AKIPRESS.COM - President of Mongolia Khaltmaa Battulga has vetoed Mongolia's state budget 2018 law which was previously approved by the Parliament.

The reason for declining to adopt the 2018 budget was "the projected deficit would violate the terms of an International Monetary Fund (IMF) bailout agreement," Reuters reports.

Mongolia and the IMF agreed to a $5.5 billion bailout in May 2017 to stabilize its floundering economy and its currency, the tugrik, which went into freefall last year. In return, Mongolia agreed to end expansionary monetary policies, introduce austerity measures, raise some taxes and reduce welfare spending.

But parliament did not meet the terms agreed with the IMF after failing to narrow the deficit in next year’s budget, President Khaltmaa Battulga said in a notice published on his official website.

The president said the 2018 budget deficit would amount to 2.5 trillion tugrik ($1.03 billion) or 9.5 per cent of gross domestic product, with planned expenditure at 7.7 trillion tugrik.

He said both expenditure and the deficit for 2017 and 2018 have continued to rise at the same rate as in previous years.

Battulga also criticized “inefficient investment projects” and plans for the construction of state-owned buildings while citizens were forced to pay higher taxes. A new progressive income tax will be levied at between 10 and 25 percent starting from Jan. 1, compared with a flat rate of 10 percent now.