ADB, Mongolia Agree to New Five-Year Development Plan

News Release | 17 April 2012

MANILA, PHILIPPINES - The Asian Development Bank (ADB) and the Government of Mongolia have agreed on a new five-year country partnership strategy (CPS) that will provide $740 million assistance to help the country diversify its economic activities and narrow the inequality gap.

ADB's Board of Directors today endorsed the CPS that outlines its support for Mongolia's efforts to address priority infrastructure gaps, regional economic integration, and access to basic urban services, including water supply, education and health.

"As Mongolia approaches the middle-income level, ADB's support is expected to grow and play an increasingly catalytic role by improving the environment for private sector participation in infrastructure and service delivery, and by addressing policy, regulatory and capacity constraints," said Robert Wihtol, Director-General of ADB's East Asia Department.

The new strategy is built on two pillars: competitive, sustainable, and regionally integrated growth; and inclusive social development. Selective investments are planned in transport, energy and municipal development, with emphasis placed on public-private partnerships and regional cooperation. ADB will also support skills development through higher education reform and vocational training, as well as help sustaining health reforms so that private sector can invest to improve health services.

Mongolia is changing rapidly. The country rebounded strongly after being one of the hardest hit by the global economic downturn of 2008 to 2009. With a growing mining sector, Mongolia is poised to become one of the fastest growing countries in the region.

Poverty remains a challenge, however. In 2010, an estimated 39% of the population was living below the poverty line, with nomadic families, households headed by women, and recent urban migrants registering a high poverty incidence. Inequality is severe between the urban and rural areas, especially in the western part of the country. This is reflected in poor and unequal access to basic social services in underserved suburban and rural areas.

The CPS plans to raise the percentage of college graduates employed in the fields in which they received training to 50% by 2016, up from 40% in 2007. It also plans to achieve universal coverage of health insurance by 2015.

The country's infrastructure is still inadequate to realize the full potential of mining sector development. Despite strong government commitment to health and education, fundamental skills mismatch and inefficient health services still prevent many Mongolians from participating in the new mining- and services-based economy.

ADB has been the government's single largest source of official development assistance. Between 1991 and 2011, Mongolia received loans for 47 projects totaling $840 million. In addition, since 2007, 12 Asian Development Fund grant projects totaling $172 million have been approved.