Identifier
Created
Classification
Origin
06ULAANBAATAR774
2006-10-12 08:44:00
UNCLASSIFIED
Embassy Ulaanbaatar
Cable title:
High Commodity Prices Create Rosey Optimistic Figures
how-toVZCZCXRO6752 PP RUEHLMC DE RUEHUM #0774 2850844 ZNR UUUUU ZZH P 120844Z OCT 06 FM AMEMBASSY ULAANBAATAR TO RUEHC/SECSTATE WASHDC PRIORITY 0453 INFO RUEHMO/AMEMBASSY MOSCOW 1605 RUEHBJ/AMEMBASSY BEIJING 5269 RUEHUL/AMEMBASSY SEOUL 2497 RUEHKO/AMEMBASSY TOKYO 2266 RUEHOT/AMEMBASSY OTTAWA 0349 RUEATRS/DEPT OF TREASURY WASHDC RUCPODC/USDOC WASHDC 1110 RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC 0373
UNCLAS ULAANBAATAR 000774
SIPDIS
SIPDIS
STATE PASS DOC/ITA, USTR, USTDA, OPIC, AND EXIMBANK
STATE FOR EAP/CM, EB/TPP, OES/IHA
USAID FOR ANE CALISTA DOWNEY
E.O. 12958: N/A
TAGS: ECON ETRD PGOV MG
SUBJECT: High Commodity Prices Create Rosey Optimistic Figures
Refs: (A) Ulaanbaatar 576, (B) Ulaanbaatar 621
UNCLAS ULAANBAATAR 000774
SIPDIS
SIPDIS
STATE PASS DOC/ITA, USTR, USTDA, OPIC, AND EXIMBANK
STATE FOR EAP/CM, EB/TPP, OES/IHA
USAID FOR ANE CALISTA DOWNEY
E.O. 12958: N/A
TAGS: ECON ETRD PGOV MG
SUBJECT: High Commodity Prices Create Rosey Optimistic Figures
Refs: (A) Ulaanbaatar 576, (B) Ulaanbaatar 621
1. Summary and comment: Mongolian government economic figures
confirm that high commodity prices continue to fill government
coffers. The budget surplus in the first eight months of 2006 was
US $190 million, or 10% of official GDP. Rising commodity prices on
the country's principle exports have allowed Mongolia to cut its
trade deficit to a paltry US $4.6 million. Other economic
indicators are also positive, including moderate inflation and
sharply higher international tourism arrivals. The problem: Despite
the risk of commodity prices slumping again, Mongolia's politicians
cut tax rates sharply this summer and are planning to continue
sharply raising social welfare payments. The budget now in
preparation aims at a 4% deficit -- and that's if commodity prices
stay high. End summary and comment.
2. The Mongolian Statistical Office reported in mid September that,
during the first eight months of 2006, Mongolia's general government
budget overall balance was in surplus by MT 217.4 billion (US $186.6
million),or almost 10% of GDP. Total tax collections shot up by
51.9% compared with the same period in 2005. Taxes on foreign
trade increased by 27.6%; value added taxes rose by 31.8%; and
excise taxes climbed by 23.0%.
3. The consumer price index increased by a modest 4.7% from the
corresponding period of last year -- but was up 46.9% since 2000,
reflecting last year's impact of higher petroleum and energy costs.
4. Mongolia's foreign trade is nearly in balance, with an extremely
modest deficit of US $4.6 million for 2006 despite imports
increasing by 32%. The value of exports rocketed by 60.2%, thanks
mainly to spiking commodity prices for Mongolia's main exports of
copper and to a lesser extent gold. Copper concentrate exports rose
12.1% by volume over last year, while prices jumped 91% (from an
average of US $513 per ton in the first 8 months of 2005 to $982
this year). Mineral exports overall rose US $288.7 million.
(Comment: Under other circumstances, export increases would have
been much greater. Septel notes that a windfall profits tax passed
in May has led so far to huge stockpiles as producers hope for
repeal or attempt to figure out ways around the tax. With gold
sales down by 12 tons over last year, but production continuing
unabated, estimates are that $227 million of gold, or more than 12%
of GDP, is now being held unsold.)
5. Industrial output rose 3.2% from the same period last year (up
14.7 million USD to 469.6 million USD) led by increases in several
areas such as apparel production, clothing accessories, wood
products, leather products, food a beverage among others.
Production of main items of industrial products, electricity,
thermal energy, copper concentrate, molybdenum concentrate, crude
oil, knitted goods, medical tablets, liquid medicine, meat, spirit,
alcohol, bakery products, cement, metal steel, metal foundries,
combed down, increased by volume.
6. During the first 8 months of 2006, international air passengers
grew by 29.5%, as tourists flocked in for Mongolia's 800th
anniversary celebrations. Overall, the transportation sector saw
modest increases in the amount of freight and passengers carried,
with rail networks seeing a 2.7% increase in freight and a 0.3%
increase in passengers serviced compared to figures over the same
period in 2005. The month of August, 2006, however recorded larger
numbers in air freight and passengers year on year with an increase
of 4.8% in freight and 10.8% in passenger traffic.
7. The government statistics showed that the number of registered
unemployed decreased by 2,100 persons (5.9%) to 33,400 persons from
the same period last year. Women made up 57.1% of the unemployed.
Over the course of 2006, more than 26,000 registered unemployed
found work, 11.3% in government or state-owned enterprises and 88.7%
in the private sector. (Note: As in other developing economies, the
official figures fail to count many persons who are unemployed.)
MINTON
SIPDIS
SIPDIS
STATE PASS DOC/ITA, USTR, USTDA, OPIC, AND EXIMBANK
STATE FOR EAP/CM, EB/TPP, OES/IHA
USAID FOR ANE CALISTA DOWNEY
E.O. 12958: N/A
TAGS: ECON ETRD PGOV MG
SUBJECT: High Commodity Prices Create Rosey Optimistic Figures
Refs: (A) Ulaanbaatar 576, (B) Ulaanbaatar 621
1. Summary and comment: Mongolian government economic figures
confirm that high commodity prices continue to fill government
coffers. The budget surplus in the first eight months of 2006 was
US $190 million, or 10% of official GDP. Rising commodity prices on
the country's principle exports have allowed Mongolia to cut its
trade deficit to a paltry US $4.6 million. Other economic
indicators are also positive, including moderate inflation and
sharply higher international tourism arrivals. The problem: Despite
the risk of commodity prices slumping again, Mongolia's politicians
cut tax rates sharply this summer and are planning to continue
sharply raising social welfare payments. The budget now in
preparation aims at a 4% deficit -- and that's if commodity prices
stay high. End summary and comment.
2. The Mongolian Statistical Office reported in mid September that,
during the first eight months of 2006, Mongolia's general government
budget overall balance was in surplus by MT 217.4 billion (US $186.6
million),or almost 10% of GDP. Total tax collections shot up by
51.9% compared with the same period in 2005. Taxes on foreign
trade increased by 27.6%; value added taxes rose by 31.8%; and
excise taxes climbed by 23.0%.
3. The consumer price index increased by a modest 4.7% from the
corresponding period of last year -- but was up 46.9% since 2000,
reflecting last year's impact of higher petroleum and energy costs.
4. Mongolia's foreign trade is nearly in balance, with an extremely
modest deficit of US $4.6 million for 2006 despite imports
increasing by 32%. The value of exports rocketed by 60.2%, thanks
mainly to spiking commodity prices for Mongolia's main exports of
copper and to a lesser extent gold. Copper concentrate exports rose
12.1% by volume over last year, while prices jumped 91% (from an
average of US $513 per ton in the first 8 months of 2005 to $982
this year). Mineral exports overall rose US $288.7 million.
(Comment: Under other circumstances, export increases would have
been much greater. Septel notes that a windfall profits tax passed
in May has led so far to huge stockpiles as producers hope for
repeal or attempt to figure out ways around the tax. With gold
sales down by 12 tons over last year, but production continuing
unabated, estimates are that $227 million of gold, or more than 12%
of GDP, is now being held unsold.)
5. Industrial output rose 3.2% from the same period last year (up
14.7 million USD to 469.6 million USD) led by increases in several
areas such as apparel production, clothing accessories, wood
products, leather products, food a beverage among others.
Production of main items of industrial products, electricity,
thermal energy, copper concentrate, molybdenum concentrate, crude
oil, knitted goods, medical tablets, liquid medicine, meat, spirit,
alcohol, bakery products, cement, metal steel, metal foundries,
combed down, increased by volume.
6. During the first 8 months of 2006, international air passengers
grew by 29.5%, as tourists flocked in for Mongolia's 800th
anniversary celebrations. Overall, the transportation sector saw
modest increases in the amount of freight and passengers carried,
with rail networks seeing a 2.7% increase in freight and a 0.3%
increase in passengers serviced compared to figures over the same
period in 2005. The month of August, 2006, however recorded larger
numbers in air freight and passengers year on year with an increase
of 4.8% in freight and 10.8% in passenger traffic.
7. The government statistics showed that the number of registered
unemployed decreased by 2,100 persons (5.9%) to 33,400 persons from
the same period last year. Women made up 57.1% of the unemployed.
Over the course of 2006, more than 26,000 registered unemployed
found work, 11.3% in government or state-owned enterprises and 88.7%
in the private sector. (Note: As in other developing economies, the
official figures fail to count many persons who are unemployed.)
MINTON