L.Erdenechimeg: 80 percent of the 200 halted construction projects were earmarked for schools, kindergartens and hospitals


Recently, the state budget for 2014 was approved by the parliament and financing for over 200 construction projects were halted to balance the budget deficit and cost overrun. But officials are debating over whether this decision was necessary.

Below is an interview of Uls Turyn Toim with L.Erdenechimeg, member of the parliament (MP) regarding the parliament’s decision and other related issues.

-The allocations for the budget of MPs, for their electoral districts, from the state budget rose by four billion MNT in the state budget for 2014. What was the reason for the increase? A lot of criticisms were voiced in regard to this decision. What is your stance on it?

-I believe the public has misunderstanding it. Many people asked, “Does it mean that each MP’s budget for their electoral district increased by four billion MNT?” There are 48 MPs elected from electoral districts and the budget for each MP was increased by 90 million MNT, which totals four billion MNT.

-How will MPs spend their budget?

-MPs will spend the budgets for their fuel consumption and campaigns for promoting legislations at their electoral districts. MPs elected from provinces paid for fuel and drivers’ salary as well as printed materials for promoting legislation from their own personal assets when working campaigns at their electoral districts. But MPs also have right to spend their salary for their own families, not just work. The budget was increased due to complaints from the MPs.

-Do you think that the Prime Minister will find the increase unnecessary as he urged members to refuse spending from the state budget on issues that are not of direct concern of the state?

-The decision was made based on the public and MPs’ request. The increase could’ve been halted but it was approved to improve interaction between the public and the MPs.

-The state budget for 2014 halted financing of over 200 buildings that are currently still under construction. The Prime Minister explained that the halt is a solid method for eradicating “corrupted budget spenditure.” Do you agree with this?

-I find the halt very unfortunate. Over 200 construction projects are going to be stopped. Over 80 percent of them were dedicated for school, kindergarten and hospital premises. The resumption  of the construction projects will be resolved during the parliament session scheduled in April 2014, after the budgets are audited. Therefore, none of the buildings will be completed within their initial planned date within 2014. The construction of each kindergarten was initially estimated to cost 680 million MNT but it rose to 1.1 billion MNT. But we can conduct the auditing earlier and release the results by February to save time and complete the projects by 2014. If this should happen, it will be in many ways beneficial to the public. Several MPs have decided to submit this proposal to the parliament.

-Members of the Democratic Party couldn’t reach their goal to increase state debt to an amount equivalent to 50-60 percent of Mongolia’s gross domestic product (GDP) by amending the Law on State Budget Sustainability. The Mongolian People’s Party (MPP) expressed strong oppositions for the idea. What is your stance on the matter?

-The parliament had an in-depth discussion on national debt and reached a decision not to amend the law. Personally, I think it is possible for the state debt to reach an amount equal to 50-60 percent of the GDP. If we look at Mongolia as an enterprise, technically it could acquire a loan equal to 100 percent of its total asset, if it able to pay the collaterals. The most important part is to formulate a detailed economic projection and conduct a thorough study. If the enterprise can’t use the loan efficiently, it will turn into nothing more than a massive debt burden on our descendants.

On the other hand, if the state invested the loan money equal to 50 to 60 percent of the GDP into profitable sectors, it would act as a leverage for the development of the Mongolian economy in the long-run. When based on reliable projections, it has potential to bring much more benefits. I think Mongolia’s development pace could’ve experienced a speed-up if the Ministry of Economic Development promoted the benefit in a more persuasive way and MPP approved of it.

-Many people were critical of the way Chinggis Bonds were spent. Do you think it was inefficiently?

-The total fund accumulated by Chinggis Bonds isn’t spent. I have to say that the development and construction projects funded by Chinggis Bonds this summer were fruitful. But investments made for sectors that will support the economy didn’t meet the expected results, in my opinion. For instance, a substantial amounts were invested from Chinggis Bonds to food, agriculture and light industry sectors. However, many enterprises that were in the most urgent need of investment didn’t recieve their share. Commercial banks are profiting from the bonds’ investments in the meantime. For instance, the banks haven’t issued loans from Chinggis Bonds to clothing and textiles sector as they lacked collaterals. Around 40 to 50 billion MNT fund from Chinggis Bonds was dedicated to supporting agriculture and light industry have not reached their intended beneficiaries.

As commercial banks are using the funds granted to them from Chinggis Bonds to boost their circulation, they are able to pay their interests to the state. The whole bond investment endeavor looks like it was meant to support commercial banks. I hope the Ministry of Economic Development will resolve this issue and provide the loan for the intended recipients.

-Some MPs are highly critical of the government’s management. For instance, MP R.Amarjargal submitted a letter of resignation from his position as the member of parliament by his own volition last week. What is your stance on this issue?

-R.Amarjargal is one of the politicians that I esteem. He is fully capable of exposing the truth about how Mongolia’s development will turn in the future with the current management. But his request for resignation gave me a shock as I am new to the parliament. I regret that he decided to resign. This issue will be discussed at the Democratic Party’s meeting today (November 18; the meeting’s initial decision was that the party will not accept the resignation of R.Amarjargal, but a final decision is yet to be made). We hope that our member R.Amarjargal will re-think his decision. I think he should remain in his position to support the new members as he is one of the few reliable and experienced members. The Democratic Party, even the faction in the parliament, has different opinions within itself. I see it as a necessary practice for a healthy political party. R.Amarjargal is one of the oppositions of some of the party’s mainstream ideology. We learn about our mistakes from his views.

-The Democratic Party has established a new group and it has started voicing criticisms of some aspects of the party’s operation and management. Is this necessary for a healthy political party too?

-Our Democratic Party has developed several groups. Some are newly found, while others are disbanding. A formation of a new group is a typical practice for us. One of the Democratic Party’s main advantage is that its members can voice their opinions freely as it supports pluralism.

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