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S&P Global Ratings affirms Mongolia's sovereign credit ratings

S&P Global Ratings on April 28 affirmed Mongolia's long-and short-term sovereign credit ratings at B, with a stable outlook.

The ratings take into account the country's weak economic prospects,balance of payments and public finances. The rating agency added that it has observedthat developing institutional effectiveness and predictability hamper policy responses.

The rating agency said it projects Mongolia's GDP growth rateto slow to 2.6% in 2016, while the average growth rate through 2019 is forecastat around 4%. The country's GDP growth rate per capita is expected at only 1% in2016 due in part to ancillary effects of weaker terms of trade, capital outflowsand its mixed mining policies, which have discouraged foreign direct investment.

S&P Global Ratings said the stable outlook on Mongolia'sratings balances its low-income resource-driven economy, emerging policy environmentand fiscal performance, high external risk, as well as its limited monetary flexibility,with the prospect that large mining projects may quickly reverse the country's sovereigncredit profile in the next 12 months.

Mongolia's ratings could be upgraded if the development of twolarge mines, the Oyu Tolgoi and Tavan Tolgoi mines, hastens economic growth andenhances fiscal and external performances more than currently expected, the ratingagency said. Conversely, Mongolia's ratings could be downgraded if the country'sexternal liquidity significantly weakens.

S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.