Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) Mongolia Multi-Sectoral Technical Assistance Project (P119825) EAST ASIA AND PACIFIC | Mongolia | Macro Economics & Fiscal Management Global Practice | IBRD/IDA | Technical Assistance Loan | FY 2010 | Seq No: 9 | ARCHIVED on 27-Jun-2016 | ISR22730 | Implementing Agencies: Ministry of Finance, Bank of Mongolia, Financial Regulatory Commission, Ministry of Finance Key Dates Key Project Dates Bank Approval Date:28-Jun-2010 Effectiveness Date:17-Mar-2011 Planned Mid Term Review Date:31-Dec-2012 Actual Mid-Term Review Date:15-Jan-2013 Original Closing Date:31-Dec-2014 Revised Closing Date:30-Jun-2017 Project Development Objectives Project Development Objective (from Project Appraisal Document) To support the Recipient’s efforts to enhance its capacity for policy making, regulation, and implementation in the fiscal, social,and financial sectors. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Enhancing capacity for Fiscal Management:(Cost $3.16 M) Supporting Government efforts to better protect the poor:(Cost $3.16 M) Enhancing capacity for maintaining financial sector stability:(Cost $3.37 M) Project management:(Cost $0.81 M) Strengthening Capacity and Improving Transparency of the Government Procurement Agency:(Cost $0.30 M) Supporting Pensions Reform:(Cost $0.30 M) Improving Public Financial Management:(Cost $0.90 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Moderately Satisfactory  Moderately Satisfactory 6/27/2016 Page 1 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) Overall Implementation Progress (IP)  Moderately Satisfactory  Moderately Satisfactory Overall Risk Rating  Moderate  Moderate Implementation Status and Key Decisions Progress towards PDOs The project was successfully restructured in May. The restructuring extended the project closing date to June 30, 2017, and amended the results framework to have more relevant and realistic results indicators, including one project development objective indicator and three intermediate indicators. An updated implementation plan was submitted by the client during the restructuring process. The project is making steady progress towards the project development outcomes since the last supervision mission. The project has four project development outcome indicators; two indicators were successfully achieved and two indicators are making steady progress towards end-target values. The current progress and expected achievement in the four PDO indicators are as follows: The first PDO indicator, which aims to reduce the structural budget deficit according to the ceiling of the Fiscal Stability Law (FSL), made good progress in 2015, but will likely face growing challenges in 2017. In 2015, the structural budget deficit was reduced to 5 percent of GDP, the deficit ceiling of the FSL, despite a significant revenue drop due to sharp declines in key commodity prices. In 2016, however, the budget is expected to face significant challenges to contain the budget deficit within 4 percent of GDP imposed by the FSL, due to growing spending pressure in the run-up to the June election and continued drops in mineral revenues. Technical support of the MSTAP through the Component A1 (Improving Fiscal Policy and Budget Planning) would remain an important tool to maintain the fiscal reform momentum that aims to reduce the structural budget deficit to less than 2 percent of GDP by 2018. Two PDO indicators on the adoption of the accounting and auditing laws and the construction of the PMT database were successfully achieved. The second PDO indicator that aims to adopt the laws on accounting and auditing was successfully achieved, with the approval of the new laws by the parliament in June 2015. The ultimate success of the new law would depend on proper implementation, demanding continued support to preparing necessary regulations and policy documents on the new account and auditing standards as well as training activities. The Component A2, Improving Public Financial Management, will continue to support the follow-up activities. The third PDO indicator that aims to construct a poor household database based on the PMT survey was also successfully achieved as the database became available in 2014. The Component B, Supporting the Government to Better Protect the Poor, is now focused on introducing the new integrated database of all social benefit programs and improving the poverty targeting of the existing social welfare benefits. The fourth PDO indicator aims to make the new deposit insurance agency fully operational, and made significant progress with the Mongolia Deposit Insurance Corporation (DICOM) established in 2013. Continued support of the MSTAP is important to make the DICOM a full-fledged pillar of the financial system safety net during the initial stage of DICOM’s operation. By the new closing date, the intended project outcome to support the DICOM is expected to be successfully achieved as the new agency will be equipped with a functioning information system, proper legal framework and internal procedures on risk pay-out compensation in line with international standards. Disbursement Progress Project disbursement made significant progress since the last supervision mission. Overall disbursement of the project significantly picked up to 87.6 percent in May 2016, from 79.4 percent in October 2015. Given the outstanding commitments and the updated implementation plan of the client, overall project disbursement is expected to reach 95 percent by the end of 2016. While disbursement made significant progress in all of the sub-components, disbursement progress varies across the components. Disbursement rates is faster in Component A1 (90%), B (90.8%), and E (100%) as of May 2016, other components show slower disbursement progress including Component A2 (79.7%) and C (86.4%). Disbursement on spending categories also varies: disbursement progress was higher in training budget (93%) and goods (93%), but slower in the expenditures on consultancy work (84%). 6/27/2016 Page 2 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  --  High  High Macroeconomic  --  High  High Sector Strategies and Policies  --  Moderate  Moderate Technical Design of Project or Program  --  Moderate  Moderate Institutional Capacity for Implementation and Sustainability  --  Low  Low Fiduciary  --  Low  Low Environment and Social  --  Low  Low Stakeholders  --  Moderate  Moderate Other  --  --  -- Overall  --  Moderate  Moderate Results Project Development Objective Indicators PHINDPDOTBL  By the Closing Date, the Recipient shall have reduced its structural deficit according to the deficit ceilings set forth in the Fiscal Stability Law. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The 2015 budget was revised twice by The structural reducing budget In 2014, the general deficit is expenditures to meet The 2015 budget government budget reduced the new 5% of GDP execution recorded a recorded a deficit according to Value deficit ceiling of the 5% of GDP deficit in line equivalent to 4% of GDP, the deficit FSL, in the face of with the budget deficit above the FSL's deficit ceiling of the continued revenue ceiling of the FSL. ceiling of 2% of GDP. Fiscal Stability shortages due to a Law. sharp minerals market downturn. Date 31-Dec-2014 30-Nov-2015 30-Jun-2016 30-Jun-2017 PHINDPDOTBL  The Government shall have submitted to the Parliament for passing the draft laws on accounting and auditing that would create thelegal environment for ensuring that Mongolia's accounting and auditing (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 6/27/2016 Page 3 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) Achieved. Draft laws Achieved. Draft laws submitted to the submitted to the Parliament and Parliament and approved by approved by Parliament Draft laws Adherence to international Parliament in its Value in its plenary session submitted to standards uneven plenary session held held on June 18, 2015. the Parliament. on June 18, 2015. Therevised laws Therevised laws become effective become effective January 1, 2016. January 1, 2016. Date 01-Jan-2011 27-Nov-2015 27-Nov-2015 30-Jun-2017 PHINDPDOTBL  MPDSP has prepared a poor households database, on the basis of the Proxy Means Test survey. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Achieved. The second round of PMT survey data collection was Achieved. The second completed in Dec round of PMT survey 2013, and the data collection was database became completed in Dec 2013, available in and the database Apr2014.Furthermore, became available in as of Dec 2014 the Apr2014.Furthermore, database was as of Dec 2014 the endorsed by the database was endorsed government to be used by the government to be Database Value No database across government used across government completed programs in programs in varioussectors. The varioussectors. Use of database – which is the database is on currently being used slowly expanding within only for the Food the welfare sector but Stamp Program – now also for targeting of can be used for othergovernment targeting of programs and subsidies othergovernment for the poor. programs and subsidies for the poor. Date 01-Jan-2011 30-Nov-2015 20-Jun-2016 30-Jun-2017 PHINDPDOTBL  New deposit insurance agency is fully operational. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Limited Bank Deposit Limited Bank Deposit The new New Law on Deposit Insurance Law was Insurance Law was Deposit Insurance Corporation enacted in 2013 and enacted in 2013 and Insurance Value enacted and is about to DICOM has been DICOM has been Corporation is a have its implementation established according established according to full-fledged started to the law. IT system the law. The support for pillar of the 6/27/2016 Page 4 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) fordevelopment for the the development of an financial sector deposit insurance and IT infrastructure, safety net, with capacity building including a new software proper engagements through for efficient data institutionalstru trainings are in collection, analysis, and cture and progress. reporting procedure financial needed for the limited capacity, deposit insurance deposit payout scheme, is ongoing. capabilities, Also, the assessment of and clear the implementation mandates and progress of the Bank responsibilities. Deposit Insurance acts is ongoing and the further planned activities include assessment of the DICOMs capacity to evaluate banks’ deposit insurance risk; its legal framework and internal procedures for risk pay- out compensation in line with the international best practices. Date 30-Apr-2013 24-Nov-2015 25-May-2016 30-Jun-2017 Overall Comments Intermediate Results Indicators PHINDIRITBL  Strengthened fiscal planning and management capacity through improving budget planning mechanism (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target On-going. Introduction of the new Budget Planning Information System (BPIS) – the first intermediate results No on-line web-based The BPIS indicator – is being Budget Planning becomes successfully Information System existed functional and implemented with the for budget preparation and is used for support of the MSTAP. different char of accounts budget Value -- Three MSTAP are used for budget planning both consultants are planning (Fiscal, budget at the central providing technical planning system) and and local support to the BPIS execution (GFMIS) government system, including systems level. training to 11 aimag governments so far. The BPIS is expected to become fully operational in 2017-18. Date 01-Jan-2012 30-Jun-2014 31-May-2016 30-Jun-2017 6/27/2016 Page 5 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) PHINDIRITBL  Strengthened legal framework for prudent natural resource revenue management. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Achieved. The new law on Mongolia's natural resource fund (Future Heritage Fund Law) was adopted in Dec 2015, New legal ready for framework for implementation. The prudent natural No legal framework for MOF initiated work to resource prudent natural resource Value -- set up a road map revenue revenue management comprising preparatory management is exited. work necessary to set adopted and up a well-functioning ready for long-term savings fund implementation. which is expected to begin accumulation of mineral revenues in 3-4 years. Date 01-Jun-2011 27-Nov-2015 30-Jun-2016 30-Jun-2017 PHINDIRITBL  Fiscal transfer formula for local government financing improved to increase predictability of resources and to reduce horizontal inequities between local governments and facilities (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Partially Achieved.• An On-going. improved financing mechanism of special The methodology for purpose transfer for Transferring Revenue Government primary health care from the General Local regulations are services is planned to Development Fund to adopted and be used in 2016. The the Local Development implemented to Value No fiscal transfer formula MOF and the MOH has fund approved by improve the been discussing the Government resolution financing proposed changes in No. 30 of 2012 is being mechanisms to the financial formula on followed. local primary health care governments. services and reached The revised version of an agreement in financing methodology November. The MOF for primary health care 6/27/2016 Page 6 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) and the MOH plan to services provided by issue a joint decree by soums and villages was the end of 2015 on the approved by joint order introduction of the #498/345 in December revised financing 2015 by the MoF and formula into the 2016 Minister of Health. The budget allocation.• An draft methodology was initial study on applied to the 2016 education financing budget planning mechanism began in process. October by one MSTAP consultant. A Studies on improving national consultant was education financing hired for nine months mechanism are under on October 1, 2015 to way. One MSTAP improve the consultant delivered a methodologies in draft report on teacher financing mechanism salaries—a main of pre-school and determinant of education general education financing mechanism— programs. • An to the MoF. A senior improved LDF transfer MSTAP consultant will formula was presented be hired to conduct a to the President Office more comprehensive in 2015. Currently, study to improve discussion is under education financing way on the weights of mechanism in the key parameters of the remainder of 2016. transfer formula, particularly on the size of population. Date 01-Jan-2011 09-Dec-2015 01-May-2016 30-Jun-2017 PHINDIRITBL  Improve the templates used for financial reporting in accordance with IFRS and create a consolidated database system for allowing electronic filing of financial statements by firms (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Achieved. IFRS- Achieved. IFRS- complied accounting complied accounting guidelines for entities guidelines for entities along with the revised along with the revised chart of accounts chart of accounts obtained approval by obtained approval by theMinister of Finance theMinister of Finance Existing template on December 23, 2014 on December 23, 2014 Regular ineffective due to (order #249). The e- (order #249). The e- financial modifications to IFRS. balance system for balance system for statement e- Value Lack of capacity and electronic submission electronic submission of filing to MOF inefficiency of the current of financial statements financial statements through e- software - eBalance wasupgraded and wasupgraded and balance system implemented 2013 Q1. implemented 2013 Q1. Data conversion for Data conversion for years 2002-2012 was years 2002-2012 was done in December done in December 2014. 2014. The upgraded e- The upgraded e-balance balance system isnow system isnow fully fully operational with operational with access 6/27/2016 Page 7 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) access to past years to past years data to data to perform perform analytics. analytics. Date 01-Jan-2011 27-Nov-2015 27-Nov-2015 30-Jun-2017 PHINDIRITBL  Capacity enhancement for setting and enforcing international financial reporting standards (IFRS) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Ongoing. Capacity of Ongoing. Capacity of financial statement financial statement preparers, Accounting preparers, Accounting Standards Committee, Standards Committee, and other regulators and other regulators enhanced through enhanced through IFRS IFRS andIFRS for SME andIFRS for SME trainings for trainings for Enhanced Lack of capacity for both approximately 800 approximately 800 capacity for regulators and preparers of accounting Value accounting professionals Accounting financial statements with professionals nationwide from 2012- Standards regards to IFRS. nationwide from 2012- 2015, preparation of a Committee 2015, preparation of a 108 page IFRSmanual, 108 page IFRSmanual, and an enhanced e- and an enhanced e- balance system used by balance system used regulators for the by regulators for the collection and analysis collection and analysis of financial reporting of financial reporting data. data. Date 01-Jan-2011 30-Nov-2015 30-Nov-2015 30-Jun-2017 PHINDIRITBL  MoPDSP and GOSWS have created an adequate IT infrastructure for designated users on the basis of the PMT database for poor households and citizens or targeting purposes for social programs, assist (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Mostly achieved. Mostly achieved. Multi –sector Development of Development of Welfare database is Welfare Administration Administration and operational, and Information Information System sharing and System (WAIS) has (WAIS) has been retrieval of data No web based software been completed with completed with specific enabled for all Value available specific modules modules on registration, users including onregistration, reporting, administration a number of reporting, and accounting. Some Ministries administration and modules of the system anddepartment accounting. The whole have been rolled out s using ISDB to system will officially roll from April 2016. determine 6/27/2016 Page 8 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) out from early 2016. eligibility of social programs, services and benefits. Date 01-Jan-2011 30-Nov-2015 20-Jun-2016 30-Jun-2017 PHINDIRITBL  Percentage of staff trained in the Ministry of Population Development and Social Protection, General Office for Social Welfare Service and local governments (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Partially achieved, with Partially achieved, with a Training a good progress. A good progress. A series delivered to a series of capacity of capacity building significant building training events training events were portion of social were organized organized including two workers and including two unknown due to govt series of trainings on GOSWS staff, Value nationaltrainings on restructuring in 2012 social work services and and long term social work services WAIS/ISDB institutional and WAIS/ISDB implementation training implementation nationwide. 92% of the capacity nationwide. 92% if the field staff have been buildbeyond the field staff have been trained. project life trained. Date 01-Jul-2012 30-Nov-2015 20-Jun-2016 30-Jun-2017 PHINDIRITBL  Accounting standards introduced (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Due to the fact that not all banks were prepared to fully implement IFRS, banks will start complying with the new accountingstandards IFRS for banks has IFRS for banks starting January 2016. been introduced and the introduced and No IRFS in place for A national consultant, banks requested to Value applied to financial sector who is responsible for comply with the new Mongolian renewing the standard, accounting standards banks conducted a series starting January 2016. oftraining for supervisors between July-September 2015 to improve their understanding of the new standards. 6/27/2016 Page 9 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) Date -- 24-Nov-2015 25-May-2016 30-Jun-2017 PHINDIRITBL  Bespoke Macro-prudential policy framework developed (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target In progress. The BOM In progress. Draft started its work on regulation and manual reviewing laws and Formal macro- on risk-based regulations on prudential supervision has been prudential ratio in the supervision developed. Also, the Mongolian banking policy adopted stress testing framework system. Draftregulation and applied, Value -- and draft regulation on and manual on risk- overall enforcement and prompt based supervision has prudential corrective measures for been developed, supervision banks have been leading to an standards delivered and the improvement in the upgraded supervisors have been Supervision trained accordingly. department. Date -- 24-Nov-2015 25-May-2016 30-Jun-2017 PHINDIRITBL  State Bank is restructured and its privatization announced. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target In progress. The In progress. The process to privatize the process to privatize the State Bank has State Bank has officially officially started, with started. It has been the target date for included in the list of sometime in 2016: It state-owned financial has been included in institutions that will be the list of state-owned privatized in 2016 and financial institutions State Bank is was approved by the Value -- that will be privatized in restructured Parliament on 2016 and was and privatized. November 13, 2015. approved by the The government Parliament on estimates the State November 13, 2015. Bank privatization The government proceedings to be estimates the State MNT75 billion, which is Bank privatization reflected in the budget proceedings to be document. MNT75 billion, which is 6/27/2016 Page 10 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) reflected in the 2015 budget. Date -- 24-Nov-2015 25-May-2016 30-Jun-2017 PHINDIRITBL  Transparency on procurement process managed by the GPA will be enhanced according to the revised Public Procurement Law (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Information on bidding Information on bidding and contracts posted and contracts posted on Information on on Government Limited disclosure of Government website. bidding and website. 100% of information on contract 100% of Procurement contracts Value Procurement Plans, awardees, and contract Plans, Invitation for Bids posted on Invitation for Bids & cost. & Contract Awardsare government Contract Awardsare posted on the website posted on the procurement website. procurement website. Date 01-Jan-2011 09-Dec-2015 09-Dec-2015 30-Jun-2016 PHINDIRITBL  A strategy paper, policy options and main concept driving the pension reform agenda have been submitted to the Government , and animplementation plan has been developed (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Achieved. White Paper Achieved. White Paper (Policy Framework) on Define pension (Policy Framework) on Pension Reform has reform policy Pension Reform has been supported by the concepts to Despite the govt intention been supported by the Cabinet and endorsed establish to move to a multitier Cabinet and endorsed by the Parliament as of sustainable Value pension system, the actual by the Parliament as June 11, 2015. multi-pillar strategy has not been ofJune 11, 2015. With Following the approval pension system defined yet. approval of this overall of this reform that provides framework, respective framework, draft an adequate legislative changes amendments to benefit to under preparation. respective legislations theelderly have been prepared. Date 01-Jun-2013 30-Nov-2015 20-Jun-2016 30-Jun-2017 Overall Comments 6/27/2016 Page 11 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P119825 IDA-47770 Effective USD 12.00 12.00 0.00 11.36 0.65 95% P119825 TF-99122 Closed USD 0.50 0.25 0.25 0.25 0.00 100% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P119825 IDA-47770 Effective 28-Jun-2010 04-Aug-2010 17-Mar-2011 31-Dec-2014 30-Jun-2017 P119825 TF-99122 Closed 31-Mar-2011 13-Apr-2011 13-Apr-2011 31-May-2012 31-May-2012 Cumulative Disbursements Restructuring History Level Approved on 27-Mar-2012 ,Level Approved on 17-Apr-2013 ,Level 2 Approved on 04-Oct-2013 ,Level 2 Approved on 10-Dec-2014 ,Level 2 Approved on 16-Mar-2016 6/27/2016 Page 12 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) Related Project(s) There are no related projects. 6/27/2016 Page 13 of 13 Public Disclosure Copy