Mongolian parliament ousts PM Norov Altankhuyag amid slump

Mongolia's parliament voted yesterday to remove prime minister Norov Altankhuyag amid concerns about a serious economic downturn as gold, copper and coal prices slump along with foreign direct investment.

Out of 66 members of parliament who voted, 34 were in favour of ousting Altankhuyag, Mongolian television showed. Ten members of parliament, including eight members of his own coalition government, did not show up.

It will now be up to the coalition government to select a new candidate, who will have to be approved by the president and confirmed by parliament.

The government has been in turmoil over the past month. Seven ministers, including the ministers of mining and foreign relations, resigned after Altankhuyag won parliamentary approval to consolidate ministries from 16 down to 13.

That led to calls from the opposition Mongolian People's Party for the prime minister to stand down, and finally people from his own government demanded his resignation.

The political fight has distracted the government of the resource-rich country, landlocked between Russia and China, from passing a budget.

Parliament rejected a budget proposal for the second time on October 31, amid criticism of exorbitant spending and overly optimistic economic projections.

Mongolia's Fiscal Stability Law takes full effect next year, which will cap the country's debt at below 40 per cent of gross domestic product.

"It's quite clear that whoever will run next year will have big, big trouble even paying state employees' salaries," said Luvsanvandan Sumati of the Sant Maral polling group.

Key to reviving foreign investment, which has slumped 59 per cent this year, is a resolution of a long-running dispute over the huge Oyu Tolgoi copper mine. Mongolia shares ownership with mining giant Rio Tinto.

Rio suspended work on a US$5.4 billion expansion in August last year because of disagreements on construction costs. Altankhuyag had been expected to sign a memorandum of understanding before bankers release US$4 billion in financing to help pay for the expansion.

China bought more than 90 per cent of Mongolia's exports, mainly of coal and copper, and 49 per cent of foreign enterprises registered in Mongolia were Chinese, Xinhua reported in August.