ULAN BATOR, Dec. 4 (Xinhua) -- The Asian Development Bank (ADB) and Mongolia's XacBank Joint Stock Company have signed a financing package of 50 million U.S. dollars to enhance financing for climate action and to support micro, small, and medium-sized enterprises (MSME) in Mongolia, local media reported on Wednesday, citing the ADB.

The package includes 40 million dollars from ADB and a concessional loan of 10 million dollars from the Canadian Climate and Nature Fund for the Private Sector in Asia (CANPA), a trust fund managed by ADB.

At least 70 percent of the financing package will be dedicated to climate mitigation and adaptation projects, with the remainder allocated to multisector MSME finance, including lending to women-owned and women-led businesses, according to the ADB.

"A strong green finance market is essential to fostering a sustainable economy that supports Mongolia's net zero goals," said Bhargav Dasgupta, ADB vice-president for market solutions. "As Asia and the Pacific's climate bank, ADB is partnering with XacBank to improve the livelihoods of people who run these crucial businesses and to support broad economic growth, while helping Mongolia to build resilience against climate impacts."

Green finance is increasingly important in Mongolia, which faces significant climate vulnerabilities and high greenhouse gas emissions. The local green loan market is still developing, with green loans representing only a small percentage of total bank loans. The Mongolian government aims to expand this market by 2030, highlighting the need for private sector involvement to meet these and other climate targets.

MSMEs are vital to the Mongolian economy, making up over 70 percent of registered businesses and employing a considerable share of the workforce. Even so, they often struggle to access credit, especially for investments that meet green standards. Expanding their access to climate-friendly and inclusive financing can help enhance the resilience of this key strategic sector and drive sustainable and inclusive growth in Mongolia.

ADB is also expected to support XacBank's efforts to promote gender equality by introducing new banking products designed specifically for women entrepreneurs.

"At XacBank, we are dedicated to advancing sustainable finance and supporting businesses that contribute to Mongolia's climate resilience," said Tsevegjav Gumenjav, XacBank's chief executive officer."This partnership with ADB allows us to offer long-term, affordable financing options that will empower more green businesses and MSMEs to thrive, contributing to a sustainable and inclusive economy for Mongolia."

Established in 2001, XacBank is one of Mongolia's leading banks, with a strong commitment to sustainable finance and MSME development.

XacBank operates across all 21 provinces, serving over 1 million customers through its 72 branches. Enditem

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