The Lari is stable

Economic analysts have assured Georgia that the GEL remains stable. Despite the war with Russia, inflation has not increased. However, if the conflict continues the currency may slip out of control and major price rises could result.

Lado Papava, commenting on the present situation, thinks that there should be no acute devaluation of the Lari unless the population starts to panic. The country has sufficient reserves of foreign currency to absorb the effects of the war in the short term and budget revenues are stable.

Papava thinks that in the present circumstances Georgia could support its financial position with the USD 500 million revenue which the country accrued by issuing Eurobonds at the beginning of 2008. This intervention could stabilize the economy.

Papava does not exclude the possibility that when the war is over the World Bank, other financial institutions and other countries could play a part in subsequent economic rehabilitation programmes by issuing grants and soft loans.