How to Remunerate Dissolved Deposits
20 June, 2013
How to Remunerate Dissolved Deposits
A recommendation package of how to remunerate the deposits dissolved after the collapse of the Soviet Union is offered to Georgian government by Young Lawyers. The non-governmental watchdog believes it is high time to address to solution of this enduring problem at last that deprived many Soviet citizens including Georgians off their lifetime savings after the Soviet regime fell and the rampant hyperinflation had eaten up all deposits.
According to the research of Young Lawyers Association, aired on June 14,
2013, devaluation of deposits was reasoned by ousting Georgia from the Ruble [soviet currency] zone that induced hyperinflation in the country, and by inadequate monetary-credit policy of newly emerged Georgian state.
Almost all the former soviet republics had undertaken the problem of so called Soviet deposits since mid 90s and tried to find solution through different legal and economic mechanisms but only two Lithuania and Kazakhstan completed the process so far. Georgia acknowledged the dissolved deposits as the internal state debt in 1998 and the process got stagnated in fact. The issue would emerge periodically during pre-election campaign and was forgotten post-election. The new authorities activated the problem couple of months ago however the issue is complicated enough as neither the exact volume of the devaluated deposits nor the number of depositors have ever been calculated all this time. The problem is aggravated by territorial conflicts with Georgian breakaway republics of Abkhazia and South Osetia that impedes to get due papers on registered deposits and depositors who abandoned the conflicting regions as Internally Displaced People (IDPs) or still reside there. The tentative volume of the evaporated Georgian deposits stands around GEL 502 million as new authorities suggest however the speculated figures put out by numbers of economic analysts and people who were close with the issue reaches even GEL 2-5 billion and the speculated number of depositors accrues to 2 million. Finance minister assures the issue is too complex and needs some time to adjust figures and outline solutions. Young Lawyers who started researching the dissolved deposit issue since February of 2013 based their analysis an the experience of other post-soviet countries, also delved in fiscal policy of the National Bank of Georgia (NBG), as well as in decisions drawn by both Georgian and EU court respective to the questioned deposit cases, activity of the state commissions created to research the soviet deposits problem, Georgian legislation and worked out a package of 18 recommendations directed to Georgian executive and legislative bodies as well as to courts. Young Lawyers recommend Georgian authorities to address to the so called soviet deposits problem without delay. First of all government has to define the total volume of deposits either at Gel 502 million or give a new figure, further suggest compensations through either cash or non-cash payments. Lithuania and Kazakhstan for example compensated the devaluated savings as following: Lithuania took the money raised through privatization of the state property and redistributed it gradually within 1998-2008 while Kazakhstan issued the state bonds with 5-10 and 15-20 maturity period to the soviet depositors.
Taking into account the restricted budgetary potential of Georgian Young Lawyers suggest paying fixed compensation rates including three categories: USD 700 for depositors with the minimal savings, USD 1000-to average savings and USD 1500 – to the biggest savings. However some economic analysts uphold the Kazakhstan model that can boost Georgian sluggish stock exchange. Moreover, Young Lawyers find it reasonable to categorize the recipients and complete compensations within 10 years based on precise timelines. The non-governmental watchdog recommends making decisions on compensation mechanisms by end of 2013 and starting payment right after the decisions will be made public.
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