The concept of a treasury fund is relatively common in miningdependent countries as a part of mining revenue is saved for sustainable development and is drawn for other key sectors. This also helps overcome difficulties, such as commodity busts or economic downturns, more easily.

“Although Mongolia’s GDP grew from MNT 2.2 trillion in 1990 to MNT 27.9 trillion in 2018, the country still lacks a reliable fund. The treasury was actively discussed since 2010; however, the financing to the fund was drastically cut due to election cycles, commodity price drops, budget deficits and governance,” explained Mr. Sumiyabazar.

Mongolia currently has two funds that replace a treasury fund. These are the Fiscal Stability Fund and Future Heritage Fund. The Government has ratified the necessary bills for these funds to sustainably accumulate a fraction of non-renewable minerals revenue; however, the actual operations are similar to that of a risk-fund than a treasury.

As stated on the 2019 budget, a total of MNT 1 trillion will be allocated to the Future Heritage Fund and half of this amount will be expended to settle previous debts. Mr. Sumiyabazar remarked, “Treasury fund is not a savings policy. Other countries invest a diverse number of sectors via their treasury funds. It is time we talk about this.”

But the bill remains frozen on the Parliament’s order list since last year. According to Odbayar Odonchimeg, Deputy Director for Business Strategy at the Erdenes Mongol LLC, the approval of the bill will increase the overall revenue of minerals sector, optimize investments, and improve the profitability of state-owned enterprises. “Treasury fund is also a big step forward for the capital market. We have high domestic demand of specialized investors for the instrument,” noted MIBG LLC.