The International Monetary Fund said on Sunday that they and other partners have agreed on terms for a more than USD 5 billion loan package to Mongolia with an aim to revive the country's debt ridden economy.
The deal is subject to approval by the IMF's executive board, which is expected to consider Mongolia's request in March.
Under the preliminary agreement, the IMF would provide USD 440 million over three years. The Asian Development Bank, World Bank, Japan and South Korea are together expected to provide up to USD 3 billion, and the People's Bank of China is expected to extend its 15 billion RMB (USD 2 billion) swap line with the Bank of Mongolia for at least another three years, the IMF said in a statement.
Finance Minister Choijilsuren Battogtokh said that the six-month negotiations had been tough, and that the government would be revising its 2017 budget before the IMF executive board considers whether to approve the loan.
He said the government proposed to bring in more money for the budget by increasing income, fuel and other taxes, and by raising the retirement age from 55 to 65 for women, and from 60 to 66 for men.
Its proposals have to be approved by parliament during a session in March, which is likely because the ruling Mongolian People's Party has a clear majority.
Battogtokh said that with the loan package, the government estimated growth would be "below zero per cent" in 2017, 1.8 per cent in 2018 and 8.1 per cent in 2019.
The economy of mineral-rich Mongolia has been hit hard in recent years by a sharp decline in commodity prices and a collapse in foreign direct investment.