The funding is being granted within the Extended Fund Facility (EFF) Program running by the Government of Mongolia in partnership with the International Monetary Fund (IMF). The first funding of the program or USD 120 million was granted in December 2017. While, the World Bank’s International Development Association and the International Bank for Reconstruction and Development are jointly providing USD 100 million for the second phase.

The funding will be spent on reducing expense of public investment projects, increasing their efficiencies, increasing housing access in a way of improving apartment mortgage program, strengthening social protection system, upgrading business environment and ensuring implementation of law on Animal Health.

Minister of Finance Ch.Khurelbaatar said that EFF program co-implementing with the International Monetary Fund is giving its yields. "Mongolia’s economic growth was at 7.2 percent in 2018 and 7.3 percent as of the second quarter of this year. Mongolia’s credit rating has been upgrading. The World Bank Group Board of Directors convened two months ago, where they resolved to grant funding of USD 100 million to Mongolia. The Parliament ratified draft law on issuance of funding yesterday. This financing will target to supporting budget, not for implementing projects and programs."

“Today, we signed an important financing agreement that would back a large-scale economic program running by the Mongolian Government. This is one of the largest programs, in which the Government of Mongolia and international partner organizations reached to an agreement. It is the second biggest financing to be allocated to grow Mongolia’s economy and improve debt sustainability and competitiveness. We will be rendering assistance on improving Mongolia’s economy in the future,” WB Country Manager for Mongolia Andrei Mikhnev said.

Since its last meeting held in Marrakech, Morocco, the IFSWF has welcomed two new full members – Fonds Souverain d'Investissements Stratégiques (FONSIS) of Senegal and Bpifrance – and four new associate members – the Egypt Fund, the Future Heritage Fund of Mongolia, the National Infrastructure Investment Fund of India and the National Investment Fund of Cyprus.

The Future Heritage Fund of Mongolia was established in 2015 with the intent of collecting a portion of mineral revenue for future generations’ use and the main sources of the FHF's financing include 65 percent of the royalty payments and the dividends to the state owned shares of legal entities with state ownership participation or state owned enterprises which possess mining licenses for mineral deposits

The IFSWF is a global network of sovereign wealth funds (SWFs) established in 2009 to enhance collaboration and dialogue between members, to promote a deeper understanding of SWF activity and to raise the standard for SWF best practice and governance.

The budget deficit reached MNT 1.8 trillion in the first eight months of 2016, due to the economic crisis. Tax revenues, generate more than 80 percent of the budget revenue increased by 21.5 percent from the previous year, reflecting the budget surplus. However, total expenditure and net lending of the General government budget increased by MNT 920.3 billion or 17 percent year-over-year. This increase was mainly due to MNT 532.1 billion increase in current expenditure and MNT 460.4 billion or 69 percent increase in capital expenditure.

In the meantime, NSO also announced the new debt statistic. The gross external debt of Mongolia increased by 7.3 percent to USD 29.7 billion in the first half of the year. The general government debt increased by MNT 1.6 trillion or 7.6 percent and reached MNT 22.7 trillion. year. In general government debt, foreign debt accounts for 85 percent or MNT 19.3 trillion.

The government will pay international bonds from 2021. In other words, Mongolia will pay a total of USD 2.9 billion for the next four years, which is the main challenge for the country.

Furthermore, the total foreign trade turnover increased by 11.9 percent in August 2019, mainly due to the 15 percent increase in exports. The rise of coal and unprocessed or semi-processed gold exports has been the key driver as well.

Foreign trade surplus increased by USD 426.6 million to USD 1.3 billion from the same period of the previous year. Imports indicate that mining-related products are the main reason for foreign trade surplus. For example, imports of diesel fuel, transportation, and parts of vehicles increased by USD 176 million.

Mongolia supplies around 40 percent of the world raw cashmere demand and it is deemed that the domestic production of final cashmere products for exports would increase the economic values by five times and the export revenue alone to reach USD 1.7 billion. Also, the proposed duty-free treatment by the USA to Mongolia cashmere products and 25 percent duty of China on knitted products are viewed as great opportunities to encourage exports.

President of the Mongolian National Chamber of Commerce and Industry (MNCCI) O.Amartuvshin said during the forum “In spite of the Mongolia’s abundant production of raw cashmere, the manufacturing capacity in the country is very low. The MNCCI in cooperation with private sector is formulating a strategy to raise the production of final cashmere products as it will help in the growth of the value added products and creating numerous job places in different stages of the cashmere production”. He also noted that promotion of non-mining exports is one of the main tasks of the MNCCI, for which attracting investment is an essential. “In this regard, cooperating with out southern neighbor China, another major supplier of raw cashmere with a great potential for technology and human resources, and building joint factory with them with the help of the government support will help Mongolia to export its cashmere to the world markets”.

The cashmere forum in China served as an important platform for Mongolia and China, which provide 90 percent of the global cashmere together, to talk about each of the cashmere markets and competitions with markets of other countries, define the adequate policy and raise capital. In 2018, the Government of Mongolia launched a cashmere product to expand cashmere production, increase economic profits and create jobs in the cashmere industry and thanks to the program, more than 2300 jobs were added.

On the sidelines of the forum, “Soft gold” cashmere fashion show was organized displaying cashmere collections by designers from Mongolia, China, Russia, Japan, South Korea and Italy. From Mongolia, fashion designer of the Evseg LLC S.Alimaa presented her cashmere collection.

China is about to receive its first Russia LNG via the “Power of Siberia“ pipeline on December 1st. That transports gas from Yakutia to the Russian Far East Province of Primorsky Krie at Blagoveshchensk and then heads south into Northern China as well as Japan.

The order to examine the Mongolia route came from direct discussions between Russian President Vladimir Putin and the Gazprom CEO Alexei Miller, where Putin is said to have stated:
“I would like to refer to the issue that we have repeatedly discussed with you and with Chinese partners, I mean the possibility of using the resources of the Irkutsk and Krasnoyarsk regions. Also, have a look at the reserves in Yamal for supplies to China via the western route through Mongolia. That is a challenging route, though the preliminary consideration of the issue has shown that it is quite realistic, and Chinese partners also tend to agree.”

Such pipelines are hi-tech. They need to be able to withstand temperatures as low as -62 °C (-79.6 °F). Nanocomposite coatings are used to increase the lifetime of the pipelines, which must also be able to withstand earthquakes by incorporating materials that will deform under seismic activity. Internal coatings ensure energy efficiency by reducing the friction of the pipeline’s inner surfaces. The Mongolia pipeline can be expected to run alongside the Trans-Mongolia railway, which enters Mongolia from Irkutsk and heads across the country, exiting at the Chinese border city of Erlian. Russia agreed last week to upgrade this route.

The cost is likely to run into several billion dollars, and will also be a boost to Mongolia as the country will receive transit fees in addition to providing maintenance and support services. Should it go ahead, completion would be in the region of about five years as pipelines already exist between Yamal and Irkutsk.

At the end of August 2019, the national currency in circulation reached MNT 925.7 billion, showing a decrease of MNT 9.3 billion (1.0%) from the previous month and by MNT 1.8 billion (0.2%) from the same period of previous year.

At the end of August 2019, the amount of outstanding loan to entities, enterprises and citizens amounted MNT 18.3 trillion, showing a decrease by MNT 23.0 billion (0.1%) from the previous month, while it shows an increase of MNT 2.3 trillion (14.5%) from the same period of previous year.

At the end of August 2019, the principals in arrears amounted MNT 982.4 billion, showing an increase by MNT 103.8 billion (11.8%) from the previous month, while it shows a decrease by MNT 36.1 billion (3.5%) from the same period of previous year. The principals in arrears makes up to 5.4% of total loans, showing an increase of 0.6 points from the previous month, while it shows a decrease of 1.0 points from the same period of previous year.

At the end of July, the outstanding loans to individual in arrears amounted MNT 12.1 trillion, decreased by MNT 8.0 billion (0.1%) from the previous month, but increased by MNT 1.8 trillion (17.7%) from the same period of previous year. From the total loans to individuals 37.2 percent was mortgage loans, 27.4 percent was salary loans, 13.1 percent was small and medium enterprises loans, 10.1 percent was consumer loans, 6.7 percent was pensions and 5.5 percent was other loans.

At the end of August 2019, the non-performing loans in banking system amounted MNT 1.9 trillion, decreased by MNT 19.8 billion (1.0%) from the previous month, but increased by MNT 545.6 billion (39.9%) from the same period of previous year. The non-performing loans in the banking system makes up to 10.5% of total loans, showing an increase of 1.9 points from the same period of previous year.

Source: National Statistics Office of Mongolia

In August 2019, equilibrated revenue and grants of the General government budget reached MNT 841.2 billion, decreased by MNT 293.4 billion or 25.9% from the previous month whereas, total expenditure and net lending reached MNT 826.8 billion, increased by MNT 35.3 billion or 4.5% from the previous month.

In the first 8 months of 2019, tax revenue reached MNT 6.2 trillion, increased by MNT 1104.8 billion or 21.5% compared with the same period of previous year. This growth was mainly affected by increases of MNT 362.9 billion or 28.1% in income tax, MNT 267.1 billion or 26.9% in social security revenue, MNT174.9 billion or 13.0% in value added taxes, MNT 116.4 billion or 24.1% in other tax, MNT 89.3 billion or 18.0% in excise taxes and MNT 80.7 billion or 18.7% in revenue from foreign activities.

General Government budget revenue was comprised of 81.3% of tax revenue, 8.2% of non-tax revenue, 10.0% of the future heritage fund and 0.5% of the stabilization fund.

In the first 8 months of 2019, total expenditure and net lending of the General government budget increased by MNT 920.3 billion or 17.0% compared with the same period of previous year. This increase was mainly due to MNT 532.1 billion or 11.7% increase in current expenditure and MNT 460.4 billion or 69.1% increase in capital expenditure.

General government budget expenditure and net lending was comprised of 80.1% of current expenditure, 17.8% of capital expenditure and 2.1% of net lending.

Source: National Statistics Office of Mongolia

In August 2019, the gross industrial output reached MNT 1.6 trillion and increased by MNT 135.5 billion (9.3%) compared to the previous month.

In August 2019, the seasonally adjusted industrial production index was 176.2 (2010=100), increased by 11.5% from the same period of previous year, whereas, it is decreased by 1.6% from the end of previous year and by 0.5% from the previous month.

In the first 8 months of 2019, in mining sector, extraction of zinc concentrate, crude oil, copper concentrate, fluorspar, gravel, coal and iron ore are increased by 0.4-36.0% compared to the same period of previous year, which in manufacturing sector, production of wooden products, horse meat, vacuum windows and doors, cashmere products, buuz and dumpling, wooden window and door are increased by 2.2% to 2.7 times more.

On the other hand, in mining sector, extraction of molybdenum concentrate and gold are decreased by 4.7-20.5%. In manufacturing sector, productions of beer, sausage products, alcoholic beverage, copper cathode, combed cashmere, and fodder are decreased by 2.7-35.6% compared to the same period of previous year.

In the first 8 months of 2019, the sales of industrial production reached MNT 13.5 trillion, increased by MNT 2.0 trillion (17.7%) from the same period of previous year. From the total sales of industrial production, MNT 9.5 trillion (70.4%) were export.

Source: National Statistics Office of Mongolia

In the same period of 2019, total foreign trade turnover increased by USD 1.0 (11.9%) billion, of which exports increased by USD 715.8 million (15.3%) and imports increased by USD 289.2 million (7.6%) compared to the same period of previous year.

In the first 8 months of 2019, foreign trade surplus reached USD 1.3 billion, which increased by USD 426.6 million from USD 869.2 million in the same period of 2018. In August 2019, foreign trade surplus reached to USD 231.6 million. Compared to the previous month, foreign trade surplus increased by USD 212.5 million. The 715.8 million increase in exports from the same period of previous year was due to the increases of USD 294.8 million in bituminous coal and USD 199.8 million in gold, unwrought or in semi-manufactured forms exports.

The USD 289.2 million increase in imports from the same period of previous year was mainly due to USD 57.2 million increase in mineral products imports, especially, USD 99.0 million increase in diesel imports and USD 176.0 million increase in transport vehicles and its spare parts.

Exports of mineral products, textiles and textile articles, natural or cultured stones, precious metals jewelry make up to 95.7 percent of total export. On the other hand, 68.6 percent of imports are mineral products, machinery, equipment, electric appliances, transport vehicle and its spare parts and food products.

Source: National Statistics Office of Mongolia