The Mongolian parliament on Thursday started an extraordinary session to discuss the economic crisis facing the country and work on proposed austerity laws.

The country's budget deficit has increased rapidly; foreign investment is drying up; and the exchange rate of the Mongolian currency has been weakening, said Parliament Speaker Miyegombo Enkhbold.

Foreign direct investment nosedived to 35 million U.S. dollars in the first six months this year, compared with 4.6 billion dollars in 2011, he said.

During the extraordinary session, which is set to last until Sept. 15, the parliament is expected to discuss and approve draft laws that either raise taxes or cut social welfare programs such as cash handout for children and scholarships.

Mongolian Prime Minister Jargaltulga Erdenebat is currently working on a budget reform in a bid to reduce deficit and stabilize the economy in the next 18 months.

Aside from mounting budget deficit, the Mongolian government is also worried about 4 billion U.S. dollars of foreign debt it has to pay back in the next five years.

The government has no cash to repay the debt and Finance Minister Battogtokh Choijilsuren told local media that the country has to borrow new loans to pay back the old debt.

The Mongolian economy, heavily dependent on mining, has plunged into deep crisis as a result of falling commodity prices in the global market in recent months.

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