Caa1 - the lowest credit rating in Mongolian history

Journalist B.Erdenechimeg

2017-09-04 18:15 GMT+8

ULAANBAATAR (GoGo Mongolia) - In Nov 2016, Moody's Investors Service ("Moody's") downgraded Mongolia's government long-term issuer and senior unsecured ratings to Caa1 from B3. 

Several green lights have turned on in Mongolian economy since then. Specifically, current account deficit stood at 358 million USD, meaning that it has dropped by 37 percent or 212 million USD from the same period of last year.

Goods and services account deficit dropped by 470 million USD and had a surplus of 248 million USD. Moreover, the balance of financial account had a surplus of 313 million USD

Mongolia has received 645 million USD foreign investment in the same period of last year while as of Jul 2017, foreign investment amounted 313 million USD which decreased by 332 million USD compared to the same period of last year. 

Meanwhile, the total balance of payments deficit was 48.8 million USD as of July 2017. A year ago, this amount was 41 million USD.

However, Caa1 ratings have not moved up and it is the lowest credit ratings in Mongolian history. 

"Invest Mongolia 2017" conference which is being held in Ulaanbaatar during Sep 4-5 raised this issue. Private sector representatives noted that with the Caa1 rating, it is almost impossible to attract investment from foreign countries. If one could find investment, the cost would be high. The biggest banks of Mongolia including Trade Development Bank, Khas and Khaan are determined their credit rating separately. However, their ratings are directly affected by the country`s rating. 

The Government pays for providers of credit ratings such as Moody`s, Fitch and S&P. Thus, private sector representatives recommended inviting representatives of these organizations to introduce the latest economic data and move the rating up. If Mongolia still has the Caa1 rating, Western investors consider Mongolia as a high-risk country to invest. 

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