‘If we normalize export operations, we can get out of economic crisis quickly’
- By Misheel Lkhasuren -
- Apr 29,2022
Parliament reviewed draft amendments to the Law on Budget Framework Statement for 2022 and Budget Assumptions for 2023 to 2024, as well as their accompanying bills during its plenary session on April 28.
During the session, lawmaker Ts.Tuvaan asked how the issue of salaries of civil servants has been reflected in the bill on the budget framework statement.
Minister of Finance B.Javkhlan responded that this May, the government will submit a bill on the state budget for 2023, which includes issues related to the salaries of civil servants. “As this budget amendment is for 2022, the issue of salaries has not been raised at all. We are fully capable of paying healthcare workers in both urban and rural areas,” he said.
“Can’t the state budget be approved without deficit? I guess we will pay off 1.5 billion USD in debt between 2022 and 2023. How do we pay this debt? There will be no country to lend us money at low interest rates in the future. Day by day, Mongolia is approaching default,” parliamentarian D.Ganbat commented.
The finance minister explained, “As for the budget deficit, we are within the law. You need to read the budget law. This budget amendment has been developed for state austerity in response to the current situation. Monetary policy has been tightened. Therefore, there is a need to coordinate fiscal policy with monetary policy. The economy can be stabilized if the budget amendment is approved in accordance with the current situation.”
“When we developed the 2022 state budget in 2021, we projected to overcome the difficulties of COVID-19 pandemic and expected the economy to grow further. However, we have not completely gotten rid of the pandemic. The tension between Russia and Ukraine is having a negative impact on our country. In addition, China’s border restriction is hugely impacting us. In other words, external shocks affect us more. Internal issues are very limited. As a result, the previous optimistic economic outlook with a growth of 5 percent has been lowered. The main issue is export. If we normalize exporting operations, we will be able to get out of the economic crisis quickly,” he added.
In accordance with the draft amendment to the 2020 Budget Law, the bill stipulates giving cashback of 50 percent of social insurance premiums to some insured persons. The government proposed to reimburse 50 percent of the monthly insurance premiums of private sector employees earning 1 million MNT or less.
Moreover, the budget amendment provides for the exemption of domestically produced vegetable oils from value-added taxes, the continuation of the monthly child allowance of 100,000 MNT, and the provision of 1 trillion MNT in soft loans from the state budget for national food production and food reserves.
FOREIGN MINISTRY PUSHES FOR RATIFICATION OF CROSS-BORDER PAPERLESS TRADE DEAL
During the parliamentary session, Minister of Foreign Relations B.Battsetseg introduced a bill on the ratification of the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific.
The agreement aims at accelerating the implementation of digital trade facilitation measures for trade and development. Designed as an inclusive instrument accessible to countries at all levels of development to develop their capacity to engage in cross-border paperless trade, the final treaty text was adopted by the Economic and Social Commission for Asia and the Pacific in May 2016.
Minister B.Battsetseg informed, “From 2015 until the ratification of this agreement, Mongolia worked in the technical working group for negotiations. According to a 2018 study by the Economic and Social Commission for Asia and the Pacific, Mongolia’s enforcement of the Trade Facilitation Agreement of the World Trade Organization alone is expected to reduce trade costs by about 10 percent. However, it is estimated that the full implementation of the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific can reduce this cost by about 30 percent.”
The passage of the agreement is expected to reduce the time spent on exporting and importing products by 55 to 60 percent and increase exports by 19 percent, growing the chances of joining the global price chain and saving about 133 million USD a year. The foreign ministry also assessed that there are several e-systems in Mongolia that support cross-border paperless trading systems, but that the level of automation varies from agency to agency.
The minister added, “Mongolia has begun to implement some provisions of the cross-border paperless trade agreement in agreement with its partner countries. For instance, the General Customs Office of Mongolia has started exchanging cargo manifests electronically with the Russian customs authority. In the future, the parties are discussing the exchange of electronic statistical information and preliminary statements. There is no need to amend other laws in line with this draft law.”