Mongolia’s Sovereign Credit Rating Upgraded to “BB-” for the First Time

On October 30, 2025, international credit rating agency S&P Global Ratings announced that it had upgraded Mongolia’s sovereign credit rating to “BB-” and revised the outlook to Stable. This marks the first time Mongolia has reached the “BB” rating category, with a rating of “BB-”.

Key factors behind the upgrade:

• Since 2022, strong commodity exports and prudent fiscal management have significantly reduced Mongolia’s government debt-to-GDP ratio.
• Although exports have weakened this year, continued mining activity and government investment are expected to support sustained economic growth over the next two to three years.
• Accordingly, S&P Global upgraded Mongolia’s long-term sovereign rating to “BB-” with a Stable outlook, while maintaining the short-term rating at “B”.
• The Stable outlook on the long-term rating reflects expectations of steady economic growth and low fiscal deficits over the next two years, despite political uncertainties.

Conditions for a potential rating upgrade:

S&P Global may consider a further upgrade if Mongolia’s external and fiscal position strengthen, particularly if net external debt falls below 50% of current account receipts, and the annual change in net government debt declines to below 1% of GDP, reflecting stronger external and fiscal consolidation. Continued improvement in institutional settings and policy predictability would also support an upgrade.

Conditions for a potential rating downgrade:

A downgrade could occur if economic growth slows relative to peer countries or if fiscal discipline weakens, leading to larger deficits and pushing government debt above 30% of GDP.

Institutional and economic profile:

• Geopolitical developments have boosted China’s demand for coal, driving Mongolia’s coal exports to record highs over the past two years. Although coal exports and prices have declined this year, a 45% increase in copper production and a recovery in agriculture following two harsh winters continue to support economic growth.
• Real GDP growth is projected to average around 5.5% annually through 2028, driven by sustained investments in the Tavan Tolgoi and Oyu Tolgoi mining projects, as well as improved customs clearance processes that have eased transport bottlenecks at the China-Mongolia border.
• Despite some political uncertainty, fiscal and economic policy continuity is expected to be maintained.

Fiscal flexibility and performance:

• Mongolia recorded budget surpluses for three consecutive years. However, as revenues declined this year, the government reduced expenditures through an August supplementary budget. Over the next few years, spending is expected to slightly exceed revenues, resulting in modest fiscal deficits.
• The external sector has improved as export revenues grew rapidly, reducing net external debt relative to current account receipts. Nonetheless, the current account is expected to remain in deficit over the next two to three years, keeping external indicators relatively weak.
• Mongolia’s continued access to concessional financing from international markets helps mitigate risks associated with its high external debt.