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Monthly Economic Report/№26

DEVELOPMENT BANK OF MONGOLIA

Monthly Economic Report
(January, 2017)

Ulaanbaatar
2017
Monthly Economic Report/№26

I. External trade Trade balance has been maintaining its positive
balance owing to the lower import during the
Total trade turnover in accounting month
last year and it amounted USD 1,559.4 million
grew by 33.6% compared with same time of last
annually.
year, reached USD 705.7 million. The increase
of trade turnover was contributed by 30.2%
growth of export, 39.2% growth of import. II. State Budget
Figure 1. External trade State budget income and expenditure
Export (mln $)
Export growth, yoy (%)
Import (mln $)
Import growth, yoy (%) amounted MNT 440.5 billion, MNT 465.8 billion
6,000 60%
50%
respectively and budget deficit touched MNT
4,000

2,000
40% 25.3 billion.
30%

0 20%
10% Figure 2. State budget (bln MNT)
-2,000 0%
Income (bln MNT) Expenditure (bln MNT)
-4,000 -10% Income growth, yoy (%) Expenditure growth, yoy (%)
-20% 8,000 60%
-6,000
-30% 6,000 50%
-8,000 -40% 4,000
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 40%
2,000
2013 2014 2015 2016 2017
- 30%
Source: www.1212.mn (2,000) 20%
(4,000)
As of January 2017, share of mineral products (6,000)
10%

0%
in total export equals 87.6% whereas share of (8,000)
-10%
(10,000)
textile and natural, cultured stones metals (12,000) -20%
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1
were 2.8%, 4.2% respectively. 2013 2014 2015 2016 2017

Source: www.1212.mn
Although border price of exporting copper
concentrate dropped, exporting coal price has
Details of budget performance in 2016M01,
been grown in recent months. For instance,
2017M01 are compared as follows:
border price of exporting coal grew by 2.2 times
than January 2016. And it was USD 29.6 per ton Figure 3. Details of budget income (bln MNT)
whereas touched USD 64.3 per ton presently. 300.5
360.9
2016M01

2017M01
Specifically, coal export income had an
influence on the total export growth
86.777.0 76.988.9
significantly. It was USD 34.3 million January 49.138.3 53.0
79.7
34.8
19.229.8 31.2
2016 whereas amounted USD 169.3 million in
Tax revenue Social Value added Excise tax Revenue of Other taxes Non tax
reporting month. security tax foreign revenue
contribution activities

In import side, total import raised 39.2% and Source: www.1212.mn
reached USD 277.2 million. The growth in total
import contributed by export of mineral and Figure 4. Details of budget income (bln MNT)
chemical product, base metals as well as 189.3
186.2 175.9
2016M01

163.2
2017M01
machinery and its equipment, electric
appliances.
62.3
49.1
The improving trade performance will have 31.0
17.3
1.6 3.0 - 2.1
a positive impact on international reserve Expenditures Current Interest Capital Subsidies Net lending
on goods and transfers expenditure
further and it equals USD 1.3 billion in services

December 2016 as per BoM’s statement. Source: www.1212.mn
Monthly Economic Report/№26

III. Monetary Policy Annual inflation in January was contributed by
1.8% of food, 0.5% of cloth whereas 0.5 %,
The Bank of Mongolia cut its policy rate by 1
percentage point to 14 percent 19 December 0.1% of housing and household equipment
20161. M2 money annually grew by 20.5% and respectively.
touched the amount of MNT 11,873.5 billion.
IV. Exchange Rate
Currently, GoM reached an agreement with
IMF and to be expected financial program of After the program agreement with IMF,
$440 million. Also, swap line of RMB 15 billion positive developments in the internal FX
between Central Bank of China and Bank of market and yields of Mongolian government,
Mongolia is expected to extend at least three DBM were emerged. Specifically, USDMNT and
years2. JPYMNT had kept their stable level during last
Figure 5. М2 money (bln MNT) two week.
М2 money (bln MNT) М2 growth (yoy)
14000 50% BoM announced that its international FX
12000 40% reserve accounted for USD 1.3 billion
10000
30% December 2016. This can be met import
8000
20%
consumption of 4.7 months following to the
6000
10%
trade January 2017.
4000

0%
2000
Figure 7. USD, JPY and daily fluctuation
0 -10%
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1
USDMNT JPYMNT
2013 2014 2015 2016 2017 2600 2.5% 25 5.0%
2.0% 4.0%
2500
Source: www.1212.mn, Bank of Mongolia 1.5%
23 3.0%
2400 2.0%
1.0% 21 1.0%
Annual M2 growth of 20.6% was 2300
0.5% 0.0%
2200
contributed by time deposit in MNT and foreign 2100
0.0% 19 -1.0%
-2.0%
-0.5%
currency, current account in MNT and foreign 2000 -1.0%
17 -3.0%
-4.0%
currency. Specifically, time deposit and current 1900 -1.5% 15 -5.0%
1/2/2016

6/5/2016

1/2/2017
2/23/2016
4/13/2016

7/27/2016
9/18/2016
11/10/2016

1/2/2016
2/17/2016
4/1/2016
5/18/2016
7/4/2016
8/19/2016
10/5/2016

1/7/2017
11/21/2016
account in MNT grew by 29.4%, 11.0% whereas
time deposit and current account in foreign
currency grew by 54.7%, 28.3% respectively Source: Bank of Mongolia
January 2017 compared with same month of BoM has been holding FX auction twice a week
last year. and ask amount was higher than bid based on
the auction request from commercial banks in
Annual inflation, has been maintaining its last auctions.
significant lower level, was 3.3% in first month
of this year.

Figure 6. Annual inflation (%)
Food,
Other, 1.8%
0.2%
Household
equipment,
0.1%

Educati…

Transport,
0.01%

Housing, Cloth,
0.5% 0.5%

Source: www.1212.mn,

1 2
https://mongolbank.mn/documents/pressrelease/20161219e.pdf http://www.imf.org/en/News/Articles/2017/02/19/PR1754-Mongolia-IMF-Reaches-
Staff-Level-Agreement-on-3Yr-EFF
Monthly Economic Report/№26

V. Balanced of Payment
As a result of Balanced of payment (BoP)
performance last year, current account had a
deficit of USD 449.0 million, capital and
financial account was USD 707.4 million
respectively. BoP finally (total of current,
capital and financial accounts) equals USD -18.2
million.
Table 1. Balanced of payment (mln $)3
2016M01-
2016M12
12
I. Current Account 39.1 -449.0
I.1 Goods and services balance 217.4 187.8
1. Goods balance 352.3 1,329.9
2. Services balance -135.0 -1,142.1
I.2 Income balance -181.2 -832.3
I.3 Current transfers 2.9 195.5
II. Capital and Financial Account -40.0 707.4
II.1 Capital account 6.0 92.3
II.2 Financial accounts -45.9 615.1
1. Direct investment 110.9 -4,081.2
1.1 Abroad -2.7 -9.0
1.2 In Mongolia 113.6 -4,072.1
2. Portfolio investment -10.7 469.1
3. Financial derivatives 2.2 -1.7
4. Other investment -148.4 4,228.8
III. Net Errors and Omissions -29.3 -276.6
Total of Current, Capital and Financial
-30.1 -18.2
Accounts

For the details of current account, goods
and trade balance USD 1,329.9 million, service
balance was -USD 1,142.1 million. Income
balance kept its minus level, -USD 823.3 million
and current transfer operated positively, USD
195.5 million.

Furthermore, total of capital and financial
account were USD 707.4 million because
capital account and financial account had
positive amounts USD 92.3 million and USD
615.1 million respectively.

3
BoP performance as of December 2016, The Bank of Mongolia