Mongolia has requested a rescue loan from the International Monetary Fund (IMF) to address balance of payments woes and support its troubled economy, the IMF said on September 30.

Mongolia has been struggling to stabilise its economy and control its budget deficit, as the foreign debt has surged amid a fall in government revenues mainly because of a sharp decline in prices of coal and copper, the country’s main exports. The resource-rich country has also been hit by the slowing growth in neighbouring China, which buys up nearly all of its copper, gold and coal. As such, Mongolia’s request for assistance was widely expected, despite previous denials by the government.

It was a boom in FDI that helped Mongolia rack up an astronomical GDP growth of 17.5% in 2011. But the freefall in commodity prices have badly hit the economy, reliant on mining coal, copper and gold. Latest figures by the statistics office showed GDP expanded by 1.4% in the first half of the year, easing from 3% a year ago. Mongolia’s economy will likely expand 0.3% in 2016, easing sharply from 2.3% last year, the Asian Development Bank (ADB) said in a new forecast published on September 27.

At the same time, the country’s budget deficit has plunged to 20% of GDP this year, while it faces approximately $2bn in public and private debt repayments due in next year. The country’s total external debt is estimated at $23.5bn, almost twice the size of its $12bn economy, where government debt alone stands at $8.4bn.

An IMF team will visit Mongolia’s capital, Ulaanbaatar, this month to conduct discussions with the government concerning financial assistance. “The Mongolian authorities have made a request for financial assistance from the IMF to support their economic programme, which is intended to address balance of payments pressures and stabilize the economy,” IMF spokesman Gerry Rice said a statement, according to Reuters.

Mongolia’s central bank raised its policy interest rate by 450 basis points (bps) to 15% on August 18 in a bid to stem a sharp fall in the country’s national currency. The decision to hike rates was taken to improve yields on tugrik-denominated assets in order to protect the currency and ensure mid-term stability.

The measure was announced shortly after the recently elected Mongolian government said the country is in the middle of an economic crisis. As part of its anti-crisis measures, the government will initiate a spending freeze, salary cuts for civil servants, debt reduction efforts and the set-up of a body tasked with attracting foreign investments.

In addition, the new government, led by the Mongolian People’s Party (MMP), which trounced the Democratic Party in the parliamentary elections in late June, has been cleaning house in its efforts to consolidate power and appoint loyal members at executive posts. One example of such efforts includes MPP’s dismissal of three board members that helped sign a $4.4bn deal between Mongolia and Rio Tinto on the underground expansion of the Oyu Tolgoi copper and gold mine.

Despite firing key officials necessary for continued good relations with investors, MPP has pledged to introduce investor-friendly policies in the country’s ailing mining sector and cut debt. The party is credited for luring investors into the country as it led Mongolia for most of its democratic quarter of a century.