Khurelsukh Reelected Prime Minister of Mongolia Amid Economic Downturn

Mongolia’s Prime Minister Ukhnaagiin Khurelsukh unveiled his new cabinet after a landslide victory by his Mongolian People’s Party (MPP) in last month's election. New cabinet ministers were confirmed and sworn in this week. The new government’s four-year action plan is expected to be approved once Parliament convenes in August or September.

Businesses can expect a stable business and investment environment thanks to the continuity in government. Political stability is likely to be ensured for the next four years as the ruling party controls a supermajority in Parliament and the prime minister has strong ties with President Khaltmaagiin Battulga despite belonging to a different political party.

What You Need To Know

  • The MPP won because the electorate rewarded the government’s tough measures on preventing the spread of the coronavirus and efforts to limit special business interests and high-level corruption. Khurelsukh has closely followed Battulga’s lead in portraying himself as “anti-establishment,” consolidating power since the MPP decisively lost the 2017 presidential election. The prime minister also cleverly modified election rules prior to the vote, shifting to a winner-take-all model that allowed the MPP to win 62 seats (out of 76) with only 45 percent of the overall vote.

  • While Khurelsukh and Battulga come from two opposing political parties, the president will likely seek to continue his fruitful relationship with Khurelsukh despite his aspirations of consolidating control within an executive presidency. Battulga’s nominal allies, the Democratic Party, failed to coordinate effectively with the president and were hobbled by poor candidate selection, a reputation for insider-dealing and a lack of financial resources.

  • During his appointment speech, Khurelsukh said that energy independence, completing an oil refinery being built with Indian support and building new railways to export commodities would be priorities for his government. The Covid-19 pandemic has highlighted Mongolia’s economic dependence on its neighbors, as Mongolia’s trade continues to be depressed by China's low demand for the country’s key commodity exports. Meanwhile, though Russia has continued to supply Mongolia with energy throughout the pandemic, Ulaanbaatar remains nervous about relying on Moscow for almost all its energy needs.

  • The cabinet line-up showed that Khurelsukh named his ministers mostly from among non-politicians and less known technocrats. Constitutional amendments barred lawmakers from holding cabinet positions. Khurelsukh’s hand within the government is likely to be strengthened by the new Cabinet’s relative inexperience and lack of independent political support.

  • Policy continuity and certainty is welcome news to investors who have suffered from policy and regulatory inconsistencies in the past, but economic headwinds still threaten the Mongolian economy. Public debt will grow to meet the MPP’s populist election promises and the country needs to repay bonds worth $2.9 billion in the coming two years. Meanwhile, Mongolia’s economy is on track for a contraction despite its strong track record in containing the Covid-19 pandemic

Cabinet List

The new line-up of ministers is as follows:

  1. Ya. Sodbaatar becomes deputy prime minister. He was formerly an MP and minister of road and transport. 

  2. MP L. Oyun-Erdene remains cabinet secretary. He will continue to lead the government negotiation team with Rio Tinto. His portfolio has been expanded to include long-term economic development issues, including the 2050 vision.

  3. MP Ch. Khurelbaatar remains minister of finance. 

  4. MP D. Sarangerel changed her portfolio from health to head the Ministry of Nature, Environment and Tourism. 

  5. MP Kh. Nyambaatar becomes minister of justice. He was chair of the legal standing committee in Parliament since 2019.  

  6. G. Yondon becomes minister of mining and heavy industry. He spent almost all his career at state-owned MongolRosTsvetMet, a fluorspar mining company.  

  7. G. Saikhanbayar becomes minister of defense. Educated in Russia and China, he held a long-time senior position at the ministry.

  8. B. Munkhbaatar becomes minister of construction and urban development. He was a former deputy minister and Oyu Tolgoi copper-gold mining company's board member. 

  9. L. Tsedevsuren becomes minister of education and science. She was a state secretary and spent her career at the ministry.

  10. N. Enkhtaivan becomes minster of foreign affairs. He was posted to Beijing as commercial counsellor and has extensive relations with Chinese business. Prior to his appointment, he was a chief of staff for the MPP caucus in Parliament.

  11. L. Khaltar becomes minister of roads and transportation. Previously, he was a deputy minister. Educated in Russia, Khaltar spent his career at Ulaanbaatar Railways. 

  12. N. Tavinbekh becomes minister of energy. An electrical engineer by profession, Tavinbekh spent his career at Baganuur-Southeastern region electricity distribution network, starting as a wireman.

  13. Z. Mendsaikhan becomes minister of food, agriculture and light industry.

  14. S. Chuluun was appointed minister of culture.

  15. T. Munkhsaikhan becomes minister of health. He spent his career as a doctor and manager of the national center for trauma and orthopedics. 

  16. A. Ariunzaya becomes minister of social welfare and labor. Prior to this appointment, she was a head of the national statistics office. 

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