Mongolia’s fairytale economic boom is developing cracks. The failure of the country’s fifth-largest bank and delays to the development of its giant copper mine underscores fears that its growth potential is built on shaky foundations. Yet greater economic realism may ultimately be welcome.
The surprise insolvency of Savings Bank, which controlled about 8 per cent of Mongolia’s banking assets, has rattled the country’s economic cheerleaders. The central bank closed down the lender and transferred its deposits to a state-owned rival after it ran up bad loans worth $109-million (U.S.) – more than twice its capital, according to Fitch Ratings. Some of these loans appear to have been made to Just Group, controlling corporate shareholder in Savings Bank, despite regulations designed to limit such exposures. Continue reading
It is an expat “goldrush” driven by the promise of an economic boom after the rollback of many sanctions following the end of decades of junta rule.
However, some, at least, are also drawn by a commitment to help rebuild the impoverished nation.
The once-empty Western bars of central Yangon are now doing a roaring trade, hotels are fully booked and networking nights thrum with the chatter of new arrivals hungry for contacts in the city. Continue reading