The Board of Directors of the European Bank for Reconstruction and Development (ERBD) has today approved a new three-year strategy for Mongolia, which became a country of EBRD operations in 2006.
The strategy, which was approved on the eve of the presidential election in the country, notes that Mongolia remains committed to democratic values, has developed a competitive political party system and has established a vibrant civil society, although challenges on the path to a consolidated democracy remain. The EBRD continues to support Mongolia in its transition to a full market economy.
The EBRD is currently the largest foreign investor in Mongolia. All projects that the Bank has supported – totalling just under US$ 1 billion – have been in the private sector, while almost all of these involve local entrepreneurs or banks.
One of the priorities for the EBRD in Mongolia over the next three years will be to support infrastructure projects with private sector participation, including public-private partnerships (PPPs). The EBRD is prepared to finance new projects in the energy and rail sectors, including in the South Gobi region.
The main challenges, according to the new strategy, are fair, efficient and transparent management of the wealth generated by the natural resources boom and a sustainable development model. “The country’s key task is to put in place institutions and policies that ensure the whole society benefits from the boom,” said Olivier Descamps, the EBRD’s Managing Director for Turkey, Eastern Europe, Caucasus and Central Asia. “The EBRD, together with other international financial institutions, will work as partners with the government of Mongolia to help build those institutions and policies, from fiscal policy to inclusive regional development,” he added.
The strategy defined the main priorities for the EBRD’s work in Mongolia over the next three years. They are:
Diversification. The Bank will aim to expand its engagement with the non-extractive private sector.
- Sustainable growth. The Bank will support the financial sector through small and medium-sized enterprise (SME)-debt programmes, equity and technical assistance.
- Responsible mining and institutions. The Bank will continue to offer debt and equity finance to reputable mining companies which meet its high standards and will support institutional building – all of the Bank’s support in the mining sector has thus far been directed to local enterprises.
- Infrastructure and private sector development. The Bank will support Mongolia’s infrastructure-building – including through the development of renewable energy – and will promote private sector involvement where possible.
The EBRD has invested US$ 955 million in 55 projects in Mongolia, while also mobilising approximately US$ 2 billion from other sources of financing. While some 18 transactions were made in the natural resources sector, and two in the energy sector, the majority of projects – 35 – have been in the manufacturing and services sector. The EBRD in Mongolia also runs an extensive small business support programme for micro, small and medium-sized enterprises.