A dramatic depreciation in the value of Georgia’s national currency – the lari – has sparked concerns about the health of Georgia’s economy, with consumers facing the possibility of rising commodity prices. The lari suffered a 2.86% fall against the United States Dollar on December 5, dipping to around two lari to the dollar – the lowest exchange rate in more than a decade.
Georgian citizens, while concerned at the lari's slide, have been exhibiting their trademark dark humour online, drawing on American rappers, an iconic national painting and a Hollywood blockbuster to highlight their currency's plight.
The head of Georgia’s central bank, Giorgi Kadagidze, made a televised address on December 5, saying the fall in the lari’s value was due to both “external and internal” factors. In the first half of 2014, Foreign Direct Investment in Georgia was down by 9.6% compared to the same period last year.
At the same time, remittances from abroad – one of the key sources of external financing in – have been decreasing in recent months compared to last year. The largest decrease was in remittances from Russia, where the ruble is also depreciating rapidly.
The World Bank’s regional director for the South Caucasus, Henry Kerali, posited that the depreciation is partly attributable to heightened seasonal demand for the US dollar, as well as events in Ukraine. Georgian exports to Ukraine have recently been sliding, although the number of tourists has increased.
A similar depreciation last year caused a rise in food prices in Georgia, which is a net importer for food products. In addition to this, the dollar is frequently preferred for such transactions as rent payments and the sale of second-hand cars.
As the lari began its descent on Friday, users of social media posted a doctored-image of the now obsolete 1 lari note, replacing the image of Georgian painter Niko Pirosmani with the face of Finance Minister, Nodar Khaduri. The inscription ‘one lari’ was also changed to read ‘choilari’ – a local insult which roughly translates as ‘sucker’ or ‘doormat’.
Once news broke that the price of the dollar had risen to two lari, Khaduri’s face was replaced by American rapper 50 cent, reflecting the new value of the Georgian currency.
In an image of the two hundred lari note, the face of Georgian anti-Bolshevik commander, Kakutsa Cholokashvili, was altered to show him weeping over the currency depreciation.
Another image of the 10 lari note, featuring the iconic Mother of Imereti figure from the painting by Davit Kakabadze, shows the figure removed from the note along with the inscription: ‘The lari no longer has a mother’, which can also be rendered as ‘the lari is in a terrible state’.
Other images have emerged which make light of the lari crisis. This one is based on a famous Hollywood film poster and advertises ‘Nodar Khaduri’s film: Saving Private Lari’.
Another one parodying a scene from Once Upon a Time in America shows a one lari coin falling over, saying ‘Forgive me Nodar [Khaduri] …. I slipped’.
Meanwhile, the dram in neighbouring Armenia has also fallen in value against the dollar, mirroring the recent depreciation of the Russian ruble. In Georgia, the central bank has urged calm, reassuring concerned citizens that the country’s economic foundations are strong enough to survive the currency crash without a dramatic increase in inflation. The lari is expected to stabilize in the next week, while annual inflation is expected to be around 3.5%.