THE MOF PLANS TO PRESENT THE DRAFT AMENDMENT TO THE LAW ON DEBT MANAGEMENT TO THE PARLIAMENT FOR RATIFICATION

8/4/2021

One of the key objectives of the "Fiscal and Financial Stability Strengthening Project" jointly implemented by the Ministry of Finance of Mongolia and the World Bank, is to improve the legal environment for debt management, medium-term debt management strategy, and create a reporting system for contingent liabilities.

In this context, the Debt Management Division of the Financial Policy Department of the Ministry of Finance cooperated with a law firm - MDS&KhanLex (i) to review the current state of implementation of the Debt Management Law, (ii) to develop regulations governing debt management, and (iii) to prepare proposals to amend the Debt Management Law. 

The draft amendments to the Law on Debt Management and the accompanying draft laws include fundamental reforms. These include:

  1. Contingent liabilities to fiscal relations, such as government debt guarantees, debts of state and locally owned entities, are unregulated. Therefore, in this draft law, the issues related to registration, reporting, and monitoring of contingent liabilities shall be regulated by this law consistent with the Budget Law;
  2. The timeline for preparing and the Parliamentary approval of the new borrowing plan and debt management strategy in the Debt Management Law is inconsistent with the Budget Law. Therefore, it is essential to harmonize these two laws to avoid legal loopholes;
  3. Regulations related to government debt and contingent debt are unclear. Therefore, the draft law stipulates that the risk assessment of programs, projects, and activities shall be organized by the state central administrative body in charge of finance and budget affairs and carried out before every decision. The methodology for risk assessment shall be approved and enforced by the Cabinet member in charge of finance and budget affairs. In addition, it has been stipulated in the draft law that the state audit body must evaluate the implementation of the Government's debt management and legislation every three years and eliminate duplication of functions of government organizations;
  4. The current law gives the Cabinet member in charge of finance and budget affairs the authority to issue domestic securities and determine their terms under the borrowing plan approved by the Government. Still, the issue is regulated by the Government and the Parliament. Therefore, it is needed to be revised that the Parliament’s decision to be only limited to issuance of international bond;
  5. If the State Audit Office and the State Central Administrative Body Responsible for Finance and Budget affairs reveal violations of the legislation on debt management through its registration, control, and inspection, the authority to impose sanctions on the responsible organizations and officials was included in the draft law. It is considered that the implementation of this law will be enhanced by improving the current accountability;
  6. Relationships related to the issuance of securities or debt creation of provinces and the capital city are not regulated by the Law on Debt Management. Therefore, there is a need to reflect the issuance of securities by provinces and the Ulaanbaatar capital city into the draft law.

This strengthening of the debt management system will improve Mongolia's debt management performance. According to the World Bank's assessment in (i) 2008, 1 indicator was rated A, 5 were rated B, 6 were rated C, 3 were rated D, (ii) in 2011, 1 indicator was rated B, 8 were rated C, 5 were rated D, (iii) and in 2016, 1 indicator was rated B, 7 were rated C, and 6 were rated D. Adopting a draft law amending the Debt Management Law and improving the implementation mechanism is expected to increase this assessment and positively impact public debt sustainability.

NEWS
WORLD BANK WORKING GROUP MET WITH PIU AND IMPLEMENTING ORGANIZATIONS REGARDING THE COMPLETION REPORT OF THE STRENGTHENING GOVERNANCE IN MONGOLIA PROJECT

4/3/2023

Concerning the Strengthening Governance in Mongolia project, which was completed on February 28, 2023, the World Bank working group to develop the project completion report had an official meeting with Project Implementation Unit (PIU) and implementing organizations on March 30, 2023. The purpose of the working group meeting is to review the implementation of the project, the results achieved, and the fulfillment of the project indicators.

PERFORMANCE BASED FINANCING: INSPIRING NEW APPROACHES TO PUBLIC FINANCIAL MANAGEMENT IN HEALTH AND EDUCATION

3/23/2023

Performance based financing (PBF) links funds or payments to service providers to results achieved and gives them considerable autonomy in the use of these funds. The strategic approach is appealing to many individuals and organizations as it motivates them to perform better and channels resources directly to the frontlines. This in turn fosters greater accountability. Using this approach has been popular in different sectors with some promising results emerging. 

AN INTEGRATED SYSTEM FOR RESULTS-BASED MEDIUM-TERM BUDGET PLANNING: IN ACHIEVING THE GOALS OF IMPROVING BUDGET PLANNING, BUDGET EFFICIENCY AND PROGRAM OUTCOME.

3/7/2023

    Under the scope of improving public financial management, Mongolia is aiming to introduce result-oriented medium-term budgeting, transitioning from the traditional input-based budgeting. This goal is aligned with development policy of Mongolia to shift from medium-term fiscal framework (MTFF) to medium-term expenditure framework (MTEF).

The MOF is entering the new phase of PFM Reform Action Plan

2/28/2023

Within the framework of the European Union financed, World Bank managed “Strengthening Governance in Mongolia” project, the Ministry of Finance, in compliance with the “Sustainable Development Vision 2030” and the “Action Program of the Government of Mongolia for 2016-2020”, has approved and implemented the Public Financial Management (PFM) Reform Strategy and the Action Plan for 2018-2022. The overarching objective of the strategy was to improve governance and achieve effective resource allocation and efficient public service delivery. The implementation status of the PFM Action Plan is indicated as “Certain results have been achieved” at the rate of 85 percent.

LAUNCHED BETA VERSION OF THE REDEVELOPED GLASS ACCOUNT PORTAL

1/20/2023

The Ministry of Finance Mongolia has developed and successfully launched the new version of the Glass Account Portal in 2023 within the framework of the Strengthening Governance in Mongolia Project jointly implemented by the EU and the World bank.

New systems and services are added in the Intermediate service platform for fiscal and financial systems

1/11/2023

The Ministry of Finance Mongolia has developed and successfully launched the Intermediate Service Platform (ISP) in 2022 within the framework of the Strengthening Governance in Mongolia Project. The main purpose of the system is to provide a possibility of information /web services/ exchange between the independent systems of the Ministry of Finance and other organizations in a easy and flexible way. In addition, it is solving the issues of overlapping connections and development between many information systems and organizations, transferring them to a unified standard, making it has no complexity, and more secure.

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