be delivered on concrete areas;

Employee skills and motivation;

Quality of the Databases and information systems used by local government.

Balanced Scorecard (BSC) is a general and flexible approach to performance

measurement, have been used profit and nonprofit enterprises and in public sector. A unique

feature of the Balanced Scorecard is that it offers a framework that selects financial and

nonfinancial performance measures from the organization strategy. The measures include, but

are not limited to, measures of operating, quality, and process improvements.

The Balanced Scorecard linked perspectives that are derived from the organization’s vision,

strategy, and

objectives:

Customer. How do we create value for our customers – citizens ?

Process. At which processes must we excel to satisfy our citizens and stakeholders?

Learning and growth. What employee capabilities, information systems, and local

government organizational capabilities do we need to continually improve our processes

and citizen relationships?

Financial. How is success measured by our stakeholders?

According methodological approach of the balanced scorecard many organization, before

choosing their performance objectives and measures, creating vision statements and mission

statements or Strategy directions, in governmental bodies mainly indicating social impacts. After

strategy declaration Local Government should state objectives, measures and targets for

performance. objectives is that describes what the local government is challenging to achieve, it

is typically written as action express, for example customer/citizen perspective objective will be:

establish Healthy lifestyle in the society. Objectives of the process will be Achieve excellence in

citizens order fulfillment through continuous process improvements. Objectives of the learning

and growth - Align employee incentives and rewards with the achievement process or consumer

objectives, financial perspective Objectives can be for local government - Increase revenues

from business in local budget through supporting innovative entrepreneurship. In the Diagram #1

You can find Cascading Planning in the Public Sector, by that can be made steps of the Balanced

Scorecard buildings in local Governments.

Diagram #1: Cascading Planning in the Public Sector

source: (Mackay, 2005)

As the objectives are set we should indicate Measures which should describe how success in

achieving an objectives will be determined. for example, an objective react to citizens written

demand on time. Selected measures on that objectives is giving clear focus to workers on how

their progress efforts will be evaluated. So, measurement is a powerful tool for correspond

clearly what the local government means for that objectives. for example measure of that

objectives can be divide in the different directions because citizen written demand can be

different characteristic, sometimes very complicated, for example according Georgian

administrative Low every letter should be responded in 10 days, but sometimes that time is very

vital for citizens if they are requesting money for Emergency Surgery . So measures can be

stated following way demands responded in two days, in five days, in time. The targets setting

methodology is very time consume because it is very important starting point from which level

we are starting and when it should be the target shown. for example if the unemployment rate in

the local community is 45%, it impossible to achieve even reduction of the unemployment rate

by 10% in a year. There should be set to represent excellent performance, but it should not

miracle. For example if we measured starting point and indicate that demands from citizens

responded in two days was 5%, in five 5 days 25%, in time 62%, so it means 38% was not

responded at all. In the targets can be state increase by 10% every stage of measurement in one

year. It means in two days should 15%, in five 5 days 35%, in time 72%, so it means 28% still

remains non responded. but it is still performance and can be managed acceding performance, if

we will target 100% respond we should be sure that local government bodies has or not

capability to answer that amount requests. Some times in local governments is full of the

problems, there is not enough computers, sometimes is not electricity, employee are not

competent or reinforced to answer all of the demands of the citizens. when starting point

indicator is very poor there is very important research what is causes that poor performance.

One of the best way to detect problems is Cause and effect analyses it is also known as – Cause

and Effect Diagrams, Fishbone Diagrams, Ishikawa Diagrams, Herringbone Diagrams, and

Fishikawa Diagrams, but is approach the following there should be analyzed following factors

which will be mainly will be causing the problem non responded demands of citizens, there are

following factors: Site, Task., People, Equipment and Control, and in every factor in the different

direction should be given answer of the question does it coincided with problem solving, for

examples: Site - does workers have calm environment for working solving, Task., People – does

the employee competent and skilful for answering the demands – education, comitial skills,

Language proficiency, Equipment - the computer or information system existing and working

well, and Control – if the not responding is not provide any checks and punitive actions from

mangers. By comparing current performance to the target performance, employees and managers

of the departments or local authority can determine whether the local government body is

achieving its desired level of the performance and there is given more clarification, motivation,

feedback, and evaluation. According A Practitioner’s Guide to the Balanced Scorecard There is a

common and coherent theme to the government approach to performance measurements and this

is captured by the acronym FABRIC: Focused; Appropriate; Balanced; Robust; Integrated and

Cost effective (Mackay, 2005).

The local governmental bodies has special characterized Conservancy is an example of an pubic

body had some excellent performance indicators, but these were not linked to its strategy. The

nature of the conservancy mission is restricted by central government or they responsibility stage

is not giving possibility to prove that performance is the result of the local governmental bodies

achievements. many objectives which can be aimed by government, is coming from different

stakeholder so they already supported but international donors or central budgets but local

government should explore process and Learning and growth perspectives, setting measurement

system and establish key perforce indicators and set targets.

But main question of each activities are following: Mission (constituent) should answer How do

we have a social impact with our citizens/constituents?; Support question is How do we attract

resources and authorization for our mission? Process question is To have a social impact and to

attract resources and support, at which processes must we excel; Learning and growth How do

we align our intangible assets to improve critical processes?; Financial question is How should

we manage and allocate our resources for maximum social impact.

Let our mission will be more wealthy, healthy and prosper local community with high level of

human Development index, the one strategies can be “Reducing Social Inequality in the local

communities”, but there is how can we evaluate and asses that performance in local level.

Social equality means equal accesses of fundamental rights, health and education, less poverty

population more corps and food producing, so we can state indicators and measure Social

inequality in local level can be different and most of them can be provided from Countries

statistical department. among indicators for assessing social inequality can be: Agricultural

machinery, tractors per employed in Agricultural sector or per area of the square kilometers,

Fertilizer consumption (kilograms per hectare of arable land), Arable land (hectares per person),

Cereal production (metric tons), Crop production index, Food production index, Livestock

production index, Permanent cropland (% of land area), Agricultural irrigated land (% of total

agricultural land), (%) Benefits held by 1st 20% population - All Social Safety Nets, (%)

Program participation - All Social Safety Nets, (%) Benefits held by 1st 20% population - All

Social Insurance, (%) Program participation - All Social Insurance, local Trade in services (% of

local GDP), Primary income payments in local are from employee, for self employee, and

Primary profit payments from firms, primary property tax, Investment in local area, Banks and

banks branches operating in area, Electric power consumption (kWh per capita), Access to

electricity (% of population) in area, Population density (people per sq. km of land area), Bank

nonperforming loans to total gross loans (%),Bank capital to assets ratio (%), Commercial bank

branches (per 100,000 adults), Borrowers from commercial banks (per 1,000 adults), Depositors

with commercial banks (per 1,000 adults), Consumer price index, Deposit interest rate

(%),Lending interest rate (%),Interest rate spread (lending rate minus deposit rate, %), Grants

and other revenue (% of revenue), local business Revenue, excluding grants (current LCU),

Subsidies and other transfers (% of expense), Time spent dealing with the requirements of

government regulations (% of senior management time) Profit tax (% of commercial profits),

CPIA economic management cluster average (1=low to 6=high), CPIA building human

resources rating (1=low to 6=high), Motor vehicles (per 1,000 people), Vehicles (per km of

road), Telephone lines (per 100 people), Telephone lines (per 100 people), Household final

consumption expenditure per capita growth (annual %), Gross national expenditure deflator

(base year varies by country), Gross fixed capital formation, private sector), Gross fixed capital

formation (% of GDP), Agriculture, value added, Manufacturing, value added, Industry, value

added, GDP per capita, GNI, Atlas method, Gross savings, School enrollment, Pupil-teacher

ratio, Primary education teachers per 100 person, Children out of school, Poverty headcount ratio

at $2 a day (PPP) (% of population), Poverty headcount ratio at $1.25 a day (PPP) (% of

population), Poverty gap at $2 a day (PPP) (%),Poverty gap at $1.25 a day (PPP) (%),GINI

index, Public spending on education, Prevalence of anemia among children (% of children under

5) Improved water source, rural (% of rural population with access), Mortality rate, neonatal (per

1,000 live births), Immunization, Community health workers (per 1,000 people), Nurses and

midwives (per 1,000 people), Low-birthweight babies (% of births), Tuberculosis case detection

rate (%, all forms), Health expenditure, private (% of GDP), Cause of death, by communicable

diseases and maternal, prenatal and nutrition conditions (% of total), Incidence of tuberculosis

(per 100,000 people), Poverty gap at national poverty line (%), Poverty headcount ratio at

national poverty line (% of population), Local Unemployment and etc. There are more than 1000

indicator which are calculating in every country were world bank operating and it can be

adjusted according local government needs mission and strategies, main thing is that indicators

for calculation would be most cost effective because central government also need the

information for policy planning and evaluation. but very important issue is that research

comparison to the local indicator country wide indicators.

Our Objective it to broad because we are using that kind of big number indicators. But if our

objective would be more narrow the performance can be measured much more easy. It can be

meaningful till create balanced scorecard foresee local government body structure, according

Provisions of the Akhaltsikhe (Samtskhe Javakheti, Georgia, one of the poorest region in

Georgia) Municipality there are the following structural units for implementing local government

tasks:

A) The Administrative Office;

B ) Finance - Budget Office;

C) Infrastructure and Economic Development Department ;

D) culture, education, sports, Monument Protection and Youth Affairs Office;

E) Fire Protection Service;

F) Military registration and conscription.

Let us see some Examples of the Strategic objectives from their function set performance

indicator, target and method of calculation.

UNIT Function Examples of

the

Objective

Measurement,

KIP

Target of KIP Methodology of calculation

Minimum

goal

Average

goal

Maximum

goal

A) The

Administrative

Office

Promoting the coordination of

work local government units and

territorial bodies, Proceedings of

the Board local government

activity, Manage Human

Resources , as well as the head

of the Public Relationship and

the legal provision of the Local

governments activities

1. The best

Service to

the citizens

1. Middle Time

of answering

citizens

demands

days

10 day 8 day 6 day ∑

∑

That indicator can be divided in

different directions for examples:

request with social issues,

Request of land registration

Requests for healthy life styles

2. Trained

educated

ready to

Serve

workers

a) computer

skills and

languages

knowledge

b) High level

degree worker

ratio.

Worker training

day ratio

d) Computer

number

a) 80% of

the workers

b) BBA

degree 60%

c) 80%

a) 90%

workers

b) BBA

degree 70%

c) 85%

a) 95% of

workers

b) BBA

degree 80%

c) 90%

B ) Finance -

Budget Office;

Budget basic functions: Self

Preparation of the draft budget ,

the municipal finance programs

Calculation - justification , the

budget execution , budget funds

Targeted, appropriate and

effective use and

implementation of the budget

Reporting software , as well as

financial documents prepared by

the Board of

Authentication.

Can be measured according strategic objective of the country

C) implementing municipal

economic development

programs of developing and

Can be measured according strategic objective of the country

Infrastructure

and Economic

Development

Department ;

Implementation of relevant

statistical data collection -

processing and

Municipal property

management.

Territorial planning and urban

planning, construction

Permitting decisions on the

preparation, construction and

architecture

Supervise the activities of the

implement Municipality

Public works and infrastructure

projects in the planning -

Implementation and

enforcement of relevant local

procurement

Preparation of proposals.

D) culture,

education,

sports,

Monument

Protection and

Youth Affairs

Office;

Culture, education, sports,

Monument Protection and Youth

Affairs. Services and main

functions : the municipality of

Education, Culture, Sports and

Youth development and

implementation of municipal

programs Provision.

Georgian

Language

proficiency

among high

school

High School

Graduation

Rates in

Georgian

Language

a) 7 a) 8 a) 9 a ) The average performance of pupils

in Georgian language non Georgian

schools

High level

School

education in

Region

a) middle grate

performance of

the pupils

b) ratio of the

graduated from

schools

enrolled in

High education

a) 7

b) 20%

a) 7,5

b) 25%

a) 8

b) 30 %

a) The average performance of pupils

in every subject in schools

b)

Number Pass in the High education

Number of school graduated

To promote

healthy

lifestyle in

schools

a) ratio of the

pupils involved

in sport

sections

b) Number of

the

competitions

a) 10%

b) 3

a) 15%

b) 4

a) 20%

b) 5

a) Number of the pupils involved in

sport sections

Total Number of the pupils in School

b) Number of the competitions hold by

municipality in a year

hold by

municipality

c) Local

sportsmen's

achievements at

the national

level

c) 3

c) 4

c) 5

c) Number of prizes taken by local

sportsmen in the national level

To promote

cultural

activity

a) number of

cultural

activities in

region

a) 4 a) 6 a)8 a) number of cultural activities in

region (Folk Song Festival, Folk

Dance Festival, etc)

E) Fire

Protection

Service;

Fire service main functions :

Municipality

Provision of fire protection and

rescue operations.

Our

community

Always save

From Fire

a) Installed Fire

Protection

Systems in

Buildings,

manufactories,

Different

governmental

agencies

b) On time

reaction to the

fire alarm

a) 80%

b) 100%

a) 90%

b) 100%

a)100%

b) 100%

Number of Building were Installed Fire defense System

Total Number of Building

Number of the fire served

Number of the fire in the community

F) Military

registration and

conscription

Military

Registration and recruitment

issues delegated to

municipalities

Authority to ensure

implementation

Timely

mobilization

of the

persons with

liability to

serve in

military

forces

mobilized

persons to

Military

liability persons

ratio

80% 85% 90% mobilized persons

persons with liability to serve in

military forces

There are another issue of evaluation of the performance capability for implementation strategies

that can be done by learning and growth perspectives.

The indicators can be, % of the employees of the local government bodies knowing more than

one languages, % of the employees of the local government bodies knowing more than two

languages, % of the employees of the local government bodies having computer using skills, %

employees trained in newest legislation and etc.

learning and growth perspectives identifies the objectives for the people in the local government

systems, and organizational configuration that create long-term development . The learning and

growth objectives based on the employee capabilities and skills, technology, and organizational

position that will drive improvement in these critical processes. The learning and growth

objectives direct management’s attention to the required investments to improve the skills of

their employees, the information technology and systems. So learning and growth perspectives

concentrating in three components: Human Resources, Information Technology and

Organization Culture and Alignment, diagram #2 is sown the strategic objectives of the

components more detailed.

Diagram #2 . strategic objectives of the components for the learning&growth perspectives

components objectives

Human Resources Strategic competency availability

Information Technology Strategic information availability

Organization Culture and Alignment

Culture and climate

Goal alignment

Knowledge sharing

As shown in the diagram #2 above, Strategic information availability is one of the key objective

in the Learning and growth perspective. All of explained above nearly impossible implement

without proper e-governance systems because it would be very time consume job only making

reports have take huge volume human work . But if that will be planed and administrated

properly with adequate software support for every stakeholder of the local Government will be

easy to plan, monitoring and asses the results and key performance indicators.

That Balanced Scorecard approach can be more widely used as a tool for program Budgeting and

evaluation which will guarantee effective Fiscal policy strategies for the areas where is

necessities of intervention. The budget process in recent years has made significant reforms in

Georgia. and Georgia is trying using program budget approaches in local level.

The main advantage of the program budget, to the traditional organizational structure budget,

that the budget allows for a result-oriented budget planning process . Program format is clear

cause - effect relation between the results and the financial resources put into specific measures,

which is a prerequisite for effective utilization of public finances. Also, the program budget

allows us to see the entire budget for the funding of major programs to be carried out and the

results, and not only in the organizational setting.

That is the advantage of the program budget , which is the biggest problem related to its

implementation. Output-oriented budget planning software , it represents a starting point not only

to get to the final and interim results and program implementers distributed resources.

For functional program Budgeting process in the country, there should be fulfilled following

three conditions:

• The first condition : Performance Audit

• The second condition : E-Governance : program budget should include a very large amount of

information and 1. Provide the ability to edit and 2. Random access hierarchy program budget

should reflect the Treasury's operational information (plan , commitment , resources , demand

for payment of a debt ) .

• The third condition : measures of meaningful indicators.

From that conditions Balanced Scorecard Methods can be used in first and third condition and

for functional purposes E-Governance requiring both of them.

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Short Bio - Dr. Eka Gegeshidze

Dr. Eka Gegeshidze, Professor, of the School Business, Economics and Management in The University of

Georgia, She born in December 6, 1972. She Received PhD in Economics in 2011, work GDP and

Economic Growth. She has been involved in Spreading Entrepreneurship education since 1999, She

have done adaptation of the JA Economics, Student Company and Business Ethics program in Georgian.

She has specialized in various aspects of the economic and Education reforms of countries in transition,

including Economics Development, youth education and participation, Education reform, Joint ventures,

financial services, budgetary Methods, taxation, democracy and governance, local governance

performance and program budgeting, Accounting business restructuring and development of small and

medium-sized businesses. His recent experience includes the following activities: Economic

Development, Macroeconomic Policy, Public Economics, Economic growth and Globalization, Curricula

developments, relation of investment projects and Business Cycle; Business evaluation and Planning,

planning; project planning, management and evaluation; economic and financial analysis (feasibility

studies, business plans); taxation, research of problems of regional development and creation of

appropriate programs. Mrs. Gegeshidze has excellent communication and language skills.