As part of our series of 25 years in 25 days, we start with 1991, the year Mongolia joined the World Bank, IFC, and IDA. The Articles of Agreement were signed on February 14, 1991 on the eve of the Mongolian lunar new year, Tsagaan Sar. Mongolia greeted the year of the female iron sheep as the 155th member of the World Bank.
Mongolia’s first Country Economic Memorandum was titled “Toward a Market Economy”, and it wrestled with the immediate macroeconomic challenges of runaway inflation and falling output. The official exchange rate was 40 MNT per US$. Price reform was among the most crucial elements of a reform program aimed at stabilizing the economy. While noting economic risks, the report also noted that “Mongolia's medium-term development prospects include its well educated labor force, abundant agricultural and natural resources and the basic resilience of the rural economy.”
By the end of the year, Mongolia’s first World Bank credits had been signed. The $30 million Economic Rehabilitation Project sought “to help rehabilitate, maintain and operate priority sectors of Mongolia's economy. Together with complementary assistance already committed or planned by other donors (Germany, Japan, USA, ADB, IMF), it constitutes part of an immediate response by the international community to the country's short-term economic difficulties.” The project financed equipment, materials, spare parts, vehicles and other inputs needed for the key agriculture, energy (electric power, coal mining and petroleum products), and transport sectors, to help sustain economic performance and output.
The impact of the collapse of socialist bloc trading arrangements was clear in the project document which noted “the increasing likelihood that the 1991 $400 million USSR/Mongolia barter trade agreement (accounting for 80 percent of import needs) may not in practice be fully realized.”
An accompanying $5 million Technical Assistance Project was the first of many collaborations with Japan and UNDP. In later years the project financed the preparation of a successful oil/gas and mining sector investors’ conference held in June 1997 and cosponsored by the Government and the World Bank. This marked the first time these sectors were opened to investors. As a result, the Government signed twenty-five contracts with investors. Building on the success of the first conference, a second conference, focusing on the agro-industry and tourism held in June 1998, was prepared under the Japanese Population and Human Resources Development Fund (PHRD) grant.
Tomorrow we continue our journey with 1992, the year Mongolia joined MIGA….
*Prepared in collaboration with Ulziimaa Erdene.
(Please follow our 25 years in 25 days journey at http://www.worldbank.org/mongolia and on twitter @WorldBankMGL with the hashtag #WBG_Mongolia25th)