Arshad Sayed, resident representative of the World Bank in Mongolia has expressed the hope that the present turmoil in global finances would have a beneficial effect on the Mongolian economy by slowing it down. “The economy has been heating up, and a slowdown might actually work to its advantage by tempering down inflation,” he said, talking to a journalist.

With economies contracting in the developed countries, Mongolian exports are likely to fall, and “in the medium term Mongolia will have to tighten its belt if the growth goes down significantly”. The volume of foreign investments is likely to drop, and so will remittances from Mongolians working abroad, which now amount to US$200 million a year. The fall in copper prices will erode state revenues.  Sayed was positive that “spending on items that do not increase productivity” has to be curbed, and hoped that “the temptation to raise salaries, wages, etc. would be resisted by all means”.
Commending the work of the Bank of Mongolia so far, Sayed said its role now becomes “even more important” as it has to ensure a balance between “preventing inflation and providing enough liquidity for businesses to keep running”. Explaining that food and fuel price rises “affect the poor disproportionately”, and that a lower growth rate might force the Government “to cut down on social programs and on other recurrent spending such as social transfers”, Sayed said the Government has to “get the mining sector up and running quickly”. Since mining is a long-term operation, “it makes little sense to worry about whether you have missed the peak or prices will rise again”.

 

Source: en.news.mn