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Public Administration News  
World Bank Supports Policy Reforms for Mongolia
Source: mongolnews.mn
Source Date: Friday, July 02, 2010
Focus: Knowledge Management in Government
Country: Mongolia
Created: Jul 05, 2010

A US$12 million credit, approved by the World Bank’s Board of Executive Directors will, among other things, help Mongolia to improve and manage social protection systems for the poor.

The Mongolia Multi-sector Technical Assistance (MSTA) project, aims to support the government’s efforts to build its capacity for policy making and regulation in the fiscal, social and financial sectors.

Mongolia was hit hard by the global financial crisis especially as a result of the collapse of mineral prices, in particular for copper. Given Mongolia’s high reliance on copper revenues in the budget (with mineral revenues accounting for more than one-third of the total budget revenues), the fiscal shock was very large, causing the balance to shift from a 2.9 percent of Gross Domestic Product (GDP) surplus in 2007 to a 5.4 percent deficit in 2009. Real GDP contracted by 1.6 percent in 2009, following growth of 8.9 percent in 2008.

The Government of Mongolia took the necessary measures to overcome the crisis and international development partners provided budget support and technical assistance.

“The crisis highlighted the need for policy reforms – especially in terms of policies to protect the country’s poorest people from the boom and bust cycles typical of economies that depend on mineral exports” said Arshad Sayed, World Bank Country Manager for Mongolia “The challenge now is to turn the crisis into opportunity. The MSTA project aims to build the capacity needed to achieve this.”

Policy reforms include adopting an appropriate fiscal framework, improving the budget process and the planning and management of public investments, and implementing a targeted poverty benefit. Other key reforms are to prepare the banking sector for the upturn in economic activity, investment and capital inflows in the years ahead.

“The MSTA will assist Mongolia to successfully manage the upcoming mining boom and any bust that may follow,” said Rogier van den Brink, World Bank Lead Economist and the Task Team Leader for the project.

Duration of the project is four years from July, 2010 until December, 2014.
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