Minister for Finance S.Bayartsogt answers questions on recent developments in the economic situation of Mongolia.

What is the benefit of having a budget stability law?

The Law about Administration of Budgeted Organizations and Finance regulates the issues regarding budget making, financing and implementation while the General Budget Law of Mongolia regulates the budget incomes and expenses. There still remain issues that are not regulated by law. These include general procedures of budget administration, budget policy, strategy, responsibility etc. Because of this, even though Parliament permits the Government to make the general balance and the budget plan, occasional needs to change provisions in the budget arise because of internal and external market influences. Revenues are also sometimes unstable as seen during Parliamentary discussions of the budget. In the absence of such a law, political parties campaign during elections promising huge sums of money to the people which exceed the capacity of the state. Such promises cannot be kept if the budget income is low; otherwise financial reserves will be depleted. Unproductive expenses, coupled with lower investments in essentials, will lead to instability in the financial system. The Budget Stability Law will do away with all this and the budget will no longer be subject to uncertainty and avoidable pressure.

Everyone talks about reforming budget management procedures. Just what is involved?

Both the Budget Stability Law and the Budget Law were developed as part of these reforms. We want all issues concerning the budget to be regulated by a series of special laws. The Budget Law combines the State United Budget Law and the Law of Administration and Financing of Budgeted Organizations. It makes the budget system less complex and easy to implement and helps effective budgeting, execution, reporting and monitoring. The law clarifies the scope of budget implementation, components, rankings, and also defines the procedures of budget development, approval, spending and reporting. The responsibility for implementing and administering the budget will also be demarcated. The budget’s legal status will become understandable, systematic and the individual responsibility of all who deal with it would be ascertained.

Would the Chilean experience be effective in Mongolia?

We must not copy the Chilean model too literally. Instead, the law must incorporate the specific characteristics of the Mongolian situation and our needs. Since there are many similarities between Mongolia and Chile in their economic structures, their experience gives us a good idea of what we should have.

Which existing laws will have to be amended when budget management practices are reformed?

Nearly 20 laws will be amended such as the Law about the President, the Law about Parliament Discipline, Parliament Election Law, Central Election Organization Law, Budget Administration and Finance Law, United Budget Law, Government Special Fund Law, Health Law, Education Law and Nature Protection Law.