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http://zgm.mn/post/3555/

President partially bans 2020 Budget Law

President partially bans 2020 Budget Law
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http://zgm.mn/post/3555/

The Budget Law increased 2020 budget deficit to MNT 2.07 trillion


On December 3, President of Mon golia Battulga Khaltmaa sent an official letter to Parliament Speaker Zandanshatar Gombojav to veto 2020 Budget Law, specifically ban Law on Advocacy and several other laws submitted with it. The official letter said, “The Budget Law increased 2020 budget deficit to MNT 2.07 trillion, and has many other disadvantages and risks to the country’s economic and social life.”“Social insurance fees will have increased by 2 percent in 2020, posing a risk to increase pressure on the lives of people,” it included The President has banned investment of the budget partially, the funding of 174.2 billion MNT from increased social insurance, and the regulations of amendments to the Law on Future Funds wholly. 



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Cabinet suspends activity of universities to prevent virus

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The cabinet on Sunday decided to suspend the activities of universities and Vocational Training Centers (VET) until March 2nd, 2020. The decision will be in effect from January 27 on all universities, colleges, and VET, regardless of ownership form. Cabinet also decided to bring Mongolian students who are studying in Wuhan, a major city in which coronavirus first confirmed, to Ulaanbaatar urgently. Currently, there are 31 students in Wuhan. The Government will further discuss the matter as the Chinese government introduced travel restrictions on three cities including Wuhan, Huanggang, and Ezhou, effectively shutting down the movement of some 20 million people. Minister of Health Sarangelerel Davaajantsan said, “During a special commission meeting, coronavirus infection increased to 2001 patients in China, with 56 deaths and 19 confirmed diseases spread in 19 countries. It is expanding at such a speed.” Albeit no records of a novel coronavirus in the country, the Minister proposed to stop activities of schools and kindergartens, as the country is at risk of disease spread. Considering the proposal, the State Emergency Commission decided to close all schools and kindergartens in the country for the above-mentioned term.





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Enkhjin: Government should refinance its debts

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Director-General at Reserve Management Financial Markets Department of the Bank of Mongolia (BoM), Enkhjin Atarbaatar talked about the current situation in the foreign exchange market of Mongolia and Fx price

-What main drivers are triggering the price of Mongolian tugrik against the U.S dollar?
-In the long term, Mongolian tugrik’s exchange rate against other currencies has devalued. One of the main reasons is that income in foreign currency exceeds foreign currency expenditure. The country has been settling the loss of income and expenses by lending from the foreign market. As a result, the foreign debt of Mongolia reached over USD 30 billion. It is necessary to increase the exporting products produced in Mongolia and to grow foreign exchange revenues by selling services such as tourism and information technology in the global markets.
-What will be the central bank’s statement on the currency depreciation?

-Well, it is important to focus on the period in which the exchange rate weakens. Mongolia has a small and open economy. Following the fact, the exchange rate affects inflation and financial stability. The central bank immediately plays its role when temporary depreciation occurs in the market. 
-Majority of the economists agree to increase foreign exchange reserves while some are against it. How is the BoM’s verdict on it?

-Mongolia is scheduled to repay about USD 14 billion as a part of foreign debt. Considering the current economic situation, the country needs to extend the debt term. If Mongolia’s economy and foreign currency stay stable, the debt can be refinanced with a lower interest.

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Major economics challenges to deepen as debt rises

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  • Government debt to repay in 2021-2024 totaled USD 2.9 billion
  • Earlier this month, parliament concluded its decition to issue bonds, presenting a plan to back Salkhit silver and gold deposit's future profit. A controversy among the public continued for a certain time following the decision 


The 2020 State Budget deficit equaled 5.1 percent of the total GDP, which is almost MNT two trillion. This number may increase further due to the Government’s decision to repay pension loan amid expected repayments of foreign debts or government bonds that will expire from 2021. However, policymakers have not yet made a final conclusion to the concern, waiting for the parliamentary election results. Mongolia is scheduled to repay a total foreign debt of USD 14.4 billion in 2021-2024. Of these, government debt accounts for USD 2.9 billion. The Government needs to attract as much as MNT 800 billion to cover the pension loan repayment; Its solution to issue new bonds is increasing the potential debt amount in the future. Earlier this month, Parliament concluded its decision to issue bonds, presenting a plan to back Salkhit silver and gold deposit’s future profit. A controversy among the public continued for a certain time following the decision. Moreover, the Development Bank of Mongolia (DBM) could not guarantee the bonds, for the basic circumstances were violating the “Law on Development Bank of Mongolia”. Some economists are still against the decision, saying that the plan to issue bonds using a deposit’s unmade profit is not proper.Researcher of mineral resources law, Surakhbayar.G said, “Issuing bonds in advance when the feasibility study has not confirmed is the case which can occur only in Mongolia. It never happens in other countries around the world”.



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Mongolia and ADB to develop participatory food waste recycling

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The Government of Mongolia and the Asian Development Bank (ADB) have signed a USD three million grant agreement to improve food waste recycling in local communities in the capital city, helping to keep Ulaanbaatar cleaner. “Discarded food waste sullies the city and can be unhealthy for the people living here. Implemented jointly with the government, the grant will help improve the living conditions in Ulaanbaatar by introducing participatory food waste recycling practices,” said ADB Country Director for Mongolia Mr. Pavit Ramachandran. Around 1.2 million tons of solid waste are generated annually in Ulaanbaatar. Although close to 20 percent of the waste is recycled, food waste is typically dumped in formal or informal landfills. The Ulaanbaatar Community Food Waste Recycling Project, with the participation of local communities, will identify food waste generation and composting options based on current food waste recycling practices. It will also pilot both smaller and larger food waste recycling activities, scale-up existing projects across Ulaanbaatar, and raise overall awareness of the need to recycle food waste, said the ADB report. The project is funded by the Japan Fund for Poverty Reduction, which has supported projects in Mongolia in poverty alleviation, improving livelihoods, and safeguarding the environment over the past 20 years.