Parliament agrees to reduce planned projects

During its plenary session on March 31, Parliament supported discussing a draft parliamentary resolution to revise the appendix to Parliamentary Resolution No. 23 of 2020.

Mongolia’s five-year Development Guidelines for 2021 through 2025 and the Investment Program of Mongolia for 2021 to 2025 were developed and approved by Parliamentary Resolution No. 23 of 2020. A total of 150 projects and activities with approved funding of 49.7 trillion MNT, 88 projects and activities requiring funding of 18.6 trillion MNT, and 98 projects and activities requiring feasibility study were included in the appendix to the resolution.

However, the government developed the new draft resolution to reduce the 150 projects and activities to 136 and lower their funding to 45.4 trillion MNT in addition to allowing 89 projects and activities to get a feasibility study done.

Minister of Finance B.Javkhlan explained that the reduction in projects and funding until 2025 was necessary due to the economic difficulties caused by the COVID-19 pandemic.

“The implementation of the projects and measures set forth in the draft resolution is expected to, directly and indirectly, create a total of 149,226 new jobs from 2021 to 2025, reducing unemployment and poverty,” he said.

“Increasing foreign concessional loans has had a positive effect on the current value of government debt and has lowered the weighted average interest rate, but will further grow government debt service costs and exchange rate risk. In this context, it is necessary to limit the use of government soft loans and reduce the exchange rate risk of government debt portfolios.”

During the session, lawmaker S.Byambatsogt commented that in 2020, projects and activities worth 49.7 trillion MNT were planned for implementation. “Now, project costs are being decreased to 45.4 billion MNT. However, other projects’ funding was 18.6 trillion MNT, but it has increased to 31.5 trillion MNT. Why did you increase funding for some projects? Moreover, has the financing of the Ulaangom-Khovd road been resolved?” he asked.

Minister B.Javkhlan answered that there are three main appendices to the investment program. They approved 150 projects that secured funding and completed a feasibility study. The amount of funding was a total of 49.7 trillion MNT. However, five projects were removed and the funding amount fell to 45 trillion MNT.

Minister of Roads and Transport Development L.Khaltar further explained, “Financing of the Ulaangom-Khovd road is being negotiated with the Asian Development Bank. The state secretary of the ministry will visit Uvs, Khovd and Bayan-Ulgii provinces with representatives of the bank to get acquainted with projects and programs.”

“We approved a list of projects and programs with funding of 49.7 trillion MNT to be carried out over the next five years. Today, the number of projects to be implemented until 2025 and the amount of funding are being re-discussed. Mongolian foreign debt is at its peak now. The country’s debt was estimated at 69 percent of GDP on average over the past two years. It seems that the government will finance almost all measures reflected in the New Revival Policy through concessions. Is there a single project that has been successfully implemented in Mongolia today? The economy is shrinking. It can expand only by exchanging US dollars. But there is no export, no inflow of US dollar and no foreign investment. When will the government resolve the issue of exports to China? According to the information I received, it will be resolved in June. In this case, we’re likely to lose more foreign exchange reserves,” parliamentarian T.Dorjkhand underlined.

Minister B.Javkhlan said, “Many projects and programs have been implemented under concession agreements. The most successful of these is the 50-kilometer-long road project built by Monnis Group. A few days ago, the Zuunbayan-Khangi railway was launched under a concession agreement.”

“Exports to China have not stopped, but we are exporting less coal than before. The prices of key raw materials are high now, but it is unfortunate that we are not making as much profit as we did before the pandemic. We are missing out on a lot of opportunities. We are in talks with countries to which Mongolia supplies products to begin long-distance transportation in the near future. In terms of investment, there is a lot of work to be done this year within the framework of the New Revival Policy,” he added.

Parliament also reviewed the draft parliamentary resolution on the 2022 budget of the Mongolian Treasury behind closed doors.