Mongolian Prime Minister Sukhbaatar
Batbold said a tight monetary policy and budget discipline will check the rate
of inflation and prevent Mongolia”s economy, one of the world”s
fastest-growing, from overheating.
Buoyed by a wave of foreign direct
investment to exploit its extensive but largely untapped natural resources,
Mongolia”s gross domestic product surged 17.3% last year—up from 6.4% in 2010.
That has sparked concern that inflation, which reached 11.1% in December, could
end up short-circuiting its blistering economic growth.
“We have to have tight monetary
policy. And also we will have to take control over the expenditures, especially
on the budget side,” Mr. Batbold said in an interview with The Wall Street
Journal during a visit to Japan.
Last month, the World Bank reported that
government spending in Mongolia rose 56% in 2011 and is expected to increase
32% this year.
Noting that the stepped-up spending
was enabled by a gusher of natural resources-related revenue, the international
aid organization warned that Mongolia”s economy may see a repeat of previous
boom-and-bust cycles.
Weak global growth has also prompted
questions about Mongolia”s ability to ride out a potential downswing in the
prices of commodities such as copper, coal and gold.
The Mongolian currency depreciated
by 11% in 2011 because of steady inflationary pressure and sagging commodity
prices late in the year.
But the Mongolian leader said he is
confident his country”s economy will stay on track for elevated yet sustainable
growth for the coming years, largely through infrastructure investments that he
says will help fuel longer-term productivity.
“We had quite good growth last
year, and we think we have an opportunity to keep this momentum for years to
come. As international financial institutions predict, our growth rate will be
maintained for [the] next decade,” Mr. Batbold said.
In a meeting with Japanese Prime
Minister Yoshihiko Noda on Monday, the two leaders agreed to start talks on a
bilateral free-trade agreement, which if concluded would be Mongolia”s first
such pact.
The landlocked country, which is
wedged between China and Russia, has grabbed the attention of Japan”s trading
companies—along with the world”s biggest mining conglomerates—by opening up
vast tracts of land for natural-resource exploration and development.
Mr. Batbold said selection of the
winning bids for rights to develop the massive Tavan Tolgoi coal mine in the
South Gobi Desert near China”s northern border will still “take some
time,” signaling a decision may not be made before parliamentary elections
in June.
“The sooner the better of
course, but looks like it will take some time,” Mr. Batbold said.
“It”s not related to the elections. It”s just a legal process according to
the rules.”
The Mongolian prime minister said
part of Erdenes-Tavan Tolgoi Co., the state-owned company in charge of the
world”s largest coking-coal deposit, may be publicly listed both in Mongolia
and on one or more overseas stock exchanges.
Mr. Batbold said Mongolia is very
interested in establishing new air routes and more frequent service linking his
country with Japan and other regional destinations. “It is very important
for Mongolia. This is one of the bottlenecks for growth,” he said.
Currently, there are only two
nonstop flights a week between Tokyo and the capital city of Ulan Bator, both
via MIAT Mongolian Airlines.
The prime minister met Sunday with
senior officials of All Nippon Airways, which entered a strategic
cooperation accord with Mongolia”s privately held Eznis Airways last May. ANA
is considering adding direct flight service between Japan and Mongolia and may
decide to do so as soon as this year, said Bayanjargal Byambasaikhan, chief
executive of Mongolian conglomerate Newcom Group LLC, which owns Eznis. ANA
couldn”t be reached in Tokyo late Tuesday for comment.
“The Mongolian economy is
growing, and we need more diverse ways of connecting to the rest of the
world,” he said in an interview.
—Mari
Iwata contributed to this article.
Source:
http://online.wsj.com
