Mongolia’s total external debt amounts to USD 29.7 billion

Economy
baljmaa.ts@montsame.gov,mn
2019-09-18 16:17:43

Ulaanbaatar /MONTSAME/. On September 17, “Balance of payments and external debts” theoretical and practical conference was organized at the initiative of the Bank of Mongolia on the occasion of the 95th anniversary of the establishment of banking sector in Mongolia. The conference brought together economic and financial scholars and researchers to discuss foreign currency revenue, policy measures and strategies in monetary policy and so on. 


The officials of the central bank delivered a report on the current condition of external debts of Mongolia during the conference. According to the Bank of Mongolia, the external debts of Mongolia, including both public and private sectors stood at USD 29.7 billion as of June 2019 and debts by the public and private sectors took the largest share of the total debts. To be specific, government debts reached USD 7.2 billion, the central bank's debts at USD 2 billion and commercial banks’ debts totaled USD 2.3 billion and the remaining debts are private credits.


One third of the total external debts is owed by foreign invested companies. The report also indicated that there is no large amount of outstanding payment for foreign debts due before 2021. However, between 2022 and 2024 the Government of Mongolia and other banks are scheduled to make payments for the bonds issued on international markets. It is also calculated that a total of USD 14.5 billion of debt repayment will be made in the next four years. In this regard, the yesterday’s conference focused on paving the way for solutions for financial sources of the pending debts. 


The swap arrangement of USD 2 billion between the Bank of Mongolia and the People’s Bank of China is to mature next year. The two banks agreed to extend the swap line agreement, maturity of which was scheduled in 2017, by three years until 2020. At the conference, the officials of the Bank of Mongolia noted that talks to extend the arrangement again with the People’s Bank of China since the Mongolia’s central bank is in financial shortage to make the large amount of repayment. 


International Monetary Fund’s Resident Representative for Mongolia Seok Hyun Yoon delivered a presentation about Mongolia’s foreign debts, levels and flows.  Some facts drew attention in his presentation were Mongolia’s external debt amounted to 300 percent of the country’s gross domestic product as of 2017, which is already five times higher than the acceptable amount and global average.  Moreover, the country's net external debt ratio with GDP equaled to 180 percent, five times more than the recommended level of 35 percent. Advising to manage the external debt level same to the international standards in the long run by improving its external debt management, Mr. Seok Hyun Yoon underlined the necessities Mongolia encounter to increase foreign direct investment, improve business environment and diversify the economy with the help of expansion of capital investment, which will finally help the country to exchange some of its debts with lower interest rate debts. 


As mentioned before, substantial amount of debt repayment is scheduled in 2020-2024, the speakers and participants of the conference noted the importance of increasing foreign currency reserve and of the successful implementation of the development project of the Oyu Tolgoi mine to draw in more foreign investment.