SPEECH BY PRESIDENT KHALTMAAGIIN BATTULGA AT THE OPENING OF AUTUMN SESSION OF THE STATE GREAT KHURAL
Esteemed Members of Parliament,
Speaker of Parliament,
Prime Minister,
The Autumn session of the State Great Khural, formed as results of the 2020 elections, is opening.
The year 2020, when the world faced a substantial challenge it has never before come across, is coming to an end. The responsibility of adopting the next year’s budget awaits You.
The spread of coronavirus has left no country out. For the past nine months, Mongolia has been pushing all its limits to contain the virus from spreading internally. I would like thank the thousands of workers and service people in healthcare, emergency management, law enforcement and border protection. The main damage done by the pandemic to the country’s economy is the loss of revenue from exports. The volume and scale of the expected second wave of the pandemic is still unclear. It is clear, however, that we must not lose caution, while also make optimal policies and decisions in order to revive the economy and regain the export revenue.
My part in the opening of the new Parliament’s autumn session aims specifically to remind You that special attention should be paid to overcoming economic constraints and approve deficit-free state budget.
I have toured through most of the provinces before the autumn session and held meetings with more than 7,000 citizens, and listened to their opinions. Situations have gotten critical in localities. Dry summer and drought are going to cause harsh wintering condition.
Animal-origin products, which are the main source of income for herders, are devalued to the point where tons of wealth is dumped as garbage. As some of You might observe, the socio-economic condition in western region is worse than that of eastern region, and that there are noticeable differences. This big a gap within one country and unified nation is a call for integrated state policy. The rural areas are in serious need for equal treatment and balanced growth.
It is a proven fact that fundamentals of growth are created by 5-10 years of consistent and comprehensive development of industrial complexes, specified in the right directions and placed in the right locations, with necessary infrastructure and desirable services and amenities.
This is a practice implemented even in Mongolia. The first example can be Darkhan, where Sharyn Gol Industrial Complex was planned comprehensively in 1961 to be commissioned along with Darkhan railway station and Sharyn Gol coal mine. The plan also included operation of Darkhan iron ore processing plant. Darkhan Thermal Power Plant, Cement and Lime Plant, Housing complex, medical center, school and mall. The industrial complex comprised of Darkhan TPP, Darkhan Cement and Lime Plant, Steel Plant, Lime Processing Plant, Sheepskin Factory, meat factory, geology and exploration expedition, fruit and vegetable farm, food factory and related infrastructure.
The second major industrial complex is the City of Erdenet. The mineral resources were discovered in fall of 1964 by a team geologists. Between 1973 and 1978, open pit mine, concentrate plant, thermal power plant, cement and concrete plant, building metal structure fabrication unit, a 1.0 million cubemeter pond, 174 km long railroad, 164 km long roadway, 420 km long overhead transmission lines, 64 km water pipelines, a carpet factory, food factory and related developments including schools, kindergartens, trade and service centers, and four apartment complexes with capacity of 15,000 residents.
The purpose of mentioning all of the above is that, in the past several years, we could not commission one small-scale industrial complex, let alone a full-sized one. In turn, the country has gotten prone to relying on imports, international credits and assistances.
Budgetary discipline has disappeared, and the local administrations have been misbehaving beyond tolerance. They continue allocating the budget to unnecessary and improper matters, as though they have no idea what’s important.
I am highlighting Orkhon aimag for this case. The gate of Erdenet’s park alone cost 140 million tugrugs. The residents are truly upset about this issue.
Budget is not being taken seriously enough. Taxpayers’ money cannot be wasted recklessly. Personally, I think this is an aftermath of bandwagoning in the absence of opposition, in decisionmaking. Due to insufficient number of workplaces in soums, the urban migration have been surging, as the lands are left unmanned. The remote regions are in dire need for demographic policy. Constant jobs can easily be created with the unfathomable opportunities offered by the processing industry of animal-origin products coming from the five types of livestock. In this regard, activating the commissioning of Darkhan Leather and Wool Complex, accelerating the construction, and ensuring possibilities to sell and purchase animal-origin raw materials in rural areas should be prioritized in the budget planning.
The ordinary citizens want jobs, not benefits. To tell You an example, Ms. Baigalmaa, a resident of Bayankhongor province said, “Normally, any country’s citizens are provided with workplaces, pay taxes and the country develops. It is a global practice. However, in the recent days, growth is viewed by the volume of donations, assistances, welfare, road and housing constructions. I am seriously concerned. Why is it that the Government does not provide jobs and then build things that are not useful to the citizens? If the citizens are employed, then those developments can be easily built, with or without Government’s guidance”. This should be heard by the local administrators, who should be ashamed. How is it possible to keep leaders who are less thoughtful than their residents?
To be honest, distinguished members of Parliament, You have the power to solve all these problems. Just over a month ago, a deficit of 4.8 trillion tugrugs were reflected in the state budget. Your indifference towards the state budget reveals itself in local administrations as there is merely a competition who can best waste the budget funds allocated for the region. Budget deficit is debt! It is not going anywhere. It is paid only by the taxpayers. The deficit you created is paid from their pockets. The other option is to take out foreign credits.
Now You are to read and approve the budget for 2021. Is there going to be more deficit, if I may ask? Each year over the past four years, when MPP ruled, the state budget has always been approved with deficit in values more than 2.0 trillion tugrugs. Is any of You, esteemed MPs, concerned for such accumulation of debt?
How many more years is Mongolia going to get by on foreign credits and aid? What is the reason for the Parliament to not bat an eye when it comes to acquiring export revenues?
Behind all obstacles, and heap of pressing issues, there is the insufficient amount of revenue. We need revenues, more revenues than ever acquired. We need projects that will not only bring stable growth, but to kick-start the growth engine.
Let’s put an order to the issues we prioritize! The most important issue is the export revenues. Our country has what it takes, the resources and opportunities. There are almost 80 million heads of livestock grazing. It is out fault that the benefits are not reaped, but thrown away.
I once again ask You to focus on increasing people’s incomes first, before you deal with all the polarizations and sensations. Harsh winter awaits. International financial organizations have warned us of shrink in the economy. There are better things to discuss than the patterns on Deel, packaging of alcohol, and the Cambridge curriculum.
Instead of celebrating the “success” of debt financing to settle debts, please work on opening doors from income.
It is the high time for our nation to rethink the approaches, solutions and choices we have been making to this point.
In 2017, a veto had been put due to the Government’s non-compliance with the Budget law, but the majority denied the veto.
An initiative had been presented to the Parliament and the Cabinet in 2018. If implemented, the initiative could save a total of 1.4 trillion tugrugs (about USD 500 million) from the state budget.
If the budgeted expenditure had been trimmed down to not run budget deficit, the 100 billion tugrugs as indicated in the Article 11 of the Budget Law would have been saved, and 408 billion tugrugs as indicated in the Article 12 of the Budget Law would have been kept while 2.5 trillion tugrugs as in the Article 13 of the Budget Law would not have been accumulated as Government’s debt. I am deeply regretful.
The general budget for 2019 was approved with projected deficit of 1.9 trillion tugrugs. Many members of the Parliament talk about its non-compliance with the Law on Budget Stability and certain articles in the Budget law. Five to eight billion tugrugs were allocated from the Government budget to constituencies represented by Parliament members, seemingly corruption, and a large number of construction projects without any designs were proposed in the budget. The budget also contained significant errors and violations, such as lack of planning for reserve currency and schedule for repayment, etc.
The general budget for 2020 have also failed to reflect public interests wholly, having too much spending and unrealistic incomes. The veto imposed on the budget had been rejected. Since March this year, the Parliament and the Government have been repeatedly notified about the urgent need to make amendments to the budget, and suggestions and demand have been forwarded to cut inessential expenses from the budget of 2020. Even so, no changes have been made to the budget.
Economists, scholars and researchers, the civil society and political parties had all been urging to revise the budget. However, budget amendments were approved with total deficit of 4.7 trillion tugrugs only last month. Suffering from the consequences of budget irresponsibility, Mongolia has produced 1.7 trillion tugrugs of debts only within a year, which already exceed the Chingis sovereign bond! There is other way than re-financing this loss with the help of another debt. But the debt ceiling has been reached. Should we now immediately stop pursuing the policy to generate more budget losses leading the country to go bankrupt, I must firmly remind you to that the population is on the verge of turning into a victim of your foolishness. I am calling your attention on that you must solve following problems in the country’s general budget for the next year. Take these into consideration during the budgetary debates, if you please.
These are:
- Setting strict criteria for “essential” operating and capital budget expenditures, abolishing prodigal budget spending, reducing budget expenditure drastically to have no deficits;
- On the grounds of budgetary savings and benefits, designating sufficient funding for building industrial complexes to manufacture non-mining export products of livestock animal origin based on the agricultural industry;
- Earmarking enough funding necessary for intensifying and completing some railway developments with high significance for export growth and economic expansion;
- Having a complex approach to planning of policy and measures in order to increase budget revenues and expand the economy.
I will be presenting my own suggestions and conclusion on the package Law on Courts, which is included in the agenda of the Parliament’s autumn regular session for discussion.
Last but not least, I would like to sum up the single message forwarded by 500 people I have met during my recent working trip to 13 aimags, and convey to you here. The people have communicated their hope that there should not be a single step backward in the fight for social justice.
I thank you for attention.”
