ADB LOAN TO ERDENES MONGOL WILL SUPPORT ECONOMIC DIVERSIFICATION DRIVE

The Asian Development Bank (ADB) has approved a $35 million loan to help state-owned asset management firm, Erdenes Mongol LLC, strengthen its management and investment capacities, allowing it to more effectively support the country’s drive for economic diversification.

“Improving the efficiency and effectiveness of the management of Erdenes Mongol is important for Mongolia’s state asset management and diversification of its economy,” said Hiroko Uchimura-Shiroishi, an ADB Financial Sector Specialist. “We appreciate important changes are being made on the legal front in this regard, and this loan will support the capacity strengthening of Erdenes Mongolia in a comprehensive and fast manner.”

Mining in Mongolia accounts for 20% of the country’s gross domestic product and this heavy reliance makes it vulnerable to commodity demand and price volatility. In the past, Mongolia has also lacked an effective mechanism to channel funds raised from natural resources into the broader economy.

State-owned Erdenes Mongol was created in 2007 to manage state assets and to raise funds for infrastructure investments needed to broaden the economy. However, the company has been hampered by legal, corporate and management limitations, which the government is seeking to address through regulatory changes including amendments to the Human Development Fund Law, which were approved in January 2016. This will allow the company to strengthen its finances and operate as a commercial entity.

ADB’s technical assistance loan will help the company draw up a full corporate strategy for its operations, with midterm and long-term targets. It will support Erdenes Mongol for its project development and management in line with international standards. Erdenes Mongol will embed proper systems for investment decision making, sound corporate governance, and prudent risk management.

To accompany ADB’s loan, Erdenes Mongol is providing counterpart support equivalent to $6.2 million for the project, which will be carried out over 3 years, with an expected completion date of April 2019.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.

Source: adb.org