ADB's Work in Mongolia

The twin shocks of the Russian invasion of Ukraine and the border closure with the People’s Republic of China (PRC) due to the coronavirus disease (COVID-19) caused significant stress on Mongolia’s economy in 2022. Conditions began to improve during the second half of the year as border restrictions eased, allowing for increased exports of mineral products to the PRC. Growth in 2022 was 4.8% compared to 1.6% in 2021 and –4.6% in 2020. Mongolia’s ongoing economic recovery remains vulnerable to shocks, though the economy is transitioning to a post-pandemic expansion.

The Asian Development Bank (ADB) is a key source of external finance for Mongolia. ADB has provided $308.5 million on average annually from 2017 to 2022. ADB’s assistance is aligned with Mongolia’s New Recovery Policy and Vision-2050.

To date, ADB has committed 357 public sector loans, grants, and technical assistance totaling $3.7 billion to Mongolia. Cumulative loan and grant disbursements to Mongolia amount to $2.91 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds. ADB’s ongoing sovereign portfolio in Mongolia includes 40 loans worth $1.37 billion.

ADB, through its countercyclical support facility, provided $100 million in emergency assistance for Mongolia in 2022. The support helped the government to weather adverse social and economic impacts especially for poor and vulnerable groups, including women and girls.

ADB committed $30 million to support livestock production in 20 soums (districts) of Mongolia. The project will help protect herders against climate change impacts and increase the quality of livestock products. ADB also committed $38 million for a project supporting sustainable tourism and conservation in two national parks, which will help boost the tourism-related skills and income of more than 16,000 residents

ADB approved an $18 million private sector loan to support food security and job creation in Mongolia. The proceeds will be used as additional working capital support for Ulaanbaatar Flour to procure 60,000 tons of wheat directly from 6,000 local farmers. It will also provide financing for the construction of new warehouses, additional quick-service restaurants, and maintenance capital expenditures.

Students from the Sainshand School No.2 benefited from the rehabilitated facilities, furniture, and educational equipment that was provided by the ADB. Photo: Kevin Hamdorf/ADB

The Japan Fund for Prosperous and Resilient Asia and the Pacific provided a $2-million grant to increase efficient and renewable energy heating systems in remote areas in Mongolia. The project will help design, procure, and install more sustainable heating systems in hospitals in soum centers

Nonsovereign operations. Total outstanding balances and undisbursed commitments of ADB’s nonsovereign transactions in Mongolia as of 31 December 2022 was $47.37 million representing 0.37% of ADB’s total private sector portfolio.

Operational challenges. Projects in Mongolia face challenges such as delayed implementation due to inadequate project readiness, limited construction season due to weather conditions, weak institutional capacity of implementing agencies in project management, price escalation of construction materials due to inflation, shortages of construction materials due to supply bottlenecks, and poor performance of contractors.

ADB will continue to improve project implementation by ensuring that more projects are design- and procurement- ready at the approval stage. In 2022, ADB approved the Small Expenditure Financing Facility for $20 million to finance activities that support project readiness and strengthen implementation of infrastructure projects. To strengthen the capacity of implementing agencies, ADB supports ongoing capacity building training. ADB closely monitors overall project implementation and adopts remedial measures on a case-by- case basis.

Knowledge Work

ADB, the Asian Development Bank Institute, and the ADB–PRC Regional Knowledge Sharing Initiative organized the East Asia Forum where experts shared the region’s progress in providing innovative and sustainable solutions to decarbonization.

ADB conducted research and analysis on the experiences, needs, and aspirations of young people in the Bayankhoshuu and Selbe areas to engage local youth on the future of Mongolia’s urban areas. The study covered issues such as non-income poverty dimensions, gender inequalities, and employment prospects.

As part of its gender equity support to Mongolia, ADB published the working paper Impact of Gender Inequality on Long-Term Economic Growth in Mongolia.

ADB also published papers on the regulation of medicines and health-care financing reform including results, lessons learned, and future directions to support health sector reform in Mongolia.

  ADB Projects in Mongolia Project data sheets for loans, grants, TAs