Mining in Mongolia: Economic Promises and Pitfalls

As Mongolia hurtles towards its parliamentary elections, the country's economic future hangs in the balance. The ruling Mongolian People's Party (MPP) touts a remarkable post-pandemic recovery, with GDP per capita reaching a historic $5,220 and foreign currency reserves more than doubling. Yet beneath this veneer of prosperity lies a more complex reality.

Mongolia's external debt has ballooned to a staggering $35 billion, equivalent to 150% of GDP. More alarmingly, government debt is outpacing corporate borrowing, projected to hit 53% of GDP by 2024. This debt spiral, coupled with the country's heavy reliance on volatile commodity exports, paints a precarious economic picture.

The newly minted "Ulaanbaatar Bond," adding another $163 million to the capital's debt burden just days before the election, exemplifies the government's penchant for short-term fiscal maneuvers. While funding critical infrastructure, the bond's hasty issuance and high interest rate (12-14%) raise red flags about fiscal discipline and transparency.