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Ulaanbaatar /MONTSAME/ Today, May 26, Bank of Mongolia officials made a briefing on economic changes in April. Money supply to the market reached MNT12.4 trillion, up by MNT221 billion, compared to the same period of the previous month. 53 per cent of the supply is tugrug savings and 19 per cent is foreign currency savings. Foreign currency savings have been dropped constantly over last months due to Tugrig’s exchange rate increase against foreign currency, said a senior officer of Research and Statistics Department of Bank of Mongolia A.Anand.
“Outstanding loan amount reached MNT12.7 trillion, up by MNT28 billion compared to last month. Loan by individuals occupies 52 per cent of total loan, while 42 per cent by private companies. 7.9 per cent of them is overdue and 8.6 per cent is insecure. 945 citizens got mortgage loans of MNT56 billion, totaling mortgage balance to MNT4.1 trillion. 1.8 per cent of mortgage is insecure and 2.3 per cent is overdue.
Balance of payments had a deficit of USD164 million, while trade turnover amounted to USD2 billion, up by USD523 compared to the same period of last year. The import growth of oil by USD71 million and heavy machines and equipment import by USD78 million as well as coal export increase by USD440 million influenced it, he said.
The foreign debt of Mongolia is USD24.9 billion in the first quarter, including Government debt of USD5.8 billion and Bank of Mongolia’s USD1.7 billion and debt of commercial banks and other sectors makes 70 per cent of total foreign debt.
Journalists asked questions after the briefing.
How much foreign exchange reserve does Mongolia have now?
Foreign exchange reserve of Mongolia equals to USD1.2 billion, which means equal to 3.2 months’ need supply. Within IMF agreement, the reserve will reach USD1.6 billion at the end of this year and USD4 billion by 2020.
How much mortgage loan is being issued monthly to citizens?
Monthly mortgage issuance totals to MNT25 billion. Next year, mortgage program will be transferred from the Bank of Mongolia to the Government. Now we are carrying out a study with a World Bank expert and the Government.
Economic growth in the first four months has gone beyond the expectation. What were the factors?
Economic growth was 1 per cent at the end of 2016 due to mining sector growth. This year, the growth is expected to be minus 2.1 per cent this year. In connection with mining sector growth, economic predictions have been updated and economic growth would be minus 0.2, according to the new prediction. It is highly probable that the growth would exceed the expectation, if large scale projects are realized successfully.
Ulaanbaatar /MONTSAME/ On May 25, D.Ganbat, Minister of Road and Transport Development of Mongolia and Ivana Grollova, Ambassador of the Czech Republic to Mongolia signed an agreement on aviation relationship. Thanks to the agreement, the two countries will enjoy opportunity to develop bilateral air transport relations, by conducting direct and charter flight between Mongolia and Czech.
In this regard, it would be open for Mongolia to use an airport of Czech as an intermediate stop when launching new flights from Mongolia to European countries, according to Mongolia's road and transport ministry.
Minister D.Ganbat, pointing out that transport cooperation between Mongolia and Czech is an important to strengthen the bilateral economic relations, mentioned Mongolia is planning to establish an agreement on international road transport with the Czech. Then, the citizens and enterprises of Mongolia and Czech will take advantage of an opportunity to travel reciprocally, run trade activities, and further opportunities to improve bilateral economic relations and to increase trade turnover will be created.
Ulaanbaatar /MONTSAME/ Today, May 26, Bank of Mongolia made a press briefing regarding the International Monetary Fund's approval of Extended Fund Facility program for Mongolia. D.Orgil, spokesperson of the Bank of Mongolia (BoM) read the central bank's statement, which reported that USD 38.6 million, an initial funding of the Extended Fund Facility program, has been funded to BoM to increase foreign-exchange reserves.
Within the framework of the program, aimed at implementing economic reform in Mongolia, a total of USD 5.5 billion will be financed by international organizations, including IMF, World Bank, Asian Development Bank and JICA, as well as some countries which have bilateral ties to Mongolia, such as Japan, the People’s Republic of China and the Republic of Korea.
The program will provide positive results in the economy such as price stability, increased foreign-exchange reserves to about USD 4 billion, stabilized exchange rate of MNT against foreign currencies, proper foreign debt structures and debt sustainability.
Also, legal reforms aimed at improving BoM’s governance, strengthening its independence and ensuring financial stability will be made. For instance, making amendments to provide legally assured environment of independence to BoM. As well as to provide chance to efficiently resolve issues related to the amendments.
In order to sustain stability in the banking sector, a comprehensive assessment will be conducted in commercial banks. Through this assessment, current situations of the banking and financial system will be assessed in details, enabling for a chance to determine the activities required to expand financial intermediation.
"Healthy and safe operation of banking system will benefit the private sectors by supporting domestic and foreign investments” said D.Orgil, spokesman of BoM.
Dr. Enebish Namjil is a professor at the National University of Mongolia. He worked as administrator for the Darkhan Solar Plant Project (10MW) which commissioned its full operations on January 19, 2017 in Khongor Soum of Darkhan-Uul Aimag. Dr. Enebish spoke with the Mongol Messenger during his participation in the 8th National Renewable Energy Forum and shared his thoughts on Mongolia's capability to utilize renewable energy.
First of all, let me congratulate you on successfully commissioning the Darkhan Solar Plant. How is the plant’s operation going? To what extent does it contribute to the central energy network?
The project was successfully completed. Mongolia’s total electricity consumption is roughly 1GW. Nearly 90 percent of this demand is met by the centralized energy system which means 800-900 MW. The 10 MW of energy produced by the Darkhan Solar Plant is a tiny contribution.
In your opinion, which one of the three main sources of renewable energy – water, wind and sun – is the most viable in Mongolia?
All three of them are viable in our country. All we need to do is to come up with the right and ambitious policy. While Mongolia can be ranked 5th in the world with its underground mineral resources, it can top the globe with its capacity to utilize renewable energy. The Mongolian Gobi desert is advantageous for it is studied more closely compared to other deserts such as the Sahara and Arizona.
Starting in 1999, we teamed up with international experts and studied feasibilities of the Gobi for utilization of renewable energy and even came up with technological solutions to exploit the great resources. Our studies have proven that mega plants with 10-100 times larger capacities than the total energy consumption of Mongolia can be built in the Gobi. Mongolia has nothing to lose because such plants only require a minuscule part of the vast Gobi region. The land will not be dug or depraved in any way; it will only be used for its sunlight and wind. Mongolia will benefit from the high-tech and possibility of exporting the excess energy that's produced. Only the tax revenue of such amount of renewable energy exports will be enough to increase Mongolia’s GDP several times.
Will these large developments require a great amount of other type of sources such as water?
Renewable energy plants never use millions of tons of water like thermal power plants. Water will only be required for drinking and cleaning the main equipment once or twice a year. Wind farms do not use water for their operation. Besides, Mongolia has a chance to prosper utilizing the power of its surface water source. Isn’t it regretful to know that we are wasting ground water, which is a more precious resource than gold itself, just to operate the cooling system of thermal plants and see the ground water evaporate in a few years? The world's most developed countries have actually been practicing utilization of surface water for development. The usage rate of surface and ground water is normally 90:10 in developed nations, whereas the rate is almost the opposite in Mongolia.
Does this mean you support the building of hydropower plants in Mongolia?
Absolutely...hydro-plants use only the flowing force. The important thing is to build them according to proper standards and technology.
What's your opinion of Orkhon-Gobi project?
I take it as one of the best initiatives in terms of its significance in expanding green zones in the Gobi region and improving drinking water supply to the Gobi. There are many projects such as Orkhon-Gobi with similar technological models in other countries. Orkhon-Gobi project is one of the most outstanding alternatives of making use of the surface water that flows through the territory. As such, I think this is the best project so far that offers the use of surface water to satisfy the water consumption of Mongolia. In its absence, major mines in the Gobi, namely, Oyu Tolgoi and Tsagaansuvarga obviously use ground water. As I said earlier, ground water is more precious than copper or gold. It is reckless that we are wasting something more valuable to produce things of less value. There is no disadvantage for Mongolia to become a renewable energy producer. It will require land area which would equal to less than one percent of the country's territory, yet be enough to make this country wealthy by multiplying the GDP several times. Renewable energy resources, for Mongolia, are an unexplored "gold mine".
Does Mongolia have enough professional cadres to move such large-scale projects forward?
Mongolia does have a certain level of professional force. The government has been attaching greater importance to the issue. I can name the agreement with the Government of Japan on preparing 'One Thousand Engineers'. Training specialists in renewable energy and electrical engineering is a priority. There are renewable energy engineering courses opening at the Mongolian University of Science and Technology and 20-30 students graduate every year. I am a lecturer at the National University of Mongolia. Ten students from the university are studying in Japan to earn Master's and Doctor's degrees in renewable energy. Also, to operate wind farms or solar plants requires only two or three highly-skilled engineers. Only two engineers are operating the Darkhan Solar Plant, commissioned recently. Combined with three security guards, three dispatchers, a director and driver, only 11 personnel are required to run the whole plant. On the other hand, a thermal power plant with equal capacity as the solar plant hire 300-400 workers just to run smooth operations.
Can Mongolia become exporter of renewable energy?
The very lucid example of reaching the goal of establishing export-targeted production might actually be the production of renewable energy. Especially, producing solar and wind energy is a development passage for Mongolia. For the time being, mining is the main source of our country's income; it is an inarguable truth. Nevertheless, Mongolia can certainly become a regional pillar of renewable energy production. In order to make this come true, the Government should commit uncompromisingly to carry-out negotiations and deals with our two great neighbors and other countries in Northeast Asia.
The interview first appeared in the Mongol Messenger's issue No. 19 for May 12, 2017
KATHMADNU - Nepali stakeholders have said that Nepal's participation in China-proposed Belt and Road Initiative has opened window of many opportunities in the areas of trade and investment.
Nepal and China had signed a Memorandum of Understanding on Belt and Road Initiative on May 12 in Kathmandu before Nepali delegation led by Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara participated the Belt and Road Forum for International Cooperation in Beijing on May 14.
Speaking at the 14th meeting of Nepal-China Non-governmental Cooperation Forum on Thursday, a platform of apex private sectors of two countries, Mahara said Nepal should take advantage of the opportunity to attract more Chinese investment in Nepal.
"Nepal is very much keen to take advantage of China's high economic growth," he said.
Bhawani Rana, President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the apex private sector body of Nepal, said following the signing of the MoU on Belt and Road Initiative, the door has been opened for more cooperation between two countries.
"There is a lot of scope of investment from China in the areas of hydropower, manufacturing sector, tourism and road infrastructure under public-private partnership modality," she said.
The forum was formed in 1996 with the joint initiative of FNCCI and All China Federation of Industry and Commerce (ACFIC) to promote economic and business cooperation, joint ventures and cultural exchanges from the private sectors of two countries.
On the occasion, Chinese Ambassador to Nepal Yu Hong stressed that Nepal needs to take measures to improve investment climate including in the areas of policy stability and infrastructure development.
E-commerce giant Alibaba and its financial services affiliate plan to lead an investment round of at least $1 billion in a Chinese food delivery service, sources told Bloomberg.
According to people familiar with the matter, the financing will value startup Ele.me at $5.5-$6 billion. It will also help to compete with firms like Meituan-Dianping for the massive Chinese market.
Apparently, Alibaba’s investment is motivated by rival Tencent Holdings being a stakeholder in Meituan-Dianping and also has a small stake in Ele.me.
China’s two largest internet companies Alibaba and Tencent have been focusing on the so-called on-demand services as a way to promote their lucrative online payments services.
Sales of on-demand services are expected to exceed $1 trillion this year in China as people turn to their smartphones or the web to order food, schedule beauty treatments and hire domestic helpers. Growth in local food and restaurant transactions is forecast to outstrip many other retail segments in the world’s second-largest economy.
Tencent is now “putting up quite a big initiative around the restaurant vertical” to propel WeChat Pay, said the company’s President Martin Lau. He added the firm had lost market share in restaurants but is “putting aside a pretty good budget to get back on the competition front.”
Alibaba’s deal with Ele.me which translates from Mandarin as “Are you hungry now?” was first reported in December 2015. The startup has previously raised $3 billion from Uber competitor Didi Kuaidi and a group of investors.
Even though Denmark has already voted against dropping the krone for the euro, the European Commission may coerce the country to adopt the European single currency, reports German newspaper Frankfurter Allgemeine Zeitung.
The notes leaked from last week's meeting in Strasbourg revealed the EU Commission wants all 27 members of the bloc to adopt the euro by 2025.
Officials from the EU are reportedly seeking to draw up a euro budget able to incorporate a fixed tax payment from all the member states. The raised cash is for investment across the bloc.
However, the EU Commissioner for the Euro and Social Dialogue Valdis Dombrovskis, says the whole thing has been misunderstood.
“There has been some confusion. What we discuss in the coming reflection paper is the completion of the economic and monetary union. It doesn’t mean the EU member states must adopt the euro. There is no specific time schedule, but we naturally encourage all member states to make the necessary preparations,” the EU Commission’s Swedish site quotes Dombrovskis.
The euro is the sole currency for 19 members of the bloc. The nine remaining countries, including Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, Sweden, and the United Kingdom, that is currently in the process of quitting the EU, do not use the euro as the main national currency.
The EU Commission is reportedly due to hold a meeting regarding the future of the euro on May 31. The cabinet wants to re-establish control over the euro, according to the German tabloid.
The Organization of the Petroleum Exporting Countries and major non-OPEC oil producing nations have agreed to extend their cuts in crude oil output until March of next year.
OPEC held a meeting at its headquarters in Vienna, Austria, on Thursday. Participants agreed on the 9-month extension, citing the need to ease the glut of supply. The cuts originally were to finish at the end of June.
At a separate meeting with OPEC members, leading non-OPEC countries, including Russia, agreed on the extension.
The agreement is apparently in line with a similar deal struck between Saudi Arabia and Russia on May 15th.
OPEC and non-OPEC nations implemented the reductions in January to raise crude prices. But a rise in oil prices has been capped by expansion of shale oil production in the US.
Observers say the same cycle may occur again, clouding the prospect for higher crude prices.
Ulaanbaatar /MONTSAME/ During its plenary session on May 25, Thursday, Parliament discussed and approved the appointment of heads of diplomatic missions to 6 countries.
President Ts.Elbegdorj made a proposal on the appointment of 6 Ambassadors to Parliamentary Standing committee on Security and Foreign Policy which gave a nod, and transferred it to the Parliament.
The candidates were - Purevsuren Lundeg to Switzerland, Battur Avirmed to France, Ganbat Damba to Germany, Tenger Gonchigzeveg to Japan, Otgonbayar Yondon to the US and Chimguundari Navaan-Yunden to Canada. During the Parliament session, the candidates presented their actions plans, expressing readiness to uphold the image of Mongolia abroad, and work responsibly.
Thus, the Parliament voted up the appointment of Ambassadors Extraordinary and Plenipotentiary of Mongolia to Switzerland, France, Germany, Japan, the US and Canada.
Ulaanbaatar /MONTSAME/ On May 25, Minister of Finance B.Choijilsuren and IMF Resident Representative Neil Saker made a briefing regarding the Executive Board’s approval of three-year extended arrangement under Extended Fund Facility (EFF) for Mongolia.
“- Since the Government and Bank of Mongolia reached an agreement with IMF to implement EFF, credit rate of Mongolia has improved and investors’ trusts have been raised. In other words, economy of Mongolia has transferred from fall to growth and green light has been lit in the economy. The first funding of USD38.6 million will be disbursed very soon” said the Finance Minister. Later today, the Bank Mongolia reported that the funding of USD 38.6 million has been deposited into the central bank from the IMF.
If private sector financing is added, then the total amount of EFF will reach USD6 billion. The funding will be considered as the biggest in IMF history of operation in terms of GDP relations, said Mr Neil Saker. “The program will aim to stop high economic growth and drastic fall, ensuring stable economic growth of 8 per cent. Mongolia has potential and resource to ensure such growth”, he noted.
The program aims to stabilize the economy, restore confidence, and pave the way to economic recovery. A critical pillar of the program is fiscal consolidation, to reduce the pressure on domestic financial markets, stabilize the external position, and restore debt sustainability. The program includes important safeguards to protect the most vulnerable during this period of adjustment as well as institutional reforms to make sure the fiscal adjustment is durable. Another pillar of the program is a comprehensive effort to rehabilitate the banking system and strengthen the Bank of Mongolia. A broad set of structural reforms is designed to support private-sector led growth.