Mongolia Says Will ‘Walk the Walk’

In the face of the current crisis, Mongolia cut spending and requested support from the IMF. To turn the economy around, the new government aims to lure foreign money to pay for stalled infrastructure and mining projects.

“It’s important to not only talk the talk, but to walk the walk, and that’s what we intend to do,’’ Foreign Minister Munkh-Orgil Tsend, said last week in Ulaanbaatar, Bloomberg reported.

“By the end of the first half of next year we will have brought in most of the investment projects that have been in the pipeline for many years, including Tavan Tolgoi,’’ he said, referring to Mongolia’s largest coking coal deposit.

The crisis began after prices for Mongolia’s commodity exports fell and the budget deficit expanded. Disputes with foreign investors such as Rio Tinto Group also delayed spending on new mining projects and investment collapsed, hitting tax revenues, growth and the currency.

The tugrik has fallen 19% this year, reaching an all-time low of 2,479 to the dollar last week. The budget deficit is also widening—with the shortfall at $905 million in the first nine months of this year, compared to $435 million in the same period a year ago.

Development of Tavan Tolgoi includes the construction of a 240-kilometer long railway from the mine site to the Chinese border, as well as coal-handling preparation plant, plus power and water supply facilities.

An IMF program, which could be in place by February, may be followed by bilateral loan agreements from partner countries including China and Japan, the foreign minister said. An IMF program is considered a stopgap measure before big foreign investment projects can move forward, said Munkh-Orgil.