Ulaanbaatar
Mongolia and IMF reach agreement on Extended Fund Facility
PoliticsUlaanbaatar /MONTSAME/ The Government of Mongolia and Bank of Mongolia have reached a staff-level agreement with the International Monetary Fund on three-year Extended Fund Facility (EFF) program for USD 440 million.
The staff team led by Koshy Mathai worked in Mongolia from February 1 to 19 to continue the discussion of several months with the Mongolian Government. A press conference to announce the result of the discussion is taking place at the State House right now. The conference is being attended by Finance Minister, Governor of the Bank of Mongolia, head of the IMF staff team and other officials.
Other international partners also plan to support the government's program; the Asian Development Bank, World Bank, and bilateral partners, including Japan and Korea are expected to provide up to USD 3 billion in budget and project support; and the People's Bank of China is expected to extend its RMB 15 billion swap line with the Bank of Mongolia for at least another three years. Thus, the total external financing package will be around USD 5.5 billion. The agreement is subject to the confirmation of financing assurances, the completion prior actions by the authorities and the approval of the IMF Executive Board, which is anticipated to happen in March.
After highlighting that it has not been an easy discussion, the Finance Minister B.Choijilsuren introduced about several arrangements to be made in the scope of the program. “Some 6-7 tax rates are projected to increase, including income tax and social insurance payment. Also, the government has consented to raise the retirement age in the long run and cut some duplicated welfare of social welfare. For example, the number of recipients of cash allowance within the government’s “Child Money Program” will be decreased to 40 percent of total recipients. Currently, about 60 percent of all children aged under 18 years of age is provided with the monthly allowance. The money saved with the reduction will be allocated as food vouchers” said the Finance Minister B.Choijilsuren.
“2017 budget amendment, assessment of the banking sector of Mongolia and halting quasi-fiscal activities of the central bank are the first measures to be carried-out with a view to fully realize the EFF and to be followed by the approval of IMF Board” said IMF staff-team leader Koshy Mathai at the press conference. “The repayment is due within around 10 years under certain schedule. Meanwhile, the disbursement of USD 440 million will not be made at once, instead it will be phased over the duration of the program".
