Patching the front hem with the back hem

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  • Apr 01,2016
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The Mongolian phrase “patching the front hem with the back hem” perfectly describes Mongolia’s economy in the past. Making short-sighted decisions to cope with a lack of resources and spending extravagantly at the hint of money without thinking about the future. Sound familiar? Although Mongolians are extremely good at following foreign culture and banging their chests with the mention of their history and of their historically renowned leader Chinggis Khaan, who redrew the world map as often as he wanted, we Mongolians are also extremely bad at learning from the same history we chant and the histories of the countries that we so admire. But the Prime Minister’s speech at the Mongolian Economic Forum: Lessons, Challenges, and Solutions on March 31 gave me hope that we’ve learned and that we have development potential. Instead of the dramatic – impossible even – promises, and phrases such as “becoming the next Asian tiger” and “rapid development”, the forum heard wiser and more grown-up phrases such as “the need to save economic surplus” and “policies in line with the state budget”. The Prime Minister listed the places where the country went wrong. According to President of Mongolbank N.Zoljargal, the fact that we didn’t save or circulate economic surplus during our economic boom is the lesson. The challenge is to decrease dependency on mining and diversify the economy, and the solution is to implement the New Balance policy. The New Balance policy emphasizes sustainable debt management and a balanced budget. MP S.Bayartsogt noted that fish have five-second memories and parliamentarians have four-year memories. He said that it was essential for Mongolia to get out of this cycle for long-term sustainable development. It’s not only in Mongolia where parliamentarians work to get re-elected. The main issue is that the majority of the Mongolian public has a shorter memory than the parliamentarians. The people meant to monitor the implementation of policies and the decisions of the state are lacking in enough awareness to allow politicians to get away with their wrongdoings. James Anderson, Resident Country Representative of World Bank in Mongolia, said that Mongolia is experiencing positive progress, such as establishing the Independent Authority Against Corruption and laws on transparency and budget sustainability. He noted that Mongolia needs to pay attention to public inclusion when developing laws, as it raises public awareness. Let’s say politicians wanted to have a longer memory than normal parliamentarians, that they wanted to include the public’s voice when making laws to encourage public participation, and implemented the New Balance policy. How developed a country would Mongolia become? I can only hope and wait to see what the people I choose next June remember, that they follow these words and turn them into action. Even if these changes were implemented, you might ask, “What about foreign debt and pre-existing problems?” Without a doubt, a common fear prevails in people’s hearts when politicians start talking about debt. It seems to me that questions such as “Will we end up adopting the Chinese yuan as our currency like Zimbabwe?” and “Will we go into default and spend months and years in economic hardship like Greece?” are actually made up by politicians to control the public. As Donald Trump continues to prove through his unimaginably successful electoral bid for the U.S. presidency, that fear appeals to the public more than hope, I suspect that Mongolia is already being ruled by fear. But according to Professor L.Oyun at the Finance Department of the School of Economics at the National University of Mongolia, separating the terms “debt” and “loan” are essential to understand when talking about debt in the first place. L.Oyun says that debt refers to a loan that hasn’t been paid in time. I don’t know if politicians don’t know the difference between the terms, or if they use the fact that the public can’t distinguish between them, because they use “debt” in almost every sentence they utter. Then it’s uncertain whether the claim that every Mongolian is born with a 15 million MNT debt is even true. “Chinggis and Samurai bonds are just loans, not debt,” said L.Oyun. The future can be bright for Mongolia, and as former democratic revolutionary S.Zorig said, “We can see a light at the end of the tunnel.” According to L.Oyun, Mongolia is fully capable of repaying the Chinggis and Samurai bonds starting from 2017. “Our researchers have conducted a study about it. We have no problem repaying the Chinggis and Samurai bonds if the monthly rate of return reaches 11.7. Mongolia’s ability to make payment depends on what the bond funds are being spent on and where the benefits come from. The way I see it, we can pay. I believe that people are creating this expectation that we can’t pay, perhaps for political reasons. “I don’t know who calculated and came up with the idea that Mongolia will go into default. But we just keep saying Mongolia is going to go bankrupt. We can’t explain the economy with one number,” said L.Oyun. Anyhow, if these politicians actually stay true to their word instead of forgetting them, as they usually do, and if Professor L.Oyun’s calculations are correct, Mongolia might as well regain rapid development before we run out of back hem to patch the front.