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World Bank Supports Mongolia’s Reforms with USD120 Million Financing


Oyundelger 2017-12-04 06:12

The World Bank’s Board of Executive Directors approved USD120 million in financing to support Mongolia’s efforts to restore debt sustainability and strengthen the social protection system.

The World Bank’s Board of Executive Directors approved USD120 million in financing to support Mongolia’s efforts to restore debt sustainability, strengthen the social protection system, and enhance the competitiveness of the economy. Although  Mongolia’s  legal  system  includes  controls  over  fiscal  deficits,  these  controls  were  largely circumvented  in  the  past  several  years  through  off-budget expenditures.  By consolidating off-budget and quasi-fiscal expenditures, spending priorities will be debated during budget negotiations. Reducing capital expenditure – the largest source of spending increase in 2016 – is also a priority target. Measures to boost revenues include a more progressive personal income tax system that will reduce taxes for lower income groups, as well as increases in excise taxes on alcohol and tobacco, supporting both health and revenue objectives. Other reforms to expand the tax base will follow in the coming years. The program also endorses the government’s efforts to rebalance the social welfare system in favor of the poor, notably by strengthening the Food Stamp Program and laying the foundation for a poverty-targeted benefit. The program includes reforms aimed at making the pension system sustainable. Strengthening  the  investment  climate  will  help  Mongolia  to  unlock  its  long-term  potential  and  reduce  its reliance  on  commodity  exports.  Important reforms in this  area  include  strengthening  investor  protection, streamlining permit requirements, strengthening animal health management to promote livestock production and exports, and improving the trade environment. Policy reforms are expected to promote specific development outcomes that contribute to poverty reduction.

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