Giorgi Kalatozishvili, Tbilisi. Exclusively for Vestnik Kavkaza
The Georgian national currency continues to fall. And there is no bottom to the abyss in which the lari finds itself. In early November $100 could be bought for 176-177 laris in Tbilisi. A week ago $100 cost 235-237 laris. The devaluation was 35%.
Devaluation influences most negatively people who have taken dollar loans in banks, mortgaging their houses or flats, while they get their incomes in laris. These are hundreds of thousands of people in the small country. Apparently, the annoyed social force is ready for anything. The authorities are concerned about the situation. This is confirmed by regular governmental sessions behind closed doors, sessions with the participation of the board of the National Bank, and constant consultations with the real leader of the ruling collation, the billionaire Bidzina Ivanishvili.
“Consultations with the billionaire” are not covered, but journalists couldn’t help but notice government escorts frequently entering the territory of the glass palace on the mountain over Old Tbilisi.
The government has developed an anti-crisis plan of emergency measures. Prime Minister Irakli Garibashvili urges officials to pull their belts in, i.e. forget about benefits and frequent business trips to the West. However, these are initial measures only. In the long-term prospect, the government is ready to take radical steps to save the national currency.
First of all, another stage of “big privatization” will start. The government is ready to sell off all the state assets that are left – several thermal power-stations, probably the railways, and the state's share in the ports of Poti and Batumi.
However, certain facilities haven’t been announced yet; but obviously, only one person can afford them – Bidzina Ivanishvili, who has spent about $1 billion on charity in the last 10 years. Recently, he has established the Fund for Co-Investment, which contains $10 billion. Probably the Fund will actively invest in real estate. The government has recently approved a set of drafts on tax benefits for developer-companies.
It is interesting that the authorities aren’t using the gold-and-forex reserve to support the lari. Experts think this step is right, as devaluation of the national currency is connected with objective foreign economic reasons – the strengthening of the dollar, the weakening of the ruble, the fall in exports to Russia and Ukraine, and a drastic decrease in transfers from Russia. Under such conditions, spending of the forex reserve would mean burning the money without any benefit. Thus, the government took a strategy of economic recovery, supporting developers, and 'big privatization', remembering about the opportunity to get a long-term loan from international donors.
The IMF mission has already visited Tbilisi. After long-lasting talks, the sides decided that Georgia wouldn’t get money to strengthen the lari. The only way to save the national currency is economic growth. The IMF promised to recommend the World Bank and the Asian Bank of Development to issue a major loan to the country for providing for the infrastructural projects which were initiated by Mikhail Saakashvili – construction of a by-pass railroad around Tbilisi and a new port in the Black Sea.
The most interesting thing is that at the moment of the lari's fall, Zurab Abashidze, the permanent envoy of the Georgian Premier for settlement of relations with Russia, began to speak about reconstruction of a dialogue with Russia and direct talks with Abkhazia and South Ossetia under the direct mediation of Moscow, as a necessary condition for stabilizing the situation and attracting foreign investments.
