The impact was harsh due to the late response from Mongolia
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Loading ...MP O.Chuluunbat has his views in the recent development of crisis and economy recession.
Q: Some said that the world crisis has nothing to deal with Mongolia. But it affects our daily life.
MP O.Chuluunbat: World economy recession and crisis is taking effect on us. Its impact is harsh because our reaction was so late. Money loan was halted since April and May and it decreased affected in the business and economy activities by 30-40% decrease. Actually, the business activity in Mongolia i carried out advances based on the loan and credit. If one company gets loan it doesn’t mean that its director or owner uses it, but it is used in business activities that can help in living of many individuals and companies.
Almost every company has network of payable and receivables from each other. If the loan is frozen, then all the circulation in banks is frozen. For example, a steel factory pay to electricity provider and it pays to another. Each of them contributes to the budget, so everything is interdependent to each other.
Q: Did the decision makers listened to the experts of this sector?
MP O.Chuluunbat: I think that Bank of Mongolia didn’t discuss it with private sector. If it was discussed with, the result will not be such dramatic. It should be foreseen that these interdependent companies will be in crisis together with this decision. According to the recent news tax is decreased from import goods. So, the merchants’ income will decrease alongside and leading shrinking in the trading sector and tax income will be decreased.
Q: What will the situation in the future?
MP O.Chuluunbat: The situation will be more critical in the early months of the next year. Budget income will become worse. The main tax that came from copper sales was disappeared. Sovereign bond issuance in the foreign market is an alternative but Russian, Thailand and Turkish bonds are not successful.
Q: So what we are going to do now?
MP O.Chuluunbat: We should work more on bilateral cooperation. Bilateral relations such as Mongolia-Russia, Mongolia-Japan, Mongolia-USA, Mongolia-IMF must be solved immediately. As for now, some governments are taking certain measures. But we need more concentration.
Also we should think about strengthening domestic money resource and raising or attracting capital form the foreign market. I have been talking about it in last ten years. 3.9 billion US$ at combanks is small money. As for Mongolia, we need 5-10 billion US$ is needed if we want to be without inflation and crisis. This money can bring workplaces to many people.
Also banking sector must be transparent. As for US Minister for Finance, he has been open to everyone from the very beginning. Only O.Chuluunbat says this crisis is inevitable. This crisis has been evolved for long.
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