S&P Affirms Mongolia at 'BB-' with Stable Outlook, Citing Mining Growth and Fiscal Discipline

S&P Global Ratings has affirmed Mongolia’s long-term sovereign credit rating at 'BB-' and short-term rating at 'B', maintaining a Stable Outlook on the long-term rating. The affirmation reflects expectations of sustained mining-led economic growth, continued fiscal surpluses and a broadly stable government debt burden, balanced against external vulnerabilities and institutional weaknesses.

Key Highlights

1. Mining Remains the Primary Growth Driver

S&P expects real GDP growth to average approximately 5.6% annually through 2029, supported by rising copper production at Oyu Tolgoi and steady coal exports to China. Coal export volumes are forecast to reach approximately 100 million tonnes in 2026, up from 84 million tonnes in 2025, while copper is becoming an increasingly important export driver.

1. Fiscal Surpluses Expected to Continue

S&P forecasts general government fiscal surpluses of 2.0% of GDP in 2026 and 1.6% in 2027, supported by mining-related revenue. Despite rising public-sector wages, pensions and infrastructure spending, net general government debt is projected to remain broadly stable at around 25% of GDP, although large-scale strategic projects and expenditure pressures present risks to fiscal discipline.

1. External Vulnerabilities Persist Despite Improving Indicators

Strong mineral exports are expected to narrow the current account deficit to approximately 1% of GDP in 2026, from 8% in 2025. Narrow net external debt is also projected to decline to 58% of current account receipts in 2026, from 184% in 2020. Nevertheless, substantial external financing needs, a high net external liability position and dependence on mineral exports to China continue to constrain the sovereign credit profile.

1. Political Stability and Institutional Reform Remain Important

S&P expects broad political consensus on fiscal prudence, foreign investment and infrastructure development to support policy continuity despite leadership changes. However, institutional weaknesses, unpredictable policymaking and exposure to commodity-price volatility remain key rating constraints.

Outlook and Rating Sensitivities

The Stable Outlook reflects S&P’s expectation that Mongolia will sustain robust economic growth while limiting the accumulation of government debt over the next 12 months.

A downgrade could follow a sustained deterioration in economic growth or fiscal discipline, particularly if net general government debt rises above 30% of GDP. An upgrade could be supported by further improvements in external and fiscal positions, alongside stronger institutional settings and more predictable policymaking.

CMM Perspective

S&P’s affirmation reinforces the importance of Mongolia’s mining-led growth and fiscal discipline in sustaining sovereign creditworthiness. However, the key challenge is converting strong commodity revenues into durable fiscal and external resilience, particularly as social spending and large-scale infrastructure projects increase financing demands. For international investors, Mongolia’s improving debt metrics remain a credit strength, but commodity concentration, external liquidity requirements and policy predictability will continue to shape sovereign risk pricing.