Mongolia’s Debt Overhang Amidst a Pandemic

As the economic effects of the COVID-19 pandemic unfold, the most severe casualties of “The Great Lockdown” are resource-dependent economies with limited institutional capacity to respond to the crisis. Their supply chains have been cut off, their markets are disrupted, and their investors are crowding out. Many of these countries have high external debt and an obligation to repay it in the medium term or they will face the trilemma of registering a double-digit growth, accruing further debt, or defaulting. Come 2021, Mongolia, a superlatively resource-dependent economy, will be at the center of this trilemma. The immediate cause of Mongolia’s current state is its inconsistent fiscal expenditure and its undiversified mining economy. Over the years, fiscal mismanagement of the previous …



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