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mongolia_map-855pxPopulation: 2,796,484

HDI ranking: 108/187

HDI score: 0.675

Decentralization has become part of the reform agenda since 1992 and steps towards more decentralization have been taken since then. However, Mongolia remained highly centralized especially with regard to fiscal control. The new budget law could be a step towards more decentralization, though further challenges for local governments remain.

Local governance at a glance

  • Mongolia is structured into the capital city of Ulaanbaatar and 21 aimags (provinces). The provinces are subdivided into soums (rural districts), and soums into bags (rural sub-districts). Ulaanbaatar consists of 9 duuregs (urban districts), which are subdivided into khoroos (urban sub-district). While Ulaanbaatar and aimags are intermediate tiers of government, districts and sub-districts are local government (Yadamsuren, 2005).
  • Responsibilities towards local governments are held by 1) the prime minister, in charge of local governments’ procurement of goods and services, 2) the minister of the cabinet office, responsible for local government administration issues, and 3) the minister of finance who has the control of local budget expenditure (InfoMongolia, 2012).
  • All administrative units are governed both through a hural (parliament), respectively bags and khoroos through general meetings of the citizens, and through a governor. While hurals are elected directly every four years by citizens, the governors are appointed through the governor from the next higher level, however, based on a nomination from the hurals. Thus, the governors of aimags and the capital city are appointed by the prime minister. That system results in a combination of self-government and central government (Yadamsuren, 2005; KhanLex 2012).
  • The new election law from 2012 provides for 30% women to be included on the parties’s list. In the case of non-compliance there are no legal sanctions (Quota Project, 2014).

Civil society actors include

  • The research and trainings of the Center for Political Research (CPR) includes a focus on the local level, on fiscal decentralization, public administration and regional development.

Fiscal control

  • In 2011, a new budget law was passed enabling local governments to collect a broader range of taxes (Lkhagvadorj, 2012).
  • The budget law’s revenue assignment includes common taxes, state taxes, aimag and capital city taxes as well as soum and district taxes (Lkhagvadorj, 2012).
  • The local government’s budget is composed of local revenues and budget transfer from the central government (Namkhaijantsan, 2011).
  • Detailed information about the local governments’ budget formula is not provided.

Key initiatives for participatory local governance

  • The new constitution from 1992 states that Mongolia is a democracy, which is divided in subnational levels of administration governments.
  • The new budget law from 2011 aims to shift the former fiscal centralization towards more decentralization and fiscal power for local governments. According to the new law, local governments are provided with more alternatives to accumulate and spend local revenues. Furthermore, by introducing a formula based transfer allocation it aims to provide more predictability and sustainability in the local budgeting process (Mongolia Focus, 2012; Lkhagvadorj, 2012).

Challenges for participatory local governance

  • According to Freedom House, Mongolia is still confronted with a serious problem of corruption (Freedom House, 2013).
  • Budget transparency, participation and oversight of the budget remains a further problem both on the national and subnational level. The Open Budget Index 2012 states that with 51 points out of 100 points just “some information” were made available by the government. Also on the aimags’ subnational level the overall budget transparency ranking just results in an average score of 33.2 points out of 100 points (Open Budget Index, 2012; Namkhaijantsan, 2011).
  • Local self-governance is challenged by line ministries which exercise their power on the local level. Furthermore, the governors are more powerful than hurals and since the prime minister is involved in their appointment, their decisions are often in representation of the central government (Yadamsuren, 2005).

Recent posts on this website about this country: 


List of sources (in order of citation)

Yadamsuren, B., 2005: “Citizen Participation of Local Budgeting: A Case of Mongolia.”

InfoMongolia, 2012: “What the Cabinet Ministers of Mongolia are responsible for.”

KhanLex, 2012: “General Introduction the Mongolia’s Law and Government.”

Quota Project, 2014: “Mongolia.”

Lkhagvadorj, A., 2012: “An Analysis of the New Budget Law of Mongolia of 2011.”

Namkhaijantsan, D., 2011: “Budget Transparency Rating of Local Governments in Mongolia. Final Report.”

Mongolia Focus, 2012: “2012 Local Elections: Pre-election Observation and Analysis”

Freedom House, 2013: “Mongolia.”

Open Budget Index, 2012: “Mongolia.”