Mongolian PM survives no-confidence vote over economic policies

Mongolian Prime Minister Saikhanbileg Chimed.
Mongolian Prime Minister Saikhanbileg Chimed. PHOTO: REUTERS

ULAAN BAATAR (BLOOMBERG) - Mongolian Prime Minister Saikhanbileg Chimed has survived a no confidence vote over his handling of the economy, setting him up to rule through summer elections.

Forty-two lawmakers in the 76-seat Great Hural voted in support of Mr Saikhanbileg, with 31 against. A five-hour debate concluded in the early hours of Friday. A group of 19 MPs had filed a petition alleging that Saikhanbileg's May authorization of Rio Tinto Group's development of the Oyu Tolgoi copper mine constituted an abuse of power, offering little benefit to Mongolian citizens, delaying dividends and increasing the state's debt burden.

Saikhanbileg and his Democratic Party - a patchwork of sometimes bickering factions - has five months to turn around the sluggish economy before voters return to the polls. Perceived instability and declining commodity prices conspired to send yields on Mongolia's sovereign bonds to record highs last week.

The vote results are a "major boost for political stability until 2016 elections, de-risking Mongolia in this sense,'' Dale Choi, founder of Mongolian Metals & Mining, said in an e-mailed statement. "OT underground is safe now from political interference, until elections bring an additional four years of clarity.''

The Mongolian tugrik fell to an all-time low Thursday of 2,006 against the U.S. dollar. The currency was little changed Friday.

Rio Tinto will re-start development of the underground mine, which had been on hold since August 2013 due to disputes over a range of issues including fees, taxes and funding. A $4.4 billion (S$6.28 billion) project financing package to develop the mine was concluded in December. Wrapping up a separate coal mining deal with a group that includes China Shenhua Energy Co. remains a government priority.