China can be Mongolia's friend in need with bond problem

Principles must be respected in bilateral relationship: experts
As concerns mount about whether Mongolia can repay a $580 million bond due in March, experts said that the country can tap into its economic cooperation with China, its biggest trading partner, to help with its financial impasse and reverse its slow growth.
Mongolian citizens are scratching up cash and donating money, jewelry and even horses to the government to help it keep going for long enough to get an international bailout, according to an article posted by the Foreign Policy magazine on February 3.
A prominent Mongolian economist and members of parliament have been leading the donation drive, media reports said.
The bond in question was issued by the Development Bank of Mongolia in March 2012, with a tenor of five years and a coupon of 5.75 percent. The bond will mature on March 21.
Foreign Policy said that the Mongolian government is negotiating a bailout with China and the IMF amid a severe economic crisis in the country, which has dragged down GDP from double-digit growth a few years ago to contraction.
However, despite concerns raised in the media, the Mongolian government said it will stay current on its debt obligations.
The Ministry of Finance of Mongolia assured investors that the government will stay current on all its debt obligations and that the liquidity position of the Mongolian government is strong enough to fully repay the $580 million notes coming due on March 21, read a statement on the website of the Development Bank of Mongolia on January 20.
The Mongolian government has no intention of embarking on any avenue that would be considered unfriendly by the international capital markets and talks with the IMF are continuing in a positive manner, and they are expected to be concluded soon, the statement said.
Experts said China, Mongolia's largest trading partner, can play a positive role in helping the crisis-stricken country.
As of the end of September 2016, Mongolia's overall debt stood at $23.78 billion, up 10 percent from a year earlier and exceeding 210 percent of its GDP, according to a statement posted on January 25 on the website of the economic and commercial counselor's office of the Chinese Embassy in Mongolia.
The statement cited data from Mongolia's statistical authority and the central bank in the country.
A slump in commodity prices, coupled with natural disasters in 2016, caused Mongolia's GDP in 2016 to contract 1.6 percent.
Sun Huijun, an expert on relationships among China, Russia and Central Asian countries, told the Global Times Sunday that as China's neighbor is experiencing hardships, China can prove to be "a friend in need."
"China can help Mongolia secure low-interest loans from multilateral institutions, or arrange loans after inter-governmental negotiations," Sun said.
Mongolia's trade in 2016 totaled $8.27 billion, down 2.3 percent year-on-year, the same statement showed. Trade with China, which accounted for 60 percent of its total trade, declined 6.4 percent to $4.96 billion. Mongolian exports to China were down 0.2 percent year-on-year to $3.9 billion and imports sank 23.7 percent to $1.06 billion.
Li Xing, director of the Eurasian Studies Center with the Beijing Normal University, said that China has the capacity to lift Mongolia out of the current crisis and improve its economy, but there is a condition.
"Under China's proposed 'One Belt and One Road' (B&R) initiative, there is an economic corridor starting from China, running through Mongolia and onward to Russia. This is a plan drawn up by the Chinese government, and much can be done under the framework," Li said.
Formally called the Silk Road Economic Belt and the 21st Century Maritime Silk Road, the B&R initiative was proposed in 2013.
The B&R initiative has many plans involving infrastructure and connectivity, and it can bring lots of money to Mongolia, Li told the Global Times Sunday.
Sun said prosperous neighbors and partners also suit China's ambitions to push its B&R initiative, against the backdrop of likely uncertainties in world trade brought up by the Trump administration.
"Russia, Kazakhstan and Mongolia are especially important to the northern route of the Silk Road initiative," noted Sun.
Li said that $580 million liquidity is within easy reach for China, "but China has its principles that are non-negotiable." Li noted that the visit by the Dalai Lama to Mongolia last year hurt bilateral relations.
The Mongolian foreign minister has said that the Dalai Lama would not be invited to Mongolia again, according to media reports in December 2016.



Post a Comment

Facebook page

Powered by Blogger.


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 Israel Mongolia and Italy Mongolia and Japan Mongolia and Kazakhstan Mongolia and Korea Mongolia and Kuwait Mongolia and Kyrgyzstan 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 US 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