New Delhi: The Asian Infrastructure Investment Bank’s (AIIB) Board of Directors has approved a loan of USD100 million to Mongolia to support its COVID-19 Rapid Response Program, which aims to mitigate the adverse health, social and economic impacts caused by the pandemic and to alleviate poverty. This is AIIB’s first project financing in the country.
The Government of Mongolia is responding proactively to manage the negative impacts of COVID-19, yet the country remains vulnerable to the pandemic. The Government estimated that 20 percent of the population, especially the poor and other vulnerable groups, are at high risk due to a strained healthcare system. Limited diversification of Mongolia’s economy also makes it particularly vulnerable to exogenous shocks, such as the COVID-19 pandemic, triggering a severe economic slowdown.
AIIB’s financing under the Program is a policy-based loan, cofinanced with the Asian Development Bank (ADB). The loan will provide budgetary support to the government’s countercyclical development expenditure program, which targets funding for public health, social protection for vulnerable groups, support to businesses and fiscal stimulus measures. The loan is provided under the Bank’s COVID-19 Crisis Recovery Facility (CRF).
“Our first project financing in Mongolia comes during a challenging time as the country navigates this global crisis. The additional capital AIIB is providing will support the Government’s plans for health protection and poverty alleviation during this critical time,” said AIIB Vice President, Investment Operations, Konstantin Limitovskiy. “We are responding as part of an international effort to stimulate Mongolia’s economy, protect vulnerable groups and safeguard productive sectors and businesses.”
While AIIB does not have a regular instrument for policy-based financing, the Bank is extending such financings on an exceptional basis under the CRF to support its members through projects cofinanced with the World Bank or ADB.
The CRF, created as part of the coordinated international response to counter the COVID-19 crisis, has an initial size of USD5-10 billion to support AIIB members’ urgent economic, financial and public health financing needs and quick recovery from the crisis. AIIB is currently reviewing additional projects from its clients. Projects being proposed under the CRF can be found here. Additional information about Mongolia’s COVID-19 Rapid Response Program can be found here.