Ulaanbaatar
Mongolbank says credit interest can be reduced threefold
PoliticsUlaanbaatar /MONTSAME/ At the meeting of parliamentary Standing committee on Economy, Bank of Mongolia (Central Bank) presented information about reduction of interests of pension and salary loans, and credits for herdsmen, small and medium enterprises, in connection with the decreased inflation rate.
President of the Bank of Mongolia N.Zoljargal said that 2015 saw its first positive performance of inflation rate improvement inline with GDP growth since 2006. GDP showed 2.5% growth by the end of the third quarter of 2015. Between 2009 and 2012, GDP raised by 40.2%, and the consumption of low and medium income households increased by 7.7-10.1%, he informed.
One third of inflation was formed solely by meat and petroleum price increase in 2010-2012. Supply-push inflation pressure was eliminated in 2013-2015. The pressure of foreign exchange rate has not been contributing to inflation since August of 2014.
Most importantly, portion of households with average monthly income of 500 thousand – 2.3 million MNT was 39% in 2011, and the portion advanced to 67% in 2015, he said.
Total of 240 billion MNT of credit was distributed by State Bank and Khan Bank to herders, with 2.5% monthly interest, which rate is very high. This is burden on agri-businesses and livelihoods of herdsmen. The current annual interest 30% can be reduced to 10%, given the decreased inflation rate.
