Government debt accounts for 54.5 percent of GDP www.zgm.mn
In the first half of 2019, the Government debt reached 54.5 percent of GDP at the present value. It is a decrease of 4.4 percentage points from late 2018.
The government paid MNT 702 billion to debt in the first half of this year. Of these, MNT 265 billion were principal payments and MNT 437 billion were interest payments, according to the Ministry of Finance. As a result, the volume of government debt in the gross domestic product has decreased.
The Government aimed to reduce the debt to 55.3 percent of GDP when approving this year’s budget. Also the Government managed to reduce interest expense by raising equity management and redeeming higher-rate securities over time. As estimated, one out of MNT 13 of 2019 budget expenditure will be spent on interest rate payment. In the upcoming years, high-yield foreign debt is expected to be a major challenge for the Government and the Bank of Mongolia (BoM). For example, the Government and the private sector will pay a total debt of USD 14.4 billion in 2020-2024. The government and BoM will pay a debt of USD 6.7 billion.
Mazaalai, Chinggis, Gerege, and Khuraldai are Mongolia’s main international bonds. These bonds are worth USD 2.9 billion and payable by 2024. In specific, Mazaalai bond which is worth USD 500 million is due in 2021, Chinggis bond worth USD 1 billion in 2022, Gerege bond worth USD 800 million in 2023, and USD 600 million of Khuraldai bond will expire in 2024. According to market data, Gerege bond price has increased by 7 percent, to USD 102 since the beginning 2019. The rate of return to investors was reduced by 27 percent, to 5.035.
The Parliament approved a strategic document of government debt management 2019-2022. “The payment of foreign securities is due to be paid from the cash deposit, repurchase, repayment, and repayment of long-term debt to try to use the resources,” the document included.