Second Economic Management Support Operation

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The development objective of the Second Economic Management Support Development Policy Operation for Mongolia is to support the Government of Mongolia in restoring debt sustainability, strengthening the social protection system, and enhancing competitiveness. Poverty increased during the economic slowdown of 2014‐16, but declined only moderately during 2017-18, pointing at continued challenges in the labor market and the need for strong social support policies. The reform program seeks to: (i) restore the country’s debt sustainability through fiscal adjustments, (ii) strengthen the social protection system with an emphasis on poor and vulnerable groups, and (iii) enhance competitiveness of the economy through structural reforms. Second economic management support operation (EMSO 2) will help Mongolia to consolidate the adjustment already achieved, address some of the long‐standing structural weaknesses and distortions in the economy, and anchor macroeconomic policies going into an election year. In addition, it will help create fiscal space by substituting high‐cost, short‐term domestic borrowing with relatively more concessional and long‐term external assistance.