World Bank Country Manager talks of Mongolia’s economic future

Arshad M. Sayed of the World Bank is leaving Mongolia soon after four years as Country Manager and Resident Representative. In what may well be his last public address here, the Indian-born economist who has worked closely with the Mongolian Government to help it tide over the economic crisis, told a selected audience at the Central Bank auditorium on Thursday that it was certainly possible for Mongolia to turn the present crisis into an opportunity but nothing can be achieved soon or without taking hard decisions. His lecture was entitled “Mongolia’s Economic Growth: What’s Next?”

Sayed said 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?”, 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. Mongolia’s medium-term growth outlook is very favourable, but the upcoming mining boom is likely to lead to significant structural shifts. Withdrawal of the windfall profit tax means the Government will lose revenue equivalent to 5 per cent of the GDP, and this can be cushioned only with fiscal consolidation. Mining booms are inevitably followed by busts, and a social safety net has to be put in place so that the poor are permanently protected. The banking sector must be reformed and infrastructure needs addressed.

Sayed read out a poem he had written as his fareweel thoughts on Mongolia. It endd with the following words: “Do not pity, /or worry,/ or shed tears/ or rush in judgement/ For I am Mongolia/ and I have a date with destiny.”