IMF Executive Board Concludes 2025 Article IV Consultation with Mongolia
IMF News, September 15, 2025
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- Published: September 15, 2025
Overview
- Executive Board completed the Article IV Consultation for Mongolia on September 5, 2025.
- Recent developments:
- A booming mining sector in 2023-24 significantly bolstered exports and fiscal revenues.
- Coal exports declined markedly in the first half of 2025, resulting in a widening current account deficit, reduced budget revenues, and depreciation pressures.
- Headline inflation peaked in February 2025 and moderated to 8.2 percent by June 2025.
- Credit growth in both the banking and nonbank financial sectors remains high, despite some recent moderation.
- A new government formed in June 2025 signaled policy continuity and submitted an amended budget to Parliament aimed at reducing expenditures and ensuring compliance with the structural fiscal deficit limit.
Economic Outlook and Projections
- Growth:
- Growth in 2025 is projected to rise to 5.5 percent.
- Growth is projected to remain around 5½ percent in 2026.
- Over the medium term, growth is projected to gradually converge to its potential of about 5 percent.
- Inflation:
- Inflation is anticipated to stay above the BOM target band until 2026.
- Current account and external:
- A sharp decline in coal exports—primarily due to lower prices—is expected to widen both the current account and fiscal deficits.
- Current account deficits are forecast to persist, reflecting the high import intensity of investment projects and continued strong consumer goods imports.
- Sectoral drivers:
- Mining output expected to remain robust, driven by increased production of higher-grade copper concentrate at Oyu Tolgoi.
- Strong recovery in the agriculture sector supports the 2025 growth projection.
Downside Risks and Policy Concerns
- Key downside risks:
- Uncertainties in Chinese coal demand.
- Larger-than-expected declines in coal prices.
- Policy slippages that could undermine reform progress, including pressures to reduce non-mineral tax collections and exempt large investment projects from fiscal rules.
- Policy responses urged by Directors:
- Prudent macroeconomic policies to restore external and internal balances.
- Structural reforms to achieve diversified and sustainable growth.
- Avoid frequent changes to fiscal rules to preserve credibility.
Fiscal Policy, Revenues, and Fiscal Rules
- Authorities and fiscal stance:
- Authorities committed to meeting the structural deficit limit through expenditure restraint, reflected in the supplementary 2025 budget.
- The tax package currently under review should reduce reliance on volatile mining revenues and safeguard fiscal sustainability.
- Importance of implementing mega capital projects within the fiscal rules and after careful prioritization.
- Fiscal recommendations:
- Create fiscal space by broadening the non-mining tax base.
- Expand domestic debt issuance to develop domestic debt markets and enhance monetary policy transmission.
Monetary Policy, Exchange Rate, and Financial Sector
- Monetary policy:
- Directors called on the Bank of Mongolia (BOM) to maintain a tight monetary policy stance to contain inflation.
- Recommended strengthening the BOM’s legal mandate, operational autonomy, and governance via amendments to the central bank law and by ending BOM’s quasi-fiscal operations.
- Exchange rate and reserves:
- Greater exchange rate flexibility recommended to enhance resilience to external shocks and deepen the foreign exchange market.
- Directors encouraged the BOM to pursue opportunistic reserve accumulation when market conditions allow.
- Macroprudential and financial sector measures:
- Recent macroprudential policy tightening was welcomed.
- Recommendations include aligning the DSTI limit for nonbank financial institutions with that of banks, incorporating pension-backed loans into the DSTI limit, expanding the BOM’s macroprudential toolkit, and separating macroprudential from monetary policy.
- Strengthen financial oversight and insolvency frameworks.
- AML/CFT:
- Progress in strengthening the AML/CFT framework was welcomed and effective implementation was called for.
Executive Board Assessment (Directors’ Main Messages)
- Recognized achievements:
- Strong growth and fiscal surpluses in 2023−2024 helped reduce Mongolia’s vulnerabilities.
- Concerns:
- Near-term outlook less favorable with rising downside risks from lower coal prices and greater global uncertainty.
- Policy emphasis:
- Prudent macroeconomic policies, fiscal consolidation through broadening tax base, adherence to fiscal rules, stronger central bank independence and governance, further macroprudential actions, and structural reforms to improve the business climate, combat corruption, strengthen governance, and address climate change-related challenges.
Key Economic and Financial Indicators (selected figures from Table 1)
- Real GDP growth (percent change):
- 2022: 5.0
- 2023: 7.4
- 2024: 4.9
- 2025 (projection): 5.5
- 2026 (projection): 5.3
- Nominal GDP (in USD million):
- 2022: 17,146
- 2023: 20,315
- 2024: 23,586
- Consumer Prices (Avg; percent change):
- 2022: 15.1
- 2023: 10.4
- 2024: 8.7
- 2025 (projection): 7.2
- 2026 (projection): 6.7
- Copper prices (US$ per ton):
- 2022: 8,829
- 2023: 8,491
- 2024: 9,142
- 2025 (projection): 9,539
- 2026 (projection): 9,641
- Bituminous coal prices (US$ per ton):
- 2022: 123
- 2023: 131
- 2024: 107
- 2025 (projection): 68
- 2026 (projection): 74
- General government accounts (selected, in percent of GDP):
- Primary balance (IMF definition):
- 2022: 2.2
- 2023: 4.3
- 2024: 2.8
- 2025 (projection): 1.3
- 2026 (projection): 1.2
- Total revenue and grants:
- 2022: 34.4
- 2023: 39.2
- 2024: 35.1
- 2025 (projection): 32.1
- Primary expenditure and net lending:
- 2022: 30.3
- 2023: 36.5
- 2024: 33.8
- 2025 (projection): 32.7
- Overall balance (IMF definition):
- 2022: 0.7
- 2023: 2.7
- 2024: -0.3
- 2025 (projection): -0.7
- Non-mineral primary balance (in percent of GDP):
- 2022: -6.3
- 2023: -5.7
- 2024: -8.9
- 2025 (projection): -7.2
- General government debt:
- 2022: 64.5
- 2023: 45.9
- 2024: 46.0
- 2025 (projection): 48.4
- 2026 (projection): 51.3
- Gross official reserves (in USD million):
- 2022: 3,400
- 2023: 4,922
- 2024: 5,510
- 2025 (projection): 4,946
- 2026 (projection): 5,128
- Net international reserves (NIR):
- 2022: -788
- 2023: 1,152
- 2024: 1,768
- Exchange rate (Togrog per U.S. dollar, eop):
- 2022: 3,445
- 2023: 3,411
- 2024: 3,420
IMF Executive Board Concludes 2025 Article IV Consultation with Mongolia, September 15, 2025