Sensitive
financial issues were discussed at a “secret” meeting on Monday attended by members
of the Standing Committee on the Economy, and representatives of the International
Monetary Fund, the MongolBank, and the National Statistics Office. They talked
mainly about the budget deficit and the threat of inflation. 

The
Finance Ministry has proposed revisions to the 2010 budget following the
increase in the price of copper and gold. If this has meant MNT 364.2 billion in
extra revenue, the decision to increase the salary of civil servants by 30
percent, and reinstatement of the child allowance will lead to more expenses.
Some new public projects have also been proposed. Taken together, these will
take the budget deficit beyond the proposed 5% of GDP as stipulated by the IMF.

The
resultant inflation may nullify the 30 percent increase in salary.  The Government’s hopes of keeping inflation under
six percent have been belied. It has already reached 10 percent and many analysts
predict an even darker future with inflation hovering around 27 percent by the
end of the year.

The
IMF, which has lent money to keep the budget deficit within manageable limits,
is strongly recommending austerity measures. There seems to be rethinking in
the Finance Ministry and Parliament seems to have suspended further discussion
on the revised budget. These are likely to resume on Monday, after MPs will
have considered what was discussed at the meeting.