A downgrade of short-term political risk from 5/7 to 6/7 is justified by Mongolia’s current liquidity crisis resulting from a double external shock combining low mining prices, which are hitting most of its exports, and weaker demand from China. Moreover, the country faces heavy public external debt maturities in 2017 and 2018. Short-term external debt cannot be financed by insufficient foreign exchange reserves, which remain on a slow downward path. Moreover, the sharp depreciation of the Mongolian currency, the tögrög, against the USD and RMB makes debt servicing even more challenging. Hence, the government has requested an IMF programme – currently under negotiation – with the aim of notably easing liquidity pressures and helping debt obligations to be honoured. An external debt moratorium is not unlikely at some point even though the authorities are determined to maintain investor confidence and pay off debt in due time. Meanwhile, external payment delays could increase further.