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Mongolia is a vast country, with a population density of 2 people per every square kilometre, so the delivery of public services is often a tricky game.
Delivering better outcomes in health and education, particularly for the most vulnerable citizens, is a perennial concern, both in the capital Ulaanbaatar, which accounts for nearly 40% of Mongolia’s population, and the aimags (provinces) beyond.
The problem is particularly severe in the ger areas (where people live in yurts), once considered to be temporary settlements but now home to an increasing population.
We hope to improve public services by giving citizens a great say in the decision-making processes. This is why the Government of Mongolia, civil society partners, the Open Government Partnership and the Swiss Agency for Development Cooperation have launched a plan to target support for poor and vulnerable sub-segments of Mongolian society.
We have two main objectives. First is to build the capacity of civil society and citizens to help them engage. Second is to support the installation of permanent mechanisms that sustain this initiative – from the publication of data to mechanisms that include citizen feedback in policymaking.
We have selected ten villages across Mongolia to try things out. One village conducted an audit of key processes in education and healthcare. They found that the healthcare procurement system was inefficient, and advised on a new bidding process. For example, pharmaceutical procurement now requires a group of independent experts to sign off large purchases, ensuring less room for corruption and saving 10% of the estimated budget already.
We have also improved feedback management across the country. For example, the Ministry of Health discovered low moral and mistreatment of medical staff, and so villages were encouraged to adopt action plans to improve this.
Helping the vulnerable
New village feedback mechanisms have helped to spot gaps in the system. For example, we discovered that 7,000 temporary residents in Khuvsgul were not receiving basic healthcare, and once included in the system, enabled us to fight tuberculosis. Satisfaction in healthcare increased by 28% in just three months!
These are just a few small examples of how together governments, civil society, and citizens can produce better and more equitable development outcomes when they work together.
Hopefully as the results and the lessons from these micro-projects are consolidated, policy changes at local and national levels will ensure that joint-problem becomes the norm – rather than the exception.
More information on the project can be found here: http://www.irgen-tur.mn/en/what-is-masam
This article was published in partnership with the Open Government Partnership.
Chinese and Mongolian archaeologists have unearthed rare artifacts in a joint excavation in Mongolia. The artifacts include iron belts inlaid with gold and silver and iron swords with wooden scabbards. They include pottery, ironware and bronze items typical of grassland culture, as well as items produced during China's Han Dynasty (202 B.C. -- A.D. 220) such as bronze mirrors. 'This shows that China had close exchanges with the Xiongnu group during the Han Dynasty,’ Zhou Ligang, head of the Chinese archaeological team.
The Xiongnu people were an alliance of nomadic tribes also known as the Huns that emerged around the end of the third century B.C. and had a huge impact on Chinese and world history. During the Han Dynasty, the Xiongnu and China clashed several times.
Launched in July 2017, the collaborative team has been cooperating on surveys, mapping, excavation and research on a Xiongnu cemetery in Arkhangai Province in Mongolia. The site has more than 400 known tombs.
Mongolia is planning to bring back to life the long-delayed and massive Tavan Tolgoi coal rail project in the south Gobi desert. Prime Minister U.Khurelsukh announced that his government will cooperate with China on the project.
Before New Year, Xing Haiming, Chinese Ambassador to Mongolia expressed Beijing's intention of cooperating with the Mongolian railway project to connect Tavan Tolgoi mine to the Gashuun Sukhait border crossings.
Located in the South Gobi desert, Tavan Tolgoi is home to the world’s largest high-quality coking coal deposit used in steelmaking, with reserves estimated in 7.5 billion tonnes. Mongolia is one of biggest coal suppliers to China.
National Statistics Office released the preliminary results of social and economic situations of 2017. According to the report, trade surplus reached a record high of USD 1.9 billion (MNT 4.6 trillion) and trade turnover resulted at USD 10.5 billion. Foreign trade turnover grew by USD 1.3 billion, to USD 6.2 billion.
Minerals export revenue stands at approximately USD 4.9 billion (MNT 12 trillion), of which coal exports made up USD 2.2 billion (MNT 5.3 billion). The coal exports revenue grew by USD 1.3 billion (MNT 3 trillion) and formed 36 percent of total export revenue alone.
Budget deficit reduced drastically thanks to the increase in trade revenue. Cut by MNT 1.9 trillion, the deficit stands at MNT 1.7 trillion. Another key factor to the decline was tax revenue. Specifically income tax, VAT, foreign operation and social insurance revenues contributed significantly; however, budget deficit still resulted higher compared to the same period of the previous year.
Furthermore, national consumer price index for goods and services jumped by 6.4 percent compared to the end of 2016. The growth was mainly due to changes in prices of main consumer goods, namely food products, beverages, potatoes, vegetables and transportation. However, petroleum industry is showing a negative sign.
Money supply reached MNT 15.8 trillion at the end of 2017 displaying MNT 3.6 trillion yoy. The currency issued in circulation totalled MNT 906.4 billion in 2017, a 10 percent increase. Additionally, MNT picked up against USD. The official USD/MNT rate of the Bank of Mongolia rose by 2 percent last month, while CNY/MNT weakened by 10.26 units.
As of the end of 2017, over 7000 private entities reportedly stopped operations. Presently, only around 50.7 percent of 155.1 thousand registered entities are actively operating. From 76.5 thousand inactive companies, 44.7 percent are on a temporary standstill and the remaining 49 percent are inactive.
Singapore, January 18, 2018 -- Moody's Investors Service has today upgraded the Government of Mongolia's long-term issuer ratings and the senior unsecured ratings to B3 from Caa1, and the senior unsecured MTN program rating to (P)B3 from (P)Caa1. The short-term issuer ratings are affirmed at Not Prime. The outlook remains stable.
The key factors driving the rating upgrade are an alleviation in liquidity and external pressures and prospects of a somewhat attenuated sensitivity of Mongolia's credit metrics to fluctuations in commodity prices, if the reforms currently implemented and planned are adhered to.
The refinancing of government debt at the end of last year, combined with measures to narrow the fiscal deficit and windfall gains from higher commodity-related revenues reduce Mongolia's financing needs. In addition, the measures currently implemented under the IMF program, if effective, will contribute to reduce - but not eliminate - the volatility of economic and fiscal outcomes as a result of potential sudden changes in commodity prices and demand.
The stable outlook on Mongolia's B3 rating reflects balanced risks. On the upside, reforms may prove more effective at reducing Mongolia's sensitivity to commodity cycles than we currently envisage. On the downside, and in particular in a less favorable commodity environment, liquidity and external pressures could intensify significantly again. Such a scenario may arise in the event of deviations from the objectives of the reforms planned over time.
Moody's has also raised the local-currency bond and deposit ceilings to Ba2, from Ba3 previously. The long-term foreign currency deposit ceiling is raised to Caa1 from Caa2, and the long-term foreign currency bond ceiling to B1 from B3. All short-term foreign currency ceilings remain at Not Prime. These ceilings act as a cap on ratings that can be assigned to the foreign- and local-currency obligations of entities domiciled in the country.
In October 2017, Mongolia refinanced debt maturities that were due in 2018. The refinancing clears immediate government liquidity pressures, pushing back the next repayments of government external debt to 2021. It also alleviates external risks arising from a thin foreign reserve position relative to maturing debt obligations.
The debt refinancing has combined with a narrowing fiscal deficit on account of higher revenue growth as the government has started to implement fiscal measures and benefited from unexpectedly strong commodity-related revenues. As a result, Mongolia's gross borrowing needs have moderated to an estimated 17.7% of GDP in 2018, from over 30.0% of GDP expected at the beginning of last year, when the rating was confirmed at Caa1 following a review for downgrade. We expect Mongolia's financing needs to decline gradually further, albeit remaining at high levels.
A more favorable commodity price environment and stronger demand for Mongolia's exports resulted in the current account deficit narrowing in 2017, to an estimated 5.3% of GDP from 6.1% of GDP in 2016. Moody's forecasts the current account deficit to narrow further to 4.6% of GDP in 2018. Coupled with disbursements from the IMF and other bilateral lenders and stronger foreign direct investment, this supports accretion to foreign exchange reserves. And with the extension of upcoming maturing debt repayments, reserves coverage of debt payments has improved from very weak levels.
We expect the External Vulnerability Indicator, or the ratio of maturing long term and short term external debt obligations relative to foreign exchange reserves to moderate to 144.5% in 2018 and subsequently fall further from these levels although reserves will remain lower than debt repayments due over the next year. While this ratio is still high compared to other sovereigns rated by Moody's, it represents a material moderation of balance of payments pressure from 420.2% in 2017.
IMPLEMENTATION OF WIDE-RANGING REFORMS TARGETED AT IMPROVING ECONOMIC AND FISCAL FUNDAMENTALS
GDP growth surprised on the upside in 2017. Moody's now estimates that GDP increased by 4.2% in 2017 and 3.3% in 2018. This denotes some capacity of the economy to respond to a favorable external environment, and a greater resilience to fiscal and monetary policy tightening than we previously estimated.
The fiscal deficit and debt burden are also narrowing at a faster pace than we previously expected, partly because of the buoyancy offered by a higher growth and commodity price environment. However, as a commodity-reliant economy, Mongolia's susceptibility to commodity price boom-bust cycles remains high, and is reflected in a wide range of possible outcomes in its deficit and debt metrics when subject to positive or negative economic or financial shocks.
Under our baseline assumptions, higher nominal GDP growth contributes to a stabilization in fiscal and external metrics. In turn, a relatively favorable macroeconomic environment affords the government the ability to implement reforms. Structural benchmarks under the IMF's Extended Fund Facility are a primary focus of government policy. These reforms are centered around increasing accountability and restraint over budgetary spending, improving fiscal health through more effective tax collections and reducing pro-cyclical spending by tightening the budgetary process; strengthening the banking system, and enhancing the independence and effectiveness of monetary policy.
While progress has been made in setting up the regulatory and legal framework, adherence to the current reform plans over a sustained period of time would distinguish the current improvements in headline economic and fiscal metrics from previous cycles. Indeed, past experience indicates that in an adverse commodity price environment, previously implemented rules have been relaxed or circumvented, resulting in a reversion to boom-bust cycles.
RATIONALE BEHIND THE STABLE OUTLOOK
The stable outlook indicates risks to Mongolia's rating are balanced.
On the upside, reforms may prove more effective at reducing Mongolia's sensitivity to commodity cycles than we currently envisage, and both fiscal and external buffers may improve.
On the downside, implementation risks would stem primarily from domestic political risks and commodity price fluctuations, both of which have diminished the effectiveness of past reforms. Since reforms have been implemented in an environment of favorable commodity prices and demand, there remains a risk of slippage to pro-cyclical behavior in an adverse commodity scenario.
The stable outlook also captures the potential credit positive or negative implications of the reforms of the banking system. The results of the banks' Asset Quality Review (AQR) are awaited; they will determine capital shortfalls and lay out a response strategy. We expect that the immediate fiscal costs associated with recapitalization of banks will be moderate. Beside these costs, the government's management of this exercise and the measures that are taken to strengthen governance and financial supervision to prevent a renewed erosion of banks' capital in the future will provide important indicators about potential changes in Mongolia's institutional strength.
WHAT COULD CHANGE THE RATING UP
Upward rating pressure could develop as a result of sustained and effective implementation of structural reforms leading to greater confidence that, even in an adverse commodity price environment, macroeconomic volatility and fiscal pro-cyclicality would be reduced.
A build-up of buffers, evident through a lasting strengthening of Mongolia's external liquidity position and/or a meaningful and durable reduction in the government deficit and debt burden would also be credit positive. In particular, these developments would be accompanied by a steady rise in international reserves and increased certainty about the government's ability to meet external debt repayments.
WHAT COULD CHANGE THE RATING DOWN
We would view signs that reform progress slows or seems ineffective at reducing the volatility of Mongolia's credit metrics as credit negative. A renewed material widening of the fiscal deficit, or a weakening of the external payments position such as through a widening trade balance or a reduction in capital inflows, would also weigh on Mongolia's credit profile.
GDP per capita (PPP basis, US$): 12,272 (2016 Actual) (also known as Per Capita Income)
Real GDP growth (% change): 1% (2016 Actual) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 1.1% (2016 Actual)
Gen. Gov. Financial Balance/GDP: -15% (2016 Actual) (also known as Fiscal Balance)
Current Account Balance/GDP: -6.1% (2016 Actual) (also known as External Balance)
External debt/GDP: 216.3% (2016 Actual)
Level of economic development: Low level of economic resilience
Default history: At least one default event (on bonds and/or loans) has been recorded since 1983.
On 16 January 2018, a rating committee was called to discuss the rating of the Mongolia, Government of. The main points raised during the discussion were: The issuer's governance and/or management, have materially increased. The systemic risk in which the issuer operates has materially decreased. The issuer has become less susceptible to event risks.
The principal methodology used in these ratings was Sovereign Bond Ratings published in December 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable....
Ulaanbaatar, January 17, 2018 — The Asia Foundation announces the appointment of Mark Koenig as country representative in Mongolia. In this role, he oversees the Foundation’s development programs in Mongolia, focused on strengthening governance, empowering women, addressing environmental challenges, and improving access to information and education.
The Asia Foundation has played a unique role in the country’s development since 1990 as the first nonprofit organization to be invited into Mongolia. Today, Koenig leads a dynamic team in Ulaanbaatar working effectively with the government, civil society, and the private sector in Mongolia to strengthen democratic governance and build a foundation for long-term economic prosperity.
Koenig brings more than a decade of experience in governance issues across Asia. Most recently, he served as the deputy director and Urban Governance specialist for The Asia Foundation’s Program Specialists Group working out of the Foundation’s office in Thailand, where he designed urban governance programming in countries including Mongolia, Cambodia, Nepal, and Myanmar.
Mark Koenig has worked at The Asia Foundation in a full-time capacity since 2010, coming from the International Security Sector Advisory Team (ISSAT) in Geneva, Switzerland. At the Foundation, he first focused on program design relating to urban governance, community policing, anti-corruption, and improving public policy processes in a range of countries including Nepal, Afghanistan, Timor-Leste, and Mongolia. In 2013, he became the Foundation’s assistant director for the Program Strategy, Innovation and Learning unit, where he played a leading role in the Foundation’s country strategic planning process, supported the Foundation’s strategic partnership with the Australian government, and implemented programs using innovative adaptive management techniques and political economy strategies to support public policy processes.
Koenig holds a bachelor’s degree in Political Science from the Johns Hopkins University and a master’s degree with a concentration in Law and Development from the Fletcher School of Law and Diplomacy at Tufts University.
The Asia Foundation is a nonprofit international development organization committed to improving lives across a dynamic and developing Asia. Informed by six decades of experience and deep local expertise, our work across the region addresses five overarching goals—strengthen governance, empower women, expand economic opportunity, increase environmental resilience, and promote regional cooperation.
Mining giant Rio Tinto has halted shipments of copper concentrate from its giant Oyu Tolgoi copper mine following a week-long dispute at the border crossing to China and a new tax bill from the Mongolian government.
A dispute between Chinese trucking companies and Mongolian officials over health insurance for drivers has halted coal and copper transport at the remote Gants Mod crossing for over a week.
The mine is once again under political pressure, with Mongolian politicians claiming the country has seen too little benefit from its massive expenditure. The high costs of financing the mine mean that the government will not see its share of profits for several years, although Ulan Bator does receive tax revenues.
Also this week, Rio Tinto’s Canadian-listed subsidiary Turquoise Hill, which holds the shares in the Oyu Tolgoi mine, revealed a new bill for $155m in back taxes, following a Mongolian audit of 2013-2015 tax payments by the mine. The company said it is disputing the assessment.
China's economy grew by 6.9% in 2017 according to official data - the first time in seven years the pace of growth has picked up.
The figure beats Beijing's official annual expansion target of about 6.5%.
China is a key driver of the global economy and so the better-than-expected data is likely to cheer investors around the world.
But many China watchers believe the GDP numbers are much weaker than the official figures suggest.
This month alone, the governments of Inner Mongolia and of the large industrial city of Tianjin have admitted their economic numbers for 2016 were overstated.
Taking the figures at face value, the 2017 growth rate is China's highest in two years. And it represents the first time the economy has expanded faster than the previous year since 2010.
However as Beijing ramps up efforts to reduce risky debt and to increase air quality, analysts said this may impact 2018 growth.
The numbers released on Thursday also showed that in the last three months of 2017, the economy grew at an annual rate of 6.8% - slightly higher than analysts had been expecting.
First, it looks like stronger exports - as the world economy picked up - and the final sputter of (another) government infrastructure investment spurt helped make 2017 better than expected.
But that's the model China is trying - gently - to get away from.
Second, is it true?
China's figures can be so stable, so in line with government targets, that it's hard to really believe them.
In the run up to these figures being published there's also been an unusual spate of honesty from several provincial governments, who've admitted faking their GDP or fiscal figures. All of which fed into the national picture.
China's debt has risen significantly in recent years, with worrying numbers around local government loans, corporate and household debt and non-performing bank loans.
The International Monetary Fund (IMF) said recently that the country's debt had ballooned and was now equivalent to 234% of the total output. It said Beijing needed to concentrate less on growth and instead help improve banks' finances, among other efforts.
Beijing meanwhile says it has been taking steps to contain risky debt despite the impact that might have on economic growth - efforts the IMF said it recognised.
The government has promised to continue tackling local government debt, among other efforts, and on Thursday vowed to help state-owned enterprises "leverage and cut debt ... and to repay their bonds on time this year".
China's strict anti-pollution measures, which were introduced across 28 cities last year, are also expected to hurt economic growth in the short term.
The measures have included shutting down or cutting back production at factories in heavy industry like cement and steel.
Households have also been asked to switch to natural gas and electricity from coal, in an effort to curb pollution.
However this policy left millions without proper heating, and so was temporarily abandoned in December.
Chinese officials have said Beijing's air quality improved sharply in the winter of 2017 and heralded their efforts as a "new reality" for the country....
The Chairman of the State Great Khural (parliament) of Mongolia M.Enkhbold and his spouse will make an official visit to Vietnam from 20 to 23 January.
The visit is made at the invitation of National Assembly (NA) Chairwoman Nguyen Thi Kim Ngan, said the NA Committee for External Affairs.
Vietnam and Mongolia have developed long-standing friendship and multi-faceted cooperation in various fields since they established diplomatic ties in November 1954.
Rio Tinto has hit more turbulence in Mongolia, with blockades near the Chinese border stopping Rio's Oyu Tolgoi mine from delivering copper to customers.
The disruption, caused by protests on the Chinese side of the border, come barely 48 hours after it was revealed that Mongolia had sought $US155 million of allegedly unpaid taxes from Oyu Tolgoi.
The Rio subsidiary that operates Oyu Tolgoi, Turquoise Hill Resources, said the protests had been underway for 10 days and had forced the company to declare force majeure on its copper shipments to Chinese customers.
"The placement of protesters vehicles prevented any traffic from safely traversing the border...and has continued to do so," the company said in a statement.
The focus of the protest was unclear, but Turquoise Hill described the protesters as coal transporters.
It is not the first time tensions on the border between Mongolia and China have caused problems for Oyu Tolgoi.
In December 2016 the Chinese province of Inner Mongolia, which shares a border with the nation of Mongolia, imposed new tariffs on Mongolian goods entering China.
That incident caused copper shipments from Oyu Tolgoi to be temporarily interrupted.
Turquoise Hill owns 66 per cent of Oyu Tolgoi, with the Mongolian government owing the balance.
Rio owns 50.79 per cent of Turquoise Hill, and an expansion of Oyu Tolgoi ranks as arguably Rio's most important growth project worldwide.