Development Bank Ceo Speaks About Road Financing

Trans. by B.DULGUUN

Meat is supplied to the capital from three eastern provinces of Mongolia. It used to take two months for three hired shepherds to collect 600 sheep from eastern provinces and bring them to Ulaanbaatar. It's reported that the total cost of transportation amounted to 20 million MNT within the span of two months.

Now, it's become possible to transport 600 sheep to the capital within a day by truck thanks to a new road connecting Ulaanbaatar with Sukhbaatar, Dornod and Khentii Provinces. The total expense has dropped to four million MNT, according to a company that exports canned meat to Russia.

CEO of the Development Bank of Mongolia N.Munkhbat gave an interview about the economic benefits of new roads.

How much was invested for constructing roads connecting Ulaanbaatar and eastern provinces? Many people complain that investments are recovered for a long time and that the majority of bond investments were spent on road constructions. Can you comment on this?

During the four years since the establishment of the Development Bank, our bank has been actively financing development projects. The total amount of financing has exceeded five trillion MNT.

The Development Bank primarily invests in three directions. One of them is infrastructure. Hard infrastructure is essential for a nation. Around 1.4 trillion MNT has been spent on road projects, Street Project, and Ulaanbaatar's engineering infrastructure, networks and cable lines. Hard infrastructure is unique because it isn't a business activity. Its economic benefit is shown indirectly. This type of investment takes 28 percent of the total portfolio. The remaining 72 percent is spent on financing projects of government and non-government organizations that will give off profit to some extent. The private sector's projects are financed through commerce banks. Our bank is also investing in large projects for the Third and Fourth Thermal Power Plants, Amgalan Thermal Power Plant, three cement and metallurgical plants, MIAT Mongolian Airlines' Boeing 767-300ER aircraft, and the Tavan Tolgoi project.

It's become clear that engineering infrastructure and Street Project are economically beneficial, but the public is unsure whether road projects are beneficial. The Ministry of Roads and Transportation has researched and made calculations on this. Our bank made estimations using economic calculations of professors of the National University of Mongolia. Overall, the Development Bank is...