Mongolia's new government faces old problems - BUSINESS NEW EUROPE: "The term "Dutch Disease" may have originally been coined in relation to a gasfield in The Netherlands, but Mongolia is finding out that it can just as well apply to coal. This "black gold" that propelled Mongolia's economic growth to a record 17.3% in 2011 is now in a sudden glut and Chinese demand has dropped off a cliff, and the country's new government is learning the hard way about how reliance on a few commodities can endanger the economy.
Mongolia shipped 21.1m tonnes of coking coal to China in 2011 worth $2.25bn, up 26% in volume and a staggering 155% in terms of value from the previous year. The coal excitement reached its peak exactly a year ago in September 2011, when 2m tonnes were sent across the country's southern border to rake in $380m for those in on the deal. The country overtook Australia as China's main coal supplier and the previous government's coffers began to swell with royalty and tax revenue, which it swiftly dealt out to its citizens in preparation for the elections in June this year. But the handouts didn't work, and now a new government has taken the reins. "
'via Blog this'
