Parliament Discusses Monetary Policy
The President of the Bank of Mongolia (BM), N.Zoljargal, has held an informal meeting with journalists to inform people about the main direction of the monetary policy to be implemented in 2013 by the state.
He also discussed the status of the bank. N.Zoljargal opened the meeting with a speech titled ‘Risks facing to Mongolian Economy and resolutions to them’ and noted that the economy develops in a sustainable manner when the middle classes make more money, increase their savings and hold power.
Mr N.Zoljargal spoke of the risks facing the Mongolian Economy and said, “Due to the mining sector, the Mongolian economy is growing at an accelerated rate. As the mining sector is providing 90 % of total exports from Mongolia, the state budget consists of mostly profits from mineral resources. This affected the importation and exportation rate in Mongolia. In two to three years, the rate has tripled. Foreign currency flow reached USD 14 billion and the investment rate has risen in 2010 after decreasing in 2009. This change in rates affects the budget income too.
The Chinese Economy which once reached 10% has slowed down as the European economy decreased. In other words, the Mongolian outcome of the slowdown in the Chinese economy has become certain since 2011. The recession of the European region will not just last for a year or two, but a long time. Therefore, the only important thing is determining the proper actions to take in order to defend Mongolia from the influence of outer regions.”
He further noted the developments in the Mongolian mining sector “Compared to other sectors, the labour productivity of mining is three times greater. As the mining sector in the 21st century permanently involves advanced technology, not many people will serve in this sector. Specifically, only 100,000 officials are able to work for mining sectors in the future in Mongolia. Though the mining sector plays the most significant role in the economy of our country, the number of people in its workforce is rather few.”
What’s more, social welfare increases only inflation and poverty. For instance, while 100 billion MNT was used for social welfare in 2009, the poverty rate was 35% then. The fund of social welfare reached 900,000 MNT in 2011. Yet, the poverty rate was increased by 41% that year. Thus the Bank of Mongolia has decided to set a policy against the massive fund of social welfare and improve the power of the middle class which means the Mongolian economy will grow further. It is now vital to create a powerful middle class with high incomes and salaries which depend on the productivity rate of their own work.
Another main direction of the Bank of Mongolia is to ensure the sustainability of the macro economy and banking sector and to provide better infrastructure for financial markets.
Main Direction of Monetary Policy in 2013
The State of Mongolia claimed that it would enforce the monetary policy which supports the macro economy as it plays a key role in ensuring sustainable economic growth. The Bank of Mongolia and the Government of Mongolia will implement a policy which limits inflation. As a result, they will hold inflation at less than 8% by the end of 2013 and will set a condition of having inflation at a maximum of 5-7 % by 2014-2015. The direction included other actions to raise the responsibility of the Bank of Mongolia such as improving the awareness of people on the procedure of passing monetary policies and reporting the implementation of the main aim of monetary policies to the public.
For the work to improve the stability of the banking sector, the Bank of Mongolia is set to do the following: increase funds, increase payment capacity and risk taking capacity of banks, improve the inspection and control system of banks with regard to international regulation method and finally to reform the legal environment of payment in advance in order to set a condition to reduce the risk and interest rates of banks.
As for works to enhance the infrastructure of financial markets, numerous actions are to be taken. Namely, the state will shift the warranty of monetary savings into the system of limited savings insurance to reduce the risk of the Government and improve the sustainability of banks. The Bank of Mongolia will reform the settlements system in 2013-2015, increase the usage of giro-systems and enter an internationally acknowledged system to assess banking services and products to ensure the reliable and permanent operation of settlement systems in Mongolia. Moreover, the Bank of Mongolia is aiming to take actions to improve the basic financial knowledge of the public and provide equal services for each citizen.
The President of the Bank of Mongolia, N.Zoljargal, further stated, “The monetary policy must embody numerous aims with economic significance and resolutions for economic issues. After compiling the speeches we delivered in the past two years, we passed a method to resolve the risks which are facing the Mongolian economy apt to the current position of Mongolia.”
Short URL: http://ubpost.mongolnews.mn/?p=1327
He also discussed the status of the bank. N.Zoljargal opened the meeting with a speech titled ‘Risks facing to Mongolian Economy and resolutions to them’ and noted that the economy develops in a sustainable manner when the middle classes make more money, increase their savings and hold power.
Mr N.Zoljargal spoke of the risks facing the Mongolian Economy and said, “Due to the mining sector, the Mongolian economy is growing at an accelerated rate. As the mining sector is providing 90 % of total exports from Mongolia, the state budget consists of mostly profits from mineral resources. This affected the importation and exportation rate in Mongolia. In two to three years, the rate has tripled. Foreign currency flow reached USD 14 billion and the investment rate has risen in 2010 after decreasing in 2009. This change in rates affects the budget income too.
The Chinese Economy which once reached 10% has slowed down as the European economy decreased. In other words, the Mongolian outcome of the slowdown in the Chinese economy has become certain since 2011. The recession of the European region will not just last for a year or two, but a long time. Therefore, the only important thing is determining the proper actions to take in order to defend Mongolia from the influence of outer regions.”
He further noted the developments in the Mongolian mining sector “Compared to other sectors, the labour productivity of mining is three times greater. As the mining sector in the 21st century permanently involves advanced technology, not many people will serve in this sector. Specifically, only 100,000 officials are able to work for mining sectors in the future in Mongolia. Though the mining sector plays the most significant role in the economy of our country, the number of people in its workforce is rather few.”
What’s more, social welfare increases only inflation and poverty. For instance, while 100 billion MNT was used for social welfare in 2009, the poverty rate was 35% then. The fund of social welfare reached 900,000 MNT in 2011. Yet, the poverty rate was increased by 41% that year. Thus the Bank of Mongolia has decided to set a policy against the massive fund of social welfare and improve the power of the middle class which means the Mongolian economy will grow further. It is now vital to create a powerful middle class with high incomes and salaries which depend on the productivity rate of their own work.
Another main direction of the Bank of Mongolia is to ensure the sustainability of the macro economy and banking sector and to provide better infrastructure for financial markets.
Main Direction of Monetary Policy in 2013
The State of Mongolia claimed that it would enforce the monetary policy which supports the macro economy as it plays a key role in ensuring sustainable economic growth. The Bank of Mongolia and the Government of Mongolia will implement a policy which limits inflation. As a result, they will hold inflation at less than 8% by the end of 2013 and will set a condition of having inflation at a maximum of 5-7 % by 2014-2015. The direction included other actions to raise the responsibility of the Bank of Mongolia such as improving the awareness of people on the procedure of passing monetary policies and reporting the implementation of the main aim of monetary policies to the public.
For the work to improve the stability of the banking sector, the Bank of Mongolia is set to do the following: increase funds, increase payment capacity and risk taking capacity of banks, improve the inspection and control system of banks with regard to international regulation method and finally to reform the legal environment of payment in advance in order to set a condition to reduce the risk and interest rates of banks.
As for works to enhance the infrastructure of financial markets, numerous actions are to be taken. Namely, the state will shift the warranty of monetary savings into the system of limited savings insurance to reduce the risk of the Government and improve the sustainability of banks. The Bank of Mongolia will reform the settlements system in 2013-2015, increase the usage of giro-systems and enter an internationally acknowledged system to assess banking services and products to ensure the reliable and permanent operation of settlement systems in Mongolia. Moreover, the Bank of Mongolia is aiming to take actions to improve the basic financial knowledge of the public and provide equal services for each citizen.
The President of the Bank of Mongolia, N.Zoljargal, further stated, “The monetary policy must embody numerous aims with economic significance and resolutions for economic issues. After compiling the speeches we delivered in the past two years, we passed a method to resolve the risks which are facing the Mongolian economy apt to the current position of Mongolia.”
Short URL: http://ubpost.mongolnews.mn/?p=1327
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