Mongolia agrees to IMF bailout 

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The International Monetary Fund said it had reached an agreement in principle for a $US224 million loan package to help Mongolia, which has been hit hard by the global financial crisis.

"An IMF staff mission and the Mongolian authorities today reached agreement, subject to approval by the IMF Executive board, of an economic program supported by fund resources (of $US224 million) under an 18-month stand-by arrangement," IMF Managing Director Dominique Strauss-Kahn said in a statement.

Strauss-Kahn said the executive board was expected to discuss the programme shortly after a meeting of international donors, which will take place next week in Ulan Bator.

"Mongolia has been hard hit by the global financial crisis through a sudden and precipitous drop in the price of the country's main export commodities, notably copper. This has had a negative impact on both the fiscal and external accounts," Strauss-Kahn said.

He said Mongolia's mineral revenue has fallen, export proceeds are expected to decline "markedly" this year and foreign direct investment flows have been cut.

"With more than one-third of the population living below the poverty line, it is imperative that steps are urgently taken to address the economic downturn and protect Mongolia's most vulnerable citizens," he said.

Strauss-Kahn said the Mongolian government has put together a macroeconomic program aimed at restoring economic stability.

"The authorities' strong commitment to macroeconomic stability and a return to robust and equitable growth justifies the proposed exceptional access to IMF resources ... and merits the backing of the broader international community," he said.

In January, Mongolia's president said his country was in talks with the IMF over a loan package of $US60 million to $US70 million to attract investment in its mining sector.

The country is also negotiating with China, Russia, Japan and several Gulf countries on $US300 million to $US3 billion in loans that would be linked to large mining projects, President Nambaryn Enkhbayar told Reuters in an interview during the World Economic Forum meeting in Davos, Switzerland.