-Will inflation decrease? Many citizens are worried that it will keep increasing.

-The general trend of inflation has been upward, and it stands at 13 percent right now. Inflation in Mongolia historically increases and decreases by seasons, so it could be reduced in October. The World Bank recommends the Central Bank continue its present monetary policy.

-The Mongol Bank recently said it wants to strengthen its monetary policy further. Do you agree with that?

-The Mongol Bank has the right policy and the World Bank views that it has taken good measures and wants it to continue these.

-The state budget can have an impact on inflation. Economists say increased spending can lead to increased inflation. International organizations are also warning the government to reduce spending to slow the rate of inflation. What is your opinion?

-The budget policy poses risks. The government should make it a policy to not overheat the economy. The World Bank believes that revising the 2011 budget because of increased revenue poses risks.

-What should be done with the increased revenue?

Additional revenue should be reserved. If expenditures are increased, inflation could be also increased.

-The government’s MNT 21,000 monthly allowances to citizens have been criticized by economists and the central bank, who say it raises inflations. What about that?

Certainly, the World Bank has also criticized this allocation of cash. We appreciate the decisions of political parties that have said they will not promise cash in the 2012 election.

A study shows that alcohol sales increase after distribution of the monthly allowance of MNT 21,000. Research has shown that the death rate increases after similar payments are made in Alaska. Are these problems connected to the payments? 

Studies have shown that alcohol consumption increases after the payments, and increased alcohol consumption can lead to more deaths. However, Alaska allocates cash only once a year.

Governments allocating cash is a big problem because it gives people the idea that state services are free and that they deserve payments from the government. This can create a rift between the government and the people, because if the government stops the allowances and increases taxes, the people will oppose that.

Some countries allocate cash in special situations. For example, in Arabian countries, cash was allocated during the economic downturn in 2008. Outside of Alaska and Mongolia, no government allocates cash systematically. Inflation was 34 percent in Mongolia after the 2008 election. The World Bank sees that in the first nine months of 2012 there will be risks. Poor people are especially vulnerable to inflation, and we should not forget them. The World Bank is glad that social welfare programs are being begun in Mongolia.

-What about the Development Bank?

-The World Bank supports the hiring of the South Korean managing team for the Development Bank because political influence could be an issue since the Development Bank is a state bank. The bank should choose the most economically responsible projects to fund.