Russia withholds loan as Mongolia "still has to repay the grand debt in full"

The long-promised USD300-million agriculture loan from Russia will not be available as Russia considers that Mongolia is yet to pay back around USD150 million of the “grand debt”. Mr. Ts.Sukhbaatar and Mr. D.Dorligjav from the Presidential Office were recently in Russia to finalize preparations for President D.Medvedev’s visit to Mongolia. When they suggested that a reference to the USD300 million agriculture loan on easy terms be included on the visiting President’s agenda, they were told by the Russian Presidential Office that this could not be done as under Russian law no commercial loan can be given to a country which already owes Russia money. The Mongolian side said their perception was that all outstanding Mongolian debt to Russia had been waived, but were told this was not so and “some debt remains”. According to the Russian position, Mongolia still has to pay USD150-160 million.

It appears when Prime Minister and later President Enkhbayar negotiated on the debt with the Russians in 2004, he was told Mongolia should put this money into the Mongolian-Russian joint venture Mongolrostsvetmet as part of its capital. Mr. Enkhbayar said a decision on the issue could be taken later. When he returned to Mongolia, however, Mr. Enkhbayar did not make any public revelation of this proposal. Instead, he repeatedly said he had persuaded Russia to waive all debt, and this claim won him many votes, and perhaps the victory also, in the presidential election of 2005. During his four years in office Mr. Enkhbayar is not known to have referred to the issue on any occasion.

Mr. Sukhbaatar says the Russian claim comes as a bolt from the blue. The truth has to be ascertained and the issue resolved without delay. For the moment, however, it is clear there will be no USD300 million loan immediately. Interestingly, earlier Russia had withheld the loan on the ground that the Mongolian Government would have to stand guarantee that commercial banks would repay the money. There was no talk then about Mongolia being ineligible for a loan because it still owed Russia money.

Source: en.News.mn

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