Press Release: IMF Executive Board Completes the Final Two Reviews under Stand-By Arrangement with Mongolia
September 9, 2010Press Release No. 10/332
September 9, 2010
The Executive Board of the International Monetary Fund (IMF) has completed the fifth and the sixth reviews of Mongolia's economic performance under a program supported by an 18-month Stand-By Arrangement (SBA). The Board also approved the Mongolian authorities’ request for rephasing the final disbursement. While the completion of the final two reviews under Mongolia’s SBA enables the disbursement of an amount equivalent to SDR 30.66 million (about US$46.4 million), the Mongolian authorities do not intend to draw this amount. Total disbursements under the arrangement remain an equivalent to SDR 122.64 million (about US$185.4 million).
The SBA was approved on April 1, 2009 (see Press Release No. 09/110) for an amount equivalent to SDR 153.3 million (about US$231.8 million) or 300 percent of Mongolia's quota.
Following the Executive Board's discussion on Mongolia, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, stated:
“The Mongolian economy is undergoing a brisk recovery. International reserves are at historic highs, the fiscal position has strengthened, and pro-poor spending has been protected. These developments are a testament to the authorities’ unwavering commitment and policy performance under the Fund-supported program. Close engagement with the Fund, together with technical support and outreach efforts, has contributed to the program’s success in stabilizing the economy and the financial market.
“The government has built a strong institutional foundation for fiscal policy. The recently adopted fiscal responsibility law—a landmark in public financial management—will help secure fiscal discipline. The nominal spending limit for 2011 enshrined in the medium-term fiscal framework will promote macroeconomic stability and bolster fiscal policy credibility. Strict adherence to the targets in the medium-term fiscal framework and fiscal responsibility law will be essential.
“Spending on social transfers has steadily increased. The social transfer reform legislation, expected to be adopted by parliament in the coming months, will introduce a targeted poverty benefit, which will both strengthen the social safety net and enhance budget flexibility.
“Monetary policy continues to focus on maintaining low inflation, contributing to strong, sustainable, and equitable growth. The recent tightening of monetary policy, alongside a nominal appreciation of the currency, has helped contain the upswing in inflation. The flexible exchange rate regime continues to work well and foreign currency intervention is being used appropriately to build reserves and smooth out short-term fluctuations in currency markets.
“Significant progress has been made in reforming the banking system. The Empowering the Banking Sector and Capital Support Program, a comprehensive bank restructuring and recapitalizing framework, has been submitted to parliament. Its implementation will help ensure prudent, transparent use of public resources. The recently issued banking regulations are an important step toward strengthening banking supervision, critical to preventing a re-emergence of vulnerabilities,” Mr. Shinohara stated.