MNT 2 trillion loan program for SMEs starts

2021-03-09 20:24:44

With the aim of encouraging businesses run by individuals and entities and keeping jobs, the Government has launched MNT 2 trillion loan program. Mongolia’s economy shrank by 6 percent and GDP went down by 12 percent. Due to the situation, the remaining securities of the central bank has reached MNT 7.9 trillion. In other words, commercial banks have deposited all their money as a form of risk fund, not issuing loans. Therefore, we have studied possibilities to recover the economy by mobilizing the vacant source centralized in commercial banks, the Finance Minister B.Javkhlan stated in the beginning of his briefing. As reflected in the Government's 10 trillion plan for health protection and economic recovery, the employment support loan will have annual interest rate of 3 percent with 3 years of term and the government will be responsible for 60 percent of loan guarantee if necessary. Furthermore, repo financing and mortgage loan programs, which have been previously implemented by the Bank of Mongolia, will run normally. Relevant ministries will manage the plan in six directions and the Ministry of Finance and the BoM will work towards cohering monetary and budget policies and taking macro-economic situation under their control. It is only required to be VAT payer to get the loan and micro or family business runners and individuals who have been keeping jobs, will be involved in the loan mostly, the Finance Minister highlighted. According to a survey, 80-90 percent of businesses get business loans up to MNT 50 million. According to the demand, it is planned to grant MNT 500-600 billion to 20-25 thousand citizens. “It is fully possible for entities to make re-financing to their previous loans got from commercial banks and turn into the loan with 3 percent interest rate." Since the beginning of the pandemic, 68.9 thousand jobs have been lost in Mongolia. According to a study made by scholars, 130 thousand jobs will be lost in 2021 unless we activate the economy. Furthermore, Mongolia has seen its highest economic growth in 2010-2011 or money supply was at 70 percent. Since then, money supply was at around 35-45 percent in years when money supply has normal growth while the performance lowered to 15 percent according to the year-end statistic of 2020. In other words, money supply has decreased thrice compared to the period with normal growth.

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