Mongolian Parliament Passes the 2026 Budget Amid Promises of Restraint

Mongolia’s 2026 budget passed on time, ending weeks of political brinkmanship and silencing talk of parliament’s dissolution. Lawmakers approved the package with 75.3% support after a final round of debate.

The plan outlines modest tightening after years of expansion. Total revenue is ₮31.93 trillion (31.2% of GDP) and total expenditure ₮32.98 trillion (32.2% of GDP), producing a ₮1.05 trillion deficit, or roughly 1% of GDP.

The decision also covers the National Wealth Fund, Social Insurance Fund, and Health Insurance Fund, setting fiscal parameters meant to signal discipline after years of political expansion.

Salary and pension hikes for teachers, doctors, and researchers will now track inflation. Earlier, teachers secured a 50 percent pay rise in January and another 30 percent later in 2026, costing over ₮1.1 trillion even after offsets. Doctors gained 15 percent but are pressing for parity. Inflation near ten percent lends urgency to these demands, but permanent obligations outlast revenue cycles.

Current expenditures will fall by 6–12.8% through cuts and delays to non-essential programs, while equipment spending will be reduced by half across multiple ministries. Investment projects scheduled beyond 2026 will receive smaller allocations, and only those near completion will retain full funding.

Deputy Speaker Purevdorj called the budget a test of political maturity, claiming it reins in unsustainable growth and redirects resources toward health and education.

The approval ends weeks of bargaining that turned the budget into a proxy fight inside the ruling Mongolian People’s Party (MPP).

Spending pledges doubled as factional insurance while parliamentary procedure lagged behind patronage politics. The flashpoint was the ₮363 billion ($105 million) list of construction projects, advanced quietly by the Budget Standing Committee despite the Fiscal Stability Council’s warning that many lacked feasibility studies or financing.

Supporters said the projects would stimulate local growth. Critics called them pork-barrel politics—district-level favors to shore up loyalty before the MPP’s leadership contest.

The structural imbalance remains. Mongolia’s ₮33 trillion budget, triple its 2019 size, is already largely pre-committed. Roughly 70% goes to wages, pensions, and subsidies, obligations that no government dares unwind. Each rural hospital or cultural hall adds permanent costs, locking in payroll and maintenance that crowd out future investment.

Opposition MP Tsenguun cited ₮1.2 trillion ($335 million) in wasteful programs, including the New Cooperatives loan fund worth ₮608 billion, a herder credit scheme that ballooned into an election-season handout with weak repayment. Local administrators operate as shadow patrons, diverting funds through opaque networks.

Former finance minister Khurelbaatar, now mediating MPP reconciliation, criticized the budget’s political logic. He said priorities still reflect bargaining over productivity, and that fragmented capital projects remain vehicles for short-term populism.

Defenders note foreign-exchange reserves at $5.9 billion, rebuilt by coal and Oyu Tolgoi exports, give a cushion. But commodity cycles outpace wage growth, and discipline rarely survives abundance.

The real test begins now: execution, arrears control, and procurement integrity will determine whether this year’s restraint is real or rhetorical.

This budget projects a cautious tightening dressed in fiscal virtue. The headline deficit looks small, but the arithmetic rests on optimistic revenue assumptions in a slowing economy.

Mongolia’s government wants to appear prudent ahead of the 2027-2028 elections, yet its dependence on mining revenues and heavy taxation still limits autonomy. The challenge is to keep trust because without it, even balanced budgets cannot steady a fragile system.