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New ADB Strategy in Mongolia to Address Growth and Social Development

News Release | 19 October 2005

MANILA, PHILIPPINES - ADB will support the Mongolian Government in promoting higher private sector-led growth and inclusive social development, in a new Country Strategy and Program (CSP) for 2006-2008.

The CSP proposes assistance from ADB's concessional Asian Development Fund totaling about $85 million over the three years, averaging about $28 million a year. This will be supplemented by an additional $40 million from ADB's regional fund and cofinancing sources. The lending program will be supported by technical assistance grants averaging about $1.9 million a year.

The CSP aims to help Mongolia maintain stable broad-based economic growth and address priority goals of reducing disparities in development between urban and rural areas, while improving access to jobs, incomes, and higher quality public services.

Planned for the period are projects to address urban development, public administration reform, agriculture, transport, and health.

The final assistance levels are subject to performance and overall ADF availability.

When Mongolia joined ADB in 1991, its economy was in crisis and the country was in flux, given that financial support and technical assistance previously provided by the Soviet Union had been withdrawn. Since then Mongolia has made a strong transition to a market economy, but there has been insufficient growth to reduce the large percentage of the population who fell into poverty in the early transition years.

Harsh natural conditions, geographical isolation, difficult access to financial resources and unemployment are the major causes of poverty, according to the CSP. Low incomes are compounded by inadequate social services, particularly poor medical facilities, urban services, and education.

ADB has provided loans totaling $605.8 million to the end of 2004 for 35 projects in the agriculture, education, energy, financial, health, industry, telecommunications, transport, and urban development sectors, complemented by technical assistance amounting to $57 million.

"With much of the important rehabilitation and emergency agenda now complete, ADB assistance is now to be better focused on sectors that have the maximum impact on poverty reduction," says Barry Hitchcock, ADB Country Director in Mongolia.

"ADB is therefore adopting a more focused approach, narrowing the number of sectors to include assistance in agriculture, transport, education, health, and urban development."

A key change in the CSP is that it targets constraints to broad-based and stable growth rather than higher growth itself, and constraints that limit economic opportunities for the poor rather than general transition and development constraints.

"The CSP addresses the Government's twin priorities within a framework that will develop rigorous performance indicators and establish systems to manage the Government's strategy for achieving results," Mr. Hitchcock adds.

CSPs define ADB's medium-term development strategy as agreed with the country. A CSP update is usually prepared every year taking into account the continued relevance of the CSP, its implementation, and ADB's operational program.