World Bank urges Mongolia to reform during mining boom

Mongolia should use its current mining boom to fix long-standing budget problems and avoid repeating past economic mistakes, a new World Bank report warns, the organisation announced. The country has bounced back from three tough years of external shocks with strong coal exports driving growth. But the World Bank says Mongolia needs fiscal reforms now to prevent another boom-bust cycle that has hurt the economy before.

Mongolia’s finances look much better than they did a few years ago. Public debt has dropped and the government has built up financial reserves while bond markets have gained confidence in the country. Strong mining revenues have helped fund government spending, but that’s also created some problems the World Bank wants addressed.

The report found that government spending has grown beyond pre-pandemic levels and exceeds what similar countries spend. Programs like subsidized housing mortgages and transfers through state companies add to the spending spree.

“Mongolia stands at a pivotal moment,” said World Bank Country Manager Taehyun Lee. “The current economic boom creates a unique opportunity to strengthen the country’s fiscal position, but also risks repeating past boom-bust cycles if reforms are delayed.”

Mongolia’s social programs help reduce poverty and inequality, but they’re expensive and could target help better to those who need it most. The country also needs to improve access to health and education, especially in rural areas. Better planning and oversight of public investment projects would help too, particularly as the government wants to ramp up infrastructure spending.

The World Bank suggests tax reforms that would reduce Mongolia’s heavy dependence on mining revenues while making the system fairer and more growth-friendly. These changes would help stabilize the economy and create room for investments in infrastructure and human development that benefit everyone, not just during mining booms.