The following is an interview with Member of Parliament N.Uchral about upcoming parliamentary sessions and other timely issues.
The fall recess of Parliament has ended and MPs are getting back to work. The most important task will be to approve the next year’s budget amendment. Overall, how accurate is the draft fiscal budget for 2017?
Fiscal saving can’t simply be made by cutting one specific spending. Opposition is inevitable when you try to decrease additional costs, supplies and social welfare budget that have already been approved and are being carried out. Besides cutting unnecessary and inefficient costs, it’s necessary to take structural measures to efficiently reduce budgetary spending. Instead of arbitrarily spending taxpayers’ money, there must be a norm and limit.
Just like all products have norms and standards, budgetary expenditure has a norm as well. In my opinion, next year’s budget is quite problematic in some areas. A very small example of this is the fact that 10 million MNT has been projected for a sports competition of a small organization with 62 staff. Yet, an organization with 526 people had allocated 7.7 million MNT for their sports competition. As I observed, establishing a norm without discriminating between government officials and nongovernment workers is very crucial and urgent.
When the economy isn’t in a good shape, we must have budgetary discipline. Yet, budgets of some ministries and agencies have increased. I’m sure each organization has its reasons but still, we are in need of a norm for enforcing budgetary discipline.
One key part of the Mongolia People’s Party (MPP)’s action plan is to resolve the issues of schools operating in three shifts and improve the availability of schools. Yet, the new state budget doesn’t include investment for constructing new schools and kindergartens, right?
Additional investment hasn’t been specified in the budget. However, financing for quite a few schools and kindergartens will be resolved through concessional loans. The government specified that every school operating in three shifts nationwide will be assisted in transferring to a two shift operation. In the future, not a single school will operate in three shifts in Mongolia. Songinokhairkhan District, from which I was elected from, has 10 schools that operation in three shifts. Within the next two years, we will ensure that these schools operate in two shifts so new schools and kindergartens will be built. A list of schools and kindergartens to be built through concessional loans was approved at the Cabinet meeting.
There are schools that operate in four shifts in Songinokhairkhan District such as School No.62, which has no choice but to operate like this because there aren’t any other schools in 23rd khoroo of this district. A school expansion building, with a capacity for 450 children, will be built this year through a concessional loan to moderate the workload. It was also decided that a school and kindergarten complex will be constructed in 23rd khoroo of Songinokhairkhan District. But I heard that a lawsuit is currently underway in relation to this matter. I’m trying to fix this matter as soon as I can to begin constructing the complex.
I’m also trying to build a kindergarten for 120 children in 29th khoroo of Songinokhairkhan District through concessional loan. All that’s left is land permit related issues. Land clearing will be resolved after discussion with the district administration.
If related problems are resolved, I believe that the availability of schools and kindergartens will improve. Moreover, 60 percent of children who are unable to attend kindergartens reside in our district. The issue concerning the unavailability of kindergartens and schools will be settled nationwide if more education facilities are built in our district. Because children are unable to go to kindergartens, more and more mothers are staying at home and quitting their jobs. This reduces the household income. Household income of Mongolians has declined for the second time in history this year. Kindergarten related issues influenced the most on this. Therefore, solutions for these issues are urgently needed.
Sixty percent is a large chunk. Parents started sending their children to child care service facilities. The government is trying to stop this service next year. What’s your stance on this?
There are many faults and shortcomings in the child care service. For instance, there isn’t a standard for the building, leading most child care services to be conducted in cold, unhealthy and dirty environments that don’t meet standards. Therefore, this service will be resumed as part of the Stay-at-Home Mothers Program, which financially supports mothers staying at home and looks after their children.
In other words, only the form of child care services has changed, making mothers look after their children. This doesn’t mean that the child care service is being completely discarded or that the government is ignoring unemployed mothers or those without a source of income. The Stay-at-Home Mothers Program has been included in the government action plan so it will be launched shortly.
...The government is in a position to immediately join the Stand-By Arrangement if flexible requirements are set...
The ruling party seems to be taking various measures to stimulate the economy. Prime Minister J.Erdenebat and Minister of Finance B.Choijinsuren visited the USA and discussed the possibility of implementing the Stand-By Program. Do you think it’s a good solution for stabilizing the economy?
We’re about to pay 6.6 trillion MNT for loan services. This figure exceeds Mongolia’s budget revenue. It’s challenging to settle this type of situation so the government is considering all possible options and one of them is the Stand-By Program.
The Stand-By Arrangement has high requirements. This means that we will be pressured into cancelling as many welfare policies as possible. The budget policy will become way too strict, which might put a lot of pressure on the public. Even so, it has its merits. It will enforce budget discipline, increase responsibilities and save on unnecessary spending, and open opportunities to recover the economy within a short period as it provides a loan with a low interest rate.
In the past, our nation achieved to rapidly grow the economy by joining the Stand-By Arrangement. There’s no reason not to joint it if the other side sets reasonable requirements. But if the requirements are too high, it will become very difficult for the public to make ends meet this time when wages, pensions and benefits aren’t increasing. The government is in a position to immediately join the Stand-By Arrangement if flexible requirements are set.
Another option is to release a bond ourselves. In other words, it means that bond loans will be repaid with another bond. Or else, it’s impossible to repay the national debt with the current budget revenue. Right now, there isn’t any other way. Even so, Mongolia must follow a neutral state administration policy. It’s not right for a nation to take out large loans.
It has almost been 100 days since the new government was formed. How do you evaluate the new government’s work so far?
The reason the public elected the MPP is because they trusted the MPP’s action plan. Approximately, 97 to 98 percent of their action plan was reflected in the government action plan. MPs must supervise the implementation of the action plan. The government already launched the Stay-at-Home Mothers Program, Nasnii Khishig Program, Education Loan Fund, and measures to reduce corporate taxes. Starting the implementation of the government action plan in less than three months’ time is a huge advantage.
A draft legislation to support local producers by reducing corporate income tax to one percent in four sectors is currently under discussion. Why was the reduction specified for only four fields?
The government expects to increase jobs with the new draft bill to support producers by minimizing corporate income tax to one percent in four sectors. This is also part of the government action plan to be implemented in the next four years. However, there isn’t an estimate on how many new jobs will become available. Officials say job vacancies will double but it carries the risk of companies becoming smaller. Personally, I don’t support production of construction materials because the companies that barely managed to become large corporations may have to downsize to earn an income of less than 1.5 billion MNT (annually). The smaller factories become, the worse the quality of products becomes.
As for agriculture, it is a field that receives abundant assistance and support from the state. If they receive incentives, they shouldn’t receive benefits. It’s wrong to receive both incentives and benefits. Instead, the state should promote the export of intellectual property. Mongolians are capable of producing and exporting new, creative and profitable intellectual property if the government supports the IT sector more. The IT sector should be eligible for the incentive on corporate income tax.
