A magnitude-5.1 earthquake occurred in southern Khovsgol Province, near its border with Arkhangai Province, at around 04:34 Nov. 28. The epicenter was approximately 109 km (68 miles) south-southwest of Tsengel. The tremor occurred at a depth of about 10 km (6 miles), and light shaking was probably felt in parts of north-central Mongolia. There have been no initial reports of damage or casualties as a result of the earthquake; significant damage is unlikely. It could take several hours until authorities can conduct comprehensive damage assessments, especially in remote areas. Aftershocks are likely over the coming days.

Officials may temporarily shut down transportation infrastructure in the tremor zone to check for damage. Minor disruptions could occur during shutdowns, but service will likely resume quickly if no damage is found. Utility outages are possible, particularly near the earthquake's epicenter.

Mongolia is ramping up efforts to enhance its tourism industry by drawing more foreign visitors throughout all four seasons of the year, according to a statement released by the government's press office on Thursday.

With a strongly continental climate characterized by long, harsh winters and short summers, Mongolia has traditionally faced seasonal limitations in tourism.

To overcome this challenge, the government has introduced several key measures, including plans to reduce airfares by up to 40 percent during off-peak seasons, develop airports in major tourist destinations, and promote cross-border tourism. These initiatives aim to position Mongolia as a year-round destination, offering diverse attractions in every season, said the press office.

The government views tourism as a vital sector for diversifying Mongolia's economy, which has long been reliant on the export-oriented mining industry.

In line with this goal, Mongolia has designated 2023-2028 as the "Years to Visit Mongolia," setting an ambitious target to attract at least 1 million foreign tourists annually.

In 2023, the country welcomed over 650,000 foreign tourists, generating 1.2 billion U.S. dollars in revenue from tourism. The upward trend has continued in 2024, with a record-breaking 680,711 foreign visitors arriving by October, marking a historic high for the sector.

As of November 25, 2024, the official foreign exchange reserves of Mongolia exceeded USD 4.9 billion, an increase of USD 38.8 million or 0.8 percent compared to the beginning of this year. This is the amount that satisfies the country's foreign exchange-paid import needs for 5.1 months, according to the Bank of Mongolia.

The increase in foreign exchange reserves was mainly due to the improvement in the USD flow into Mongolia, including export revenues and foreign direct investment. Specifically, export revenues reached USD 13.4 billion at the end of October, an increase of about USD 800 million from the previous year. The total export is constituted of:

• 55 percent hard coal,

• 19.8 percent copper concentrate,

• 6 percent gold export.

Exports of mining and mineral products are expected to continue to grow by the end of the year. International credit ratings agencies such as Fitch and Moody's have upgraded Mongolia's credit rating outlook to "B Stable." Due to the improvement in the country's credit rating, the ratings of commercial banks have also improved, and they are starting to attract affordable business and green loans from international markets.

Due to major projects to be implemented by the Government, investment in Mongolia is anticipated to increase. Official sources have reported that the country's foreign exchange reserves are expected to exceed USD 5 billion by the end of 2024.

The Government of Mongolia, the Ministry of Culture, Sports, Tourism, and Youth, and the Mongolian Youth Union NGO jointly organized the “Mongolian Citizenship Oath-Taking Ceremony” for the 22nd year.

The event is organized under the auspices of the Prime Minister of Mongolia on November 26 of each year, the historic day of the Proclamation of the Mongolian People’s Republic and the Adoption of the First Constitution, to “instill patriotism, respect for the state, and be honest and proud of the nation's history and culture while realizing the responsibilities to the country and people.”

Prime Minister Oyun-Erdene Luvsannamsrai congratulated the citizens of Mongolia who received their citizenship certificates on this day, saying, “We are the continuation of the heroic history of the Great Mongol Empire, stretching from Siberia to India, from Vietnam to Hungary, and from Korea to the Balkan Peninsula. We also must not forget the bitter history of our empire being divided into parts, losing our independence, and suffering under the rule of the Manchu Qing Dynasty for more than 200 years. Citizens who devote themselves to the development of their country and protect and cherish their freedom, independence, history, culture, and heritage will remain in history over centuries.” The Premier recalled the great deeds of Da Lama Tserenchimed, Chin Van Khanddorj, Sain Noyon Khan Namnansuren, Manlaibaatar Damdinsuren, Khatanbaatar Magsarjav, and the leaders of the People’s Revolution and the brave patriots of the past.

“On this day in 1924, with its first Constitution, we became the second Republic in Asia to prioritize the rights of the people, and one of the first countries in the world to grant women the right to vote. The Constitution stipulates that natural resources are owned by the people, state institutions are established on the principle of democratic elections, as well as keeping the right to practice religion open and separating religious affairs from state affairs. Mongolia became the 101st full member of the United Nations on October 27, 1961. Since then, Mongolia established diplomatic relations with all UN member states and has become an “Oasis of Democracy in Asia,” noted the Prime Minister in his address to 16-year-olds, calling on them to contribute to the development of their country, honor and promote its history, culture, and independence.

This ceremony of taking the oath of citizenship of Mongolia coincided with the 100th anniversary of the adoption of the first Constitution. There are 62,668 young people in Mongolia, turning 16 this year.

The oath-taking ceremony for Mongolian citizenship was held in the "Ikh Mongol Hall" of the State Palace of Mongolia and in nine districts of Ulaanbaatar and 21 aimags with the participation of around 850 student representatives.

On November 22, 2024, the Ministry of Health of Mongolia and the Medicine and Medical Devices Regulatory Authority signed a procurement contract with South Korean pharmaceutical company DongKoo Bio & Pharma. This marks the beginning of improving the quality and safety of medicines distributed in Mongolia while providing access to effective and affordable medications.

Minister of Health Munkhsaikhan Togtmol stated, “The Government is implementing a policy to purchase high-quality medicines approved by the World Health Organization (WHO) at low prices from countries with strict medicine regulations. Based on international experience, agreements of this nature both decrease future medical costs and increase the variety of medicines available to citizens. Mongolia will use this model to secure the availability of affordable quality-assured medicines.”

As part of this initial procurement contract, DongKoo Bio & Pharma will supply five types of medicines to Mongolia, including medicine for diabetes, hypertension, blood thinning, and antifungal applications. These medicines will be priced on average 50 percent lower than the customs value of medicine with the same composition. Additionally, citizens will be able to access these medications from the Health Insurance Fund with subsidized costs.

Recent amendments to the Law on Medicines and Medical Devices, the Law on Procurement of Goods, Works, and Services with State and Local Property Funds of Mongolia have established a legal foundation for the direct procurement of quality-assured medicines, medical devices, bioactive products, and vaccines from international organizations and foreign manufacturers.

In September 2024, Minister of Health Munkhsaikhan Togtmol visited the Republic of Korea to meet with pharmaceutical manufacturers from countries with strict regulatory and monitoring standards, recognized by the WHO. During his visit, the Minister of Health negotiated to supply Mongolia with effective medicines at reasonable prices. Following these negotiations, the Ministry of Health announced the finalization of price agreements with four well-known pharmaceutical companies in the Republic of Korea, where the purchase of 18 types of medicines currently subsidized by the Health Insurance Fund would be provided to citizens.

The United States announced sanctions Thursday targeting dozens of Russian banks, including Gazprombank, the largest remaining bank yet to face U.S. action, as part of its efforts to weaken Russia’s capacity to wage war on Ukraine. Gazprombank, a major conduit for Russia’s military finances, was among more than 50 internationally connected Russian banks sanctioned by the U.S. Treasury.

Almost 80 percent of Mongolia’s oil payments go through this bank. Therefore, the Ministry of Finance of Mongolia took urgent action and contacted the US Treasury Department to obtain a “COMFORT LETTER” from the US Treasury Department stating that oil payments from Mongolia are not subject to this.

Here is the “COMFORT LETTER” from the US Treasury Department:

“We understand that Mongolia is facing difficulties in making payments to Russia related to essential imports, particularly energy, and that Mongolian financial institutions (including the Bank of Mongolia) may rely on Gazprombank JSC and its six foreign subsidiaries noted above (collectively, “Gazprombank”) to make payments for energy, specifically crude oil, petroleum products, electricity, and natural gas. In light of Mongolia’s unique and challenging energy situation, its efforts to abide by U.S. sanctions, and the limited alternatives for obtaining and paying for energy, OFAC is providing this guidance that non-U.S. persons would not be exposed to U.S. sanctions under E.O. 14024 for transactions involving Gazprombank that are ordinarily incident and necessary to payments for crude oil, petroleum products, electricity, and natural gas for consumption within Mongolia. Non-U.S. financial institutions would not risk exposure to U.S. sanctions under E.O. 14024 for processing such payments involving Gazprombank. This guidance is valid until June 30, 2025.”

Upcoming Changes to Mongolian Double Tax Treaties (DTTs)

The Multilateral Convention to Implement Tax Treaty Measures to Prevent Base Erosion and Profit Shifting, commonly known as the Multilateral Instrument (MLI), is a dynamic tool designed to modify existing tax treaties in line with a jurisdiction's policy preferences for implementing BEPS measures. The MLI, developed by the Organisation for Economic Co-operation and Development (OECD), aims to address issues such as hybrid mismatches, treaty abuse, artificial avoidance of permanent establishment (PE) status, and the resolution of international tax disputes.

Mongolia's Implementation of the MLI

Mongolia has taken significant steps towards implementing the MLI by including all its effective DTTs as Covered Tax Agreements (CTAs). However, it is important to note that some of Mongolia's DTT partners have either not joined the MLI or have not listed the Mongolian DTT as a CTA in their MLIs. As a result, it is anticipated that 19 of Mongolia's DTTs will be modified under the MLI starting from 2025.

Implications for Taxpayers

The adoption of the MLI will significantly impact the application of DTTs. Specifically, the benefits of DTTs will not be applicable if, considering all relevant facts and circumstances, obtaining the DTT benefit was one of the principal purposes of any arrangement or transaction. Therefore, taxpayers should review their international operational, financial, and holding structures, arrangements, and transactions in advance to prepare for the introduction of these new rules.

Source: https://www.pwc.com/

India's JSW Steel (JSTL.NS), opens new tab and state-run Steel Authority of India (SAIL) (SAIL.NS), opens new tab are in talks with Mongolian authorities to import two shipments of coking coal, two sources with direct knowledge of the matter said.

JSW Steel, the country's biggest steelmaker by capacity, plans to buy 2,500 metric tons, while SAIL aims to import 75,000 metric tons of the steelmaking raw material from Mongolia, said the sources who requested anonymity as the plans are not public.

Both JSW Steel and SAIL would import Mongolian coking coal either via Russia or China, said the sources.

"We are just trying to understand how the logistics work," SAIL Chairman Amarendu Prakash told Reuters when asked if the company was looking to receive a shipment from Mongolia.

SAIL was exploring sourcing coking coal from Mongolia to diversify its suppliers, it said in an emailed statement to Reuters.

India, the world's second-largest producer of crude steel, meets 85% of its coking coal requirements through imports.

Late last year, erratic weather conditions hit coking coal supplies from Australia, which accounts for over half of India's coking coal imports of around 70 million metric tons a year.

Since then, Indian steel mills have been seeking to source coking coal from other countries.

Last month, a source said India was exploring ways to import regular supplies of Mongolian coking coal via Russia to reduce reliance on supplies through China.

The Dow added about a third of a percent, while the S&P 500 and Nasdaq each added roughly six-tenths of a percent.

Industry officials say landlocked but resource-rich Mongolia can offer superior grades of coking coal at relatively lower prices to India, which is witnessing strong steel demand driven by rapid economic growth and increasing infrastructure spending.

Mongolian coal is about $50 a metric ton cheaper than the Australian supplies, they said.

India's Jindal Steel and Power (JNSP.NS), opens new tab is also keen to source coking coal from Mongolia, one of the sources said.

India's JSW Steel and Jindal Steel and Power didn't respond to Reuters emails for comment.

The Indian government is working to help steel companies diversify imports to avoid over-reliance on specific countries, commodities consultancy BigMint said.

India imported 29.4 million metric tons of coking coal during the first half of the fiscal year, up nearly 2% from a year earlier, the consultancy added.

Reporting by Neha Arora; Editing by Mayank Bhardwaj and Christina Fincher

By working together but independently, the central banks and government can win the fight against inflation and foster economic stability and growth for years to come

Discussions at the Bank of Mongolia’s recent international conference marking its centennial highlighted an important policy issue: how to better align monetary and fiscal policies to tackle high inflation.

Ideally, monetary and fiscal policies should operate like a rider on a horse, working in concert but also within their mandates and objectives. In Mongolia, there is room to make the monetary-fiscal ride smoother to arrive at target inflation more quickly.

The Bank of Mongolia—one of Asia’s oldest central banks in a country that was an early initiator of coin and paper note circulation dating back eight centuries to the Mongol Empire—has played a major role in Mongolia’s transition from a centrally planned economy to a market economy. The Bank established a two-tier banking system in 1991 to separate the central bank from commercial lenders, scrapped the fixed exchange rate in 1993 to promote exports and improve the balance of payments, and phased out direct controls in favor of a market-oriented monetary policy framework.

The Bank also introduced elements of an inflation targeting framework in 2013 but its journey toward full-fledged inflation targeting remains incomplete. While the central bank has a mandate to maintain stable prices, two obstacles impede the journey: a lack of operational independence and the significant impact of fiscal policies on monetary policy outcomes, given the large share of the government in the economy.

Improving government policies can therefore play an important role in keeping inflation in check.

One way to do this will be to grant Mongolia’s central bank greater independence from the government, including by eliminating requirements for the Bank to provide specific kinds of government-mandated lending to the private sector. The Bank does not enjoy the autonomy typical of advanced inflation targeting economies. Parliament has constitutional authority over monetary, financial, and credit policy. Lawmakers approve the central bank’s inflation target and other monetary policy guidelines annually.

On the fiscal side, budget spending often follows the business cycle in an economy that is deeply tied to global commodity markets. Mining exports make up about 90 percent of exports, and nearly a third of government revenue comes from the mining industry. Government spending that rises and falls in step with prices for commodities like coal or copper tends to be procyclical, fueling boom-and-bust economic cycles and surges in inflation.

The government can avoid procyclical fiscal policies by taking a prudent approach toward spending during good economic times by sticking to fiscal rules, as we noted after our October visit to Mongolia. Spending discipline during commodity booms helps prevent the economy from overheating and keeps inflation in check. It also helps with building fiscal buffers in good times that can provide support during economic downturns without imperiling debt sustainability.

In an economy that is heavily influenced by commodity market swings, the government therefore also shares responsibility in helping the central bank achieve its inflation objectives. This is important because monetary policy is most effective when fiscal and monetary policies are aligned, steering output and prices in the same direction together.

This implies that when inflation is high, fiscal policy should also be tighter to assist tighter monetary policy. Such synchronization can prevent the central bank from having to raise interest rates to very high levels. That in turn would help ensure that the fight against inflation does not disproportionately burden borrowers or fuel risks to financial stability.

The government can also support monetary policy objectives by developing a well-functioning market for domestic securities. Until recently, the government has relied on external borrowing, to benefit from lower global financing costs.

Plans for new domestic securities issuances were deferred leading to a sharp decline in the pool of domestic debt securities available to the Bank for its monetary policy operations.

Unable to use government securities for monetary operations like most other central banks, the Bank has relied on issuing its own bills to absorb excess liquidity. The high interest costs of doing so are weakening its balance sheet and could hinder monetary policy operations down the road.

Restarting issuance, even amid fiscal strength, will help the central bank better manage liquidity and develop the domestic debt market. A robust domestic market will also improve monetary transmission by establishing benchmark bond yields.

When it comes to better alignment between monetary and fiscal measures, policymakers can take inspiration from the ancient tradition of Mongolian horse racing, a hallmark of the national festival of Naadam. A better monetary-fiscal coordination would not only smooth the ride; it would be a winning formula for the economy and the people of Mongolia.

BY ****

Angana Banerji is a deputy division chief and Mongolia mission chief in the IMF’s Asia and Pacific Department. Thomas Helbling, a Deputy Director in the IMF’s Asia Pacific Department, oversees the IMF’s work on Mongolia.

During the 81st Session of the Committee Against Torture (CAT) on Tuesday, 12th of November, and Wednesday, 13th of November 2024, the CAT reviewed the 3rd periodic report of Mongolia.

The country rapporteurs were Mr. Huawen Liu and Ms. Naoko Maeda.

The country delegation was led by Mr. N.Myagmar, State Secretary, Ministry of Justice and Home Affairs of Mongolia.

Main issues discussed

The Committee praised Mongolia's commitment to abolishing the death penalty, highlighting its ratification of the Second Optional Protocol to the International Covenant on Civil and Political Rights as a significant step toward international standards.

On detainee treatment, the Committee noted Mongolia's efforts to equip interrogation rooms with video and audio recording devices for transparency. However, it raised concerns about reports that recordings were deleted after 14 days instead of the required six-month retention period. Experts sought clarification on Mongolia’s plans to ensure universal access to this equipment nationwide.

The Committee also inquired about Mongolia’s extradition agreements, asking how the risk of torture is assessed in such cases and the legal right to appeal deportation or extradition orders.

The Committee expressed concern over harassment of human rights defenders (HRDs), particularly those opposing mining projects. It urged Mongolia to strengthen legal protections for HRDs and ensure freedoms of expression and association.

Additional concerns included the ill-treatment of LGBTQ+ individuals. The Committee called for stronger measures to address police violence, discrimination, and harmful practices such as conversion therapy, emphasizing the need for better medical and legal support.

Finally, the Committee commended Mongolia’s efforts to align its laws with international standards on human trafficking and victim protection. It encouraged the country to provide details on the implementation of these laws and the distribution of the increased human rights budget, particularly for vulnerable groups.

The CAT’s recommendations are available here.

Follow-up Recommendations

The CAT outlined specific recommendations for Mongolia, requesting the State party to provide information by 22 November 2024 on progress made in the following areas on the implementation of recommendations regarding:

The adoption of a comprehensive definition of torture and the criminalisation of all acts of torture, including superiors’ liability, complicity and attempts of acts of torture.

The guarantee of fundamental legal safeguards during the arrest and the first moments of detention and the recording of interrogations.

The establishment of an independent mechanism to investigate acts of torture and ill-treatment committed by public officials.