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Mongolia and ADB

ADB operations in Mongolia address infrastructure gaps, promote renewable energy, foster regional economic integration, expand access to basic urban services, and provide support to agribusiness.

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:
$22.07 million

Paid-in capital subscription:
$1.11 million

Driven by strong domestic demand, Mongolia has mounted a strong economic recovery since 2017.

The country, however, continues to face long-standing development challenges, including underdeveloped infrastructure, lack of export diversification, underemployment, desertification, and air pollution. Finding solutions to these problems will be essential if Mongolia is to develop a more resilient and diversified economy, and permanently lift out of poverty the 28.4% of the population who are impoverished.

The Tsedenbal plaza in Ulaanbaatar

ADB has been Mongolia’s largest multilateral development partner since 1991, playing a central role in the country’s transformation to a middle-income, market-based economy.

Since 1991, ADB has committed sovereign loans totaling $2.7 billion, nonsovereign loans totaling $182.2 million, grants of $323.7 million, and technical assistance worth $178.6 million to Mongolia. Cumulative loan and grant disbursements to Mongolia amount to $2.05 billion.


ADB-Supported Projects and Programs

ADB’s development program for Mongolia continues to strive for inclusive growth and closer regional cooperation.

In 2019, ADB committed a $38 million loan to develop ecotourism in two national parks in Khuvsgul and Khentii provinces, serving as models for economically inclusive development and conservation. The project will improve park infrastructure, sanitation, and management and is expected to benefit 11,000 residents through new or diversified opportunities to earn income.

Fostering sustainable tourism is vital for Mongolia’s long-term development.

To improve access to high-quality health care systems, ADB approved $158.34 million for its first multitranche financing facility in Mongolia. The bank committed $79.58 million for the first tranche, which included cofinancing. The investment program will establish district hospitals in the Chingeltei and KhanUul districts of Ulaanbaatar, expand provincial hospitals in Khovd and Uvs, upgrade the National Ambulance Call Center, and establish 16 family health centers. ADB also committed $16 million in additional financing to complete a new Songinokhairkhan district hospital, servicing 320,000 poor residents of Ulaanbaatar.

In community health, ADB committed a $160 million policy-based loan to help address severe air pollution in Ulaanbaatar and committed a $1.15 million technical assistance grant financed by the Japan Fund for Poverty Reduction to improve food waste recycling within poor pockets of the capital.

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

ADB continues its work in promoting inclusive economic growth and enhancing regional integration for Mongolia. The bank committed $27 million in additional financing to upgrade border-crossing facilities in Bichigt and Borshoo, connecting Mongolia to the People’s Republic of China and the Russian Federation, to facilitate trade and transport in the country. It also committed an additional $60 million, cofinanced by the High-Level Technology Fund and the Japan Joint Crediting Mechanism, to rehabilitate 176 kilometers of road from Darkhan to Altanbulag and from Khuiten Valley to Arvaikheer. The project will also improve the safety of 204 kilometers of road from Ulaanbaatar to Darkhan.

ADB provided $1.15 million in technical assistance to strengthen the Mongolia National Audit Office and $600,000 in technical assistance to enhance the readiness of three eastern provinces to develop their private sectors.

In line with its commitment to support the Government of Mongolia with valuable knowledge products, ADB published a brief on integrating people with disabilities into Mongolian society along with a technical report on living with disability in the country. The bank also published a brief on how Mongolia can achieve sustained macroeconomic stability by improving the management of its natural resource revenues.

The regional transport of freight and passengers via the Western Road Corridor increased economic development and regional trade.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3.00 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2019, ADB mobilized $3.28 billion of longterm cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Financing Partnerships

Financing partnerships enable ADB’s development 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 Finance Program and Supply Chain Finance Program.

ADB began cofinancing operations in Mongolia in 1994. Since then, sovereign cofinancing commitments for Mongolia have amounted to $375.57 million for 38 investment projects and $54.40 million for 61 technical assistance projects. Nonsovereign cofinancing for Mongolia has amounted to $187.36 million for four investment projects and $0.22 million for one technical assistance project.

In 2019, Mongolia received $155 million in loan cofinancing from the ExportImport Bank of Korea and the Green Climate Fund for two projects; and $4.98 million in grant cofinancing from the High-Level Technology Fund and the Japan Fund for the Joint Crediting Mechanism for two projects.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

Macroeconomic stability in Mongolia is improving, but the country remains vulnerable to shocks. Small and medium-sized enterprises play an important role in promoting diversification and making the growth process more labor-intensive, particularly in developing value chains for Mongolia’s unique agricultural resources. This requires structural reforms to expand access to finance. It will also require infrastructure investments 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, poorly regulated development of the mining sector, and the impacts of climate change are causing significant environmental degradation, and these issues must be addressed.

Future Directions

Under its country partnership strategy, 2017–2020 for Mongolia, ADB will address infrastructure gaps, promote renewable energy, foster regional economic integration, expand access to basic urban services, and provide support to agribusiness. Gender equality will remain a focus across ADB operations. The bank will use partnerships—in power, heating, renewable energy, and water—to transform service delivery, encourage private sector participation, and promote green development in the country. ADB will also intensify its cofinancing partnerships, providing additional resources and knowledge products to address Mongolia’s mostpressing development issues, including the launch of a policy note series.

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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