CEO OF DEVELOPMENT BANK ADDRESSES ITS CLAIM AGAINST THREE COMPANIES
In September, the Development Bank of Mongolia (DBM) had announced that it had filed claims against three companies regarding the repayment of 200 million USD in loans.
“Money from large bonds and loans taken out by the government were mediated through the Development Bank to finance infrastructure and manufacturing projects. Unfortunately, some projects have not been implemented due to issues pertaining to the executor’s financial responsibility,” said CEO of DBM B.Batbayar.
The bank has several claims of repayment, some of which are being currently investigated by law enforcement agencies. The issue of the 200 million USD loan repayments has been at the forefront of the new DBM administration’s efforts to seek repayment for the loans provided by the previous administration. As a result, the case involving three companies and 200 million USD was filed to a court by DBM.
B.Batbayar has stated that the bank is working to receive 300 million USD in loan repayment in 2017.
DBM’s CEO B.Batbayar recently spoke to the media regarding the issue.
We do not have the right to disclose the confidential information regarding the companies.
How much money did the three companies receive in loans?
The aforementioned three com- panies received their loans during the Democratic Party’s administration. It is a loan totaling 200 million USD. We established a risk fund and have also reached out to law enforcement agencies. The three companies have not made their repayments on time and some are being investigated for misappropriating the funds provided with the loan.
The volume of non-performing loans provided by DBM decreased by five percent. Can this be attributed to the establishment of a risk fund?
There are two reasons for the decrease in non-performing loans. First, we will take action to make sure that loans that have not been repaid will be repaid. When the issue is transferred to law enforcement agencies, many of the companies voluntarily repay their debt through other means. This has helped the volume of non-performing loans to decrease. Second, a debtor has the right to invoke one extension on a loan on the basis of external factors such as droughts and foreign market conditions. For example, if the export of meat decreases due to a spread of food mouth disease amongst cattle or any other circumstances not dependent on the company’s operations occurs, there is an opportunity to extend the life of the loan. In this event, the volume of nonperforming loans decreases.
The main goal of DBM is to boost foreign exchange reserve and create jobs. It is not the goal of nor is it in the interest of DBM to liquidate the machinery of a company.
Mongolia will have to pay 660 million USD in bond debt in 2018. What is the capacity of the government to repay these obligations?
The government will most likely draft up several options. The decision comes down to using Mongolia’s domestic funds to repay the bond debt or to refinance the debt through a loan with a lower interest rate. We do not eliminate the possibility of DBM purchasing securities in bonds issued by the government.
CEO of Development Bank of Mongolia, B.Batbayar