On Friday, Parliament reviewed bills attached to a final draft of amendments to the 2017 state budget, with proposed tax increases, adjusted budgets, and rising state debt coming under fire from MPs.
During Parliament’s review, Head of the Security and Foreign Policy Standing Committee MP J.Enkhbayar criticized some measures on taxing savings account interest. He said that taxing a person with less than 100 million MNT in their savings account is wrong, because many of these people are saving for the education of their children. He added that they are already paying taxes on their income, so a tax on interest from savings accounts should not be carried out.
MP J.Enkhbayar told Minister of Finance B.Choijilsuren to properly explain the amendments to the 2017 state budget to the public and Parliament, and to assure people that the Mongolian People’s Party will deal with the nation’s economic challenges quickly.
During the parliamentary session, MP L.EnkhAmgalan noted that that the majority of state-owned companies are operating with deficits, so there should be changes made to their management and leadership.
MP M.Oyunchimeg stated that she disagrees with the proposed increases for personal income taxes, because many people are in debt from salary and mortgage loans. She proposed that it would be more appropriate to find ways to generate state revenue without increasing personal income taxes.
Head of the Budget Standing Committee Ch.Khurelbaatar said that the IMF is the best cure for healing the Mongolian economy the Democratic Party let fall ill, but that the Government of Mongolia was ineffective in its negotiations with the IMF. He suggested that if the government had started negotiating with the IMF in August of last year, Mongolia would have reached an agreement with the IMF with better terms.
He added that there are a lot of inefficient measures in the amendments, and a number of questions have been left unanswered, such as why 2017’s economic growth rate is anticipated to fall below zero, how megaprojects will be implemented, why State Bank will not be privatized, and why railway projects will be not launched.
Minister B.Choijilsuren emphasized that today’s situation is very different from the last time a standby facility was implemented by the IMF, but that under the new extended fund facility (EFF) program, 5.6 billion USD has been generated from six different resources. He said that the standby facility program included financing of 280 million USD, but financing from the EFF program covers 5.6 billion USD, so negotiations took time.
The Minister of Finance noted that projections of 2017’s economic growth falling below zero helped the government reach an agreement with the IMF, because the IMF advised the government to calculate risk. He said privatization of State Bank will be carried out in 2018 because it is expected to sell at a higher price next year, and that megaprojects will be implemented in 2018 and 2019 in response to studies conducted with consultation from the IMF.
MPs supported further discussion of the amendments and other attached bills, which were submitted to the Budget Standing Committee for preparation for parliamentary review.