Mongolia’s parliament has voted to remove Prime Minister Norov Altankhuyag. The decision was made amid concerns about a serious economic downturn as metal prices and foreign direct investment slump.

Reuters says that out of the 66 members of parliament who voted, 34 were in favour of ousting Altankhuyag. Ten members of parliament, including eight members of his coalition government, did not show up. It will now be up to the coalition to select a new candidate, who will have to be approved by the president and confirmed by parliament.

The government has been in turmoil in recent weeks as seven ministers, including the ministers of mining and foreign relations, resigned after the Prime Minister won parliamentary approval to consolidate ministries from 16 down to 13. This move led to calls from the opposition Mongolian People's Party for the PM to stand down, and finally people from his own government demanded his resignation.

The turmoil has distracted the government 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 debt at below 40% of gross domestic product.

Key to reviving foreign investment, which has slumped 59%, is resolution of a long-running dispute over the Oyu Tolgoi copper-gold mine that Mongolia shares ownership with Turquoise Hill Resources, which is majority owned by Rio Tinto.

Rio suspended construction of a $5.4 billion underground expansion project in August 2013 because of disagreements including construction costs. Altankhuyag had been expected to sign an MoU before bankers release $4 billion in project financing to help pay for the expansion.

Resource Center Whitepapers, Videos, Case Studies