Central bank presents monetary policy stance for 2020Economy
Ulaanbaatar /MONTSAME/. On October 21, the Bank of Mongolia organized an open discussion on the monetary policy of Mongolia for the third year with a view to shed light on the formulation of the country’s monetary policy outline on the basis of macro-economic factors and basic economic indicators.
The discussion heard presentations by B.Bayardavaa, Director General of Monetary Policy Department of the central bank on ‘Economic forecast – Monetary Policy’, by N.Urgamalsuvd, Director of Monetary Policy Projection Department on ‘General guidelines of state monetary policy for 2020’. Also, Deputy Governor and officials of the Mongol Bank attended to deliver information on the given issues.
During the event, the Bank of Mongolia introduced general guidelines of state Monetary policy for 2020 where objectives for economic growth to pay close attention on potential risks and challenges to be faced during the next few years are reflected in it as well as solutions for maintaining economic stable growth. In addition, risk-taking capacity of the banking sector will be improved by applying Basel standard regulatory framework to the banking control and monitoring tools. Moreover, the Bank of Mongolia will be guided by a policy aimed at stabilizing the inflation next year and banking legal framework reform will be introduced to protect the customers’ rights.
As Mongolia’s economic growth is expected to remain solid next year, it is needed to ensure balance of external and internal sectors and implement most appropriate policy of exchange rate, according to the Bank of Mongolia.
In terms of factors having influence on the monetary policy, the central bank officials remarked the high percentage of imports in the production and consumption, inadequate foreign exchange reserves, necessity to decrease the burden of foreign debts, insufficiency of economic diversification, in particularly, over-dependence on mining, dependence in foreign environment and positive correlation between business and financial cycles. The state monetary policy for 2020 will be aimed at tackling these issues.
The country’s economic conditions prone to international economic shocks, which lead to economic and financial crises make it more difficult to stabilize the macro economy and prevent from crisis. B.Bayardavaa, Director General of Monetary Policy Department said exchange rates, budget and salary are main things that cause the monetary policy rate to grow and also noted that budgeted salary raise for next year will have a positive effect on the economic growth”.
Regardless of the country’s overall economic state, Deputy Governor B.Lkhagvasuren informed that there is no risk for domestic tugrug currency to weaken depending on some p[positive economic indicators, such as economic growth of 6.5 percent and foreign exchange reserve of USD 4 billion.
At the event, the Bank of Mongolia also presented about the Mongolia’s economic forecast projected by international financial companies, such as International Monetary Fund, Asian Development Bank, S&P and Fitch.