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Wednesday, July 6, 2011




Mongolia Briefing is a magazine and daily news service about doing business in Mongolia. We cover topics relating to the Mongolian economy, the market in Mongolia, foreign direct investment and Mongolian law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates


Finance

Mongolia Considers Raising Country’s Debt Ceiling to Facilitate Infrastructure Development

By Elena Fehrbach

The Ministry of Finance has prepared and presented a plan to raise Mongolia’s debt ceiling that would give opportunity to the country to sell more foreign debt to pay for infrastructure development.

The country’s current debt ceiling is 40 percent of GDP. The plan is to increase it to 70 percent, according to Mr. K. Ganzorigt, the State Secretary of the Ministry of Finance who announced the new plan while meeting with diplomats and foreign press. He mentioned that raising of the debt ceiling would form part of the new debt management plan in Mongolia. Continue reading

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Credit Ratings Update from Moody’s and Fitch

By Elena Fehrbach

Moody’s: Outlook for Mongolia’s banking system remains negative

Moody’s Investors Services (Moody’s) announce that the outlook on Mongolian banks remain negative due to expectations of continued weakness in Mongolia’s key commodity exports. Key commodities in Mongolia are coal and copper with the exports of both commodities accounting for 88 percent of total exports and 20 percent of Mongolia’s GDP. Continue reading

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The Draft Bill on the Treasury Fund has been Introduced in Mongolia

By Elena Fehrbach

Mongolia is making another step forward in the direction of establishment of their own Treasury Fund. The President of Mongolia has initiated the establishment of the Treasury Fund that should be based on the Government revenue from the mining industry. The first draft has just been discussed by the Parliament of Mongolia and on an opening remark, Mr. L.Dashdorj, the advisor to the President, stressed upon the lack of system and policy on saving of wealth for the long-term future usage by the next generation. Continue reading

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Moody’s Outlook on Mongolian Banks Has Been Revised to “Negative”

By Elena Fehrbach

Jan. 22 – Moody’s Investor Services (Moody’s) has issues a revised rating for three Mongolian ban, downgrading them from “Stable” to “Negative”. The Banks under study are: Khan Bank, Trade and Development Bank and Xac Bank. Other than that, Trade and Development Bank’s baseline credit assessment (BCA) was downgraded from B1 to B2. Moody’s opinion about TDB’s rating downgrade is that the loan portfolio of this bank is too much overweighed against risky sectors, such as construction and mining. Moody’s has also affirmed TDB’s B1 senior unsecured bond and local currency deposit ratings based on assessment of TDB’s systematic importance being the second largest lender in terms of loans in the Mongolian Banking System.

Rating Rationale

Moody’s has commented that the rationale behind the ratings downgrade is that the banks remain vulnerable to deterioration is assets quality and high amount of borrowers against highly intensive changing operating environment. The industrial peculiarity of Mongolia also plays its role. Resource-based industry constitutes the significant part of the economy and due to boom-bust cycles characteristic to such sectors, the operating environment is highly volatile. Continue reading

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Bank of Tokyo Mitsubishi UFJ to Open Office in Ulaanbaatar

By Elena Fehrbach

The Central Bank of Mongolia has approved the request form the Bank of Tokyo Mitsubishi UFJ (BTMU) to open an official representative office in Mongolia. It has been announced that the approval has been granted on 10 October 2013. Continue reading

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Mongolia Gov’t Proposes Amendments to Tax Law

By Elena Fehrbach

Aug. 24 – The Ministry of Finance and the Ministry of Economic Development has released drafts of new laws and amendments to a number of current laws on the website of the Mongolian National Chamber of Commerce and Industry. According to the accepted practice, the Ministries are requesting representatives of foreign and local business and legal communities to comment on the drafts of the new laws. Continue reading

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Moody’s Revises Local Currency Country Risk for Mongolia

By Elena Fehrbach

Aug. 10 – Moody’s Investors Services agency has adjusted local currency country risk, foreign currency bond and deposit ceiling for Mongolia. Ceiling changes refers to the highest rating that can be assigned to a domestic issuer. In case of Mongolia, the adjustment was completed as follows:

  • Local currency bond ceiling is now Ba3. Previously it was Baa1;
  • Long-term local currency deposit ceiling was changed to Ba3;
  • Short-term foreign currency bond and deposit ceiling remain unchanged;
  • Long-term currency bond ceiling was changed to Ba3;
  • Long-term foreign currency deposit ceiling didn’t change and stands at B2. Continue reading
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Luxembourg Initiates DTA Negotiations with Mongolia

By Elena Fehrbach

Aug. 4 – According to the announcement by the Ministry of Foreign Affairs of Luxembourg as of July 30, foreign ministries of Luxembourg and Mongolia have agreed to negotiate a Tax Treaty on Avoidance of Double Taxation. Continue reading

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