Mongolia Weekly: Central bank raises rate, government curbs spending, plans to end fuel rationing
August 8, 2026 to August 14, 2026 --- 1. Bank of Mongolia Raises Policy Rate to 12.5% as Inflation Hits 13% On August 12, the Bank of Mongolia raised its policy rate by 0.5 percentage points to 12.5% and the reserve requirement on banks’ tugrik deposits by 0.5 points to 14.5%. Annual inf
August 8, 2026 to August 14, 2026
1. Bank of Mongolia Raises Policy Rate to 12.5% as Inflation Hits 13%
On August 12, the Bank of Mongolia raised its policy rate by 0.5 percentage points to 12.5% and the reserve requirement on banks’ tugrik deposits by 0.5 points to 14.5%. Annual inflation reached 13% nationally and in Ulaanbaatar in July, the highest nationwide rate in four years, led by fuel, food and regulated goods. The bank said the measures are intended to anchor expectations and limit secondary effects from supply-driven price increases.
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From daily briefs: 2026-08-11, 2026-08-12, 2026-08-13, 2026-08-14
2. Government Orders Spending Curbs After MNT 2.1 Trillion First-Half Deficit
The government ordered all budget entities to adopt a spending-saving regime after reporting a MNT 2.1 trillion first-half 2026 deficit, with balanced revenue of MNT 14.6 trillion and consolidated expenditure of MNT 16.7 trillion. Salaries, pensions, emergency services, healthcare and education are to remain fully funded, while non-essential spending will be reduced. Finance Minister Z. Mendsaikhan said a budget amendment will be prepared. The Democratic Party demanded its immediate submission and an extraordinary parliamentary session before end-August.
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From daily briefs: 2026-08-08, 2026-08-10
3. Government Builds Fuel Storage and Targets 30% Supply Diversification
The government is building 23 fuel-storage sites with MNT 300 billion in financing and 300,000 cubic metres of capacity, while pursuing supplies from China, South Korea, Kazakhstan and Singapore. It aims to raise national storage coverage to 45 days by the end of 2026 and 60 days by August 2027, and to source at least 30% of fuel from countries other than its dominant supplier. The measures respond to vulnerability to short-term shortages and price shocks amid recent distribution disruptions.
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From daily briefs: 2026-08-09, 2026-08-10, 2026-08-12
4. Prime Minister Orders Refinery Support and Site-Security Plans
Prime Minister N. Uchral directed ministries to resolve 14 regulatory, financing and operational issues affecting the USD 1.7 billion, India-financed oil refinery in Altanshiree soum, Dornogovi Province, and to prepare plans and cost estimates for Internal Troops protection of its construction site. The project is more than 60% complete and scheduled for commissioning in 2028. Its 527-kilometre crude-oil pipeline from Block 19 in Matad soum is more than 90% complete. The refinery is designed to process 1.5 million tonnes annually and cover about 55% of domestic petroleum-product demand.
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From daily briefs: 2026-08-11, 2026-08-13, 2026-08-14
5. Zes-Oyu Switchyard Opens Mongolia’s Second External Power Link
On August 3, the 220-kilovolt Zes-Oyu outdoor switchyard entered operation, creating Mongolia’s second connection between the national grid and an external power system after 50 years. Built with Oyu Tolgoi investment at the Energy Ministry’s request, its six bays and 3-kilometre line enable parallel operation with Inner Mongolia. Agreements signed December 16, 2025 allow imports of up to 80 MW and coordinated dispatch, separating southern-region winter demand from the central grid and potentially supporting future domestic supply to Oyu Tolgoi.
Local Coverage: news.mn
From daily brief: 2026-08-14
6. Assessment Finds Desertification Affects 81.9% of Mongolia’s Territory
A sixth national assessment based on 1991-2025 data found desertification affected 81.9% of Mongolia’s territory to some degree. Evidence differs on the 2020 baseline: one passage gives 76.9%, or about 120.3 million hectares, while another gives 76%. The ministry says the findings should inform urban planning, development plans and investment allocations. The results will be presented as Ulaanbaatar prepares to open COP17 on August 17.
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From daily briefs: 2026-08-13, 2026-08-14
7. Mongolia’s Seven-Month Exports Reach USD 12.2 Billion
Customs briefs put Mongolia’s first-seven-month trade turnover at USD 19.3 billion and USD 19.4 billion, respectively, with exports of USD 12.2 billion. One said the trade surplus exceeded USD 5 billion for the first time; the other said exports exceeded imports by USD 5 billion. Coal and copper ore and concentrate generated 82.7% of export revenue. Passenger-car and truck imports were three-year lows, while gasoline and diesel imports rose from a year earlier.
Local Coverage: eagle.mn, urug.mn, news.mn
From daily briefs: 2026-08-08, 2026-08-11
8. Prime Minister Orders Thermal Plant No. 3 Repairs by October 1
After an August 7 visit, Prime Minister Uchral ordered Thermal Power Plant No. 3 to finish boiler repairs and installation by October 1 and ensure winter readiness. The state-owned plant supplies 32% of Ulaanbaatar’s heat and 10% of central-region electricity, and its repairs were 77% complete on average. MNT 2.1 billion funds boilers No. 4 and No. 8. Turbine generator No. 7 is due before peak demand, but No. 9 will be commissioned during winter high load; funding to replace obsolete 25-MW No. 5 is to enter the 2027 budget.
Local Coverage: unuudur.mn, isee.mn
From daily briefs: 2026-08-08, 2026-08-11
9. Rail-Gauge Differences Force Fuel Imports Onto Trucks at Erenhot-Zamyn-Uud
Differences between Mongolia’s broad-gauge and China’s standard-gauge rail systems require fuel arriving at Erenhot-Zamyn-Uud to be transferred to trucks. The crossing handled an average of 16 broad-gauge and 7.5 standard-gauge trains a day in 2025, moving 15.5 million tonnes, while the Economy and Development Minister said capacity has reached its limit. The 32.6-kilometre dual-gauge Gashuunsukhait-Ganqimaodu railway, costing more than MNT 900 billion, is planned to reach about 70% completion in 2026 and begin trial freight in April 2027, as 2026 copper exports are projected at 2.1 million tonnes and iron exports rise from 2027.
Local Coverage: news.mn
From daily brief: 2026-08-14
10. Authorities Plan to End AI-92 Rationing on August 15
Authorities plan to end temporary AI-92 purchase limits and even-odd licence-plate sales rules on August 15, with nationwide distribution expected to normalize from next Monday after weekend deliveries replenish stations. On August 12, 46 Russian rail tank cars carrying more than 2,700 tonnes reached Ulaanbaatar, while another 152 cars carrying 9,120 tonnes were en route. Russia agreed to supply an additional 25,000 tonnes of AI-92 and 5,000 tonnes of jet fuel this month; China is supplying 3,000 tonnes of jet fuel.
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From daily briefs: 2026-08-08, 2026-08-09, 2026-08-11, 2026-08-12, 2026-08-13, 2026-08-14