MANILA, PHILIPPINES (12 May 2020) — The Asian Development Bank (ADB) has approved a $100 million loan to the Government of Mongolia to mitigate the severe health and economic impacts of the novel coronavirus disease (COVID-19) pandemic.
“I commend the government on its response to the COVID-19 outbreak, which has kept the number of COVID-19 cases low in Mongolia,” said ADB President Masatsugu Asakawa. “However, the crisis is putting a strain on the economy and the threat to public health remains serious. ADB’s assistance will help fund critical support to vulnerable people and businesses, and assist the government in managing the economic impact and responding to the health and social protection needs the pandemic has created.”
COVID-19 is triggering a severe economic slowdown in Mongolia. The current turmoil in the global economy and commodity markets has reduced revenues, increased balance of payment pressures, and accentuated financial sector risks. Women and small businesses are particularly vulnerable.
The economy, with its dependence on mining, which accounts for almost a quarter of gross domestic product and 90% of exports, remains vulnerable to swings in commodity prices. Mongolia is also heavily dependent on trade with its neighbor, the People’s Republic of China, where an economic slowdown has triggered a sharp fall in export prices in Mongolia and badly hit the transport, tourism, retail trade, and services sectors.
In response, the government launched on 27 March a countercyclical development expenditure program (CDEP), with the intention of introducing $1.8 billion in measures to counter the negative impacts of the COVID-19 pandemic.
ADB’s COVID-19 Rapid Response Program is funded through the COVID-19 pandemic response option (CPRO) under ADB’s Countercyclical Support Facility. CPRO was established as part of ADB’s $20 billion expanded assistance for developing member countries’ COVID-19 response, which was announced on 13 April.
The program will support the government’s ongoing initiatives, including a National Emergency Response Plan to contain the spread of COVID-19 and strengthen the health system; and the CDEP, comprising cash transfer schemes and other social protection measures targeting poor and vulnerable groups, households, and businesses.
With ADB assistance, the CDEP will increase the allocation under the Child Money Program by 50% to reach 1.1 million children. Private sector workers will be exempt from personal income tax for 6 months starting from 1 April, aimed at employees at risk of losing their jobs. At least 45% of the beneficiaries are targeted to be women.
Support will also be provided to micro, small, and medium-sized enterprises, including those engaged in international trade, particularly the import of critical food and medical supplies, to protect jobs. Businesses whose operations have been impacted will be eligible for a 6-month exemption from the payment of social insurance, with at least 50% of the beneficiaries women.
Short-term assistance in supplying medical equipment and supplies will be complemented by a set of medium-term measures, including strengthening 35 hospitals to meet national infection prevention and control standards, and improving 210 hospitals to meet national standards to manage Severe Acute Respiratory Infection patients, and enhancing testing capacity.
To ensure that COVID-19 pandemic responses are well-aligned and complementary, ADB is working closely with the International Monetary Fund, the World Bank, other development partners, and various United Nations agencies.
ADB’s rapid response support to Mongolia has included the reallocation of $1.4 million in early February under an existing health sector operation to support the procurement of emergency health equipment, a small-scale technical assistance project for emergency response systems in the health sector, and a $1 million grant from the Asia Pacific Disaster Response Facility to support further procurement of emergency medical equipment. On 7 May, ADB approved $30 million in extra financing for the Fifth Health Sector Project to further strengthen the country’s preparedness and response.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.