The 2020 State Budget deficit equaled 5.1 percent of the total GDP, which is almost MNT two trillion. This number may increase further due to the Government’s decision to repay pension loan amid expected repayments of foreign debts or government bonds that will expire from 2021. However, policymakers have not yet made a final conclusion to the concern, waiting for the parliamentary election results. Mongolia is scheduled to repay a total foreign debt of USD 14.4 billion in 2021-2024. Of these, government debt accounts for USD 2.9 billion. The Government needs to attract as much as MNT 800 billion to cover the pension loan repayment; Its solution to issue new bonds is increasing the potential debt amount in the future. Earlier this month, Parliament concluded its decision to issue bonds, presenting a plan to back Salkhit silver and gold deposit’s future profit. A controversy among the public continued for a certain time following the decision. Moreover, the Development Bank of Mongolia (DBM) could not guarantee the bonds, for the basic circumstances were violating the “Law on Development Bank of Mongolia”. Some economists are still against the decision, saying that the plan to issue bonds using a deposit’s unmade profit is not proper.Researcher of mineral resources law, Surakhbayar.G said, “Issuing bonds in advance when the feasibility study has not confirmed is the case which can occur only in Mongolia. It never happens in other countries around the world”.

Published Date:2020-01-28