AKIPRESS.COM - Mongolia is in a fix, says Standard & Poor's.

The ratings agency has cut its growth forecasts for the country, trimming it to an average of 4.3 percent over 2015 to 2018.

In May, the ratings agency expected growth of 4.4 percent for this year, then 5.5 percent, 7 percent, and again 7 percent for 2018. Now it expects 3.5 percent for this year, then 3.6, followed by 3.7 and 6.2.

S&P says: "Weak exports and investment inflows continue to pressure Mongolia's public finances and balance of payments. We also observe that weak institutional effectiveness and predictability hamper policy responses.

We are therefore lowering our long-term sovereign credit rating on Mongolia to 'B' from 'B+' and revising the transfer and convertibility assessment to 'B+' from 'BB-'. We are also affirming our 'B' short-term sovereign credit rating."

On a more positive note, S&P says: "...two large mining projects could markedly transform the country's external and fiscal profile in three to four years if its terms of trade improve and the projects come on-line as planned."

In August, the country's governing 'super coalition' broke down, but S&P notes that this has not delivered too hefty a financial blow, despite a generally shaky environment.

"Notwithstanding its minority status, the government passed the supplementary 2015 budget, and we expect it to achieve its objectives when it presents its 2016 budget later this month. Mongolia's governance and policy effectiveness remains weak, in our view, and a past record in policy shifts continues to weigh on the environment for growing business confidence and foreign investment," the ratings agency said.