Behind ADB’s Response to Mongolia’s COVID-19 CrisisEconomy
Ulaanbaatar/MONTSAME/. While Mongolia’s quick action averted a public health disaster over COVID-19, it has faced economic challenges, requiring quick assistance from ADB. When the early reports of the novel
coronavirus disease (COVID-19) were hitting the international headlines, the
Government of Mongolia was quick to act.
Strict border closures, a suspension of air passenger travel, enforced quarantine for arriving passengers, and restrictions on daily life kept the number of COVID-19 cases so low, there has been no recorded transmission within the country and all known cases have been imported by visitors or Mongolians returning from abroad.
While the government’s actions helped prevent COVID-19 exerting a high human cost in Mongolia, it still faced a huge economic cost. The economy, with its dependence on mining, which accounts for almost a quarter of gross domestic product and 90% of exports, remains vulnerable to swings in commodity prices. Mongolia is also highly dependent on trade with its neighbor, the People’s Republic of China, where the economic slowdown has triggered a sharp fall in export prices in Mongolia and badly hit transport, tourism, retail trade, and services. These combined to hit Mongolia with a 10.7% contraction in GDP in the first quarter of 2020.
The government launched on 27 March 2020 a countercyclical development expenditure program (CDEP) introducing $1.8 billion in measures to counter the negative impacts of the COVID-19 pandemic. CDEP contains cash transfer schemes and other social protection measures targeting poor and vulnerable groups, households, and businesses. For this, the government turned to the Asian Development Bank (ADB) for assistance.
ADB steps in
ADB responded on 12 May with the approval of a $100 million Countercyclical Support Facility Loan, funded through the
COVID-19 pandemic response option (CPRO) under ADB’s Countercyclical Support Facility.
“We received the official request for assistance from Mongolia on 17 April and delivered the package a little more than four weeks later,” said ADB Country Director in Mongolia Pavit Ramachandran. “This is something that would not have come together without the seamless coordination from across our team and ADB.”
But internal discussion on a response package for Mongolia started well before the ADB corporate COVID-19 package was approved.
“ADB took unprecedented steps to put in place resources, policies, and business processes within a short span of time to respond to COVID-19 in Mongolia,” said Director for Public Management, Financial Sector and Regional Cooperation in the ADB East Asia Department Emma Fan.
Staff found that ADB’s close relationship with the government helped speed things along. “The government was able to move its machinery extremely quickly to get key information and to turn that around in just a couple of days,” said ADB Senior Country Economist in Mongolia Declan Magee. “That comes not from a year or two of engagement but from 30 years of consistent partnership—that is such an asset for ADB in Mongolia.”
Under the Countercyclical support the CDEP has increased the allocation under the Child Money Program. Private sector workers are exempt from personal income tax for 6 months starting from 1 April, aimed at employees at risk of losing their jobs. At least 45% of the beneficiaries are women. Support has also been provided to micro, small, and medium-sized enterprises, including those engaged in international trade, particularly the import of critical food and medical supplies, to protect jobs.
“Integrating gender into a budget support operation of this nature is a first and it does create a precedent,” said ADB Social Development Specialist Veronica Mendizabal Joffre. “We were 100% clear on the importance of this operation for women and Mongolian people in general and the strong teamwork gave us a push to continue and deliver.”
Even with its stringent measures, the government estimates that 20% of the population are still at risk from the public health threat posed by COVID-19, particularly the poor and vulnerable. More than 10,500 Mongolians from overseas are waiting to return home from infected countries, potentially bringing the disease with them. But testing capacity for COVID-19 was inadequate and there is a lack of essential health care equipment and trained medical personnel.
Among ADB’s first corporate responses on COVID-19 was to reprogram $1.4 million of savings of the ongoing Fifth Health Sector Development Project in Mongolia as early as 13 February. A $1 million grant was subsequently allocated on 25 March from the Asia Pacific Disaster Response Fund. This assistance was used to hand over in February and March 570 pieces of medical equipment for diagnosis and treatment patients with respiratory conditions for 30 district and provincial general hospitals and 4 tertiary level hospitals. The equipment included portable digital X-rays, ventilators, patient monitors, oxygen concentrators, infusion and injection pumps and nebulizers Personal protective equipment was also delivered to 700 customs officers working at the borders.
A small-scale technical assistance of $225,000 on 2 March 2020 has been strengthening national capacity for emergency preparedness. Under this, World Health Organization technical experts from Germany were deployed in March to train national experts in infection prevention and control as well as conduct training in provincial and district level hospitals.
On 7 May, ADB also approved $30 million in extra financing for the Fifth Health Sector Project to further strengthen the country’s preparedness and response.
CPRO is providing further medical equipment and supplies, complementing this with a set of medium-term measures. These include strengthening 35 hospitals to meet national infection prevention and control standards, and improving 210 hospitals to meet national standards to manage severe respiratory infection patients, and enhancing testing capacity.
The assistance does not stop there. As part of ADB’s COVID-19 response package, a $26.4 million Shock Responsive Social Protection Project was approved on 19 June. The project will provide cash transfers to households channeled through the Food Stamp and Child Money Programs in Mongolia. ADB is also planning ahead to be ready to support a secondary response later this year should this be requested by a new government that will be formed after elections on 24 June in Mongolia.