Country Assistance Program Evaluation for Mongolia: From Transition to Takeoff (2008)

Date: September 2008
Type: Evaluation Reports
Country:
Subject:
ADB administration and governance; Economics; Evaluation
Series: Country Assistance Program Evaluations

Description

This update to the findings of the 2002 country assistance program evaluation for Mongolia assesses the performance of ADB strategies and assistance programs in the country during 1997-2007. It aims to identify key lessons and recommendations to provide inputs to the preparation of a new country partnership strategy for Mongolia.

Summary of findings

From Program Lending to Investment Operations. Emphasis of ADB support shifted from program lending to investment projects by 2002, when the financial system stabilized and started to recover. Asian Development Fund allocations gradually declined, resulting to projects that were smaller in size and more difficult to implement efficiently. Portfolio management became increasingly difficult, with start-up and initial implementation delays and project extensions.

Commitment to Transition and Poverty Reduction Paid Off. ADB has made important contributions to establishing the policy setting and institutional framework for a market economy and by helping the Government restore fiscal stability. Also, ADB contributed to poverty reduction indirectly through support for enhancing Mongolia's connections for regional and global markets and fostering growth and employment led by the private sector.

Country Assistance Paid Off in Several Sectors. ADB's success has been in the transport, education, banking, and urban sectors. There was strong government ownership, follow through on major sector policy reforms, judicious use of lending and nonlending assistance, and increasing coordination of external assistance.

Private Sector Development. Overall, ADB's private sector participation remains limited because Mongolia lacks well-defined legislative and regulatory frameworks necessary for it. ADB's private operations provided support mainly for small financial sector operations that aided ADB's operations in the private sector. It had limited cross sector synergies and complementarity between public and private operations.

Platform for Regional Cooperation Established. Regional assistance under the CAREC program paid off in terms of attracting investment in trade facilitation and developing the western transport corridor that is part of the Asian Highway network. There are potential benefits for Mongolia and its neighboring countries from fostering cross-border and regional cooperation, which include export opportunities for power and livestock based products.

Results-Orientation and Monitoring. Full awareness and institutional capacity within the Government was lacking. A more focused results framework with monitorable quantitative indicators would have been useful.

Lessons Identified. Lessons identified include (i) overly sophisticated ADB-assisted public sector governance reforms; (ii) ADB assistance to help the Government to introduce new laws were sometimes pursued with large institutional capacity gaps; (iii) ADB assistance became stretched over a large number of regions, subsectors, institutions, and themes; (iv) while being responsive to demand, ADB assistance sometimes lacked investment efficiencies and cross-sector synergies; (v) rapid urban-to-rural migration without adequate urban planning and provision of public services places growing burden on the capital city and its peri-urban areas; (vi) weak harmonization of approach in aid coordination; and (vii) weak results monitoring of program delivery and portfolio by both ADB and the Government.

Overall Rating: Derived by combining the top-down and bottom-up ratings, overall ADB assistance to Mongolia during the evaluation period is rated successful. There is, however, scope for improvement and a need for an innovative approach to ADB assistance in the next country strategy for Mongolia.

Recommendations

The evaluation recommends that the next country partnership strategy

Reorient the role of ADB to support Mongolia in the country's changing development context by: gradually shifting toward becoming a source of new knowledge and catalytic financing; building country capacity for sound public sector financial management, investment planning, results monitoring, and debt management; supporting design and implementation of further policy reforms; and supporting the protection of the country's renewable natural resource base and environment.

Strengthen strategic focus and sector selectivity in ADB operations by: focusing on small number of key subsectors where ADB has good prospects; strategically focusing assistance in sectors and thematic areas that address constraints on the country's economic development; and strengthening policy dialogue and donor coordination support.

Support further private sector development and improve complementarity between the public and private sectors by: helping the Government establish a public utilities tariff and regulatory regime conducive to fostering public-private partnership; providing support for vocational and higher education; and providing support for further developing financial markets and long term financing instruments.

Foster regional cooperation by: supporting the transport corridors building; using catalytic and risk-minimizing assistance to support private sector participation with regional orientation to accelerate development in the Gobi region; exploring subregional cooperation in capital market development; and facilitating policy dialogue for promoting cross-border and regional cooperation.

Improve portfolio performance and client responsiveness by: intensively supervising projects; building institutional capacity to implement projects and monitoring results in partnership with the Government; simplifying project and program design and ensuring time frames and implementation schedules are realistic; working with other partners to build country systems and implement sector-wide approaches, particularly in improving results-oriented monitoring and evaluation systems; and strengthening the resident mission by delegating necessary responsibilities and resources for project administration and increasing participation in project development.

Contents

  • Executive Summary
  • Map
  • Introduction
  • Development Context and Government Priorities
  • Asian Development Bank's Country Strategy
  • Program Implementation
  • Sectoral Results Achieved and Performance Determinants
  • Overall Performance Assessment and Rating
  • Key Findings, Lessons, and Recommendations
  • Appendixes