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Emerging Subjects of the New Economy: Tracing Economic Growth in Mongolia


Alternatives to the IMF and China? Anti-offshore Movements and Debt Restructuring Possibilities

By uczipm0, on 6 June 2017




Sanchir is a political scientist and activist broadly concerned with economic and political development in Mongolia and in the Global South.  His main area of research focuses on, but not limited to problems of late and uneven development, democratization process in post-socialist countries, issues of trade, and investment, extractivism, poverty and debt in the developing world.  He has an interdisciplinary research agenda that combines political theory, global political economy, and Central Asian and Russian studies.  This blog post originated in email conversations between Sanchir, members of the Emerging Subjects project, and Mongolia-focused scholars about the role of the IMF and China in addressing Mongolia’s economic crisis.


On May 24th, 2017 The Executive Board of the International Monetary Fund (IMF) approved a three-year extended arrangement under the Extended Fund Facility (EFF) for Mongolia to support an approximately $5.5 billion total financing package.  Along with obtaining financing from the IMF to address Mongolia’s sovereign debt crisis, there was also the possibility of Mongolia receiving a straight loan from China; however, the Chinese side ultimately cancelled the deal.  Many politicians, political commentators, and media outlets have promoted the arrangement with the IMF as a lesser of these two evils.

I have argued that presenting a bailout from the IMF or loans from China as the only options for Mongolia to address its economic situation is a false binary propagated by official discourse and a monopolized media.  Notwithstanding the question of plausibility, different civil society organizations and individuals (including myself) have been invoking other possibilities.  This includes alternatives such as returning embezzled money from offshore accounts[1]; auditing the use, distribution, and repayment of sovereign bond sourced credits; cutting unnecessary budget expenses and other measures of similar ilk.

The most prominent movement in Mongolia promoting theses aforementioned views has been the People’s Anti-Offshore Committee (‘The Committee’). Their biggest activity has been the protest of March 31st where several hundred people protested at Sukhbaatar Square over the alleged theft of public funds now held in offshore accounts. Politicians and activists at the protest demanded the return of $17 billion lying in these accounts. Even though some people have speculated that these protests were funded by some members of the ruling class in order pressure their opponents, the birth of different anti-offshore Mongolian groups abroad, as well as a large interest in the People’s Anti-Offshore Committee itself, indicates that the movement has serious opposition potential and popular legitimacy.

The Facebook group for ATOZ, one of the main anti-offshore movements, reached 172,426 members (not an insignificant number for Mongolia's small population).

The Facebook group, ATOZ, one of the main anti-offshore movements, reached 172,426 members (not an insignificant number given Mongolia’s small population).


According to the Extended Fund Facility arrangement with the IMF, Mongolia has agreed to “cut spending, raise taxes and the retirement age, while pledging to maintain a flexible exchange rate and build a stronger regulatory environment for banking and finance.” This is in line with the standard IMF austerity package that has in other countries led to the shrinking of the national economy, which makes future debt repayments an even greater burden (Toussaint, 2010; Varoufakis, 2016; Weisbrot & Sandoval, 2007).  For this reason, I have personally been involved in advocating that Mongolia carry out a debt restructuring process consistent with the United Nation’s principles along with a new Debt Sustainability Analysis, the partial writing-off of debt to manageable proportions, and a citizen debt audit to differentiate between odious and legitimate debt [2].

In my opinion, one of the reasons why getting assistance from either the IMF or China have become the normalized options for Mongolia is because neither would necessarily shake-up the whole system as it currently exists. These two options maintain the position of the dominant class while the current administration will not have to tackle the existing debt problem. They can just pass the buck onto the next government by extending and refinancing the loans. In short, it allows for a position that maintains the status quo rather than holding anyone to account for the current position Mongolia finds itself in.



[1]Leaks of offshore information from Mossack Fonseca, a law firm in Panama, exposed a lengthy list of potential tax evasion, money laundering, and illegal transactions, which involved top level government officials from a number of countries, including Mongolia. Among the 49 Mongolian individuals and business entities named in the Panama Papers, there were accounts related to two former prime ministers of Mongolia, S. Bayar and S. Batbold; parliament member S. Bayartsogt; and other government officials.

[2] For example, during my speeches at the Left Forum organized by Rosa Luxembourg Stiftung in March 2016, Asia Europe People’s Forum held in Ulaanbaatar in July 2016, and the Peoples Research Training in Mongolia organized by Asia Pacific Research Network (APRN), People’s Coalition on Food Sovereignty (PCFS) and Centre for Human Rights and Development (CHRD).



Toussaint, Eric. Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers. New York: Monthly Review Press, 2010.

Varoufakis, Yanis. And the Weak Suffer What They Must?: Europe’s Crisis and America’s Economic Future. Washington, DC: Nation Books, 2016.

Weisbrot, Mark, and Sandoval, Luis. Argentina’s Economic Recovery: Policy Choices and Implications. New York: Center for Economic and Policy Research, October 2007, #2.

19 Responses to “Alternatives to the IMF and China? Anti-offshore Movements and Debt Restructuring Possibilities”

  • 1
    Rebecca Empson wrote on 7 June 2017:

    Dear Sanchir, thank you for your stimulating post. I like your point that the current economic solution maintains the political status quo. Can I ask if you think it also facilitates a sense of ‘donor dependency’, much cultivated during the 1990s, or if this has now been entirely transformed into an elitist oligarchy due to the recent boom-bust mineral economy? My second question is about a debt restructuring process, I personally support this approach, but wonder to what extent personal debt now facilitates and upholds government debt, especially regarding the mortgage market?

  • 2
    Sanchir Jargalsaikhan wrote on 9 June 2017:

    Thank you, Rebecca!

    Regarding your first question, I think the current solution facilitates ‘donor dependency’ in different ways compared to the 1990’s but with very similar results. During that time IFI’s involvement was concentrated on setting up the country’s general governance framework. Their current actions consist of more piecemeal reforms and arrangements.

    Although, IMF’s pledge to rehabilitate the banking system is laudable, Fund’s other recommendations don’t pave the way for long term sustainable economic recovery. IMF’s exclusive commitment to private-sector led growth undermines the productive capacity [already meager!] of the state which has been the main driver of development in most developing countries. Lack of meaningful civil society participation in designing an economic reform plan that evokes public legitimacy has been another significant problem.Furthermore, the Fund’s promise to include safeguards to protect the most vulnerable during the period of adjustment is too general. Measures [such as strengthening tax system] to curb illicit financial flows should’ve also been a big priority, having cost the country $1.48 billion between 2004 and 2013 alone according to Global Financial Integrity think tank’s [conservative] estimates. The Fund’s insistence on contractionary monetary policy has already resulted in rise in domestic interest rates that has crowded out public and private investment, therefore constraining growth and ability to repay debts. It has also affected commercial bank conduct tilted towards investing in government securities and against providing loans to productive investment.

    In general, short term solutions proposed by the current authorities and IMF will only extend the process where a raised debt is spent on servicing the existing debt. Moreover, the lack of long term solutions doesn’t bode well for the future of the economy and the fate of its population the majority of which are vulnerable [we estimate that around 80% of the population is either in poverty or one significant financial set-up away from sliding into poverty]. At the end of the day, these short term interventions sustain our rentier economy which relies on external sources of income [i.e. loans, FDI andetc.] while neglecting its productive sectors. Ultimately, I trace the structural reasons of Mongolia’s debt crisis to the adoption of neoliberal policies since the early 1990’s. Mongolia’s existing debt trap is a symptom of the structural trade and fiscal deficits that have dogged its economy up until now. Even though IFI’s reforms and recommendations have become more disjointed, the results are eerily similar to those of the 1990’s. I will go in-depth into this topic in near future with an article on our website.

    Regarding your second question it is even more difficult to come up with an answer. It will be more comprehensible if we distinguish between public and private debt as well as between external and domestic debt. Concerning the restructuring process of the external debt, I am afraid that the train had already passed [at least for the foreseeable future]. Private and public domestic debt is a different story. The whole banking sector is over-leveraged with bad loans and any stimulus to economy [like the subsidy program/үнэ тогтворжуулах хөтөлбөр] and growth in activity will be used/siphoned off to service those loans. The mortgage market is the primary example. Mortgage/debt resolution between lenders/creditors needs to be facilitated by the state involving banks, consumers, banks, intermediary mortgage holders and all other stakeholders. Because it is such a complicated situation, I will try to dwell on this in the coming weeks.

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    Anti-offshore Movements as the Place of Political Mobilization and Discourse Setting | UCL Emerging Subjects Blog wrote on 12 May 2018:

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