M.Enkhsaikhan: There will be deep crisis in Mongolia

Oct 27 • Economy, Government, Interview, Mining, Politics • 885 Views • 2 Comments on M.Enkhsaikhan: There will be deep crisis in Mongolia

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Q: What will your evaluation on today’s political and economy situation being as an economist?
M.Enkhsaikhan: The world economy and finance is at the edge of serious crisis and even our two neighbors. Then there will be an obvious question, what will it be for Mongolia. On October 15 2008, 20 big economies are meeting on economy issue. But we don’t pay attention on it, we are like sitting on an isolated island. We are talking about old and weary dreams such as budget, Government principles and Minsiter’s post. It is worrisome that we are doing nothing to prepare for the approaching danger. Recently scholars and experts made an advice for Big “8”. When I had a look on it, but there are around 60 countries have no prespective in development. Countries that are included in it; African and Central Asian countries. These countries are under difficulty and their situation will be even worse in the future. One of the following four factors is enough for darkening of those countries’s future; first rich in mineral, second land locked with bad neighbours, third no policy on economy or failure of good governance, forth fierce political rivalry and revolt. Single of them is enough for blurry future. I would like to ask from people that how many of them we have in Mongolia? We are chasing petty issues not in macro level. The big crisis is expected. It will start with commercial banks. Budget cannot support its heavy load. No need to blame each other why it is happening. It is better to summarize the actions in the past correctly. Unfortunately, there is no analysis on what is happened in the past. Commercial banks halted their loan from quite long ago. The most potential banks stopped recently. There are 1.9 trillion MNT at banks as saving. Its monthly interest rate will be 30 billion MNT. If bank stopped their loan, then they are passive. So about 30 billion MNT pressure is on the shoulder of our commercial banks. Most of the banks has given away their most loan. Crisis is inevitable. The only issue is to bear this problem evenly or unevenly.

Q: Is there any ways to avoid from the crisis?
M.Enkhsaikhan: No. There is only question about how to land softly. In doing so, we should learn from the mistakes in the past. But it is impossible now. Because this country is led by arrogant and irresponsible politicians. Right at the moment, the budget loss is 290 billion MNT and no tax income implementation. Increasing price decreases company profit and tax paying capacity. This huge loss will swallow our Fund that was composed by the increased commodity price and 68% windfall tax by the end of this year.

Q: Are you sure with this timing?
M.Enkhsaikhan: Yes, it will swallow completely by the end of this year. There is nothing to expect in the next year.

Q: So Mongolia is facing with the world economy crisis or Mongolian uncontrolled economic policy is allowing this crisis?
M.Enkhsaikhan: It is obvious that politicians will blame the world economy. World crisis will influence. But basic crisis is the creation of Mongolians. First, there is no certain policy for the Government, Second, Mongolian gained around 5 billion US$ from the windfall tax and increase of copper commodity price.but we failed to manage it correctly, therefore we are ruining other sectors of our economy except mining one.

Q: It is nothing wrong about machining big money.
M.Enkhsaikhan: Nothing is wrong with it. Unfortunatley, our policitians are lured by this big money and don’t want to listen words from Worlld Bank and international finanical organisations.

Q: In contrary, people think that we are getting poor when we followed their advice.
M.Enkhsaikhan: Not like that. In the past, ADB decreased its operation in Mongolia. Fisrt of all, Mongolians never listen to them. Secondly, many countries such as Pakistan and Afganistan are welcoming ADB to help them. It is same to IMF. We Mongolians are blowing our own horn so much when we see big money and rejecting foreign organizations.

Q: What we should have done?
M.Enkhsaikhan: According to the experiences of other countries, they manage their windfall from the world market. But we inserted all aof them into the construction. We had big boom recently. Therefore, the apartment and building price increased so much. Bnaks invested heavily in construction business during the boom. Actually, construction building is not based on labor, but it based on the windfall income, therefore when commodity price decreases, all start to collapse. Mongolia never had and managed such a big money in its history. Just we didn’t have the experience to manage it. In other coutries they manage their money. It proves that we are in crisis not because of the world economy crisis, but it is all becasue of our dismissive and arrogant behavior.

Q: When the crisis will reach its peak?
M.Enkhsaikhan: I think that the furthest time is the end of the first quarter of next year.

Q: What measures do we need?
M.Enkhsaikhan: Crisis is inevitable. We need measures to soften its impact only. Unfortunately, nobody cares about it. Authorities have no idea about what is facing us and approaching crisis.

Q: Can you tell us what we need to do being as Prime Minister and economist?
M.Enkhsaikhan: I can tell. But I think nobody will pay attention on it. Now, the measures that were taken by me, when I was Prime Minister. Exactly same measures were taken by the Americans. It is called “bailout”. It is like raising money for banks when banks have no money or money circulation.We approached to ADB and did injected about 60 billion MNT. So we revived our economy. But now in order to revive or resque our economy we need 1.5 billion US$. Did authorities understand it or not? If the understand it, do we have such a big money?

Q: You did this operation in “State Banks”, but can it be made on private banks?
M.Enkhsaikhan: Yes, it can be. Americans are doing the same for private banks. But we don’t have money now. IMF is ready to assist anyone who asks for help. But Pakistan made request first. Mongolia is still silent. Even Ministers for Finance of the world met at IMF, but Mongolia didn’t attended the meeting.

Q: If Prime Minister asks your help, what will you do?
M.Enkhsaikhan: I will accept.

Q: Is there any chance to give 1,5 million to each citizen of Mongolia?
M.Enkhsaikhan: No, zero chance.

Q: Why it is not big money?
M.Enkhsaikhan: Value of money is evaluated by its labor. It is easy to give 1.5 million MNT and let inflation make goods price up to 1,5 million MNT. We can cheat in such a way. I said about it before the election. Now no need to be fooled by it. Even promisers have no chance and waste money to fulfill it.

Q: Even exploiting those treasure hills?
M.Enkhsaikhan: It is better to forget about it for next 5 years.

Q: Can they be put at banks as a security?
M.Enkhsaikhan: In socialist time, there was a method to get from Soviet Union. It is no more in modern days. One who don’t know about world economy will think like this. Exactly the same as the economy crisis brings political crisis.

Q: Do you mean the incident of July 1st?
M.Enkhsaikhan: Yes, that incident is the expression of the political crisis. It was peaceful demonstration at the beginning. Authority was the main reason to put them into violence. They were big parties that took part in the election. The control was lost when one was trying to be played and another was trying to play on. Therefore, the biggest accusation goes to the politicians. To punish mischievous teenagers is wrong. They were there not because of their belief, but they followed their emotions. It is very wrong trend to punish youth. If they will be punished, they must be mercied urgently.

Q: To show mercy…?
M.Enkhsaikhan: Just a simple. Better to follow the legal language. This incident was the first time when political violence was used. This established practice. In another words, there will be high risk of political violence in the future. The main casue of it is the economical crisis. We can’t use force when we can’t control or monitor our crisis. Therefore, we should make correct move. I think we can’t open the criminal case on those who took part in this incident. Especially, for those policemen.

Q: Many people oppose the Coalition Government. You also formed the coalition Government.
M.Enkhsaikhan: I am against division. I therefore, I support coalition government, but the only issue is coalition on what? Our Government gave children money. This is the result of many people’s effort. Parties run election campaign in order to take the power of the Government. Therefore, it is good to take a chance to be included in the Government even you lost the election. If this Government can soften the approaching crisis, then it will be its outcome of cooperating.

Q: Authorities are showing nice numbers such as growth in macro economy etc. For example, I don’t know what benefit was for me.
M.Enkhsaikhan: Economy is growing if compares with the previous years. Also the living standard has big gap in population. We are developing but with less speed than our neighbors. It is just like retreat instead of advancing.

Q: Nothing, except crisis, we will benefit from the State Great Khural and Government of Mongolia. This incapable situation creates talks of change of the administration.
M.Enkhsaikhan: Basically, we chose the most expensive way to form our Administration. We will definitely form our Administration. But we need to choose the appropriate mechanism for our economy. How much we wasted for choosing these 76. Local self government election was the same. Election is wasting so much money. These people are corrupting the statehood for recovering their wasteful campaign and this money always goes to China. Next year there will be Presidential election and another crisis is approaching. It will be much worse. Some people start talk about increased presidential power not because of exhausted or tired up with the current power split, but because of their knowledge of economy. When I start to talk this way, people always suspected that I am talking for Enkhbayar. Now they understand that it was for the mechanism. We should have good policy on economy and we can unite on it. But we have 2.6 million Presidents and deny each others.

Q: EU doesn’t agree that Mongolia transferred into the market economy.
M.Enkhsaikhan: I think that it has political reason. Our neighbors haven’t got liberal market economy. EU can’t call that our neighbors are not into market economy and calls Mongolia as market economy. It is political reason to justify their position. I think Mongolia is market economy. But it has so much involvement from the Government. There is no economy without Government involvement. But government involvement is to support its market, but not like us to be corrupted or use pressure.

Q: Today’s Government has 10 times bigger budget than Enkhsaikhan’s Cabinet.
M.Enkhsaikhan: We are wasteful on small profit or gain. But this gain or profit not because of industrialization, but thanks to the commodity price boom. Basically, if we lived within our production limit, we will not be in today’s situation.
Q: Oil refinery in Zuunbayan…
M.Enkhsaikhan: Dream, dream. Knowledge of decision makers and businessmen is very low. This creates such fairy tale. It is like we believe in our dream and then learn that we were cheated. Yes, people can have dream and zeal, but it shall move forward when we have correct information and correct consent. It is better to deal with what we can, but not to jump everything.
Q: The third source of crude oil?
M.Enkhsaikhan: Once the source is one, it is also dream.
Q: Why we don’t buy it from other countries?
M.Enkhsaikhan: We will transport them through their land. It will create much bigger issue. The Mongolian economy can’t develop better than our neighbors. If we have development growth of 10% and our neighbors have 1%, they are loosing. They just will not allow us.

Thank you for you interview.

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2 Responses to M.Enkhsaikhan: There will be deep crisis in Mongolia

  1. sir/madam,
    I am jorawar singh from India State Punjab.i am doing agriculture in PUNJAB and now i listen news about your country that you want a some farmers from punjab. i respect your proposal so i want to come to your country for agriculture.please contact to me for the further formalities.i shall be too thankful to you

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  2. yondon says:

    hey amarsanaa… it was quite good interview with Mr Enkhsaikhan. What he said was really make sense to me. Awesome!!! I wish more people perceive in such way.

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