IMF agrees terms for $5 billion loan to debt-ridden Mongolia

Reference(s):

Ref A: Wile, Anthony. (2011, February 27). Exclusive Interview: John Perkins on His Best-Selling Book 'Confessions of an Economic Hit Man' and the Unsustainability of Modern Capitalism. http://www.thedailybell.com/exclusive-interviews/anthony-wile-john-perkins-on-his-best-selling-book-39confessions-of-an-economic-hit-man39-and-the-unsustainability-of-modern-capitalism/

Ref B: Miller, Berkshire. J. (2011, March 07). Why the US and China Woo Mongolia.
http://thediplomat.com/2011/03/why-the-us-and-china-woo-mongolia/

Ref C: Xinhua. (2011, March 25). Mongolian president meets Chinese FM. http://www.chinadaily.com.cn/china//cpc2011/2011-03/25/content_12475115.htm

Ref D: Utsunomiya, Keiko. (2017, February 19). IMF Reaches Staff-Level Agreement with Mongolia on Three-Year Extended Fund Facility. http://www.imf.org/en/news/articles/2017/02/19/pr1754-mongolia-imf-reaches-staff-level-agreement-on-3yr-eff

Ref E: Bayarstsogt, Khaliun. (2017, February 20). Mongolia dodges bond default, agrees to bailout with IMF. http://asia.nikkei.com/Politics-Economy/Economy/Mongolia-dodges-bond-default-agrees-to-bailout-with-IMF

Ref F: Namjilsangarav, Ganba, (2017, Febrary 19). IMF agrees terms for $5 billion loan to debt-ridden Mongolia.  https://www.washingtonpost.com/world/asia_pacific/imf-says-it-has-agreed-terms-for-5-bn-loan-to-mongolia/2017/02/18/888ca2d0-f65c-11e6-9fb1-2d8f3fc9c0ed_story.html?utm_term=.2fb48cfba67f



Additional References:

Ref G: Bat-Erdene, Belguun. (2016, November 23). An Analysis of Mongolia’s Resource-Led Development: the Impact of Foreign Direct Investment in the Extraction.
Industryhttp://repository.usfca.edu/cgi/viewcontent.cgi?article=1257&context=thes

Ref H: Central Intelligence Agency (CIA). (2017, January 17). World Facts Book: Mongolia. https://www.cia.gov/library/publications/the-world-factbook/geos/mg.html

Ref I: International Monetary Fund (IMF). (No Date). About the IMF. http://www.imf.org/external/about.htm

Ref J: Foreign Policy Association. (2011, November 2). President Tsakhia Elbegdorj of Mongolia on Emerging Democracies. https://www.youtube.com/watch?v=WJ70Orq-3II

Ref K: Seeker, Daily. (2015, December 15). How Powerful is Mongolia? https://www.youtube.com/watch?v=hh-t2m4Q6I0

Ref L: Bruxelles. (2017, February 17). Factsheet on the EU-Mongolia Framework Agreement on Partnership and Cooperation. https://eeas.europa.eu/headquarters/headquarters-homepage_en/20826/Factsheet%20on%20the%20EU-Mongolia%20Framework%20Agreement%20on%20Partnership%20and%20Cooperation

Ref M: New Atlantis Full Documentaries. (2012, April 09). Mongolia. https://www.youtube.com/watch?v=ZeBnyZ12_OQ&t=588s

Ref N: Bezemer, Dirk J. (ND). Finance and Growth: When Credit Helps, and When it Hinders.
https://www.ineteconomics.org/uploads/papers/bezemer-dirk-berlin-paper.pdf


CONCLUSION/RECOMMENDATION

It's my opinion that if Mongolia is unable to meet the terms of the agreement, you can bet your bottom dollar what's to transpire is what I've dubbed, 'The John Perkins Effect', which stands to make multinational corporations (MNCs) lots of money' (See Ref A).


BACKGROUND INFORMATION

International Affairs Professional J. Berkshire Miller published a 2011 article in thediplomat.com entitled, 'Why the US and China Woo Mongolia: An economic minnow but a geographic titan, Mongolia is of growing strategic interest to both the US and China' (See Ref B).

In it, China is characterized as Mongolia’s biggest trade partner, a point noted during a February 24th, 2011 meeting – nearing exactly seven years this coming Friday – between Chinese Foreign Minister Jiechi and Mongolian President Tsakhias in Ulan Bator, the capital and largest city of Mongolia (See Ref C).

In this international balance-of-power chess game, Miller then-assumed that Beijing would take notice of Washington’s increased interest in the region and the US would invoke countermeasures if we viewed China's partnership (with Mongolia) as a long-term asset to project its influence in the region, causing the US to engage deeper with Mongolia as a potential strategic ally (See Ref C).

Other international partners also planning to support Mongolia include the Asian Development Bank (ADB), World Bank, and bilateral partners including Japan and Korea are together expected to provide up to $3B in budget and project support; and the People’s Bank of China is expected to extend its RMB 15B swap line with the Bank of Mongolia for at least another three years (See Ref D).

Fast-forward to 2017 under the watchful eyes of Mongolian Finance Minister Battogtokh and his proposal to increase income-, fuel- and other taxes, and raise the retirement age from 55 to 65 for women, and from 60 to 66 for men, the US has engaged deeper indeed into the pocket of Mongolia's economy. The International Monetary Fund (IMF) and the Mongolian government announced Saturday an agreement on a three-year bailout program that averts a default on a semi-sovereign bond maturing March 21 (See Ref E).

An Analyst at Independent Mongolian Metals & Mining Research, Dale Choi, says that the Saturday-announced loan agreement led by Dr. Koshy Mathai, Division Chief of the IMF's Asia and Pacific Department – basically an agency of the U.S. Treasury Department – to provide terms for a $5B-plus bailout loan package with $440M in tranches over three years means that both foreign and indigenous investors can now make assumptions and investment decisions (See Ref F).