Abstract
2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Mongolia
Fund Relations
(As of May 31, 2019)
Membership Status: Joined: February 14, 1991; Article VIII
| General Resources Account: | SDR Million | Percent Quota |
|---|---|---|
| Quota | 72.30 | 100.00 |
| Fund Holdings of Currency | 224.11 | 309.98 |
| Reserve Position in Fund | 5.44 | 7.52 |
| General Resources Account: | SDR Million | Percent Quota |
|---|---|---|
| Quota | 72.30 | 100.00 |
| Fund Holdings of Currency | 224.11 | 309.98 |
| Reserve Position in Fund | 5.44 | 7.52 |
| SDR Department: | SDR Million | Percent Allocation |
|---|---|---|
| Net cumulative allocation | 48.76 | 100.00 |
| Holdings | 37.66 | 77.24 |
| SDR Department: | SDR Million | Percent Allocation |
|---|---|---|
| Net cumulative allocation | 48.76 | 100.00 |
| Holdings | 37.66 | 77.24 |
| Outstanding Purchases and Loans: | SDR Million | Percent Quota |
|---|---|---|
| None |
| Outstanding Purchases and Loans: | SDR Million | Percent Quota |
|---|---|---|
| None |
Latest Financial Arrangements:
Overdue Obligations and Projected Payments to Fund (SDR Million; based on existing use of resources and present holdings of SDRs):
| Forthcoming | |||||
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Principal | 2.33 | 17.91 | 26.21 | ||
| Charges/interest | 1.96 | 3.89 | 3.88 | 3.67 | 2.96 |
| Total | 1.96 | 3.89 | 6.21 | 21.58 | 29.17 |
| Forthcoming | |||||
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Principal | 2.33 | 17.91 | 26.21 | ||
| Charges/interest | 1.96 | 3.89 | 3.88 | 3.67 | 2.96 |
| Total | 1.96 | 3.89 | 6.21 | 21.58 | 29.17 |
Safeguards assessment: Safeguards assessments of the BOM were conducted in 2002, 2003, 2009, and 2017. The 2017 assessment found limited progress in strengthening the safeguards and governance frameworks at the central bank. While financial accountability and transparency practices were found to be robust, other areas, such as operational and financial autonomy, collegial decision making, oversight of central bank operations and audit mechanisms, and internal audit needed to be strengthened. The BOM has taken steps to address key recommendations from the 2017 safeguards assessment. These include amending the central bank law to improve the governance frameworks, autonomy of the BOM, and collegial decision-making, establishing an MoU with the Ministry of Finance to limit the central bank’s involvement in the mortgage program, and setting up a working group to review the veracity of program monetary data. At the same time, the BOM has drafted a new charter for the Internal Audit Department and established a quarterly reporting mechanism of the function to the Supervisory Board. However, some important recommendations remain. Agreement on the timing and modalities for the transfer of the mortgage program from the BOM to the MOF has not yet been reached and discussions continue. Further, discussions with another central bank on conducting a peer review of internal audit and aspects of controls were initiated, but no firm agreements have been reached yet.
Exchange Arrangement:
On March 24, 2009, the BOM instituted a foreign exchange auction allowing the determination of the exchange rate mainly by market forces. The de jure exchange rate arrangement is floating. The de facto exchange rate arrangement was reclassified twice: (1) retroactively to crawl-like from floating, effective September 18, 2017, and (2) to other managed from crawl-like, effective April 11, 2018.
Mongolia accepted the obligations of Article VIII, Sections 2, 3, and 4 on February 1, 1996. Mongolia maintains two multiple currency practices (MCPs) subject to Fund jurisdiction. First, the modalities of the multi-price auction system give rise to an MCP since there is no mechanism in place that ensures that exchange rates of accepted bids at the multi-price auction do not deviate by more than 2 percent. The Executive Board approved the multi-price auction MCP until June 22, 2010 (Decision No. 14365 of June 23, 2009), and its further extension until March 15, 2012 or the next Article IV consultation whichever is earlier (Decision No. 14669 of June 23, 2010 and Decision No. 14365 of March 16, 2011). The MCP, however, could not be resolved by March 15, 2012, and would be continued as long as the multiple price foreign exchange auction mechanism remains in place. Therefore, the MCP is unapproved, and since the criteria for approval of this MCP are not in place, staff do not recommend Executive Board approval of said measure. In addition, Mongolia has an official exchange rate (reference rate) that is mandatorily used for government transactions (as opposed to the commercial market rate). Therefore, by way of official action, the authorities have created market segmentation. While Order #699 of the BOM issued on December 3, 2010, sets forth that the reference rate is determined based on the weighted average of market rates used from 4 PM of the previous day to 4 PM of the current day, staff are of the view that this Order does not eliminate the market segmentation and the multiplicity of effective rates arising from it. Accordingly, in the absence of a mechanism to ensure that the commercial rates and the reference rate do not deviate by more than 2 percent, the way the reference rate is used in government transactions gives rise to an MCP subject to Fund approval. Since the criteria for approval of this MCP are not in place, it remains unapproved. Mongolia imposes exchange restrictions for security reasons in accordance with United Nations Security Council Resolution No. 92/757 concerning certain transactions with the Federal Republic of Yugoslavia (Serbia and Montenegro) that have been notified to the Fund under Decision 144 (11/4/94).
The BOM notes that hitherto there have been no cases where exchange rates of accepted bids at the multi-price auction deviate by more than 2 percent, and plans to introduce a mechanism to ensure the deviation would never exceed 2 percent The BOM is also working on the development of an indicative spot exchange rate.
Article IV Consultation:
The 2017 Article IV consultation (IMF Country Report No. 17/140) was concluded by the Executive Board on May 24, 2017. Mongolia is on a 24-month cycle.
ROSC Assessments:
The following ROSC assessments have been undertaken: Data Dissemination (May 2001), Fiscal Transparency Module (November 2001), Fiscal Update (May 2005), Data Dissemination (April 2008), Monetary and Fiscal Policy Transparency (September 2008), Banking Supervision (September 2008).
Recent Financial Arrangements:
A 36-month Extended Fund Facility in an amount of equivalent to SDR 314.5054 million (435 percent of quota) was approved on May 24, 2017. The Executive Board completed the fifth review on October 31, 2018.
FSAP Participation:
Mongolia participates in the Financial Sector Assessment Program (FSAP). The first, second, and third FSAP missions took place in May 2007, September 2007 and November 2010 respectively. The latest report (IMF Country Report No. 11/107) was published in May 2011.
Technical Assistance in 2017–2019: Missions:
Missions:
Tax review, (FAD) May 2017
CB law amendment, (LEG) June 2017
e-GDDS, (STA) June – July 2017
Tax policy, (FAD) September 2017
NPL resolution, (MCM) September – October 2017
FX law amendment, (LEG) October 2017
Appraisal industry, (MCM) October 2017
Bank recapitalization reform, (MCM) October 2017
Macro-Fiscal modeling, (FAD) November – December 2017
AML/CFT, (LEG) December 2017
Public investment management, (FAD) December 2017
Bank business plan, (MCM) December 2017
FRC needs assessment, (MCM) December 2017
Effective bank resolution framework, (MCM) February – March 2018
AML/CFT, (LEG) April 2018
Improving taxpayer compliance, (FAD) May 2018
Tax administration, (FAD) June 2018
Residential property price index, (STA) July 2018
Appraisal industry, (MCM) July – August 2018
National accounts, (STA) August – September 2018
Macroprudential surveillance, (MCM) October 2018
Accounting and Reporting, (FAD) September – October 2018
Public investment management, (FAD) October – November 2018
Tax administration, (FAD) November 2018
Appraisal industry, (MCM) November – December 2018
DICOM, (MCM) December 2018
AML/CFT, (LEG) January 2019
Banking regulation, (MCM) January – February 2019
Macro-Fiscal modeling, (FAD) March 2019
Tax administration, (FAD) March 2019
Government finance statistics, (STA) April 2019
FARI financial modeling and revenue forecasting, (FAD) Apr – May 2019
AML/CFT, (LEG) April 2019
Cyber security, (MCM) May 2019
Tax administration, (FAD) June 2019
Banking regulation, (MCM) June – July 2019
PPP/concession, (FAD) June – July 2019
Residential property price index, (STA) July 2019
Resident Representative:
Since July 2019, Mr. SeokHyun Yoon has been the resident representative based in Ulaanbaatar.
Relations with Other International Financial Institutions
World Bank: https://www.worldbank.org/en/country/mongolia
Asian Development Bank: https://www.adb.org/countries/mongolia/main
Statistical Issues
(As of July 2019)
| I. Assessment of Data Adequacy for Surveillance |
| General: Data provision to the Fund is broadly adequate for surveillance, but some shortcomings exist in the estimation of GDP and treatment of missing observations in price indices. The priority areas for improvement are national accounts and price statistics, and also the migration of government finance statistics to a new methodology. |
| National Accounts: The National Statistics Office (NSO) currently publishes annual and quarterly GDP using the production and expenditure approaches. Annual supply-use tables are compiled and represent a significant quality improvement as part of Mongolia’s implementation of 2008 SNA. A rebase from 2010 to 2015 is planned to take place during 2019. A recent mission (August – September 2018) recommended making further use of tax data to supplement/replace survey collections; and to improve volume estimates of taxes and subsidies on products. |
| Price Statistics: CPI estimates use a base year of 2010 using the 2010 household survey. The NSO publishes a producer price index (PPI) and uses the imputation of missing prices. The NSO compiles a quarterly residential property price index for Ulaanbaatar following a mix-adjustment by stratification methodology and is receiving TA to implement an enhance index compilation methodology and to improve data sources in the longer-term. |
| Government Finance Statistics: Currently, the concepts, classifications, and definitions used to compile sub-annual and annual fiscal statistics for the consolidated general government operations series used by APD for surveillance generally follow the guidelines of the GFSM 1986. The authorities have indicated an intention to adopt a migration path to the GFSM 2001/2014 methodology. STA has been providing assistance (funded by Japan) aimed at developing a benchmark annual GFSM 2014-based series, 2016-forward. A June 2019 GFS TA mission compiled a financial balance sheet and integrated presentation of stock and flows for the consolidated general government sector using the accrual (IPSAS-based) accounts maintained by the Ministry of Finance. In December 2018 the authorities began reporting of public sector debt statistics (PSDS) to the World Bank for dissemination on the PSDS Website. |
| Monetary and Financial Statistics: The BoM reports regular monetary data using the IMF’s recommended Standardized Report Forms (SRFs), covering the central bank balance sheet (SRF 1SR) and other depository corporations (SRF 2SR). Mongolia’s monetary and financial statistics (MFS) conform to the concepts and definitions of the Monetary and Financial Statistics Manual and Compilation Guide (MFSMCG). The BoM does not currently compile and report data for the other financial corporations sector through the Standardized Report Forms (SRFs). The BOM also reports some basic data to the IMF’s Financial Access Survey including mobile and internet banking and the two indicators adopted by the UN to monitor Target 8.10 of the Sustainable Development Goals (commercial bank branches per 100,000 adults and ATMs per 100,000 adults). |
| Financial sector surveillance: Mongolia does not currently report Financial Soundness Indicators (FSIs) to the Fund for dissemination on the Fund’s external website. The BoM is quite advanced in the compilation of FSIs, but needs to finalize their action plan related to the submission of the data and metadata to the IMF for external dissemination. |
| External Sector Statistics: For compilation of external sector statistics (ESS), the Bank of Mongolia (BOM) follows the statistical framework of the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6). Priorities for improvement includes addressing persistent negative net errors and omissions. Mongolia participates in the IMF’s Coordinated Direct Investment Survey (CDIS) and Coordinated Portfolio Investment Survey (CPIS). Mongolia has also started compiling external debt statistics and the Reserves Data Template. |
| II. Data Standards and Quality |
| In April 2019, Mongolia graduated to the Fund’s Special Data Dissemination Standard (SDDS), which sets high standards for the timeliness and periodicity of dissemination of economic and financial data. |
| I. Assessment of Data Adequacy for Surveillance |
| General: Data provision to the Fund is broadly adequate for surveillance, but some shortcomings exist in the estimation of GDP and treatment of missing observations in price indices. The priority areas for improvement are national accounts and price statistics, and also the migration of government finance statistics to a new methodology. |
| National Accounts: The National Statistics Office (NSO) currently publishes annual and quarterly GDP using the production and expenditure approaches. Annual supply-use tables are compiled and represent a significant quality improvement as part of Mongolia’s implementation of 2008 SNA. A rebase from 2010 to 2015 is planned to take place during 2019. A recent mission (August – September 2018) recommended making further use of tax data to supplement/replace survey collections; and to improve volume estimates of taxes and subsidies on products. |
| Price Statistics: CPI estimates use a base year of 2010 using the 2010 household survey. The NSO publishes a producer price index (PPI) and uses the imputation of missing prices. The NSO compiles a quarterly residential property price index for Ulaanbaatar following a mix-adjustment by stratification methodology and is receiving TA to implement an enhance index compilation methodology and to improve data sources in the longer-term. |
| Government Finance Statistics: Currently, the concepts, classifications, and definitions used to compile sub-annual and annual fiscal statistics for the consolidated general government operations series used by APD for surveillance generally follow the guidelines of the GFSM 1986. The authorities have indicated an intention to adopt a migration path to the GFSM 2001/2014 methodology. STA has been providing assistance (funded by Japan) aimed at developing a benchmark annual GFSM 2014-based series, 2016-forward. A June 2019 GFS TA mission compiled a financial balance sheet and integrated presentation of stock and flows for the consolidated general government sector using the accrual (IPSAS-based) accounts maintained by the Ministry of Finance. In December 2018 the authorities began reporting of public sector debt statistics (PSDS) to the World Bank for dissemination on the PSDS Website. |
| Monetary and Financial Statistics: The BoM reports regular monetary data using the IMF’s recommended Standardized Report Forms (SRFs), covering the central bank balance sheet (SRF 1SR) and other depository corporations (SRF 2SR). Mongolia’s monetary and financial statistics (MFS) conform to the concepts and definitions of the Monetary and Financial Statistics Manual and Compilation Guide (MFSMCG). The BoM does not currently compile and report data for the other financial corporations sector through the Standardized Report Forms (SRFs). The BOM also reports some basic data to the IMF’s Financial Access Survey including mobile and internet banking and the two indicators adopted by the UN to monitor Target 8.10 of the Sustainable Development Goals (commercial bank branches per 100,000 adults and ATMs per 100,000 adults). |
| Financial sector surveillance: Mongolia does not currently report Financial Soundness Indicators (FSIs) to the Fund for dissemination on the Fund’s external website. The BoM is quite advanced in the compilation of FSIs, but needs to finalize their action plan related to the submission of the data and metadata to the IMF for external dissemination. |
| External Sector Statistics: For compilation of external sector statistics (ESS), the Bank of Mongolia (BOM) follows the statistical framework of the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6). Priorities for improvement includes addressing persistent negative net errors and omissions. Mongolia participates in the IMF’s Coordinated Direct Investment Survey (CDIS) and Coordinated Portfolio Investment Survey (CPIS). Mongolia has also started compiling external debt statistics and the Reserves Data Template. |
| II. Data Standards and Quality |
| In April 2019, Mongolia graduated to the Fund’s Special Data Dissemination Standard (SDDS), which sets high standards for the timeliness and periodicity of dissemination of economic and financial data. |
Mongolia: Common Indicators Required for Surveillance
(As of July 2019)
Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.
Both market-based and officially determined, including discount rates, money market rates, and rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I), Not Available (NA).
Reflects the assessment provided in the data ROSC or the Substantive Update (published in April 2008, and based on the findings of the mission that took place during September 1–28) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).
Same as footnote 7, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.
Mongolia: Common Indicators Required for Surveillance
(As of July 2019)
| Date of Latest Observation | Date Received | Frequency of Data6 | Frequency of Reporting6 | Frequency of Publication6 | Memo Items: | ||
|---|---|---|---|---|---|---|---|
| Data Quality-Methodological soundness7 | Data Quality – Accuracy and Reliability8 | ||||||
| Exchange rates | 05/31/19 | 05/31/19 | M | M | M | ||
| International reserve assets and reserve liabilities of the Monetary Authorities1 | 05/2019 | 07/2019 | M | M | M | ||
| Reserve/base money | 05/2019 | 07/2019 | M | M | M | O, LO, LO, LO | O, O, O, O, LNO |
| Broad money | 05/2019 | 07/2019 | M | M | M | ||
| Central bank balance sheet | 05/2019 | 07/2019 | M | M | M | ||
| Consolidated balance sheet of the banking system | 05/2019 | 07/2019 | M | M | M | ||
| Interest rates2 | 05/2019 | 07/2019 | M | M | M | ||
| Consumer price index | 2019M6 | 07/2019 | M | M | M | O, LO, O, O | LO, LO, LO, O, O |
| Revenue, expenditure, balance and composition of financing3 – general government4 | 05/2019 | 06/2019 | M | M | M | LO, LNO, LO, O | LO, O, LO, LO, LNO |
| Stocks of general government and general government-guaranteed debt5 | 2019Q1 | 05/31/19 | Q | Q | Q | ||
| External current account balance | 2019Q1 | 07/18/19 | Q | Q | Q | O, O, O, LO | LO, O, LO, LO, LO |
| Exports and imports of goods | 2019Q1 | 07/18/19 | Q | Q | Q | ||
| GDP/GNI | 2019Q1 | 05/15/19 | Q | Q | Q | O, LNO, O, LO | O, LO, LO, LO, LNO |
| Gross external debt | 2019Q1 | 05/31/19 | Q | Q | Q | ||
| International investment position | 2019Q1 | 7/18/19 | Q | Q | Q | ||
Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.
Both market-based and officially determined, including discount rates, money market rates, and rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I), Not Available (NA).
Reflects the assessment provided in the data ROSC or the Substantive Update (published in April 2008, and based on the findings of the mission that took place during September 1–28) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).
Same as footnote 7, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.
Mongolia: Common Indicators Required for Surveillance
(As of July 2019)
| Date of Latest Observation | Date Received | Frequency of Data6 | Frequency of Reporting6 | Frequency of Publication6 | Memo Items: | ||
|---|---|---|---|---|---|---|---|
| Data Quality-Methodological soundness7 | Data Quality – Accuracy and Reliability8 | ||||||
| Exchange rates | 05/31/19 | 05/31/19 | M | M | M | ||
| International reserve assets and reserve liabilities of the Monetary Authorities1 | 05/2019 | 07/2019 | M | M | M | ||
| Reserve/base money | 05/2019 | 07/2019 | M | M | M | O, LO, LO, LO | O, O, O, O, LNO |
| Broad money | 05/2019 | 07/2019 | M | M | M | ||
| Central bank balance sheet | 05/2019 | 07/2019 | M | M | M | ||
| Consolidated balance sheet of the banking system | 05/2019 | 07/2019 | M | M | M | ||
| Interest rates2 | 05/2019 | 07/2019 | M | M | M | ||
| Consumer price index | 2019M6 | 07/2019 | M | M | M | O, LO, O, O | LO, LO, LO, O, O |
| Revenue, expenditure, balance and composition of financing3 – general government4 | 05/2019 | 06/2019 | M | M | M | LO, LNO, LO, O | LO, O, LO, LO, LNO |
| Stocks of general government and general government-guaranteed debt5 | 2019Q1 | 05/31/19 | Q | Q | Q | ||
| External current account balance | 2019Q1 | 07/18/19 | Q | Q | Q | O, O, O, LO | LO, O, LO, LO, LO |
| Exports and imports of goods | 2019Q1 | 07/18/19 | Q | Q | Q | ||
| GDP/GNI | 2019Q1 | 05/15/19 | Q | Q | Q | O, LNO, O, LO | O, LO, LO, LO, LNO |
| Gross external debt | 2019Q1 | 05/31/19 | Q | Q | Q | ||
| International investment position | 2019Q1 | 7/18/19 | Q | Q | Q | ||
Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.
Both market-based and officially determined, including discount rates, money market rates, and rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I), Not Available (NA).
Reflects the assessment provided in the data ROSC or the Substantive Update (published in April 2008, and based on the findings of the mission that took place during September 1–28) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).
Same as footnote 7, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.
Main Data Websites
National Statistics Office (www.1212.mn)
National Accounts
Consumer Price Inflation
Agricultural and Industrial Production
Petroleum Imports
Electricity Production and Consumption
Coal Production
Retail Prices
Employment
Exports and Imports Securities Market Data
Bank of Mongolia (www.mongolbank.mn)
Monetary Survey
Consolidated Balance Sheet of Commercial Banks
Distribution of Bank Credit to the Nongovernment Sector
Net Credit to Government
Interest Rates
Balance of Payments
Services and Income Accounts
Official Reserves of the Bank of Mongolia
Selected Indicators of Commercial Bank Foreign Exchange Operations
Nominal and Real Exchange Rates
Government Budget Accounts
Ministry of Finance (www.mof.gov.mn)
Government Budgetary Operations
National Development Agency (www.nda.gov.mn)
Long- and medium-term development strategy
Economic and social policies
Investment policy coordination
Financial Regulatory Commission (www.frc.mn)
FRC decisions
Total assets of regulated entities (insurance companies, securities and broker firms, non-bank financial institutions, savings and credit unions)
Consolidated income statements of regulated entities (insurance companies, securities and broker firms, non-bank financial institutions, savings and credit unions)
Formerly PRGF.