Mongolia became an EBRD country of operations in 2006. The EBRD supports Mongolia in its transition to a full market economy and is currently the largest foreign investor in the country. All projects that we have supported have been in the private sector and almost all of these involve local entrepreneurs or banks.
One of the priorities for the EBRD in Mongolia is to support infrastructure projects with private sector participation, including public-private partnerships (PPPs).
The main priorities of the EBRD's work in Mongolia are:
Diversification: The EBRD will aim to expand its engagement with the non-extractive private sector.
Sustainable growth: We support the financial sector through small and medium-sized enterprise (SME)-debt programmes, equity and technical assistance.
Responsible mining and institutions: The EBRD continues to offer debt and equity finance to reputable mining companies which meet its high standards and will support institutional building. All of our support in the mining sector has thus far been directed to local enterprises.
Infrastructure and private sector development: The EBRD supports Mongolia's infrastructure-building "including through the development of renewable energy“ and promotes private sector involvement where possible.
The EBRD's latest Mongolia strategy was adopted on 7 June 2017
Current EBRD forecast for Mongolia's Real GDP Growth in 2018 5.2%
Current EBRD forecast for Mongolia's Real GDP Growth in 2019 5.9%
The past year has seen a significant acceleration of growth in Mongolia, with a GDP rise of 5.1 per cent, compared with just 1 per cent in 2016. In 2017, the decrease in copper and gold output due to the deterioration in the grades mined was partially offset by stronger coal mining and higher prices. Increased export revenues lifted corporate and household earnings, thereby supporting fixed investment and private consumption.
Inflation accelerated significantly as a result to 6.6 per cent in March 2018 from 1.9 per cent in early 2017 but remained below the Bank of Mongolia’s 8 per cent target. The Bank of Mongolia slightly cut its policy rate from 11 per cent to 10 per cent in March 2018 in response. The favourable economic environment and fiscal consolidation measures narrowed the general government deficit to an estimated 6.4 per cent of GDP in 2017 versus a targeted 10.6 per cent under the IMF’s Extended Fund Facility. Public debt fell by three percentage points to 84.6 per cent of GDP during 2017. Export growth together with funds received from IFIs and bilateral lenders allowed the authorities to rebuild foreign exchange reserves to US$ 3.0 billion as of February 2018 from a low of US$ 1.0 billion in October 2016.
The increase was also supported by US$ 1.4 billion in bond issues in 2017. Exchange rate pressures have subsided and Mongolia’s economic outlook has strongly improved from a year ago. As a result, growth is forecast toremain above 5 per cent in the short term, reaching 5.2 per cent in 2018 and 5.9 per cent in 2019. Major contributors will be ongoing investments in the Oyu Tolgoi mine development (including the doubling of gold production at the mine) and a continued pick up in private consumption.