Chinese Foreign Minister Wang Yi backed the International Monetary Fund's (IMF) 5.5 billion US dollar bailout plan for Mongolia during talks with his Mongolian counterpart Tsend Munkh-Orgil on Monday morning in Beijing.

The meeting took place against a backdrop of strained relations between the two countries following the 14th Dalai Lama’s visit to Ulan Bator in November.

Although the Dalai Lama was invited by the Center of Mongolian Buddhism, the Gandantegchinlen Monastery rather than the Mongolian government, and was religious in nature, the trip caused expected repercussions from China.

Munkh-Orgil reaffirmed Mongolia’s commitment to the one-China policy and promised that the Dalai Lama would not be permitted to visit Mongolia again during his time in office.

Wang said the two countries' bilateral relationship is now back on track, and economic cooperation as well as high-level political exchanges are expected to be rolled out this year.

The IMF announced the 5.5 billion US dollar bailout plan yesterday to support the country’s economy. Mongolia will receive funds totaling 440 million US dollars from the IMF and three billion US dollars in preferential loans from the World Bank, Asian Development Bank, Japan and South Korea.

Mongolia has been hit by the steep slump in coal, copper and other commodity prices over the past five years. Its currency, the tugrik, has fallen almost 30 percent against the dollar since June. And its national debt now stands at around 23 billion US dollars, or twice the annual economic output, and a 580 million US dollar payment to foreign bondholders is due March 21.

Also on the agenda of today’s talks was China’s financial aid to Mongolia, as part of the IMF’s loan package.

“China supports the IMF’s financial aid to Mongolia and will help the country overcome its current economic obstacles. China is willing to extend its swap line with the Bank of Mongolia for at least three years,” Wang said. “The two countries are also working to boost export levels of Mongolia’s coal, agriculture and animal husbandry. China is willing to offer free aid and preferential loans to Mongolia.”

The joint fund projected that Mongolia’s economic growth will recover to eight percent by 2019 as its foreign exchange reserves reach 3.5 billion US dollars - a level not seen since 2012.