During its plenary session on May 14, Parliament reviewed the implementation of Parliamentary Resolution No. 92 on ensuring the interests of Mongolia in the development of the Oyu Tolgoi project.
Minister of Justice and Internal Affairs Kh.Nyambaatar reported on the implementation, and said, “A sub-working group, which is responsible for supporting the working group, was established. Since the reorganization of the working group, the members met six times and received official information from relevant organizations in order to eliminate discrepancies in information about the Oyu Tolgoi project and to reach a common understanding in the interests of Mongolia. The government approved the guidelines for the working group to implement the resolution and negotiate with the foreign investor of the Oyu Tolgoi project in order to improve the project agreement, protect the interests of Mongolia and make it mutually beneficial to investors. The working group is working in accordance with the guidelines.”
“The government provided information on the claim that the Mongolian side may have used its position to create an advantage for itself and others in drawing up the Oyu Tolgoi investment agreement and the underground mining financing plan to the Supreme Court of the State of New York. This information is based on sources available to the public online. According to the source, the lawsuit was dismissed at the request of the plaintiff’s representative, King & Spalding,” the justice minister said.
BUDGET FRAMEWORK STATEMENT FOR 2022 APPROVED
Parliament approved the Budget Framework Statement for 2022 and Budget Assumptions from 2023 to 2024 on May 13.
The Budget Framework Statement for 2022 and Budget Assumptions from 2023 to 2024 were developed by the government based on the Law on Fiscal Stability, State Budget Law, and key macroeconomic indicators.
In the budget revenue assumption, the volume of exports of major mining products such as gold, copper and coal will still be highly dependent on world market prices as in previous years.
The government expects that the medium-term economic growth will be from 4 to 6 percent and the budget deficit will be around 2 percent of GDP by the end of 2024, in addition with the stabilized government debt to GDP ratio to not exceed 60 percent.
The government set a goal to bring Mongolia’s economic growth to the level of long-term growth or about 6 percent from 2022 to 2024.
Economic growth will be fostered by intensive construction works of the oil refinery, the Oyu Tolgoi underground mine, railway, Youth I, II and III residential complexes, wastewater treatment plant, and energy projects.
The post COVID-19 world economy is likely to contract to a great extent, however, the economic capacity of China will be enhanced. The government considers that the economic growth of China will serve as a condition to keep higher demand and stable prices of Mongolian main export products.
BILL ON REDUCING SOCIAL INSURANCE PREMIUMS DISCUSSED
Last week, Parliament supported to discuss the amendment to the Law on Social Insurance.
The amendment provides for a reduction of pension insurance premiums paid by employers to 9.5 percent and insurers to 8.5 percent from July 1, 2021.
Lawmakers estimate that reducing social insurance premiums payments of employers and insurers to 8.5 percent will increase insurers’ income by about 10 percent and reduce financial burden on businesses.
The reduction of social insurance premiums will reduce the Social Insurance Fund’s revenue by 189.3 billion MNT in 2021 and increase the amount of financial support from the state budget to the Pension Insurance Fund, according to the bill initiators. Therefore, there will be a need to amend the 2021 Budget Law and the Law on Social Insurance Fund.
Legislator S.Odontuya stressed that reducing taxes and fees is not effective, and it is important to correct the system’s shortcomings.
Lawmaker S.Chinzorig noted that it is important to address the issue without making politicized decisions, with an estimate, professional assessment and conclusion, and to increase the social insurance fund’s resources and expand the insurer base through the stock market.
Expressing his support, parliamentarian D.Ganbat said that in the future, special attention should be paid to include herders in social insurance.
Bill initiators T.Enkhtuvshin said, “Companies pay 8.5 percent rate in social insurance premiums now. Therefore, the bill initiators believe that it should continue this way from July 1, 2021. If the law is implemented from July 1, 2021, 94 billion MNT will be needed, and if it is implemented from January 1, 2021, 140 billion MNT will be needed. The implementation period of the law can be discussed and decided at the discussion stage.”
“Social insurance premiums were fully exempted from April 1, 2020 to October 1, 2020. From October 2020 to the end of 2020, only 5 percent of pension contributions were paid. Until July 1, 2021, employers and insurers will be able to pay 8.5 percent in social insurance premiums in a reduced form. From January 1, 2021, only civil servants and local and state-owned organizations have paid 9.5 percent in social insurance premiums. This has greatly helped businesses to retain their jobs, and the number of companies, organizations and individuals paying social insurance premiums has increased. Currently, 38,000 employers and 572,000 insurers have been covered by the preferential and exemption measures,” said Minister of Labor and Social Welfare A.Ariunzaya.
