ULAANBAATAR, January 30, 2015 – A new agreement with Mongolia provides $22.7 million for the third phase of a project supporting the country’s effort to empower rural communities in a more diversified and modern economy, the World Bank announced today.
The Third Sustainable Livelihoods Project (SLP III) will help Mongolia further implement the Integrated Budget Law of 2011 that gave rural communities a greater role in the government-funding process.
SLP III also supports local economic development through the “Soum Program” that promotes investments for private sector growth in the more than 300 soums – or local administrative districts – throughout the country.
Mongolia’s Minister of Finance, D. Erdenebat, signed the credit agreement today with Bert Hofman, the World Bank’s Country Director for China, Korea and Mongolia.
“The adoption of the Integrated Budget Law was a major milestone for empowering rural communities and provides a transparent mechanism for fiscal transfers for local development,” Hofman said. “With this in place, the SLP III project will build the capacity of local governments and communities to manage local development initiatives.”
Since its inception in 2002, the three-phase Sustainable Livelihoods Program has backed efforts by the Mongolian government and the international community to modernize a mostly rural and under-developed economy.
The first phase, from 2002-2007, demonstrated new approaches to make a living in rural areas by establishing community development funds that helped introduce the concept of community participation to identify needed investments such as pastoral risk management.
In the second phase, from 2007-2013, an expanded program led to community development fund financing for more than 6,000 sub-projects, mostly for investments in education and health.
Now SLP III will boost continued implementation of the Integrated Budget Law, government decentralization policy, and other reforms.
It will build capacity for the government Local Development Funds, which finance investments in infrastructure and services at the local level. Under the budget law, LDF allocations get decided each year through a robust participatory process at the community level.
The project also will bolster the Soum Program, which offers incentives to local government entities that adopt participatory processes to reflect local needs and priorities in their planning, budgeting, implementation, monitoring and evaluation.
Funding for the SLP III Project comes from the $22.7 million credit from the World Bank Group’s International Development Association (IDA), and an $11.4 million grant from the Swiss Agency for Development and Cooperation.
For more information, please visit www.worldbank.org/mongolia