The World Bank in Mongolia

Over the past 30 years, Mongolia has transformed into a vibrant democracy, tripling its GDP per capita since 1991. Primary school enrollments are at 97%, coupled with impressive declines in maternal and child mortality (45 per 100,000 live births in 2017 and 15.6 per 1,000 live births in 2019 respectively). With vast agricultural, livestock and mineral resources, and an educated population, Mongolia’s development prospects look promising in the long-term assuming the continuation of structural reforms.  

Due to the severe and widespread economic impact of the COVID-19 pandemic, the Mongolian economy contracted by 5.3 percent in 2020, its worst contraction since the early 1990s. A sharp decline in global demand for key commodities and border closures with China were among the key external factors that crippled the mining-led economy. Domestically, the services sector was hit hard by containment measures, which helped Mongolia avoid the worst possible health effects of the pandemic. While a series of generous government relief and stimulus packages in the form of tax relief and income support helped mitigate the impact of COVID-19 on households and businesses, it took a significant toll on the budget. The fiscal gains of the past three years have rapidly eroded with the overall budget deficit rising sharply to 9.5 percent of GDP. Consequently, government debt as a share of GDP has increased again in 2020, reversing the downward trend of recent years. Inflationary pressures remained subdued in 2020, mostly driven by weak domestic demand and lower oil prices.  

The economy is projected to recover in 2021 as the authorities continue efforts to control the pandemic, stimulus measures prop up domestic demand, the adverse impact of the global economy recedes, and businesses and consumers adjust to the new norm of living with the pandemic as vaccines are rolled out. However, the recovery is subject to risks, including further waves of COVID-19 cases domestically and globally, possible financial instability, and weather-related shocks.  

Mongolia’s official national poverty rate has fluctuated since 2010. The poverty headcount rate declined sharply from 38.8% to 21.6% during the economic boom in 2010-2014. However, between 2016 and 2018, poverty reduction was uneven, declining in rural but not in urban areas. Growth in rural areas was faster and favorable to the poor, contributing to reducing rural poverty from 34.9% in 2016 to 30.8% in 2018, supported by rising livestock prices and expansion of poverty-targeted social protection programs. 

By contrast, the urban poverty rate remained unchanged at 27% from 2016 to 2018, mainly driven by stagnant wage growth in the poorest population group. Consequently, poverty is increasingly concentrated in urban areas. In the coming years, fiscally sustainable labor and poverty-targeted social protection policies coupled with a positive economic outlook will be key to reducing poverty. 

To ensure sustainable and inclusive growth and to reduce poverty, Mongolia will also need to strengthen governance; build institutional capacity to manage public revenues efficiently; allocate its resources effectively among spending, investing, and saving; and ensure equal opportunities to all its citizens in urban and rural areas.  

Last Updated: Apr 06, 2021

Mongolia became a member of the World Bank in February 1991, and the World Bank is celebrating the 30th anniversary of Mongolia’s membership in 2021. Over the last three decades, the World Bank has provided over US$1.3 billion in development financing to the country.  

As of  March 2021, the Bank's portfolio in Mongolia has total commitments of $ 424.41 million, comprised of 13 operations financed by IDA/IBRD credits totaling $ 400.21 million, 2 co-financing grants totaling $ 18.07 million, and  3 recipient-executed trust fund operations totaling $ 6.13 million.   

In addition to the lending operations and grants, the Bank also provides analytical and advisory services to Mongolia to support its medium- and long-term development objectives and to build the capacity for formulating and implementing strategic reforms. 

The World Bank Group’s Country Partnership Strategy (CPS) for Mongolia for 2013-2017 focused on three areas: 

• Enhancing Mongolia’s capacity to manage the mining economy sustainably and transparently. 

• Building a sustained and diversified basis for economic growth and employment in urban and rural areas. 

• Addressing vulnerabilities through improved access to services and better service delivery, safety net provision, and improved disaster risk management. 

In 2018, the World Bank Group finalized the Systematic Country Diagnostic (SCD) which identified key development challenges and priorities to eradicate poverty and promote shared prosperity in Mongolia. To ensure continuity of the World Bank Group’s program in Mongolia and in close consultation with the Mongolian authorities, this Performance and Learning Review (PLR) updates the current strategy and extended until December 31, 2020.  

The World Bank Group is in the process of developing its next Country Partnership Framework (CPF) for Mongolia in consultation with the stakeholders in government, private sector, and civil society. The CPF will guide the WBG’s engagement in Mongolia until 2025 and is planned to be finalized in FY21. 

Last Updated: Apr 06, 2021

Since 1991, IDA has supported Mongolia in a range of areas, including rural development, education, Ulaanbaatar’s development, sound management of the mining sector, environmental protection, and policy development.

The overall goal of the rural program in Mongolia 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, through micro-finance, telecommunications, and social services to rural residents. 

Between 2007 and 2013, the Rural Education and Development (READ) Project made learning materials available in rural Mongolia by establishing 3,560 classroom libraries in all 383 rural primary schools. Each school received over 160 books, benefiting a total of 130,000 students, and 4,144 rural primary teachers and 383 school directors were trained. A local professional development network has been set up consisting of 95 core schools and 178 mentor teachers.

The Renewable Energy and Rural Electricity Access Project (REAP) helped the government of Mongolia complete its National 100,000 Solar Ger Electrification Program, which provided over half a million nomadic herders with access to electricity through portable solar home systems. The project also helped fund improvements in soum (district) electrification, including rehabilitating mini-grids and installing renewable energy technology hybrid systems to power them. 

In 2006, the Index-Based Livestock Insurance Project was launched initially in four aimags (provinces). In 2010, when another dzud (severe winter) hit Mongolia, the project was expanded to cover all 21 aimags. This was the first time such a system was implemented in Mongolia or anywhere else in the world, where payments are based on the total number of livestock lost by species and soum (district) rather than on households’ actual, individual losses. Since the program started, insurance policies have become more and more popular among herders, with purchased policies increasing each year. After the project closed in 2015, the government continued to support index-based livestock insurance. The 2016-2017 sale season was the highest on record.

Under the Livestock and Agricultural Management Project (LAMP), the government has improved rural livelihoods and food security through targeted investments to boost productivity, market access, and diversification in livestock-based production systems. More than 200 subprojects in horticulture, value chain development, livestock health and breeding have been funded under the project, leading to increased household incomes and outputs of livestock products, better nutrition and jobs in 15 soums of 5 western aimags Zavkhan, Khuvsgul, Govi-Altai, Bayankhongor, and Arkhangai. Around 7,000 people have received training in livestock health, breeding, nutrition, horticulture, and environment management. The project was implemented through December 2017. 

Thanks to the Information Communications Infrastructure Development Project (ICIDP), all 330 soum centers (villages) in Mongolia received access to modern phone and Internet services, while 34 soum centers were connected to high-speed internet during the project implementation in 2005-2013. Herders started using mobile phones in their daily lives, and telephone call minutes made from outside of soum centers jumped from zero at the start of the project to about 530,000 annual minutes in 2012. The rate of Internet users in and outside soum centers continues to expand.   

The government also improved the policy and regulatory environment and promoted investments in ICT in rural areas, which ensured continued additional annual investment in the ICT sector of the country – annual investment increased from US$37.6 million in 2005 to $395 million in 2013.  A mechanism has been established to collect resources into a fund to finance universal access to telecommunication and Internet services. 

Improving Primary Education Outcomes for the Most Vulnerable Children in Rural Mongolia Project, funded by the Japan Social Development Fund, targeted rural nomadic herders’ children in 30 soums of four provinces. The project introduced a home-based school preparation program for herders’ children living in remote rural areas. The level of school readiness of the children enrolled in the program has been significantly higher than of those enrolled in other alternative preschool education programs.

In addition, mobile toy and book libraries have been established in 30 soums, giving parents the opportunity to borrow and use high-quality education materials with their children at home. Extracurricular after-school programs, developed under the project, are helping primary grade rural children better adapt to school and dormitory environments. Overall, more than 7,500 children between 5-10 years, 15,000 parents, 500 teachers and soum officials have benefitted from the project.

Governance Assistance Project (GAP), implemented from 2006–2014 with US$14 million financing, helped improve the efficiency and effectiveness of governance processes in the management of public finances, promote transparency and accountability in the performance of public sector functions, and foster the investment climate in Mongolia. The project was designed around five principal intervention areas: debt management, budget execution, tax administration, public procurement, and mineral resource management.

Overall, the project contributed to an improved investment climate, reduced corruption, and increased government accountability as reflected in improved perceptions of corruption in tax administration and public procurement, expanded taxpayer registration, better public access to budget information, and increased competition in procurement. It also contributed to building capacity on core government functions. 

Last year, the Second Economic Management Support Operation (EMSO2) Development Policy Financing (DPF) was approved with US$100 million financing. The program aims to support the government in restoring debt sustainability, strengthening the social protection system, and enhancing competitiveness.

In addition to lending projects, the World Bank also provided technical assistance and produced analytical reports to help inform policy and stimulate public debate. Recent research includes:

• Mongolia Economic Memorandum: Mines and Minds (September 2020)
• Mongolia Economic Update (January 2021) 
• Mongolia InfraSAP : Infrastructure for Connectivity and Economic Diversification (November 2020)
• Mongolia Poverty Update (March 2020)
• Mongolia Public Expenditure Review (July 2019)
• Mongolia Central Economic Corridor Assessment (May 2019)

Last Updated: Apr 06, 2021