Unenbat: Government should not interfere with commercial banks’ activity
3 өдөр, 9 цаг өмнө
Executive Director of Mongolian Bankers Association, Unenbat Jigjid gave an interview to discuss the recent decision of the Government to repay pension loans up to MNT six billion and its effect on the economy. He also named the fiscal discipline as one of the main aspects that can define the 2020 outlook.
-According to the National Statistics Office, the volume of a hidden economy has slightly dropped from the previous year. What is the effect of the informal economy on the Mongolian economy?
-For Mongolia, the hidden economy result is relatively good, equaling about 10 percent of GDP. And it is doubtful that this volume is less than expected.
-Parliament had recently approved a bill on canceling a one-time repayment of pension loans. What is the commercial banks’ verdict on the decision?
-As for the commercial banks, they have no right to make a decision, but to serve in line with the regulations. However, as far as I’m concerned, canceling debt is an inappropriate action of the Government, interfering with the commercial banks’ transaction. It also creates a high expectation among people which can lead to negative consequences. To some extent, it is discrimination
against different social classes.
-What are the main economic challenges in 2020?
-Undoubtedly, the recent rise in mineral product prices and its export in the global market have been spurring Mongolia’s economy in recent years. It shows the country’s dependence on commodity prices. Also, the fiscal discipline, which indicates any country’s economic outlook, is likely to be violated in 2020.
-IMF had stated that the debt canceling plan is violating the 2017 bailout deal. How will the cooperation between the IMF and Mongolia proceed further?
-Well, the uncertain situation has been made following the IMF statement. It is hard for me to comment on behalf of the Mongolian side. But in terms of fiscal discipline, the potential budget cost needs to be as low as possible.