Reform will make the lari vanish
By Messenger Staff
Monday, May 25
The main reforming Minister who came in after the Rose Revolution, Kakha Bendukidze, was sacked because of his unpopularity. However it seems he still runs the economy.
Some time ago Bendukidze proposed getting rid of the lari. Some people didn’t take this idea seriously, but the Prime Minster’s team seems to actually be working on this.
Bendukidze’s argument was that foreign investors should be “liberated” from the lari and given the possibility of investing in dollars or euros without an exchange rate applying. This concept is gaining traction in Government circles. The Georgian Prime Minister’s advisor, Nona Karalashvili, says that the reform which gives investors the opportunity to invest in Georgia in the currency they want will be the most successful one. Karalashvili doesn’t exclude the possibility that after some time the lari could be taken completely out of circulation.
In the Government’s plan the lari will no longer be the only legal tender in the country. People will be allowed to pay for everything they want in dollars and euros as well. The national currency will thus become a “second class” one. This idea is supported by the President of the New Economic School of Georgia, Paata Sheshelidze, who also happens to be working on this project.
“It is a fact that despite the existence of the lari, many deals in Georgia are done in other currencies, especially dollars and euros. This reform can be implemented in different ways: one option is that any currency could be allowed to circulate in the country, meaning anyone can use any currency they want,” states Sheshelidze.
According to Sheshelidze the abolition of the lari will be very beneficial for Georgia, as with its disappearance “one more bureaucratic chain will vanish, and the Government will avoid spending its resources on printing money and remove one way it can get into people’s pockets.” Existing practice elsewhere is also cited as an argument for reform – Panama has used the US dollar for one hundred years and Montenegro, which is not in the EU, has adopted the euro.
The introduction of the lari was considered one of the most successful reforms in Georgia not so long ago. But now the Government wants to abolish it. We will find however that if the Government really does introduce “currency pluralism” the reaction from experts and society will be quite negative.
“I think the only aim of this is to destroy the country. This is the first time I have heard that the primary national currency may become secondary, and it is incomprehensible foolishness. If they can’t manage the lari properly they should say it directly,” states the former President of the National Bank Nodar Javakhishvili.
Georgia’s economy and most of its people are in a really poor condition now and people are quite suspicious of those members of the Government who claim to be “progressive reformers” and who try to prove this by quoting the placings they have been given in certain international ratings. Doing this only irritates people – their prosperity hasn’t risen as a result of the “boom in foreign investment” or the reforms.
One result of this “currency pluralism” will be that employees of budget-financed organizations will be the only people in Georgia paid in lari, whose rate will become more and more artificial and in the hands of the ‘reforming’ Government may become a tool for robbing people. Furthermore, if we consider that Russian capital is directly or indirectly present in Georgia and the Russians are trying to recreate the “rouble zone” on post-Soviet territory, it’s clear that it is possible that the Russian rouble would also be circulating in Georgia, and Russian-financed companies will pay the salaries of their employees in this currency, meaning that the rouble, not the dollar or euro, will perforce become the dominant currency in Georgia, in which investors will have to calculate various aspects of their proposed investment.
Bendukidze’s reforming initiative may play straight into Russia’s hands and strengthen Moscow’s position in Georgia’s economy. As history has frequently shown, there is more than one way of conquering a country.
Some time ago Bendukidze proposed getting rid of the lari. Some people didn’t take this idea seriously, but the Prime Minster’s team seems to actually be working on this.
Bendukidze’s argument was that foreign investors should be “liberated” from the lari and given the possibility of investing in dollars or euros without an exchange rate applying. This concept is gaining traction in Government circles. The Georgian Prime Minister’s advisor, Nona Karalashvili, says that the reform which gives investors the opportunity to invest in Georgia in the currency they want will be the most successful one. Karalashvili doesn’t exclude the possibility that after some time the lari could be taken completely out of circulation.
In the Government’s plan the lari will no longer be the only legal tender in the country. People will be allowed to pay for everything they want in dollars and euros as well. The national currency will thus become a “second class” one. This idea is supported by the President of the New Economic School of Georgia, Paata Sheshelidze, who also happens to be working on this project.
“It is a fact that despite the existence of the lari, many deals in Georgia are done in other currencies, especially dollars and euros. This reform can be implemented in different ways: one option is that any currency could be allowed to circulate in the country, meaning anyone can use any currency they want,” states Sheshelidze.
According to Sheshelidze the abolition of the lari will be very beneficial for Georgia, as with its disappearance “one more bureaucratic chain will vanish, and the Government will avoid spending its resources on printing money and remove one way it can get into people’s pockets.” Existing practice elsewhere is also cited as an argument for reform – Panama has used the US dollar for one hundred years and Montenegro, which is not in the EU, has adopted the euro.
The introduction of the lari was considered one of the most successful reforms in Georgia not so long ago. But now the Government wants to abolish it. We will find however that if the Government really does introduce “currency pluralism” the reaction from experts and society will be quite negative.
“I think the only aim of this is to destroy the country. This is the first time I have heard that the primary national currency may become secondary, and it is incomprehensible foolishness. If they can’t manage the lari properly they should say it directly,” states the former President of the National Bank Nodar Javakhishvili.
Georgia’s economy and most of its people are in a really poor condition now and people are quite suspicious of those members of the Government who claim to be “progressive reformers” and who try to prove this by quoting the placings they have been given in certain international ratings. Doing this only irritates people – their prosperity hasn’t risen as a result of the “boom in foreign investment” or the reforms.
One result of this “currency pluralism” will be that employees of budget-financed organizations will be the only people in Georgia paid in lari, whose rate will become more and more artificial and in the hands of the ‘reforming’ Government may become a tool for robbing people. Furthermore, if we consider that Russian capital is directly or indirectly present in Georgia and the Russians are trying to recreate the “rouble zone” on post-Soviet territory, it’s clear that it is possible that the Russian rouble would also be circulating in Georgia, and Russian-financed companies will pay the salaries of their employees in this currency, meaning that the rouble, not the dollar or euro, will perforce become the dominant currency in Georgia, in which investors will have to calculate various aspects of their proposed investment.
Bendukidze’s reforming initiative may play straight into Russia’s hands and strengthen Moscow’s position in Georgia’s economy. As history has frequently shown, there is more than one way of conquering a country.