BEIJING Feb 10 Mongolia's parliament moved
towards meeting the conditions of an International Monetary Fund
(IMF) bailout of $3-5 billion on Friday, as lawmakers voted to
grant greater independence to the Development Bank of Mongolia.
The country is scrambling to avoid missing a $580 million
sovereign-guaranteed debt repayment, issued by the Development
Bank, due in March. The economy has been badly hit by weak
prices for its coal and dwindling foreign investment.
The Mongolian government is in talks with both the IMF and
China to refinance billions of dollars of debt issued since 2012
by the March deadline.
The law's passage fulfils most of the requirements for a
bailout, according to Dale Choi, an analyst for Mongolian Metals
"This removes a major obstacle for reaching IMF staff level
agreement. I expect the agreement to be announced next week,"
Choi told Reuters.
Seventy-seven percent of Mongolia's lawmakers voted in
favour of the new law on the bank's governance, Choi said,
adding that the legislation should meet most of the IMF's
Chimed Khurelbaatar, who heads the parliament's budget
committee, urged lawmakers to pass the bill allowing the
Development Bank to act independently of the government.
"Recommendations from the IMF ... suggested there should be
separated control," said Khurelbaatar.
In 2009, the IMF pulled Mongolia out of economic crisis with
a $230 million stand-by agreement.
Khurelbaatar told legislators that another bailout this time
round was preferable to defaulting and said "the IMF is not a
scary organisation," according to a research note by Choi.
"The IMF is an important organisation for economic
stabilisation, to get the country out of debt," he said.
(Reporting by Terrence Edwards; Editing by Sue-Lin Wong and