This document provides a summary of business and economic news from Mongolia in its March 13, 2009 issue. Key points include: Parliament is unlikely to debate an investment draft on the Oyu Tolgoi project in the current session due to reservations from both major parties; Rio Tinto denies plans to delay the Oyu Tolgoi project and is keen to ramp up development; Mongolia's prime minister's economic advisor indicates the government may rethink the gold windfall tax; and the EBRD plans to take an equity stake in a privately-held Mongolian mining operation to strengthen the private sector role in mining.

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
www.bcmmongolia.org
info@bcmmongolia.org
Issue 60, March 13, 2009
NEWS HIGHLIGHTS:
Business: Investment draft unlikely to be debated in present session of Parliament; Rio keen to
„ramp up‟ Oyu Tolgoi, not considering delay; PM‟s Economic Advisor indicates rethink
on gold windfall tax; TDB CEO calls for comprehensive program to help gold miners;
Boroo Gold refutes allegations; Khan Resources ready for talks, Government not;
Copper prices drop on renewed recession concerns; Mongolia invites Canadian
investment in mining; Russian Railways wants joint venture with Moscow on Tavan
Tolgoi proposal; EBRD to take stake in Energy Resources; Polo completes resource
estimates for Union mine; MCA holds workshop to brief local suppliers; Dutch
financial support for XacBank housing and energy schemes; Global financial assets lost
USD50 trillion last year, ADB says; Special US visas for business visitors; Veerhuis to
discuss use of EPS technology in Mongolia; Small explorers backed by miners best bet,
says Faber; Initial estimate for SouthGobi‟s Indonesian project “very encouraging”.
Economy: IMF announces staff-level agreement on USD224 million loan; IMF justifies “exceptional
decision” by citing Government program; Central Bank raises interest rate from 9.5 to
14 percent; Committee under Bayar to oversee Action Plan; Poor countries to hurt
most from shrinking global economy, World Bank says; Budget shows deficit as tax
earnings fall; Drop in both industrial output, productivity; MNT keeps falling against
major currencies; Foreign currency deposits rise; Rise in number of jobless, also of
new jobs; External trade turnover and surplus fall; Average household income rises
22.9% yoy; Chinese traders buy up cashmere cheap; People waiting for prices to
decrease, companies for loans; Mongolia resumes import of dairy cows from China.
Politics: Bayar to visit Russia next week; DP threatens boycott if child allowance is cut; Former
Filipino Ombudsman and Hong Kong expert helping Mongolia fight corruption; Special
review of labor safety measures after rise in accidents; More seeds needed for spring
plantation; Marginal rise in nationwide crime rate; One vote majority for move to bail
out road companies; Suggestion to provide heating for one month less; General Tax
Authority to register NGOs.
NOTE TO BCM MEMBERS
We are pleased to inform you that from March 13, 2009, the Business Council of Mongolia will
collaborate with Mongolian National Broadcasting (MNB) and provide the BCM Newswire for use on
Friday "MN Today" programs. As many of you know, MNB is a leader among nationwide TV
broadcast stations. Please tune on Fridays from 9.25 PM to 9:35 PM and enjoy this breaking news
about Mongolia. Happy viewing!
BUSINESS
INVESTMENT DRAFT UNLIKELY TO BE DEBATED IN PRESENT SESSION OF PARLIAMENT
Hopes that the draft investment agreement on Oyu Tolgoi will be approved by Parliament in its
present special session received a setback on Wednesday when both big parties and partners in the
coalition Government announced that their MPs had reservations about certain provisions in the
draft and favored more time for deliberation. Both groups of MPs have separately and
independently discussed the draft three times.

2. Mr. D.Lundeejantsan and Mr. G.Zandanshatar, leader and deputy leader respectively of the MPRP
group in Parliament, have said that members of the group feel discussion of the draft should be
postponed to the regular spring session of the legislature. The present special session was
summoned to discuss only economic issues and the agreement, but the MPs feel they want more
information on several provisions in the draft before they are ready to decide on it. They realize its
approval is urgent for the country, but they also think the matter is too important to be given less
than the most careful consideration.
This is the opinion of the DP group, too. It has not said discussion should be postponed but, after
discussing the draft for the third time, members of the group have sought clarifications before
finally deciding on whether to support it or not. The group feels the matter must be reviewed with
the utmost care as the Oyu Tolgoi operations will largely determine the development of Mongolia in
the coming decades.
The MPRP is expecting the money from Oyu Tolgoi to pay for the party’s campaign promise to give
MNT1.5 million to every Mongolian citizen as his share in the country’s natural resources.
The MPRP group is believed to have raised about a dozen objections. It thinks the draft is not clear
in its exposition of the feasibility study, estimate of reserves and the likely benefits to Mongolia. It
also believes that revenue from the operations must compensate for the loss resulting from the
withdrawal of the windfall tax and VAT. The MPs also object to the provision “… investors will
schedule the project implementation procedure and in this they will keep the Minister for Mineral
Resource and Energy informed…” as limiting the right of the Mongolian side.
Briefing newsmen after the DP group meeting, MP D.Odkhuu said members wanted to have more
information on how the draft can be reconciled with five references in Clause 30.1.1 of the Mineral
Law. They also sought more detailed information on several technical and economic aspects before
the draft is discussed in Parliament. A clearer work plan for first five years of operation also needs
be prepared.
MPRP members also want a clearer and unambiguous translation of the agreement so that the
investors do not get any advantage in the event of any later disagreement. They are studying and
reviewing the Mongolian version of the text of the agreement, but only the English version will be
valid in any dispute.
Source: business-mongolia.com, www.news.mn
RIO KEEN TO „RAMP UP‟ OYU TOLGOI, NOT CONSIDERING DELAY
Rio Tinto Group has denied a report in the Sydney Morning Herald that it was planning to slow
development of the USD3 billion Oyu Tolgoi copper-gold deposit in Mongolia. “We’re keen to ramp
up the project,” Rio Tinto Chief Executive Officer Tom Albanese said in e-mailed comments. “I
welcome the fact that the Mongolian Government is moving ahead with the investment agreement
process right now.” London-based Rio Tinto and Ivanhoe Mines Ltd., jointly developing Oyu Tolgoi,
may proceed at a slower pace than planned, the newspaper had reported, citing Mr. Albanese. He
was reported as saying that it was likely the company might take more time in the construction
phase given the current economic environment. In his later comments, Mr. Albanese said Rio Tinto
and Ivanhoe have spent more than USD1 billion on the project to date, and, “Clearly, we have to
plan additional construction stages carefully, including reviewing costs in the current economic
conditions. The project will be developed in stages as provided” in the investment agreement.
Ivanhoe has been trying for more than five years to win an investment agreement with Mongolia to
benefit from demand in China, the biggest metals buyer. Rio called Oyu Tolgoi “the world’s largest
undeveloped copper-gold resource” when it agreed to buy 10 percent of Vancouver-based Ivanhoe
in October 2007.
Source: Bloomberg.com
PM‟S ECONOMIC ADVISOR INDICATES RETHINK ON GOLD WINDFALL TAX
Mr. N.Enkhbayar, Economic Advisor to the Prime Minister, has said the Government agrees with the
suggestion of some MPs that increasing gold holdings should be a priority in the efforts to raise
foreign currency reserves. Both the Central Bank and the Mineral Resources Authority report that
the volume of gold traded to the Bank has dramatically decreased since imposition of the windfall
profits tax, progressively dropping from 24 tons in 2005 to 15.2 tons in 2008. The gold trade has
shifted to the “shadow economy” causing a huge loss. Both Government economists and gold
miners are confident that the total repeal of the windfall tax, or at least lowering its percentage,

3. would return the trade from the shadow economy into the open. The Central Bank estimates it will
be sold 20 tons a year. The Government wants more gold to be extracted and then to be sold to the
Central Bank and is seriously reviewing a revision of the tax, even though its annulment is unlikely.
Asked how one could be sure that now gold was part of the so-called shadow economy, Mr.
Enkhbayar said while the volume of gold traded to the Central Bank decreases, border and customs
organizations keep reporting that cases of gold smuggling are on the rise. The amount of gold
seized before it could be smuggled out rose from 27 kg in 2005 to some 80 kg last year.
Source: Montsame
TDB CEO CALLS FOR COMPREHENSIVE PROGRAM TO HELP GOLD MINERS
Mr. Balbariin Medree, CEO of The Trade and Development Bank and President of Mongolian Banking
Association, has said that with foreign currency reserve depleted and the exchange rate unstable,
it is imperative for the national economy that there is adequate financing for gold miners to
substantially increase production. Eliminating the windfall tax on gold will lead to more gold being
sold to the Central Bank and commercial banks, putting more money in the State budget and
attracting more investment in the mining industry.
Many participants at a recent conference of the Government, miners and bankers suggested all gold
mining companies should have the same rights. Gold extraction increased 7.5 times between 1990
and 1996, and kept growing until the imposition of the windfall tax in 2006 reversed the process.
Banks had always tried to meet the financial needs of gold miners but now that they have little
credit to offer, the Government should step in to finance the gold mining sector and also constitute
an equitable legal environment. A comprehensive program has to be adopted to lift the sector from
its present doldrums. It has become less competitive, exploration activities have been delayed too
long, placer deposits are used up. It will require considerable investment on advanced equipment
and technology, skilled manpower and prudent management. Maybe, said Mr. Medree, small
companies would be better off by forming a consortium, or by being managed by intermediate-
operator companies.
Source: www.tdbm.mn
BOROO GOLD REFUTES ALLEGATIONS
Troubled by the “many slanderous and completely false statements” about it “recently publicized
in the mass media”, Boroo Gold Company has prepared a newsletter to set the record straight.
“The Mines Eye” nails the lie about allegations made in “this campaign of misinformation”. It shows
how misconceived and ill-founded the charges are that the company “forced an unprofitable
contract on Mongolia, robbing the country of its mineral riches”, and that it “has prejudiced the
national interest of Mongolia”.
Source: www.miningmongolia.mn
The entire text of the repudiation, as it appears in the Mongolian National Mining Association
Newsletter of March 10, 2009, can be read under the title “The Mines Eye, March, 2009“ on the
BCM Website, Articles/Reports on Mongolia.
KHAN RESOURCES READY FOR TALKS, GOVERNMENT NOT
While officials from Khan Resources have said they hope to begin negotiating with Mongolian
authorities "at the earliest possible date" on an investment agreement for the company's USD333
million Dornod uranium project, the Government has indicated that it will first finalize the long-
awaited agreements on the Oyu Tolgoi and Tavan Tolgoi projects before taking up other mining
agreements. Once that is done, “we hope to be able to sit down with the Government and map out
a timetable for the investment agreement,” President and CEO Martin Quick has said. A recently
completed feasibility study has confirmed expectations of mining three million lbs of uranium
annually over a 15-year period.
Khan is currently in talks with possible partners in the project. It owns 58% of the main property
while the balance is held in equal parts by the Mongolian and Russian Governments. In December,
Khan signed a letter of intent on cooperation with Japan's Marubeni Corporation, and the firm is in
talks with another two potential partners, Mr. Quick said in an interview. He declined to provide
any further details beyond saying, “We want to get those discussions finalized quickly, because we
feel that with a large partner by our side we will have a lot more sway with the Government.”

4. Khan will also need to establish which authority it will be talking to, as it is unclear whether
responsibility for uranium mining will fall under the Mongolian Nuclear Energy Commission or the
new Minerals and Energy Ministry. “But, I am hoping that by the summer we will be able to be in a
position to sit down with the Government and start negotiations," Mr. Quick said.
Once an investment agreement is in place, the company believes it can start up production within
three years. Assuming the negotiations with the Government run smoothly, detailed engineering
work on the mine and processing plant will be completed during the last quarter of this year.
Source: http://www.miningweekly.com
COPPER PRICES DROP ON RENEWED RECESSION CONCERNS
Copper futures dropped for the second time in three sessions on Monday on renewed concern that
recession may cut demand for the metal used in homes, cars and appliances. Before that, copper
had plunged 60 percent from a record in May as recessions in the U.S., Europe and Japan sapped
demand.
“Copper finds itself testing the low bounds of what we estimate to be the new range as renewed
economic doom and gloom takes over sentiment,” Mr. Alex Heath, the head of industrial metals
trading at RBC Capital Markets in London, has said in a report. “Given the economy, there is a limit
as to how far copper can go on the upside,” said Mr. Donald Selkin, the chief market strategist at
National Securities Corp. in New York.
Still, declining metal stockpiles will “give copper some support”, Mr. Selkin said. “The fact that
warehouse stocks keep declining is a positive for copper and gives people some hope that demand
is coming back in,” Mr. Selkin said. “It’s helping to push copper to a higher trading range.” Last
week, copper surged 9.8 percent on speculation government spending will boost consumption in
China and the U.S., the world’s two biggest buyers of the metal.
In the 94 developing countries that have experienced a slowdown in economic growth, the “most
affected sectors” include mining, manufacturing and construction, the Washington-based World
Bank has said.
Source: www.bloomberg.com
MONGOLIA INVITES CANADIAN INVESTMENT IN MINING
Some 70 individuals representing potential Canadian investors attended a Round Table meeting
organized by the Mongolian Embassy in Canada and the Mongolian Mineral Resources and Petroleum
Authority in cooperation with the Department of Foreign Relations and International Trade of
Canada during the annual PDAC (Prospectors and Developers Association of Canada) convention
held in Toronto earlier this month.
Vice Minister for Minerals and Energy B.Ariunsan presented the present state policy on the mining
sector and briefed participants on the views and actions of the Mongolian Government with regard
to the Oyu Tolgoi and the Tavan Tolgoi project investment issues. Emphasizing the importance of
developing mining in Mongolia as a key towards achieving economic progress and prosperity,
Ambassador to Canada D.Gotov called upon investors to come to Mongolia to take advantage of the
Government’s commitment to promoting foreign investment based on balanced interests.
Source: www.mfat.gov.mn
RUSSIAN RAILWAYS WANTS JOINT VENTURE WITH MOSCOW ON TAVAN TOLGOI PROPOSAL
Russian Railways (RZD) plans to propose to the Russian Government they should form a joint
venture to mine the Tavan Tolgoi coal field. The Railways now owns half the shares in Ulaanbaatar
Railway, the other half being controlled by the Mongolian Government. Mr. Igor Levitin, the Russian
Transport Minister and also co- chairman of the Russian-Mongolian inter-governmental commission,
said at a recent meeting of the commission, "RZD is due to submit its proposals by April 1. The
details are being finalized."
Source: Steelguru, Interfax
EBRD TO TAKE STAKE IN ENERGY RESOURCES
The European Bank on Reconstruction and Development (EBRD) is taking an equity stake in a
privately-held Mongolian mining operation, in an investment that will strengthen the role of the
private sector in this crucial industry, boost competition and set a new benchmark in environmental
and health and safety standards.

5. According to EBRD, the investment of up to €30 million in Energy Resources LLC (ER) will support
the production of high-quality coking coal from the Ukhaa Hudag deposit in southern Mongolia,
some 200 km north of the border with China, a major importer of Mongolian coal.
The EBRD’s backing for the project will also help bring sustainable economic growth to this region
at the foot of the Gobi desert, stimulating new enterprise in an otherwise depressed area. Energy
Resources is an entirely Mongolian consortium, comprising three large domestic groups. This
project, at a mine which has an expected production life of over 100 years, will allow ER to
compete with the Mongolian state mining industry and with larger foreign investors.
By working initially with Leighton Holdings, one of the world’s foremost international contract
mining operators, ER will also ensure that the mine is operated according to the highest industrial
standards. The EBRD’s investment also reflects the company’s commitment to high governance and
transparency as well as environmental and health and safety standards.
Energy Resources Chairman J.Odjargal said, “ER is very pleased that EBRD is joining the UHG
project that would create 450 jobs immediately, especially during these times of crisis when
business opportunities are limited and the country’s foreign currency reserves are scarce.” While
developing the main mining project, ER will also work with the EBRD’s TurnAround Management
and Business Advisory Services Programs that help enterprises adapt to the demands of a market
economy.
The EBRD started investing in Mongolia in October 2006 and has made provision of finance to
support the mining and mining services sector a priority. However, its total investments to date of
around USD120 million have stretched across a wide range of sectors, also including the financial,
the retail and the beverage industries.
Source: Finchannel.com
POLO COMPLETES RESOURCE ESTIMATES FOR UNION MINE
South Africa based mining group Polo Resources has received a completed NI 43-101 technical
report on its Union coal mine in Mongolia. Work has now begun on a detailed environmental and
social impact assessment (DESIA) and an advanced scoping study in preparation for resuming
production at the mine.
The technical report from Micromine of Australia demonstrates measured and indicated coal
resources of 44.5 and 50.2 million tons (Mt) respectively, for a total of 94.7 Mt. An additional 38.4
Mt are classified as inferred. Micromine based the report on results from a 40 diamond borehole
program which was carried out last year. A total of 25 coal seams were identified at Union with a
cumulative coal thickness of up to 130m. The coal is believed to be of a suitable grade for
producing a good quality energy coal product for the Mongolian and Chinese power generation
markets.
The Union project consists of two mining licenses and three exploration licenses covering a total of
14.6 sq km. The mine is situated 95 km south east of Ulaanbaatar. In January this year, Polo
reached an agreement with US listed coal producer Peabody Energy giving Peabody the option to
buy a 50% stake in a joint venture formed to hold all of Polo's coal and mineral interests in
Mongolia.
Source: SmallCapNews.co.uk
MCA HOLDS WORKSHOP TO BRIEF LOCAL SUPPLIERS
MCA-Mongolia last week organized a procurement information workshop to enhance local suppliers'
knowledge of its procurement procedures and regulations, and to stimulate discussion regarding the
private sector's goals and aspirations with respect to MCA procurement and the role that the
Millennium Challenge Compact can play in private businesses.
The overall procurement volume of MCA-Mongolia would reach USD40-50 million in 2009, giving an
opportunity for the private sector to submit proposals for various tenders. However, local
companies do not always use their full potential because of a variety of factors, such as
unfamiliarity with the MCC system and its opportunities, lack of capacity and experience in
developing sound proposals using MCA-Mongolia's procurement information. Participation in the
workshop was open to all interested companies, and about 150 representatives of service providers,
consultant companies and suppliers turned up. The information package distributed to these
participants included a summary of tenders planned for 2009.

6. Mr. Bayarbaatar, CEO MCA-Mongolia, focused on country ownership, while Mr. Robert Reid,
Millennium Challenge Corporation (MCC) Resident Country Director, showed how MCC was
implementing a new model in foreign aid. He stressed the commitment of MCC to reduce poverty
and elaborated the governing principles of the program as being promotion of competition,
openness and transparency.
Source: Montsame
DUTCH FINANCIAL SUPPORT FOR XACBANK HOUSING AND ENERGY SCHEMES
The Netherlands Development Finance Company (FMO) has signed three agreements with XacBank.
The first concerns a USD7 million loan for a project focused on providing affordable housing to
young and low income families in Ulaanbaatar, and the second a USD5 million loan for two energy
projects.
Around 700,000 people or 65 percent of the total residents of Ulaanbaatar live in Gers, many of
them below the poverty line. Bad public infrastructure and a lack of clean water and proper
sanitation characterize the living circumstances in these Ger districts. The FMO financing will
support XacBank in addressing housing problems and providing reasonably priced housing.
The two energy projects enhance access to energy efficient products in these Ger districts and
provide nomadic herdsmen in rural areas with 10,000 solar panels.
Source: xacbank_fmo.jpg
GLOBAL FINANCIAL ASSETS LOST USD50 TRILLION LAST YEAR, ADB SAYS
The value of global financial assets including stocks, bonds and currencies probably fell by more
than USD50 trillion in 2008, equivalent to a year of world gross domestic product, according to an
Asian Development Bank report. Asia, excluding Japan, probably lost about USD9.6 trillion, said Mr.
Claudio Loser, a former International Monetary Fund director and the author of the report that was
commissioned by the ADB.
“The loss of financial wealth is enormous, and the consequences for the economies of the world
will unfortunately commensurate,” said Mr. Loser. “There are serious economic and political
stumbling blocks that may well cause the recovery to be costly and slow to consolidate.” According
to him, “Poor macroeconomic and regulatory policies allowed the global economy to exceed its
capacity to grow and contributed to a buildup in imbalances across asset and commodity markets.
The previous sense of strength and invulnerability is now gone.”
Developing nations, which mostly escaped the earlier effects of the credit crisis, are facing more
problems as the downturn worsens, Mr. Loser’s report said. Net capital flows to emerging markets
may fall to USD165 billion this year, from USD470 billion in 2008 and a record USD930 billion in
2007. “There is no room for denial or populist policies,” Mr. Loser said. “Otherwise the crisis will
become even deeper and harder to reverse.”
Source: Bloomberg.com
SPECIAL US VISAS FOR BUSINESS VISITORS
Mongolians, mainly from the mining sector, are now able to apply for a special business visa to visit
the USA. Applications meeting certain requirements like evidence of intention to return to Mongolia
after the visit, professional career, bank statement and family status are received every
Wednesday afternoon. Mr. Robert Pope, Consular Officer, recently told media eight applications
have already been submitted. The main criteria for grant of a visa are that the companies
employing the applicant should have operated for a length of time in the mining sector and have
ties with foreign companies.
Source: www.gogo.mn, www.mining.mn
VEERHUIS TO DISCUSS USE OF EPS TECHNOLOGY IN MONGOLIA
A four-member high-level team from Veerhuis B.V. in the Netherlands will arrive in Mongolia on
March 16 to finalize arrangements for introducing the EPS (Expanded Polystyrene) construction
system here. A local construction company has been recently selected for transfer of the
technology and Ganymedes LLC will be responsible for the general management of the work.
Veerhuis has hopes the technology will be used in a program to build houses for government
officials as part of the 100,000 Apartments program and also by Habitat for Humanity in its projects

7. in Mongolia. The team plans to meet senior Ministry and banking officials and the Mayor of
Ulaanbaatar.
Source: www.ganymedes.mn
SMALL EXPLORERS BACKED BY MINERS BEST BET, SAYS FABER
Mr. Marc Faber, the investor who advised buying gold in 2001 before it tripled, said he owns
Ivanhoe Mines Ltd., NovaGold Resources Inc. and Gabriel Resources Ltd. because explorers will gain
the most as bullion rallies. Commodities will be the first assets to rally when growth returns after
the credit collapse that has led to the worldwide recession, Mr. Faber said. Small explorers backed
by larger miners are less expensive than the bigger firms themselves and have the financial support
to stay in business should the economy worsen, he added.
Precious metals will climb as other assets decline, Mr. Faber said. The 82-company Bloomberg
World Mining Index last week advanced 31 percent since falling to a four-year low on November 20
and prices for the metal climbed 21 percent, compared with a 6.4 percent decline in the MSCI
World Index of stocks.
Source: Bloomberg.com
INITIAL ESTIMATE FOR SOUTHGOBI‟S INDONESIAN PROJECT “VERY ENCOURAGING”
SouthGobi Energy Resources has received an initial independent NI43-101 compliant resource
estimate of 17.4 million tons for its Mamahak coal project in East Kalimantan, Indonesia. The
Mamahak Joint Venture comprises four concessions totaling about 22,976 hectares. Reconnaissance
and initial field mapping have started over the larger project area. The company believes the area
has the potential to host significant metallurgical coal resources.
SouthGobi’s chief operating officer Gene Wusaty says, “Our first drilling program has been a
resounding success. This initial resource estimate is very encouraging as it’s based on only a
fraction of the total land area of our concessions. The resource is wide open for significant
expansion.”
Ivanhoe Mines is SouthGobi Energy Resources’ largest shareholder and owns about 80.2% of issued
and outstanding shares.
Source: www.southgobi.com
ECONOMY
IMF ANNOUNCES STAFF-LEVEL AGREEMENT ON USD224 MILLION LOAN
The International Monetary Fund has announced an agreement in principle on a USD224 million loan
package to help Mongolia come out of the global financial crisis. "An IMF staff mission and the
Mongolian authorities today reached the agreement, subject to approval by the IMF Executive
board, of an economic program supported by Fund resources (of USD224 million) under an 18-month
stand-by arrangement," IMF Managing Director Dominique Strauss-Kahn said in a statement issued in
Washington late on Friday.
Mr. Strauss-Kahn said the executive board was expected to discuss the program shortly after
international donors met in Ulaanbaatar. Finance Minister S.Bayartsogt has since said this meeting
will be on March 14.
"Mongolia has been hard hit by the global financial crisis through a sudden and precipitous drop in
the price of the country's main export commodities, notably copper. This has had a negative impact
on both the fiscal and external accounts;" Mr. Strauss-Kahn said. Mongolia's mineral revenue has
fallen, export proceeds are expected to decline "markedly" this year and foreign direct investment
flows have been cut.
"With more than one-third of the population living below the poverty line, it is imperative that
steps are urgently taken to address the economic downturn and protect Mongolia's most vulnerable
citizens." Mr. Strauss-Kahn said the Mongolian Government has put together a macroeconomic
program aimed at restoring economic stability.
In January, Mongolia's President said his country was in talks with the IMF over a loan package of
USD60 million to USD70 million to attract investment in its mining sector. The country is also

8. negotiating with China, Russia, Japan and several Gulf countries on USD300 million to USD3 billion
in loans that would be linked to large mining projects.
Source: en.News.mn, Reuters.com
IMF JUSTIFIES “EXCEPTIONAL” DECISION BY CITING GOVERNMENT PROGRAM
The formal statement issued in the name of Mr. Dominique Strauss-Kahn, Managing Director of the
International Monetary Fund announcing the USD224 million loan to Mongolia says the decision was
taken after the Government, in collaboration with an IMF mission, had put together a strong and
ambitious macroeconomic program with two key objectives: (i) to restore economic stability
through fiscal and monetary policies; and (ii) to protect the poor and preserve social stability
through improving the social safety net.
The statement says the program is built on four main planks:
1. The centerpiece is a budget adjustment for this year and next that will put in order Mongolia’s
fiscal finances and restore the deficit to a sustainable range. The Government also intends to
strengthen the institutional framework for fiscal policy to prevent the repeat of the boom and bust
cycles of recent years and ensure the long-term sustainability of its policies.
2. This fiscal program will be supported by a proactive monetary policy that will seek to safeguard
international reserves.
3. Improving the social safety net is a key element of the program to ensure that the poorest
segments of the society are protected adequately. To this end the Government will begin a
comprehensive overhaul of its social transfer programs, improving targeting and raising the level of
social support to the very poor.
4. The Government will further strengthen the banking system by improving the current framework
for deposit guarantees and enhancing bank supervision.
The proposed “exceptional access to IMF resources (of 300 percent of quota)” is justified by the
Mongolian "authorities’ strong commitment to macroeconomic stability and a return to robust and
equitable growth, and merits the backing of the broader international community”, Mr. Strauss-
Kahn said and appealed to donors “to support Mongolia in its impressive efforts”.
Source: www.imf.org
CENTRAL BANK RAISES INTEREST RATE FROM 9.5 TO 14 PERCENT
The Central Bank has raised the interest rate to 14 percent from 9.5 percent. Announcing this at a
press conference on Tuesday, the Bank President, Mr. L.Purevdorj, said the move was aimed at
stabilizing the value of the MNT against foreign currencies. This follows the Bank’s earlier decision
to raise the risk adjusted capital requirement from 10% to 12%, with the same aim. Asked why the
rate was being raised when elsewhere in the world Central Banks were lowering, Mr. Purevdorj
explained that the Mongolian economic structure is different and has to follow its own way.
Defending the Central Bank’s policy of persisting with a tight credit policy, Mr. Purevdorj said
pouring more money into the market would lead to a further fall of the MNT. He said the monetary
policy would continue to be rigid and cash supply would not be increased this year. “The USD is
gaining because there is a shortage of dollars. Similarly, MNT value will also go up only when there
is a shortage,” he said.
About the foreign currency reserve situation, Mr. Purevdorj said the deal with the IMF would lead
to some USD600 million being available from foreign sources. USD200 million of this will be added
to the reserve before the end of 2009. At present, Mongolia has about USD541.7 million which is
enough to meet import needs for three months.
Source: en.News.mn
COMMITTEE UNDER BAYAR TO OVERSEE ACTION PLAN
The Government decided on Monday to set up a special committee under the Prime Minister to
direct and oversee the implementation of the Action Plan to tackle the economic crisis. The plan
was approved last week by Parliament. The committee has been given unspecified extraordinary
authority.
It will seek funding sources to implement the MNT1.5-trillion (around USD1 billion) economic rescue
plan, and will take measures to ensure stability in the finance sector, increase job opportunities
and promote the development of agriculture.
Source: www.chinaview.cn, Montsame

9. POOR COUNTRIES TO HURT MOST FROM SHRINKING GLOBAL ECONOMY, WORLD BANK SAYS
The global economy is likely to shrink for the first time since World War II, and trade will decline by
the most in 80 years, the World Bank has said in a paper prepared for meetings of the G20 group of
countries in London in April. World growth will be 5 percent below its potential. Developing nations
will bear the brunt of the contraction. They will face a shortfall of between USD270 billion and
USD700 billion to pay for imports and service debts. They will be hurt by tighter credit, withdrawals
of foreign direct investment, and a decline in the amount of money sent home by workers overseas.
World Bank President Robert Zoellick said in a statement action is needed by governments and
multilateral lenders “to avoid social and political unrest”.
A surge of debt issuance by rich nations risks “crowding out many developing country borrowers,
both private and public”. Emerging nations that can access capital markets will be forced to pay
higher rates of interest. The report said that 94 out of 116 developing countries had experienced a
slowdown in economic growth, with poverty increasing in 43. The economic crisis will swell the
ranks of the poor by 46 million this year. The result would be growing dependence on foreign aid.
The dire prediction underscored what many are calling a mounting crisis within a crisis, as the
downturn that started in the wealthy nations of the West washes over developing countries through
a pullback in investment, trade and credit. Despite America’s position as the epicenter of the crisis,
investors are flocking to US treasury bills and the dollar, squeezing developing nations out of global
credit markets.
The World Bank called on developed nations struggling with their own economic routs to dedicate
0.7 per cent of the money they spend on stimulus programs towards a new Vulnerability Fund to
help developing countries. Mr. Justin Lin, the bank’s chief economist, said the spending would be
more effective in poorer countries in boosting demand. Channeling infrastructure investment to the
developing world can have a “bigger bang for the buck”, he said.
"The challenge facing developing countries is how, with fewer resources, to pursue policies that can
protect or expand critical expenditures, including on social safety nets, human development and
critical infrastructure," the World Bank paper said.
Source: www.bloomberg.com, www.reuters.com, Los Angeles Times-Washington Post News Service
BUDGET SHOWS DEFICIT AS TAX EARNINGS FALL
The general government budget showed an overall deficit of MNT112.2 billion in the first two
months of 2009. The current balance deficit was MNT90.6 billion. Compared with the same period
last year, tax revenue decreased 39.8 percent. Taxes earned from foreign trade dropped 13.9
percent, and from corporate income tax by 56.0 percent. Non-tax revenue decreased by 70.0
percent from the same period in 2008.
Source: www.nso.mn
DROP IN BOTH INDUSTRIAL OUTPUT, PRODUCTIVITY
Total industrial output in February 2009 was MNT290.4 billion at current prices, 26.5 per cent less
than in February last year and 24.5 per cent less than in January 2009. Output in the mining and
quarrying sector has fallen 41.8 per cent from February 2008 and 17.0 per cent from January 2009.
At the end of February 2009, the industrial production index was down 4.7 points from the previous
month.
Figures for February show industrial productivity (at current prices) has decreased by 21.6 per cent
from the same month last year. Industrial products worth MNT278.4 billion (at current prices) were
sold at domestic and foreign markets.
Source: www.nso.mn
MNT KEEPS FALLING AGAINST MAJOR CURRENCIES
The Central Bank's nominal rate of MNT against USD was 1,471.45 at the end of February 2009,
weakening 25.6 percent from 12 months ago. The MNT fell 6.5 percent in a month. The
corresponding rates against EUR were 1,906.41, 7.8 percent, and 5.5 percent respectively. Against
CNY these stood at 215.21, 30.7 percent, and 6.5 percent, respectively, while the corresponding
rates against RUB were 41.15, 15.3 percent, and 3.5 percent respectively.
Source: www.mongolbank.mn

10. FOREIGN CURRENCY DEPOSITS RISE
Money supply (broad money or M2) at the end of February, 2009 was MNT117.2 billion or 5.2
percent more than in January, 2009, but 1.7 percent less than in February, 2008. Currency issued in
circulation increased by 14.6 percent over the previous month, and 28.2 percent more than in
February, 2008. MNT deposits increased by 2.0 percent over January, but were 18.1 percent less
than in February, 2008. Foreign currency deposits increased by 9.8 percent over January and by
30.4 percent over February, 2008.
The amount of outstanding loans rose by 0.5 percent over January, and by 20.4 percent over
February, 2008. Compared with February, 2008, loans to individuals fell by 8.4 percent, but those
to the private sector rose by 31.1 percent. Loans to the public sector and to other financial
corporations decreased by 20.1 percent and 17.9 percent respectively. Principals in arrear
increased by 14.3 percent over January and 2.9 times over February, 2008.
Quantum of doubtful loans rose 1.2 percent over January, and 2.9 points over February, 2008. Non-
performing loans were 7.4 percent of the total loans outstanding, an increase by 4.3 points over
February, 2008.
Source: www.mongolbank.mn
RISE IN NUMBER OF JOBLESS, ALSO OF NEW JOBS
The number of the registered unemployed stood at 32,200 at the end of February, an increase of
6.9 per cent over the figure for the corresponding period in 2008. Women accounted for 57.4 per
cent of them. The number of newly registered unemployed people rose 43.1 per cent when
compared to figures a year ago. People getting jobs also rose, by 20.1 per cent from February,
2008. There were 2,039 new jobs in February 2009. This is 233 more than in January and 295 more
than in February, 2008.
Of the total 3,800 people who got new jobs in the first two months of 2009, 16.4 per cent entered
service in government- or state-owned enterprises and the remaining 83.6 per cent were absorbed
in companies, cooperatives or small-scale private businesses. So far the Employment Support Fund
has distributed, through banks and non-banking financial institutions, MNT4.4 billion to 530 self-
employed people, 698 unemployed people, 326 herders and 63 establishments.
Source: Montsame
EXTERNAL TRADE TURNOVER AND SURPLUS FALL
Total external trade turnover in the first two months of 2009 equaled USD438.2 million, of which
exports accounted for USD232.4 million and imports USD205.8 million. The resultant surplus of
USD26.5 million was USD30.8 million less than what it was in the same period last year. The total
external trade turnover decreased by 45.9 percent in this period, exports by 46.4 percent and
imports by 45.3 percent.
Much of the decrease is attributed to the fall in the value of copper concentrate by 57.0 percent,
of zinc concentrate by 90.9 percent, and of gold, in unwrought or semi-manufactured forms, by
41.2 percent. The volume of export of copper decreased by 6.0 percent, of zinc by 79.2 percent,
and of gold by 39.7 percent.
Petroleum import went down 32,700 tons or USD38.2 million, flour imports by 23,500 tons or
USD9.6 million, car imports by 1,900 pieces or USD4.7 million. Electricity imports increased by 4.7
mgWt or USD243,300.
Source: National Statistics Office
AVERAGE HOUSEHOLD INCOME RISES 22.9% YOY
A survey of 2,808 households in Ulaanbaatar city and 21 aimags has revealed that the average
household monthly income in the 4th quarter of 2008 was MNT 343,500, a 22.9 per cent increase
over the corresponding period in 2007. The average monthly expenditure was MNT 365,000, or 15.7
per cent more than in the same period the previous year.
Source: Montsame
CHINESE TRADERS BUY UP CASHMERE CHEAP
Herders had a bad time last year as the price of a kilogram of cashmere dropped from MNT40, 000
to MNT16,000, and much remained unsold. This year, things are not much better. Traders at
wholesale markets in Ulaanbaatar note that very little has been coming there from rural areas.

11. They think this is so because Chinese traders have already bought up all the cashmere with the
herders. The price they pay is around MNT18,000 for a kilo. Chinese traders were largely absent
last year, for several reasons.
New cashmere should sell for more, around MNT25,000, but the Chinese traders buy for cash, and
buy in quantity, usually taking all that a herder has. This persuades the producer to sell for a lower
price. The Chinese have this advantage because they come with adequate loans from their banks
and fan out all over Mongolia. Local buyers have always complained that they cannot match the
Chinese offer because they do not have so much ready cash. This year, chances of getting credit
from banks are even less and so local cashmere manufacturers fear they will have to be content
with poor grade leftovers.
Source: Ardiin Erkh
MONGOLIA RESUMES IMPORT OF DAIRY COWS FROM CHINA
Mongolia has resumed import of dairy cows from China, which were suspended for about two
months following an outbreak of foot-and-mouth disease. The General Administration of Quality
Supervision, Inspection and Quarantine in China recently announced that 50 Holstein cows had
tested safe and entered Mongolia via an Inner Mongolia city, Erenhot. The Mongolian Government
suspended imports at the end of 2008, after foot-and-mouth disease type Asia-1 was detected in
China's northwestern Gansu Province.
Source: Xinhua
POLITICS
BAYAR TO VISIT RUSSIA NEXT WEEK
Prime Minister S. Bayar will pay an official visit to Russia next week at the invitation of his Russian
counterpart Vladimir Putin, the Mongolian Ministry of Foreign Affairs and Trade has announced. The
two prime ministers will hold talks on bilateral relations and economic and trade cooperation.
Source: www.xinhuanet.com
DP THREATENS BOYCOTT IF CHILD ALLOWANCE IS CUT
The DP group in Parliament has come out against any reduction in the quantum of the child
allowance, let alone its withdrawal. Its opposition does not extend to the proposed cut in the
allowance to the newly married. MP D.Odkhuu told newsmen, “The DP is 100 percent against the
proposal to cut or eliminate the child money, and if it is included in the third discussion of the
revised budget provisions, the party will boycott Parliament and the debate.” The party’s MPs feel
that with household incomes considerably reduced, the child allowances must be maintained at
their current level.
Source: www.news.mn
FORMER FILIPINO OMBUDSMAN AND HONK KONG EXPERT HELPING MONGOLIA FIGHT
CORRUPTION
Former Filipino Ombudsman Simeon Marcelo is in Mongolia with Hong Kong graft buster Tony Kwok
to take part in international efforts to help the country with its renewed anti-corruption campaign.
Mr. Marcelo and Mr. Kwok were invited by the Asia Foundation to attend meetings aiming to
strengthen the investigation, prosecution, and adjudication of corruption cases in the country.
They plan to meet with Mongolia’s Attorney General’s Office, members of the Judiciary, Parliament
and Government, and officials from the Independent Authority Against Corruption (IAAC).
Mr. Kwok has 36 years of law enforcement experience. Since his retirement, he has been providing
anti-corruption consultancy services to more than 15 countries. In the 2002 Hong Kong Honors List,
Mr. Kwok was awarded the Silver Bauhinia Star in recognition of his contribution to the success of
the fight against corruption in Hong Kong.
Mr. Marcelo led the prosecution team that obtained the conviction of former President Joseph
Estrada. After resigning as Ombudsman in 2005 because of health reasons, Mr. Marcelo was last
year inducted into the World Bank’s Independent Advisory Board where he advises on the
institution’s anti-corruption measures.

12. Aside from sharing their experiences in fighting corruption, the two graft fighters will help with
capacity building efforts to support the renewed anti-corruption campaign in Mongolia. In 2006,
Mongolia passed its Anti-Corruption Law and established the IAAC, which is now in the process of
developing strategy and operating procedures while recruiting and training its staff. The IAAC
launched its first investigations in 2007. Since then, more than 200 cases have been investigated.
At present, a sizable number of Mongolian government officials are under prosecution, including a
former Central Bank Governor and a member of Parliament. The anti-corruption campaign in
Mongolia has also led to jail terms for more than 20 senior and mid-ranking officials from various
political parties.
Source: http://www.abs-cbnnews.com
SPECIAL REVIEW OF LABOR SAFETY MEASURES AFTER RISE IN ACCIDENTS
The number of industrial accidents increased by 43.1 percent last year and that of casualties by
81.8 percent. There were 123 accidents in the construction sector, killing 63 and injuring 84 others.
The number of mining accidents reached 95 involving 123 people. The number of deaths was seven
times more than in 2007.
Judging this to be an alarming trend, the State Professional Monitoring Agency plans to run a
special review of labor safety arrangements in the construction sector from April 1 through June 1
and in the mining sector between July 1 and September 1. The review will cover labor relations,
labor safety, labor hygiene, employment of foreign citizens, social insurance etc.
Source: Montsame
MORE SEEDS NEEDED FOR SPRING PLANTATION
Following the bountiful harvest last year, agricultural companies are preparing in a big way for the
spring plantation. The availability of quality seeds is one of the main problems. Companies and
farmers stocked 17,000 tons of seed last year and there are 11,000 tons more in the national
reserve, but another 10,000 tons are required. The Ministry for Food, Agriculture and Light Industry
has announced a tender for supply of 5,000 tons of wheat seed appropriate for the Mongolian soil.
A tender has been issued for purchase of 100 high-capacity tractors. Once they come, they will be
sold to farmers on easy terms. The Ministry is trying to get a Russian loan of MNT300 million for
various equipment that can be paid for in 5-7 years.
Source: Ardiin Erkh
MARGINAL RISE IN NATIONWIDE CRIME RATE
The number of recorded cases of crime in the first two months of 2009 rose by 0.7 per cent over
the same period last year. The rate of the rise in Ulaanbaatar was, however, higher - 6.0 per cent.
Nationwide there were fewer muggings, traffic violations, acts of violence against children, and
thefts. Increases were recorded in crimes against environmental protection, against human
freedoms, rights and reputation, robbery, forgery, fraud, attempted murder, violent attacks, and
violating administrative rules.
Altogether crimes caused damage worth MNT9.8 billion of which MNT0.9 billion was restituted by
the offenders.
Source: www.nso.mn
ONE VOTE MAJORITY FOR MOVE TO BAIL OUT ROAD COMPANIES
At a time when drastic cuts are being made in State expenses to plug the budget deficit,
Parliament last week passed a proposal to reimburse several road construction companies the
MNT11.1 billion they say they spent above their contracted costs because of the unexpected rise in
petroleum prices during the work. Several MPs cutting across party lines strongly criticized the
move, and the motion was passed by a majority of just one vote. This being a budget issue, it will
be discussed again.
Among the severest critics of the pay-out were the head of the Standing Committee on Budget, Mr.
Ch.Khurelbaatar (MPRP), and Mr. Z.Enkhbold (DP). “Companies implementing tendered work in all
sectors have suffered because of the fall in the value of the MNT. What will happen if they now
demand such reimbursement? We cannot set a precedent like this,” said Mr. Enkhbold. Mr.
Khurelbaatar said that to win tenders companies kept their expenses low, and it was usual that
once work started, they asked for more money on many pretexts. “The contracts do not provide for

13. any help to them in meeting these later problems and the practice has to stop. I ask all of you not
to support the bail-out,” he said.
Mr. R.Bud (MPRP) supported the payment by saying that in the case of the road companies, 60
percent of their approved expenses were on petroleum. “They worked 1,700-1,800 kilometers away
from Ulaanbaatar where prices were even higher. Most of them had taken up to MNT20 billion in
bank loans. If we don’t want to stop road construction in the western regions, this money should be
paid,” he said.
Source: www.news.mn
SUGGESTION TO PROVIDE HEATING FOR ONE MONTH LESS
The Standing Committee discussing the revised budget is reviewing every amendment with great
care. Last week it approved two proposals. The first will save MNT14 billion by reducing the annual
heating period by one month. The second will limit the use of fuel by State organization vehicles to
30 km per day, instead of the 70 km at present. Another MNT7.6 billion will be saved from the
expenses for medicine.
However there was no support for a plan to save MNT7 billion from the budgeted outlay for military
and police uniform. Mr. Ts.Nyamdorj, Minister of Justice and Interior, reminded members that the
saving might end up in “people finding police personnel in torn uniforms and border soldiers
without shoes”.
Source: Ardiin Erkh
GENERAL TAX AUTHORITY TO REGISTER NGOs
Under a new law that took effect last December, the registration of NGOs is now the responsibility
of the General Tax Authority, and not the Internal Affairs Ministry. Registration work has been held
up for some time, but the Authority now says that it will soon begin registering unions, foundations,
religious organizations, and press associations.
Source: en.News.mn
NEW MONGOLIAN LAWS
The following new amendments to current Mongolian laws were published in the latest weekly
Government Bulletin. Unless decided otherwise by Parliament, the laws take effect ten (10) days
after publication.
Bulletin Date Law
02.13.2009 Amendments to “Law on social welfare to elderly people”
Amendments to “Law on Presidential elections in Mongolia”
Please visit BCM website, Legislative Committee, for a weekly listing summary of new Mongolian
laws.
BCM members who wish complete versions of the laws in Mongolian language are welcome to call or
email the BCM office (11-332345; info@bcmmongolia.org) to arrange for a convenient pickup.

14. SPONSORS
ECONOMIC INDICATORS
MSE WEEKLY REVIEW
For the week ended March 06, 2009, trading activity on the Mongolian Stock Exchange (MSE) totaled
279,700 shares with 22 companies traded. Total market value of transactions was MNT 32.8 million.
Total market capitalization of the 358 stock companies listed on the MSE was MNT 448.1 billion,
and increased by MNT 13.8 billion or 3.1 % from the previous week.
The Top-20 Index increased by 127.48 points or 2.7% compared to the previous week, closing at
4,938.92 points. The MSE Composite Index increased by 75.38 points or 3.1% compared to the
previous week, closing at 2,518.56 points.
Most active stocks traded were: Olloo (154,500 shares), Genco Tur Buro (61,500 shares), UID
(32,500 shares), Khuh Gan (20,900 shares), and APU (5,900 shares).
Major share price percentage gainers were: NIC (59.0%), Suu (49.8%), Erdenet Khivs (22.2%),
Baganuur (20.5%), and Gobi (16.3%). Major share price percentage losers were: Eermel (13.0%),
Khorinkhoyordugaar (9.9%), Auto Impex (7.1%), Mon.Tsakh.Kholboo (5.1%), and Tuul Songino Usnii
Nuuts (4.0%).
INFLATION
Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]
Year 2007 *15.1% [source: NSOM]
Year 2008 *22.1% [source: NSOM]
February 28, 2009 *18.2% [source: NSOM]
* year over year (yoy)

15. CURRENCY RATES – March 12, 2009
Currency name Currency Rate
US dollars US 1574.10
Euro EUR 1993.44
Japanese yen JPY 15.99
British pound GBP 2161.08
Hong Kong dollar HKD 202.96
Chinese yuan CNY 230.04
Russian ruble RUB 44.78
South Korean won KRW 1.07
Disclaimer: Except for reporting on BCM’s activities, all information in the BCM NewsWire is
selected from various news sources. Opinions are those of the respective news sources.