Business:
Investment draft unlikely to be debated in present session of Parliament; Rio keen to ‘ramp up’ Oyu Tolgoi, not considering delay; PM’s Economic Advisor indicates rethink on gold windfall tax; TDB CEO calls for comprehensive program to help gold miners; Boroo Gold refutes allegations; Khan Resources ready for talks, Government not; Copper prices drop on renewed recession concerns; Mongolia invites Canadian investment in mining; Russian Railways wants joint venture with Moscow on Tavan Tolgoi proposal; EBRD to take stake in Energy Resources; Polo completes resource estimates for Union mine; MCA holds workshop to brief local suppliers; Dutch financial support for XacBank housing and energy schemes; Global financial assets lost USD50 trillion last year, ADB says; Special US visas for business visitors; Veerhuis to discuss use of EPS technology in Mongolia; Small explorers backed by miners best bet, says Faber; Initial estimate for SouthGobi’s Indonesian project “very encouraging”.
Economy:
IMF announces staff-level agreement on USD224 million loan; IMF justifies “exceptional decision” by citing Government program; Central Bank raises interest rate from 9.5 to 14 percent; Committee under Bayar to oversee Action Plan; Poor countries to hurt most from shrinking global economy, World Bank says; Budget shows deficit as tax earnings fall; Drop in both industrial output, productivity; MNT keeps falling against major currencies; Foreign currency deposits rise; Rise in number of jobless, also of new jobs; External trade turnover and surplus fall; Average household income rises 22.9% yoy; Chinese traders buy up cashmere cheap; People waiting for prices to decrease, companies for loans; Mongolia resumes import of dairy cows from China.
Politics:
Bayar to visit Russia next week; DP threatens boycott if child allowance is cut; Former Filipino Ombudsman and Hong Kong expert helping Mongolia fight corruption; Special review of labor safety measures after rise in accidents; More seeds needed for spring plantation; Marginal rise in nationwide crime rate; One vote majority for move to bail out road companies; Suggestion to provide heating for one month less; General Tax Authority to register NGOs.
LEAD STORIES:
INVESTMENT DRAFT UNLIKELY TO BE DEBATED IN PRESENT SESSION OF PARLIAMENT
Hopes that the draft investment agreement on Oyu Tolgoi will be approved by Parliament in its present special session received a setback on Wednesday when both big parties and partners in the coalition Government announced that their MPs had reservations about certain provisions in the draft and favored more time for deliberation. Both groups of MPs have separately and independently discussed the draft three times.
Mr. D.Lundeejantsan and Mr. G.Zandanshatar, leader and deputy leader respectively of the MPRP group in Parliament, have said that members of the group feel discussion of the draft should be postponed to the regular spring session of the legislature. The present special session was summoned to discuss only economic issues and the agreement, but the MPs feel they want more information on several provisions in the draft before they are ready to decide on it. They realize its approval is urgent for the country, but they also think the matter is too important to be given less than the most careful consideration.
This is the opinion of the DP group, too. It has not said discussion should be postponed but, after discussing the draft for the third time, members of the group have sought clarifications before finally deciding on whether to support it or not. The group feels the matter must be reviewed with the utmost care as the Oyu Tolgoi operations will largely determine the development of Mongolia in the coming decades.
The MPRP is expecting the money from Oyu Tolgoi to pay for the party’s campaign promise to give MNT1.5 million to every Mongolian citizen as his share in the country’s natural resources.
The MPRP group is believed to have raised about a dozen objections. It thinks the draft is not clear in its exposition of the feasibility study, estimate of reserves and the likely benefits to Mongolia. It also believes that revenue from the operations must compensate for the loss resulting from the withdrawal of the windfall tax and VAT. The MPs also object to the provision “… investors will schedule the project implementation procedure and in this they will keep the Minister for Mineral Resource and Energy informed…” as limiting the right of the Mongolian side.
Briefing newsmen after the DP group meeting, MP D.Odkhuu said members wanted to have more information on how the draft can be reconciled with five references in Clause 30.1.1 of the Mineral Law. They also sought more detailed information on several technical and economic aspects before the draft is discussed in Parliament. A clearer work plan for first five years of operation also needs be prepared.
MPRP members also want a clearer and unambiguous translation of the agreement so that the investors do not get any advantage in the event of any later disagreement. They are studying and reviewing the Mongolian version of the text of the agreement, but only the English version will be valid in any dispute.
Oyu Tolgoi is operated by Ivanhoe Mines (TSX:IVN) with strategic partner Rio Tinto (NYSE:RTP)
Source: business-mongolia.com, www.news.mn
IMF ANNOUNCES STAFF-LEVEL AGREEMENT ON USD224 MILLION LOAN
The International Monetary Fund has announced an agreement in principle on a USD224 million loan package to help Mongolia come out of the global financial crisis. "An IMF staff mission and the Mongolian authorities today reached the agreement, subject to approval by the IMF Executive board, of an economic program supported by Fund resources (of USD224 million) under an 18-month stand-by arrangement," IMF Managing Director Dominique Strauss-Kahn said in a statement issued in Washington late on Friday.
Mr. Strauss-Kahn said the executive board was expected to discuss the program shortly after international donors met in Ulaanbaatar. Finance Minister S.Bayartsogt has since said this meeting will be on March 14.
"Mongolia has been hard hit by the global financial crisis through a sudden and precipitous drop in the price of the country's main export commodities, notably copper. This has had a negative impact on both the fiscal and external accounts;" Mr. Strauss-Kahn said. Mongolia's mineral revenue has fallen, export proceeds are expected to decline "markedly" this year and foreign direct investment flows have been cut.
"With more than one-third of the population living below the poverty line, it is imperative that steps are urgently taken to address the economic downturn and protect Mongolia's most vulnerable citizens." Mr. Strauss-Kahn said the Mongolian Government has put together a macroeconomic program aimed at restoring economic stability.
In January, Mongolia's President said his country was in talks with the IMF over a loan package of USD60 million to USD70 million to attract investment in its mining sector. The country is also negotiating with China, Russia, Japan and several Gulf countries on USD300 million to USD3 billion in loans that would be linked to large mining projects.
Source: en.News.mn, Reuters.com
IMF JUSTIFIES “EXCEPTIONAL” DECISION BY CITING GOVERNMENT PROGRAM
The formal statement issued in the name of Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund announcing the USD224 million loan to Mongolia says the decision was taken after the Government, in collaboration with an IMF mission, had put together a strong and ambitious macroeconomic program with two key objectives: (i) to restore economic stability through fiscal and monetary policies; and (ii) to protect the poor and preserve social stability through improving the social safety net.
The statement says the program is built on four main planks:
1. The centerpiece is a budget adjustment for this year and next that will put in order Mongolia’s fiscal finances and restore the deficit to a sustainable range. The Government also intends to strengthen the institutional framework for fiscal policy to prevent the repeat of the boom and bust cycles of recent years and ensure the long-term sustainability of its policies.
2. This fiscal program will be supported by a proactive monetary policy that will seek to safeguard international reserves.
3. Improving the social safety net is a key element of the program to ensure that the poorest segments of the society are protected adequately. To this end the Government will begin a comprehensive overhaul of its social transfer programs, improving targeting and raising the level of social support to the very poor.
4. The Government will further strengthen the banking system by improving the current framework for deposit guarantees and enhancing bank supervision.
The proposed “exceptional access to IMF resources (of 300 percent of quota)” is justified by the Mongolian "authorities’ strong commitment to macroeconomic stability and a return to robust and equitable growth, and merits the backing of the broader international community”, Mr. Strauss-Kahn said and appealed to donors “to support Mongolia in its impressive efforts”. Source: www.imf.org
CENTRAL BANK RAISES INTEREST RATE FROM 9.5 TO 14 PERCENT
The Central Bank has raised the interest rate to 14 percent from 9.5 percent. Announcing this at a press conference on Tuesday, the Bank President, Mr. L.Purevdorj, said the move was aimed at stabilizing the value of the MNT against foreign currencies. This follows the Bank’s earlier decision to raise the risk adjusted capital requirement from 10% to 12%, with the same aim. Asked why the rate was being raised when elsewhere in the world Central Banks were lowering, Mr. Purevdorj explained that the Mongolian economic structure is different and has to follow its own way.
Defending the Central Bank’s policy of persisting with a tight credit policy, Mr. Purevdorj said pouring more money into the market would lead to a further fall of the MNT. He said the monetary policy would continue to be rigid and cash supply would not be increased this year. “The USD is gaining because there is a shortage of dollars. Similarly, MNT value will also go up only when there is a shortage,” he said.
About the foreign currency reserve situation, Mr. Purevdorj said the deal with the IMF would lead to some USD600 million being available from foreign sources. USD200 million of this will be added to the reserve before the end of 2009. At present, Mongolia has about USD541.7 million which is enough to meet import needs for three months.
Source: en.News.mn
Comments
Post new comment