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Economy / Featured News / Mongolia News / Politics / December 22, 2014

AMBITIOUS YOUNG PM EMBARKS ON CURING AND SORTING OUT MONGOLIA

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Mongolian Government has started on December 19, 2014 that Prime Minister Ch. Saikhanbileg ( reported by Bloomberg to be 45 years old, with LLM from George Washington University and passion for powerlifting and Denver Broncos- IMM&MR)  has stated to Parliament (among other things, selected summary translation and names of sections by IMM&MR)

TO BE OR NOT TO BE

  • “it will not overstatement to remind famous quote “ to be or not to be””
    ·“First of all, let’s postpone or various politics, let’s forget temporarily next year’s election, let’s stop competition on who’s more patriot, let’s quit doing populism on who loves people more. Let’s discuss issues with common sense, without any emotions”
    ·         “it would be wrong direction to blame this or that Government”
    ·         “ to get to the point, we are facing , exactly as in 2008-2009 , balance of payment crisis, which, if extended, could become financial and,  further,  economic crisis”
    ·         “ we have established ourselves several years ago foundations of crisis”
    ·         “ we saw that no matter how many bonds and loans we get and expand the economy, if we cut other hand and don’t make correct policy and plan properly benefits , economy will not grow as we want it”

ECONOMIC INDICATORS

  • “ as of November 2014, GDP by current prices is MNT 16.5 trillion(~US$8.9 billion)
    ·“even though mining and agriculture has grown ~16% and economic growth is to reach ~7%,  trade and construction sector is to decline by 5-10%”
    ·         “ fiscal expansion, increasing leverage, injections by Bank of Mongolia and DBM, all these when FX inflows have not increased, increased pressure on balance of payments,”
    ·         “as of October 2014, BOP deficit has reached US$880 million and exchange rate has risen to 1900”
    ·         “inflation has decreased to 11.5% as of November due to shrinking economy”
    ·         “ national debt is likely to reach MNT11.5 trillion (~US$6.2 billion) by present value or 53% of GDP, including 4 trillion from foreign soft loans and 2.5 trillion domestic bonds and 2.7 trillion foreign bonds”
    ·         “credit expanded 54% in 2013 and likely to expand under 20%  in 2014, money supply is likely to expand 9% in 2014 vs. ~30% in 2013”
    ·         “we saw that we don’t have correct policy, investment, skilled labour and equipment, no matter how many resources we have, we will continue to just sit on them”
    ·         “ if we keep making policymaking that makes others flee from us,  investment that has collapsed 7.5 times  within only 3 years from US$4.6 billion to US$0.6 billion clearly tells us that no one will pay attention and we will become Robinsons lost on isolated island”
    ·         “ deterioration of value and principles is more dangerous than decline of quantitative indicators”
    ·         “2.5 million square meters of forestry is being illegally harvested per year”

HOTEL MONGOLIA

  • “ while news that business representatives who come to Mongolia to invest are banned from leaving without explanations are becoming business card of Mongolia,  we watch silently, and observe, as if saying “ don’t invest in our country”

MINING STUCK

  • “Today when exchange rate is declining and even one ton of gold is important for nation, those who have never been even once at the site, make one shout at Parliament Standing Committee and get mining extraction stuck by one whole year.”
    ·“ yet when we have cut tax on gold only by 2.5% , gold sales to Bank of Mongolia increased almost 3 times”,
    ·         “ if we apply little bit of heart, effort and understanding we can solve many problems”
    ·         “ We must acknowledge our shortcomings and stop the unrealistic expectations”
    ·         “Members of Parliament, now is the time to make painful but absolutely required decisions. If situation continues as is, after certain time, I will not refuse emergence of requirement to declare default or bankruptcy as a country”
    ·         “while it is not meant to scare each other, the point is that, if fiscal and monetary policy will continue as is, there will be serious economic crisis”

RUSSIAN CRISIS

  • “There is recognizable melody being heard from not far away, northern neighbour, where although for different reasons, investors became unable to come, there is exchange rate and foreign exchange deficit and sharp decline in main export product petroleum price. “
    ·“It is big signal to us that no matter how big economy, market depending commodities prices can decline very quickly”
    ·         “Is this what is waiting for us? As with family of seriously ill patient, no matter how difficult, we must say truth and unite actions”
    ·         “We  have one good news and one bad news”

BAD NEWS

  • “We have not reached the bottom of decline. This means if measures are not taken, current conditions will deteriorate even further”

GOOD NEWS

  • “ Diagnosis of our disease is clear, recovery possible, control is in our hands”
    ·“If we don’t do uneasy decisions now, we never will. Let’s overcome together the crisis”
    ·         “Medical pill is sour, but heals. This Prime Minister, this Government has no choice but keep absolutely required actions”

BUDGET CONSOLIDATION

  • “ Budget will be consolidated, DBM expenditures will be consolidated in budget and we have truly one budget”
    ·“This will mean that some of requirements for fiscal responsibility will not be fulfilled. However, according to advice of IMF and World Bank, bill on transfer period on fulfilling law requirements on retroactive basis for near 2-3 years will be submitted”

PROPER ACCOUNTING

  • “ There has been practice of making budget approvals , based on wishes, and amending by year end, based on reality”
    ·“as tradition, investment funding shortfall of MNT320 billion (~US$173 million) has been postponed to next year”
    ·         “ let’s all refuse this false practice”
    ·         “ let’s make next year a year of finishing unfinished facilities and bear for just one year no new construction of new facilities”
    ·         “Let’s decide this year buildings we can finish. Let’s sell, auction, transfer by management buildings that cannot be finished, ones that have no meaning even if finished and ones that private sector can take on and run on its own”

STOP FALSE BUDGET PLANS

  • “If we don’t cut budget revenues expectations by MNT1 trillion (~US$540 million), we will not get rid of main disease”
  • “ in reality  revenues and expenditures increase on average 3-6% per year, yet we project revenues and expenditures increase by 16-18% per year”

WE MADE MONGOLIAN SOCIETY WELFARE SOCIETY

  • “Children’s MNT20,000 (~US$10.81) monthly subsidy will be issued to families who need it,  those with family income below ~one million MNT(~US$540)  and temporarily suspended for others”
  • “ student subsidies of MNT70,000(~US$38) per monthly will be issued only to academically excelling students”
  • “one time financial aid to all retiring state service human resources will be capped at 12 months max from 12-36 months depending on sector”
  • “ we have more herders with more thousand herds than number of billionaires in the world”
  • “ we have 60 million herds yet neither herders willing to export meat nor export meat itself”
  • “no tax whatsoever on herders will be changed with at least local authority levying tax per herd head and use proceeds themselves “
  • “ stop right away issuance every year of new uniforms for state inspectors, socials security, tax inspectors, state registrars, welfare employees”

PLETHORA OF INSTITUTE

  • “ Plethora of labour-related organizations funded by budget such as Labour Research Institute, etc and etc, will be consolidated in National Labour Center”
  • “ Plethora of science institutes funded by budget such as Textiles Institute , etc and etc will be transferred away from budget to Mongolian University of Technology and Science”

OFFICES INTO HOSPITALS

  • “Building of former Ministry of Road and Transportation under Peace Bridge will be converted into new Children Hospital”
  • “It will be researched if new Office to the north of State Palace could be converted into new Hospital”
  • “ labour conditions for doctors and teachers will be liberalized with contracts with state ,so they can receive higher salaries based on work results”
  • “ state shall outsource from private sector services such as drivers, cleaners, electricians and plumbers instead of running all these services for every budget organization”
  • “ state will maintain kindergarten food monies, however, parents  should add,  to improve food quality”
  • “Subsidies to Famous Mothers will stop children reach over 18 years”
  • “Social transfers will be targeted from now on”

10 THOUSAND STATE OFFICIALS

  • “Direction to downsize 15% of all state officials except teachers and doctors have been issued with estimate of 10 thousand employees”
    ·“However, it was considered to be best decision , instead of increasing unemployed by 10 thousand individuals,  to keep the jobs but with salaries one year freeze, this is beneficial to private sector as well”

PRICE STABILIZATION PROGRAMS

  • “Government together with Bank of Mongolia have decided to fully exit in near term biggest part of price stabilization program , program on fuel”

ACTION PLAN

  • “Budget will be made healthy”
    ·         “Monetary policy will be made healthy”
    ·         “Investment environment will be made healthy”
    ·         “Balance of payments will be made healthy”
    ·         “All of these in sum will make economy healthy”
    ·         “I will shortly introduce to Parliament plan to get out of economic difficulties and list of works to implement”

WARNING

  • “Either we take unpopular measures, sort out economy , budget and money”
    ·“Or we can keeping lying to each other, give up to destructive populism, pawn and lose everything”

OPTIMISM

  • “Clearly , tomorroweconomy will develop and expand”
    ·         “Today we cut costs and save, build correct development road and install correct principles”
    ·         “I am confident in supercoalition , we can cure budget and economy and develop our country”
    ·         “I believe in long term vision of Mongolian statesmen and wisdom of Mongolian people”
    ·         “Crisis is danger yet opportunity too”
SOURCE: UCLALUM




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