Asian Development Bank (ADB) President Takehiko Nakao on September 25 met with Mongolia’s Prime Minister Saikhanbileg Chimed to discuss ways ADB can support sustainable, inclusive growth in Mongolia, through job creation and diversification of the economy. He also met with Bolor Bayarbaatar, Minister of Finance and ADB Governor for Mongolia.
Mr. Nakao commended the authorities’ efforts to stabilize the economy, manage inflation, and improve the investment climate. ADB projects this year’s growth at 2.3%, reflecting drought-affected crop yields and declining commodity prices, but it will recover to 3.0% in 2016. Inflation is forecast to be 7.6% this year, substantially lower than the double-digit inflation of previous years.
“Mongolia has huge development potential thanks to its strategic location and vast resources in mining and non-mining sectors,” Mr. Nakao told the country’s leaders. “As Mongolia continues to pursue appropriate macroeconomic and structural policies, ADB is fully committed to supporting Mongolia in realizing this potential through better regional integration and investments. It will bring real improvements in people’s lives across the country.”
The ADB President acknowledged the rapid progress Mongolia has made in lowering its poverty rate—particularly in rural areas—to a national average of 21.6% in 2014 from 27.4% in 2012 through the contribution of the mining sector. Mongolia’s mining sector accounted for 17.1% of gross domestic product and 83% of exports in 2014, while providing fewer than 4% of jobs. Given the volatile nature of the mining sector, Mr. Nakao urged continued efforts to make the economy less prone to movements in the mining sector. He underscored the strong need to continue diversifying its economy.
There was also substantive progress in mobilizing private sector resources, including for the ADB-supported $1.3 billion Combined Heat and Power Number 5 Project. The concession agreement was signed in June 2014 with a consortium of global companies, under the country’s first major public-private partnership arrangement. The power purchase agreement was signed in July 2015, marking a major step forward in addressing the burgeoning needs of the world’s coldest capital for heat and power, according to ADB.
In 2015 ADB already approved a $50 million loan to support agribusinesses. Responding to the current difficult macroeconomic situation, ADB is preparing to provide assistance for continued delivery of social welfare programs for the most vulnerable through a $150 million loan scheduled for approval in late September. In addition, ADB plans a further $75 million loan financing for approval in 2015 to support small- and medium enterprises, and to support safer food and agricultural trade.
Since ADB began its development assistance to Mongolia in 1991, it has provided $1.6 billion in total resources for transport; energy; water supply and other municipal infrastructure and services; education; and health; finance; and agriculture.
Mr. Nakao was on a 2-day visit to Mongolia, and attended the 14th Central Asia Regional Economic Cooperation (CAREC) Ministerial Conference. This was his second visit to Mongolia, the first visit being in July 2013 shortly after he took office.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.