Document Sample
MONGOLIA Powered By Docstoc
					                                                                             December 31, 2006


       1. Partners have operational national development strategies
       a. Coherent long-term vision with medium-term strategy derived from vision
1.      Some work has been done toward developing a long-term vision widely agreed
within the country. With the support of the UN, the Government is working on a MDG-
based National Development Strategy (NDS) through 2021. The NDS is expected to
become a reference point for policymakers. The Government plans to operationalize the
NDS in 2009. In February 2005, the Academy of Sciences and the Mongolian
Development Institute, a local think-tank, completed a development plan through 2021,
with the mining sector expected to play a lead role, prepared at the initiative of the
President. The plan has not yet been widely shared within the country. In 1998, the
Government adopted a Mongolian Action Program for the 21 st Century, known as MAP-
21, linked to a Sustainable Development Strategy through 2021, developed with UN
support. The Action Program and the Strategy were not implemented due to frequent
government changes, and policy makers rarely refer to them.
2.      The Economic Growth Support and Poverty Reduction Strategy (EGSPRS),
Mongolia’s PRS, 1 identified a set of polices through 2006 and was rooted in the main
policy directions of the Government which left office in June 2004. Since the EGSPRS
was not a legally binding document, in 2004 a newly-elected Government composed of
the former ruling party and the former opposition groups decided to rely on a
constitutionally-mandated Action Plan for 2004-08 as Mongolia’s medium-term
development strategy. The Action Plan incorporates some of the EGSPRS priorities. The
Government also prepared Guidelines for Economic and Social Development in 2005 and
2006, also required by the Constitution as the annual implementation framework for the
Action Plan.
3.     In 2006, the Government completed a Master Plan to Develop Education for
2006-15. It is conducting an infrastructure review, which is expected to be completed in
early 2007, to identify the main-cross sectoral issues, key strategic options, as well as the
investment and institutional gaps for the sector. It is also updating a Health Master Plan
completed in 2005 and a transport sector strategy, which are at the basis of the
Government Action Plan and will serve as an input into the NDS together with Master
Plans for the environment, rural development, energy and information and
communication technology. There are also a National Household Livelihood Capacity
Support Program, which was launched in 2001 building on a National Poverty
Alleviation Program for 1994-2000, a National Program on Gender Equality and a Social
Sector Development Master Plan.
4.     Local government strategies and plans have been formulated systematically every
2-3 years. They have been incorporated into the Government Action Plan.

 The Government completed the EGSPRS in July 2003. It prepared a EGSPRS Progress Report, which
was discussed by the Cabinet in May 2005.

                                                                         December 31, 2006

       b. Country specific development targets with holistic, balanced, and well
        sequenced strategy
5.      Development goals linked to the MDGs are being identified and are expected to
be at the basis of the forthcoming NDS, which will thus help strengthen their link with
future Government Action Plans and sector strategies. The EGSPRS already incorporated
national development goals linked to the MDGs with targets for 2015. In 2004, the
Government prepared a national report on the status of MDG implementation, identifying
bottlenecks and policy actions to achieve the MDGs. The Government is currently on
track to achieve some of the MDGs, including universal primary education, and has made
significant progress on others such as reducing infant and child mortality.
6.       The Government Action Plan for 2004-08 maintains the broad objectives
identified in the EGSPRS, and proposes a new social and economic development policy
with greater emphasis on improvements in the social sectors. It addresses cross-cutting
issues such as governance and transparency, gender and private sector development. The
EGSPRS’s five main pillars were: i) ensuring macroeconomic stability and enhancing
public sector effectiveness; ii) enabling private sector-led growth through a sound
institutional and regulatory environment; iii) enhancing balanced and environmentally
sustainable development; iv) fostering sustainable human development and an equitable
distribution of the fruits of economic growth through improved service delivery in
education, health and social welfare; and v) promoting good governance reform and
gender equality.
       c. Capacity and resources for implementation
7.       Starting in 2003, a three-year rolling MTEF has been updated annually and the
Government recognizes the necessity to implement the Government Action Plan through
the budget as well as annual socio-economic guidelines in order to improve the
relationship between planning and budgeting processes. The EGSPRS was only
consistent with the macroeconomic medium-term budgetary framework adopted in 2003.
The Public Investment Program (PIP) remains, however, fragmented. Sector policies are
not yet fully linked to the budget, but the Government is taking steps to ensure that
priorities identified in sector strategies and reflected in the Government Action Plan are
aligned with the MTEF. NDS priorities are also expected to be in line with the MTEF,
which also reflects objectives identified in local development plans. In 2004, up to 9
percent of GDP was spent in the education sector, and health spending per capita and
medicine expenditures per patient increased. In 2005, expenditures in education increased
to 9.8 percent of GDP and health spending amounted to 6.4 percent. The Government is
also making efforts to develop and strengthen national capacity for gender-sensitive
budgeting and has introduced a Child Money program, which covers all children under
age of eighteen.
8.      With the successful establishment of the Government Financial Management
Information System (GFMIS), which has been deployed countrywide with cash execution
centralized at the Ministry of Finance and Economy, Government capacity for planning
and implementation is improving. A Human Resource Management Information System
(HRMIS) is also being implemented with World Bank assistance. However,
fragmentation, duplication and overlapping of administrative and management structures

                                                                         December 31, 2006

still exist. Strategy implementation is also undermined by bottlenecks at the local level.
Local governments deliver almost 70 percent of social services. However, they have
limited revenue autonomy and the allocations they receive do not always mirror local
       d. Participation of national stakeholders in strategy formulation and
9.      The Ministry of Finance and Economy, which took the lead in EGSPRS
implementation, chairs an inter-ministerial steering group supported by a technical
committee and an UN-funded Poverty Research Group. In April 2004, the Poverty
Research Group was integrated into the main structure of the Ministry of Finance and
Economy to coordinate the integration of the EGSPRS into the Government Action Plan.
Ministers and Vice-ministers were responsible for coordination at the sectoral level.
Working groups, established in each ministry and Ulaanbaatar city, have identified
sectoral policies based on existing government strategies. A Working Group on the
National Development Strategy is coordinating the formulation of the NDS. Inter-
ministerial coordination, which is also required for Government Action Plan formulation,
remains, however, an open challenge partly due to the fragile coalition supporting the
Government. There is limited mutual understanding between central and line ministries
on overall strategic priorities.
10.    There is a separate institutional structure for coordinating a proposal to access
Millennium Challenge Account (MCA) funds. In mid-2004, the Government established
a National Council for the MCA, comprised of government officials and stakeholder
representatives, to coordinate formulation and implementation of Mongolia’s proposal for
the MCA. The National Council has remained in place after the change of Government
and conducted extensive consultations for the MCA Proposal.
11.     Stakeholder representatives have been involved in the ministerial working groups
during EGSPRS implementation and reporting, as they had been during formulation. The
Government recognizes the need to foster participation through a mechanism to increase
public control on budget revenue and allocation of budget expenditures. However, due to
frequent Cabinet changes, an action plan to develop this mechanism has not yet been
12.    Civil society organizations participated in EGSPRS formulation and were
involved in EGSPRS implementation and monitoring through their participation in the
ministerial working groups.
13.     Private sector representatives participated in the working groups involved in
EGSPRS implementation and monitoring. Their role and impact in the first EGSPRS was
14.     Parliamentary involvement in policy-making is in place but interruptions due to
political instability have weakened its impact. In April 2005, Parliament adopted a
resolution requiring the Executive to report progress on the MDGs at the national level
every two years. Parliament receives regular reviews from sector ministries on progress
in implementing policies and programs. As required by the Constitution, it approved the
Government Action Plan for 2004-08 and the Guidelines for Economic and Social

                                                                        December 31, 2006

Development for 2005 and 2006. The Executive also sent the EGSPRS to Parliament for
hearing in June 2005. Some Parliamentarians participated in regional consultations for
the formulation of the EGSPRS. They also took part in a roundtable discussion with the
Cabinet on EGSPRS priorities and implementation.
       2. Reliable country systems
15.     Some progress is being made in strengthening expenditure discipline. In 2001, the
Government established a Treasury Single Account that captures all extra budgetary
allocations and expenditures. In 2004, Parliament passed a Public Sector and Finance
Management Law addressing growing inadequacies in public sector management and
reasserting budget discipline. Many of the current expenditure and revenue policies are
being aligned with this Law. The GFMIS is also contributing to improving fiduciary
controls in the management of public finance. In 2002, the Government updated its debt
data base in line with UNCTAD Debt Management and Financial Analysis System and
linked it to the Bank of Mongolia’s unified system, thus improving debt management and
reporting processes. The World Bank Country Policy and Institutional Assessment
(CPIA) performance criterion that assesses the quality of budgetary and financial
management places Mongolia at 4 on a scale of 1 (very weak) to 6 (very strong).
16.     Efforts have been made to strengthen public procurement. Above a certain
amount of procurement, close scrutiny was applied up to the award decision but there
were minimal post-award checks. The State Secretary of Finance was responsible for
final review and clearance at the award stage and retained the power to delay final
approvals, leaving little room for appeals and oversight. Under a new Procurement Act
which became effective in February 2006, responsibility to review and award
procurement contracts has been decentralized to executing ministries, departments and
agencies depending on certain thresholds, while the Ministry of Finance and Economy
retains oversight through no-objections and post-award reviews.
17.     The Mongolian National Audit Office is the Supreme Audit Institution and
reports annually to Parliament about its activities.
18.     A more effective Anti-Corruption Law and Anti-Money Laundering Law were
approved by Parliament in July 2006. The law provides for the establishment of a new
anti-corruption council and an asset and income disclosure system. Parliament has also
ratified the UN Convention on Anti-Corruption. Mongolia ranks 99 of 163 in the 2006
Transparency International Corruption Perceptions Index; on a scale from 0 (highly
corrupt) to 10 (highly clean), it receives a score of 2.8.
       3. Aid flows are aligned on national priorities
       a. Government leadership of coordination
19.    The Ministry of Finance and Economy leads coordination. There are three
informal working groups composed of government officials and external partners’
representatives jointly chaired by the Government and external partners, to coordinate
support for infrastructure, private sector development and social sectors.

                                                                                   December 31, 2006

20.      In-country Technical Meetings between the Government and external partners,
jointly organized and co-chaired by the Government and the World Bank, are becoming a
regular forum for dialogue focused on aligning external assistance around country
priorities and improving management of development results. They mark a shift in
Government-external partner cooperation and are aimed at replacing CG meetings, the
last of which took place in Tokyo in 2003 and was co-chaired by the Government and the
World Bank. The meetings focus on priority development results as reflected in the
Government’s own socio and economic guidelines and budget documents, and attempt to
align with key windows in the budget process. The first and second Technical Meetings
took place in February 2006 and October 2006 in Ulaanbaatar.
           b. Partners’ assistance strategy alignment
21.     External partners are making efforts to align their strategies with the EGSPRS and
the Government Action Plan. The five major external partners are Japan, ADB, the World
Bank, Germany and the USA, accounting for approximately 87 percent of gross ODA in
2003-04. Net ODA accounted for 17.3 percent of GNI in 2004.2 Mongolia has been
eligible for MCA assistance since FY04. The MCA proposal, which was completed in
October 2005, supports private sector-led growth and human development in line with
the Government Action Plan. The EC is preparing a Country Strategy Paper and National
Indicative Program for 2007-13 which is likely to reflect priorities identified in the
forthcoming NDS. ADB prepared a Country Strategy and Program for 2006-08, aligned
with EGSPRS priorities. The World Bank Country Assistance Strategy FY05-08 is
aligned with the EGSPRS and supports a subset of EGSPRS priorities. USAID approved
its Strategic Plan for 2004-08 in September 2003. It is broadly in line with EGSPRS
objectives on the acceleration and broadening of sustainable, private sector led growth
and more effective and accountable governance. Since 2001, the German Cooperation
has focused its support on sustainable economic development, including private sector
development with particular focus on SMEs, and the environment, including protection
of natural resources, energy efficiency and renewable energies. The UN Development
Assistance Framework 2007-11 supports the national development framework as
articulated in the forthcoming NDS, the ESGPRS and the Government Action Plan.
           c. Partnership organization
22.     A number of development assistance agencies have strengthened their presence in
the country and the region and delegated project management to the field to better
participate in daily decision making and improve dialogue and cooperation. USAID and
UN agencies maintain a strong presence in the country. ADB has strengthened its
Resident Mission. The World Bank program is coordinated by a Country Director based
in China and a Country Office in Ulaanbaatar. Almost all projects supported by Germany
in the field of technical assistance and cooperation are managed by GTZ in country;
German financial cooperation is managed by KfW Headquarters, assisted by a local
representative in Ulaanbaatar. While external partners do not have sufficient local
technical staff, they make strong efforts to actively participate in the informal working

    See OECD/DAC Aid Statistics at

                                                                            December 31, 2006

       4. Strengthen capacity by coordinated support
       Coherent and coordinated capacity support
23.     External partners are moving toward aligning support for capacity building in line
with some of the bottlenecks identified in the EGSPRS, but a coherent capacity building
strategy is not yet in place. Efforts are underway to reduce fragmentation in capacity
building support. For example, the ADB and the World Bank are providing joint support
for civil service reform, procurement and financial management.
       5. Use of country systems
       Donor financing relying on country systems
24.     Most external support is still in the form of project assistance. The World Bank
has made a first move towards budget support, which relies on country systems, through
a series of PRSCs, the approval of which, however, is still pending. Other external
partners, including the EC, the ADB and Sweden, have expressed interest in co-financing
future PRSCs.
25.    No externally-financed project assistance uses national procurement or financial
management systems, with the only exception of some project components relying on
National Competitive Bidding.
       6. Strengthen capacity by avoiding parallel implementation structures
       PIUs progressively phased out
26.     For externally-financed projects, Project Implementation Units (PIUs) are the
most common project implementation arrangement. However, there is a tendency
towards the use of lighter PIU structures. For example, implementation of the World
Bank-financed Rural Education and Development Project is supported by a small PIU,
headed by a Project Coordinator, and comprising a Finance Officer, a Procurement
Officer, a Project Assistant and a translator. The World Bank Economic Capacity
Building Technical Assistance Project is being executed by the Ministry of Finance and
Economy through an existing Project Coordination Unit (PCU). The PCU is carrying out
day-to-day management of the project activities. Also, the World Bank-financed Index-
Based Livestock Insurance Project provides for a PIU located within the Ministry of
Finance and Economy to be responsible for the overall implementation and management
of the Project. It includes a director, component and provincial or aimag coordinators and
other staff with responsibilities for finance, administration, procurement and general
administration. In addition to these full-time PIU staff, the Project outlines the possibility
of seconding staff members from the Ministry of Food and Agriculture, the Ministry of
Justice and the National Statistical Office to work with the PIU on a part-time basis in
order to facilitate close collaboration with their respective ministries.
       7. Aid is more predictable
       Disbursements aligned with annual budgetary framework
27.    The Government receives a significant and stable annual aid flow each year.
Loans are reflected in the budget through a debt management and financial analysis
system. During the February 2006 Technical Meeting, external partners discussed how to

                                                                                   December 31, 2006

better align external support with the Government’s own planning and budgeting cycle.
The Government is developing a debt management strategy to follow up on these
           8. Aid is untied
28.     Multilateral assistance, which accounted for approximately 40 percent of gross
ODA in 2004,3 is untied. All German aid is untied. United aid might increase through
expected increases in funding from other bilateral partners that as a policy provide only
untied aid.
           9. Use of common arrangements or procedures
29.     ADB and the World Bank are coordinating their support in the education and
transport sectors. ADB, the World Bank and Japan are coordinating their support in the
health sector around common sector strategies and common results frameworks. External
partners are working toward coordinated and harmonized procedures to support the
implementation of the Education Master Plan. They are working together to support the
Government in developing a proposal for funding from the Education for All—Fast
Track Initiative that Mongolia joined in September 2006.
           10. Encouraging shared analysis
           a. Joint missions
30.     Most external partners carry out missions independently and the Government has
not yet requested that more missions are conducted jointly.
           b. Analytical partnership
31.    Partnerships in external analytical support are emerging. ADB and the World
Bank are coordinating their portfolio reviews. In 2003, the World Bank prepared a
Country Procurement Assessment Review (CPAR) in cooperation with the the
Government and ADB. ADB, Germany, Japan and the World Bank are jointly carrying
out analytical work in rural development and decentralization in partnership with the
Government. The World Bank and ADB conducted a joint Country Gender Assessment
and Civil Society Assessment. The World Bank is conducting poverty and household
surveys in close collaboration with the Government and UNDP. External partners have
posted 20 documents on the Country Analytic Work website as of October 2006.4
           11. Results oriented frameworks
           a. Quality of development information
32.    The quality and availability of poverty-related data is improving. The
Government prepared a national statistical development strategy, with the support of a
multi-donor Trust Fund for Statistical Capacity Building, managed by the World Bank.
The strategy was launched in March 2006 and external partners have expressed their

    See OECD/DAC Aid Statistics at

                                                                           December 31, 2006

intentions to coordinate their support around this strategy, as well as their commitment to
financing it. The National Statistical Office conducts annual Household Income and
Expenditure Surveys. It conducted a census in 2000, a Labor Force Sample Survey and a
Living Standards Measurement Survey in 2002/03. It is planning updated poverty surveys
as input into the NDS and the Government Action Plan.
       b. Stakeholder access to development information
33.     Information on Government policies is easily accessible and efforts are being
made to further improve public access to data. The Poverty Research Group was
regularly publicizing information on EGSPRS implementation through its bi-monthly
information sheet entitled “Poverty Issues,” as well as through other publications and
newspapers. The Government printed 1200 copies of the EGSPRS in Mongolian and 400
copies in English, and distributed them to governmental and non-governmental
organizations, citizens, as well as all provinces or aimags and districts or soums during
regional seminars. However, data and analysis conducted to inform the design of public
policy, such as raw poverty data from the Living Standard Measurement Survey and
Environmental Impact Assessments are not made available to the public.
34.     The Government has an updated website with information on Cabinet meetings
and other relevant government documents, including the Government Action Plan and
draft laws. The Open Society Forum website also provides updated information on
current policy issues and has detailed information on the Government budget for 2004,
2005 and 2006 as well as the draft 2007 budget.5
       c. Coordinated country-level monitoring and evaluation
35.      The Government is taking steps to develop a country-level M&E system. In
February 2006, UNDP initiated a system-wide project to improve the Government’s
ability to monitor the MDGs and the implementation of the Government Action Plan. The
Ministry of Finance and Economy leads the MDG monitoring using the database
DevInfo, in cooperation with the Ministry of Foreign Affairs and the National Statistical
Office. In April 2004, the Government approved the creation of an EGSPRS M&E
system consisting of two main components: a Strategic Management Section and an
Information Collection, Processing and Analysis Section. While the Strategic
Management Section activities have been focused on preparing and disseminating
participatory reports on the EGSPRS implementation process as well as on reviewing and
improving the strategy, the activities of the Information Collection, Processing and
Analysis Section have mainly focused on collecting and analyzing quantitative and
qualitative information on EGSPRS implementation. However, because the EGSPRS is
not fully integrated with the other government strategies, the EGSPRS M&E system does
not yet feed into policy design and budgeting.
       Development effectiveness assessment frameworks


                                                                     December 31, 2006

36.    Mongolia endorsed the Paris Declaration on Aid Effectiveness. The Government
and external partners reviewed a harmonization action plan at the 2003 CG meeting and
are now considering steps for its implementation. They have not yet updated the
harmonization action plan in the context of the Paris Declaration.

                                                                           December 31, 2006

ADB (2003), Country Strategy and Program Update (2005 – 2006). Mongolia. Manila.
__________ (2005), Country Strategy and Program 2006-2008 – Mongolia. Manila
ADB and World Bank (2005), Mongolia. Country Gender Assessment. Manila.
Aid Harmonization and Alignment (2006), Initiatives for Mongolia.
Constitution of Mongolia 1992.
EIU (2006), Mongolia Country Report (November). London.
Government of Mongolia (2003), Economic Growth Support and Poverty Reduction Strategy.
__________ (2004), Action Plan of the Government of Mongolia for 2004-2008. Ulaanbaatar.
__________ (2004), Millennium Development Goals: National Report on the Status of
       Implementation in Mongolia. Ulaanbaatar.
__________ (2005), Economic Growth Support Poverty Reduction Strategy. Implementation
       Progress Report 2004. Ulaanbaatar.
IMF and World Bank (2003), Mongolia Poverty Reduction Strategy Paper Joint Staff Assessment.
       Washington DC.
________ (2005), Mongolia Poverty Reduction Strategy Paper Progress Report Joint Staff
       Advisory Note. Washington DC.
JBIC (2001), Poverty Profile Executive Summary: Mongolia. Tokyo.
MCC (2006), Mongolia Country Status Report. Washington DC.
UN (2006), United Nations Development Assistance Framework 2007-11. Ulaanbaatar.
VENRO (2003), PRSP-Watch. Länderprofile: Mongolei (September). Berlin.
World Bank (2002), Mongolia Public Expenditure and Financial Management Review.
      Washington DC.
__________ (2003), Mongolia Country Procurement Assessment Report. Washington DC.
__________ (2004), Country Assistance Strategy for Mongolia. Washington DC.
__________ (2004), Mongolia Poverty Reduction Support Credit. Project Information Document.
       Washington DC.
__________ (2004), Mongolia: World Bank Vice-President Reaffirms Support for New Coalition
       Government. Washington DC.
__________ (2005), Mongolia Poverty Reduction Strategy Paper Progress Report Joint Staff
       Advisory Note. Washington DC.
__________ (2005), Mongolia: Second Private Sector Development Credit Project. Project
       Appraisal Document. Washington DC.
__________ (2006), Mongolia – Governance Assistance Project. Project Information Document.
       Washington DC.
__________ (2006), Mongolia Poverty Assessment. Washington DC.

                                                                           December 31, 2006

__________ (2006), The Government of Mongolia - External Partners Cooperation Intensified
       (Press Release).

Related websites
ADB Mongolia
Government of Mongolia and External Partners Technical Meeting, Ulaanbaatar, October 9-10,
GTZ Mongolia
JICA Mongolia
KfW Mongolia
Millennium Challenge Corporation
Transparency International: Corruption Perception Indexes
USAID Mongolia
World Bank Country Policy and Institutional Assessment (CPIA),,contentMDK:2093360