Ulaanbaatar
Talks on Japanese soft loan to be held after IMF's financial program approved
PoliticsUlaanbaatar /MONTSAME/ During his visit to Japan on March 27-30, Parliament Speaker M.Enkhbold met with Japanese Prime Minister Shinzo Abe, who said that Japan is ready to render
financial assistance to Mongolia within the framework of the International Monetary Fund's program on economic and financial reform.
“The total financial package of the IMF's 'Extended Fund Facility' program is USD 5.5 billion. And a large sum of the finance would be made up of the financial assistance of USD 850 million proposed by Japan during the Parliament Speaker's visit to Japan. According to corresponding legislations of Mongolia, this assistance would be considered as a soft loan with an interest rate of less than 1 percent and over 20 years of period. The exact amount of the soft loan will be decided by a joint working group of Mongolia and Japan and the Japanese working group may soon arrive in Mongolia" said State Secretary of Minister of Finance of Mongolia B.Nyamaa said in his interview for parliament.mn.
He continued "As mentioned, the soft loan will be directed at a program to revive the economy in the scope of the IMF's program. This loan is important in meeting the expected results of the IMF program. Currently, the Mongolian government plans to use the loan for funding budget deficit and to prevent possible debt burden in the future".
Some positive economic impacts are expected as a result of the program, including 6-8 percent of stable economic growth, foreign currency reserve to reach USD 4 billion and average inflation rate to be at around 6 percent. Furthermore, macroeconomic stabilizations will be stabilized, enabling long-term growth and removal of unsteady macroeconomic conditions.
"Certainly, investors were concerned about Mongolia's currency reserve and sustainable economic growths. Therefore, the loan is important in clearing these doubts. Also, the financial assistance is not entitled to certain projects and the Japanese government will render the assistance for funding the economic transition" noted State Secretary of Finance Minister B.Nyamaa.
It is anticipated that the Mongolian and Japanese sides will discuss this issue further, after the Extended Fund Facility program is approved by the IMF Board.
Source: www.parliament.mn
