The Press Conference on the Monetary Policy of year 2009

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The President of MongolBank A.Batsukh and the First Deputy President D.Enkhjargal made the Press Conference on the Monetary Policy of the year 2009.
The principle of the State on the monetary policy was made in three years since year 2007 and it will be amended every year if necessary. According to the main principle of state monetary policy, the inflation rate of year 2009-2011 will be 9.5% in average, 12% in the end of the next year, 10% at the end of year 2010 and 6.5% at the end of the year 2011. The monetary and fiscal policy will be focused mainly on decreasing inflation and securing social welfare in Mongolia. Also the draft amendment on the Central Bank Law to establish Monetary Policy Committee was planned.
The measures to support the interest rate policy and loan towards increasing the workplaces and labor productivity to encourage the fiscal effectiveness. Also it will help the commercial banks of Mongolia in attracting source from foreign markets.
The increase of salary is helped to the inflation, which is reached to 34%. Labor productivity increased by 12,6% in year 2007, but it was 7% lower than the increase of salary. After the information, they answered questions from the correspondents.
Q: What will be the measures of MongolBank to harness the inflation?
B.Enkhhuyag: Interest rate was 30-40% in year 2000. But it was decreased down to the 19% in year 2007. This trend increased in year 2008. The inflation was the main reason of it.
A.Batsukh: When inflation was 6%, the interest rate was 20%. The policy to expand the budget and social care expenditure were the main reason of inflation. This year budget expenditures that are vulnerable to the inflation will be shrunk. The budget projection of this year is zero. If the State Great Khural approves the proposal of the Government on the State Budget, there will not be loss in budget.
B.Enkhhuyag: When inflation reached 34%, the money supply increase must be decreased.
Q: What will be the situation if the election promises such as “Grant of the Motherland” will be distributed?
A.Batsukh: The source of fund must be secure. It must be solved without influencing the inflation.

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