FinMin discusses economic problems
InfoMongolia has carried an interesting interview with Finance Minister Ch.Ulaan in which he reveals that government revenues fell short last year due to problems with exports and the falling market price for mining products. The Finance Minister also reveals further delays to the second phase of the Oyu Tolgoi Project.
InfoMongolia have given us permission to publish the article below, but you can see the article and much more if you go to their website.
“Mongolia’s economy facing difficulties and it is true, says Finance Minister Ch.Ulaan
Every Wednesday, a Government official works at the “11 11” Center to give comprehensive understanding on current situation arousing in the country and this time guest was Minister of Finance Ch.Ulaan.
Finance Minister emphasized and he did not hide that country’s economy is facing difficulties, therefore the Government of Mongolia should bear to cut needless spending, find effective project expenditure and strengthen control on budget executors.
Here below some question-answers.
The speculation of worsening economy in the country has been growing, what the reason is?
We have been facing economic challenges and there are several factors caused. For instances, by the end of the third quarter the state budgetary revenue did not hit the planned volume that caused to interrupt revenue from taxes for export products, where the world market price for mining products dropped. Also, some large-scale enterprises’ activities have not been stabilized yet, which caused to interrupt budget revenue by 20 percent. However, the State Budget for the first quarter of 2014 was approved lower compare to previous year’s quarter, but we have been facing budget revenue interruption and this warns a big signal in Mongolia’s economic prospects.
The US dollar rate against Tugrug is been strengthening, aftermath entities expect a huge deficit.
We cannot artificially reduce the dollar rate and it impossible. The key factor to keep and lowering the rate is to adhere a right policy, but Mongolia’s economy prefers to import all end-products. Let’s figure out, Mongolia’s population is only three million people and livestock counts at 45 million heads, but we purchase 70% of imported milk by foreign currency. We should get rid of that. Contrary, we have experiencing some positive outlooks. In the first quarter, foreign trade deficit has been reduced year-on-year and expect equilibrium of payment balance. Further, foresee to increase export and reduce import, at that time we can generate foreign currencies.
The State Great Khural (Parliament) approved a policy to hold inflation at one-digit this year. Do we have opportunities to reach this goal?
Although the regulation was ratified, as of the first three months of 2014, inflation rate is still at two-digit numbers and only implementing macroeconomic and state monetary policies, it is fully available to transfer into single digit.
How about salary and pension increase possibilities or facing insufficient fund?
It was ratified a bill to spend 200 billion MNT (Tugrug) for salaries and pensions, where pensions were increased in the first quarter and salaries being raised step by step. However civilians are not satisfied, but Government is considering to reach the preferable level.
When it expects to start the second phase of Oyu Tolgoi Project?
Government of Mongolia is ready to implement the second phase investment, but investors are delaying, which is related to the first phase disputes. Nevertheless, some issues to finalize the investment audit for the first phase are still awaited and Mongolia’s position remains same forwarded before.
Is it true that the Bank of Mongolia about to release a 50,000 banknote?
We are studying to release a 50 thousand banknote. Primarily in terms of economic efficiency we should foresee.
Do you think Mongolia’s total debt is underestimating due to law?
Yes, the total debt limit is set by law. Performances showed in 2013, the debt is included in the GDP’s 50 percent. This does not mean at the warning level, but we should to lessen up to 40 percent of GDP.”