The newly formed Government held its first session on June 18, 2025, discussing the draft amendments to the state budget to reduce inefficient state spending.
To do that first of all, it plans to make civil service rationally structured, compact, and competent. Changes will be made to improve functions and structure, ensure a reasonable ratio of management and executive personnel, and reduce the number of civil servants, except for teachers and doctors, by nine percent. It is estimated that a total of MNT1.9 trillion will be saved in the framework of saving the bearable costs of state institutions, continuing the programs being implemented in an austerity mode, completely saving the costs of programs that have not started yet, and creating a compact, competent, and productive e-government.
In parallel with the reduction of civil service staff, the quality of public services that reach citizens will not be degraded by continuing the digitalization of government services, introducing innovations to improve productivity conforming with the characteristics of each sector. The draft amendment reflects to reduction of the number of first deputy heads and deputy heads of state institutions. Moreover, savings will be made by suspending business trips abroad and receiving foreign guests other than high-level foreign visits, as well as buying furniture and routine maintenance of all levels of state institutions, and reducing expenses for transportation and fuel of state institutions other than military institutions, and internal business trips.
Second, according to the Law on State Savings, the procurement process should be completed by May 31, 2025, and projects without contracts will not be funded, and the savings resulting from tender procurement will be saved. However, the financing and implementation of projects with contracts in line with relevant laws and within the framework of the state budget investment plan will not be affected. Consequently, a total of MNT 328.2 billion is estimated to be saved.
As for foreign loans and aid, a total of MNT 1.9 trillion, including foreign loans of MNT 1.5 trillion and aid of MNT 417.0 billion, is approved to be used in 2025 and the budget amendments will not change the funding. This year high amount of funding from foreign loans and aid will be allocated for development projects such as the construction of an oil refinery, the Erdeneburen Hydropower Plant, and the Millennium Challenge Corporation's project to increase water supply in Ulaanbaatar.
Third, the laws that lead to the increase of budget expenditures will be streamlined. The budget amendment will not reduce mandatory financing expenses aligning with laws and regulations, including pensions and benefits provided by the Social Insurance and Welfare funds, child allowance, spending for medicines and medical equipment, student lunches at all levels of educational institutions, Government loan service payments, as well as salaries of civil servants and one-time retirement benefits, and benefits for stable employment in rural areas, stated the Minister of Finance.
Currently, 1028 provisions of 208 laws out of a total of 932 laws in force in Mongolia increase budget expenditures in some way and make it impossible to save through amendments. Therefore, the relevant draft laws have been developed, taking into account the urgent need to repeal or amend some laws to reduce current budget expenditures and strengthen discipline and accountability.
In addition, as the Government designated 2026 as the “Year to Support Education” and in line with its policy of promoting the construction of new kindergartens and general education schools, increasing accessibility, attracting private sector investment, and investing in education, a draft law has been developed that reflects the construction of new kindergartens and secondary and high school buildings regardless of the form of ownership, will be subject to the tax deduction specified in Article 22.9 of the Law on Corporate Income Tax.
By amending the 2025 budget, the balanced revenue of the consolidated budget is estimated to be MNT31.2 trillion, reduced by MNT2.3 trillion, while the total expenditure of the consolidated budget to be MNT31.2 trillion, reduced by MNT2.3 trillion, making the state budget balanced and deficit-free.
Prime Minister Zandanshatar Gombojav instructed the Ministers to familiarize themselves with their sectoral budgets. and that an irregular Cabinet session is announced to be on Friday, June 20, 2025, to discuss the draft amendments to the state budget again.

Published Date:2025-06-19