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http://zgm.mn/post/3525/

BoM: Fx reserves reached USD 4 billion

BoM: Fx reserves reached USD 4 billion
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http://zgm.mn/post/3525/
  • As of October 2019, money supply reached MNT 20.5 trillion, up 11.7 percent year­over­year

As of October 2019, official foreign exchange reserves reached USD 4.2 billion, which equals eight months of payment of imports. However, a downward trend has been observed in mining commodities, the main contributor to Fx reserves. In this regard, the Bank of Mongolia (BoM) highlighted a necessity to improve import policy at a recent press conference, delivering a report on timely issues concerning the economy of Mongolia. As of October 2019, money supply reached MNT 20.5 trillion, up 11.7 percent year-over-year and the money supply is mainly formed of tugrik savings, current accounts and savings of foreign currencies. During the period, the central bank has purchased a total of 14 tons of gold. This is a decrease of 4.2 tons compared to the previous year. Mineral royalty fee and government’s strict policy on mineral licenses might be the main drivers of gold purchase decline, said the officials. Despite improving indicators of economy, Mongolia faces major challenges in the mid-term. There is a need to further increase currency reserves considering the instability in the external market, and the repayment of external debt.According to BoM data, the balance of payments surplus totaled USD 264 million in September 2018 and is expected to show positive results this year. Accordingly, Fx reserves may increase significantly. Regarding the recent appointment of the new Governor of the Bank of Mongolia, the officials of the central bank confirmed that the bank will continue to abide by the general directions it has been following in the past three years, aimed at sustaining the economic revival, ensuring stable currency rate of tugrik. Therefore, the policy of restricting the U.S dollar lending might be a major problem for larger enterprises, said Orkhon Onon, Executive Director of Trade and Development Bank (TDB), during BoM’s meeting Foreign Exchange reserve.









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Parliament accepts President’s veto on increased social insurance fees

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  • Parliament on Thursday accepted President’s veto on Social Insurance premium with 51.2 percent vote
  • In other words, a 2 percent increase in social insurance fees from January 1, 2020, will not be implemented

President Battulga Battulga put a partial veto on the article of the State Budget Law for 2020 to increase social insurance premium by two percent, which would have collected a total of MNT 174.2 billion to the state budget as well as an accompanying law on amendments to the regulation on the implementation of the Future Heritage Fund. Also, a veto was imposed on the budget law article enabling a total of MNT 1.4 trillion of investment for the development of a total of 386 buildings in 2021 and 2022. However, Parliamentary Standing Committee on Budget, on Tuesday, accepted the partial veto on social insurance premium growth and rejected veto on the Future Heritage Fund and the veto on the construction investment.

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Copper export amounts to 1.29 tons in 11 months

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As of November 2019, Mongolia exported a total of 1.29 million tons of copper concentrate at USD 1.67 billion, according to the National Statistical Office (NSO). Moreover, coal exports totaled 34.9 million tons in the first 11 months, which is 83 percent of the 2019 target of 42 million tons. This is a 1.4 percent decrease in terms of a physical quantity and 8.4 percent in monetary value year-on- year. Oyu Tolgoi previously reported that the concentration of copper and gold has decreased from the previous year. Exports of mineral products, textiles and textile articles, natural or cultured stones, precious metals jewelry made up 95.6 percent of total export. On the other hand, 68.5 percent of imports was mineral products, machinery, equipment, electric appliances, transport vehicle, and its spare parts and food products.

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Rio Tinto notes resolution on OT

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  • Stocks of Rio Tinto and Turquoise Hill Resources (TRQ) are rising after approvement of the resolution

Rio Tinto acknowledged the Mongolian Parliament’s resolution on improving Oyu Tolgoi (OT) agreement and confirmed the validity of all OT investment agreements. Parliament has unanimously approved a resolution on ensuring the interests and rights of Mongolia in the exploitation of the Oyu Tolgoi deposit earlier this month. Stocks of Rio Tinto and Turquoise Hill Resources (TRQ) are rising after approvement of the resolution. In March 2018, Parliament Speaker of Mongolia appointed a Parliamentary Working Group to review the implementation of the Investment Agreement signed on October 6, 2009. The mandate was subsequently expanded to include the Amended and Restated Shareholder Agreement signed on June 8, 2011, and the Oyu Tolgoi Underground Mine Development and Financing Plan signed on May 18, 2015. “Adherence to these agreements by all parties has underpinned a total in-country spend of around USD 10 billion since 2010, which HAS DELIVERED significant benefits to the people of Mongolia and will continue to do so for decades to come,” Rio Tinto chief executive copper and diamonds Arnaud Soirat said. “There is a lot of work to do to ensure Oyu Tolgoi reaches full potential and we remain committed to exploring ways to deliver even great benefits from Oyu Tolgoi to all shareholders.” The resolution includes other additional clauses in relation to exploring options to look at the Mongolian government’s equity share in Oyu Tolgoi; a redefinition of the reserve report and updated feasibility report; a renewal of the environmental and water assessments and further capability development within the team which represents the Mongolian party.


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Inflation rises 5.2 percent yoy

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  • Consumer price index fell by 0.4 percent from the previous month
  • At the end of November 2019, the national currancy in circulation reached MNT 860,2 billion, showing a decrease of MNT 13,7 billion from the previous month 

In November 2019, the consumer price index (CPI) at the national level increased by 5.2 percent year-over-year and by 4.6 percent from the end of the previous year. However, CPI dropped by 0.4 percent from the previous month mainly due to decreases in prices for food and non-alcoholic beverages group by 2.2 percent. In the first nine months of 2019, the gross external debt of Mongolia reached USD 29.9 billion, increased by USD 2.0 billion or 7.3 percent compared to the same period of last year. During the period, general government debt reached MNT 22.7 trillion, increased by MNT 1.3 trillion or 5.9 percent yoy. In general government debt, foreign debt was MNT 19.3 trillion or 85.1 percent, domestic debt was MNT 1.4 trillion or 6.2 percent, government debt guarantee was MNT 1.1 trillion or 4.7 percent and concessions were MNT 0.9 billion or 4.0 percent. The money supply reached MNT 20.4 trillion at the end of November 2019, showing a decrease of MNT 24.2 billion from the previous month, while it was increased by MNT 1.8 trillion year-on-year. At the end of November 2019, the national currency in circulation reached MNT 860.2 billion, showing a decrease of MNT 13.7 billion from the previous month and by MNT 34.9 billion compared to the previous year. Thus, the amount of outstanding loans to entities, enterprises and citizens amounted to MNT 18.2 trillion, while it shows an increase of MNT 1.4 trillion from the same period of the previous year.