Standard & Poor’s Ratings Services yesterday revised its rating outlook on Mongolia to stable from positive. The government’s attempt to renegotiate the OT agreement, and uncertain mineral demand and prices are some of the major causes for this. However, the agency still believes that the country has strong growth potential, and that nominal GDP growth would exceed the growth in debt.
According to the latest development, Mongolia’s Mining Minister seems to continue with his intention to renegotiate the O.T investment agreement and had promised that he would resign if it is not done.
S & P analyst Agost Benard said that the mining sector had largely propelled Mongolia’s growth in recent years. “The country’s fiscal and external balances are therefore exposed to volatility in global mineral prices and mineral demand from China. Underdeveloped infrastructure and utilities also constrain Mongolia’s effort to sustain strong growth and achieve greater economic diversification”, he added.