Just under half a year into his tenure, Mongolian Prime Minister Uchirbat has issued a strict order: the entire country must begin living a "hardship lifestyle." All large-scale in-person meetings have been canceled, and overseas visits are completely suspended. The money saved will be fully redirected toward winter disaster prevention and securing energy supply. This austerity measure will remain fully enforced until the end of the year, with relaxation decisions to be made based on the situation at that time.
In fact, Mongolia isn't new to cutting expenses. Years ago, due to external conflicts, it entered a state of "comprehensive frugality," slashing budgets and halting procurement—everything was done. But this time, the scale is significantly greater and the duration longer. The most direct reason is that the government’s finances simply can’t sustain it anymore.
Mongolia’s economy has long relied on “mineral exports.” Coal, copper, and iron ore are its primary revenue sources. When international markets fluctuate, Mongolia trembles along with them. To reduce overdependence on mining, the government has recently implemented sweeping tax cuts in an effort to stimulate non-mining sectors. However, before these tax cuts could yield results, mineral exports ran into trouble. Due to tensions with Western mining companies and domestic nationalist protests, mining production has noticeably declined. Meanwhile, global commodity prices remain volatile, making export revenues insufficient to cover the fiscal gap left by tax reductions.
Even worse, spending continues to surge. To appease public sentiment and narrow income disparities, the previous administration approved substantial increases in public sector salaries and pensions, further expanding fiscal expenditure. Uchirbat essentially inherited a “messy situation,” and now he has no choice but to tackle it head-on.
The external environment offers no relief either. Mongolia’s railway infrastructure is underdeveloped, so transportation mainly depends on roads, with gasoline-powered vehicles dominating. Yet, regional conflicts have disrupted traditional fuel supply channels, causing inflation to keep rising, and procurement costs for the government continue climbing. For a country with a small population, its debt burden has become unbearable. Inflation leads to currency depreciation, worsening the debt burden. The central bank is forced to raise interest rates sharply, increasing the cost of borrowing to repay old debts—making the fiscal situation spiral downward in a vicious cycle.
Climate conditions are adding insult to injury. Global warming and land desertification have significantly increased the frequency of natural disasters in Mongolia. Last year, a severe snowstorm caused millions of livestock to die. This year’s abnormal weather patterns mean the government must prepare funds and supplies in advance to prevent major disasters during winter.
Saving money isn’t wrong in itself—but the savings from canceling meetings and halting official trips are mere drops in the bucket when it comes to easing fiscal pressure. What Uchirbat truly needs is systemic reform. But what he lacks most right now is time.
If internal pressures become unsustainable, Mongolia may turn to external assistance. Although Western countries talk about rare earths and conduct military drills with Mongolia, they may not actually step in when real emergency aid is needed. At that point, Mongolia might finally realize that the only reliable allies are its two longtime neighbors right next door.
Original source: toutiao.com/article/1872918317883392/
Disclaimer: This article reflects the personal views of the author.