The UB Post - - BUSINESS & ECONOMICS - By B.CHINTUSHIG DBM has filed a claim against three com­pa­nies re­gard­ing the re­pay­ment of a loan. Can you tell us more

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.

about this?

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

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