Mongolia

The Mongolian government is considering the establishment of an asset management company before the end of the year to offload onerous non-performing loans from domestic banks’ balance sheets, the Financial Times reported. Mongolia secured an International Monetary Fund financial package last month to slash a bulging debt load. That package included a requirement for an audit of the domestic banking sector as part of its fiscal discipline guidelines.

Mongolia has requested a rescue loan from the International Monetary Fund as it battles to plug the gap in its public finances while keeping its giant neighbour, China, at arm’s length, the Financial Times reported. The central Asian nation submitted a formal request for financial assistance from the fund to support its economy and address balance of payments pressures, the IMF said on Friday. A team from the IMF will visit Ulan Bator, Mongolia’s capital, for discussions with the government.

The commodity super-cycle that peaked in 2011 powered Mongolia to world-beating growth. Then came the bust and China’s recent economic slowdown that’s pushed the land of Genghis Khan into an unprecedented economic crisis this summer. Yet even though the commodity market finally has a pulse again after a five-year collapse, a modest revival in prices isn’t going to be enough to rescue Mongolia’s mineral-rich, $12 billion economy. What worked for Mongolia in 2011 isn’t working now.

Western consumers are buying fewer luxury goods, and demand for cashmere has plunged, The New York Times reported. The painful effects of this are being felt all the way to these nearly empty plateaus of Inner Mongolia, by goatherds and factory workers and owners — showing how ripples from markets in the United States, Europe and Japan can reverberate to some of the most remote corners of the world. The problem is not just the collapse of the cashmere market, but also a government ban on Kashmir goats across much of Inner Mongolia for environmental reasons.