AKIPRESS.COM - Moody's Investors Service has changed the outlook on Mongolia's banking system to stable from negative, the international ratings service said on July 3.
The outlook indicates Moody's expectation for how bank creditworthiness will evolve in the country over the next 12-18 months.
"Our stable outlook on Mongolia's banking system is based on the fact that the economic program between the IMF and the Government of Mongolia will lead to a less challenging operating environment for the banks," says Hyun Hee Park, a Moody's Assistant Vice President and Analyst.
"In particular, the IMF's Extended Fund Facility package, together with investment in phase 2 of the Oyu Tolgoi mining project, and key commodity prices above 2016 lows will help stabilize the economy and lay the foundation for a return to growth in 2018," adds Park.Moody's baseline scenario assumes a marginal decline of 0.2% in real GDP growth for Mongolia in 2017, because the impact from the IMF measures will not emerge until 2018. Moody's forecasts real GDP growth of 1.8% in 2018.
Moody's rates seven of the 14 commercial banks in Mongolia, and one government-related policy bank. These banks accounted for 90.1% of total system loans and 91.1% of total system deposits at end-2016.