Mongolia’s political environment is peaceful and stable and power is transferred peacefully by democratic elections. The country has a relative social advantage, given the low crime rate and low social unrest.
In the eight Parliamentary Elections held peacefully since the 1992 Constitution came into effect, power has alternated between the two major parties, the Mongolian People’s Party and the Democratic Party. In 2020, the Mongolian People’s Party achieved a landslide victory in both the parliamentary and local elections. This ensured the continuity of foreign investment policy as well as the stability and consistency of ongoing political and economic decisions.
The average lifespan of the government in Mongolia is 1.8 years.
New cabinets usually do not make major policy changes if the ruling party remains unchanged. The current government has been reshuffled twice without a complete restructuring since its formation in 2021.
Though, Mongolia’s political landscape still has its challenges, the most immediate one being that of social instability. The risks of unrest within Mongolia have been growing quickly due to surging inflation, foreign currency shortages, and an increase in awareness of corruption.
In December 2022, thousands of protesters had been demonstrating against soaring inflation and government corruption in Ulaanbaatar, the capital city of Mongolia, for more than 10 days. The protesters were triggered by allegations that surfaced a few months ago of government officials profiting from illegal sales of coal to China.
The experience in other economies suggests that especially the shortages in foreign reserves presage greater unrest, noted Fitch Solutions.
The Sant Maral Foundation, a reputable and politically impartial polling organization in Mongolia, conducted a survey of 1,200 respondents in 2022. The results showed a significant lack of trust in the government among the public.
Mongolia – Short-Term Political Risk Index, 2022
Note: Higher scores denote lower risk. Source: Fitch Solutions