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 2019 6.2%
Current EBRD forecast for Mongolia's Real GDP Growth in 2020 5.0%
Growth in Mongolia accelerated significantly to 6.9 per cent in 2018 from 5.3 per cent a year earlier. This was enabled by a continued surge in fixed investment and a rebound in private consumption. The contribution of net exports was negative due to increasing mining-related imports, and the current account deficit widened to 15 per cent of GDP in 2018, from 10 per cent in 2017.
In the second half of 2018, the tugrik came under pressure, depreciating overall by 8 per cent in 2018. Average annual inflation accelerated to 6.8 per cent in 2018 from 4.3 per cent in 2017. In response to these developments the Bank of Mongolia tightened monetary policy by raising the policy rate from 10.0 per cent to 11.0 per cent in November 2018 and by restricting the growth of consumer lending through a ceiling on the household debt-to-income ratio. Fiscal accounts have improved in the past year, with the fiscal deficit of 2017 turning into a small surplus in 2018.
The economy is projected to grow by a still high 6.2 per cent in 2019, slowing down somewhat to 5.0 per cent in 2020, aided by further investment in the underground expansion of Oyu Tolgoi. Private consumption is also projected to support GDP growth as real incomes rise, thanks in part to an increase in public workers' salaries. Downside risks include a possible slowdown in China and the stalling of reforms due to political uncertainty in the run-up to the parliamentary elections scheduled for 2020.