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Ts.Davaasuren: Cutting budget through politicized and populist method is wrong

Trans. by B.DULGUUN

The following is an interview with independent Member of Parliament Ts.Davaasuren regarding timely issues related to 2015 budget amendment and 2016 budget projections.

 

Parliament had already finished discussing budget amendments by October last year. This year’s budget has become troublesome, with several additional amendments. Can you comment on this?

 

Economic and fiscal challenges have been fueled by a political crisis. Politicians who are fired up with politics probably don’t have time for fiscal issues. Most politicians, who consolidate their power by selling national resources, wouldn’t be aware of the money shortage faced by the public. But they do seem to be concerned with wage, pension and tax issues. They’re paying attention to the state budget only to decrease the taxes they pay, such as excise taxes. How can a good state budget be made with these approaches?

 

MPs are discussing structural changes to ministries and government offices. Is this an attempt to overcome economic difficulties?

 

Well, I wonder. I think that Mongolia can overcome the economic crisis and debt burdens by making agreements for strategic deposits, such as Oyu Tolgoi (OT) and Tamsag, by increasing yield percentage to the Mongolian side.

People were screaming that we were facing crisis and currency shortage last year. Yet exports, which was 4.2 billion USD in 2013, increased to 5.7 billion USD in 2014. When export is increasing, why is currency reserves declining, exchange rates falling, the economy becoming more dire, and why are we unable to repay debts? The reason is very simple. Mongolia is getting back only five to 24 percent of export income. The government is receiving merely five percent from sales revenue after reducing OT taxes for loan repayment.

The integrated budget for 2016 is 6.9 trillion MNT. OT is planning to make sales of 3.9 trillion MNT, which is equal to 56 percent of Mongolia’s state budget. If we cut debt deductions from OT taxes, OT will provide only 2.6 percent of the 2016 state budget’s revenue. Mongolia will be left with 20 percent gains from crude oil. Under these circumstances, we will not be able to overcome the economic crisis no matter how much we cut costs. The only way to get through the crisis is by making major mining agreements with foreign investors that are mutually beneficial, and recover lost revenue.

 

Policymakers explained that they expect the 2016 state budget to be directed to the private sector with a softer monetary policy. What should be done to make sure next year’s budget doesn’t face a deficit?

 

The Central Bank of Mongolia basically became bankrupt because it couldn’t determine an effective policy in recent years under the management of unprofessional politicians. Independent politicians appealed twice to have the bank’s heads replaced, but it wasn’t even discussed. This was a violation of the law.

 

Dismissing government employees will generate unemployment benefit issues. Wouldn’t dismissing 3,000 government employees raise billions of MNT worth of issues?

 

In my opinion, it’s wrong to make budget cuts through flattened, politicized and populist methods. The society will suffer if crucial job positions are erased. Nevertheless, it’s necessary to reduce the number of ministries that are separated by each sector and increase the state budget. These types of insignificant expenses increase the state debt. It’s best to provide their one-time benefit and remove redundant positions.

 

What should be removed from the budget amendment?

 

It’s good that decision makers have recognized the expansion of the state budget and are taking measures to reduce it. From this side, some progressive trends can be observed from the 2016 state budget. Minister of Finance B.Bolor knows well about fiscal issues as she’s been leading the State Budget Standing Committee’s working group for several years now. She probably took action to optimize and cut wasteful spending. This is good, but we have to talk about how accurate the decision is and how much it can cut from the budget. Rather than trying to decrease wages, it’s more effective to cut down the budget by liquidating useless ministries at the start of the new year. This method will seem more reasonable to the public. As for investment measures, I can spot some new buildings and facilities that are insignificant. The working group that will be assigned by Parliament should pay attention to this. There are some unavoidable cost increases. For example, new schools and kindergarten will be needed as the birth rate and population are increasing.  These schools and kindergartens will also need teachers and other staff, who’ll receive wages from the state. But this isn’t such a bad cost increase.

 

MPs are discussing to reduce annual salaries of government officials by 30 percent. Is it possible to settle the budget issue without decreasing salaries?

 

Now that is a very populist approach. Instead, if all the split up ministries are liquidated and staff is reduced before the elections, at least four billion MNT can be saved.

 

Export amount and GDP are expected to increase next year. This is connected to OT’s plan to make sales of 3.9 trillion MNT in 2016. Economists said that OT sales will impact economic growth, but currently, the Mongolian economic growth is at around three percent. Can you comment on this?

 

Our nation became one of the top five countries with the fastest economic growth. Yet, we were also named as one of the top 10 countries facing the most debt risk. The economy will continue to grow next year as well. I will now explain why Mongolia is facing economic difficulties despite a growing economy.

Mongolia’s export reached 5.7 billion USD in 2014, because OT had started, Erdenet Mining Corporation managed to export two to three times more copper concentrates than average, and Tamsag’s oil export amount increased. OT’s sales is expected to reach 3.9 trillion MNT, but only five percent of this income will stay in Mongolia. As mentioned before, OT tax will make up only 2.6 percent of the state budget revenue after debt deductions.

 

You’re known to be against privatization. Can you explain why?

 

I don’t support the privatization of all large institutes that are significant and carry the country. Economic freedom will become limited if these institutes are sold off to outsiders. Valuables and the source of life will be taken away.

 

It’s still unclear whether a bill on political parties will be submitted. The recent Baganuur District election has displayed consequences of false promises from political parties, their internal conflict and struggle for power. It also showed that the public is tired of conspiracy. Is it true that it wasn’t a competition between candidates, but a battle between two large political parties for raising their reputation?

 

Party politics caused the state to become weak and end up in its current situation. The state capacity is directly dependent on the capacity of ministries. Now, unprofessional ministers are making policies and heading ministerial operation. Ultimately, there aren’t any experienced teams and everyone is considered fit to be appointed as a minister. These people are only thinking about personal profit and have no sense of responsibility. The current government has been weakened as people have been assigned to important projects only through their connection to a political party. That’s why it’s crucial to eliminate party membership. This will strengthen the government, improve productivity, and develop the nation. These two parties involved in the Baganuur District election are able to exist thanks to its membership. Eliminating party membership might be difficult at the moment, but taking this measure will improve society.

 

Does the law specify the status of independent members in politics?

 

The advantage of being an independent member is the fact that it allows you to express public interests without being restrained by party policies. The public prefers independent members because parties look down on the public and prioritize party interests over public interests. The public is thinking of nominating many independent members from among themselves to fix the state. The time to have political parties stop making false promises has come. If they are properly held accountable once, then they will start to work for the public. Our people cannot separate from their misery if politicians are bound by money and membership.

 

Will you join a political party during the next election? Or will you run as an independent?

 

At the moment, I’m fulfilling the expectations of my voters as an independent member. I will enquire about what I should do from them. Afterwards, I will make my decision.

 

Which political party do you think will win the 2016 election?

 

Political parties have lost public confident right now. Situations have probably become difficult especially for parties participating in the current government. They will have to take responsibility together. The party that realizes its situation first and regains public confidence will probably win the next election. But I doubt they’ll be able to apologize, make a reform in time and regain the public confidence. It’s most likely that public will seek an alternative option.

 

Source: www.mminfo.mn

 

Short URL: http://ubpost.mongolnews.mn/?p=16652

Posted by on Oct 29 2015. Filed under Prime Interview. 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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