Mongolian anti-corruption agency arrests 2 ex-PMs amid mine probe

ULAN BATOR, April 11 (Xinhua) -- Mongolian law enforcement officials on Wednesday confirmed the arrest of two former prime ministers as part of an investigation into abuse of power involving a large mining deal.
They have been investigated by the Independent Agency Against Corruption (IAAC), the country's top anti-corruption body, in the large mining deal signed between the government and Anglo-Australian mining giant Rio Tinto.
The agency detained Bayar Sanjaa, prime minister when Mongolian government signed the original 2009 investment agreement, as well as Saikhanbileg Chimed, prime minister when the financing arrangement of the deal was revised in 2015.
The prosecutor's office in the capital, Ulan Bator, said the two have been arrested Tuesday evening for charges of abuse of official power for preferential treatment in the investment agreement to develop the Oyu Tolgoi mine.
Earlier, the IAAC has arrested other former officials including a former finance minister and a former head of tax authority.
Currently, financing arrangements of the mining deal are under investigation by the IAAC and a parliamentary working group.

Source:Xinhua news agency

Mongolia mining corruption probe snares former PM

Saikhanbileg Chimed the highest-ranking official implicated in investigation

By Lucy Hornby in Beijing, China

A Mongolian investigation into allegations of corrupt mining payments has ensnared a former prime minister who has been asked to return from the US to answer prosecutors’ questions. 

 Saikhanbileg Chimed, prime minister for two years until 2016, is the highest-ranking official to have been implicated in the probe, which dates from revelations in the leaked Panama Papers of transfers to a Swiss bank account in the name of Bayartsogt Sangajav, the former Mongolian finance minister. Swiss authorities froze the account in January. 

 Over the weekend, Mongolian authorities arrested Mr Bayartsogt and two other former officials with ties to Erdenes Mongol, the state-owned holding company set up to contain Mongolia’s shares in mining projects including the Oyu Tolgoi copper mine and the Tavan Tolgoi coking coal deposit. 
They also requested Mr Saikhanbileg return from the US. Mr Saikhanbileg could not be contacted for comment. 

Turquoise Hill, the Canada-listed subsidiary of Rio Tinto which is developing a $5bn underground stage of the Oyu Tolgoi mine, has previously said it received a request for more information by the Mongolian anti-corruption authorities. 

 The request for information concerned the “possible abuse of power by authorised officials” during the negotiation of the 2009 Oyu Tolgoi investment agreement, shortly after Rio took over negotiation of the Oyu Tolgoi project from Ivanhoe Mines, the original developer. 

 Mr Saikhanbileg signed the agreement to develop the second, underground phase of the mine, which economists said was necessary for the Mongolian government to meet its budgetary commitments. Negotiations over the first phase of the giant mine were also fraught, with rancour on both sides and repeated changes to Mongolia’s mining investment regime, once the most liberal in the world. 

 Swiss prosecutors have said the investigation was not directed against Rio or its employees. Rio Tinto declined to comment on Tuesday. 

 “The Mongolian government and public is slowly beginning to build up capacity to analyse its relationship with Oyu Tolgoi and with Rio Tinto as an investor and to ask questions about that relationship in the process,” said Julian Dierkes, an expert on Mongolian civil society at the University of British Columbia. 

 Mr Saikhanbileg’s departure from office in 2016 was marred by the contentious $400m purchase of nearly half of the giant Erdenet copper mine in Mongolia’s north from Russian holding company Rostec, which returned the entire mine to Mongolian ownership.

Erdenet long had symbolic value as the Soviet Union’s most important investment in Mongolia but has been plagued by allegations of mismanagement and corruption. The previously unknown private company that bought the stake, Mongolian Copper Corp, is fighting the Mongolian government’s decision in February 2017 to nationalise the stake bought from Rostec.

Bayanjargal Byambasaikhan, former chief executive of Erdenes Mongol, told the Financial Times in 2016 that the holding company would have trouble establishing control over the state’s share in Erdenet due to the complexity of the politics surrounding that mine. Mr Byambasaikhan was one of the people arrested this weekend. 

 In a statement on Tuesday, the Business Council of Mongolia, an organisation chaired by Mr Byambasaikhan, noted that he had returned to Mongolia from a posting at the Asian Development Bank in 2010, after the 2009 investment accord for the Oyu Tolgoi mine. “The BCM Executive Committee has full confidence in Byambasaikhan’s integrity,” it said.

Source:Financial Times

Signing of Japanese ODA Loan Agreement with Mongolia: Supporting reforms in Mongolia under an international aid framework with the aim of economic and fiscal reconstruction

On December 5, the Japan International Cooperation Agency (JICA) signed a loan agreement with the Government of Mongolia in Ulaanbaatar, the capital city, to provide a Japanese ODA loan of up to 32 billion yen for the Fiscal, Social and Economic Reform Development Policy Loan.
The economy of Mongolia depends heavily on the mineral resource sector, which accounts for 20 percent of the country’s gross domestic product (GDP) and 90 percent of exports, which are primarily coal and copper. Due to a drop in the prices of minerals, which are major exports, a slowdown in the economy of China which purchases 80 percent of the exports from Mongolia, a drop in foreign direct investment caused by restrictive investment policies and other such factors, the GDP growth rate dropped from 17 percent in 2011 to one percent in 2016. Fiscally, the country faces such challenges as increasing domestic infrastructure expenses, and rising social welfare expenditures due to inadequate controls on payees. Such factors pushed the fiscal deficit-to-GDP ratio to 17 percent in 2016 while the public debt-to-GDP ratio grew from 33 percent in 2011 to 88 percent in 2016, making reforms toward economic and fiscal reconstruction priorities.
Given these circumstances, an international aid framework totaling approximately 5.65 billion dollars was created in 2017 by the International Monetary Fund, the World Bank, the Asian Development Bank and others. With the aim of economic and fiscal reconstruction in Mongolia as a part of the international aid framework, the project will support reforms by the Government of Mongolia in three areas: stable macroeconomic management, the promotion of helping the socially vulnerable and enhancing economic growth.
Specifically, the project will support reforms such as those aimed at strengthening fiscal discipline in the area of stable macroeconomic management. In the area of the promotion of helping the socially vulnerable, the project will support reforms directed at targeting subsidies to the socially vulnerable and improving their living environment, and in the area of enhancing economic growth, the project will support the stimulation of foreign direct investment through improvements to the investment environment and reforms aimed at economic diversification.
The project will support mid- to long-term reforms from such a macro perspective, contribute to the short-term reduction in the fiscal burden of Mongolia, and contribute to fiscal, social and economic stability.
Two years have passed since the launch of the Sustainable Development Goals (SDGs) adopted by all UN member countries, including Japan and Mongolia. This project aims to accomplish the core SDG principle of “leaving no one behind,” through providing support to the socially vulnerable such as the improvement of living conditions in ger (yurt) districts where many poor people live. In addition to strengthening economic growth, the project will, through collaboration with various other projects being carried out in Mongolia, lead to improvements in social welfare and health care systems and address urban environment issues, especially air pollution in Ulaanbaatar. All these comprehensive areas of support cover the three dimensions of sustainable development (economic, environmental and social) that will be put into practice in the project.
1. Terms and Amount of Loan
Project titleAmount (million yen)Annual interest rate (%)Repayment
ProjectConsulting services
Fiscal, Social and Economic Reform Development Policy Loan32,0000.8206General untied
2. Executing Agency
Ministry of Finance
Address: Government Building 2, S. Danzangiin gudamj 5/1, Ulaanbaatar 15160, Mongolia
Phone: +976-51-26-02-47
3. Planned Implementation Schedule
(1) Completion of project: December 2017 – with completion of the loan disbursement
(2) Issuing of letters of invitation for consulting services: No hiring of consultants is planned for this project.
(3) Tender announcement of initial procurement package for international competitive bidding on project construction: No work in conjunction with international competitive bidding is planned for this project.

IMF Reaches Staff-Level Agreement on the First and Second Reviews of Mongolia’s Extended Fund Facility

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
  • Mongolia’s economy is recovering and GDP growth is now projected at 3.3 percent this year and 4.2 percent in 2018, reflecting buoyant external conditions and improving confidence. Key targets have been achieved.
  • Important structural reforms are underway to lay the foundations for long-term growth and break the boom-bust cycle. The key near-term focus is supporting the authorities’ policies to strengthen the banking sector and enhance fiscal policy making.
  • The IMF welcomes the authorities’ commitment to continue the reform momentum to cement the long-term benefits.
An International Monetary Fund (IMF) staff team led by Mr. Geoff Gottlieb visited Ulaanbaatar from October 18-30, 2017 to conduct discussions on the first and second reviews of the three-year Extended Fund Facility (EFF) arrangement approved on May 24, 2017, in an amount equivalent to SDR 314.5054 million, or about US$434.3 million (see Press Release No. 17/193).
At the conclusion of the visit, Mr. Gottlieb made the following statement:
“The economy is growing more strongly than expected, with GDP growth likely to reach at least 3.3 percent this year on the back of strong coal exports, a robust recovery in services, and a return of confidence following the approval of the $5.5 billion IMF-supported package. Growth is expected to become more broad-based in 2018 as the domestic economy revives, but there are downside risks to the coal sector.
“Performance under the program has been positive, with all quantitative targets met. Fiscal results have been better than expected, supported by stronger revenues and tight expenditure control. The overall fiscal deficit is likely to be 7.5 percent of GDP this year compared to 17 percent in 2016. The authorities’ proposed 2018 budget is in line with the revised program that envisages a deficit of 6.5 percent of GDP. The authorities have committed to save half of any revenue overperformance should it materialize, thus helping to reduce borrowing and ensure debt sustainability. The remainder would be used to fund productive one-off spending in line with the government action plan. Both this year and next, the authorities have allocated a one-time bonus to civil servants. Net international reserves have improved, and the authorities have rolled over the sovereign bonds maturing in 2017 and 2018 at attractive interest rates, removing a key risk to the external position.
“The authorities have moved ahead with their ambitious structural reform agenda, which will help to sustain growth over the medium term, promote diversification and competitiveness, and mitigate the boom-bust cycle. The rehabilitation and strengthening of the banking system is underway: the results of the comprehensive Asset Quality Review are expected in mid-December; important legal reforms are being drafted to strengthen the financial system; and improvements to the regulatory and supervisory framework are under way.
“On the fiscal side, steady progress is being made in strengthening tax administration, tax policy, and budgetary controls, including through the establishment of a fiscal council and a high-level working group on tax policy. It is important that the reform momentum is maintained in 2018 to cement the long-term benefits of such policies on promoting inclusive and sustainable growth. In this regard, it is encouraging that the commitment of the new government to the program policies remains strong.
“The authorities and the team have reached staff-level agreement on the completion of the first and second reviews under the EFF arrangement, which is subject to the approval of the IMF Executive Board.
“The team thanks the authorities for their cooperation, constructive dialogue, and hospitality during its stay in Mongolia.”
IMF Communications Department
PHONE: +1 202 623-7100EMAIL: MEDIA@IMF.ORG

Mongolia to tidy up debt profile

By Frances Yoon
HONG KONG, Oct 20 (IFR) - The Government of Mongolia (Caa1/B-/B-) plans to buy back foreign debt due next year and issue new bonds to address its short-term maturities and complete a turnaround from last year's economic crisis.
The sovereign has announced tender offers for its US$500m 4.125% January 2018 bonds and Rmb1bn (US$152m) 7.5% June 2018 Dim Sum notes. If completed, the buybacks will leave it with no major foreign debt maturities until 2021, according to Thomson Reuters data.

If successful, the plan will leave Mongolia in better shape than last year, when government overspending and declining commodity exports left it at the risk of default. The country was forced to pay 10.875% to issue a US$500m five-year note in March 2016, at the time the highest yield on any sovereign bond since 2011.
The latest buyback comes amid a much-improved economic backdrop. The International Monetary Fund earlier this year approved a US$5.5bn bailout to relieve debt pressures and maintain stability in the local currency, the tugrik.
A recovery in coal exports also helped drive demand for its US$600m sovereign bond this March, allowing the new-money component to price more than 300bp inside the 2016 deal.
As of the end of September, export revenue more than doubled from the same period in 2016, National Statistics Office data showed.
Moody's expects higher real GDP growth and for foreign reserves to recover to US$1.7bn this year from US$1.2bn at the end of May.
The IMF estimate for the overall fiscal deficit is 10.6% of GDP this year, and the actual deficit will likely be lower than this, according to Moody's.
"Mongolia has emerged from the brink of default," said Anushka Shah, a credit analyst at Moody's. "Government revenues are materially up. It's been a good year for them. They are also likely to surpass some of the targets set by the IMF after the loan. What might happen is that the government will have to revise targets based on the performance so far."
The proposed issue comes amid a rally in Mongolia's outstanding bonds. Mongolia's 8.75% 2024s were trading at 112.958/113.625 to yield 6.26%, near their tightest level since issue, while its US$1bn 5.125% December 2022s, its largest outstanding issue, were also trading at a record low 5.58%, according to Tradeweb.
"Mongolia's bonds have tightened across the curve, reflecting the demand for emerging-market debt which continues to be strong," said another banker on the deal. "There have been some investors sitting on the sidelines and missing out on the rally, who are now quite keen to pick up bonds."
The banker added that demand was expected to be healthy, given that the curves of emerging-market peers, such as Vietnam, Pakistan and Sri Lanka, have become very tight.
Still, Mongolia has a long way to go to improve its fiscal position. The resignation of the cabinet last month reflects the country's political instability, which does not bode well for the IMF's requirements to implement policies to improve its fiscal position and structural reforms over a three-year period.
Newly appointed Prime Minister Ukhnaa Khurelsukh has asked the IMF to disburse about US$38m in funds after the programme's suspension in mid-September.
"External fragilities remain. Their external borrowing needs are still one of the highest. So, when rates rise, there's a risk that they face limited market access and this could raise debt servicing needs because of its material portion of external debt," said Shah.
The proposed 144A/Reg S notes have initial ratings of B-/B- (S&P/Fitch).
Credit Suisse, Deutsche Bank and JP Morgan are joint lead managers and joint bookrunners for both the tender offer and proposed new issue.


IMF Reaches Staff-Level Agreement on the First Review of Mongolia’s Extended Fund Facility

August 2, 2017
End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
An International Monetary Fund (IMF) staff team led by Mr. Koshy Mathai visited Ulaanbaatar from July 19 to August 2 to conduct discussions on the first review of the three-year Extended Fund Facility (EFF) arrangement approved on May 24, 2017, in an amount equivalent to SDR 314.5054 million, or about US$434.3 million (see Press Release No. 17/193 ).
At the conclusion of the visit, Mr. Mathai made the following statement:
“The economy is rebounding, with GDP growth likely to reach 2 percent this year on the back of strong coal production and exports, high private investment, and a return of confidence following the approval of the $5.5 billion IMF-led package.
Performance under the program has been good, with all quantitative targets on track. Fiscal results have been better than expected, supported by strong revenues and tight expenditure control. About half of the revenue overperformance will be saved, thus helping to reduce borrowing and control debt, while the remainder will be used to fund productive spending in line with the government action plan. Net international reserves have improved, reflecting strong export performance and capital inflows into the government securities market.
The authorities have moved ahead with their ambitious structural reform agenda, which will help to sustain growth over the medium term. The strengthening of the banking system is underway: the Asset Quality Review will soon be launched, important legal reforms are being drafted, and improvements to the regulatory and supervisory framework are being implemented. On the fiscal side, steady progress is being made in strengthening tax administration, tax policy, and budgetary controls, including through the establishment of a Fiscal Council. To strengthen the social safety net and target expenditures toward the most vulnerable, the government is fine-tuning the Child Money Program, with a commitment to target the program to less affluent families from 2018 and use the savings to increase food stamps for the poor.
The authorities and the team have reached staff-level agreement on the completion of the first review under the EFF arrangement, which is subject to review by the management and Executive Board of the IMF. The Board is expected to consider the first review in late September, and this could lead to a disbursement of SDR 27.9560 million, or about $37.82 million.
The team thanks the authorities for their cooperation, constructive dialogue, and hospitality during its stay in Mongolia.”


China, Mongolia renew currency swap deal

BEIJING — China's central bank on Thursday renewed a currency swap agreement with the Bank of Mongolia.
The agreement allows the two central banks to swap 15 billion yuan ($2.2 billion) for 5.4 trillion Mongolian togrog, the People's Bank of China (PBOC) said on its website.
The deal aims to "facilitate bilateral trade and investment and promote the economic development of both countries," PBOC said.
The agreement is valid for three years and is extendable by mutual consent.
In 2011, Chinese and Mongolian central banks signed a currency swap deal for 5 billion yuan, making it possible for trade settlement and investment with their own currencies. In 2014, they expanded the deal to 15 billion yuan.


IMF Executive Board Approves Financial Arrangement for Mongolia

May 24, 2017
  • Mongolia's economic reform program aims to stabilize the economy, restore confidence, and pave the way to economic recovery.
  • The total financing package amounts to about $5.5 billion, including support from the Asian Development Bank, the World Bank, Japan, Korea and China.
  • The program also lays the foundation for sustainable, inclusive growth in the future, and end the boom-bust cycles of the past.
The Executive Board of the International Monetary Fund (IMF) today approved a three-year extended arrangement under Extended Fund Facility (EFF) for Mongolia in a total amount of SDR 314.5054 million (about US$434.3 million, or 435 percent of quota) to support the country’s economic reform program. Other financing partners, including the Asian Development Bank, the World Bank, Japan, and Korea, have also committed to provide budgetary and project support, and the People’s Bank of China has agreed to extend its swap line with the Bank of Mongolia. In sum, the total financing package amounts to about $5.5 billion. The Board’s approval of the arrangement enables the immediate disbursement of an amount equivalent to SDR 27.9560 million (about $38.6 million).
The authorities’ program aims to stabilize the economy, restore confidence, and pave the way to economic recovery. A critical pillar of the program is fiscal consolidation, to reduce the pressure on domestic financial markets, stabilize the external position, and restore debt sustainability. The program includes important safeguards to protect the most vulnerable during this period of adjustment as well as institutional reforms to make sure the fiscal adjustment is durable. Another pillar of the program is a comprehensive effort to rehabilitate the banking system and strengthen the Bank of Mongolia. A broad set of structural reforms is designed to support private-sector led growth.
The Executive Board also concluded the 2017 Article IV consultation with Mongolia today. A separate press release will be issued shortly.
Following the Executive Board’s discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the following statement:
“Mongolia was hit hard by the sharp decline of commodity prices and the slowdown in key export markets. Efforts to mitigate these shocks through expansionary policies were unsuccessful and resulted in unsustainable public debt, falling international reserves, and lower growth.
“Against this background, the Mongolian authorities are implementing a program to maintain macroeconomic stability, pave the way to economic recovery, and protect the most vulnerable during the adjustment process. Fiscal consolidation is a critical element of this program, including cuts of non-essential expenditures, a move to progressive taxation, pension and public financial management reforms, and steps to strengthen and better target the social safety net. A number of structural fiscal reforms, including an independent fiscal council, will help to bolster budget discipline. Sizable fiscal adjustment, coordinated concessional external financing from development partners, and continued engagement with private creditors will help restore debt sustainability and rebuild international reserves. The commitment to a market-determined exchange rate will strengthen the economy’s resilience to external shocks, supported by prudent monetary policy and the program’s favorable impact on confidence and private sector capital flows. A new central bank law is envisaged to strengthen the governance and independence of the Bank of Mongolia. In addition, implementation of a comprehensive strategy would rehabilitate the banking sector, improve the supervisory and regulatory framework, and strengthen the AML/CFT regime. The program also includes structural reforms to achieve sustainable and inclusive growth. These reforms aim to improve the business environment, promote economic diversification, and encourage foreign direct investment.
“Determined implementation will be critical to the success of the program. Together with Mongolia’s development partners, the IMF will assist the authorities in their effort with an arrangement under the Extended Fund Facility.”
Recent Economic Developments
With minerals accounting for up to 90 percent of total exports, the sharp drop in commodity prices from 2011 onward severely affected the balance of payments and fiscal position. Macroeconomic policy easing to buffer the economy from external shocks supported growth for a while, but at the cost of increasing public debt, weakening the balance of payments, and reducing banks’ asset quality. By end-2016, the large fiscal deficit and the depreciation of the currency together pushed general government debt up to nearly 90 percent of GDP.
The authorities recognized these economic difficulties and prepared an “Economic Recovery Program” that would largely reverse past policies. They also approached the Fund for assistance.
Program Summary
The authorities’ program supported by the extended arrangement aims to stabilize the economy, restore confidence, and pave the way to economic recovery. A critical pillar of the program is fiscal consolidation to reduce the pressure on domestic financial markets, stabilize the external position, and restore debt sustainability.
The program also lays the foundation for sustainable, inclusive growth in the future. To end the boom-bust cycles of the past, the reform program will: (i) discipline fiscal policy; (ii) improve the central bank’s independence, governance, and focus on core responsibilities; (iii) strengthen the financial sector; (iv) foster economic diversification and inclusive growth; and (v) protect the most vulnerable in society.
Fiscal Policy. The fiscal adjustment, combined with the projected growth recovery, a gradual normalization of domestic yields, and the authorities’ access to concessional financing under the program, is expected to restore debt sustainability.
Monetary and Exchange Rate Policies. A new Bank of Mongolia (BOM) law will be adopted to clarify the BoM’s mandate and strengthen its governance and autonomy. The monetary stance will need to remain tight for the time being, and the exchange rate flexible.
Financial Sector reforms. As a first step, the authorities will undertake a comprehensive diagnosis of the banking system to assess institutions’ financial soundness and resilience. This will be followed by recapitalization and restructuring as needed. The regulatory and supervisory framework will be strengthened.
Growth-enhancing structural reforms. Given the country’s large mineral resources, mining will always be a key sector for the economy, but agribusiness and tourism have strong potential as well. The program includes structural reforms to promote economic diversification and improve competitiveness.
Social protection. The program includes important safeguards to protect the vulnerable groups, and gives priority to health and education. For instance, the savings from better targeting the Child Money Program will be used entirely to increase spending on the food stamp program for the most vulnerable.
Program financing. Other international partners also plan to support the government’s program: the Asian Development Bank (ADB), World Bank, and bilateral partners including Japan and Korea are together expected to provide up to $3 billion in budget and project support; and the People’s Bank of China is expected to extend its RMB 15 billion swap line with the Bank of Mongolia for at least another three years.
IMF Communications Department
PHONE: +1 202 623-7100EMAIL: MEDIA@IMF.ORG

Mongolian PM makes Sendai pledge

ULAANBAATAR, 12 April 2017 – The Prime Minister of Mongolia, Mr. Jargaltulgyn Erdenebat, says his country is ready to share its vast experience of managing extreme hazards to support greater implementation of the Sendai Framework for Disaster Risk Reduction across Asia.
The Prime Minister revealed that this was one of the key motivations behind Mongolia’s decision to host – and co-organise with UNISDR – the next Asian Ministerial Conference on Disaster Risk Reduction in Ulaanbaatar in 2018.
“Mongolia is determined to share our experience and lessons learned in disaster prevention, reduction and mitigation to ensure that we collectively achieve a good outcome to this very important conference,” Mr. Erdenebat said.
The Prime Minister was speaking during a meeting at his office with Mr. Robert Glasser, the Special Representative of the UN Secretary-General’ for Disaster Risk Reduction and Head of UNISDR.
During their talks, Mr. Erdenebat emphasised the importance of organising the regionwide conference, known for short as the AMCDRR, “so that all countries and stakeholders benefit from the results including the opportunity to assess global progress against key global frameworks”.
He added that Mongolia was a good venue “as we are at the heart of Asia” and because the country is exposed to virtually all human-induced and natural hazards, particularly in terms of its extreme climate.
Landlocked Mongolia is sparsely populated, with three million people living in an area twice the size of France. It is also the world’s second-largest landlocked country after Kazakhstan.
It is vulnerable to a wide variety of natural hazards, including floods, droughts, earthquakes, storms and other extreme weather events, including “dzud” – a severe winter in which large numbers of livestock die primarily from starvation.
The high-level meeting last week followed the signing of a Statement of Cooperation between the Government of Mongolia, represented by its National Emergency Management Agency (NEMA) and UNISDR to co-organise the AMCDRR.
During the discussion, Mr. Glasser said that the AMCDRR was “an excellent opportunity for Mongolia” to highlight how it had effectively addressed many of the challenges that it faces.
“The AMCDRR 2018 will enable Mongolia to demonstrate its regional leadership on strengthening disaster resilience and showcase its significant progress to adopt a more comprehensive approach to disaster risk reduction across government ministries and with various stakeholders,” Mr. Glasser said.
“This is even more important as hazards are set to continue intensifying in the years ahead because of the effects of climate change.”
Next year’s edition of the biennial Asian conference will be particularly important because the Sendai Framework, adopted by the international community in 2015, has a target of 2020 for national and local governments to have disaster risk reduction plans in place.
Achieving that goal is critical to the Sendai Framework’s overall aim of bringing about substantial reductions in disaster losses globally by 2030, and will also help link efforts to curb disaster risk to the implementation of the Sustainable Development Goals and the Paris Agreement on climate change.
The issue will be in the spotlight next month at the 2017 Global Platform for Disaster Risk Reduction, in Mexico.
The AMCDRR will take place in Mongolia on 16-19 July next year. The 2016 edition was hosted last November by India in New Delhi.

Mongolia's trade surplus up 45.5 pct in first quarter on coal trade surge

ULAANBAATAR, April 12 (Reuters) - Mongolia's foreign trade surplus hit $523.7 million in the first quarter of the year, up 45.5 percent from the same period in 2016, the country's statistics office said on Wednesday.
The increase was driven by a 446 percent surge in coal trade, which reached $541.3 million over the period, while total mineral exports were up 58 percent, the National Statistical Office said. Minerals represented 89.2 percent of Mongolia's total exports over the period.
Mongolia's trade surplus for the whole of 2016 stood at $1.56 billion, up 79 percent on the year.
But an economic slowdown caused by dwindling foreign investment and declining commodity prices turned into a full-blown crisis last year as Mongolia's currency, the tugrik, plummeted.
Amid concerns it would be unable to repay debt, the country agreed a $5.5 billion bailout with the International Monetary Fund and other partners in February.
The ruling Mongolian People's Party has blamed the country's economic woes on the previous government's expansionist fiscal policies. It is attempting to reverse course with policies aimed at curbing government spending and attracting foreign investment, especially in its lucrative natural resources.
Despite plans to raise taxes and cut spending, the MPP has a narrow lead in public support ahead of presidential elections set for June 26, according to a survey published this week by the Sant Maral Foundation, a Mongolian polling organisation.
The MPP was setting Mongolia in the "right direction", 35.9 percent of respondents said, while 28.3 percent said it was taking the country in the "wrong direction".
Candidates for the presidential election have not yet been announced. Incumbent Tsakhia Elebegdorj of the Democratic Party will step down after completing his maximum two terms in office.
(Reporting by Terrence Edwards; Editing by David Stanway and Susan Thomas)

Source:Reuters news agency

Donald Trump signs a visa-free travel policy for Mongolia

The United States President, Donald Trump has signed an executive order to allow all Mongolian nationals travel to the United States without visas.
The new order, serving as a change in visa policy for Mongolians travelling to the United States, would permit  them stay in the U.S for a maximum period of 180 days for Tourism or Business purposes only.
Stay over 180 days would therefore require a visa.
Trump says this measure is to strengthen trade between the United States and Mongolia.
However, Mongolians who hold dual nationality will be banned from entering the United States if their other passport is from Syria, Iraq, Sudan, Libya, Somalia and Yemen-the seven Muslim-majority countries “of concern”.
It has emerged that trade and bilateral visa deals have been discussed by Trump and Mongolian diplomats in the States.

Source:April Fool Day

Japan, Mongolia ink extensive cooperation accord

Foreign Minister Fumio Kishida and his visiting Mongolian counterpart, Tsend Munkh-Orgil, signed on Wednesday a bilateral medium-term action plan for 2017-2021, including cooperation in the political, security and economic fields.

The action plan states that Tokyo and Ulan Bator will demand that North Korea completely abandon its nuclear arms and missile programs and abide by U.N. Security Council resolutions.
“I hope to promote relations between the two countries in a mutually beneficial and strategic way,” Kishida said in his Tokyo meeting with Munkh-Orgil. Kishida also expressed hope of collaboration with Mongolia on other issues, including North Korea’s abductions of Japanese nationals.
The plan also confirms Mongolia’s support for Japan’s aim of resolving the abduction issue.
On the economic front, the plan calls for steady implementation of a bilateral economic partnership agreement for free trade that took effect in June last year, and improving the investment environment.

Source:Japan Times

After the IMF bailout package… What else?

Why the bailout?
The Mongolia government has jointly announced with the IMF that it will implement the politically difficult – but inevitable – rescue package, and avoid becoming a delinquent international debtor. Let’s be clear – this is an aid package, at very low interest rates. It is also coming from long-term friends of Mongolia – the IMF/World Bank, ADB and with support from Japan and other bilateral partners. The Chinese government will reportedly extend the term of the US$2.2B Yuan swap facility (due in August) by three years.
This multi-party package will only come into being because the Mongolian government has agreed to a structural reform of government finances and processes. Signing up to the US$440m IMF package has opened the door to a larger US$5B plus support and debt restructuring package.
The IMF $440m package by itself will make little up-front difference to Mongolia’s plight, being drawn down over 3 years.
This larger package will also make easier the refinancing of existing government debts. Just recently DBM’s bonds of 580 million USD (issued at 5.75% for 5 years) were exchanged for the new 600 million USD Khuraldai government bond (issued at 8.75% for 7 years). The new Khuraldai bond is 52% more expensive than the DBM bond raised 5 years ago. However it is a 2.1% lower interest rate than the last 500 million USD bond raised just 12 months ago – representing a 20% reduction in borrowing costs. This reflects a first benefit from the proposed IMF deal.
However the lenders are also saying, “if we are to help you then you must also help yourself”. The restructuring of government revenues and expenditures is required “with or without bond repayment” and “with or without IMF bailout”.
By the end of 2016, the budget deficit reached 15% оf GDP and public debt reached 78% of GDP ( Effectively government expenditures have grown at a far faster rate than its revenues. At the peak of commodity prices the government were running large deficits and borrowing internationally to fund this. With the downturn in commodity prices the debt situation has become chronic.
Fiscal restructuring has to take place, with or without IMF bailout, but with IMF bailout at least the country will receive fiscal support from donor community. So the main culprit is not just a temporary fall in mining products prices, its the underlying fiscal structure and policies which created the unsustainable budget deficit and inefficiency.
Some economists claim that the bailout package is either unnecessary or it’s terms are unfair – or both.
But we ask you – what do individuals, families and companies do when they fall on tough times? They restructure to survive. If they don’t this quickly their relatives, shareholders and trading partners quickly cut financial support. They restructure or fail – simple as that. For companies, you restructure or go bankrupt.
Officially governments do not become bankrupt – look at Zimbabwe for instance. However, where lending countries and major lending institutions see an economy and government finances being mismanaged or in very poor condition, they quickly reduce their support, and demand action before support is re-instated.
There are also notable examples of countries like Venezuela where political leaders prolong their own country’s agony. They pretend the crisis does not exist, or waste time placing the blame on other parties. They often continue to print money to pay their own bills and make debt repayments. They do this for personal survival (or benefit) – but economic recovery does not occur and the catastrophe moves closer because the underlying economic structure itself is erroneous.
Government leaders may take actions within their own country that defy commercial logic. In recent years, despite being in economic crisis, Mongolia failed to support implement a number of large investment projects which could deliver billions of US dollars in FDI and tax revenue. Projects like the Tavantolgoi coal deal, Power plant No 5 and Gobi power plant could bring in at least 5 billion of dollars in FDI. However, due to domestic politics it so far hasn’t happened. Unfortunately, No minister in Mongolia resigns when he or she pursues wrong policies and can’t work with investors (ie get projects to the starting line).
However, when governments borrow from international markets to fund domestic projects they ironically expose themselves to the reality of being a “commercial borrower” – where government must repay its debt on time or face significant consequences.
We know from limited experience that when your economy is strong your exchange rate is strong. This occurred during the OT stage one construction and the peak of the commodities boom when coal and iron ore prices were very high.
But now we, Mongolians also know from much longer experience that when your economy is weak, your exchange rate diminishes and interest rates climb to high levels. And critically the cost of repaying your international debt increases significantly in local currency terms. When government revenues have fallen and government costs are not reduced at the same rate, then a bad problem is made worse.
All of these factors are in play in Mongolia – and the only realistic option is to accept the IMF remedy. While it is bitter to swallow, it is better to face reality sooner rather than later. Without the remedy a declining future and financial disaster comes much closer. A mega-commodities boom is not around the corner – and is not our savior.
Let us be clear again – the current level of Mongolian government debt is not sustainable and Mongolia has significant international debts due for payment soon. Refinancing, on good terms, when you have already high debt levels and a weak economy is extremely difficult.
The current success of Khuraldai bonds was only possible because investors thought that the country is serious in its intent to rebuild its own troubled finances with the help of IMF.
The INS supports the IMF bail-out package and the co-commitment measures being put into place by the government. INS realises there will be hardships, but INS also wants a better future for Mongolia, and the bailout package is a first step towards this future.
However, INS states the long-term solution is not the bail-out package per se. We need our government to put in place “economic stimulation policies and programs” that ultimately provide better government services, higher incomes and more jobs for all Mongolians. Restructuring the fiscal system to make it sustainable is a precursor to recovery.
Support ourselves through a strong economy
Restructuring and repaying old debts is not enough. Cutting government expenditures and raising more tax is not enough. It is critical that Mongolia’s government deliver a strong engine room – that is a “strong and growing economy” to provide the things that other country’s citizens take for granted. Government needs to deliver the economic growth, solve escalating health issues and take real steps to actually improve the business climate.
We are all sick from pollution and anti-sanitary conditions. We need our government to deliver healthy cities and towns for our citizens, young and old, to live in. Health wise, and politically, this is not negotiable. The IMF bail-out package is not going to deliver clean cities..
We also need to remember that for every significant social problem (like pollution) not fixed – there is an ongoing and growing public cost. To government it is growing health budgets, for the business community it is lower productivity and absences, and for Mongolians specifically it is chronic illness and reduced life expectancy.
We absolutely need strong businesses, both domestic and international, that make profits, pay Mongolian taxes and provide well paid jobs. The current government has stated that the state should not play a role in business going forward. However, the jury is out here – where we see SOE’s reverting back to large panels of ministry representatives on their boards.
Both sides of parliament recognise the failure of our state-owned and state-run enterprises. They clearly do not deliver efficient business organisations or outcomes. They borrow from government, make very small profits and pay little tax. They also have higher levels of employment than would be the case in privately run companies.
Our government must solve (for themselves) the riddle of how to attract the next wave of foreign investment and international finance. Last three years have witnessed falling amount of investment of all kinds, from 6.57 trillion MNT in 2013 to 4.754 trillion in 2015 (NSO), which includes all kinds of investment. It is not just foreign investment that’s falling – public and private Mongolian domestic investment is also falling.
The Mongolian banks – standing alone – do not have the capacity to service the needs of local businesses.  Attracting investors (and finance) to Mongolia is critical for Mongolia’s economy. Lowering the cost of borrowing capital for businesses – to be profitable –  is critical. Both are essential if we are going to invest in new and efficient power and heating stations and smarter living technologies, to solve Ulaanbaatar’s pollution problem. Again, here the long term commitment to restructure and improve public finance is crucial.
The government urgently needs to accelerate the next stage of economic recovery. We need to harness the business sector and excite international financiers, promoters and investors about the prospects and returns from establishing business in Mongolia. This cannot be done on a basis of IMF bailout alone. Real and credible actions are needed to kick start the key projects.
Mongolia’s natural endowments are minerals and agriculture. Mongolians have a rich culture and the world shares a curiosity in Mongolia’s history. Mongolians in general are not isolationists. However, Mongolia does not have a large population so we must be smart in how we build external markets to attract and underpin new business ventures. We need to be even smarter in how we attract and retain our future business partners and those who will fund future grand enterprises.
Initiating large-projects (whether in mining, energy, infrastructure or agriculture) is the quickest way to stimulate economic growth, but this does not always have a broad impact on incomes or employment. Mongolian officials have unfortunately struggled in building good relationships with in-country investors and building confidence with offshore investors. The Prime Minister has stated that addressing this is a key focus for this government.
Mongolia needs to build a strong and credible case for “why business should focus on investing in Mongolia” – as opposed to other countries with similar opportunities.
The much-needed private sector investment will come when the correct conditions are in place. If these conditions are not attractive – compared to our competitors – the level of incoming investment will not be large.
This must be the next most critical task rapidly advanced by the government. It is not easy work, but critical to get right

Source: Institute for National Strategy of Mongolia

Russian, Mongolian experts to meet for discussion of power plants in Lake Baikal area

Russian environmental and scientific circles have repeatedly expressed their concerns about Mongolia’s plans to build three dams at rivers that feed Lake Baikal

Russian environmental and scientific circles have repeatedly expressed their concerns about Mongolia’s plans to build three dams at rivers that feed Lake Baikal

MOSCOW, March 13. /TASS/. Experts of Mongolia and Russia will hold the first meeting in June to discuss construction of a chain of hydropower plants (HPP) on the Selenga river and its feeders, Mongolia’s Ambassador to Banzragchiin Delgermaa told TASS on Monday.
"A mutual decision was made according to results of the intergovernmental commission meeting [in December 2016 - TASS] that we will exchange information in the first instance," the diplomat said. "Mongolia has a conclusion of a French expert company that also built HPP in Russia regarding two our projects. According to their conclusion, construction of the HPP will not actually exert negative influence on environment. However, Russia has its conclusion and its studies," the ambassador said.
"It was decided to set up a joint research team with scientists and experts of both sides," Delgermaa said. "We suggested holding the meeting with participation of Russian and Mongolian experts in March but the Russian party made a proposal to postpone such a meeting until June," she said.

The Baikal Lake is unique, the ambassador said. "This is not merely the Russian but also the global treasury. Therefore we will undertake measures to prevent environmental problems and will jointly settle arising issues," the diplomat added.
Russian environmental and scientific circles have repeatedly expressed their concerns about Mongolia’s plans to build three dams at rivers that feed Lake Baikal, the world’s largest and deepest freshwater lake and a UNESCO World Heritage site. Under the plan, three dams are to be built: one at the Selenga River, that accounts for some 80% of all water that flows into the lake, and two at its main tributaries - the Eg River and the Orkhon River.
The announcement coincided with the unprecedented decline in the Baikal water level that started in fall of 2014 and continued through 2016.

Source:Tass, Russian News Agency

Mongolian PM to visit Russia in first half of 2017

MOSCOW, March 13. /TASS/. Mongolia’s Prime Minister Jargaltulga Erdenebat will pay a visit to Russia in the first half of 2017, Mongolian Ambassador to Russian Banzragchin Delgermaa told TASS on Monday.

"At a meeting of the intergovernmental commission in Ulan Bator in 2016, we had a very efficient discussion of issues in all spheres, not only in the trade-and-economic sphere but also in humanitarian and other areas," she said. "We have already adopted a detailed plan to deal with the problems that have been piling up for years, including railway transport, excise duties during railway shipments, building a water storage facility, cooperation in border regions. Our embassy is working with Russian ministries and agencies in all spheres."

"As for concrete results, we expect that about 40-50% of problem issues in relations between our countries will be regulated and resolved in practical terms before the Mongolian prime minister’s visit which is expected to take place in the first half of this year," the ambassador said, adding that the next regular meeting of the intergovernmental commission is scheduled to be held in Moscow in late 2017.
Russian Prime Minister Dmitry Medvedev visited Mongolia in July 2016. He had a series of bilateral meetings with Mongolia’s top officials and took part in a summit meeting of heads of state and government of ASEM (Asia-Europe Meeting) member states.

Source:Tass, Russian News agency


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