Funding sources for Development Bank identified

Funding sources for Development Bank identified Minister of Finance S.Bayartsogt answered questions from members of the DP group in Parliament at their meeting yesterday to discuss the draft combined budget of 2011. The MPs felt the only way large projects could be taken up without increasing the budget deficit was to get the Development Bank to provide the capital. They felt it is urgent to formulate and adopt the legal principles that would make this possible.

The head of the group, Ch.Saikhanbileg, later answered media questions.

How much money is needed for all the planned development work and how much of this will come from the budget, and how much through the Development Bank?

The budget can annually spare up to MNT650 billion but this is not enough to achieve long-term development. Many Ministries and local administrations are not satisfied with their allocation. Parliament has approved a policy document that calls for MNT18.2 trillion for development. Since neither the Government nor commercial banks nor the private sector can come up with this kind of money, we are taking steps to provide the Development Bank with the capital for projects that would yield results maybe after 20 years.

What are these steps?

The Government has identified five possible sources to finance the Development Bank. These include issue of domestic and foreign bonds, using the amounts received as advance payment from mining investors, and a part of the foreign currency reserves held by the Mongol Bank. Around MNT12.1 trillion can be raised this way. The DP group favors this policy.

Members of your group wanted fresh sources, particularly from business products, for budget revenue. Have you decided on anything?

We have received many suggestions. A working group will discuss these and prepare final recommendations.