[BREAKING: Mongolia agrees to $5.5B IMF Extended Fund Facility, including $2B PBOC swap extension]

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- BREAKING NEWS -

Sunday, February 19, 2017

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Mogi: apologies beforehand for not fully reflecting what was agreed. Some of the things may be incorrect and/or incomplete.. Took these notes as I heard them live

Mongolia agrees to $5.5 billion IMF extended fund facility

February 19 (Cover Mongolia) Finance Minister B. Choijilsuren, Bank of Mongolia Governor N. Bayartsaikhan and IMF head of team Koshy Mathai just finished holding a press conference announcing a "staff level" agreement on 3-year Extended Fund Facility.

IMF is giving $440 million, other donors, such as ADB and World Bank, is giving $3 billion. People's Bank of China has agreed in principle to a 3 year extension on $2 billion RMB-MNT swap. In total around $5.5 billion in financial assistance.

3 prerequisite measures needed before final approval:

1.    Budget amendment

a.     Reducing child money from 60% to 40% of children and converting from cash to food stamps. Government will cancel the delayed payment to other groups

b.    Increasing excise tax on fuel, tobacco

c.     …

2.    Beginning of a diagnosis of the banking sector

3.    Ending quasi-budget activities at the central bank

Formal approval by IMF board of directors expected within March.

Some of the policy contents:

-       Loose fiscal policy was a key factor. Reducing budget deficit will be key.

-       Social welfare is protected.

-       Development Bank reform

-       Bank of Mongolia will now focus solely on monetary policy and not fiscal.

o    Such as transferring the subsidized mortgage program to the government from 2018.

o    World Bank is advising on how to further continue the program.

o    ₮4 out of ₮8 trillion "fiscal" spending from BoM was used to finance mortgages. Repayments from this will now be given to the state budget. 2017 budget amendment will reflect this.

-       Extending the retirement ages in steps

The press conference was held live. IMF part was in English.

GoGo News: https://www.facebook.com/gogo.mn/videos/1275780405834582/

iKon News: https://www.facebook.com/iKonNews/videos/627496407435931/

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Mogi: more full coverage within the day

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