SGK adopted budget with deficit of 9,9%
Copper price, main contributing commodity for the Mongolian economy, has been surging recently, reaching over US$ 8000 per ton, which was around US$ 4000 per ton just a year ago. According to the forecast made by economists, the Mongolian economy growth would reach 7.5%, allowed further expansion in the state budget.
Last Thursday, SGK adopted the Law on the state budget of 2011, Law on 2011 budget of the Human Development Fund and Law on 2011 budget of the Social Insurance Fund. Budget expense will be 4 trillion MNT. Main part of such expense is consists of 21 thousand MNT per citizen, which was planned by the Government.
Income of Mongolia will be 3.304,6 billion MNT and expense will be 4.084,1 trillion MNT or 52.1% of the GDP. Private sector criticizes that such policy shrinking role of private sector in the economy, nurturing state-reliant sectors which are unhealthy with competition and vulnerable with self growing capacity.
Another serious finding is that the budget will suffer 779.5 billion MNT or 9.9% of GDP. The first draft of the state budget, submitted on September 30 2010, had deficit of 5% of GDP, but Government contributed 3.6% and SGK added additional 1.3%, composing deficit of 9.9% of GDP.
The Mongolbank warned to the Government and decision makers that the inflation would reach over 20%, but international organizations predict it would reach even 35%. But the Government and State Great Khural made “call” that it could harness inflation rate within 8-9% in between 2011 – 2013. Another benchmark of composing the budget is the commodity base price. The lawmakers predicted that ounce gold will be US$ 1350, a ton of copper US$ 8425 and a ton of coal US$ 98.8.