Mongolia’s gross domestic product expanded by 1.4% in 2021, after a difficult year in 2020. Employment has been under pressure because of the prolonged adverse impacts of the coronavirus disease (COVID-19) pandemic. The Government of Mongolia introduced new policy measures o address COVID-19 in February 2021 with a total budget of over $3.5 billion.

ADB launched a new country partnership strategy for Mongolia in 2021, which aims to aid economic recovery and help lay foundations for long-term inclusive and sustainable growth. ADB will focus on fostering equitable social development and economic opportunities, investing in climate-resilient infrastructure, driving economic competitiveness and diversification, and promoting sustainable and green development.

To date, ADB has committed 341 public sector loans, grants, and technical assistance totaling $3.6 billion to Mongolia. Cumulative loan and grant disbursements to Mongolia amount to $2.65 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds. ADB’s ongoing sovereign portfolio in Mongolia includes 43 loans and 1 grant worth $1.4 billion. For 2021, ADB committed $211.16 million to Mongolia’s COVID-19 pandemic response, supporting vaccine procurement, strengthening health care systems, and bolstering social welfare support.

ADB committed $73 million to mitigate the socioeconomic impacts of the pandemic on poor and vulnerable groups, topping up monthly cash grants to 1.2 million children for an additional 6 months. Through a $40 million loan under the Asia Pacific Vaccine Access Facility, of which $21 million was in cofinancing from the Asian Infrastructure Investment Bank, ADB is supporting Mongolia to secure COVID-19 vaccines. A complementary $5 million grant from the Japan Fund for Poverty Reduction (JFPR)2 will improve testing and support effective vaccine delivery. A $100 million policy-based loan will strengthen Mongolia’s health sector and ensure the availability of critical medicines and emergency supplies.

ADB is also increasing support to address domestic violence in Mongolia through an additional grant financing of $1 million for an ongoing project financed by JFPR to expand immediate response services and income assistance to domestic violence survivors.

To preserve Mongolia’s pasturelands, ADB approved a $30 million loan to make livestock production systems in central Mongolia more resilient to climate change. ADB will also help implement a $1 million technical assistance grant financed by JFPR to strengthen Mongolia’s food safety and traceability system.

To support the readiness and strengthen the implementation of major infrastructure projects proposed for 2022 to 2024, ADB has committed a $20 million loan for a small expenditure financing facility.

ADB’s $30 million loan (along with JFPR’s $2 million grant cofinancing) for the second phase of a sustainable tourism project in Mongolia will strengthen local tourism planning and development in three aimags (provinces) of western Mongolia.

Nonsovereign operations. Total outstanding balances and undisbursed commitments of ADB’s nonsovereign transactions in Mongolia as of 31 December 2021 was $56.72 million representing 0.4% of ADB’s total private sector portfolio.

Operational challenges. Despite macroeconomic stability prior to the COVID-19 pandemic, Mongolia remains vulnerable to shocks. The economic base needs to be broadened and diversified. Small and medium-sized enterprises can stimulate diversification and ensure more inclusive growth, particularly in developing value chains for Mongolia’s unique agricultural resources. This requires expanded access to finance, infrastructure investment, and regional integration to improve connectivity and access to external markets. Developing a more skilled workforce and enhancing the quality of life in urban areas will be critical. Policy reforms and institutional strengthening will be needed to improve the inclusiveness and efficiency of social service delivery. Rapid urbanization, a poorly regulated mining sector, and the impacts of climate change are causing significant environmental degradation, and these issues must be addressed.

  ADB Projects in Mongolia Project data sheets for loans, grants, TAs