Mongolia continues to borrow

Sep 16 • Business, News • 1000 Views • No Comments on Mongolia continues to borrow

1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

Mongolia’s debts incurred in the socialist days are settled but the country continues to borrow. The loans it took from The Asian Development Bank, The International Monetary Fund and Japan between 1991 and 2009 now total USD2.6 billion. According to The Debt Department of the Finance Ministry, foreign debt consists 94% of the Government’s total debt, with domestic debt accounting for the remaining 6%.

Foreign loans can come from bilateral agreements with another country or from international financial institutions. Of Mongolia’s loans from individual countries, 56% is from Japan, 8% from South Korea, 4% from China and 6% from Kuwait. Of institutional loans, 58% is from The Asian Development Bank, 37% from The World Bank and 1% from The IMF. Besides this, USD118.7 billion received as grants and soft loans has been invested in infrastructure in the last two decades, USD883 million in the economic field, and USD141.8 million in social sectors.

The situation is taken to be of threat to the economy when Government debts equal 40% of the GDP. It was 29.5% of the GDP in 2009. The IMF and The World Bank have classified Mongolia as a country of “minor risks” in terms of debt repayment. All outstanding debts at present have to be repaid by 2050 but in most cases an annual interest has to be paid. The repayment will reach its peak in 2020.

The share of domestic debt has gone up as more bonds carrying higher interests were sold to meet the successive budget deficits. MNT300 billion worth of bonds were sold in 2009 and this equals 2.8% of the GDP. Earlier sales amounted to altogether MNT80 billion in 2005 and 2006, and to MNT150 billion in 2007.
This year’s bonds, mainly to provide for long-term apartment loans, will be on sale from September 17. They will be for a total face value of MNT30 billion. Half of it will be redeemable with 7.5% interest in 365 days and the other half with 7.8% interest in 546 days. All interest will be paid on maturity.

Source: news.mn

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

« »