The statement emphasized that delays and reversals of some structural reforms mandated by the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) program pose a risk to the continuity of donor assistance. “Reforms subject to delays and reversals were those primarily designed to prevent a return to pro-cyclical fiscal policies and to strengthen and empower institutions to support adherence to fiscal rules,” highlighted Moody’s.

Earlier this week, the IMF staff team disclosed the report for the third review under the EFF. The team foresaw that growth is expected to remain strong in 2018; however, the report addressed several several risks including changes in global commodity demand and bottlenecks at the border. According to Moody’s, an asset quality review of Mongolian banks, stipulated by the program and conducted by an independent consultant, also points to a much smaller capital adequacy shortfall than the IMF previously forecast, resulting in lower potential recapitalization costs to the Government. In addition, Moody’s view that Mongolia’s growth outlook rests critically on the continuation of the Oyu Tolgoi copper mine and the expansion of the Tavan Tolgoi coal project over the next five years.

In January, Moody's upgraded the Government of Mongolia's long-term issuer ratings and the senior unsecured ratings to B3 from Caa1, and the senior unsecured medium-term note (MNT) program rating to B3 from Caa1. The short-term issuer ratings are affirmed at Not Prime and the outlook stable