Only Economic Diversification Can Assure Survival, Says Former PM

By , 13 March, 2010, 2 Comments

Former Prime Minister D. Byambasuren does not see any “quick exit from the present economic crisis, even if some superficial indications may look promising”.

The distribution of cash has led to an overall increase in prices of items in daily use. Banks are still troubled with outstanding loans and the long-term impact of the dzud will be clear only with time. Livestock is the economy’s key sector and difficulties there will be felt in many areas of life: herders’ livelihood, the consumer market, and health of the banking system. Herders, he felt, are not receiving adequate support, but abandoning them will have disastrous consequences.

Canceling the export tax on raw cashmere or providing compensation based on the number of goats does not have any sustainable effect. Instead, Mr. Byambasuren urged easier credit facilities and fairer marketing opportunities for herders.

He regretted that there is no progress in setting up a copper processing industry, even 40 years after production began in Erdenet, and the landmark Oyu Tolgoi investment agreement was signed.

Profligacy in public expenditure has led to a severe imbalance in foreign trade figures. “On top of this domestically driven crisis came the global downturn and the Government had no clue to how to get out of the mess,” he said.

Raw commodity prices will always move in cycles and “Mongolia’s survival in a tough world” can be ensured “only by a diversification of the economy and strengthening the economic structure”, he said.

Source: Unuudur newspaper; translated and delivered via the BCM Newswire by Mongolia Business Council

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