Moody’s Upgrades Mongolia’s Credit Rating to ‘B1’ with a Stable Outlook

On October 16, 2025, the international credit rating agency, Moody’s, announced that it has upgraded Mongolia’s soveriegn credit rating to “B1”, changing the outlook to “Stable”. The agency identified several key factors as the main contributors to this positive revision:

• Export diversification and growing domestic demand have reduced the economy’s dependence on coal prices. Despite the continued decline in coal prices since 2024, Mongolia’s economic growth has remained stable, supported by rising copper exports. Exploration activities for gold and rare earth elements have expanded, while government policies aimed at improving infrastructure and strengthening foreign relations are expected to enhance export competitiveness in the coming years. Furthermore, increases in wages and pensions have stimulated household consumption, contributing positively to stable economic growth.
• Governance and institutional reforms are expected to support sustainable growth. Following the pandemic, prudent debt management has reduced the risks and pressures associated with external debt. Efforts to combat corruption and the forthcoming revision of the Development Bank Law are expected to strengthen transparency and accountability, helping to mitigate the impact of commodity prices fluctuations on the economy.
• Although government debt is projected to rise, it will remain comparable to that of peer-rated countries. Since 2017, the government’s debt-to-GDP ratio has steadily declined. However, due to the failing coal prices, budget revenues have weakened, and the fiscal deficit is expected to widen in 2025. In response, the government is undertaking measures to reduce the deficit by cutting non-essential infrastructure projects and curbing recurrent expenditures. While planned tax reforms may temporarily lower revenues and increase the debt burden, the overall debt level is expected to remain in line with countries holding similar credit ratings.

As a result, Moody’s upgraded Mongolia’s long-term credit rating to “B1” with a stable outlook , while reaffirming the short-term credit rating at “Not Prime.”

Conditions for a further upgrade:

Moody’s indicated that Mongolia’s credit rating could be raised if non-debt capital inflows contirbute to a steady increase in foreign currency reserves, a reduction in government debt, lower borrowing costs through increased domesticfinancing, and reduced exchange rate risks, while maintaining progress in fiscal reforms.

Conditions for a potential downgrade:

Conversely, the rating could face downward pressure if factors that could undermine overall economic stability, such as, loan financing needs increase, the government’s ability to meet payment obligations weakens, or external financing shortfalls emerge.