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Economy / Featured News / Mongolia News / April 30, 2014

Where is the bond money?

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The number of people is growing who are seeking truthful answers to the question of whether the Chinggis bond money and money of the lately released Samurai bond has left, or not. This search might be causing serious trouble for N.Alyankhuyag’s cabinet. The present Government could give the impression to the public that it created a pleasant economic environment, by releasing the bond in a foreign market, however only after a year the government received criticism that it deteriorated the country’s economy. Economists have been warning since last autumn that Mongolia is facing an economic crisis. Although the Government of Mongolia, who had ignored the warning, recently agreed that the situation in Mongolia critical. Accordingly, with the launch of the Spring Session, the Speaker of the Parliament has developed a draft regulation for measures to be taken to intensify the economy, and it is being discussed in the Government and Parliament.
At the same time, ministers and some authorities are making complaints that the government is not spending and devoting the bond money on the planned projects and activities.
Prime Minister N.Altankhuyag once said at the Parliamentary meeting of December 7, 2012 “The bond money spending should be transparent to the public. Its spending will be open not only to parliamentarians, but to the public as well” according to official protocol.
However, the authorities did not keep this promise; they didn’t reveal to the public the facts on how the bond money was spent and what amount of money is left, and this information was not even released to parliamentarians. Mongolia is paying 273 million MNT a day since December 2012 for the interest of the Chinggis Bond. By the beginning of 2014, Mongolia has paid back 108 billion MNT, money equivalent to building 325 kindergartens and 108 schools on only the interest.

The following are speeches by officials regarding the bond spending.

Prime Minister N.Altankhuyag
A bond of a total of 1.5 billion USD was issued and 700 million USD of it has been spent so far. The decision has been made to spend around 500 million on certain items of that remaining 800 million USD. We are planning to spend the remaining 300 million USD in promoting and supporting the production and industry sector, however the final decision has not been made.
From speech of the Prime Minister during weekly meeting “30 minutes with the Premier”… 2013-09-26

Minister for Economic Development N.Batbayar
Half of the bond money has not been spent. It was transferred to the Development banks in a foreign currency, but now it is in Mongolian tugriks.
Statement made during Parliamentary Standing Committee on Economy… 2014-04-23

Minister for Road and Transportation A.Gansukh
The construction of a 267 kilometers railway on the route for Tavantolgoi-Gashuunsukhait is at 70 percent. The Government decided in March 2013 to finance it with 400 million USD from the Chinggis bond.
As of today, the work of 173 million USD has been completed. The financing of the next 200 million USD is being waited for. But the Economic Development Ministry and Development Bank said they ran out of money.
“Unuudur” Daily Newspaper… 2014-04-04

Chairman of Standing Committee on Economy B.Garamgaibaatar
All money of the bond has been shared out to various projects. The relevant ministries still haven’t delivered proper projects on what the bond money will be spent on. The bond or the loan is not just simply handed over or distributed. One should meet certain demands and requirements to get the loan. Ministries promised to reach the demands; however they still haven’t delivered a project that meets the demands.
I don’t know what how much money is left from the bond money. What I know is, capital remained from the bond has been transferred to the Ministry of Agriculture and Industry to support light industry.
“Political overview” newspaper… 2013-08-27

Deputy Minister of Economic Development O.Chuluunbat
Interest on the Chinggis bond has been lowered. Ten years of it is at around 80 percent and five years at 90 percent. We won’t buy the Mongolian bond as a warning has been made that has poor trust. Governments of all countries issued their bonds in the world market.
The Government evaluations of a bond becomes the main indicator on how trustworthy a partner is in terms of business, economy and politics. Any investor sees our bond evaluations besides checking ratings in Moody’s and Standart&Poors before entering Mongolia.
Daily Newspaper 2014-01-31

CEO, Development Bank of Mongolia N.Munkhbat
The unspent remainder of the Chinggis bond is 1.4 trillion MNT. The decision was made to issue financing of 200 million USD from the Chinggis bond and 55 million USD from its own source of the Development bank for the new railway project, and financing is being made as planned.
We haven’t stop or frozen the financing and so far we have issued 164.2 million USD for railway projects from the designated 200 million USD of the Chinggis bond. The performance of the total projects is at 24 percent and dam construction work is at 70 percent.
Informal meeting 2014-04-21

Capital City Governor E.Bat-Uul
The Chinggis bond is not the money of N.Batbayar, it is public property. He has no rights to freeze the financing of certain projects. Implementing Street projects in provinces has no benefits. The project initially was developed to be carried out only in Ulaanbaatar.
Informal meeting 2014-04-09
From an official letter to Parliamentarians sent by Capital City authorities…
…It is time to do construction, which will change the lives, convenience and future of city dwellers and write a new city history. Investment projects should be prioritized in terms of significance and the investments to inevitable constructions such as the 22 kilometers road of Biocombinat, highway to airport, Yarmag bridge etc. should not be stopped. In recent days some ministers started mentioning about stopping financing of apartment construction and some works under the Street project…

SOURCE: UB Post




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