Mongolia is mulling a plan to use its mounting income from the mining sector to establish a sovereign wealth fund. An apparent reaction by the president to concern that the country is not leveraging that revenue to the benefit of the wider population, the fund would be used to promote long-term economic development.
President Tsakhia Elbegdorj's bill on launching the "Treasury Fund", was discussed in the President's Civil Hall on January 24, UB Post reports. Presidential Advisor Luvsandash Dashdorj criticised the government's lack of a "clear system and policy" to handle the income from Mongolia's rising raw materials exports.
Dashdorj pointed out that accumulating $500m a year in the fund from 2016 would leave Mongolia with some $230bn by 2064. Elbegdorj's bill proposes spending up to 25% of the fund on education, with investments starting in 2025.
Natural resources, in particular coal, account for around 80% of Mongolia's exports. Revenues are expected to soar as more mining projects - including the development of the Oyu Tolgoi copper-gold deposit - progress. However, this has sparked a rise in resource nationalism, and there is popular pressure on the government to ensure that the exploitation of Mongolia's natural resources benefit the entire population.
Other countries in the region have already launched sovereign wealth funds as their import revenues increase. Kazakhstan has established a national oil fund, while Yerevan operates the State Oil Fund of the Azerbaijan Republic (SOFAZ).
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