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Wednesday, 26 October 2016


South Ossetia putting lari out of doors

2011-01-17 18:23

12378.jpegYear of 2011 made an unlucky start in Georgia in financial terms. Lari fluctuations in respect of dollar may provoke a price growth in the consumer market. However, the experts suggest that one should not panic, trying to prove that the fall of the Georgian national currency is a natural process. Even the National Bank's efforts aimed at the forcible checking of the lari rate failed: lari has been going downhill for the whole of the previous year. Besides, South Ossetia started pouring oil on flames: it will prohibit lari circulation in its territory from this year on. 


"In general, the majority of companies pay out their tax liabilities and salaries, so the demand of lari always goes up by the end of the year, thus enforcing it. There has been a contrary trend since the beginning of the year: the people prefer to save money in US dollars. Thus, the lari rate fluctuation is a natural process. The main point is that it should not become a jump process", - economic expert Levan Kalandadze is citied by Pirveli agency.

Nevertheless, despite the specialists' assurances, there is an obvious growth of prices for certain products in the Georgian shops. For instance, sugar price has jumped within the last week up to about 2,40 laris. Onions and potatoes have also become more expensive by several tetris.

But does the Georgian government care about the common people's mishaps? The national currency rate fluctuation seriously affects the state budget. In the middle of last year, after municipal elections, an abrupt lari fall induced a seventeen-million-dollar loss for the republic's treasury. This was explained by the excessive political agitation expenses of the Georgian party in power, United National Movement, which increased inflationary expectations and the money supply.

The funny thing is that in July 2010, Minister Kakha Baindurashvili tried to justify the state budget increase by attributing it to the current low rate of the national currency. The explanation was simple enough: the point was not the inflation cried about from the housetops. It's just that the republic's expenses were not calculated in dollars, so the government had to tack, choosing optimal variants.

In its turn, the opposition assured the people that in this way, President Mikheil Saakashvili was trying to settle the "elections" arrears at a lower rate, so the lari fall was the result of a political decision aimed at preventing the trade balance deficit from acquiring an enormous scale.

Anyway, lari devaluation in respect of dollar at the end of last year has tired everyone in the South Caucasus. No wonder the South-Ossetian government announced that after the New Year holidays the Georgian currency would be declared "persona non-grata" within the entire of its territory, which means it will lose the status of a legal means of payment since 10 January 2011.

"The administration of the Leningorsky region of South Ossetia took a decision to withdraw Georgian currency from circulation", - said head of the regional administration Sergey Gagloyev in the RBCDaily newspaper.

Naturally, Georgian government gave a sharp response to this shocking situation. "Russian authorities can see Georgia's success in the international arena, so they are irritated and venture such irresponsible steps as the genocide of cultural memorials, restriction of traveling and withdrawal of currency", - Our Abkhazia is citing Chairman of parliamentary commission for territorial integrity of Georgia Shota Malashkhia.

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