Ulaanbaatar
IMF approves Financial Arrangement for Mongolia
Politics
Ulaanbaatar /MONTSAME/ On May 24, the Executive Board of the International Monetary Fund approved a three-year extended arrangement under Extended Fund Facility (EFF) for Mongolia in a total amount of about USD434.3 million to support the country’s economic reform program. Other financing partners, including the Asian Development Bank, the World Bank, Japan, and Korea, have also committed to provide budgetary and project support, and the People’s Bank of China has agreed to extend its swap line with the Bank of Mongolia. In sum, the total financing package amounts to about USD5.5 billion. The Board’s approval of the arrangement enables the immediate disbursement of an amount equivalent to about USD38.6 million.
The Executive Board had postponed its meeting on April 28 due to a parliamentary resolution clause on currency transmission of large-scale projects through Mongolian banks. Therefore on May 05, the parliament cancelled the resolution clause.
The Executive Board had postponed its meeting on April 28 due to a parliamentary resolution clause on currency transmission of large-scale projects through Mongolian banks. Therefore on May 05, the parliament cancelled the resolution clause.
Following the Executive Board’s discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued a statement. “Fiscal consolidation is a critical element of this program, including cuts of non-essential expenditures, a move to progressive taxation, pension and public financial management reforms, and steps to strengthen and better target the social safety net. A number of structural fiscal reforms, including an independent fiscal council, will help to bolster budget discipline. Sizable fiscal adjustment, coordinated concessional external financing from development partners, and continued engagement with private creditors will help restore debt sustainability and rebuild international reserves.
The commitment to a market-determined exchange rate will strengthen the economy’s resilience to external shocks, supported by prudent monetary policy and the program’s favorable impact on confidence and private sector capital flows. A new central bank law is envisaged to strengthen the governance and independence of the Bank of Mongolia. In addition, implementation of a comprehensive strategy would rehabilitate the banking sector, improve the supervisory and regulatory framework, and strengthen the AML/CFT regime.
The program also includes structural reforms to achieve sustainable and inclusive growth. These reforms aim to improve the business environment, promote economic diversification, and encourage foreign direct investment”, noted the statement.
The commitment to a market-determined exchange rate will strengthen the economy’s resilience to external shocks, supported by prudent monetary policy and the program’s favorable impact on confidence and private sector capital flows. A new central bank law is envisaged to strengthen the governance and independence of the Bank of Mongolia. In addition, implementation of a comprehensive strategy would rehabilitate the banking sector, improve the supervisory and regulatory framework, and strengthen the AML/CFT regime.
The program also includes structural reforms to achieve sustainable and inclusive growth. These reforms aim to improve the business environment, promote economic diversification, and encourage foreign direct investment”, noted the statement.
Source: www.imf.org
B.Ooluun
