The Bank of Mongolia (BoM) will implement the eight-percent mortgage lending program jointly with the government until 2020. The construction market has grown 5.3 times over the last six years as the mortgage loan program with an annual 8 percent interest rate was initiated in 2013. Regarding the IMF’s Extended Fund Facility (EFF) program, the central bank plans to halt the mortgage loan funding next year, risking the market to decline. “The government budgeted only MNT 60 billion for the program, which plays an important role in decreasing air pollution, and it may carry risk for the construction sector,” said Hashchuluun Chuluun- dorj, Member of Monetary Policy Council of the Bank of Mongolia. He also addressed that the budgeted funding is not adequate for supporting the sector to develop. In other words, government funding will shrink three times in 2020 com- pared to this year; current funding will be cut as the central bank exits the project. Within the eight-percent mortgage loan program, the Bank of Mongolia transferred approximately MNT 118 billion out of MNT 310 billion which was budgeted for funding the program in 2018. As of today, a total of 95,000 people have involved in the program. This number is expected to exceed 100,000 in the next year. The construction industry has attracted the most investment in the last decade. Therefore, economic growth can be sustained by supporting this sector without hardly depending on the mining sector. Mongolia’s main sectors that contribute to economic growth are construction, mining, agriculture, and services sector.

Published Date:2019-12-25