Context:
Mongolia has experienced great economic growth in the last 14 years. Between 2000 and 2005, the gross domestic product increased by 5.6% per year on average, between 2005 and 2010 by 6.7% and until 2013 by further 10.7%. With a current gross national income of more than USD 4,126, the country has transformed from a low-wage country into a middle-income country in the upper range. The child mortality rate among children under five has been reduced fourfold and modern communication and information technologies have become commonplace - an information society has emerged. However, the field of poverty reduction is not keeping its pace with these positive developments. Mongolia's poverty rate was 36.3% in 1995 and decreased to 21.6% in 2014. These figures show that the country's growth rate does not benefit all members of society equally.
With its rich mineral reserves, Mongolia has great potential to further increase its economic growth. On its way to becoming a wealthy country with relatively high social development level, a dynamic market, and a strong diversified economy, it still faces a number of challenges. Strong institutions and qualified specialists and managers are needed to formulate viable economic and development policy strategies and then implementing them.
Objective: Ministries and the Mongolian state administration provide better public services, the administration works more efficiently and the country uses the revenues from the mineral sector for equitable growth.
Approach: Mongolia has already introduced an integrated policy planning system. With the adoption of the Law on the Development of Policy Planning in November 2015, a legal basis was established for binding and coordinated policy planning that defines the rights and duties of the responsible authorities. In order to enforce the law, guiding principles and procedures have to be developed, meanwhile employees also need the necessary skills and competences to implement planning requirements. The project team is therefore supporting the Mongolian government in developing a legal framework that covers the entire policy cycle and is tied to the budget, fiscal framework and the training of qualified specialists.
In order to plan realistic national development strategies and put them into practice, it is crucial that the public finance management is functioning well. According to the World Bank Public Finance Administration Assessment Report from April 2015, the high dependence of the economy on mineral resources is one of the main reasons for the low creditworthiness of the Mongolian government and its budget and medium-term fiscal framework. The project team therefore supports the Mongolian Ministry of Finance in developing the technical equipment and expertise for mineral sales forecasting, macroeconomic modelling, international taxation and fund management.
On the allocation side of public finance management, the program cooperates with the Ministry of Population Development and Social Security (MoPDSP). The government's pension reform policy from June 2015 stated, that the government wanted to decrease the steadily rising cost of pensions, while at the same time securing a pension benefit for older people to enable them to live an adequate life. Furthermore, social services need to be standardised in order to benefit more people and use the resources more efficiently.