ULAANBAATAR May 5 Mongolia's legislature
removed the main obstacle to an International Monetary Fund-led
bailout for its crisis-ridden economy by annulling a
controversial banking requirement for foreign-invested projects,
state news agency Montsame said Friday.
The IMF board had been expected to approve a $5.5 billion
rescue package for Mongolia at a meeting on April 28, but
delayed a decision amid concerns about a clause that required
foreign projects such as Rio Tinto's (RIO.AX> Oyu Tolgoi
copper mine to channel sales revenues through local banks in
order to boost Mongolia's foreign exchange reserves.
Heavy foreign debt, a collapse in its tugrik currency and a
slowdown in growth in its biggest trading partner, China, have
combined to push the economy into crisis.
A member of the budget standing committee, Ch. Khurelbaatar,
said there was no time to waste in receiving the IMF program,
according to a summary of a Thurday meeting posted on the
Mongolian parliament's official website.
Analysts said the banking requirement had been a major
sticking point for Rio Tinto and investors that lent $5.4
billion to finance the expansion of the Oyu Tolgoi mine.
The expansion was already put on hold for two years because
of a dispute over taxes and repeated attempts by lawmakers to
change a landmark investment agreement signed in 2009 that
granted the Mongolian government a 34 percent stake in the mine.
Nick Cousyn, chief operating officer of Ulaanbaatar-based
brokerage BDSec, said the clause "could have easily resulted in
another work stoppage for underground construction".
(Reporting by Terrence Edwards; Editing by Simon Cameron-Moore)