Mongolia’s new president has a tall task at hand
On June 26th, Mongolians voted in general elections for their new president, however, the position will not be filled as quickly as expected. Khaltmaa Battulga of the opposition Democratic Party (DP) won the most votes, but failed to secure a majority. He will now be joined by either Sainkhuu Ganbaatar of the breakaway Mongolian People’s Revolutionary Party (MPRP) or Miyeegombo Enkhbold of the ruling Mongolian People’s Party (MPP) in the country’s first ever second-round run-off. Regardless of which party emerges victorious, Mongolia’s new president will assume office with an economically grim picture to face.
The downturn in commodity prices has driven this Asian (AAXJ) (VPL) economy from double-digit growth rates to less than 5% (even negative) growth rates over the last two years. in the same time period, gross reserves have depleted and unemployment has risien to around 10%. The government debt-to-GDP ratio stood at 77.4% as assessed most recently by the World Bank in 2015.
IMF: Mongolia now has a chance to turn things around
Recently, the IMF approved a three-year, $434 million loan for Mongolia as part of a larger $5.5 billion financing package. The broader bail-out package is also supported by Japan (EWJ), Korea (EWY), China (FXI), the World Bank, and the Asian Development Bank. Relative to GDP, this is the fourth-largest package in IMF history.