The Asian Development Bank (ADB) has approved a $26.4 million loan to lessen the socioeconomic impacts of the coronavirus disease (COVID-19) pandemic on poor and vulnerable groups in Mongolia, especially women and children.
“The loss of jobs and income in the wake of COVID-19 coupled with rising food prices will particularly affect poor and vulnerable people, ” says ADB Principal Social Sector Specialist Karin Schelzig. “The Shock-Responsive Social Protection Project will expand food support and cash transfers on a temporary basis, utilizing the targeting and delivery systems of two established social assistance programs.”
Mongolia’s early and robust response to contain the spread of COVID-19 has helped keep the number of cases relatively low, but the health risk-level remains high, and the curtailment of economic activity has affected many parts of the economy. ADB estimates show that Mongolia will suffer significant investment and consumption shocks in addition to negative global demand spillovers in 2020.
The pre-crisis poverty rate in Mongolia was 28.4%. A significant share of Mongolians who are technically non-poor live precariously close to the poverty line.
To counter the negative impacts of the pandemic, on 27 March the government launched a countercyclical development expenditure program, which includes temporary increases in child money program benefits. On 6 May the government announced further social assistance measures including expanding the food stamp program.
The project will finance the temporary increase in the monthly benefit levels for all child money program and food stamp program beneficiaries through September 2020. The child money program reaches more than 1 million Mongolian children with electronic transfers. Food stamps are cash-like benefits that are delivered either as electronic payments to e-cards or as physical vouchers in more remote areas. Food stamps can be used to purchase 10 staple food items, including milk and vegetables.
Food stamps benefit 240,500 Mongolians, among them more than 118,000 children. Women and girls comprise 53% of the recipients. The program reaches 44,325 families (the poorest 5%).
The project is a key part of ADB’s package of support to mitigate the impact of COVID-19 in Mongolia. This assistance has included grants to purchase emergency medical equipment and supplies, short and medium-term responses such as a $40 million loan to support health security, a $24 million reallocation to support small- and medium-sized enterprises, and a $100 million countercyclical support program.
Total project cost is $270.79 million, of which $239.39 will be provided by the Government of Mongolia. The World Bank will also provide loan cofinancing of $5 million for the expansion of the child money program benefits.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.