ULAANBAATAR, June 29, 2015—Mongolia’s economy remains under pressure but prospects have improved after the agreement on the second phase development of the Oyu Tolgoi mine, according to the World Bank’s Mongolia Monthly Economic Brief.
“An important step was taken to revitalize foreign investment inflows by the recent agreement on the second phase development of the Oyu Tolgoi mine,” said World Bank Senior Economist Taehyun Lee. “This will help ease the balance of payments pressure in the short-term and support Mongolia’s growth potential in the longer term.”
The monthly report called for a supplemental budget to help the government address large revenue shortfalls, which reached 18 percent in the first five months of 2015. Declining imports, weaker copper and oil prices and sluggish growth, as well as overoptimistic revenue projections, all contributed to the revenue shortfalls.
“Consolidating and managing the budget deficit will help address the underlying causes of the current economic difficulties,” said James Anderson, World Bank Country Manager for Mongolia. “A supplementary budget would enable the budgetary authorities to properly prioritize spending consistent with realistic revenue estimates and the Fiscal Stability Law. At the same time,” he continued, “care must be taken to prioritize spending in a way that does not adversely affect the most vulnerable of the population.”