From the Founder-Editor

A Mongolian proverb says one should make sure one has a vessel before getting ready to milk a cow. This is what is happening now. The expected revenue from the mining sector is being distributed on paper and allotted to different new funds.

Indeed, this is what has kept Parliament most busy in the last few weeks. The State budget has just been approved but the difference from the exercise in previous years has been that the general budget was discussed along with those of the Human Development Fund, Mongolia’s Development Fund and the Social Welfare Fund. There has been a  change in the budget flow as money for all social welfare payments is now placed in the Human Development Fund.

This means there has been no time, and perhaps desire, to reform the entire budgetary process. This is despite a previous commitment that reforms would be made. It had been announced that in 2010, the Government will draft a law on a stability fund, which, too, would be made up of money coming from the mining sector. If the copper price overshoots the average estimated in the budget the excess revenue should go to this fund. Mongolia would then join several other resources-rich countries in establishing such a stability fund. 

A few important laws will be discussed by Parliament in the new year and  this issue of the MMJ contains the text of the Draft Law on Budgetary Stability, Draft Amendment to the Law on the Central Bank and the Draft Law on Banking. It is now clear that the current budgetary management must be improved and the banking system completely revamped before the Mongolian economy can pick up. Unless the overall economy is healthy, the proceeds from mining will not lead to prosperity, but to a new ailment, something akin to the “Dutch disease”.

I started with the proverb that says a vessel for the milk has to be in hand before approaching the cow and now end with another wise Mongolian saying. This says that whatever you desire strongly will come to pass. It is worth looking back at this point of time when the calendar is about to turn to a new year and analyse our performance in 2009. Mongolia signed its first agreement on use of a strategic deposit and now looks at the future with assurance and self-confidence. This year also marked the 70th  anniversary of establishment of the geological sector in Mongolia. The mining sector was full of news. Altogether it has been a tough year with the harsh wind spreading the crisis, but we are not deterred and feel certain that tomorrow’s sun will be bright and dispel the gloom. The next year will be busy and eventful with Mongolia enthusiastically taking up infrastructure developments.

The MMJ has been your companion during 2009. We have sought to share your interests, answer your questions and offer you help in adopting an informed point of view. We hope the  new year will see us receiving reports of your success. On this cold winter day we pin our hopes on a warm spring and  wish you and your family all happiness in the new year. The lights on the Christmas tree sparkle with joy. Happy New Year!