Unraveling the 2013 budget

When it comes to spending, the new government does not look so different from the last. The 2013 budget seems to indicate that the new government will continue to the old practices of excessive, short-sighted spending from the last government.

Parliament is currently reviewing a MNT 7.4 trillion budget for 2013, which, if passed, would be the largest ever in Mongolian history. The budget is projected to amount to 42 percent of gross domestic product, down from 45 percent in 2011. Moreover, the budget deficit is projected to be some MNT 351 billion in 2013.

A third of the budget is investment, another third is government consumption, and the last is transfer payments. The main criticism for the budget is unwise spending while the economy is overheating. The Bank of Mongolia has thus far failed in its mission to bring inflation to the single digits and the government continues to ignore the advice of the World Bank against “pro-cyclical” fiscal policies.

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