Speaker G.Zandanshatar: Pension-secured loan debts paid offPolitics
Ulaanbaatar /MONTSAME/. Following the announcement by President Kh.Battulga in his New Year’s address, the Parliament, on January 10, approved the law on one-time forgiveness of pension-backed loan debts.
The law states that the Mongolian government’s benefits to receive from the revenues of the Salkhit gold and silver deposit production will be used as the collateral to back the government bonds to be issued by the Erdenes Mongol LLC to raise funds for covering the expenses of the pension loan debts’ repayment.
Last month, the Bank of Mongolia informed that an outstanding pension loan balance amounted to MNT 776 billion, as of November 2019.
On February 18, Parliament Speaker G.Zandanshatar met representatives from commercial banks and ‘Erdenes Mongol’ LLC and government officials, regarding the matters of pension-backed loan repayment and Salkhit silver deposit.
CEO T.Munkhbayar of the ‘Erdenes Silver Resource’ LLC, under the government-owned Erdenes Mongol LLC, who is a holder of special mineral license over the Salkhit deposits in Dundgobi aimag, informed at the meeting that an additional feasibility study made on only one-third of the deposit estimated the net profit at MNT 569 billion, including taxes. “Explorations will be intensified in the future and the current identified reserves are expected to increase.”
Governor of the Bank of Mongolia B.Lkhagvasuren said that relevant studies are being conducted on the pension loan cancellation. Since the beginning of this year, the Bank of Mongolia has suspended giving out pension loans. Mr. B.Lkhagvasuren said that the central bank is also studying the options to launch other alternative products in lieu of the pension-backed loans, such as interest-free pension advances with terms of up to three months.
As most of the senior borrowers have taken out pension-backed loans through their pension accounts in the Khan Bank or State Bank of Mongolia, the meeting was attended by representatives from these banks.
The Khan Bank representative R.Munkhtuya said the loan payments deducted from the retirement allowance in January has been already transferred back to the accounts of holders of pension loan debts. Around 62 percent of all pension-backed loan borrowers receive their monthly pension allowance through the Khan Bank.
Director of the State Bank G.Dulguun said the bank has written off debt balances of pension loan of more than MNT 6 million, totaling MNT 180 billion.
Erdenes Mongol CEO P.Gankhuu said at the press briefing that government bonds titled ‘Erdenes’ are guaranteed by the Development Bank of Mongolia and agreements of MNT 695 billion in total will be made in the near future with commercial banks to finalize the repayment of pension-backed loan of more than MNT 6 million.
The government bonds, which will have an interest rate of 6 percent and 5-year term, are ready to be sold to commercial banks, reports the Parliament Secretariat.
CEO P.Gankhuu also reported that Erdenes bonds will be distributed to around 195 thousand pensioners, who did not get loans against their pension, by May 1.
“The pension loan forgiveness requires a lot of time and works as it concerns 418 thousand pensioners in the country. We are working to complete all works on the loan repayment before the Tsagaan Sar Holiday next week. In February, no deduction was taken from pension allowances of the borrowers, meaning that the pension-backed loan debts were paid off.” said Parliament Speaker G.Zandanshatar.
He also thanked for the commercial banks for cooperating with the government on this mater as part of their social responsibilities in spite of possible losses due to difference between 10-percent interest rate of pension loans and 6-percent interest of the government bonds.