The Parliament is currently discussing the draft bill on 2019 State Budget. As expected of a pre-election year, a significant amount of financing has been allocated to local budgets. On the other hand, the mining revenue, which is expected to account for 27 percent of total budget revenue, was increased by 76.4 percent compared to 2018 budget. Considering the external environment, the World Bank and Asian Development Bank recently upgraded their outlook on Mongolia’s economy; however, both banks warned the Government to remain wise on expenditure. “In some senses, the revenue performance has increased, so it does give the Government more flexibility. What they have got to do is to use that flexibility wisely. I would say to them that the best course of action going forward is to continue the focus on building up the buffers and keeping control of current expenditure,” said Declan Magee, Senior Economist at ADB. As for the World Bank, the recent regional economic report stated that the “Growing political uncertainty could induce a sudden relaxation of the government’s commitment to structural reforms. Mongolia’s growth prospects could be adversely affected by the consequences of an escalating trade war and a potential reduction in global demand-mainly from China-for coal, copper and other commodities and the resultant decline in global commodity prices. Weather related shocks, resumption of non-trade barriers at the border with China, could also significantly affect Mongolia’s coal exports.”

Published Date:2018-10-10