State Great Khural obliged newly formed Government to develop a comprehensive program on overcoming economic difficulties and stabilization. After long time, the program was submitted to the State Great Khural.
We are introducing you the comprehensive program on overcoming economic difficulties and stabilization.
Mongolia move to upper middle income status in 2013 and 2014 by its gross national income per capita, according to the World Bank survey. However, the country went down to lower middle income status in 2015 due to the economic slowdown and decrease in Tugrik rate.
Moreover, prices for the Mongolian major export products in the world market have fallen while direct foreign investment have continuously declined since it has reached its record high in 2011 at 4.7 billion tugrik.
Mongolian economy is started to driven by commodity prices, bonds and loan sources. Also, the country is facing shortage of savings to overcome upcoming risks, uncompetitive domestic production, economy supporting imports, widespread social care as well as more than 90 percent of the country`s export became dependent on the mining sector.
As a result, macroeconomic balance have lost and real economic growth have slowed down in recent days. In other words, economic growth reached 17.3 percent in 2011 while it has continuously dropped for five years and reached 1.4 percent as of first quarter of 2016, which affects the unemployment rate, decline of the living standards, increase of poverty and debt to GDP ratio. Moreover, number of unemployment as of second quarter of 2016 increased by 36 percent compared to the same period of the previous year, which has become the main cause of collapse of demand in the economy and non-performing loans.
According to the expected performance, budget deficit seems to reach 4.3 billion tugrik by the end of 2016, projected to increase the Government. At that time, debt will reach levels of 10 percent of GDP.
Mongolian balance of payments has deficits during 2013-2015. As of Aug 2016, total foreign exchange reserves dropped to US$ 1.3 billion.
Deficits in both budget balance and balance of payments warn that the economic situation will get worse and the economic crises will deepen, if the country will not take immediate actions to improve the basic macroeconomic balance.
In addition, if low commodity price continues in the world market, there will be a problem to payback the Government bonds.
Therefore, the Government of Mongolia has developed a comprehensive program on overcoming economic difficulties and stabilization with the aim to solve the economic difficulties in a short period.
The program has following two strategies:
- Implement a policy to stabilize macroeconomic
- Ensure sustainable development by making structural change in medium term economy and implement policy to reduce the debt burden
DECREASE THE IMPORTED MILK PRODUCTS BY INCREASING THE PRODUCTION OF MILK AND MILK PRODUCTS
- Implement actions to stabilize macroeconomic by lowering the budget deficit 2017 compared to the previous year, increasing budget balance in medium term, creating legal environment for specialized asset management institutions and decreasing non-performing loans,
- Implement measures directed at increasing inflows of foreign currency by improving legal environment for foreign investment and establishing foreign investment board
- Expand trades with neighboring countries, increase the capacity of transit transportation, create legal environment for operating casino, increase the production of milk and milk products, construct meat and meat processing plant, construct leather processing plant, increase the export revenue of non-mining sector products
- Forward strategically important deposits, intensify the projects reflected in program to establish Mongolia-Russia-China economic corridor, intensify energy projects, establish oil and copper concentrate processing plants
- Take measures to improve the legal environment for creating a responsible government
BENEFITS OF IMPLEMENTING THE PROGRAM
- Stable macroeconomic by improving budget balance and reducing balance of payments burden
- Restore foreign investors` trust
- Reduce debt budget
- Increase economic growth by implementing major infrastructure projects
- Diversify the economy by increasing the export revenue of non-mining sector products
Economic growth expected to reach at
- 5.1 percent in 2018,
- 7.1 percent in 2019.
Moreover, processing industry expects to rise an average by 6.3 percent in 2017-2019 and it will rise to 10 percent starting 2019. About 20 thousand jobs will be created in the midterm after implementing projects. As a result, unemployment rate will be reduced to 8 percent by the end of 2019.
As a result of mining and agricultural processing plants as well as projects to be implemented in energy sector, export is projected to increase and reach US$ 5.4 billion in 2019 while import will reach US$ 5.5 billion.
Direct foreign investment is expected to rise by US$ 2-3 billion in a year.
Total of 10 billion tugrik is required for the implementation of the program.
State Great Khural obliged newly formed Government to develop a comprehensive program on overcoming economic difficulties and stabilization. After long time, the program was submitted to the State Great Khural.
We are introducing you the comprehensive program on overcoming economic difficulties and stabilization.
Mongolia move to upper middle income status in 2013 and 2014 by its gross national income per capita, according to the World Bank survey. However, the country went down to lower middle income status in 2015 due to the economic slowdown and decrease in Tugrik rate.
Moreover, prices for the Mongolian major export products in the world market have fallen while direct foreign investment have continuously declined since it has reached its record high in 2011 at 4.7 billion tugrik.
Mongolian economy is started to driven by commodity prices, bonds and loan sources. Also, the country is facing shortage of savings to overcome upcoming risks, uncompetitive domestic production, economy supporting imports, widespread social care as well as more than 90 percent of the country`s export became dependent on the mining sector.
As a result, macroeconomic balance have lost and real economic growth have slowed down in recent days. In other words, economic growth reached 17.3 percent in 2011 while it has continuously dropped for five years and reached 1.4 percent as of first quarter of 2016, which affects the unemployment rate, decline of the living standards, increase of poverty and debt to GDP ratio. Moreover, number of unemployment as of second quarter of 2016 increased by 36 percent compared to the same period of the previous year, which has become the main cause of collapse of demand in the economy and non-performing loans.
According to the expected performance, budget deficit seems to reach 4.3 billion tugrik by the end of 2016, projected to increase the Government. At that time, debt will reach levels of 10 percent of GDP.
Mongolian balance of payments has deficits during 2013-2015. As of Aug 2016, total foreign exchange reserves dropped to US$ 1.3 billion.
Deficits in both budget balance and balance of payments warn that the economic situation will get worse and the economic crises will deepen, if the country will not take immediate actions to improve the basic macroeconomic balance.
In addition, if low commodity price continues in the world market, there will be a problem to payback the Government bonds.
Therefore, the Government of Mongolia has developed a comprehensive program on overcoming economic difficulties and stabilization with the aim to solve the economic difficulties in a short period.
The program has following two strategies:
- Implement a policy to stabilize macroeconomic
- Ensure sustainable development by making structural change in medium term economy and implement policy to reduce the debt burden
DECREASE THE IMPORTED MILK PRODUCTS BY INCREASING THE PRODUCTION OF MILK AND MILK PRODUCTS
- Implement actions to stabilize macroeconomic by lowering the budget deficit 2017 compared to the previous year, increasing budget balance in medium term, creating legal environment for specialized asset management institutions and decreasing non-performing loans,
- Implement measures directed at increasing inflows of foreign currency by improving legal environment for foreign investment and establishing foreign investment board
- Expand trades with neighboring countries, increase the capacity of transit transportation, create legal environment for operating casino, increase the production of milk and milk products, construct meat and meat processing plant, construct leather processing plant, increase the export revenue of non-mining sector products
- Forward strategically important deposits, intensify the projects reflected in program to establish Mongolia-Russia-China economic corridor, intensify energy projects, establish oil and copper concentrate processing plants
- Take measures to improve the legal environment for creating a responsible government
BENEFITS OF IMPLEMENTING THE PROGRAM
- Stable macroeconomic by improving budget balance and reducing balance of payments burden
- Restore foreign investors` trust
- Reduce debt budget
- Increase economic growth by implementing major infrastructure projects
- Diversify the economy by increasing the export revenue of non-mining sector products
Economic growth expected to reach at
- 5.1 percent in 2018,
- 7.1 percent in 2019.
Moreover, processing industry expects to rise an average by 6.3 percent in 2017-2019 and it will rise to 10 percent starting 2019. About 20 thousand jobs will be created in the midterm after implementing projects. As a result, unemployment rate will be reduced to 8 percent by the end of 2019.
As a result of mining and agricultural processing plants as well as projects to be implemented in energy sector, export is projected to increase and reach US$ 5.4 billion in 2019 while import will reach US$ 5.5 billion.
Direct foreign investment is expected to rise by US$ 2-3 billion in a year.
Total of 10 billion tugrik is required for the implementation of the program.