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http://zgm.mn/post/200/

ADB: Mongolia’s economic recovery to continue

​Asian Development Bank releases Mongolia Economic Outlook 2018​

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http://zgm.mn/post/200/


Asian Development Bank (ADB) disclosed the Asian Development Outlook 2018 yesterday and highlighted that Mongolia’s economic growth will remain solid in 2018 and 2019, albeit with slight moderation, following a strong performance in 2017 as coal exports and mining investments strengthened. ADB projects Mongolia’s gross domestic product (GDP) growth to moderate to 3.8 percent in 2018 from the 5.1 percent growth in 2017 before rising again to 4.3 percent in 2019. This is following the 1.2 percent growth in 2016. Continued investment in mining, particularly in the development of the Oyu Tolgoi underground mine, will continue to drive growth. Transportation bottlenecks, however, will prevent coal exports from matching 2017 performance, although these will ease somewhat in 2019, according to ADB report. “Sustained investment into the mining sector will form a basis for continued growth. The strong performance against the International Monetary Fund program is helping to restore investor confidence and improve macroeconomic stability. Continued government commitment to this program will be key in ensuring that macroeconomic buffers are built up, reducing Mongolia’s vulnerability boom-bust cycles in the future,” remarked Yolanda Fernandez Lommen, ADB Country Director for Mongolia. Furthermore, ADB expects the inflation to accelerate to 8 percent in 2018 and ease to 7 percent in 2019, from the 4.3 percent recorded in 2017 following the 24.7 percent depreciation of MNT in 2016, which affected import prices on top of higher commodity prices due to drought and higher excise taxes.


Rising domestic demand and international oil and food prices, coupled with the effects of looser monetary policy in 2017, will continue to drive inflation higher in 2018. These effects will be less pronounced in 2019 as oil prices and domestic demand subside. Mongolia’s budget deficit is projected to equal 6.4 percent of GDP in 2018 and 5.1 percent in 2019, from 3.9 percent of GDP in 2017, as expenditure on social insurance, welfare, and equipment increases, coupled with a likely reduction in budget revenue as reforms to ease reporting requirements and the tax burden for SMEs take place. A sharp recovery in FDI, financial support from multilateral development partners, and better terms of trade allowed the country to refinance a major part of its external debt. Gross reserves more than doubled, reaching 5.5 months of imports. These developments pushed the value of MNT up by 2.5 percent against the USD. The current account deficit will narrow to 6.3 percent in 2018 before widening to 7 percent in 2019. Downside risk to the outlook include lower coal and copper prices, disruptions to the successful implementation of the extended fund facility, higher meat prices, interruption to Oyu Tolgoi production or investment, and worsening financial instability arising from the bank restructuring program. Upside risk to growth include higher commodity prices and a possible deal on large infrastructure projects tied to existing mining production.


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MCE raises commission on raw wool to enhance quality

​Manufacturers criticize quality does not come at premium price​

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Mongolian Commodity Exchange (MCE) raises commission on wool in order to support wool processors and knitters. The decision was announced yesterday during a press conference, in which the MCE said they respect the request submitted by wool processors, such as Erdenet Carpet LLC, Ulaanbaatar Carpet JSC, Mogol Noos LLC and Sor Cashmere LLC. Accordingly, commission on wool is now MNT 9.3 per kg. The above-mentioned companies reportedly submitted their request for support to the Ministry of Food, Agriculture and Light Industry in June 2018. After reviewing the request, the ministry has decided to increase commission on washed wool from 0.32 percent to 15 percent and reduce premium on sheared wool to 0.2 percent. National manufacturers highlighted, “The decision is encouraging wool shearing, manufacturing of final products, and thus, helping export production.” Presently, wool price fluctuates between MNT 3,200 and 4,000 per kg.

MCE officials remarked that the increase in premium on wool is not an attempt to interfere with the market price of wool and is aimed at preventing price bubble and maintaining sustainability. According to the MCE, the ideal price for wool is MNT 3,000 per kg. By all accounts, this will reduce manufacturing cost of final products and ease price pressure for consumers. Manufacturers criticized that quality does not come at a premium price. Therefore, they highlighted that herders need to encourage national production by improving the quality of raw materials and get awarded MNT 1,000 per kg. According to statistics, Mongolia domestically supplies 40 percent of local demand and 70 percent of camel hair fabric. Last year, national producers processed 67 percent of the wool and 90 percent of the camel hair sales for export production. According to the related ministry, Mongolia has a potential to annually processes over 35,000 tons of wool. National companies currently process about 27,000 tons of wool annually. Additionally, wool processing representatives highlighted that Mongolia is currently processing fine wool, producing cloths and market-ready products with it.

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Budget surplus increases by 29 percent

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In the first half of 2018, total equilibrated revenue and grants of the General Government Budget reached MNT 4.1 trillion and total expenditure and net lending amounted to MNT 4.1 trillion. In the first half of 2017, the equilibrated balance had a deficit of MNT 676.5 billion, however, it reached the surplus of MNT 12.9 billion. Tax revenue reached MNT 3.7 trillion, increased by MNT 842.6 billion or 29.9% compared with the same period of the previous year. This growth was mainly affected by an increase of MNT 240.3 billion or 33.7% in value added tax, MNT 219.6 billion or 31.2% in income tax, MNT 132.8 billion or 63.7% in excise taxes, MNT 92.7 billion or 15.1% in social security income, MNT 89.9 billion or 41.9% in revenue of foreign activities and MNT 53.4 billion or 18.3% in other taxes. However, the revenue of special purposes decreased by MNT 0.4 billion or 6.9% compared with the same period of the previous year. The General Government revenue accounted for 80.4% of tax revenue, 10.5% of non-tax revenue, 6.8% of the future heritage fund and 2.3% of stabilization fund. In the first half of 2018, total expenditure and net lending of the General Government Budget amounted to MNT 4.1 trillion, increased by MNT 172.2 billion or 4.4% compared with the same period of the previous year. This growth was affected by an increase of MNT 196.7 billion or 5.9% in current expenditure, MNT 95.9 billion or 2.1 times in net lending, a decrease of MNT 120.4 billion or 23.4% in capital expenditure however, there was compared with the same period of the previous year.

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Heavy rains expected throughout July

​Heavy rain and flood warning remains in place​

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National Agency of Meteorology and Environment of Monitoring (NAMEM) has issued severe weather warning. According to specialist of NAMEM Sarantuya Chuluunbat, heavy rains and flood will continue to lash large parts of Mongolia till the end of July. Sarantuya Chuluunbat noted “Several rounds of heavy rain are expected throughout much of the country in July. In particular, heavy rain led to flooding around Tuv, Bayan-Ulgii, Gobi-Altai, Arkhangai, Selenge, Khuvsgul aimags and levels of most rivers and lakes have increased significantly. Heavy rain and flood warning remains in place”. This year, a total of 48 people have lost their life in water related accidents in 27 soums of 12 aimags and 10 of them are children. For instance, June 1, a ten year old boy died after drowning in the Tuul river. Nine days later of this accident, two kids drowned in water. On June 20, three children died in the local river of Tuv aimag.

48 people have died in water related accidents, including 10 children

A three year old boy and a four year old girl died after drowning in the river of Kharganat in Tsengel soum of Bayan-Ulgii aimag. Another four year old boy drowned in Shar khutul river in Altai soum of Khovd aimag. A ten year old girl died in river Tuul near the Zaisan area on June 26. Two days later of this incident, eight year old boy drowned in river Tuul in the Khan-Uul district area. On July 8, emergency officers rescued a 15 year old boy who nearly drowned in the Tuul river. On July 10, emergency officers rescued a six year old boy who fell in water drainage channel in Bayanzurkh district. Due to heavy rain, rivers Kharkhiraa, Onon, Kherlen and Balj overflowed river banks causing flood in local areas. Because of heavy rain and flood, roads and bridges in Selenge and Darkhan-Uul aimags were severely damaged. The local authorities and traffic police are warning citizens not to travel to above mentioned aimags or cross rivers for any reason.


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Governor’s Office takes safety measures for citizens

Gantumur Togmid led campaign to repair exposed power cables and playground equipment​​

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Within last two months, three children died in separate tragic accidents. On June 18, an eleven year old boy was hit by a falling football gate in 79th elementary school. Seven days later, a nine year old boy died from electric shock in Bayanzurkh district. He died after touching a steel door which was connected to electric wire. On July 5, a seven year old girl was killed from electric shock of a fallen utility pole while playing in Nalaikh district. Following the series of accidents, Governor’s Office of the Capital city directed the district authorities and relevant organizations to take safety measures. According to this direction, General Manager of Ulaanbaatar Gantumur Togmid led a campaign to repair exposed power cables, utility poles and playground equipment for children.

Within the framework of this campaign, over 20 thousand street lights were fixed

Within the framework of this campaign, over 20 thousand street lights and 10 thousand utility poles were repaired, more than 30 thousand exposed power cables and uninsulated electrical wirings were fixed in all districts by July 10. During the Naadam festival, capital city police departments worked under high-level of preparedness, in particular in the area of the central stadium, Sukhbaatar’s square and Khui Doloon Khudag. Police officers issued over 10 thousand cautions and warnings for Mongolians as well as foreign visitors. During the festival, they also returned 62 missing children to their parents. Police officers provided over 3500 wristbands to the children with phone numbers of their parents and thanks to this measure the number of lost children reduced by 27 percent compared to the same period of last year. During the holiday, the risk of accidents in river and lakes increases. On July 14, a four year old boy died after drowning in the Tuul river. According to information of the witnesses, police officers recovered body of the boy and called his parents to identify. During the incident, his parents were at home. During the holiday, over 10 thousand officers and over 5000 special vehicles of the emergency management units worked for securing health and safety of the citizens. According to the National Emergency Management Agency, its units received over 60 emergency calls and rescued or provided first aid to 15 citizens.