2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Mongolia


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

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Latest Financial Arrangements:

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Overdue Obligations and Projected Payments to Fund (SDR Million; based on existing use of resources and present holdings of SDRs):

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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:


  • 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)

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Table 2.

Mongolia: Common Indicators Required for Surveillance

(As of July 2019)

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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.