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Mongolia: COVID-19 Rapid Response Program

Sovereign (Public) Project | 54174-001 Status: Active

The proposed COVID-19 Pandemic Response Option (CPRO) will, in the short-term, help the government mitigate the negative economic impact and the significant decrease in trade and capital flows caused by the COVID-19 pandemic, alongside falling commodity price trends. The government's ongoing initiatives include a Coronavirus Pandemic Response Plan designed to contain the spread of the disease while strengthening the health system, and a significant increase in expenditure with an important rise in transfer payments that will ease the burden on vulnerable people.

Project Details

Project Officer
Van Rijn, Johannes Jacobus Frederik East Asia Department Request for information
Country
  • Mongolia
Sector
  • Public sector management
 
Project Name COVID-19 Rapid Response Program
Project Number 54174-001
Country Mongolia
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3922-MON: COVID-19 Rapid Response Program
Ordinary capital resources US$ 100.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Sector / Subsector

Health / Health system development

Public sector management / Public expenditure and fiscal management - Social protection initiatives

Gender Equity and Mainstreaming Effective gender mainstreaming
Description The proposed COVID-19 Pandemic Response Option (CPRO) will, in the short-term, help the government mitigate the negative economic impact and the significant decrease in trade and capital flows caused by the COVID-19 pandemic, alongside falling commodity price trends. The government's ongoing initiatives include a Coronavirus Pandemic Response Plan designed to contain the spread of the disease while strengthening the health system, and a significant increase in expenditure with an important rise in transfer payments that will ease the burden on vulnerable people.
Project Rationale and Linkage to Country/Regional Strategy

Since 2017, Mongolia has been recovering from a difficult economic period. Economic growth decelerated from a peak of 17.3% in 2011 to 1.2% in 2016, as net FDI inflows totally collapsed from $4.5 billion to negative $4.2 billion, coal exports decreased by 57.2%, terms of trade deteriorated significantly due to external shocks, and large mining projects were delayed. These factors pushed public debt to 109.1% of GDP in 2016, with a fiscal deficit of 15.3% in the same year. As a result, in May 2017, the International Monetary Fund (IMF) approved a 3-year Extended Fund Facility (EFF) of $5.5 billion, which was also supported by other development partners, including the World Bank and ADB. Economic performance over 2017-2019 was relatively robust, with growth recovering 5.3% in 2017, rising to 7.2% in 2018 and moderating at 5.1% in 2019.

Before the COVID-19 pandemic, this recovery was already moderating. The slowdown in economic activity became apparent in the second half of 2019 as fourth quarter growth dipped to 2.2%, making it the slowest quarter since the third quarter of 2016. This was driven by falling commodity prices directly impacting Mongolia's export prices, declining production in the mining sector and reduced economic activity in the PRC. The combined result was a downward adjustment in mining sector production and exports, and their transmission to non-mining sectors. As of February 2020, Mongolia's export price index decreased by 8.7% month on month and by 7.0% on year over year basis.

Mongolia will experience a severe economic slowdown due to the COVID-19 pandemic. The current turmoil in the global economy, capital markets and commodity markets due to COVID-19 pandemic, has weakened the global, regional and country-specific outlook. Consequently, GDP growth in Mongolia will be much lower in 2020 than envisioned ADB has revised the 2020 forecast down from 6.1% to 2.1%. A protracted global economic crisis due to the COVID-19 pandemic would further worsen this outlook considerably and may require support beyond the scope of this intervention.

Impact Adverse effects of the COVID-19 pandemic on the economy are mitigated and poverty is alleviated.
Project Outcome
Description of Outcome Negative health and economic effects of the COVID-19 crisis on vulnerable groups mitigated.
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Measures and increased fund allocation for social protection programs for the most vulnerable groups implemented

Measures to safeguard productive sectors and MSMEs from the downturn implemented

Measures to strengthen infection prevention and control established

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Van Rijn, Johannes Jacobus Frederik
Responsible ADB Department East Asia Department
Responsible ADB Division Public Mgt, Financial Sector and Regional Coop Division, EARD
Executing Agencies
Ministry of Finance (formerly Ministry of Finance and Economy)
[email protected]
S.Danzangiin Gudamj 5/1, Zasgiin Gazriin
II Bair, Ulaanbaatar 15160 Mongolia
Timetable
Concept Clearance -
Fact Finding 02 Apr 2020 to 02 Apr 2020
MRM 16 Apr 2020
Approval 12 May 2020
Last Review Mission -
Last PDS Update 13 May 2020

Loan 3922-MON

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 100.00 Cumulative Contract Awards
ADB 100.00 - 0.00 0.00 %
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

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