Mongolia has come to an arrangement with the IMF (International Monetary Fund) on a $5.5 billion bailout package, officials announced, as the country struggles to stabilise its economy.
The landlocked north Asian nation has been affected by more than 50 percent drop over the past few years in the price of copper.
Mongolia ‘s economy went up by 1% in 2016, while its budgeted deficit exploded to $1.5 billion according to the Mongolian National Statistics office.
A lot of natural resources still lie buried beneath Mongolia but development has been delayed for years and slowing growth in China has crippled the economy.
The IMF package will include a $440 million loan over the next three years, Koshy Mathai, the IMF’s Asia-Pacific deputy division chief, said in a statement issued on Sunday.
The Asian Development Bank, World Bank, Japan and Korea are expected to provide another $3 billion in support, while the People’s Bank of China will extend its $2.2 billion swap line for another three years.
The bailout package is intended to “restore economic stability and debt sustainability as well as to create the conditions for strong, sustainable, and inclusive growth, while protecting the most vulnerable citizens”, Mathai said. “Fiscal consolidation is a key priority, as loose fiscal policy in the past was a major driver of Mongolia’s current economic difficulties and high debt,” Mathai added.
It will help the country to make the $580 million bond payment due in March. The loan is subject to approval by the IMF’s executive board, which will be considering it in next month.