IMF Staff Country Reports

The 2023 Article IV Consultation with Mongolia highlights that growth rebounded to 5.0 percent in 2022 and the external position stabilized as a result of China’s reopening, the government’s determined efforts to boost exports, and private sector financing inflows. The procyclical fiscal stimulus from the supplementary budget will lift near term growth and inflation but entails increased macroeconomic stability risks. The growth boost from the stimulus is expected to fade from 2024 onward as higher inflation and external pressures begin to weigh on the non-mining sector. Fiscal consolidation and adherence to fiscal rules are critical to ensure macroeconomic stability. Consolidation should entail measures to contain the wage bill, prioritize public investment, increase progressivity in personal income taxes, introduce means-tested social assistance targeting, and continued improvements in public investment management and tax and customs administration. External buffers should be strengthened to build resilience to external shocks. A comprehensive development agenda is needed to reduce medium-term vulnerabilities.