Mongolia: The next steppe

A decade of transparency highlights new opportunities for accountability in the land of steppe and sky.

Fresh from a landslide victory in last June’s elections, Mongolia’s new government faces both economic headwinds and opportunities for reform. A sharp economic slowdown since 2012 coupled with frequent policy and legal changes have forced Mongolia to start negotiating an IMF package. Mining remains at the heart of its economic plans.  

Informing mine affected communities

A decade of EITI implementation has yielded some significant achievements. A vibrant debate over management of the extractive industries has grown in line with greater access to information through the EITI, particularly in the local communities that host mining projects.

Detailed information about the sector is now available through a new online data portal, including production and sales data, taxes and payments to government, donations, environmental rehabilitation provisioning and license information, all disaggregated by company. Accessible through graphs, charts and maps, this information has increasingly been used by citizens to strengthen their oversight of local mining operations.

Government officials have highlighted the impact of transparency in revenues and expenditures on creating a supportive environment for investment, building trust with local communities, and maintaining the social license for extractive companies to operate. Yet there is scope to do more.

The role of state-owned enterprises

Mongolia has maintained significant state participation in the mining sector, with equity stakes in 21 extractives state-owned enterprises (SOEs) in 2014. In recent years there have been changes in SOE management. In line with the policy of gradual privatisations under Mongolia’s state policy on minerals, the government has stated that it intends to reform the management of SOEs through Erdenes Mongol, with support from the Asian Development Bank and the International Finance Corp.

Mongolia could use the EITI to clarify and explain the financial relationship between the government and SOEs, including loans, guarantees and quasi-fiscal expenditures. Such information would be of clear interest to the general public, the IMF, the credit rating agencies and many others. This would also help Mongolia deliver on its commitments in its 2016-2018 Open Government Partnership action plan.

Tracking decentralisation

Mongolia has also gone some ways in decentralising administrative powers to the 21 provinces (aimags) and 329 districts (soums), most recently earmarking shares of mining, oil and gas royalties in 2015. Since 2012, the government has also required all 21 aimags and 103 soums hosting extractive industries to establish subnational EITI councils. With fledgling councils now established in 20 aimags and 14 soums, the focus is gradually shifting to strengthening them as forums for consultation.

Finance Ministry data on subnational transfers is already available online and easily visualised. The EITI could be used to track transfers of royalties, reconciling the ministry’s data with receipts by aimag and soum governments.

Open steppes

Growing volumes of online extractives information are key to meeting expectations of local communities in one of the world’s most using country. These include the EITI’s open data portal, the mining cadastre, information on all government spending on the government’s ‘Glass Account’ website among others. Ensuring ease of access to this information and the interoperability of systems will be key to ensuring that this increasing transparency translates into concrete accountability. Indeed, more data is on its way.

Recent controversies linked to the Panama Papers only add to the impetus for Mongolia to establish a public beneficial ownership register, as it has committed under both EITI and OGP (in its 12th commitment). Since 2014, the EITI has been working to disclose the beneficial owners of mining, oil and gas licenses, presenting the first results of its work in an interactive infographic. Drawing on a recent study on beneficial ownership by the Open Society Forum, Mongolia is preparing its roadmap for the establishment of a public register of beneficial owners by 2020. 

 

Photo credit: L'irrésistible silhouette bleue