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“Capital Market-Key to Development” conference which invited representatives from Mongolian financial market, government and half-government industrial organizations took place yesterday at the Foreign Ministry. It was the first conference which called representatives from bond, insurance organizations.
The meeting was attended by Vice Minister for Finance T.Ochirkhuu, Mongol bank president L.Purevdorj, director of Financial Regulation Bureau D.Bayarsaikhan and director of Government Property Bureau D.Sugar.

Prime Minister S.Batbold said the bond in the market is equal to 2.3 percent of the GDP was too little. Financial market is based on capital market and cash market. But the capital market is almost left over in Mongolian economy as 95-96 percent of total investments are cash markets. These markets must be 50:50. S.Batbold urged to raise the proportion of capital market by 2-3 times next year.
In order to make it possible, better legal condition must be created as well as training professionals in the sector.
Director of Mongolian Stock Exchange R.Sodkhuu said most marketable stocks must be available to the investors. Furthermore, high speed network and most developed infrastructure should be compounded as well as raising the knowledge of the people.
Director of Eurasia Capital Company Marat Yutegenov said only about 100 of the 360 companies registered in Mongolian stock exchange had audits. But only two of them were audited by famous international companies while the information regarding the rest is very poor.
“If we really want to develop the sector, company knowledge about finances must be improved” he added.
Participants also said the state owned factories have political burdens. There are about 90 state owned organizations in infrastructural field. This year 72.7 percent of them worked with losses. The representatives said it was because the Government does limit the prices of their products. Director of Shivee Ovoo Mine Kh.Balsandorj told the PM that the operation of these companies should be independent from political affairs.

A year ago, Golomt bank became a settlement executor bank of International Airline Association. Golomt bank announced about implementation of this project, had been successfully on last Wednesday. Golomt bank selected 89th bank to execute settlement. Golomt bank is a bridge between companies, which do functions about airline companies and has big importance to settlement and system of reporting among them.
International Airline Association is 64 year-old, has joined over 230 world airline companies to 100 branches. Ministry of Transport and Urbanization, Ministry of Environment, MIAT and other airline companies discusses about success and future attitude of this project.

DP group in the Parliament met yesterday to discuss about two major issues. The most discussed issue was about permitting MNT 100 billion worth Government bond after abolishing Zoos Bank and establishing the Government Bank. Central Bank’s President L.Purevdorj gave information on the issue. But the MPs agreed that more study and detailed calculation should be made. The group members also suggested revising the Government’s action to guarantee the cash inflows in commercial banks. The issue will be discussed and finalized by the Parliament today.
Head of the DP group Ch.Saikhanbileg said the MPs agreed that banking sector must be stabilized, minimize the risks and rightfully settle the weight on the budget before selling the Government bonds in the market.
“We need a lot of calculations. Mongol bank’s president was asked to provide additional information and documents. The issue will be discussed by the Standing Committee on Economy on Wednesday after the Parliament reaches agreement”

Parliament made the final discussion of State Budget-2010, budget of Human Development Fund and Social Insurance Fund. The State budget was approved by 95 percent of the MPs who attended the meeting. The budget law aims to hold the budget loss within five percent of the GDP, not decrease investments as well as not raising taxes.
Budget income for 2010 was estimated to be MNT 2.426.8 billion /33.8 percent of the GDP/, budget expense MNT 2.785.4 billion /38.8 percent of the GDP/. Budget loss will be MNT 358.6 billion exactly 5 percent of the GDP. MNT 229.1 billion will be spent for 69 programs with pay-back terms.
Copper price in global market was estimated to be USD 5800 per ton. Total of MNT 80.2 billion will be added to the budget income: MNT 6.9 billion from company income tax, MNT 68 billion from price increase tax, MNT 5.3 billion from mine usage payments.
Minister for Education, Culture and Science will have the most budget as the Parliament budgeted MNT 486.331.3 to the Ministry. MNT 300 million was budgeted for economizing the foreign relations and additional MNT 9.5 billion to implement “Mongolian Livestock” program.
Financial assistance will be given to Arkhangai, Bayan-Ulgii, Bayankhongor, Gobi-Altai, Dundgobi, Zavkhan, Uvurkhangai, Uvs, Khovd and Khuvsgul provinces. The 10 provinces will take MNT 14.292.32 million. Budget income from provincial budgets for the 2010 will be MNT 131.678.3 million. UB will have to centralize the most which is MNT 56.825.8 million to the budget while Gobisumber will give MNT 48.1 billion.
Later on, the Parliament approved the budget of Social Insurance Fund for 2010. MNT 346.846.2 million will be centralized in the fund, while the fund will spent MNT 490.935.3 million. MNT 342.889.7 million will be given to pension fund and MNT 27.504.1 million to allowances and MNT 80.093.8 million for health insurances. The draft law was got 93 percent of approval rate.
Human Development Fund law was also approved by 86.2 percent of the MPs. Income for the fund will be MNT 346.663.3 million. The Human Development Fund will spend MNT 10.906.1 million for health insurance payments and MNT 324 billion in cash. Risk fund of the Human Development Fund will be MNT 11.757.2 million for the next year.
After approving the three laws, the Parliament was presented a draft protocol “Some actions related to the budget” made by the Standing Committee on Budget.
MPs asked questions and gave their suggestions afterwards.
Related to the MNT 1 billion allowance for the Parliament members, MP Kh.Temuujin proposed to create an environment to monitor the MPs to stop them from advertizing themselves by the budget money.
Finance Minister S.Bayartsogt said there will be no MP money next year, but the budget income will be distributed equally to develop the countryside. MPs, budget governor and policy ministries will be in charge of planning the investments for the regions.
“People think MNT 500 million is given to the MPs in cash. It is wrong. We need to explain the citizens about the budget” said the minister. The Standing Committee’s draft protocol failed to get majority votes and was sent back to the committee for another discussion.
Parliament Speaker D.Demberel thanked the MPs and working groups for working hard to make the budgets.
“Investment amount was raised to more than MNT 400 billion. We have planned to follow a unified policy for welfare programs. Government now has the duty to make the preparations before January 1st” said D.Demberel.

Vice Minister for Finance T.Ochirkhuu and Mongolbank President L.Purevdorj officially announced that Zoos Bank was abolished and State Bank was established. The State Bank is based on actives of Zoos Bank and began operation. This means more than 40 branches of Zoos will serve the people by the name of State Bank.
L.Purevdorj called the citizens to have faith and reconsider to take back their deposits in the new bank because Finance Ministry and Mongolbank are behind its operations.
Mongolbank is now working to ensure stable operations and find the bad loans of MNT 60 billion. Zoos Bank’s loss reached MNT 87.9 billion in total. Foreign experts will take over the operations of the Government Bank.
Ben Torrenbol promised to operate the bank with new structure and professional team. He also said Government’s decision to establish the State Bank was right. The employees of the Zoos Bank can stay in their positions by making new contracts.
Mongolbank stated that State Bank will not have special status or rights because it is owned by the Finance Ministry.
The Central Bank is also planning to abolish Anod Bank this week and transfer the actives to the State Bank. The director of the bank is yet to be clear. Mongolbank is blamed for taking wrong policies for the troubled commercial bank by injecting MNT 150 billion but only earning MNT 40 million. Announcing a bankruptcy for commercial banks is made by court organization. Thus the Central Bank decided to abolish the banks.
Director of Mongol Gazar Company Ts.Myanganbayar is said to be behind the financial problems of the two commercial banks by taking loan of MNT 60 billion in the name of his companies. Sources suggest that he is being investigated. According to facts Ts.Myanganbayar spent most of the money on casinos.
The officials are now looking for ways to cover the damage caused by Ts.Myanganbayar. They are considering to take Mongol Gazar Company and imprisoning Ts.Myanganbayar or to raise money from his Olon-Ovoot mine which was mortgaged in the two banks. Sources suggest that a team led by Central Bank president L.Purevdorj headed to Umnugobi province to study the Olon-Ovoot deposit.
Even though the Mongolbank is saying the problems in the banking sector is being solved, huge amount of bad loans are still there.
National Statistics Bureau said bad loans in the banking sector reached MNT 406.1 billion which accounts for 15.5 percent of total loan payments in October, up by 2.1 percent compared to the previous month and by 4.9 times from same period of last year.