2003: Understanding the environment, and strengthening public financial management

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ImageWe are reviewing the 25 year partnership between Mongolia and the World Bank, one year at a time, and today we examine 2003.  GDP grew 7.0% that year, the highest growth rate since the transition began. Nevertheless, agricultural production was still well below its historical levels:  agriculture’s share of GDP had fallen from 35% in 1998-1999, prior to the dzud, to only 21% in 2003. 

After several years of difficult winters, the World Bank program had begun to focus more on rural livelihoods. This shift found further support in the Government of Mongolia’s first full poverty reduction strategy paper (PRSP) which drew on a broad range of quantitative and qualitative data sources to understand the nature of poverty in Mongolia.  And that nature was one of vulnerability.  The difficult winters, and the migration to the cities they sparked, had heightened attention to environmental problems—the ongoing rewriting of land management institutions raised even more concern.  Programs aiming to make livelihoods sustainable needed to be matched with programs to make land use sustainable.

By 2003, the Parliament had passed the Land Privatization Law, and the Ministry of Nature and Environment had proclaimed 2002 the Year of the Land for Mongolia.  The government was raising awareness about the causes of land degradation and disseminating information on policies and practices that would improve land management. Despite these efforts, there was little understanding of the complex interactions between natural and institutional causes of land degradation.  The 2003 Mongolia Environment Monitor examined the relationships among land, poverty and livelihoods, as well as the key features of Mongolia’s land management legislation and institutions. Another report examining Mongolia’s cashmere sector, argued for a strategy that addresses the institutional and market design complexities and the need “to improve the laws governing ownership and use of critical producer inputs such as land and water.”

Public administration was also in focus in 2003.  The Economic Capacity Building Technical Assistance Credit Project  (ECTAC) supported a public sector management reform program aimed at improving budgetary and public expenditure management systems and processes, civil service and public administration performance. This was one of several projects over the years to seek to improve budget preparation, execution and monitoring systems and processes. In addition to the framework and policies, the project successfully rolled out a GFMIS (treasury) system throughout government, and assisted in refining the overall legal framework for procurement. (The 2003 Country Procurement Assessment Report was also aimed at reviewing the efficacy of procurement and focused on means of strengthening the efficiency and transparency of procurement.)  When the ECTAC was restructured in 2009 in response to the financial crisis, the project successfully supported the passage of the Fiscal Stability Law and the Budget Law.  While its achievements in public financial management were laudable, the project failed to reach its ambitious targets in civil service reforms. The lessons learned were incorporated into more recent public sector projects. 

Transparency was also a theme in the World Bank’s own access to information policy development.  In 2003, the World Bank strengthened support to Public Information Centers (PICs) and adopted a Translation Framework that broadened access and dissemination of information to stimulate interest and encourage participation in the World Bank’s work.  The PICs are open to everybody who is interested in obtaining information on the issues relevant to Mongolia's development. There are five PICs in Mongolia, maintained by the Open Society Forum, the National University of Mongolia, the Darkhan-Uul and Umnugobi Central Libraries, and the Secretariat of the State Great Khural.

Next we look at 2004 and the increasingly important mining sector.
Prepared in collaboration with Davaadalai Batsuuri. (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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