AfDB provides $100 million in emergency aid to Mongolia – Mongolia
MANILA, PHILIPPINES (August 25, 2022) – The Asian Development Bank has approved $100 million in emergency assistance to the government of Mongolia to help it weather the effects of severe economic shocks.
The Russian invasion of Ukraine and continued border restrictions with the People’s Republic of China (PRC) due to COVID-19 have caused significant fiscal strains in Mongolia. In response, the government prepared a Counter-Cyclical Development Expenditure Program (CDEP) to assist poor and vulnerable groups, mitigate inflationary pressures, and support macroeconomic stabilization.
“This AfDB loan will support government measures aimed at stabilizing the economy,” said AfDB financial sector specialist for East Asia, Peter Rosenkranz. “The budget support provided through this Counter-Cyclical Support Facility (CSF) loan will also provide fiscal space to pursue key economic structural reforms over the medium term.”
Mongolia is experiencing a growing current account deficit, increased pressure on foreign exchange reserves and growing external financing needs. Rising food and fuel prices erode purchasing power and increase poverty. Inflation spiked to 16.1% nationally in June 2022, and was particularly high for food and fuel.
With one in four people in Ulaanbaatar living below the poverty line, rising costs are particularly hard on the poor, who spend an average of 43% of their total income on food, compared to 32% spent on food by households. not poor.
External shocks disproportionately affect poor and vulnerable groups, including women and girls. Women are heavily concentrated in low-wage sectors such as services, food production, and wholesale and retail trade, which have been hardest hit by the pandemic due to mobility restrictions. This program will reach 1.2 million children in 64% of households in the country through direct cash transfers.
“This AfDB financing will help poor and vulnerable groups overcome the difficulties caused by external shocks,” said Emma Fan, Director of the AfDB’s East Asia Department for Public Management, Financial Sector and Cooperation. regional. “The emergency support provided under the CSF will extend social protection support to vulnerable households under the CDEP until the end of 2022.”
The program will support other key government measures, including a 50% refund of social security contributions for the lowest paid employees for the remainder of 2022 and 8.5% wage increases for public service employees the lowest paid (three-quarters of whom are women). It will also provide around 16,000 new kindergarten places for young children in poor areas.
The AfDB is committed to achieving a prosperous, inclusive, resilient and sustainable Asia and the Pacific, while continuing its efforts to eradicate extreme poverty. Founded in 1966, it is owned by 68 members, including 49 from the region.
- Asian Development Bank
- © Asian Development Bank