2000: Restocking after the Dzud

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ImageThe winter of 1999-2000 brought a terrible dzud—a Mongolian term for a particularly harsh winter causing major losses of livestock.  According to a UNDP-GOM report, it was the worst dzud in 50 years for five of Mongolia’s aimags.  The late snowfall affected over 70 percent of the total territory of Mongolia and when fully counted by June 1, 2000, nearly 2.4 million heads of livestock were lost.  Partially as a result of this calamity, GDP growth fell to just 1.1% and agriculture’s share of GDP fell by 4 percentage points.

The suffering in rural areas was clear, and the loss of animals meant a loss of future livelihoods, as well.  As part of its relief plan, the Mongolian Government requested to reallocate the remaining proceeds of the World Bank’s Poverty Alleviation for Vulnerable Groups Project for dzud disaster relief. Over $1.3 million went to assist poor herders affected by the dzud to help them restock and maintain their livelihoods. About a third of all eligible herder households received support from the restocking project.  In subsequent years, the World Bank program in Mongolia would shift to address squarely the challenges facing herders.

In the years 1999-2000, the World Bank also prepared a new Legal Needs Assessment Report, analyzing Mongolia’s Legal Reform Program which had been adopted Parliament in 1998.  The purposes were “to assess major problems affecting the efficiency of the newly shaped legal system and identify the programs needed to help the government to design further legal-reform activities”; and “to provide information to the external donor community for shaping upcoming legal reform projects and to coordinate activities that have been or are being carried out as part of the legal-reform process.”  (The report would help inform a World Bank project a few years later.)

Mongolia’s financial sector, a focus of World Bank support for years, continued to receive attention and support.  A policy based loan called the Financial Sector Adjustment Credit Project aimed to “support the Government's medium-term strategy for financial sector reform, in order to achieve macroeconomic stability, accelerate private sector growth, and reduce poverty.”  The policy framework itself was based on tripartite discussions with Government of Mongolia, IDA and the Asian Development Bank.  It covered the establishment of basic financial infrastructure, and helped improve banking skills and accounting standards, as well as develop a clear policy framework regarding bank failures.  It also supported the consolidation of the banking system, divestiture of the Government's ownership in the Trade and Development Bank, the development of effective regulation and supervision of the financial system, and improvement of the payments system in rural areas, among other policy reforms. 

Next we look at 2001, transport, energy, and (again) the fragility of rural livelihoods.
Prepared in collaboration with Arailym Murat.

 (Please follow our 25 years in 25 days journey here and on twitter with the hashtag #WBG_Mongolia25th)


Jim Anderson

Lead Governance Specialist, World Bank

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