EXPENDING MINERAL EXPORTS ANTICIPATED TO FUND EXPANDED STATE BUDGET

A.Khaliun 

In August, the three-party coalition government signed a cooperation agreement titled "Courage for Rapid Development" and unveiled its 2024-2028 action program. Thiswas presented to Parliament for discussion during the last ten days of the month. Additionally, on August 16, the government submitted a draft amendment to the 2024 budget.

This draft amendment includes funding for major energy, infrastructure, and industrial projects planned for the next four years, as well as expenses related to the establishment of a new government.

Although the parties have formed a united government, political parties, coalitions and members are meticulously reviewing the budget amendment, which has been under discussion in Parliament for the second week.

Prime Minister L. Oyun-Erdene highlighted the urgent need to initiate major energy, infrastructure, and industrial projects to address Mongolia's developmental challenges and expand the nation's economic base. Speaking at the Parliament Assembly Hall, he stated that the budget amendment will lay the foundation for a new 30-year development plan and facilitate the actual implementation of mega projects.

The budget amendment includes 885.2 billion MNT for 15 projects under the regional development policy, 378.3 billion MNT for three projects under the economic policy, and 222.6 billion MNT for three projects under the human development policy.

During its term, the government plans to implement several projects under the regional development policy, including the Khushig Valley Tunnel, a government building in the Khushig Valley, the "Five Circles of New Revival" highway project to connect aimag and soum centers with border crossings, the New Kharkhorum Project, the New Zuunmod City project, and the Tuul River Highway. The budget amendment includes all costs related to preparation, developing feasibility studies and technical plans and drawings, and implementing these projects.

We also seek Parliament's support in promptly launching price and tariff reforms in the energy sector, as well as increasing market competition and liberalization.

A total of 3.1 trillion MNT is needed in the state budget for 2024 to promptly initiate large-scale development projects. As a result, the state budget for 2024 will increase by 30.2 trillion MNT.

WHERE WILL THE GOVERNMENT FIND ADDITIONAL FUNDING?

According to the National Statistical Office, foreign trade generated a profit of $2.9 billion in the first seven months of this year. Exports increased by $567 million, or 6.5%, compared to the same period last year. Mining products constitute 93.5% of all exports. Notably, coal exports contributed $383.5 million of the increase. The physical volume of coal exports rose by 12.1 million tons from July of the previous year, and reached 47.5 million tons, which positively impacted the economy. 

While Parliament is debating the budget amendment, G. Zolboo, Head of the Finance and Budget Research Department at the Ministry of Finance, stated, "When we approved the 2024 budget, we projected an export of approximately 60 million tons of coal. As of August 23, 2024, we have already exported 53 million tons. Therefore, we expect to export around 75 million tons of coal by the end of this year.

The increase in the physical volume of coal exports fosters positive expectations as the budget is being finalized. However, it is also important to note that exports of other minerals, such as copper, gold, and iron ore, are also performing strongly.

Increased mineral exports are stimulating economic activity. Based on the performance of the first six months of this year, the Ministry of Finance has projected income for the remainder of the year. The Ministry approaches the budget revision with optimism, anticipating that it could surpass the initially approved budget by approximately 3 trillion MNT by year-end.

Consequently, the government will depend on the continued growth of mineral exports, particularly coal, to support the 2024 state budget amendments and advance major infrastructure projects fundamental to development.