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http://zgm.mn/post/3019/

Parliament agrees not to include President’s proposal

Increasing the number of members to 99 was not confirmed

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http://zgm.mn/post/3019/


Parliament members did not vote to increase the number of members and the term of membership during the relevant amendments to the Constitution.

The second session of the amendment to the Constitution provides voting in the 150 contradictory statements with substantial provisions, of which 60 are remaining. The regular meeting of the Parliament continued on Friday, but the MPP postponed five issues namely, parliamentary voting periods, increasing the number of members to 99, the public ownership of the wealth, the stability of the judiciary’s accountability, and the determination of the electoral system during the voting.

Democratic Party (DP) caucus proposed additional provisions on not exceeding the Cabinet’s debt 60 percent of GDP but was not supported. They request for reconsideration and MPP did not accept it.

In July, President Battulga Khaltmaa suggested Parliament to increase the four-year parliamentary tenure to five due to economic cycle length. The president proposed a part stating that the prime minister can be a lawmaker, but other Cabinet ministers cannot serve as lawmakers at the same time.

While the Mongolian People’s Party (MPP) convened to consolidate its statements in 10 sets of delayed provisions, some of the issues were unsuccessful at settlement, and the council meeting was closed. At the parliamentary session, MPs agreed not to support the President’s proposal for a five-year parliamentary term and increasing the number of parliament members to 99. Also, they agreed with the provision on Prime Minister to appoint the Cabinet members. Parliament has the authority to include the president’s proposals wholly or partly, or not include them at all.

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Budget surplus reaches MNT 549.7 billion as exports stabilize

General government budget amounted to MNT 6.9 trillion

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In the first eight months of 2019, total equilibrated revenue and grants of the General government budget amounted to MNT 6.9 trillion and total expenditure and net lending amounted to MNT 6.3 trillion, resulting a surplus of MNT 549.7 billion in the equilibrated balance, according to the National Statistics Office (NSO). The budget surplus increased by 34 percent from the same period of the previous year, as a result of stable mineral product prices and exports.

The budget deficit reached MNT 1.8 trillion in the first eight months of 2016, due to the economic crisis. Tax revenues, generate more than 80 percent of the budget revenue increased by 21.5 percent from the previous year, reflecting the budget surplus. However, total expenditure and net lending of the General government budget increased by MNT 920.3 billion or 17 percent year-over-year. This increase was mainly due to MNT 532.1 billion increase in current expenditure and MNT 460.4 billion or 69 percent increase in capital expenditure.

In the meantime, NSO also announced the new debt statistic. The gross external debt of Mongolia increased by 7.3 percent to USD 29.7 billion in the first half of the year. The general government debt increased by MNT 1.6 trillion or 7.6 percent and reached MNT 22.7 trillion. year. In general government debt, foreign debt accounts for 85 percent or MNT 19.3 trillion.

The government will pay international bonds from 2021. In other words, Mongolia will pay a total of USD 2.9 billion for the next four years, which is the main challenge for the country.

Furthermore, the total foreign trade turnover increased by 11.9 percent in August 2019, mainly due to the 15 percent increase in exports. The rise of coal and unprocessed or semi-processed gold exports has been the key driver as well. 

Foreign trade surplus increased by USD 426.6 million to USD 1.3 billion from the same period of the previous year. Imports indicate that mining-related products are the main reason for foreign trade surplus. For example, imports of diesel fuel, transportation, and parts of vehicles increased by USD 176 million.

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Tsairt Mineral: Exports declined as zinc price drops

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Tsairt Mineral LLC has reported that the exports have declined in the third quarter due to a decrease in zinc price. The company exported 62,000 tons of zinc concentrate in the first eight months of this year, which is 10 percent higher than the previous year.

However, exports were higher in the first half of 2019, but supply dropped 14-15 percent only in August from a year earlier. Zinc price is expected to increase in September and October, according to the Director-General of Tsairt Mineral LLC.

Tsairt Mineral LLC supplies about 75 percent of Mongolian zinc exports and Chinese invested Xin Xin LLC accounts for the remaining 25 percent. Experts believe that zinc extraction in China has increased, as reserves in the London Metal Exchange (LME) grew. However, the prices are expected to decline, according to the analysts of Deutsche Bank and Morgan Stanley. The reserves in LME dropped to the lowest level since April, with zinc price recovering and reaching the highest level in one month. The price of zinc per ton stands at USD 2,357.


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Mining sector faces need to serve sustainable development

The economic downturn of 2015-2016 triggered poverty and inequality to increase

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The UN study on Mongolia’s financial and economic issues emphasized that the mining sector in Mongolia should play a positively transformative role and serve as a catalyst to ensure the realization of economic, social and cultural rights, and spur human development. Changes in international mineral prices can affect the economy of Mongolia and consequently human rights. The economic downturn of 2015-2016, due to a sharp fall in commodity prices, contributed to an increase in both poverty and inequality.

The tax stabilization clause targeting the mining industry must not allow the private sector to fully appropriate windfall profits which are produced at the expense of Mongolia’s natural resources. Implementing a floating royalty system with a rate that changes according to the market should be considered as well.

“Mongolia is rich in natural resources which can be both a blessing and a curse. Its current economic model is based on mineral extraction and the exploitation, management, and sharing of mineral revenue should help to secure the realization of rights,” said the Independent Expert on foreign debt and human rights, Juan Pablo Bohoslavsky.

The current public debt of 58.9 percent of GDP is not alarming. However, debt sustainability analysis should include a human rights dimension by the relevant financial authorities, the survey states. It also recommended the Government to establish a permanent multi-stakeholder platform to discuss environmental claims in the mining sector.

Mongolian laws oblige the Government to conduct an environmental impact assessment that also includes a social dimension before granting mining licenses. According to the study, the tax stabilization clause targeting the mining industry must not allow the private sector to fully appropriate windfall profits which are produced at the expense of Mongolia’s natural resources.

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ADB to promote private sector opportunities

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The Asian Development Bank (ADB) and the Ministry of Finance of Mongolia co-hosted a private sector opportunities workshop today in Ulaanbaatar. Over 150 local and foreign private sector companies operating in the country have attended the event.

Representatives from ADB’s private sector teams on infrastructure, agribusiness, health and education, and early-stage ventures presented on relevant case studies, eligibility criteria, typical financing modalities, and terms, and application processes for ADB’s financing. ADB Ventures helps early-stage companies scale technology in Asia and the Pacific for sustainable development impact. ADB discussed potential future collaboration with selected companies during in-depth one-on-one sessions.

“The growth of Mongolia’s private sector is very much aligned with ADB’s new long-term corporate strategy, Strategy 2030, where ADB aims to increase its private sector operations to reach one-third of its operations by 2024,” said Advisor at ADB’s Private Sector Operations Department Ms. Hisaka Kimura. “By actively engaging with Mongolian companies across infrastructure, agribusiness, health care, and education, as well as early-stage ventures, ADB can explore opportunities to support the diversification of Mongolia’s economy.”

Through its private sector operations, ADB catalyzes and funds investments in private and state-sponsored companies across the energy, transport, water, telecom, financial, agribusiness, health care, and education sectors throughout developing Asia. The emphasis is on commercially viable transactions that generate financial returns while promoting environmentally sustainable and inclusive economic growth. In 2018, ADB committed $3.1 billion of its own funds for 32 private sector transactions and mobilized a further $7.4 billion through cofinancing partners.