Protests Erupt as Inflation Squeezes Households

ULAANBAATAR, MONGOLIA — In the shadows of an immense statue of Chinggis Khaan, the founder of the Mongol empire, thousands gather. They stand outside the Government Palace to demand officials remedy the ever-increasing cost of living.

A young demonstrator holds up a mirror, asking if government officials can bear to look themselves in the face, while others chant “Do your job” during the two-day dissent in April. The protest signals a breaking point for citizens who struggle to keep up with rising costs. They accuse the government of neglecting its duty to remedy the situation and forcing people to consider fleeing the country.

Two months after the administration approved its highest-ever total spending budget of 18.2 trillion Mongolian togrog (MNT) ($5.9 billion), officials called on citizens to “switch to austerity.” The move angered many already reeling from the coronavirus pandemic and the conflict in Ukraine, both of which have affected the flow of goods into the country.

Neighboring China — Mongolia’s biggest import partner — closed its border in January 2020 in the wake of the pandemic, hindering supply chains and forcing prices up. Now, the supply chain of goods into the country has taken another hit following Russia’s invasion of Ukraine. Exports out of Russia have halted, and Mongolia has lost access to the once-steady flow of cereals, oils, dairy products and sugar from its second-biggest import partner.

Mongolians are grappling with a record rise in inflation from 2.4% in January 2021 to 14.6% in the same month this year. Surging inflation and rising prices are expected to continue throughout the year. More social unrest could follow, in a situation that looks graver every day.

The rising cost of living is felt acutely in many of the country’s food stores, where shoppers each week can afford less to feed themselves and their families.

“Some Mongolians buy half of their bread, while others do not even have enough bread to eat a day,” says Oyunbileg Dorjsuren, a saleswoman at Bileg grocery store, in the Sukhbaatar district of the capital, Ulaanbaatar.

Everyday costs — such as gasoline, up 55%, along with meat and vegetables — are increasingly difficult to fund in a country where the average monthly wage has risen only 8%, putting a mere 110,100 MNT ($36) extra into the monthly pay packets of most Mongolians.

Nansalmaa Oyunchimeg, GPJ Mongolia

Fuel prices in Mongolia have risen 55% within the last year.

The impacts of sharply reduced imports are felt throughout the economy, says Dovuuch Manibadar, a professor of economics at Otgontenger University in Ulaanbaatar, the capital. “It is a big shock. It certainly reflects in many ways, such as rising foreign exchange rates, unemployment, inflation and declining budget revenues.”

In response to the financial hardship, thousands turned out in April to demonstrate in Ulaanbaatar’s Sukhbaatar Square, claiming that while they are being told to “switch to austerity,” the same can’t be said for government officials who hadn’t cut spending.

Some employers gave their workers paid leave to join the demonstration, while university professors allowed their students to skip class so they could demonstrate. The tone was patriotic, with many demanding action so that they wouldn’t be forced to leave their country in search of higher wages.

Joining them was Ankhbayar Erdenebayar, who runs a private fitness center which has lost more than 20 million MNT ($6,440) due to coronavirus shutdowns.

Nansalmaa Oyunchimeg, GPJ Mongolia

Gombosuren Enkhbayar, right, holds a mirror up to the Government Palace — that asks how officials can bear to look themselves in the face — during a protest calling for action to stop the rising cost of living.

“I do not want to leave my daughter in such a society; I want to save my future,” says Ankhbayar, who demonstrated for two days outside the Government Palace, holding a sign that read, “I want to live in my homeland.”

Saruul Baatarbileg was also at the demonstration. She works as a barista in a coffee shop but says she can barely afford to feed herself due to the sharp rise in food prices. “While I’m still young, I want to work in my home country, but my country tells me to become a beggar,” she says. “This can’t be happening.”

People demonstrated into the night until they were dispersed by police armed with shields and batons at around 3 a.m. Twenty people were arrested amid reports of vandalism on state-owned property. Faced with an even bigger crowd in the central square the following day, the government called an extraordinary meeting, after which Prime Minister Oyun-Erdene Luvsannyam announced a step toward amending the 2022 budget to ease the economic burden on households.

After the prime minister’s statement, most of the more than 4,000 young people who had gathered in Ulaanbaatar’s central square dispersed peacefully.

On May 5, the State Great Hural, Mongolia’s parliament, announced it had amended its budget to trim total expenditures by 300 billion MNT ($96 million) to 17.9 trillion MNT ($5.7 billion) and announced certain foods, such as vegetable oil and sugar, would be exempt from taxes until the end of the year.

Nansalmaa Oyunchimeg, GPJ Mongolia

Ariuntuya Buuveibaatar browses for grapes at a store in Khan-Uul, Ulaanbaatar. Behind her, vendors Murun Sukhbat and Altantsetseg Jigjid, at the register, say the rising cost of food prices — including fruit — is felt in many of the country’s food stores.

The government should next work with the private sector, says Dulguun Baasandavaa, advisor to the Ministry of Economy and Development and former deputy chairperson of the National Development Agency.

“We have a lot to do together,”  Dulguun says. “There are ample opportunities for cooperation between the government and the private sector. We have to do what we have to do in society with the help of taxes.”

But if the government fails to ease the economic burden on Mongolians, many demonstrators say they are prepared to take to the streets again.

Tsend-Ayush Tumenjargal, who joined the demonstration on the second day, helped create a list of demands to submit to the government, including reducing inflation, government spending and social security contributions. He’s one of many who plan to keep a close eye on how the government reacts.

“I’m ready to march again if the previous protests do not work,” he says.