Mongolia

FY 2001 Program Description and Activity Data Sheets

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FY 2001 Program In 1999 USAID began working under a new five-year strategy (1999-2003) which will assist Mongolia to: (1) consolidate its transition to democracy, and (2) accelerate and broaden sustainable private sector growth. Under its economic growth program USAID is funding programs to: (1) transfer productive assets to the private sector; (2) increase the efficiency of financial markets; (3) improve the business environment; and (4) improve management of natural resources. USAID will conclude its current support for macroeconomic reform, pensions, budget analysis, energy sector commercialization and financial sector restructuring in FY 2000. Based on successful passage of new power sector legislation, USAID expects to provide long-term support to develop an independent regulatory agency and to assist the GOM with the restructuring of the sector. Further assistance in other sectors will depend upon a careful analysis of additional prospects for reform and the role that other donors intend to play in these key sectors. (Several donors may be planning activities in reform areas in which USAID provided initial assistance.) USAID also anticipates providing further assistance to the banking sector, tax policy and administration and debt management. USAID's privatization program, begun in FY 1998, will continue through FY 2001. In FY 2000, USAID will provide the resources for the Mongolians to implement a competitiveness analysis of their economy. The result of the analysis will be a strategy and action plan for improving the competitiveness of Mongolian products. In FY 2001, USAID intends to provide resources to assist the Mongolians to implement their plans. Activities could include a broad range of efforts to: improve the legal/regulatory framework; strengthen and improve public sector/private sector coordination; improve private sector capacity to produce and market for export; support for information technology; and strengthen the capacity of institutions of higher education. USAID's Gobi Regional Growth Initiative (GREGI) and the Farmer to Farmer (FtF) program will continue to be the primary vehicles for USAID's rural area focus. (GREGI is the new name for the previously named Rural Civil Society Program.) With technical assistance and training aimed at a wide range of civil society organizations (e.g., women's groups, business associations, cooperatives) and selected microenterprises (primarily associated with animal products and cashmere production), GREGI will also foster cooperation between local governments and these civil society organizations to create a joint agenda for policy reform that will strengthen rural economies and civil society. FtF will use experienced U.S. volunteers to assist local organizations to develop private agriculture in Mongolia, with a focus on animal health, improved animal breeding and improved efficiency of the crop sector. USAID will also continue to work with FtF and others to demonstrate how development and natural resource management can be effectively joined at the local level. USAID will broaden and deepen democratic reform. Resources will be used to: (1) establish the foundation for an effective rural civil society and (2) improve the effectiveness of the parliament and the judiciary. USAID will begin a rule of law program in FY 2000 to support bipartisan efforts to reform and modernize the judiciary. This program will be active until the end of the strategy period. USAID will also continue support for the International Republican Institute's program for Parliamentary and political party support. With civil society building being undertaken through GREGI and FtF, USAID does not anticipate other major programs in the democracy area. USAID will continue its U.S. degree program to support objectives in both the economic growth and democracy. USAID plans to provide modest support for Mongolia's participation in Eisenhower Foundation programs beginning in FY 2000. This support will last through the strategy period. USAID will ensure that Mongolia's accelerated growth is environmentally sustainable by addressing issues critical to pasture and crop land degradation and better resource management, particularly of Hovsgol National Park. Urban environmental issues will also be addressed through the United States-Asia Environmental Partnership (US-AEP). In FY 2000, $750,000 was earmarked for child survival activities. USAID hopes to develop activities that fit within the existing strategic approach, possibly working with orphans and other disadvantaged children in the areas of vocational training and training for children with special needs. If the Mission is not able to establish such a program, it will have to develop and seek approval for an SpO to address the earmark. Possibilities include: funding the programs of existing international NGOs in child survival areas and providing assistance to United Nations Children's Fund (UNICEF) in its children's programs. USAID assumes this earmark will continue in FY 2001. ACTIVITY DATA SHEET PROGRAM: Mongolia TITLE: Accelerate and Broaden Environmentally Sound Private Sector Growth, 438-001 STATUS: Continuing PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $6,000,000 ESF; $4,640,000 FSA PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $10,000,000 ESF INITIAL OBLIGATION: FY 1994 ESTIMATED COMPLETION DATE: FY 2003 Summary: The Economic Policy Support Project (EPSP) is the principal vehicle by which USAID is implementing its economic growth program under its new five-year strategy (1999-2003). EPSP seeks to increase the standard of living of the people of Mongolia and to improve economic and social indices by assisting the GOM's transition from a centrally planned economy to a true private sector-led, market oriented economy. The project provides technical assistance, training and other inputs to establish environmentally sound, growth-oriented market-economy policies and practices, and to develop and strengthen select public and private-sector institutions that will help develop and sustain a market-oriented economy. All Mongolians are benefiting from lower inflation and a more vibrant urban economy, for which USAID can fairly take partial credit. All Mongolians promise to benefit from the achievement of future activity goals, including improved pensions, the development of a commercial power sector, and a better working financial sector. Activities in rural Mongolia promise to establish linkages between economic growth, improved environmental quality, and increased democratic participation. In addition, the following other activities are being supported in FY 2000 and FY 2001: USAID is providing assistance to the Mongolian State Property Committee to expedite the process of privatization, help the GOM maximize the market value of the privatized firms and educate the public about the privatization process. Promising Mongolians are benefiting from long-term economics and business training in the United States. USAID will broaden this training to cover both our democracy and economic growth strategic objectives and will support the Eisenhower Fellowship Program in Mongolia. USAID is working to build a consensus among private and public stakeholders in Mongolia to improve Mongolia's competitiveness. The goal is to raise Mongolian living standards by helping private enterprises to improve productivity, quality, service and innovation and to better define the government's role in this effort. USAID is funding the Global Technology Network (GTN-Mongolia) to assist Mongolian firms improve production efficiencies by adopting U.S. technology or to establish business relationships with U.S. companies. The resources of the International Executive Service Corps (IESC) complement the program. USAID is funding sustainable rural development activities through Mongolia Farmer to Farmer (FtF), which is focusing on improving animal health and breeding stock and improving the productivity of the crop sector. The Gobi Regional Growth Initiative fosters microenterprise growth and helps civil society organizations in the Gobi region to become effective advocates and implementers of economic reform. The Lake Hovsgol program seeks to develop that region of Mongolia into an effective protected area that will lend itself to local economic development. The hallmark of USAID assistance under EPSP has been its speed, flexibility and high quality. EPSP fully deserves credit for helping the GOM to go further, faster and achieve higher quality reform outcomes than would have been possible without the project. Key Results: USAID's two strategic objectives are designed to be mutually supportive: both seek to help establish a market-oriented democratic society in Mongolia. USAID considers four intermediate results to be necessary to achieve the goal of accelerating and broadening environmentally sound private sector growth: (1) transferring public productive assets to private ownership; (2) increasing the efficiency of financial markets; (3) improving the business environment; and (4) improving the management of the natural resource base. It is expected that, as a result of these efforts, by 2003 three-quarters of the Mongolian economy will be in private hands and the private sector will be universally recognized as the paramount engine of economic growth, the economy will be growing at a sustained rate of 5% annually with positive growth in much of rural Mongolia, and the national savings and investment rate will have increased substantially. The increased economic growth that results from USAID's activities is expected to broaden and deepen popular support for a market oriented and democratic society in Mongolia. Performance and Prospects: USAID has played a key role in the macroeconomic reform agenda of the Democratic Union Coalition. In the early days of the Coalition, USAID economic policy workshops led to the development of a comprehensive economic reform agenda and later assisted the GOM to implement the agenda. Key achievements include rationalizing electricity, heat, coal and petroleum prices resulting in a more viable power sector. USAID played a key role in training a core cadre of economic analysts capable of implementing the GOM's economic growth objectives and in promoting passage of legislation necessary for financial sector restructuring, pension reform, and energy sector restructuring. USAID assistance was vital in the substantial progress of the sale of state-owned enterprises and helped the GOM to revise the auctioning mechanism and substantially increase revenues. With USAID assistance, the GOM reached a new Enhanced Structural Adjustment Facility agreement with the IMF in 1999, gaining a strong endorsement from the IMF for their successful economic reforms. There is a broad consensus across virtually all sectors of Mongolian society on the continuing need for market-oriented economic reform. However, the pace and exact nature of the reform process is likely to be influenced by the outcome of the June 2000 parliamentary elections. Possible Adjustments to Plans: Depending on the outcome of the June 2000 parliamentary elections, USAID may have to adapt significant portions of its economic growth program to conform to the policies of a new government. Other Donors Programs: The International Monetary Fund, the World Bank, the Asian Development Bank, Gesellschaft Fur Technische Zusammenarbeit (GTZ), the United Nations Development Programme (UNDP) and the Japan International Cooperation Agency provide technical assistance in the fields of economic policy and public administration. The Netherlands and UNDP have active environmental programs. Principal Contractors, Grantees or Agencies: USAID implements this activity through the following partners: Development Alternatives Incorporated, Academy for Educational Development, Barents Group, Mercy Corps International, USAID Global Technology Network, U.S. Department of Interior, Philadelphia Academy of Sciences, J.E. Austin Associates and Agriculture Cooperation Development International/Volunteers in Overseas Cooperative Assistance (ACDI/VOCA). Selected Performance Measures: (1) Baseline/Actual (1999) Target (2000) Target (2001) Private sector growth rate (in constant prices) 15% 20% 25% Number of businesses with permits or licenses in selected rural aimags* (total/women) (2) 462/75 550/95 690/125 Number of "most valued companies"** privatized by international tender 0 2 2 Steps taken toward strengthening the banking sector (3) 7% (1994) 77% 84% Steps taken toward restructuring and commercializing the energy sector (4) 1,2,3 4,5 6,7 (1) These measures are the product of new USAID/Mongolia Performance Monitoring Plan that was developed and approved in 1999. (2) Includes South Gobi and Middle Gobi aimags. (3) Steps include: 1=rehabilitation/liquidation(R/L) of the Agricultural Bank, 2=R/L of the Investment and Technical Innovation Bank, 3=R/L of the Reconstruction Bank. (4) Steps include: 1=agenda developed, 2=consensus of major stakeholders achieved, 3=Energy Law drafted, 4=Energy Law passed; 5=Legal establishment of a regulatory authority, 6=Unbundling of generation, transmission, and distribution functions, and 7=regulatory authority issues licenses. * provinces ** Firms with high asset value and which have the greatest potential for revenues at sale and/or over the longer term following the sale U.S. Finance Table (Microsoft Excel) ACTIVITY DATA SHEET PROGRAM: Mongolia TITLE: Consolidate Mongolia's Democratic Transition, 438-0O2 STATUS: Continuing PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $1,360,000 FSA PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $2,000,000 ESF INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: FY 2003 Summary: USAID has supported Mongolia's democratic transition from the very beginning of its democratic movement. The first phase of USAID support was designed to open the doors to the west and to allow Mongolians to study other democratic systems. The second phase of USAID assistance sought to improve the capabilities of Mongolia's new democratic institutions and to foster the development of robust and sustainable citizen-initiated non-governmental organizations in Mongolia. A third phase was entered in FY 1999 with the approval of the USAID's current strategic plan for Mongolia. Under this plan, USAID committed itself to consolidating Mongolia's transition to democracy by improving the effectiveness of parliament and the judiciary and by establishing the foundations for an effective rural civil society. These rural civil society organizations are vital not only as mechanisms for popular advocacy and feedback, but also for promoting economic growth in rural Mongolia. Key Results: USAID's two strategic objectives are designed to be mutually supportive: both seek to help establish a market-oriented democratic society in Mongolia. USAID considers two intermediate results to be necessary to consolidate Mongolia's transition to democracy: (1) establishing the foundations for effective rural civil society and (2) improving the effectiveness of parliament and the judiciary. It is anticipated that by 2003 the foundations for rural civil society will be firmly established. This achievement will fulfill the pressing need for democratic advocacy and feedback mechanisms and also help stimulate economic growth. In addition, it is anticipated that USAID's efforts to improve the performance of parliament and the judiciary will strengthen both democratic processes and the business environment in Mongolia. Coupled with the work of other donors, USAID's interventions will create the structural changes necessary to support a market oriented and democratic society. Performance and Prospects: Mongolia's overall accomplishments in embracing democracy have been profound: 1) a new constitution has been put into effect which guarantees basic democratic rights and protection; 2) a representative parliament has been created; 3) five free and fair national-level elections have been held; 4) a new, independent, judicial system has been established; 5) a vibrant community of citizen-initiated non-governmental organizations has emerged; and 6) the national parliament has passed legislation protecting and promoting the development of non-governmental organizations. USAID assistance has played a role in all of these accomplishments and has been a major contributor to the last two accomplishments above. Through support to the International Republican Institute (IRI), USAID is providing training and technical assistance to members of parliament and major political parties. Its efforts are focused on establishing democratic representative processes throughout Mongolia, particularly in the countryside. These activities are expected to continue in FY 2001. Funds are also being used to improve the organizational viability of political parties, especially at the provincial and local levels. This assistance is playing a vital role in the preparations of the three major parties for the upcoming June 2000 parliamentary elections. USAID is also actively engaged in efforts to improve the effectiveness of GOM ministries and the Great Hural (national parliament). USAID is funding the rural institution development component of the Farmer to Farmer program and the Gobi Regional Growth Initiative (GREGI). GREGI is the new name for the previously named Rural Civil Society Program. In FY 2001, USAID will work to foster the development of institutions that will support rural enterprise development, such as business associations, women's groups, local chambers of commerce, herder's associations and cooperatives. The goal is to have these institutions provide training and support to develop rural enterprises and agriculture, lobby local and national governments to support business growth, and provide policy alternatives to rural business issues. Finally, building upon the on-going judicial strategy development exercise that it has undertaken in cooperation with the GOM, USAID expects to begin implementation of a comprehensive program of judicial reform and enforcement in FY 2000. This program will accelerate in FY 2001 and continue through the end of the strategy period. USAID's activities will probably focus on improving the policy environment, court administration, information systems and the development of a bar association. Judicial training is an area that is over subscribed and USAID does not intend to focus on training, but will coordinate its efforts with the training programs of other donors. Possible Adjustments to Plans: None. Other Donor Programs: The Asian Development Bank (ADB) is engaged in an effort to improve the quality of legal professionals, the European Union is active in strengthening NGOs and Germany's GTZ is supporting the training of judges. EU, GTZ and UNDP have active programs in rural areas. UNDP may provide assistance to the parliament. Principal Contractors, Grantees or Agencies: USAID implements this activity through the following partners: The International Republican Institute, the National Center for State Courts, Mercy Corps International, and Agriculture Cooperation Development International/Volunteers in Overseas Cooperative Assistance. Selected Performance Measures: (1) Baseline/Actual (1999) Target (2000) Target (2001) Rural civil society organizations perceptions of meaningful engagement with parliament and government (2) 1 1.5 2.5 National elections (parliamentary and presidential) are fair and free, and provide meaningful choice to voters (3) NA Yes NA Steps taken toward the establishment of an independent judiciary (4) 1 2 3,4 (1) These measures are the product of new USAID/Mongolia Performance Monitoring Plan that was developed and approved in 1999. (2) The measurement is a scale: 1=no responsiveness, 2=very limited responsiveness, 3=meetings with some two-way discussion, 4= substantive two-way interchange. (3) Unit of measurement is yes/no. (4) Steps Include: 1=conference on the independence of the judiciary, 2=strategic plan developed, 3=allocation of responsibilities, 4=action plans developed. U.S. Finance Table (Microsoft Excel) ACTIVITY DATA SHEET PROGRAM: Mongolia TITLE: Mongolia Energy System Reformed, 438-003 STATUS: Completed PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: -0- PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: -0- INITIAL OBLIGATION: FY 1992 COMPLETION DATE: FY 1999 Summary: With the breakup of the Soviet Union in 1990, the Government of Mongolia (GOM) assumed increased responsibility for construction, operation and maintenance of its infrastructure. As early as 1991 it was apparent that outside assistance would need to be provided if the electric power and urban steam heating systems were to continue to function, particularly during the extended winter period. Much of Mongolia's power generation equipment was on the verge of being unserviceable and the country lacked the foreign exchange to purchase critically needed spare parts in international markets. USAID authorized the Mongolia Energy Sector Project (MESP) in 1992. Its purpose was to increase the reliability of Mongolian electricity and district heating systems in Ulaanbaatar and selected provincial centers through the provision of spare parts, commodities and limited technical assistance. MESP has been USAID's most visible project in Mongolia. It provided critically needed equipment, spare parts, technical assistance and training to shore up energy production at Power Plants #2, #3 and #4 in Ulaanbaatar and the Sharyn Gol and Baga Nuur coal mines during the critical days of the early transition. Later, project funds were used to purchase diesel generator sets to produce electricity in five rural provinces. These diesel generator sets were considerably more efficient than the Soviet and Czech sets they replaced. The emergency situation in the energy sector is now over. Power plants and coalmines are now running more efficiently and price increases have resulted in a positive cash flow for the Energy Authority. In addition, the cost of generating electrical energy in selected rural centers has been reduced and the reliability of electrical power supplies has been increased. MESP activities essentially ended in FY 1998. Residual activities (including an inter-agency agreement with the U.S. National Renewable Energy Laboratory to accelerate the use of wind energy technology) were transferred to the Mission's Economic Growth activity when USAID/Mongolia's new strategy was approved in the fall of 1998. The vast majority of MESP funds expended in FY 1999 ($2.967 mil. out of $3.330 mil.) were disbursed in December 1998 as payment for rural generator sets that were purchased and installed in FY 1998. The remaining MESP funds disbursed in FY 1999 were delayed payments for expenditures made earlier in the life of the activity. Key Results: The most significant achievement of the Mongolia Energy Sector Project is that it kept the Mongolian electricity, steam heat, and hot water system up and running without any major long-term interruptions. In addition, the project trained key Mongolians in power plant operations and management, thereby helping to protect the sustainability of USAID's energy sector investments. This activity effectively ended in FY 1998 with residual energy activities being folded into the Mission's Economic Growth Strategic Objective. FY 1999 expenditures were for payments for expenses incurred in FY 1998. Performance and Prospects: Not applicable. The activity has been completed. Possible Adjustments to Plans: None. Other Donors Programs: Other donors involved in the energy sector include the World Bank (upgrading production at the Baga Nuur and Sheve-Ovoo coal mines), the Asian Development Bank (assisting in the rehabilitation of Power Plant #3 and improving the financial management of the Mongolia Energy Authority), the Government of Japan (also upgrading production at the Baga Nuur and Sheve-Ovoo coal mines and assisting in the rehabilitation of Power Plant #4), the NORDIC Development Fund (Finland, Iceland, Denmark, Sweden and Norway) and Danish International Development Assistance (DANIDA), (engaged in limited rehabilitation work at Power Plant #3), and Germany's Gesellschaft Fur Technische Zusammenarbeit (assisting in upgrading the power plant at Darkhan). Principal Contractors, Grantees or Agencies: USAID implemented the program through the GOM Ministry of Infrastructure Development, the Mongolian Renewable Energy Corporation, and the Institute of Meteorology and Hydrology. United Engineers and Constructors, Morrison Knudsen, and Wagner Asia Equipment were the principal contractors. The U.S. National Renewable Energy Laboratory also helped implement the activity through a participating agency service agreement. Selected Performance Measures: (1) Actual (1999) Target (2000) Target (2001) Disruption averted to the energy production system Y NA NA Sustainable improvements made in the energy sector Y NA NA Considerable savings in supplying rural electricity Y NA NA (1) These indicators date from before the approval of current USAID/Mongolia Performance Monitoring Plan in July 1999. Because the energy activity had already ended, new energy indicators were not included in the new performance monitoring plan. (2) Y=Yes; N=No. U.S. Finance Table (Microsoft Excel)

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