PM: Government, central bank, commercial banks will together overcome economic difficulties

2021-03-04 17:50:45

Ulaanbaatar /MONTSAME/. Prime Minister of Mongolia L.Oyun-Erdene today, March 04, held a meeting with the representatives from the banking and financial industry of the country. 

The meeting was attended by more than 30 representatives, including Minister of Finance, officials from the Bank of Mongolia and directors of 12 commercial banks operating in Mongolia, and representatives from government and nongovernment organizations.

The meeting agenda focused on issues to consider by the banking industry for the implementation of the government’s MNT 10 trillion comprehensive plan for the economic recovery and health protection. 

At the beginning of the meeting, Prime Minister L.Oyun-Erdene introduced about the recently-approved MNT 10 trillion financing plan, which outlines a measure to provide small and medium sized businesses and manufacturers with 3-percent interest loans,  totaling MNT 2 trillion with government budget funding, and asked the commercial banks to cooperate within this target. 

“Due to the COVID-19 related restriction measures in the country, the country’s GDP fell 6 percent in 2020 and the number of job places has been reduced by over 70,000 out of a total 820,000 job places in Mongolia. And it is calculated that the number is likely to increase to 130,000 in case the lockdown measures are enforced and no financial support is available,” reminded the Prime Minister. 

The meeting also heard presentations by the banking representatives on the current situation and their views and expectation on the government’s MNT 10 trillion economic recovery plan.

Banks wish to ease lending criteria for borrowers 

Chief Executive of the Mongolian Bankers Association L.Amar mentioned that in 2020, commercial banks spent one-third of their expenses or around USD 100 million in total to improve their technologies and for digital transformation, which helped customers access uninterrupted services amid COVID-19. 

He also informed that around 40 percent of loans issued on the market is considered somewhat risky and commercial banks have deferred consumer loan repayment of around 150,000 borrowers and mortgage loan repayment of 55,000 consumers. 

According to him, the commercial banks are willing to invest in measures to increase job employment and income. The requests proposed by the banks include lowering of eligibility criteria for borrowers, only to consider their ability to repay the loan;  ensuring transparency of requirement set by the government; establishing bureaucracy-free and digital control system and having a system designed for protecting the borrowers against credit risks, etc. 

Vice President of the Mongolian Bankers Association J. Medree highlighted that the eligibility criteria for borrowers interested in taking out loans should be eased as a large number of companies and businesses are not in condition to satisfy the requirements set for the loan programs announced within the framework of the MNT 10 trillion plan. 

After hearing proposals and suggestions from the banking and financial industry representatives, Prime Minister L.Oyun-Erdene pointed out that all possibilities will be explored to solve the problems and the current economic difficulties will be overcome with the help of collaboration of the government, the Bank of Mongolia and commercial banks.