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Mongolia: Weathering Exogenous Shocks Program

SUMMARY

STATUS
Approved
MEMBER
Mongolia
SECTOR
CRF-Economic Resilience/PBF
E&S CATEGORY
Category C
PROJECT NUMBER
000688

FINANCING

APPROVED FUNDING
USD100 million
FINANCING TYPE
Sovereign

TIMELINE

APPRAISAL REVIEW/FINAL REVIEW
August 31, 2022
FINANCING APPROVAL
September 29, 2022

OBJECTIVE

To increase the resilience of the population, specifically the poor and vulnerable groups, to the adverse impacts of the ongoing COVID-19 pandemic along with multiple macroeconomic pressures in Mongolia.

DESCRIPTION

The Program is proposed to be supported under the COVID-19 Crisis Recovery Facility (the Facility) of the Bank and co-financed with the Asian Development Bank (ADB).

The proposed Program will support the government measures and financing needs, and mitigate the adverse social and economic impacts on the Mongolian people by providing targeted assistance to poor and vulnerable groups, including women and girls.

Due to its high dependence on trade with its two large neighbors, China and Russia, Mongolia is one of the most severely affected economies by the twin shocks created by COVID-19 containment policies and the multiple macroeconomic pressures. The exposure to these twin shocks has adversely impacted Mongolia’s economy and its population.

The current international environment is characterized by disrupted global economic conditions, increasing challenges in financial and commodity markets, and inflationary pressures on energy and food prices. Economic growth forecast for Mongolia in 2022 was considerably downgraded from 6% p.a. made in September 2021 to only 1% p.a. real GDP growth in July 2022, according to the IMF. The situation is having severe economic impacts in Mongolia, particularly for the 27.8% of households already below the poverty line, with a further 14.9% of people at risk of falling into poverty.

Against this backdrop, the government has prepared a countercyclical development expenditure program (CDEP) to help vulnerable groups, tame inflationary pressure, and support macroeconomic stabilization. The approved budget for 2022 was amended in two occasions to strengthen the critical measures to address the impacts of the twin shocks.

The Program will support the CDEP and will provide the following three outputs: (i) measures to provide temporary increase in cash transfers directly made to households; (ii) measures to cushion adverse socioeconomic impacts on vulnerable groups, including women, and (iii) measures to counteract inflationary pressures of imported essential goods and commodities.

PROJECT TEAM LEADER

Asian Infrastructure Investment Bank

Gabriel Giacobone

Infrastructure Sector Economist

gabriel.giacobone@aiib.org

 

Guoping Zhang

Senior Investment Operations Specialist

guoping.zhang@aiib.org

 

Asian Development Bank

Peter Rosenkranz

Financial Sector Specialist

prosenkranz@adb.org

BORROWER

Odontuya Baigalmaa

Director, Debt Management Division, Financial Policy Department
Ministry of Finance

odontuya_b@mof.gov.mn

IMPLEMENTING ENTITY

Maral Ulambayar

Specialist, Debt Management Division, Financial Policy Department
Ministry of Finance.

maral_u@mof.gov.mn

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