175 Mongolians return from Kazakhstan www.montsame.mn

A charter flight from Nur-sultan, Kazakhstan with 175 passengers aboard landed just recently at 7 PM today, June 10, at the Chinggis Khaan International Airport in Ulaanbaatar.

AmCham Mongolia discusses Economic Outlook of Post-Election Mongolia www.montsame.mn

The American Chamber of Commerce in Mongolia (AmCham Mongolia) organized its June Online Monthly Meeting on Economic Outlook of Post-Election Mongolia. The panelists were Andrei Mikhnev, Country Manager of the World Bank, D.Enkhtuvshin, Vice President of MCS Holding, A.Bilguun, Board Member of the Mongolian National Mining Association, and Dr. Ch.Khashchuluun, an Independent Economist. Around 70 attendees participated in the online discussion representing AmCham member companies, and domestic and international businesses.

In his opening remarks, Jay Liotta, Chairman of AmCham Mongolia, asked How quickly Mongolia can recover from the impacts of COVID-19 on the Economy? Public health policies dominate the Economic recovery program, and while positive health impacts are wonderful, it can be devastating to an economic situation. Mongolia’s Economy has contracted by 10.7%. The nation’s payment balance showed a deficit of 665 million USD, deteriorating by almost one billion USD compared to a surplus of 322 million dollars the same period last year. Fitch credit ratings perceive that the Mongolian economy will rebound rapidly from the temporary shock of COVID-19 to a 7.9% GDP growth in 2021. It also reported that Mongolia’s credit ratings would remain “B,” and the outlook of the nation remains stable. Yet we have a trade deficit of 389.6 million USD. Major exports fell sharply due to border restrictions. Coal exports at the end of May were 2.6 times lower than 2019, and investors and lenders remain hesitant to put their time and capital into Mongolia as they will have to cover added risks and costs.

The foreign direct investment totaled 481.4 million USD, which is 20% lower than the same period last year. As of the first quarter of 2020, the Bank of Mongolia emphasized more than 90% of the foreign direct investment was related to the OT project. So how realistic is a quick recovery, and how much is within Mongolia’s power? Will the next parliament care about foreign direct investment and stand against state-owned businesses driving a state-planned economy?

Andrei Mikhnev, Country Manager of the World Bank, emphasized that the Covid-19 is a significant factor impacting the Economy in Mongolia, not so much the elections. June issue of the Global Economic Prospects, a semi-annual publication from the World Bank shows a -0.5% to -2.6% growth forecast for Mongolia. The situation will worsen if the newly elected parliament won’t take adequate measures to address declining exchange reserves in Mongolia, extensive intervention to support the national currency, management of public and private debt. Finally, Mongolia needs to closely monitor the key commodities and its prices to continue to enjoy the benefits of its vast natural resources and maintain the growth we have seen since 2017. The new government’s major challenge will be to build the private sector-led strong Economy that is transparent and encourages broader participation of businesses.

A.Bilguun highlighted the potential of growth in gold exploration due to recent discoveries of new deposits. The mineral sector has a competitive advantage in global and regional markets and should be treated as such.

D.Enkhtuvshin emphasized that the development of mega-projects becomes challenging once the government starts to get involved and that Mongolia needs to re-think the degree to which the government should partner with private businesses after the elections.

Finally, the discussion ended on a hopeful note from Dr. Ch.Khashchuluun, who stressed that the advantage of a small, mobile economy is that Mongolia has the potential to rebound quickly in the second half of the year given the newly-elected government implements adequate measures. The new government’s top priority will be to develop the economic recovery plan.

Following the panel discussion, the panelists took part in the Q&A session and answered the virtual audience’s questions. In conclusion, AmCham and the panelists urged for a carefully constructed multi-step economic recovery program from the government.

source: AmCham Mongolia

Mongolian-Russian Treaty on Comprehensive Strategic Partnership submitted to the State Duma www.montsame.mn

A treaty between Mongolia and the Russian Federation on Friendly Relations and Comprehensive Strategic Partnership was signed between the heads of the two countries on September 3, 2019 during the state visit of President of Russian Federation Vladimir Putin to Mongolia at the invitation of President Kh.Battulga.

World Bank: Mongolia’s economy may shrink by 0.5 percent in 2020 www.zgm.mn

World Bank estimates that Mongolia’s economic outlook to shrink by 0.5 percent in 2020. As the pandemic spreads around the world and the quarantine lasted longer than originally expected, it was decided to reduce the forecast by six percentage points. However, economic growth is predicted to stand at 4.9 percent next year. Capital flows were disrupted and borrowing costs increased. High debt levels are a major challenge for Mongolia. The Asian Development Bank (ADB) also cut its outlook and released a new estimate in April, highlighting Mongolia’s economy to grow 2.1 percent this year. Moreover, the global economy is on track to shrink by 5.2 percent this year amid the COVID-19 pandemic, the deepest recession since the Second World War, the World Bank Group said in its latest Global Economic Prospects released Monday. Particularly, the economies of developing countries are expected to diminish for the first time in 60 years. Over 90 percent of the world’s GDP is expected to fall. The global economy is expected to lessen by 8 percent this year if the quarantine regime continues for a long time without limiting the spread of COVID-19. Estimates show that Mongolia’s economy will weaken by 4 percent if the quarantine regime is eased and economic communications are normalized. Despite the positive estimation of the economic outlook, the pandemic is causing damage twofold from the 2009 crisis.

Four parties to collaborate to establish metal alloy production plant www.montsame.mn

With the aims of naturalizing eco-friendly recycling technology in Mongolia, putting waste coal into economic circulation, producing value-added product and exporting it to the international market, a four-sided memorandum has been established today, June 10 among “Erdenes Mongol” LLC, “National Center on Complex Processing of Mineral Raw Material of the Republic of Kazakhstan”, “ICMD International Corporation of Metal Alloy Development Holding of Germany” and “Coeus Consulting” Company.

BoM to conclude contract with banks to finance gold sector www.montsame.mn

The Bank of Mongolia (BoM) is preparing to provide soft financing to gold mining companies. With implementation of the program, 23 tons of gold is estimated to be mined or to increase official foreign exchange reserves by USD 1.2 billion at the current value.

Goods to be destroyed after blaze at Mongolia’s top store www.news.mn

Earlier yesterday (10 June), the food at the supermarket on the ground floor of the State Department Store was destroyed. On 7 June, a huge fire destroyed the fifth and sixth floors of Mongolia’s most famous store, located in the heart of Ulaanbaatar. The rest of the building was filled with dense black smoke.

Mongolia graphite mine may help China fill gap from lower imports www.mining.com

Market analyst Roskill predicts that a new ‘ultra-large’ flake graphite mine being built in Inner Mongolia is likely to fill in the gap that has been left in the Chinese market by slower production in Mozambique.

2.1 million people in Mongolia eligible to vote in parliamentary elections www.akipress.com

The State Registration Authority of Mongolia compiled a list of 2.1 million eligible voters for the upcoming parliamentary election on June 24.

Economic challenges rise amid soaring external debt www.zgm.mn

In terms of debt burden, Mongolia ranked 59th out of 66 developing countries, with the economy shrinking by 10.7 percent in the first quarter of 2020. The total foreign debt reached USD 30.6 billion at the end of 2019, increased by USD 1.9 billion in the last four years. The country’s external debt per capita had also increased from MNT 15 million to MNT 28.3 million. Total revenue in the trade sector contracted by 5.4 percent, with businesses losing more than MNT 280 billion since the pandemic. Thousands of people who used to work in the sector are now unemployed without income. Moreover, revenue from the catering sector decreased by MNT 2.8 billion in the first quarter. In terms of different industries, most of the travel companies saw a deficit, with hotel revenues down 42.9 percent, or nearly double their operations. The external debt has risen sharply by 35 percent over the past five years, and Mongolia is scheduled to repay USD 2.9 billion in foreign debt next year. This is about 70 percent of the country’s official foreign exchange reserves which stands at USD 4.09 billion. As of May, the Bank of Mongolia (BoM) has purchased 8.5 tons of precious metals. Specifically, gold accounts for 6.8 tons of and silver 1.7 tons. The gold purchase has doubled from the previous year, and the central bank and the government are estimating to increase it to 23 tons this year.