9 billion USD in concession payments paid from state budget

The draft Law on PublicPrivate Partnerships, developed by the government and the Ministry of Finance with technical assistance from the International Monetary Fund and the World Bank, is ready to be submitted to Parliament to cancel out the Law on Concessions and create a new legal regulation on publicprivate partnerships.

According to Finance Minister B.Javkhlan, over the past 13 years, 9 billion USD have been paid in concession payments from the state budget under buildtransfer, buildusetransfer or buildoperatetransfer arrangements, which “pressurized” the government and amassed huge fiscal debt.

The creation of a legal environment that prioritizes foreign investors will not only improve the investment environment but also improve international evaluation, the minister noted. If the government and the private sector sign an agreement, he believes that projects can run stably in the medium and long term if the government provides a guarantee.

Minister of Finance B.Javkhlan said, “Out of the fiscal expenditures amounting to 20 trillion MNT in the 2023 draft budget, 2.6 trillion MNT will be spent on investments in sectors where the government does not have enough capacity but the private sector has ample opportunities. The private sector can implement 22 projects worth 19.6 trillion MNT within the framework of the New Revival Policy. If the draft bill is approved, it means that the market worth 20 trillion MNT will be opened and offered to the private sector,” he said.

In the event of a payment risk, the government will issue a guarantee or assume financial responsibility in the draft bill. This is aimed to ensure stability in the medium and long term.