World Bank2012-03-192012-03-192009-01-02https://hdl.handle.net/10986/3017Mongolia's external economic outlook is dramatically changing as it faces sharp reductions in the copper price, caused by the financial crisis and global downturn. This compels the government now to drastically cut spending to prudently manage the budget. The budget is extremely dependent on mining revenues. Government is taking the right step in proposing a balanced budget for 2009. But further adjustments will be needed given the continuing fall in copper prices. A prudent fiscal stance will also be needed to manage inflation, which accelerated in the past year to over 30 percent. The current situation highlights the need to manage mining revenues better than in recent years. Mongolia saved little during the boom years, but instead dramatically increased expenditures on wages and salaries, and poorly-targeted social transfers. Adopting a multi-year fiscal framework-which enforces saving during the boom years, sets limits to expenditure growth and debt, and ensures transparency to the public-can help. Since much of the past windfall revenues have been spent, the country enters the down-turn with little savings and high inflation, forcing it to cut expenditures with every drop in the copper price. To avoid such situations in the future, the government has the opportunity to adopt a transparent, multi-year budget framework for expenditures and investment. This includes adopting a new fiscal responsibility law. It will ensure that the government saves during the 'boom' years, so that it can continue to spend during the 'bust' years. It will also set limits to expenditure growth and public debt. Within the limits set by this framework, parliament can then exercise its constitutional rights to amend the budget.CC BY 3.0 IGOACCESS TO INFORMATIONACCOUNTABILITYACCOUNTABILITY MECHANISMSACCRUAL ACCOUNTINGADVERSE CONSEQUENCESAGGREGATE DEMANDALLOCATIONANNUAL BUDGETAUDIT OFFICEAUTOMATIC STABILIZERSBENEFICIARIESBUDGET BALANCEBUDGET CYCLEBUDGET DEFICITBUDGET DEFICITSBUDGET DOCUMENTSBUDGET ENTITYBUDGET FRAMEWORKBUDGET INFORMATIONBUDGET MANAGEMENTBUDGET PLANNINGBUDGET PREPARATIONBUDGET SITUATIONBUDGET SURPLUSESBUDGET SYSTEMBUDGETARY ALLOCATIONSBUSINESS PLANSCAPACITY CONSTRAINTSCAPITAL EXPENDITURESCAPITAL INVESTMENTCAPITAL INVESTMENTSCAPITAL PROJECTSCAPITAL SPENDINGCENTRAL BANKCENTRAL GOVERNMENTCHART OF ACCOUNTSCIVIL SERVICECIVIL SERVICE REFORMCIVIL SOCIETY ORGANIZATIONSCOMMODITY PRICESCOMPETITIVE BIDSCONSUMPTION SMOOTHINGCOST-EFFICIENCYCUT SPENDINGCYCLICAL FACTORSDEBTDEBT BURDENDEBT MANAGEMENTDEBT MANAGEMENT SYSTEMDEBT SUSTAINABILITYDISCRETIONARY ACTIONDONOR ASSISTANCEDONOR COORDINATIONDONOR FINANCINGDONOR FUNDINGECONOMIC FLUCTUATIONSECONOMIC GROWTHEDUCATION EXPENDITURESEDUCATION SERVICESEFFICIENCY GAINSEVALUATION CAPACITYEXCHANGE RATEEXOGENOUS SHOCKSEXPENDITURE ASSIGNMENTSEXPENDITURE GROWTHEXPENDITURE MANAGEMENTEXPENDITURESEXTERNAL AUDITFINANCIAL AUDITSFINANCIAL BURDENFINANCIAL CRISISFINANCIAL MANAGEMENTFINANCIAL MANAGEMENT INFORMATIONFINANCIAL MANAGEMENT INFORMATION SYSTEMFINANCIAL MANAGEMENT SYSTEMFINANCIAL MANAGEMENT SYSTEMSFISCAL AFFAIRSFISCAL BALANCEFISCAL CONSOLIDATIONFISCAL DECISIONSFISCAL DEFICITFISCAL DEFICIT TARGETFISCAL DISCIPLINEFISCAL POLICYFISCAL POSITIONFISCAL REVENUEFISCAL RULESFISCAL STANCEFISCAL SUSTAINABILITYGOVERNMENT BUDGETGOVERNMENT DEBTGOVERNMENT EXPENDITUREGOVERNMENT EXPENDITURESGOVERNMENT POLICYGOVERNMENT PRIORITIESGOVERNMENT REVENUESGROSS DOMESTIC PRODUCTHEALTH CAREHEALTH EXPENDITUREHEALTH EXPENDITURESHEALTH FINANCINGHEALTH INSURANCEHEALTH INSURANCE FUNDHEALTH MINISTRYHEALTH OUTCOMESHEALTH SECTORHEALTH SERVICESHEALTH SPENDINGINFLATIONINFORMATION ASYMMETRYINFRASTRUCTURE SERVICESINTERNAL AUDITINTERNAL CONTROLSMACROECONOMIC CONDITIONSMACROECONOMIC STABILITYMANAGEMENT CONTROLSMARKET ECONOMYMARKET FAILURESMASTER PLANMEDIUM-TERM EXPENDITUREMEDIUM-TERM EXPENDITURE FRAMEWORKMEDIUM-TERM FISCAL FRAMEWORKNATIONAL AUDITNATIONAL STATISTICSNATIONAL STATISTICS OFFICEOUTPUT RATIOPERFORMANCE CONTRACTINGPERFORMANCE CONTRACTSPERFORMANCE MANAGEMENTPERFORMANCE MANAGEMENT FRAMEWORKPOVERTY REDUCTIONPRICE INDEXPRIVATE PENSIONPRIVATE SECTORPRIVATE SECTOR GROWTHPROCUREMENT POLICYPROGRAMSPUBLIC BUDGETPUBLIC DEBTPUBLIC DEFICITPUBLIC DEFICITSPUBLIC EDUCATIONPUBLIC EXPENDITUREPUBLIC EXPENDITURE POLICYPUBLIC EXPENDITURE TRACKINGPUBLIC EXPENDITURESPUBLIC FINANCEPUBLIC FINANCESPUBLIC FINANCIAL MANAGEMENTPUBLIC FINANCIAL MANAGEMENT SYSTEMSPUBLIC GOODSPUBLIC HEALTHPUBLIC HEALTH INTERVENTIONSPUBLIC INFRASTRUCTUREPUBLIC INVESTMENTPUBLIC INVESTMENT PROGRAMPUBLIC INVESTMENTSPUBLIC PROCUREMENTPUBLIC RESOURCESPUBLIC REVENUEPUBLIC REVENUESPUBLIC SECTORPUBLIC SECTOR MANAGEMENTPUBLIC SERVICEPUBLIC SERVICE DELIVERYPUBLIC SERVICESPUBLIC SPENDINGRECURRENT EXPENDITURESRESOURCE ALLOCATIONRESOURCE MANAGEMENTREVENUE LEVELSREVENUE SOURCESSCHOOL MANAGEMENTSERVICE DELIVERYSOCIAL ASSISTANCESOCIAL INSURANCESOCIAL PROTECTIONSOCIAL SECURITYSOCIAL SECURITY SYSTEMSOCIAL TRANSFERSOCIAL WELFARESTRENGTHENING BUDGET EXECUTIONSUPREME AUDIT INSTITUTIONSSUSTAINABILITY ANALYSISTAX ADMINISTRATIONTAX COLLECTIONTAX POLICYTOTAL EXPENDITURESTOTAL PUBLIC SPENDINGTRANSPARENCYTREASURY MANAGEMENTTREASURY SYSTEMUNCERTAINTYWorld Bank10.1596/3017