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Business Council of Mongolia, Kempinski Hotel, Ulaanbaatar Mongolia, 27th August 2012
Improving Transparency in Mongolia
Монголд ил тод байдлыг сайжруулах нь
ТӨСЛИЙН УДИРДАГЧ: САНГИЙН ЯАМ
-2-year project lead by the Mongolian Ministry of Finance.
- Working with The University of Sydney.
- Other partners include Financial Regulatory Commission of Mongolia and Mongolian Stock Exchange.
- Funding provided by the Australian Government (AusAID).
- The project goal is to improve transparency and accountability in the Mongolian public sector
Four project outcomes:
1) identify material deficiencies in the current practice of public sector disclosure;
2) build capabilities in key public institutions in the areas of disclosure;
3) develop a locally contextualised best-practice framework; and,
4) design systems for the aggregation and dissemination of public sector performance that conform to international best-practice.
INTERNATIONAL BENCHMARKS
A number of international ratings play a material role in defining the quality of transparency and accountability in Mongolia.
* Transparency International – Corruption Perception Index
* World Bank – Doing Business Report
* IMF and World Bank – Observance 0f Standards and Codes
* The Extractive Industries Transparency Initiative
They aggregate data from:
•business surveys;
•assessments by risk analysts; and
•country experts from international institutions.
TRANSPARENCY INDEX RANKING
0
20
40
60
80
100
120
140
160
180
200
2006 2007 2008 2009 2010 2011
Mongolia ranking
All countries
TRANSPARENCY INDEX RANKING
61
4552
58 60
73
0
20
40
60
80
100
120
140
160
180
200
2006 2007 2008 2009 2010 2011
Mongolia ranking
All countries
Perceptions of corruption are
increasing
EASE OF DOING BUSINESS RANKING
0
20
40
60
80
100
120
140
160
180
200
2006 2007 2008 2009 2010 2011 2012
Mongolia ranking
All countries
EASE OF DOING BUSINESS RANKING
61
4552
58 60
73
86
0
20
40
60
80
100
120
140
160
180
200
2006 2007 2008 2009 2010 2011 2012
Mongolia ranking
All countries
Regulatory environment constraining
business activity
REGULATORY QUALITY
Worsening perception of the ability of the
government to formulate and
implement sound policies and regulations
that permit and promote private sector
development.
CONTROL OF CORRUPTION
Worsening perceptions of the extent to which
public power is exercised for private
gain, including both petty and grand forms
of corruption, as well as "capture" of the state by
elites and private interests.
EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE
2010 was the first year that Mongolia was
considered compliant
Decrease in discrepancies between
taxes and royalties companies disclose
they have paid and the amount government
discloses it has received
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2006 2007 2008 2009 2010
Company payments
Government reciepts
SOVERIGN CREDIT RATING
Mongolia’s sovereign credit rating is ranked as BB- (non-investment grade).
Comparative analysis suggests that governance indications are comparatively weak.
The sovereign credit rating is influential in informing the investment decision choice and the cost of borrowings for:
- The Mongolian Government
- Domestic banks
- Domestic private sector
- Foreign investors
SOVEREIGN RATING CRITERIA
Source: Criteria For Rating Sovereigns, Standard & Poor’s
1 5432
SOVEREIGN RATING CRITERIA
Source: Criteria For Rating Sovereigns, Standard & Poor’s
SOVEREIGN RATING CRITERIA
Source: Criteria For Rating Sovereigns, Standard & Poor’s
SOVEREIGN RATING CRITERIA
Source: Criteria For Rating Sovereigns, Standard & Poors
SOVEREIGN RATING CRITERIA
Source: Criteria For Rating Sovereigns, Standard & Poors
SOVEREIGN RATING CRITERIA
Source: Criteria For Rating Sovereigns, Standard & Poors
EAST ASIA DEBT ISSUANCES
Source: Mongolia Quarterly Economic Update, The World Bank, June 2012, p. 12
EAST ASIA DEBT ISSUANCES
Source: Mongolia Quarterly Economic Update, The World Bank, June 2012, p. 12
A+
AAA
A+
A+
A+
BBB-
BBB-
BB-
SAVINGS FROM FUTURE BORROWINGS
Mongolia’s National Development and Innovation Committee (NDIC) estimate that Mongolia will require USD$50 Billion in funding in next five years (2013-2017).
If borrowing at BB- rating where to remain at 5.75%, the annual interest bill would be a staggering USD$2.875 Billion
SAVINGS FROM FUTURE BORROWINGS
Mongolia’s National Development and Innovation Committee (NDIC) estimate that Mongolia will require USD$50 Billion in funding in next five years (2013-2017).
If borrowing at BB- rating where to remain at 5.75%, the annual interest bill would be a staggering USD$2.875 Billion
An improvement in sovereign credit rating which leads to a one percent (100 bps) reduction in interest equates to USD$500 million in savings every year for Mongolia.
These savings can be used to fund other valuable economic and social priorities for Mongolia.
CONTACT