Mongolia: Re-elected incumbent president to face socio-economic and political challenges

> Event: Incumbent President Elbegdorj has been re-elected directly (without having to contest a second round) for a second four-year mandate after winning over 50% of the vote.

> Impact on country risk: Mr Elbegdorj’s victory is good for his ruling Democratic Party (AN) and political stability as Mongolia will be facing many challenges in coming years.

Exports from Oyu Tolgoi, the world’s largest copper mine, and the giant TavanTolgoi coal mine are indeed going to change dramatically Mongolia’s economy and society. In the short-term, President Elbegdorj will work at reaching a final deal with Rio Tinto (co-owner with the Mongolian government) about the Oyu Tolgoi mine, which will eventually pave the way to starting exports.

Moreover, the
controversial mining law – which requires the Parliament or cabinet for new mining projects – has also to be reviewed in Parliament. President Elbegdorj is likely to keep a friendlier business stance than the more nationalist opposition, which matters greatly given the crucial importance of FDI for the domestic mining sector.

However, given his main role in the previous mining law, the investor Risk Monthly July 2013 environment risks remaining difficult, volatile and subject to some political interference in the extractive industry.

Beside the legal framework, President Elbegdorj’s most important challenges during his mandate will undoubtedly be to manage an overheated economy, continue his fight against corruption and ensure that massive mining revenues are distributed among a still poor population while avoiding the Dutch disease trap.

analyst: Raphaël Cecchi, ONDD Belgium –