Policy and politics
Mongolia growth rate may fall by one-third
N. Zoljargal , Governor of Mongol Bank, has said the nation’s growth rate may slow by a third this year from a record 17 percent in 2011 as inflows of foreign investment cool. “It’s a reality check for us,” he said in an interview in Hong Kong, expressing the hope that the pace of expansion may be a “very healthy” 11 to 12 percent.
GOVERNMENT ACTION PROGRAMME 2012-2016
Following approval by Parliament,the new government’s manifesto for its entire term has become the formal map for the country’s direction in the coming four years. We give below an English version of the parts of it that are of interest to our specialised readership.
Dark cloud from China covers Mongolia
Minister of Finance Ch.Ulaan announced in August that State revenue until then was MNT1.2 trillion less than what had been estimated in the budget.
Mark the figure it is not MNT100 billion, MNT200 billion or even MNT500 billion, but a whopping MNT1.2 trillion. The shortfall has put the Human Development Fund in a critical situation and it is not clear how State-funded construction works will continue. Just before his statement, several coal companies had put exports on hold.
The “Reform” Government’s proposed Action Plan
We give below selected parts of the 2012-2016 Action Plan formulated by the Government and awaiting approval by Parliament.
Every Mongolian to have a job and an income
• Keep inflation in single digit and the purchasing power of the MNT stable.
• Restrict budget deficit to no more than 2% of GDP.
• 80% of imports by sectors other than mining will be exempt from tax.
Mongolia’s Mining and Mineral Game
Mongolia’s newly elected government is implementing “Resource Nationalism” to restrict foreign investments. Currently China controls 70% of Mongolia’s mining assets and politicians are looking to limit foreign control. Last month, Chalco was forced to give up the acquisition of SouthGobi. Still Chinese control is prominent.
After the election
With the election behind us, the Human Development Fund in its present form is all set to receive a make-over, and we shall have fresh discussions on new approaches to social welfare and new uses for the Fund. Work on the 2013 budget will also have to begin withoutdelay.
New railway agency to have specific tasks
Before coming to these, let me clarify some legal regulations pertaining to the new company. The Mongolian Railway Transportation Law, passed by the State Great Khural in 2007, is the governing document of this sector, and regulates all aspects of railway transportation.
Prophecy Coal to raise $800 million for power plant
Prophecy Coal Corp expects to raise $800 million in debt and equity financing by September to build a coal-fired 600-megawatt power plant in Mongolia, and expects to conclude a power purchase agreement with the Mongolian government by May.The price is expected to be slightly less than what the Government currently pays for importing electricity from Russia, said Joseph Li, a director and chief operating officer of Toronto-listed Prophecy Coal.The agreement is expected to last at least 25 years.
Is Mongolia ready to join the shale oil bandwagon?
Expectations of reduced energy dependence were raised when Mineral Resources and EnergyMinisterD.Zorigt declared at the Economic Forum that once “some important agreements” were out of the way, the Government wouldpay serious attention to developing the country’s shale oil resources.