Project Overview

Objective: Promote private and financial sector development and reinforcing the institutional capacity of the  banking sector by (i) increasing the availability of commercial bank term lending to Investment Enterprises, (ii) strengthening the financial intermediation function and resource allocation capabilities of the Participating Financial Institutions;

(iii) strengthening Bank of Mongolia’s financial supervision functions; (iv) underpinning MOF’s role in fostering private sector growth and a sound Mongolian financial sector; (v) supporting the Government with building supervision capacity to address banking problem;

Location: Mongolia, most of the projects being implemented in Ulaanbaatar and some other areas.

Approval Date: 28^th June 2005                                                   

Closing Date: 30^th April 2010

Extension is under Consideration

       Project Cost:  SDR 6.991 (USD 10.54 million equivalent at approval)

      Borrowers:        Government of Mongolia

      Implementing Agency:  Ministry of Finance of Mongolia,  through 

                                                                 -  Bank of Mongolia  

                                                                 -  PFI-s,  as   TDB, Zoos Bank,  Golomt Bank,   Khaan Bank 

       Beneficiaries:     Sub-Borrowers –    Private  Companies

      World Bank Involvement and input:

-In 2000-2004, WB provided funding and technical assistance for the implementation of the First Private Sector Development Credit (PSDCI) and disbursed  USD 10 mln and financed 47 Investment Project and created more than 900 new jobs.

-In 2006-2011 WB is providing funding and technical assistance for the implementation of the Second Private Sector Development Credit (PSDCII)

 Key results of the project

Sub-Loans:

-          Increased number of private companies benefited from the Project, as evidenced that 31 sub-  loans were approved by IDA and  disbursed for total amount USD 9,367,067.12, from which 6,753,286.99 by IDA and  2,324,870.13 by GOM as at March 23, 2010. 

-          PFIs have improved loan portfolio diversification. 

-          Sub-borrowers have improved access to new sectors, markets and new business activities by expanding of production and service capacities, by installation of new machineries and upgrading new technologies.

-          More than 450 new jobs created.

Technical Assistance Program:

-            Participating Financial Institutions are organizing staff training per medium term training Programs.

As result of these training activities, the knowledge, skills and attitudes acquired by the trained staffs are assisting the PFIs to enhance their operating capacity and effectiveness in credit and risk assessment/ evaluation, to improve financial control, risk based internal audits and human resources management.

-            The Bank of Mongolia is organizing Training Programs.

As result of the staff training, BOM supervisors skills have been enhanced. Improved quality and effectiveness of BOM bank supervision evidenced by timely identification of and action against violations of prudential regulations and the commercial banking law.

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Major impacts on development that was addressed by the project as development project:

                  It is continued to support development of intermediate-term lending market to meet capital       

                  investment needs of Mongolia’s private sector, especially SME-s.  

  Project Team Leader:            Mrs. Xiaofeng Hua,  Senior Financial Sector       

                                                                                        Specialist,   World Bank

  Project Coordinator:              Mrs.  B.Saran