On Wednesday, Parliament discussed draft amendments to the 2022 Budget Law, the Budget Laws of the Social Insurance Fund and the Future Heritage Fund, the Law on Budget Framework Statement for 2022 and Budget Assumptions for 2023 to 2024, as well as their accompanying bills, which were submitted by the government.
During the parliamentary plenary session, Premier L.Oyun-Erdene informed that the government considered all possible measures to reduce the negative impact of the external climate on the Mongolian economy and society, implement cost-saving measures, prevent food shortages and price increases, protect citizens’ incomes, and resolve other social issues.
GOVERNMENT PLANS TO REMOVE 1,500 JOBS
A bill on state austerity has been submitted to Parliament for the first time. Each government agency has tried to regulate austerity through sectoral laws, regulations and rules, but has so far failed to make drastic changes in line with societal expectations, the prime minister highlighted.
It sets obligatory restrictions on the activities of all levels of budget organizations and state-owned and partially state-owned legal entities.
The bill, in particular, prohibits Parliament, government agencies, and state-owned enterprises from having a deputy chair, unless otherwise stated in the law, and the Ulaanbaatar mayor from having more than two deputies while province, district and soum governors can’t have more than one deputy governor.
It also bans the state use of large cars in urban areas. In accordance with the bill, government officials will drive full-size cars only during business trips to rural areas. In partnership with private companies specializing in e-technology, a smart control system will be used to reduce the current use of 9,800 state-owned vehicles by at least 60 percent and the government will no longer own cars, reported the prime minister.
In accordance with the draft law, directors of state-funded organizations will not make arbitrary decisions on staffing, basic salaries, additional pay, compensation or bonuses.
Premier L.Oyun-Erdene further explained that coverage of telephone bills, reception of foreign guests, exchange of gifts, organization of banquets, sponsorship of arts and sports events, financing of tuition fees, and donations will be banned for public organizations. Government officials will no longer travel in business class when going abroad. In addition, employees other than special civil servants will not wear uniforms, he said.
Under the budget amendment, a total of 33 measures were canceled, including the construction of six office buildings, three stadiums, seven cultural centers, three gyms and complexes, two swimming pools, one airag house, six local landscaping works and three public roads and squares, as well as the purchase of 18 office equipment and 12 office renovation work. The government estimates that this will reduce operating and management costs by more than 20 percent and eliminate more than 1,500 jobs.
The prime minister pointed out that the bill prohibits further financing of unurgent local projects such as monuments and memorials.
‘50% OF SOCIAL INSURANCE PREMIUMS WILL BE REIMBURSED TO CITIZENS EARNING LESS THAN 1 MILLION MNT’
Prime Miniter L.Oyun-Erdene mentioned that at a time when commodity prices are rising due to external factors, funds raised by the budget cuts will be spent on measures to protect citizens’ incomes. In this regard, lawmakers reviewed a bill on the cashback of 50 percent of social insurance premiums to some insured persons. The government decided to reimburse 50 percent of the monthly insurance premiums of private sector employees earning 1 million MNT or less.
Moreover, the draft law provides for the exemption of domestically produced vegetable oils from value-added taxes, the continuation of the monthly child allowance of 100,000 MNT, and the provision of 1 trillion MNT in soft loans from the state budget for national food production and food reserves.
L.Oyun-Erdene noted that in order to protect the organic business environment, the government would fight hard against groups that have influenced government organizations and the judiciary to misappropriate natural resources and public property.
During the session, bill initiators emphasized that this budget amendment is “the beginning of a policy to decentralize Ulaanbaatar” and “ensure a balance between urban and rural development”.
The government has proposed measures to provide 1 percent soft loans to businesses and individuals to increase employment in rural areas and finance 50 percent of mortgage interest rates from the state budget for people moving to rural areas and buying apartments for the first time.
Minister of Finance B.Javkhlan reported, “Within the framework of budget savings, budget amendments, budget assistance and other loans from the World Bank and the Asian Development Bank, the balance of payments is expected to improve by a total of 400 million USD. The government’s outstanding loans amount to 8.5 billion USD, of which 4.7 billion USD is planned to be repaid from 2020 to 2024. A total of 1.1 billion USD was planned to be repaid this year, and we were able to repay 1 billion USD in advance.”
Auditor General of Mongolia D.Zandanbat underscored that the Development Plan of Mongolia for 2022 was developed with six chapters, 23 objectives and 263 activities to address the challenges posed by the COVID-19 pandemic, including human development, economic policy, e-policy, green development policy, and capital city and regional development. The plan costs a total of 11 trillion MNT. Of these, about 870 billion MNT is planned to be budgeted from the state budget, 11.7 billion MNT from provincial budgets, 2.2 trillion MNT from foreign loans and grants, 1.2 trillion MNT from public-private partnerships, and 5.7 trillion MNT from other sources. Mongolia’s 2022 development plan needs to be updated and approved in line with the budget amendment, D.Zandanbat expressed.
As a result of the abovementioned measures, the equilibrated revenue of the general government budget is expected to be reduced by 245.3 billion MNT to 15.5 trillion MNT and the total expenditure by 245.3 billion MNT to 17.9 trillion MNT, resulting in a deficit of 2.4 trillion MNT.
