The latest data from February show that exports are rebounding strongly, buoyed by high copper prices andstrong demand from
With rising inflation eroding real incomes and purchasing power, low-income households are likely to be the most severely affected. Moreover, these effects will be felt on top of those from the sharp economic downturn last year and the recent dzud. According to latest information by the Ministry of Food and Agriculture, the total official livestock loss equals 4.1 million. Over 50 percent of the livestock losses are goats, which suggests that the cashmere sector will experience a significant supply shortage in the coming season and that rural livelihoods and incomes will remain under strain.
In the banking sector, there are tentative signs of a stabilization of non-performing loans (NPLs). However this may prove to be a temporary respite given that loans with principals in arrears are continuing to mount (these are categorized as NPLs once they have been in arrears more than 90 days).
Overall through, the economy is continuing to show signs of recovery, following an extremely sharp downturn last year. This recovery is being supported by a favorable external environment, on the back of strong policy actions over the past year.
At its upcoming spring session, the Mongolian Parliament is expected to debate and enact a number of important reform laws. These include comprehensive social welfare reform legislation to consolidate and improve the targeting of existing social transfers in a fiscally sustainable manner. Parliament is also expected to adopt a Fiscal Stability Law and an Integrated Budget Law which will set in place a fiscal framework for managing mining revenues as well as a commitment to prudent fiscal policy. With regard to the banking sector, a restructuring strategy is expected to be finalized soon, laying out a framework for banking sector resolution techniques. Finally, there has been growing pressure to amend the 2010 budget, to exclude public investment program projects lacking feasibility studies.
These reforms will play a crucial role in ensuring that