China’s participation in the 5.5 billion rescue plan for Mongolia will promote the country’s economic recovery

[Global Times special correspondent in Mongolia Yang Tao] “The International Monetary Fund steps in to rescue Mongolia.” Mongolia reached a preliminary agreement with the International Monetary Fund (IMF) on the 19th. , the IMF will grant Mongolia a loan of US$440 million. According to reports, the loan is part of an “international rescue package” worth US$5.5 billion to help the Mongolian government ease its balance of payments pressure and repay emergency debt.

　AccordingtonewsreleasedbyMongoliaandtheIMFonthe19th,inadditiontotheIMF’sUS$440millionloan,AsiaTheDevelopmentBank,theWorldBank,JapanandSouthKoreawillprovideMongoliawitha”rescuepackage” of up to US$3 billion; China plans to renew a 15 billion yuan (approximately US$2.2 billion) local currency swap agreement with the National Bank of Mongolia, which will be valid for at least Over three years, the total amount is approximately US$5.5 billion.

Mongolia’s Ministry of Finance stated that negotiations with the IMF are not easy. In order to obtain the loan, Mongolia must carry out a series of reforms, including increasing 6 to 7 types of taxes, extending the retirement age, cutting social welfare, etc. The preliminary agreement is subject to approval by the IMF’s executive board, which is expected in March.

In addition, Mongolia’s Minister of Foreign Relations Monkh Orgil will visit China starting from the 19th to discuss cooperation on multiple projects. Analysts believe that China’s help will play a positive role in promoting Mongolia’s economic recovery.

In August last year, the Mongolian Finance Minister announced that the country was in a state of deep economic crisis, and the country’s economic growth rate that year was only 1%. Foreign debt is the biggest problem for Mongolia’s economy, and it continues to borrow new debt to pay off old debts. In March, a US$580 million debt from the Development Bank of Mongolia was about to mature. The domestic political instability, factional fighting, and imperfect foreign investment policies have seriously affected the country’s economic development. In recent years, the amount of foreign investment in Mongolia has been declining year by year. In the middle of last year, the new Mongolian government came to power and proposed economic development as a priority, but this first required a financial foundation. In 2016, Mongolia made loan requests to the IMF, World Bank, Asian Development Bank, etc., and the Mongolian speaker also went to Russia, Kuwait, Saudi Arabia, the United Arab Emirates, Japan and other countries for negotiations, but due to Mongolia’s low debt repayment capacity, little results were achieved. Analysts believe that if Mongolia wants to get out of its economic predicament, it needs the protection of domestic policies and a stable investment environment.

Although the depreciation of the Mongolian currency exchange rate has affected purchasing power to a certain extent, the country’s economic pressure is mainly on the government and has little impact on people’s livelihood. The country is self-sufficient in milk, meat, carrots, potatoes and other vegetables, and import tariffs on daily commodities are very low. Tibetan New Year is coming in a week, and the shopping malls in Mongolia are as crowded as ever.