Country risk in Mongolia is high. The OECD has a country credit grade of 6. This is akin to a speculative grade sovereign rating, which indicates an elevated risk of Mongolia being unable and/or unwilling to meet its external debt obligations. But economic recovery and improved public and external finances, owing in large part to progress on IMF-led reforms, are positives for the rating.
Mongolia’s business climate generally outperforms the regional average, ranking 74th out of 190 economies on the World Bank’s ease of doing business gauge. Mongolia scores well on most metrics. But getting electricity connected, resolving insolvencies and trading across borders are somewhat more difficult than regional peers.
Mongolia scores in the bottom half on most of the World Bank’s governance gauges. Corruption remains a problem, while the government’s growing nationalistic tendencies raises investor uncertainty. This is keeping political risk at moderate to high levels.
The risk of expropriation in Mongolia is moderate. The delineation of authority across different tiers of government around property rights makes it difficult for investors to enforce private property rights. The independence of the judiciary has also been in question—though the 2018 Supreme Court ruling against the government in the case involving the expropriation of the Erdenet mine suggests investors can get a fair hearing.