South-South Cooperation : How Mongolia Learned from Chile on Managing a Mineral-Rich Economy

South-South Cooperation : How Mongolia Learned from Chile on Managing a Mineral-Rich Economy

Mongolia's mineral-rich economy was hit extremely hard by the global downturn during 2008-9, when copper prices plunged, external demand fell, and growth collapsed. The shock exposed serious underlying weaknesses in the management of the count...

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Bibliographic Details
Main Authors:	van den Brink, Rogier, Sayed, Arshad, Barnett, Steve, Aninat, Eduardo, Parrado, Eric, Hasnain, Zahid, Khan, Tehmina
Format:	Brief
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCOUNTABILITY ACCOUNTING ADB APPROPRIATIONS BALANCE OF PAYMENTS BANKING SECTOR BASIC EDUCATION BEST PRACTICES BID BOOM-BUST CYCLE BOOM-BUST CYCLES BUDGET EXECUTION BUDGET PROCESS BUDGET SURPLUSES BUDGETING BUSINESS CYCLE CAPITAL BUDGETING CAPITAL MARKETS CASH TRANSFERS CENTRAL BANK CIVIL SOCIETY CIVIL SOCIETY ORGANIZATIONS COMMODITY PRICE COMMODITY PRICES CONFIDENCE CONSOLIDATION CONSUMER PRICE INDEX CONTINGENT LIABILITIES CURRENCY CURRENT ACCOUNT DEBT DEBT MANAGEMENT DEBT SERVICE DEFICITS DEPOSITS DEVELOPING COUNTRIES DEVELOPMENT BANK DIVERSIFICATION DONOR SUPPORT ECONOMIC CRISIS ECONOMIC POLICY EQUALIZATION EXPENDITURE EXPENDITURES EXPLOITATION FINANCIAL ASSETS FINANCIAL INSTITUTION FINANCIAL MANAGEMENT FINANCIAL RESOURCES FISCAL BALANCE FISCAL BURDEN FISCAL DECENTRALIZATION FISCAL LEGISLATION FISCAL MANAGEMENT FISCAL POLICIES FISCAL POLICY FISCAL REFORMS FISCAL RESPONSIBILITY FISCAL SUPPORT FISCAL SURPLUS FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES GOVERNMENT BORROWING GOVERNMENT OFFICIALS GROSS DOMESTIC PRODUCT INCOME DISTRIBUTION INFLATION INTERNATIONAL FINANCIAL INSTITUTIONS INVESTMENT PROJECTS INVESTMENT STRATEGIES LAWS LEGAL ENVIRONMENT LEGISLATION LEGISLATIVE FRAMEWORK LOCAL GOVERNMENT LOCAL GOVERNMENTS LOCAL TAXES MINISTER MONETARY FUND MUNICIPAL SERVICES NATIONAL BUDGET OPEN ECONOMY PENALTIES PENSION PENSION FUND PENSION FUNDS PENSION REFORMS PLEDGES POLICY ENVIRONMENT POLITICAL ECONOMY POLITICIANS PORK BARREL PRESENT VALUE PRICE VOLATILITY PROCUREMENTS PROVISIONS PUBLIC PUBLIC DEBT PUBLIC EXPENDITURE PUBLIC EXPENDITURE MANAGEMENT PUBLIC EXPENDITURES PUBLIC INVESTMENT PUBLIC PROCUREMENT PUBLIC PROCUREMENT LAW PUBLIC SECTOR PUBLIC SECTOR MANAGEMENT PUBLIC SERVICES PUBLIC SPENDING PUBLIC TRANSPORT REAL EXCHANGE RATE RESERVE RESERVE FUND RETURN ROADS SAFETY NET SAVINGS SOCIAL WELFARE SPECIAL FUNDS STRUCTURAL DEFICITS TECHNICAL ASSISTANCE TRANSPORT URBAN PLANNING UTILITIES WAGES WATER SUPPLY
Online Access:	http://documents.worldbank.org/curated/en/2012/09/16776969/south-south-cooperation-mongolia-learned-chile-managing-mineral-rich-economy http://hdl.handle.net/10986/17096

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Summary:	Mongolia's mineral-rich economy was hit extremely hard by the global downturn during 2008-9, when copper prices plunged, external demand fell, and growth collapsed. The shock exposed serious underlying weaknesses in the management of the country's natural resource wealth, particularly the lack of policies to insulate the economy from commodity cycles and real exchange rate appreciation pressures, an inadequate safety net, and poor public investment planning. These issues gained further urgency with the signing of a major copper mining deal in 2009 that further increased the country's mineral dependence. As part of its reform efforts and with the assistance of the World Bank and the International Monetary Fund (IMF), the government began an intensive south-south exchange, notably with Chile, another major copper producer, on strengthening the policy environment. The dialogue proved critical in the passage of several landmark laws within the space of a few years, including a fiscal stability law modeled after Chile, and the accompanying integrated budget and procurement and social welfare laws. These reforms will be crucial in managing the boom-bust cycle of mineral prices and mitigating Dutch disease effects by anchoring a prudent countercyclical fiscal policy, strengthening public financial management, increasing savings, and providing a fiscally sustainable social safety net targeted to the poor.

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