At the scientific conference hosted by Mongol Bank on December 23, economic expert O.Nomunshur presented a comprehensive analysis of the country’s central bank objectives, governance, operational guidelines and the critical legal reforms needed to address current economic challenges. In her report, O.Nomunshur emphasized that the primary driver of inflation in the upcoming years will be the budget expansion and cash distribution typically associated with election years. She explained that these fiscal policies, while politically motivated, tend to increase inflationary pressures in the year following an election.

O.Nomunshur pointed out that since 2008, the government has consistently expanded the budget ahead of elections, and this trend has contributed significantly to economic instability. According to her analysis, similar fiscal strategies were expected in 2023 in preparation for the 2024 election, which would likely lead to further inflation. She highlighted that the inflation rate, which stood at 5.1 percent in June, had already risen to eight percent by November, with the likelihood of further increases in the coming years. “Budget expansion and the distribution of funds, such as the dividends from Erdenes Tavan Tolgoi, become imported goods for the consumer country, which increases the outflow of foreign currency and exacerbates inflation,” she said.

The expert also examined Mongolia’s economic history, noting the key milestones that shaped the country’s banking system. She discussed the transition to a market economy in 1990 and the subsequent passing of the Law on Banking in 1991, which established a two-tier banking system. This was followed by the adoption of the Law on the Central Bank in 1996, which laid the foundation for an independent central bank and a robust banking supervision system. O.Nomunshur traced Mongolia’s economic recovery, particularly after the Oyu Tolgoi Project in 2009, which significantly boosted foreign investment, though it failed to accumulate sufficient foreign exchange reserves.

In her report, she also addressed the impact of fiscal expansion and the increasing external debt, which now stands at around 170 percent of GDP. She cited the issuance of the Chinggis Bond in 2012 as a key moment when the country’s external debt rose sharply, leaving the country vulnerable to future economic shocks. She compared the current economic situation to previous crises, such as the financial difficulties faced in 2008 and 2016, highlighting the role of fluctuating commodity prices and external debt in shaping Mongolia’s economic trajectory.

O.Nomunshur noted that the increase in government spending and the growing reliance on foreign exchange interventions could lead to a repeat of the economic instability seen in the past. She pointed out that the country’s annual growth rate of imports has surged by 26 percent since 2024, while exports have not seen corresponding growth. This imbalance, coupled with declining global commodity prices, mirrors the situation in 2016, when external market conditions were similarly unfavorable.

In addition to her analysis of the current economic situation, O.Nomunshur provided several key recommendations to improve Mongolia’s monetary and fiscal policies. She stressed the need to clarify the target of the central bank, which she said is currently too ambiguous, making it difficult to implement effective monetary policy. She also recommended that Mongol Bank set a medium-term inflation target, which would help anchor expectations and provide clearer guidance for both investors and consumers. Furthermore, she advised the central bank to avoid excessive foreign exchange interventions, which, according to her, could distort market mechanisms and exacerbate long-term economic imbalances. Finally, she called for broader legal reforms to ensure that the central bank remains independent and capable of navigating economic challenges without undue political interference.

Concluding her report, O.Nomunshur emphasized that maintaining the independence of the central bank is crucial for the economic sovereignty of Mongolia. She pointed out that 214 countries globally have central banks, and the independence of these institutions is a fundamental pillar for managing inflation, ensuring stability,and fostering long-term growth.

Mongolia is seeking to strengthen its support for the wool, cashmere, and leather processing industries, according to a statement from the presidential press office on Thursday.

As part of the national campaign "White Gold," initiated by President Ukhnaa Khurelsukh, the Ministry of Food, Agriculture, and Light Industry, in collaboration with 10 major commercial banks, signed a financing agreement on Thursday.

Under the agreement, enterprises in these sectors are expected to receive 788.9 billion Mongolian tugriks (over 231 million U.S. dollars) in circulating capital and concessional investment loans in the coming year alone, the press office announced.

Within the framework of the national campaign, which will run until 2028, Mongolia aims to significantly enhance its cashmere processing capacity.

The Asian country is expected to increase the level of full cashmere processing from the current 20 percent to 40 percent, and expand exports from 398 million U.S. dollars to 690 million U.S. dollars under the framework of the campaign.

Additionally, the campaign seeks to increase the level of wool processing from 25 percent to 55 percent, with exports projected to grow from 52 million U.S. dollars to 119 million U.S. dollars.

Meanwhile, the level of deep processing of leather and hides is estimated to increase from 30 percent to 50 percent, and exports are expected to grow from 9.6 million U.S. dollars to 22.4 million U.S. dollars.

Altogether, the campaign is expected to significantly boost Mongolia's economic growth, creating over 8,000 new jobs across the wool, cashmere, and leather sectors, while enhancing the country's industrial capacity and export potential.

Mongolia has an average annual production capacity of 37,000 tons of sheep wool, 10,000 tons of goat cashmere, 2,000 tons of camel wool, 400 tons of yak fur, and 18 million pieces of hides and skins, according to the presidential press office.

Promoting livestock husbandry is considered a key strategy for diversifying Mongolia's mining-dependent economy.

As one of the world's last remaining nomadic nations, Mongolia had 64.7 million livestock at the end of 2023, according to the National Statistics Office.

In commemoration of the centennial of the establishment of the Museum Sector in Mongolia, an Honorary Session was held at the State Palace of Mongolia on December 24, 2024.

The first museum in Mongolia was established and opened to the public in December 1924. Since then, the museum sector has expanded to include over 40 museums, housing more than 336,000 artifacts and employing more than 1,200 people.

In 2021, Mongolia became one of the few Asian countries to pass the Law on Museums. A museum is a non-profit cultural and academic institution responsible for registering, collecting, preserving, studying, promoting, and disseminating cultural values and heritages.

Minister of Culture, Sports, Tourism, and Youth of Mongolia Nomin Chinbat opened the Session, emphasizing, “100 years ago, a museum sector was established in Mongolia and began to make a valuable contribution to enlightenment. Since then, museums have fulfilled their role in collecting, preserving, promoting, and showcasing our national heritage to the world.

Over the past four years, we have passed the first Law on Museums, allowing children under 16 to visit museums for free while offering discounts to people with developmental challenges and senior citizens. Moreover, we have made it a tradition to organize the Museum Open Day during the first week of March each year, providing free entry for the public. The Chinggis Khaan National Museum of Mongolia and two local museums have been put into operation, and the construction work on four museums has been completed. We have also upgraded the security and preservation systems in all state and local museums. Compared to 2019, the number of museum visitors has increased by 40 percent, reaching 1.1 million, and revenue has grown by 1.5 times, amounting to MNT 4.2 billion. The number of museum staff has increased by 12.5 percent compared to 2019.

The Chinggis Khaan National Museum of Mongolia was named one of the must-see museums in 2024 by National Geographic, while the French magazine Historia named the exhibition “Chinggis Khaan: How the Mongols Changed the World” displayed in Nantes, France, the best exhibition of 2023.

In the future, we aim at opening the National Museum of Natural Sciences, and the Museum of Archeology and Ethnology, further developing the museum sector regionally and internationally.”

At the Session, Head of the Documentation and Monitoring Department of the Office of the President of Mongolia Yanjinsuren Sodnomdorj read out the congratulations of President of Mongolia Khurelsukh Ukhnaa. Furthermore, Chairman of the Standing Committee on Education, Culture, Science and Sports of the State Great Khural of Mongolia Undram Chinbat delivered greetings.

The Session was attended by more than 700 representatives from public and private museums.

According to the Mongolian Customs General Administration, over the first 11 months of 2024, Mongolia earned USD 8.181.5 million from coal exports, which is an increase of USD 250 million compared to the same period of the previous year.

The amount of coal exported since the beginning of the year has reached 78,519.7 thousand tons, a 21.1 percent increase compared to the same period last year.

As Mongolia set a target to export 78 million tons of coal in 2024, the performance has already exceeded the plan for this year, and the export is expected to surpass 80 million tons for the first time. For 2025, coal export is planned to be increased to 83 million tons.

According to the socio-economic report for November 2024 presented by the National Statistics Committee, the country's sales in the foreign market for the first 11 months of 2024 amounted to MNT 34.1 trillion, of which 33 trillion were from the mining sector. The composition of foreign sales of mining products was as follows:

· 60.4 percent from coal extraction,

· 35.3 percent from metal ore extraction,

· 3.1 percent from oil extraction,

· 1.2 percent from other mineral extraction.

The industrial production index was 256.8 in November 2024, down 44.6 percent from the same period last year.

The sales of mining and extractive industries increased by over MNT 3.8 trillion (11.4 percent) from the same period last year, mainly due to an increase in sales of coal by MNT 1.9 trillion (9.9 percent), metal ore by MNT 1.9 trillion (15.8 percent), and other minerals by MNT 82.6 billion (19.7 percent).

On December 20, 2024, Prime Minister of Mongolia Oyun-Erdene Luvsannamsrai addressed the public, providing details on the decisions made at the irregular session of the Cabinet of Mongolia.

“The Cabinet of Mongolia held the irregular session with three main objectives. First, it's been 100 days since the Mongolian Government's Action Plan was approved. We assessed the fulfillment of the tasks assigned to the Ministers. Second, we discussed the preliminary economic indicators for 2024, taking December 20th as a cutoff point. Third, we scrutinized the conclusions of the National Committee and the capital city on air pollution in Ulaanbaatar and approved an Emergency Action Plan,” highlighted Prime Minister of Mongolia Oyun-Erdene Luvsannamsrai.

As of today, the economy of Mongolia has grown by 5 percent, and foreign exchange reserves stand at USD 4.9 billion. There is a positive outlook for reserves to reach USD 5 billion by the end of the year. The State Budget of Mongolia has resulted in a surplus of MNT 1.3 trillion.

Exports have reached USD 15.7 billion, with coal exports hitting a historic high of 81.8 million tons. These figures were discussed today because this marks the earliest opportunity to observe the initial tangible results of implementing the Law on Mongolia’s Sovereign Wealth Fund. The leaders of the Mongolian People's Party, the Democratic Party, and the Hun Party submitted the Law on Mongolia’s Sovereign Wealth Fund to the State Great Khural of Mongolia. Then, on April 19, 2024, the State Great Khural passed the Law. Since the Law came into force, its first outcomes are being seen today. Following the examples of the Sovereign Wealth Fund of countries, we will name Mongolia’s Sovereign Wealth Fund after our Great Emperor Chinggis Khaan as a symbol of development and prosperity. From now on, this Fund will be known as the "CHINGGIS FUND" internationally.

MNT 4 trillion has been generated in the Future Heritage Fund of the Sovereign Wealth Fund. Additionally, MNT 495 billion, or MNT 135 thousand per citizen, has been deposited into the Savings Fund, which is now accessible to all Mongolian citizens through the E-Mongolia platform. This allows every Mongolian citizen to see the direct connection between their savings and the nation's wealth.

As we utilize our mineral resources, our savings will grow. This accumulation will arise from 34 percent of the national wealth and the royalties from mineral resources, leading to increased savings for every citizen. This legal framework ensures that citizens' savings will increase as new mega-projects are implemented in Mongolia. It is projected that once the Mongolian Government’s 14 mega-projects are fully implemented, the Savings Fund could reach MNT 18 trillion by 2030. Preliminary estimates indicate that the Development Fund could accumulate MNT 500 billion. Also, the Development Bank has been transformed into an EXIM Bank.

The Loan Agreement for the Erdeneburen Hydropower Plant, one of the 14 mega projects of the Government of Mongolia, has been finalized. Also, the Cabinet decided to establish a Coke and Chemical Plant based on the Baganuur Coal Mine.

Previously operating at a deficit, Erdenes Tavan Tolgoi Company is now generating a profit of MNT 4.3 trillion. The dividend payout is expected to be around MNT 350 thousand per shareholder. Considering the upcoming cold season and inflation, it has been decided to distribute the dividends in three installments. The first installment will see citizens receiving MNT 135 thousand each.

We have also made decisions regarding air pollution. Multiple factors contributed to traffic congestion and air and soil pollution in Ulaanbaatar. We must approach this issue comprehensively and resolve it from the root of the problem. Therefore, Ulaanbaatar city must have the financial, human, and legal capacity to alleviate these issues. The State Great Khural and the Government must provide all necessary political support to the capital city.

The Ministry of Road and Transport of Mongolia and the Ministry of Land, Infrastructure and Transport of the Republic of Korea are jointly implementing the "K-Smart" Electronic Traffic Management Project to improve the management of road maintenance in Mongolia.

Director of the National Road Transport Center of Mongolia D. Oyunbold met with the representatives of the South Korean side of this project, Dr. Lim Jae-Kyu and Dr. Lee Jae Hoon from the Korea Institute of Construction Technology, and Choi Jun-seong, Chairman of the Korean Society of Road Engineers. At the meeting, the parties discussed the planned works and the successful implementation of the project within 4 years.

Under the project, with a grant of KW 6.5 billion from the Ministry of Land, Infrastructure and Transport of the Republic of Korea and the International Development Assistance Organization (ODA), Mongolian engineers and technical workers will be trained in the Republic of Korea, road maintenance equipment will be provided, as well as effective technology, including using artificial intelligence in road maintenance, automatically monitoring, detecting and measuring road surface damage and anomalies, will be introduced in Mongolia.

The Mongolian government on Wednesday decided to designate 2025 as the year to promote infrastructure development in the capital of Ulan Bator.

"The government made the decision to declare 2025 as the year to advance infrastructure development of Ulan Bator," said Khishgee Nyambaatar, the city's mayor, at a press conference following a regular government meeting.

As part of this initiative, cabinet members have been tasked with providing comprehensive support and coordination for projects and initiatives aimed at addressing the city's most urgent challenges and accelerating its development.

Ulan Bator is currently grappling with a range of critical issues, including severe air pollution, traffic congestion, energy shortages, and urban planning inefficiencies.

In response to these problems, the Mongolian government has recently declared a heightened state of preparedness in the capital.

Originally designed to accommodate 500,000 residents, Ulan Bator now hosts approximately half of Mongolia's total population of 3.5 million.

More than half of the city's residents live in its ger districts, where there are no running water, central heating, or sewage systems.

Deteriorating air quality, largely driven by the use of processed fuel for heating, has become a growing concern, particularly as the city faces harsh winter conditions.

PM2.5 levels in both the ger districts and central areas of the city often far exceed the World Health Organization's recommended safety limits during the winter months.

In addition to air pollution, traffic congestion remains one of Ulan Bator's most significant challenges.

The city currently has 720,000 registered vehicles, further exacerbating its urban issues.

The month of December in Mongolia has been filled with controversy around the interim free trade deal the country intends to sign with the Eurasian Economic Union (EEU), consisting of Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan. The Mongolian government plans to sign a 3-year free trade agreement with the bloc, removing all tariffs and quotas on 375 items and paving the way for local companies to gain access to large foreign markets with a total population of over 200 million people.

The negotiations started in 2019 but entered an active stage in 2024, with both sides expressing interest in completing the agreement by the end of 2024. In early December, the government shared a list of products that would be part of the trade agreement. The Mongolian side is hopeful that it will allow its economy to grow by exporting meat, wool, and leather products worth USD 15.5 billion.

The government is adamant that signing the agreement is in Mongolia’s best interests. Its main argument is that Mongolia's economy cannot grow by catering to a small domestic market of 3.5 million people. This growth is expected to draw foreign investment, diversify the economy, and reduce dependence on the mining sector.

However, all the business stakeholders in the country seems to hold the exact opposite opinion. Representatives of Mongolian businesses, whom the deal will affect directly, have all spoken against it and called to either cancel or at least postpone its signing.

Mongolian National Chamber of Commerce and Industry has expressed its worries that the deal will undermine national security by killing off local food production and creating dependence on other countries for food supplies. A coalition of professional associations consisting of the NGO Food Evolution, the Food Producers’ Union, the National Association of Veterinarians and Breeders, and the Farmers’ Union has done the same.

The Chamber of Commerce added that trading with Russia and Belarus, two pariah states under unprecedented number of sanctions, poses reputational and financial risks that may scare away potential investors and result in secondary sanctions.

Director of Food Evolution, T. Monkhtor, forecasted that Russian food products, such as dairy, wheat, and flour, which are cheaper and higher quality, will flood the Mongolian market and bankrupt local companies. His estimate is that will take only one year for this grim scenario to take place. The consequences could be catastrophic with hundreds of thousands losing their jobs and sources of income.

He also recalled the failure of the free trade agreement Mongolia signed with Japan in 2017. The deal benefitted only Japan with its exports to Mongolia growing from USD 300 million in 2017 to 600 USD million in 2023. Mongolia’s exports to Japan grew only by USD 3 million, from USD 15 to 18 million. The fear is that the deal with the EEU will have a similar outcome but with a devastating effect.

On December 18, the government partially gave in to these demands and agreed to postpone the negotiations. Deputy prime minister S. Amarsaikhan announced that the deal will not be suspended. Instead, the government will proceed in consultation with non-state actors, soliciting their feedback and possibly restructuring the agreement. What appears to be an interim victory for local food producers is a loss for consumers, who ultimately bear the cost of their country’s attempts to sustain its food industry.

BY Nurbek Bekmurzaev

The installed new energy capacity, which includes wind power and solar energy, in North China's coal-rich Inner Mongolia autonomous region has surpassed 120 million kilowatts, exceeding the region's installed thermal power capacity for the first time.

Inner Mongolia has achieved this milestone one year ahead of schedule, most recently having connected a 1-million-kilowatt photovoltaic project to the grid. Its total installed power capacity is now 240 million kilowatts, and its installed thermal power capacity is 117 million kilowatts.

Inner Mongolia possesses abundant new energy resources, with a wind energy resource potential of 1.46 billion kilowatts, accounting for approximately 57 percent of the national figure. Its solar energy resource potential amounts to 9.4 billion kilowatts, representing approximately 21 percent of the national potential.

Currently, new energy installations connected to the grid in the region generate 270 billion kilowatt-hours of green electricity annually, which is equivalent to reducing standard coal use by 84 million tons and reducing carbon dioxide emissions by over 220 million tons.

Inner Mongolia also boasts coal reserves totaling 536.5 billion tons, accounting for nearly one-third of the national total. In 2023, its annual coal production output came in above 1.2 billion tons, of which approximately 60 percent was sold outside the region, with about 250 million tons used to generate thermal power within the region.

According to a bulletin posted on the regional energy bureau's official website in January, Inner Mongolia at the time planned to shut down three coal mines in 2024 with a total production capacity of 2.1 million tons.

Inner Mongolia has also made great strides in technological innovation in the field of new energy. The region has integrated wind and solar power generation with desertification control, for example, by using solar panels to provide shade and reduce surface water evaporation to enable plant growth beneath. Projects such as this ingeniously combine new energy development with desert ecosystem restoration.

Inner Mongolia can be seen as a microcosm of the rapid growth of China's new energy sector, which has maintained a double-digit annual growth rate in recent years.

Since 2013, the country's installed wind power capacity has grown sixfold, and its installed solar power capacity has surged more than 180-fold. New installations in China account for over 40 percent of the global annual total, contributing significantly to the world's green development.

In the tone-setting annual economic work conference held earlier this month, China's policymakers pledged to accelerate the comprehensive green transformation of economic and social development next year.

To achieve the country's dual carbon goals, China will tighten control over the consumption of fossil fuels, work faster to develop a new energy system, and promote the integrated development of hydro, wind and solar power, said an official from the Office of the Central Committee for Financial and Economic Affairs.