A recent Social Indicator Sample Survey-2023, jointly conducted by the National Statistics Office of Mongolia and UNICEF, revealed that children comprise 37.1 percent of Mongolia's total population. The survey shows notable disparities between urban and rural areas in terms of children's health, education, and development opportunities.

“One in three children in rural areas cannot access preschool education. Children’s immunization rates and healthcare services vary highly between urban and rural areas. While immunization rates are high in the central region and Ulaanbaatar city, the rates for children in Bayan-Ulgii aimag are low,” reported the Ministry of Family, Labor, and Social Protection of Mongolia.

Therefore, to solve inequalities, create child-friendly environments in both urban and rural areas, improve budgeting and planning related to children, and increase investment in the social sector, the Cabinet Secretariat of the Government of Mongolia and UNICEF have co-organized a discussion on "Strengthening the Participation and Partnership of Local Organizations in Ensuring Children's Rights." Participants discussed the implementation of the Convention on the Rights of the Child at the local level and how to work at the national level to reduce violations of children's rights.

LONDON, Nov 19 (Reuters) - Swiss trading house Trafigura is trying to track down $500 million in Mongolia following a year-long probe of staff and associates over a billion-dollar fraud scheme at its local fuel supply business, according to three trading sources familiar with the case.

The Mongolia case, the second large-scale fraud Trafigura has uncovered in the past two years, has rattled bank trade financiers who are now questioning the strength of oversight at one of the world's biggest energy and commodity traders, two banking sources who work with Trafigura and lend money to the company said.

Trafigura said last month it had made provisions of $1.1 billion after discovering what it described as "misconduct" at its Mongolian unit, including manipulation of data and concealment of overdue receivables.

The company said its principal counterparty in Mongolia recognized it owed Trafigura "a substantial proportion" of the $1.1 billion but gave no further detail and did not name the counterparty.

Lex Oil was Trafigura's main local counterparty, the three trading sources familiar with the case and Trafigura's Mongolia operations told Reuters. They spoke to Reuters on condition of anonymity because they were not authorised to speak publicly about the matter.

Lex has acknowledged to Trafigura it owed the company over half of the $1.1 billion while the remaining $500 million is still unaccounted for, the three sources said.

Over 2,600 wind turbines are located offshore here.

Trafigura has not accused any counterparty or individual of fraud as the investigation is still ongoing, the three sources said.

Lex did not respond to a request for comment.

Trafigura said the probe into the misconduct was still ongoing.

Asked about risk oversight at Trafigura, a company spokesman said that since the Mongolia case had been discovered, Trafigura performed a risk review of its global network. The company identified higher-risk locations and the review of those places resulted in no significant findings, the spokesman said. The spokesman did not give details on which countries were considered higher risk locations.

Trafigura has over $77 billion in open credit lines from around 150 banks that it uses for trade in oil, gas and metals, according to its annual report.

The company said last month it would likely need to restate comparisons with previous years in its 2024 financial statements due to what it had uncovered in Mongolia.

That came after Trafigura took a charge of nearly $600 million in early 2023 after discovering it had been the victim of a nickel supply fraud.

The potential size of the Mongolian loss is large relative to the country's consumption of about $1 billion worth of fuel every year, according to U.S. government data.

The government of Mongolia did not reply to a request for comment.

The Mongolian fuel business has generated high margins for Trafigura, which blended various imported fuels and also made money on loans to the cash-strapped local coal and fuel distribution industries, according to the three trading sources.

Trafigura began its internal probe in 2023, when it first discovered irregularities. The company later brought in an external auditor to complete the investigation, the three trading sources said. It did not disclose the name of the external auditor.

Reuters was unable to ascertain the name of the external auditor.

Trafigura said last month the misconduct occurred over five years and involved "manipulation of data and documents, resulting in inflated sums being paid by Trafigura, and deliberate concealment of overdue receivables".

PARTNERSHIP

Trafigura became Mongolia's key fuel supplier around 2014, according to the three trading sources. The government declined to comment. Trafigura says they were one of the top suppliers of Mongolia.

The firm specialised in blending Russian diesel with supplies of jet kerosene from Singapore to produce winter diesel for Mongolia, where temperatures drop well below freezing in winter months.

Mongolia's coal industry is the top consumer of the fuel, used in heavy machinery to produce coal for export to China.

Trafigura and Lex established a partnership in 2019, the three trading sources said. Trafigura provided credit to Lex to supply local customers.

Mongolian importers such as Lex were also involved in supplying Trafigura with Russian diesel, the three trading sources said.

The Swiss trader then blended the Russian fuel with Singaporean jet and sold the blend back to the Mongolian companies such as Lex. Trafigura loaned them the money to finance the fuel purchases, according to two of the three trading sources.

Trading houses like Trafigura provide trade finance in some countries where international banks would struggle to offer credit due to internal compliance rules around operations in higher risk countries.

The scheme crumbled in 2020 when the COVID pandemic halted Mongolian coal exports to China, reducing the country's mining activity and fuel consumption, the three trading sources said.

Lex Oil, however, continued to import and blend the fuel, building up debt to Trafigura while expanding its storage facilities and lending to local importers, according to the three trading sources.

Lex did not respond to a request from Reuters for comment about how it accumulated its debts to Trafigura.

As Mongolia's fuel consumption dropped, Lex Oil charged diesel consumers for storing unused fuel, which continued for over two years between 2020 and 2022.

A number of Mongolian businesses defaulted on their debts to Lex Oil due to lack of income during the pandemic, the three trading sources said. Reuters was unable to identify the names of the companies which defaulted.

Trafigura only discovered the debts and defaults in 2023 when it did additional reviews of its offices following the nickel fraud, one of the three trading sources said.

Trafigura declined to comment on what triggered additional checks of the Mongolian offices.

In 2023, Trafigura's executives travelled to Mongolia to meet local officials but were unable to get help to recover the debts, according to two of the three trading sources.

Trafigura declined to comment on its contacts with Mongolian authorities. The government of Mongolia declined to comment.

"What Trafigura thought they had in Mongolia somehow disappeared," one of the three trading sources said.

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Reporting by Dmitry Zhdannikov and Robert Harvey; Editing by Simon Webb and Sonali Paul

In 2023, the State Great Khural (Parliament) of Mongolia adopted Resolution No. 64, designating the celebration of the 100th anniversary of the proclamation of the Republic and the adoption of the First Constitution.

According to the resolution, the 100th anniversary will be commemorated nationwide on November 26, 2024. The celebration will include scientific research on the historical significance of the First Constitution, academic conferences, the creation and dissemination of historical and educational works, and initiatives to promote public understanding of the Constitution and its importance. Additionally, state ceremonies and other events will be organized.

As part of the celebrations, the State Great Khural will hold a ceremonial session dedicated to the 100th anniversary of the Republic's proclamation and the adoption of the First Constitution. A parliamentary conference on "The Oversight Role of Parliament" will also take place.

Furthermore, activities will be organized for university students and high school seniors, such as lectures on "The Essence, Content, and Significance of the First Constitution" and academic conferences on "Constitutionalism: Past, Present, and Future." The program will also feature exhibitions, traditional wrestling tournaments, and other state ceremonial events, according to the Parliament’s Press and Media Department.

Translated by ChatGPT

In December 2024, an interim trade agreement between the Eurasian Economic Union (EAEU) and Mongolia is expected to be signed, with the draft finalized in record time. This milestone reflects the growing business ties between Russia and Mongolia and the dialogue between their government agencies, as well as broader trends of Eurasian integration and Russia’s pivot to the East.

The need to revitalize trade and economic relations has long been at the forefront of official negotiations between Russia and Mongolia. Although Russia currently ranks as Mongolia’s second-largest foreign trade partner, it accounts for only 10.2% of Mongolia’s total foreign trade, with China’s share at 72.4%. While Russia’s role in Mongolia’s imports is large (25.8%), its share in exports is under 1%.

The main pressing issue is the significant imbalance in mutual trade. Russia’s trade turnover with Mongolia has fluctuated over time, but Russia consistently runs a large surplus—Russian exports currently make up 95% of the trade volume, while supplies from Mongolia account for just 5%. This trade gap is partly due to high customs duties, non-tariff barriers and stringent veterinary sanitary requirements for Mongolian livestock products, which have export potential.

The commodity structure of Russian exports to Mongolia is traditionally dominated by three main categories: petroleum products (accounting for over half of exports), engineering products and food products (each making up 10–20% of exports). At the same time, Russia supplies a quarter of Mongolia’s imports, with a strong presence in certain commodities: more than 90% of petroleum products, 27% of food products and 30% of electric power.

In general, the conditions for increasing Russian exports to Mongolia are quite favorable. On the one hand, businesses are provided with state support through the International Cooperation and Export national project, with regional offices of the Russian Export Center offering free consultations, transaction support, marketing research, and access to preferential loans and export insurance for interested companies. On the other hand, Mongolia pursues a fairly liberal trade policy, which avoids non-tariff barriers for Russian goods and services.

Russia and Mongolia began discussions on developing preferential trade cooperation within the EAEU several years ago. On September 24, 2024, the Council of the Eurasian Economic Commission (EEC) finally approved the draft interim trade agreement with Mongolia. Under the draft, the EAEU and Mongolia have each drawn up lists of tariff commitments covering 375 commodity items (based on the six-digit Harmonized System codes). For these products, “in no case a rate of a customs duty … shall be higher than the respective agreed bound rate,” set at 0%. This arrangement effectively means a full exemption from customs duties for a fairly wide range of goods.

The trade agreement is expected to help boost mutual trade, foster a more transparent and equitable trade environment and create new supply chains and cooperation projects in the Eurasian region. This aligns with the EAEU’s efforts to diversify its foreign ties and cultivate flexible, diverse formats of interaction that take into account the unique characteristics of Eurasian nations, the interests of Russia and its partners in the regional integration on the one hand, and third countries on the other.

The signing of the interim trade agreement within the Eurasian partnership framework comes amid a massive transformation of transport and logistics flows in the new geopolitical reality and rising interest in the Mongolian direction. Favorable conditions are now emerging for infrastructural connectivity in the region where Russian, Mongolian and Chinese borders meet.

Strengthening cross-border cooperation largely relies on Russian regions bordering Mongolia, and their role in forging stable ties and creating new logistics across Eurasia is growing. A major and long-awaited development came in October 2024 with the opening of the Kyakhta customs and logistics terminal on the Russia–Mongolia border in Buryatia. The facility offers customs services, as well as storage, transportation and sorting services for a broad range of products, with a daily capacity of over 300 vehicles. The implementation of transport and logistics solutions, coupled with the renovation of border checkpoints, will undoubtedly have a major impact not only on the local scale—bringing benefits to the regions involved—but also in enhancing trade and economic relations between Russia and Mongolia and promoting economic connectivity in Eurasia.

On November 14, 2024, Prime Minister of Mongolia Oyun-Erdene Luvsannamsrai reviewed the detailed report on budgetary and tax policies during his visit to the Ministry of Finance of Mongolia and the General Department of Taxation.

Minister of Finance of Mongolia Javkhlan Bold presented that in the 16-year period from 2005 to 2021, the budget revenue of Mongolia amounted to MNT 99.9 trillion, whereas in the last three years, it has reached MNT 110.4 trillion.

Exports amounted to USD 78.4 billion in 2005-2021, while in 2022-2025, it is estimated to reach USD 63.3 billion.

Moreover, GDP per capita is projected to double from USD 4,657 in 2021 to USD 8,000 in 2025. Finance Minister Javkhlan stated that due to optimal debt management, the burden of foreign debt has decreased. At the same time, the Ministry is currently formulating three options to reduce expenditures for the 2025 State Budget.

Prime Minister Oyun-Erdene Luvsannamsrai underscored, “The 2025 State Budget is the first budget approved by the new Parliament, consisting of 126 members elected through a mixed electoral system. Therefore, it mainly focuses on regional development, shifting away from the traditional approach of evenly dividing budget allocations into electoral districts. A number of Members of Parliament criticized the previous practice of raising budget allocations in the constituencies and called for reduced expenditures, which is a positive outcome of the new system. Moreover, the issues sparking public criticism concerning the 2025 State Budget should be addressed, and a draft budget adjustment is required. We must focus on adopting a deficit-free budget.”

Given that mining, particularly coal, is the main source of Mongolia’s economy, the Premier highlighted the global shift away from coal and towards a green economy, urging the Government to prepare in advance for a possible reduction in coal exports.

The Energy Regulatory Commission is set to increase electricity tariffs from November 15, 2024. The Energy Regulatory Commission has announced that the average electricity tariff will be raised from MNT 216 per kWh to MNT 280. The changes were made in a way to not overburden households financially and encourage them to monitor their energy consumption and save energy.

A three-tier tariff based on consumption is to be introduced. The average household tariff was previously MNT 140, but under the revised tariff, consumption up to the first 150 kWh in a month will be charged at MNT 175, consumption between 150-300 kWh at MNT256, while consumption exceeding 300 kWh will be MNT285.

In other words, if consumers use energy efficiently, they will be charged at a lower price and pay less. This will result in a change of MNT 35-131 per kWh of electricity consumption. The average monthly electricity consumption of households nationwide is 220 kWh, and the monthly electricity bill was MNT 36,220. Therefore, the new tariff will add an average of MNT 15780 to the electricity bill of a household in a month, noted the officials of the Energy Regulatory Commission.

Chair of the Energy Regulatory Commission Tuvshinchuluun Erdenechuluun emphasized, “The energy sector is operating at a loss, as it is selling electricity and heat below the cost of production. If this continues, normal operations of the energy industry will be disrupted. Therefore, there is a need to increase prices. Two main issues were taken into account when increasing prices. We plan to bring the price of electricity and heat to its production cost while adding the lowest possible financial burden on consumers.”

According to a study, 45 percent of the 788 thousand households in Mongolia consume electricity up to 150 kWh each month, 40 percent use 150-300 kWh, and 15 percent use more than 300 kWh.

In addition to the current two tariffs for electricity, daytime and nighttime, a new evening “Peak Hour Tariff” is being introduced. The nighttime electricity discount for households in Ger districts will continue to apply. In addition, the tariff for households in need of social welfare support and assistance will remain unchanged.

The electricity tariff for businesses and organizations will be increased by an average of 30 percent.

Household electricity and heating tariffs in Mongolia have not changed in five years since 2019. Therefore, the Energy Regulatory Commission highlights that the tariff change that adheres to market principles will create conditions to ensure the financial and economic self-sufficiency of the energy sector.

Mongolia's gross domestic product (GDP) grew by 5.0 percent year-on-year during the first three quarters of 2024, according to data released by the National Statistics Office (NSO) on Monday.

The GDP reached approximately 56.2 trillion Mongolian tugriks (over 15.4 billion U.S. dollars) from January to September, the NSO reported.

The growth was primarily driven by increased value-added contributions from the mining and quarrying sector, as well as the service sector, said the statistical agency.

Renowned for its abundant natural resources, Mongolia has long relied on its mining industry as a key driver of economic growth. In 2023, the landlocked country's economy expanded by 7.0 percent, mainly driven by the mining sector.

Singapore, November 18, 2024 -- Moody's Ratings (Moody's) has upgraded the Government of Mongolia's long-term issuer and senior unsecured ratings to B2 from B3. The short-term issuer ratings are affirmed at Not Prime. The outlook remains stable.

The upgrade of Mongolia's ratings to B2 reflects a significant consolidation in its debt burden on the back of an uptick in mineral revenues, combined with an emerging track record of effective debt and fiscal management.

In conjunction with fiscal consolidation, prudent liability management has resulted in debt obligations being successfully refinanced over recent years, thus clearing the maturity schedule until 2026 and alleviating liquidity risks, albeit from high levels.

Strong trends in trade over the last year are also reflected in a build-up in foreign reserve buffers, which are likely to remain around current levels, underpinned by steady export growth. As a result, external vulnerabilities have come off from high levels more recently and should stabilize going forward, although they continue to remain a credit constraint relative to B-rated peers.

The B2 rating reflects Mongolia's susceptibility to commodity price cycles due to its narrowly diversified economic structure, which results in high growth and fiscal volatility. This is balanced by strong growth prospects, backed by structural global demand for copper, which will temper the economy's overall sensitivity to coal demand over time.

Although it is likely that some of the improvements in these metrics could normalize as commodity prices and demand fluctuate, a lengthening track record of effective fiscal and monetary management would continue to support the credit profile. The stable outlook reflects our view that external liquidity risks, while elevated, will remain manageable. Mongolia's sizeable market debt obligations in 2026 are expected to be met with continued market access at non-prohibitive costs, mitigating the probable risk of a credit event consistent with a B2 rating.

Concurrently, we have also raised Mongolia's local-currency country ceilings to Ba3 from B1 previously. The two-notch gap to the sovereign rating reflects a large government footprint in the economy, high commodity reliance in overall revenues, and still-high external imbalances. The foreign-currency country ceiling is raised to B2 from B3 previously, representing a two-notch gap to the local currency ceiling, to take into consideration the assessment of weak policy effectiveness and high external debt that point to transfer and convertibility risks at times of heightened external vulnerability.

Please click on this link https://www.moodys.com/viewresearchdoc.aspx... for the List of Affected Credit Ratings. This list is an integral part of this Press Release and identifies each affected issuer.

RATINGS RATIONALE

RATIONALE FOR THE UPGRADE TO B2

DEBT BURDEN TO STABILIZE FOLLOWING SIGNIFICANT CONSOLIDATION

Mongolia's debt ratio has declined from a peak of over 93% in 2016 and to 43% of GDP at the end of 2023. We expect that the debt burden will moderate further at the end of this year, before gradually increasing to 54% by the end of the decade. However, this remains consistent with the median for B1-B2 rated sovereigns between 2025-2030, at 50.7% of GDP.

Debt reduction has been driven by a combination of high nominal GDP growth and debt repayments, whilst new borrowings were limited. Although nominal GDP has been propped by high inflation over 2021-22, real growth has also seen a steady expansion. In addition, the fiscal balance has consolidated: on the back of improved mineral revenues due to a favorable commodity price environment for coal and copper, the fiscal position moved to a surplus in 2023, for the first time since 2018.

We expect that fiscal surpluses will be short-lived, and factors in the balance reverting to a deficit this year. This, coupled with the government's large planned infrastructure program could further add to the debt burden.

Mongolia also has a history of procyclical fiscal policies. Nevertheless, improvements in debt management will likely keep fiscal outcomes within a range comparable to B2 peers. Recent amendments to the government's fiscal responsibility legislation specify the debt ceiling of 60% of GDP in nominal rather than net present value terms, allowing for greater transparency. New rules prioritize concessional funding and mandate a structural fiscal deficit that is limited to 2% of GDP in debt per year. While these measures are too recent to have any visible impact yet, adherence could boost fiscal transparency and limit increases in market debt. Moreover, despite the forecasted upward drift in the debt ratio, it may be less likely that Mongolia will experience a spike in leverage comparable to the previous cycle in 2013, as growth cycles have turned more predictable given structural demand for copper, and as Mongolia enjoys more established financial market access compared to the past, allowing for a smoother refinancing of maturities.

GOVERNMENT LIQUIDITY RISKS HAVE ALLEVIATED, UNDERPINNED BY CLOSER FISCAL POLICY MANAGEMENT

Refinancing risks are materially lower in the medium term. Since 2020, the government has been consistently refinancing upcoming maturities for the year ahead. This is in line with its debt management strategy, that aims to reduce the pressure of the external debt on budget in the long term and lengthen the maturity profile of the debt portfolio. In addition, borrowing requirements have significantly reduced.

Factoring in a wider fiscal deficit and large upcoming maturities, we expect gross borrowing requirements to rise to 11.7% of GDP in 2026, from an estimated 5.4% of GDP 2024. Nonetheless, this is lower both relative to peers as well as to historical trends. These debt obligations should be financed relatively smoothly. The issuance of domestic debt presents another financing option that has not been tapped into in the past but could be met with demand from the banking system and support the building of a yield curve.

HEALTHY GROWTH PROSPECTS REDUCE RISK OF VOLATILITY

Following a very strong growth performance in 2023 where real GDP expanded by 7.1%, we expect trends will moderate to 5.8% this year, before edging higher in 2025. Beyond 2025, growth should average around 6% with the completion of Oyu Tolgoi after it hits sustainable production in 2028 resulting in some normalization in the structural growth trajectory.

Mongolia's exposure to commodities continues to introduce a disproportionate degree of growth volatility. While diversifying its production and export base to other sectors has been a key policy effort, that process has been slow and proceeded incrementally. As Mongolia veers its commodity mix toward copper, this volatility in growth caused by commodity cycles could moderate.

Copper production would be supported by output from the Oyu Tolgoi mine as it moves towards hitting peak production, and copper content improves. Increased production should also be supported by strong demand impetus, driven by organic improvements in living standards, but more importantly by the use of copper in electrification as energy transition goals become predominant, and demand for digital infrastructure –which consumes more electricity – increases. As currently operating copper mines are mature and will face declining ore grades, this puts Mongolian copper in a favorable position to meet global demand.

These trends should support a degree of vertical diversification within the commodities sector.

Meanwhile, exports of coal - Mongolia's largest commodity export - face the risk of a gradual slowdown in demand in the long run, due to slower growth in China and global efforts toward carbon transition. Nonetheless, agencies such as the International Energy Agency still project relatively stable coal demand in the near term, particularly for coking coal, which is used primarily for steel-making. Mongolia's competitive pricing, strong ash content, and better connectivity to China would likely underpin this demand.

Another focus area for Mongolia has been to leverage its critical mineral resources, as well as diversifying to other sectors such as agriculture, tourism, and renewable energy.

RATIONALE FOR THE STABLE OUTLOOK

The stable outlook is premised on the view that external liquidity risks will remain at elevated, albeit manageable levels. While financing pressures may spike at various junctures given Mongolia's market debt obligations, and the fiscal deficit will widen as spending pressures persist and mineral revenues normalize, this is balanced by our expectation that the government will continue to have access to markets at costs that are not prohibitive, containing risks of a credit event to levels consistent with a B2 rating. While growth performance should remain strong in 2025, it is subject to downside risks from slower growth in China, Mongolia's largest trading partner.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS

Mongolia's ESG credit impact score is CIS-4, driven by high exposure to environmental and governance risks. The sovereign also has moderate exposure to social risks. The CIS-4 score indicates that the rating is lower than it would have been if ESG risk exposures were not present.

Mongolia has high exposure to environmental risks (E-4 issuer profile score), reflecting an economy that is highly dependent on the production and export of hydrocarbons, particularly coal, which leaves the sovereign susceptible to carbon transition risk. The nature of the coal-based economy coupled with continued urbanization has also resulted in waste and pollution levels, particularly air pollution. Mongolia is also vulnerable to water scarcity driven by mineral extraction, overgrazing, deforestation and desertification. These risks are driven by mining and urbanization, and have threatened the livestock sector.

Exposure to social risks is moderate (S-3 issuer profile score). The uneven distribution of incomes is balanced by a young population coupled with a strong social safety net that has enhanced the provision of health and education benefits. However, access to basic services, including drinking water and sanitation, is very weak.

Mongolia has high exposure to governance risks (G-4 issuer profile score) with weak executive institutions and policy effectiveness against ongoing structural reforms. Low fiscal prudence and a tendency to procyclical policies curb the sovereign's financial capacity to respond to environmental and social risks particularly during economic downturns.

GDP per capita (PPP basis, US$): 17,884 (2023) (also known as Per Capita Income)

Real GDP growth (% change): 7.2% (2023) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 7.9% (2023)

Gen. Gov. Financial Balance/GDP: 1.4% (2023) (also known as Fiscal Balance)

Current Account Balance/GDP: 0.6% (2023) (also known as External Balance)

External debt/GDP: 168.3% (2023)

Economic resiliency: b1

Default history: No default events (on bonds or loans) have been recorded since 1983.

On 13 November 2024, a rating committee was called to discuss the rating of the Mongolia, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have materially increased. The issuer's institutions and governance strength, have not materially changed. The issuer's fiscal or financial strength, including its debt profile, has materially increased. The issuer's susceptibility to event risks has not materially changed.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

FACTORS THAT COULD LEAD TO AN UPGRADE

The rating would likely be upgraded upon evidence of a sustained build-up in the foreign exchange liquidity buffer supported by non-debt creating inflows, that alleviate external liquidity risks from sizeable debt obligations.

Evidence of a lengthening track record of policy prudence, particularly with regard to measures that mitigate a tendency to veer toward procyclical fiscal policies as well as enhanced governance and supervision around state-owned entities, would be credit positive.

A consistently falling debt burden accompanied by steady improvements in debt affordability would also alleviate fiscal constraints and drive upward rating momentum. These indications would likely relate to improvements in the management of domestic public finances, containing the government's funding requirements and the economy's external financing needs.

Progress toward economic diversification away from a reliance on commodities that reduces susceptibility to boom-bust economic cycles would also likely be a trigger for upward rating action.

FACTORS THAT COULD LEAD TO A DOWNGRADE

A rating downgrade could be triggered by widening gross borrowing requirements, and/or rising government liquidity risks that point to difficulties in meeting these borrowing needs. Persistent external financing gaps that threaten macroeconomic stability would also exert downward rating pressures. A sustained shock to growth, for instance through the derailment of large mining projects, would also be a trigger for downward rating action.

The principal methodology used in these ratings was Sovereigns published in November 2022 and available at https://ratings.moodys.com/rmc-documents/395819. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

REGULATORY DISCLOSURES

The List of Affected Credit Ratings announced here are a mix of solicited and unsolicited credit ratings. For additional information, please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com. Additionally, the List of Affected Credit Ratings includes additional disclosures that vary with regard to some of the ratings. Please click on this link https://www.moodys.com/viewresearchdoc.aspx... for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody's disclosures on the following items:

• Rating Solicitation

• Issuer Participation

• Participation: Access to Management

• Participation: Access to Internal Documents

• Endorsement

• Lead Analyst

• Releasing Office

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.

For any affected securities or rated entities receiving direct credit support/credit substitution from another entity or entities subject to a credit rating action (the supporting entity), and whose ratings may change as a result of a credit rating action as to the supporting entity, the associated regulatory disclosures will relate to the supporting entity. Exceptions to this approach may be applicable in certain jurisdictions.

For ratings issued on a program, series, category/class of debt or security, certain regulatory disclosures applicable to each rating of a subsequently issued bond or note of the same series, category/class of debt, or security, or pursuant to a program for which the ratings are derived exclusively from existing ratings, in accordance with Moody's rating practices, can be found in the most recent Credit Rating Announcement related to the same class of Credit Rating.

For provisional ratings, the Credit Rating Announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating.

Moody's does not always publish a separate Credit Rating Announcement for each Credit Rating assigned in the Anticipated Ratings Process or Subsequent Ratings Process.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.

Anushka Shah

VP - Senior Credit Officer

Sovereign Risk Group

Moody's Investors Service Singapore Pte. Ltd.

71 Robinson Road #05-01/02

Singapore, 068895

Singapore

JOURNALISTS: 852 3758 1350

Client Service: 852 3551 3077

Gene Fang

Associate Managing Director

Sovereign Risk Group

JOURNALISTS: 852 3758 1350

Client Service: 852 3551 3077

Releasing Office:

Moody's Investors Service Singapore Pte. Ltd.

71 Robinson Road #05-01/02

Singapore, 068895

Singapore

JOURNALISTS: 852 3758 1350

Client Service: 852 3551 3077

Electricity tariffs in Mongolia are set to increase starting November 15, 2024, following a decision by the Energy Regulatory Commission to align consumer electricity prices with real costs. Heating tariffs will also see adjustments beginning May 16, 2025.

The current average electricity tariff of MNT 216 per kWh will be MNT 280, but a tiered system will now be applied to household electricity consumption to encourage energy efficiency and minimize the financial impact on families. For households, the first 150 kWh of monthly consumption will be charged at MNT 175 per kWh, consumption between 150 and 300 kWh will cost MNT 256 per kWh, and usage exceeding 300 kWh will be charged MNT 285 per kWh. Previously, households were charged an average of MNT 140 per kWh.

The introduction of this tiered system reflects the principle that higher consumption incurs higher costs. Households consuming up to 150 kWh, accounting for 45% of all households, will see modest increases, while 40% of households consuming 150-300 kWh and 15% consuming more than 300 kWh will experience steeper tariff changes. For the average household consuming 220 kWh per month, the monthly electricity bill will rise from MNT 36,220 to MNT 52,107, marking an increase of MNT 15,887.

To accommodate varying usage patterns, an evening peak-hour tariff will be introduced, supplementing the existing day and night tariffs. Households in ger districts will continue to benefit from the night-time electricity discount, and tariffs for socially vulnerable households will remain unchanged. Household tariffs have remained stable for the past five years since 2019.

The electricity tariffs for businesses and organizations will increase by an average of 30%. The Energy Regulatory Commission stated that this reform, aligning prices with market principles, aims to promote financial and operational sustainability within Mongolia’s energy sector.

Korea and Mongolia took significant steps to deepen their partnership at the third Korea-Mongolia Future Strategy Forum, held Friday in Busan, where experts shared insights and challenges in collaborating in the areas of energy and health care.

Energy: Tapping into Mongolia’s vast potential

The first session focused on energy cooperation, a key area where the two nations can complement each other. Mongolia, with its vast reserves of coal and critical minerals like lithium and cobalt, is looking to modernize its energy sector and reduce greenhouse gas emissions, while Korea, reliant on energy imports for 94 percent of its needs, is eager to secure sustainable resources.

“Mongolia has set a goal to cut greenhouse gas emissions by 22.7 percent as part of its 2050 Long-Term Development Policy,” said Ganbaatar Enkhtvshin, director general of Mongolia’s Ministry of Energy. He outlined plans to expand renewable energy, address electricity shortages and develop eco-friendly tourism powered by clean energy. However, he acknowledged that challenges like infrastructure gaps and funding delays remain significant obstacles.

Korean energy expert Park Chan-kook, from the Korea Energy Economics Institute, noted that Mongolia’s energy mix is currently dominated by coal, which accounts for 86 percent of electricity production. “As demand for electricity in Mongolia grows rapidly, there’s an urgent need to diversify into renewables,” he said. He highlighted the opportunity for Korea and Mongolia to collaborate, with Mongolia providing raw materials for renewable technologies like batteries and Korea contributing advanced technology and investment.

Mongolian energy researcher Battsengel Lkhagvademberel added that much of Mongolia’s energy is wasted due to outdated systems. “Improving efficiency and integrating renewable energy will require significant innovation,” he said, outlining Mongolia’s exploration of hydrogen as a long-term clean energy solution.

Health care: From diagnostics to drug development

The second main session shifted focus to health care, with a specific emphasis on eliminating hepatitis, a major public health challenge in both Korea and Mongolia. Dr. Cho Nam-joon, a leading materials scientist and infectious disease expert from Singapore’s Nanyang Technological University, presented his groundbreaking work on combating hepatitis B and D -- viruses that significantly contribute to liver cancer worldwide.

Cho highlighted the prevalence of hepatitis in Mongolia, which has one of the highest rates of liver cancer globally, and detailed a trilateral research initiative between Stanford University, Korea and the Mongolian Onom Foundation. The collaboration has yielded a low-cost rapid diagnostics kit for hepatitis delta virus, priced under $3, with sensitivity and specificity rates nearing 100 percent.

“This achievement combines the technological expertise of Korea and Mongolia to create the world’s first rapid diagnostics kit for delta virus, enabling faster, more affordable detection and treatment,” he explained. The initiative has expanded to include diagnostics for hepatitis B and C, with the ultimate goal of eliminating hepatitis-related liver cancer globally.

Luvsan Khurelbaatar, chairman of Mongolia’s Monos Group, shared details about the Silk Road Project, a long-term initiative in partnership with Korea’s Daegu Haany University. The project aims to enhance medical education, research, and production in Mongolia, with a particular focus on traditional medicine and pharmaceutical innovation.

“We have been collaborating with Daegu Haany University for over 15 years, building a foundation of trust and shared expertise,” said Khurelbaatar. “Through this partnership, we are working to improve Mongolia’s medical workforce, foster innovation in research and development, and explore new markets for Mongolia’s unique natural resources.”

Khurelbaatar also discussed Monos Group’s broader activities, including the development of R&D centers in cooperation with Mongolian universities and investments in beauty and wellness products derived from plants native to Mongolia.

“This initiative will combine Mongolia’s rich natural resources with advanced Korean technology to develop new products for the global market,” he added.

BY

Moon Joon-hyun

mjh@heraldcorp.com