Asian Development Bank establishes a new Country Partnership Strategy with Mongolia

Asian Development Bank (ADB) reported that its Board of Directors has endorsed a new Country Partnership Strategy (CPS) for Mongolia, which could potentially include assistance of 1.2 billion USD issued from 2017 to 2020, and also approved two policy-based loans (PBLs) totaling 250 million USD to start implementation of the new CPS.

The ADB noted, “The loans will help maintain funding for social welfare programs for the poor and vulnerable people and stabilize and restructure the banking industry during the implementation of an extended fund facility of the International Monetary Fund (IMF) approved on May 24.”

The stated goal of ADB’s assistance from 2017 to 2020 is to promote and sustain inclusive growth during times of economic turbulence. The ADB will focus on three main areas: economic and social stability, developing infrastructure for economic diversification, and strengthening environmental sustainability. Annual lending from ADB will amount to about 300 million USD a year, with PBLs accounting for about half of this amount.

“The CPS builds on ADB’s role as Mongolia’s lead development partner and improved operational performance in recent years. The CPS is closely aligned with the government’s high-priority areas, and will focus on complex projects requiring significant technical expertise,” said Yolanda Fernandez Lommen, ADB Country Director in Mongolia. “ADB has also closely coordinated with the IMF and World Bank in formulating this CPS.”

To mitigate the adverse impacts of the economic slowdown and fiscal consolidation, a PBL of 150 million USD will ensure fiscal expenditure is maintained for social welfare programs. Besides strengthening fiscal management, the PBL will help Mongolia consolidate the country’s 71 existing social welfare programs and achieve better targeting to ensure that the poor and vulnerable people are supported.

A second PBL of 100 million USD will support the government’s efforts to restructure and recapitalize the banking industry, reduce nonperforming loans, and enhance industry regulation and supervision. Under these objectives, the government will implement a road map for the banking industry's rehabilitation and ensure effective management and the sale of distressed state assets.