IMF Executive Board approves 4th review of extended fund facility

The Executive Board of the International Monetary Fund (IMF) completed the fourth review of Mongolia’s performance under the extended fund facility program, allowing Mongolia to draw 36.91 million USD.

More than a year into the program, IMF’s fourth review concluded that Mongolia’s economic performance continues to be strong with over-performance on key fiscal and reserves targets. So far, 184.55 million USD has been provided from IMF as part of the 5.5 billion USD financing package.

“Mongolia’s performance under the program remains strong. The combination of strong policy implementation and a supportive external environment has helped the authorities over-perform on all end-March 2018 quantitative targets under the program. Progress has also been made on structural reforms, albeit with some delays,” IMF said in a statement.

The government’s Economic Recovery Program, supported by IMF, aims to stabilize the economy, reduce the fiscal deficit and debt, rebuild foreign exchange reserves, introduce measures to mitigate the boom-bust cycle and promote sustainable and inclusive growth.

“Mongolia is making good progress under the fund-supported program. Helped by a favorable external environment and strong program implementation, growth has picked up and there has been a considerable improvement in fiscal sustainability, debt dynamics, and external buffers,” said Tao Zhang, acting chair and deputy managing director at IMF.

“All end-March 2018 quantitative targets under the program were met. Fiscal accounts showed robust performance posting a primary surplus, mainly reflecting a sharp increase in revenue. Meanwhile, international reserves have more than doubled since the start of the program. Reforms to strengthen the financial sector are ongoing with a focus on the follow-up to the asset quality review completed in January. Banks are in the process of raising capital to address any identified shortfalls. In addition, the authorities passed a law outlining when and how public funds can be used to preserve banking sector stability,” Zhang added.

“Notwithstanding this progress, Mongolia remains vulnerable to external and internal shocks. It is therefore critical to take advantage of the current favorable economic environment to continue building fiscal and foreign exchange buffers, strengthen the banking sector, and improve the investment climate. A steadfast implementation of the authorities’ reform program is key to build resilience against shocks and ensure continued strong and inclusive growth,” he added.