A. BACKGROUND

The World Bank (WB) and the European Union (EU) has been implementing a new hybrid Trust Fund (TF) aimed to support the efforts of the Government of Mongolia (GOM) to improve fiscal discipline, public financial management (PFM), as well as transparency and accountability processes for strengthened governance in Mongolia. 

This TF, through both Recipient Executed (RE) and Bank Executed (BE) interventions, serves two main purposes. Firstly, it complements and expands the ongoing technical assistance the WB is providing through the Strengthening Fiscal and Financial Stability (SFFS) Project. Secondly, this TF supports the GOM in advancing the current efforts toward increasing transparency, participation and accountability in fiscal matters as well as in strengthening its capacity to deal with non-technical drivers of the reform process that prevent state agencies from implementing policies and regulations as intended. 

The Component 2 of the TF focuses primarily on supporting the specific needs of the GOM to establish sound fiscal discipline, to improve expenditure management by strengthening the budget credibility, to establish the foundations for medium-term budgeting, and to re-orient public investment to strategic projects linked to the diversification of the economy. Five priority areas constitute the core of the component: (i) development and implementation of a public financial management reform plan and inter-agency coordination; (ii) strengthening budget preparation and execution towards results-based medium-term budgeting; (iii) improving budget reporting and transparency by increasing the comprehensiveness of fiscal and financial information and reporting; (iv) improving the management of contingent liabilities, through improving the existing governance framework for recognizing, managing, and disclosing contingent liabilities; and (v) strengthening public investment management, through the development and implementation of mechanisms for prioritizing capital project proposals and cost-benefit analysis.

The Government of Mongolia (GOM) has undertaken reforms to gradually bring about fiscal discipline and strengthen the PFM system. The first phase of reforms between 2003 and 2008 established the basic elements of the system, including strengthening internal controls, cash management introducing single treasury system, and accounting and reporting. The second phase of reforms between 2008 and 2012 contributed to enhancement of fiscal legal framework with enforcement of the Fiscal Stability Law and revised edition of the Budget Law establishing fiscal rules and strengthening fiscal discipline and fiscal decentralization. Subsequently, the GOM approved in late 2018 an overall PFM strategy that is ambitious but attempts to set forth general principles and areas of intervention. 

The PFM Reform Action Plan for 2018-2022 defines the transition from the MTFF to MTBF as one of the key agendas on budget reform policy in Mongolia. Hence, within the framework of strengthening PFM and implementing the Action Plan, Mongolia is aiming to introduce results-quality-performance-based medium-term budgeting shifting from traditional input-based budgeting. Results-quality-performance-based financing reform has been implemented in the health sector since 2021 and, building on the experience, starting from 2022 MOF is to expand the scope of this reform to other social sector services such as education, culture, public sports, child protection, vocational education and employment services. 

For successful implementation of the above-mentioned reform agenda, the MOF considers that a solid foundation is essential for putting in place an institutional framework for transitioning from line-item budgeting to results-quality-performance based medium term budgeting (MTBF). In particular, MOF is planning to enhance and update key elements of the PFM in line with international best practices such as with regards to budget classifications, information systems, program goals and objectives, non-financial indicators (KPIs), performance assessment and management of the annual budget process as these are critical elements to good budget systems. Currently, these elements are not in line with the international best practices as evidenced by the 2021 PEFA Assessment Report 2021 of Mongolia with lower scores on PI-4 Budget Classification, PI-8 Performance Information Service Delivery and PI-16 Medium-Term Perspective in Expenditure Budgeting. 

Hence, to help strengthen the institutional framework for transitioning from line-item budgeting to results-quality-performance based medium term budgeting, the Ministry of Finance (MOF) is planning to recruit a team of national consultants who would work together towards establishing a sound basis and to enhance the key elements of the PFM as stated above. The team will be led by a team leader, who in addition to technical tasks, will be responsible for coordination and management of the team members’ work programs. The team members will include an IT consultant, a system business and functional analyst, a consultant to update budget classifications, two national consultants to develop KPIs, and a data analyst.

B. OBJECTIVE OF THE ASSIGNMENT 

The objectives of the national consultant to provide support to development of a performance framework and performance indicators are to (i) undertake a comprehensive review of the international best practices on performance frameworks, (ii) assess the current practices with regards to performance frameworks in Mongolia; and (iii) define the framework for linking strategic objectives with key results and monitoring performance indicators that is suitable in Mongolia.

C. SCOPE OF WORK

Key tasks under the assignment will include, but not be limited to, the following:

Task 1: Review effective approaches, best practices and latest trends on linkages of strategic objectives with budget and performance review processes, and based on the review finingss, prepare and present to the Client a brief report (PPT) containing the following matters:  

• Performance results systems used by both national and international governments and companies;
• Linkage of objectives and key results (OKR) and establishment of performance indicators;
• Measuring and monitoring frameworks for performance results workable for basic social services such as education and health; and
• Viability of using the OKR approach for programs/services financed by the Government; 

Task 2: Review “Program outcome/performance indicators” to be approved by the annual budget law of Mongolia in Annex 1 and prepare and present a brief report (PPT) based on the following:

• Classify and assess performance indicators in terms of their nature and their alignment with common performance indicators used in other countries and produce a report on the findings. Illustrate it in examples for at least 3 programs from the public services and public administration sectors each;
• Assess if performance indicators defined in Annex 1 can measure whether strategic objectives of the sectors are fulfilled and how strong the correlation between the objectives and key results; 

Task 3: Based on the above review and assessment, define the framework for linking strategic objectives and key results and for monitoring performance indicators that is viable in Mongolia:

• Develop a framework that illustrates best the linkage between OKR of programs and budget allocation along with its justification and concept;
• In collaboration with the national consultant working on the framework for introducing results-based medium-term budgeting, develop a program budgeting guideline along with templates for the above-selected programs (education, health, public administration and so on) illustrated in examples;
• Provide support to the national consultant working on improvement of budget classification to refine definitions of program classification to the extent that it conveys strategic objectives and key results; and
• Work with other team members on how to present strategic objectives, key results and key performance indicators in the proposed integrated system of the results-based medium-term budget.

D. DELIVERABLES

1. Report on the findings of the review on effective approaches, best practices and latest trends on linkage of strategic objectives with budget and performance review;
   
2. Report on the assessment of “Program outcome/performance indicators” to be approved by annual budget law of Mongolia; and
3. Comprehensive road map for establishing the framework for linking strategic objectives and key results and for monitoring performance indicators (reporting on performance progress)

E. CONSULTANT’S QUALIFICATIONS/ SELECTION CRITERIA

Education: A suitable candidate should have a postgraduate degree in a relevant field: accounting, statistics, economics, public finance and/or other related field;

Experience: The incumbent should have at least five (5) years of relevant professional experience including in the public sector. Knowledge of technical terms and issues regarding performance indicator and its measurement would be an advantage. 

Language skills: Fluent written and spoken skills in Mongolian and English.

Other skills: 

• Excellent interpersonal skills with the ability to function effectively and collaboratively in a team environment and high integrity and accountability;
• Be proficient in PC-based applications such as Word, Excel and data management, and have excellent web research and navigation skills; 
• Be able to work overtime if required.

F. SUPERVISION AND REPORTING

• The consultant will work with the designated staff of the Budget Consolidation Division of Fiscal Policy and Planning Department of the MOF, as well as other relevant MOF/government officials and consultants under the supervision of the General-Director of the Fiscal Policy and Planning Department. The designated official will communicate regularly with the consultant to review progress with the work program and to resolve any outstanding issues;
  
• The consultant should submit monthly progress reports with the relevant supporting documents/deliverables included under Section D to report on the progress of the assignment; and
• All information provided to the consultant will be regarded as confidential and should not be shared with outside individuals or organizations without prior consent of the Client. 

G. INSTITUTIONAL ARRANGEMENTS

The client will provide office space, assign the officials to accept deliverables stated in the contract and provide all necessary materials required for undertaking the assignment. The consultant shall bring his/her own computer/laptop.

H. CONTRACT DURATION AND PAYMENT CONDITION

The consultant's work is expected to commence in March 2022. The contract will be for a period of twelve (12) months.

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