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Asia-PacificOctober 3 2016

Can Mongolia break out of its boom and bust cycle?

While it appears likely that Mongolia will need another IMF bailout, hopes are high that the newly elected MPP government's austerity package could introduce the transparency and fiscal reforms necessary to stabilise the economy for good. Stefania Palma reports.
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Overspending, overborrowing and an over-reliance on Chinese export demand as well as on the extractives industry mean Mongolia is now in the ‘bust’ end of its economic cycle. Gross domestic product (GDP) growth has fallen from 17.5% to 1.4% in just five years and the country may ask for International Monetary Fund (IMF) support to reach fiscal consolidation.

In a bold and unusual move, the newly elected Mongolian People’s Party (MPP) has thrust the country’s dirty fiscal laundry out in the open. Now, a strategy to strengthen fiscal discipline, re-engage with foreign investors and diversify the economy could help Mongolia break its continual economic cycles of boom and bust.

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