S.Bayartsogt: Salary and pension will be increased without announcement

http://www.business-mongolia.com/mongolia/2008/10/06/sbayartsogt-salary-and-pension-will-be-increased-without-announcement/
October 6, 2008

Mr. S.Bayartsogt made press release and interview to the media, in relation with the proposal of the Budget Modification and Project on development principles of economy and society in year 2009, to the State Great Khural. His primary target is to decrease inflation rate down to 12% from 34% and to decrease consumption price. The development principles stated that economic growth rate will be 14.1%, reach GDP to 7 trillion 95 million MNT and GDP per capita will be 2274 US$ in year 2009. According to the first 8 months performance of the state budget, total income was 1 billion 405.1 million MNT and expenditure was 1 billion 401 million MNT. Tax waive on oil products and wheat, grain was the main reason of decreasing budget income. He answered some questions from journalists:


Q: Can inflation be decreased down to 12%?
S.Bayartsogt: We closely studied factors that are fueling up inflation. Last year crude oil and grain price increased in the world market. But, according to the prognosis, in the next year those commodities price will be stable. Mongolia can have harvest of wheat to supply its domestic demand. Another factor that helped in inflation growth was 30-40% increase of fixed expenditures such as heating and electricity. Therefore, the fixed expenditure price will not be increased more than 4% in the future. Also, the issue salary, related with the inflation, will be arranged. In doing so, salary and pension will be increased without announced after discussing with the budget managers of the provinces and areas. Also, the policy of not increasing simultaneously will be pursued. As the result of these measure, there is a possibility to decrease inflation and maintain stability in consumption price.
Q: Copper commodity price is decreasing in the world market. What risk it shall bring into the income of our budget. Will it affect to the election promise of 1.5 million MNT?
S.Bayartsogt: Some say the Mongolian budget is “copper budget”. 1/5 of the state budget comes from copper. Yes, if copper commodity price will be decreased, the definitely our income will be decreased accordingly. Therefore, we need to cut off our expenditure. Distribution of cash is purely against our policy to shrink the budget, when inflation is high. But mining wealth must be created in advance. We will reject tax exemptions that are affecting decrease of budget income, staring from October 15 2008. Tax will be levied on.
Q: During the last four years, there were many tax exemptions. Can it be limited in the next four years?
S.Bayartsogt: Basically, we will pursue policy to halt exemptions, any waive of taxation and subsidies.
Q: Financing of 100 billion MNT and 30.5 billion MNT from the Mongolia Development Fund is being discussed right now. Isn’t it a paradox that you are talking about shrinking budget and others are talking about financing?
S.Bayartsogt: I don’t support that personally. Also it is the issue of the previous Government. Personally, I didn’t supported it.
Q: There are talks about to start mining Oyu Tolgoi and Tavan Tolgoi mines. Is this budget included in the state budget of year 2009?
S.Bayartsogt: No. It can be added as the amendment or modification when the issue is solved.