Mongolia has reached a $5.5bn bailout agreement with the International Monetary Fund (IMF), the Fund said in a statement on February 19.

The deal has been reached just weeks prior to the country’s development bank facing a repayments deadline on a $580mn bond. The IMF will provide Mongolia with funds totalling $440m, with the World Bank, Asian Development Bank, Japan and South Korea offering $3bn in preferential loans.

The Financial Times has reported that the ADB intends to lend Mongolia about $300mn in budgetary support per year over the next three years, which will replace previous loans of an equivalent amount. Mongolia is also requesting an extension of the Chinese government’s $2.2bn central bank swap agreement, which has been its largest single source of foreign financing.

With repayments worth $1bn in debt due by January 2018, Mongolia's leaders have so far met with representatives of the IMF, China, India and Japan for crisis relief talks.

According to data uploaded last week, Mongolia’s growth slumped to 1% in 2016 down from 2.3% growth in 2015. A boom in FDI helped Mongolia rack up astronomical GDP growth of 17.5% in 2011. But stalled talks over the underground development of the giant Oyu Tolgoi gold and copper mine in 2013-2015 and the subsequent freefall in commodity prices have badly hit an economy reliant on mining coal, copper and gold.

In addition, Mongolia registered a net foreign direct investment (FDI) outflow of $4.28bn in the first 10 months of 2016.

However, the price of copper, which accounts for around a third of Mongolian exports, grew by over 20% within the past three months amid supply risks and signs that U.S. President Donald Trump will ramp up infrastructure spending. That will have a positive impact on Mongolia’s economy.

The country is expecting FDI to sway the economy back to growth thanks to the $6bn underground expansion at Rio Tinto's Oyu Tolgoi copper mine, which began in 2016, following a deal reached in May 2015 that ended two years of stalled talks between the Mongolian government and the Anglo-Australian miner Rio Tinto.

However, the underground expansion is only set for completion by 2019. Rio believes the mine, when launched, will account for 30% of the economy. The IMF expects economic growth to recover by 2019, reaching 8% as foreign exchange reserves grow to $3.5bn, a level not seen since 2012.