The Executive Board of the International Monetary Fund (IMF) has completed its 2025 Article IV Consultation with Mongolia, following a period of strong economic growth driven by the mining sector in 2023 and 2024. The sector's performance contributed to increased exports and fiscal revenues, reducing external and fiscal vulnerabilities. However, the first half of 2025 saw a sharp drop in coal exports, which led to a widening current account deficit, lower budget revenues, and depreciation pressures on the national currency.
Headline inflation peaked in February but moderated to 8.2 percent by June. Despite some moderation, credit growth remains high in both banking and nonbank financial sectors. The new government formed in June 2025 has indicated it will continue existing policies and has submitted an amended budget aimed at reducing expenditures to comply with structural fiscal deficit limits.
Economic growth for Mongolia is projected at 5.5 percent for 2025, mainly due to a recovery in agriculture and continued strong mining output—particularly higher-grade copper concentrate production at Oyu Tolgoi. Nonetheless, declining coal prices are expected to further widen both current account and fiscal deficits. Growth is forecasted to remain near this level into 2026 before gradually converging toward its potential rate of about five percent over the medium term.
Risks to this outlook have grown due to uncertainties around Chinese demand for coal and potential declines in coal prices. There are also concerns that policy changes could undermine reform progress if pressures mount to distribute mining benefits more broadly or exempt large projects from fiscal rules.
In their assessment, IMF Executive Directors recognized Mongolia’s achievements: "Executive Directors noted the strong growth and fiscal surpluses achieved in 2023−2024, which helped reduce Mongolia’s vulnerabilities." They also highlighted emerging risks: "Directors underscored, however, that the near-term outlook has become less favorable, with rising downside risks from lower coal prices and greater global uncertainty."
The Board called for prudent macroeconomic management: "Against this backdrop, they called for prudent macroeconomic policies to restore external and internal balances and for structural reforms to achieve diversified and sustainable growth."
Directors supported efforts by Mongolian authorities to adhere to spending limits: "Directors welcomed the authorities’ commitment to meeting the structural deficit limit through expenditure restraint, which is reflected in the supplementary 2025 budget." They emphasized broadening non-mining tax bases and careful prioritization of capital projects within established fiscal rules.
Further recommendations included strengthening domestic debt markets: "Directors encouraged the authorities to expand domestic debt issuance to develop domestic debt markets and enhance monetary policy transmission." They advised maintaining tight monetary policy against inflationary pressures: "Directors called on the Bank of Mongolia (BOM) to maintain a tight monetary policy stance to contain inflation."
The Board suggested legal reforms for central bank independence: "They also recommended strengthening the BOM’s legal mandate, operational autonomy, and governance through amendments to the central bank law and by ending the BOM’s quasi-fiscal operations."
On exchange rate policy: "Directors concurred that greater exchange rate flexibility would enhance Mongolia’s resilience to external shocks and help deepen the foreign exchange market."
Regarding financial stability measures: "Directors welcomed the recent macroprudential policy tightening," recommending further alignment between banks' practices regarding lending standards as well as improved oversight frameworks.
Finally, directors stressed ongoing reforms as key for long-term development: "Directors agreed that structural reforms to improve the business climate, combat corruption, strengthen governance, and address climate change-related challenges remain essential for achieving diversified and sustainable growth." Progress was acknowledged on anti-money laundering regulations with calls for effective implementation going forward.
The IMF conducts annual consultations under Article IV of its Articles of Agreement. During these consultations staff gather economic information during country visits before reporting back for discussion by its Executive Board; summaries are then shared with national authorities (IMF explanation).