Mongolia plans to tap international capital markets on a regular basis in future, its central bank governor Naidansuren Zoljargal said on Wednesday. Mongolia's economy, which grew at the fastest rate in the world in 2011, depends heavily on copper exports to China and has been hammered by the global slide in commodity prices in the past few years.
Rating agencies have repeatedly downgraded the landlocked country's debt since it last issued Eurobonds in 2012. According to Fitch, the $12 billion economy now has one of the highest net external debt ratios in the world. Mongolian sovereign and sovereign-guaranteed entities must pay back a combined $1.1 billion as external bonds mature in 2017 and 2018, Fitch said. "There is a strong possibility we will go into the Eurobond market again," Zoljargal said in an interview on the sidelines of the annual meeting of the European Bank for Reconstruction and Development (EBRD). The timing and details of the next issue will be determined by the new government following legislative elections in June.
But Zoljargal said "the market will see us regularly." "They will take the Mongolia risk, and we want to get our share of financing through the market, and do our financing properly and transparently and to communicate regularly." Zoljargal said international banks were too downbeat on Mongolia's growth prospects, after the World Bank in April slashed its 2016 economic expansion forecast to 0.7 percent and to 2.7 percent in 2017.
"The World Bank and others are too pessimistic. I am certain we can do much better this year," said Zoljargal. He said he expected growth could top 4 percent this year and 6 to 7 percent annually within two or three years and thereafter, driven by diversification of the economy, particularly in the agricultural sector.
Mongolia's economy grew 2.3 percent in 2015, according to the World Bank. Unlike some of its commodity-focused peers, Mongolia has no plans to seek assistance from the World Bank or the International Monetary Fund, said Zoljargal. "We have 2 percent inflation and our balance of payment current account deficit is 5 percent. I don't see a need for any programme. It's very, very healthy macro numbers we have there."