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Редакцийн зурвас

Government’s economic “healing” and Super Cycle

The cabinet has announced the “MNT 10 trillion plan for preserving public health and recovering the economy”. The decision can be perceived as a hopeful and righteous measure as the money supply, the blood flow of the economy has dried out and businesses are in lack of cash. The ray of happiness that is visible among poor business owners is a clear depiction of this. However, the strict requirements make it unattainable for businesses that barely survived for an entire year of lockdown. 

The government certainly does not have such money, which equals the entire budget revenue, and they admitted it publicly. It is simply a hopeful attempt to supply the surplus in the banking sector to the market as loans. Except from the MNT 2 trillion that “Erdenes Tavan Tolgoi” JSC is trying to raise and MNT 1 trillion from the collateralization of the Kharmagtai deposit, the major chunk of this program is sourced from the Bank of Mongolia’s reserve and the commercial banks. In other words, the Cabinet is attempting to increase the money supply using its sources.

Many analysts are expecting a forthcoming “Super Cycle’’ in the global commodity market. Based on the expectation of massive growth in the market, driven by the accelerating speed of the “Covid-19” vaccination, the probability of a surge in commodity prices is relatively high. Especially the prices of key minerals have reached record highs since 2011. Of course, no one can say for certain how many months, or years it will continue, or even if it really is a “Super Cycle” or not. Regardless, a favorable environment for the already exhausted Mongolia is forming up in the external market. 

The exploration costs in Australia have grown to a level similar to the previous “Super Cycle”, while this indicator is on a decline in Mongolia. However, it is time to utilize such opportunities that the market has handed to us. The Prime Minister did not express any position on attracting foreign investment, exploiting mega projects such as gold deposits, and issuing exploration licenses. 

The MNT 10 trillion plan will certainly weigh on Mongolia’s economy this year. But it is too early to predict its outcome. Since the prices of commodities reached record highs of a decade in the external market, the time is on our side for penetrating foreign markets, drawing foreign investment, supporting major businesses and projects, and benefit from the economic recovery after the pandemic. It is definitely not the time to be relying on the banking sector and half-heartedly sail through problems like previous crises. 

 

Агуулга

  • Policy

    G.Yondon: Financing for exploiting gold deposits is under consideration

    Accordingly, we spoke with the Ministry of Mining and Heavy Industry G.Yondon.

    Хуудас 8

  • Opinion

    Banking sector-backed MNT 10 trillion plan

    The Government’s MNT 10 trillion program has become the responsibility of the Bank of Mongolia (BoM).

    Хуудас 12

  • Economy

    Loan program for businesses misses target

    Although the central bank unlocked its door wide open for extra supplies, however, loan issuance to the real economy shrank in the last 12 months rather than growing

    Хуудас 18

  • Budget-2020

    Far-stretched losses of a failed estimate

    The initial forecast of the year-end consolidated budget revenue of Mongolia reached MNT 10,402 billion in 2020, falling 13.6 percent, by MNT 1,638 billion compared to the previous year.

    Хуудас 22

  • Company

    The Government’s secret “Milk Cow”

    We are highlighting “Mongolrostsvetmet” SOE, one of the companies that practiced the Law on Transparency as an example in this edition.

    Хуудас 24

Эрхлэн гаргагч

Э.Долгион


Үүсгэн байгуулагч

David D'Astoli


ГҮЙЦЭТГЭХ ЗАХИРАЛ

Б.Батманлай

ЕРӨНХИЙ ЭРХЛЭГЧ

С.Болд-Эрдэнэ

Дизайн Директор

О.Болдбаатар


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