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Empty promises won’t save the economy

Trans. by O.SHURENTSETSEG

As the election of 2016 comes near, the increase of broken promises from candidates will take place. The upcoming parliamentary session will discuss next year’s state budget, and it is obvious that candidates in the elections will make beautiful promises to increase the budget’s resources. It is a commonly known fact that members of parliament all start acting like they’re working when the end of election terms approach.
In two months, on November 15, next year’s budget must be approved. The deadline specified in the law is November 15, this does not mean that we can’t approve the budget before the deadline. During this two month period, candidates will try to win their elections by talking about expenses to be included in the state budget. Promises like “herders will get paid” lead to inflationary boom-bust economic decline, but it seems like this is irrelevant to those seeking office.
As of August 2015, the state budget deficit was 769.2 billion MNT. The World Bank and International Monetary Fund predict nearly one trillion MNT in deficits by the end of this year. The drop in foreign investment to 44 million USD led to the budget deficit and only three percent economic growth this year.
Coking coal exports, which constituted one third of the budget in the past, fell from 12.2 million to 9.6 million tons, and the price for copper – our country’s main resource – decreased to 5,147 USD per ton in the global market.
During this crisis situation, investments for political purposes should be stopped. In the past three years, the government spent 35 billion MNT to refurbish Bayanlig and Buutsagaan soums in Bayankhongor Province and the Eastern Gobi’s Zamiin Uud soum. No additional jobs or increased quality of life for those soum residents developed as a result, and migration to Ulaanbaatar still hasn’t stopped.
The building of new industries in those soums would have been more beneficial, but by unwritten law, MPs with greater public relations get higher budget allocations each year. National School Number 67 in Ulaanbaatar is operating with four shifts in a day, but the government is building two-story high schools for 1,000 students in Aldarkhaan soum in Zavkhan Province and Tserkhenmandal soum in Khentii Province.
What is the purpose of building a school for 1,000 students in Tserkhenmandal soum when they have a total of 220 students, and only 45 students in Aldarkhaan soum. The state also built a sports gym and a cultural center in a soum that has less than 1,000 children. Modu Company built a 20-bed hospital, 650-student high school, 180-student kindergarten, 150-student dormitory, and an administration and sports complex for the New Soum project. These are clear examples of extravagant budgets for unproductive projects.
The state budget has direct and indirect involvement with the mining industry. This year’s budget was estimated to earn 59 percent from the mining industry (around 2.6 trillion MNT), however, the actual profit was lower than what had been budgeted for projected earnings.
In the past three years, the mining sector has fallen, along with minerals prices in the global market. Coming up in 2017, the Chinggis and Samurai bond debts will need to be paid. Mongolia has to have adequate financial resources to pay these debts.
Investment for public projects should be stopped and the government should implement a budget for austerity starting with next year’s budget. The Mongolian economy no longer has the endurance to sustain all these politicians’ extravagant projects. For this reason, economists suggest stopping spending for next year’s budget proposal.
What could happen when foreign investment and public investments stop? Under the new State Budget Law, the Community Development Fund was established. It is likely that politicians will urge allocating some money to this fund. Nevertheless, there are no other decent budget options.

Source: News.mn

Short URL: http://ubpost.mongolnews.mn/?p=16317

Posted by on Sep 22 2015. Filed under Opinion. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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