MONGOLIA: Economic Policy Analysis

This site presents an analysis of the Mongolian government's economic policies compared to a list of 34 economic policies as prepared by Ms. Tuul Ganbold with the McKeever Institute of Economic Policy Analysis in the Spring of 2009 (MIEPA). To read the analysis scroll through this site. To learn more about the background policies, click here

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Several foreign born students living in California have completed a study of their home country governments' economic policies as compared to the MIEPA list of policies as outlined above. The study on Mongolia is shown below. The ratings herein are based on the following rating scale:


5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2009. Used herein with permission]

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Comparison of Mongolia's economic policies to MIEPA criteria as prepared by native student of Mongolia, Ms. Tuul Ganbold, studying in San Francisco in Spring, 2009.



      1               4.7           14.1             15.0        94%

      2               4.3           12.9             15.0        86

      3               1.5            4.5             15.0        30

      4               2.0            6.0             15.0        40

      5               3.0            9.0             15.0        60

      6               4.0           12.0             15.0        80

      7               3.0            9.0             15.0        60

      8               4.7           14.1             15.0        94

      9               2.0            6.0             15.0        40

      10              4.7           14.1             15.0        94

      11              4.0           12.0             15.0        80

      12              4.0            8.0             10.0        80

      13              5.0           10.0             10.0       100

      14              4.5            9.0             10.0        90

      15              2.5            5.0             10.0        50

      16              3.5            7.0             10.0        70

      17              1.5            3.0             10.0        30

      18              3.5            7.0             10.0        70

      19              3.0            6.0             10.0        60

      20              3.5            7.0             10.0        70

      21              2.5            5.0             10.0        50

      22              3.0            6.0             10.0        60

      23              2.0            4.0             10.0        40

      24              1.0            2.0             10.0        20

      25              1.0            2.0             10.0        20

      26              3.0            6.0             10.0        60

      27              1.0            2.0             10.0        20

      28              1.5            3.0             10.0        30

      29              3.0            3.0              5.0        60

      30              2.0            2.0              5.0        40

      31              2.5            2.5              5.0        50

      32              2.0            2.0              5.0        40

      33              3.0            3.0              5.0        60

      34              1.5            1.5              5.0        30           

  TOTAL              97.9          219.7            375.0       58.6%
                    =====         ======           =====        =====
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1. Freedom from Internal Control: 4.7

Mongolian people can travel and can move to one to another place because of the four seasons. From the history, Mongolian people have been moving place to place without any permission. We all love to travel and especially out of capital city. Mongolian people have big traveling freedom inside of the country without any permission. There are 21 beautiful cities to travel.

Sources:, Interviewed with Jagaa who were traveling all over in Mongolia.

2. Freedom of Speech: 4.3

The constitution provides for the rights of freedom of speech all expression and the government generally respects them. The law provides for freedom of speech and of the press, and government generally respected these rights in practice. However, government interference with licensing and indirect intimidation of the press, particularly broadcast media, was a problem. Access to information was limited by a far-reaching State Secrets Law, which limited freedom of information and government transparency.

A variety of newspapers and other publications represented both major political parties and independent viewpoints.

If journalist reported false information in order to take advantage or take someone’s bad reputation, than he or she will go to jail or punished by law.


3. Effective, Fair Police Force: 1.5

It’s hard to say that Mongolian police officers are fair and effective because money is strong, people can do illegal things for money. Many police officers are involved taking of bribery.

For example, many traffic police officers take money from the people who about to take a ticket. Many of us know that how get away from the tickets. People know all this but they never admit.


4. Private Property Rights: 2.0

The enforcement of laws protecting private property is weak. The government of Mongolia and all parties have noted that Mongolia has made significant reforms in its economic structure and has build private sector based economy since the country shifted into market driven economy in 1990.


5. Commercial Banks: 3.0

Mongolian commercial banks perceive lending to be a high risk activity because of the large number of defaulters, and because relationships between borrowers and lenders.

Mongolian commercial banks have limited ability to select potential borrowers and design long term loans, and private entrepreneurs lack the skills to prepare 'bankable' projects. Commercial banking is a relatively new activity, and foreign banks, which are usually an important vehicle for transferring and promoting credit skills, are just about to enter the market.

There are now 16 commercial banks in Mongolia. In spite the number of banks, the level of financial intermediation remains low. The banking system is highly concentrated.


6. Communication System: 4.0

Telephone: as of 2004, there are 404,400 main lines in use. Mobile phones are very popular in the city as well as the countryside. Especially in the countryside, the government prefers the installation of cell phone base stations over laying land lines, as cell phone base stations are easier to install. Mongolia’s Communication Authority has announced a plan to connect all sum centers and a number of other settlements to cell phone services.

Radio: Ulaanbaatar has 20 FM stations, including foreign radio stations BBC world service, VOA, and inner Mongolian Radio.

TV: Mongolian TV Broadcasting started on September 27, 1967 with the start of Mongolian National Television, about 13 channels of National TV.

Internet: internet usage has grown rapidly in the last few years. In 2000, there were 30,000 users but as of 2007, there were more than 268,300.

In Mongolia, about 70% of population served by communication system compare to Russia and China.


7. Public Transportation: 3.0

The public transportation works only capital city which is Ulaanbaatar. In the capital, use only clearly identified licensed taxis and busses. But public taxi service is not available outside Ulaanbaatar, which means is not good for the visitors.

There are no car-rental companies in Mongolia, but it is possible to hire a car and driver. Public transportation in Ulaanbaatar is extensive, cheap and usually crowded. Per last year’s survey by the Road and Transportation Department of Ulan Bator reveals that 150,000 people daily use the public transportation out of 300,000 total passengers in Ulan Bator, the most crowded settlement of the country. There is a good network of both buses and trolley buses. Prices for buses are low but they are generally jam-packed.

Visitors or business owners cannot carry or shifts their stuff without private carriers.

Sources: ,

8. Education: 4.7

Mongolian’s system of education closely followed the Soviet and Eastern European model until the demise of the USSR. Since the early 1990s, it has been undergoing many changes as the country shifts from a centralized economy and one party state system to a market-oriented economy with a more pluralistic system of government.

Most of Mongolian’s institutions of higher education are based in the capital, Ulaanbaatar. Many students go abroad to pursue higher education studies, especially to the countries of the former Soviet Union and Eastern Europe.

Higher education in Mongolia is provided by Universities, colleges and institutes. Colleges offer mainly undergraduate programs, while universities focus more on research and graduate study.

Compulsory education is available from ages 8 to 16, with almost 90% of the primary school age children attending in 1996. The attendance rate for secondary school was much lower at a little over 50% of the population attending. Institutions of higher learning had almost 40,000 attendees. Almost 95% of the Mongolian’s students attending schools.

Sources:, ,

9. Social Mobility: 2.0

In the 1980s, most Mongolians worked in occupations different from those of their parents, who were almost universally herders.

Nowadays, it is hard to find a good jobs even someone has skills. So the unemployment rate getting higher than before. Also, they don’t look only skills and they look for something else too, such as age.

For example, one of my Mom’s friend was teaching at University about seven years but she got fired because of her age. She is not 50 year old and had many years of experience. So now is hard to find to find a job in her age.

1990s was the best time for everybody because everybody has own jobs and has equal opportunities for everyone. Now is hard to find a job, if he or she doesn’t have a power. This means, if someone has talent but he or she doesn’t know or connections with a person who has power, it is hard to get a job or to have good opportunities.

Sources:, Interview with Inga and her experience of job in Mongolia.

10. Freedom From Outside Control: 4.7

Mongolia is located in between two biggest countries in the world but Mongolians are not under control of Chinese or Russians. 1921, Mongolia had independency. The Russian Revolution of October 1917 came as a great shock to Mongolian’s aristocracy.

In February 1921, retreating White Russian troops entered Mongolia and expelled the Chinese. The brutality of both the Chinese and Russian forces inflamed the Mongolians’ desire for independence.


11. Foreign Currency Transactions: 4.0

Togrog is the only currency in Mongolia. There are heavy restrictions on the import and export of currency in Mongolia. The import of local currency is limited to Tg 815, and import of foreign currency is limited to US$ 2,000 or the equivalent of another currency. Only the amount of currency declared upon arrival is permitted to be exported upon departure from the country.

If people have US dollar or any other foreign currency, they always and must exchange at Bank. Bank is the safest, protected and lower price and current market price. In order to determine the exchange rate in accordance with market supply and demand, and to support inter-bank market activities. The Bank of Mongolia has started announcing currency trading rates from June 24, 2002.

“Mongo” coins are not in circulation as currency any longer, as they are of negligible value. The US dollar is the only recommended currency at present. Banks cash traveler’s checks and they do so against a fee of 2 percent if the person need cash US dollars, and without a commission if cashing “Togrogs.”


12. Border Control: 4.0

The Manchus, Chinese, Russians and Japanese have long completed for control of Northeast Asia, particularly of the Mongol regions. Since the days of Chinggis Khan and the Mongol Empire in the thirteenth and fourteenth centuries, all of the nearby regional powers saw the Mongol as a potentially strong military force.

Mongolian relations with China began to improve in the mid-1980s when consular agreements were reached and cross- border trade contacts expanded. The cornerstone of the Mongolian- Chinese relationship is a 1994 Treaty of Friendship and Cooperation, which codifies mutual respect for the independence and territorial integrity of both sides.

There is some smuggling going on but border patrol 85% controlled the smugglers.


13. Currency: 5.0

The “Togrog” is the official currency of Mongolia. The “Togrog” was introduced on

December 9, 1925 at a value equal to one Soviet ruble, where one ruble or togrog was equal to 18 grams of silver. It replaced the Mongolian dollar and other currencies and became the sole legal currency on April 1, 1928.

To obtain cash advance on someone’s Visa card is swift and efficient at the Trade & Development Bank in Ulaanbaatar. Cash can be exchanged at all hotels, whilst traveler’s checks must be cashed at the Banks.


14. Cultural, Language Homogeneity: 4.5

Today, the Mongolian language comprises several dialects including, Khalkha, Baryad, Oirad, Chahar, Kharchin, Khorchin, Ordos and others.

The main language is Mongolian, almost everybody speaks. There are many people speak Russian language, there are lots of languages that people learning second and third forein languages to help their future life.


15. Political Effectiveness: 2.5

Mongolia is situated in high regions of Central Asia with severe climate conditions, and therefore difference in daily temperatures during warn and cold seasons, is enormous.

The government is taking measures to improve the system for natural disaster preventing and reduce losses and damages that may affect social, economic and ecological values.

The government approved the “The national program for reducing natural disasters” in 1999. However, natural disaster always costly and it is hard to cover 100% damage from the government.


16. Institutional Stability: 3.5

From 1926-1990, judges and courts occupied one of the lowest governmental levels.

1926, decision to establish first instance courts.

1992, the Constitution of Mongolia proclaimed the principle of equality of the state power and recognized independent court as the only institution to exercise judicial power. 1993, Law on court was enacted to apply the provisions of the Constitution.

2004, more than 280 laws exist. The right to adopt laws remains with the legislative branch of the state.


17. Honest Government: 1.5

It is hard to trust, it comes to government because of the people, who work for the government. It doesn’t mean everybody but there are some people work for themselves not for others.

According to George W. Bush warned when he visited to Mongolia, that there “should be no corruption in government, that one of the foundations of any government is the ability for the people to trust the government, itself.”


18. Common Law: 3.5

Mongolian laws are of equal status within a unified system of law, the Mongolian legal system has been influenced by the Romano-Germanic legal system division between civil and public law. Although criminal law is sometimes also classified as a separate division, it must be regarded as a specialized part of public law.

Civil law contains a concentration of legal principles concerned with the regulation of civil life. Public law is concerned with the legal relationship between the citizen and the state.

The modern system of Mongolian law is to develop a country respecting human rights, democratic values, the market economic, and the rule of law.


19. Central Bank: 3.0

The Bank of Mongolia is the central bank of Mongolia. The central bank of Mongolia is the organization in charge of implementing state monetary policy within the territory of Mongolia.

The bank of Mongolia has reduced its policy rate by 0.5 points to 9.75 percent.

The central bank has made a variety of moves to help ensure liquidity in the banking system, including allocating half of a stabilization fund made up from windfall profits on copper and gold.

The former Soviet Union transferred its own share of capital and stocks in the Bank of Mongolia to the State of Mongolia. Following this, the Bank of Mongolia was renamed as the State Bank of Mongolia.

Sources: ;;

20. Domestic Budget Management: 3.5

In 2008, the total budget loss is 395 billion MNT or 6.1% of total GDP. But the state budget current balance has profit of 300 billion MNT. Current balance of 300 billion MNT that major part of its budget loss is because of the investment and creation.

Budget: Revenues- $1.58 billion Expenditures-$1.497 billion

Sources: ;

21. Government Debts: 2.5

Before 1990, Mongolia had been dependent on financial support and technical assistance provided by the Soviet Union. With the collapse of Soviet support, the country found itself unable to meet its needs, due to a shortage of foreign currency to buy consumer goods, equipment, and other necessities.

Russia has decided to write off $10 billion in Mongolian debt. Under the agreement, Ulan Bator will repay just $300 million, which it intends to raise through a state-bond issue. In recent years, Mongolia has been energetically developing economic ties with the European Union, Japan, and the United States, a process that has been retarded by the country’s debts to Russia and China.

At the time the write-off agreement was reached, Mongolia's GDP was less than half of the amount of debt.

Sources:; ;

22. Economic Statistics: 3.0

Mongolian National Statistical office of Mongolia publish statistical information monthly and yearly. It is given information with two languages English and Mongolian. The goal of this web site is to give information about economy situation what’s happing in Mongolia. However, it does not give lots of information and it just shows basic information that we should know.


23. Protection of Public Health and Safety: 2.0

Despite Passing a law on toxic and hazardous chemicals in 2006, the government failed to monitor the use of toxic chemicals such as mercury and sodium cyanide in mining. Large amounts of these chemicals were reportedly uses in more than 20 soums (districts) in a aimag (provinces), polluting the local water supply. According to the National Human Rights Commission, in khongor soum mercury contamination was 100 to 125 times higher than recommended levels and sodium cyanide was 900 times higher than recommended levels.

For example, the Boroo Gold Company (BGC) believes that the health and safety of its employees and the public, and the protection of the natural environment, are among its fundamental responsibilities.

For example, TB medication is available only through the central TB hospital and regional clinics and not from private pharmacies. National statistics show the lowest incidence of TB in the past 10 years occurred during 1990 to 1994.

The food safety situation in Mongolia is presented from the end users health outcome, or from the end of the food chain till food supply, storage and point of purchase. Positive changes include advances in the legislative environment and technological improvements in small food enterprises over recent years.


24. High wage policies: 1.0

In Mongolia the banking system is not work same as American bank, so the cash money is important in Mongolia. Average salaries in Mongolia are very hard to provide whole family. People’s wage is getting higher than before but the living expense is also going up too. Unemployment rate increased by 65%, which shows unable to provide and support their family members. Annual income per person $880 source from : World Bank Development indicators 2007.


25. Environmental Protection: 1.0

The latest Mongolian state of the environment report prepared by UNEP, it shows that recent transitions to a market economy from centralized policies of rapid urbanization and industrialization have accelerated risks to the environment.

For the nearly one million residents of Ulaanbaatar, declining air quality is causing an increasing number of people to fall ill with respiratory diseases, especially during the winter. City residents inhale pollution of heating boilers, 75,000 open fires in traditional Mongolian tents and wood homes, and the emissions of 50,000 vehicles now on the streets of the capital. There are law of protects the environment but it does not work well because of the poor economy.


26. Strong Army: 3.0

The great Mongol Empire of the thirteenth and fourteenth centuries that stretched from Korea to Hungary and encompassed nearly all of Asia except the Indian subcontinent and parts of southeast Asia. Because the Mongol Empire was so rest the largest contiguous land empire in the history of the world.

In Mongolia drafting age is 18 and required one year serves, however they can be excused for medical or an other reasons. Mongolian armed forces are performing peacekeeping missions in Sierra Leone, Iraq, Ethiopia, Eritrea, and Afghanistan.

Ground forces possess over 600 tanks, 450 mobile artillery pieces, 100 mobile anti- air defense vehicles and other military vehicles and equipment . Most of them are old Soviet Union models desired between the late 50’s to early 70’.

Sources: of Mongolia ;

27. Foreign Trade Impact: 1.0

Exports: 1.949 billion & Import: 2.117 billion and GPD is 9.792 billion.

1.949+2.117 / 9.792 = 42%;

Overall foreign trade impact covers only 1.4% of the GPD.


28. Protection of Foreign Currency Earning Enterprises: 1.5

2008 economic growth of Mongolia was 8.9% and inflation was 22.1%. Inflation rate increased by 5.7% in April 2008, the highest indication of last year. Foreign trade loss was over one billion US $ and the main cause of the recession in 2008. 1) export commodity price fell and decreased foreign currency flow into Mongolia; 2) individuals prefer foreign currency savings instead of MNT. (MNT is Mongolian currency)

For example, today more than half of the raw cashmere in Mongolia is exported to China. Exporting raw cashmere puts the Mongolian cashmere industry out of business because Chinese enterprises able to buy higher price than Mongolian cashmere enterprise. Since the Chinese government is buying large amounts of cashmere in Mongolia, it is pulling the supply of raw cashmere out of Mongolia. To counter this trend, the Mongolian government after the transformation put an export tax on raw cashmere. This export tax does not work very well due to smuggling.

Sources:; of Mongolia ;

29. Management of Foreign Currency Budget: 3.0

For the preliminary result of 2008, total and revenue and grants of General Government budget amounted to 2156.4 bln (togrogs) and total expenditure and net lending 2462.0 bln (togrogs). The General Governmental budget overall balance was a deficit 305.7 bln (togrogs).

Exports: animal products, cashmere, wool, copper, hides, and some metals.

Imports: food products, building materials, fuel, machinery, equipments.

Exports 1.949 - Imports 2.117=-0.168

Source: more& id=28;

30. Layers of Collective Actions: 2.0

Mongolia is a parliamentary republic. The parliament is elected by the people and in turn elects the government. The president is elected directly. Mongolia has a number of political parties, the biggest ones being the Mongolian people’s Revolutionary Party (MPRP) and the Democratic Party (DP). The resident elect 4 years and can reelect one more term. Parliament members, 76 members for 4 years term.

There are few major departments appointed by the upper level, such as school institute, the utility department and the medial associate.


http://en.wikipedia.orge/wiki/mongolia ;

31. Pro-Business Climate: 2.5

Last 10 years, Mongolia business climate changed because there are many business open by individual owner. Opening new business in Mongolia is easy, but have to have own money in order to make own business because there are no loan system works. In order to improve the pro business climate, the government try to lower the taxes and try to spend less, but seems doesn’t work well.


32. Government Enterprises: 2.0

Early 1990, almost all enterprises used to own by government. Many times, government enterprises get help as finance. But nowadays, after 2000, there are many businesses focus on private. Most of the big enterprises owned by private parties. Many government enterprises do finance themselves and sometimes need government help as well. There are few government enterprises, such as Mongol Bank, Gobi, and Daatgal Bank.

Source: ;

33. International Security Agreements: 3.0

From Mongolia’s perspective, that of a non-nuclear weapon state, nuclear disarmament should remain a highest priority on the international disarmament agenda. Mongolia, located between two nuclear weapon states, Russia and China.

In the wake of the international socialist economic system’s collapse and the disintegration of the former Soviet Union, Mongolians began to pursue an independent and nonaligned foreign policy. Mongolian relations with China began to improve in the mid-1980’s when consular agreements were reached and cross-border trade contacts expanded. The cornerstone of the Mongolia- Chinese relationship is a 1994 Treaty of Friendship and Cooperation, which codifies mutual respect for the independence and territorial integrity of both sides.

Source: ;

34. Protections of Domestic Enterprises from Government Mandated Costs: 1.5

Mongolia has promoted a market-oriented economy since its shift to a democratic system in 1990, and as a result many private businesses have flourished. Since 2005, the economic goes down, it change whole environment. The media became controlled by government and taxes rate goes up for the businesses. Nowadays the domestic enterprises are getting worse and lots of unemployed people and increasing tax. In the business market and people who are related with government not honest and based on bribery.



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