Mongolia: Staff Concluding Statement of the 2026 Article IV Mission
IMF News, June 26, 2026
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Bibliographic details
- Published: June 26, 2026
Mission context
- IMF staff mission led by Mr. Tahsin Saadi Sedik held Article IV discussions with Mongolian authorities in Ulaanbaatar during June 10–23, 2026.
- The authorities consented to publication; views are those of IMF staff and do not necessarily represent the IMF’s Executive Board.
Recent economic developments
- Growth and activity
- Growth remained strong in 2025, underpinned by a rebound in agriculture and robust mining activity.
- Strong growth continued in early 2026, mainly driven by buoyant mining activity; non-mining growth was subdued.
- Inflation, credit, exchange rate, and reserves
- Inflation rose for a third month in a row, driven by surging food and energy prices, breaking the downward trend since November 2025.
- Inflation reached 11.2 percent in May 2026 (monthly data reference).
- Credit growth moderated to about 17 percent in May 2026.
- Exchange rate remained broadly stable since April 2025.
- Gross international reserves increased to $7.4 billion in early June 2026, though remaining below the IMF’s Assessing Reserve Adequacy metric.
- Fiscal pressures and sovereign outlook
- Lower coal prices in 2025 contributed to fiscal pressures.
- Authorities responded to 2025 mining revenue shortfalls by tightening spending execution, resorting to tax prepayments, collecting tax arrears, postponing expenditure payments, and using the Fiscal Stability Fund.
- Rating agencies have upgraded Mongolia’s sovereign credit rating and spreads have declined.
Outlook and risks
- Staff baseline projections
- GDP growth is projected to reach 5.8 percent in 2026.
- Inflation is projected at 10 percent in 2026, driven by high food and fuel prices.
- The fiscal balance is expected to deteriorate in 2026, reflecting wage increases and front-loaded, expedited execution of the two mega projects that have been excluded from fiscal rules.
- Under staff’s baseline, the Sovereign Risk and Debt Sustainability Framework is expected to assess Mongolia’s sovereign risk as moderate, in line with the 2025 assessment.
- Key downside risks
- Political pressures to reduce non-mining taxation and increase current spending (notably higher wages across other public sectors and higher pensions), and draw down fiscal buffers.
- External risks: heightened geopolitical tensions (including spillovers from the Middle East conflict and Russia’s war in Ukraine), and uncertainty surrounding Chinese coal demand and commodity prices.
- Vulnerabilities
- Vulnerabilities remain elevated, with risks tilted to the downside.
Policy priorities and recommendations — Fiscal
- Overriding priority: safeguard fiscal sustainability and reduce vulnerabilities amid costly new policy proposals.
- Supplementary budget
- Submit a supplementary budget to Parliament that includes the full impact of salary increases for teachers and healthcare workers and expands borrowing ceilings needed to finance the expected deficit.
- Aim to avoid cash shortages that could trigger unconventional, one-off revenue measures.
- Revenue and spending stance
- Reconsider plans to lower non-mining taxes.
- The decision to reverse the expansion of VAT rebates from 2 to 5 percent is welcome.
- Prioritize streamlining tax incentives, collecting tax arrears, and implementing tax and customs administration reforms.
- Streamline and target social spending rather than pursue broad tax cuts.
- Fiscal measures in response to higher fuel prices should be temporary and well targeted, while preserving price signals.
- Pensions
- Pension reforms should not jeopardize fiscal sustainability; components of the proposed pension reform package are estimated at about 1.3 percent of GDP annually in fiscal cost.
- Public financial management and fiscal transparency
- Strengthen the Medium-Term Fiscal Framework with greater granularity and realism.
- Improve governance of mining funds, revive the domestic government securities market, and adopt a strategy to monitor and reduce fiscal risks.
- Upgrade state-owned enterprises governance and oversight; mitigate contingent liabilities from public-private partnerships; enhance coordination with subnational entities; address the Development Bank of Mongolia’s balance sheet and governance issues.
- The exclusion of the two mega projects from fiscal rules requires reporting that follows good international practices.
Policy priorities and recommendations — Monetary, FX, and financial sector
- Monetary policy stance
- The Bank of Mongolia (BOM) should stand ready to tighten if food and fuel price shocks elevate risks of unanchored inflation expectations and second-round effects.
- Monetary policy should remain tight.
- BOM governance and operations
- Amendments to the BOM Law are critical to enhance the bank’s mandate, autonomy, governance, and capital position; these amendments should be finalized and submitted to Parliament.
- Relieve the BOM from conducting quasi-fiscal operations; the government should proceed with the stalled takeover of the BOM’s subsidized mortgage program, with subsidies transparently reflected in the budget.
- Consider establishment of a mortgage bank, guided by good international practices.
- Pursue greater exchange rate flexibility by phasing out the BOM’s role as the main provider of FX and hedging instruments, and accumulate reserves when conditions permit.
- Macroprudential and financial stability
- Strengthen the macroprudential framework: expand BOM’s macroprudential toolkit and enhance coordination with the Financial Regulatory Commission.
- Continue progress in risk-based supervision, and reform credit information, insolvency, and resolution frameworks to enhance financial sector resilience.
- Notable welcome steps: BOM convening dedicated Monetary Policy Committee meetings focused on financial stability and macroprudential issues, and establishment of a new Financial Stability Department.
Structural reforms
- Priorities to achieve sustainable and inclusive growth
- Improve the business environment to support investment and attract FDI.
- Strengthen governance and anti-corruption frameworks, and the rule of law.
- Move toward a more diversified and private sector-led growth model.
- Key legislative reforms needed
- Revised Foreign Investment Law, Insolvency Law, amendments to the SOE Law and the Minerals Law, and the draft Whistleblower Law.
Selected key statistics (preserving source figures)
- Growth and prices
- Real GDP growth (percent change): 2023: 7.4; 2024: 5.1; 2025: 6.8; 2026 (proj): 5.8; 2027 (proj): 5.6; 2028 (proj): 5.2; 2029 (proj): 5.0.
- Consumer Prices (Avg; percent change): 2023: 10.4; 2024: 6.2; 2025: 8.6; 2026 (proj): 9.5; 2027 (proj): 7.2; 2028 (proj): 6.7.
- Inflation reached 11.2 percent in May 2026 (text reference).
- External sector and reserves
- Gross international reserves (in USD million): 2023: 4,922; 2024: 5,510; 2025: 7,005; 2026 (proj): 7,283; 2027 (proj): 7,286; 2028 (proj): 7,268; 2029 (proj): 7,248; 2030 (proj): 7,276; 2031 (proj): 7,273.
- Gross international reserves increased to $7.4 billion in early June 2026 (text reference).
- Net international reserves (NIR) (USD million): 2023: 1,152; 2024: 1,768; 2025: 3,326.
- Current account balance (percent of GDP): 2023: 0.6; 2024: -8.4; 2025: -4.7; 2026 (proj): -4.9; 2027 (proj): -5.5; 2028 (proj): -6.2; 2029 (proj): -7.3; 2030 (proj): -7.7.
- Fiscal sector (percent of GDP)
- Primary balance (IMF definition): 2023: 4.3; 2024: 3.2; 2025: -0.7; 2026 (proj): -2.8; 2027 (proj): -3.3; 2028 (proj): -3.2.
- Total revenue and grants: 2023: 34.6; 2024: 38.9; 2025: 36.3; 2026 (proj): 31.9; 2027 (proj): 30.4; 2028 (proj): 29.0; 2029 (proj): 28.8; 2030 (proj): 28.9.
- Primary expenditure and net lending: 2023: 30.3; 2024: 36.2; 2025: 33.1; 2026 (proj): 32.5; 2027 (proj): 33.2; 2028 (proj): 32.4; 2029 (proj): 32.2.
- Overall balance (IMF definition): 2023: 1.3; 2024: -2.6; 2025: -5.0; 2026 (proj): -5.8; 2027 (proj): -6.1; 2028 (proj): -6.5.
- Non-mineral primary balance (percent of GDP): 2023: -8.8; 2024: -5.6; 2025: -8.5; 2026 (proj): -10.4; 2027 (proj): -10.5; 2028 (proj): -10.1; 2029 (proj): -9.9; 2030 (proj): -9.7.
- Gross financing needs (percent of GDP): 2023: 4.7; 2024: 3.0; 2025: 5.5; 2026 (proj): 9.1; 2027 (proj): 11.9; 2028 (proj): 12.3; 2029 (proj): 14.1; 2030 (proj): 17.4.
- General government debt (percent of GDP): 2023: 46.7; 2024: 44.1; 2025: 45.1; 2026 (proj): 47.3; 2027 (proj): 50.6; 2028 (proj): 54.2; 2029 (proj): 57.4; 2030 (proj): 62.0.
- Commodities (US$ per ton)
- Copper prices: 2023: 8,491; 2024: 9,142; 2025: 9,947; 2026 (proj): 13,527; 2027 (proj): 13,889; 2028 (proj): 13,837; 2029 (proj): 13,805; 2030 (proj): 13,801; 2031 (proj): 13,814.
- Bituminous coal prices: 2023: 131.4; 2024: 107.3; 2025: 66.5; 2026 (proj): 73.4; 2027 (proj): 79.2; 2028 (proj): 76.3; 2029 (proj): 76.4.
- Monetary sector
- Broad money growth (percent change): 2023: 24.2; 2024: 10.6; 2025: 20.3; 2026 (proj): 17.5; 2027 (proj): 12.8; 2028 (proj): 12.4; 2029 (proj): 12.1.
- Credit growth (percent change): 2023: 22.0; 2024: 19.8; 2025: 17.0; 2026 (proj): 16.4; 2027 (proj): 15.0; 2028 (proj): 13.8; 2029 (proj): 13.1.
Source: IMF staff concluding statement of the 2026 Article IV Mission to Mongolia (June 26, 2026).
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- Mcs062626 Mng Mongolia 2026 Concluding Statement Article Iv Consultation