HACT

‐ August 2017
Macro Assessment-
Mongolia
Prepared for the UNICEF, UNDP

and UNFPA in Mongolia
11 October 2017
Draft
1
Table of Contents
Abbreviations and Acronyms...................................................................................................................... 3
Executive Summary.................................................................................................................................... 4
Annex 1. Macro Assessment Checklist ..................................................................................................... 6
Annex 2. Risk Consideration Checklist ...................................................................................................... 7
Appendix A: Sources of Information ........................................................................................................ 28
Appendix B: Change Readiness Index Country Snapshot........................................................................ 30
2
Abbreviations and Acronyms
HACT Harmonized Approach to Cash Transfers

PFM Public Financial Management
IP Implementing Partner
UN United Nations
UNDP United Nations Development Programme
UNICEF United Nations Children’s Fund
UNEP United Nations Environment Programme
UNFPA United Nations Fund for Population Activities
EFF Extended Fund Facility
IMF International Monetary Fund
SAI Supreme Audit Institution
MNAO Mongolian National Audit Office
DBM Development Bank of Mongolia
TSA Treasury Single Account
PEFA Public Expenditure and Financial Accountability Assessment
LTAS Long Term Agreement for Services
KPMG LLP KPMG International member firm located in the United States
KPMG Mongolia KPMG International member firm located in Mongolia
3
Executive Summary
This Macro Assessment for Mongolia was prepared in accordance with the corresponding Terms of
Reference included in the Long Term Agreement for Services (LTAS - 42105423) between KPMG and the
United Nations Children’s Fund (UNICEF).
Objective and Scope of the Macro Assessment

The Macro Assessment is performed to support adequate awareness of the public financial management
(PFM) environment in which the UNICEF, UNDP and UNFPA (Agencies) provide cash transfers to
Implementing Partners (IPs). The term ‘PFM’ in the harmonized approach to cash transfers (HACT)
framework is broadly defined to include a range of considerations for operating within the country; it is not
limited solely to the financial environment, but also includes national procurement capacity, exchange rate
volatility, and presence of informal/black markets.
The Macro Assessment represents a desk review of publicly available PFM assessments and reports. No
original PFM assessment procedures were performed for this Macro Assessment.
The two primary outputs of the Macro Assessment comprise:
1. Outlining Risks to use of PFM for cash transfers: An outline of the risks related to use of the PFM for
cash transfers within the country by governmental IPs, as well as other country-specific knowledge for
non-governmental IPs; and
2. Determining Capacity of Supreme Audit Institution: A determination on whether the government’s
Supreme Audit Institution (SAI) has the capacity to undertake scheduled and special audits of
government IPs.
Results
The following provides details of the two primary outputs of the Macro Assessment:
Risks: The following table provides a summary of the risks identified during the Macro Assessment:
No. Indicator Risk Rating

1 The annual budget contains all significant government expenditures Low
2 Budget and performance Low
3 Budget execution High
4 To what extent are internal controls and financial procedures adhered to? Moderate
5 Bank reconciliations Low
6 Transfer of cash resources Moderate
7 Reporting of cash and asset position to government Low
8 Financial audit / SAI auditor general Low
9 SAI independence High
10 Audit standards applied by the SAI Low
11 Follow-up action to audit reports Significant
12 Country has a national procurement framework Low
13 Transparency of audit process Moderate
14 Staff qualifications and skills Significant
15 Financial systems Moderate
16 Environmental conditions High
17 Exchange rate volatility High
18 Existence of a black market Significant
19 Public Debt Moderate
4
The Macro Assessment does not conclude with one overall risk rating. Instead, the Macro Assessment
provides the risks associated with a broad range of topics that can be utilized by agencies in consideration
of its country operations and the programs implemented by its IPs.
Supreme Audit Institution:

The capabilities of the SAI is considered in indicators 9 – 11, which resulted in High, Low and Significant
risks, respectfully. It was observed in indicator 9 that the SAI is not an independent body, which presents a
high level of risk in the SAI's ability and capacity to undertake HACT related scheduled and special audits of
government IPs. The UN Agency engaging a government IP should discuss the HACT related audits
requirements with the SAI to determine whether a lack of independence would impact their ability to
complete the audit services.
Refer to further details of the Macro Assessment provided in Annex 1 & 2 below
5
11 October 2017 United Nations Macro Assessment - Mongolia
Annex 1. Macro Assessment Checklist

General Overview of Macro Assessment
Country being macro assessed Mongolia
Agencies utilizing HACT framework in country United Nations Children’s Fund (UNICEF)
United Nations Development Programme
(UNDP)
United Nations Population Fund (UNFPA)
Agency contact person(s) Paula Morais <[email protected]>

Lucia Simao <[email protected]>
George Bento <[email protected]>
Start/end date of macro assessment (dd/mm/yyyy 24/08/2017 – 07/09/2017

– dd/mm/yyyy)
Has a macro assessment been performed for this In October 2013 by KOSI
country previously (by any organization)?
Member(s) of the macro assessment team The macro assessment was conducted by
(Name, designation, section/organization) KPMG Mongolia and reviewed by KPMG LLP1.
The team members included:
KPMG Mongolia:
Mark Eberst, Partner
Joo Ho Lee, Director
KPMG LLP:
Mark Fitzgerald, Principal
Audie McRae, Manager
Motwani Nicholas, Senior Associate
Sources of information used in assessment (title, See Appendix A
date published, source, etc.)
A risk consideration checklist is provided in Annex 2.
1
KPMG in the United States is KPMG LLP (US), a U.S. limited liability partnership and member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative; KPMG Mongolia, the member firm affiliated with KPMG International located in
Mongolia. References to KPMG are to KPMG in the United States or KPMG in Mongolia as the context requires.
6
Annex 2. Risk consideration checklist
Risk Consideration
Indicator Comment
No. Indicator High risk Significant risk Moderate risk Low risk
risk level
1 The annual No Yes Low According to the IMF, the

budget annual budget includes all
contains all government expenditures,
significant including extra budgetary
government financing.
expenditures,
including Extra-budgetary financing,
relevant donor such as the finances raised by
contributions Development Bank of
Mongolia (DBM) and Bank of
Mongolia, has been included
into the annual budget since
2017.
DBM’s commercial spending

remains unconsolidated but
will be included in the fiscal
targets per the IMF’s
recommendation. (Appendix
A, Item 1; Item 5). pg 31 of
item 1; pg 11 of item 5
IMF’s recommendations
were to be implemented to
be in compliance with EFF
funding arrangement IMF
was to provide for Mongolia.
However, recently the IMF
announced that it will delay
7
Risk Consideration
Indicator Comment
risk level
disbursing EFF funds to

Mongolia after the country’s
prime minister and Cabinet
were toppled in a
parliamentary no-confidence
vote on September 7, 2017.
According to a Reuters article,
the IMF office in Mongolia
confirmed that what would
have been the first review of
the EFF package would now
be delayed until a new
administration is formed.
(Appendix A, Item 19)
2 Budget and Budget decisions Budget decisions Low As per the 2015 PEFA report,
performance are only nominally are fully debated budget decisions appear to be
debated. Little with assistance fully debated with assistance
consideration of from expert from Budget Standing
previous committees. Full Committee.
performance is consideration of The parliament has
approximately six weeks to
taken into previous
approve the budget where
account when performance is
debates are normally
setting future taken into involved. (The Government is
budgets. account when required to submit the next
setting future year’s budget to the
budgets. parliament by October 1st
and the parliament has to
approve the budget by
November 15th.)
8
Risk Consideration
Indicator Comment
risk level
It is not clear if the previous

year’s performance is
considered when setting
future budgets. However, the
annual budget submitted to
the parliament includes actual
performance for previous five
years in addition to the
current year
approved/amended budget
estimates.
(Appendix A, Item 1). pg
31;71
3 Budget Government Government Government Government High The Government of Mongolia
execution historically does historically historically historically historically could not execute
not execute executes budgets executes budgets executes budgets budgets as planned due to
budgets as as planned, but as planned with as planned overestimations in its
planned. there are limited without revenues during the initial
significant exceptions. exceptions. budgeting process.
exceptions.
From years 2012 to 2014,
original budgeted spending
had to be repeatedly reduced
due to over budgeted
revenues, with budget
revenue shortages averaging
17 percent of the initial
budgeted revenues during the
same periods.
(Appendix A, Item 2). pg 15
9
Risk Consideration
Indicator Comment
risk level
While no publicly available

PFM assessment and/or
report has been identified that
addresses the shortage, the
expenditure continued to be
lower than the budgeted in
2015. The executed
expenditure in 2016
exceeded the initial budgeted
amount by 19.4% due to
unbudgeted spending
programs and loose spending
controls in time for the
national election.
Based on the information

above, the indicator has been
assessed as High.
4 To what extent Procedures are Procedures are Procedures are Procedures are Moderate Internal controls and financial
are internal frequently over- generally generally always followed. procedures are
controls and ridden or ignored. followed, but followed. While comprehensive and enforced.
financial Emergency there are exceptions exist,
procedures While there are exceptions,
procedures are significant they are not
adhered to? exceptions. frequent enough they are not frequent enough
routinely used.
Doubt exists as to prevent to prevent reliance on the
to whether or not reliance on the internal control system. The
the internal internal control internal control rules and
control system procedures are well
system.
can be relied understood and implemented.
upon.
10
Risk Consideration
Indicator Comment
risk level
(Appendix A, Item 1). pg 58-

59
5 Bank Many accounts A number of Generally banks Performed to a Moderate Per the 2015 PEFA report,
reconciliations are not reconciled significant are properly high standard for Bank account reconciliations
monthly. accounts are not reconciled each all bank accounts for the Treasury Single
Reconciliations reconciled month. at least once a Account (TSA) and for the
are often poorly monthly. Quality Exceptions exist month. accounts held in commercial
performed. is sometimes but appropriate banks are done on a daily
basis between the Treasury
poor. follow-up action
department and the Central
is taken in all
Bank.
cases.
TSA accounts for all
government transactions
except extra-budgetary funds,
which accounted for 19.7%
of total government
expenditure in 2013.
(Appendix A, Item 1). pg 11,
17, 62
As described in indicator #3,

Mongolia has historically
experienced issues with
extra-budgetary spending,
and a lack of TSA oversight
over these funds should be
taken into consideration.
While the majority of
government transactions are
reconciled efficiently, the
extra budgetary funds appear
11
Risk Consideration
Indicator Comment
risk level
to account for significant

portion of government
transactions. As such, we
have set the overall risk as
Moderate.
6 Transfer of Cash transfers Cash transfers Cash transfers Cash transfers High Assessment of the duration
cash resources from from from from for the transfer of funds from
central/regional central/regional central/regional central/regional the central government to the
levels to project levels to project levels to project levels to project municipalities and
level take more level take two to level take one to level take a week provinces/districts was not
than one month. four weeks. two weeks. or less. readily available.
However, according to order

No.415 by the Minister of
Finance, dated December 22,
2016, the Ministry of Finance
(MoF) is fully in charge of
cash transfers from
central/regional levels to
project level. The cash should
be transferred within four
working days from MoF to
central/regional government
levels after reviewing
processes by the MoF (the
reviewing process, according
to local information, generally
takes more than one month).
Central/regional government
then has an obligation to
transfer cash resources
within three working days to
12
Risk Consideration
Indicator Comment
risk level
the project level (executing

unit).
(Appendix A, Item 12). article

4.14 and 4.16
As the total number of days

required should be seven
working days according to the
415th order, due to the timing
of the review process adding
more days, we have set the
risk level as high.
7 Reporting of Analysis of cash Full analysis of Low There is a full analysis of cash
cash and asset and asset cash and asset and asset position made
position to position made to position is made available to the government.
government government to government.
contains Consolidated financial
significant statements for the
Government of Mongolia are
omissions.
prepared biannually. The
consolidated financial
statements include both
central and subnational
entities. The consolidation
includes wholly-owned
entities and those in which
the government’s
participation in ownership is
90%
or greater, as well as
project/programs and funds
13
Risk Consideration
Indicator Comment
risk level
implemented/managed by
Government ministries and
agencies.
The accounting framework for
presentation of the financial
statements required by law is
accrual based IPSAS.. The
financial statements therefore
present information on
revenues, expenditures,
assets, liabilities and equity
accounts.
(Appendix A, Item 1) pg 66;67

8 Financial audit/ External audit External audit External audit External audit Low All entities of central
SAI auditor covers less than covers 80% to covers 90% of covers all central government are audited
general 80% of central 90% of central central government annually covering
government government government expenditures. revenue/expenditure and
expenditures. expenditures expenditures. assets/liabilities.
*For
A full financial audit, and
decentralized
certain performance audits,
governments,
are performed and standards
consider
should adhere to auditing
consolidated
standards that focus on
audit coverage,
significant and systemic
if available.
issues. The exception to the
audit requirement is the
Parliament, which is not
regularly audited. (Appendix
A, Item 1) pg 70
14
Risk Consideration
Indicator Comment
risk level
9 SAI SAI reports to SAI reports to High The Supreme Audit Institution
independence government legislature (or in Mongolia reports to the
agency. equivalent justice legislature.
system). (Appendix A, Item 1) pg 70
However, it should be noted

that the Auditor General is
appointed by and reports to
the speaker of the Parliament
who is also the partisan of the
ruling party. Accordingly, the
independence may be
impaired. As such, the risk
rating has been assessed as
High.
10 Audit SAI applies SAI applies SAI applies Low The Supreme Audit Institution
standards national audit national audit international audit applies international audit
applied by the standards, which standards, which standard. standards.
SAI are significantly comply with (Appendix A, Item 1) pg 68,
inconsistent with international table 24
international standards.
standards.
11 Follow-up Points raised by Points raised by Points raised by Points raised by Significant There is evidence of effective
action to audit external audit are external audit are external audit are external audit are and timely follow up for the
reports infrequently usually but not always followed always properly most part.
followed up. always followed up. In a few followed up.
up. A significant cases, points Points generally Based on random sampling of
number of points recur in following do not recur in ten government entities, we
have reviewed follow-up
recur in following years. following years.
actions taken to findings
years.
raised in the previous year’s
15
Risk Consideration
Indicator Comment
risk level
audit reports as of fiscal year

ended 2016.
We noted that with exception

of the Ministry of Foreign
Affairs of Mongolia, nine
government entities had
followed up on the previous
year’s audit
recommendations as
evidenced in the audit reports
of randomly selected entities
as of December 31, 2014 and
2015. As for Ministry of
Foreign Affairs of Mongolia, it
had been noted that 50% of
previous year’s audit
recommendations had been
followed up. As such, we
have set the risk level as
“Moderate”
(Appendix A, Item 1) pg 70
12 Country has a No Yes Low Mongolia has a national

national procurement framework.
procurement According to a
framework comprehensive review of
Mongolian public
procurement framework
conducted by Partnership for
Action on Green (PAGE) and
16
Risk Consideration
Indicator Comment
risk level
the United Nations

Environment Programme -
(UNEP), Mongolia has a
suitable legislative framework
to support the
implementation of sustainable
public procurement (SPP).
(Appendix A, Item 3) pg. 28,
30-32
It should be noted that while

there is a procurement
system in place, the system
is not assessed highly in
comparison with that of other
countries. According to the
2017 Benchmarking Public
Procurement report by World
bank, The Mongolia scores
54th of 180 countries on bid
preparation score, 63rd on bid
submission score, 57th on bid
opening, evaluation and
award score, 50th on
procurement contract, 54th on
performance guarantee score
and 48th on payment of
suppliers score.
(Appendix A, Item 16) pg.

158-159
17
Risk Consideration
Indicator Comment
risk level
Mongolia’s score of 38 on
Transparency International’s
2016 Corruption Perception
Index dropped its ranking
from 72 to 87 in 2016. Over
recent years, Mongolia’s
score on the Corruption
Perception Index has
stagnated, with scores of 36
in 2012, 38 in 2013, 39 in
2014, and 39 in 2015. This
year, Mongolia’s score fell by
one point to 38, suggesting
continued stagnation in
Mongolia’s anti-corruption
efforts.
(Appendix A, Item 21 and 22 )
13 Transparency Statutory external Most statutory All statutory All statutory Significant All audit reports are available
of audit audit reports are external audit external audit external audit to the public on the
process infrequently reports are reports are reports are Mongolian National Audit
published. They published. They published. They published. They Office (MNAO) websites.
are rarely debated are sometimes are usually are debated in They are sometimes debated
in the media, debated in the debated in the the media when in the media when of public
even when of media when of media when of of public interest. interest.
public interest. public interest. public interest.
As per the OECD’s report, the
MNAO’s 2014 report
indicated that the MNAO
conducted 248 performance
audits, 4,543 financial
18
Risk Consideration
Indicator Comment
risk level
statement audits and 187

compliance audits, thus
performing a total of 4,978
audit engagements; the audit
reports were made available
to the public on the MNAO
website.
(Appendix A, Item 7) pg. 74
According to the MNAO

annual report 2016, the
MNAO conducted 196
performance audits, 3,297
financial statement audits and
219 compliance audits, thus
performing a total of 3,712
audit engagements in 2016.
The MNAO conducted audits
on the 67% of entities
subject to external audit while
outsourcing to private
independent audit firms for
the remaining 33%. The
MNAO has 389 employees in
2016.
According to the Census of

Mongolia, prepared once in
every four years, Mongolia
has a total 6,082 entities
19
Risk Consideration
Indicator Comment
risk level
which 1,124 for state-owned

entities and 4,958 for local
entities in 2016.
(Appendix A, Item 18)
Not only that 2,785

government entities were not
subject to an audit by MNAO,
the number of entities
audited by each employee of
MNAO is significant at 9.5 on
average and may negatively
impact the quality of the audit
performed by MNAO given
the volume of resources
available to the MNAO.
According to provision 16.2 of

State Audit law, the MNAO
selects an audit subject and
submits to the State Budget
Committee of the Parliament
that makes the ultimate
decision as to the entity that
would be subject to MNAO’s
audit.
20
Risk Consideration
Indicator Comment
risk level
14 Staff It is often unclear In some cases, it In only some It is always clear Significant Although there is not much
qualifications whether staff is unclear isolated cases is that all staff have clarity on whether personnel
and skills have the skills whether staff it unclear the skills and have the skills and
and qualifications have the skills whether staff qualifications qualifications necessary to
necessary to and qualifications have the skills necessary to conduct their jobs well,
discharge their necessary to and qualifications discharge their Mongolia ranks number 86
out of 127 on KPMG’s
duties. discharge their necessary to duties.
Change Readiness Index
duties. discharge their
(CRI), with a score of .45 out
duties. of 1.0 on Public
Administration. This score is
based on political interference
and corruption, which affect
government bureaucracy
management. As such, we
have set the risk level at
Significant. (Appendix A, Item
4.1 p. 8; Item 4.2
“Government Capability”)
As per a UNDP Mongolia’s

report, there is continuing
politicization of personnel
policy at the central executive
level. High turnover of staff in
senior positions is observed
after each election. This is an
issue of concern as it
undermines government
stability and continuity.
21
Risk Consideration
Indicator Comment
risk level
15 Financial Financial systems Financial systems Financial systems Financial systems Moderate Financial systems are
systems only capture and only capture and are adequate for are adequate for adequate for most, but not all,
report on the report on the most but not all data capture and data capture and reporting
most basic most basic data capture and reporting needs. needs. The financial systems
financial data, and financial data. reporting needs. They are reliable are reliable and properly
this is frequently While there are They are reliable and properly maintained. Budget reporting
is “good” but can be
unreliable. system and properly maintained.
enhanced (Appendix A, Item
System maintenance and maintained.
6). pg 10;13
maintenance and performance
performance is problems, The Implementing Partner’s
generally poor. generally the annual and quarterly
system is stable. budget/disbursement plans
are prepared annually by
IPSAS (“International Public
Sector Accounting Standard”)
through the Government
Financial Management
Information System (GFMIS)
non-integrated, stand-alone,
fixed asset accounting,
procurement, budget entity,
and consolidated financial
reporting systems. The
annual budget/disbursement
plan will be discussed and
approved by the MOF and
Implementing Partner and
reflected in the state budget.
The Government Financial
Management Information
System (GFMIS) covers under
IPSAS (“International Public
Sector Accounting Standard”)
22
Risk Consideration
Indicator Comment
risk level
and Integrated Budget Law

(IBL) and its respective
regulation.
Also, financial management

procedure is updated
manually including
procedures related to proper
authorization for payment
requests, segregation of
duties, and other specific
internal control procedures
and practices relating to the
project’s Financial
Management and the MOF
(“the Ministry of Finance”)
will carry out day-to-day
implementation of the project
and be responsible for the
overall project oversight and
coordination and a PSC
(“Project Steering
Committee”) will be
established at the MOF for
this purposed. The
procedures identified in the
updated FM Manual will have
to be closely followed by all
the parties involved in project
implementation.
(Appendix A, Item 6). pg 33
23
Risk Consideration
Indicator Comment
risk level
16 Environmental Natural disasters Natural disasters High Natural disasters or significant

conditions or significant or significant events regularly occur that
events regularly events that displace citizens and
occur that displace citizens resources.
displace citizens and resources
rarely or never (Appendix A, Item 8) pg 1
and resources.
occur. The following natural
disasters occur frequently:
meteorological events such
as blizzard; heavy snow; dust
storm; "dzud" which is an
extremely harsh winter; rain
water flood; snow melt flow;
and others such as
earthquake; wildfire; drought;
and desertification.
The high frequency of natural

disasters and their extent
presents a serious constraint
which delays the
development of Mongolia.
17 Exchange rate Foreign exchange Foreign exchange Foreign exchange Foreign exchange High Mongolia has had a floating
volatility rates fluctuate rates fluctuate rates have rates do not exchange rate regime since
significantly on a significantly on a remained fluctuate 2009 and the foreign
daily basis. weekly or relatively significantly. exchange rates continue to
monthly basis. consistent, with fluctuate significantly.
the exception of
24
Risk Consideration
Indicator Comment
risk level
significant one-off (Appendix A, Item 9) pg 61

fluctuations.
18 Existence of a Black market is Black market Black market Black market may Significant The Asia Foundation report,
black market prevalent and exists and has exists in the exist but does not makes references to previous
influential in the significant country, but have an influence reports that estimated the
country. influence in the effective actions in the country. size of the informal sector in
country. are being taken to Mongolia. The study on the
eliminate or limit informal economy which was
funded by USAID (published
its influence in
in 2000) suggested that the
the country.
informal economy accounted
for 13% of value-added GDP.
In 2004, the National
Statistical Office (NSO) of
Mongolia put this figure at
10.5%, and the informal
sector’s share of GDP was
revised downward again to
8% following a census in
2006. As for the informal
economy’s share of overall
GDP, the International
Monetary Fund asserted in
2008 that the informal
economy accounted for 37%
of Output. Mongolia has, of
course, changed considerably
since these studies were
published, but within the
informal sector, change has
been gradual and the informal
sector decreased.
25
Risk Consideration
Indicator Comment
risk level
(Appendix A, Item 14) pg. 13-

15
Per BTI’s country report on

Mongolia, the informal sector
is now relatively small, at
below 10% of GDP.
It should be noted that

according to the World Bank /
EBRD Business Environment
and Enterprise Performance
Survey (BEEPS V), one of the
top three business
environment obstacles
identified by Mongolian firms
was competitors’ practices in
the informal sector.
Additionally, corruption is an
issue in the judiciary and
other areas of government.
19 Reliability of Moderate Mongolia’s national accounts

statistical data statistics were considered as
broadly adequate for Fund
surveillance according to the
IMF Staff Report issued in
2015.
26
Risk Consideration
Indicator Comment
risk level
However, further work is

required to resolve
inconsistencies and improve
coherence of source data.
(Appendix A, Item 11) p.5
27
Appendix A: Sources of Information
The following sources of information were utilized for the Macro Assessment. Each source
represents to the most recent publicly available document at the time the Macro Assessment was
performed.
1. Mongolia Public Financial Management Performance Report, 2015

https://openknowledge.worldbank.org/bitstram/handle/10986/22093/Mongolia000Pub0t0perform
ance0report.pdf?sequence=1&isAllowed=y
2. Mongolia Economic Update - November 2015

http://documents.worldbank.org/curated/en/588341468197974334/pdf/101064-WP-PUBLIC-
ADD-SERIES-Box393257B-Mongolia-Economic-Update.pdf
3. Review of the public procurement legal framework of Mongolia, 2016

http://www.scpclearinghouse.org/sites/default/files/mongolia_legalreview_final_1.pdf
4. 2017 Change Readiness Index – Assessing countries’ ability to manage change and
cultivate opportunity
4.1 https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2017/07/change-readiness-index-
report-2017.pdf;
4.2 https://home.kpmg.com/xx/en/home/insights/2017/06/change-readiness-tool.html
5. Mongolia: 2017 Article IV Consultation and Request for an Extended Arrangement Under
the Extended Fund Facility-Press Release: Staff Report; and Statement by the Executive
Director for Mongolia
https://www.imf.org/en/Publications/CR/Issues/2017/05/31/Mongolia-2017-Article-IV-
Consultation-and-Request-for-an-Extended-Arrangement-Under-the-44954
6. International Development Association project appraisal document on proposed credits in

the amount of SDR 2.8 million IDA hard-term credit and SDR 6 million IDA credit to
Mongolia for a strengthening fiscal and financial stability project, 2017
http://documents.worldbank.org/curated/en/996871495728315670/pdf/PAD2269-REVISED-
PUBLIC-Mongolia-Strengthening-Fiscal-PAD-PAD2269-07272017.pdf
7. Anti-Corruption Reforms in Mongolia report 2015

http://www.oecd.org/corruption/acn/Mongolia-Round-3-Monitoring-Report-ENG.pdf
8. ASIA-PACIFIC REGION: Overview of El Niño Impact and Responses (as of June 2016)
http://www.un-mongolia.mn/new/wp-content/uploads/2016/06/ElNino_infographic_160606.pdf
9. World Bank East Asia and Pacific Economic Update April 2017
https://openknowledge.worldbank.org/bitstream/handle/10986/26332/9781464810862.pdf?sequ
ence=4&isAllowed=y
10. EBRD-Country Strategy for Mongolia, 2017

www.ebrd.com/strategy-and-policy-coordination/strategy-for-mongolia.pdf
28
11. IMF, Technical Assistance report – Report on the National Accounts Mission, 2017
http://www.imf.org/~/media/Files/Publications/CR/2017/cr1752.ashx
12. The order of Finance Minister, December 2016

http://www.iltod.gov.mn/wp-content/uploads/2017/06/Sangiin-saidiin-2016-415-r-tushaal.pdf
13. Country report on Natural Disasters in Mongolia (Asian Disaster Reduction Center)
http://www.adrc.asia/countryreport/MNG/MNGeng98/index.html
14. The informal economy in Ulaanbaatar: Policy options to promote growth in the ger areas
(Asia Foundation)
https://asiafoundation.org/resources/pdfs/TheInformalEconomyinUlaanbaatar.pdf
15. Mongolia country report, BTI-2016

https://www.bti-
project.org/fileadmin/files/BTI/Downloads/Reports/2016/pdf/BTI_2016_Mongolia.pdf
16. Benchmarking Public Procurement 2017 by World Bank

http://bpp.worldbank.org/~/media/WBG/BPP/Documents/Reports/Benchmarking-Public-
Procurement-2017.pdf
17. The MNAO annual report 2016

http://www.audit.mn/?p=16743
18. State and Local Property of Mongolia

http://www.pcsp.gov.mn/n/1100
19. IMF delays Mongolia bailout payment after govt ousting, September 14, 2017, Reuters
https://www.reuters.com/article/mongolia-imf/imf-delays-mongolia-bailout-payment-after-govt-
ousting-idUSL4N1LV2TI
20. The Role of the Constitution of Mongolia in Consolidating Democracy, UNDP Mongolia,
2015
file:///C:/Users/mmungunshagai/Downloads/ConstReview_eng.pdf
21. Mongolia’s position on Transparency International’s 2016 Corruption Perception Index

https://www.transparency.org/country/MNG#
22. Mongolia slips 15 places on the 2016 Corruption Perception Index

http://theubpost.mn/2017/01/28/mongolia-slips-15-places-on-the-2016-corruption-perception-
index/
29
Appendix B: Change Readiness Index Country
Snapshot
Location: Mongolia
KPMG’s Change Readiness Index (CRI) indicates the capability of a

country – its government, private sector, and civil society – to Mongolia
anticipate, prepare for, manage, and respond to a wide range of
change drivers, which enables it to proactively cultivate opportunities ranks 86th
and mitigate potential negative impacts.
Below is a snapshot of how Mongolia performs under the three pillars of the
out of 127
CRI: enterprise capability, government capability, and people & civil countries on
society capability.
Each pillar’s capability is determined by various sub-indicators. The three

change
leading areas of strength and opportunity are reflected for each change readiness
readiness pillar. The number in parentheses indicates the rank of each sub-
indicator against the other countries in the Index. To learn more about
Mongolia’s performance on the CRI, visit the Change Readiness Index tool.
Pillar Rank: 123 Pillar Rank: 70 Pillar Rank: 56

Areas of strength Areas of strength Areas of strength
- Technology infrastructure (61) - Security (17) - Demographics (56)

- Labor market (31) - Land rights (52) - Civil society (43)
- Innovation and R&D (76) - Food and energy security (64) - Safety nets (51)
Areas of opportunity Areas of opportunity Areas of opportunity
- Infrastructure (104) - Macroeconomic framework (129) - Health (105)

- Informal sector (86) - Public administration and state- - Human capital (71)
- Economic diversification business relations (66) - Inclusiveness of growth
(134) - Fiscal policy and budgeting (131) (57)
30

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‐ August 2017

Prepared for the UNICEF, UNDP

Abbreviations and Acronyms...................................................................................................................... 3

Annex 1. Macro Assessment Checklist ..................................................................................................... 6

Annex 2. Risk Consideration Checklist ...................................................................................................... 7

Appendix A: Sources of Information ........................................................................................................ 28

Appendix B: Change Readiness Index Country Snapshot........................................................................ 30

HACT Harmonized Approach to Cash Transfers

Objective and Scope of the Macro Assessment

No. Indicator Risk Rating

Supreme Audit Institution:

Annex 1. Macro Assessment Checklist

Country being macro assessed Mongolia

Agency contact person(s) Paula Morais <[email protected]>

Start/end date of macro assessment (dd/mm/yyyy 24/08/2017 – 07/09/2017

A risk consideration checklist is provided in Annex 2.

Annex 2. Risk consideration checklist

1 The annual No Yes Low According to the IMF, the

DBM’s commercial spending

disbursing EFF funds to

(Appendix A, Item 19)

It is not clear if the previous

(Appendix A, Item 2). pg 15

While no publicly available

Based on the information

(Appendix A, Item 1). pg 58-

As described in indicator #3,

to account for significant

However, according to order

the project level (executing

(Appendix A, Item 12). article

As the total number of days

(Appendix A, Item 1) pg 66;67

However, it should be noted

audit reports as of fiscal year

We noted that with exception

12 Country has a No Yes Low Mongolia has a national

the United Nations

It should be noted that while

(Appendix A, Item 16) pg.

(Appendix A, Item 21 and 22 )

statement audits and 187

(Appendix A, Item 7) pg. 74

According to the MNAO

(Appendix A, Item 17) pg. 4

According to the Census of

which 1,124 for state-owned

(Appendix A, Item 18)

Not only that 2,785

According to provision 16.2 of

As per a UNDP Mongolia’s

and Integrated Budget Law

Also, financial management

(Appendix A, Item 6). pg 33

16 Environmental Natural disasters Natural disasters High Natural disasters or significant

The high frequency of natural

(Appendix A, Item 13) pg 2

significant one-off (Appendix A, Item 9) pg 61

(Appendix A, Item 14) pg. 13-

Per BTI’s country report on