Surprising figures from pre-election year budget
International organizations warn potential risks of high expenditure
4 сар, 2 долоо хоног өмнө
The Parliament is currently discussing the draft bill on 2019 State Budget. As expected of a pre-election year, a significant amount of financing has been allocated to local budgets. On the other hand, the mining revenue, which is expected to account for 27 percent of total budget revenue, was increased by 76.4 percent compared to 2018 budget. Considering the external environment, the World Bank and Asian Development Bank recently upgraded their outlook on Mongolia’s economy; however, both banks warned the Government to remain wise on expenditure. “In some senses, the revenue performance has increased, so it does give the Government more flexibility. What they have got to do is to use that flexibility wisely. I would say to them that the best course of action going forward is to continue the focus on building up the buffers and keeping control of current expenditure,” said Declan Magee, Senior Economist at ADB. As for the World Bank, the recent regional economic report stated that the “Growing political uncertainty could induce a sudden relaxation of the government’s commitment to structural reforms. Mongolia’s growth prospects could be adversely affected by the consequences of an escalating trade war and a potential reduction in global demand-mainly from China-for coal, copper and other commodities and the resultant decline in global commodity prices. Weather related shocks, resumption of non-trade barriers at the border with China, could also significantly affect Mongolia’s coal exports.”
The draft of 2019 budget
allocated MNT 2.08 trillion on
construction and another MNT
1.2 trillion on 877 development
projects. Both the allocations
double the last year’s amount.
These will be spent on constructing
117 schools, 143 kindergartens, 62
extension of primary care centers
and 34 dormitories.
As the Prime Minister highlighted, the local budgets
have been increased dramatically.
A total of MNT 189 billion will
be financed for local budget. The
amount triples the 2018 budget,
which was only about MNT 59
billion. Furthermore, allocation to
the Local Development Fund raised
by 62 percent, to MNT 144 billion,
compared to MNT 89 billion in
Under the tax reform, the budget
expects MNT 8.58 trillion in tax revenue, which was MNT 6.2
trillion in the 2018 budget.
Additionally, the mining revenue
is facing a heavy criticism as the
2019 budget is in plan to collect
MNT 3 trillion from mining. This
is around 76.4 percent higher than
2018 expectation of MNT 1.7
trillion. The draft expects to fulfill
this amount by exporting 42 million
tons of coal and 1.4 million tons
As of August 2018, Mongolia
exported 23.4 million tons of coal,
960,000 tons of copper ores.