The Mongolian economy is rapidly recovering, said an International Monetary Fund team after evaluating the economic bail-out programme in the country.

The IMF predicts Mongolian GDP growth to reach 3.3 percent this year and 4.2 percent next year. The country’s Extended Fund Facility (EFF) programme has achieved its goal, said the IMF. In the near future, the IMF will focus on supporting the banking sector and improving the implementation of Mongolia’s monetary policies.

Geoff Gottlieb, leader of the IMF staff team in Mongolia, said the Mongolian economy is recovering faster than they expected, which was largely due to the growth of coal exports as well as the restoration of services. But next year the coal industry will be at risk.

The quantitative indicators that determine current monetary policies were positive as a result of strict control over the expenditures of the state budget, which has been increased.

Last year, Mongolia’s budget deficit reached 17 percent, while it decreased by 7.5 percent in 2017. Net international reserves improved, and the authorities turned over sovereign bonds with maturity in 2017 and 2018 at attractive interest rates, eliminating the key risk to the external position.

Long-term structural reforms will continue to contribute to economic growth.

The authorities have moved ahead with their ambitious structural reform agenda, which will help to sustain growth over the medium term, promote diversification and competitiveness and mitigate the boom-bust cycle.

Currently, the banking system is being restored and strengthened: the results of a comprehensive asset quality review are expected in mid-December; important legal reforms are being developed to strengthen the financial system; and improvements of the regulatory and supervisory framework are under way.

The Mongolian authorities and the IMF team have reached staff-level agreements on the completion of the first and second reviews under the EFF arrangement, which is subject to the approval of the IMF Executive Board.

As part of the full implementation of this program, Mongolia will receive 440 million U.S. dollars from the IMF and 5.5 billion U.S. dollars from donor countries, including Japan and the Republic of Korea.

The IMF staff team, led by Mr Gottlieb, were in Mongolia from 18 to 30 October to sum up the results of the first phase of its EFF program and decide whether to continue it.