1 BIRTHS DECREASE BY 1.4 PERCENT FROM PREVIOUS YEAR WWW.MONTSAME.MN PUBLISHED:2020/08/14      2 CHINA REMAINS MONGOLIA'S TOP EXPORT DESTINATION, IMPORT SUPPLIER WWW.XINHUANET.COM PUBLISHED:2020/08/14      3 UNDP MONGOLIA FACILITATES MULTI STAKEHOLDER WORKSHOP TO ADDRESS THE KEY CHALLENGES FACING MONGOLIA’S CASHMERE INDUSTRY POST COVID-19 WWW.MN.UNDP.ORG PUBLISHED:2020/08/14      4 KEY CHINA-MONGOLIA RAILWAY PORT SEES PEAK CARGO CLEARANCES WWW.INNERMONGOLIA.CHINADAILY.COM.CN PUBLISHED:2020/08/14      5 EXPORTS DECREASED BY 17.1 PERCENT COMPARED TO PREVIOUS YEAR WWW.MONTSAME.MN PUBLISHED:2020/08/14      6 CHINESE RAIL SPEEDING TOWARDS EXCITING FUTURE BY DOUBLING NETWORK LENGTH WITHIN 15 YEARS & INTRODUCING 600KPH MAGLEV TRAINS WWW.RT.COM PUBLISHED:2020/08/14      7 RUSSIA OFFERS TO HELP US WITH COVID-19 VACCINE; US SAYS NO WWW.CNN.COM PUBLISHED:2020/08/14      8 MONGOLIA’S SUCCESS AND CHALLENGES AGAINST COVID-19 WWW.EASTASIAFORUM.ORG PUBLISHED:2020/08/13      9 FIRST EVER RAILWAY BRIDGE CONNECTING RUSSIA & CHINA TO OPEN IN 2022 WWW.RT.COM PUBLISHED:2020/08/13      10 CABINET MEETING: SMALL, MEDIUM-SIZED ENTERPRISE DIRECTORATE ESTABLISHED WWW.MONTSAME.MN  PUBLISHED:2020/08/13      ДЭМБ: КОРОНАВИРУСНИЙ УЧРУУЛЖ БУЙ ХОХИРОЛ САРД $375 ТЭРБУМААР ХЭМЖИГДЭЖ БАЙНА WWW.ZINDAA.MN НИЙТЭЛСЭН:2020/08/14     АЯЛАХАД ТОХИРОМЖГҮЙ, АЮУЛТАЙ БҮСЭД МОНГОЛЫГ БАГТААВ WWW.UNUUDUR.MN  НИЙТЭЛСЭН:2020/08/14     ОЛОН УЛСЫН СТАНДАРТ ХАНГАСАН ХӨЛБӨМБӨГИЙН “TDB CENTER” ЦЭНГЭЛДЭХИЙН ШАВ ТАВИХ ЁСЛОЛ БОЛЛОО WWW.NEWS.MN НИЙТЭЛСЭН:2020/08/14     ОРОСЫН КОМПАНИУДЫН АШИГ ЭРС БУУРЧ БАЙГААГ АНХААРУУЛАВ WWW.NEWS.MN  НИЙТЭЛСЭН:2020/08/14     ХЯТАД УЛС 2035 ОНООС ӨМНӨ ТӨМӨР ЗАМЫН УРТАА 200,000 КМ-ЭЭР СУНГАНА WWW.IKON.MN  НИЙТЭЛСЭН:2020/08/13     ЭКСПОРТ ӨМНӨХ САРААС 16.9 ХУВИАР ӨСЧЭЭ WWW.NEWS.MN НИЙТЭЛСЭН:2020/08/13     УУЛ УУРХАЙН БҮТЭЭГДЭХҮҮНИЙ ЭКСПОРТЫГ НЭМЭГДҮҮЛЭХ ТАЛААР ЯРИЛЦАВ WWW.MONTSAME.MN НИЙТЭЛСЭН:2020/08/13     ДАВХАР БҮРТГЭЛТЭЙ ҮНЭТ ЦААСЫГ ГАДААД, ДОТООДОД ХӨРВҮҮЛЭХ БОЛОМЖТОЙ БОЛОВ WWW.MONTSAME.MN НИЙТЭЛСЭН:2020/08/13     ЛОКАРНО КИНО НААДАМД МОНГОЛЫН УРАН БҮТЭЭЛЧИД ГУРВАН ШАГНАЛ ХҮРТЛЭЭ WWW.MONTSAME.MN НИЙТЭЛСЭН:2020/08/13     ОРОС УЛС ГАЗРЫН ХОВОР ЭЛЕМЕНТИЙН ҮЙЛДВЭРЛЭЛЭЭР ХЯТАД УЛСТАЙ ӨРСӨЛДӨХ ТӨЛӨВЛӨГӨӨГӨӨ ЗАРЛАЖЭЭ WWW.IKON.MN НИЙТЭЛСЭН:2020/08/13    

Moody's - Mongolia faces liquidity risks as coronavirus squeezes export revenue and limits financing options www.moodys.com

Moody's Investors Service says in a new report that Mongolia is facing rising external vulnerability risks amid the coronavirus pandemic, as pressures on export revenue coupled with highly uncertain access to external financing threaten already weak foreign exchange reserve adequacy.

Moreover, the government's borrowing requirements will increase markedly to fund a sizable stimulus package, which raises liquidity risks. Recently approved emergency assistance from the International Monetary Fund (IMF) and other multilateral agencies alleviates some of these risks, although the size of funding indicated so far remains short of financing needs.

"Mongolia's primary commodities, coal and copper, have fallen sharply in price, and combined with export restrictions and lower demand from China and globally we expect a large drop in commodity export proceeds in 2020," says Anushka Shah, a Moody's Vice President and Senior Analyst.

"This in turn will widen the current account deficit and reduce reserves, with lower foreign reserves set against substantial repayment obligations on external debt that will start coming due in 2021, reflected in mounting vulnerabilities," adds Shah.

In response to the coronavirus outbreak, the government has announced a sizable fiscal stimulus plan. Moody's expects this will widen the budget deficit to 8.6% of GDP in 2020, from its projection of 4.8% at the start of 2020. A larger deficit will add to the government's gross borrowing requirements, estimated at 12.5% of GDP in 2020, and which will peak at 17.0% of GDP in 2022 as external bond repayments come due.

Financing will likely be drawn from a mixture of external sources, in particular multilateral and bilateral lenders, and domestic sources. If concessional sources do not all materialize and the local authorities maintain their planned stimulus measures, liquidity strains will increase.

Beyond 2020, Moody's expects growth to return toward Mongolia's high potential rates.

Robust growth potential continues to represent an underlying credit strength, although it is dependent on large projects proceeding as planned beyond 2020. This is Moody's base case assumption, particularly supported also by political continuity following recent parliamentary election results.

Subscribers can access the report "Government of Mongolia: External vulnerability, government liquidity risks turn more acute under coronavirus-driven pressures" at: http://www.moodys.com/researchdocumentcontentpage.aspx…

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This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Anushka Shah
VP-Senior Analyst
Sovereign Risk Group
Moody's Investors Service Singapore Pte. Ltd.
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Client Service : 852 3551 3077

Gene Fang
Associate Managing Director
Sovereign Risk Group
Moody's Investors Service Singapore Pte. Ltd.
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Client Service : 852 3551 3077

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Published Date:2020-07-02