Central bank updates financial statisticsEconomy
Ulaanbaatar /MONTSAME/. Last week, the Bank of Mongolia provided update on the financial indicators of Mongolia and introduced the latest or 14th financial stability report released by the central bank jointly with other regulatory agencies.
As introduced by G.Dulguun, First Deputy Governor of the Bank of Mongolia, the financial stability report highlighted about the negative impact posed by the COVID-19 pandemic on the financial market stability of the country. Changes in the balance of payment, revenues and lending show the effect of the pandemic on Mongolia’s economy. In particular, the price and volume of export commodities have been dropping, leading to the decline in the export revenues.
In the second half of this year, the balance of payment deficit equaled to USD 679.2 million, and the government budget deficit decreased by 21.4 percent compared to the same period of last year and government budget balance showed a deficit of MNT 2.2 trillion.
Moreover, individuals and business entities who are suffering decline in their revenues due to the pandemic have also faced challenges to repay their loans, eventually posing risk to the financial industry. In order to stabilize the situation and stimulate economic growth, the central bank lowered the policy rate twice down to 9 percent and extended the maturity on consumer loans once up to 12 months for lenders experiencing difficulties, hence reducing the monthly loan repayments.
According to the report, in spite of the decline of the effectiveness in the banking industry as well as loan issuance rate, owner’s equity sufficiency and liquidity coverage ratio remain adequate. A study conducted by the National Statistics Office of Mongolia shows that economic and financial statistical indicators of all sectors, but banking sector, have been relatively stable.
The central bank also presented that money supply (M2) in Mongolia rose by 5.8 percent, reaching MNT 21.5 trillion, as of the first seven months of 2020, mostly influenced by foreign currency and Mongolian Tugrug savings.
Total loans in the banking industry reached MNT 17.2 trillion, as of the first seven months of 2020, which is made up of MNT 15.6 trillion of loans in Tugrug currency and MNT 1,6 trillion borrowings in foreign currencies.
Compared to the previous month, the total loan amount lowered by 0.3 percent, and nonperforming loans and overdue loans grew by MNT 24.6 billion and MNT 128 billion respectively, accounting for 11.3 percent and 6.6 percent of total loans. Average interest rate of new loans in Tugrug currency issued last month is 15.8 percent and 10.6 percent in foreign currencies. In July 2020, banks have issued mortgages to 1077 new borrowers, totaling MNT 74.8 billion. The weighted average interest rate of new mortgages equals to 10.7 percent. Average interest rate of savings in Tugrug currency is 10.5 percent and 3.2 percent in foreign currencies.
According to the central bank, total external debts of Mongolia reached USD 30.8 billion in the second quarter of 2020, climbing by USD 300 million since previous quarter. The growth reflects soft loans received from the Asian Development Bank, International Monetary Fund and the People’s Republic of China and an increase of market price of government-issued securities.