IMF Executive Board Completes Fifth Review under the Extended Arrangement for Mongolia and Approves US$ 36.22 Million Disbursement

IMF News, October 31, 2018

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Canonical URL: IMF Executive Board Completes Fifth Review under the Extended Arrangement for Mongolia and Approves US$ 36.22 Million Disbursement

On October 31, 2018, the Executive Board completed the fifth review of Mongolia’s performance under the program supported by a three-year extended arrangement under the Extended Fund Facility (EFF).
Completion of the review enables Mongolia to draw the equivalent of SDR 26.2088 million (about US$ 36.22 million).
Total disbursements under the arrangement now amount to SDR 157.2454 million (about US$ 217.33 million).

Mongolia’s three-year extended arrangement was approved on May 24, 2017, in an amount equivalent to SDR 314.5054 million, or about US$ 434.3 million1 at the time of approval of the arrangement.
The government’s Economic Recovery Program, supported by the IMF, aims to:
- stabilize the economy,
- reduce the fiscal deficit and debt,
- rebuild foreign exchange reserves,
- introduce measures to mitigate the boom-bust cycle,
- promote sustainable and inclusive growth.

Mongolia continues to perform well under the program, driven by strong policy implementation and a supportive external environment.
The authorities met all end-September 2018 quantitative targets under the program, with significant over-performance on fiscal targets.
Growth has accelerated further, leading to improvements in the fiscal position and debt dynamics.
The fiscal accounts have posted a primary surplus, reflecting both a sharp increase in revenues and continued expenditure restraint.
Past over-performance allowed the authorities to meet key reserve targets, despite a recent rise in balance of payments pressures.

In the financial sector, the focus remains the follow-up to the Asset Quality Review (AQR).
"Select banks are in the process of booking the results of the AQR and subsequent on-site inspections. They are also now raising the needed capital to address identified shortfalls by the end-December 2018 deadline."
"The Bank of Mongolia will remain focused on ensuring financial sector stability throughout the process."

Mongolia remains vulnerable to external and domestic shocks.
Policy recommendations emphasized by Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director:
- take advantage of the still favorable economic environment to further bolster fiscal and external buffers;
- strengthen the banking sector;
- improve the investment climate;
- continue efforts to protect social spending;
- strengthen tax administration;
- improve public financial management.
"A dedicated implementation of the authorities’ reform program is key to build resilience against shocks and ensure sustainable, inclusive growth."

Source: Press Release No. 18/404, October 31, 2018, IMF Communications Department.