During its plenary session on November 3, Parliament reviewed the draft 2023 Budget Law and the draft amendment to the Law on Budget Framework Statement for 2023.

Parliamentarians asked questions and expressed their views on the bills at the session.

Legislator M.Oyunchimeg underscored that the Consumer Price Index is estimated to be 8 percent although it is already 13 to 14 percent right now. She noted that the 30 percent increase in the price of flour was putting too much pressure on the people. The best-selling consumer good was baked goods, she said.

Minister of Food, Agriculture and Light Industry Kh.Bolorchuluun explained, “The prices of flour and rice did not increase in the last four to five years and remained stable. However, the price suddenly increased by 30 percent. The price stabilization program was approved in May. This program can only keep inflation at 10 percent. However, the cost of grain and rice increased by 50 percent. If the government controls prices of grain and rice, without providing support, the industry will go bankrupt.”

Mentioning that since 2010, Parliament amended the Fiscal Stability Law 13 times, Deputy Speaker of Parliament S.Odontuya expressed, “Lawmakers say they will not amend the budget framework statement for three years, but change it every year. We need strict fiscal discipline. It is said that Argentina developed thanks to a ‘good’ fiscal discipline and the unchanged budget framework statement. Moreover, China develops its budget framework statement for periods of 30 years.”

Member of Parliament B.Battumur commented, “We can approve the state budget without deficit by raising the budget revenue. This will stabilize the exchange rate and reduce inflation. The informal economy is expected to earn 200 billion MNT next year. There is a lot of theft in the coal market. There is a huge opportunity to generate income from businesses that have unclear income.”

Minister of Finance B.Javkhlan responded that the government is working to reveal informal business activities and seize money from them. “We need to be careful in planning the budget revenue. Revenues were calculated for expenses, which led to large deficits. We mustn’t repeat this mistake. That’s why income should be realistic,” he stressed.

The government’s budget policy for 2023 is aimed at implementing the state austerity policy, promoting the New Revival Policy, reducing import-related pressure and stabilizing the macroeconomic situation through the optimal distribution of resources. 

The total revenue is estimated at 19.6 trillion MNT and the total expenditure at 20.3 trillion MNT in next year’s state budget. 

Under the draft budget, new investments will not be made in the coming year but unfinished projects will continue to get financing. The government plans to spend 11.9 trillion MNT on water and other expenses, 1.4 trillion MNT on child allowances, 2.5 trillion MNT on investments for procuring educational equipment, 420 billion MNT on measures to reduce traffic congestion in the capital and 68.5 billion MNT on the construction of a satellite city in Khushigt Valley.

According to the draft budget law, there will be a deficit of approximately 1.8 trillion MNT, which is equivalent to 3.3 percent of the GDP of Mongolia. The government has also estimated that economic growth will drop to 5 percent next year, with inflation moderating to 10 percent or less.