## IMF Executive Board Completes First and Second Reviews under the Extended Arrangement for Mongolia and Approves US$ 79.1 Million Disbursement

_IMF News, December 15, 2017_

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## Bibliographic details
- Published: December 15, 2017

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### Overview
- On December 15, 2017, the Executive Board of the International Monetary Fund (IMF) completed the first and second reviews 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 55.912 million (about US$ 79.1 million), bringing total disbursements under the arrangement to SDR 83.868 million (about US$ 118.6 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$425 million at the time of approval of the arrangement.

### Economic performance and outlook
- Growth in 2017 is projected to reach 3.3 percent, considerably better than forecasted at the time of program approval.
- The combination of strong policy implementation and a supportive external environment has helped the authorities over-perform on all of the quantitative targets under the program.
- Net international reserves have improved, reflecting:
  - strong coal export performance,
  - capital inflows into the bond and money markets, and
  - donor disbursements.

### Fiscal performance and public finance
- All quantitative targets under the program have been met.
- Fiscal results have been better than expected, supported by stronger revenues and tight expenditure control.
- The fiscal deficit in 2017, at 7.6 percent of GDP, is less than half of what it was in 2016.
- The recently approved 2017 Supplementary Budget and the 2018 Budget are in line with the program.
- About half of the revenue overperformance will be saved, thus helping to reduce borrowing and control debt.
- The remainder of the revenue overperformance will be used to fund productive spending in line with the government action plan and for a one-off bonus to civil servants.

### Structural reforms and financial sector measures
- The authorities are moving ahead with an ambitious structural reform agenda to:
  - sustain growth over the medium term,
  - promote diversification and competitiveness, and
  - mitigate the boom-bust cycle.
- Banking system rehabilitation and strengthening is underway:
  - Results of the comprehensive Asset Quality Review are expected imminently.
  - The Bank of Mongolia is taking steps to improve the regulatory and supervisory framework.
  - Important legal reforms regarding the governance and operations of the Bank of Mongolia, the Deposit Insurance Corporation, and the banks are expected to be passed soon.
- Fiscal-side reforms:
  - Progress is being made in strengthening tax administration, tax policy, and budgetary controls, including through the establishment of a high-level working group on tax policy.
- Social protection reforms:
  - To strengthen the social safety net and target pro-poor expenditures toward the most vulnerable, the government is focusing the Child Money Program on less affluent families and using the savings to increase food stamps for the poor.

### Policy implications and recommendations
- With debt still high and the economy still exposed to global commodity developments, it is critical to maintain strong commitment to the program.
- Sustained implementation of the reform agenda is necessary to:
  - cement solid growth,
  - improve confidence,
  - strengthen fiscal revenues and foreign reserves, and
  - mobilize donor support.

*IMF Press Release No. 17/502 (December 15, 2017).*

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## References

- [Mitsuhiro Furusawa](http://www.imf.org/external/np/omd/bios/mf.htm)
- [Mongolia and the IMF](http://www.imf.org/external/country/MNG/index.htm)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Press Release No. 17/193](http://www.imf.org/en/News/Articles/2017/05/24/17193-imf-executive-board-approves-financial-arrangement-for-mongolia)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2017/12/15/pr17502-imf-executive-board-completes-first-and-second-reviews-under-the-extended_