Controversy continues to surround the government’s ambitious New Cooperative Movement, a policy launched by the ruling Mongolian People’s Party (MPP) ahead of the 2024 parliamentary elections. Initially promoted as a lifeline for herders and rural cooperatives, the initiative is now drawing sharp criticism over poor loan repayments, questionable spending and alleged political motivations. 
The MPP pledged a massive 5 trillion MNT in soft loans to support herders and revitalize the cooperative sector. However, repayment rates have proven alarmingly low. According to government data, only 58 billion MNT have been repaid so far, barely a fraction of the 844.5 billion MNT allocated through the 2024 and 2025 state budgets. Despite these results, another 133.9 billion MNT has been included in next year’s budget, sparking public discontent and opposition outcry.
During a recent meeting of the Parliamentary Standing Committee, Democratic Party politician G.Ganbaatar, a member of the party’s National Policy Committee and Political Council, delivered a scathing critique of the program. “In last year’s election, the MPP suddenly invented the New Cooperative story to win the votes of herders. They allocated a total of 844.5 billion MNT, but repayment is minimal. Now they plan to add another 133.9 billion MNT. There is no monitoring, no transparency and huge sums are being wasted on interest payments and fuel for luxury vehicles,” he said. 
G.Ganbaatar accused government officials of misusing public funds, claiming that up to 5 billion MNT were spent on fuel and car rentals for senior officials’ countryside visits under the guise of the program. “This so-called cooperative initiative has completely undermined the true principles of cooperatives, which should be based on market forces and mutual benefit. This fraudulent decision will one day lead you before legal authorities, just like in the Coal Hearing,” he added. 
Public frustration has been mounting since the scheme’s inception. Many herders, originally promised accessible credit and market support, now complain that the funds never reached those in real need. Some cooperative members have even organized protests, calling the program a “vote-buying tactic” disguised as rural development. Economists and civil society groups have echoed these concerns, urging the government to conduct a transparent audit of the program. Analysts warn that without meaningful oversight, the“New Cooperative Movement risks not only becoming another drain on the state budget but also eroding trust in public institutions.
Then-Prime Minister L.Oyun-Erdene proudly announced the program through Government Resolution No. 166, adopted on April 26, 2024, as part of what he described as a broader national effort to protect herders from the economic impacts of drought and climate change. The announcement coincided with the urgent submission to Parliament of the Law on Reducing the Negative Impacts of Natural and Climate Change on Traditional Livestock Farming.
“In order to support herders who have been affected by drought and are in a difficult financial situation, the Government has decided to postpone the repayment of loans and loan interest for one year,” L.Oyun-Erdene declared at the time. “Herders themselves will bear six percent of the loan interest, and the state will cover the rest.” His remarks were widely publicized as part of a media campaign positioning the initiative as a compassionate, forward-looking reform. However, beneath the populist branding and the nostalgic invocation of the New Cooperative concept, originally rooted in Mongolia’s socialist past, critics say the movement quickly morphed into a vehicle for unchecked public spending. Behind the scenes, insiders and opposition members allege that the program effectively became a 5 trillion MNT loan distribution scheme, channeling funds indiscriminately under the banner of “Loans to Support Herders”.
Data from government reports indicate that 844.5 billion MNT were allocated through the 2024 and 2025 state budgets. Yet as of this year, only 58 billion MNT have been repaid, a repayment rate many economists have described as alarming. Despite these results, the 2026 draft state budget already includes another 133.9 billion MNT for the continuation of the initiative, now informally dubbed New Cooperative-2.
Next year’s budget to channel 134 billion MNT into the project
A total of 844.5 billion MNT in loans were provided to nearly 25,000 herders under the New Cooperative Movement. In 2024 and 2025 alone, 115.8 billion MNT from the portfolio of the Minister of Food, Agriculture and Light Industry was spent on interest subsidies. According to State Secretary of the Ministry T.Jambaltseren, next year’s budget will also include an interest subsidy of 109 billion MNT within the minister’s portfolio. This is because the 2026 state budget allocates 133.9 billion MNT for the implementation of the New Cooperative-2 movement, as well as 500 billion MNT in loans sourced through commercial banks.
However, this renewed funding has drawn criticism from opposition members. Parliamentarians J.Bayarmaa, the initiator of the bill on combating vote buying, voiced strong opposition during a recent parliamentary discussion. “There is a concept in politics called abuse of state power and resources. The New Cooperative Movement is a clear example of this. It is a cunning way for the ruling party to buy the votes of herders or voters with taxpayers’ money. This inappropriate use of the state budget, spent inefficiently and without control, must be stopped. Why is the government even increasing interest subsidies? Instead of harming the country like this, we should tell the herders the truth and make them understand: ‘You will simply pay off the loans you took, and we will not charge additional interest.’ But it is unacceptable to add another 134 billion MNT to the 2026 budget,” she said. 
The project, which has been implemented for more than a year and has already cost nearly 1 trillion MNT including interest subsidies, remains largely opaque. There is still no clear information on its actual benefitsь whether the loans were used for their intended purpose, how many of the 25,000 herders have started production, or whether they are processing livestock raw materials. It can only be concluded that the loan repayment rate has not even reached 10 percent.
Following last weekпs committee meeting, the issue turned into a political scandal. A parliamentary working group was established to analyze the implementation of the New Cooperative Movement and the use of the distributed loans. The group reportedly spent a significant amount of money conducting field studies during the spring and summer.
In August, the head of the working group, lawmaker M.Mandkhai presented preliminary findings. She reported, “A total of 10,000 new cooperatives have been established across the country, and about 100,000 herders have participated in the movement. Of these, more than 24,000 herders from about 7,700 cooperatives have received loans, and more than 70 percent of the loans were used to purchase breeding stock. However, since a detailed analysis of loan utilization has not been conducted, it is not yet possible to assess the actual results. Therefore, it is necessary to monitor loan use in the future and carry out a benefit-based evaluation,” she said. 
‘It is necessary to pay attention to the purpose of the loan granted’
Before the public could even notice, imagine, or calculate, five trillion MNT had begun flowing into the financial machine known as the New Cooperative Movement. The Government continues to include and finance payments exceeding the annual interest rate of six percentage points in its yearly budget. While the spending and benefits of the previous loans remain unclear, the New Cooperative-2 initiative has already been approved for inclusion in next year’s state budget. raising growing concerns that the same mistakes seen in past special loan funds will be repeated.
Successive governments have previously issued low-interest loans at six percent annually through the Small and Medium Enterprises Development Fund and the Agricultural Entrepreneurship Support Fund. Yet, history offers many examples of politically connected individuals or those with inside information obtaining such loans and misusing them for purposes far removed from production. These schemes often resulted in no industrial growth, bankruptcies and lengthy police and court proceedings against those responsible.
Even during the COVID-19 pandemic, the Government failed to release clear information about the outcomes of the “10-Trillion MNT Comprehensive Program”, leaving the public uncertain about how those vast sums were spent. Documents later revealed that the New Cooperative Movement had spent hundreds of millions of MNT merely on press advertising during the election period. Meanwhile, questions remain unanswered: if loans alone are the solution, will cooperatives truly develop? Or will the livestock sector’s growth and future once again be put at risk?
It is only natural that many questions arise: What is the income growth rate of the cooperatives that received funding? Did they create new local jobs? Do they have the ability to sustain themselves independently in the market? Reports have surfaced of three to five households forming a cooperative, securing loans of around 50 million MNT, and, lacking both capital and a clear business plan, simply purchasing cars instead of investing in production.
When the program began, the State Bank issued a clear warning, “Herders must develop their own business plans. Doing business based on someone else’s project is both pointless and risky. It is essential to ensure that loans are used for their intended purpose and that repayments are made responsibly. The Loan Guarantee Fund has provided guarantees covering up to 80 to 100 percent of cooperative loans. However, herders themselves must determine how to grow that money and by how many times.” Unfortunately, few people appear to have heeded that advice.
As MP J.Bayarmaa noted, herders should now be told the truth and made to understand that “We are not providing loans to be turned into cars, but to help you grow your 100,000 MNT into 200,000 MNT, and these loans must be repaid.” Otherwise, she warned, herders may one day be left with nothing but regret, saying, “We have no cattle, no factories, and if you don’t take my two ears, there’s nothing else to give.” She added, “This kind of misplaced love and affection, buying the votes of herders with taxpayers’ money, must never happen again.” 
Meanwhile, the Deputy Prime Minister’s Office has instructed officials to “determine the number of newly established cooperatives through detailed research, plan the scale and location of implementation on a regional basis, accurately calculate funding sources and total budgets, set the maximum and minimum loan amounts, conditions, and requirements, and design activities to be implemented at the provincial and soum levels according to local characteristics.” The directive also calls for coordination with regional development policies and for improving access to information on land allocation for citizens and cooperative members.
Yet, questions remain about whether such monitoring and planning can truly fix a flawed foundation. If the results of the loans issued under the New Cooperative Movement remain unknown, if their benefits cannot be measured or verified, then perhaps the more responsible course would be to reduce funding and redirect those resources toward solving the country’s more urgent and tangible problems.

Published Date:2025-10-16