Currency forum says “motherland allowance” increases poverty
Mongolia’s “motherland allowance,” which grants each Mongolian citizen MNT 21,000 every month, was heavily criticized at an open forum on currency policy held at the University of Mongolia on Thursday.
Participants concluded that the allowance is having a negative effect on Mongolia’s economy and standard of living.
For example, it was noted that in 2006, before the allowance was started, poverty in Mongolia was 32 percent, while in 2011 it was 39.2 percent. Participants also said the allowance may be increasing inflation.
Regarding inflation, the forum heard a National Statistics Committee report that says meat prices have increased since last July and will further increase by the end of the year. The director of Mongol Bank’s monetary policy research board, D.Boldbaatar, said economists are warning that inflation could hit 13 to 15 percent next year.
The National Statistics Committee also reported that GDP increased by 12.2 percent at the end of September, mainly due to an influx of foreign money into the economy. But it was also noted that the fast-growing economy could lead to higher prices for consumer goods.
Mongol Bank’s monetary policy research board specialist B.Davaadalai said Mongolia must be careful to ensure that its economy is not too dependent on mining. If it is, he said, the economy will be susceptible to price fluctuations on global commodities markets. He added that capital from the mining sector is being spent for welfare allowances, but not for development.
An open forum on budget policy will be held on Friday, and one on economic growth and policy will be held next Monday.
Participants concluded that the allowance is having a negative effect on Mongolia’s economy and standard of living.
For example, it was noted that in 2006, before the allowance was started, poverty in Mongolia was 32 percent, while in 2011 it was 39.2 percent. Participants also said the allowance may be increasing inflation.
Regarding inflation, the forum heard a National Statistics Committee report that says meat prices have increased since last July and will further increase by the end of the year. The director of Mongol Bank’s monetary policy research board, D.Boldbaatar, said economists are warning that inflation could hit 13 to 15 percent next year.
The National Statistics Committee also reported that GDP increased by 12.2 percent at the end of September, mainly due to an influx of foreign money into the economy. But it was also noted that the fast-growing economy could lead to higher prices for consumer goods.
Mongol Bank’s monetary policy research board specialist B.Davaadalai said Mongolia must be careful to ensure that its economy is not too dependent on mining. If it is, he said, the economy will be susceptible to price fluctuations on global commodities markets. He added that capital from the mining sector is being spent for welfare allowances, but not for development.
An open forum on budget policy will be held on Friday, and one on economic growth and policy will be held next Monday.
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