Publication: Monitor Volume: 4 Issue: 216

The Georgian parliament approved yesterday the nomination of Davit Onoprishvili as finance minister. His immediate predecessor, “financial whiz-kid” Mikheil Chkuaseli, resigned last week under fire after his fiscal and monetary policies proved insufficient to forestall a financial crisis (see the Monitor, November 16). Onoprishvili, 37 (to Chkuaseli’s 28), is a graduate of Columbia University in the United States and a former employee of the World Bank. He is a parliamentary deputy of the governing Union of Citizens of Georgia (UCG) and has until now chaired the legislature’s committee on economic reforms. Onoprishvili’s nomination by Eduard Shevardnadze suggests that the president places undiminished trust in the young, Westernized group of UCG officials, who tend to compete with the middle-aged Komsomol veterans in Shevardnadze’s entourage. One member of the latter group, State Minister (equivalent to prime minister) Vazha Lortkipanidze, was instrumental in pushing Chkuaseli out.

The new finance minister inherits a crisis which is only beginning but is expected to deepen. The government’s wage and pension arrears are growing, exports are declining, the Central Bank’s foreign currency reserves are falling rapidly (from an already modest US$140 million in September to US$80 million at present), and the stability of the lari (the national currency) is in question. One cause of the problems is the spillover from Russia’s financial crisis and the shrinkage of the Russian market for such traditional Georgian exports as wine, tobacco and tea. But according to Georgian economic reformers and Western experts, the main cause lies in inadequate tax collection, which in turn stems largely from official corruption and selective privileges to favored groups. Onoprishvili promises to go after tax defaulters and to resist political pressure to curb such corruption, enforce the recently adopted, IMF-approved tax code, and resist printing lari (Prime-News, Reuters, November 19).