September 30, 2016 / 12:16 PM / a year ago

UPDATE 1-Mongolia requests financial assistance from IMF

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BEIJING, Sept 30 (Reuters) - Mongolia has sought financial assistance from the International Monetary Fund (IMF), as it grapples with balance of payments woes and looks to stabilise its economy, the IMF said on Friday.

Mongolia’s government, elected in a landslide at the end of June, has been plunged into turmoil after years of collapsing foreign investment, unsustainable fiscal expansion and a decline in demand for commodities like coal and copper.

Mongolia, a former Soviet satellite landlocked between China and Russia, raised its benchmark interest rates by 450 basis points to a record 15 percent in August in an attempt to stabilise a currency that had been in free-fall.

Discussions about financial assistance from the IMF will begin next week when Mongolian officials visit Washington D.C. to attend the annual meetings of the IMF, the organisation said in a statement, without saying how much was sought.

“The Mongolian authorities have made a request for financial assistance from the IMF to support their economic programme, which is intended to address balance of payments pressures and stabilize the economy,” spokesman Gerry Rice said in the emailed statement.

The IMF would also send a team to Ulaanbaatar in late October to continue discussions, it added.

Mongolia’s currency, the tugrik, has slumped 15 percent since June and the government has even fallen behind on payouts to Olympic athletes.

Reporting by Sue-Lin Wong; Editing by Clarence Fernandez and Nick Macfie

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