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Mongolia and ADB

Building on a 3-decade partnership, ADB will use sovereign, nonsovereign, and knowledge initiatives to ensure that Mongolia is resilient to the impacts of the pandemic and can continue to progress toward long-term sustainable and inclusive development.

ADB's Work in Mongolia

ADB Membership

Joined 1991

Shareholding and Voting Power

Number of shares held:
1,596 (0.015% of total shares)

Votes:
40,710 (0.306% of total membership, 0.470% of total regional membership)

Overall capital subscription:
$22.99 million

Paid-in capital subscription:
$1.15 million

Prior to the coronavirus disease (COVID-19) outbreak, the country’s economic growth averaged 5.9% during 2017–2020, boosted by stronger external demand and a recovery in foreign direct investment.

COVID-19 has put the economy under deep pressure, despite resolute action taken by the Government of Mongolia to contain the virus. Gross domestic product contracted by 5.3% in 2020.

The Tsedenbal plaza in Ulaanbaatar

The Asian Development Bank (ADB) has been Mongolia’s largest multilateral development partner since 1991, supporting the country’s transformation to a middle-income, market-based economy.

Since 1991, ADB has committed sovereign loans totaling $3 billion, nonsovereign loans totaling $182.1 million, grants of $335.7 million, and technical assistance worth $187.1 million for Mongolia. Cumulative loan and grant disbursements to Mongolia amount to $2.42 billion.


ADB-Supported Projects and Programs

In 2020, ADB provided immediate COVID-19 support for Mongolia to improve preparedness and response, prevent domestic violence, and manage the risk of food insecurity. Asia Pacific Disaster Response Fund resources were also tapped for two emergency response grants.

ADB’s COVID-19 Rapid Response Program loan of $100 million helped the government mitigate severe health and economic impacts, deliver medical equipment and supplies, and improve infection control and testing capacities. The program ensured vulnerable female employees, including those in micro, small, and medium-sized enterprises, benefited from tailored social protection and job retention support.

ADB’s rapid response to mitigate COVID-19 impacts in Mongolia.

ADB also approved a $30 million health sector development project (additional financing) to improve the capacity and hygiene of hospitals, and committed $26.4 million for cash transfers to needy households affected by the pandemic.

In 2020, ADB continued its support for inclusive and sustainable development in Mongolia. Through a $2 million grant from the Japan Fund for Poverty Reduction (JFPR), an inclusive education project will help improve accessibility in schools and kindergartens, while a $100 million loan and a $3 million grant will install 125 megawatts of advanced battery energy storage—the first such system in Mongolia and among the largest globally. Suited to Mongolia’s cold climate and charged entirely by renewable electricity, the system is expected to avoid 842,039 tons of carbon dioxide emissions annually from 2025.

Construction of the Songinohairkhan district hospital, a model multifunctional general hospital, which other district hospitals are expected to follow.

In Ulaanbaatar, ADB committed $43.65 million for urban services and ger area development, benefitting 840,000 people by constructing roads, flood protection channels, electricity cables, water and sewerage pipelines, and social facilities. To improve air quality and public health, ADB released another $60 million for air quality improvement efforts in the capital city. The bank also administers a JFPR grant of $2 million to improve solid waste management and recycling in four secondary cities.

Underpinning agriculture, ADB provided a $40 million loan and a $2 million JFPR grant to establish efficient and climate-resilient irrigation systems, benefitting 3,458 farming households

ADB also committed a $30 million loan to develop and operationalize the Zamyn-Uud free zone as part of economic cooperation between Mongolia and the People’s Republic of China.

To ensure the policy relevance of its knowledge products, ADB continued its bilingual policy note series with an issue titled Boosting Mongolia’s Long-Term Economic Growth through More Equal Labor Force Participation between Men and Women. The publication provides concrete recommendations to increase women’s participation in the economy through the labor code improvements and the business enabling environment. ADB also published a book setting out policy recommendations to address the country’s main development challenges and opportunities.

ADB has partnered with the Bill & Melinda Gates Foundation to develop and evaluate pathways for processing and reusing sewage sludge in agriculture and land reclamation.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments in loans and equity investments from ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020.

In 2020, commitments from ADB’s own funds amounted to $15.1 million for a wheat supply chain liquidity support project and a dairy value chain project in Mongolia. Total outstanding balances and commitments of ADB’s nonsovereign transactions in the country as of 31 December 2020 was $69.5 million, representing 0.5% of ADB’s total nonsovereign portfolio.

Financing Partnerships

Financing partnerships enable ADB’s financing partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade and Supply Chain Finance Program and Microfinance Program.

ADB began cofinancing operations in Mongolia in 1994. Since then, sovereign cofinancing commitments for Mongolia have amounted to $513.72 million for 47 investment projects and $60.1 million for 66 technical assistance projects. Nonsovereign cofinancing for Mongolia has amounted to $188.05 million for five investment projects and $0.22 million for one technical assistance project.

In 2020, Mongolia received a total of $123.65 million loan cofinancing from the Asian Infrastructure Investment Bank, the European Investment Bank, and the World Bank for three investment projects; and a total of $14.5 million grant cofinancing from the High Level Technology Fund and the Japan Fund for Poverty Reduction, for seven investment projects.

A summary of cofinanced projects is available at Mongolia: Cofinancing.

Operational Challenges

Despite improvement in macroeconomic stability before COVID-19, Mongolia remains vulnerable to shocks. The economic base needs to be broadened and diversified. Small and medium-sized enterprises can stimulate diversification and ensure more inclusive growth, particularly in developing value chains for Mongolia’s unique agricultural resources. This requires expanded access to finance, infrastructure investment, and regional integration to improve connectivity and access to external markets. Developing a more skilled workforce and enhancing the quality of life in urban areas will be critical. Policy reform and institutional strengthening will be needed to improve the inclusiveness and efficiency of social service delivery. Rapid urbanization, a poorly regulated mining sector, and the impacts of climate change are causing significant environmental degradation, and these issues must be addressed.

Future Directions

ADB is developing a new country partnership strategy, 2021–2024 for Mongolia. It will focus on supporting the country’s COVID-19 recovery as well as encouraging sustainable and inclusive growth. ADB will use sovereign, nonsovereign, and knowledge initiatives to ensure that Mongolia’s economy is resilient to the impacts of the pandemic. The bank will work with the government to give people the skills to fulfil their potential and help shape a diversified, environmentally responsible, and socially equitable economy. ADB will also intensify its cofinancing partnerships, providing additional resources and knowledge products to address Mongolia’s most-pressing development issues.

This article was originally published in the ADB and Mongolia: Fact Sheet. Updated yearly, this ADB Fact Sheet provides concise information on ADB's operations in the country and contact information.

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