NPLs in Mongolia and the Policy Implications
The speaker provided an overview of Mongolia’s experience with nonperforming loans and the interventions of development partners. The measures taken under the IMF and ADB programs helped strengthen the overall banking system, with important reforms taken in the direction of banking sector stabilization. However, challenges impeding the quick resolution of NPLs such as inefficiencies in the legal system and low recovery rates of distressed assets still remain. Furthermore, earlier attempts to establish an AMC have failed which caused a loss of public trust in the government. Hence, continued reform and long-term engagement are needed for further banking sector reform.