ULAANBAATAR, Mongolia – The State Great Khural (Parliament) of Mongolia officially adopted the State Budget for 2027 during its plenary session today, following a robust parliamentary debate. The vital fiscal legislation secured final approval with 83.6 percent support, with 110 members participating in the vote.

The newly approved 2027 fiscal package balances aggressive public infrastructure investments with targeted social welfare expansions, underpinned by historic revenue inflows from major mining projects, including Mongolia’s first-ever dividend distributions from the Oyu Tolgoi copper and gold mine.

Macroeconomic Framework: Revenues, Expenditures, and Deficits

Under the finalized fiscal framework, the consolidated 2027 state budget projects a total balanced revenue of MNT39.2 trillion (approximately US$10.88 billion) against a total expenditure and net lending of MNT41.5 trillion (approximately US$11.52 billion).

The resulting budget deficit stands at MNT 2.30 trillion, representing exactly 2.0 percent of the Gross Domestic Product (GDP), remaining comfortably below the statutory ceiling mandated by the Fiscal Stability Law.

State revenue collection is anchored primarily by the Ministry of Finance, with the General Taxation Authority and the General Customs Agency driving the bulk of tax receipts. A transformative highlight of the 2027 budget is the projected injection of MNT 3.5 trillion in dividend revenues from State-Owned Enterprises (SOEs), led directly by the state's equity stake in Oyu Tolgoi project.

"For the first time in our modern economic history, structural dividends from world-class mega-projects like Oyu Tolgoi are directly fortifying our national budget, enabling us to transition from deficit dependency to targeted investments in energy independence, housing, and citizen welfare," noted Minister of Finance Z.Mendsaikhan during the parliamentary defense of the budget.

Sector-by-Sector Investments and Social Welfare Reforms

The 2027 budget introduces sweeping reforms across education, healthcare, taxation, and labor markets, designed to directly benefit over 2 million citizens and 220,000 registered businesses.

• Education and the Free School Lunch Expansion: The education sector commands the largest operational portfolio, featuring the rollout of the “One Child–One Computer, One Classroom–One Smart Board” initiative and the transformation of 100 general education schools into eco-friendly "Green Schools". Crucially, beginning next academic year, the national School Lunch Program will expand to officially include 6th and 7th-grade students in public schools, broadening nutritional support beyond primary grades. Nationwide, a total of 45 hospitals, 137 schools, 72 kindergartens, 41 student dormitories will be built.

• Pensions and Healthcare Protections: Basic pensions for senior citizens will see substantial increases ranging between MNT 100,000 and MNT 300,000. Average monthly pension will reach to MNT 1.3 million per pensioner. Furthermore, health insurance will fully cover 100% of medication costs for hypertension, cardiovascular diseases, and diabetes for seniors, children, persons with disabilities, and low-income populations.

• Tax Relief and Wage Adjustments: To ease the cost-of-living crisis, monthly wage income up to MNT 792,000 will be entirely exempt from personal income tax, reducing the aggregate tax burden on citizens by MNT 840 billion. 212,000 public servants salaries across education, health, and civil administration are scheduled for tiered increases.

• Social Insurance and Job Creation: Under sweeping social insurance reforms, working students aged 18–24 and employers of start-up businesses (covering up to three employees for 36 months) will be exempt from contributions. Additionally, small and medium-sized enterprises (SMEs) will gain access to concessional loans capped at an annual interest rate of 10 percent.

Regional Infrastructure and Housing Development

Addressing chronic regional disparities and urban congestion in Ulaanbaatar, the 2027 budget allocates massive capital outlays for infrastructure and energy security.

• Energy Independence Projects: Capitalizing on Oyu Tolgoi dividends and state funds, Mongolia will commence construction on the 300-megawatt Thermal Power Plant No. 6 adjacent to TPP-3 in Ulaanbaatar and complete regional thermal power plant builds across 10 provinces.

• Transport and Connectivity: The Ministry of Road and Transport is earmarked for extensive capital works, including the paving and construction of 338 kilometers of major regional roads, modernized border logistics terminals, and enhanced regional transit corridors.

• Concessional Housing: Approximately 16,000 citizens will gain access to modern housing loans through expanded mortgage financing sources of up to US$500 million, co-ownership schemes, and rent-to-own arrangements. An additional MNT 25 billion is dedicated to green concessional loans for households upgrading residential plot infrastructure and adopting renewable energy.

Parliamentary Review, Major Cuts, and Oversight

During the rigorous multi-stage review process, the State Great Khural—in coordination with the National Audit Office—enforced strict fiscal discipline by implementing balanced expenditure reductions. Lawmakers pruned approximately MNT 2 trillion in non-essential administrative overhead, luxury vehicle procurement, and redundant bureaucratic programs from the original executive draft to keep inflationary pressures in check.

While opposition members raised concerns regarding potential inflationary risks associated with rapid public expenditure expansion, parliamentary leadership emphasized that rigorous oversight of SOE governance and the ring-fencing of mining dividends into the Savings Fund will safeguard long-term economic stability.

With the 2027 State Budget now enacted into law, line ministries and provincial governors are tasked with executing the procurement and tender processes ahead of the fiscal year, setting the stage for what government economists project will be a 6.0 percent GDP growth trajectory, driven by continued expansion in the mining sector (including the ramp-up of the Oyu Tolgoi underground mine), coal export demand from China, and non-mining activities.

Source: https://parliament.mn/news/mongol-ulsyn-2027-ony-tosviin-tukhai-khuuliin-tosluudiig-etseslen-batlav