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Mongolia

Author(s):
International Monetary Fund
Published Date:
November 2002
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I. Growth and Recovery in Mongolia During Transition1

A. Introduction

1. Like many former socialist countries, Mongolia began its transformation from a centrally-planned economy to a market-based economy in the early 1990s. While there is a large literature on the growth experience of other transition countries, Mongolia has received relatively little attention.2 This paper attempts to fill this gap by focusing on the following questions: (i) What were Mongolia’s sources of growth before and during transition? (ii) How do Mongolia’s growth and recovery compare with those of other transition economies? and (iii) What explains differences in Mongolia’s performance relative to other transition economies?

2. The findings of previous studies about other transition economies include the following stylized facts.3 First, the reforms introduced at the early stages of transition were typically followed by output declines in the short run. Second, traditional factor inputs appear to have had a limited role in explaining growth over time and across countries for transition economies. In particular, econometric studies have found no strong link between the level of aggregate investment and the strength of recovery from the fall in output recorded in the early years of transition. Therefore, most researchers agree that efficiency gains are the main source of growth during the recovery phase of transition, with the development of good institutions playing an important supportive role.

3. The chapter is organized as follows: Section B describes the major sources of economic growth in Mongolia since the early 1980s in the context of a basic growth accounting framework. Section C discusses Mongolia’s post-transition growth performance relative to other transition countries. The main conclusions along with some caveats are summarized in Section D.

B. A Growth Accounting Exercise for Mongolia

Methodology and Data

4. Following the conventional growth accounting framework, we assume that Mongolia’s output performance since the early 1980s can be explained by the following Cobb-Douglas production function:

where K is the physical capital stock, q is a human capital index, and L is labor input. A is total factor productivity (TFP) which captures anything not explained by K, L, or q.

5. Taking logarithms and differentiating, we obtain the following growth accounting equation:

Equation (2) decomposes the growth rate of output into the growth rates of TFP, physical capital, labor, and human capital.

6. Physical capital K is calculated by the conventional perpetual inventory method, as discussed in Barro and Sala-i-Martin (2000):

where I is the level of real investment and δ is the rate of depreciation of the existing capital stock. Given estimates of the depreciation rate and the initial capital stock, and a time series of the investment data, we can calculate the capital stock series recursively using (3). In this study, the depreciation rate is assumed to be 6 percent, which is well within the range of 4–10 percent used in other similar studies. Since Mongolia’s industrialization began in the early 1960s, 1959 has been selected as the initial year when the capital stock was assumed to be zero.4

7. The time series data used in this study for real GDP (Y), real investment (I), the capital stock (K), labor (L), and human capital (q) between 1980 and 2001 are presented in Table I.1. Data on real GDP and investment in current prices were obtained from the National Statistical Office (NSO).5 Due to the lack of official data on the expenditure deflators, the investment deflator was approximated based on the following equation:

Table I.1.Mongolia: Estimates of Real GDP and Factor Inputs, 1980–2001
YearReal GDPReal InvestmentCapitalLaborHuman Capital
In billions of togrogs, constant 1995 pricesIn thousands of personsAverage number of years of schooling
1980376.1172.81183.8516.06.7
1981407.4235.31348.1518.06.7
1982441.4250.01517.2532.26.8
1983466.9208.71634.9543.06.9
1984494.9236.71773.5550.37.0
1985525.7259.91927.0589.57.1
1986575.0294.12105.5643.17.2
1987594.8278.92258.0665.47.3
1988625.2275.42398.0743.37.4
1989651.5291.82545.9764.17.5
1990635.1205.42598.5783.67.6
1991576.497.02539.6795.77.7
1992521.654.82442.0806.07.9
1993505.9122.32417.8765.48.0
1994517.692.72365.4759.88.1
1995550.391.52315.0767.68.2
1996563.291.32267.4769.68.3
1997585.7111.42242.8765.18.4
1998606.4129.52237.7792.68.5
1999625.9146.62250.1813.68.7
2000632.5153.82268.8809.08.8
2001639.7175.92308.6832.38.9
Sources: Data provided by the NSO; and NSO and UNDP, Living Standards Survey, 1998.
Sources: Data provided by the NSO; and NSO and UNDP, Living Standards Survey, 1998.

Investment Deflator=w*(Construction Investment Deflator)+(1-w)*(GDP Deflator),

with w being the share of construction in total investment. The construction deflator has been derived implicitly from the real and nominal construction data obtained from Mongolia’s national accounts statistics. Since there are no data for the nonconstruction investment deflator, the GDP deflator has been used as a proxy.6 Labor input has been approximated by total employment, which was obtained from the NSO. Finally, following Lucas (1988), the human capital index is measured by the average number of years of schooling of the Mongolian population aged 15 or above. Data for this variable were obtained from Mongolia’s Living Standards Survey (1998) and are presented in Table I.2. Since only data for two years are available (1989 and 1998), figures for other years were estimated by assuming a constant annual growth rate in the human capital stock.

Table I.2.Mongolia: Composition of Population Aged 15 or above by Educational Status
UneducatedPrimaryIncomplete SecondaryComplete SecondarySpecial EducationTertiaryAverage Number of Years of Schooling
(0 Year of Schooling)(4 Years of Schooling)(8 Years of Schooling)(10 Years of Schooling)(10 Years of Schooling)(14–15 of Years Schooling)
(In Percent)
19899.420.533.918.19.68.57.5
19984.215.332.224.512.311.58.5
Sources: NSO and UNDP, Living Standards Survey, 1998: and staff estimates.
Sources: NSO and UNDP, Living Standards Survey, 1998: and staff estimates.

8. The income share of capital, α, is calculated by a regression approach. Specifically, dividing both sides of (1) by L and q and then taking logarithms, we obtain:

In yt = In At + α In kt,

with, ytYtqtLt and ktKtqtLt. Taking first differences (indicated by a Δ), we obtain the following regression equation which can give us an estimate of α:

where γ is average TFP growth and εt is the disturbance term. The regression results are shown below:

CoefficientsStandard Errort Statistics
Intercept-0.0080.009-0.95
α0.690.183.77
Number of Observations20 (1980–1999)R-squared0.43

As discussed below, average TFP growth over the period between 1980 and 2000 is sometimes positive and sometimes negative, which is consistent with an estimated intercept not significantly different from zero. The estimate of α of 0.69 may seem large, but it is not out of line with the findings of other empirical studies. For example, Senhadji (1999), using a similar econometric approach as the one used in this paper, found that the average value of α for his sample of 88 countries was 0.53, with some countries having values as high as 0.91. Similarly, Heytens and Zebregs (2000) estimated that α was equal to 0.63 in China, an Asian transition economy, which may share a number of characteristics with Mongolia.

Results

9. As indicated in Figure I.1, the evolution of real GDP and capital and labor productivity since 1990, where the latter are defined as GDP/K and GDP/L, suggests that Mongolia, like many other former socialist economies, experienced a painful “transformational recession” in the first few years during its transition to a market economy before beginning to recover as a result of efficiency gains from market-oriented reforms. Real GDP and capital and labor productivity bottomed out in 1992–93 and began to recover to positive rates of growth thereafter. By 1995, capital productivity had started to surpass its 1990 level, and by 2001, real GDP had reverted to the level prior to the transition. Labor productivity as of 2001, however, was still slightly below the level of 1990, possibly reflecting sluggishness in the shedding and reallocation of labor employed in the less productive state-controlled sector of the economy.

Figure I.1.Mongolia: Output, Capital Productivity, and Labor Productivity, 1990–2001

(1990=100)

Source: WEO; Staff estimates.

10. Mongolia’s sources of growth before and after the transition resemble those in most other transition economies. As is indicated in Table I.3, which summarizes the estimates derived from equation (2), capital accumulation appears to have been the key engine for economic growth before the transition began; however, its role diminished following the launching of market-oriented reforms. Similarly, neither education nor employment appears to have made a considerable contribution to economic growth during the early years of transition. While the growth of factor inputs cannot account for Mongolia’s growth performance during the transition, total factor productivity (TFP) seems to be of paramount importance. In the 1980s, TFP was largely negative, reflecting resource misallocation typical of all planned economies. Then, TFP declined even further at the initial stages of the transition, becoming the primary factor accounting for the collapse in Mongolia’s real GDP in the early 1990s. But as stabilization policies took hold and the foundations were laid for the development of a competitive market economy, TFP turned positive from the mid-1990s. Hence, consistent with the findings of empirical work on other transition economies, efficiency gains, as measured by TFP, appear to have been the main factor accounting for the pick-up of growth in Mongolia as the transition took root.

Table I.3.Mongolia: Results of Growth Accounting Exercise(In Percent)
YearAnnual Average Growth Rate of OutputAnnual Average Contributions to Output Growth
CapitalEmploymentEducationTFP
1980–847.117.340.500.43-1.17
1985–895.514.982.080.43-1.98
1990–94-4.99-1.60-0.240.43-3.58
1995–20012.54-0.030.420.431.72

Sensitivity Analysis

11. Although the above growth accounting exercise is based on arbitrary assumptions about the initial capital stock and its rate of depreciation, sensitivity analysis suggests that the results are robust to different assumptions. Table I.4.A shows the results for the growth accounting exercise under a different assumption about the initial capital stock, with an investment/GDP ratio between 1949–59 that is the same as the average level recorded during the 1970s (38 percent), as opposed to an assumption of a zero capital stock in 1959 in the benchmark scenario. While this probably overstates the initial capital stock by a significant amount, the results in Table I.4.A are only slightly different from those in Table I.3, and the big picture remains the same. Similarly, changes in the depreciation rate do not alter the main results. As shown in Tables I.4.B and I.4.C the relative contributions to growth from factor inputs and TFP show basically the same patterns with a depreciation rate of 4 percent or 10 percent (compared with 6 percent in the benchmark scenario).

Table I.4.Mongolia: Growth Accounting Exercise: Sensitivity Analysis(In percent)
YearAnnual Average Growth Rate of OutputAnnual Average Contributions to Output Growth
CapitalEmploymentEducationTFP
A. Assuming the Investment/GDP Ratio Equals 38 Percent During 1949–59
1980–19847.117.190.420.36-0.87
1985–19895.515.081.740.36-1.67
1990–1994-4.99-1.76-0.200.36-3.38
1995–20012.54-0.090.350.361.92
B. Assuming a Depreciation Rate of 4 Percent
1980–19847.117.970.420.36-1.65
1985–19895.515.621.740.36-2.21
1990–1994-4.99-0.67-0.200.36-4.47
1995–20012.540.480.350.361.34
C. Assuming a Depreciation Rate of 10 Percent
1980–19847.116.400.630.54-0.47
1985–19895.514.022.610.54-1.67
1990–1994-4.99-3.04-0.300.54-2.19
1995–20012.54-0.500.530.541.97

C. Comparison with Other Transition Economies

12. Compared with other transition economies, Mongolia’s speed of recovery has been moderately fast. While Mongolia’s output recovery was slightly more sluggish than in the best-performing countries in Central and Eastern Europe, its growth performance during the transition has been unequivocally superior to those of the Baltics, the Commonwealth of Independent States (CIS) except for Uzbekistan, and the poorer performers in Central and Eastern Europe (Figure I.2 and Table I.5. and Table I.6. While the Baltics and the CIS suffered a cumulative output loss averaging 23.8 percent and 34.2 percent, respectively, during 1990–2001, Mongolia’s output rose by 0.7 percent during the same period. Moreover, between 1990–2001, Mongolia recorded only three years of output decline, compared with an average of 3.9 years in Central and Eastern Europe, 4.7 years in the Baltics, and 5.8 years in the CIS.

Figure I.2.Comparative GDP Performance in Transition Economies, 1990–2001

Source: WEO; staff estimates.

Table I.5.Comparative GDP Performance in Transition Economies, 1990–2001Index (1990=100)
Country1989199019911992199319941995199619971998199920002001
Mongolia102.6100.090.882.179.781.586.688.792.295.598.699.6100.7
Commonthwealth of Independent States (CIS)
Armenia102.2100.087.641.535.737.640.242.644.047.248.851.756.7
Azerbaijan113.3100.099.376.759.047.441.842.344.849.352.958.864.1
Belarus102.3100.098.889.282.975.567.769.677.583.986.891.895.6
Georgia117.6100.078.943.530.727.528.331.234.535.536.637.339.0
Kazakhstan102.3100.089.084.376.566.961.461.762.761.563.269.478.5
Kyrgyz Republic102.4100.092.279.467.153.850.954.559.961.163.366.870.3
Moldova102.4100.082.553.953.336.836.334.234.732.431.332.034.0
Russia96.4100.094.576.966.957.955.553.654.151.454.259.162.1
Tajikstan148.3100.092.966.158.746.240.438.639.341.342.946.451.2
Turkmenistan102.3100.095.390.281.267.262.358.251.655.264.375.991.4
Ukaine103.7100.089.480.769.253.346.942.240.940.140.042.346.2
Uzbekistan95.9100.099.588.586.482.882.083.485.489.192.996.5100.8
Average107.4100.091.672.664.054.451.151.052.454.056.460.765.8
Baltics
Estonia102.3100.092.172.266.264.967.770.477.280.880.386.090.3
Latvia102.3100.088.957.649.049.348.950.554.957.057.661.666.2
Lithuania94.8100.094.374.262.256.158.060.765.168.465.868.372.3
Average99.8100.091.868.059.256.858.260.565.768.867.972.0763
Central and Eastern Europe (Negative Growth)
Bulgaria110.0100.089.681.771.866.269.162.659.161.562.966.368.9
Croatia108.1100.083.073.367.471.476.380.886.188.388.091.295.0
Macedonia, FYR108.1100.093.887.681.079.678.779.680.883.587.191.087.3
Romania105.9100.087.179.480.783.889.993.587.883.682.684.188.6
Average108.0100.088.480.575.275.378.579.178.579.280.183.284.9
Central and Eastern Europe (Positive Growth)
Albania111.1100.072.066.873.280.179.495.288.595.6102.6110.6117.8
Czech Republic102.5100.088.487.988.089.995.399.498.697.698.0101.2104.5
Hungary103.6100.088.185.484.987.488.789.994.098.6102.7108.1112.2
Poland107.7100.093.094.999.0104.1111.2117.9125.9131.9137.3142.8144.3
Slovak Republic100.4100.084.178.575.679.384.689.995.499.3100.5102.8106.1
Slovenia108.1100.091.186.188.593.397.1100.5105.1109.1114.8120.1123.6
Average105.6100.086.183.384.989.092.798.8101.3105.4109.3114.3118.1
Sources: WHO; IMF Occasional Paper 184; and staff estimates.
Sources: WHO; IMF Occasional Paper 184; and staff estimates.
Table I.6.Comparative Growth Performance and Location of Transition Economies, 1990–2001(In percent, unless otherwise indicated)
Cumulative Growth between 1990–2001Number of Years of Decline Before Initial RecoveryTotal Number of Years of Decline Between 1990–2001Cumulative Decline Before Initial RecoveryCumulative Growth Since Initial RecoveryAverage Growth between Initial Recovery and 2001
MONGOLIA0.73.03.0-20.326.43.0
Commonthwealth of Independent States (CIS)
Armenia-43.33.03.0-64.358.85.9
Azerbaijan-35.95.05.0-58.253.37.4
Belarus-4.45.05.0-32.341.25.9
Georgia-61.04.04.0-72.541.55.1
Kazakhstan-21.55.06.0-38.628.04.2
Kyrgyz Republic-29.75.05.0-49.138.15.5
Moldova-66.06.08.0-65.8-0.6-0.1
Russia-37.96.07.0-46.415.83.0
Tajikistan-48.86.06.0-61.432.55.8
Turkmenistan-8.67.07.0-48.477.215.4
Ukraine-53.89.09.0-60.015.47.4
Uzbekistan0.85.05.0-18.022.93.5
Average-34.25.55.8-51.335.35.8
Baltics
Estonia-9.74.05.0-35.139.14.8
Latvia-33.83.04.0-51.035.13.8
Lithuania-27.74.05.0-43.928.83.7
Average-23.73.74.7-43.334.34.1
Central and Eastern Europe (High Growth)
Albania17.82.04.0-33.276.36.5
Czech Republic4.52.04.0-12.118.91.9
Hungary12.23.03.0-15.132.23.5
Poland44.31.01.0-7.055.14.5
Slovak Republic6.13.03.0-24.440.54.3
Slovenia23.62.02.0-13.943.64.1
Average18.12.22.8-17.644.44.2
Central and Eastern Europe (Low Growth)
Bulgaria-31.14.06.0-33.84.00.6
Croatia-5.03.04.0-32.640.84.4
Macedonia, FYR-12.75.06.0-21.310.91.7
Romania-11.42.05.0-20.611.51.2
Average-15.13.55.3-27.016.82.0
Sources: WEO; IMF Occasional Paper 184; and staff estimates.
Sources: WEO; IMF Occasional Paper 184; and staff estimates.

13. Mongolia’s relatively fast recovery cannot be easily attributed to any one factor such as geography, historical and economic ties, the level of industrialization, per-capita income, or openness. As Table I.6. shows, despite Mongolia’s physical proximity and historical and economic ties to the CIS, the latter performed more poorly than Mongolia. Similarly, Mongolia’s high growth performance cannot be fully explained by its low level of industrialization (as approximated by the agricultural share in GDP over the period 1990–2001). As Table I.7. shows, countries with a like-sized agricultural sector, such as Armenia and Moldova, recovered more slowly than Mongolia during transition. Nor can Mongolia’s low income level alone account for its relative growth success in light of the poor performance in other low-income countries such as Tajikistan, and the good performance in high-income countries such as Slovenia (Table I.8.). Finally, openness to trade may partly explain Mongolia’s relative growth success. As shown in Table I.9. Mongolia is a fairly open economy, with an exports-plus-imports-to-GDP ratio of about 112 percent. Yet, this factor alone cannot explain Mongolia’s favorable growth performance, compared with the performance in some other highly open economies such as Moldova.

Table I.7.Comparative Growth Performance and Share of Agriculture in GDP in Transition Economies, 1990–2001
Agriculture Share in GDPCumulative Growth between 1990–2001 (rank*)Number of Years of Decline Before Initial RecoveryTotal Number of Years of Decline Between 1990–2001Cumulative Decline Before Initial Recovery (rank*)Cumulative Growth Since Initial Recovery (rank*)Average Growth between Initial Recovery and 2001
RankAverage, 1990–2000
Albania149.132.04.012264
Georgia239.9254.04.026189
Kyrgyz Republic339.9175.05.019158
Armenia433.6223.03.024255
MONGOLIA533.283.03.061021
Moldova633.0266.08.0251126
Uzbekistan732.875.05.05219
Tajikistan829.6236.06.02347
Turkmenistan924.7117.07.01811
Azerbaijan1024.3205.05.021243
Belarus1118.295.05.010236
Romania1218.1132.05.07824
Ukraine1318.0249.09.02232
Bulgaria1415.3184.06.0132225
Kazakhstan1514.0155.06.0151614
Lithuania1613.4164.05.0161317
Macedonia, FYR1712.9145.06.081223
Latvia1811.9193.04.0201416
Croatia1911.0103.04.0112112
Estonia2010.9124.05.0141910
Russia219.3216.07.017720
Hungary228.643.03.041718
Poland236.011.01.01911
Slovak Republic245.553.03.09613
Czech Republic255.162.04.022022
Slovenia264.522.02.03515
Sources: WBO; World Bank: World Development Indicators Database; IMF Occasional Paper 184; and staff estimates.

The lower the rank, the better the performance.

Sources: WBO; World Bank: World Development Indicators Database; IMF Occasional Paper 184; and staff estimates.

The lower the rank, the better the performance.

Table I.8.Comparative Growth Performance and PPP-Based Per-Capita Income Level in Transition Economies, 1990–2001
PPP Per CapitaCumulative Growth between 1990–2001 (rank*)Number of Years of Years of Decline Before Initial RecoveryTotal Number Years of Decline of Between 1990–2001Cumulative Growth between Decline Before Initial Recovery (rank*)Cumulative Growth Since Initial Recovery (rank*)Average Growth between Initial Recovery and 2001
RankAverage, 1990–2000
Slovenia1327722.02.03515
Czech Republic21233662.04.022022
Hungary3971643.03.041718
Slovak Republic4886453.03.09613
Russia57873216.07.017720
Estonia67150124.05.0141910
Poland7711211.01.01911
Turkmenistan86570117.07.01811
Lithuania96553164.05.0161317
Belarus10639795.05.010236
Croatia116128103.04.012112
Romania126041132.05.07824
Latvia135870193.04.0201416
Kazakhstan145169155.06.0151614
Bulgaria155011184.06.0132225
Macedonia, FYR164830145.06.081223
Ukraine174682249.09.02232
Georgia184621254.04.026189
Azerbaijan192856205.05.021243
Moldova202791266.08.025126
Albania21272732.04.012264
Armenia222626223.03.024255
Kyrgyz Republic232580175.05.019158
Uzbekistan24217975.05.05219
Tajikistan251462236.06.02347
MONGOLIA2644883.03.061021
Sources: WEO; IMF Occasional Paper 184; and staff estimates.

The lower the rank, the better the performance.

Sources: WEO; IMF Occasional Paper 184; and staff estimates.

The lower the rank, the better the performance.

Table I.9.Comparative Growth Performance and Openness in Transition Economies, 1990–2001
OpennessExports/GDPCumulative Growth between 1990–2001 (rank*)Number of Years of Decline Before Initial RecoveryTotal Number of Years of Decline between 1990–2001Cumulative Decline Before Initial Recovery (rank*)Cumulative Growth Since Initial Recovery (rank*)Average Growth between Initial Recovery and 2001
Rank(=Exports + Imports)/GDP)
Moldova12.791.29266.08.02511
Estonia211.460.70124.05.01419
Slovak Republic31.350.6453.03.09613
Slovenia41.340.6922.02.03515
Armenia51.300.43223.03.024255
Belarus61.160.5595.05.010236
Czech Republic71.140.5762.04.022022
MONGOLIA81.120.5083.03.061021
Macedonia, FYR91.090.50145.06.081223
Latvia101.090.51193.04.0201416
Croatia111.090.51103.04.01121
Lithuania121.040.49164.05.0161317
Bulgaria130.940.46184.06.0132225
Ukraine140.940.46249.09.02232
Kyrgyz Republic150.880.39175.05.019158
Hungary160.860.4243.03.041718
Azerbaijan170.790.35205.05.021243
Georgia180.640.24254.04.026189
Romania190.580.26132.05.07824
Russia200.540.31216.07.017720
Poland210.510.2511.01.01911
Albania220.440.1032.04.012264
Turkmenistan230.00117.07.01811
Kazakhstan24155.06.0151614
Uzbekistan2575.05.05219
Tajikistan26236.06.02347
Sources: WEO; IMF Occasional Paper 184; and staff estimates.

The lower the rank, the better the performance.

Sources: WEO; IMF Occasional Paper 184; and staff estimates.

The lower the rank, the better the performance.

14. Quite surprisingly, Mongolia’s pattern of growth and recovery resembles more those in the high-growth Central and Eastern European countries, which are very different from Mongolia in terms of geography, history, market structure, and developmental stage. Perhaps, Mongolia’s relatively good performance can be attributed to a combination of policy factors, such as a determined macroeconomic adjustment effort to contain inflation and external imbalances and the rapid establishment of an open exchange and trade system, which helped enhance competition and efficiency, as well as more advantageous initial conditions. The latter may have included Mongolia’s relatively low degree of industrialization, which is likely to have facilitated price liberalization and enterprise restracruring.7

D. Conclusions

15. This chapter has described some of the key stylized facts of Mongolia’s growth and recovery during the first decade of its transition to a market-based system and compared them to those of other transition economies. The major findings have been as follows: (1) As in most former socialist countries, while capital accumulation appears to have been the primary factor accounting for growth in the 1980s, efficiency gains became the main source of growth during the early stages of transition; (2) Mongolia, like most other transition economies, experienced a painful, initial “transformational recession” before the economy began to recover; (3) the speed of Mongolia’s recovery has been moderately fast compared with other transition economies; and (4) Mongolia’s favorable performance cannot be easily explained by any single factor such as, geography, historical and economic ties, the level of industrialization, per-capita income, or openness; rather, it is likely due to a combination of policy factors and relatively advantageous initial conditions.

16. While the above results are instructive, they need to be interpreted with caution in light of the well-known weaknesses in the quality of national accounts and related data in transition economies.8 In particular, comparisons of economic performance before and after the transition, and across countries, along the lines described above, may be subject to a large margin of error. In the case of Mongolia, there are also reasons to question the quality of post-transition national accounts data, as elaborated in the following chapter.

II. Issues in Developing National Accounts Estimates and Projections1

A. Introduction

1. Mongolia’s GDP growth rate is officially estimated to have slowed to 1 percent in 2000–01 from an average annual growth rate of 3–4 percent in the late 1990s, but it is targeted to rise to 5–6 percent in the medium-term macroeconomic framework underlying the government’s Interim Proverty Reduction Strategy paper (I-PRSP). The results of the preceding chapter provide a useful framework for the assessment of Mongolia’s economic growth prospects in the period ahead. Thus, assuming that TFP growth continues to be underpinned by sustained implementation of sound macroeconomic policies and market-friendly reforms, and that continued contributions from employment growth and improved education are supported by a progressive recovery in investment, the achievement of the government’s medium-term growth targets should be within reach. Nevertheless, to better assess the factors underlying the recent trends and medium-term prospects, one has to look also at developments in the key sectoral components of GDP. The performance of the weather-sensitive agricultural sector may be of particular significance in this regard, given its unusually poor performance in 2000–01.

2. At the same time, it should be noted that Mongolia’s national accounts statistics continue to suffer from considerable weaknesses. This suggests that recent national accounts estimates and projections should be interpreted with great caution. This chapter first summarizes the main weaknesses of the existing national accounts statistics and then reviews the recent developments and prospects for the main components of GDP.

B. Weaknesses in Mongolia’s National Accounts Statistics

The Treatment of Animal Losses

3. Mongolia experienced two consecutive years of drought in 1999–2000, followed by exceptionally severe winter weather in 2000–01, which resulted in annual losses equivalent to 10–15 percent of the beginning-of-year herd stock in 2000–01. As illustrated in Figure II.1, such big losses have been extraordinarily rare over the last 50 years, and have occurred only once before in the latel960s. Having two consecutive years of such losses has been an unprecedented event in Mongolia’s recent history.

Figure II.1.Mongolia’s Animal Loss Rates, 1951–2001

(Loss During the Year/Beginning-of-Year Herd Stock)

Source: Data provided by the NSO; and staff estimates.

4. According to the 1993 System of National Accounts and the FAO’s handbook on economic accounts, output of the livestock sector should be calculated as the sum of the changes in the value of the herd stock, and the value produced in the forms of meat, milk, hair, skin, and other raw materials of animal origin.2 While a large loss of animals adversely affects both the value of the herd stock and current production, the former can be expected to have a more significant impact.

5. Table II.1. illustrates the impact of the exceptional weather on total output of the livestock sector. While current production decreased by 20 percent in 2001, after having recorded only a slight increase in 2000, the large decline in the value of the herd stock implies that the relevant component of value added was negative in both years. This negative component accounts fully for the recorded decline in the output of the livestock sector in 2000, and for about half of the decline in 2001.

Table II.1.Mongolia: Output of Livestock Sector at 1995 Constant Prices and Contributions to its Growth
In billion of TogrogsGrowth RateContribution to Growth
(In percent)(In percent)
1999200020012000200120002001
Changes in the value of animals33.0-32.2-75.2n.an.a.-23.1-19.6
Production total249.4251.1203.50.7-19.00.6-21.7
Meat production126.5133.8100.65.8-24.82.6-15.2
Milk production52.241.832.4-19.9-22.5-3.7-4.3
Wool production40.941.238.20.7-7.30.1-1.4
Raw hides and skin, fur skin25.630.328.518.4-5.91.7-0.8
Other products *4.24.03.8-4.8-5.0-0.1-0.1
Livestock sector total282.4218.9128.3-22.5-41.4-22.5-41.4

Includes eggs, honey, blood horns, feather, and manure.

Source: Data provided by the NSO; and staff estimates.

Includes eggs, honey, blood horns, feather, and manure.

Source: Data provided by the NSO; and staff estimates.

6. The analytical treatment of such extraordinary losses in the national accounts is an issue worthy of careful consideration. If the weather-related losses are viewed as one-time catastrophic occurrences, then the whole or part of the resulting losses may be excluded from the calculation of GDP.3 However, in the case of Mongolia, harsh winters can be expected to occur with some regularity. In addition, the animal losses resulting from adverse weather are not totally exogenous but may also depend on the extent to which provisions have been made to protect herds from the hardships that can be expected to be associated with Mongolia’s harsh winter. Thus, until 1999, the national accounts methodology used by the NSO did not make any special provisions for the treatment of extraordinary losses in the herd stock.

7. In these circumstances, the authorities are considering three options for the methodology to account for the impact of the unusually large animal losses during 2000–01:4

  • Option A: Distinguish between animals employed as fixed assets (i.e., used for production year after year) and work in progress (i.e., those in the process of being fattened for future slaughter or future employment as productive assets but still in their growth period), and exclude fixed assets from the GDP estimates.

  • Option B: Distinguish between losses that are recurrent or accidental and those that can be deemed as exceptional or catastrophic losses, and exclude exceptional or catastrophic losses from the GDP estimates.

  • Option C: Treat the losses that occurred in 2000–01 like the losses that occurred in previous years, and adhere to the same national accounts methodology used by the NSO for previous years.

8. Mongolia’s GDP growth estimates for 2000–01 are highly sensitive to the choice from among the above options. As illustrated in Table II.2, under Option C, in particular, which reflects the NSO’s methodology until 1999, the estimated rate of growth of real GDP would have to be revised down to significant negative numbers for both years.

Table II.2.Mongolia: Estimates of Annual Growth Rates of Output, 2000–01(In Percent)
20002001
GDPOf which: LivestockGDPOf which: Livestock
Preliminary official estimates1.1-15.71.1-18.5
Option A3.6-8.3-1.6-24.3
Option B1.6-14.3-1.4-26.2
Option C-1.4-22.5-5.2-42.1
Sources: Data provided by the NSO; and staff estimates.
Sources: Data provided by the NSO; and staff estimates.

Accuracy and Reliability

9. Even if one abstracts from the issues related to the measurement of output in the animal husbandry sector, the accuracy and reliability of Mongolia’s national accounts are weak. The criteria that can be used to assess data accuracy and reliability include the size of the statistical discrepancy between GDP estimates derived from the production and expenditure sides, comparisons of national accounts estimates of various GDP components with similar estimates derived from other sources, and the size and frequency of revisions to GDP estimates5.

10. Mongolia’s national accounts show substantial discrepancies between the production- and expenditure-side estimates of GDP. Thus, over the 1995–2000 period, GDP calculated from the expenditure side exceeded the corresponding production side estimates by a margin ranging from 3–8½ percent (Table II.3.).

Table II.3Mongolia: Statistical Discrepancy of GDP between Production Side and Expenditure Side, 1995–2000
199519961997199819992000Average
A. Production Side GDP at Current Price
Billions of Togrogs550.3646.6832.6817.4925.31,044.6
Growth (in percent)17.528.8-1.813.212.9
B. Expenditure Side GDP at Current Price
Billions of Togrogs589.1666.9901.1878.61,005.31,092.4
Growth (in percent)13.235.1-2.514.48.7
Statistical Discrepancy (B-A as a percent of A)7.13.18.27.58.64.66.5
Sources: Data provided by the NSO; and staff estimates.
Sources: Data provided by the NSO; and staff estimates.

11. The individual expenditure components of GDP derived from national accounts data sources also show substantial differences from the corresponding estimates derived from government finance and balance of payments statistics. As illustrated in Table II.4, data on public consumption as well as public investment obtained from the fiscal accounts show nonnegligible differences from the corresponding national accounts data, with significant year-to-year variations. Data on net exports of goods and services from the balance of payments show even larger and more variable deviations from the corresponding national accounts data.

Table II.4.Mongolia: Difference Between Expenditure Data Derived from the National Accounts and Other Source Data, 1995–2000(In billions of togrogs, unless indicated otherwise)
199519961997199819992000
Public Consumption
Data from MOFE (A)170.891.3121.5147.7156.0200.3
GDP data (B)71.491.7112.0144.6158.9180.3
Difference (B-A)/A percent0.80.4-7.8-2.11.8-10.0
Public GFCF
Data from MOFE (A)267.875.297.0107.7114.1106.6
GDP data (B)79.090.1117.3115.5135.6152.9
Difference (B-A)/A percent16.619.821.07.218.843.4
Net Export of Goods and Services
Data from BOP (A)-12.0-51.218.1-110.7-123.2-160.1
GDP data (B)-6.7-51.149.8-110.3-128.8-170.1
Difference (B-A)/A percent-44.5-0.2175.8-0.44.66.3
Sources: Data provided by the NSO; and staff estimates.

95 percent of current expenditure excluding subsidies, transfers, and interest payments.

Capital expenditure plus gross foreign on-lending.

Sources: Data provided by the NSO; and staff estimates.

95 percent of current expenditure excluding subsidies, transfers, and interest payments.

Capital expenditure plus gross foreign on-lending.

12. The NSO makes periodic revisions to its national accounts statistics to reflect improvements in methodology, coverage, source data, and other factors. Such revisions are normally expected to result in improvements in the overall quality of statistics. Accordingly, a revised series on GDP estimates from the production side for the period 1995–98 was published in 2000. The main factors underlying this revision were the implementation of the Mongolian Standard Industrial Classification (MSIC) and the associated expansion in industrial detail, especially for services; the incorporation of the results of the 1998 Establishment Census and other new surveys; and a shift in the base year for the constant price estimates from 1993 to 1995. As can be seen from Table II.5, the resulting revisions for nominal GDP were both large and highly variable from year to year, ranging from an upward adjustment by 28 percent in 1995 to a downward adjustment by 6½ percent in 1998, While this pattern of data revisions may be due to legitimate factors, it raises further questions about the reliability and accuracy of Mongolia’s national accounts.

Table II.5.Mongolia: Magnitude of Revision of GDP Estimates from the Production Side, 1995–98
19951996199719981999
A. Revised Series (in billions of togrogs)550.3646.6832.6817.4925.3
B. Old Series (in billions of togrogs)429.2586.5758.9875.9
Magnitude of Revision (A-B as a percent of B)28.210.29.7-6.7
Sources: Data provided by the NSO; and staff estimates.
Sources: Data provided by the NSO; and staff estimates.

Price Deflators

13. A major difficulty in the estimation of constant price GDP data is the lack of appropriate price indices for deflation. In particular, the NSO does not currently compile a producer price index (PPI). As a result, the national accounts resort to extensive use of consumer price index (CPI) components, or even the total CPI, for deflating production. In the absence of a national CPI, the CPI of Ulaanbaatar city is used as a substitute. Some specific areas of concern with regard to deflation methods are as follows:

  • Wholesale and Retail Trade: The price index used to calculate constant price estimates is the price index for the goods component of the CPI. As this index relates to sales and not value-added, distortions are introduced in the event that there are any changes in the relative sizes of margins, taxes, goods costs, and other inputs.

  • Financial Intermediation: The deflator utilized is the CPI which is unlikely to be a good representation of financial sector wages and profitability. Moreover the high volatility of financial sector profits before and after the banking system crises of the 1990s could not possibly have been captured by the CPI, with the result that the constant price estimates were probably distorted.

  • Public Administration: The deflator used is the CPI for services. As a result, unless wages are indexed to the CPI for services and paid retroactively (which has definitely not been the case in Mongolia in recent years), the constant price estimates are incorrect.

Informal Sector

14. As in most other transition economies, inadequate coverage of a relatively large informal sector poses a particular challenge for the compilation of national accounts in Mongolia. While a sample survey on unincorporated businesses and the informal sector was conducted by the NSO in 1999, its coverage was relatively limited and a number of business activities were excluded. A number of other studies have suggested that the informal sector accounts for a significant fraction of total employment in Mongolia, especially in trade and other services.6 The corresponding level of economic activity accounted for by the informal sector is reported to be equivalent to as much as 30 percent of GDP by some estimates. This would be in line with existing estimates for the size of the informal sector in the CIS states, which share a number of institutional and historical features with Mongolia.7

C. Possible Sources of Growth Over the Medium Term

15. As illustrated in Table II.6, the agricultural and tertiary sectors accounted for the bulk of Mongolia’s economic growth during the late 1990s. A key contributing factor to the dynamism of the agricultural sector was the privatization of herds, which greatly enhanced production and investment incentives in the animal husbandry sector. Thus, the total size of the herd increased from 24.7 million in 1990 to 33.6 million by end-1999. In the tertiary sector, which was dominated by trade, transport, and related services, the early privatization of small and medium-sized enterprises, together with the entry of new firms, was also conducive to rapid growth in activity. While profitable opportunities in gold mining and other mineral extraction also led to sustained growth in the output of the mining sector, manufacturing suffered a prolonged decline. As the former employees of defunct state industries sought new opportunities in herding, trading, and other services, including in the informal sector, the growth of activity in these sectors was amplified.

Table II.6.Mongolia: Recent Contributions to GDP Growth by Sector and Possible Sources of Future Growth(In Percent)
AverageAverageEstEstProj.Proj.Proj.
1991–951996–9920002001200220032004
Agriculture, Hunting and Forestry1.9-5.8-5.90.10.71.3
Secondary Sector-0.10.32.81.51.61.7
Mining and Quarrying0.60.81.10.90.91.0
Manufacturing-0.8-0.31.50.50.60.6
Tertiary Sector1.56.64.22.32.72.9
Whole sale and retail trade0.64.42.41.01.31.5
Hotels and Restaurants0.00.10.10.00.10.1
Transport, Storage and Communication0.51.91.20.70.90.9
Financial Intermediation0.00.10.50.30.10.1
Real GDP-2.63.31.11.13.95.06.0

16. The effects of the exceptional weather led to a drastic shift in the pattern of economic growth during 2000–01. The decline in the output of the agricultural sector is estimated to have been largely offset by an upsurge of activity in the tertiary sector, led by wholesale and retail trade and transport and communications. However, there are still questions about the appropriate accounting treatment of the losses in the herd stock, which fell to 25.6 million by end-2001. The mining sector’s contribution to growth also increased in 2000–01, as new gold mines came on stream, production of copper rose, and the sector continued to attract the lion’s share of new foreign direct investment. Manufacturing activity is estimated to have picked up strongly in 2002, especially in textiles, apparel, and dressing and dyeing of fur. However, the exports of these sectors’ products have been lackluster, raising questions about the sustainability of the recent pickup in activity.

17. While the staff’s latest estimates suggest that, on current trends, real GDP can be expected to increase by 3½—4 percent in 2002, the prospects for the medium term are subject to a considerable degree of uncertainty. The government’s I-PRSP envisages a progressive increase in the annual rate of growth of real GDP to 5 percent in 2003 and to 6 percent in 2004. As illustrated in Table II.6, assuming that there is resumed growth in the agricultural sector, albeit at a more modest rate than in the late 1990s, and a sustained expansion of the secondary and tertiary sectors, the government’s medium-term growth targets could be feasible. However, the large weather-related losses of the last two years have raised the possibility that the agricultural sector may be far more vulnerable in the period ahead than it had been over the last fifty years. This could be a result of both endogenous and exogenous factors. On the domestic policy front, the herders’ lack of preparedness to deal with the recent exceptional weather could be seen as a side-effect of the shift from the collective farms of the former centrally planned system. Another possibility is that long-term changes in climatic conditions may imply that the occurrence of drought and extreme cold may not be as infrequent as in the past, with the result that agriculture may become a less reliable source of economic growth than it had been in the 1990s, These considerations reinforce the need for a steadfast implementation of sound fiscal, monetary, and external sector policies, coupled with market-based reforms, to enhance opportunities and incentives for investment in export-oriented activities in sectors that are less vulnerable to the vagaries of Mongolia’s climate.

III. Public Enterprise Reform and Privatization in Mongolia1

A. Introduction

1. A fundamental objective of Mongolia’s reform from the early days of the transition has been to enhance economic growth prospects and foster a more efficient use of the economy’s scarce resources. In addition to macroeconomic stabilization, the program has thus emphasized measures to liberalize prices, strengthen competition, encourage entrepreneurial activity, and develop sound market institutions. The restructuring and privatization of inefficient state-owned enterprises have been critical to the achievement of the above objectives. Privatization has also been important for its signal effect to investors and donors regarding the government’s commitment to the transition to a market system.

2. Given Mongolia’s pre-eminent need to promote medium-term fiscal sustainability, one of the objectives of public enterprise reform and privatization has been to support fiscal consolidation. While, in principle, privatization alone should not be expected to ease the government’s intertemporal budget constraint, as the budgetary receipts generated in the short run would normally be equal to the present discounted value of foregone future dividends, in practice there are at least two channels through which it can facilitate fiscal consolidation. First, to the extent that privatization is accompanied by the imposition of hard budget constraints and market discipline, it should help foster tariff reforms and improved enterprise performance. If the anticipated efficiency gains are factored into the sale price of privatized entities, there would be a clear net gain for the budget. Second, privatization is an important means for the improvement of fiscal transparency and the containment of implicit subsidies and contingent government liabilities. These have posed a particular challenge in the case of Mongolia’s large and inefficient energy sector.

3. As in many other transition economies, the constraints facing the restructuring and privatization of public enterprises in Mongolia have been numerous and daunting. These have included: (1) weak administrative capacity to manage the reform program; (2) lack of a domestic capital market; (3) a legal infrastructure that hardly recognizes private property; (4) price distortions and a thin share market that makes valuation difficult; (5) low domestic savings; (6) high initial start-up costs and/or a need to adjust tariffs and restructure public enterprises prior to privatization; (8) a lack of equitable and uniform enforcement of tax laws, which serves as a deterrent to investors; and (9) the shortage of resources for compensation for social costs resulting from plant closures, the shedding of excess labor, and the discontinuation of the use of public enterprises to achieve social objectives.

B. Developments During 1991–2000

4. Privatization was a key component of Mongolia’s economic reform strategy from the early years of the transition, although important sectors of the economy remained under state control. It initially encompassed separate programs for small and medium-sized enterprises and in agriculture, relying primarily on a mass privatization program through vouchers, which covered the manufacturing, distribution, and service sectors as well as the animal husbandry sector. Altogether, some 4,500 entities were privatized during 1991–96 through the distribution of vouchers to the public. While these early privatizations did not generate any significant receipts for the budget, they definitely enhanced competition and efficiency and, thereby, facilitated the early recovery of output following its initial decline at the onset of transition.2 However, some of the largest state-owned enterprises, including those officially designated as most-valued companies (MVCs), remained outside the scope of the privatization program during this period. In addition, airlines, railroads, telecommunications, and utilities, for which special regulatory regimes often apply, continued to be run by state-owned enterprises.

5. The privatization process speeded up considerably during the late 1990s, but it stalled in 2000 as the political support for reforms waned in the run-up to the Parliamentary elections of mid-2000. While the government’s privatization program was expanded to include some of the larger enterprises, which were now offered for sale through competitive auctions, a select number of MVCs and key economic sectors remained under state ownership. During this period, the State Property Committee (SPC) succeeded in privatizing 910 enterprises and commercial entities. With the help of the improved macroeconomic situation, the recovery of economic activity, and the progressive development of market institutions, privatization during the 1997–2000 period generated about Tog 42 billion or the equivalent of about 5 percent of GDP in financing for the budget. However, as the support for reform within the government began to be eroded, new legislation was approved in 1999 to establish a Negative List of MVCs which could not be privatized without the Parliament’s express authorization. As a result, both the number of privatized enterprises and the resulting receipts for the budget fell sharply in 2000 (Statistical Appendix Table 14).

6. The financial situation of the ailing energy sector also took a turn for the worse in the late 1990s. Energy consumption in Mongolia is especially high, because of the harsh climate and the low population density. Although the economy depends critically on a well run energy sector, as in many other transition economies, one of the legacies of central planning has been an inefficient use of energy. This has been evident in low operational efficiency in generation, large losses in transmission and distribution, tariffs set well below supply costs, and shortcomings in collection, which have been exacerbated by the chronic payments difficulties of Erdenet, a large copper mine that accounts for about one-third of Mongolia’s electricity consumption.3 While the importation of oil at subsidized prices from Russia may have concealed the cost of these problems in the past, after the alignment of oil import prices with world market prices, the gap between Mongolia’s electricity and heating tariffs and supply costs widened to an estimated 25–50 percent in 2000. Largely as a result, the industry’s financial losses deteriorated from US$43 million (0.5 percent of GDP) in 1999 to US$17.1 million (1.8 percent of GDP) in 2000.

7. Although the weak finances of the energy sector may have had a limited direct impact on the budget to date (in the form of tax arrears and the nonpayment of principal and interest on foreign loans on-lent to the energy sector by the government), they have also resulted in other less transparent but potentially more damaging effects. These are as follows:

  • The lack of adequate financial resources has led to a large build-up of energy company arrears to other enterprises, which rose to Tog 35 billion (3.4 percent of GDP) as of 2000. This has been a particularly serious problem to the Bagannuur Coal Company, a state-owned enterprise that is the largest supplier of coal to the Energy Authority.

  • The main public enterprises in the energy and coal sectors have accumulated government-guaranteed external debts amounting to US$400 million since the early 1990s, or almost half of Mongolia’s total external debt outstanding as of January 2000. With repayments scheduled to reach a peak of about US$18–20 million a year by 2025, a heavy burden could be placed on the budget if the financial position of these enterprises does not improve.

  • Reduced expenditures for maintenance have led to a depletion of capital, with plant and equipment becoming increasingly outdated. Over the next few years, both the energy companies and the coal mines will need to significantly increase their expenditures on maintenance and investment. By some estimates, if the needed investment were to be financed through external borrowing, the external debt of the two sectors would have to double to about US$800 million; this could seriously strain Mongolia’s external sustainability.

8. Notwithstanding the difficult political constraints on public enterprise reform, overall progress was impressive during the 1990s. Thus, the economy was essentially transformed during Mongolia’s first ten years of transition, with the private sector, which only accounted for about 4 percent of GDP in 1990, having grown to about 60 percent of GDP by 2000. As indicated in the preceding chapter, the extent of the transformation to a market-based economy is probably understated by these figures, as informal sector growth, which has been considerable, is not accounted for in the official national accounts. The agriculture, animal husbandry, construction, food, small-scale transportation, mining, and trade sectors, in particular, had been largely privatized by 2000. In the energy sector, the new government that took office in August 2000 recognized the urgent need for a rethinking of Mongolia’s energy development strategy and, as a first step, electricity and heating rates on average, were raised by 14.2 and 100 percent, respectively, with effect from December 2000. In addition, a new Energy Law was passed in late 2000, which set the stage for a comprehensive restructuring of the energy sector, including by establishing an independent Energy Regulatory Authority (ERA) vested with the responsibility to regulate tariffs.

C. Developments Since 2000 and Remaining Challenges

9. The government’s public enterprise reform program received new impetus in early 2001 with the approval of the new Guidelines for Privatization for 2001–04. The Guidelines effectively abolished the Negative List that had been introduced by the previous Parliament and proposed an ambitious timetable for the privatization of MVCs while also setting important sector-specific objectives for the reforms of the energy sector and the social sectors. Reforms were also proposed for the road sector, telecommunications, the coal sector, railways, and the geodesy and cartography sectors, although these were not to involve privatization, but rather steps to improve performance along commercial lines.

10. The government’s initial privatization program for 2001 envisaged the privatization of three important MVCs, including a beverage company (APU), the Trade and Development Bank (TDB), which is Mongolia’s largest and most profitable bank, and Gobi, the largest cashmere company operating in Mongolia. In the event, reflecting a combination of factors, including the tragic events of September 11 which led to an overall deterioration in the global climate for foreign investment, only APU could be privatized during 2001, at a sale price of Tog 4.5 billion (0.4 percent of GDP). However, significant progress was also made in preparing the TDB and Gobi for privatization.

11. A tender for the privatization of TDB was issued in early September 2001, but bidding was delayed several times, and a privatization contract was finally signed in May 2002. Both the IFC and the IBRD agreed to take up some shares in the Bank if a qualified strategic investor could be identified who would like such participation. Formal expressions of interest and bids were expected to be placed before the end of 2001, but the deadline was extended several times. The public tender process for the sale of the government’s 76 percent interest in the TDB was finally concluded in May 2002. The State Property Committee (SPC) executed the sale to a consortium of foreign investors for US$12.23 million (1.0 percent of GDP).4 In addition, the foreign investors have agreed to inject at least US$28 million (2.2 percent of GDP) of additional capital into the bank within 24 months following the closing of the transaction, and have proposed to expand TDB’s deposit base over that two-year period at the rate of 25 percent per annum and its loan portfolio at 50 percent per annum. New lending activities for the bank are to include consumer credit and trade and project finance, while new distribution channels are to include a significant increase in the number of ATMs, expansion of regional business centers, and telephone and internet banking services. In due course, TDB would also set up representative offices in nearby regional centers in Russia, China, as well as the USA, to enhance and promote international trade with Mongolia.

12. A tender for the privatization of the government’s 70 percent interest in Gobi was announced in July 2001, but good quality bidders were difficult to come by in the aftermath of September 11. In these circumstances, the State Property Committee decided to close the bidding as of late March 2002. In the meantime, with cashmere prices having fallen by 33 percent since September 2001, it may be necessary to re-evaluate the minimum price; a firm has been contracted through international tender to advise the authorities on an appropriate pricing strategy. The intention was to reopen bidding in the third quarter of 2002, with a view to disposing the government’s entire equity position.

13. The government’s privatization program for 2002 was approved in January 2002. Aside from the continued pursuit of the privatization of Gobi, the program, envisages the privatization of the Neft Oil Concern (NIC), Mongolia’s national airline (MIAT), and two insurance companies. In addition, the remaining four MVCs, including Power Plant No. 2, the Ulaanbaatar Power Distribution Network, the Mongolian Telecommunications Company, and the Agricultural Bank, are to be restructured and prepared for subsequent privatization.

14. The privatization of NIC, an oil and gas distribution company, will probably have to await the resolution of some difficult problems. NIC’s capital has been eroded in recent years by the large quasi-fiscal losses incurred as NIC was required to supply oil to remote rural areas at subsidized prices. As a result, NIC will need to be financially rehabilitated before it can be privatized. To this end, NIC’s receivables could be assigned to offset its overdue debts to the government, which were on the order 1 percent of GDP as of 2001, and it may also be necessary that new capital be infused from the government. Equally importantly, the government will need to make a credible commitment to any prospective buyer to allow flexibility in the setting of future prices and a clear agreement will have to be reached as to who should bear the cost of cleaning up the environmental damage that has resulted from NIC’s past operations.

15. In the case of MIAT, the national airline, which has been plagued by financial and safety problems, a major constraint to privatization is the issue of the internal fare structure. Currently rates for domestic travel are well below costs, and it will probably be politically difficult to raise these rates. No investor would be interested in purchasing the company unless this issue is resolved. Aside from its inadequate fare structure, MIAT is currently overstaffed, its fleet is outdated and underutilized, and its scheduling needs to be overhauled. While the government is keen to resolve these problems expeditiously, with the recent sharp downturn in the profitability of the airline industry world wide, the prospects for an early privatization of MIAT look dim. In these circumstances, the government is considering the possibility of bringing in an external management team to strengthen the airline before privatization is pursued, as was done with the Agricultural Bank.

16. The Agricultural Bank of Mongolia, which is the principal provider of banking services to the rural communities, has recorded an impressive turn-around in its profitability and financial health over the last two years. Poor governance in the context of a lax regulatory environment had brought the bank to the verge of failure in the late 1990s, and the authorities had placed the bank under an external management contract in the summer of 2000, with a view to its rehabilitation and eventual privatization. Under this arrangement, the bank has managed to eliminate its financial losses, has comfortably met the Bank of Mongolia’s increasing minimum capital requirements, and recorded a pre-tax profit of Tog 1.5 billion (0.1 percent of GDP) during the first five months of 2002. The bank has also opened 83 new offices throughout Mongolia, and its network of 352 branches now reaches virtually every territorial unit in the country. While the Agricultural Bank was not among the entities that were to be privatized in 2002 under the government’s privatization program approved in January, an international tender for its privatization was announced in July 2002.

17. The Energy Authority was unbundled into 18 separate generation, transmission, and distribution companies in April 2001, but progress towards resolving the energy sector’s fundamental problems has so far been limited. A key objective of the unbundling exercise was to separate any portions of the company that may be natural monopolies from those that can be effectively privatized and/or opened to competition from new entrants. The recent restructuring makes it difficult to assess the evolution of the sector’s financial position with any degree of accuracy. Nevertheless, the available evidence suggests that the new enterprises continue to sustain financial losses, while accounts receivable and arrears to other sectors have remained high. While electricity tariffs were raised by 15 percent with effect from July 2002, vociferous opposition to the increases by a broad range of political forces has since forced the ERA to partially roll back tariffs. Thus, current electricity tariffs at the retail level are Tog47/Kwh (US$0.042/Kwh), whereas estimates for the marginal cost of producing electricity are in the range of US$0.055/Kwh to US$0.065/Kwh, and the long-run marginal cost is probably on the order of US$0.080/Kwh.5 In these circumstances, despite some progress towards clearing arrears between budgetary entities and the key energy sector enterprises, the problem of inter-enterprise arrears has yet to be addressed. Perhaps more worrying from a medium-term perspective, unless the energy sector can quickly revamp its operations to become commercially viable, there is a risk that investment for the much-needed upgrading of the sector’s plant and equipment will be inefficiently utilized. The ultimate result could then be a sharp increase in Mongolia’s publicly guaranteed external debt, which would undermine efforts to protect fiscal and external sustainability.

References
STATISTICAL APPENDIX
Table 1.Mongolia: Selected Economic and Financial Indicators, 1997–2001
Nominal GDP (2001): S1,030 million
Population (2001): 2.37 million
Quota: SDR51.1 million
19971998199920002001
(Percent change)
Real GDP4.03.53.21.11.1
Consumer prices (period average)36.69.47.611.68.0
Consumer prices (end period)20.56.010.08.18.0
(In percent of GDP)
General government revenue25.527.627.233.638.0
General government expenditure34.541.939.440.543.3
Current balance1.6-0.7-0.23.14.7
Overall balance-9.1-14.3-12.6-6.8-5.3
Net domestic credit to government-3.34.10.0-0.7-1.9
Total public debt 1/2/64.586.0100.194.787.6
NPV of total public debt60.264.371.8
(Percent change)
Net foreign assets68.3-31.696.933.68.9
Net domestic assets-6.356.5-23.6-17.996.1
Domestic credit-5.160.111.1-8.041.6
Credit to enterprises13.2141.929.518.5-39.7
Broad money19.88.831.717.528.0
Reserve money26.213.551.819.48.4
Broad money velocity (GDP/BM) 3/5.55.04.34.131
Annual interest rate on central bank bills (percent) 4/35.023.311.48.58.8
(In millions of US dollars unless otherwise indicated)
Current account balance excluding official transfers13-129-127-153-164
(In percent of GDP)1.2-13.2-14.1-15.8-15.9
Current account balance including official transfers74.3-75.5-60.3-54.4-76.8
(In percent of GDP)7.0-7.8-6.7-5.6-7.5
Trade balance30-120-113-140-170
(In percent of GDP)2.9-12.4-12.5-14.4-16.5
Exports fob569462454536523
(Percent change)341-18.7-1.818.0-2.4
Imports c.i.f538582567676693
(Percent change)5.48.2-2.619.22.5
Financial and capital account balance53116626879
(In percent of GDP)5.012.06.97.07.7
Gross official international reserves (end-period) 5/137.5123.2156.8190.9206.8
(In weeks of next year/projected imports c.i.f)12.311.312.114.313.5
Public and publicly guaranteed external debt 1/605759828837854
(In percent of GDP)57.478.191.486.382.9
NPV of public and publicly guaranteed external debt 2/571542571
(In percent of GDP)63.055.955.5
Debt service 5/41.036.231.924.233.9
(In percent of export of goods)6.36.75.73.85.3
Exchange rates
Togrogs per US dollar (period average)7908411,0221,0771,098
NEER, end-period (1995=100)6369615962
REER, end-period (1995=100)113118107108117
NEER, period average (1995=100)6265636161
REER period average (1995=100)109118110115118
Export prices (US dollar percent change)-3.6-18.1-7.013.6-11.9
Copper price (US dollar percent change)19.3-38.1-5.818.4-12.7
Import prices (US dollar percent change)-6.5-6.8-2.42.5-1.6
Terms of trade (percent change)3.1-12.1-4.810.8-10.4
Real GDP (excluding agriculture percent change)3.81.72.611.510.7
Nominal GDP (billion togrogs)83381792510451,131
Nominal GDP (million US dollars)1,0549729069701,030
Sources: Mongolian authorities; and Fund staff estimates.

Includes IMF loans, guarantees and arrears

Excludes unresolved claims by Russia estimated at TR 10.5 billion.

Seasonally adjusted figures for broad money velocity from 1997 onwards.

Annualized yield on end-period auction of 14-day bills.

Beginning December 2000, includes commercial banks’ foreign exchange deposits with the Bank of Mongolia

Sources: Mongolian authorities; and Fund staff estimates.

Includes IMF loans, guarantees and arrears

Excludes unresolved claims by Russia estimated at TR 10.5 billion.

Seasonally adjusted figures for broad money velocity from 1997 onwards.

Annualized yield on end-period auction of 14-day bills.

Beginning December 2000, includes commercial banks’ foreign exchange deposits with the Bank of Mongolia

Table 2.Mongolia: Gross Domestic Product, 1997–2001(At current prices)
19971998199920002001
(In billions of togrogs)
Gross domestic product832.6817.4925.31044.61130.5
Industry199.8149.1168.5204.3229.4
Agriculture298.9306.2342.1322.9289.8
Construction18.320.123.019.323.7
Transportation51.556.862.483.1100.5
Communications12.615.122.329.135.2
Trade174.8172.2191.7243.9284.5
Services76.897.8115.4142.0167.3
Net factor income from abroad-11.30.3-10.3-9.9-3.2
Gross national product821.3817.7915.01034.71127.3
(In percent of GDP)
GDP100.0100.0100.0100.0100.0
Industry24.018.218.219.620.3
Agriculture35.937.537.030.925.6
Construction2.22.52.51.82.1
Transportation6.27.06.78.08.9
Communications1.51.92.42.83.1
Trade21.021.120.723.325.2
Services9.212.012.513.614.8
Sources: National Statistical Office, and Ministry of Finance and Economy.
Sources: National Statistical Office, and Ministry of Finance and Economy.
Table 3.Mongolia: Gross Domestic Product, 1997–2001(At 1995 constant Prices)
19971998199920002001
(In billions of togrogs)
Gross domestic product585.7606.4625.9632.8640.0
Industry132.4137.9139.5142.8161.4
Agriculture227.7242.2252.4216.1181.6
Construction9.29.19.37.98.9
Transportation31.533.434.039.741.9
Communication9.710.913.019.123.9
Trade109.9106.5107.8135.5146.4
Services65.266.369.971.675.9
Net factor income from abroad-0.1-2.7-3.5-3.5-3.7
Gross national product585.6603.7622.4629.3636.3
(Percent change)
GDP growth4.03.53.21.11.1
Industry-3.34.21.12.413.0
Agriculture4.36.44.2-14.4-16.0
Construction-2.7-1.11.6-14.612.4
Transportation2.16.01.916.75.5
Communication19.712.019.047.525.0
Trade17.1-3.11.325.78.0
Services-0.61.75.42.55.9
Gross national product5.23.13.11.11.1
Sources: National Statistical Office, and Ministry of Finance and Economy.
Sources: National Statistical Office, and Ministry of Finance and Economy.
Table 4.Mongolia: Output of Major Agricultural Products, 1997–2001
19971998199920002001
(In thousands of metric tons, unless otherwise specified)
Meat496.0554.0599.1639.2468.1
Milk (million tons)419.0431.0467.0375.6290.3
Diary products (tons)68.4104.136.524.917.7
Eggs (millions)6.18.59.66.77.7
Wool26.026.020.921.719.8
Wheet240.4194.6169.5142.0138.7
Cereals240.0195.0169.5142.1142.2
Potatoes54.265.16.758.858.3
Other vegetables23.834.045.638.944.5
(In millions of head)
Livestock31.332.933.530.126.1
Sheep14.214.715.213.811.9
Goats10.311.11110.29.6
Cattle3.63.73.83.12.1
Horses2.93.13.22.62.2
Camels0.40.40.30.30.3
(Percent change)
Meat-7.611.78.16.7-26.8
Milk13.22.98.4-19.6-22.7
Diary products (tons)38.452.3-64.9-31.8-28.9
Eggs24.539.312.9-30.214.9
Wool-7.10.0-19.63.8-8.8
Cereals9.1-18.8-13.1-16.20.1
Potatoes17.820.1-89.7777.6-0.9
Other vegetables5.842.934.1-14.714.4
(In percent of total head)
Memorandum item:
Privately owned livestock94.495.396.296.797.2
Sources: National Statistical Office, and Ministry of Finance and Economy.
Sources: National Statistical Office, and Ministry of Finance and Economy.
Table 5.Mongolia: Output of Basic Industrial and Mining Products, 1997–2001(In thousands of metric tons, unless otherwise specified)
19971998199920002001
Electricity (million kilowatt hours)2,6622,6752,8422,9463,010
Coal4,9245,0574,9645,1855,337
Fluorspar567612597734585
Copper concentrate358358362358381
Gold concentrate (kilograms)8,4519,53110,24611,80813,700
Bricks (millions)1619171721
Cement1121091049268
Lime5856503730
Sawn timber (thousand of cubic meters)3736161521
Scoured wool11112
Felt (thousand meters)75103102114111
Woolen fabrics (thousand meters)85192138
Coats (thousands)20000
Suits (thousands)1291416
Leather footwear (thousand pairs)42337617
Leather coats (thousands)00000
Sheepskin coats (thousands)31012
Meat (excluding pork)874612
Sausages793663439755728
Flour6466674038
Bakery goods2019152023
Confectionery1311887
Milk and dairy products (liters)23221
Toilet soap14871600
Household soap3122001532204
Carpets (thousands of square meters)644588629705615
Processed metal14131310
Sources: National Statistical Office, and Ministry of Finance and Economy
Sources: National Statistical Office, and Ministry of Finance and Economy
Table 6.Mongolia: Gross Industrial Output at 1995 prices, 1997–2001
19971998199920002001
(In billions of togrogs)
Food34.233.029.228.733.6
Leather and shoes1.10.90.40.60.7
Textiles19.721.722.619.325.3
Clothing1.81.82.02.33.7
Energy 1/42.743.145.246.647.7
Coal13.612.912.712.813.1
Mining of metal ores89.094.797.4102.7116.3
Other mining and quarrying11.212.814.216.515.6
Non-metalic products5.14.94.64.23.9
Wood processing1.51.51.11.01.4
Chemicals0.91.01.01.01.1
Printing0.61.11.01.61.6
Furniture2.62.43.13.14.7
Other3.53.13.53.23.8
Sources: National Statistical Office, and Ministry of Finance and Economy.

Includes electric and thermal energy.

Sources: National Statistical Office, and Ministry of Finance and Economy.

Includes electric and thermal energy.

Table 7.Mongolia: Coal Mining Sector, 1997–2001(In thousands of metric tons)
19971998199920002001
Production4,9245,0574,9645,1855,337
Imports10038304310
Consumption5,0354,9865,0175,2125,327
Intermediate1/3,6734,1934,1274,4494,537
Final consumption1,362793890763790
Industry and construction856465347180152
Agriculture711323
Communal housing and public services282192202407334
Other217125309173304
Exports03
Memorandum item:
Stock, end of year89195170186206
Sources: National Statistical Office, and Ministry of Finance and Economy.

Consumption by thermal power stations.

Sources: National Statistical Office, and Ministry of Finance and Economy.

Consumption by thermal power stations.

Table 8.Mongolia: Petroleum Balances, 1997–2001(In thousands of metric tons)
19971998199920002001
Opening stocks63.765.153.337.836.4
Gasoline - Octane 7620.317.418.69.718.3
Gasoline - Octane 931.11.71.82.41.8
Airplane fuel4.33.42.92.11.3
Diesel31.636.324.718.911.6
Other 1/6.46.35.34.73.4
Imports185.5195.9132.998.8101.2
Gasoline - Octane 76110.5114.879.665.256.1
Gasoline - Octane 9317.021.46.07.713.5
Airplane fuel7.710.20.90.9
Diesel43.043.344.923.125.6
Other 1/7.36.21.52.85.1
Domestic production 2/68.917.30.06.90.0
Total supply318.1278.3186.2143.5137.6
Consumption 3/251.9224.1147.8106.7101.2
Losses1.10.90.60.50.5
Closing stocks65.153.337.836.335.9
Gasoline - Octane 7617.418.69.718.414.8
Gasoline - Octane 931.71.82.41.72.5
Airplane fuel3.42.92.11.41.7
Diesel36.324.718.911.613.6
Other 1/6.35.34.73.23.3
Memorandum item:
Total import of Mongolia371.8403.2409.9445.3450.3
NIC’s share of the total import49.948.632.422.222.5
Sources: Neft Import Concern; and Ministry of Finance and Economy.

Fuel for electricity generation and lubricants.

Purchased domestically.

Sales of Neft Import Concern.

Sources: Neft Import Concern; and Ministry of Finance and Economy.

Fuel for electricity generation and lubricants.

Purchased domestically.

Sales of Neft Import Concern.

Table 9.Mongolia: Electricity Sector, 1997–2001
19971998199920002001
(In millions of kilowatt hours)
Supply3,0063,0423,0453,1273,212
Domestic2,6622,6752,8422,9463,016
Imports344367203181196
Utilization, total3,0063,0423,0453,1273,212
Industry and construction1,2611,2109591,1821,203
Transport and communications7663677987
Agriculture3211272117
Commercial housing and public services400426444463476
Other sectors113219370165164
Loss in transmission and distribution493465509576603
Power stations’ own use589588610616644
Exports4260592518
(Togrogs per kilowatt hour, annual average)
Tariff
Industry37.037.041.041.045.0
Agriculture37.037.0-41.041.045.0
Households32.032.035.035.045.0
(Percent change)
Supply and utilization0.31.20.12.72.7
Domestic1.80.56.23.72.4
Imports-10.26.7-44.7-10.88.3
Industry and construction2.9-4.0-20.723.31.8
Transport and communications22.6-17.16.317.910.1
Agriculture-46.7-65.6145.5-22.2-19.0
Commercial housing and public services5.36.54.24.32.8
Other sectors-45.793.868.9-55.4-0.6
Loss in transmission and power stations’
Own use in total supply (in percent)36.034.636.738.138.8
Sources: National Statistical Office, and Ministry of Finance and Economy.
Sources: National Statistical Office, and Ministry of Finance and Economy.
Table 10.Mongolia: Employment by Sector, 1997–2001(Number of employees, in thousands at end of year)
19971998199920002001
Total employment 1/765.1792.6813.6809.0832.3
Agriculture and forestry374.5394.2402.6393.5402.4
Industry100.497.998.891.093.3
Transport and communications30.333.434.934.135.1
Construction27.427.527.623.420.4
Education43.042.543.254.455.2
Health35.435.634.833.533.0
Other154.1161.5171.7179.1192.9
Foreign employees23.216.9
Memorandum items:
Labor force828.8842.4853.4847.6872.6
Unemployed63.749.839.838.640.3
Sources: National Statistical Office, and Ministry of Finance and Economy.

Excludes foreign employees

Sources: National Statistical Office, and Ministry of Finance and Economy.

Excludes foreign employees

Table 11.Mongolia: Ulaanbaatar Consumer Prices, 1997–2002 1/(December 2000=100)
199719981999200020012002
Jun-Aug
(Period average)
Overall index76.984.190.4100.9109.0110.1
Flour and flour goods97.093.294.599.2101.998.4
Meat and meat products98.8102.9103.5135.4137.5137.9
Milk and diary products80.385.990.493.0100.291.5
Sugar, candy, tea, fruits86.086.591.491.1100.3100.8
Potato and vegetables91.687.294.5127.6113.0123.7
Other food stuffs77.486.297.9100.8102.4102.2
Alcohol and tobaccos77.385.489.597.1112.4115.9
Men’s clothing78.692.995.697.0103.6108.4
Women’s clothing73.691.397.698.0102.0100.5
Children’s clothing85.097.097.799.999.5101.8
Footwear64.481.795.897.099.898.7
Cloth96.9103.8100.499.998.4100.4
Housing, heating, and electricity54.866.774.981.3110.0119.2
Household goods94.095.094.198.6100.9101.4
Medical care80.284.592.5100.0100.2102.1
Transport and communication62.972.483.897.9100.5102.8
Education ad recreation59.875.788.998.299.397.9
Other goods and services74.285.693.7100.1102.1103.9
(End of period)
Overall index79.484.192.5100.0108.0107.4
Flour and flour goods96.594.897.3100.0103.094.0
Meat and meat products76.479.390.3100.0119.5129.0
Milk and diary products92.296.096.0100.0106.469.7
Sugar, candy, tea, fruits89.884.692.4100.099.897.3
Potato and vegetables78.270.3103.3100.0106.1127.8
Other food stuffs82.695.7100.1100.0104.8103.1
Alcohol and tobaccos88.784.890.4100.0116.3112.0
Men’s clothing91.299.797.3100.0111.1106.4
Women’s clothing93.398.0102.0100.0103.698.2
Children’s clothing96.3101.8100.7100.0104.4101.7
Footwear77.390.9100.1100.0100.997.7
Cloth107.0105.0100.4100.097.4102.5
Housing, heating, and electricity66.172.275.8100.0122.2124.0
Household goods99.893.097.3100.0101.4101.6
Medical care82.884.9100.0100.099.4106.8
Transport and communication64.076.096.8100.0101.0102.4
Education ad recreation69.683.496.3100.098.497.9
Other goods and services78.390.896.3100.0103.4104.8
(Percent change)
Memorandum items:
Annual average36.69.47.611.68.0
End of period20.56.010.08.18.0
Sources: National Statistical Office.

The number of commodities comprising the consumer basket increased from 205 to 239 since December 2000.

Sources: National Statistical Office.

The number of commodities comprising the consumer basket increased from 205 to 239 since December 2000.

Table 12.Mongolia: Ulaanbataar Consumer Price Inflation, 2000–2002(12-month percentage change)
200020012002
weight1212345678910111212345678
Overall index.1.008.110.510.213.39.19.24.64.77.65.86.37.38.02.81.9-3.0-3.4-5.1-1.10.21.4
Food stuffs0.515.27.45.411.23.13.2-4.4-1.44.60.94.34.49.71.40.0-7.9-8.1-11.0-4.6-3.0-1.2
Flour and flour goods0.132.81.92.32.42.42.42.21.92.42.64.34.33.02.32.0-1.5-2.5-3.3-4.6-6.8-7.7
Meat and meat products0.1610.810.95.218.0-4.9-1.9-13.2-7.25.40.35.22.919.50.80.0-14.9-14.0-21.011.9-4.32.6
Milk and dairy products0.054.214.417.117.511.917.4-0.2-3.62.4-2.30.52.66.4-5.6-12.5-15.3-14.7-13.9-7.1-6.8-8.8
Sugar, candy, tea, and fruits0.058.28.912.013.615.614.414.19.014.311.110.11.6-0.20.40.50.1-0.5-1.13.23.1-4.0
Potatoes and vegetables0.05-3.2-5.9-12.2-3.9-3.8-21.2-28.0-20.0-9.7-19.0-5.05.16.14.31.5-8.1-7.74.819.51.63.9
Other food stuffs0.04-0.11.0-1.3-0.71.2-0.2-0.20.00.61.47.26.34.82.71.80.5-1.2-0.3-0.42.61.4
Alcohol and tobacco0.0410.621.319.514.015.916.116.216.213.113.713.515.216.36.57.78.47.02.60.30.2-0.4
Clothes and shoes0.13-0.31.31.82.13.33.63.23.93.86.17.56.54.55.25.43.11.41.01.40.2-0.5
Men’s clothing0.032.83.72.62.54.94.84.35.56.410.612.712.411.111.712.210.86.76.66.75.43.3
Women’s clothing0.04-2.00.12.53.84.54.43.83.74.65.85.97.03.62.83.5-0.2-0.6-0.6-1.0-2.5-3.5
Children’s clothing0.01-0.7-2.2-2.5-4.0-1.4-4.0-3.9-2.6-4.53.55.76.64.45.15.43.73.45.45.85.16.0
Footwear0.05-0.11.51.71.82.33.83.44.43.03.75.52.60.92.92.50.7-1.2-2.3-1.2-2.0-1.7
Cloth0.000.4l.l0.2-0.4-1.3-3.2-4.0-3.8-4.4-0.60.60.8-2.6-2.5-1.70.32.34.35.15.77.4
Housing, heating, and electricity0.1132.041.844.943.043.742.642.931.430.632.123.333.322.211.610.59.69.49.99.613.816.9
Household goods0.032.72.02.63.72.51.6144.33.01.02.82.71.41.50.9-0.2-l.l-0.31.01.30.6
Medical care0.010.00.60.60.30.20.20.30.70.4-0.50.20.2-0.6-1.3-1.2-0.9-0.82.42.56.26.4
Transport and communication0.103.34.75.45.34.53.74.4-0.10.20.41.21.31.02.52.21.72.03.43.23.12.3
Education and recreation0.073.94.04.02.02.12.01.11.10.70.2-1.2-1.2-1.6-2.3-2.2-2.0-2.1-2.1-1.4-0.9-1.0
Other goods and services0.043.90.20.20.61.92.52.22.61.92.52.63.13.42.62.72.91.31.82.12.13.0
Source: National Statistical Office.
Source: National Statistical Office.
Table 13.Mongolia: Retail Prices, 1997–2001(End of period; in togrogs per kilogram, except where stated)
19971998199920002001
Mutton595620720801959
Beef6507007748751,088
Flour365325325355362
Bread230240250250266
Sugar555500590684677
Rice360390420446476
Vegetable oil (liter)1,4001,5701,5501,5001,25
Tea bricks (2 kilograms)2,4652,2602,4652,5502,397
Tobacco1,4001,2901,2651,5001,520
Gasoline A-93 (liter)235265410390410
Gasoline A-76 (liter)206226380350375
Diesel (liter)222249396470420
Sources: National Statistical Office; and Neft Import Concern.
Sources: National Statistical Office; and Neft Import Concern.
Table 14.Mongolia; Privatization of State-Owned Enterprises, 1998–2001 1/
No. of Enterprises PrivatizedPrivatization Revenue (million togrogs)
1998
Total privatization13812,177
Large enterprises367,292
Construction sector164,907
Mineral sector180
Agriculture sector121,339
Other7965
Small enterprises and assets1024,885
1999
Total privatization3659,475
Large enterprises167,133
Construction sector3477
Mineral sector2918
Agriculture sector42,741
Other72,997
Small enterprises and assets3492,342
2000
Total privatization195,487
Large enterprises95318
Construction sector31,588
Mineral sector21,364
Agriculture sector1742
Other31,625
Small enterprises and assets10169
2001
Total privatization114,903
Large enterprises14,446
Construction sector00
Mineral sector00
Agriculture sector00
Other14,446
Small enterprises and assets10457
Source: State Property Commission.

Excludes privatization receipts of local governments

Source: State Property Commission.

Excludes privatization receipts of local governments

Table 15.Mongolia: Government Average Wages, 1997–2001
19971998199920002001
Employment (thousands)136.8135.2134.0136.4133.7
Wage bill (billions of to grogs)44.856.063.586.192.1
Per capita wage (thousands of togrogs)327.5414.2473.9631.2688.6
Nominal wage index (1996=100)126.6160.1183.1244.0266.1
Percent change26.626.514.438.720.6
CPI index (period average, 1996=100)136.6149.4160.8180.0190.5
Percent change36.69.47.611.68.0
Real wage index (1996=100)92.6107.1113.9135.6139.7
Percent change-7.415.66.324.311.6
Exchange rate (Togrogs/US$)795854102210771098
Monthly per capita wage (US$)34.340.438.648.952.3
Sources: Ministry of Finance and Economy; National Statistical Office; and Fund staff estimates.
Sources: Ministry of Finance and Economy; National Statistical Office; and Fund staff estimates.
Table 16.Mongolia: Summary Operations of the General Government, 1997–2001
19971998199920002001
(In billions of togrogs)
Total revenue212.1225.5251.7351.4429.5
Current revenue206.0216.8244.8346.5420.1
Tax revenue and social security contributions164.0154.0182.0260.9328.2
Income taxes62.641.539.062.864.5
Taxes on goods and services58.570.687.1117.2157.5
Customs duties8.81.59.022.327.0
Social security contributions21.226.130.639.354.0
Other taxes12.814.416.319.225.2
Nontax revenue42.062.862.785.791.9
Capital revenue and grants6.18.76.94.99.3
Total expenditure and net lending287.6342.1364.6422.6489.7
Current expenditure192.6222.4246.9314.2366.7
Wages and salaries44.856.063.586.192.1
Goods and services83.199.6100.7124.7162.6
Subsidies and transfers43.555.865.385.295.5
Interest payments21.211.117.318.216.5
Capital expenditure and net lending95.0119.7117.7108.4123.0
Domestically financed capital expenditure29.434.028.943.849.0
Domestic net lending-1.912.03.61.85.3
Foreign financed projects67.673.785.262.968.8
Current balance13.4-5.6-2.132.353.4
Overall balance-75.5-116.6-112.9-71.3-60.2
Errors and Omissions0.00.04.5-0.3-6.2
Financing75.5116.6117.371.067.1
Foreign, net92.868.6105.866.672.8
Project loans67.673.786.963.068.8
Cash loans43.97.516.513.423.7
Less: Amortization18.712.79.79.719.7
Privatization10.414.511.77.25.6
Settlement of claims with Central Bank0.00.012.24.29.8
Domestic banking system, net-25.433.6-0.2-7.0-18.8
Domestic nonbank financing, net-2.30.00.00.0-2.4
(In percent of GDP)
Total revenue25.527.627.233.638.0
Current revenue24.726.526.533.237.2
Tax revenue and social security contributions19.718.819.725.029.0
Nontax revenue5.07.76.88.28.1
Capital revenue and grants0.71.10.70.50.8
Total expenditure and net lending34.541.939.440.543.3
Current expenditure23.127.226.730.132.4
Capital expenditure and net lending11.414.612.710.410.9
Errors and Omissions0.00.00.50.0-0.5
Financing9.114.312.76.85.9
Foreign, net11.18.411.46.46.4
Sources: Ministry of Finance and Economy; and Fund staff estimates.
Sources: Ministry of Finance and Economy; and Fund staff estimates.
Table 17.Mongolia: General Government Revenue, 1997–2001
19971998199920002001
(In billions of togrogs)
Total revenue and grants212.1225.5251.7351.4429.5
Current revenue206.0216.8244.8346.5420.1
Tax revenue and social security contributions164.0154.0182.0260.9328.2
Income taxes62.641.539.062.864.5
Enterprise income tax54.931.326.548.043.8
of which Erdenet19.60.00.015.511.3
Personal income tax7.710.112.614.820.7
Social security contributions21.226.130.639.354.0
Sales tax and VAT38.146.160.476.2104.2
Domestic VAT (Sales tax prior to 1998)19.821.128.930.243.8
VAT on imports (Sales tax prior to 1998)18.325.031.446.060.4
Excise taxes20.324.526.741.053.3
Excise on alcohol9.78.911.215.523.2
Excise on vodka and tobacco3.13.83.54.53.1
Excise on imported beer0.20.43.1
Excise on vehicles0.52.33.17.27.3
Excise on petroleum7.09.58.813.416.6
Customs duties and export taxes8.81.59.022.327.0
Customs duties7.20.75.917.226.0
Export taxes1.60.83.25.21.0
Other taxes12.814.416.319.225.2
Petrol and diesel tax4.84.34.34.25.5
Vehicle license fee0.82.02.52.93.4
Tax on private property0.00.00.30.31.7
Other7.38.09.211.914.6
Nontax revenue42.062.862.785.791.9
Own budget revenues22.025.629.035.247.2
Dividends7.710.65.717.211.6
of which Erdenet1.111.01.6
Other nontax revenue12.326.528.033.233.2
Capital revenue and grants6.18.76.94.99.3
Capital revenue0.10.10.00.10.2
Grants 1/6.08.66.94.89.2
(In percent of total revenue)
Current revenue97.196.297.298.697.8
Tax revenue and social security contributions77.368.372.374.276.4
Enterprise income tax25.913.910.513.710.2
Personal income tax3.64.55.04.24.8
Social security contributions10.011.612.111.212.6
Taxes on goods and services27.631.334.633.436.7
Customs duties and import surcharges4.10.73.66.36.3
Other taxes6.16.46.55.55.9
Nontax revenue19.827.924.924.421.4
Capital revenue0.00.10.00.00.0
Grants2.83.82.71.42.1
(In percent of GDP)
Total revenue25.527.627.233.638.0
Current revenue24.726.526.533.237.2
Tax revenue and social security contributions19.718819.725.029.0
Enterprise income tax6.63.82.94.63.9
Personal income tax0.91.21.41.41.8
Social security contributions2.63.23.33.84.8
Taxes on goods and services7.0869.411.213.9
Customs duties and import surcharges1.10.21.02.12.4
Other taxes1.51.81.81.82.2
Nontax revenue5.07.76.88.28.1
Capital revenue0.00.00.00.00.0
Grants0.71.00.70.50.8
Sources: Ministry of Finance and Economy; and Fund staff estimates.

Grants relate to receipt of the budget of counterpart funds from recipient of the grants. This differs from the balance of payments definition which records grants when they are received from abroad.

Sources: Ministry of Finance and Economy; and Fund staff estimates.

Grants relate to receipt of the budget of counterpart funds from recipient of the grants. This differs from the balance of payments definition which records grants when they are received from abroad.

Table 18.Mongolia: General Government Expenditure, 1997–2001
19971998199920002001
(In billions of togrogs)
Total expenditure and net lending287.6342.1364.6422.6489.7
Current expenditure192.6222.4246.9314.2366.7
Wages and salaries44.856.063.586.192.1
Goods and services83.199.6100.7124.7162.6
Subsidies and current transfers43.555.865.385.295.5
Subsidies 1/0.40.40.60.56.1
Transfers43.255.564.784.789.4
Social Security Fund30.738.842.358.464.3
Social Assistance Fund10.010.311.811.613.7
Other transfers2.56.410.614.711.5
Interest payment21.211.117.318.216.5
Capital expenditure and net lending95.0119.7117.7108.4123.0
Domestically financed capital expenditure29.434.028.943.849.0
Domestic lending minus repayment-1.912.03.61.85.3
Foreign financed projects67.673.785.262.968.8
(In percent of total expenditure)
Current expenditure67.065.067.774.474.9
Wages and salaries15.616.417.420.418.8
Goods and services28.929.127.629.533.2
Subsidies and transfers15.116.317.920.219.5
Subsidies0.10.10.20.11.2
Transfers and other15.016.217.720.118.3
Social Security Fund10.711.311.613.813.1
Other4.34.96.16.25.1
Interest payments7.43.24.74.33.4
Capital expenditure and net lending33.035.032.325.625.1
Domestically financed capital expenditure10.29.97.910.410.0
Domestic lending minus repayment-0.73.51.00.41.1
Foreign financed projects23.521.623.414.914.0
(In percent of GDP)
Total expenditure and net lending34.541.939.440.543.3
Current expenditure23.127.226.730.132.4
Wages and salaries5.46.86.98.28.1
Goods and services10.012.210.911.914.4
Subsidies and current transfers5.26.87.18.28.4
Subsidies0.00.00.10.00.5
Transfers5.26.87.08.17.9
Social Security Fund3.74.74.65.65.7
Social Assistance Fund1.21.31.31.11.2
Other transfers0.30.81.11.41.0
Interest payment2.51.41.91.71.5
Capital expenditure and net lending11.414.612.710.410.9
Domestically financed capital expenditure3.54.23.14.24.3
Domestic lending minus repayment-0.21.50.40.20.5
Foreign financed projects8.19.09.26.06.1
Sources: Ministry of Finance and Economy; and Fund staff estimates.

Beginning in 2001, this item includes subsidies to state-owned enterprises for quasi-fiscal activities which, previously, had been recorded under purchases of goods and services.

Sources: Ministry of Finance and Economy; and Fund staff estimates.

Beginning in 2001, this item includes subsidies to state-owned enterprises for quasi-fiscal activities which, previously, had been recorded under purchases of goods and services.

Table 19.Mongolia: General Government Expenditure by Function, 1997–2001
19971998199920002001
(In billions of togrogs)
Total expenditure287.6342.1364.6422.6489.7
General public services25.031.933.042.250.4
Defense15.417.718.426.125.4
Public order and safety12.015.017.023.928.7
Education46.658.464.882.198.7
Health28.632.935.746.053.1
Social security and welfare42.951.759.976.084.5
Housing and community services3.43.84.77.07.1
Recreation and culture9.311.411.514.315.1
Economic affairs23.728.622.433.045.1
Other 1/80.790.997.172.181.6
(In percent of total expenditure)
General public services8.79.39.010.010.3
Defense5.45.25.16.25.2
Public order and safety4.24.44.75.65.9
Education16.217.117.819.420.2
Health9.99.69.810.910.8
Social security and welfare14.915.116.418.017.3
Housing and community services1.21.11.31.71.4
Recreation and culture3.23.33.13.43.1
Economic affairs8.28.46.17.89.2
Other 1/28.126.626.617.116.7
(In percent of GDP)
Total expenditure34.541.939.440.543.3
General public services3.03.93.64.04.5
Defense1.92.22.02.52.2
Public order and safety1.41.81.82.32.5
Education5.67.17.07.98.7
Health3.44.03.94.44.7
Social security and welfare5.16.36.57.37.5
Housing and community services0.40.50.50.70.6
Recreation and culture1.11.41.21.41.3
Economic affairs2.83.52.43.24.0
Other 1/9.711.110.56.97.2
Sources: Ministry of Finance and Economy; and Fund staff estimates.

Includes capital expenditure and net lending (foreign-financed projects).

Sources: Ministry of Finance and Economy; and Fund staff estimates.

Includes capital expenditure and net lending (foreign-financed projects).

Table 20.Mongolia: General Government Social Expenditure, 1997–2001
19971998199920002001
(In billions of togrogs)
Total expenditure287.6342.1364.6422.6489.7
Social expenditure130.8158.2176.6225.4258.5
Social security and social assistance42.951.759.976.084.5
Education46.658.464.882.198.7
Health28.632.935.746.053.1
Housing and community services3.43.84.77.07.1
Recreational, cultural affairs and services9.311.411.514.315.1
(In percent of total expenditure)
Social expenditure45.546.248.453.352.8
Social security and social assistance14.915.116.418.017.3
Education16.217.117.819.420.2
Health9.99.69.810.910.8
Housing and community1.21.11.31.71.4
Recreational, cultural affairs and services3.23.33.13.43.1
Sources: Ministry of Finance and Economy; and Fund staff estimates.
Sources: Ministry of Finance and Economy; and Fund staff estimates.
Table 21.Mongolia: Subsidies and Transfers, 1997–2001
19971998199920002001
(In billions of togrogs)
Total subsidies and transfers43.555.865.485.295.5
Total subsidies0.40.40.70.56.1
Energy0.10.10.10.05.4
Urban transport0.30.30.60.50.5
Other0.00.00.00.00.1
Total transfers43.255.564.784.789.4
Social Security Fund30.738.842.358.464.3
Social Assistance Fund6.87.411.811.613.7
Other5.79.310.614.711.4
(In percent of GDP)
Total subsidies and transfers5.26.87.18.28.4
Total subsidies0.00.00.10.00.5
Total transfers5.26.87.08.17.9
Sources: Ministry of Finance and Economy; and Fund staff estimates
Sources: Ministry of Finance and Economy; and Fund staff estimates
Table 22.Mongolia: Social Security And Social Assistance Funds, 1997–2001
19971998199920002001
(In billions of togrogs)
Social Security Fund
Total revenue33.8238.5347.6160.6074.78
Budget transfers5.008.5613.5113.5120.96
Social security contributions 1/28.5529.4733.1646.4652.55
Civil servants7.758.669.7616.6816.92
Business entities12.7912.3914.4017.3320.97
Employees9.018.419.0012.4514.65
Other0.270.500.950.641.28
Total expenditure31.9740.0243.6557.7165.82
Old age pension22.5326.5428.2438.3741.85
Handicapped persons2.453.263.825.526.21
Survivors’ benefits3.584.454.696.276.74
Disability benefits0.520.650.630.750.92
Death benefits0.590.710.730.831.22
Allowance for accidents0.811.011.171.932.16
Serviceman’s pension1.852.063.573.79
Unemployment benefits0.200.300.550.460.53
Administration0.930.881.250.001.08
Capital investment0.260.360.000.000.00
Other0.000.510.001.31
Overall balance1.95-1.493.962.908.96
Social Assistance Fund
Total expenditure10.0310.3211.8211.6013.67
Pregnancy1.761.881.832.273.56
Mothers with large families0.500.471.580.690.51
Child care1.920.070.060.090.06
Twins0.000.000.010.010.01
Infanct nursing0.041.762.842.873.30
Social pension1.531.592.753.593.82
War veterans0.091.120.951.021.59
Other4.193.421.791.060.82
(In percent of total government expenditure)
Memorandum items:
Social Security Fund expenditure11.111.712.013.713.4
Budget transfers to the Social Security Fund1.72.53.73.24.3
Social Assistance Fund expenditure3.53.03.22.72.8
(In percent of GDP)
Social Security Fund expenditure3.84.94.75.55.8
Budget transfers to the Social Security Fund0.61.01.51.31.9
Social Assistance Fund expenditure1.21.31.31.11.2
Sources: Ministry of Finance and Economy; and Fund staff estimates.

A Part of social security contributions constitutes intergovernmental transfers.

Sources: Ministry of Finance and Economy; and Fund staff estimates.

A Part of social security contributions constitutes intergovernmental transfers.

Table 23.Mongolia: Number of Social Security Beneficiaries, 1997–2001(In thousands)
19971998199920002001
Social security310.7294.9298.9310.5316.5
Old age174.3167.7167.5171.6173.2
Handicapped persons24.426.629.432.735.2
Survivors’ benefits34.534.233.734.935.6
Disability benefits57.756.758.161.462.9
Other benefits19.89.710.29.99.6
Social assistance530.0454.6249.1223.9242.2
Pregnancy70.869.043.845.950.5
Mothers with large families294.4233.461.628.753.8
Child care93.55.837.631.520.6
Twins0.40.60.30.40.3
Infant nursing4.340.34.73.53.3
Wax veterans40.757.641.547.956.2
Social pension23.224.825.430.633.8
Disabled Nursing homes for elderly5.23.69.310.1
Other2.717.930.626.113.6
Source: Ministry of Finance and Economy.
Source: Ministry of Finance and Economy.
Table 24.Mongolia: Government Employment and Wage Bill, 1997–2001
19971998199920002001
(Number of positions)
Government employment
General public services15,78015,51515,11415,45615,584
Public order and safety12,89113,99514,38414,96012,658
Education47,68647,64946,49847,67048,863
Health27,26627,02127,04626,16825,344
Social security and welfare1,5911,5711,6391,552621
Recreation and culture6,3036,3075,8586,2416,195
Agriculture and forestry3,2391,4231,3351,4741,432
Other services22,05721,71122,13722,92722,551
Total136,813135,192134,011136,448133,248
(In billions of togrogs)
Wages and salaries
General public services6.08.39.412.813.0
Public order and safety4.66.47.511.012.0
Education16.420.624.132.236.2
Health7.89.610.513.915.1
Social security and welfare0.60.60.70.90.3
Recreation and culture2.22.12.53.23.5
Agriculture and forestry1.20.60.60.80.6
Other services5.97.68.211.411.7
Total44.856.063.586.192.1
Source: Ministry of Finance and Economy.
Source: Ministry of Finance and Economy.
Table 25.Mongolia: Expenditure of the Health Sector, 1997(In billions of togrogs)
19971998199920002001
Total expenditure28.632.935.746.053.1
Wages and salaries7.89.610.513.915.0
Social security2.02.42.64.14.3
Social security payments1.72.02.13.43.5
Health insurance0.30.50.50.70.8
Other goods and services17.319.321.525.831.9
Electricity1.21.11.21.51.6
Fuel and heating3.33.54.34.65.6
Transport (fuel)1.21.21.31.82.0
Food2.02.02.02.22.7
Medicines4.85.76.07.39.5
Other4.75.86.78.510.5
Investment1.01.10.71.51.3
Capital repair expenditures0.50.50.40.60.7
Source: Ministry of Finance and Economy.
Source: Ministry of Finance and Economy.
Table 26.Mongolia: Expenditure of the Education Sector, 1997–2001(In billions of togrogs)
19971998199920002001
Total expenditure46.658.464.882.198.7
Wages and salaries16.420.624.132.236.1
Social security4.04.55.19.79.8
Social security payments3.23.64.28.18.2
Health insurance0.70.90.91.61.7
Other goods and services24.730.131.936.745.8
Electricity1.71.92.02.32.8
Fuel and heating9.210.310.912.515.4
Transport (fuel)0.50.50.50.60.7
Food3.33.33.34.15.4
Medicines0.00.00.00.00.0
Other10.014.215.217.221.6
Investment0.71.82.52.43.1
Capital repair expenditures0.91.41.20.60.8
Lending minus repayment0.00.00.63.1
Source: Ministry of Finance and Economy.
Source: Ministry of Finance and Economy.
Table 27.Mongolia: Monetary Survey, 1997–2002
199719981999200020012002
DecDecDecMarJunSepDecMarJunSepDecMarJun
(In billions of to grogs)
Broad Money 1/170.1167.3220.4228.1255.8266.1258.8270.5313.9317.4331.4345.9401.0
Currency49.856.487.395.0118.9114.5100.993.7125.5116.3109.2101.3131.8
Deposits120.3110.8133.1133.1137.0151.6157.9176.8188.5201.1222.2244.6269.2
Demand deposits26.326.127.623.624.829.129.829.929.635.547.045.655.9
Togrog time deposits44.744.845.249.449.655.659.067.072.381.687.9103.0113.1
Forex time deposits49.339.860.360.162.566.969.180.086.584.087.396.0100.2
Net foreign assets112.376.8151.2160.5173.8196.1202.1200.6222.9222.7220.1221.0222.7
Net international reserves131.093.6153.6162.3169.7195.7206.5204.7228.3228.6227.0230.1232.7
Bank of Mongolia73.167.5113.0115.5123.8136.9154.3147.7177.7178.2176.3178.2186.2
Commercial banks57.926.140.746.846.058852.257.150.650.550.751.946.5
Other NEA-18.8-16.8-2.4-1.84.10.4-4.4-4.2-5.5-6.0-7.0-9.1-10.0
Bank of Mongolia-1.73.16.34.38.24.60.40.50.40.30.20.20.3
Commercial banks-17.1-19.9-8.7-6.1-4.1-4.3-4.8-4.7-5.9-6.3-7.2-9.3-10.3
Net domestic assets57.890.469.167.682.170.056.870.091.194.8111.3124.9178.3
Domestic credit91.7146.8130.6136.7117.3118.4120.1138.8141.4152.4170.1190.9238.0
Net credit to government21.347.947.751.058.657.351.356.142.047.931.535.942.3
Credit65.970.976.791.595.892.595.295.489.497.084.389.993.7
Minus: Deposits44.523.028.940.537.135.343.939.247.349.152.954.151.4
Claims on nonbanks70.498.982.885.758.661.168.882.799.4104.5138.6155.1195.7
Claims on public enterprises11.718.38.69.36.96.86.35.28.88.710.410.512.7
Claims on the private sector44.248.031.433.734.736.545.560.676.781.5114.8127.6163.3
Nonperforming loans14.532.642.141.916.417.415.915.712.111.910.914.116.1
Accrued interest receivable on loa0.70.80.60.41.11.21.82.32.52.93.6
Other items, net-33.9-56.4-61.4-69.2-35.2-48.4-63.4-68.8-50.3-57.6-58.7-66.1-59.7
(In percent)
Memorandum items:
Twleve-month percentage change
Broad money 1/19.88.831.748.438.633.617.518.622.719.328.027.827.7
Net foreign assets68.3-31.696.9152.0128.377.633.624.928.213.68.910.2-0.1
Domestic credit-5.160.1-11.1-16.4-32.6-21.3-8.01.520.628.741.637.568.3
Claims on public enterprises-36.956.2-53.2-48.1-52.8-57.0-26.7-44.327.127.765.8101.644.6
Claims on the private sector43.38.5-34.5-35.0-32.3-18.644.879.8120.8123.2152.4110.6113.0
Key ratios
Currency/total deposits41.450.965.671.486.875.563.953.066.657.849.141.449.0
Demand deposits/total deposits21.923.620.817.718.119.218.916.915.717.721.118.720.8
Togrog time deposits/total deposits37.140.533.937.136.236.737.437938.440.639.642.142.0
Forex time deposits/total deposits41.035.945.345.245.744.143.745.245.941.839.339.237.2
Currency/broad money29.333.739.641.646.543.039.034.640.036.632.929.332.9
Demand deposits/broad money15.515.612.510.39.710.911.511.O9.411.214.213.213.9
Time deposits/board money55.250.647.948.043.846.049.554.350.6552.252.957.553.2
Sources: Bank of Mongolia; end Fund staff estimates.

The end-1997 broad money stock is artificially inflated by a one-off increase due to a US$20 million (Tog 16.3 billion) deposit, which was reversed in early 1998. The annual broad money growth rate reflects an adjustment for this increase.

Sources: Bank of Mongolia; end Fund staff estimates.

The end-1997 broad money stock is artificially inflated by a one-off increase due to a US$20 million (Tog 16.3 billion) deposit, which was reversed in early 1998. The annual broad money growth rate reflects an adjustment for this increase.

Table 28.Mongolia: Balance Sheet of the Bank of Mongolia, 1997–2002
199719981999200020012002
DecDecDecMarJunSepDecMarJunSepDecMarJun
(In billions of togrogs)
Reserve money64.673.3111.3120.1144.7145.2132.9127.1154.5153.1144.1142.8176.0
Currency outside Banks49.856.487.395.0118.9114.5100.993.7125.5116.3109.2101.3131.8
DMB reserves13.216.023.924.025.329.132.033.429.036.834.641.644.2
Cash in vaults7.05.04.37.36.66.46.46.07.98.010.09.514.1
Demand deposits of DMBs6.211.019.616.718.622.725.527.421.128.924.632.030.1
Deposits of business units1.60.80.21.10.61.60.00.00.00.00.30.00.0
Net Foreign Assets71.470.6119.3119.8131.9141.6154.6148.2178.1178.5176.5178.5186.5
Net international reserves73.167.5113.0115.5123.8136.9154.3147.7177.7178.2176.3178.2186.2
Assets111.8111.1168.1177.9182.2194.7209.3199.9227.3227.5227.9235.9242.0
Minus: Liabilities38.743.655.162.458.457.855.152.349.649.451.557.655.8
Other assets, neto1.73.16.34.38.24.60.40.50.40.30.20.20.3
Assets2.03.16.34.38.24.60.40.50.40.30.20.30.3
Minus: Liabilities3.70.00.00.00.00.00.00.00.00.00.00.00.0
Net Domestic Assets6.92.7-8.00.412.83.6-21.7-21.0-23.7-25.4-32.5-35.7-10.5
Net Credit to Government17.629.732.643.753.348.834.138.226.631.535.030.230.0
Credit30.432.637.450.959.955.753.453.343.143.551.950.147.4
Reconstruction bonds13.819.619.619.619.619.619.620.410.69.813.612.58.6
Treasury IMF account6.46.413.222.222.222.233.832.932.433.738.337.638.8
Other10.26.54.69.018.013.90.00.00.00.00.00.00.0
Minus: Deposits12.82.94.87.26.56.919.315.116.512.016.919.917.4
Domestic currency6.02.54.54.24.95.812.912.410.39.413.116.815.0
Foreign currency6.80.40.43.01.71.16.42.76.22.63.93.02.4
Claims on deposit money banks3.15.66.77.76.04.64.83.03.94.67.35.45.8
Claims on nonbanks3.99.04.64.60.90.90.91.01.01.01.01.01.0
Minus: Central bank bills (net)19.111.721.219.627.030.021.118.128.836.550.040.031.2
Other items, net-12.4-29.8-30.6-36.0-20.4-20.8-40.4-45.2-26.3-26.1-25.8-32.3-16.2
(In percent)
Memorandum items:
Reserve money growth (12 month percent change)26.213.551.8100.460.148.619.45.86.75.58.412.413.9
Broad money/reserve money (ratio)2.632.281.981.901.771.831.952.132.032.072.302.422.28
Sources: Bank of Mongolia; and Fund staff estimates.
Sources: Bank of Mongolia; and Fund staff estimates.
Table 29.Mongolia: Consolidated Balance Sheet of Commercial Banks, 1997–2002
199719981999200020012002
DecDecDecMarJunSepDecMarJunSepDecMarJun
(In billions of togrogs)
ASSETS121.1113.1135.0135.2136.4150.0157.9176.8189.3202.4226.0246.8271.5
Net foreign assets40.86.231.940.841.954.547.452.444.744.243.542.536.2
Net international reserves57.926.140.746.846.058.852.257.150.650.550.751.946.5
Assets54.926.141.747.547.259.653.358.452.952.152.353.147.9
Minus: Liabilities7.00.01.10.71.20.91.11.32.31.61.71.21.5
Other foreign assets. net-17.1-19.9-8.7-6.1-4.1-4.3-4.8-4.7-5.9-6.3-7.2-9.3-10.3
Assets0.00.00.00.00.00.00.00.00.00.00.00.00.0
Minus: Liabilities17.119.98.76.14.14.34.84.75.96.37.29.310.3
Net domestic assets80.2106.9103.094.494.595.5110.5124.4144.5158.2182.5204.3235.3
Reserves33.216.023.923.223.627.631.033.328.435.434.641.047.4
Cash7.05.04.37.36.66.46.46.07.98.010.09.514.1
Deposits with BOM6.211.019.615.917.021.224.527.320.527.424.631.433.3
Central bank bills19.111.721.212.627.030.021.118.028.736.449.739.731.0
Domestic credit54.1103.993.488.463.068.785.199.6113.8119.8134.1159.6207.0
Net credit to government3.718.215.17.35.38.417.217.915.516.4-3.55.512.3
Claims on Government35.538.339.340.635.936.841.842.146.353.532.539.746.3
Less: Government deposits31.720.124.133.330.628.424.624.230.837.135.934.234.0
Loans to nonbanks50.485.678.281.157.760.267.981.798.4103.5137.5154.0194.7
Public enterprises7.89.34.04.76.05.95.44.37.97.89.59.611.8
Private sector23.143.731.433.734.736.545.560.476.581.4114.7127.4163.2
Nonperforming loans14.532.642.1:41.96.417.415.915.712.111.910.914.116.1
Accrued interest receivable on loan0.70.80.60.41.11.21.82.32.52.93.6
Other assets. net-6.1-24.7-35.4-36.9-19.1-30.7-26.7-26.4-26.4-33.4-35.9-36.0-50.1
LIABILITIES121.1113.1135.01352136.4150.0157.9176.8189.3202.4226.0246.8271.5
Deposits120.3110.8132.9132.0136.4150.0157.9176.8188.5201.1221.9244.6269.2
Demand deposits26.326.127.523.524.829.129.829.929.635.547.045.655.9
Public enterprises19.418.318.817.116.519.619.821.119.823.230.631.135.6
Private sector6.97.88.86.48.39.510.08.89.912.316.414.520.3
Time and savings deposits44.744.845.148.349.054.059.067.072.381.687.6103.0113.1
Foreign currency deposits49.339.860.360.162.566.969.180.086.584.087.396.0100.2
Borrowing from BOM0.82.32.13.20.00.00.00.00.81.34.12.22.3
Memorandum items:
Net foreign assets (million U.S. dollars)50.26.929.837.439.350.243.347.840.840.239.538.532.7
Foreign currency deposits (million U.S. dollars)60.644.256.255258.761.663.072.978.976.479.286.990.7
Sources: Bank of Mongolia; and Fund staff estimates.
Sources: Bank of Mongolia; and Fund staff estimates.
Table 30.Mongolia: Net Bank Credit to Government, 1997–2002(In billions of togoros)
199719981999200020012002
DecDecDecMarJanSepDecMarJunSepDecMarJun
Net credit to government from the banking system21.347.947.751.058.657.351.356.142.047.931.535.942.3
Claims65.970.976.791.595.892.595.295.489.497.084.389.993.7
Minus: Deposits44.523.028.940.537.135.343.939.247.349.152.954.151.4
Bank of Mongolia (net)17.629.732.643.753.348.834.138.226.631.535.030.330.0
Claims on Government30.432.637.450.959.955.753.453.343.143.551.950.247.4
Advance financing to budget0.42.80.04.413.49.20.00.00.00.00.00.00.0
Loans to the MoF in CFC0.00.00.00.00.00.00.00.00.00.00.00.00.0
FX financing without togrog funds4.03.74.64.64.64.60.00.00.00.00.00.00.0
Government bonds13.819.619.619.619.619.619.620.410.69.813.612.68.6
Reconstruction bonds9.819.619.619.619.619.619.620.410.69.813.612.68.6
Treasury bills4.00.00.00.00.00.00.00.00.00.00.00.00.0
MARA account5.80.00.00.00.00.00.00.00.00.00.00.00.0
Treasury IMF account6.46.413.222.222.222233.832.932.433.738.337.638.8
Less: Deposits12.82.94.87.26.56.919.315.116.512.016.919.917.4
Central Government12.32.34.87.26.56.919.315.116.512.016.919.917.4
Budget deposits9.70.51.34.42.92.713.47.911.16.07.78.27.2
In domestic currency2.90.10.91.41.21.67.05.24.93.43.95.14.7
In foreign currency6.80.40.43.01.71.16.42.76.22.63.93.02.4
Budget reserves2.61.83.42.63.33.84.33.93.32.73.53.10.9
Budget investment funds0.00.00.10.20.30.30.10.20.20.62.02.40.8
Loan repayment account (MARA)0.10.10.10.10.10.10.20.10.11.41.5
Deposits of the social insurance fund1.32.91.82.53.64.87.0
Local Government0.50.60.00.00.00.00.00.00.00.00.00.00.0
Budget revenue0.50.60.00.00.00.00.00.00.00.00.00.00.0
Commercial banks (net)3.718.215.17.35.38.417.217.915.516.4-3.55.512.3
Claims on Government35.538.339.340.635.936.841.842.146.353.532.539.746.3
Advance financing of MoF0.40.20.20.81.32.70.00.61.93.01.80.71.9
Government securities34.835.838.137.932.533.641.841.043.849.430.638.544.3
Inherited and directed credits0.00.00.00.00.00.00.00.00.00.00.00.00.0
Accrued interest receivable0.02.31.02.02.00.50.00.50.61.10.00.50.2
Projects0.00.00.00.00.00.00.00.00.00.00.00.00.0
Nontrade settlement0.00.00.00.00.00.00.00.00.00.00.00.00.0
Other0.30.00.00.00.00.00.00.00.00.00.00.00.0
FX financing without togrog fund0.30.00.00.00.00.00.00.00.00.00.00.00.0
Takeover of agricultural loans0.00.00.00.00.00.00.00.00.00.00.00.00.0
Less: Government deposits31.720.124.133.330.628.424.624.230.837.135.934.234.0
Central Government28.617.221.429.225.623.021.019.725.027.929.928.028.6
Budget deposits11.73.33.84.56.46.50.80.10.00.00.00.00.0
Budget reserves1.40.90.50.00.00.00.00.00.00.00.00.000
Budget funds with BITI0.40.00.00.00.00.00.00.00.00.00.00.00.0
Current account of budget units2.73.17.013.511.09.811.110.011.511.69.48.76.5
Social security and pension funds7.98.210.011.08.06.48.69.212.915.820.018.8213
Privatization funds0.20.10.10.00.10.00.10.00.00.00.00.00.0
Budget investment funds0.00.O0.10.10.00.10.30.30.50.40.40.30.3
Time deposits4.31.70.10.10.10.10.10.10.10.20.20.30.4
Repayable assistance to Reconstruction Bank0.00.00.00.00.00.00.00.00.00.00.00.00.0
Local Government2.42.02.13.64.44.73.03.95.38.05.05.34.5
Budget revenue1.10.50.61.62.62.71.41.92.84.62.22.72.6
Reserves0.00.00.00.10.00.00.00.00.00.00.00.00.0
Current account of budget units1.31.11.21.51.51.71.31.72.02.72.22.11.4
Budget investment funds0.00.30.30.40.30.20.30.40.40.80.50.50.4
Time deposits0.10.00.00.00.00.00.00.00.00.00.00.00.0
Accounts outside budget0.60.90.60.40.60.70.60.50.61.21.00.90.9
Sources: Bank of Mongolia; and Fund staff estimates.
Sources: Bank of Mongolia; and Fund staff estimates.
Table 31.Mongolia: Interest Rates, 1997–2002(In percent per annum)
199719981999200020012002
DecDecMarJunSepDecMarJunSepDecMarJunSepDecMar
Deposit rates
Current accounts20.8-60.8-60.8-63-63.0-6.03.0-6.03.0-6.03.0-6.02.4-6.02.4-6.02.4-4.80.3-4.80.0-5.10.0-5.1
Savings deposit accounts4-354-204-204-204-203.0-13.23.6-13.21.2-13.21.2-13.21.2-13.21.2-9.61.2-9.61.2-9.61.2-9.61.2-9.6
Time deposit accounts
Domestic currency
0-1 year6-706-436-436-435-439.6-30.09.6-30.03.6-30.03.6-30.03.6-24.02.4-24.02.4-25.22.4-24.02.4-24.02.4-24.0
1-3 year36-4324-3024-3024-3024-30-
Foreign currency
1-3 year-43-24-24-24-24-3.6-3.6-2.4--12.0-12.0-12.0-18.0-14.4-13.2-13.2
Loan rates
Bank of Mongolia45-5023.323.317.517.511.411.215.610.98.611.212.59.98.611.4
Commercial loans 1/
Short-term (less than 1 year)
Domestic currency45.847.242.242.44536.538.942.734.73834.537.441.439.3
Foreign currency34.237.234.130.636.531.727.129.325.821.522.821.422.221.1
Source: Bank of Mongolia.

Average rates.

Source: Bank of Mongolia.

Average rates.

Table 32.Mongolia: Balance of Payments, 1997–2001 1/(In millions of U.S. dollars)
19971998199920002001
Trade balance30.2-120.1-113.1-140.2-170.0
Exports, f.o.b.568.5462.3454.2535.8523.2
Copper199.1124.8119.2160.3147.1
Non copper369.4337.5334.9375.5376.1
Imports, c.i.f.-538.3-582.4-567.3-676.0-693.1
Services balance-7.3-11.5-7.4-8.5-22.2
Receipts80.077.9100.6104.2113.5
Payments-87.3-89.4-108.0-112.7-135.7
Income, net-14.30.4-12.8-12.42.9
Official interest payments-7.6-9.2-7.9-9.3-9.0
Private unrequited transfers4.22.55.98.025.0
Current account deficit (-), excluding official transfers12.8-128.8-127.4-153.0-164.2
Public unrequited transfers (net)61.553.367.198.687.4
Official grants54.845.860.286.272.1
Other official transfers (net)6.77.56.912.415.3
Financial and Capital account52.5116.462.468.379.0
Direct investment20.018.934.240.043.0
Medium- and long-term loans (net)109.893.797.280.568.8
Disbursements142.3122.5173.7151.0167.2
Amortizations-32.5-28.8-76.6-70.5-98.4
Commercial Banks, (net)-18.140.0-22.9-13.53.6
Short-term-59.2-35.5-46.1-38.7-36.3
Errors and omissions-69.6-69.812.720.212.5
Overall balance57.2-28.814.734.114.7
Financing-57.228.8-14.7-34.1-14.7
Change in net official reserves (increase -)-64.315.0-30.5-35.2-19.5
Arrears accumulated (+) or payments (-)-1.613.82.0-15.84.8
Exceptional financing (rescheduling)8.70.013.816.80.0
Memorandum items:
Current account deficit (-), excluding official transfers (in percent of GDP)1.2-13.2-14.1-15.815.9
Net official reserves (end of period)89.974.9105.4140.6160.1
Gross official reserves (end of period)137.5123.2156.8190.9206.8
(In weeks of next year imports)12.311.312.114.313.5
Outstanding arrears (end of period)0.913.815.80.04.8
Sources: Mongolian authorities; and Fund staff estimates.

Beginning in 1999, BOP coverage was expanded to reflect the findings of a new private sector survey As a result, data for 1999–2001 are not directly comparable with the corresponding data of previous years.

Sources: Mongolian authorities; and Fund staff estimates.

Beginning in 1999, BOP coverage was expanded to reflect the findings of a new private sector survey As a result, data for 1999–2001 are not directly comparable with the corresponding data of previous years.

Table 33.Mongolia: Commodity Composition of Exports, 1997–2001(In millions of U.S. dollars, unless otherwise indicated; unit values are denominated in U.S. dollars)
19971998199920002001
Copper concentrate (value)199.1124.8119.2160.3147.1
Volume (concentrate in ’000 tons)479.7485.7492.7496.0540.9
Refined capper equivalent119.180.5138.0138.9146.0
Unit value-refined (per ton)1671.71550.0864.21154.11007.3
Molybdenum concentrate15.712.19.06.25.1
Volume (tons)4109.34131.34164.43028.23081.8
Unit value (per ton)3820.62919.22167.12032.51647.9
Fluorite concentrate23.418.516.819.319.8
Volume 0000 tons)178.0156.8164.1197.1215.6
Unit value (per ton)131.5117.6102.798.192.0
Gold117.0117.295.969.774.7
Volume (kg)11695.912544.110960.37839.88328.7
Unit value (per kg)10003.59339.98752.18892.08966.9
Sawn wood20.834.14.90.30.0
Volume (’000 cubic meters)168.7268.138.32.50.1
Unit value (per cubic meter)123.3127.1126.7126.7219.3
Cashmere tops0.90.52.20.60.3
Volume (tons)12.59.641.57.12.8
Unit value (per kg)72.048.452.489.9103.0
Cashmere, de haired31.633.045.954.555.0
Volume (tons)590.4849.81168.3770.21006.6
Unit value (per kg)53.538.839.370.854.7
Cashmere garments10.45.07.813.011.6
Volume (0000 pieces)275.0152.2314.5428.5325.2
Unit value (per piece)37.832.824.830.435.7
Cashmere, greasy/raw16.20.314.421.90.9
Volume (tons)824.616.2799.5717.250.2
Unit value (per kg)19.618.918.030.517.3
Textiles26.123.718.473.216.2
Volume (’000 pieces)2890.03786.14399.66696.77701.5
Unit price9.06.34.210.92.1
Camel wool, raw2.11.41.71.72.2
Volume (tons)904.2664.3893.3836.8964.0
Unit value (per kg)2.32.11.92.02.3
Skin and bides21.123.823.934.916.3
Volume (’000 pieces)2600.02798.52688.24395.81579.0
Unit price8.18.58.98.010.3
Leather goods3.70.30.00.00.0
Volume (000 pieces)37.02.10.00.0
Unit value (per piece)1OO.O149.8
Sheepskin coats0.00.10.10.20.3
Volume (’000 pieces)0.40.86.11.11.4
Unit value (per piece)56.5158.017.2218.6222.2
Carpets0.00.00.91.40.0
Volume (000 square meters)3.10.028.968.10.0
Unit value (per square meter)14.532.119.9
Meat9.08.713.215.812.0
Volume (000 tons)6.46.713.216.713.5
Unit value (per ton)1406.31287.6997.7948.2888.0
Scrap Metal16.19.55.65.24.0
Volume (000 tons)90.132.217.120.210.7
Unit value (per ton)179.1294.6325.0259.1371.7
Other55.249.674.257.5157.6
Total568.54623454.2535.8523.2
Sources: Mongolian authorities and Fund staff estimates.
Sources: Mongolian authorities and Fund staff estimates.
Table 34.Mongolia: Commodity Composition of Imports, 1997–2001(In millions of U.S. dollars)
19971998199920002001
Food76.580.960.8101.9113.1
Live animals and animal products1.31.41.12.14.9
Vegetable products32.026.718.046.451.0
Animal and vegetable oil5.06.15.66.16.8
Prepared food38.246.636.147.250.4
Energy91.291.385.2120.3143.8
Mineral products91.291.385.2120.3143.8
Of which: Petroleum products73.672.171.8109.8124.0
Equipment Goods170.1194.9231.1200.3180.4
Machinary and equipment124.9127.1176.7133.3112.5
Vehicles and transportation equipment45.267.854.467.067.9
Raw Materials and Spare Parts66.162.844.356.473.2
Chemical products26.329.420.228.133.0
Raw hides and skins0.70.20.40.20.7
Building materials6.25.04.45.59.8
Metals32.828.219.322.729.8
Consumer Goods64.573.591.3135.6119.5
Rubber products11.810.312.613.315.1
Wood and wood products4.01.80.91.72.2
Cellulosic materials6.47.76.28.710.3
Textile26.531.546.279.963.3
Footwear and clothes1.32.31.21.82.2
Measuring instruments7.711.617.221.117.5
Manufactued articles6.88.37.09.18.9
Other imports35.179.151.361.563.0
Total (c.i.f)538.3582.4567.3676.0693.1
Memorandum items:
Nonfood imports461.8501.5506.5574.1580.0
Nonenergy imports447.1491.1482.1555.7549.3
Source: Mongolian authorities and Fund staff estimates.
Source: Mongolian authorities and Fund staff estimates.
Table 35.Mongolia: Direction of Trade, 1997–2001(In percent of total exports or imports)
19971998199920002001
Exports 1/100.0100.0100.0100.0100.0
Countries of the former CMEA10.611.913.710.410.6
Former U.S.S.R.10.611.913.610.410.6
Russia10.411.813.59.710.3
Kazakhstan0.20.10.10.20.2
Other0.10.00.00.50.0
Former Czechoslovakia 2/0.00.00.00.00.0
Korea, Democratic People’s Republic of0.00.00.10.00.0
EU countries10.410.710.07.56.5
Belgium0.31.00.30.30.3
France0.10.10.20.40.0
Germany1.40.60.70.40.6
Italy2.52.94.13.13.0
Netherlands0.61.01.00.70.7
United Kingdom5.33.73.82.41.7
Austria0.00.00.00.00.0
Finland0.0110.00.00.0
Other0.20.20.00.10.0
Other79.177.476.482.183.0
China21.829.357.157.353.7
Hong Kong, China1.12.61.01.61.5
Japan8.43.73.01.73.3
Korea9.89.60.60.60.9
Singapore0.00.40.30.00.0
Switzerland31.020.40.20.20.1
United States5.68.512.919922.0
Federal Republic of Yugoslavia (Serbia/Montenegro)0.00.00.00.00.0
Other1.42.91.30.81.6
Imports100.0100.0100.0100.0100.0
Countries of the former CMEA37.335.433.337.540.9
Former U.S.S.R.36.331.530.535.838.7
Russia35.429.929.233.6364
Kazakhstan0.40.70.1110.6
Other0.51.01.21.21.7
Bulgaria0.70.80.60.00.2
Former Czechoslovakia 2/1.61.31.00.61.0
Hungary0.40.40.30.30.2
Poland1.11.30.90.80.7
Korea, Democratic People’s Republic of0.00.00.00.00.0
EU countries20.217.810.311.410.6
Denmark2.80.20.60.71.3
France2.35.31.71.40.9
Germany4.35.14.64.85.1
United Kingdom1.10.70.81.00.7
Austria0.03.20.10.30.1
Finland0.41.21.10.80.6
Other9.32.11.51.41.2
Other42.546.856.451.148.5
China12.911.613.517.819.3
Hong Kong, China1.21.61.12.62.5
India0.10.30.40.30.2
Japan7.411.822.411.99.5
Korea4.47.57.19.09.7
Singapore3.83.41.81.71.5
Switzerland0.40.20.50.50.8
United States7.97.26.14.62.5
Federal Republic of Yugoslavia (Serbia/Montenegro)0.00.00.00.00.0
Other4.43.13.63.63.2
Sources: Mongolian authorities; and Fund staff estimates.

Data for exports of copper refer to country of initial purchaser rather than country of destination of final product.

Data after 1993 refer to Czech Republic and Slovak Republic.

Sources: Mongolian authorities; and Fund staff estimates.

Data for exports of copper refer to country of initial purchaser rather than country of destination of final product.

Data after 1993 refer to Czech Republic and Slovak Republic.

Table 36.Mongolia: Services and Income Accounts, 1998–2001(In millions of U.S. dollars)
1998199920002001
ReceiptsPaymentsReceiptsPaymentsReceiptsPaymentsReceiptsPayments
SERVICES
Passenger fares11.84.67.33.57.33.410.14.4
Railway6.02.12.21.21.91.13.71.1
Airline5.82.55.12.35.42.36.43.3
Port services18.215.92.924.53.112.33.123.6
Transit fees2.22.618.81.220.91.622.62.4
Travel35.045.135.640.935.951.339.355.3
Embassy expenses abroad2.74.52.05.53.45.33.95.3
Embassies/international organizations0.50.00.50.00.50.00.42.4
Commissions0.00.80.00.54.30.80.01.0
Communications7.26.07.54.27.74.47.74.4
Technical Assistance0.06.50.07.50.013.20.015.3
Other0.33.426.120.121.120.326.421.6
Total77.989.4100.7107.9104.2112.6113.5135.7
INCOME
Direct investment income0.00.10.02.90.05.30.03.4
Interest on bank deposits8.80.06.70.011.00.010.80.1
Interest on debt0.09.20.015.90.019.40.013.6
Official Medium- and long-term0.0920.07.90.09.30.09.0
Short-term0.00.00.00.00.00.00.00.0
Private Sector0.00.00.08.00.010.10.04.5
Interest on trade credit0.00.40.00.40.00.4
Other interest0.90.00.32.00.39.90.3
Total9.79.36.719.513.025.420.717.8
Sources: Mongolian authorities; and Fund staff estimates.
Sources: Mongolian authorities; and Fund staff estimates.
Table 37.Mongolia: Medium-and Long Term Loan Disbursements, 1997–2001(In millions of U.S Dollars)
19971998199920002001
Official loans134.393.7101.971.084.2
Japan12.936.432.520.216.3
Balance of payments support0.00.00.00.00.0
Project12.936.432.520.216.3
Germany5.14.74.84.89.9
China7.10.30.00.00.0
Balance of payments support0.00.00.00.00.0
Project7.10.30.00.00.0
Korea0.00.12.50.00.5
Russia0.00.00.00.00.0
India0.00.00.00.00.0
Norway7.02.70.40.00.0
Kuwait0.71.01.01.13.8
World Bank34.016.413.013.323.0
Balance of payments support9.30.00.00.011.1
Project24.12.412.613.111.3
Technical assistance0.614.00.40.20.6
Asian Development Bank67.431.847.131.330.0
Balance of payments support35.90.016.112.210.0
Project31.55.131.019.120.0
Technical assistance0.026.80.00.00.0
IFAD0.30.30.60.30.7
Commercial loans8.028.871.980.083.0
Copper mine0.00.0
Mini-metal project0.00.0
Airplanes0.028.8
Leather factory6.00.0
Commercial bank2.00.0
Other0.00.0
Total142.3122.5173.7151.0167.2
Sources: Ministry of finance and economy, and Fund staff estimates
Sources: Ministry of finance and economy, and Fund staff estimates
Table 38.Mongolia: Short-Term Capital Flows, 1997–2001(In millions of U.S Dollars)
19971998199920002001
Import credits-16.0-0.2-9.5-6.6-11.5
Inflows6.112.33.45.45.0
Erdenet3.05.04.3
Others0.40.40.7
Outflows22.112.512.912.016.5
Erdenet12.99.516.5
Trade credit extended on exports-11.17.2-0.34.13.3
Inflows-11.18.25.26.54.5
Erdenet5.26.54.5
Outflows0.01.05.52.41.2
Others5.52.41.2
Others-0.1-0.4-3.1-7.2-7.1
Inflows6.29.410.010.911.8
Erdenet3.04.13.7
Others7.06.88.1
Outflows6.39.813.118.118.9
Erdenet5.97.77.9
Others7.210.411.0
Total-27.26.6-12.9-9.7-15.3
Sources: Mongolian authorities; and Fund staff estimates.
Sources: Mongolian authorities; and Fund staff estimates.
Table 39.Mongolia: Official International Reserves of the Bank of Mongolia, 1997–2002(In million of U.S dollars, end of period)
199719981999200020012002
May
Gross foreign assets137.5123.2156.8190.9206.8219.9
Cash1.52.93.13.67.311.4
SDR holdings0.70.50.20.10.00.0
Reserve position in the IMF0.00.00.00.00.10.0
Monetary gold24.69.10.422.551.19.8
Current account0.61.10.96.52.055.6
Deposit account78.789.6127.8114.5124.6114.6
Foreign government bills33.823.520.343.621.628.4
Short-term foreign liabilities47.648.351.450.246.846.6
Borrowing from banks0.00.00.00.00.00.0
International Bank for0.00.00.00.00.00.0
Economic Cooperation0.00.00.00.00.00.0
International Investment Bank0.00.00.00.00.00.0
Use of Fund credit47.648.351.450.246.846.6
Net international reserves 1/89.974.9105.4140.6160.1173.3
Sources: Bank of Mongolia; and Fund staff estimates.

Beginning in December 2000, includes foreign exchange assets arising from commercial banks’ foreign exchange deposits with the Bank of Mongolia.

Sources: Bank of Mongolia; and Fund staff estimates.

Beginning in December 2000, includes foreign exchange assets arising from commercial banks’ foreign exchange deposits with the Bank of Mongolia.

Table 40.Mongolia: Selected Indicators of Commercial Bank Foreign Exchange Operations, 1997–2002
199719981999200020012002
May
Foreign assets (US$ million)81.729.038.948.747.539.7
Cash5.63.14.54.36.65.3
Demand deposits44.419.06.16.113.28.5
Time deposits31.76.828.338.127.625.8
Other assets0.00.00.00.10.00.0
Foreign liabilities (US$ million)15.122.19.15.38.09.7
Deposits of foreign banks and non residents8.60.01.01.01.50.9
Loans from foreign banks5.37.92.80.50.50.9
Other foreign liabilities1.214.25.33.86.07.9
Foreign currency denominated loans (US$ million)20.244.328.325.045.458.9
Summary indicators (in percent)
FC loans/total loans31.946.338.840.336.436.1
Non-performing loans/total loans (forex)20.316.744.817.75.96.3
Non-performing loans/total loans (togrog)32.856.960.528.19.38.7
Foreign currency deposits (US$ million)60.644.256.263.079.289.2
Summary indicators (in percent)
FC deposits/total deposits41.035.945.443.739.337.6
FC current accounts/total current accounts57.449.256.254.246.249.1
FC demand deposits/total demand deposits31.237.948.247.251.646.6
FC time and savings deposits/total time and savings deposits21.019.831.231.729.625.8
Source: Bank of Mongolia; and Fund staff estimates.
Source: Bank of Mongolia; and Fund staff estimates.
Table 41.Mongolia: External Debt and Debt Service, 1997–2001
19971998199920002001
(In millions of US dollars)
External debt604.8759.0827.8837.0853.5
Medium- and long-term557.3710.7776.4786.7806.7
IMF47.648.351.450.346.8
Short-term0.00.00.00.00.0
Debt service41.036.231.924.233.8
Amortization35.028.324.114.924.8
Interest6.08.07.89.39.0
Medium- and long-term39.934.727.917.526.8
Amortization34.127.020.38.518.0
Interest5.87.77.69.08.8
IMF1.11.54.06.67.0
Repurchase/Repayments0.91.33.86.36.8
Charges0.20.20.20.30.2
Short-term0.00.00.00.00.0
(In percent)
External debt/GDP57.478.191.486.382.9
Medium- and long-term52.973.185.781.178.3
IMF4.55.05.75.24.5
Short-term0.00.00.00.00.0
External debt93.3140.5149.2130.8134.1
Medium- and long-term85.9131.6139.9122.9126.7
IMF7.38.99.37.97.4
Short-term0.00.00.00.00.0
Debt-service ratio1/6.36.75.73.85.3
Amortization5.45.24.32.33.9
Interest0.91.51.41.51.4
Medium- and long-term6.26.45.02.74.2
Amortization5.35.03.71.32.8
Interest0.91.41.41.41.4
IMF0.20.30.71.0l.l
Repurchase/repayments0.10.20.71.01.1
Charges0.00.00.00.00.0
Short-term0.00.00.00.00.0
Sources: Mongolian authorities; and Fund staff estimates.

In percent of goods and services.

Sources: Mongolian authorities; and Fund staff estimates.

In percent of goods and services.

Table 42.Mongolia: External Debt Stock by Creditor, 1997–2001(In millions of U.S. dollars, end of period)
19971998199920002001
External Debt604.8759.0827.8837.0853.5
Medium and long-term official518.0647.0763.4773.4793.6
Multilateral (excluding IMF)288.0350.8412.5437.2474.5
Asian Development Bank193.3234.7281.6298.8319.3
World Bank94.4115.5129.6136.9153.1
IFAD0.30.61.31.52.1
Bilateral official229.9296.3350.9336.5319.1
Paris Club212.3275.4322.2306.6283.5
Japan112.3171.6214.8208.4193.6
Russia51.950.251.543.326.4
Germany31.736.037.637.546.5
Finland8.26.26.26.06.0
Norway8.211.412.111.411.0
Non-Paris Club17.620.928.729.935.6
China13.014.315.515.515.5
Korea2.42.98.78.17.9
India1.51.31.21.00.9
Hungary0.00.00.00.00.0
Kuwait0.72.43.35.39.2
IMF47.648.351.450.346.8
Commercial39.364.113.013.013.1
Short-term0.00.00.00.00.0
Sources: Ministry of Finance and Economy, and Fund staff estimates.
Sources: Ministry of Finance and Economy, and Fund staff estimates.
Table 43.Mongolia: Monthly Exchange Rates, 1998–2002(In togrogs per U.S. dollar, period average)
Official rate 1/Interbank rate 2/Street rate
1998
January815.2816.9821.3
February816.6818.2820.9
March816.7817.6821.1
April818.0818.6820.7
May821.4823.9831.1
June833.6838.9849.6
July839.3842.4852.8
August846.3853.5866.1
September852.0856.0863.6
October857.9863.9871.8
November872.5880.5889.1
December891.9905.4911.9
1999
January916.5929.7944.1
February975.2982.0986.5
March1019.61049.21066.3
April1024.91017.51014.2
May1004.41001.31003.3
June1008.11008.91012.7
July1015.01017.11020.7
August1035.21041.51047.5
September1052.51055.61061.0
October1065.71069.21075.3
November1074.21075.41076.3
December1070.41070.41072.6
2000
January1080.81084.81092.1
February1089.21090.31094.6
March