Mongolia is a part of the Montreal protocol on substances that deplete the ozone layer and is committed to gradually reducing the use of hydrochlorofluorocarbons (HCFCs) and eventually phasing them out. Currently, Mongolia is implementing Phase II of the “Hydro chlorofluorocarbon-type Refrigerant Phasing Management Program (HPMP)” under the agreement with the Multilateral Fund of the Montreal Protocol, which aims to ensure the implementation of the Montreal Protocol, according to the Ministry of Environment and Tourism.

Within the framework of the HPMP program, the use of HCFC substances is targeted to be phased out by 2030. Within the scope of the HPMP II phase, it is aimed to completely stop the import of HCFC substances and phase them out by January 1, 2030, which is the baseline level of 1.4 ozone-depleting capacity (ODP).

The government of Mongolia reviews the consumption of HCFC substances (in the case of Mongolia, the amount of imports is considered as the total consumption of the country), which is reported to the Multilateral Fund and the Ozone Secretariat every year. In 2016, an international expert of UNEP conducted two audits of Mongolia’s substance use from 2013 to 2019. By Mongolia’s obligations under the HPMP II phase of UNEP, the review of national HCFC consumption was approved by the 88th meeting of the Multilateral Fund’s Executive Committee in 2021.

On September 22, 2023, through the National Ozone Authority (NOA) in the Ministry of Environment and Tourism, the international experts of UNEP prepared the 2020-2022 HCFC consumption report based on the results of the implementation of the II phase of the HPMP program and presented the results to national stakeholders.

Based on the results of the review, only HCFC-22 ozone-depleting substance (ODS) is imported as a pure substance for Mongolia. No illegal domestic trade in HCFC-22 substances was detected during the period covered by this examination. During the period covered by the review of HCFCs, the source of imports was China, a party to the Montreal Protocol as well. Mongolia’s total certified consumption of HCFC-22 is lower than the maximum allowable amount stipulated in the HPMP Phase II agreement.

The review report on the use of HCFC substances in Mongolia will be prepared and submitted to the 93rd meeting of the Multilateral Fund Executive Committee in 2023 for discussion, as stated by the National Ozone Authority.

Summary of this week's events:

September 25: The results of the first stage of the “Ulemjiin Chanar” International Long Song Singers Competition will be announced.

September 23-25: The Prime Minister of Mongolia L. Oyun-Erdene will participate in the “New Revival of Dornod” investment forum in the Choibalsan city of Dornod aimag.

September 25-28: The “Jangar” Tea Road cultural and heritage festival will be celebrated in Khovd aimag.

September 25-30: Mongolia-China Friendship Week will take place in Ulaanbaatar city, as well as Dornod and Arkhangai aimags.

September 26: The Mongolian National Chamber of Commerce and Industry and the Chinese International Economic and Cooperation Association will jointly organize the 19th joint meeting between Mongolia and Taiwan.

September 27: The Prime Minister of Mongolia L. Oyun-Erdene will work in Khuvsgul aimag.

September 27: Commemorating World Tourism Day, the “Green Investment – Our Future” event will be held.

September 28-29: The Mongolian Renewables Industries Association will organize the International New Energy Summit 2023.

September 28 - October 1: Ulaanbaatar Partnership International Trade Fair will take place at the international exhibition hall of the Misheel Expo.

September 29: The Prime Minister of Mongolia L. Oyun-Erdene will work in Orkhon aimag.

September 29: Morin Khuur Ensemble of Mongolia will perform the “Duun Deg” concert at the Mongolian State Philharmonic Orchestra.

September 29 – October 1: The National Tourism Exhibition and Forum will be held at the Ara Complex in Arkhangai aimag.

September 30: The concert “Dulaakhan Namar” [“Golden Autumn”] by the Honored Artist of Mongolia S. Javkhlan will be staged at the Central Stadium of Mongolia.

The Autumn Green Days expo will take place until September 26.

The Official Visit of the Chairman of the State Duma of the Federal Assembly of the Russian Federation Vyacheslav Victorovich Volodin to Mongolia will continue.

The Hangzhou 2022 Asian Games will continue.

The solo exhibition “Altan Kholboos” [“Golden Threads”] by State Merit Artist J. Bolortuvshin will continue.

Mongolia held its Car-Free Day here on Saturday to reduce traffic congestion, promote healthy living and cut down on vehicle emissions, according to the municipal government of Ulan Bator.

On Car-Free Day, all main roads of the capital city were closed to both private cars and public transport vehicles and only opened for pedestrians and cyclists.

For many years, air pollution and traffic jams have been the most pressing issues in Ulan Bator, home to around half of the country's 3.4 million population.

The Car-Free Day is observed twice a year in the capital city, once in spring and once in autumn.

The Chairman of the State Great Khural of Mongolia G. Zandanshatar and the Chairman of the State Duma of the Federal Assembly of the Russian Federation Vyacheslav Victorovich Volodin held official talks at the State Palace today.

At the outset of the meeting, the Speaker of the Parliament G. Zandanshatar welcomed the Chairman of the State Duma of the Federal Assembly of the Russian Federation V.V. Volodin and expressed Mongolia’s willingness to further strengthen and develop its traditional good neighborly relations with Russia.

The two parties shared the same opinion that this visit of the Chairman of the State Duma V.V. Volodin is important for the expansion of relations and cooperation between the two countries, including the intensification of inter-parliamentary cooperation. During the official visit of the Chairman of the State Great Khural G. Zandanshatar to the Russian Federation last June, the parties agreed to establish a joint commission on inter-parliamentary cooperation between the two countries and hold the first meeting in Ulaanbaatar, which was an important step in the development of the comprehensive strategic partnership between the two countries.

At the first meeting of the joint commission on inter-parliamentary cooperation between the two countries, the direction of further relations and cooperation will be determined along with creating new mechanisms, and inter-parliamentary cooperation will be brought to a new level, emphasized the Chairman of the State Duma V.V. Volodin. “Our two countries are neighbors. It is our duty to further develop the ancient tradition of friendly relations and cooperation between the two countries. It is especially important to develop cooperation of border regions and improve the coordination between the legislative bodies”.

The Chairman of the State Duma V.V. Volodin officially announced during the talks that Mongolia would not be subject to any restrictions on oil products taken by the Government of this country. The Speaker of the Parliament G. Zandanshatar expressed his support in principle for the proposal to hold the next meeting of the Inter-Parliamentary Cooperation Commission in Russia next year.

During the meeting, the parties exchanged detailed views on expanding cooperation in trade, economy, investment, energy, road transport, tourism and humanitarian sectors aimed at strengthening the comprehensive strategic partnership between Mongolia and Russia.

The negotiations between the Chairman of the State Great Khural of Mongolia G. Zandanshatar and the Chairman of the State Duma of the Federal Assembly of the Russian Federation V.V. Volodin took place in a businesslike, open and friendly atmosphere. It was of particular significance in respect of strengthening the mutual trust of the parties, expanding the scope of relations at all levels, and further consolidating the relationship between the legislative bodies of the two countries.

The official visit of the Chairman of the State Duma of the Federal Assembly of the Russian Federation V.V. Volodin to Mongolia continues.

The Mongolian Stock Exchange has marked a momentous achievement as it surpassed a trading volume of three trillion MNT within the first nine months of 2023. This significant milestone was reached after the successful sale of 387,000 shares from 43 companies and coal commodities valued at 207 million MNT on the exchange.

To put this achievement into perspective, it’s worth noting that the exchange’s trading volume peaked at 354.4 billion MNT in 2015, a record at that time, during its 25-year history. However, the exchange shattered its previous record in 2021 when it traded securities worth a staggering 1.4 trillion MNT.

The Marketing and Public Relations Department of the Mongolian Stock Exchange attributed this latest achievement to several key factors. First, the inclusion of shares from five major banks and the introduction of 13 new products for trading in 2023 played a pivotal role in boosting trading activity. Additionally, a significant portion of the 3 trillion MNT, over 60 percent, was generated from the trading of coal and iron ore, both vital components of Mongolia’s mining sector.

This accomplishment underscores the continued growth and vibrancy of the Mongolian Stock Exchange, as it continues to play a pivotal role in the country’s financial landscape.

In addition, MSE also introduced a new trading system. Within its plan to regularly carry out trading system and infrastructure reforms, it successfully implemented the Millennium trading system infrastructure reform project as an organization responsible for conducting transparent and error-free securities trading. In the framework, the user acceptance test for the newly installed main trading system was conducted from September 4 to 8, and another test involving all stakeholders of the stock market was conducted from September 9 to 16. On September 18, the system update was successfully introduced into the market considering conducting commercial tests.

As part of the Master Work Agreement established between the London Stock Exchange and the Mongolian Stock Exchange, the Millennium IT complex system for securities trading, settlement, deposit, and control was introduced to the Mongolian stock market on July 2, 2012. With that system, the infrastructure of the domestic stock market has introduced international standards, and not only securities companies, but also investors, can participate in online trading.

September 20, Asian Development Bank (ADB) presented Mongolia’s economic prospects. In the Asian Development Outlook, the growth forecast in 2023 revised slightly up from its previous projection of 5.4 percent in April to 5.7 percent but went down from the 2024 outlook of 6.1 percent estimation to 5.9 percent. However, inflation is likely to trend downward in the second half of 2023, though average inflation will remain high at 10.5 percent for this year before moderating down to 8.6 percent for 2024.

Mongolia’s economic recovery continued through this year and GDP growth will be maintained in the near term. It is anticipated to be driven by robust external demand, recovery in exports, and revived domestic demand, though tempered by persistently high inflation, contractionary monetary policy, and tight domestic financing conditions. The bankers emphasized that supporting economic immunity through ensuring price stability, improving employment, and structural reforms will have a positive impact on sustainable and accessible GDP growth, reports Asian Development Outlook. GDP growth in 2024 will be driven by mining, with positive spillover into transport and other services, as well as private sector lending.

Senior Country Economist from ADB Mongolia Edward Faber said, “Although recovery was uneven in terms of sector contributions, the economy’s near-term growth prospects remain robust. Maintaining price stability, improving employment, and strengthening economic resilience through structural reforms are imperative to make growth more sustainable and inclusive.”

Economic expectations in Mongolia have improved since the beginning of this year, mainly due to the re-opening of China, subsequent recovery in exports, significant improvements in the current account balance, rebounding of foreign exchange reserves and lowered risks associated with the external debt repayment.

Senior Economics Officer of ADB S.Bold informed, “Mongolia’s economy grew by 6.4 percent in the first half of 2023. The reasons for economic growth for the third quarter in a row was mainly because of the service and mining sectors. On the other hand, the contribution of net exports has increased significantly due to the significant improvement in the current balance of payments compared to the same period last year. Total consumption also has a positive effect. After a three-year crisis, Mongolia’s economy is now transitioning to a new growth cycle, which is the third expansionary cycle since the 2009 recession. While the numbers may be good, we need to look at this growth in terms of quality. In the past 20 years, profit was gained only in six years. During a time of strict monetary policy, one sector shrinks as the agricultural sector depends on weather conditions. On the other hand, the non-mining sector “absorbs” the labor market. A strict policy has a significant impact on each sector.”

If you look at the economic history of Mongolia over the last 20 or 30 years, the balance of payments, foreign currency reserves, and inflationary pressures have increased during crises and difficulties. S.Bold informed that as the fiscal policy expands, the budget deficit will increase, which in turn will add to national debt. Due to this, there is no room for monetary policy. Thus, the choice is made to tighten the monetary policy. However, when the economy is expanding rather than shrinking, monetary policy is less flexible. Due to the increase in the current account deficit, they significantly weaken the monetary policy and cannot support the private sector. It only leaves an option for a policy based on structural distortions of the economy. He informed that the reason for inflation staying high and the slow economic growth despite Asia and the Pacific inflation dropping was that the policy implementers were failing to regulate a policy that is fit for the problem. If the right policy is implemented, effects on citizens and companies in the future will be positive.

He also mentioned that the economy can grow steadily if the external balance improves. In addition, he said that it is necessary to expand the tax base, prioritize the reduction of budget expenditures, and increase savings. In terms of spending, it is necessary to stop the expansionary budget policy implemented during the pandemic and switch to the policy of normal times. Furthermore, S.Bold also advised to invest in public investment funds, refuse to invest in projects that are not completed throughout the year, and increase the capital of savings funds when the income is high, and ensure the stability of the budget. On the other hand, it is important to remember that just because the budget is profitable, not everything will be fine. There are positive indicators such as foreign exchange reserves of Mongolia have reached the level of 3.5 months of import needs or 3.9 billion USD, but if the right measures are not implemented, the influence of the mining industry is dominant, the growth of the government will be temporary after the pandemic, and it will disappear if the next external shock occurs. If we do not carry out structural reforms, we cannot rule out another crisis.

Downside risks to the outlook would arise from any decrease in China’s demand for bulk commodities, a fall in coal and metals prices, new trade restrictions, disruption caused by exacerbated geopolitical tensions, negative spillover from tighter financing conditions, global uncertainty and slowdown, or capital flow reversal.

ECONOMY EXPERIENCES 2 MAJOR RISKS

S.Bold said that in order to ensure sustainable and accessible economic growth, we need to pay attention to two things. First, the high level of inflation should be reduced and kept at a low

and stable level. As mentioned above, inflation has been above the target level for more than two years. Although the economy is said to have grown, it should be noted that it does not affect households and the private sector. Recently, the Mongol Bank pointed out that inflation is increasing due to demand. Supply-side inflation cannot be fought with policy rates. But it is desirable to increase the supply of goods and products in the consumer basket.

Second, employment should be increased, and the number of employees is not increasing. As of Q2, 1.16 million citizens were employed in Mongolia. During this period, the employment rate was 54.5 percent, which is an impressive figure. However, this does not even reach the pre-pandemic numbers of 62.5 percent. We need to support the private sector to create quality and stable jobs, and we need to reform the labor market.

It was also mentioned that Mongolian banking sector is stable. It’s important to create the right expectations in the industry, and that the regulatory environment and untimely decisions have a negative effect on expectations. It’s necessary to attract foreign and domestic investment to further strengthen the banking sector. To attract capital from abroad, it is necessary to reduce the risk of Mongolia’s financial sector and at least improve its credit rating. Central banks of some large economies are raising their interest rates, while some Asian countries have started lowering them. In general, the bankers clarified that there will be room for softening of the strict monetary policy in the coming year. Economic growth will not be felt by citizens and enterprises if a strict monetary policy is maintained. Therefore, it is advisable to follow a policy aimed at attracting foreign investment, which is fiscally stable money-wise, and supports the private sector.

REGION FACES SOME RISKS AS WELL

ADB has estimated that the economy of the Asia and the Pacific region will grow steadily, but risks will increase. The “Asian Development Outlook” report noted that the economies of developing Asian countries are expected to grow by 4.7 percent this year. This means that the figure has changed slightly from the previous estimate of 4.8 percent. Then, it has maintained its estimate that it will grow by 4.8 percent next year. The situation in China’s real estate sector is weighing on the outlook for the region. High global interest rates have increased the risk of financial instability. Sporadic supply disruptions from the continuing Russian-Ukrainian war, export restrictions, and the increased risk of droughts and floods caused by El Nino could once again trigger rising food prices and challenge food security.

Getech has successfully finished an exploration project for Asian Battery Minerals, a participant in the 2023 BHP Xplor accelerator programme, targeting potential nickel deposits in Mongolia.

Getech was invited by BHP to the accelerator to offer its unique geoscience exploration solutions to the programme’s cohort. Asian Battery Minerals, targeting nickel in Mongolia, elected to contract with Getech.

Getech employed its pioneering methodologies – such as terrain and structural analysis, as well as gravity and magnetics data analysis – to assist Asian Battery Minerals. The team provided an extensive report analysing the structural and paleotectonic elements in the exploration area of interest.

The project has been deemed successful by Asian Battery Minerals, as the results have the potential to significantly enhance its exploration strategy in Mongolia.

Richard Bennett, Executive Chairman of Getech, comments:

“While we are known to have extensive experience in mineral exploration for sedimentary basin ores, this project focused on ‘hard rock’ exploration. This challenge proved that our mineral systems analysis capabilities and data extend into deeper and older deposits such as magmatic nickel. Leveraging our proprietary data amassed over 30 years and our geological exploration expertise, complemented by AI-driven analytics, we can successfully locate potential new search spaces for a wide range of minerals.”

Gan-Ochir Zunduisuren, Managing Director at Asian Battery Minerals, said:

“We are delighted with the results of our partnership with Getech. Their in-depth analysis and innovative approaches have provided us with valuable insights for our nickel exploration in Mongolia.”