Mongolia’s debt crisis was caused by a combination of wildly over-optimistic revenue projections based on unrealistic expectations of mineral sector revenue growth, off-budget spending and a plethora of small infrastructure projects with questionable economic development benefits. The IMF program, while harsh, may help stabilize or even shrink public debt levels, preventing a banking crisis. Full implementation of the program is expected to lead to:

• A 1 percentage point drop in GDP growth in 2018 relative to the baseline scenario, with growth likely to recover by 2019 and stabilize going forward.
• Forty-seven thousand fewer jobs by 2021—a decrease of more than 3 percent—relative to the baseline scenario, predominantly in the public sector.
• The debt-to-GDP ratio falling from 90 percent to almost 50 percent in the long run.

However, a mere 15 percent drop in mineral prices makes the debt situation worse than today, even with the implementation of the IMF program. This high degree of risk calls for additional debt repayment or supplementary measures.