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Mongolia: Shock-Responsive Social Protection Project

Sovereign (Public) Project | 54214-001 Status: Active

The project is aligned with the following impact: adverse socioeconomic impacts of the COVID-19 pandemic reduced. The project will have the following outcome: basic needs of the poor and vulnerable, especially women and children, supported.

Project Details

Project Officer
Schelzig, Karin Mara East Asia Department Request for information
Country
  • Mongolia
Sector
  • Public sector management
 
Project Name Shock-Responsive Social Protection Project
Project Number 54214-001
Country Mongolia
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3937-MON: Shock-Responsive Social Protection Project
concessional ordinary capital resources lending / Asian Development Fund US$ 26.40 million
Loan: Shock-Responsive Social Protection Project
World Bank US$ 5.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Partnerships
Sector / Subsector

Public sector management / Social protection initiatives

Gender Equity and Mainstreaming Effective gender mainstreaming
Description

The project is aligned with the following impact: adverse socioeconomic impacts of the COVID-19 pandemic reduced. The project will have the following outcome: basic needs of the poor and vulnerable, especially women and children, supported.

Output 1: Poverty-targeted food support increased. Output 1 will finance a temporary increase in the monthly benefit level for all FSP beneficiaries for 5 months. The cash-like benefits are delivered either as electronic payments to e-cards (for 70% of the recipients, mostly in urban areas) or as physical vouchers (for 30% of the recipients, mostly rural). Food stamps can be used to purchase 10 staple food items, including milk and vegetables, from more than 750 participating vendors nationwide. The FSP helps smooth consumption and protect food intake for more than 240,500 people, among them more than 118,000 children. Women and girls comprise 53% of all FSP recipients. The program reaches 44,325 families (the poorest 5%). Each family receives food stamps worth MNT16,000 per adult and MNT8,000 per child per month. A poor family of five would normally receive just over $20 per month (less than 7% of the monthly poverty line for a family of five).

Output 2: Child-targeted income support increased. Output 2 will finance a share of the temporary increase in the monthly benefit level to all CMP beneficiaries for 6 months. The CMP provides monthly cash grants to children aged 0 17. Payments are made to accounts set up in the children's names, with mostly mothers as the custodians, on the condition that children are registered in the Integrated Household Database (IHD). As of March 2020, 1,107,130 children (about 93% of the total) received CMP grants worth MNT20,000 per child per month. A mother of three children under 18 would receive about $21.50 (about 7.2% of the monthly poverty line for a family of five) to support her children's needs.

Emergency assistance loan characteristics. The project will (i) restore economic activities during and after the pandemic, (ii) mitigate immediate losses, (iii) provide immediate short-term transitional assistance, (iv) be restricted to the transition phase, (v) complement efforts by other development partners to ease the transition from relief to normal development, (vi) not be a policy-based loan.

Project Rationale and Linkage to Country/Regional Strategy

Impact of the pandemic. The World Health Organization (WHO) declared the COVID-19 outbreak a public health emergency of international concern on 30 January 2020 and a pandemic on 11 March 2020. The WHO recommended that countries take drastic actions to contain the disease, requiring an immediate response to control and prevent its spread and reduce its health, economic, and social impacts, especially on poor and vulnerable groups. Mongolia's early and robust response to contain the spread included strict border closures, a suspension of air travel, enforced quarantine for arriving passengers, closure of schools and non-essential businesses, and other restrictions on daily life. These measures helped keep the number of cases relatively low, but the health risk-level remains high, and the curtailment of economic activity has affected many parts of the economy, including small and medium-sized enterprises, the service sector, and mining and extractive industries. A narrow economic base and dependence on mining make the economy inherently vulnerable.

Mongolia will experience a severe economic slowdown. Preliminary estimates show that Mongolia will suffer losses totaling $71 million $276 million. Gross domestic product growth will be much lower in 2020 than envisioned: the Asian Development Bank (ADB) has revised the 2020 growth forecast to 2.1%, down from 6.1%, but a protracted global economic crisis brought about by the pandemic would significantly worsen this outlook. To counter the negative impacts of the COVID-19 pandemic, on 27 March 2020 the government launched a countercyclical development expenditure program (CDEP) and announced its intention to introduce measures with a cost of MNT5.1 trillion ($1.84 billion). The program includes three areas of support: social protection measures to support citizens, support to vulnerable businesses and fiscal stimulus measures, and public health protection.

Socioeconomic impacts on the poor and vulnerable. The loss of jobs and income coupled with rising food prices will particularly affect existing poor and vulnerable people. The pre-crisis poverty rate was 28.4% in a population of 3.24 million, but this national average masks significant differences by gender, location, and age. The poverty rate is significantly higher among urban households headed by women (32.4%), households living in the country's eastern region (37.4%), and among very young children aged 0 4 (38.0%). Childhood poverty is widespread: children under the age of 15 comprise 42% of the country's nearly 905,000 poor people, while 52% live in households with more than three children. A significant share of Mongolians who are technically non-poor nevertheless live precariously close to the poverty line. Increasing the poverty line by half from MNT166,580 to MNT249,870 per capita per month nearly doubles the poverty rate to 55.7% of the population (footnote 5). About 15% of non-poor Mongolians are considered particularly vulnerable to falling into poverty as their household income falls below 1.25 times the poverty line. Mongolia's experience with past crises indicates the adoption of negative coping strategies is a risk. Negative coping strategies can include selling productive assets, reducing consumption levels, or making harmful choices regarding investment in education, health, and livelihoods, all of which can impact long-term well-being.

Global social protection response. As of 22 May 2020, 190 countries have planned, introduced, or adapted 937 social protection programs in response to COVID-19; the majority are social assistance transfers (559 measures, or 60% of the total). The most commonly used social assistance instruments are cash-based measures, with 283 measures in 113 countries. During a crisis, expanding support using existing programs and their infrastructure such as targeting and delivery systems is more efficient than creating new programs. Mongolia's Ministry of Labor and Social Protection (MLSP) used the food stamp program (FSP) in this way during the most recent financial crisis in 2017. The shock-responsive social protection literature identifies several options for responding to shocks using existing programs, including (i) adjusting the design of existing social protection interventions (such as waiving conditions), (ii) attaching interventions to existing program infrastructure, (iii) vertically expanding programs to temporarily increase the value or duration of benefits for existing recipients, and (iv) horizontally expanding programs to temporarily add new recipients.

Expanded social assistance measures. The CDEP included a temporary increase in child money program (CMP) benefits of MNT10,000 per child per month for 3 months (April to June 2020). The total additional benefit of about $11 per child would have provided some basic support to families, but the amount is relatively low from a welfare perspective, and as a share of the poverty line. Recognizing this, on 6 May 2020 the government announced an expanded package of temporary social assistance measures, including (i) a further increase in the CMP, bringing the total to MNT100,000 per child per month for 6 months; and (ii) doubling the value of the FSP to MNT32,000 per adult per month and MNT16,000 per child per month for 5 months (details are in paras. 9 10). The total cost of these two measures basic program benefits plus temporary top-ups is about MNT740.6 billion.

Impact Adverse socioeconomic impacts of the COVID-19 pandemic reduced (ADB's Comprehensive Response to the COVID-19 Pandemic)
Project Outcome
Description of Outcome Basic needs of the poor and vulnerable, especially women and children, supported
Progress Toward Outcome The loan became effective on 13 August 2020 and implementation is progressing satisfactorily. The MOF and MLSP are working towards fast disbursement to ensure achievement of the outcome.
Implementation Progress
Description of Project Outputs

Poverty-targeted food support increased

Child-targeted income support increased

Status of Implementation Progress (Outputs, Activities, and Issues) As of Q3 2020, about 67% of the loan amount has been disbursed to support the food stamp program and the child money program.
Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The project has no or very minimal impact on the environment. No environmental assessment is required after reviewing the environmental implications. No further actions including preparation of environment management plans will be required.
Involuntary Resettlement The project activities do not involve civil works and will not trigger land acquisition or involuntary resettlement impacts. No further action including preparation of resettlement plans will be required.
Indigenous Peoples The project is socially inclusive without any partiality to any ethnic groups. Ethnic groups will benefit from the project if they meet program eligibility criteria and their households are included on the beneficiary list for both poverty-targeted food support and child-targeted income support. The project's benefits are national in scope. The food stamp program is targeted to the poorest 5% of households while the child money program eligibility extends to 100% of Mongolia's children age 0-17.
Stakeholder Communication, Participation, and Consultation
During Project Design The proposed project will provide temporary top-ups to social welfare benefits for the poor and vulnerable, ensuring food security and basic needs during a time of severe economic difficulties. A communication program will be conducted, and a communication campaign will ensure widespread awareness of the social assistance measures. The impact assessment will involve beneficiaries. Given the scope and urgency of the program, no participation plan has been developed.
During Project Implementation Extensive communication campaign will be conducted on temporary social welfare measures as part of the project.
Responsible ADB Officer Schelzig, Karin Mara
Responsible ADB Department East Asia Department
Responsible ADB Division Urban and Social Sectors 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 11 May 2020 to 12 May 2020
MRM 19 May 2020
Approval 19 Jun 2020
Last Review Mission -
Last PDS Update 29 Sep 2020

Loan 3937-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
19 Jun 2020 02 Jul 2020 13 Aug 2020 30 Apr 2021 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 270.79 Cumulative Contract Awards
ADB 26.40 19 Jun 2020 26.11 0.00 99%
Counterpart 239.39 Cumulative Disbursements
Cofinancing 5.00 19 Jun 2020 26.15 0.00 99%

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


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Tenders

No tenders for this project were found.

Contracts Awarded

Contract Title Approval Number Contract Date Contractor Contractor Address Executing Agency Contract Description Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
EMERGENCY CASH ASSISTANCE (SEP 2020 / LIQUIDATION OF ADVANCE) Loan 3937 07 Dec 2020 MOF AND MSLP ULAANBAATAR MONGOLIA MONGOLIA Ministry of Finance OTHERS 9,818,671.00 9,818,671.00
EMERGENCY CASH ASSISTANCE (15-31 AUG 2020) Loan 3937 15 Oct 2020 MOF AND MLSP ULAANBAATAR MONGOLIA MONGOLIA Ministry of Finance OTHERS 8,421,354.76 8,421,354.76
EMERGENCY CASH ASSISTANCE (MAR-JUL 2020) Loan 3937 03 Sep 2020 MOF AND MLSP ULAANBAATAR MONGOLIA MONGOLIA Ministry of Finance OTHERS 7,871,791.77 7,871,791.77

Procurement Plan

None currently available.