The Government exchanged views with foreign partners on difficulties and challenges the country is taking to reform the budget’s sustainable situation in social welfare policy, in banking infrastructure and in real economic branches. Participating in the so-called Policy Discussion which was organized on June 8 in the Government House by the Government of Mongolia in cooperation with the WB were MPs, cabinet members, heads of government agencies and civil representation.

Government and foreign partners debated the social impact of economic policy

The Policy discussion is being held once every 6 months and is the joint technical meeting of the Mongolian government and foreign partners. The meeting was opened by PM S.Batbold who introduced foreign partners with some basic socio-economic policy principles implemented by Parliament and the government.

At the end of 2009 the GDP of the country declined by 1.6 percent. As of the first 4 months of this year the total industrial production was up by Tgs60.7 billion or 12.7 percent, and foreign trade turnover grew against the previous year by Tgs570.3 million or 58.1 percent which enables overcoming or somehow softening the economic crisis, asserted the PM. Aside from these positive indications, we face serious damage caused to our agricultural sphere, inflation growth, and growing unemployment, which is under consideration of the government. The number of livestock perished in this winter’s dzud reached 8.1 million. In the first five months of this year, prices on foodstuffs have gone up by 13.8 percent where meat and meat products occupy a leading place. Aside from this, we failed to reserve enough meat.

Decline in building and construction branches increased unemployment. The Prime Minister assured that at the end of the year, they expect to fulfill the basic targets envisaged in the directives of the country’s social and economic development in 2010. He expressed confidence that the present discussion will be reflected and productive in strategy planning and that the Government is going to implement together with foreign countries.

The biggest projects and profits began to be implemented in the mining spheres of the economy, said Klaus Roland, Director of the WB in charge of Mongolia. This is a serious challenge. But how do you spend this profit? Norway, as well as other countries carried-out considerable suitable and acceptable policy. This is why I recommend adhering to a suitable policy, he advised.

The discussions were held in three main directions: The sustainable budget situation, social welfare renewal, and support of economic growth where each branch members exchange opinions.

Finance minister S.Bayartsogt stated that an unstable budget situation causes inflation. The growth of government expenditures and loans, unfavorably influence the national currency rate which needs legal regulation, stabilization of funds, and coordination of the political parties promises. Talking about budget stability, IMF representative Parmeshvar Ramlogan said that the government profit level must be coordinated with production capacity, the expenditure standards with the country’s debt repayment capability, and the expenditure standards with long-term price calculations of mineral resource products. Only on this basis can Mongolia be able to reach budget stabilization.

As for social welfare, although the expenditures and the number of people involved in this branch of the economy significantly grew, no significant changes occurred to reduce poverty. T.Gandi, Minister of Social Welfare reported that her ministry drafted the law and submitted it to Parliament for directing social welfare in the target-oriented direction.

The WB and the ADB were of the same opinion concerning social welfare matters stressing that social welfare allowances need to be given to the poor households and to support children’s development, not in whole, but every month. The new allowances to poor families must play an important role to stabilize the social welfare structure and reduce poverty.

The third part of the discussion related to support economic growth was divided into two sub questions: To ensure the banking reform and the actual branch growth.

By Sh.Erdenechimeg

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