On 19th Feb, 2017, International Monetary Fund (IMF) and Government of Mongolia have reached staff-level agreement on an economic and financial program to be supported by a three-year Extended Fund Facility for $440 million, as part of a $5.5 billion external financing package.
Other international partners also plan to support the government’s program: the Asian Development Bank (ADB), World Bank, and bilateral partners including Japan and Korea are together expected to provide up to $3 billion in budget and project support; and the People’s Bank of China is expected to extend its RMB 15 billion swap line with the Bank of Mongolia for at least another three years.
As a result, Mongolian external debt to GDP ratio will be doubled than the international average while it has forecasted to reach 86.3 percent of GDP by 2017.
On the other hand, some tax rates will be increased including excise taxes on vehicle, alcoholic products and tobacco as well as social insurance premium and personal income tax starting 1st of April, 2017 required by the IMF`s Extended Fund Facility program.
However, requirements related to increase of tax rates, new tax and social issues regarding salary and pension are irritating public.
Thus we clarified the position of Mongolian professional economists on IMF`s Extended Fund Facility program.
-I think it is the best action to overcome economic crisis. Mongolia was facing lack of discipline and financial accountability. Unfortunately, Mongolia has established an agreement with IMF after reaching its final stop to face economic collapse. IMF talks mainly about budget and monetary policy. However this time they suggested new proposal to conduct complex audit on the operation of commercial banks and financial system. Because they consider that it is not working well. IMF`s program is the only thing can fix it. If the Government of Mongolia fulfill the obligations required by the IMF on time, very positive result is awaiting us. Collapsed economy shall be restored with strict requirements.
-IMF`s program seems quite reasonable for me. IMF has eased the loan requirements in the last five years. However we should notice that what terms and conditions are hiding behind. It is significant for us to know all requirements even it is hidden.
IMF demanded to tax interest income on personal savings accounts and I think it is right. However, increasing social insurance premium and retirement age are wrong decision.
-World Bank and IMF have ruined Mongolian economy. We must acknowledge it at all levels. Reaching an agreement with IMF means that they are going to repay the previous loan that collateralized by Mongolian people with the people too. IMF have already became bankrupt at the end of 1990s. They take others money and make economic and political ultimatum.
IMF has not developed any countries as they promised. Stopping all policies directed to social support might worsen Mongolian economy.
-There are no good news about IMF. We have been cooperating with the IMF since 1998. They are always causing fall in Tugrik rate. All countries that cooperated with the IMF went into debt. Extended Fund Facility program was implemented previously in Russia, Ukrain and Egypt which brought negative results, causing currency fall. Salary, pension, benefits will depreciate in Mongolia after the program and the country will trap in poverty. I think it is the program to make Mongolia as a geopolitical subsidary place against Russia and China through economic and financial method.
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