AKIPRESS.COM - Mongolia is planning to set up a task force to deal with an “economic crisis’’ that’s led to slowing growth, a declining currency and a soaring budget deficit, the nation’s finance minister said, Bloomberg reports.

Government bonds due in 2022 tumbled the most on record and the currency weakened.

“We came into a situation where we may not be able to afford to finance salaries and operational costs of government departments, such as the Mongolian military who protect our borders and national security, the social and health employees who are in charge public health, as well as individuals in culture and sport,’’ Choijilsuren Battogtokh said in a nationally televised address on Tuesday. “We are in a deep state of economic crisis.’’

Mongolia has suffered from falling commodities prices, an economic slowdown in China and waning interest by foreign investors spooked by anti-investment laws and inconsistent policy. Choijilsuren’s comments come six weeks after the Mongolian People’s Party trounced the Democratic Party in June elections, which appears to lay the groundwork for increased austerity measures.

The task force will present its plan to the government and the National Security Council in the coming days, followed by a public announcement, said Choijilsuren, without mentioning details of the plan. He added that it is a “critical goal’’ of the government to avoid default.

The government’s $1 billion Eurobond due December 2022 fell 6.21 cents to 83.72 cents on the dollar, sending the yield up 138 basis points to 8.51 percent by 3:05 p.m. in London. The rate was as high as 12.05 percent in February amid a slump in copper prices, the nation’s largest export revenue earner last year. Notes due in 2018 slid 3.5 percent to 93.61 cents on the dollar, sending the yield to 9.12 percent, the highest since April.

Mongolia sold $1.5 billion in sovereign debt in 2012, know as Chinggis Bonds, largely to finance road projects across the country. The government is scheduled to repay $500 million in 2018 and the rest in 2022. The Development Bank of Mongolia faces a $580 million repayment next year. In total, Mongolia has about $5 billion in general government debt, according to Choijilsuren.

"We do not believe the government wants to default or restructure," said Avanti Save, a credit strategist at Barclays Plc in Singapore, who cut the rating on the country’s notes to market weight from overweight on Wednesday. "The government is engaging in some kitchen-sinking, announcing all possible bad news at once, and blaming the previous government for the country’s challenging fiscal and debt dynamics."