IMF Executive Board Concludes 2026 Article IV Consultation with Mongolia
IMF News, August 6, 2026
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- Published: August 6, 2026
Overview and recent developments
- Executive Board concluded the Article IV consultation and endorsed the staff appraisal without a meeting on a lapse-of-time basis. Authorities consented to publication of the Staff Report.
- Despite a sharp decline in coal prices, macroeconomic outcomes in 2025 were better than expected due to:
- strong recovery in agricultural output;
- solid mining production;
- higher copper exports and softer import demand that helped narrow the current account deficit.
- Buoyant mining activity underpinned strong GDP growth through April 2026 of 7.8 percent y/y.
- Inflation rose since March 2026 driven by surging meat and energy prices, reaching 12.0 percent y/y in June.
Outlook and projections
- Growth:
- Growth is projected to remain robust in 2026, supported by strong mining activity, but to moderate from the high 2025 level as agricultural base effects fade.
- Real GDP growth (percent change) from Table 1: 2023: 7.4; 2024: 5.1; 2025: 6.8; 2026: 5.8; 2027: 5.6; 2028: 5.0.
- Inflation:
- Inflation is projected to remain elevated at around 10 percent by year-end, amid high food and fuel prices, before easing gradually thereafter.
- Consumer Prices (Avg; percent change) from Table 1: 2023: 6.2; 2024: 8.6; 2025: 8.8; 2026: 9.5; 2027: 8.3; 2028: 6.7.
- Consumer Prices (EoP; percent change) from Table 1: 2023: 7.5; 2024: 10.0; 2025: 9.0; 2026: 6.9; 2027: 6.6.
- External sector:
- Current account balance (percent of GDP) from Table 1: 2023: 0.6; 2024: -10.4; 2025: -8.4; 2026: -4.5; 2027: -5.3; 2028: -7.0.
- Exports of goods (percent of GDP) from Table 1: 2023: 68.5; 2024: 62.0; 2025: 60.5; 2026: 67.3; 2027: 65.3.
- Imports of goods (percent of GDP) from Table 1: 2023: 46.1; 2024: 49.0; 2025: 44.7; 2026: 46.6; 2027: 44.0.
- Commodity prices (from Table 1):
- Copper prices (US$ per ton): 2023: 8,491; 2024: 9,142; 2025: 9,947; 2026: 13,527; 2027: 13,889; 2028: 13,837; 2029: 13,805; 2030: 13,801; 2031: 13,814.
- Bituminous coal prices (US$ per ton): 2023: 131.4; 2024: 107.3; 2025: 66.5; 2026: 73.4; 2027: 79.2; 2028: 76.3; 2029: 76.4.
Executive Board assessment and risks
- Assessment highlights:
- Despite multiple shocks, Mongolia’s economy has remained resilient.
- External position in 2025 assessed to remain weaker than implied by fundamentals and desirable policy settings.
- Headline inflation has started rising again amid higher food and fuel prices and is expected to remain elevated throughout the year.
- Downside risks (balance of risks tilted to the downside):
- Domestic: potential deterioration in external financing conditions due to fiscal slippages and higher debt, political pressures to reduce non-mining taxes and increase current spending (wages and pensions).
- External: heightened geopolitical tensions (including adverse spillovers from the Middle East conflict and Russia’s war in Ukraine), and uncertainty about prospects for coal exports to China and commodity prices.
Fiscal policy recommendations
- Priorities:
- Rebuild buffers and safeguard sustainability.
- Submission of a supplementary budget to Parliament is a priority to avoid end-year cash shortages as in 2025.
- Reconsider the recently approved tax package given its adverse impact on non‑mining revenues.
- Focus on tax policy and administrative reforms to strengthen non-mining revenue.
- Increase efficiency in current spending to create space for development spending and rebuilding buffers.
- Public financial management and transparency:
- Strengthen public financial management and fiscal transparency, including through a well-defined MTFF, more realistic budget formulation, and stronger governance of mining funds.
- Avoid policy measures that undermine fiscal rules’ credibility, including selective exclusion of public investment projects.
- Fuel price response:
- Fiscal measures in response to higher fuel prices should be temporary and well‑targeted, while preserving price signals.
- Financing resilience:
- Reduce reliance on external financing to strengthen fiscal resilience.
Monetary policy, FX reserves, and exchange rate
- Monetary stance:
- Bank of Mongolia (BOM) should maintain a tight monetary policy stance and stand ready to tighten further if risks of unanchored inflation expectations and significant second-round effects emerge.
- Strengthen BOM operational and legal autonomy, forbid quasi‑fiscal activities, and address its weak balance sheet to enhance effectiveness and credibility.
- FX reserves and exchange rate flexibility:
- Higher FX reserves and greater exchange rate flexibility would strengthen resilience to external shocks.
- While GIR have increased markedly, they remain below adequacy thresholds.
- BOM should continue opportunistic reserve accumulation when market conditions allow.
- BOM should gradually phase out its role as a structural provider of FX to the market and reduce its dominance in providing FX hedging instruments to banks by fostering development of the domestic FX derivatives market.
Financial sector and macroprudential framework
- Macroprudential and supervisory recommendations:
- Strengthen institutional separation between macroprudential and monetary policy, expand macroprudential toolkit, and enhance coordination with the FRC.
- Incorporate pension-backed loans into the DSTI framework to prevent excessive indebtedness among pensioners.
- Continue progress in risk-based supervision and reforms to credit information, insolvency, and resolution frameworks.
- Banking sector changes:
- Proposed increase in bank shareholder limits, together with allowing international financial institutions to invest in multiple banks, is welcome and could facilitate bank shareholder diversification.
- Financial indicators (selected from Table 1):
- Broad money growth (percent change): 2023: 10.6; 2024: 20.3; 2025: 17.5; 2026: 12.7; 2027: 12.4; 2028: 12.1.
- Credit growth (percent change): 2023: 22.0; 2024: 19.8; 2025: 17.0; 2026: 13.7; 2027: 12.8.
- Gross official reserves (in USD million): 2023: 4,922; 2024: 5,510; 2025: 7,005; 2026: 7,234; 2027: 7,230; 2028: 7,254; 2029: 7,264; 2030: 7,285.
- Net international reserves (NIR): 2023: 1,152; 2024: 1,768; 2025: 2,517.
Structural reform priorities
- Key priorities to achieve sustainable and inclusive growth:
- Improve the business environment to support investment and attract FDI.
- Strengthen governance and the rule of law.
- Move toward a more diversified and private sector-led growth model.
- Legislative and governance actions recommended:
- Finalize and enact promptly the revised Foreign Investment Law, amendments to the SOE Law and the Mineral Law, and the draft Whistleblower Law.
Key fiscal and debt metrics (selected from Table 1)
- General government accounts (percent of GDP):
- Primary balance (IMF definition): 2023: 4.3; 2024: 3.2; 2025: -0.3; 2026: -3.0; 2027: -4.2; 2028: -3.2.
- Total revenue and grants: 2023: 34.6; 2024: 38.9; 2025: 36.3; 2026: 31.8; 2027: 28.8.
- Primary expenditure and net lending: 2023: 36.2; 2024: 33.1; 2025: 32.2; 2026: 33.3; 2027: 32.0.
- Interest: 2023: 1.5; 2024: 1.7; 2025: 1.9; 2026: 2.2; 2027: 2.4; 2028: 3.0; 2029: 3.3.
- Overall balance (IMF definition): 2023: 1.3; 2024: -2.2; 2025: -5.2; 2026: -6.6; 2027: -5.9; 2028: -6.1.
- Non-mining primary balance (in percent of GDP): 2023: -5.7; 2024: -8.8; 2025: -5.6; 2026: -8.2; 2027: -10.6; 2028: -11.4; 2029: -10.1; 2030: -9.6; 2031: -9.2.
- General government debt (percent of GDP):
- 2023: 46.7; 2024: 44.1; 2025: 45.1; 2026: 47.0; 2027: 50.5; 2028: 55.9; 2029: 59.1; 2030: 61.3; 2031: 63.7.
- Domestic: 2023: 3.1; 2024: 4.9; 2025: 6.3; 2026: 7.8; 2027: 9.3; 2028: 10.8.
- External: 2023: 43.4; 2024: 41.0; 2025: 41.9; 2026: 42.1; 2027: 44.3; 2028: 48.1; 2029: 50.2; 2030: 52.0; 2031: 52.8.
- Gross financing needs: 2023: 4.7; 2024: 13.3; 2025: 13.1; 2026: 14.1; 2027: 16.5.
International Monetary Fund press release, August 6, 2026.