Macro and Debt Stragey

Transcription

1 MONGOLIA:GOVERNMENT OF MONGOLIA EXTERNAL PARTNERS TECHNICAL MEETING Octber 9-10, 2006 Macr and Debt Stragey By Batbayar, B. Directr, Debt Management Divisin Ministry f Finance 1

2 Cntents Macr envirnment Fiscal Plicy Debt Strategy Medium term activities 2

3 3 Macr envirnment real GDP grwth Preserve ecnmics sustainability Increase ecnmics grwth GDP grwth in 2006 is 7.5% by expected executin and 8.8% by the average f

4 4 Macr envirnment cntributin t the real GDP grwth % % 78% % % -4% ** 2007** 2008** 2009** The amendment t the Tax Laws serve the basis fr the private sectr grwth In the mid run the manufacturing sectr grwth is related t the increase f the gld and cpper price as well as the assumptin t start explratin f Oyu tlgi mines frm FY2008 Agriculture Manufacturing Service

5 5 Macr envirnment Mney supply (M2) * 2009* *-prjectin Mney supply will increase 28-29% cmpared t the previus year In terms f structure f mney supply, 80% will be savings

6 6 Macr envirnment 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 11.0% 2004 Inflatin 9.5% 6.3% 5.0% 5.0% 5.0% Inflatin is estimated at 5% n average. Althugh inflatin is a subject t be influenced by external factrs, it is deemed t be kept within ne digit number

7 7 Macr envirnment Tugrug vs US dllar exchange rate /at the end f each term/ US dllar exchange rate against Tugrug has drpped in 2006 Stability has been bserved fr the rest f freign currency s exchange rate In the medium term tugrug rate will drp by percent

8 8 Macr envirnment Freign trade balance -1.60% 2009** -1.30% 2008** -0.20% 2007** 1.40% 2006* -6.40% % сая ам.доллар Экспорт Импорт Гадаад худалдааны алдагдал Тэнцлийн ДНБ-д эзлэх хувь Psitive balance f freign trade in 2006 is due t high price f ur main exprt prduct in the wrld market Medium term freign trade deficit cmpared t GDP is expected t be

9 Macr envirnment External factrs are expected t be cnstant Sustainable macr ecnmics and ecnmic grwth are anticipated 9

10 10 Fiscal Plicy тэрбум Budget balance ** 2008** 2009** Amendment in Tax Law has been made in rder t maintain budget revenue stable, braden tax base t enhance efficiency f tax cllectin. Due t this reasn budget revenue in 2007 expected t decrease. Imprve expenditure management, cmply with the principle where budget expenditure grwth des nt exceed GDP grwth in the given FY. Increase in the current expenditure cmpared t previus years is caused by full-sized measures taken in scial welfare sectr Balance Incme Expenditure

11 11 Fiscal Plicy триллион төгрөг триллион төгрөг Budget Incme Tax incme Nn tax incme Capital incme Freign lan and aid Current Incme Nn tax incme Other incme Freign activity incme Dmestic gds and service incme Prperty tax Scial insurance Incme tax Budget incme increased by 20% n average fr the last cnsecutive three years.

12 12 Fiscal Plicy триллион төгрөг триллион төгрөг Budget expenditure Current expenditure Capital expenditure Net lan, repayable Current Expenditure Current expenditure is tend t raising due t the Scial sectr plicies Gds and services Debt service Subsidy and current transfer

13 13 Fiscal Plicy in bln MNT Public Investment Due t the increase f the budget revenue the public investment is tend t increase

14 Fiscal Plicy Debt Outstanding and Disbursed (NPV) / GDP 80% 70% 60% 50% 40% 30% 20% 10% 0% threshld level base histric mst extreme

15 Fiscal Plicy Debt Service/ Exprt 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% threshld level base histric mst extreme 15

16 T avid the abve risks, fllwing measures are being taken: Within ecnmic plicy framewrk: Natinal develpment strategy Millennium challenge develpment Within fiscal plicy framewrk: Budget expenditure refrm Sustainability fund medium term Debt management strategy: Dmestic debt strategy External debt strategy Cntingency strategy 16

17 Debt Strategy (1) Debt management strategy f the Gvernment f Mnglia: Define bjectives Define scpe f the debt Aftermath f debt management strategy implementatin: Decrease debt service csts Manage debt risks Stimulate and develp Gvernment bnd market activities In the lnger run it is presumed t facilitate t advance the credit rating 17

18 Debt Strategy (2) The Strategy is als t: Supprt Sci-ecnmic guidelines and Meduim Term Budget Framewrk f T cmpliment fiscal and mnetary plicies 18

19 19 Debt Strategy (3) Debt management strategy bjectives: T prvide medium and lng term gvernment prgrams and activities with cnsistent financing at the lwest cst, Frecast pssible risks and maintain it at reasnable level Als, in the medium term Supprt Scial and ecnmic guideline, and Supprt bjectives f Medium Term Budget Framewrk Decrease external debt Increase the share f the dmestic debt Risk management: Cntinue btaining cncessinal lans Minimize the exchange rate expsure f the prtfli Set gvernment bnd market at cnstant peratinal stance

20 Debt Strategy (4) Medium term dmestic debt strategy: Setup a gvernment bnd mechanism t prvide its sustainable and peratinal stance Issue bnds as per schedule annunced in advance Diversify gvernment bnds Implementatin f dmestic debt strategy might face fllwing risks: Rll-ver risk Relatively high depsit rates f cmmercial banks creates risk t cmpete with gvernment bnd interest 20

21 Debt Strategy (5) Medium term external debt strategy shall have the fllwing gals t pursue: Cnsistency between external debt structure t NIR Minimize the exchange rate risk f the prtfli Define the terms and cnditins f new brrwing Evenly schedule debt service withut burdening budget, Main cnstraints t implement external debt strategy: Exchange rate risk Operatinal risk 21

22 Debt Strategy (6) Cntingent Liability Gvernment guaranteed lans /fully r partially/ Pre 1990 debt, expressed in XTR the Gvernment is in the prcess f debt settling negtiatins with Pland, Bulgaria, Rmania Pst 1990 debt in dispute the Gvernment is in the prcess f debt settling negtiatins with Finland debt 22

23 23 On-lending lans Other 18% Cmmunicati n 7% Mining 12% Manufacturin g, cnstructin 7% Energy 23% by Sectrs, % Husing, Banking urban service finance 5% 2% Agricultu 1% Rad, transprt 25% Pr repayment reasns: Lack f cnslidated database n nlending lans up t 2001; The status f the cmpanies received n-lending has been changed Privatizatin did nt include the nlending bligatin f the cmpany in respective balance sheet by SPC Exchange rate differences High cst f freign Cnsultant services High cst f the equipments and mashinery

24 On-lending lans Millins USD ДЗЗ-ээр орж ирэх орлого Найдвартай орж ирэх магадлалтай

25 25 T d list in the mid run Within gvernance framewrk: Imprve legal envirnment f debt management. Mnitr allcatin f functins f debt management implementatin Make gvernment debt management reprt transparent and public Within debt strategy and risk management framewrk: T perfect debt management bjectives and its scpe Develp an Actin plan t develp gvernment bnd market Develp a plicy fr n-lending Intrduce a methdlgy t analyze cst-risk evaluatin Develp methdlgy t cmpare lan cnditins with cst Capacity building: Upgrade current DMFAS versin Develp a training prgram f debt management staff fr capacity building Develp a Cde f Ethics and enfrce its implementatin Macr ecnmic plicy and cash management crdinatin: Regularly analyze debt sustainability Crdinate with BOM n issuing T-Bills

26 THANK YOU 26