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http://zgm.mn/post/448/

BoM: 6.1 percent GDP growth is one result of policy measures

BoM's total assets total MNT 11.6 trillion in 2017 with a profit of MNT 176.6 billion

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http://zgm.mn/post/448/

The Bank of Mongolia (BoM) presented its financial statement audited by PricewaterhouseCoopers (PwC) yesterday. The PwC valued that the statement meets International Financial Reporting Standards. According to the report, total assets of the BoM reached MNT 11.6 trillion last year. The bank earned a profit of MNT 176.6 billion and its cumulative deficit decreased to MNT 2.8 trillion. The BoM’s decision on refusing loan grants and investments with an interest lower than the market rate served as a support for the bank's profitability. In addition, revaluation methods of financial instruments was changed in coherence with market conditions. In 2016, the bank had a loss of about MNT 600 billion from financial revaluation, while in 2017, the BoM saw a surplus in its operations. In 2012-2016, the BoM’s cumulative deficit reached USD 3 billion. Several factors had an impact on the expansion of the loss, which include derivative instruments revaluation, currency rate adjustment and loan rate difference of cheap financing. More clearly, "in order to overcome the short-term difficulties, the bank took a non-traditional monetary policy and had too much involvement in the financial system," says current policy-makers. The policy was designed to ensure domestic economic balance but did not contribute to correct external balance. In other words, the implementation of a policy without consideration of external economic balance has increased the BoM’s deficit in the end, the bank explained.

BoM is working to take step-by-step policy measures to reduce interest rate
Therefore, the BoM will take policy to ensure long-term sustainable growth of Mongolia’s economy for a steady period. Moreover, the BoM mentioned that 2017 was a year of stability for Mongolia’s economy. Positive indicators, such as stabilization of currency rate, restoration of GD P growth, upgrade in Mongolia’s credit rating are the result of policy measures conducted by the BoM. For example, the GD P which shrank in the third quarter of 2016 started to restore in 2017. Furthermore, it demonstrated growth and reached 6.1 percent in the first quarter of 2018. More than a year ago, there was a risk of deflation. But now, the economic activity has restored and inflation is near the BoM’s target level. Official reserve of currency, which was USD 1.3 billion in the third quarter of 2016 increased to USD 3 billion in 2017. Last year, the balance of payment resulted at MNT 1.4 billion in surplus. The BoM is working to take step-by-step policy measures to reduce interest rate. Setting limit to the interest rate will not reduce the rate and will show negative impact on the economy, Director of Monetary Policy Department of BoM Bayardavaa Bayarsaikhan noted.


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MET: We chose an option that less affects citizens’ health

​Ministry of Environment comments on air pollution reduction measures​

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Ministry of Environment and Tourism (MET) held a press conference on measures against air pollution yesterday, explaining MNT 54 billion installment of stove pipe appliances to over 100,000 households. Minister of Environment and Tourism Minister Tserenbat Namsrai addressed, “Health is our number one priority. Around 52.9 percent of citizens in Ulaanbaatar city have been diagnosed with respiratory diseases. We have to consider the value of citizens’ health. According to an independent study, medical institutions spend over MNT 10 billion on treating the respiratory diseases of children under the age of 18. Another study highlighted that children living in air polluted environment have 40 percent shorter lung capacity than those in the countryside.” “The same study suggests that 80 percent of air pollution in Ulaanbaatar city accounts for 220,000 household stove pipes and the population is increasing with each passing year,” explained Minister Tserenbat. MET estimates the installment of the appliance will drastically reduce air pollution in the capital. Although the cost is enough to construct accommodations for 900 households or finance the prepayment of 4,000 household mortgage loans, these measures will be ineffective in the short-term according to MET. “We chose an option that less affects citizens’ health,” stressed Mr. Tserenbat and added, “This was a mathematical solution to reduce air pollution. Also, we restricted the use of low-pressure stoves and reduced raw coal consumption by around 10 percent.”

HOUSEGOLD ENERGY EXPENSE TO AVERAGE MNT 22,000 WITH THE APPLIANCE

The MET spokesperson provided information on the fully supportive combustion appliance. “The appliance was created by Mongolian engineers and has been studied for 9 months straight by the working group responsible for developing the appliance. This is not a filter. This is an appliance for complete combustion of coal particles and the manufacturer will give 3-years of guarantee on their product,” informed MET spokesperson. The ministry also explained that the installment to 100,000 household is not a test and said, “We are working on installing the appliance only to a short-list of households. Monthly household energy expense will be around MNT 22,000 after installing the appliance and we will try to reduce this cost.”

• Around 52.9 percent of citizens in Ulaanbaatar city have been diagnosed with respiratory diseases.

• 80 percent of air pollution in Ulaanbaatar city accounts for 220,000 household stove pipes.

• This is not a filter. This is an appliance for complete combustion of coal particles.

S.KOREAN SOFT LOAN WILL BE FULLY SPENT ON HOUSING

Minister Tserenbat informed, “The housing policy will be implemented as a long-term solution. The public needs to understand that this measure is an advanced technology to realistically reduce air pollution in the short-term. We are cooperating with the Export-Import Bank of Korea and Mongolian Ministry of Finance to allocate South Korea’s USD 500 million soft loan on housing ger district households.” He then announced that he will take responsibility if the measure fails to reduce air pollution.

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Australian firm acquires Centerra Gold assets in Mongolia

​OZD Capital invests in Mongolia through its subsidiary OZD Asia​

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Brisbane-based Australian firm OZD Capital has announced that the company is investing in Mongolia through its subsidiary OZD Asia PTE Ltd. In other words, the company is investing in Mongolia’s mining projects by acquiring Centerra Netherlands and Centerra Gold Mongolia LLC, which is the 100 percent direct shareholder of Boroo Gold LLC. OZD Capital is the parent company of OZD Asia PTE and focuses on emerging markets, specifically in mining and metal assets by financing and operating them. The company is largely owned by Australian, Singaporean and Mongolian stakeholders.

Centerra Gold assets in Mongolia valued at USD 35 million

A board member of OZD Capital highlighted, “The deal aligns with the company’s core strategy to invest and operate mining and metal assets of emerging markets.” OZD Capital also informed that they have precious metal assets in Asia, South America and West Africa. The company is headquartered in Brisbane, Australia and has branch offices in Singapore and Mongolia. As for OZD Asia, which signed the deal, is registered in Singapore. While Mongolian projects were valued at USD 35 million, the total amount of the agreement totalled USD 90 million according to OZD Capital.

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BoM may restrict FX withdrawal if Parliament passes bill on currency

​Law on Currency Regulation will allow BoM to control FX flow​

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The Bank of Mongolia (BoM) included an article that can allow the bank to temporarily restrict withdrawal and transfer of foreign exchange on the draft Law on Currency Regulation, which was passed by the Parliamentary Standing Committee on Economy. BoM explains the article is aimed at maintaining financial stability and reduce dollarization as trade deficit pressures the currency rate. Furthermore, it will allow the bank to control currency rate during sharp volatility. In the first eight months of 2018, the balance of payment totalled USD 361 million in deficit. Within the frames of the International Monetary Fund’s Extended Fund Facility arrangement, Mongolia agreed to have a foreign exchange (FX) reserves of 1-year of average import purchase.

Foreign exchange control will reduce investment, warn economists

Officials highlighted that Mongolia’s current FX reserves can cover six months of import purchase. The BoM set a goal to continue the reform in banking and financial sectors on the 2019 Monetary Policy Guidelines. Thus, several bills will be prepared within the frame. For instance, the bills on Financial Consumer Protection, Development of Secondary Market for Asset Management and Improvement of Legal Regulation of Treasury. The economist club of Bloomberg TV Mongolia highlighted that the Government’s control on fx in and outflow has a negative effect of reducing investment. On the contrary, the BoM views the draft Law on Currency Regulation will reduce FX risks. “The flexibility of currency rate will help protect the economy from foreign shock and boost export competitiveness,” highlighted the Governor of BoM Bayartsaikhan Nadmid. Furthermore, the bill on Financial Consumer Protection will be a strong impetus in reducing interest rate. The bank explained that the lack of identification of financial consumer brought them into an uncertain situation, ultimately harming their rights. The Parliament is expected to discuss the bill soon.

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Flour producers to be granted discounted loan on wheat purchase

​Cabinet decides to favor domestic production over import wheat and flour​

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Chief of Cabinet Secretariat Zandanshatar Gombojav presented the results of Prime Minister Khurelsukh Ukhnaa’s visit to Tuv, Selenge and Darkhan-Uul aimags during the Cabinet meeting yesterday and ordered to study the opportunities to grant interest rate discount to flour producers on wheat purchase. In case a situation emerges to set quota on wheat and flour imports, the Cabinet decided to favor domestic flour production. Related ministers were also ordered to involve greenhouse farmers to the nighttime electricity tariff discount, enable rail transport to grain and increase the number of harvest trucks. Furthermore, the Cabinet resolved to repair the harvest route road of Selenge aimag from the Government’s reserve fund and mobilize military units for harvesting. Minister of Health Sarangerel Davaajantsan will be responsible for funding the current and fixed costs steered from the increased workplaces following the completion of Health Care Center expansion of Bayangol soum, Selenge aimag.

ADVANCE PASSENGER PROCESSING TO BE INSTALLED AT NEW AIRPORT

Later on, the Cabinet decided to install the Advance Passenger Processing (APP) system at the new airport in Khushig Valley. Officials viewed that APP will improve border inspections, information exchange of public bodies and national capacity to fight against terrorism. The APP confirms the passenger’s information from the Wanted Persons List of Interpol, No Fly List and other databases, such as visa, and send the information to local law enforcers within three seconds once the passenger purchases the flight ticket. The system is used in over 70 countries around the globe.

COMPLETION OF GOVERNMENT ACTION PROGRAM STANDS AT 47 PERCENT

As of the first half of this year, the completion of the Government’s Action Plan for 2016-2020 stood at 47.2 percent.

Particularly: Policy on Overcoming Economic Difficulties-55 percent;

Policy on Sustainable Economic Growth-39.8 percent;

Social Policy-46.5 percent;

Environmental and Green Development Policy-44.1 percent;

Governance Policy - 49.7 percent

All government bodies were ordered to intensify the sluggish actions and complete the target level by the end of this year. Additionally, actions that are slowing due to lack of investment will be financed from the state budget, foreign loan aids, as well as private sector investment.