Mr. D.Zorigt, who heads the working group of the DP on the Human Development Fund (HDF), issues related to which are now being discussed in Parliament, has said the Fund is planned as an institution to work for decades and has several objectives. The first of these is to realize the two parties’ election promise to the people but the idea is to go beyond that. Mongolia stands to earn a lot in the coming years from mining and the Fund is meant to save the money, use it productively to build wealth for the future generation instead of just spending it on welfare programs.
The draft is also meant to protect Mongolia from what is known as the ‘Dutch disease’, to describe an economic condition that, in its broadest sense, refers to negative consequences arising from large increases to a country's income. The Government share of profits from strategic mines will be put into this Fund which will have a special status under the law. All citizens of Mongolia, present and future, living here or abroad, will have an equal share in the Fund during their lifetime, but nobody will be allowed to sell, mortgage, or transfer the share. On death, every citizen’s share will revert to the corpus of the Fund.
The entire USD250 million from the advance payment for Oyu Tolgoi will be placed in the HDF. The fund will also receive the royalty payments from mines, and the dividends to the Government from its share in them. Mr. Zorigt said mining and infrastructure are important but more important is the development of health, education, social insurance and of a place to live. The money in the Fund will be used to provide these. If Parliament, the Government and political parties allow the Fund to realize its potential, Mongolia will prosper in a way undreamt of. A part of the money in the HDF would be invested abroad, but the returns will be placed in the Fund itself and not diverted anywhere else.
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