REPORT

1. Mongolia
Selected Macroeconomic Indicators
December 18, 2013
For further information, please contact:
SSelenge@imf.org

2. 2
2006 2007 2008 2009 2010 2011 2012 2012 2013
Q1 Q2 Q3 Oct. Nov.
Total US$-value 1,543 1,947 2,534 1,885 2,909 4,817 4,385 809 1,215 1,074 382 381 4,030 3,861
Mining 1,164 1,536 2,129 1,560 2,530 4,414 4,032 750 1,019 958 358 350 3,713 3,435
Copper 635 812 836 502 771 964 839 209 195 275 70 102 769 851
Gold 270 235 600 308 178 113 122 43 93 110 50 8 102 304
Coal 116 185 306 882 2,273 1,902 209 333 241 97 126 1,762 1,007
Iron Ore 16 92 87 254 442 533 126 225 127 69 45 470 591
Crude oil 53 102 116 155 252 336 94 109 147 47 51 306 447
Zinc 176 155 122 134 143 131 43 32 14 13 8 117 110
Molybdenium 75 82 50 52 46 38 9 7 7 2 2 35 27
Fluor spar 45 59 48 69 95 103 15 21 28 7 6 95 77
Other mining 259 8 19 20 36 86 29 2 5 8 4 3 57 22
Non-mining 379 411 405 325 378 403 352 60 195 116 25 31 317 426
Textiles 263 227 192 216 241 234 13 161 75 10 11 228 272
Animals, animal products 27 32 46 69 40 24 5 5 3 1 4 22 17
Hides and skins 42 41 29 33 51 31 14 5 7 2 1 26 30
Other 80 106 58 60 71 64 27 25 31 11 14 42 108
Export volumes
Copper 608 583 587 569 576 575 140 143 186 51 65 527 586
Gold (tons) 11.6 22.1 10.9 5.1 2.7 2.8 1.0 2.2 2.8 1.2 0.2 2.3 7.4
Coal 3,269 4,169 7,113 16,726 21,106 20,916 3,445 4,039 3,897 2,062 2,661 18,868 16,104
Iron Ore 240 1,013 1,598 3,564 5,802 6,416 1,122 2,076 1,492 816 481 5,743 5,986
Crude oil ('000s of barrels) 812 1,059 1,939 2,071 2,554 3,568 982 1,156 1,396 463 534 3,231 4,532
Zinc 133 138 151 120 121 141 42 35 21 14 9 126 121
Molybdenium 3.2 4.1 6.7 4.8 4.2 4.3 1.1 1 1 0.3 0.3 3.9 3.6
Fluor spar 360 349 314 406 407 429 64 78 112 29.3 26.9 398 311
Export volumes
Copper -4 1 -3 1 0 0 -2 28 7 36 11
Gold 91 -51 -53 -47 4 100 340 367 200 -33 222
Coal 28 71 135 26 -1 1 -41 -2 -8 15 -15
Iron Ore 321 58 123 63 11 -24 22 3 19 12 4
Crude oil 30 83 7 23 40 31 48 54 17 35 40
Zinc 4 10 -21 1 17 34 36 -42 -21 -40 -4
Molybdenium 28 63 -28 -13 2 0 0 -9 -25 -25 -8
Fluor spar -3 -10 29 0 5 -28 -33 -1 -31 -29 -22
Implied prices
Copper 7 -40 58 23 -13 6 -11 5 -6 3 0
Gold 34 4 24 20 4 3 -15 -6 12 -31 -8
Coal 25 -3 22 104 -16 -42 -22 -28 -46 -18 -33
Iron Ore 33 -40 31 7 9 54 33 -9 7 19 21
Crude oil 46 -38 25 32 -5 -5 -2 12 11 9 4
Zinc -15 -28 38 6 -21 6 -7 -22 -7 -2 -3
Molybdenium -15 -63 44 2 -20 -15 -20 -20 -7 -11 -16
Fluor spar 36 -10 10 38 2 10 15 -1 -8 -14 4
Mining export price 12 -23 36 49 -11 -10 -11 -11 -21 -6 -13
Mining export volume 20 1 21 14 4 3 -12 20 6 14 5
Source: National Statistics Office Mongolia; and IMF staff calculations.
Table 1. Mongolia: Exports
First 11 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)
2013

3. 3
Figure 1. Mongolia: Real Sector Developments
The economy expanded by 11½ percent during the first nine months of 2013 despite slowing
exports and FDI inflows. The start of OT’s open-pit mining is boosting industrial production.
Mongolia’s growth has been impressive.... …contributing to a decline in poverty.
The economy expanded by 11.9 percent (y/y) in the third
quarter of 2013, led by the mining sector and non-mining
industry.
Industrial output rose 28 percent during Sept.-Nov. 2013
(y/y), owing to the start of OT production. Non-mineral
industrial output expanded by 9 percent (y/y).
International copper prices are down 8 percent this year.
Coal export volumes are down 15 percent this year.
-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.
-5
0
5
10
15
20
25
-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
2013Q3
Net taxes Services
Mining industry Non-mining industry
Agriculture GDP at market prices (y/y growth)
Source: Mongolian authorities.
Real GDP Growth
(Contribution and year-on-year percentage change, 2008Q1-2013Q3)
-30
-20
-10
0
10
20
30
40
50
-30
-20
-10
0
10
20
30
40
50
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
Sep-13
Gross Industrial Output
Non-Mineral Industrial Output
Mineral Industrial Output
Industrial Production
(12-month percentage change in 3mma , March 2008-November 2013)
Sources: Mongolian authorities.
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-Dec. 18, 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
Oct-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-November 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 in
Ulaanbaatar was 11.1 percent in November 2013 (y/y).
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.
The real effective exchange rate appreciated through
June. In recent months there has been a correction.
Chinggis bond proceeds raised reserves in late-2012.
Gross reserves amounted to US$2.3bn in November.
-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
0
10
20
30
40
-10
0
10
20
30
40
Dec-07
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
Sep-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, December 2007-November 2013)
-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)
-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.
40
60
80
100
120
140
40
60
80
100
120
140
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, 2005=100, Jan. 2005-Nov 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
Oct-13
Source: Mongolian authorities.
Gross international reserves
(In millions of U.S. dollars, January2009-November 2013)

5. 5
Figure 3. Mongolia: Fiscal Developments
Expansionary fiscal policy pushed the deficit (including operations of the Development Bank of
Mongolia (DBM)) to 10.9 percent of GDP in 2012.
Including DBM spending, the deficit reached 10.9 percent of
GDP in 2012.
The 2012 non-mining deficit topped the 2008 record.
Spending now exceeds 57 percent of non-mineral GDP. Fiscal policy has been pro-cyclical.
The Chinggis bond and DBM bond raised public debt by
US$2.1bn in 2012.
During the first 11 months of 2013, the budget has run a
small deficit (MNT 124bn or 0.7 percent of GDP). But this
excludes DBM spending.
-15
-10
-5
0
5
10
-15
-10
-5
0
5
10
2005 2006 2007 2008 2009 2010 2011 2012
On-budget overall balance
Increase in deficit owing to DBM spending
Sources: Mongolian authorities; and IMF staff estimates.
Fiscal balance
(in percent of GDP)
-25
-20
-15
-10
-5
0
-25
-20
-15
-10
-5
0
2005 2006 2007 2008 2009 2010 2011 2012
Non-mineral (NM) on-budget balance
Larger NM deficit due to DBM spending
Sources: Mongolian authorities; and IMF staff estimates.
Non-mineral fiscal balance
(in percent of non-mineral GDP)
0
10
20
30
40
50
60
70
0
10
20
30
40
50
60
70
2005 2006 2007 2008 2009 2010 2011 2012
Non-mineral revenue
On-budget expenditure
DBM spending 1/
Sources: Mongolian authorities; and IMF staff estimates.
1/The DevelopmentBankof Mongoliaprovidedloansof US$ 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)
-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
70
0
10
20
30
40
50
60
70
2005 2006 2007 2008 2009 2010 2011 2012
Nominal public debt NPV of public debt
Public debt
(in percent of GDP)
Sources: Mongolian authorities; and IMF staff esimates.
-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
Oct-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-Nov. 2013)

6. 6
Figure 4. Mongolia: External Sector Developments
The trade deficit continues to be large.
Imports remain subdued owing to the decline in FDI.
Export growth remains weak, despite the start of
operations of the OT open pit mine.
The 12-month trade deficit remains over US$2 billion.
Before the recent depreciation, the REER was appreciating
more than in copper-producing peer countries (e.g. Chile
and Peru).
Amid overall relatively strong export performance, non-
mineral exports have underperformed.
Mongolia’s sovereign spread is now about 190 basis points
wider than the average for emerging market economies.
Stock prices of 3 mining companies operating mostly in
Mongolia (MMC, TRQ, South Gobi) have slumped.
-60
-40
-20
0
20
40
60
80
100
120
140
-60
-40
-20
0
20
40
60
80
100
120
140
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Exports
Imports
Sources: Mongolian authorities; and IMF staff estimates.
Imports and Exports
(Twelve-month percentage change in 3mma, Dec. 2007-Nov. 2013)
-6,000
-5,000
-4,000
-3,000
-2,000
-1,000
01,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Trade balance (RHS, inverted scale)
Exports (LHS)
Imports (LHS)
Trade Balance
(12-month rolling sums, in US$m, Dec. 2007- Nov. 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-Nov 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
Oct-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, Jan. 2008-Nov. 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
Oct-13
Nov-13
Dec-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-December 18, 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-Dec. 18, 2013)
Return since Jan.1, 2011
(in percent) _
MMC (coal) -89
TRQ (copper) -80
South Gobi(coal) -92
Rio Tinto (diverse) -24
Copper price -25

7. 7
Figure 5. Mongolia: Monetary Developments
Bank lending has picked up rapidly in recent months.
The growth of private sector credit accelerated to 58 percent
in November (y/y). Deposit growth amounted to 31 percent
(y/y).
Banks’ loan-to-deposit ratio substantially exceeds the
average for the past 8 years.
Banks are holding substantial overall excess reserves with
the Bank of Mongolia, mostly in foreign currency.
Bank lending rates on 1-year togrog loans averaged 18.8
percent in October.
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
Dec-07
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
Sep-13
Credit
Deposits
Sources: Mongolian authorities; and IMF staff estimates.
Bank Credit and Deposits
(Quarter-on-quarter change, in percent (saar), Dec. 2007-Nov. 2013)
70
80
90
100
110
120
130
140
70
80
90
100
110
120
130
140
Dec-07
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
Sep-13
8-year average
Headline Loan-To-Deposit Ratio
Commercial Banks' Loan-To-Deposit (L/D) Ratio
(December 2007-November 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
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
Sep-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-November 12, 2013)
0
5
10
15
20
25
0
5
10
15
20
25
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
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-Oct. 2013)
Sources: Mongolian authorities; and IMF staff estimates.
0
5
10
15
20
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
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
Oct-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)
(Jan. 1, 2009-Dec. 18, 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
Jul-13
Oct-13
Nonperforming loans to total loans
Bank capital to risk-weighted assets
Bank Capitalization and Asset Quality
(In percent, January 2009-October 2013)
Sources: Mongolian authorities; and IMF staff estimates.