Moody's changes Mongolia's outlook to stable from negative; affirms B3 rating

AKIPRESS.COM - Moody's Investors Service changed the outlook on the Government of Mongolia's issuer ratings to stable from negative and affirmed the long-term B3 issuer and foreign currency senior unsecured bond ratings and the (P)B3 senior unsecured MTN program rating.
The short-term issuer ratings are affirmed at Not Prime.
The decision to change the rating outlook to stable reflects Moody's view that liquidity risks and external pressures have stabilized for the foreseeable future, albeit at somewhat higher levels than seen prior to the pandemic. Higher government borrowing requirements resulting from sizeable stimulus in 2020 were financed primarily through a combination of concessional sources and a drawdown on fiscal reserves, thus relieving liquidity pressures. Recent refinancing has also reduced upcoming maturities in 2021 and 2022. External vulnerabilities have declined, on the back of a faster than expected recovery in mining exports, that Moody's expects to continue.
The affirmation of the B3 rating reflects Mongolia's existing credit challenges, including long-standing external and liquidity risks, as well as fiscal weaknesses that have increased due to the pandemic. The economic impact of the coronavirus pandemic and the government's announced fiscal stimulus measures reversed gains from a broadly balanced government budget in years leading up to the pandemic. Moreover, weak governance continues to impede the government's capacity to shelter the economy and public finances from commodity price cycles that they are exposed to.