Mongolia

Over the past 20 years, Mongolia has transformed itself from a socialist country to a vibrant multiparty democracy with a booming economy. Mongolia is at the threshold of a major transformation driven by the exploitation of its vast mineral resources and the share of mining in GDP today stands at 20 percent, twice the ratio of a decade ago. The economy grew by 17.3 percent in 2011, compared to 6.4 percent GDP growth in 2010. GDP is expected to grow at a double digit rate over the period from 2013 to 2017.

This economic growth has translated into some benefits for the people of Mongolia. Poverty has been on a downward trend over the past decade. Most recently, it decreased from 39.2 percent in 2010 to 29.8 percent in 2011. Substantial progress has also been made in regard to several Millennium Development Goals (MDGs) at the national level, though significant regional disparities prevail.

To ensure sustainable and inclusive growth, Mongolia will need to strengthen institutional capacity to manage public revenues efficiently and limit the effects of Dutch Disease; allocate its resources effectively among spending, investing, and saving; reduce poverty; and offer equal opportunities to all its citizens in urban and rural areas. It needs to do this in a manner which protects the environment and intergenerational equity.

Mongolia became a member of the World Bank Group in February 1991. To date, the Bank has provided US$578.7 million to Mongolia. Mongolia also has received an additional US$101.3 million from the global trust funds.

As of November 2012, there are 13 active Bank-supported investment and Technical Assistance operations with US$ 211.1 million in commitments, and 41 active Trust Funds in the portfolio with a total donor commitment of US$ 67.4 million. The majority of the projects support infrastructure development, economic governance and institutional strengthening of the mining sector.

In addition to the lending and grant operations, the Bank also provides analytical and advisory work to Mongolia to support its medium and long term development objectives and capacity building for government’s reform strategy in key strategic directions.

In 2008, Parliament of Mongolia approved the Comprehensive National Development Strategy. The document sets a 14-year development path: the first phase (2007-2015) will focus on achieving the Millennium Development Goals and actively developing the country’s economy; the second phase (2016-2021) will be dedicated to transitioning to a knowledge-based economy.

The World Bank Group’s Country Partnership Strategy (CPS) for Mongolia is aligned with this Strategy and thus identifies three areas which the World Bank Group will support over the next five years (FY13-FY17):

• Enhance Mongolia’s capacity to manage the mining economy sustainably and transparently.
  • support the country in developing a regulatory environment, institutional capacity, and infrastructure for world-class mining;
  • support the Government in designing and implementing policies and systems for a more robust, equitable, and transparent management of public revenues and expenditures.
• Build a sustained and diversified basis for economic growth and employment in urban and rural areas.
  • enhance the investment climate and financial intermediation; 
  • create more opportunities in the rural economy for enhanced livelihoods.
• Address vulnerabilities through improved access to services and better service delivery, safety net provision, and improved disaster risk management.
• work with the Government on the design, adaptation, and implementation of a comprehensive social protection system that supports the poor;
• support better delivery of basic services (education, health, justice, and infrastructure);
• reduce vulnerability of households exposed to natural hazards and pollution.

Since 1991, IDA has supported rural development, education, improving the livability of Ulaanbaatar, ensuring sound management within the mining sector, sustainable infrastructure development in southern Mongolia, environmental protection, policy development and air pollution abatement measures.

The overall goal of the rural program has been to reduce the vulnerability of herders to pastoral risk as well as to protect and extend gains made to provide relief in cases of climate emergencies, micro-finance, telecommunications and social services to rural residents.  It is doing so through several projects.

The new livestock insurance regime is being scaled up nation-wide to protect herders from the vulnerability of natural and environmental risks. This project also improves the country’s risk management system. During 2006-2009, 15,802 herders were covered by the Index Based Livestock Insurance Program (IBLIP) in four pilot aimags (provinces) Bayankhongor, Uvs, Sukhbaaatar and Khenty. 3947 herders have received indemnity payments of approximately 770 million Togrog through the program.

As of March 2011, 39,389 microfinance loans have been disbursed by banks and non-bank financial institutions, benefiting 181,470 people directly or indirectly under the microfinance fund which is a component of Mongolia’s Sustainable Livelihoods Project (SLP). The SLP is supported by the World Bank and donor partners (European Union and the Japanese Government).

The SLP is also helping more than 127,287 herder families improve their pastoral management skills.

In the energy sector, the amount of overall system losses for electricity distribution companies continues to decline. The World Bank’s Energy Project has reduced technical and non-technical losses from an average of 31 percent to 22.7 percent in Ulaanbaatar (UB), and from 33.7 percent to 15 percent in six aimag centers. Overall system losses have been reduced to 25 percent, revenue collection ratio at aimag utilities has been increased to 94.5 percent while the targets are 20 percent and 90 percent respectively.

In the Information and Communications Technology sector, there has been a significant increase in the coverage and use of relevant ICT services among the rural population through an incentive program supported by the Bank’s Information and Communications Infrastructure Development Project . All soum (district) centers in Mongolia now have access to modern mobile telephony services and several rural soums centers have also access to Internet. 

In urban development, Bank programs support the construction of water systems within ger (nomadic tents) areas. By constructing new water kiosks, the number of persons per water kiosk has decreased to 892 from 1492 per kiosk.    

The basic education system has benefited from support provided under several Bank grant funds. The Global Education for All - Fast Track Initiative has (i) upgraded education quality at all levels of schooling; (ii) provided education services that can be accessed by children in all parts of the country, including rural areas, and by poor and vulnerable groups; and (iii) improved the management capacity of central and local educational institutions at all levels. 

The fast track initiative project has provided rural schools with lab tops, projectors and mobile teaching stations to increase skills and knowledge of teachers and also make learning more interactive.

The Community Initiative Funds under the SLP is also assisting in the development of the education sector. Within this project, the renovation of rural schools’ ceilings, doors, windows and heating systems have been funded, as well as to the renovation of school dormitories which allow more rural children from nomadic families to go to school full time.

Under Mongolia’s Rural Education and Development Project more than 3,800 rural primary school classrooms have received new libraries and books, and more than 4500 primary school teachers have received training in updated teaching skills.

In economic management and governance, the efficiency and effectiveness of governance processes in the management of public finances have been significantly improved by establishing Treasury management system and connection of GFMIS to all aimags and UB districts.  

In the financial sector, the focus has been on establishing and implementing a new risk management framework in participating banks. This ensures safe and efficient online transactions between end-users and their banks, improves access to new sectors/markets/business activities and increases term lending to support the private sector entities.