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Welcome to the first edition of Inside Mongolia for 2025! We hope 2024 brought success and abundance to all our readers. In 2025, we’ll meet 52 Mondays with fresh insights in our newsletter—so much news is waiting for us.

Today’s highlights in 3 sentences:

• 💰 Foreign Currency Reserves hit a record high

• 🤓 The Bank of Mongolia shares its outlook for 2025

• 🧑🏻‍⚖️ New laws take effect

Let’s Dive In. 🌊

MARKET

• MNG: Foreign currency reserves rise by 11.8%, reaching a record high of $5.5 billion in 2024.

• UB: Ulaanbaatar City establishes surveillance sub-centers under the governors' offices of its 9 districts, following the installation of over 2,600 new surveillance cameras at 176 intersections, crossings, and roads in 2024.

• FRN: Mongolia and France reach preliminary agreement on $1.6 billion uranium project.

 📑 New Laws for the New Year

2025 begins with a series of notable increases, including adjustments to the minimum wage, pensions, salaries of civil servants, and special increments for armed forces and border guards. 

🔺 Increases on the Horizon

The authorities uphold their electoral promise to enhance pensions and benefits. For instance, pensions increased by 6%, the Mother’s honor money doubled, the civil servants' salaries rose by 6%, and the minimum wage significantly boosted by 20%.

• 🆕 Pensions Tied to Inflation: Starting January 1st, 2025, pensions rise annually in step with inflation. While the government loudly champions pension fund reform and the rollout of a multi-layered pension system in 2024, the reality paints a different picture, cash increases surge ahead, leaving meaningful reforms trailing behind.

• 😣 A Financial Burden: The 6% pension increase necessitates an additional ₮297.4 billion from the already overburdened Social Security Fund. For a long time, pensions alone have consumed over 80% of the fund's total expenditures, and their growing reliance on government budget support pushes the fund closer to the brink of collapse.

• 💸 Minimum Wage Milestone: Furthermore, the minimum wage increases to ₮4,715 per hour or ₮792,000 per month, effective April 1. This marks the first time in history it rises for 3 consecutive years. Click HERE to explore the positive and negative impacts of this significant change.

🔑 Other Laws

Furthermore, several new laws across various sectors, including financial services for herders, benefits for elders, the Mongolian language, and organic production, are now in effect.

• 🐑 Law on Herders: The Law on Herders, adopted in 2024, introduces Chapter 12, which enables the provision of preferential loans to herders, and aims to enhance their financial stability. Previously, herders faced significant challenges in accessing loans and favorable terms. However, under the new law, herders who meet specific criteria can now access preferential and highly preferential loans.

• 👴🏻 Law on the Elderly: Amendments to the Law on the Elderly bring new benefits, such as free public transport, medical equipment discounts, and fuel vouchers. The most important change is implementing the criminal code, which prohibits third parties from misusing elders' pensions and benefits. Those who violate this can face penalties, including imprisonment, ensuring stronger protection for the elderly.

• 🇲🇳 Law on the Mongolian Language: Starting from January 1, 2025, Mongolia officially adopts both Cyrillic and traditional Mongolian scripts for legal papers and official documents. This dual-script policy requires government employees to maintain official documents in both scripts, ensuring accessibility and preserving the nation's linguistic heritage.

• 🫛 Organic Food Law: The newly adopted Organic Food Law builds on the 2016 law, enabling the state to financially and non-financially support organic producers. It defines organic production, outlines requirements and responsibilities for producers, and introduces new certification processes, labels, and trade incentives.

2025 brings reforms aimed at supporting the workforce and herders while addressing structural challenges. However, effective implementation and sustainable funding remain critical to achieving these goals.

🔎 How the Bank of Mongolia Sees 2025

In this article, we present a translation of the Bank of Mongolia President’s interview, offering an overview of the economic outlook for 2025.

⚔️ Government Programs: A Double-Edged Sword

The government’s targeted soft loan program, which starts during the COVID era, provides ₮10 billion in 2020 to preserve jobs. Initiatives like the “Food Revolution” and the “New Cooperative” program issue $1.2 billion and over ₮660 billion in loans, respectively, to stimulate growth. The upcoming “White Gold” program focuses on industries processing agricultural raw materials, continuing the government's economic push. Additionally, the government allocates ₮200-₮300 billion annually on interest subsidies for these programs.

• While these loans total ₮2 trillion, a fraction of the ₮35 trillion in total loans, they raise long-term concerns. Concessional loans, offered at favorable terms, help businesses in the short term but disrupt market norms. The BOM President warns that businesses struggle to transition to non-concessional financing later, risking long-term financial instability.

🧮 Current Account

Mongolia’s current account balance in 2023 shows a strong surplus, driven by high global commodity prices, particularly coal and copper. This surplus stabilizes the MNT and strengthens foreign exchange reserves, acting as a buffer against external shocks.

For 2024, the BOM expects a more moderate surplus of around $150 million. While export volumes remain steady, imports, especially in consumer goods like automobiles and luxury items, grow by 26%, putting pressure on the balance of payments. This shift from a 6% rise in exports signals potential challenges ahead.

🔜 2025: A Tough Road Ahead

Looking toward 2025, the BOM President foresees increasing challenges in maintaining a stable current account. Several key factors contribute to this outlook:

• 💹 Commodity Price Volatility: Coal prices drop to $70-$80 per ton by the end of 2024 and do not recover significantly. While copper production from the Oyu Tolgoi mine shows promise, Mongolia’s reliance on these two commodities leaves the country vulnerable to global market fluctuations.

• 🚀 Rising Imports: The persistent growth in imports, particularly in consumer goods, continues to pressure the trade balance. Without measures to stimulate domestic production, this trend narrows the current account surplus further.

• 🍰 Need for Diversification: The BOM President stresses the importance of diversifying Mongolia's export base beyond raw materials. Expanding the manufacturing sector and developing value-added industries ensure long-term economic resilience.

While Mongolia navigates 2023 with a strong current account surplus and maintains a moderate surplus in 2024, the outlook for 2025 presents significant challenges. The Bank of Mongolia remains focused on maintaining macroeconomic stability through prudent policy adjustments and strategic economic diversification. Balancing the risks of government programs, commodity price volatility, and rising imports is key to Mongolia’s ability to weather the storm and secure a sustainable economic future.

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⭐ Selected for you

ECONOMY & BUSINESS

• Investing In Nature as a Climate and Development Opportunity for Mongolia. (ReliefWeb)

• Mongolia's Hunnu Air Will Add A New Embraer E195-E2 To Its Tiny Fleet In March. (SimpleFlying)

• Mongolian Restaurant Expanding to Bartlett. (Newsbreak)

• All Systems Go at TMK With Six Mongolian Gas Wells Now in Action. (SydneyMorningHerald)

POLITICS

• UNDP Supports Mongolia in Enhancing Climate Forecasting Capabilities with State-of-the-Art High-Speed Supercomputer. (UNDP)

• Prime Minister L. Oyun-Erdene Presents a $3,495 Statue of Mongolian Warriors to Joe Biden. (SCMP)

CULTURE & LIFESTYLE

• 40% of Mongolia's Territory Faces a High Risk of Experiencing Harsh Winter. (XinhuaNews)

• Why Mongolia Should Be Your Next Wellness Escape? (NationalGeographic)

• “Bird flu” Virus Found in Mongolian Horses. (EquusMagazine)

• The Last Reindeer Riders: Inside the World of Mongolia's Dukha Tribe. (MSN)

• “Galdan Boshgot-380” Exhibition Opens at the Chinggis Khaan National Museum of Mongolia. (ChinggisMuseum)

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Publisher: Ts.Ankhbayar
Writer: M.Khulan
Graphics by: Ts.Tselmeg

Disclaimer: The information Inside Mongolia provides is for educational and informational purposes only. It is not intended to be or constitute financial advice, trading advice, or any other advice. The decision whether to consider the information we provide is solely our readers' independent decision.