REPORT

1. Mongolia
Selected Macroeconomic Indicators
September 19, 2013
For further information, please contact:
SSelenge@imf.org

2. Table 1. Mongolia: Exports
2005 2006 2007 2008 2009 2010 2011 2012 2012 2013
Total US$-value 1,065 1,543 1,947 2,534 1,885 2,909 4,817 4,385 2,875 2,703
Mining 786 1,164 1,536 2,129 1,560 2,530 4,414 4,032 2,623 2,361
Copper 326 635 812 836 502 771 964 839 558 563
Gold 331 270 235 600 308 178 113 122 61 195
Coal 116 185 306 882 2,273 1,902 1,261 693
Iron Ore 16 92 87 254 442 533 356 442
Crude oil 53 102 116 155 252 336 207 298
Zinc 176 155 122 134 143 131 73 80
Molybdenium 75 82 50 52 46 38 26 21
Fluor spar 45 59 48 69 95 103 66 56
Other mining 129 259 8 19 20 36 86 29 15 12
Non-mining 279 379 411 405 325 378 403 352 252 342
Textiles 263 227 192 216 241 234 189 236
Animals, animal products 27 32 46 69 40 24 10 11
Hides and skins 42 41 29 33 51 31 18 23
Other 80 106 58 60 71 64 35 72
Export volumes
Copper 608 583 587 569 576 575 382 396
Gold (tons) 11.6 22.1 10.9 5.1 2.7 2.8 1 5
Coal 3,269 4,169 7,113 16,726 21,106 20,916 12,266 9,595
Iron Ore 240 1,013 1,598 3,564 5,802 6,416 4,309 4,327
Crude oil ('000s of barrels) 812 1,059 1,939 2,071 2,554 3,568 2,146 3,052
Zinc 133 138 151 120 121 141 77 86
Molybdenium 3.2 4.1 6.7 4.8 4.2 4.3 3 3
Fluor spar 360 349 314 406 407 429 282 221
Export volumes
Copper -4 1 -3 1 0 4
Gold 91 -51 -53 -47 4 236
Coal 28 71 135 26 -1 -22
Iron Ore 321 58 123 63 11 0
Crude oil 30 83 7 23 40 42
Zinc 4 10 -21 1 17 11
Molybdenium 28 63 -28 -13 2 -4
Fluor spar -3 -10 29 0 5 -22
Implied prices
Copper 7 -40 58 23 -13 -3
Gold 34 4 24 20 4 -4
Coal 25 -3 22 104 -16 -30
Iron Ore 33 -40 31 7 9 24
Crude oil 46 -38 25 32 -5 1
Zinc -15 -28 38 6 -21 -1
Molybdenium -15 -63 44 2 -20 -19
Fluor spar 36 -10 10 38 2 10
Mining export price 12 -23 36 49 -11 -12
Mining export volume 20 1 21 14 4 -1
Source: National Statistics Office Mongolia; and IMF staff calculations.
First 8 months
(annual change, in percent)
(in millions of U.S. dollars)
(weighted average annual change, in percent)
(in thousands of tons, unless otherwise indicated)
(annual change, in percent)

3. 3
Figure 1. Mongolia: Real Sector Developments
The economy expanded by 11 percent during the first half of 2013 despite slowing exports and
FDI inflows.
Mongolia’s growth has been impressive.... …contributing to a decline in poverty.
Growth reaccelerated to 14.3 percent (y/y) in the second
quarter of 2013 from 7.2 percent (y/y) in the first quarter.
Industrial output during May-July was 13.9 percent higher
than during the same period last year.
International copper prices are down 7 percent so far this
year.
Coal export volumes may have started to bottom out from
their year-long slump.
-5
0
5
10
15
20
-5
0
5
10
15
20
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
China
Mongolia
Sources: Mongolian authorities; and IMF staff estimates.
Real GDP growth rate: China vs. Mongolia
(Year-on-year percent change)
0
5
10
15
20
25
30
35
40
45
50
National Urban Rural
2010 2011 2012
Mongolia: Poverty Headcount
(In percent)
Source: Mongolian authorities.
-10
-5
0
5
10
15
20
25
-10
-5
0
5
10
15
20
25
2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
Agriculture
Non-miningindustry
Services
Net taxes
Miningindustry
GDP at market prices (y/y growth)
Sources: Mongolian authorities; and IMF staff estimates.
Real GDP Growth
(Contribution and year-on-year percentage change, 2008Q1-2013Q2)
-30
-20
-10
0
10
20
30
-30
-20
-10
0
10
20
30
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Gross Industrial Output
Non-Mineral Industrial Output
Mineral Industrial Output
Industrial Production
(12-month percentage change in 3mma , March 2008-July2013)
Sources: Mongolian authorities; and IMF staff estimates.
0
2,000
4,000
6,000
8,000
10,000
0
2,000
4,000
6,000
8,000
10,000
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Spot Rate (London Metal Exchange)
Budget price (from 2011: FSL-based structural price 1/)
Price in amended budget
International copper price
(U.S. dollars per metric ton, Jan. 1, 2008-Sep. 19, 2013)
Sources: Bloomberg LP; Mongolian authorities; and IMF staff estimates.
1/ The structural price is the average of the past 12 years and projections for the current and subsequent 3 years.
Structuralprices as perFSL 1/
-60
-40
-20
0
20
40
60
80
100
120
-60
-40
-20
0
20
40
60
80
100
120
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
volume growth (y/y, 3mma)
volume growth (y/y, 12mma)
Sources: Mongolian authorities; and IMF staff estimates.
Coal Export Volume
(Change, in percent, January 2011-August 2013)

4. 4
Figure 2. Mongolia: Overview of Macroeconomic Developments
Expansionary fiscal policy in 2012 supported growth but also put pressure on inflation
and the current account. The successful international bond issuance boosted reserves.
Strong demand growth in recent years may have
outstripped the growth of Mongolia’s production capacity….
…contributing to double-digit inflation in 2012. Inflation
decelerated to 8.4 percent in August.
Expansionary fiscal policy was the main driver of the
acceleration of inflation in 2012.
It also kept the current account significantly in deficit even
as imports for the FDI-financed OT mine wound down.
Through July, the nominal exchange rate was quite
stable, putting the REER on an appreciating trend.
Chinggis bond proceeds raised reserves in late-2012.
Gross reserves amounted to US$2.7bn by end-August.
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
-6,000
-5,000
-4,000
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Mineral Output Gap (in percent of mineral GDP, RHS)
Non-mineral Output Gap (in percent of Non-mineral GDP, RHS)
GDP (in bil Tog, LHS)
Potential GDP (in bil Tog, LHS)
Output gap (in percent of GDP, RHS)
Sources: Mongolian authorities; and IMF staff estimates.
Output Gap Estimates
(based on HP filter)
-10
-5
0
5
10
15
20
25
30
35
-10
-5
0
5
10
15
20
25
30
35
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Non-food items (contribution to headline CPI)
Food items (contribution to headline CPI)
Headline CPI (y/y)
Non-food CPI (y/y)
Food CPI (y/y)
Sources: Mongolian authorities; and IMF staff estimates.
Consumer Price Inflation
(in percent, January 2008-Aug 2013)
-25
-20
-15
-10
-5
0
-25
-20
-15
-10
-5
0
2008 2009 2010 2011 2012
Non-mineral (NM) on-budget balance
Larger NM deficit due to DBM spending
Sources: Mongolian authorities; and IMF staff estimates.
Non-mineral fiscal balance
(in percent of non-mineral GDP)
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
-4,000
-3,500
-3,000
-2,500
-2,000
-1,500
-1,000
-500
0
500
1,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Transfers, net
Income, net
Goods and services, net
Current account
Current account (RHS, in percent of GDP)
Current Account
(2003-2012)
Sources: Mongolian authorities; and IMF staff estimates.
60
70
80
90
100
110
120
130
140
150
60
70
80
90
100
110
120
130
140
150
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
REER NEER
Sources: Mongolian authorities; and IMF staff estimates.
Exchange rates of the togrog
(Index, Jan. 2005=100, Jan. 2005-Jul, 2013; an increase is an appreciation)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Source: Mongolian authorities.
Gross international reserves
(In millions of U.S. dollars, January2009-August 2013)

5. 5
Figure 3. Mongolia: Fiscal Developments
Expansionary fiscal policy pushed the deficit (including operations of the Development bank of
Mongolia (DBM)) to 11.8 percent of GDP in 2012.
Revenue has performed well in recent months. During the
first 8 months of 2013 the on-budget deficit is limited to
MNT 97 billion on contained spending.
Including capital spending settled in Q1 of 2013, the 2012
fiscal deficit reached 8.4 percent of GDP. Including DBM
spending, the deficit reached 11.8 percent of GDP in 2012.
Spending now exceeds 58 percent of non-mineral GDP… …and the non-mining deficit topped the 2008 record.
Thus continuing the pattern of pro-cyclical fiscal policy.
The Chinggis bond and DBM bond raised public debt by
US$2.1bn. These proceeds remained largely unspent.
-40
-20
0
20
40
60
80
100
-40
-20
0
20
40
60
80
100
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Revenue
Expenditure
Sources: Mongolian authorities; and IMF staff estimates.
Revenues and expenditure (excl. DBM, incl. carryover)
(Twelve-month percentage change in 3mma, Jan. 2008-August 2013)
-15
-10
-5
0
5
10
-15
-10
-5
0
5
10
2005 2006 2007 2008 2009 2010 2011 2012
On-budget overall balance
Increase in deficit owing to DBM spending 1/
Sources: Mongolian authorities; and IMF staff estimates.
Fiscal balance
(in percent of GDP)
0
10
20
30
40
50
60
70
0
10
20
30
40
50
60
70
2005 2006 2007 2008 2009 2010 2011 2012
Non-mineral revenue
On-budget expenditure
DBM spending 1/
Sources: Mongolian authorities; and IMF staff estimates.
1/The DevelopmentBankof Mongoliaprovidedloansof US$ 190 million for non-revenue generatingpublicinvestmentprojects
suchas roads("social benefitprojects") in2012. The budgetwill needto repaythese loans.
Non-Mineral Revenue and Expenditure
(in percent of non-mineral GDP)
-25
-20
-15
-10
-5
0
-25
-20
-15
-10
-5
0
2005 2006 2007 2008 2009 2010 2011 2012
Non-mineral (NM) on-budget balance
Larger NM deficit due to DBM spending
Sources: Mongolian authorities; and IMF staff estimates.
Non-mineral fiscal balance
(in percent of non-mineral GDP)
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
2005 2006 2007 2008 2009 2010 2011 2012
Annual change of non-min. GDP gap
Annual change of CAB (inverse)
Sources: Mongolian authorities; and IMF staff estimates.
2/ The cyclically adjusted fiscal balance is the overall balance net of cyclical effects. Cyclical effects are computed using country specific
elasticities of aggregagerevenueand expenditure series. In this case, the elasticityassumptions are 1 for revenue and 0 for spending.
Cyclically-adjusted fiscal balance (CAB) vs. Output gap
(in percent of potential non-mineral GDP)
0
10
20
30
40
50
60
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010 2011 2012
Public debt
Public debt (net of unspent amount)
NPV of public debt
NPV of public debt (net of unspent amount)
Public debt
(in percent of GDP)
Sources: Mongolian authorities; and IMF staff esimates.

6. 6
Figure 4. Mongolia: External Sector Developments
The trade deficit continues to be large.
Import growth has picked up on accelerating private credit
growth. Export growth remains negative on a 3mma-basis
despite the start of exports from OT in July.
The 12-month trade deficit remains in excess of US$2
billion.
The REER is trending upward and appreciating more than in
copper-producing peer countries (e.g. Chile and Peru).
Amid strong overall export performance, non-mineral
exports have underperformed but a recent pickup is visible.
Mongolia’s sovereign spread is now about 200 basis points
wider than the average for emerging market economies.
Stock prices of 3 mining companies operating mostly in
Mongolia (MMC, TRQ, South Gobi) have slumped.
-60
-40
-20
0
20
40
60
80
100
120
140
-60
-40
-20
0
20
40
60
80
100
120
140
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Exports
Imports
Sources: Mongolian authorities; and IMF staff estimates.
Imports and exports
(Twelve-month percentage change in 3mma, Jan. 2008-August 2013)
-6,000
-5,000
-4,000
-3,000
-2,000
-1,000
01,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Trade balance (RHS)
Exports (LHS)
Imports (LHS)
Trade Balance
(12-month rolling sums, in US$m, Jan. 2008-August 2013)
Sources: Mongolian authorities; and IMF staff estimates.
90
100
110
120
130
140
150
90
100
110
120
130
140
150
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Chile Lao P.D.R. Peru Mongolia
Source: IMF INS.
Real Effective Exchange Rates
(Index, 2005=100; a rise denotes a real appreciation. Jan. 08-July 13)
50
100
150
200
250
300
350
400
450
50
100
150
200
250
300
350
400
450
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
High-income countries
Middle and low income countries
Mongolia: Non-mineral exports
Mongolia: Total exports
Sources: Haver Analytics; CEIC Data Company; and IMF staff estimates.
Note: High-income countries include Australia, New Zealand, Japan, Korea, Singapore, and
Taiwan; Middle- andlow-income countries include Indonesia, Philippines; Sri Lanka, Vietnam,
Bangladesh, andIndia.
Export performance relative to other Asian countries
(2006Q1=100, 3mma, sa, January 2008-August 2013)
0
100
200
300
400
500
600
700
0
100
200
300
400
500
600
700
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Mongolia Philippines
Emerging mrkts. (EMEs) Sri Lanka
Vietnam Mongolia spread over EMEs
Source: Bloomberg LP.
JP Morgan EMBI Global Sovereign Spreads
(in basis points, January 1, 2012-September 19, 2013)
0
20
40
60
80
100
120
140
160
0
20
40
60
80
100
120
140
160
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Mong. Mining Corp. (MMC, in HK)
Turquoise Hill (TRQ, in Toronto)
South Gobi (in HK)
Rio Tinto (London)
Sources: Bloomberg LP.; and IMF staff estimates.
Stock Prices for Mining Companies
(Index, January 1, 2011=100, Jan. 1, 2008-Sep. 19, 2013)
Return since Jan.1, 2011
(in percent) _
MMC (coal) -84
TRQ (copper) -75
South Gobi(coal) -90
Rio Tinto (diverse) -27
Copper price -27

7. 7
Figure 5. Mongolia: Monetary Developments
Bank lending has picked up rapidly in recent months.
The growth of private sector credit accelerated to 47 percent
in July (y/y). Deposit growth amounted to 22 percent (y/y).
Banks’ loan-to-deposit ratio has now risen substantially
above the average for the past 8 years.
Banks are holding substantial overall excess reserves with
the Bank of Mongolia, mostly in foreign currency.
The easing of monetary policy and inflation now seems to
be translating into lower bank lending rates.
In three steps, the Bank of Mongolia’s Monetary Policy
Committee lowered the policy rate 275 bps, to 10.5 percent.
New regulations to strengthen bank capitalization are
being phased in amid low reported NPLs.
-40
-20
0
20
40
60
80
100
120
140
-40
-20
0
20
40
60
80
100
120
140
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Credit Deposits
Sources: Mongolian authorities; and IMF staff estimates.
Bank credit and deposits
(Quarter-on-quarter change, in percent (saar), Jan. 2008-Aug. 2013)
70
80
90
100
110
120
130
140
70
80
90
100
110
120
130
140
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
8-year average
Headline L/D ratio
Commercial banks' Loan-to-Deposit (L/D) ratio
(January 2008-August 2013)
Sources: Mongolian authorities; and IMF staff estimates.
0
5
10
15
20
25
30
35
40
0
200
400
600
800
1000
1200
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Excess reserves on togrog deposits (in MNT bn, LHS)
Excess reserves on forex deposits (in MNT bn, LHS)
Required reserve rate (in percent, RHS)
Excess reserves (in percent of reserve money, RHS)
Sources: Mongolian authorities; and IMF staff estimates.
Excess Reserves
(June 2009-August 20, 2013)
0
5
10
15
20
25
0
5
10
15
20
25
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Headline CPI
Lending rate (in togrog, 1 year)
Lending rate (in US$, 1 year)
Deposit rate (in togrog, average 1 year)
Deposit rate (in US$, average 1 year)
Spread on togrog lending and deposit rates
Commercial banks' interest rates
(Percent per annum, end-of-period, Jan. 2009-July 2013)
Sources: Mongolian authorities; and IMF staff estimates.
0
5
10
15
20
0
200
400
600
800
1,000
1,200
1,400
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
CBBs outstanding (in billions of togrogs, LHS)
7-day CBB rate (in percent, RHS)
84-day CBB rate (in percent, RHS)
Sources: Mongolian authorities; and IMF staff estimates.
Central Bank Bills (CBBs)
(January 1, 2009-Sep. 11, 2013)
0
5
10
15
20
0
5
10
15
20
25
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Nonperforming loans to total loans
Bank capital to risk-weighted assets
Bank Capitalization and Asset Quality
(In percent, January 2009-June 2013)
Sources: Mongolian authorities; and IMF staff estimates.