Source: IMF                        Date: 29 September, 2011

Satisfied that Mongolia's economy has reached a point of stability, the International Monetary Fund (IMF) will withdraw its resident representative from Ulaanbaatar.The decision to end the stay in Mongolia of Parmeshwar Ramlogan, a representative of the IMF who had been observing Mongolia from up-close, comes from the Mongolian economy's quick recovery from the 2008 crisis, rising income per capita, and the IMF's own organization budget constraints. The group said it will maintain a local office to be managed from a regional office in Tokyo.“This success reflected the authorities’ commitment to pursue sound macroeconomic policies, a recovery in copper prices, and timely support from the international community,” said the source. “With coal output rapidly increasing and two massive mining projects in the pipeline, Mongolia has a bright economic future and an opportunity to spread prosperity to all of its citizens.”However, it did warn against a string of risks. Inflation is on the rise and if not dealt with, will be a detriment to the private sector. Government spending, which is up 30 percent, is a key factor driving inflation. A six percent increase in spending, as the government has already proposed, would be highly risky, said the IMF and advised against it.It also advised Mongolia against abusing its Development Bank as a tool to circumvent its fiscal stability laws or for undisclosed spending. This would add fiscal risk and create a barrier to transparency, which would ultimately undermine the credibility of the institution. For the Central Bank, it advised an increase in interest rates to combat inflation and measures to slow economic growth.