The Mongolian government should review and re-direct government expenditure to critical areas such as transport, energy, water, education and health care to ensure sustainable economic growth, an expert of the Asian Development Bank (ADB) said here Wednesday.
The Mongolian government budget for 2012 had very substantial increase in public investment including infrastructure investment which is very necessary to develop the country's natural resource sector, to diversify the economy and to enhance general and inclusive growth, said Jan Hansen, a senior financial specialist of ADB resident mission in Mongolia.
Speaking at a launch ceremony of ADB's flagship annual economic publication Asian Development Outlook, Jansen emphasized that the government should ensure that the country's macroeconomic stability was preserved and inflation was kept at a low and acceptable level.
According to the ADB report, Mongolia's gross domestic product could grow 15 percent in 2012 and 17.5 percent in 2013, driven by mining-related investment and output. Mongolia's economy expanded by 17.3 percent in 2011.
The report also noted Mongolia's economy was developing rapidly, but fiscal policy must balance the need for macroeconomic stability and support for long-term economic growth that benefits all Mongolians.
Government spending rose by 56 percent in 2011 and was budgeted to rise by a further 32 percent this year, fueled by sharply rising resource revenues.
The country's inflation increased to 12.5 percent in February 2012 and is expected to remain in double digits in the coming two years.
The over expansionary government spending and high inflation are considered to be the major potential risks for the Mongolian economy.