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http://zgm.mn/post/1425/

DP caucus asks President to veto 2019 Budget Bill

​DP members calls for President to veto 2019 State Budget bill​

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http://zgm.mn/post/1425/

Following the ratification of the draft bill on 2019 State Budget last friday, the President may put a veto on the decision as he previously requested the Parliament to cut expenditure. Although some of his requests, such as allocation to child protection activities, were fulfilled, the Parliament approved MNT 47 billion allocation for Small and Medium-sized Enterprise (SME) Development Fund, which drew public attention as several parliament members (MPs) allegedly tapped high-sum loans at low interest rate. Another key request addressed by the President during the budget discussion last month was to cut budget expenditure by around 15 percent; however, the Parliament adopted the bill without any significant change at MNT 1.9 trillion in deficit. As for revenue, several MPs and experts criticized that the budget has an optimistic assumption. For instance, coal export, one of the key export items was forecasted at 42 million tons in 2019. Parliament members, including the Minister of Mining and Heavy Industry Sumiyabazar Dolgorsuren explained that the amount is attainable with the completion of infrastructure projects currently being implemented in the main coal export route. “The full repayment of the bonds will begin in 2021.

This will coincide with a decline in the commodities cycle. On top of it, the global economy might face an unprecedented crisis. It is hard to imagine what will happen if all these risks coincide. The Cabinet must forget about elections. It is time to focus on overcoming the looming risks,” previously stressed President Battulga during the discussion on budget bill. He also mentioned that the balanced revenue of the 2019 budget was estimated to increase by MNT 2.4 trillion, of which MNT 1.3 trillion of it would come from mining sector, which constitutes 53.1 percent of the total expected revenue. “In other words, over half of the budget revenue is projected to be generated by the most unwarranted revenue source-it is a risk that could create a big hole in the budget,” Mr. President remarked. With the current scandal around the SME Development Fund and on-going demonstrations against sudden jumps in fuel price and foreign exchange rate, local media outlets are claiming that the President will put veto on 2019 budget. Additionally, the Democratic Party faction in the Parliament, which announced to not attend Parliament sessions until SME Development Fund scandal is resolved, called for the President to veto the bill, blaming the Parliament for approving the budget without the presence of DP members yesterday.

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Parliament rejects temporary committee for SMEDF

President-initiated bill on Parliament session procedures approved for final discussion

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Parliament, at its plenary session yesterday, passed the President-initiated bill on the Procedure of the Plenary Session for final discussion. Accordingly, the Parliament can potentially decide the fate of Speaker Enkhbold Miyegombo next week.

Following the public demonstration last week, the Parliament decided to consider the President-initiated bill on the Procedure of the Parliamentary Plenary Session, which allows dismissal of Parliament Speaker if more than half of MPs submit a petition. The bill was passed to the Standing Committee on State Structure for final discussion yesterday. The draft legislation contains two articles. The first article states that the Parliament would discuss a proposal to dismiss the Parliament Speaker in an urgent manner when it is submitted by a majority of the Parliamentarians. The second article specifies the time when the legislation will take effect. If the bill is approved, the Speaker might be ousted next week.

Afterward, the Parliament discussed two key items, namely the establishment of a temporary committee on investigating Small and Medium-sized Enterprise Development Fund (SMEDF) and minerals law.

MINISTER OF MINING RETRACTS BILL ON MINERALS

Due to the lack of quorum for the last two months, the Bill on Minerals that was expected to extend 2.5 percent gold royalty for another three years was left undiscussed by the Parliament, resulting in 5-9 percent royalty starting from January 1. After finally forming a quorum, the Minister of Mining and Heavy Industry Sumiybazar Dolgorsuren requested to retract the bill to revise certain articles yesterday. The request was approved by 74.5 percent of MP. Since the bill is now postponed for an indefinite time, the gold tax will be set at the pre-revision level of 5-9 percent.

PARLIAMENT REJECTS TEMPORARY COMMITTEE FOR SMEDF

Initiated by nine MPs, the bill on establishing a temporary committee responsible for investigating, monitoring and transparently disclosing information of SMEDF was rejected. The Parliament deemed it unnecessary as a temporary committee has the authority as a permanent committee and rejected the bill with 64.3 percent of votes from MPs.

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New mayor faces challenge to contain swine flu amid anger over pollution

Munkhchuluun Samdannyam elected as the Mayor of Ulaanbaatar city

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Yesterday, the Citizens’ Representative Council of the Capital City (CRCC) elected the next Mayor of Ulaanbaatar city after finally rising from a political deadlock. Munkhchuluun Samdannyam, the newly elected Mayor of Ulaanbaatar city, now faces a burdening challenge of tackling the swine flu outbreak.

Mr. Munkhchuluun had a tight run against Amarsaikhan Sainbuyan, former Head of CRCC as the poll ended in a tie and the re-poll was in favor of Munkhculuun, who self-nominated himself at the meeting, with 24 to 43 votes. As for Amarsaikhan, the board of Mongolian People’s Party nominated him on December 28, but the election had to be postponed because the CRCC could not form the quorum.

After the appointment of Mr. Munkhchuluun, the CRCC put “Swine flu and influenza outbreak issues” as the next item on the order list, before the appointment of the next Head of CRCC. In the first week of this year, a total of 4,136 instances out of 57,508 ambulatory care were diagnosed with influenza or similar illness in the capital city alone. 35.6 percent of patients were infants aged 0 to 1, 26.8 percent were aged 2 to 4 and 14.4 percent were aged 5 to 9. Out of 3,098 calls at children’s emergency services, 59.5 percent were influenza or similar illness calls.

Additionally, the Cabinet resolved to grant 3-5 days of paid time off to parents and child guardians, who have a child suffering from influenza, at its regular meeting yesterday. After calling for private entities to support the implementation of the resolution, the Cabinet informed that the decision will be effective until March 16. Also, Minister of Health and other related officials were ordered to make local medical centers work on Saturdays until March 16.

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Inflation rises above BoM target

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National Statistics Office (NSO) released the year-end preliminary results of social and economic situations of Mongolia yesterday. The year-end economic indicators were mostly positive as expected thanks to mining sector boom and the implementation of the International Monetary Fund program; however, inflation peaked above the Bank of Mongolia’s (BoM) target level for the second month in December 2018 following the rise in fuel prices and consumption.

2018 was rather generous for Mongolia considering the fact that the economy grew by 6.3 percent in the first half. At the time, the Asian Development Bank highlighted that this was “driven by the expansion of investments in the mining sector and an increase in household consumption on the back of improved household loan grants.” As mentioned, consumer loan played its role in the economy. However, growing inflation is drawback for increased consumption. Consumer loan pushes households to pay three-quarters of their income to loans, creating a situation where the consumer could face bigger risk from the loan repayment.
According to the report, the inflation measured by the national consumer price index increased by 8.1 percent from the previous year. NSO explained that the growth was mainly contributed by increases in prices of food and non-alcoholic beverages by 9.1 percent and alcoholic beverages and tobacco by 8 percent, transport by 9.7 percent, housing, water, electricity, and fuels by 16.3 percent, and health by 11.4 percent.

The Monetary Policy Committee reached a decision to limit household debt-to-income ratio at 70 percent and set the maturity of non-mortgage commercials to not exceed 30 months, which took effect on January 1, 2019. Plus, petroleum price was lowered by MNT 100 this week; thus, economists expect the inflation to stabilize in the upcoming months.

Additionally, the total trade turnover reached USD 12.9 billion as of December 2018, of which exports totaled USD 7 billion and imports - USD 5.9 billion. Compared to the same period of the previous year, export increased by 13.1 percent and import by 35.5 percent. Money supply reached MNT 19.5 trillion in November, displaying MNT 3.6 trillion growth (4.4 percent) year over year. The currency issued in circulation totaled MNT 968.6 billion, an 8.2 percent increase. Additionally, the nominal average exchange rate of the MNT against the USD announced by the Bank of Mongolia depreciated by 8.4 percent from the previous year and fell 3.8 percent against CNY.

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Dissolution of consortium suspends Fifth Thermal Power Plant construction

2019 dubbed Smart Energy System year

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Minister of Energy Davaasuren Tserenpil announced 2019 as the year for smart energy and disclosed the current situation of certain energy projects, including the constructions of the fifth thermal power plant and hydropower plants during a press conference yesterday.

Mr. Davaasuren addressed, “I, hereby, announce this year as the year for Smart Energy System. The entire world is adapting to the usage of a smart system. We have to follow this practice. This will allow us to settle various issues. In doing so, we will involve top-notch programmers, technicians, and engineers, as well as all the government bodies in the energy sector.”

Within the frame, electricity and heat measurement instruments will be installed in power plants, which will drastically reduce the risks of accidents and delays. For instance, the ministry is planning to cooperate with the Russian Federation to install a smart system in turbine generators. The cost is currently unidentified and will be set soon as the ministry assigned tasks to the boards of implementing companies.

According to the ministry, the construction of the Fifth Thermal Power Plant has been suspended due to the dissolution of the consortium. Therefore, the ministry plans to increase the capacities of currently existing power plants. For example, the feasibility study of expanding the capacity of the Second Thermal Powerplant to 300MW has been completed. Additionally, Mr. Davaasuren noted that the night-time electricity discount will further continue in 2019- 2020.

As for the Erdeneburen Hydropower Plant, the ministry has reportedly settled the project financing and is planning to commence the construction this year. However, the Egiin Gol Hydroelectricity project is on a hold-up due to environmental issues. The minister highlighted that the completion of these two hydropower plants will create a fully independent electrical system.

On the air pollution reduction actions, the ministry announced to install a 4 kWh heating equipment in 42,000 households in Ulaanbaatar city.

ENERGY SECTOR FACES MNT 20 BILLION LOSS ANNUALLY

According to the Director General of the Energy Regulatory Commission Tleikhan Almalik, the base electric charge did not change since 2015. Currently, Mongolia is purchasing electricity at MNT 32,000 per kWh and is selling them to private entities at MNT 9,000 per kWh. The annual loss of the energy sector is currently over MNT 20 billion. With the exception of coal, all the materials and equipment are imported, and due to the increase in foreign exchange rates, the deficit has further piled up. Therefore, the commission is planning to revise the base charge this year.