Innovative financing options for a sustainable recovery from COVID 19 and beyond in Mongolia
Project start date 21 December 2020
Project start date 21 June 2022
Focus area SDG Financing
Project office UNDP in Mongolia
Funded by UNDP Rapid Financing Facility and UNDP Mongolia
Implementing partner Ministry of Finance and Ministry of Environment and Tourism
Amount contributed $ 350,000
Mongolia took early action to avoid a domestic COVID-19 outbreak, but the socio-economic toll has been significant. Innovative financing strategies to recover from COVID-19 that addresses Mongolia’s vulnerability to indebtedness and macro-economic instability, while finding solutions for long term challenges around climate change, are essential for a greener and more sustainable recovery for Mongolia. Strategies to promote a sustainable recovery from COVID-19 can have significant impacts by focusing on the agricultural sector, which accounts for over 40% of employment and 15% of GDP and is also the second most important export after minerals (Mongolia is estimated to produce 40% of the world’s supply of cashmere). There is an urgent need to strengthen adaptation financing options for the updated Nationally Determined Contributions which is estimated to be close to 50% of GDP and highly likely to rise. These sets of issues has to be addressed by exploring options within the context of sustainable debt framework.
By focusing on short- and medium-term innovative financing options within the context of reprofiling/restructuring the debt in tandem with strengthening the development of a portfolio of inclusive green initiatives especially those that are beneficial for women, which can attract investor interest and/or facilitate revenue streams, the initiative can bring a new-solution oriented accelerator approach to promote a green and inclusive recovery in challenging circumstances, including a recovery that promotes gender equality.
The proposed activities are fully aligned with the government substantive focus areas and the priority assigned to debt restructuring/reprofiling as outlined in the Government Action Plan (2020-2024) and the Mid-Term Development Plan (2020-2025). It is also in line with UNDP’s Beyond Recovery 2.0: Towards 2030 on green economy, UN Mongolia Socio-Economic Response Plan for COVID-19 in regard with green recovery, green fiscal stimulus, and gender equality and the calls emanating from the high-level intergovernmental focus of the UN on Initiative on Financing for Development in the Era of COVID-19 and Beyond.
Output 1: Pipeline project development for gender-responsive green and climate and investment opportunities
In collaboration with relevant ministries, and partners (including private sector), the project will conduct market assessment/modular MAP in line with Mongolia’s Green Taxonomy, Adaptation and mitigation technology needs assessments and aligned with NDC Strategy and other development policies; and apply gender analytical tools (analysis, indicators, disaggregated data) and engagement of women as actors in the process to ensure responsiveness to together enhance equity in impact.
Output 2. Short-medium term debt management options that leverage blended and innovative finance for a green recovery and environmental sustainability
Facilitate a comprehensive consultation of government with stakeholders and donors to inform the needs and benefits of the debt to climate and gender responsive swaps and innovative financing mechanisms and provide technical assistance. Consultations will specifically focus on the gendered dimensions exploring the needs of men and women and to ensure the swaps further enhances gender equality.
Based on an analysis of Mongolia’s debt profile and government consultations with creditors, the project will undertake a technical feasibility study focusing on possible debt to climate/nature swap. It will also support dialogue and consultations with targeted creditors, IFIs and development partners.
Output 3. Medium -long term debt management options that leverage innovative financing instruments for environmental sustainability
In collaboration with the Ministry of Finance, Ministry of Environment and Tourism and other line ministries, the project will support awareness raising on options, feasibility study and needed frameworks for selected bond (green, SDG, social, sustainability, sustainability linked etc.) It will also provide a capacity building training for government staff on the relevant financing instruments.