Budget expenditure reform Budget Expenditure Division Fiscal Policy

  • Slides: 29
Download presentation
Budget expenditure reform Budget Expenditure Division Fiscal Policy and Planning Department

Budget expenditure reform Budget Expenditure Division Fiscal Policy and Planning Department

Brief 1. 2. 3. Current situation of budget expenditure Budget expenditure reform – planned

Brief 1. 2. 3. Current situation of budget expenditure Budget expenditure reform – planned measures Annex

Current situation of budget expenditure

Current situation of budget expenditure

Percentage of budget expenditure of GDP has been increasing � Percentage of budget expenditure

Percentage of budget expenditure of GDP has been increasing � Percentage of budget expenditure of GDP, the main indicator measuring the government involvement in the economy, is relatively high. Although the percentage of budget expenditure of GDP fluctuates annually, as of the last 10 years, the performance depicts a growing trend. 60% 50% 40% 30% 54% 46% 20% 45% 49% 37% 33% 39% 2012 2013 36% 10% 0% 2006 2007 2008 2009 2010 2011 ДНБ-д төсвийн зарлагын эзлэх хувь Percentage of budget expenditure of GDP 2014

Structure and dynamics of aggregated budget expenditure Changes in total expenditure: 2000 -2014 Recurrent

Structure and dynamics of aggregated budget expenditure Changes in total expenditure: 2000 -2014 Recurrent expenditure УРСГАЛ Capital ЗАРЛАГА expenditure ЭРГЭЖ ТӨЛӨГДӨХ ЦЭВЭР ЗЭЭЛ Төсвийн нийт зарлага 7, 293. 8 8, 000. 0 6, 629. 9 6, 017. 8 1% 4, 997. 0 1% 33% 25% 10% 7, 000. 0 6, 000. 0 5, 000. 0 4, 000. 0 3, 080. 7 3, 000. 0 2, 000. 0 1, 000. 0 429. 7 489. 9 550. 5 615. 8 752. 5 2000 2001 2002 2003 2004 0. 0 -1, 000. 0 Total budget expenditure Refundable net credit ХӨРӨНГИЙН ЗАРДАЛ 2, 466. 82, 336. 6 1, 747. 3 3% 4% 1, 237. 0 5% 20% 17% 764. 6 6% 15% 79% 71% 78% 79% 2005 2006 2007 2008 2009 26% 8% 19% 73% 2010 28% 65% 2011 74% 66% 2012 2013 71% 2014 Changes in recurrent expenditure: 2000 -2014 Subsidy and recurrent Other expenditure of commodity and Цалин, хөлс ба НДШимтгэл Татаас ба урсгал шилжүүлэг Wage and SI contribution remittance services Бараа, үйлчилгээний бусад зардал Зээлийн үйлчилгээний төлбөр Credit service payment RECURRENT УРСГАЛ ЗАРЛАГА EXPENDITURE Thousands 6, 000. 0 5, 000. 0 4, 000. 0 3, 000. 0 2, 000. 0 1, 000. 0 5, 326, 301 4, 671, 881 4, 428, 112 7. 5% 8% 3% 20% 3, 236, 403 20% 22% 1% 2, 256, 667 22% 1, 842, 919 42. 5% 1, 761, 191 41% 51% 2% 1, 367, 668 23% 982, 350 2% 1% 52% 21% 29% 3% 46% 314, 119 366, 838 415, 309 434, 832 538, 699 600, 289 2% 28% 43% 39% 30% 51% 29% 50% 26% 4% 41% 25% 28% 29% 34% 31% 32% 20% 24% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Budget policy follows cycles ДНБ-ийн өсөлт GDP growth 70. 0% ДНБ-ий бодит өсөлт Actual

Budget policy follows cycles ДНБ-ийн өсөлт GDP growth 70. 0% ДНБ-ий бодит өсөлт Actual growth of GDP Нийт зарлагын өсөлт Growth of total Linear(ДНБ-ий бодит өсөлт) Linear (Actual growth of GDP) expenditure 62. 2% 60. 0% 50. 0% 41. 2% 41. 1% 40. 0% 31. 8% 30. 0% 22. 6% 20. 0% 10. 0% 7. 7% 0. 0% 2006 -10. 0% 2007 20. 4% 17. 5% 12. 3% 6. 4% 2008 -1. 3% 2009 -5. 3% 2. 7% 2010 GDP /MNT ДНБ /тэрб. төг/ in billion/ 2011 2012 2013 2014 2015 Нийт зарлага /тэрб. төг/ Total expenditure /MNT in billion/ 25, 000. 0 20, 782. 7 17, 219. 5 20, 000. 0 15, 000. 0 10, 000. 0 5, 000. 0 18. 1% 14. 7% 11. 7% 4, 027. 6 4, 956. 6 2007 6, 555. 6 6, 590. 6 2008 2009 8, 414. 5 11, 087. 7 13, 944. 2 0. 0 2011 2012 2013 2014

Growth of recurrent expenditure has been declining Инфляци Inflation 0. 6 0. 5 growth

Growth of recurrent expenditure has been declining Инфляци Inflation 0. 6 0. 5 growth 48. 9% growth 51. 7% 30. 4% 0. 3 28. 0% 23. 2% 14. 0% 0. 2 4. 8% 8. 3% 0. 4% 2007 2008 14. 3% 13. 8% -1. 0% 0 -0. 1 валютын ханшны өсөлт Exchange rate 39. 7% 0. 4 0. 1 төсвийн зарлагын өсөлт Budget expenditure 11. 1% 9. 4% 1. 9% 2009 -0. 3% 2010 2011 2012 19. 2% 5. 0% 11. 2% 10. 0% 3. 8% 2013 2014 14. 2% -12. 9% -0. 2 Changes compared with previous years 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 Total budget expenditure - 41. 1% 41. 2% -5. 3% 31. 8% 62. 2% 20. 4% 2. 7% 18. 1% 2 Recurrent expenditure - 31. 0% 28. 8% 1. 5% 26. 2% 43. 4% 36. 8% 3. 0% 16. 8% - 50. 8% 63. 8% 6. 6% 12. 6% 23. 7% 49. 1% 16. 9% 12. 9% Wage and SI contribution Other commodity and services - -24. 1% 35. 6% -22. 8% 31. 5% 35. 4% 21. 8% 16. 2% 8. 5% Subsidy and remittance - 147. 9% 1. 5% 14. 9% 65. 5% 29. 8% -15. 8% 16. 4% Credit interest - 1. 5% 1. 3% 32. 9% 21929. 9 -98. 7% % 105. 6% -86. 6% 320. 4% 71. 0% 6. 2% 17. 8% 22. 1% 4. 2% 14. 3% 9. 4% 14. 2% 12. 5% 12. 2% 4 Exchange rate (USD/MNT) - 0. 4% 8. 3% 13. 8% -12. 9% 11. 1% -0. 3% 19. 2% 7. 3% 5 Actual growth of GDP -1. 3% 6. 4% 17. 5% 12. 3% 11. 7% 14. 7% 3 Inflation

Credit interest expenditure depicts an increasing trend Percentage of credit interest of recurrent expenditure

Credit interest expenditure depicts an increasing trend Percentage of credit interest of recurrent expenditure 16. 0% 14. 0% 12. 0% 10. 0% 8. 0% 6. 0% 4. 0% 2. 0% 0. 0% 14. 8% 10. 3% 7. 6% 5. 9% 8. 7% 5. 9% 4. 6% 1. 5% 0. 1% 2006 2007 2008 2009 Зээлийн хүүгийн эзлэх хувь 2010 2011 2012 2013 2014 Linear(Зээлийн хүүгийн эзлэх хувь) Besides foreign credit interest, expenditure of domestic credit interest has been increasing. It is affected by the state budget deficit, which is higher than the overall budget deficit (2%). Furthermore, issuing of commercial bond and liability has a risk to increase credit interest expenditure.

Structure of recurrent expenditure by sectors Recurrent budget expenditure of Mongolia by sectors Нийгмийн

Structure of recurrent expenditure by sectors Recurrent budget expenditure of Mongolia by sectors Нийгмийн хамгаалал Social protection 31. 0% Боловсрол Education 19. 3% Нийтийн үйлчилгээ Public services 10. 2% 8. 6% Эрүүл. Health мэнд 7. 1% Нийгмийн. Public order хэв журам Budget expenditure of EU members by sectors Нийгмийн хамгаалал Social protection 39. 0% Эрүүл мэнд Health 14. 4% Нийтийн үйлчилгээ Public services 12. 8% Боловсрол Education 10. 7% Батлан хамгаалах Defense 4. 5% Эдийн засгийн хөгжил Economic Эдийн засгийн бусад Other economical 4. 0% development Нийгмийн хэв журам 3. 9% Public order Батлан хамгаалах 3. 3% Хөдөө аж ахуй Agriculture 2. 1% Соёл урлаг, чөлөөт цаг Culture/entertainment 1. 8% Орон сууц, нийтийн ахуй Housing and utility 0. 8% Эрчим хүч Power 0. 6% Тээвэр, холбоо Transport/communication 0. 6% Эрдэс баялаг, уул уурхай Minerals/mining 0. 5% 9. 6% Defense Соёл урлаг, чөлөөт цаг 2. 4% Culture/entertainment Орон сууц, нийтийн орчин 2. 0% Housing and utility Байгаль орчин 1. 8% Nature/Environment Percentage of public order and defense of total budget expenditure is relatively high.

Main factors affected recurrent expenditure growth for the last 10 years Subsidy and recurrent

Main factors affected recurrent expenditure growth for the last 10 years Subsidy and recurrent Wage and SI contribution Татаас ба урсгал шилжүүлэг remittance Цалин, хєлс болон НДШ-ийн expenditure зардал Бараа, үйлчилгээний бусад зардал Other commodity and Credit service payment Зээлийн үйлчилгээний төлбөр service expenditure 5, 000. 0 397. 8 380. 2 8. 6% Credit interest expenditure 1, 065. 6 4, 000. 0 889. 1 20. 1% Commodity and service expenditure 3, 000. 0 1, 541. 5 1, 399. 0 31. 6% 2, 000. 0 Wage related expenditure 1, 000. 0 1, 979. 1 17. 6 1, 859. 3 Subsidy and remittance expenditure 176. 5 142. 4 0. 0 2003119. 8 он 2003 10 42. 0% 2013 он 2013 Зөрүү Difference

Main factors affected recurrent expenditure growth § For the last 10 years, recurrent expenditure

Main factors affected recurrent expenditure growth § For the last 10 years, recurrent expenditure has increased by 10. 4 times, and net growth has increased by 4. 4 trillion MNT. Affecting factors 1. 3. Percentage of total expenditure growth 1. Цалин+НДШ зардлын нэмэгдэл Incremental wage+SI contribution expenditure 2. Тэтгэвэр, тэтгэмжийн өсөлт 2. Benefit increase 31. 6% 18. 6% 3. БҮБЗ-ын өсөлт /ХО, бусад шалтгаанаар/ Other commodity and service expenditure increase /investment, by other reasons/ 4. Нийгмийн халамжийн зардал 4. Social welfare expenditure 5. ОН-ын төсөвт олгох татаас 5. Subsidy to local budget 6. Зээлийн үйлчилгээний төлбөр 6. Credit service payment 7. Инфляцийн нөлөөлөл /БҮБЗ-д/ Inflation affect /to other commodity and service expenditure / Out of which, 8% is vacancy related wage expenditure growth. 11. 7% 10. 9% 9. 6% 8. 4% 0. 0% 10. 0% 20. 0% 30. 0% 40. 0%

Factors affected expenditure changes, in detail /MNT in million/ No CHANGES IN TOTAL RECURRENT

Factors affected expenditure changes, in detail /MNT in million/ No CHANGES IN TOTAL RECURRENT EXPENDITURE 1 Wage and SI contribution expenditure Average wage of civil servants increased by 9. 4 times Number of civil servants increased by 38. 5 thousand 2 Other commodity and service expenditure Price level changed– 3. 2 times Others /Service coverage, investment objects etc. / 3 Credit service payment Foreign credit service increased Domestic credit service increased 4 Subsidy and recurrent remittance a. SI fund benefit increased b. Social welfare expenditure increased: Basic welfare expenditure increased New welfare types appeared Cash delivered to public c. Benefit in education sector d. Subsidy to power and heating deficit Subsidy to municipal transportation Subsidy to local budget Subsidy to agricultural sector TOTAL RECURRENT EXPENDITURE 2003 2013 Changes Percentage of total expenditure growth 1, 399, 049. 7 1, 095, 793. 2 31. 6% 176, 496. 1 1, 065, 644. 8 339, 948. 4 889, 148. 6 371, 605. 1 7. 7% 20. 1% 17, 649. 4 397, 805. 8 12, 826. 5 125, 948. 2 4, 822. 8 271, 857. 6 119, 794. 3 1, 979, 140. 8 87, 504. 6 910, 482. 3 19, 822. 2 502, 555. 3 19, 678. 5 146, 503. 0 0. 0 116, 052. 3 0. 0 240, 000. 0 120, 000. 0 12, 467. 5 566, 103. 2 7, 853. 3 33, 966. 5 1, 523. 4 46, 550. 7 3, 090. 8 429, 586. 0 0. 0 56, 000. 0 470, 028. 8 4, 900, 000. 0 517, 543. 5 380, 156. 4 113, 121. 6 267, 034. 8 1, 859, 346. 5 822, 977. 7 482, 733. 1 126, 824. 5 116, 052. 3 240, 000. 0 120, 000. 0 553, 635. 7 26, 113. 2 45, 027. 3 426, 495. 2 56, 000. 0 4, 429, 971. 2 11. 7% 8. 6% 2. 6% 6. 0% 42. 0% 18. 6% 10. 9% 2. 6% 5. 4% 2. 7% 12. 5% 0. 6% 1. 0% 9. 6% 1. 3% 100. 0% 142, 440. 1 1, 541, 489. 8 12 24. 7% 8. 4%

 800. 0 700. 0 600. 0 140. 4 138. 8 500. 0 126.

800. 0 700. 0 600. 0 140. 4 138. 8 500. 0 126. 1 124. 9 125. 0 149. 0 135. 2 154. 5 152. 1 160. 1 168. 5 176. 8 180. 6 662. 9 687. 3 180. 0 588. 5 301. 3 200. 0 100. 0 - 62. 3 2002 85. 2 70. 2 2003 2004 95. 2 121. 9 2005 2006 Төрийн албан хаагчдын тоо Number of civil servants 346. 3 314. 5 150. 0 120. 0 400. 0 300. 0 210. 0 90. 0 413. 8 60. 0 30. 0 182. 6 2007 2008 2009 2010 2011 2012 2013 бат 2014 definite projected төсөл - Төрийн албан хаагчдын сарын дундаж цалин /төг/ Monthly average wage of civil servants (MNT) 20. 0 15. 0% Since 2003, an objective to decrease vacancies by 10 -15% has defined. 15. 0 10. 0% 5. 0 -1. 7 -12. 7 -1. 1 0. 0 10. 2 13. 8 3. 1 2. 4 5. 6 8. 4 8. 3 3. 4 0. 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -5. 0% 0. 0 2003 2004 -5. 0 -10. 0% -10. 0 -15. 0 Changes in number ТАХ-ын тооны өөрчлөлт of civil servants -15. 0% Нэмэгдэж буй хувь Increasing percentage Vacancy, thousand persons Average wage, in thousand Civil servant vacancy 2003 -2014 (in thousand persons)

For the last 10 years, an average wage has increased by 10 times 800.

For the last 10 years, an average wage has increased by 10 times 800. 0 700. 0 662. 9 588. 5 600. 0 Thousand MNT 687. 3 500. 0 413. 8 400. 0 301. 3 300. 0 346. 3 182. 6 200. 0 100. 0 314. 5 62. 3 20. 6 70. 2 21. 0 2002 2003 85. 2 21. 8 95. 2 24. 6 121. 9 38. 4 55. 6 90. 8 93. 1 94. 5 107. 5 117. 9 135. 1 192. 3 2004 2005 2006 2007 2008 2009 2010 2011 Хөдөлмөрийн хөлсний доод хэмжээ /төг-сарын/ Minimum wage (MNT/month) Minimum livelihood threshold (national average – person/month) Амьжиргааны доод түвшин /Улсын дундаж -1 хүн сард/ Төрийн албан хаагчдын сарын дундаж цалин Monthly average wage of civil servants Хувийн салбарт ажиллагчдын сарын дундаж цалин Monthly average wage of private sector 14 2012 2013 2014 2013 бат 2014 төсөл definite projected

Increase of pension since 2007 300000 254687 250000 221800 200000 162000 126940 150000 2007.

Increase of pension since 2007 300000 254687 250000 221800 200000 162000 126940 150000 2007. 01 2007. 05. 02 2007. 10. 01 2008. 01 2010. 01 2012. 05. 01 172200 207300 145200 180300 105200 140300 70200 105300 54000 81000 45000 69503 67500 0 96430 80360 37500 51750 50000 34500 64290 56250 100000 2014. 01 - Law on 2014. 01 - Complementing working years and pension АЖТДШНТ insurance contribution Бүрэн тэтгэврийн доод хэмжээ Minimum of complete pension Хувь тэнцүүлсэн тэтгэврийн доод хэмжээ Minimum of pro rata pension Дундаж тэтгэвэр Average pension Years Pension increase rate and amount Period of increase Resolution 2007 (Pension *15%) 2007. 01 2007. 05. 02 2007 Pension + (from 7500 to 11250₮) 2007. 10. 01 2008 (Pension *20%) 2008. 01 2010 (Pension *30%) 2010. 01 Pension + 35, 000₮ 2012. 01 (Pension + 35, 000₮)*23% 2012. 05. 01 Government Resolution 15 of 2007 Government Resolution 110 of 2007 Government Resolution 241 of 2007 Government Resolution 355 of 2007 Government Resolution 241 of 2010 Government Resolution 80 of 2012 Government Resolution 153 of 2012 2014. 01 - Law on

Changes in welfare expenditure: 2003/2014 No Types of expenditure I. Types of continuing welfare

Changes in welfare expenditure: 2003/2014 No Types of expenditure I. Types of continuing welfare types 1 2 3 4 5 6 7 II. 8 Welfare pension Welfare benefit Social welfare and nursing services Social welfare services for disabled Discount and services for elders Discount for Partisans of people’s revolution, State heroes, Labor heroes and Public titleholder elders Benefit for distinguished mothers Types of welfare appeared for the last 10 years Benefit for pregnant and nursing mothers 9 Single benefit for veterans 10 Participatory approach welfare services 11 Conditional grant to support livelihood 12 Food support 13 Specialized nursing services 14 Benefit for reindeer people III. Other grant 15 Children’s money TOTAL 2003 2014 Number of people MNT /in mln/ people involved 354, 091 19, 559. 2 522, 352 39, 748 5, 739. 2 66, 098 152, 376 10, 049. 8 31, 292 33, 272 306. 7 19, 283 985. 2 55, 248 107, 141 2, 400. 0 169, 644 MNT /in mln/ 176, 625. 8 90, 422. 1 19, 826. 6 14, 306. 6 17, 882. 4 2, 271 78. 5 3, 550 2, 983. 2 - 196, 520 287, 413 80, 134 1, 447 31, 205. 0 88, 105. 6 38, 464. 3 3, 396. 8 58, 582 9, 826. 0 354, 091 19, 559. 3 42, 400 100, 450 25, 844. 4 9, 986. 3 137. 8 450. 0 240, 000. 0 504, 731. 4 4, 400 1, 000, 000 1, 809, 765

Deficit of Pension insurance fund has been increasing annually Billion MNT 783. 4 198.

Deficit of Pension insurance fund has been increasing annually Billion MNT 783. 4 198. 5 38. 7 12. 6 1995 17. 3 80. 9 2000 2005 53. 7 121. 0 Тэтгэврийн даатгалын сангийн орлого Revenue of pension insurance 2010 2014 (185. 9) 332. 1 Тэтгэврийн даатгалын сангийн зарлага Expenditure of pension insurance fund Deficit Алдагдал 969. 3 Pension insurance fund expenditure of 969. 3 billion MNT occupies 18. 2% of total recurrent expenditure of aggregated budget. According to the World Bank actuarial consultant projection, deficit of pension insurance fund will increase annually reaching 8% of GDP in 2035, and 12% in 2050, respectively. 17 Source: World bank PROST projection

Budget expenditure reform

Budget expenditure reform

GOAL 1: Decrease budget deficit and increase stockpiling through implementing anti-cycle budget policy OBJECTIVES

GOAL 1: Decrease budget deficit and increase stockpiling through implementing anti-cycle budget policy OBJECTIVES 1. Limit budget expenditure growth at macro level MEASURES TO BE IMPLEMENTED Develop and have approved proposal to limit the budget-cycle following policy measures, which mainly affect expenditure growth at macro level: • Reflect the issue to not increase revenue and expenditure submitted by Government in Law on Budget Sustainability and Law on Budget; • Study and develop legal regulation to not exceed recurrent expenditure growth than population growth, previous year inflation and expected performance average of present year inflation /budget midterm framework, annual budget limit/; • Establish legal environment to index wage and pension only reflecting inflation and labor productivity growth;

GOAL 1: Decrease budget deficit and increase stockpiling through implementing anti-cycle budget policy OBJECTIVES

GOAL 1: Decrease budget deficit and increase stockpiling through implementing anti-cycle budget policy OBJECTIVES Decelerate expenditure growth and improve government property management through extending partnership of public and private sectors MEASURES TO BE IMPLEMENTED Elaborate proposal on reducing government involvement in economy through developing partnership of public and private sectors; Within this scope, thoroughly study and make a decision on the following issues based on the analysis of obligations: • In cooperation with related ministries, study and make a decision on the issues to shift some budget institutions and state budgeted manufactures to self-sustained, and to privatize state and local property entities; • Study and make a decision on the issue to give the right of privatization to local authorities considering the increase of property use expenditure along local investment growth; • Reduce subsidy to state property companies; • Have schools, kindergartens and hospitals built by concession, and let private sector be in charge of the services; • Have some government services implemented by private sector; For instance, have security and services for local schools, hospitals, kindergartens and cultural centers implemented through contractors; • Privatize health resorts affiliated to budget institutions /Civil Aviation Authority, Police, Ministry of Defense, Customs General Administration etc/

GOAL 2: Save budget expenditure and improve effectiveness OBJECTIVES MEASURES TO BE IMPLEMENTED Develop

GOAL 2: Save budget expenditure and improve effectiveness OBJECTIVES MEASURES TO BE IMPLEMENTED Develop proposal on structural and management changes towards improvement of budget expenditure effectiveness; Within this scope, thoroughly study and make a decision on the following issues based on the analysis of obligations: • Enhance budget effectiveness • through elimination of duplication Integrate duplicated budget institutions; Integrate universal services such as cleaning, maintenance and security of local, ministerial and state organizations, or have some services implemented through contractors; • Standardize services and finance performance by normal; • Reduce number of funds through amendment of Law on Government Specific Funds, and save through reducing number of secretariats or their integration.

GOAL 2: Save budget expenditure and improve effectiveness OBJECTIVES MEASURES TO BE IMPLEMENTED Reduce

GOAL 2: Save budget expenditure and improve effectiveness OBJECTIVES MEASURES TO BE IMPLEMENTED Reduce vacancies of budget institutions up to 20%, limit and freeze in relation with the measures to change structure and management, support partnership of public and private sectors and eliminate duplication; At the same time, in cooperation with related ministries, take measures not to increase unemployment rate through transferring or mediating the released staff to other vacancies, involving in employment programs and implementing specific programs; • Limit vacancy related recurrent expenditure growth • • • Have Government resolution on not creating new vacancies at budget institutions approved and enforced; Clearly reflect this issue in the guideline for 2015 revenue limit and annual budget planning; In 2012 -2013, study cases and reasons of failure of the article in Law on Budget on vacancy limit of budget institutions to be defined by Minister of Finance, and develop and enforce required legal acts; Approve and enforce reference vacancy normal in education and health sectors; Study and make a decision on the issue not to include labor contractors with civil services in the category of civil servants; Survey vacancies of contractors and as the first step, reduce unrequired vacancies up to 50%; Establish data system on vacancies and their changes at budget institutions, and connect it with the budget planning system; Subtract management vacancies /Deputy Governor, Deputy Heads of Departments at Ministries and Agencies etc. / at budget institutions;

GOAL 2: Save budget expenditure and improve effectiveness OBJECTIVES MEASURES TO BE IMPLEMENTED Reduce

GOAL 2: Save budget expenditure and improve effectiveness OBJECTIVES MEASURES TO BE IMPLEMENTED Reduce some commodity and service expenditure for basic and support services for budget institutions Freeze and reduce some commodity and service expenditure that can be tolerated • Reduce use civil service vehicles; Introduce regulation that only Government members use vehicles, and other civil servants use on-call services; • Reflect in related regulations and enforce the requirement to choose less fuel spending or liquefied gas using vehicles for city transportation when planning and managing procurement; • In order to reduce expenditure for meetings, conferences, seminars and training, limit organizing these events in expensive hotels, more than 2 days and/or gathering a large number of participants, and adopt e-methodology using advanced communication technology; Within this scope, define related expenditure norm, and enforce from 2015 fiscal year; • Nullify expenditure for furniture procurement in 2015 -2016 fiscal years; • Develop and enforce expenditure normal per civil administrative servant; • Make a decision not to spend budget saving for incentives;

GOAL 2: Save budget expenditure and improve effectiveness OBJECTIVES MEASURES TO BE IMPLEMENTED Analyze

GOAL 2: Save budget expenditure and improve effectiveness OBJECTIVES MEASURES TO BE IMPLEMENTED Analyze impact and effectiveness of some considerable programs and measures to economy and society: Correlate government subsidy and support to some programs with outcome and responsibilities • Benefit to students (whether to relate with achievement and presence) • Subsidy and incentives to herders, producers and importers (whether increases production and export) • Compensation for stamped out livestock due to highly contagious animal diseases (whether herders will be responsible for involvement of livestock in vaccination) • Subsidy to student transportation (whether to reduce or cancel)

GOAL 2: Save budget expenditure and improve effectiveness OBJECTIVES MEASURES TO BE IMPLEMENTED Improve

GOAL 2: Save budget expenditure and improve effectiveness OBJECTIVES MEASURES TO BE IMPLEMENTED Improve relationship and effectiveness between capital and recurrent expenditure Enhance effectiveness of recurrent expenditure in relation with budget investment • Enhance integrity of relationship between capital and recurrent expenditure at the planning stage; • Budget and administrative institutions not to construct individual buildings; Do best to jointly manage and cheapen space use and service expenditure; • Not to implement less effective projects, which increase recurrent expenditure from local and state budget investment • Include an additional criterion for projects and programs to be implemented by Local Development Funds not to increase local basic and permanenttype recurrent expenditure;

GOAL 3: Improve budget responsibility and transparency, and equally distribute the government basic services

GOAL 3: Improve budget responsibility and transparency, and equally distribute the government basic services to the public OBJECTIVES MEASURES TO BE IMPLEMENTED Based on the actuarial projection and recommendation developed by an international consultant, analyze the following issues in the pension reform options Implement effective, equal and accessible social protection policy • Estimate mid and long-term impacts of pension reform options to budget, and define budget capacity; • Define possible options to implement pension reform, and sources and methodologies to finance; • Develop index-based pension approaches;

GOAL 3: Improve budget responsibility and transparency, and equally distribute the government basic services

GOAL 3: Improve budget responsibility and transparency, and equally distribute the government basic services to the public OBJECTIVES MEASURES TO BE IMPLEMENTED Have prepared for transferring from traditional to result-based program budgeting Improve budget effectiveness through improving budget planning techniques and enhancing integrity of planning and performance • In order to correlate budget classifications, review and update structure and stages of existing programs, measures, financial sources and economic classification, and pilot from 2015 fiscal year; • Have developed and approved Law on Government Specific Funds; • Develop and enforce procedures to rationalize financing approaches for social basic services to the public such as first stage health aid and education; • Strengthen capacity of related staff of budget institutions;

Measures to be implemented � Develop required legal environment changes and submit to the

Measures to be implemented � Develop required legal environment changes and submit to the Parliament and Government for decision; � Organize a complete survey and follow-up recommendation on civil structure and obligations, and define and implement policy on civil service reform; � Reflect appropriate changes on saving and optimizing recurrent expenditure in 2014 budget amendment and 2015 budget plan; � Organize step-wise activities to rationalize and reform required standards and normal for effective budget expenditure;

Thank you for your attention

Thank you for your attention