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Mongolia seeks $3 bi...
But I do appreciate and see the angles of Roy's postings to ...
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By INTJay

Mongolia seeks $3 bi...
If the Mongolian government can easily raise capital from in...
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By Threefold Minority

Mongolia seeks $3 bi...
Thanks for the response. Would like to hear from more on thi...
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By INTJay

Mongolia seeks $3 billion loan from China to prop up banks, industry PDF Print E-mail
Friday, 16 January 2009
ImageThe global economic crisis is the reason behind Mongolia’s request for a $3 billion loan from China. 

The country’s banks have been hard hit by decreasing world prices for coal, copper and cashmere, the government said Friday. The Chinese loan will include $1 billion to be used to stabilize the country’s banking system. 

The remaining $2 billion is to be set aside to finance road construction and purchase industrial and agricultural projects as trade with China, according to a government statement. 

The Mongolian parliament anticipates a 2009 budget deficit of $296 million, or six percent of gross domestic product. Finance Minister B.Sangajav said spending would be reduced if already weak copper prices fall further.

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 1 Written by INTJay, on 2009-01-16 09:40:00, IP: 12.1.83.2
I know we have some good minds that participate in this site. 
 
I would be interested to see some comments on this from some sound minds in banking and finance. Maybe roydongen or others??  
 
Does this type of move give China a bigger stake or bigger potential hold upon Mongolia and it's business? What if the investments Mongolia makes with the money do not return as expected? What might be the consequences if Monoglia did not take such a loan from China?  
"The Mongolian parliament anticipates a 2009 budget deficit of $296 million, or six percent of gross domestic product". Break this down into some more basic laymans terms of impact on daily life, internal development and/or other aspects that would be seen and fealt by the people. 
 
Thanks in advance,.
 2 Written by Threefold Minority, on 2009-01-21 15:09:38, IP: 65.203.132.130
The amount of loan asked by Mongolian government is several times larger than their own GDP but nevertheless it is an investment opportunity for China, the only question is timing. Unlike the Southeast Asia who holds strategic interest of energy security to China, Mongolia currently is neither a strategic threat nor an opportunity to China, when and how much loan to grant will be questioned and debated in Chinese government, my guess is the term of loan will be rather strict. Does this type of move give China a bigger stake or bigger potential hold upon Mongolia and its business? No doubt about it, weather it is a performing loan or not China will ask for mining asset as collateral against the loan.
 3 Written by roydongen, on 2009-01-21 21:10:48, IP: 202.180.218.26
With thanks for INT Jay for complimenting some of us for having good minds! 
A loan from China would be a strategic good solution. Probably China will import a major part of Mongolia's future mining production and therefore China itself will pay back a large part of the loan indirectly.  
Secondly funds for infrastructure could very well be invested with PPP (Public Private Partnership) which in a reasonable way could guarantee a return on investment (toll roads, user fees) on these projects which revenues can be used as well to pay of these loans. 
Thirdly Mongolia is hard on the way to make the necessary deals to start major mining projects which with no doubt will increase the GDP drastically the coming years. 
So far, all help and aid, including loans, from China and others has been given to Mongolia without any collateral and I trust the Mongolian parliament would not even approve any loan with a collateral that damages Mongolia sovereignty and independence.
 4 Written by INTJay, on 2009-01-22 09:32:11, IP: 12.1.83.2
Thanks for the response. Would like to hear from more on this and other various subjects.  
 
Roy. I agree in your confidence so far as available resources are concerned. China would seem to be the most likely to gain in this deal from my view. With the severe lack of accountability in government how confident are you that any loan is actually going to benefit the people on a daily level and not wind up like much of the rest, being stolen by politicians and thier cousins and thier consins in laws etc...? This means that the difference in those who have and have not become divided between those with family ties to politics and those who dont. In America this action can pass more easily under radar given the population base.  
 
How will the government controll a loan of 3B? What good will development do people if they still dont have enough money? Also, I have heard of the increased immage of prosperity in Mongolia but this is actually built on a credit and loan basis the same as the government. This is a carbon copy to the American system. It is built on credit and loans and a cluster of corrupt theives in the top ranks. We also see the recent results of this type of action. If the fall-out has hit America this hard how much more would it hit Mongolia when/if the false base of loans and credit falls out? 
 
I may have rambled too much but hope you get some point.
 5 Written by Threefold Minority, on 2009-01-22 13:31:21, IP: 65.203.132.130
If the Mongolian government can easily raise capital from international market they would have done that already instead of asking China, with a recent downgraded B rating on Mongolian long-term credit by Fitch Group, the prospect of the recent proposed bond sale to lure international investor does not look good. A collateral-free loan from China amid the worldwide economic downturn is a pipe dream; China is bidding to take over troubled mining asset everywhere including a large copper mine in Zambia, why would China invest Mongolia under an inferior term unless she would advance other interest like geopolitical gain? Chinese priority is to invest and stabilize Burma and Pakistan so a southwest energy gateway can be open to alleviate the choke point of Malacca Strait. Mongolia is neither a strategic threat nor interest to China, I don’t see a burning desire for China to invest unless it’s a very good deal.
 6 Written by INTJay, on 2009-01-22 14:09:55, IP: 12.1.83.2
But I do appreciate and see the angles of Roy's postings to this news site. Just to make sure the above comment is clearly put in perspective. 
Just for this case, I side a little more with Threefold in that the whole thing seems risky for Mongolia as a country and may not benefit the actual citizens as much as would appear by the total of $$.  
 
Then again, hope for the best and that leaders would move more towards a fair and honest system of government for the people of Mongolia.

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