DISQUS

amie · 9 months ago

So the construction industry is collapsing too? In every article I read about Mongolian construction industry, those people in the industry do not want to admit that. Are they out of their mind expecting mongolians will pay $1000 p/square meter? They made so much money even when apartments were cheaper. Greedy. I don't feel sorry for them if their industry do collapse. No bail for them!!

bio · 9 months ago

Dunno why international media started calling this stimulus plan. It's actually just the gov budget deficit that needs to be covered somehow. It's not gonna stimulate the demand, just keep it in more or less current levels. They need this money to pay the wages, the many social programs etc. We actually do not have an economy that could be stimulated - any demand stimulus would just prop up imports. Usually an industrialized country would issue debt papers, but it's not a real option for Mongolia, so gotta go around begging like 5,6 years ago!

As for construction, who says it's collapsing? I haven't heard of any big name construction company going bust yet, I believe they've accumulated enough cash to withstand some more of this crisis.

bilgoon · 9 months ago

The construction industry's on the brink of a collapse unless Mongolbank decides to step in. With the housing loan craze, the future looked optimistic and the companies took loans from the banks to build more. Since the banks stopped giving out housing loans to the public, many of the companies don't have sufficient funds to complete what they started last year. I just found an article today here, which will give you main idea:
http://www.business-mongolia.com/mongolia-news/...

amie · 9 months ago

I read the article. I still have some questions. Do you think people who borrowed money from the banks to BUY the apartments are making payments on their loans? I heard almost 90% of the buyers borrowed the money from banks (like mortgage). 10% of the buyers are people who have earnings from foreign countries.

shagai · 9 months ago

Well, it is more than covering budget deficit i think. Gov't still discussing budget revision. Likely to pass it this week. It is about stimulating the economy through job creation and saving through infrastructure projects such as road bulding and and energy sector. Isn't Obama's economic plan similar to this.
As for the construction industry, it has become very slow, however, prices of apartments have not gone down as expected. Therefore, not much buyers for the apartments and office spaces. Now you can see signs posted everywhere in UB saying " Office space for lease."
Mongolia need quite large cash injection, that is for sure.

bio · 9 months ago

The first draft foresaw 6% deficit right? This 1.5 trillion business is supposed to add another 6%, but afaik it covers the initial 6% as well. I heard that most of the planned gov investment projects were put on freeze, does what you said mean that those projects will be revived and even new ones will be added? That would be great I think.

Has Mongolia actually seen rising numbers of mortgage foreclosures? I think banks are still maintaining bad loans of less than 10%, at least I haven't heard any news saying otherwise yet.

Ian · 9 months ago

This is a great blog. I've just bookmarked it. I was, at one time, one of only a handful of Westerners alllowed into Mongolia. I remember when the first adventurers and travel writers, like Tim Severin, arrived, and my office mate, Boshight, who was his guide, took part in the hunger strike which led to the overthrow of the communist government. It's really opened up since.

Reader · 9 months ago

And Jasper Becker? I love his book "Mongolia: The Lost Country" - a very good portrayal of those times. Reading it now makes you realize how much things have changed since then.

Oh wait, what's this post about? The stimulus plan? Uhh...

bio · 9 months ago

Omg, Mongolbank is rasing its policy rate from 9.5 to 14%! They're justifying this by citing the possibility of ppl putting more money into their current accounts with higher rates. What kinda central bank policy is this? What about the deflationary pressures? What about the economic activity? Have they gone mad???