|
|
|
|
|
|
|
|
|
|
  |
 |
  |
Mongolia
>> Regional Overview >> Mongolia Overview ACTIVITY DATA SHEET
PROGRAM: Mongolia
TITLE AND NUMBER: Accelerate and Broaden Environmentally Sound Private Sector Growth, 438-001
STATUS: Continuing
PLANNED FY 2001 OBLIGATION AND FUNDING SOURCE: $8,959,000 ESF
PROPOSED FY 2002 OBLIGATION AND FUNDING SOURCE: $9,000,000 ESF
INITIAL OBLIGATION: FY 1994 ESTIMATED COMPLETION DATE: FY 2003Summary: USAID's economic growth program seeks to increase the standard of living of the people of Mongolia and to improve economic and social indices by assisting the Government of Mongolia's (GOM) transition from a centrally planned economy to a private sector-led market economy. Activities under this program provide technical assistance, training, and other inputs to establish environmentally sound growth-oriented market economy policies and practices, and to develop and strengthen key public and private sector institutions that will develop and sustain a market-oriented economy.
All Mongolians are benefiting from lower inflation and a more vibrant urban economy, for which USAID can take partial credit. All Mongolians should benefit from the achievement of USAID's economic growth program goals, including a reformed financial sector, competitive export-oriented industries, increased foreign investment through the privatization of large, strategic, state-owned enterprises, the development of a commercial power sector, improved rural banking services and expanded credit in rural areas, and improved pensions. Activities in rural Mongolia will establish linkages between economic growth, improved environmental quality, and increased democratic participation.
The hallmarks of USAID's economic growth activities in Mongolia have been their speed, flexibility, and high quality. These activities have helped Mongolia to go further, faster, and achieve higher quality reform outcomes than would have been possible without USAID assistance.
Key Results: USAID's economic growth and democracy strategic objectives are mutually supportive: both will help establish a market-oriented democratic society in Mongolia. USAID considers four results necessary to achieve the goal of accelerating and broadening environmentally sound private sector growth: (1) transferring public productive assets to private ownership; (2) increasing the efficiency of financial markets; (3) improving the business environment; and (4) improving the management of the natural resource base.
It is expected that by 2003 three-quarters of the Mongolian economy will be in private hands; the private sector will be universally recognized as the paramount engine of economic growth; the economy will be growing at a sustained rate of 5% annually, with positive growth in much of rural Mongolia; and the national savings and investment rates will have increased substantially. The increased economic growth that results from USAID's activities is expected to broaden and deepen popular support for a market oriented and democratic society in Mongolia.
Performance and Prospects: The proposed FY 2001 obligation is $8,959,000 ESF. USAID has played a key role in helping to implement the macroeconomic reform agenda of various Mongolian governments. USAID assistance was instrumental in contributing to a more stable macroeconomic environment, for taking the lead in reform of certain key sectors, such as banking and the power sectors, and in advancing the effort of Mongolia to privatize key state-owned entities and in improving its auction mechanism to increase revenues and make the process more transparent. USAID also played a key role in promoting passage of legislation for pension reform and establishing the institutional framework for implementing the law. USAID continues to play a key role in training a core cadre of economic analysts capable of implementing the GOM's economic growth objectives. The new Mongolian People's Revolutionary Party (MPRP) government has readily accepted USAID support in its reform agenda. USAID is the only donor that is implementing systemic rural development in Mongolia. The Gobi Regional Growth Initiative's (GREGI's) Market Watch and Gobi Business News are of vital importance to herders and have helped them to increase their incomes and well being. The Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Assistance (ACDI/VOCA) goat breeding-improvement program is the only program of its kind in Mongolia. The program is systematically increasing the number of purebred cashmere bucks to eventually improve the stock of cashmere goats. USAID assistance to herders is increasing their skills to produce and market their bucks and help them in association building and in establishing a registry for purebred stock. This program, along with GREGI's herder management and information programs, is having a significant impact on the quality of cashmere and on herder incomes.
Privatization of State-Owned Assets and Energy Sector Restructuring: USAID will provide approximately $2,600,000 in FY 2001 to finance privatization and energy sector restructuring activities. USAID will provide assistance to the Mongolian State Property Committee to expedite the process of privatization of large state owned companies. Firms ready for privatization include the Trade and Development Bank, Gobi Cashmere Company and the Neft Import Concern. The GOM is awaiting Parliament's approval to proceed with the privatizations. The GOM recently passed a new energy law, which will lay the foundation for the restructuring of the power sector. USAID will assist the GOM with unbundling the generation, transmission, and distribution systems and establishing an independent energy regulatory authority.
Bank Restructuring and Competitiveness: USAID will use approximately $3,500,000 in FY 2001 funds to increase the efficiency of financial markets and improve the business environment in Mongolia. USAID is assisting the Bank of Mongolia in restructuring the Agriculture Bank, under a World Bank approved restructuring plan. The Agriculture Bank has the potential to be the leading rural bank in Mongolia. USAID assistance will end in July 2002, and it is expected that by then the Bank can be privatized. USAID will help government ministries and private firms and associations to improve Mongolia's competitiveness. A series of action plans geared to increase exports are being jointly developed for the cashmere, meat and tourism industries; the goal is to raise value-added exports to non-traditional markets over the next two years. The program stresses helping private enterprises to improve productivity and marketing and to better define the government's role in this effort.
Rural Development and Improved Management of Natural Resources: USAID plans to use approximately $2,600,000 for sustainable rural development and a program to encourage and help implement environmentally sound park management. GREGI is working in four provinces in the Gobi region of southern Mongolia. GREGI is fostering microenterprise and small and medium enterprise growth, through training and the provision of credit through Goviin Ecklel, a non-bank financial institution. It is implementing programs to improve herder management and marketing and will begin activities to improve land management practices. GREGI sponsors Market Watch, a twice-weekly radio program that provides commodity prices, weather information and herder management tips to one million Mongolian herders. With USAID funding, ACDI/VOCA also is improving cashmere goat breeding stock and animal health. ACDI/VOCA is also undertaking applied research on conservation tillage techniques for improving the productivity and environmental sustainability of the crop sector. USAID provides funds to the U.S. Department of Interior to improve the management of the Lake Hovsgol National Park, one of the most important parks in Mongolia. The Lake Hovsgol National Park Management Improvement Program is developing the park into an effective protected area that will lend itself to sustainable, local economic development.
Training and Human Development: USAID intends to use approximately $300,000 to send promising Mongolians for economics and business training in the United States. Most of these funds will be used to provide Masters degree level scholarships.
The USAID-supported privatization program and energy program suffered severe delays last year due to the organizational decay of the Democratic Union Coalition Government. USAID's other programs remained on track. The new MPRP government has adopted its own reform agenda that fits well with the overall USAID reform program. The MPRP agenda includes an accelerated program for privatization, as well as renewed emphasis in commercializing the power sector. The USAID reform program is still relevant, and there is an excellent chance USAID targets will be met in 2001.
Possible Adjustments to Plans: The new Government appears to have adopted a viable program for economic reform. If it is able to implement its stated program, USAID sees no need for adjustments to current plans. If privatization or energy reform do not go forward, USAID is prepared to end support in these areas and redirect support into other reform areas, such as tax policy and administration or public finance reform.
Other Donor Programs: The International Monetary Fund, the World Bank, including the International Finance Corporation (IFC), the Asian Development Bank (ADB), the United Nations Development Program (UNDP), Germany, and Japan provide technical assistance in the fields of economic policy and public administration. Germany and the UNDP have active environmental programs. The IFC and the ADB both plan to take active roles in marketing the Trade and Development Bank once it is privatized.
Principal Contractors, Grantees, or Agencies: USAID implements this activity through the following partners: Development Alternatives, Inc.; Academy for Educational Development; Barents Group; Mercy Corps International; USAID's Global Technology Network; U.S. Department of the Interior; Philadelphia Academy of Sciences; Robert Nathan and Associates; and ACDI/VOCA. Principal Mongolian agencies include the Office of the Prime Minister; the Ministry of Finance and Economics; the Mongol Bank (central bank); the State Property Committee; the Ministry of Food and Agriculture; the Ministry of Nature and Environment; and the Ministry of Infrastructure Development.
FY 2002 Performance Table
Mongolia: 438-001
Performance Measures:
Indicator FY97 (Actual) FY98 (Actual) FY99 (Actual) FY00 (Actual) FY00 (Plan) FY01 (Plan) FY02 (Plan) Indicator 1: Number of superior male breeding goats (FN 7) NA NA 300 563 1155 1080 1200 Indicator 2: The rate of growth of the private sector measured in constant dollars. (FN 1) NA NA 0.06 -0.5 0.2 0.25 0.3 Indicator 3: Number of businesses with permits or licenses in selected rural aimags disaggregated by gender of business owner - Female (FN 3) NA NA 75 (541 revised) 611 95 (553 revised) 765 841 Indicator 4: Steps taken toward restructuring and commercializing the energy sector. (FN 6) NA NA Steps 2-3 Step 4 Steps 6-7 NA NA Indicator 5: Steps taken toward strengthening the banking sector (FN 5) NA NA Steps 2&3 Step 1 Step 1 NA NA Indicator 6: Number of most valued companies (MVCs) privatized by international tender (FN 4) NA NA 0 0 8 10 10 Indicator 7: Number of businesses with permits or licenses in selected rural aimags disaggregated by gender of business owner - Total (FN 2) NA NA 462 (1190 revised) 1388 550 (1228 revised) 1302 1432 Indicator Information:
Indicator Level (S) or (IR) Unit of Measure Source Indicator Description Indicator 1: IR Number of goats ACDI/VOCA These animals are pure Mongolian Cashmere goats. They are being produced under the Cashmere Breed Improvement Program, which seeks to raise the quality of cashmere produced in Mongolia. Indicator 2: IR Percentage Growth Mongolia State Statistical Office The rate of growth of the private sector measured in constant dollars. Indicator 3: IR Number of businesses - female GREGI aimag offices The number of businesses entering the formal sector as indicated by the granting of permits to micro- and small enterprises and the granting of licenses to medium and large-scale businesses. Indicator data is reported cumulatively. Indicator 4: IR Number of steps Ministry of Infrastructure Development, Parliament, and regulatory agencies Steps include: # 1) agenda developed; # 2) consensus of major stakeholders achieved; # 3) energy law drafted; # 4) energy law passed; # 5) legal establishment of a regulatory agency; # 6) unbundling of generation, transmission and distribution functions; and # 7) regulatory agency commences operations. Indicator 5: IR Number of steps Central Bank Steps to strengthen the sector include: # 1) rehabilitation or liquidation (R or L) of the Agricultural Bank; # 2) R or L of the Investment and Technical Innovation Bank; # 3) R or L of the Reconstruction Bank. Indicator 6: IR Number of MVCs Mongolian State Property Committee Most valued companies are a subset of state-owned companies. An MVC is a company more than 50% owned by the state that has the scale and potential to interest a foreign strategic investor. Indicator 7: IR Number of businesses - total GREGI aimag offices The number of businesses entering the formal sector as indicated by the granting of permits to micro- and small enterprises and the granting of licenses to medium and large-scale businesses. Indicator data is reported cumulatively.
Footnote 1: The actual growth figure for 1999 only takes into account private sector growth in the formal sector. The 2000 data takes into account the growth generated by the informal sector.
The negative private sector growth rate in 2000 is a product of a 21.4% decline in the agricultural sector as a result of the loss of livestock in the Dzud (winter snow emergency). If only non-agricultural private sector growth is examined, to remove the effects of the Dzud, a very different and very impressive picture emerges. It shows that real value-added in the non-agricultural private sector grew by 22.1% in 2000, up significantly from the average 15.3% growth of the previous four years. The increase in 2000 primarily reflects continued strong growth in private sector transportation and communication services, the ever increasing dominance of private firms in trade and domestic commerce, and the declining market share of certain state-owned firms.
Footnote 2: Data for 1999-2003 covers Umnugovi and Dundgovi aimags (provinces).
The large jump between "actual" figure reported last year and the revised figure reported above, reflects the inclusion of the new data that became available in 2000 on very small business enterprises. Accordingly, the 2001-2003 targets have been revised upward.
Footnote 3: Data for 1999-2002 covers Umnugovi and Dundgovi aimags (provinces).
The large jump between the "actual" figure reported last year and the revised figure reported above, reflects the inclusion of new data that became available in 2000 on very small business enterprises. Accordingly the originally 2001-2003 targets have been revised upward.
Footnote 4: The run-up to the national elections in July 2000 and the resulting change of government led to a temporary slow down in the USAID supported privatization program. However, in late February 2001 Parliament passed Privatization Guidelines that presented a four-year strategy for privatization in Mongolia. Immediately thereafter the Cabinet agreed to the privatization of the three MVCs that have been the focus of USAID's initial efforts in this area. The planned totals have been adjusted to reflect existing realities.
Footnote 5: With the achievement of Step 1 in 2000, the performance targets being monitored by this indicator have been achieved. The Mission will develop a new indicator more specifically focused on the rehabilitation of the Agricultural Bank later this year for inclusion in next year's R4.
Footnote 6: Step 1 was completed in 1998. The Energy Law was passed in February 2001 and it will take effect on April 15, 2001. The legal establishment of the energy regulatory agency will follow shortly thereafter. USAID expects that will take 1-2 years for the regulatory agency to become fully operational. The GOM has been instructed by Parliament to commence the unbundling of generation, transmission and distribution functions immediately, within the framework established by the new Energy Law and to complete this process within 2001. However, it is likely to extend into 2002.
Thus, with the time period originally allotted for the achievement of the steps associated with this indicator has proven to be overly optimistic, the Mission remains confident that the steps will be achieved by the end of the strategy period.
Footnote 7: In the spring of 2000, 1660 male goats were born. A culling rate of 75% was used to select the most superior kid bucks to sell for the 2001 year. Thus 420 superior breeding male goats were available. In addition, 143 superior breeding males were selected by national research making a total of 563 superior goats available.
In the spring of 2001, 2200 male goats are expected to be born. A culling rate of 75% will yield 550 superior male kids. The total includes this 550 plus the 563 from the previous year - assuming a death rate of 5%. In the spring of 2002, the number of male goats born is expected to be slightly higher due to the young superior does (females) entering the flock for the first time. The total number of breeding does will increase only slightly due to older does being culled.
The program did not reach its target of 1,155 goats because of an outbreak of Agalactia at one of the program sites. (Agalactia is a contagious disease affecting small ruminants such as goats and sheep.) This meant that no superior goats could be produced in this locality. The second reason the number of goats fell short of the planned target was that a second site decided to "over cull" above the 75% rate. Nonetheless, the production of 563 superior goats is still quite successful considering that there were only 1,000 additional superior goats available for the entire country.
U.S. Financing
(In thousands of dollars)
Obligations Expenditures Unliquidated Through September 30, 1999 5,569 DA 5,502 DA 67 DA 0 CSD 0 CSD 0 CSD 4,140 ESF 3,412 ESF 728 ESF 0 SEED 0 SEED 0 SEED 11,099 FSA 6,583 FSA 4,516 FSA 0 DFA 0 DFA 0 DFA Fiscal Year 2000 0 DA 67 DA 0 CSD 0 CSD 6,000 ESF 1,217 ESF 0 SEED 0 SEED 4,640 FSA 4,437 FSA 0 DFA 0 DFA Through September 30, 2000 5,569 DA 5,569 DA 0 DA 0 CSD 0 CSD 0 CSD 10,140 ESF 4,629 ESF 5,511 ESF 0 SEED 0 SEED 0 SEED 15,739 FSA 11,020 FSA 4,719 FSA 0 DFA 0 DFA 0 DFA Prior Year Unobligated Funds 0 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Planned Fiscal Year 2001 NOA 0 DA 0 CSD 8,959 ESF 0 SEED 0 FSA 0 DFA Total Planned Fiscal Year 2001 0 DA 0 CSD 8,959 ESF 0 SEED 0 FSA 0 DFA Future Obligations Est. Total Cost Proposed Fiscal Year 2002 NOA 0 DA 0 DA 5,569 DA 0 CSD 0 CSD 0 CSD 9,000 ESF 0 ESF 28,099 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 15,739 FSA 0 DFA 0 DFA 0 DFA
 |
|||
Last Updated on: May 29, 2002 |
