Prime Minister gives an official statement on Mongolia’s debt

Prime Minister addressing Parliament
Prime Minister addressing Parliament
Prime Minister addressing Parliament

During Friday’s regular Parliamentary session meeting, Prime Minister Ch.Saikhanbileg gave an official statement on the current state of Mongolia’s foreign and internal debt. The PM said the statement was being made to provide accurate information to  a misinformed public about the country’s debt.

PM Ch.Saikhanbileg said, “Under the Law on the Government of Mongolia, the Law on State Budget, and the Law on Debt Management, the Finance Ministry has obligations to register statistical information about the government’s debt and to report on it.

“In accordance with the law on the Central Bank, Mongol Bank is in charge of registering and reporting the statistics of the external sector of Mongolia, or the statistical information and debt registration of government, the private sector, and banks.

“Fulfilling its obligation under the law, the Finance Ministry issues an annual report on governmental debt, and Mongol Bank hosts the registration of Mongolia’s internal and external debt registration and issues annual and quarterly reports. These reports are uploaded on the websites of Mongol Bank and the Finance Ministry and are  accessible and open to the public. Therefore, I want political parties, politicians, researchers, and interested citizens to get debt information from these official sources to avoid having off-balance concepts and understanding about debt.

“The World Bank annually issues a report on detailed statistical information about the world’s countries. Its last edition included statistical information about external and internal debts as of the end of 2014.

“The Finance Ministry has delivered statistical information on the government’s debt as of the end of 2015 to all parliamentary members. I hope you all reviewed the official report. The report, issued from the Finance Ministry, was developed in accordance with financial registration methods offered by the International Monetary Fund.

“The statistical information on Mongolia’s total debt includes direct foreign investments and loans between companies. As of the end of 2015, Mongolia’s total debt reached 21.6 billion USD, whereas 4.9 billion of it, or 22.9 percent, is debt taken on by the government.

“The government does not bear any financial obligation for foreign investments and loans issued to the private sector in cases where it did not guarantee it. Government debt is debt that is repaid from the state budget or tax income. The government’s nominal debt remainder was 14.3 trillion MNT as of the end of 2015, or 12.1 trillion MNT under the present value of the principal. Equaling 52.3 percent of the GDP, it is below the debt limit in compliance with the law on budget stability. This means that the government did not violate the law and is operating under the law.

“The misleading information that says every citizen of Mongolia has a debt of 15 million MNT is spreading and is creating mental stress for citizens. I believe and suspect that this is an intentional tactic to scare people as the parliamentary elections are approaching.

“Some people are giving the wrong idea that citizens should pay off the country’s loans. International investors and assessment organizations pay attention to the repayment capacity of a country rather than its amount of debt. When investors make a decision to invest, they compare the government’s debt to several indicators, including GDP, export income, the government’s income, and the government’s debt service, in order to determine the country’s repayment capacity and its potential to pay off debt.

“As part of the Law on Debt Management of the government, the government is aiming to implement moderate debt management, based on a strategic document on 2016 – 2018 governmental debt management, adhering to its principles: to not put massive pressure on the balance of budget and payments, to not reduce official foreign currency reserves, to keep the balance of tugrug stable, to pursue  refinancing for less expense and to improve special drawing power.

“The spread of stirred up, misleading information on debt among the public is causing instability in political affairs, impacting a downgrade of Mongolia’s drawing power, and increasing interest expenses.”