Happy with performance, IMF sees higher growth for Mongolia
3th of 1, 2018
Mongolia can now draw $79.1 million more from the IMF program’s Extended Fund Facility (EFF), bringing total disbursement under the arrangement to $118.6 million, of a maximum possible $425 million. This was revealed on 15 December by the IMF after it had completed the first and second reviews of Mongolia’s performance under the program, which, it says, “thus far has been strong”
The IMF now projects Mongolia’s growth in 2017 to reach 3.3 percent, considerably better than anticipated when the program was approved in May. “The combination of strong policy implementation and a supportive external environment has helped the authorities over-perform on all of the quantitative targets under the program,” it said in a statement. “Performance on structural reforms has also been strong, notwithstanding the delays due to the change in government in September.”
The government’s Economic Recovery Program, supported by the IMF, aims to stabilize the economy, reduce the fiscal deficit and debt, rebuild foreign exchange reserves, introduce measures to mitigate the boom-bust cycle and promote sustainable and inclusive growth.
Mitsuhiro Furusawa, IMF Deputy Managing Director, said Mongolia’s growth has “recovered more strongly than anticipated and confidence is returning, allowing the exchange rate to stabilize, external financing costs to fall, and foreign exchange reserves to recover. The authorities have cut the fiscal deficit and have started structural reforms that would improve the quality of growth going forward.”
Expressing satisfaction that all quantitative targets under the program have been met, Furusawa said fiscal results have been “better than expected”, supported by stronger revenues and tight expenditure control, and the fiscal deficit this year, at 7.6 percent of GDP, is less than half of what it was in 2016. The recently approved 2017 Supplementary Budget and the 2018 Budget are in line with the program. “About half of the revenue overperformance will be saved, thus helping reduce borrowing and control debt, while the remainder will be used to fund productive spending in line with the government action plan and for a one-off bonus to civil servants,” he said.
“With debt still high and the economy still exposed to global commodity developments”, Furusawa felt it is “critical” to maintain strong commitment to the program. “Sustained implementation of the reform agenda will help cement solid growth, improve confidence, strengthen fiscal revenues and foreign reserves, and mobilize donor support.”