Recent statistics released by the Ministry of Finance and the National Statistics Office suggest government has curbed budget investment dramatically in the 2nd quarter of this year. To be exact, only 60 percent of planned government investment was realized in the first half of 2018. This means MNT 300 billion development projects that should have started or even completed in the first half according to the Budget Law were held back. Budget implementation data on the Ministry of Finance’s web site show that no investment was released since February 23, this year. According to the approved budget law for 2018, the Ministry of Finance expects to collect MNT 3.4 trillion in budget revenue and spend MNT 4.8 trillion in budget expenditure with MNT 1.4 expected deficit. Thanks to higher commodity price, budget revenue exceeded the expected level by MNT 150 billion. But officials were not available to explain why the expenditure fell MNT 930 billion short of the plan. Mongolia issues MNT 1-2 trillion government bond domestically to cover budget deficit, but the GoM made a conscious decision to not raise capital with high interest rate. This came at a time when IMF required the country to cut budget deficit. But little did we know that this would mean budget freeze.

Published Date:2018-07-26