Buildings stand in Ulaanbaatar, Mongolia, on Monday, July 18, 2016. Mongolia's budget deficit widened to 1.12 trillion tugrik ($572 million) in the first six months of 2016 from a deficit of 535 billion tugrik ($281 million) in the same period a year earlier, according to data released on July 19 by the National Statistical Office. Photographer: Taylor Weidman/Bloomberg
© Bloomberg

New governments promise good times ahead, then blame the last guys in charge for any problems inherited. In June the Mongolian People’s Party swept back into power. Last week, its finance minister Battogtokh Choijilsuren did a little finger pointing — the economy is in bad shape, noting that the fiscal deficit was more than a fifth of GDP. But not to worry, the MPP would come with a plan to fix things.

If that deficit sounds high, consider that Moody’s had pencilled in an estimate of 5 per cent. Mongolia’s tugrik, already weakening against the dollar, fell even faster. It has lost 14 per cent in the past three weeks. That is a big problem; the country has more than a $1bn of bonds coming due by January 2018, worth multiples more than its current foreign exchange reserves.

On Thursday, Mongolia’s central bank raised its policy interest rate by 4.5 percentage points to 15 per cent. A country that once showed promise needs a plan and soon.

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