“THINGS really get messy when politicians see money,” mused Tsakhiagiin Elbegdorj, Mongolia’s president, earlier this month. He was discussing his country’s request for an emergency loan from the IMF to help ward off a balance-of-payments crisis. The messiness might be avoided, Mr Elbegdorj added, if the IMF forced Mongolia to observe a little more budgetary discipline than it is used to.
Although sparsely populated and vastly endowed with mineral wealth, Mongolia has yet to set its economy on a stable footing. Squabbling and delays over big foreign investments in mining projects, along with low global commodity prices, have stemmed inflows of foreign currency, prompting the local currency, the togrog, to wilt. It has declined 17% against the dollar since late June. The government’s lavish spending in expectation of big mining revenues, meanwhile, has boosted its debt to almost 80% of GDP, much of it denominated in dollars. The togrog’s slide has prompted fears that the government will struggle to service its foreign debt.
When the IMF last came to Mongolia’s rescue, in 2009, it seemed to be providing just the...Continue reading
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