Source: BCM NewsWire                       Date: 23 July, 2010

Talking about “Mongolia’s Economic Growth: What’s Next?” in something like a public valedictory address before leaving the country after four years as Country Manager and Resident Representative, Mr. Arshad M. Sayed of the World Bank told a selected audience at the Central Bank auditorium on Thursday that the much-touted trickledown effect “does not always work” and that Mongolia’s future would depend on its Government sticking to “a policy of sustainable and equitable growth based on the future rise in mining revenue”. He warned that instead of nurturing and encouraging “expectations far ahead of reality”, the Government and the people should settle for an informed social compact that would accept “hard decisions in uneasy times”.

Recalling that his first public address in Ulaanbaatar, in October 2006, was entitled “Mineral Resources: Blessing or Curse?”, Mr. Sayed said four years and a global crisis later he was still in no position to give a definitive answer, and was not even sure if there was one. Every nation must fashion its own way of optimally balancing contradictory pulls. Mongolia has to “transform its underground resources into tangible wealth”, diversify its economic and revenue base, ensure that it does not succumb to populist temptations of extravagance during commodity price booms, maintain fiscal discipline in the awareness that busts are inevitable, lift the banking sector from its present vulnerable position, add more value to existing assets, and avoid installing a dependency framework.

Mr. Sayed ended his address by reading out a poem he had written while working on the text of the talk. The poem in turn ends with the following words: “Do not pity,/or worry,/or shed tears/ or rush in judgment/ for I am Mongolia/ and I have a date with destiny.”

Taking part in a lively question-and-answer session, the Bank’s mining specialist here, Mr. Graeme Hancock, said he found the Oyu Tolgoi agreement quite balanced and was optimistic about the Government’s policy on Tavan Tolgoi.  However, too much must not be expected from an entity that has not yet been formed.