A bloc of lawmakers from Mongolia's ruling political party called on the prime minister to resign Wednesday, accusing him of abusing his position by allegedly handing government contracts for roads and other projects to politically connected businesses.

The 30 members of the State Great Hural from the Mongolian People's Party alleged in a statement Wednesday that Jargaltulga Erdenebat violated parliamentary procedure by signing seven contracts worth the equivalent of about $328 million.

Erdenebat, in office since 2016, is also accused of distributing millions of dollars in cash payments to families with children ahead of a presidential runoff election on July 7, in an apparent attempt to win votes for the ruling party's candidate, who lost.

"It's time to clean up the Mongolian government," said Garamjav Tseden, a wealthy businesswoman and MPP lawmaker. "I'm not standing against the government because of my personal interest," she said.

The MPP has 65 seats in the 76 member Great Hural, with the opposition Mongolian Democratic Party and independents sharing the remainder. Opposition lawmakers are expected to support the resignation demand, which can be followed by a vote of no confidence if the prime minister refuses to leave.

Mongolia, a landlocked country of 3 million, boasts vast mineral wealth but has struggled in recent years to court foreign investment due to plunging commodity prices and high-profile disputes between the government and large investors such as mining giant Rio Tinto.

The government has also been weighed down by a national debt of about $23 billion, or twice annual economic output, and recently obtained a $5.5 billion bailout led by the International Monetary Fund.

In July, Mongolia elected populist business tycoon and ex-judo champion Khaltmaa Battulga of the Democratic Party as its new president. He edged out his establishment opponent, Miyegombo Enkhbold of the MPP, in the runoff election.

The contracts called into question are for roads and power transmission equipment, including substations for the mining industry. Companies granted the contracts include ones connected to the families of three members of the Cabinet. Other beneficiaries include MPP politicians, among them Erdenebat, who received funding to build roads in his constituency.

Erdenebat could not immediately be reached for comment and calls to the government spokesman's office rang unanswered on Wednesday.

Dale Choi, an analyst at Altan Bumba Financial Group, said the fate of the prime minister should have little impact on the IMF bailout or plans to drive the economy.

The move to oust Erdenebat appeared to be part of "deck clearing" following the MPP's loss in the presidential election, while his likely replacement could show bolder leadership on the economy, Choi said in a research note.

"In short term, Gov't of Mongolia instability will not be comforting to investors, but in longer term it actually healthy development for MPP," he said. The party "desperately needs at this stage to reinvent its image and reform" and distance itself from corruption, he said.

Published Date:2017-08-24