Media Center

News Release

Email this   printer friendly format

ADB Loans for Mongolia to Restructure Education Sector

Help to restructure and reform Mongolia's education system will be provided by loans totalling US$15.5 million approved today by the Asian Development Bank for the Education Sector Development Program.

As Mongolia moves from a planned to a market economy, its education system, overstaffed and under-quality, has to meet new requirements.

On one hand, Mongolia has more education staff than it needs -- the result of heavy subsidies and the centrally-planned system of the Soviet era. The system was adequate educationally: gross enrollment rates and literacy were over 95 per cent. But it was uneconomic. Teacher-pupil ratios were much lower than in other countries in the region, for example. When the subsidies ceased, the cost overheads became unsustainable.

On the other hand, Mongolia's emerging market economy has created a demand for public administrators and business managers with new attitudes and skills such as law, financial management, accounting, auditing, marketing and information technology. There is an urgent need to train teachers in these key subjects and to develop new curricula.

For the ADB, this is the first application of a new lending modality, the sector development program, a package of policy reforms, investments and technical assistance designed to make a sector more cost-effective and responsive.

The ADB is providing a $6.5 million policy program loan and a US$9 million investment loan. The main aims of the policy program loan are to upgrade the quality and improve the efficiency of the sector by:

• a staff rationalization program covering an effective compensation package and outplacement services for staff separation, and retraining and more appropriate career paths for retained staff;
• expanding cost-sharing and cost-recovery schemes for higher education;
• bringing in cost-recovery for textbook publishing and distribution;
• developing a policy framework for technical education and vocational training;
• supporting privatization and private sector schemes;
• establishing an independent accreditation body for higher education.

At the same time, the investment loan is designed to strengthen education management capabilities, to improve quality and coordination in higher education, and to raise the quality and effectiveness of secondary schooling.

Both ADB loans are concessionary, which means they are interest-free, repayable over 40 years, including a 10-year grace period, and carry a service charge of one per cent per annum.

In addition, the Bank is providing a technical assistance grant of US$950,000 to meet key capacity building needs of the sector, including those of the Ministry of Science, Technology, Education and Culture, local authorities and selected key institutions.

The Ministry will be the executing agency for the program which will be implemented over five years, ending early 2002.

Contacts