Ulaanbaatar, November 27, 2017 —
IFC, a member of the World Bank Group, has signed a Memorandum of Understanding
with the Ministry of Justice and Home Affairs (MOJHA) of Mongolia to help
reform the country’s bankruptcy framework. It further aims to improve
access to finance and ensure financial stability in the country by strengthening
the insolvency and debt collections system.
The reform is intended to enable the Mongolian
credit industry to manage debtor insolvencies and collections in more effective,
efficient and responsible ways. It will strengthen a critical piece of
financial infrastructure, particularly for the financing of micro, small
and medium enterprises (MSMEs). It will also complement other areas of
reforms that are being undertaken by the government to drive economic growth.
Going ahead, the project will focus on strengthening
the legal and regulatory framework by updating the current bankruptcy law.
In addition, it will develop capacities and standards for Mongolian insolvency
professionals and promote non-judicial means of insolvency resolutions
and improving debt collection standards.
“Strengthening bankruptcy legislation and
improving the debt resolution system is one of the key elements of the
government’s plan to modernize Mongolia's legal framework by 2020. A good
insolvency framework will facilitate the quick resolution of non-performing
assets in the banking industry, support entrepreneurship and provide confidence
to investors”, said Bayasgalan G., State Secretary of MOJHA, “With IFC’s
help, we will be able to incorporate international best practice in this
reform and train a critical mass of insolvency professionals”.
“We are pleased to start this new initiative
with our partner MOJHA,” said Tuyen D. Nguyen, IFC Resident Representative
in Mongolia. He added, “International experience suggests that insolvency
framework is a necessary foundation for the financial markets to function
efficiently and safely. Most importantly, it will provide rules and standards
for a quick resolution of the overly indebted individuals and SMEs, and
enable the creditors to exit from problem loans in an orderly fashion."
This project in Mongolia is being supported
by a Korea Trust Fund in the World Bank Group. IFC has successfully assisted
dozens of financial infrastructure reforms in emerging markets related
to secured transactions and movable asset finance development, credit reporting
system, and bankruptcy and debt collection framework. Effective insolvency
system helps to reduce uncertainty and potential risks faced by lenders
and investors with predictable debt collection and recovery process. It
also supports entrepreneurship by giving the insolvent business individuals
reasonable exits and a fresh re-start.
IFC, a member of the World Bank Group,
is the largest global development institution focused on the private sector
in emerging markets. Working with more than 2,000 businesses worldwide,
we use our capital, expertise, and influence to create markets and opportunities
in the toughest areas of the world. In FY17, we delivered a record $19.3
billion in long-term financing for developing countries, leveraging the
power of the private sector to help end poverty and boost shared prosperity.
For more information, visit www.ifc.org