Mongolia’s Credit Rating Upgraded to ‘B+’ by Fitch
Fitch Ratings Upgrades Mongolia’s Long-Term Foreign-Currency Issuer Default Rating
Fitch Ratings has announced an upgrade to Mongolia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B+’ from ‘B’, with a Stable Outlook. This latest development is a result of reductions in Mongolia’s public and external debt burdens, driven by the strong performance of the country’s mining sector.
The upgrade reflects the larger foreign exchange reserves, lower debt, and more manageable external debt maturities that have strengthened Mongolia’s resilience to potential shocks, such as fluctuations in commodity markets. Despite this positive development, Mongolia remains susceptible to external conditions, as noted by Fitch.
The mining sector is expected to continue driving economic growth, with real GDP growth forecasted to average around 6% in the coming years. This growth is attributed to the expansion of coal and copper mining activities, supported by solid non-mining economic sectors. The recent start of production at the Oyu Tolgoi copper mine’s underground phase is expected to further boost growth from 2025 onwards.
On the fiscal front, Mongolia is projected to achieve a balanced government budget in 2024, with a modest deficit expected in 2025-2026. The country’s debt level is forecasted to stabilize at around 44% of GDP, with manageable debt maturities in the coming years.
The government has also been building up deposits, including funds dedicated to future investments and stabilizing the economy. Despite these positive developments, Mongolia still faces external vulnerabilities due to its high dependence on commodity exports.
Overall, the upgrade in Mongolia’s Long-Term Foreign-Currency Issuer Default Rating reflects the country’s improved economic outlook and strengthened financial position. The government’s continued focus on fiscal sustainability and prudent economic management will be key in maintaining this positive momentum in the future.
