MON­GO­LIA MAKES FIRST RE­PAY­MENT OF CHINGGIS BOND

The UB Post - - FRONT PAGE - By B.CHINTUSHIG

The first round of re­pay­ment of 500 mil­lion USD for the 1.5 bil­lion Chinggis Bond is­sued in 2012 was com­pleted with Prime Min­is­ter U.Khurel­sukh in at­ten­dance to wit­ness the event. Mark­ing the first mat­u­ra­tion of the Chinggis Bond, 500 mil­lion USD was trans­ferred to in­vestors. The first re­pay­ment of 500 mil­lion USD ma­tured on Jan­uary 5, 2018 while the re­main­ing one bil­lion USD will ma­ture in 2022.

In Oc­to­ber 2017, Mon­go­lia is­sued Gerege, a 5.5year 800 mil­lion USD bond at an in­ter­est rate of 5.625 per­cent, in or­der to re­pur­chase pre­vi­ous bonds ma­tur­ing in 2018.

The pro­ceeds from the bond were used to re­pur­chase 500 mil­lion USD of the Chinggis Bond’s first pay­ment and will also be used to re­pay the 151 mil­lion USD Dim Sum bond ma­tur­ing on June 2018. The re­main­der of the bond cap­i­tal will be used to meet other debt obli­ga­tions of the gov­ern­ment.

At the time, it had been re­ported that the Min­istry of Fi­nance was eye­ing a 650 mil­lion USD bond at 6.1 per­cent in­ter­est rate. Due to de­mand ex­ceed­ing ex­pec­ta­tion, the gov­ern­ment was able to in­crease the amount of the bond while de­creas­ing in­ter­est.

The com­pleted re­pay­ment of the 500 mil­lion USD debt and the fu­ture com­ple­tion of the Dim Sum bond ma­tur­ing on June 2018 will leave no ma­jor for­eign debt obli­ga­tions for Mon­go­lia un­til 2021.

The Head of the State Trea­sury Depart­ment at the Min­istry of Fi­nance S.Narantsogt took the op­por­tu­nity to re­port the eco­nomic per­for­mance of Mon­go­lia in 2017 to the prime min­is­ter and the me­dia.

“Pre­lim­i­nary cal­cu­la­tions put GDP growth in 2017 at around 3.8 per­cent. The ex­port of Mon­go­lia reached 6.2 bil­lion USD for the first time in history and sub­se­quently the trade bal­ance had a sur­plus of 1.9 bil­lion USD. In ad­di­tion, the for­eign ex­change re­serve has ex­ceeded three bil­lion USD. The main fac­tor for this in­crease was a twofold in­crease in for­eign di­rect in­vest­ment,” said S.Narantsogt.

Mov­ing for­ward, the Min­istry of Fi­nance will be main­tain­ing a pol­icy of re­pay­ing for­eign debt swiftly. For the first time in five years, the ac­count bal­ance of the state bud­get has sur­passed 405 bil­lion MNT. In terms of to­tal vol­ume, the min­istry re­ported that the as­sets in the state bud­get in­creased by a to­tal of 1.3 tril­lion MNT.

The prime min­is­ter said that the ir­re­spon­si­bil­ity of the pre­vi­ous Cabi­net ap­pointed by the then rul­ing Demo­cratic Party pushed Mon­go­lia to the brink of a de­fault. Ac­cord­ing to him, the pre­vi­ous Cabi­net is­sued a 1.5 bil­lion USD bond with­out ad­e­quate re­search or a plan.

“The cur­rent ad­min­is­tra­tion is work­ing to re­pay the money stolen from the De­vel­op­ment Bank and from the pock­ets of the Mon­go­lian peo­ple, and will con­tinue ef­forts to re­pay ex­ter­nal debt on time,” said U.Khurel­sukh.

He also ad­dressed the is­sue of the tax in­creases, which have seen a lot of push­back from the pub­lic.

“The is­sue of the tax in­creases is a ma­jor topic cur­rently. The pub­lic is very frus­trated with this de­ci­sion. I have been cor­re­spond­ing with the Fi­nance Min­is­ter in re­gards to this is­sue. An IMF team will ar­rive on Jan­uary 25. We will dis­cuss the is­sue then,” the prime min­is­ter said.

U.Khurel­sukh noted that his Cabi­net did not in­crease taxes and has been ac­tively mak­ing ef­forts to sta­bi­lize the price of pe­tro­leum since Oc­to­ber. He stated that the global mar­ket price of pe­tro­leum has in­creased and that fuel im­port­ing com­pa­nies were los­ing money. The price of fuel might in­crease due to global mar­ket forces, the prime min­is­ter said.

“The year 2018 is the year to re­pay do­mes­tic debt. No mat­ter how you look at it, one ma­jor im­pend­ing is­sue that was fac­ing Mon­go­lia has been al­le­vi­ated with this re­pay­ment,” said U.Khurel­sukh.

Photo by G.ARGUUJIN

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