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Austerity measures will be tailored to protect the poor, IMF pledges.21 April 2017
The package includes a $425 million IMF loan and low-interest money totalling about $3 billion from lenders such as the World Bank, Asian Development Bank, Japan, and Korea. The remainder will be made up by extending a 15-year currency swap deal with China, Bloomberg reports.
Mongolia has met the conditions set by lenders, said the IMF’s resident representative in Ulaanbaatar, Neil Saker.
A downturn in commodity prices brought the country’s booming economy to a screeching halt, made worse by the government’s erratic policies on the foreign-run mines that generate most of its export earnings.
Growth fell from 17 percent in 2011 to 1 percent last year, and the World Bank forecasts it to dip into the red this year.
The conditions required the government to pass a supplementary 2017 budget, a pledge by the central bank to refrain from interfering in fiscal activity, and a review of the country’s banks, Saker said.
As it typically does, the IMF has pledged the bailout will simultaneously strengthen public finances and support economic growth while protecting the “most vulnerable” in society.
“Loose fiscal policy” contributed largely to Mongolia’s economic difficulties and high debt, the IMF said recently.
“Budget deficits will be reduced steadily” to tighten ship, “while priority social spending will be maintained,” the fund promised.
The ruling Mongolian People’s Party announced spending cuts and other economic policy changes after coming to power in June, and requested the IMF’s help.
The Washington-based lender has tried to rebuff arguments that austerity programs it demands of aid recipients contribute to social disruption, claiming its programs can help governments increase social spending and mitigate the impact of budget cuts.
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