Osaka, Japan October 27, 2010

The Nature Conservancy Mongolia program

Enkhtuya Oidov, director

Biodiversity•Largest intact temperate grassland

• Not fractured

•Habitat for Mongolian gazelle roaming

and many other grassland wild life

•Wetlands sites for migratory birds

•Nomadic culture (40% of population out

of 2.7Mln) and conservation ethics

•Change in policy affected herders

traditional way of living (40mln livestock )

•Overgrazing issue (composition of herds)

Economic base of Mongolia: Animal husbandry

Development pressure (Oil exploration in Eastern Steppe)

•Mining boom

•Infrastructure

•Settlements

Real GDP Growth Rate

• 2008, GDP growth was 10.2 percent In in the first half, up from 9.9 percent in 2007.

• The pace of GDP growth is now on par with Asia’s strongest, i.e. China, India and Vietnam

Real GDP Growth Rate

September 2008- Page 2

Strong Foreign Investment

• FDI reached $500 million in 2007, of which 67 percent went to mining while trade and food was the second largest receiver of FDI

FDI is scaling up mining

Source:FIFTASeptember 2008- Page 3

Growth .. Mining has had

spillover effects

Source: IMF estimates IMF staff report, July 2008 September 2008- Page 7

-10

0

10

20

30

40

2002 2003 2004 2005 2006 2007Est.

TotalNonmineralMineral

Real GDP(Percent change)

Sources: Mongolian authorities; and IMF staff estimates.

Fiscal Policy - Expenditures have a more than tripled in three years

0

500

1,000

1,500

2,000

2,500

3,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

MN

T bi

llion

s

Capital expenditure

Purchase of goods andservices

Social welfare

Social security funds

Wages and salaries

Net lending

Subsidies to publicenterprises

Interest payments2008: plan

• Capital expenditures were planned 7 time higher in 2008 than 3 years before.

• Social welfare was planned 6 times higher in 2008 than 3 years before.

• Public wages have increased threefold since 2005.

• Absorptive capacity is an issue: 2008 June budget outturns indicate a significant under-spending (by 28 %) mostly on domestic capital expenditures.

September 2008- Page 16

Potential fuel sources could increase, and impact of fuel prices will be less

• Total crude oil domestic extraction represents 20.2% of 2007 domestic consumption and is projected to reach 50% of domestic consumption in 2010.

Source:World BankSeptember 2008- Page 18

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

tons

of o

il pr

oduc

ts (o

r equ

ival

ent)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Ratio ofconsumption overextraction (rightaxis)

Domesticconsumption - leftaxis

Domesticextraction - left axis

Where We Work: Mongolia’s Eastern Steppe