Could you provide an overview of ADB’s work in Mongolia?

ADB is the largest development financier in Mongolia. We have been here ever since Mongolia transitioned into an open economy. Our main goal is to provide financial support in the form of loans or grants, together with technical assistance to the government and to the private sector, to support development goals, including the public sector and health infrastructure, as well as connectivity, trade, capacity building and governance. We have been working closely with the Mongolian government to advance its reform agenda. For example, this year we provided a US$100 million loan for the country’s fiscal, financial, and economic resilience, especially its resilience to shocks. Mongolia’s economy is narrowly dependent on the mineral sector and therefore more vulnerable to external shocks. During 2022, we similarly provided US$100 million countercyclical support to help Mongolia overcome the twin shocks of the Russian invasion of Ukraine and the closure of the Chinese border due to Covid. Could you elaborate on how ADB supports Mongolia’s economic diversification and shock resilience?

On the one hand, we support the overall economic activity in the country through infrastructure developments (roads, ports, etc.) and public sector management activities (strengthening fiscal and financial reforms, etc.) to create an enabling ecosystem for diversification. It is important that Mongolia builds financial and fiscal buffers, available during downturn periods and external shocks, but also to use them to invest in other sectors and drive diversification. On the other hand, the ADB also has private sector operations, lending directly to businesses. For example, we provided loans for agribusinesses. We also financed multiple companies during the pandemic when cash became tight and the capacity of commercial banks was limited. Also under our private sector operations, a third type of borrower is financial institutions. We provided several loans to the banking sector to allow these banks to then fund SMEs, which tend to struggle the most with access to credit. What are the specific priorities of the ADB under its current Country Partnership Strategy (CPS)?

ADB’s support for Mongolia is guided by our four-year CPS, which coincides with the government cycle. The current CPS is called ‘Laying Resilient Foundations for Inclusiveness and Sustainable Growth,’ having been prepared in 2021 when the country was coming out of the pandemic. Under this framework, we committed to provide the government with US$421 million for the country’s post-pandemic recovery. Most recently, we approved a US$150 loan for regional road development and maintenance (Phase 3) that supports paved road connections and incorporates climate adaptation and mitigation principles, focusing on connecting provincial centers in Western Mongolia. Also last year, we approved a facility called ‘Aimags and Soums Green Regional Development Investment Program,’ a project worth US$735 million to promote green territorial development and urban-rural linkages; to make regional hubs more attractive for businesses, especially agro businesses; to address urban migration challenges; and to help with livestock management given Mongolia’s serious issues with over-grazing. Another loan we hope to approve soon is the ‘border efficiency for sustainable trade,’ which is set to upgrade facilities in at least three of Mongolia’s border posts. Could you explain Mongolia’s climate change challenge and what can be done to navigate it?

Mongolia is more vulnerable compared to other countries to the impacts of climate change because of increased desertification, water scarcity, and extreme weather conditions, all of which can be worsened by climate change. Mongolia suffers from dzud – when severe weather conditions follow poor pasture conditions, and this can lead to the widespread death of livestock. Ulaanbaatar also faces major air quality challenges due to the burning of coal in Ger settlements around the city.

ADB has positioned itself as the climate bank for Asia. We want to help Mongolia navigate severe challenges that emerge from climate change, including desertification, through activities like rangeland management. For example, we had a project on improving air quality by supporting the government’s transition from burning coal towards briquettes, which are less polluting. How do you think Mongolia’s positioning between Russia and China impacts its attractiveness?

Mongolia has tremendous advantages of being situated next to two very large trading partners and investors. It is crucial for the country to maintain solid relationships with its two neighbors. In terms of investment coming from further afield, distance plays a big factor, maybe more so than geopolitics.