Macroeconomic and Financial Development: Mongolia WORKSHOPS ON SUPPORTING ASIA PACIFIC LLDCs AND BHUTAN IN MOBILIZING RESOURCES FOR THE SDGs 14 December 201
Current state of macroeconomic and financial sector Resource Rich Country Resource Dependent Country Nominal GDP $.5b (2013) $11.1b GDP/ Capita $3,535 Main Mineral Resources 17.3% (2011) Mongolia s World Class Mineral Reserves Real GDP Growth 11.% (2013) 2.4% (2015) Estimated Reserves Copper (mm tons) 45,79.2 Coal (mm tons) 21,95.9 5.3% Electricity, gas, steam and water supply % Industrial sector structure, 2017 Manufacturing 27% Construction 15% Mining and quarring 52% Major commodities: coal, copper, gold, iron ore and oil Gold placer (tons) 537,5 Gold hard rock deposit (tons) 34.7 Tin (mm tons) 14.9 Iron (mm tons) 30.4 0% 0% Mining sector share in Revenue 1% 90% Mining sector share in Exports In 2003 2014, it was considered as one of the fastest growing economies globally with an average real GDP growth rate of.9% p.a. Due to the decline in commodity prices and the world growth slowdown, Mongolian economy fell sharply. 0% 40% 20% 0% 20 2011 20 2013 2014 2015 201 2017 Mining sector revenue share Non mining revenue share 70% 50% 30% % 20 2011 20 2013 2014 2015 201 2017 Mining sector exports share Non mining exports share
IMF Extended Fund Facility for Mongolia The Government of Mongolia has been implementing the IMF s Extended Fund Facility since May 2017. IMF Sixth reviews of Mongolia s performance under EFF (7 November 201): Mongolia s performance under the program remains strong. The combination of strong policy implementation and a supportive external environment has helped the authorities to outperform on all 201 quantitative targets under the program. International reserves have more than doubled since the start of the program. The government s Economic Recovery Program, supported by the IMF, aims to stabilize the economy, reduce the fiscal deficit and debt, rebuild foreign exchange reserves, introduce measures to mitigate the boom bust cycle and promote sustainable and inclusive growth. Key Indicators Improved Real GDP Growth (1) 14.0%.0%.0%.0%.0% 4.0% 2.0% 0.0%.3% 11.% 7.9% 2.4% 1.2%.0%.3%.0%.0% 5.1% 5.0% 4.% 20 2014 201 201H1 2019 GoM IMF Estimate (1) : IMF estimates Source: Ministry of Finance, 2017 forecasted data US$ Billion Trade Balance FX Reserve (1) Balance of Payment.0.0 4.0 2.0 0.0 2013 2014 2015 201 2017 201* 2.0 Exports Imports Balance Source: IMF Fund staff estimates and projections. (1) : IMF estimates US$ Billion 5.0 4.2 4.5 4.0 3.0 3.0 3.0 2.2 2.0 1. 1.3 1.3 1.0 0.0 2013 2014 2015 201 2017 201Q2 2019 2020 Fx reserves US$ Billion 4.0 3.0 2.0 1.0 0.0 1.0 2.0 3.0 4.0 5.0.0 2013 2014 2015 201 2017 201 June Current Account Financial Account Balance of Payment 3
Recent developments: Strengthening economic performance in 201 vs 2017 Economic growth was.3% in the first half of 201, expected to reach.0% by the end of 201. The primary drivers of the strong economic growth are large inflows of foreign direct investments, attracted by mega projects in the mining sector. Government debt issuance declined since the end of 2017 that impacted profoundly on fiscal expenditure of 201. 201 2017 201E 2019E 2020E EFF Actual EFF 3 rd review Proj* (IMF) Proj** (MOF) Proj* (IMF) Proj** (MOF) Proj* (IMF) Real GDP (percent) 1.2 0.2 5.3 5.0 5.0 7.1.0.0 4..0 Primary fiscal deficit (% of GDP) 13.0 5.5 2.1 1.5 1.0 3.0 1.0 1.7 0.3 0. Current account deficit (% of GDP).3 4.4.4.4.0 14.0.3 17.0 7.7 14.2 Proj** (MOF) Gross international reserves (US$ million) 1,297 1,92 3,0 3,595 3,150 3,203 4,299 4,13 4,755 4,523 Gross international reserves (In months of imports) 2.4 3.4 5.0 5.5 4.9.2. 7.4 7.0.0 FDI (US$ million) 4,171 995 1,44 1,533 1,59 1,771 2,14 2,02 1,990 2,557 Balance of Payment (US$ million) 5 35 57 254 301 42 27 23 41 204 Source: IMF Fund staff estimates and projections. General Government Debt (% of GDP) 7. 94.9 4. 1.7 79.4 73. 75.7 70.0 70.7 2.7 Source: Ministry of finance, IMF staff projections and estimates * Projections are based on the IMF staff report of 4 th review under the EFF program https://www.imf.org/~/media/files/publications/cr/201/cr1204.ashx ** Projections are based on the MTFF 2019 2021 estimation
Financial Sector Reform: Creating a Sound and Stable Financial System Upgraded regulatory environment and strengthened the bank supervision framework Jan 201 The Law on the Central Bank of Mongolia was amended (Monetary Policy Committee, Banking supervision and monitoring committee operations have been introduced) 1 Jan 201 The Law on Banking was also amended with improvements in risk based supervision and revision of legal environment for banking sector recapitalization activities Feb 201 The Law on deposit insurance was amended which brought it in line with International Association of Deposit Insurers (IADI) Core Principles for Effective Deposit Insurance Systems. Dedicated measures to improve the banking sector 22 Feb 201 Completion of Asset Quality Review, the comprehensive diagnosis of the banking system 22 June 201 The Parliament approved the Law on Ensuring banking sector stability authorities. It was designed to seek full recapitalization of banks by their shareholders without recourse to public funds 1 June 201 The Financial Stability Board approved and published NPL resolution strategy Key Indicators Improved 0.2 0.15 45% 40% 45% 40% 0.1 35% 35% 0.05 0 Jan 09 Jun 09 Nov 09 Apr Sep Feb 11 Jul 11 Dec 11 May Oct Mar 13 Aug 13 Jan 14 Jun 14 Prudential Ratio Nov 14 Apr 15 Sep 15 Feb 1 CAR Jul 1 Dec 1 May 17 Oct 17 Mar 1 30% 25% 20% 2011 20 2013 2014 2015 201 2017 201 Liquidity Liquidity Prudential Ratio 30% 25% 20% Source: Bank of Mongolia 5
Economic Outlook 2013 2014 2015 201 2017 201 2019 2020 Act Act Act Act Act Est Projections (In percent of GDP, unless otherwise indicated) Real sector Nominal GDP (in billions of togrogs) 19,174 22,227 23,150 23,93 27,92 31,993 3,191 40,530 Real GDP growth (percent change) 11. 7.9 2.4 1.2 5.3 7.1.0.0 GDP deflator (percent change) 2.9 7.4 1.7 2.1 7.9 7.1 4.7 5.7 Consumer prices 11.2.7 1.1 0.9 7.2 7..0.0 (End period; percent change) General government accounts Total revenue and grants 31.2 27. 25.1 23.5 29.2 22...2 Total expenditure and net lending 40.1 39.1 33. 40.5 31.1 30.2 30.4 2.3 Overall balance.9 11.3.5 17.0 1.9 7. 5. 4.1 (In percent of GDP, unless indicated otherwise) Monetary sector Broad money growth (percent change) 5.9 0.9 30.4 22.9 13.2 11.9 Reserve money growth (percent change) 54.0 2.7 2.2. 30.5 19.5 1.. Credit growth (percent change) 57.3 20.2 2.9.1.9 1.0 15.0 15.0 Balance of payments Current account balance 25.4 11.5 4.0.3..3.4 9.0 Gross official reserves (in millions of US$) 3/ 2,2 1,4 1,3 1,297 3,0 3,203 4,13 4,523 (In months of imports) 3.9 4.0 2. 2.4 5.2 4.7.2.5
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