The IMF and the Mongol Bank Disagree on Recent Movements Within the Real Inflation Rates of Mongolia
The IMF and the Mongol Bank disagree on recent movements within the real inflation rates of Mongolia.
At the start of the year, inflation was officially 13% nationally and 14.8% in Ulaanbaatar. Recent movements in the inflation rates have seen it decrease to 8% nationally and 7.5% in Ulaanbaatar.
The Mongol Bank (Central Bank of Mongolia) is following strict orders from the government to maintain inflation at a “single digit rate” and the new figures come directly from its offices but it is raising eyebrows across the financial community of Ulaanbaatar. It is unlikely that the inflation rate has been able to decrease by such as large amount within such a short space of time.
According to the latest statistical report from the 20th of April, the prices of staple food products has decreased by 1% month on month but has increased by 5% in the last week alone. Recently the state has increased the national minimum wage rate by 30%.
The recent world bank survey done in co-operation with the IMF state that inflation is on the contrary increasing within Mongolia and may reach 25% within 2011.
The Vice President of the Mongol Bank, Mr. N.Zoljargal stated publicly that inflation would never reach over 20%. However, he did not deny that the mass cash allocation in Mongolia and the price rises in the world economy would influence inflation. Officials of the Central Bank hope that the economic situation will positively change in Mongolia although the officials don’t as of yet have a clear understanding of what happened in 2010.
They underlined that 2010 was broadly a very good year when monetary supply rose by 62%, foreign currency reserve reached USD2 billion and the USD flow in the market exceeded MNT one billion. The Mongol bank also aims to reduce loan interest but keep the monetary supply lower than 40%. Officials noted that the Mongol bank will not promise to reduce banking loan interest rates to single digits any time soon.