Problems in Mongolia
Problems in Mongolia There will be deep crisis in Mongolia Q: What will your evaluation on today’s political and economy situation being as an economist? M.Enkhsaikhan: The world economy and finance is at the edge of serious crisis and even our two neighbors. Then there will be an obvious question, what will it be for Mongolia. On October 15 2008, 20 big economies are meeting on economy issue. But we don’t pay attention on it, we are like sitting on an isolated island. We are talking about old and weary dreams such as budget, Government principles and Minsiter’s post. It is worrisome that we are doing nothing to prepare for the approaching danger. Recently scholars and experts made an advice for Big “8”. When I had a look on it, but there are around 60 countries have no perspective in development. Countries that are included in it; African and Central Asian countries. These countries are under difficulty and their situation will be even worse in the future. One of the following four factors is enough for darkening of those country’s future; first rich in mineral, second land locked with bad neighbors, third no policy on economy or failure of good governance, forth fierce political rivalry and revolt. Single of them is enough for blurry future. I would like to ask from people that how many problems in Mongolia? We are chasing petty issues not in macro level. The big crisis is expected. It will start with commercial banks. Budget cannot support its heavy load. No need to blame each other why it is happening. It is better to summarize the actions in the past correctly. Unfortunately, there is no analysis on what is happened in the past. Commercial banks halted their loan from quite long ago. The most potential banks stopped recently. There are 1.9 trillion MNT at banks as saving. Its monthly interest rate will be 30 billion MNT. If bank stopped their loan, then they are passive. So about 30 billion MNT pressure is on the shoulder of our commercial banks. Most of the banks has given away their most loan. Crisis is inevitable. The only issue is to bear this problem evenly or unevenly. Q: Is there any ways to avoid from the crisis? M.Enkhsaikhan: No. There is only question about how to land softly. In doing so, we should learn from the mistakes in the past. But it is impossible now. Because this country is led by arrogant and irresponsible politicians. Right at the moment, the budget loss is 290 billion MNT and no tax income implementation. Increasing price decreases company profit and tax paying capacity. This huge loss will swallow our Fund that was composed by the increased commodity price and 68% windfall tax by the end of this year. Q: Are you sure with this timing? M.Enkhsaikhan: Yes, it will swallow completely by the end of this year. There is nothing to expect in the next year. Q: So Mongolia is facing with the world economy crisis or Mongolian uncontrolled economic policy is allowing this crisis? M.Enkhsaikhan: It is obvious that politicians will blame the world economy. World crisis will influence. But basic crisis is the creation of Mongolians. Problems in Mongolia: First, there is no certain policy for the Government, Second, Mongolian gained around 5 billion US$ from the windfall tax and increase of copper commodity price.but we failed to manage it correctly, therefore we are ruining other sectors of our economy except mining one. Q: It is nothing wrong about machining big money. M.Enkhsaikhan: Nothing is wrong with it. Unfortunately, our politicians are lured by this big money and don’t want to listen words from World Bank and international financial organizations. Q: In contrary, people think that we are getting poor when we followed their advice. M.Enkhsaikhan: Not like that. In the past, ADB decreased its operation in Mongolia. First of all, Mongolians never listen to them. Secondly, many countries such as Pakistan and Afghanistan are welcoming ADB to help them. It is same to IMF. We Mongolians are blowing our own horn so much when we see big money and rejecting foreign organizations. Q: What we should have done? M.Enkhsaikhan: According to the experiences of other countries, they manage their windfall from the world market. But we inserted all of them into the construction. We had big boom recently. Therefore, the apartment and building price increased so much. Banks invested heavily in construction business during the boom. Actually, construction building is not based on labor, but it based on the windfall income, therefore when commodity price decreases, all start to collapse. Mongolia never had and managed such a big money in its history. Just we didn’t have the experience to manage it. In other countries they manage their money. It proves that we are in crisis not because of the world economy crisis, but it is all because of our dismissive and arrogant behavior. Problems in Mongolia. |
