On Wednesday, state monetary policy for 2015 was discussed during the meeting of the Parliamentary Standing Committee on the Economy.
Beginning the meeting, the president of Mongol Bank gave a speech, introducing the details on the external and internal environment for implementing monetary policy, policy implemented from 2013 to 2014 and its results, and introducing a draft on basic directives of monetary policy for 2015.
In the past five financial quarters, the terms for foreign trade have significantly declined as well as foreign direct investment, which resulted in a 6.1 trillion MNT lack of estimated financial resources in 2013.
During 2013 and 2014 Mongol Bank and its Monetary Policy Council implemented many programs and projects in an effort to stabilize the economy, mitigating the problem of the balance of payments, supporting balanced economic growth, and protecting the economic sector from further risk.
Mongol Bank believes that improving the external flow of currency, will significantly decrease the prices of imported goods and the prices of some domestic products, which will decrease inflation by seven percent and help the economy become more stable.
The policy is focused on fostering the increased savings of the middle class. The number of households with savings has grown to 61,000, two times the number recorded last year.
Proponents of the 2015 policy say that the increase of middle class savings will be an important factor in the steady mid to long term economic growth.
Because foreign direct investment has not recovered as hoped, the balance of payments pressure is not disappearing, which influences slow economic growth, high inflation, the slowdown of credit approval, and a lack of resources in the economic and financial sectors, according to Mongol Bank.
The monetary policy for 2015 intends to provide external economic balance, keeping inflation at a low and stable level, strengthen economic stabilization, and create an environment for balanced and sustainable medium to long term economic growth.
Another important issue discussed during the meeting was the urgent creation and implementation of the government’s comprehensive external debt service plan.
This will provide the opportunity to appropriately plan estimated sources of foreign debt repayment, funding the state budget in relevance with other economic policies.
Meeting attendees also noted that the economy should not be too dependent on the significantly fluctuating mining sector.
Around 90 percent of the Mongolian economy has been dependent on the minerals sector for many years, and it has negatively influenced the nation’s economic competitiveness, poor savings, created negative attention in foreign markets, and weakened economic immunity.
The current economic crisis is also tied to mining, so decreasing the nation’s dependence on mining and diversifying economic structure are the main challenges facing the Mongolian economy.
The Standing Committee on Economy decided to discuss 2015′s monetary policy during the Parliament’s plenary session.