IMF staff team visits Oyu Tolgoi
The IMF staff team headed by Geoff Gottlieb paid a visit to the Oyu Tolgoi mine site in Khanbogd soum of Umnugovi Province as part of their visit to Mongolia to conduct the fifth review of the extended fund facility.
Accompanied by Mongol Bank Governor N. Bayartsaikhan, the staff team was introduced to Oyu Tolgoi’s operations and its contributions to the economy. The team was received by Paul Mullins, chief financial officer of Oyu Tolgoi LLC. During their tour, the team was informed about the mine’s contributions to Mongolia, including 1.6 billion USD in taxes paid to the government since 2010 and 2.5 billion USD spent on domestic procurement.
After their tour of the Oyu Tolgoi mine, the staff team also visited the Energy Resources LLC mine. The company has invested more than two trillion MNT into their mine infrastructure over the last 10 years and turned in an export revenue of 5.3 trillion MNT and have paid over 900 billion MNT in taxes and royalty fees to the state budget. In the first half of this year, the mine has extracted 4.3 million tons of coal and produced 2.9 million tons of refined coal.
The visit to the southern part of the country was a brief detour of staff team’s main objective in their working visit to Mongolia. On July 30, the IMF staff team began meetings with the Confederation of Mongolia Trade Unions (CMTU) about the prospect of raising civil servant salaries.
Reports indicate that Gottlieb, head of the staff team, highlighted the need to cut further inefficient expenditure from the budget in order to increase salaries of civil servants. He went onto underline that it is the goal of the CMTU, Cabinet, and the staff team to find a common ground on how to finance this increase in salaries.
Gottlieb noted how it would be difficult fiscally to increase salaries without either cutting inefficient expenditure or increasing taxes. He highlighted how at least one of the two must be enacted in order to fund the increase in salaries.
“It is vital to fund salary increases from a reliable source. This source must be reliable in the long-term. Government debt has ballooned to very high levels. How will Cabinet be able to finance an increase in a year when it has not yet been able to fully cut inefficient fiscal spending,” Gottlieb said.
The staff team underlined the importance of increasing salaries without adding onto the already large pile of debt that the government has incurred. Gottlieb emphasized that the staff team is not against the prospect of increasing salaries of civil servants. He underlined that the staff team maintains the mindset of trying to figure out a way to increase salaries without jeopardizing the work that the government has done to cut fiscal costs.
Concluding the meeting, the staff team thanked the CMTU for their valuable insight and feedback regarding the issue and said that the staff team will provide a recommendation to the government accordingly.