Mongolia Quarterly Economic Update, July 2010
The improvement in public finances since last year, coupled with buoyant revenue due to the commodity price recovery, has led to growing pressures for increased government spending. Recently approved budget amendments envisage a 4.5 percent of gros...
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| Language: | English en_US |
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Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/111151468053411949/Mongolia-quarterly-economic-update-July-2010 http://hdl.handle.net/10986/27707 |
| Summary: | The improvement in public finances since
last year, coupled with buoyant revenue due to the commodity
price recovery, has led to growing pressures for increased
government spending. Recently approved budget amendments
envisage a 4.5 percent of gross domestic product (GDP)
increase in spending on the originally approved 2010 budget,
while the Mid-Term Budget Framework (MTBF) for 2011-2013
projects another 12.1 percent of GDP increase in spending in
2011. The main driver for the increases is the execution of
promises made by both coalition parties to distribute
monthly percentage rate, or MNT 1.5million (around US$1000)
to each citizen in the form of cash and non-cash handouts
and large public sector wage increases planned for October
of this year. If these public spending plans materialize,
they will set the stage for a renewed bout of high inflation
and a possible return to the macroeconomic vulnerability
characteristic of the boom-and-bust cycle of the recent
past. In the real sector, the impact of increasing inflation
is evidenced through a decline in real wages. The latest
informal wage survey indicates that on average,
workers' nominal wages have increased by about 10
percent from January 2010 to June 2010; this is because of
an increase in job opportunities in the construction sector.
Real wages, however, have declined on average due to the
significant increase in the consumer price index. |
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