Ulaanbaatar /MONTSAME/. S&P Global Ratings announced on
Thursday that it has maintained Mongolia's credit rating at 'B' and the outlook
The following factors led S&P to keep the credit rating
and the economic outlook unchanged:
-Mongolia's economy shrank by 5.4 percent in 2020 due to
the negative impact of the pandemic. However, thanks to the global economic
recovery and rising mineral prices in the international market, the country’s
economy growth is expected to reach 6.7 percent in 2021 and 7 percent in 2022.
-Even though the spread of COVID-19 has been increasing in
Mongolia since April of this year, the economic recovery will continue as the
indicators related to the external sector, state budget and external debt are
improving as compared with 2020. The recovery will be driven by factors such as
Mongolia's level of vaccination, fiscal spending measures, and growth in
mineral exports due to the global economic recovery.
-The level of vaccination in Mongolia is relatively higher
than in other developing countries, which reduces the economic uncertainty
caused by the pandemic. Two-thirds of Mongolia's population has received a
single dose of the vaccine, and more than 60 percent have been fully vaccinated
-Economic outlook in the medium term will be relatively
favorable due to foreign direct investment in the mining sector. Economic
growth due to foreign direct investment in the Tavan Tolgoi and Oyu Tolgoi
mining projects will average 6.8 percent by 2024. Mongolia's economic growth is
projected to be higher in the medium term than other similar countries in terms
of GDP per capita.
-The Government of Mongolia has successfully reduced some
of its high external debt risk by successfully attracting concessional foreign
financing. For example, the share of Mongolia's total external debt in the
current account will reach 181 percent in 2020, increasing from the 2019 level,
but will decrease to 159 percent in 2021.
-The Bank of Mongolia successfully extended the CNY 15
billion swap agreement with the People's Bank of China in August 2020 until
2023, which has reduced the pressure on foreign exchange reserves.