Mongolia: Financial Regulation and Governance Program

Sovereign Project | 34135-013

Summary

The purpose of the Program is to support the development of a sound and broad-based financial sector that effectively channels resources to productive investment. Specifically, the Program will seek to: (i) reduce the cost of borrowing and expand access to credit by improving the framework for secured transactions, (ii) protect depositors from poor governance practices in banks, (iii) enhance the role of the non-bank financial (NBF) sector in savings mobilization for investment capital, and (iv) improve investor confidence by reducing the risks from potential money laundering through the financial system.

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Project Name Financial Regulation and Governance Program
Project Number 34135-013
Country Mongolia
Project Status Closed
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 2218-MON: Financial Regulation and Governance Program
Asian Development Fund US$ 10.00 million
TA 4737-MON: Capacity Building for Financial Sector Reforms
Japan Special Fund US$ 900,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector Finance - Finance sector development
Gender Equity and Mainstreaming
Description

The purpose of the Program is to support the development of a sound and broad-based financial sector that effectively channels resources to productive investment. Specifically, the Program will seek to: (i) reduce the cost of borrowing and expand access to credit by improving the framework for secured transactions, (ii) protect depositors from poor governance practices in banks, (iii) enhance the role of the non-bank financial (NBF) sector in savings mobilization for investment capital, and (iv) improve investor confidence by reducing the risks from potential money laundering through the financial system.

The Program has three main components: (i) banking sector; (ii) NBF sector; and (iii) Anti-money laundering (AML) regime. The banking sector component will aim to reduce the cost of borrowing and expand access to credit by facilitating debt enforcement and lowering the cost of collateral registration. This component will also introduce legal and regulatory changes to strengthen corporate governance in banks and to improve the supervision of groups and conglomerates that control financial institutions. The NBF sector component will seek to enhance the sector's role in resource mobilization and allocation by developing the legal and regulatory framework, strenghening regulatory capacity through the establishment of a single regulator for NBF sector, the Nonbank Financial Regulatory Commission (NBFRC), and strengthening corporate governance and transparency. This component will also aim to reduce the distortionary impact of tax policies on the financial sector. The AML component will seek to mitigate the potential risks from money laundering activities by supporting the development of the legal and regulatory framework for the AML regime, and the establishment of a financial intelligence unit to monitor and report suspicious financial transactions.

Project Rationale and Linkage to Country/Regional Strategy The country strategy and program (CSP) for Mongolia identifies the underdevelopment of the financial sector and limited access of households and small and medium-sized enterprises (SMEs) to financial services as key impediments to private sector-led economic growth and poverty reduction. A sound financial system with improved efficiency and outreach is a key medium-term outcome envisioned in the CSP. The reforms implemented under the FRGP are fully in line with the Government?s priorities and medium-term objectives.
Impact
Project Outcome
Description of Outcome
Progress Toward Outcome
Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Mongolia
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services None
Procurement The loan proceeds will be used to finance the foreign exchange costs of items produced and procured in ADB member countries (other than the items specified in the negative list of ineligible items and imports financed by other bilateral and multilateral sources). The Government will certify that the volume of eligible imports exceed the amount of ADB's projected disbursement under the loan for the given period. ADB reserves the right to audit the use of the loan proceeds and verify the accuracy of the Government's certification.
Responsible ADB Officer Jan Hansen
Responsible ADB Department East Asia Department
Responsible ADB Division Public Mgt, Financial Sector and Regional Coop Division, EARD
Executing Agencies
Ministry of FinanceMr. Balgan Batbayarbatbayar@mof.pmis.gov.mnGovernment Building-2
Negdsen Undestnii gudamj-5/1
Ulaanbaatar-210646, Mongolia
Timetable
Concept Clearance 15 Aug 2003
Fact Finding 26 Apr 2005 to 06 May 2005
MRM 20 Sep 2005
Approval 15 Dec 2005
Last Review Mission -
PDS Creation Date 29 Jul 2006
Last PDS Update 25 Jul 2010

Loan 2218-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
15 Dec 2005 04 Jul 2006 18 Sep 2006 30 Jun 2010 - 30 Jun 2010
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 10.00 Cumulative Contract Awards
ADB 10.00 15 Dec 2005 5.15 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 15 Dec 2005 5.15 0.00 100%

TA 4737-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
15 Dec 2005 31 Mar 2006 31 Mar 2006 31 Dec 2007 30 Apr 2010 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
900,000.00 0.00 220,000.00 0.00 0.00 0.00 1,120,000.00 15 Dec 2005 893,579.89
Title Document Type Document Date
Financial Regulation and Governance Program Project/Program Completion Reports Dec 2011
Loan Agreement for Financial Regulation and Governance Program between Mongolia and ADB Loan Agreement (Special Operations) Dec 2005
Financial Regulation and Governance Program Reports and Recommendations of the President Nov 2005

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation
Title Document Type Document Date
Mongolia: Financial Regulation and Governance Program Validations of Project Completion Reports Nov 2013

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