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The impact of the Project will ensure that access to and quality of education will be further enhanced during the times of fiscal constraint and after. The outcome is adequate financing of textbooks, preschool meals, and school operation costs in school year (SY) 2009-2010 and 2010-2011, and improved efficiency of the education sector.

The Project will support (i) financing of preschool meals for children ages 2-5 to protect preschool access for poor children; (ii) the continuation of the targeted provision of textbooks to secondary school students from poor families; (iii) provision of block grants to schools in need of operation and maintenance funds; and (iv) capacity building at the Ministry of Education, Culture, and Science (MECS) in financial management, budgeting, and monitoring and evaluation to enable MECS to better deal with budget constraints. The Project is in line with the $229.2 million Stand-By Arrangement of the International Monetary Fund (IMF) for Mongolia that requires the Government to maintain a tight fiscal policy to restore fiscal sustainability and which advocates donor support to mitigate the impact of the fiscal adjustment on the poor. The Project complements the Social Sectors Support Program (SSSP) approved in June 2009 that will support a comprehensive overhaul of the existing system of social transfer programs to better target these programs towards the very poor while conserving fiscal resources. The SSSP will introduce proxy means testing (PMT) for better targeting of free textbook provision and the Project will support to MECS to operationalize PMT and to enhance the efficiency and effectiveness of education service delivery. The Project is a sectoral intervention that will support the Government in addressing short-term financing needs and maintaining longer-term policy reform in the education sector.

ADB has approved advance contracting for procurement of some textbooks under the textbook provisions and recruitment of consultants for block grant delivery and textbook procurement, as well as retroactive financing of contracts under the textbook provision. The advance contracting will be undertaken in accordance with ADB's Guidelines for Procurement.