Mongolia: Capacity Building for Governance Reforms

Sovereign Project | 35376-023 Status: Closed

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Project Name Capacity Building for Governance Reforms
Project Number 35376-023
Country Mongolia
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2011-MON: Capacity Building for Governance Reforms
Asian Development Fund US$ 2.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Public sector management - Public administration

Gender Equity and Mainstreaming No gender elements
Description The purpose of the proposed TA loan for Capacity Building for Governance Reforms (CBGR) is to support the Government in enhancing its overall capacity to implement the key governance related measures under the Second Governance Reform Program (GRP-II) through interim management, on the job training programs and technical support. The scope of CBGR will cover: (i) financial management reforms in the public sector, in the areas of accounting, auditing and asset valuation; (ii) support for strategic planning in relation to the Public Sector Management and Finance Law (PSMFL) implementation; and (iii) software and limited hardware support to undertake output costing, and financial statement and performance audits efficiently.
Project Rationale and Linkage to Country/Regional Strategy Governace is a key pillar of ADB's country operational strategy for Mongolia, where ADB has supported public sector governance reforms since 1995. The Governance Reform Program (GRP) led to the formulation of a 10-year reform roadmap to be implemented over 1999-2009. GRP also helped implement critical administrative and financial management reforms on a pilot basis in selected budgetary agencies over 1999-2002. This program cluster forms an integral part of the governance reform roadmap and will help further the reforms through capacity building as well as mainstreaming measures.
Impact To help the Government enhance its overall capacity to implement key governance-related measures under Governance Reform Program II through interim management, on-the-job training programs, and technical support.
Project Outcome
Description of Outcome

To enhance capacity building for governance reforms in the following areas:

1. financial management reforms in public sector accounting, auditing and asset valuation;

2. support for strategic planning of PSMFL implementation; and

3. software and limited hardware support to efficiently undertake output costing and financial statement and performance audits.

Progress Toward Outcome Public spending is subject to routine financial audits by the Mongolia National Audit Office on an annual basis. Performance audits for selected public bodies are conducted on an occasional basis. The audit reports are discussed by Parliament in order to approve the final budget performance. However, it is not clear to what extent actions are taken based on the audit findings and recommendations. The government has adopted International Public Sector Accounting Standards and a uniform chart of accounts for use across government agencies. Budget preparation and implementation continues to be conducted on a cash accounting basis, while preparation of financial statements at year end is gradually shifting to international accrual accounting standards. Good progress has been made on preparation of consolidated financial statements for the general government. Implementation of internal audit functions has started recently in the MOF and three line ministries. There has been little progress in the integration of planning and budgeting. Strategic business planning and the medium-term expenditure framework still carry little weight to guide the annual budget process.
Implementation Progress
Description of Project Outputs

1. Establish sound institutional structures for effective public financial management.

2. Support transition to implement accrual accounting on a pilot basis.

3. Introduce internationally accepted asset valuation standards.

4. Strengthen the public sector auditing and financial inspection framework.

5. Strengthen the policy, institutional, legal and regulatory frameworks for private sector accounting and auditing.

Status of Implementation Progress (Outputs, Activities, and Issues)

The consultants conducted training sessions for the Audit Managers of the Mongolia National Audit Office (MNAO), conducted regional training and and prepared audit field manuals. ADB also purchased audit hardware and software for the MNAO. By end of 2006, about 545 government staff attended training sessions related to financial management reforms.

The International and Domestic SPEs reviewed the strategic business plans (SBPs) of the Ministry of Finance (MOF) (2005-2007), Ministry of Education, Communication and Science (MOECS) (2006-2008), Ministry of Health (MOH) (2005-2008), and Ministry of Social Welfare and Labor (MOSWL) (2005-2008) and provided suggestions for improving the SBPs for the years 2008-2010. They also drafted the manuals and guidelines on SBPs, output costing and budgeting including the establishment of benchmarks, the migration from cash to accrual accounting and the Performance Assessment Rating Tool.

During the loan review mission from 9-18 December 2008, the mission and project director concluded to align most of the remaining funds under the project with the ongoing IMF project and assignment of the resident IMF Budget Planning Advisor and (i) carry out capacity building activities in public financial management related areas in order to increase the capacity of MOF and line ministry staff in basic budgeting, planning, government accounting and treasury management skills and (ii) provide capacity building for the National Development and Innovation Committee.

Geographical Location Mongolia
Safeguard Categories
Environment C
Involuntary Resettlement
Indigenous Peoples
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 The TA loan will involve the use of 53 person-months of international consulting services, comprising the following: (i) Advisor to the Accountant General for 18 person-months; (ii) PSMFL Strategic Planning Advisor for 12 person-months; (iii) advisory services to the National Audit Office (NAO) for 18 person-months through a team of 2 auditors who will work with 6 NAO auditors to implement each of the relevant Policy Matrix Conditions; (iv) an Asset Valuation Expert for 2 person-months; and (v) a Systems and MIS Expert to design software and hardware modules on output costing and auditing for 3 person-months. All international consultants will be recruited on an individual basis. In addition, about 120 person-months of domestic consulting support will also be procured in the above areas including project management, on an individual basis by the Project Implementation Unit through competitive selection.
Procurement The procurement of hardware (computers and networking facilities) and software (system-based audit support and output-costing software) for the Management Information System (MIS) component will be based on international shopping procedures. Procurement of materials and equipment for less than $100,000 equivalent will be procured using direct purchase procedures. Any supply contracts estimated to exceed $500,000 equivalent for goods and related services will be subject to international competitive bidding requirements.
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 Finance
Mr. Batjargal Bazarsuren
Government Building-2
Negdsen Undestnii gudamj-5/1
Ulaanbaatar-210646, Mongolia
Concept Clearance 08 Mar 2003
Fact Finding 14 Feb 2003 to 28 Feb 2003
MRM 28 May 2003
Approval 14 Oct 2003
Last Review Mission -
PDS Creation Date 14 Dec 2006
Last PDS Update 28 Feb 2011

Loan 2011-MON

Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Oct 2003 09 Dec 2003 27 Jan 2004 31 Mar 2007 31 May 2011 04 Aug 2011
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 2.40 Cumulative Contract Awards
ADB 2.00 14 Oct 2003 2.01 0.00 100%
Counterpart 0.40 Cumulative Disbursements
Cofinancing 0.00 14 Oct 2003 2.01 0.00 100%
Title Document Type Document Date
Second Phase of the Governance Reform Program Project/Program Completion Reports Dec 2011
Second Phase of the Governance Reform Program Reports and Recommendations of the President Sep 2003

Safeguard Documents

See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents

See also: Independent Evaluation

None currently available.

Related Publications

None currently available.

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