Moody’s Investors Service has upgraded the Government of Mongolia’s long-term issuer ratings and the senior unsecured ratings to B3, with a stable outlook, from CAA. S&P’s and Fitch both rate Mongolia at B–.

The key factors driving the ratings upgrade are less vulnerability to fluctuations in commodity prices, especially if the reforms currently being implemented and planned are adhered to.  Moody’s also said that the country’s financing needs had been reduced after it undertook measures to narrow its fiscal deficit and refinanced government debt with longer maturities at the end of 2017.  The stable outlook reflects balanced risks.  On the upside, reforms may prove more effective at reducing Mongolia’s sensitivity to commodity cycles than currently envisaged.  On the downside, and in particular in a less favorable commodity environment, liquidity and external pressures could intensify significantly again.

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