Prime Minister’s Bond Policy Criticised

By B.KHASH-ERDENE

Currently, the mongolian government has 6.7 trillion MNT in debt. In the last twenty years, the government has lent around three trillion MNT. On June 2012, the Development Bank released bonds worth 580 million USD and in addition to this the government has released bonds worth 1.5 billion USD last month.
On Monday, Members of the Mongolian People’s Party (MPP) of Parliament, MPs D.Khayakhyarvaa, L.Enkh-Amgalan and J.Erdenebat informed that interest of the two loans combined total around 270 million MNT a day or in two days the amount of money equivalent to building a new kindergarten has to be paid, during a press conference.
Last week, the MPP established a task force devoted to monitoring the government’s international and domestic spending of the money raised through government bonds and this was their first press conference. The task force informed that they did substantial amount of research since its establishment. They stated that though they have sent their evaluations to the Prime Minister N.Altankhuyag along with some questions, the Prime Minister did not provide the information asked.
The task force criticized that the statement the Prime Minister made at the parliament assembly such as “Bonds will not create debt pressure in Mongolia,” and that the Mongolbank made financial management agreement with the government to circulate the bonds’ wealth in the financial market to pay the interests with the profit, is false.
The task force reported that when they talked to the Head of the Mongolbank, N.Zoljargal two days before the assembly, he stated, “The government and Mongolbank did not make agreement to work together. The agreement project is being discussed.”
The MPP members of parliament who organised the press conference expressed that they are not against the release of government bonds but are concerned about its correct use. They said, “Regrettably, the authorities are not openly informing the public, they are don’t want to give the full information.”
In regard to the potential pressure that might fall on the state budget when the 1.5 billion USD government bonds have to paid back, the Minister of Finance Ch.Ulaan said, “The responsibility of paying back the bond that was released with the purpose of investing and its interest is with the companies that acquired loans through the government. It is estimated that the state budget will not face pressure because economically beneficial projects will be financed. But, if the companies that received loans cannot pay them back, then the pressure will be on the state budget. Banks will be responsible for providing loans for financing projects and companies. By 2017, 500 million USD of the bonds will be paid back. The rest or one billion USD will be paid back within 2022.”
The Prime Minister announced the list of approved projects where the bond money will be used on Friday’s assembly that the Policy Council, which was formed to ensure the prudent use of the bonds’ wealth, has sanctioned.

The list of projects to be implemented by the fund sourced from the “Chinggis” Government bond:
-To construct a new railroad of 1800km
-To build paved roads to connect Ulaanbaatar city to centers of 6 Provinces
-To construct a railroad along the south of Bogd Khan Mountain
-To purchase new aircraft for MIAT company
-To build an industry on oil products
-Provide necessary investment into “ErdenesTavanTolgoi” LLC
-Provide necessary investment into “Baganuur” LLC
-To meet 100% of domestic demands in cement industry
-To develop local infrastructure of all 21 Provinces of Mongolia
-To build Sainshand Industrial complex in Dornogovi Province
-To construct a Underground Railway in Ulaanbaatar
-To construct power plants near large coal mines