Statement by Deputy Managing Director Naoyuki Shinohara at the Conclusion of his Visit to MongoliaPress Release No. 14/311
June 27, 2014
Mr. Naoyuki Shinohara, Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement today in Ulaanbaatar at the conclusion of his visit to Mongolia:
“I would like to thank the Mongolian authorities for their gracious hospitality and for the productive discussions that we have had over the past three days. In particular, I wish to thank Speaker of the State Great Hural Z. Enkhbold, Prime Minister N. Altankhuyag, Minister of the Cabinet Office Ch. Saikhanbileg, Minister of Finance Ch. Ulaan, Minister of Economic Development N. Batbayar, and Bank of Mongolia Governor N. Zoljargal, for their warm welcome and frank exchange of views.
“In my meetings, I commended the authorities for their ambitious growth and development objectives. Mongolia has a magnificent history and certainly has a promising future, given its industrious and talented people, abundant natural resources, and strategic location.
“Our discussions focused on how best to meet the challenges that Mongolia faces as it strive to realize its great potential. In recent years, Mongolia has been one of the world’s fastest-growing economies, vaulting into the ranks of middle-income countries in just a few years. This growth was earlier driven by large investments in the mining sector, spearheaded by substantial foreign direct investment. But as these have dropped, growth has been held up increasingly by fiscal and monetary stimulus. This has led to growing balance of payments pressures, the depreciation of the togrog, and higher inflation.
“I highlighted the importance of tightening macroeconomic policies to combat these pressures. Monetary policy needs to be tightened, since—as in other countries—excessive credit growth has contributed to strong imports. Moreover, the budget should include all fiscal activity, including the spending by the Development Bank, and the consolidated deficit should be brought down steadily toward the target laid out in the Fiscal Stability Law. We also discussed the importance of strengthening bank supervision and the need to maintain Mongolia’s flexible exchange rate system. While such measures might entail a somewhat slower growth path in the near term, they are critical to safeguarding domestic and external stability, and making growth—still rapid by international comparison—more sustainable.
“On a brief trip like this, it is usually difficult to see much of a country. I am thus particularly grateful to the authorities for arranging my visit to one of Ulaanbaatar’s “ger districts,” where I observed important work being done to improve living standards, and also for taking me outside the city to appreciate Mongolia’s stunning natural beauty and rich traditions. Back in the capital, I also had the opportunity to share views with leading bankers and businessmen on economic developments and the outlook for Mongolia and the world.
“The IMF will continue to work closely with the Mongolian authorities and, as always, will stand ready to assist in whatever manner is most appropriate. Once again, I would like to thank the authorities and the people of Mongolia for their warm hospitality, and I look forward to continuing our cooperation.”