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IFC IN MONGOLIA
Diversified & Growing Investment and Advisory Portfolio
IFC Strategy in Mongolia: (i) Sustainable Infra and world-class Mining; (ii)
Access to finance via systemic banks, focusing on SMEs; (iii) Diversification
(services, agri) for jobs.
Excluding OT our cumulative investment in Mongolia is approx. $500m (half in
past 3 years, and increasing mobilization). Diversified portfolio include
banks, windfarm, hospital, dairy, hotels, telco, affordable housing.
Advisory to strengthen local institutions (governance, professionalization,
sustainability): (i) Corporate Governance (banks and starting with Erdenes
Mongol, the OT SOE JV entity); (ii) Trade & Competitiveness (Inspections and
Doing Business reforms, and upcoming Agri Commercialization); and (iii)
Sustainability (water in mining, banking sector).
3
China Slowdown
US Fed Tapering
Commodity Plunge
Emerging
Markets
Risks,
Volatility!
Policy Stability
Professionalism
Diversification
Commodity Plunge
Will the old normal return in 3-4 years? (in GDP growth, in housing
starts, in global trade)
Likely persistent slower growth as the New Normal
Competitiveness & Efficiency even more important
10
11
China growth (even slower) still means ~$700 billion in new demand
Asia demographics (young) and urbanization (high) potential
US Economy is showing gradual and sustained recovery
Japan and Europe (negative interest rate) but trying structural reforms
India has big potential (challenging reforms) to be new growth engine
Technology driving efficiency and connectivity with costs decreasing
External Headwinds
Lower Chinese growth, weaker demand and lower commodity prices
Volatile emerging markets asset performance and currencies
Risk-aversion to FDI in emerging and frontier markets
Creating Pressure Domestically
Falling commodity prices mean lower exports revenues, corporate revenues,
government taxes, domestic demand lower growth
Monetary and Fiscal policies more prudent to manage FX, debts (large
sovereign bond payments due in March 2017 and January 2018)
Government policies and professionals to ensure stability, predictability
through Parliament elections mid-2016, President in mid-2017
Banking sector vulnerability increased NPLs rising on weak property and
commodity prices
Magnified as Mongolia economy is highly concentrated
China, Minerals (80-90% of export); Landlocked; 3m population
13
18
(000)
(%)
4,000
8.0%
3,500
EAP
Mongolia
6.0%
3,000
2,500
4.0%
2,000
2.0%
1,500
0.0%
1,000
500
-2.0%
0
2010
2015
2020
0-14
2025
15-64
2030
2035
65+
2040
Total
2045
2050
-4.0%
2015
2020
2025
2030
2035
2040
2045
2050
Mongolias population is expected to grow from 3 million in 2015 to 3.4 million in 2050
Mongolia has young population (out of 3 million population in 2015, 71% is aged between 15-64)
While East Asia and Pacific will on average see negative working age population growth starting 2035,
Mongolias working age population will continue growing until 2045
19
CONSISTENT REFORMS
RANKED 56 (OUT OF 189 COUNTRIES) ONE OF THE HIGHEST FOR EMERGING ASIA
Mongolia
83.67
68.83
56
Starting a business
36
25
Getting electricity
134
Registering property
59
44
Getting credit
19
59
Paying taxes
91
47
74
Enforcing contracts
22
80
Resolving insolvency
26
89
22
23
24
Thank You
25