The Parliamentary Standing Committee on State Budget and the World Bank held a panel discussion on WHO’s recent report, “Mongolia’s Mines and Minds”, at the State Palace on Tuesday morning.
The World Bank’s September 2020 Country Economic Memorandum for Mongolia estimates that out of every dollar in mineral revenues Mongolia has generated over the past 20 years, only one cent has been saved for future generations. The report argues that to break this cycle, Mongolia should use its mineral wealth to invest in people and institutions, while gradually reducing its dependence on the sector.
Noting that the mining sector defines Mongolia’s economic development today, World Bank’s Senior Economist for Mongolia Jean-Pascal N.Nganou prompted Mongolia to invest in people and institutions as it will play a major role in the economy in the future.
Participants agreed that relying solely on mining is not a sustainable option and exchanged views on how the country can better potentialize its human resources and institutions, strengthen the macroeconomic situation, sustain productivity growth, and effectively manage human capital.
CEO of Energy Resource LLC G.Battsengel: If it weren’t for mining, Mongolia’s economy wouldn’t have expanded 13 folds over the past 20 years. Today’s 13 billion USD economy wouldn’t have existed. People are saying that productivity in the mining sector is not growing. The mining sector requires not only monetary investment but also intellectual investment. This industry absorbs technology and innovation. Therefore, mining companies need to not only focus on mining but also introduce processing, concentration and value-added technologies. We can increase the value of exported mining products by adopting new technology. The mining sector will push forward the Mongolian economy in the near-future, but I hope that legislators will pay attention to better managing the sector.
Head of Financial Policy Department at the Ministry of Finance Ts.Zorigt: The Ministry of Finance has been pursuing a policy of steadily reducing debt and generating savings for the future since 2017. Mining revenues account for about a quarter of fiscal revenue, of which a third go to the Future Heritage Fund. The financial savings policy is running without interruption. The Future Heritage Fund will not be used until 2030. I assume that World Bank researchers made the estimation that Mongolia spent 99 percent of its mining revenues based on the total earning from the sector.
CEO of Erdenes Mongol LLC P.Gankhuu: Our company distributed over 300 billion MNT to the Human Development Fund in the past as well as deposited our mining returns in other forms. Last year, a constitutional amendment called for the creation of a sovereign wealth fund. We have used our natural resources in various ways for 30 years. However, now that we look back on it, we’re faced with various questions: Were we able to efficiently spend the benefits from natural resources? Have we established a proper mechanism for it? We need to reach a consensus on this.
