ULAANBAATAR -- Fresh off its blowout victory in the parliamentary election, the Mongolian People's Party has begun selecting a prime minister and a cabinet as it prepares to turn the economy around.
The MPP now must shoulder heavy responsibilities, since its dramatic election win shows the level of people's expectations, party leader Enkhbold Miegombo said early Thursday.
Having increased its seats from 30 to 65, the former opposition party now has an overwhelming majority in the 76-seat unicameral legislature. Enkhbold is largely expected to become prime minister. A new cabinet is expected by July 15, the start of a two-day summit that the East Asian country will host for the Asia-Europe Meeting.
Money on their minds
"I want the government to improve the economy above anything else," a 38-year-old business owner said.
Dissatisfaction with the previous government's economic management was the main reason for the MPP's overwhelming victory in the election, which saw 72% turnout.
Mongolian growth slowed from double digits in the 2011-13 period to just 2.3% in 2015. One big factor was the 2012 introduction of foreign investment regulations.
The regulations were meant to curb Chinese companies' ravenous acquisitions of mining rights for copper, coal and other resources but ended up also discouraging investment from Japan, the U.S. and Europe. Foreign direct investment in Mongolia sank to roughly $200 million in 2015 -- a paltry 5% or so of the 2011 figure. The end of the global resources boom and the Chinese economic slowdown have further added to Mongolia's economic woes.
With the country's fiscal condition having also deteriorated, concern is growing that Mongolia may default on $2.1 billion in foreign-currency-denominated debt maturing over the 2017-18 period. The MPP government will very likely seek assistance from the International Monetary Fund as it works to restore its fiscal health.
Improving the climate
A key challenge for the new government is whether it can abolish or revise the foreign investment regulations at a time when the country remains highly wary of Chinese investment.
One piece of bright news is global mining giant Rio Tinto's decision in May to resume second-stage development of the Oyu Tolgoi copper mine. The expansion of the mine, believed to hold one of the largest copper deposits in the world, is expected to entail $5.3 billion in investment.
Japan will likely also play a key role in Mongolia's economic development, with a bilateral economic partnership agreement having taken effect in June. Maintaining good ties with Tokyo is expected to remain a high priority.