World’s worst performing currency revealed
Cash shortage has made Mongolia borrow on massive scale, making it liable to pay interest payments of $23bn debt
PHOTO COURTESY: MONGOL BANK
Mongolia is facing either a sovereign default or a bailout as the government struggled to overcome economic crisis and a worst performing currency.
It was only in 2011 that a mining boom made the country world’s fastest grooming economy with a gross domestic product (GDP) growth of 17.5 per cent.
However, the tugrik lost about 7.8 per cent on its value in August and became the global worst-performing currency, according to Bloomberg data.
It is actually a fast decline from grace for the nation located in central Asian, neighbouring China and Russia.
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While the landlocked state has significant untapped reserves of considerable minerals such as gold, copper and coal, its commodity prices collapsed.
Same was the case with demand from China which buys 90 per cent of Mongolia’s exports.
Subsequently, the government admitted that the country, what it called, was in a deep state of economic crisis.
According to the Finance Minister Choijilsuren Battogtokh in a national television address last week, the government was not able to pay civil servants or even the armed forces.
Where the problem lies
What made matters worse was the government’s approach regarding investment laws and agreements relating to mining, causing many foreign firms to look for the exit door.
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The foreign direct investment in Mongolia plunged by 85 per cent since 2011 until the first quarter of last year, as per the US State Department.
The cash shortage made Mongolia borrow on a massive scale, making it liable to pay large interest payments of a debt of almost $23bn.
Interestingly, a delegation from the International Monetary Fund arrived in Ulaanbaatar, Mongolia’s capital, hinting a bailout.
The article first appeared on BBC News
It was only in 2011 that a mining boom made the country world’s fastest grooming economy with a gross domestic product (GDP) growth of 17.5 per cent.
However, the tugrik lost about 7.8 per cent on its value in August and became the global worst-performing currency, according to Bloomberg data.
It is actually a fast decline from grace for the nation located in central Asian, neighbouring China and Russia.
Pakistan's got a 'New Currency' and it can buy you a lot more than just happiness
While the landlocked state has significant untapped reserves of considerable minerals such as gold, copper and coal, its commodity prices collapsed.
Same was the case with demand from China which buys 90 per cent of Mongolia’s exports.
Subsequently, the government admitted that the country, what it called, was in a deep state of economic crisis.
According to the Finance Minister Choijilsuren Battogtokh in a national television address last week, the government was not able to pay civil servants or even the armed forces.
Where the problem lies
What made matters worse was the government’s approach regarding investment laws and agreements relating to mining, causing many foreign firms to look for the exit door.
Kandahar police chief bans use of Pakistani currency in province
The foreign direct investment in Mongolia plunged by 85 per cent since 2011 until the first quarter of last year, as per the US State Department.
The cash shortage made Mongolia borrow on a massive scale, making it liable to pay large interest payments of a debt of almost $23bn.
Interestingly, a delegation from the International Monetary Fund arrived in Ulaanbaatar, Mongolia’s capital, hinting a bailout.
The article first appeared on BBC News