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: 10 | ARCHIVED on 19-Dec-2016 | ISR26278 | 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 12/19/2016 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 The PDO of the MSTAP is to support the Recipient’s efforts to enhance its capacity for policy making, regulation, and implementation in the fiscal, social, and financial sectors. There are four PDO indicators to measure the progress toward the PDO: (i) reduction of structural budget deficit according to the ceilings set forth by the Fiscal Stability Law; (ii) submission of the laws on accounting and auditing to the Parliament; (iii) preparation of a poor household database using the Proxy Means Tested Survey; and (iv) fully operational Mongolia Deposit Insurance Corporation. While the PDO indicators II and III have been successfully achieved and the PDO indicator IV is making steady progress towards end-target values, the first PDO indicator—on the budget deficit control—faces significant challenges due to the rapidly deteriorating fiscal condition in 2016. The budget deficit is expected to sharply increase to over 19 percent of GDP due to a revenue decline amid a commodity price drop, and an unexpected increase in expenditures in the face of the June General Election which was driven by unplanned off-budget expenditures. However, swift corrective actions have been taken by the new government immediately after the election. The new government terminated new policy lending programs and adopted a supplementary budget to properly consolidate off-budget spending programs into the budget. The 2017 budget was approved in November, aiming to reduce the budget deficit to 9.1 percent of GDP from over 18 percent of GDP in 2016 by reducing capital expenditures and terminating off-budget spending programs. Considering the satisfactory progress in three PDO indicators and the swift corrective actions taken by the new government to reduce the budget deficit, the overall progress toward PDO is rated as moderately satisfactory, same as the previous rating. 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) 12/19/2016 Page 2 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) Baseline Actual (Previous) Actual (Current) End Target Value In 2014, the general The 2015 budget This PDO indicator The structural government budget execution recorded a faces significant deficit is recorded a deficit 5% of GDP deficit in challenges due to the reduced equivalent to 4% of GDP, line with the budget rapidly deteriorating according to above the FSL's deficit deficit ceiling of the fiscal condition in 2016. . the deficit ceiling of 2% of GDP. FSL. In 2015, the structural ceiling of the budget deficit was Fiscal Stability reduced to 5 percent of Law. 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 deficit is expected to sharply increase to over 18 percent of GDP due to a revenue decline amid a commodity price drop and an unexpected increase in expenditures in the face of the June General Election, which included the clearance of payment arrears, new off-budget policy lending programs, and unexpected payments for a settlement dispute. However, swift corrective actions have been taken by the new government immediately after the election. The new government terminated new policy lending programs immediately and adopted a supplementary budget to properly consolidate off- budget spending programs into the budget. The structural deficit ceiling of the Fiscal Stability Law was amended on September 9, 2016, reflecting the increased budget deficit, setting the deficit ceiling at 18.5 percent in 2016, 9.9 percent in 2017, 7.5 percent in 2018, and 5.5 percent in 2019. The 2017 budget was approved in November, aiming to reduce the budget deficit to 9.1 12/19/2016 Page 3 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) percent of GDP from 18 percent of GDP in 2016 by reducing capital expenditures and unnecessary spending programs. Technical support of the MSTAP through the Component A1 (Improving Fiscal Policy and Budget Planning) and the new MSTAP II would remain an important tool to ramp up the urgent fiscal consolidation effort in 2017-18 Date 31-Dec-2014 30-Jun-2016 09-Dec-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 the legal environment for ensuring that Mongolia's accounting and auditing (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 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 Achieved. The second round of PMT survey round of PMT survey data collection was data collection was completed in Dec completed in Dec 2013, 2013, and the and the database database became became available in Database Value No database available in Apr2014.Furthermore, completed Apr2014.Furthermore, as of Dec 2014 the as of Dec 2014 the database was endorsed database was by the government to be endorsed by the used across government government to be used programs in across government varioussectors. Use of 12/19/2016 Page 4 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) programs in the database is on varioussectors. Use of slowly expanding within the database is on the welfare sector but slowly expanding within also for targeting of the welfare sector but othergovernment also for targeting of programs and subsidies othergovernment for the poor. The next programs and round of PMT survey is subsidies for the poor. planned for early 2017. Date 01-Jan-2011 20-Jun-2016 12-Dec-2016 30-Jun-2017 PHINDPDOTBL  New deposit insurance agency is fully operational. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Limited Bank Deposit Insurance Law was Limited Bank Deposit enacted in 2013 and Insurance Law was DICOM has been enacted in 2013 and established according DICOM has been to the law. The support established according to for the development of the law. The support for an IT infrastructure, the development of an The new including a new IT infrastructure, Deposit software for efficient including a new software Insurance data collection, for efficient data Corporation is a analysis, and reporting collection, analysis, and full-fledged procedure needed for reporting procedure pillar of the the limited deposit needed for the limited financial sector New Law on Deposit insurance scheme, is deposit insurance safety net, with Insurance Corporation ongoing. Also, the scheme, is ongoing. proper Value enacted and is about to assessment of the Also, the assessment of institutionalstru have its implementation implementation the implementation cture and started progress of the Bank progress of the Bank financial Deposit Insurance acts Deposit Insurance acts capacity, is ongoing and the is ongoing and the deposit payout further planned further planned activities capabilities, activities include include assessment of and clear assessment of the the DICOMs capacity to mandates and DICOMs capacity to evaluate banks’ deposit responsibilities. evaluate banks’ deposit insurance risk; its legal insurance risk; its legal framework and internal framework and internal procedures for risk pay- procedures for risk out compensation in line pay-out compensation with the international in line with the best practices. international best practices. Date 30-Apr-2013 25-May-2016 25-May-2016 30-Jun-2017 Overall Comments Intermediate Results Indicators 12/19/2016 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 fiscal planning and management capacity through improving budget planning mechanism (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target On track. Three MSTAP consultants are providing technical support to the BPIS system, aiming to make the BPIS become fully operational in 2017-18. The consultants have trained local budget officers and end-users of No on-line web-based The BPIS all 21 aimags and the Budget Planning becomes capital city on how to Information System existed functional and use the BPIS for budget for budget preparation and is used for planning processes, different char of accounts budget Value -- including budget are used for budget planning both proposal, monthly planning (Fiscal, budget at the central allocation entry, planning system) and and local submission, revision, execution (GFMIS) government control and the approval systems level. of the budget (3,920 local budget entities). The 2017 local budget was prepared by using the BPIS in July-August. BPIS end-users manuals have been prepared and delivered to the end-users at the local governments. Date 01-Jan-2012 12-Dec-2014 08-Dec-2016 30-Jun-2017 PHINDIRITBL  Strengthened legal framework for prudent natural resource revenue management. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Achieved. The new law Achieved. The new law on Mongolia's natural on Mongolia's natural resource fund (Future resource fund (Future Heritage Fund Law) Heritage Fund Law) was was adopted in Dec adopted in Dec 2015, New legal 2015, ready for ready for framework for implementation. The implementation. The prudent natural No legal framework for MOF initiated work to MOF initiated work to resource prudent natural resource Value set up a road map set up a road map revenue revenue management comprising preparatory comprising preparatory management is exited. work necessary to set work necessary to set adopted and up a well-functioning up a well-functioning ready for long-term savings fund long-term savings fund implementation. which is expected to which is expected to begin accumulation of begin accumulation of mineral revenues in 3-4 mineral revenues in 3-4 years. years. 12/19/2016 Page 6 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) Date 01-Jun-2011 30-Jun-2016 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 On-going. On track. The methodology for The methodology for Transferring Revenue Transferring Revenue from the General Local from the General Local Development Fund to Development Fund to the Local Development the Local Development fund approved by fund approved by Government resolution Government resolution No. 30 of 2012 is being No. 30 of 2012 is being followed. followed. The revised version of The revised version of financing methodology financing methodology for primary health care for primary health care services provided by services provided by soums and villages soums and villages was Government was approved by joint approved by joint order regulations are order #498/345 in #498/345 in December adopted and December 2015 by the 2015 by the MoF and implemented to MoF and Minister of Minister of Health. The Value No fiscal transfer formula improve the Health. The draft draft methodology was financing methodology was applied to the 2016 mechanisms to applied to the 2016 budget planning local budget planning process. governments. process. Work on improving Studies on improving education financing education financing mechanism are under mechanism are under way. Amendment was way. One MSTAP made to the Law on consultant delivered a Basic and Secondary draft report on teacher Education on the joint salaries—a main approval by the Minister determinant of of Education and the education financing Minister of Finance of a mechanism—to the procedure on general MoF. A senior MSTAP education personnel consultant will be hired normative. A joint order to conduct a more by the Minister of comprehensive study Finance and Minister of to improve education Education was issued 12/19/2016 Page 7 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) financing mechanism in on personnel staffing the remainder of 2016. normative for secondary schools. A review of variable cost standard normative on preschool and secondary education was conducted and approved by Government resolution #242/June 2016, which found that the normative for local school dormitory variable cost standards need to be revised. Date 01-Jan-2011 01-May-2016 08-Dec-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 on December 23, 2014 on December 23, 2014 (order #249). The e- Existing template (order #249). The e- Regular balance system for ineffective due to balance system for financial electronic submission modifications to IFRS. electronic submission of statement e- Value of financial statements Lack of capacity and financial statements filing to MOF wasupgraded and inefficiency of the current wasupgraded and through e- implemented 2013 Q1. software - eBalance implemented 2013 Q1. balance system 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 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 12/19/2016 Page 8 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) PHINDIRITBL  Capacity enhancement for setting and enforcing international financial reporting standards (IFRS) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target On track and mostly achieved. Efforts to build capacity of the financial statement preparers, Accounting and Auditing Ongoing. Capacity of Standards Committee financial statement members and other preparers, Accounting regulators continue Standards Committee, under the project and other regulators through provision of enhanced through IFRS and IFRS for SME Enhanced IFRS andIFRS for SME training. So far capacity of trainings for approximately 2750 preparers and Lack of capacity for both approximately 800 accounting professionals regulators of regulators and preparers of accounting Value nationwide have been financial financial statements with professionals trained/re-trained during reporting e.g. regards to IFRS. nationwide from 2012- 100+ training events the Accounting 2015, preparation of a organized in 2012-2016. Standards 108 page IFRSmanual, Preparation of Committee and an enhanced e- methodological balance system used guidance notes and by regulators for the regulations as well as collection and analysis development and of financial reporting operationalization of the data. improved e-balance system under the project also have been contributing to enhancing capacity. 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 Multi –sector Achieved. Development database is Mostly achieved. of Welfare operational, Development of Administration and sharing and Welfare Administration Information System retrieval of data and Information (WAIS) has been enabled for all System (WAIS) has completed with specific users including been completed with modules on registration, a number of No web based software Value specific modules on reporting, administration Ministries available registration, reporting, and accounting. Some anddepartment administration and modules of the system s using ISDB to accounting. Some have been rolled out determine modules of the system from April 2016. Yet, eligibility of have been rolled out reporting practice based social from April 2016. on the WAIS modules programs, has not been reinforced. services and benefits. 12/19/2016 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 01-Jan-2011 20-Jun-2016 12-Dec-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 The target had been achieved, with a good progress. A series of Partially achieved, with capacity building training Training a good progress. A events were organized delivered to a series of capacity including two series of significant building training events trainings on social work portion of social were organized services and workers and including two series of WAIS/ISDB unknown due to govt GOSWS staff, Value trainings on social work implementation restructuring in 2012 and long term services and nationwide. 92% of the institutional WAIS/ISDB field staff had been training implementation trained as of 2015. capacity nationwide. 92% of the However, after the June buildbeyond the field staff have been 2016 elections, there project life trained. have been significant changes ion the personnel working in the sector. Date 01-Jul-2012 20-Jun-2016 12-Dec-2016 30-Jun-2017 PHINDIRITBL  Accounting standards introduced (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target IFRS for banks has IFRS for banks has IFRS for banks been introduced and been introduced and the introduced and No IRFS in place for the banks requested to banks requested to Value applied to financial sector comply with the new comply with the new Mongolian accounting standards accounting standards banks starting January 2016. starting January 2016. Date 09-Jul-2013 25-May-2016 25-May-2016 30-Jun-2017 12/19/2016 Page 10 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) PHINDIRITBL  Bespoke Macro-prudential policy framework developed (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target In progress. Draft regulation and manual In progress. Draft on risk-based regulation and manual Formal macro- supervision has been on risk-based prudential developed. Also, the supervision has been supervision Institutional framework for stress testing developed. Also, the policy adopted risk-based macro- framework and draft stress testing framework and applied, Value prudential regulation and regulation on and draft regulation on overall supervision is not enforcement and enforcement and prompt prudential established. prompt corrective corrective measures for supervision measures for banks banks have been standards have been delivered delivered and the upgraded and the supervisors supervisors have been have been trained trained accordingly. accordingly. Date 04-Dec-2012 25-May-2016 01-Dec-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 process to privatize the State Bank has officially started. It has been In progress. The included in the list of process to privatize the state-owned financial State Bank has institutions that will be officially started. It has privatized in 2016 and been included in the list was approved by the of state-owned Parliament on financial institutions November 13, 2015. that will be privatized in State Bank is owned by While the progress has 2016 and was State Bank is the Government. No been delayed, the Value approved by the restructured privatization plan is government re- Parliament on and privatized. established. announced the November 13, 2015. privatization plan of the The government State Bank in 2017, as estimates the State part of fiscal adjustment Bank privatization process. The proceedings to be government estimates MNT75 billion, which is the State Bank reflected in the budget privatization document. proceedings to be MNT75 billion, which is reflected in the budget document. Date 02-Jan-2012 25-May-2016 14-Dec-2016 30-Jun-2017 12/19/2016 Page 11 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) 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 (Policy Framework) on Define pension Pension Reform has Pension Reform has reform policy been supported by the been supported by the concepts to Despite the govt intention Cabinet and endorsed Cabinet and endorsed establish to move to a multitier by the Parliament as of by the Parliament as of sustainable Value pension system, the actual June 11, 2015. June 11, 2015. multi-pillar strategy has not been Following the approval Following the approval pension system defined yet. of this reform of this reform that provides framework, draft framework, preparation an adequate amendments to of draft amendments to benefit to respective legislations respective legislations is theelderly have been prepared. in a progress. Date 01-Jun-2013 20-Jun-2016 20-Jun-2016 30-Jun-2017 Overall Comments 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 11.87 0.12 99% P119825 TF-99122 Closed USD 0.50 0.25 0.25 0.25 0.00 100% 12/19/2016 Page 12 of 13 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Mongolia Multi-Sectoral Technical Assistance Project (P119825) 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 Related Project(s) There are no related projects. 12/19/2016 Page 13 of 13 Public Disclosure Copy