IMF Executive Board Completes Third Review under the Extended Arrangement for Mongolia and Approves US$ 30.55 Million Disbursement
IMF News, March 28, 2018
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- IMF Executive Board Completes Third Review under the Extended Arrangement for Mongolia and Approves US$ 30.55 Million Disbursement
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- Published: March 28, 2018
Key outcomes and disbursement
- The Executive Board completed the third review of Mongolia’s performance under a three-year extended arrangement under the Extended Fund Facility (EFF) on March 28, 2018.
- Completion of the review enables Mongolia to draw the equivalent of SDR 20.9598 million (about US$ 30.55 million).
- Total disbursements under the arrangement to date amount to SDR 104.8278 million (about US$ 152.79 million).
Economic performance and fiscal developments
- Real GDP growth was 5.1 percent in 2017.
- There was a significant improvement in the fiscal balance of 15 percentage points of GDP.
- All end-December 2017 quantitative targets under the program were met.
- Fiscal results outperformed expectations, driven by expenditure restraint and a strong recovery in mining-related revenues.
Reserves and external financing
- Official foreign exchange reserves more than doubled over 2017.
- Reserve recovery reflected a jump in coal exports, capital inflows, and disbursements under the external financing package from donors and the IMF.
- External financing costs continued to fall, with external bonds maturing in 2018 rolled over at lower interest rates.
Structural reforms and program implementation
- Performance on structural reforms has been mixed: some delays on structural benchmarks and reversals of three fiscal measures considered during previous reviews.
- Authorities are pursuing ambitious structural reforms to:
- sustain medium-term growth,
- promote competitiveness and diversification,
- mitigate the boom-bust cycle.
- Financial sector measures: rehabilitation and strengthening of the banking system underway, building on a recently completed comprehensive Asset Quality Review and several new laws passed by Parliament.
- Fiscal measures: authorities remain committed to the strengthened path of adjustment with continued spending restraint and efforts to sustain strong revenue performance; focus on improving the quality of tax administration with IMF technical assistance.
Risks and policy recommendations (IMF statements)
- With debt still high and the economy exposed to global commodity developments, it is critical that the authorities maintain their strong commitment to the program.
- Firm program implementation is needed to sustain the cycle of recovering growth, improving confidence, rising reserves, falling debt, and strong donor support.
- Sustaining reform momentum in the financial sector and improving tax administration are highlighted as critical priorities.
Program size and background
- Mongolia’s three-year extended arrangement was approved on May 24, 2017, in an amount equivalent to SDR 314.5054 million, or about US$434.3 million at the time of approval of the arrangement.
- Note on valuation: the dollar amount is calculated based on the SDR-dollar rate of May 24, 2017; an alternate figure cited is $425mn at an SDR-dollar rate of 1.35274 as of February 27, 2017.
IMF Press Release No. 18/113, March 28, 2018.
