The European Bank for Reconstruction and Development (EBRD) and the Bank of Mongolia (BOM) have agreed to set up a long-term dollar-tugrik swap facility to increase the availability of Mongolian tugrik (MNT) financing to local businesses affected by the coronavirus pandemic, the lender said on January 20.

The swap facility stems from joint efforts made by the EBRD and BOM to improve the competitiveness and resilience of Mongolian companies, with a strong focus on small and medium sized enterprises (SMEs), which employ over 40% of the country’s population, it added.

The swap will enable the EBRD to secure reliable access to MNT liquidity and provide local currency loans both directly and through domestic financial intermediaries to companies in such sectors as agribusiness, building materials, light manufacturing and services, the development bank said. The funds will be used to support their liquidity, short-term working capital and trade finance needs, while limiting currency exchange related risks.

The EBRD was the first international financial institution to adopt emergency measures to address the economic impact of the coronavirus pandemic in March last year. It focused on supporting existing clients by providing short-term liquidity and working capital to protect viable companies and safeguard progress towards sustainable, fair and open market economies.

In 2020 in Mongolia, the EBRD channelled over €150mn into projects ranging from key infrastructure developments to support of local small businesses through financial intermediaries.

The bank has invested more than €1.8bn in 113 projects in the country since it started operations there in 2006.