The choice of organization to run
the Development Bank will be revealed this week and two groups from South Korea
and Japan are favorites for the selection. The Chief of the State Property
Committee, D.Sugar, last week said the selection should be made on December 25 but
the Government wanted to have a say in the choice and so the announcement has
been delayed. The World Bank, the Asian Development Bank and the USAID are to
be involved in the management of the Bank, no matter who is chosen for the work.

Many large projects are expected to
receive their working capital from the Development Bank and it is essential
that it begins work without any further delay. The State Property Committee (SPC)
and the National Development and Innovation Committee (NDIC) have been charged
with the work and the Chairman of the NDIC, Ch.Khashchuluun, has been appointed
head of the Bank’s Representative Managing Council. Parliament has also
allocated MNT16 billion as its equity capital, but the bank does not yet have
an office. Khashchuluun studied in Japan and might support the choice of the Japanese.

Some feel a part of the Mongol
Bank’s foreign reserves should be used to pay for the loans the DB will issue. However,
the head of the Financing Market Department of the Currency and Economics Board
of the Mongol Bank, J.Bataa, has said, “The DB’s purpose is to finance large
projects and programs that could provide long and middle term stable growth of
the economy utilizing the Government capital accumulation and loan sources. Our
foreign currency reserves cannot be used for this.”

Ultimately, the financing will come
from the mining income and international investment. Its monitoring structure
should ensure proper use of these funds, so that the loans are used profitably
and productively. The DB can also cooperate with commercial banks in allowing
them to grant loans beyond their own capacity.

For all this to be achieved the DB has
to be managed professionally without interference from vested interests.