ULAN BATOR, July 1 (Xinhua) -- The Bank of Mongolia, the country's central bank, said on Monday that its purchase of gold decreased by 12 percent in the first half year over the same period last year.
The Bank of Mongolia has purchased a total of around six tons of gold from legal entities and individuals in the January-June period.
The decline was mainly related to the expiration of the effective period of low royalty taxes on gold with the 2014 amendments to the Minerals Law, according to experts from the central bank.
The 2.5 percent of discounted royalty on gold mining ended on Jan. 1. From then on, 5 to 10 percent royalty taxes on gold mining have been imposed on miners, resulting in the central bank's gold purchase being down 71.6 percent year-on-year in the January-March period.
To revive the central bank's gold purchases, the country's parliament has set the gold royalty at a 5 percent rate.
Gold purchase by the Bank of Mongolia has been increasing sharply thanks to the discounted royalty on gold mining, the central bank said in a statement, noting that it has purchased a total of 5.2 tons of gold since the new rate came into force on April 8.
Purchasing gold is said to be one of the key instruments for the Mongolian central bank to increase its official foreign exchange reserves.
The Bank of Mongolia purchased only 12.7 tons of gold in 2014. Thanks to the low royalty taxes on gold with the 2014 amendments, its annual gold purchase almost doubled in 2018, reaching 22 tons, according to the bank.