Mongolia Annuls Forex Regulation

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 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. 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.