By G.ULZIISAIKHAN
B.BYAMBADORJ

An interview with Steven Barnett, Assistant Director of the International Monetary Fund Office for Asia and the Pacific.

Many specialists and agencies agree that the future of the Mongolian economy is looking bright. What do you think the actual situation is? You have previously given an interview in which you said that the gap between the rich and poor is increasing. How have you come to this conclusion?
It is always difficult to come up with measures to get a lasting or sustained reduction in poverty. Having some positive steps, like the recent passage of the social welfare reform should make progress in reducing poverty. The most important thing from a macroeconomic perspective is to have economic stability. That means strong and sustainable growth, and most importantly, moderate and stable inflation. We know from both international and Mongolian experience that inflation has the biggest impact on the poor. The policies today that are causing inflation are actually making poverty worse.
The Mongolian economy is growing, so is inflation. People complain that although the statistics clearly indicate economic growth, represented in percentage – they do not see improvements in their everyday lives. Is economic growth tangible for the everyday citizen?
The biggest challenge for countries that have been blessed with mineral wealth – whether it is oil, copper, gold, or coal – is how to spread that wealth to all citizens. Most countries get it wrong. One of the major reasons they get it wrong is through Government spending; they spend too much. Although it is nice for someone to receive a cash handout or be part of a Government program, this actually does not lead to sustained reduction in poverty. As for Mongolia last year, we have seen a 60 percent increase in Government spending. The result of that is people will have more money; and they will spend more. A lot of that spending falls on imports, so the foreign companies that sell goods to Mongolia benefit the most. It also results in higher inflation and higher wages in Mongolia, makes Mongolian firms less competitive, which is another way of saying Mongolia will have fewer jobs available.
The money is not being spent in Mongolia, it is being spent abroad. The reason is when there’s a 60 percent increase in spending, there cannot be a 60 percent increase in domestic production, and you can’t have 60 percent more restaurants or cafes. That demand has to fall on some combination of people importing goods from abroad and higher prices at home.
You seem to have a critical and pessimistic or rather precautious point of view on economic decisions made by Mongolian authorities. Being aware of many economic risks, do you feel frustrated to know that authorities did not incorporate your advice in their decision-making?
The policy makers do listen to our advice, but they do not always follow it. In the end, they are politicians, listening to us means they have more information, which will of course affect their decision with economic, social, and political considerations. For me, the best thing about working in Mongolia is the fact that the policy makers genuinely want to hear what we have to say.
How do Mongolian politics affect the economy?
In some cases it is best to separate politics and economics. One of them being monetary policy. If we look at the past 20 years, across the world there’s been a decision that it’s not universal in most countries that it is best to have a monetary policy that is independent of politics. So if I were to look at some political debates today in Mongolia, I think it is important that central banking, by that I mean things like exchange interest policies – those types of decisions are not politicized.
We can point to many significant achievements for the Government’s decisions that are result of cooperation with IMF, World Bank, and ADB. I would like to give the two best examples of this; one is the fiscal stability law. It took a lot of cooperative work with the World Bank, Parliament, the Government as a whole, and us. The other one is that we were directly involved with the flexible exchange system, that is still working and implemented today.
The IMF was strongly opposing the proposed budget of 2012, which was eventually passed. It was not reduced as much as you wanted. What if the Government decides to amend the budget and decides to make changes to it?
If they cut spending, we will applaud it. If they rise spending, we will continue to remind them of the risks. However, I think it is equally important at the end of the day, the Government is reflecting the choice of the public. Part of our job is to do things like giving interviews and trying to explain directly to the public why we think the increase in Government spending does more harm than good. The public will be the biggest check on Government behavior.
You’ve been in and out of Mongolia quite frequently, what is your impression or thoughts whenever you come back to Mongolia at first glance?
I’m an optimist, even though I’m accused of being a pessimist. I definitely see improvements.
For example?
I can give you many. The exchange policy has shown significant improvement in 2008 under very difficult circumstances. Although less visible to the average person, the way that banks are supervised and regulated has improved significantly. The passage of the Fiscal Stability Law is a huge change. Not directly related to the IMF much but the passage of the social welfare reform is also a big change, I can see lots of improvements.
People say that the fast, expensive cars and buildings under construction are reflection of the country’s economy. Looking at the streets, what would you say?
There are lots of traffic jams and restaurants and cafes are a lot more crowded. There are more of them even. But an improved Ulaanbaatar does not mean improved countryside of Mongolia.
As soon as you arrived back in Mongolia you must have noticed that the fuel price had shot up. Everyone tried to find the guilty party. The first suspected culprit was the Bank of Mongolia, followed by fuel importing companies, the final suspect being politicians. But could this be the result of faulty policy? What could have been done to avoid the price surge?
First, we know it is not the Bank of Mongolia’s fault. The Bank of Mongolia has a flexible exchange rate. If the exchange rate depreciates, it is because other things that are happening in the economy are affecting it, and I would argue it in the case of Mongolia that it is because of excessive fiscal spending. The other thing we have to understand is that oil is an internationally traded commodity. Oil prices should change when the global price changes or when the exchange rate changes. As to why there was such an abrupt change in one month, we do not know because we do not look at the specifics of the oil market. In general, oil prices do fluctuate. In all countries, it is always a politically sensitive issue as it affects every people.
This could happen again and we will have the same chaotic situation. Everyone will have to pay more for everything. Do you think you may have a solution for this?
There are two. The first one is, personally, I advocate – learn to live with it. That is what happens to internationally traded prices. That is what many countries choose to do. A lot of market-based economies choose to live with the volatility.
Alternatively, the Government can decide they do not want to live with that kind of volatility, they can put in some sort of a price smoothing mechanism. Many countries do that too. It sounds good and consumers like it, but who benefits from that? It is the middle class and the rich who benefit the most from that because they are the biggest consumers of petroleum. The poor probably don’t have cars. They are probably not taking taxis.
Fuel importers made proposals to the Government; specifically during the time when the Cooperative Government was breaking up. Do you think that these events, along with the possibility that price increase ideas being included in the proposal, had anything to do with fuel prices?
I am not in a position to comment. We do not follow this particular market that closely.
The Mongolian economy is rising even though the European economy is performing at a loss. How can the growth in Mongolia benefit the people?
Mongolia’s wealth is really in the form of copper, gold, coal, and the ground. People say it s a blessing but it is not easy to turn that into sustained growth. Countries get it wrong, but for goods reasons. Often the intentions are good but they get it wrong in the policies. In Mongolia, giving a universal cash handout sounds good. It is like sharing Mongolian wealth with the people. But there are two big problems with that. One, it does not create jobs. It will actually subtract jobs in the long run because it will make Mongolia a more expensive place to do business and higher wages in Mongolia means the country will not be able to compete with other countries with anything except for mining. This is what most people refer to as the Dutch disease.
The second thing is that it transfers all of the volatility into the global commodity market, all the changes in coal and copper prices into the local economy. How can you run a business when the economy is bouncing all over the place? In 2008, you have rapid growth, 2009 you have a crisis, 2011 you have growth. Businesses cannot really thrive and prosper in that environment; they never know what will happen.
So you believe that the Mongolian economy has become and will become more and more dependent on the mining sector and we have to admit that we cannot escape this destiny that the mining will be the driving force of our economy? What do you recommendations or advice do you have for the Government in diversifying means of income?
I think there are two key policies. They are both on the fiscal side. First, the fiscal policy should insulate the economy for big changes in revenue to have a prudent and moderate, but steady growth in Government spending. Even better, what we ‘call counter-cyclical spending.’ When the copper price falls, activity in Mongolia is also going to fall, because it is dependent on copper prices. It means that in those times Mongolia needs fiscal policy to increase spending a little bit faster to help offset the impact. I think this would be the best strategy for Mongolia but unfortunately, it is the exact opposite right now.
The second thing is that the Government of Mongolia needs to save a big portion of the revenue from the mining sector. The countries that do well like Norway and Chile all save a reasonable share of the proceeds from mining. As I have said, Mongolia is doing the opposite in this situation, too. They claim they are sharing the mineral wealth with the people through the Human Development Fund, but actually they are borrowing money to do that. The budget is in a deficit so the government is borrowing money at a time of a mineral boom in order to give cash handouts to the people.
If this continues and goes on to become worse, are there any remedies to reverse it?
The hope is that the Fiscal Stability Law will put an end to the trend because it would be very difficult to do what the Government is doing right now under the Fiscal Stability Law. For example the increase in spending we had last year and this year would not be allowed under the numerical rules in the Fiscal Stability Law. But the law will not yet be implemented until 2013.
So we will have to wait until 2013?
Hopefully. Europe is in a difficult economic situation but Asia is doing comparatively fine. If the European economic problem arrives in Mongolia, do you think Mongolia will have enough resilience to overcome this shock?
That is precisely the great risk. That is exactly what we saw in 2008 and 2009. They are repeating the same mistake today, making the economy very vulnerable to global shock. The chances of being hit by this shock are increasing by the day.
Mongolians are very laid back and are sure that it won’t affect Mongolia. What do you think of this?
An economic shock can heavily affect the Mongolian economy through two channels. The first one is that commodity prices will fall: coal, gold, and copper. Mongolia will immediately be affected, I daresay, faster than many other economies. The commodity demand across Asia will fall too; making it worse for Mongolian mineral exports. We do not think Asia is immune to the ‘European flu,’ including China.
All the people in Mongolia, including the Government, are talking about the future, not the current situation. Mongolians are blind in the expectation of a possible big economic breakdown in the coming years and are blind to the risks they are undertaking. At this time, what would be some short and objective advice relevant to everyone?
In 2009, the growth was -1. That was a very painful economic period for Mongolia where people personally felt the problem and lost their jobs.
I think we are going back to the issue of people listening to us but not following. We try to ring alarm bells, flag the risks, and raise public and political awareness that the strategies that are being followed today have significant risks.
In one word, I would say be patient. I am very optimistic on Mongolia’s ongoing prospects. There’s a saying that Rome was not built in a day.
Do you have any opinion on specific events that have happened lately, like the Tavan Tolgoi IPO or the situation over at the Development Bank?
On the TT IPO, we don’t have much to say. I would make one comment on the Development Bank though. That is just, be very careful. In particular, make sure that the DB does not become a just a vehicle for off budget fiscal spending. We see that as a big risk, if the fiscal stability laws succeed in containing budget spending then there may be a temptation to use the DB instead to carrying out spending that otherwise would have been done on the budget.

The Mongolian Union of Calligraphy Artists have held the “Fresh Snow” calligraphy exhibition annually since 2006. This year’s exhibition opened at the Mongolian Modern art gallery last week. More than 20 artists and a total of 50 works were selected for the exhibition. Judges selected the artists to receive prizes for Best Young Calligrapher of the Year and the Best Work of the Show. The winners were announced at a private opening ceremony. A.Chadraabal’s “A Bull and a King of Bulls” sculpture, made with bronze, was named this year’s Best Work. A.Chadraabal, a Director at Mongolian Modern Art Gallery, is known for his bull paintings and sculptures.

By TILOVALO

Mongolia, a steppe country in Central Asia, is known for unspoiled nature, nomadic life, gers made of felt, the seemingly endless expanses of blue sky, the Gobi Desert, and the Altai Mountains. Mongolian traditional throat singing, khoomei, comes from these beautiful scenes.
Khoomei developed from the inner love of nature that the nomads felt for centuries. The animals, particularly camels and horses, the rivers and mountains, the winds of the steppes and desert are brought to life by khoomei singers.
Khoomei singer Hosoo and his band Trans Mongolia are well known in Germany. They have lived and created music there for almost 10 years.
Hosoo not only sings but also explains the content of the songs and tells the audience about the history and technique of their fascinating music.

By U.Batchimeg

The director of Asian Model agency and model, Miss Ch.Sodtuya is respected with her wide knowledge as a model. She majored in fashion designer, and finance, and got her MA in business administration from the National University of Mongolia. She has been modeling since the age of 13 and has been running her own business since 2007. She has given interview to Zuunii Medee newspaper and below is the translation.

-You are well known as a model, but you were named as National Top Young Director. Please share your impressions with us.
-First of all, Happy New Year to the readers. I am happy to be named as “National Top Young Director” from the event Altan Soyombo organized through the Politics and Management Academy. The award gave me encouragement to work harder in the future. I could not have been awarded had it not been for my co-workers and trainees. Our trainee models Kh.Badamtsetseg and I.Tugsuu were awarded in International Miss Competitions. They also granted with awards in International Miss Contests in China and other three countries in years of 2007 and 2010.
-Any award comes with responsibility. Have you planned many things to do this year?
-Of course. I have many things planned. We are organizing a beauty course aimed at providing girls with information and knowledge on beauty and how to care for themselves in rural areas. We will hold a beauty contest among them and the winning girls will be granted with certificate to participate in internal and external beauty competitions. Our agency also started working with the French firm “Rostang.” In a competition preparing models around the world, a girl Baljidmaa from Uvurkhangai province took first and was granted with a certificate to run her pictures in the spread of magazines Elle and Vogue. She also got certificates to participate in runway shows in Vietnam, France, and Japan. It is an endless effort working in rural areas to find beauties from all around the nation.
-Seeing models walking in runway shows seems like an easy thing to do. What is the work like
-It is hard work. Besides modeling, models must gain knowledge, because we cannot be successful by knowing how to model alone. Our model agency has organized several events and competitions for developing model skills nationwide. In general, one can live fancy life if one works hard. In this competitive time, models are required to possess so many skills.
-What advice do you give to the trainee models and new models?
-We offer a course at our model agency to provide moral education and how to take care of themselves by keeping a healthy lifestyle. We want them to become people who are setting example to others with their inner and outer beauty by taking courses at our model agency. I want to say to the aspiring girl and boy models, have faith in your goal and be consistent. Fashion and modeling industry require so much persistence and hard work from the people who want to survive in this industry. Achieving success depends on you. You are the reason and core for your success.
-These days, young girls are caring less for inner beauty. Please tell your opinion on this.
-In contrast, I think they started caring more about their inner beauty. Our courses aim to make them understand how important inner beauty is. In my opinion, being beautiful equally depends on both inner and outer beauty. Not just girls, but it is right for boys to learn about inner and outer beauty.
-You retired from fashion industry relatively earlier compared to other models. Why don’t you participate in Goyol Fashion Festival?
-I have not announced officially that I am retiring from this industry yet. Today, I have no time and interest to take part in modeling contests compared to my early years. I have more important things to do and put my time into. Of course, I want to participate in modeling and beauty contests that are important. Models from our agency are planning to participate in Mongolian cultural events which are going to be held in Japan and Thailand. In those events, I will participate in runway shows as well.
-There are top models who are at the age of over 40 are still in this industry. Do you want to be in this industry even after you turn the age of forty.
-I respect my senior models who are still in this industry. I am always on stage whether it is runway or lecture, so I do not have as much ambition as they do.
-What title do you prefer to be called, Miss Sodtuya or Model Sodtuya?
-I received so much interest in doing philanthropy work after becoming a Miss. One of the biggest opportunities that I had in my life was participating in Miss Mongolia 2004 when I was 17 years old. Being Miss and being model are so different. I like being called by both of them, so I work hard not to let people down.
-You are the youngest daughter in your family. Do you resemble your mother or father more?
-Our family members are very tall. I have one older brother and I am the youngest. My mother is music teacher and I can barely be considered to have grown up in family surrounded with art and music. I grew up in a family where there is so much love and support, similar to a fairytale. My brother is a university professor and so is my dad.
-During contests, you always are accompanied by your mother. She must be your best friend as well.
-My mother is the reason that I am here. When I was studying as fashion designer, my mother helped me to design clothing. She used to design clothes to us when me and brother were kids. She always supported me that is why I have become confident and positive person. I always try my best to be close with the parents of our trainees and give them advice that I think they might help them.
-It is common for the women who are in the public eye to be linked to famous business men.
-It depends on the person’s knowledge and education. A person with poor knowledge has different way to live. I always tell trainee models to be independent financially and get well-educated until the age when you separate your ways from your parents. I tell the girls that one should choose loved ones over rich ones when it comes to your life partner or husband. For me, I chose my husband because I love him.
-You have a daughter of your own. You must spend much time to your daughter.
-Frankly speaking, recently, I spend very little time with my daughter as I work from morning to late at night. Instead of me, my parents are giving as much love as I would give to my daughter. On weekends, I spend time with my daughter. Soon she will turn the age of four.
-Thank you for your time.