Members of the 218.1 National Movement held a press conference at the National Press Center on November 2, announcing that Mongolians holding USD loans will be taking the government to court.
The movement’s goal is to protect the rights of citizens who have taken out USD loans. The members of the movement say that due to the dramatic depreciation of the MNT, people with USD loans are now being required to repay their loans at current exchange rates and incurring significant financial losses.
Speaking at the press conference was State Honored Singer Ts.Tuvshintugs, who reported that he had taken out a 24,000 USD loan from Khas Bank in 2011. The exchange rate at that time was 1,271 MNT against USD. Tuvshintugs stated that due to the devaluation of the MNT in the last five years, he hasn’t been able to start repaying the loan, only its interest. According to him, the contract was ambiguous in how the currency exchange rate would be taken into account, and as a result, he has been forced to pay excessive interest. Tuvshintugs has since filed a case to with the Sukhbaatar District Court.
In article 218.1 of the Civil Code, it is stated that any loans that are issued in foreign currency shall be paid back according to the exchange rate on record on the day that the loan agreement was signed. The movement was named after this specific article, and its members claim that Mongol Bank and commercial banks have not abided by the Civil Code.
Economist and member of the 218.1 National Movement T.Bayarkhuu spoke with Zuunii Medee after the press conference.
You recently held a press conference regarding the depreciation of the MNT and the losses it has caused for people with USD loans. How many people have reached out to you? What are the total losses looking like?
The most important thing is the security of our national currency. Because the MNT has depreciated, the nation is being held hostage by USD loans. In the last 26 years, there have been deliberate efforts to depreciate the MNT. In 1990, the exchange rate was 50 MNT. Now it is 2,400 MNT. That is almost 50 times the amount it was in 1990. There have been deliberate efforts to devalue the MNT. This can be attributed to the global financial imperialism policy that has been affecting the world. Segueing from that, I would like to say thatVladimir Lenin and Karl Marx were brilliant thinkers and ideologists. Their ideologies were insufficient in practice. Still, they saw this coming. There is a quote by Lenin, “Imperialism is the last step of capitalism.” Even Lenin wasn’t able to fully realize this idea. If imperialism is the last step of capitalism, then financial imperialism is the last step of imperialism. Many other researchers and thinkers have agreed with this. I did not create this. We are being controlled by the big banks that control the dollar, the euro, and the pound. Mongolia has been ripped off for the last 26 years. Due to this, we are losing our land. We have practically become beggars, buying vegetable oil by the gram and being held down by loans. The loans have taken a hard toll on people. When people are stressed, society follows suit. When society is in crisis, the government follows suit. They make the wrong decisions and always do the wrong thing. This is the situation we are in currently.
If we have legislation regarding loans, why isn’t it enforced?
Banks can influence laws; they can even stop their enforcement. If they didn’t, 70 percent of their profit would be gone. The banks also pressure people into taking out loans and then give them high interest rates. This systematic oppression by commercial banks needs to stop. This is robbery. The saddest part is that the government is not able to regulate this. They even support it in some ways. Former President of Mongol Bank N.Zoljargal was cooperating with commercial banks in this robbery. Currently, loans total one billion USD. At its peak, this number has been three to four billion USD. Current economic hardships can be attributed to the dramatic swing in the exchange rate. The people are in debt because of this.
So, it has become clear that people with USD loans cannot pay them back due to the swing in the currency exchange. However, there are people who have taken out MNT loans who have not been able to pay them back. What is the reason for this?
Our 218.1 movement was created in order to free Mongolia from its debts. What this means is that even though we have started our struggle against USD loans, we will be addressing MNT debts in the future. People not being able to repay their loans is not only caused by the depreciation of the MNT, but the increase in prices for heating, electricity, commodities, and services in the market. This can be attributed to the government not doing its job, resulting in inflation. Therefore, the people should not be responsible for the inflation and currency depreciation that has happened in the last four years. The government should be held responsible.
How can Mongolians get out of this debt?
We need to elect a president, prime minister, and parliament members that can be held ac-
countable and will implement the correct financial policy. These people should be held accountable if Parliament passes a bad law. Accountability is the way that we can get out of this. If politicians are held accountable, there won’t be as many characters running for office. A few might slip through the cracks, but overall, we can have politicians who can be held accountable. After this is done, we need to quickly amend four or five laws regarding banking and finance.
First, the law regarding Mongol Bank. Second, the law regarding commercial banks. Third, the law regarding the exclusive use of MNT on Mongolian soil. Fourth would be the law regarding savings. Fifth, the foreign trade and foreign currency law. I have drafted amendments to these laws. However, I have no intention of giving them to today’s politicians.
These politicians who quarrel amongst themselves cannot be trusted. Also, if we implement something incompletely, it could be disastrous, like the mortgage loans that started being issued ten years ago. The people who took out those loans are still in debt, and even when they have paid their loan off, they are being threatened with eviction. For this reason, we must start the process to change the laws when politicians can be held accountable.