Development Dialogue 3: Utilising Mining Revenue for Mongolia’s Development

  • Date/Place: 28 January 2013, UN House, Ulaanbaatar
  • Partner Agency: Ministry of Finance
  • Donor: UK Embassy

Context


Mineral wealth offers a unique opportunity for resource-rich countries to transform their development prospects. Mongolia’s mineral reserves constitute a critical source of national revenue. In 2011 the mining sector accounted for 89% of total exports, generated almost one-third of government revenues, and accounted for roughly 22% of the country’s GDP.

However, not all countries benefit from such an opportunity. Botswana, Chile, Indonesia and Peru have used their resource wealth for effective and sustained economic development. Others such as Chad and Nigeria have squandered their resources and are ranked near the bottom of the Human Development Index (HDI) ranking.

Which way will Mongolia go? Extraction of non-renewable resources, while raising environmental concerns, also affects the long-term flow of resource revenues. In managing its mining revenues, how can Mongolia balance between the current development needs and the need to accumulate capital for future generations?

These are some questions motivating the Dialogue. 

Issues for discussion


Mongolia has shown strong commitment to use the mining revenue to transform its development prospects. So far it has set up a Budget Stabilisation Fund, invested in infrastructure, and provided direct cash transfers. In addition, with implementation of the Budget Law from January 2013, substantial resources will be available at the sub-national levels to promote fiscal decentralization.The Dialogue will address a number of questions to help identify suitable mechanisms for using mining revenue for human development. Specifically,

  • What policies can Mongolia adopt to balance between addressing
    immediate development issues (e.g. cash transfers, employment
    schemes, social safety nets, etc.), and accumulating capital for future
    generations (e.g. through investments in public health and education)?
  • Is what Mongolia doing enough? What more does it need to do so that
    the mining revenues can improve the lives of its people?
  • How can the revenue arrangements be made institutionally, and intertemporally, stable?
  • What institutional arrangements are necessary as a pre-condition
    to sustainably manage mining revenue flows in a transparent and
    accountable manner?
  • How does Mongolia’s experience compare with that of other resourcerich
    countries?
  • How can the mining revenue be used for economic diversification and
    sustainable economic growth but also to support social policies (e.g.
    health insurance, education grants, cash transfers, employment)
  • What are the challenges and some good practices that Mongolia can
    benefit from?

Dialogue Structure

The Dialogue will be organized as a Panel Discussion followed by an open
discussion. Panelists are expected to include representatives from:

• Government of Mongolia
• International development partners
• Civil society

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Related Documents
Opening speech

by Ms. Sezin Sinanoglu, UNDP Resident Representative