IMF to loan Mongolia US$440 million as part of bailout package

Mongolia reached an initial agreement with the International Monetary Fund for a three-year programme that includes a US$440 million loan package as part of a US$5.5 billion bailout to help the north Asian country with looming debt repayments.

“The Asian Development Bank, the World Bank and bilateral partners including Japan and Korea are expected to provide up to another US$3 billion in budget and project support, while the People’s Bank of China is expected to extend its 15 yuan billion (US$2.2 billion) swap line with the Bank of Mongolia for at least another three years,” the IMF said in a statement on Sunday. “The total external financing package will thus be around US$5.5 billion.”

Economic growth in Mongolia slowed to 1 per cent last year as commodity prices fell and growth slowed in China, the main buyer of the nation’s copper and coal exports. The country also saw foreign investment collapse after a dispute with Rio Tinto over the Oyu Tolgoi copper mine.

The Extended Fund Facility (EFF) will support the government’s plan to address balance-of-payment pressures and also help the government repay looming debts, including the Development Bank of Mongolia’s US$580 million bond repayment due in March.

This marks the sixth time since 1990 that the IMF has bailed out Mongolia, the most recent a stand-by agreement in 2009-2010, according to IMF spokesman Keiko Utsunomiya.

The financing will support a Mongolian programme, “which intends to restore economic stability and debt sustainability as well as to create the conditions for strong, sustainable and inclusive growth”, according to the IMF statement.

The agreement is subject to the confirmation of financing assurances, the completion of prior actions by the authorities, and the approval of the IMF Executive Board. The board is expected to consider Mongolia’s request in March.