Upcoming Changes to Mongolian Double Tax Treaties (DTTs)

The Multilateral Convention to Implement Tax Treaty Measures to Prevent Base Erosion and Profit Shifting, commonly known as the Multilateral Instrument (MLI), is a dynamic tool designed to modify existing tax treaties in line with a jurisdiction's policy preferences for implementing BEPS measures. The MLI, developed by the Organisation for Economic Co-operation and Development (OECD), aims to address issues such as hybrid mismatches, treaty abuse, artificial avoidance of permanent establishment (PE) status, and the resolution of international tax disputes.

Mongolia's Implementation of the MLI

Mongolia has taken significant steps towards implementing the MLI by including all its effective DTTs as Covered Tax Agreements (CTAs). However, it is important to note that some of Mongolia's DTT partners have either not joined the MLI or have not listed the Mongolian DTT as a CTA in their MLIs. As a result, it is anticipated that 19 of Mongolia's DTTs will be modified under the MLI starting from 2025.

Implications for Taxpayers

The adoption of the MLI will significantly impact the application of DTTs. Specifically, the benefits of DTTs will not be applicable if, considering all relevant facts and circumstances, obtaining the DTT benefit was one of the principal purposes of any arrangement or transaction. Therefore, taxpayers should review their international operational, financial, and holding structures, arrangements, and transactions in advance to prepare for the introduction of these new rules.

Source: https://www.pwc.com/

India's JSW Steel (JSTL.NS), opens new tab and state-run Steel Authority of India (SAIL) (SAIL.NS), opens new tab are in talks with Mongolian authorities to import two shipments of coking coal, two sources with direct knowledge of the matter said.

JSW Steel, the country's biggest steelmaker by capacity, plans to buy 2,500 metric tons, while SAIL aims to import 75,000 metric tons of the steelmaking raw material from Mongolia, said the sources who requested anonymity as the plans are not public.

Both JSW Steel and SAIL would import Mongolian coking coal either via Russia or China, said the sources.

"We are just trying to understand how the logistics work," SAIL Chairman Amarendu Prakash told Reuters when asked if the company was looking to receive a shipment from Mongolia.

SAIL was exploring sourcing coking coal from Mongolia to diversify its suppliers, it said in an emailed statement to Reuters.

India, the world's second-largest producer of crude steel, meets 85% of its coking coal requirements through imports.

Late last year, erratic weather conditions hit coking coal supplies from Australia, which accounts for over half of India's coking coal imports of around 70 million metric tons a year.

Since then, Indian steel mills have been seeking to source coking coal from other countries.

Last month, a source said India was exploring ways to import regular supplies of Mongolian coking coal via Russia to reduce reliance on supplies through China.

The Dow added about a third of a percent, while the S&P 500 and Nasdaq each added roughly six-tenths of a percent.

Industry officials say landlocked but resource-rich Mongolia can offer superior grades of coking coal at relatively lower prices to India, which is witnessing strong steel demand driven by rapid economic growth and increasing infrastructure spending.

Mongolian coal is about $50 a metric ton cheaper than the Australian supplies, they said.

India's Jindal Steel and Power (JNSP.NS), opens new tab is also keen to source coking coal from Mongolia, one of the sources said.

India's JSW Steel and Jindal Steel and Power didn't respond to Reuters emails for comment.

The Indian government is working to help steel companies diversify imports to avoid over-reliance on specific countries, commodities consultancy BigMint said.

India imported 29.4 million metric tons of coking coal during the first half of the fiscal year, up nearly 2% from a year earlier, the consultancy added.

Reporting by Neha Arora; Editing by Mayank Bhardwaj and Christina Fincher

By working together but independently, the central banks and government can win the fight against inflation and foster economic stability and growth for years to come

Discussions at the Bank of Mongolia’s recent international conference marking its centennial highlighted an important policy issue: how to better align monetary and fiscal policies to tackle high inflation.

Ideally, monetary and fiscal policies should operate like a rider on a horse, working in concert but also within their mandates and objectives. In Mongolia, there is room to make the monetary-fiscal ride smoother to arrive at target inflation more quickly.

The Bank of Mongolia—one of Asia’s oldest central banks in a country that was an early initiator of coin and paper note circulation dating back eight centuries to the Mongol Empire—has played a major role in Mongolia’s transition from a centrally planned economy to a market economy. The Bank established a two-tier banking system in 1991 to separate the central bank from commercial lenders, scrapped the fixed exchange rate in 1993 to promote exports and improve the balance of payments, and phased out direct controls in favor of a market-oriented monetary policy framework.

The Bank also introduced elements of an inflation targeting framework in 2013 but its journey toward full-fledged inflation targeting remains incomplete. While the central bank has a mandate to maintain stable prices, two obstacles impede the journey: a lack of operational independence and the significant impact of fiscal policies on monetary policy outcomes, given the large share of the government in the economy.

Improving government policies can therefore play an important role in keeping inflation in check.

One way to do this will be to grant Mongolia’s central bank greater independence from the government, including by eliminating requirements for the Bank to provide specific kinds of government-mandated lending to the private sector. The Bank does not enjoy the autonomy typical of advanced inflation targeting economies. Parliament has constitutional authority over monetary, financial, and credit policy. Lawmakers approve the central bank’s inflation target and other monetary policy guidelines annually.

On the fiscal side, budget spending often follows the business cycle in an economy that is deeply tied to global commodity markets. Mining exports make up about 90 percent of exports, and nearly a third of government revenue comes from the mining industry. Government spending that rises and falls in step with prices for commodities like coal or copper tends to be procyclical, fueling boom-and-bust economic cycles and surges in inflation.

The government can avoid procyclical fiscal policies by taking a prudent approach toward spending during good economic times by sticking to fiscal rules, as we noted after our October visit to Mongolia. Spending discipline during commodity booms helps prevent the economy from overheating and keeps inflation in check. It also helps with building fiscal buffers in good times that can provide support during economic downturns without imperiling debt sustainability.

In an economy that is heavily influenced by commodity market swings, the government therefore also shares responsibility in helping the central bank achieve its inflation objectives. This is important because monetary policy is most effective when fiscal and monetary policies are aligned, steering output and prices in the same direction together.

This implies that when inflation is high, fiscal policy should also be tighter to assist tighter monetary policy. Such synchronization can prevent the central bank from having to raise interest rates to very high levels. That in turn would help ensure that the fight against inflation does not disproportionately burden borrowers or fuel risks to financial stability.

The government can also support monetary policy objectives by developing a well-functioning market for domestic securities. Until recently, the government has relied on external borrowing, to benefit from lower global financing costs.

Plans for new domestic securities issuances were deferred leading to a sharp decline in the pool of domestic debt securities available to the Bank for its monetary policy operations.

Unable to use government securities for monetary operations like most other central banks, the Bank has relied on issuing its own bills to absorb excess liquidity. The high interest costs of doing so are weakening its balance sheet and could hinder monetary policy operations down the road.

Restarting issuance, even amid fiscal strength, will help the central bank better manage liquidity and develop the domestic debt market. A robust domestic market will also improve monetary transmission by establishing benchmark bond yields.

When it comes to better alignment between monetary and fiscal measures, policymakers can take inspiration from the ancient tradition of Mongolian horse racing, a hallmark of the national festival of Naadam. A better monetary-fiscal coordination would not only smooth the ride; it would be a winning formula for the economy and the people of Mongolia.

BY ****

Angana Banerji is a deputy division chief and Mongolia mission chief in the IMF’s Asia and Pacific Department. Thomas Helbling, a Deputy Director in the IMF’s Asia Pacific Department, oversees the IMF’s work on Mongolia.

During the 81st Session of the Committee Against Torture (CAT) on Tuesday, 12th of November, and Wednesday, 13th of November 2024, the CAT reviewed the 3rd periodic report of Mongolia.

The country rapporteurs were Mr. Huawen Liu and Ms. Naoko Maeda.

The country delegation was led by Mr. N.Myagmar, State Secretary, Ministry of Justice and Home Affairs of Mongolia.

Main issues discussed

The Committee praised Mongolia's commitment to abolishing the death penalty, highlighting its ratification of the Second Optional Protocol to the International Covenant on Civil and Political Rights as a significant step toward international standards.

On detainee treatment, the Committee noted Mongolia's efforts to equip interrogation rooms with video and audio recording devices for transparency. However, it raised concerns about reports that recordings were deleted after 14 days instead of the required six-month retention period. Experts sought clarification on Mongolia’s plans to ensure universal access to this equipment nationwide.

The Committee also inquired about Mongolia’s extradition agreements, asking how the risk of torture is assessed in such cases and the legal right to appeal deportation or extradition orders.

The Committee expressed concern over harassment of human rights defenders (HRDs), particularly those opposing mining projects. It urged Mongolia to strengthen legal protections for HRDs and ensure freedoms of expression and association.

Additional concerns included the ill-treatment of LGBTQ+ individuals. The Committee called for stronger measures to address police violence, discrimination, and harmful practices such as conversion therapy, emphasizing the need for better medical and legal support.

Finally, the Committee commended Mongolia’s efforts to align its laws with international standards on human trafficking and victim protection. It encouraged the country to provide details on the implementation of these laws and the distribution of the increased human rights budget, particularly for vulnerable groups.

The CAT’s recommendations are available here.

Follow-up Recommendations

The CAT outlined specific recommendations for Mongolia, requesting the State party to provide information by 22 November 2024 on progress made in the following areas on the implementation of recommendations regarding:

The adoption of a comprehensive definition of torture and the criminalisation of all acts of torture, including superiors’ liability, complicity and attempts of acts of torture.

The guarantee of fundamental legal safeguards during the arrest and the first moments of detention and the recording of interrogations.

The establishment of an independent mechanism to investigate acts of torture and ill-treatment committed by public officials.

On 26 November, Mongolia celebrated the 100th anniversary of its first constitution, a significant milestone in Asian political history that marked the establishment of Mongolia as a republic. One of the earliest nations in Asia to codify principles of democracy, the 1924 constitution laid a foundation of progressive values that remain influential today, writes Amarbayasgalan Dashzegve (pictured), chairman of the Parliament, member of the State Great Hural.

Mongolia’s first constitution, adopted by the First Great Hural (National Assembly) in 1924, was groundbreaking in many respects. Emerging from centuries of feudal rule, this constitution transformed Mongolia into a republic, asserting a model of government based on popular sovereignty, universal suffrage, and equality before the law. As part of these democratic foundations, Mongolia’s constitution recognised religious freedom and ethnic equality, a progressive stance that anticipated a pluralistic society. These initial measures not only represented a profound shift in Mongolia’s governance but, more importantly, represented an inspiring step for Asia, where democratic governance was still rare.

As we celebrate this day and how far we’ve progressed, we should remember that the journey to greater parliamentary representation and a better-functioning democracy is never finished. This is why, on the 100th anniversary of our constitution, we look to the future. With the support of our democratic ‘third neighbour’ partners, we will continue to strengthen our democracy under the ‘Parliament 2.0’ initiative.

Today, I am more committed than ever to upholding our democratic constitution. It is the very fabric of Mongolia’s identity and independence. It is why I have continued to implement the ‘Parliament 2.0’ initiatives – ensuring that future generations of Mongolians continue to experience our thriving social democracy.

The ‘Parliament 2.0’ initiative is a comprehensive reform package aimed at transforming the Great Hural and strengthening Mongolian democracy. This initiative seeks to make Mongolia’s Parliament more inclusive, adaptable, and effective, with the impact of these reforms already visible. In the most recent General Election, held in July, new constitutional amendments were implemented, expanding the Great Hural from 76 to 126 seats and introducing proportional representation for 48 seats.

As a result, this Parliament is one of the most diverse in Mongolia’s history, with 25.4% women and representation from various ethnic backgrounds, including the first Kazakh woman and the first members with disabilities. It is a modern legislative body that reflects Mongolia’s commitment to building a modern, representative, and stable governance system.

Importantly, these constitutional amendments are the fledging first steps – not the end result. Continuing forward, the ‘Parliament 2.0’ initiative will be guided by the “Three Pillars of Excellence,” a reflection of Mongolia’s aspirations for responsive governance in a modern world.

The first pillar, ‘People-Centered Legislation,’ focuses on enacting laws that prioritise citizens’ rights, upholding human dignity, and protecting individual welfare. The second, ‘Responsive Legislation for Modern Challenges,’ recognises the need for adaptive laws in areas like digital currencies, e-commerce, and new technologies, all of which are reshaping the global economy. The third pillar, ‘A Comprehensive and Clear Legal Framework,’ aims to simplify legal language and provide transparency, reducing ambiguity and fostering accountability.

As a Mongolian, I’ve always been proud of the moment former U.S. Secretary of State John Kerry rightly bestowed the title of ‘oasis of democracy’ upon us. It demonstrated that, despite our location and size, democratic governance can flourish in the unlikeliest of places. So, as we use the centennial celebration to celebrate the history of our thriving democracy, it is also an opportunity to strengthen ties with those who have helped support us on our journey – our ‘third neighbours.’

These ‘third neighbours’ are those nations beyond our physical geographical borders with which we have developed strategic partnerships in the fields of trade, technology, and, importantly, democracy. Over the last few years, the Great Hural has been actively strengthening partnerships with parliaments across the world, with recent delegations visiting Italy and the EU to share information and best practices on drafting legislation and scrutinising government. This coincides with our representation of the Inter-Parliamentary Union, recently held in Geneva, and the International Conference of Asian Political Parties (ICAPP) hosted in Ulaanbaatar last year. An opportunity we used to raise important issues such as equal gender representation within political parties and ensuring young people are provided the opportunity to have their voices heard in politics.

We are proud to describe fellow democracies across the globe as our strategic ‘third neighbours.’ With the advancement of legislative reforms under the Parliament 2.0 initiative, these relationships are likely to play an even more significant role in providing economic support, technical assistance, and policy expertise. Yet, Mongolia’s efforts to engage democratic allies are not merely about political alignment. They reflect an aspiration for a globalised democratic future based on the founding principles of our constitution, where governance, trade, and innovation thrive in an open and cooperative environment.

Mongolia’s celebration of its constitutional centenary is a remarkable testament to the endurance of democratic ideals. For 100 years, the country has nurtured a commitment to popular sovereignty, civil rights, and inclusivity. As it embarks on a new chapter with the ‘Parliament 2.0’ initiatives, Mongolia is showing the world that a small, landlocked nation can be a powerful advocate for democracy.

Mongolia’s legacy, cemented in the principles of its 1924 Constitution, serves as a reminder that democracy is not defined by borders or size. With the support of its third neighbours and a renewed commitment to responsive governance, Mongolia is prepared to continue leading as an oasis of democracy in Asia, offering hope and partnership to democratic nations worldwide.

China has seen its market share of seaborne coal imports fall sharply over the past two years, down from 93% between 2015-2022 to 76% in 2023-2024, amid a shift towards land-borne alternatives, according to maritime commerce platform provider Veson Nautical.

A report produced using Veson’s commodity market intelligence solution Oceanbolt shows that China’s seaborne imports only increased by 45% in 2023. Meanwhile, its coal exports soared 62% to 473.4 million tonnes for the year.

The data, the report states, represents “a seismic shift in global trade flows” as China looks to diversify supply away from traditional exporters and capitalize on geopolitical uncertainty by purchasing discounted coal from other sources.

Australia trade declines

The report also states that Australia’s share of China’s coal imports fell sharply, from 26% in 2019 to just 11% in 2023, after the unofficial ban on Australian coal imports was lifted. Since all Australian coal exports to China are seaborne, this decline largely explains the recent drop in seaborne coal volumes.

“The country that has been impacted the most in this shift to higher land borne volumes is Australia,” Mikkel Nordberg, senior maritime analyst at Veson Nautical, says. “And while there has been a recovery in imports of Australian steam coal to China after trade resumed in 2023, the coking coal trade has been heavily impacted.”

Nordberg adds that China imported just 2.8 million tonnes of Australian coking coal, a staggering 91% decline from pre-ban levels.

More Russian coal

The report cites Russia as a growing supplier of coal to China. Russia’s share of Chinese coal imports grew from 11% in 2019 to 22% in 2023. This shift could be linked with the war in Ukraine and the subsequent sanctions imposed on Russia by Western nations, it adds.

“With reduced global demand and limited buyers, China has capitalized on the opportunity to purchase Russian coal at discounted prices,” Nordberg explains. “As a result, the Russia-China coal trade surged, increasing by 20% in 2022 and a further 50% in 2023, reaching 102 million tonnes.”

Nordberg adds that between 2022-2023, Russian coal exports to China grew by 34 million tonnes, but only 18.7 million tonnes of this increase were transported by sea, suggesting that 15.3 million tonnes were shipped via land.

Mongolia wins big

The report also cites Mongolia as a big winner as coal exports to China soar as infrastructure improves.

Around 90% of Mongolia’s coal production is destined for export to China due to limited domestic demand. According to the Mongolian Coal Association, the country has the potential to produce up to 100 million tonnes annually.

However, this capacity is constrained by border infrastructure and customs processes. In 2023, Mongolia took significant steps to enhance its coal export capabilities, including the inauguration of a new railway line connecting its coal mines to the Chinese border.

Consequently, Mongolia’s coal exports to China surged by 125% in 2023, reaching 70 million tonnes, and have grown another 27% so far in 2024. Approximately 75% of these exports are coking coal, making Mongolia China’s largest supplier of this resource, the report states.

“In 2023, Mongolia accounted for 53% of China’s total coking coal imports,” Nordberg says. “As a landlocked country, all of Mongolia’s coal exports are transported overland, which means that it is effectively replacing the seaborne coking coal volumes previously sourced from Australia.”

As of November, 1,230 individuals have sought medical treatment at the National Emergency Center for Toxicology under the Central Military Hospital and the National Center for Maternal and Child Health. These individuals were affected by chemical acute poisoning. Of them, 726 received the necessary medical care and were discharged, while 504 required hospitalization.

Between November 10 and 16, 35 people, including 20 children, were treated for chemical poisoning at these institutions. This marks a significant increase compared to the same period last year, with a rise of 48.5 percent, and a sharp 76 percent increase compared to the five-year average.

Notably, 434 cases of poisoning were identified due to intentional ingestion of medications or chemicals, often in suicide attempts. Among these, 256 individuals, aged between 12 and 78, were hospitalized. On the other hand, 791 cases of accidental poisoning were reported, with 80.5 percent of these incidents involving young children. Many of these accidents occurred after children ingested medicines, chemicals, or other substances that were carelessly left out in the open.

Therefore, the relevant authorities urge parents and guardians to be extra cautious and vigilant in preventing these tragic accidents, as the number of incidents continues to rise.

The China-Mongolia-Russia Economic Corridor (CMREC) initiative, set for deployment in the latter half of the 2020s, represents a trilateral ambition to fortify regional economic integration and elevate transnational trade efficiency across Eurasia.

Based on data from local and international sources, alongside prior SpecialEurasia’s analyses, this report examines the corridor’s projected frameworks, its operational developments, and its geopolitical significance. T

The corridor, prioritised by Moscow, Beijing, and Ulan Bator, includes concessions on tariffs, an emphasis on national currency transactions, and substantial infrastructure investments, especially in transit and railway systems, to enable more direct East-West logistics routes.

Russia and China are leveraging Mongolia’s geographic importance and resource wealth to construct an intricate network, which might decrease dependence on traditional Western trade routes and financial systems, ultimately fostering a strategic pivot for regional economic influence.

China-Mongolia-Russia Economic Corridor (CMREC):

Background Information

Historically, the China-Mongolia-Russia Economic Corridor (CMREC) concept emerged in the 2010s, aligned with China’s Belt and Road Initiative (BRI) and Russia’s pivot towards Asia.

Trilateral engagement among these three countries has intensified in recent months. Notably, in November 2024, the meeting of Mongolian Prime Minister Luvsannamsrain Oyun-Erdene and Chinese Prime Minister Li Qiang cemented Beijing and Ulan Bator’s commitment to the CMREC. This development follows the success of prior multilateral dialogues, including the Islamabad summit in October.

The proposed economic corridor aims to achieve substantial operational integration between the three nations, facilitating joint initiatives in the areas of transit, resource management, and financial exchange. By adopting a collaborative structure, the goal is to reduce dollar-based transactions, expand transportation networks, and solidify regional collaborations, considering increasing geopolitical tensions and growing supply chain needs.

Geopolitical Scenario

The CMREC initiative underscores Moscow and Beijing’s dual objectives to achieve economic independence from Western markets while maintaining strategic control over critical East-West transit corridors. This multifaceted project relies on three crucial strategic mechanisms: tariff and trade concessions, infrastructure expansion, and resource-sharing agreements.

This economic corridor is part of Russia’s wider shift towards Asia, which is further strengthened by its growing partnership with China. Moscow-Beijing’s bilateral trade reached an all-time high of USD 240.1 billion in 2023, marking a 26.3% increase year-on-year. Projections show sustained growth, while China continues to increase direct investments into Russia, surpassing USD 11.5 billion and involving 83 projects worth nearly USD 200 billion. Moscow seeks to elevate similar trends with Ulan Bator, forecasting a trade increase to USD 2.5 billion by 2024, and expanding its investment footprint, particularly in Mongolian transport and mining sectors. Russian policymakers view these moves as integral to sustaining economic resilience amid Western sanctions and disruptions to traditional trade routes.

China, by contrast, perceives Mongolia’s intermediary position as pivotal in diversifying its connectivity options. Mongolia’s mineral wealth, geographic location, and limited infrastructure present opportunities for Chinese firms, particularly in high-demand sectors like coal, copper, and iron.

In recent years, the People’s Republic of China has escalated its strategic engagement with Mongolia through projects under the Steppe Road and Sustainable Development Vision 2050 frameworks. Bilateral trade with Mongolia in 2022 reached USD 5.99 billion in coal and USD 2.73 billion in copper exports. Beijing is leveraging Mongolian geophysical attributes for infrastructural expansions, particularly within the Erenhot Economic Cooperation Zone (ECZ) on the Mongolia-China border, set for completion by 2035, with projected trade flows of nearly USD 10 billion annually.

Risk Assessment

Short-Term Risks. In the immediate term, the trilateral corridor faces potential challenges arising from infrastructure inadequacies, currency fluctuation risks, and regional political dynamics. Switching to a national currency for trade might overload exchange systems without proper financial infrastructure, making barter and reciprocal payments difficult and potentially delaying transactions.

Medium-Term Risks. China’s growing economic influence in Mongolia’s mining and transit sectors could make the country more vulnerable in the next three to five years, as its reliance on Chinese resources increases. This dependency could weaken Ulan Bator’s “third neighbour” policy, aimed at balanced relations with countries besides China and Russia, like the US, Japan, and Central Asia. Strategic leverage exerted by Beijing, particularly if exacerbated by RMCEC’s success, could lessen Mongolia’s bargaining power in economic and political negotiations.

Long-Term Risks. Ulan Bator may face increased political pressure to align more closely with BRI, risking falling into a “debt trap” with Beijing. Mongolia’s crucial location for transit routes between Russia and China traps Ulan Bator into the Chinese and Russian geopolitical struggle, limiting its foreign policy independence. Such dynamics may inadvertently intensify US-China tensions over Mongolia’s strategic positioning, raising the risk of international contestation within Mongolian territory.

Key Indicators and Warning Signs

Increased Chinese infrastructure investment and bilateral trade agreements that emphasise transit dominance.

Adjustments in Mongolian foreign policy towards greater reliance on Russia and China, weakening third-party ties.

Escalating commitments to BRI-affiliated projects, specifically if Mongolia leverages Chinese financing in critical infrastructure and energy projects without alternative funding routes.

Conclusion

The CMREC is more than a logistical project; it represents a complex trilateral initiative aimed at regional economic and strategic alignment. The corridor’s influence extends beyond transportation, shaping geopolitical interactions in Northeast and Southeast Asia by redirecting resources and trade from traditional Western routes. Continued intelligence monitoring is crucial to assess the changing risks and policy shifts that Mongolia might undertake in response to its neighbours’ pressures.

Contact us at info@specialeurasia.com to discuss our monitoring and consulting services for reports and analyses on Mongolia, China, and Russia’s relations. A call can be arranged upon request.

November 24, 2024

The Qatar Chamber (QC) recently hosted a Mongolian business delegation led by HE Sergelen Purev, the ambassador of Mongolia to the State of Kuwait, Non -resident ambassador to the State of Qatar. The meeting was attended by QC First Vice-Chairman HE Mohamed bin Twar Al Kuwari, along with many representatives from Qatari tourist companies.

During the meeting, both sides discussed ways to enhance cooperation relations between the two countries in the tourism fields, facilitate travel and tourism procedures between the two countries by launching direct airlines and facilitating procedures for obtaining tourist visas.

In his remarks, HE Mohamed bin Twar said that the Chamber is keen on enhancing cooperation with the Mongolian side in tourist and economic fields, noting that Mongolia has witnessed great development in tourist infrastructure, making it a leading tourism destination.

Twar stressed that Qatari business owners are interested to learn about the investment opportunities available in Mongolia in this sector, and incentives offered for foreign investors, affirming that the Chamber encourages Qatari investors to explore opportunities in Mongolia.

For his part, HE Sergelen Purev reviewed the development of Mongolian tourism sector in recent years, affirming that the delegation visit to Qatar aims to promote Mongolian tourism sector and urge Qatari to visit Mongolia.

In a historic move, the parliament has accepted the president’s veto of the 2025 Budget Law and related legislation. For the veto to be upheld, it required the support of two-thirds of the members present at the session, and it received just that. This marks the first time the parliament has accepted a full presidential veto of the national budget.

The president had previously vetoed the entire budget on six occasions, but none of those vetoes were approved by the legislature. Three partial vetoes issued by the president in the past were all rejected. With this unprecedented decision, it remains uncertain how the 2025 budget will be re-discussed and what impact this will have on the legislative process.

Members of the parliament raised concerns during the session about the next steps for the budget, given that a complete veto has never been accepted before. The head of the parliament’s secretariat, B.Baasandorj, clarified the procedure, stating, “There is a need to clarify the budget before re-discussing it. Therefore, a one-time legislative act should be adopted by resolution and then the budget should be revisited.”

As a result, the parliament will need to adopt a one-time legislative act before proceeding with the re-discussion of the 2025 budget, which is expected to take place next week. The fact that the president vetoed the 2025 budget law, along with accompanying legislation, triggered a lively discussion in the ongoing plenary session of the parliament.

During the session, a member of parliament O.Tsogtgerel raised concerns regarding the future of the 30 percent annual budget growth, which was introduced following amendments to the Fiscal Stability Law in August. He questioned whether the system would remain in place and how it could be adjusted, noting that the recent changes had opened the door to uncontrolled budget increases.

O.Tsogtgerel emphasized that had the usual constraints not been lifted, the budget expenditure could not have expanded by more than six to seven percent relative to the real GDP growth. He pointed out that the budget approved in September included a 30 percent increase, and questioned the justification for the president's veto, which he believed was a rightful stance.

Finance Minister pushes for achievement of macroeconomic goals

In response, Finance Minister B.Javkhlan explained that the amendments made to the Fiscal Stability Law in August were part of the government’s action plan through 2028. These changes aimed to implement the government's objectives promptly, ensuring that the plan could launch without delay. B.Javkhlan highlighted that the 2025 budget had been designed to continue the government's development goals, particularly in regional development, and included necessary adjustments for price increases and sector operational costs.

B.Javkhlan also noted that Mongolia's GDP had grown 4.5 times in the past four years, with the budget-to-GDP ratio remaining stable at 3:1. The increase of 3.5 trillion MNT in budget expenditures was attributed to this stability and the need to account for price hikes and operating costs.

Despite the president's veto, B.Javkhlan emphasized the government’s commitment to achieving its macroeconomic goals without delay, while also acknowledging the changing external situation. He stressed the importance of moving forward cautiously, without rushing the process, and reiterated the government's determination to reach its long-term objectives. The debate on whether to accept the veto continues, with lawmakers carefully considering the implications of the president’s decision.

During the session, G.Zandanshatar, the Head of the Presidential Office, warned that if the president's conditions are not met, another veto may be issued. The president's veto outlined several key requirements. First, the president called for the adoption of a budget without a deficit, urging the implementation of a countercyclical budget policy that considers fluctuations in the global market and commodity prices. The focus should be on strengthening foreign exchange reserves, increasing budget savings, and reducing national debt.

In addition, the president emphasized the need to strengthen budget discipline among citizens, wealth creators, taxpayers, and professional organizations. He also called for a reduction in budget expenditures, advocating for efficiency and economy in government operations. Furthermore, the president insisted on eliminating any duplication of duties within government agencies.

The president also highlighted the importance of political parties and coalitions fulfilling their election promises. Lastly, he called for the vetoed 2025 budget law and the associated legislation to be resolved in line with relevant laws. As discussions continue, lawmakers are considering the president's demands and the necessary legislative actions to address them.

According to the attendance report for the 2024 fall regular session, presented on November 22, 39 members of parliament were absent from the session that discussed whether to accept the president’s veto of the 2025 budget law. Notably, 13 members were absent due to various reasons. In addition, three members were on medical leave. 18 members were absent due to foreign or domestic assignments. Despite these absences, 87 members were present to participate in the ongoing discussions, which is a significant turnout for such a crucial session.