Q: How the Democratic Party Group evaluated the Action Plan of the Government?
S.Bayar: Basically, MPs of DemParty ask about to bring more down to earth action plan. The world economy crisis cut down our election promises. So we should discuss about what the Government can provide and what can’t. Moreover, they demanded more clear policy for the people of Mongolia. Social welfare policy was set forth primarily, therefore, DemParty MPs commented that it can be realistic when the policy on industrialization is real.
Last week, I attended the Prime Minister’s meeting of Shanghai Cooperation Organization. During the meeting I met with Prime Ministers of People’s Republic of China, Kazakhstan and Russian Federation.
Our main concern is what the inflation will be in the next year. We are solving its main factors. Wheat issue was solved through the 3rd Atar campaign. Now the meat preparation time is coming. We are worrying about supporting our herders and farmers and not to fuel up meat price in spring. Third, in order to solve oil product shortage in Mongolia, the Mongolian companies signed on MOU to import 1 million tons of crude oil and 104 thousand tons of oil products. Once we can’t refine our oil in Mongolia, there will be an issue of importing it through China. If the Government can ensure these issues as the top priority, then we can help to decrease inflation for certain points.
Q: In order to get through the financial crisis, governments of many countries supporting their commercial banks. Is it possible for Mongolia to implement such policy?
S.Bayar: It is better say that it is necessary than possible. We took some measures. Bank and financial crisis is different in countries. Also new law on saving insurance must be adopted by the State Great Khural. Because around 95% of total saving account holders saved up to 5 million MNT at banks. Therefore, the Government must ensure that their saving is secure. Generally, the Government and Mongol Bank must show financial support for the banks.
During the meeting with DemParty group, some politicians, even who was the Prime Minister of Mongolia said that everything would collapse. Mongolia will face the crisis very soon, according to their saying. Of course, we are facing come negative outcome of the crisis, but it is too early to shake or threaten people. Especially bank business is based on the trust. Some banks operation is not good enough, but it doesn’t represent whole banking sector.
Q: Copper price fell in the world market. Where to find the source of funding 1.5 million MNT promises?
S.Bayar: 1.5 million MNT is our election promise. In order to reach this word, we should realize our mining projects beforehand. As for copper, the situation is critical. Half of the copper price, which was reaching 8000 US$ per ton not long ago, is gone. Therefore it will affect in our social welfare plan. Also it is better to know about the companies whether they are interested in Oyu Tolgoi or not. If they are still remain the same, we should calculate their capacity and financial strength. Last September, I met with investors, during the meeting, they said that we are losing so much time, if we start construction of Oyu Tolgoi in spring 2007, 2.3 billion US$ would be required. But this number is changed and it is 4.2 billion US$ in this September. They warned that the State Great Khural and Government of Mongolia should be aware of that every month its construction price is increased by 60-80 million US$.
It is necessary to study that how much these investors are interested in Oyu Tolgoi when copper price fell. It is huge amount of investment. But as for Tavan Tolgoi, there are quite many numbers of interested parts. US company expressed its interest and then South Koreans. When I asked about the prediction of coal price, they said that it will surge by 30-40%. But it is profitable business.
Therefore, we should think about that if we are ready in adopting new Mineral Law. Perhaps, it might be better that the State Great Khural issue a resolution on certain projects. We shall adopt clear and precise law. Investors demand clear and stable law from us. Therefore, it might be wrong and pushy issue if we adopt this law within this year. But, we should sign agreement, after discussing them at the State Great Khural, on Tavan Tolgoi and Oyu Tolgoi projects with foreign investors, in order to save some time. Then the door of 1.5 million MNT in the next year will be opened.
Q: How to provide it?
S.Bayar: We should issue a law. If we distribute through cash, it will ruin our economy. The Ministry of Finance has an alternative that only 10% of it can be distributed as cash. Other part can be provided through health insurance, housing program, share of mining projects. There are many alternatives. There is an issue also about the Mongolians living abroad. The State Great Khural shall solve this issue through adopting new law.
Q: The resolution is approaching to decrease number of agencies and to save 2.4 billion MNT. Will it affect the performance of the Government?
S.Bayar: The proposal to decrease 23 agencies from the previous 65 was presented to the State Great Khural. We shall save budget in the next year. But we are cutting ineffective expenses of the state organizations and institutes. It is not the issue of decreasing numbers. We have huge agency that can combine 5-6 Ministries.
Q: Some Ministries might have 2 deputies?
S.Bayar: Ministry of Mineral and Energy is merged from two ministries. Once we dissolve a ministry, why we can’t have one deputy minister that can handle the issue of the sector? It is just a project and it is still not concluded yet.