WORLD BANK: MONGOLIA NEEDS TO CONTINUE STRENGTHENING FISCAL POLICY

The World Bank announced Mongolia’s Economic Review Report on Friday. The country’s economic growth has moderated slightly in recent years, but the medium-term outlook remains positive, the report said. Considering the current situation of Mongolia’s economy, which is highly dependent on China, the impact of the new coronavirus may adversely affect the Mongolian economy, highlighted Andrei Mikhnov, World Bank Country Representative in Mongolia. He said, “The economic outlook is positive the medium-term, however, continuing to strengthen fiscal policy and maximizing foreign exchange reserves by keeping the FX interventions at a decent level remains the two most important policy goals for policymakers. Government’s economic reform in 2020 will play a significant role in market outlook and foreign direct investment of Mongolia.” Previously in April, it anticipated Mongolia’s economy to grow 6.9 percent in 2019 and 6.3 percent in 2020. The report cautions of the risks, namely the political uncertainty, commodity price fluctuations, cross-border bottlenecks, implementation delay mega projects, and slower implementation of banking sector reforms.In 2020-2021, the economy is expected to grow by an average of 5.6 percent, due to sustained growth in personal consumption and investment in the mining and industrial sectors. The Government of Mongolia also said that it would continue a unified fiscal policy aimed at continuing to reduce government debt in the medium term by increasing budget revenues and efficiently optimizing the spending. Highlights of the report include the banking sector’s credit process or dynamics, especially in light of recent developments, actions taken by the government and policymakers, and some policy recommendations. World Bank Senior Economist for Mongolia, Jean-Pascal N. Nganou said, “Strengthening the stability of the financial sector, in particular, lending policies and the stability of the banking sector is important in improving macroeconomic stability, increasing employment, and thereby reducing poverty. Monetary policymakers, who have tightened their monetary policy since the end of 2018, have been maintaining credit growth. In the future, it is crucial to prevent the risks that may arise through proper macro-policies.”