Yesterday, the agreement on ”Pre-conditions of the Mongolian Government Guarantee” was signed between the Ministry of Finance (State Secretary D.Battur) and the Development Bank of Mongolia (Chairman Ch.Hashchuluun). This will be the main condition of the Mongolian Government Guarantee which will be made by the Minster for Finance. The agreement was made according to the Mongolian laws such as Law on Budget Stability, Law on General Budget, Law on Development Bank, The Government resolution on setting the maximum limit of the loan guarantee, resolution on issuing Government guarantee and stock.
During the signature ceremony, Minister S.Bayartsogt handed “Stock Certificate of the Development Bank” and “the Mongolian Government Guarantee” to Chairman Ch.Hashchuluun.
Upon signature of the agreement, the Minister for Finance will be enabled to issue guarantee on spot whenever it is necessary to issue such bonds. This agreement will form legal environment for the issuance of the bond. Minister S.Bayartsogt noted that it is the first time in the Mongolian history to issue bond guarantee, in order to raise fund for the development programs and projects, equal to 9.8% of GDP and this operation is the key milestone in the development of Mongolia.
Shortly after the signature of the agreement, Chairman Ch.Hashchuluun shares his opinion with media representatives.
Q: When the Development Bank start issuing the bond and how much bond will be issued?
Ch.Hashchuluun: As for the Development Bank, there are many works are waiting for us to manage. First of all, it shall form its capital resource, with such purpose we are preparing to issue the first ₮300 billion at the end of April or early May. This guarantee of the Ministry of Finance, on behalf of the Government, will surely give huge impact of the bond issuance. With this guarantee, I hope that bond sales will be high enough. Prior to issue the bond, we will sign an agreement with Mongolbank and MSE in cooperating on the bond sales.
Q: Which projects will be entitled to receive bond funding?
Ch.Hashchuluun: We have the prioritized list of projects such as construction, energy, roads, heavy industry. The projects which meet with the requirements according to the law, will receive funding.
Q: Minister Kh.Battulga said that the Development Bank will grant fund for the newly planned railway construction, by April 30. So will it be funded?
Ch.Hashchuluun: Feasibility study of the newly planned railway construction was not finalized and approved. The funding will be made based on the feasibility study, but not according to the priority level. In other words, if the feasibility study is completed and approved, then the funding will be made.