N.Enkhbayar, economic advisor to new Prime Minister U.Khurelsukh, held a press conference discussing the 1.2 billion USD funding the Asian Development Bank (ADB) has pledged to Mongolia in the next three years. After the press conference, N.Enkhbayar answered questions from the media regarding the financing.
The ADB provided 1.9 billion USD over the last 25 years to Mongolia. However, this time, it has promised to contribute 1.2 billion USD in only three years. What led to this increase?
Mongolia first began acceding into international banking and finance organizations after the transition into a free-market economy in 1990-1991. The first organizations that the country entered into was the World Bank, the International Monetary Fund, and the Asian Development Bank. It has been 25 years since Mongolia has worked together with international banking and finance organizations. We have determined the capacity of our cooperation every four years. Newly appointed Prime Minister U.Khurelsukh and the resident representative of ADB met to discuss the strategy for the next four years. The representative underlined how ADB had financed 1.9 billion USD in the last 25 years and now it would be financing 1.2 billion USD for the next three years. International organizations are helping in every way they can to help Mongolia revive its economy. The extended fund facility will show results starting next year, helping to stabilize the economy.
What will the 1.2 billion USD be spent on?
Mongolia has approved its working strategy with ADB for 2017-2020. The main goal for the next four years is to ensure economic sustainability and development. There are three main components of the strategy, that being economic, ensuring social stability, increasing economic diversification, developing infrastructure, and ensuring environmental protection. Around 10 projects costing 246 million USD, designed to ensure economic and social stability is already being implemented. In terms of infrastructure development and economic diversification, 12 projects costing 328 million USD is being implemented. In 2018-2019, 500 million USD will be provided to ensure economic stability and 290 million USD will be provided for efforts to diversify the economy and build up infrastructure.
Which sectors will the projects be mainly focused on?
ADB makes a lot of efforts to create jobs and support small-to-medium enterprises. These projects will continue. In terms of economic diversification, an added cost network will be implemented in the agricultural sector. ADB has also contributed to the development of urban areas and infrastructure in the country. These efforts will continue. In its essence, 800 million USD will be provided in loans to diversify the economy and build up infrastructure.
What will the conditions of the loan from ADB be?
Since it is a loan from an international organization, it will be discounted. The financing for projects will be done separately. Since it is a long-term loan, it will have a low interest rate.
Will the 1.2 billion USD in funding from ADB be separate from the extended fund facility program?
It is separate from the extended fund facility. ADB will finance projects on their own. The bank’s focus is not only on overcoming short-term economic hardship but also to ensure long-term economic development.
Based on the extended fund facility and the projects that will be implemented by ADB, what is your forecast for economic growth in 2018?
We have essentially overcome the economic hardships we experienced last year. In 2017, it is likely we will have three to four percent economic growth. Our economy is dependent on many internal and external factors. The Mongolian economy has not yet had the chance to become fully diversified. Even though export diversification is being observed, more than 90 percent of exports remain raw resources. It is an accomplishment for Mongolia to export 10 products for close to five to six billion USD. It is looking like that number will be closer to six billion by the end of 2017. Judging by the discussions held at the annual meetings of IMF and the World Bank in Washington, the global economy is on an upwards trend. The economy of our two neighbors are both performing well. China has been able to maintain around six to eight percent of GDP growth.
Russia, despite sanctions by the international community, is saying it has overcome its economic crisis. It is beneficial for Mongolia to have its neighbors performing well economically. If we are able to build up our infrastructure to export more to our two neighbors; it opens up opportunities for more economic growth.