Mongolia raises debt ceiling as foreign investment dips

ULAN BATOR Jan 21 (Reuters) - Mongolia's parliament has voted to raise the country's debt ceiling to 58.3 percent of its gross domestic product, amid declining foreign investment and a number of sovereign bond sales to international investors.
Landlocked Mongolia's debts have spiraled as it struggles to meet its social commitments and pay for the infrastructure required to develop its mining industry, with its coffers drained by a 71 percent collapse in foreign direct investment from January to November last year, according to the most recent central bank data.
An amendment to the country's Fiscal Stability Law, agreed on Tuesday, raises the maximum allowable debt-to-GDP ratio to 58.3 percent from 40 percent. State-backed bonds totaling more than $2 billion from 2012 and 2013 have already pushed the country's debt level to nearly 60 percent, said Batdelger Tuvshintugs at Mongolia's Economic Research Institute.
"The Chinggis bond is the majority of the borrowing, $1.5 billion," he said. The bonds, named after the 13th-century Mongolian warrior known to most as Genghis Khan, will mature in 2018 and 2022.
The original 40-percent debt limit was based on recommendations by the International Monetary Fund and World Bank, Tuvshintugs said.
The debt ceiling will be reduced gradually until it reaches 40 percent again in 2018, parliament agreed.
The local currency, the tugrik, has fallen by more than a third against the dollar in the last two years, making both private and government debt more expensive to repay.
Tuvshintugs said the country might have to refinance. Apart from the Chinggis bonds, the Development Bank of Mongolia also borrowed $580 million through a bond offering guaranteed by the Mongolian government that needs to be repaid in 2017.
Mongolia sits on some of the world's most promising deposits of high-quality minerals such as copper and coal, but it has struggled to finance their development, with foreign investors wary about falling overseas demand, particularly in Mongolia's top customer China, as well as domestic political risks.
The decision to change the debt ceiling once again puts the integrity of the Mongolian government into question, said Tuvshintugs, with no one likely to pay any penalty for breaching the original 40-percent ceiling.
"Foreign investors want to see institutional quality improving, not worsening."

Source:Reuters
Share:

0 comments:

Post a Comment

Facebook page

Powered by Blogger.

Categories

Advertising in Mongolia An Culture Editorial of the Mongolianviews education Environmental protection Famous Mongolians Foreigners in Mongolia Inner Mongolia Ivanhoe Mines Mongolia agriculture Mongolia analysis Mongolia and Australia Mongolia and Belorussia Mongolia and Cambodia Mongolia and Canada Mongolia and central Asia Mongolia and China Mongolia and Cuba Mongolia and EU Mongolia and Germany Mongolia and Hongkong Mongolia and Hungary Mongolia and India Mongolia and Inner Mongolia Mongolia and Iran Mongolia and Italy Mongolia and Japan Mongolia and Kazakhstan Mongolia and Korea Mongolia and Kuwait Mongolia and Malaysia Mongolia and Nato Mongolia and North Korean Mongolia and Poland Mongolia and Russia Mongolia and Singapore Mongolia and South Korea Mongolia and Taiwan Mongolia and the world Mongolia and Tibet Mongolia and Turkey Mongolia and UK Mongolia and Ukraine Mongolia and UN Mongolia and USA Mongolia and Vietnam Mongolia Banking Mongolia civic society Mongolia crime Mongolia diplomacy Mongolia Economy Mongolia Education Mongolia Energy Mongolia Finance Mongolia Health Mongolia History Mongolia holiday Mongolia in international media Mongolia Industries Mongolia Joke Mongolia law Mongolia LGBT Mongolia medical Mongolia military Mongolia Mining Mongolia Mining Developments Mongolia Mortgage Mongolia natural disaster Mongolia Petroleum Mongolia public announcements Mongolia railways Mongolia Religion Mongolia society Mongolia Sports Mongolia Stamp Mongolia telecommunication Mongolia tourism Mongolia Urbanization Mongolia Wild Life Mongolian Agriculture Mongolian Archeology Mongolian Food Mongolian Gay Mongolian Government news Mongolian History Mongolian Military Mongolian Mining Development Mongolian Movie Mongolian News Mongolian Parliament Mongolian Political news Mongolian Press Mongolian Songs Mongolian Women Mongolian Youth Mongolians abroad Moninfo Opinion Oyu Tolgoi Investment Agreement Photo news Press Release Rio Tinto Tavan Tolgoi coal mine Ulaanbaatar development Weird expatriates in Mongolia

Blog Archive

Followers

Live Traffic