Mongolia has been listed on the European Union’s first ever tax haven blacklist among 17 countries including South Korea, Namibia, Panama, Trinidad & Tobago, Bahrain and the United Arab Emirates, Brussels announced on December 5.

The EU said the countries failed to meet international standards and did not give sufficient commitments that they would change their ways during talks in the months leading up to publication of the list. However, EU member states failed to agree any sanctions against the blacklisted countries, a fact that provoked the European Commissioner for Economic and Financial Affairs Pierre Moscovici to talk of “an insufficient response”. If further steps are taken at some point in the future, such measures could hit the foreign investment-dependent economy of Mongolia, which has only this year been able to set itself on a path to economic recovery.

Prior to this year, the country's GDP growth gradually sunk, falling to just 1% in 2016 having stood as high as 17.5% in 2011. The rebound seen in 2017 caused Mongolia’s economy to grow by 5.8% y/y in the first nine months. The recovery was largely down to soaring coal exports driven by newfound demand for Mongolian coal in China - which can no longer buy North Korean coal due to sanctions - as well as a $5.5bn bailout agreement led by the International Monetary Fund (IMF). Under the bailout deal, Mongolia now finds itself receiving support from a number of sources including the IMF, the World Bank, the Asian Development Bank and the International Investment Bank.

The blacklist also put another 47 countries on notice, with the intent of clamping down on approximately £506bn lost to aggressive tax avoidance annually.

The Mongolian government raised $800mn from an offshore dollar bond issue in October. It priced at 5.625% as the order book exceeded $5.5bn.