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FIXED INCOME INVESTOR UPDATE

GOVERNMENT OF MONGOLIA

November 2012

CHINGIS BOND

2 GOVERNMENT OF MONGOLIA l CHINGIS BOND

This presentation is being made to you based on your deemed representation to each of Deutsche Bank AG, Singapore Branch, The Hongkong and Shanghai Banking Corporation Limited, J.P. Morgan

Securities plc, Merrill Lynch (Singapore) Pte. Ltd. and TDB Capital LLC (the “Joint Lead Managers”) that either (i) you are not a resident of the United States and, to the extent you purchase the securities

described herein you will be doing so pursuant to Regulation S under the US Securities Act of 1933, as amended (the “Securities Act”) OR (ii) you are acting on behalf of, or you are, a qualified institutional

buyer, as defined in Rule 144A under the Securities Act.

This presentation is being communicated only to persons who have professional experience in matters relating to investments and to persons to whom it may be lawful to communicate it (all such persons

being referred to as “relevant persons”). This presentation is only directed at relevant persons and any investment or investment activity to which the presentation relates is only available to relevant persons or

will be engaged in only with relevant persons. Solicitations resulting from this presentation will only be responded to if the person concerned is a relevant person. Other persons should not rely or act upon this

presentation or any of its contents.

THIS PRESENTATION DOES NOT CONSTITUTE AN OFFER OR INVITATION TO PURCHASE OR SUBSCRIBE FOR ANY SECURITIES OF THE GOVERNMENT OF MONGOLIA AND NEITHER ANY

PART OF THIS PRESENTATION NOR ANY INFORMATION OR STATEMENT CONTAINED HEREIN SHALL FORM THE BASIS OF OR BE RELIED UPON IN CONNECTION WITH ANY CONTRACT OR

COMMITMENT WHATSOEVER. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED

STATES OR ANY OTHER JURISDICTION AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT

SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE OR LOCAL SECURITIES LAWS.

ANY INVESTMENT DECISION SHOULD BE MADE ON THE BASIS OF THE FINAL TERMS AND CONDITIONS OF THE SECURITIES AND THE INFORMATION CONTAINED IN AN INFORMATION

MEMORANDUM AND/OR OTHER MATERIALS THAT WILL BE DISTRIBUTED TO YOU PRIOR TO THE CLOSING DATE AND NOT ON THE BASIS OF THIS PRESENTATION.

This presentation is confidential and has been prepared by the Government of Mongolia for selected recipients for information purposes only. The Joint Lead Managers do not make any representations or

warrant the completeness or accuracy of the information contained herein, nor have they independently verified such information. Opinions and estimates constitute the sole judgment of the Government of

Mongolia as of the date of this material and are subject to change without notice. In addition, certain information and statements made in this presentation contain “forward-looking statements.” Such forward-

looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “considering,” “depends,” “estimate,” “expect,” “intend,” “plan,” “planning,” “planned,” “project,”

“trend,” and similar expressions. All forward-looking statements are the Government of Mongolia's current expectation of future events and are subject to a number of factors that could cause actual results to

differ materially from those described in the forward-looking statements. Caution should be taken with respect to such statements and you should not place undue reliance on any such forward-looking

statements.

Certain data in this presentation was obtained from various external data sources, and the Government of Mongolia has not verified such data with independent sources. Accordingly, Government of Mongolia

makes no representations as to the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change based on various factors. Past performance is not indicative

of future results. Any securities, financial instruments or strategies mentioned herein may not be suitable for all investors. The recipient of this presentation must make its own independent decision regarding

any securities of financial instruments. The Joint Lead Managers may act as market maker or trade on a principal basis, or have undertaken or may undertake to trade for their own account, transactions in the

financial instruments or related instruments of any issuer discussed herein and may act as underwriter, placement agent, advisor or lender to such issuer. The Joint Lead Managers and/or their employees may

hold a position in any securities or financial instruments mentioned herein.

DISCLAIMER


Issuer Government of Mongolia (“GoM”)

Programme Description US$5,000 mm Global Medium Term Note (“GMTN”) Program

Issuance Senior Unsecured Notes

Principal Amount US$ Benchmark

Tenor 5 years and/ or 10 years

Issuer Ratings Moody’s: B1 (Stable) / S&P: BB- (Stable) / Fitch: B+ (Stable)

Expected Issue Ratings Moody’s: B1 / S&P: BB- / Fitch: B+

Form of Notes Regulation S / 144A Notes

Listing SGX-ST

Use of Proceeds

Finance infrastructure and industrial projects in Mongolia (via both debt or equity injections), including but

not limited to mining, railways, roads, highways and power plants. Proceeds will not be used to fund the

general budget nor social welfare programs

Governing Law New York Law

Joint Bookrunners Bank of America Merrill Lynch, Deutsche Bank, HSBC, J.P. Morgan

Joint Lead Managers Bank of America Merrill Lynch, Deutsche Bank, HSBC, J.P. Morgan, TDB Capital

SUMMARY OF OFFERING


KEY INVESTMENT HIGHLIGHTS

Attractive Environment for

FDI and Trade

3

Proven Fiscal

Track Record

Augmented by Forward

Looking Initiatives

4

Strengthening Financial

Sector

5

One of the Fastest

Growing Economies

Globally

1 Large Mineral

Resource Base that

Can be Leveraged for

Industrialization

2


AGENDA

1 MONGOLIA OVERVIEW

2 KEY INVESTMENT HIGHLIGHTS


Largest land per capita, enormous natural resources, well positioned for rapid economic expansion

MONGOLIA OVERVIEW

Close Proximity to the Largest Global Resource Markets Mongolia’s key advantages

1. LARGEST LAND / CAPITA

Territory: 1.6 million sq km

Population: 2.8 million

Relatively YOUNG POPULATION

with the HIGH LITERACY rate

among emerging economies

2. ABUNDANCE OF

UNEXPLOITED NATURAL

RESOURCES

Located close to some of the

LARGEST global commodity

MARKETS

One of the fastest growing economies globally

Large mineral resource base that can be leveraged for

industrialization

Attractive environment for FDI and trade

Proven fiscal track record augmented by forward looking initiatives

Strengthening financial sector

3. FLOURISHING

DEMOCRACY IN THE

REGION

Tested with 6 CONSECUTIVE

SUCCESSFUL democratic

ELECTIONS Real GDP

Growth

17.5%

Nominal

GDP (2011)

$7.9b GDP/Capita

$2,824

RUSSIA US$1,858 142

CHINA US$7,318 1,344

S.KOREA US$1,116 50

JAPAN US$5,867 128

MONGOLIA US$8 3

Nominal GDP 2011 in USD billions

Population 2011 in millions

“Economy could grow at double-digit rates for at least the next decade,

raising per capita income (now at US$3,503) fourfold within a decade”

- Parmeshwar Ramlogan, Former resident representative for Mongolia IMF ,

July 2011

Source: World Bank

3

1

2


(US$ mm)

ONE OF THE FASTEST GROWING ECONOMIES GLOBALLY

Real and Nominal GDP Emerging Sovereign Inflation

Comparison

Emerging Sovereign GDP Growth

Comparison

3 111 3 127 2 713

3 311 3 503

4 237

5 172

4 568

6 693

7 940

2007 2008 2009 2010 2011

Real GDP (US$ mm) Nominal GDP (US$ mm)

Mongolia continues to outperform its peers in the emerging markets,

demonstrating robust growth momentum while maintaining moderate levels of inflation

17,5%

9,2%

8,3%

6,8% 5,9%

5,1% 5,1%

3,7%

1,7%

Mo

ngolia

Chin

a

Sri L

anka

Nig

eria

Vie

tnam

Bo

livia

Ukra

ine

Ph

ilippin

es

Lebano

n

10,2%

18,6%

10,6%

8,0% 8,0%

6,9%

5,5% 4,8%

4,1%

Mo

ngolia

Vie

tnam

Nig

eria

Bo

livia

Ukra

ine

Sri L

anka

Lebano

n

Ph

ilip

pin

es

Chin

a

YoY Inflation in 2011 YoY GDP Growth in 2011 0.5%

(1.3%)

27.7%

6.4%

31.8%

17.5%

32.3%

8.9%

YoY growth of Real GDP YoY growth of Nominal GDP

Source: National Statistical Office of Mongolia, Moody’s country reports;

Note: Exchange rate (MNT/USD) uses corresponding year end rate, 1,169.97 (2007), 1,267.51 (2008), 1,442.84 (2009), 1,257.18 (2010), 1,396.37 (2011), 1,342.23 (June 30, 2012)

(1) Using annualized nominal GDP in MNT, which equals the nominal GDP as at June 30, 2012 multiplied by two


Indirect taxes 53,1%

Direct taxes 29,5%

Non-tax revenue 11,5%

Others 5,9%

Total Revenue (US$ mm): 3,151

CAGR(1) (2007-2011): 23.7%

Mining and quarrying 21,0%

Net taxes on products 15,0%

Agriculture, forestry and fishing

12,3% Wholesale and retail trade; repair of motor

vehicles and motorcycles

9,2%

Transportation and storage 7,1%

Real estate activities 6,9%

Manufacturing 6,0%

Financial and Insurance

3,4%

Others 19,1%

Total Nominal GDP (US$ mm): 7,940

CAGR(1) (2007-2011): 22.3%

ONE OF THE FASTEST GROWING ECONOMIES GLOBALLY (CONT’D)

Diversified Earnings Drivers and

Revenue Base

Expanding GDP with Manageable

Inflation

Stable Exchange Rate and

Growing Foreign Reserves

Government Revenue Breakdown (2011)

1 221,00

1 165,00 1 169,97

1 267,51

1 442,84

1 257,18

1 396,37

1 342,23

1 000

1 100

1 200

1 300

1 400

1 500

31/1

2/0

5

31/1

2/0

6

31/1

2/0

7

31/1

2/0

8

31/1

2/0

9

31/1

2/1

0

31/1

2/1

1

30/6

/12

Source: Bank of Mongolia, 2012

Net Foreign Reserve and Import Cover

972 637

1 145

2 091 2 274 2 170

6,6

2,7

7,5 8,4

5,3 5,2

0

2

4

6

8

10

0

500

1 000

1 500

2 000

2 500

2007 2008 2009 2010 2011 2012YTD

Net Foreign Reserve Foreign Reserves Import Cover

10,2

% 18

,6%

10,6

%

8,0%

8,0%

6,9%

5,5%

4,8%

4,1%

17,5

%

5,9%

6,8%

5,1%

5,1%

8,3%

1,7%

3,7%

9,2%

Mon

golia

Vie

tnam

Nig

eria

Bol

ivia

Ukr

aine

Sri

Lank

a

Leba

non

Phi

lippi

nes

Chi

na

YoY Inflation Real GDP Growth

17,8% 22,1%

4,2% 13,0%

10,2% 14,7% 10,2% 8,9%

(1,3%)

6,4%

17,5% 13,2%

(25,0%)

(20,0%)

(15,0%)

(10,0%)

(5,0%)

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

(25,0%)

(15,0%)

(5,0%)

5,0%

15,0%

25,0%

35,0%

2007 2008 2009 2010 2011 1H2012

Inflation Real GDP Growth

Trends of Inflation and Real GDP Growth

Source: National Statistical Office of Mongolia, Bank of Mongolia;


(1) CAGR is calculated by using nominal GDP and total revenue in MNT during the period respectively


Main Mineral Resources Estimated Reserves

(YTD 2012)

Copper (thousand tons) 83,807

Coal (mm tons) 18,473

Gold (tons) 2,402

Lead (thousand tons) 1,740

Iron ore (mm tons) 1,047

2,909

4,818

2,2621,885

63.8%

89.2%

26.9%

54.9%

39.0%

81.0%

2009 2010 2011 1H2012

Total Exports

Mineral Exports % of Nominal GDP

Mineral Exports % of Total Exports

LARGE MINERAL RESOURCE BASE THAT CAN BE LEVERAGED FOR INDUSTRIALIZATION

Minerals – Main Composition of Total Exports (2011) Growing Share of Mineral Sector in the Economy

Total coal exports are estimated to exceed 30 million tons at the end of

2014 once railway infrastructure is in place and is expected to further

increase to 50 million tons by 2017

Mongolia continues to outperform its peers in the emerging markets, demonstrating robust growth momentum

while maintaining moderate levels of inflation

(US$ mm)

Mongolia’s World Class Mineral Reserves

Source: National Statistical Office of Mongolia, Erdenes MGL

(1) Using annualized total exports, which equals the total exports as at June 30, 2012 multiplied by two

47,2%

20,9%

12,1%

9.2%

5,3% 3,0% 2,3% Coal

Copper

Others

Iron ores & scrap

Crude oil

Zinc

Gold


LARGE MINERAL RESOURCE BASE THAT CAN BE LEVERAGED FOR INDUSTRIALIZATION (CONT’D)

ULAANBAATAR

Erdenet Tumurtoi

Shivee Ovoo

Tavan Tolgoi

Oyu Tolgoi Nariin Sukhait

Baganuur

Gurvanbulag

Tsagaan Suvarga

Dornot Mardai

Asgat

Tumurtein

Ovoo

Boroo

Burenkhaan

Silver

6.4 mm tons

Uranium

0.016 mm tons

Copper / molybdenum

ore – 1.2 bn tons

Iron ore

229.3 mm tons

Gold ore

0.025 mm tons

Metallurgical coal

125.5 mm tons

Coal

7.5 bn tons

Lignite coal

646.2 mm tons

Lignite coal

600.0 mm tons

Phosphorite

300 mm tons

Copper – 37mm tons

Gold – 1,431 tons

Copper /

molybdenum ore

10.6 mm tons of

oxides;

240.1 mm tons

sulphides

Zinc

7.7 mm tons

Uranium

0.029 mm tons

Uranium

0.001 mm tons

Mongolia has vast and diverse under developed mineral deposits,

providing the economy with significant long-term upside potential

This slide outlines the 15 strategic deposits that have been identified by the Mongolian government. The deposits cover a broad basket of minerals, ranging from coal, copper, gold, iron ore, molybdenum, phosphorite, rare earth oxides, silver, uranium, and zinc



Tavan Tolgoi Overview Oyu Tolgoi Overview

Oyu Tolgoi is one of the world’s largest copper reserves. It is expected

to produce more than 0.6 million tons of copper, 20.3 tons of gold and

93.8 tons of silver per annum once it reaches full production in 2018

As of August 2012, US$6.2 billion has been invested by Rio Tinto and

Turquoise Hill. Production is expected to commence in 2013

Strategically located in the South Gobi region of Mongolia,

approximately 550 km south of Ulaanbaatar, and 80 km north of the

Mongolia - China border

The Government of Mongolia owns 34% of the project

According to the Australasian Joint Ore Reserves Committee, the Tavan

Tolgoi formation, is one of the world’s largest under-developed coal

deposits with an estimated 7.4 billion tons of coking and thermal coal

resources

Strategically located in the South Gobi desert near the Chinese border

Target coal production of approximately 6 to 7 million tons at both East

and West Tsankhi in 2013

One of the financing options considered is to conduct an initial public

offering (“IPO”) of Erdenes TT’s shares

Tavan Tolgoi is one of the world’s largest underdeveloped coal resources capable of supporting large-scale, long-life mining operations,

while Oyu Tolgoi is believed to be the world’s largest underdeveloped copper-gold project, the commencement of operation in these

projects will drive Mongolia’s GDP growth

Source: Tavan Tolgoi website, Turquoise Hill website; (1) Erdenes TT is the company that holds GoM’s interests in Tavan Tolgoi



Establishing Direct Links to the Seaports of China and Russia to Improve International Market Access

5,600km of new railways

will be built in 3 phases

Direct railroad access to

mining deposits

Establishing export routes

to Russia and China

990km highway to be

constructed to promote

cross – border trade

Both China and Russia

have discussed the

possibility of establishing

trade zones in strategic

locations in proximity to the

highway

Planned investments in transportation infrastructure will improve direct access to

Chinese and Russian seaports and further accelerate export growth by tapping more distant markets

Source: Ministry of Roads and Transportation of Mongolia

Existing Railways in Russia and China

Phase I

Existing Railways

Potential seaports and seaways

Phase II and III


Mongolia has a long history of international trade, driven by its

strategic location

China is Mongolia's largest trading partner and one of the largest

investors in Mongolia's mining projects

Mongolia and Russia have a long history of cooperation, signing a

Joint Declaration of Cooperation and a bilateral trade agreement in

1991, and a Treaty of Friendship and Cooperation in 1993

ATTRACTIVE ENVIRONMENT FOR FDI AND TRADE

China and Russia – Mongolia’s Most Important Trading Partners Total Trade Volume

Close Relationship with Russia and China Commitments to Free International Trade

Trade Agreements:

► Has complied with the General Agreement on Tariffs and Trade

(“GATT”) 1994 upon its accession to the WTO

► Currently negotiating free trade agreements with China, Japan,

South Korea and the EU. The EU is Mongolia's third largest

trading partner by volume and value

China 94,0%

Russia 1,5%

Others 4,5%

Russia 27,0%

China 26,7%

Others 46,3%

Source: National Statistical Office of Mongolia

1H2012 Exports

1H2012 Imports

Mongolia

Russia

China 1 948 2 535 1 885 2 909 4 818

2 262

2 062 3 245

2 138

3 200

6 598

3 313 4 009

5 779

4 023

6 109

11 416

5 576

2007 2008 2009 2010 2011 1H2012

Exports Imports

(US$ mm)

Mongolia is strategically located with direct access to China and Russia, two of the largest markets in the world.

Trade volumes are expected to grow alongside GDP as output increases


1 886

360 839 570

1 630

4 620

2007 2008 2009 2010 2011 1H2012

ATTRACTIVE ENVIRONMENT FOR FDI AND TRADE (CONT’D)

Rapidly Growing FDI into Mongolia Breakdown of FDI by Industry

Source: Foreign Investments and Foreign Trade Agency

(US$ mm)

12.5% 24.4% 58.2% 40.9% 16.2% 8.5%

As % of Nominal GDP

67,5% 68,4% 80,4%

66,3% 84,7%

74,8%

26,1% 30,5% 17,9%

21,0%

7,1% 24,4% 4,4% 0,6% 0,4%

4,0% 3,1%

0,8% 0,8% 0,2% 1,2% 6,0% 4,1%

2007 2008 2009 2010 2011 1H2012

Information and communication technology Construction

Banking and financial services Others

Geology exploration

Recent Changes in Regulations Relating to Foreign Investments Prudent Regulatory Framework Supporting the Industrial Sector

“Foreign Investment Protection and Promotion Agreement” with 43 countries

A foreign investor may apply for a stability agreement to govern their

investment

121 projects to be implemented with private sector participation

Minerals Law:

► Government is able to acquire an up to 50% stake in strategic deposits if it

has contributed to exploration and up to 34% if there was no contribution

► Progressive Royalty Rate scheme. Rates increase as mineral prices rise

and are not applicable below certain threshold mineral prices

► Rates are lower for processed minerals to encourage mining companies to

engage in more value-added activities

FDI into Mongolia continues to be dominated by the Mining and Exploration sectors

as the Government continues to prudently open these industries to outside investment

Source: Foreign Investments and Foreign Trade Agency of Mongolia

(1) Using annualized imports and exports, which equals the imports and exportd as at June 30, 2012 multiplied by two


ATTRACTIVE ENVIRONMENT FOR FDI AND TRADE (CONT’D)

Government Overview Recent Developments with High Priority Countries /

Organizations

China:

Strategic partnership agreement in 2011, together with eight other agreements

on economic and technical cooperation, expanding cooperation in the

petroleum sector, and an agreement of cooperation with the Export-Import

Bank of China

The Bank of Mongolia has RMB10 billion (USD 1.6 billion equiv.) local currency

swap line with the People’s Bank of China (“PBoC”) for the purpose of financing

trade between the two countries and providing short term RMB liquidity for

stabilization of financial markets

Russia:

In 2003, in order to encourage bilateral trade and investment ties between the

two countries, Russia wrote off outstanding debt between 1946 and 1991

In January 2009, Mongolia and Russia announced a joint venture to develop

uranium deposits located in Dornod

Germany:

In October 2011, Germany and Mongolia signed several trade and cooperation

agreements in relation to mining, manufacturing & technology

International Organizations:

On March 17, 2011 the Government and the United Nations signed the United

Nations Development Assistance Framework ("UNDAF") for 2012 to 2016

In 2009, the IMF provided Mongolia with a US$242 million loan facility under

the 2009 Stand By Program, of which US$194 million has been drawn

[Add upgrades by ADB/IFC?]

Government type: Mixed parliamentary/presidential

Head of State: President (elected for a term of four years)

Executive branch: Prime Minister and Cabinet, appointed by the State Great

Khural (the “Parliament”) in consultation with the President

Legislative branch: State Great Khural (unicameral, 76 seats; members are

elected for a term of four years)

Suffrage: 18 years of age; universal

State structure: Unitary state; territory of Mongolia is divided administratively

into 21 aimags (provinces) and the capital city

Balanced Parliamentary Composition and New Coalition

Government

The Mongolian government continues to further develop relationships with key

trade partners and international organizations

Mongolia is a vibrant and true democracy with stable institutions and a high

degree of rule of law. The population is young and with a high literacy rate

Current government is a

coalition government consisting

of the Democratic Party, Justice

Coalition and the Civil Will-

Green Party Democratic

Party 40,8%

MPP 32,9%

Justice coalition

(New MPRP and MNDP)

14,5%

Civil Will-Green Party

2,6%

Independent 3,9%

Seats under dispute/

reelection 5,3%

Parliamentary Election 2012 (76 seats)


PROVEN FISCAL TRACK RECORD AUGMENTED BY FORWARD LOOKING INITIATIVES

Manageable Levels of Public Sector Debt Recent Developments with High Priority Countries /

Organizations

Fiscal Stability Law:

► The budget deficit in any given year shall not exceed 2% of

GDP

► Total expenditure growth rate of the budget should not exceed

the growth rate of nominal non-mineral GDP for the given year

of the proceeding 12 months

► External debt should not exceed 50% of GDP for 2013 and

40% of GDP for 2014

Fiscal Stability Fund (“FSF”):

► Any excess mineral revenues that exceed the amount

estimated in the budget's revenue are to be placed in the FSF

► The FSF must represent at least 5% of the GDP in any given

fiscal year

► A portion of the savings generated by the FSF may be used to

finance domestic and foreign investments

Future Bond Issuances:

► The proceeds from the bond offering will not be used to fund

the general government budget or general welfare programs

1 530 1 603

2 064 2 032 2 195

2 776

19 1

269 342 361

759

36,6%

31,0%

51,1%

35,5% 32,2%

38,3%

36,1%

31,0%

45,2%

30,4% 27,6%

30,1%

2007 2008 2009 2010 2011 1H2012

Total Public Sector Domestic Debt

Total Public Sector External Debt

Total Public Sector Debt as % of Nominal GDP

External Debt as % of Nominal GDP

(1)

(1)

The 2013 budget policy guideline outlines the framework for continued economic growth while establishing fiscal discipline

through the Fiscal Stability Law

Source: National Statistical Office of Mongolia, Moody’s Country Reports


(1) Using annualized nominal GDP, which equals the nominal GDP as at June 30, 2012 multiplied by two

(US$ mm)


PROVEN FISCAL TRACK RECORD AUGMENTED BY FORWARD LOOKING INITIATIVES (CONT’D)

Government Revenues and Budget Balance Trends in Select Components of Government Revenue

(US$ mm)

1 284 1 492 1 123

2 138 2 604

1 569

302 205

244

310

361

180 21 15

15

35

186

25

2,7% (4,5%) (5,2%)

0,5% (3,6%) (4,4%)

37,9% 33,1% 30,3%

37,2% 39,7% 38,5%

2007 2008 2009 2010 2011 1H2012

Other Revenue

Non-tax Revenue

Tax Revenue

Fiscal Surplus/Defict as % of Nominal GDP

Total Revenue and Net Lending as % of Nominal GDP

Government revenues, boosted by the strong mining sector with the receipts and a booming economy, have increased by a

CAGR(1) of 23.7% from 2007 to 2011, with the deficit still well covered by GDP

Source: National Statistical Office of Mongolia; Note: MNT/USD = 1401.0


(1) Using annualized nominal GDP, which equals the nominal GDP as at June 30, 2012 multiplied by two

13,8% 13,7%

12,5%

16,3%

21,1% 22,4%

16,5%

15,2%

12,1%

15,7%

11,7% 11,7%

7,1%

4,0%

5,3% 4,6% 4,5%

3,9%

0,5% 0,3% 0,3% 0,5%

2,3%

0,5%

2007 2008 2009 2010 2011 1H2012

Indirect taxes

Direct taxes

Non-tax revenue

Others

(% of Nominal GDP)

(1)


PROVEN FISCAL TRACK RECORD AUGMENTED BY FORWARD LOOKING INITIATIVES (CONT’D)

Government Expenditures and Net Lending Trends in Select Components of Expenditures

1 169 1 389 1 239 1 795

2 316 1 701

256

493 319

470

764

452

68

64 61

186

351

31

35,3% 37,6% 35,5% 36,6%

43,2% 47,4%

6,0% 9,5%

7,0% 7,0% 9.6% 9,8%

2007 2008 2009 2010 2011 1H2012

Net Lending

Capital Expenditure

Current Expenditure

Total Expenditure and Net Lending as % of Nominal GDP

Capital Expenditure as % of Nominal GDP

(US$ mm)

(237) (33) (280) (409) (234) 114

Budget Deficit

(% of Nominal GDP)

6,0%

8,3%

8,7%

7,7%

7,2%

9,1% 7,6%

7,8%

6,0% 6,2% 6,6% 6,0%

5,7%

1,1%

0,5% 1,0% 1,0%

0,7%

6,0%

9,5%

7,0% 7,0%

9,6% 9,8%

2007 2008 2009 2010 2011 1H2012

Wages and salaries Purchase of goods and services

Subsidies to public enterprises Capital expenditure

On the back of higher global mineral prices, development of new mines, and increased fiscal spending, Mongolia’s growth

momentum has been fully supported and will continue to see positive tailwinds

Source: National Statistical Office of Mongolia, Bank of Mongolia


STRENGTHENING FINANCIAL SECTOR

Monetary Policy Overview Historical Policy Rate

The Bank of Mongolia’s policy objectives are twofold

► Maintain inflation at low and stable levels

► Allow exchange rate flexibility in line with macroeconomic

fundamentals

To effect its policy, the Bank of Mongolia relies on 6 key tools:

► The Policy Rate to directly target inflation

► Reserve Requirements to affect broad money supply

► Open Market Operations to absorb excess liquidity

► FX Market Intervention to control exchange rate volatility

► Repo Facilities to manage intra-day liquidity

► Medium-term Price stabilization program with the Government

6,4%

8,4%

10,3% 9,8%

12,8%

10,0% 11,5%

12,3% 13,3%

jūl 07 nov 07 sep 08 nov 08 mai 09 sep 09 apr 11 okt 11 apr 12

Policy Rate

YoY Inflation Rate

17,8%

22,1%

4,2%

13,0% 10,2% 14,7%

9,6%

28,0%

8,0%

10,1% 9,2% 7,2%

2007 2008 2009 2010 2011 1H2012

YoY Inflation Rate Annual average inflation

The Bank of Mongolia continues to play an active role in safeguarding the economy, mobilizing tools to curb inflation,

maintaining competitiveness of Mongolian exports, and supporting economic growth

Source: National Statistical Office of Mongolia, Bank of Mongolia


STRENGTHENING FINANCIAL SECTOR (CONT’D)

Togrog is relatively immune to FX supply shocks Commodity Currency Volatility

1 100

1 200

1 300

1 400

1 500

1 600

1 700

1 800

1 900

-300

-200

-100

0

100

200

300

400

500

04 06 08 10 12 02 04 06 08 10 12 02 04 06 08 10 12 02 04 06 08

Mill

ion

US

D

FX Net flows Togrog referance rate, RHS

Stability since March 2009

Daily average volatility: 0.08% in 2012

0.24% in 2011

The Togrog has remained relatively stable since 2009 with daily average

exchange rate volatility at 0.08% from the beginning of 2012 and 0.24% in

2011

Source: Bank of Mongolia, Bloomberg

(1) Data from Bank of Mongolia

Currencies

(last 34 months)

Daily average

volatility

(%)

Maximum

depreciation

per day (%)

Maximum

appreciation

per day (%)

MNT (Mongolia)(1) 0.20% 1.26% 1.69%

AUD (Australia) 0.61% 3.50% 3.67%

CAD (Canada) 0.47% 2.13% 2.53%

NZD (New Zealand) 0.65% 3.05% 3.28%

RUB (Russia) 0.50% 2.55% 3.18%

CLP (Chile) 0.49% 2.24% 4.78%

SAR (South Africa) 0.00% 0.07% 0.07%

BRL (Brazil) 0.63% 3.76% 5.05%

NOK (Norway) 0.63% 2.20% 3.23%

TZS (Tanzania) 0.33% 9.09% 4.55%

PGK (Papua New Guinea) 0.17% 2.27% 2.52%

Average (ex-MNT) 0.45% 3.09% 3.29%

The Togrog has remained relatively stable versus other commodity currencies since 2010


1 696 1 901 1 469

2 248

3 721 4 403

58

149

320

298

236

229

34

74

84

72

53

39

3,2%

7,0%

17,1%

11,4%

5,8% 4,9%

2007 2008 2009 2010 2011 1H2012

Performing Loans Non-performingPast-due NPL Ratio

505 511 451

921 1,247

1 339

2 052 1 791

1 996

3 723

4 592

5 253

2007 2008 2009 2010 2011 1H2012

M1 M2

STRENGTHENING FINANCIAL SECTOR (CONT’D)

Increasing Money Supply Improving Quality of Outstanding Loans Stable Capital Adequacy

(US$ mm)

322

269

160

313

493

644

14,0%

11,1%

13,3%

15,1% 14,8% 15,4%

2007 2008 2009 2010 2011 1H2012

Capital CAR (%)

(US$ mm) (US$ mm)

Source: National Statistical Office of Mongolia


(1) Using annualized M2 in MNT, which equals the M2 as at June 30, 2012 multiplied by two

Mongolia’s banking sector continues to expand in line with the economy while maintaining a healthy degree of

capitalization and low incidence of loan delinquency


OVERVIEW OF GOVERNMENT PROJECTS

Mongolia’s Planned and Ongoing Industrial and Infrastructure Projects

Mongolia is actively developing various industrial and infrastructure projects

to support its mining industry and economic growth

Source: Mineral Resource and Petroleum Authority of Mongolia, 2011, ResCap Mongolia 101, January 2012


(1) The accumulated investment amount as of August 31, 2012 for Oyu Tolgoi

Sector Commencement Date Estimated Completion Date Investment Size

(US$ mm)

1. Mining 2009-2011 N/A 6,200(1)

2. Road Construction 2012 2013-2014 5,200

3. Railway 2012/2013 2015-2016 3,375

4. Power 2011/2012 2014-2015 1,470

5. Sainshand

Industrial Park 2013 2020 9,500


KEY INVESTMENT HIGHLIGHTS

Attractive Environment for

FDI and Trade

3

Proven Fiscal

Track Record

Augmented by Forward

Looking Initiatives

4

Strengthening Financial

Sector

5

One of the Fastest

Growing Economies

Globally

1 Large Mineral

Resource Base that

Can be Leveraged for

Industrialization

2

GOVERNMENT OF MONGOLIA

Appendix


As at 31 December As at 30

June

Key Parameters 2007 2008 2009 2010 2011 2012

Nominal GDP (US$ mm) 4,237 5,172 4,568 6,693 7,940 4,609

Real GDP (US$ mm) 3,111 3,127 2,713 3,311 3,503 1,810

Real GDP growth 10.2% 8.9% (1.3%) 6.4% 17.5% 13.2%

Nominal GDP per capita (US$) 1,620 1,957 1,697 2,444 2,824 -

Unemployment rate 9.2% 9.2% 11.6% 9.9% 7.7% 8.4%

Inflation 17.8% 22.1% 4.2% 13.0% 10.2% 14.7%(3)

Fiscal Surplus/ Deficit (% of nominal GDP) 2.7% (4.5%) (5.2%) 0.5% (3.6%) (4.4%)(1)

Total debt (% of nominal GDP) 36.6% 30.8% 50.6% 28.8% 28.4% 28.6%(1)

Current account balance (% of nominal GDP) 4.1% (13.1%) (7.7%) (10.7%) (30.0%) (30.5%)

Net foreign exchange reserves (US$ mm) 972 637 1,145 2,091 2,274 2,910

Banking sector

Capital adequacy ratio 14.0% 11.1% 13.3% 15.1% 14.8% 15.4%

Non-performing loans ratio 3.3% 7.2% 17.4% 11.5% 5.8% 4.9%

Loan to deposit ratio 97.0% 135.7% 102.3% 75.2% 95.0% 98.1%

Stock market capitalization(2)

(US$ mm) 612 407 430 1,093 1,553 1,412

Exchange Rate(2)

(USD/MNT) 1,169.97 1,267.51 1,442.84 1,257.18 1,396.37 1,342.23

KEY ECONOMIC INDICATORS

Source: Bank and National Statistical Office of Mongolia, Statistical Yearbooks of 2010 and 2011 and June 2011 Monthly Bulletin

(1) Using annualized nominal GDP, which equals the nominal GDP as at June 30, 2012 multiplied by two.

(2) Period end data

(3) Compared against June 30, 2011


SOVEREIGN COMPARISON

Source: Moody’s Country Report, Bank and National Statistical Office of Mongolia, Statistical Yearbooks and December 2011 Monthly Bulletin

Note: Exchange rate (MNT/USD) uses corresponding year end rate 1,396.37 (2011)

Emerging Market Sovereign Risk Indicators: Economic Data (As at Dec 2011)

Mongolia Philippines Sri Lanka Vietnam Bolivia Venezuela Ukraine Belarus Lebanon Nigeria

Government Bond Ratings

Moody's B1 Ba2 B1 B2 Ba3 B2 B2 B3 B1 -

S&P BB- BB+ B+ BB- BB- B+ B+ B- B B+

Fitch B+ BB+ BB- B+ BB- B+ B - B BB-

Economic Structure and Performance

Nominal GDP (US$ bn) 7.9 224.8 57.2 124.6 24.3 315.7 165.3 45.8 38.1 245.2

Nominal GDP per Capita (US$) 2,824 2,341 2,741 1,418 2,386 10,705 3,610 4,802 8,895 1,515

Nominal GDP (% change) 31.8% 12.6% 15.3% 17.1% 24.0% 33.5% 19.9% (17.0%) 2.7% 24.9%

Real GDP (% change) 17.5% 3.7% 8.3% 5.9% 5.1% 4.2% 5.1% 5.3% 1.7% 6.8%

Inflation (% change) 10.2% 4.8% 6.9% 18.6% 8.0% 28.5% 8.0% 53.2% 5.5% 10.6%

Government Finance

Revenue / GDP 39.7% 14.6% 14.9% 25.7% 34.8% 34.9% 42.0% 40.3% 21.6% 29.5%

Primary Balance / GDP 8.4% 0.8% (1.4%) (3.2%) (0.2%) (1.3%) (0.3%) 0.7% 2.8% 0.8%

Debt (US$ bn) 2.2 94.2 44.9 54.5 7.8 79.4 44.9 50.8 61.9 43.0

Debt / GDP 28.4% 41.9% 78.5% 43.7% 32.2% 25.2% 27.1% 25.3% 135.1% 19.1%

External Payments and Debt

Current Account Balance (US$mm) (2,759) 7,078 (4,615) 236 537 27,205 (9,006) (10,440) (5,707) 14,381

Current Account Balance / GDP (30.0%) 3.1% (7.8%) 0.2% 2.2% 8.6% (5.5%) (15.7%) (14.4%) 6.3%

Net FDI / GDP 58.2% 0.6% 1.5% 6.0% 3.6% 1.7% 4.3% 7.10% 8.6% 2.4%

Forex Reserves (US$mm) 2,274 75,346 6,748 14,347 12,054 28,447 31,828 544 45,327 36,797

Monetary Indicators

M2 (% change) 37.0% 6.5% 20.5% 11.9% 20.7% 54.4% 14.2% 121.2% 5.4% na

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