Found solution:
From thread:
http://forum.mikrotik.com/t/send-pubkey-test-no-mutual-signature-algorithm/157739/1
So I needed to add the following to the command line:
-o "PubkeyAcceptedAlgorithms=ssh-rsa"
Overall, the command line which performs the SSH connection looks like this:
ssh -o "PubkeyAcceptedAlgorithms=ssh-rsa" -i "/path/to/private/key/abc" "$host"
Dear Mikrotik developers,
Could you please update the software to support the more advanced algorithms?