Mongolia embraces reforms after 2008/09 shock of global downturn

Mongolia’s mineral rich economy was hit hard when the global downturn 2008/09 started. It was extremely hard for Mongolia to manage its mineral backed wealth during the period. Consequently, Mongolia had to sought for help from World Bank and International Monetary Fund (IMF). With that assistance, it initiated for a south-south exchange, especially with Chile, another copper producing country.

Mainly Mongolia had discussed with Chile on following issues in 2009:

• Role of the Congress in the budget process; legal environment; role and responsibility of Congress for improving fiscal sustainability environment.

• Fiscal rules and budget and fiscal sustainability laws.

• Fiscal audit process.

• Intergovernmental fiscal regulations and related law and procedures.

• Features of budgeting in case of natural force majeure and others, including in the economic crisis.

• Copper price estimation and Chilean Copper Stabilization

  Fund.

• Pension reforms and Chilean pension fund.

• General review of budget procedures: budget expenditure ceilings, how enforced for different spending units, and violations.

• Program budgeting: (i) types of budget classification— if program classification is used in budget process and how it is used in making appropriations and controlling expenditures; (ii) nonfinancial indicators and how they are used for funding different levels of line ministries, how collected, and by whom; and (iii) how performance management works.

• Investment budgeting.

• Medium-term budgeting and macroeconomic and fiscal projections: how are macroeconomic and fiscal projections estimated?

• Budget execution controls.

After an intense discussion with Chile Mongolia started making reforms that could be supportive to its economy.

Key reforms:

• a landmark Fiscal Stability Law (FSL) was passed by a bipartisan majority of Parliament in June 2010.

• Parliament passed the Integrated Budget Law (IBL) in December 2011.

• Public Procurement Law of Mongolia (PPLM) was passed in January 2011.

• The Social Welfare Law in January 2012.

However, Mongolian officials have said that it was a daunting task to implement those new policy reforms.