Speaker of Parliament M.Enkhbold gave an interview about his latest visit to Japan. He spoke about prospect cooperation plans between the two countries in the areas of health, economy, jurisdiction and more.
Many spectators observe that your visit to Japan on March 27 will significantly contribute to the Mongolian economy. How would you evaluate your visit?
This year is the 45th anniversary of Mongolia and Japan’s diplomatic relations. The foreign affairs ministries of both countries planned out ways to celebrate the anniversary. Embassies in Tokyo and Ulaanbaatar will focus on organizing anniversary events at both sides. Within the framework of the anniversary, foreign affairs ministers and legislators have scheduled state visits. As scheduled, I visited Japan through an invitation from Japanese House of Representatives Speaker Tadamori Oshima.
During the visit, Parliament representatives had open discussions about exchanging experience and expanding relations and cooperation. I also met with Japanese Prime Minister Shinzo Abe and went over the International Monetary Fund’s extended fund facility program (IMF extended program), bilateral economic cooperation, and sustainable sectoral partnership.
Through the IMF extended program, the Japanese government agreed to provide financial assistance to Mongolia. We discussed the possibility to jointly implement effective projects and programs for correctly managing natural resources in Mongolia and Japan’s technology, grants and human resource. For example, we had honest discussions about the establishment of a complex coal chemistry industry, production of gas and petroleum products, relevant studies, energy provision in the Northeastern Asia, and the role of Mongolia and Japan in this.
A medium-term Strategic Partnership Program was approved during the state visit. Mongolian and Japanese Foreign Affairs Ministers signed the agreement, opening the opportunity to carry out the program. The program includes all cooperation activities between the two countries until 2021. Financial organizations renewed documents developed in 2014 and established an agreement on direct financial cooperation between the Mongolian Financial Regulatory Commission and Japanese Financial Services Agency.
There’s another successful negotiation I can’t leave out. Our ministries discussed sending Mongolians to Japan through internship programs and reached some agreements, which is very significant.
What kinds of measures have been planned within the scope of the Strategic Partnership Program?
Mongolia and Japan established the Economic Partnership Agreement in 2016. Within the scope of the new program, the two countries exchanged opinions and ideas to improve especially the economy, business and investment fields and create a better legal environment for it. For instance, the two sides conversed over double taxation of partner organizations and other challenges. I’m sure that both sides will pay much more attention to this matter from now on.
The Mongolian delegation to Japan included the Minister of Labor and Social Protection and Minister of Health. Have they discussed new projects for improving health and social protection with the Japanese side?
During the meeting between Labor and Social Protection Ministers, the Mongolian side proposed to send human resources and interns to Japan in the first half of this year. They went over some issues related to preparation for sending human resources.
The Minister of Labor and Social Protection underlined the significance of studying health and medical service practices of Japan. A treatment and diagnostics center is being constructed under the National University of Medical Sciences. The ministers said that it’s possible to build a large hospital in Mongolia and equip it with the latest technologies with the health insurance fund. The delegation visited Japanese hospitals during the state visit.
You met speakers of the House of Representatives and the House of Councilors of the Japanese National Diet. Reportedly, both the Japanese Diet and government are keen to participate in the IMF extended program. The parliamentary spring session will open on April 5. Before then, shouldn’t the Mongolian side amend the state budget to be able to join the program? Will we make it on time in terms of legal regulations?
The government handed over a draft bill on amendments to the state budget to Parliament last week. Members of Parliament will discuss the bill this week. The first issue Parliament will discuss once the spring session opens on April 5 is the state budget amendment. We’re planning to discuss it for seven to 10 days. Approving the state budget amendment will enable us to settle every other issue and meet the deadline for the IMF extended program.
Economists believe that trade and investment between Mongolia and Japan will rise with the 850 million USD soft loan from Japan and the IMF extended program. What will the Mongolian government and Parliament do in these areas?
The Mongolian public understands how important and beneficial it is to be able to carry out the IMF program. They also agree it is the correct move. The previous government initiated to carry out one of IMF programs, but they weren’t successful like the current government. Since its formation in August 2016, the new government has worked very hard to join the program by meeting representatives of IMF and financial ministers of key donor countries.
Mongolia will be able to improve state budgeting, create a new economic environment, provide favorable investment conditions, and attract foreign investors to Mongolia by carrying out the IMF extended program.
When negotiating with other countries, the Mongolian government and Parliament pay special attention to providing better conditions for them through improvement in the legal environment. This way we can increase foreign investment to Mongolia. For instance, the Cabinet’s Office opened an affiliate Foreign Investment Council to which Parliament gives orders related to evaluating bids from foreign investors, making legal changes, approaching investors on state works and etc.
The IMF program will contribute in raising donor countries’ evaluation of Mongolia. A couple of countries have expressed interests to provide financial assistance to our country.
On the other hand, there was an offer to purchase a bond worth 3.3 billion USD from the bond trading proposal by the Development Bank, which announced to repay their debt of 580 million USD. This shows that Mongolia has once again gained credibility from investors.
...We don’t have resources to repay the whole debt so we’re repaying what we can and taking loans for the amounts we can’t pay off since we have a reputation to hold in the global network. However, the loans we take from now on should have lower interest rates and lending charges...
There were complaints that the ruling party repaid the state debt with another debt. Can you comment on this issue?
It was a complaint made for the sake of opposing it. If the opposition force had worked more responsibly when it ruled the government, we wouldn’t be having this debt issue or be seeking loans and financial assistance from other countries and the IMF program.
Unfortunately, they took too many reckless decisions to get loans. They signed up for loans that had high interest rates and high lending charges. Loan spending exceeded specified limits. [The previous government] attempted to implement high-cost projects and programs, which it couldn’t afford. These things brought us to the current economic state. Mongolia is spending approximately 15 to 20 percent of its budget revenue on repayments of loan interest and lending charges.
We don’t have resources to repay the whole debt so we’re repaying what we can and taking loans for the amounts we can’t pay off since we have a reputation to hold in the global network. However, the loans we take from now on should have lower interest rates and lending charges.
The public hopes that the state monitors loan spending and ensures that funds are used efficiently. Will Parliament monitor loan spending? If so, how does it plan to do this?
A revised version of the Law on Development Bank of Mongolia was adopted at the end of autumn session. It mandates specific monitoring procedures for the Development Bank’s loan issuance and loan programs and gives a list of all the rights it can exercise as a decision-making commercial bank. The Development Bank now has the right to decide whether or not to finance a project without involvement from a third party.
To be honest, it wasn’t clear whether the Development Bank or the state approved loans in the past. Hence, the revision of the law was urgently required. Even so, the government and Parliament will continue to monitor main economic indicators.
The Minister of Finance announced to use the Japanese grants to balance the state budget. In general, how does Parliament plan to spend the Japanese grant amounting to 850 million USD? The public thinks it’s another long-term loan. Is it true?
The government will provide details of loan conditions. Loans are issued when both parties have reached a mutual agreement and established mutual trust. The Japanese Prime Minister promised to issue the loan on behalf of the government. He noted that the soft loan would support our nation’s financial situation. The Mongolian government discussed this matter with the Ministry of Finance and associated organizations and strongly recommended accepting the loan as they considered that it would help push forward the economy, which is in a difficult shape at the moment. As for the amount of the soft loan, it definitely isn’t a small amount.
Parliament will monitor so that the grant is used properly to improve state budgeting.
