Strengthening Fiscal and Financial Stability Project

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The development objective of Strengthening Fiscal and Financial Stability Project for Mongolia is to contribute to the government of Mongolia’s efforts to strengthen fiscal and financial stability and improve the quality of expenditure management. This project has five components. 1) The first component, Strengthening Macroeconomic and Fiscal Management, aims to strengthen fiscal responsibility and support the implementation of relevant policy measures toward (a) improving the quality of expenditure management, (b) strengthening macroeconomic and budget policy-making capacity, and (c) improving regulatory processes. It has the following three subcomponents: (i) Improving macroeconomic policy tools and enhancing research capacity; (ii) Strengthening fiscal policy and planning; and (iii) Strengthening capacity for debt management and external development financing operations. 2) The second component, Improving the Efficiency of Public Financial Management, aims to improve fiscal discipline by strengthening the country’s PFM and enhance the quality of expenditures by revamping PIM and fostering activities aimed at increasing transparency and accountability. It has the following four subcomponents: (i) Improving budget credibility, predictability, and execution for better delivery of services; (ii) Increasing budget comprehensiveness and transparency through better control, reporting, and expansion of the recipient’s Integrated Financial Management Information System capabilities; (iii) Strengthening the public financial management institutional capacity; and (iv) Strengthening Public Investment Management. 3) The third component, Enhancing Financial Sector Stability, aims to support the MOF, BOM, FRC, DBM, and DICOM to strengthen the resiliency of the banking system. It has the following five subcomponents: (i) Developing and implementing a financial sector development strategy to strengthen financial sector stability; (ii) Providing support to the effective management the Development Bank of Mongolia; (iii) Strengthening financial safety nets; (iv) Strengthening the institutional capacity of the Financial Regulatory Commission; and (v) Improving the capacity of the Bank of Mongolia to enhance financial stability. 4) The fourth component, Strengthening of the Social Protection System, aims is to support the government’s efforts to improve public expenditure quality in social protection. It has the following two subcomponents: (i) Strengthening social welfare design, targeting, operations, and performance; and (ii) Strengthening social insurance design, governance, and financial management. 5) The fifth component, Project Management and Monitoring, aims to provide support for project implementation, coordination, monitoring and evaluation, including, among others, audit arrangements, reporting requirements, procurement, and FM activities.