The BCM monthly meeting on February 23, with 55 members present, began with the Chairman, Mr. Laurenz Melchers, commending the work of those forming the TVET working group on the subject of vocational training.  Altogether 35 BCM members are part of one BCM working group or another. Executive Director Jim Dwyer reported that 4 new members were inducted – ELC, Millennium Challenge Corporation, Bonalex and Luxembourg Ambassador to Mongolia. One of them, Bonalex, was the 100th member now on the rolls in the 2009 Membership Drive and was presented a memento to mark the distinction.

The first speaker was Mr. Do.Ganbold, President, Mongolian National Mining Association (MNMA), who provided an update on key developments in the mining sector. He called the Government’s recent indication that it was willing to annul the windfall profits tax on gold a “positive development”, but was unhappy at the refusal of the National Security Council to ratify the draft Oyu Tolgoi investment agreement. This was doubly unfortunate as apart from stalling the smooth progress of the draft, the NSC had chosen to return to two issues that had been discussed in detail and then abandoned by the working group. The NSC wanted the initial agreement to be for 20 years, and not 30 as in the draft. It also wanted 51% ownership for the Mongolian Government, and not 50%, when the agreement was to be extended. Terming both demands as “drastic” Mr. Ganbold feared a review of the draft on their basis meant needless and avoidable delay.
He was followed by Mr. L.Orgil, Foreign Policy Advisor to the President, who explained how the head of State had a special position in matters of foreign policy. A concept paper adopted in 1993 called for “balanced relations” with China and Russia and for total neutrality in any situation where the two were involved. The President represents the country in its foreign relations and can and does conclude agreements. Mr. Orgil had accompanied President Enkhbayar to the World Economic Forum in Davos and reported on the bilateral and multilateral interactions there on pressing issues such as the financial crisis and climate change. Mongolia would be hosting an international conference on the climate in June that could take important decisions.

Foreign policy was the topic of the next speaker, too, with Ambassador Mark C. Minton outlining the likely course U.S.-Mongolian relations would take under the Obama administration. Mrs. Hillary Clinton’s decision to include Japan, China, and South Korea in her first visit abroad as Secretary of State offered clear indication of the importance of the region and the USA was well aware of Mongolia’s position here as a facilitator and mediator. Referring to the international conference on the climate, he said it was appropriate Mongolia would be hosting this as this country was badly affected by desertification and depleting water resources.

Mr. Minton had no doubt that U.S. programs in Mongolia would continue and expand. Programs funded by the Millennium Challenge Account were getting off the ground as envisaged. The Peace Corps, already a formidable presence in Mongolia’s development scene, was to be strengthened. “Our relationship is on a steady course,” the Ambassador said, and added, “It will be extended and expanded in the coming years.”

Mr. Byung Kyoon Jang, Resident Representative, International Monetary Fund, gave a presentation on the current economic situation in Mongolia and possible donor support. With commodity demands and prices surging, “the last few years had been too good to believe” for Mongolia which had opted for “a policy of too rapid increase in Government spending”. In the changed situation where revenues are sliding fast, the country finds itself unable to finance such spending. However, even if “it is not easy to cut spending in one year”, Mr. Byung said an IMF mission had urged Mongolia to balance its budget and had offered suggestions on how the deficit, estimated to be 6% of the GDP but very likely to end up higher, can be plugged. “Substantial progress” was made in the talks, “but no agreement could be reached”. Along with cutting spending, efforts should be made to increase revenue, but the Mongolian Government is “reluctant to raise taxes or to expand the tax base”.    

The IMF team has agreed to return in early March to resume discussions and the donor countries and organizations will meet when, and only when, the IMF approves the fiscal policy of the Government.