Mongolia’s new finance minister said he expects the pace of economic growth to rise, aided by more foreign investment and a recovery in commodity prices after their calamitous slump in 2016.
Last year, when Mongolia turned to the International Monetary Fund (IMF) for aid as it struggled to pay its debts, growth was just 1 percent.
Finance Minister Ch.Khurelbaatar, who was appointed last month, told Reuters in an interview this week that in the third quarter of 2017, Mongolia’s growth was 5.6 percent from a year earlier.
He did not give a full-year projection for this year, but said growth in 2018 should be 4.2 percent, shored up by the USD 5.5 billion IMF-led rescue package agreed in May.
On Thursday, rating agency Moody’s Investors Service said growth should reach 4.2 percent this year. Moody’s on Thursday maintained its sovereign credit rating for Mongolia at ‘Caa1 stable’.
Global coal prices have been significantly stronger this year, but Mongolia’s ability to profit from this has been hampered by a crackdown on smuggling on both sides of the China-Mongolia border. This has created a huge bottleneck at the border.
Mongolia is in the process of refinancing debts with new bonds now that it is able to set lower rates of interest, said Khurelbaatar. The country is reforming its tax system in a bid to boost revenues, and will launch a 10-25 percent progressive income tax in January.
However, Khurelbaatar said there are no plans to raise the rate of tax on the mining sector, which accounted for 20 per cent of GDP last year, though there are plans to alter the bidding process for mining rights to improve transparency.