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. Last Updated: 07/27/2016

Georgians Line Up to Get Their Laris

TBILISI, Georgia -- Currency exchanges in the Georgian capital were swarmed Monday by those who had waited until the last minute to exchange their coupons for the country's new currency, the lari, which became official at midnight.

"Why are they torturing us? I have been waiting for three hours. Why won't they open the doors?" complained a middle-aged woman outside the offices of Georgia's Central Bank.

About 100 Tbilisi residents lined up outside the bank to sell rubles at the rate of 4,120 to the lari. At other exchanges in the city, where the lari rate reached 4,500 rubles, customers were served with little waiting.

The lari was introduced Sept. 25 at an exchange rate of 1 million coupons, or approximately 1.3 lari to the dollar. Georgians were given a week to exchange their coupons, the former currency that had become almost completely irrelevant in the economy, which operated largely in rubles.

Despite some confusion concerning the exchange period cutoff, shops in Tbilisi had changed their price tags from rubles to lari Monday, a development that Jian-ye Wang, the International Monetary Fund's representative in Georgia, cited as indicative of early success in the drive to replace the coupon.

"Whenever I appear on Georgian television, I am asked whether the lari will go the way of the coupon," Wang said. "It will not," he asserted, pointing to Georgia's market-oriented fiscal policy, the renewed strength of the Central Bank, increased international support and improved political stability.

Of the 52 trillion coupons originally issued, some 25 trillion remained in the hands of citizens before the exchange period. Nearly all of those coupons had been converted into lari by day's end Monday, according to the Central Bank.

For anyone who can demonstrate that they were ill or outside Georgia during the conversion period, the deadline for exchanging coupons will be extended until Nov. 1, and Wang said he had advised Georgian authorities to treat such requests "very liberally."

The Central Bank took no part in the currency markets during the conversion period, but re-entered the market Monday.

Although no one is sure how many rubles are currently in circulation in Georgia, unofficial estimates put the amount at 1.5 trillion (just over $300 million).

When asked if the Central Bank could absorb an influx of rubles of this magnitude, Wang said that "technically we are very well prepared to prevent a reversal of currency conversion," and that plenty of lari had been printed. The 500-lari bill had not even been introduced on the market yet, he added.

The IMF approved the release of a second, $25 million tranche of a $113 million stand-by package to the Georgian government Friday, bringing the country's hard-currency reserves to $72 million, a figure that does not include a $24 million account held by the government in a foreign bank for debt negotiation.

"The good thing is that Georgia is already moving beyond the initial stage of reform, of cleaning house and putting its financial affairs in order, and has begun to look ahead to the next stage," Wang said.

Georgia's growing financial stability is reflected in its revenues to expenditures ratio. According to official figures, in 1994 the country's revenues covered only 17 percent of expenditures.

In 1995 this figure rose to some 40 percent, and this is expected to rise up to 50 percent in 1996.

Georgia finances the remaining deficit largely by selling goods received as grants from foreign countries, and with Central Bank credits to the government.

The IMF, too, has begun to look ahead in its cooperation with Georgia. Wang said that negotiations were underway on the terms of assistance to Georgia under the Enhanced Structural Adjustment Facility, an IMF program that provides concessionary loans to poor countries.