“Public Administration Reform Experiences in Mongolia: NPM in Practice L. Tur-Od, Governance Specialist UNDP CO UNDP’s Global Practice Meeting on ‘Public Administration Reform’ Bratislava, Slovakia 19-22 April 2004 Thank you for opportunity to speak Presentation will cover four main areas: 1. An introduction to Mongolian history, people and economy 2. A summary of the political, social and economic transitions of the past decade 3. Challenges currently facing Mongolia in terms of governance, social equity and economic growth 4. Mongolia’s response to those challenges: specifically, Mongolia’s program on Good Governance for Human Security

UNDP’s Governance Setting in Mongolia The Best: On the right track towards democracy The Good: Relatively high level of political freedom, press freedom and participation The Bad: Less impressive performance in the rule of law, government effectiveness and accountability The Ugly: Poorly performed in combating corruption among public officials UNDP GHDR 2002 Mongolia is a vast landlocked country that is cold, dry and sparsely populated: It has a harsh climate where temperatures can reach minus 40 in winter It is dry: with 3000 mm of rain per year, Suva Suva gets ten times as much rain as Ulaanbaatar. It is vast: with almost 1.6 million km2 it is more than four times the size of Japan. And, of course, it is situated between two other giants, Russia and China, which has greatly influenced Mongolia’s history.

UNDP‘s Support to PAR/Governance Reforms 1993-1996 Management Development Programme (MDP) 1997-2000 Governance & Economic Transition (GET) Programme 2002-2006 Democratic Governance (DG) Thematic Area Mongolia ruled most of Asia under the leadership of of Chinggis Khan and sons. From the 17th to 19th centuries, however, Mongolia fell under the nominal rule of the Manchurian Qing Dynasty. Then, in 1921, a socialist revolution brought a communist government to power. Mongolia remained an independent state but received support from the Soviet Union. With the collapse of the Soviet Union in the late 1980s, the Mongolian socialist government collapsed also in 1990. The past ten years have been a time of turmoil and transition in Mongolia.

‘Management Development Programme: PA & CS Reform’ 1993-1997 Policies, legislation & strategic documents: ‘Policy Paper on Govt. reform processes’ Civil Service Laws & Regulations Business plans & new structures for ministries Personnel Management Handbook Implementation & Institution-building: Civil Service Council & Sub-Councils estbd. First entrance exams for civil service National Audit Office estbd. Ministries from 16 to 9 & appt. of State Secretaries Govt. common service system estbd. The Mongolia population is small, relatively young and well-educated. For every 1 Mongolian there almost 500 Chinese and more than 50 Russians. In fact the entire population of Mongolia of 2.6 million people could fit comfortably into a Beijing suburb. This means that the population density is quite low: 1.6 people/km2 compared to 130 people/km2 in China. One out of three Mongolians live in the capital city, Ulaanbaatar. Two-thirds of the population is under 30 years old, and half are under the age of 19. More than 90% are literate. Despite urbanization, nomadic culture and a pastoral way of life are at the heart of every Mongol.

(I) UNDP Support to MDP’s PA & CS Reform Component “Management Development Policy & Programme Support” [MON/94/101- US$1,200,000] “Public Administration & Civil Service Reform” [MON/94/102-US$500,000] Others: SIDA-”Civil Service Training & Consultancy” [US$800,000] UK -”Job Classifications” [US$ 350,00] NZ –”Government Restructuring” [US$350,00] Following the collapse of the socialist system, Mongolia’s first-ever democratic elections were held in 1990. Elections were repeated in 1992 and have been held every four years since then: in 1992, 1996 and most recently in July 2000. In the latest elections, a rejuvenated Mongolian People’s Revolutionary Party swept 72 of 76 parliamentary seats. The Mongolian constitution was completely rewritten in 1992. It recognizes the full set of basic human rights, including the right to freedom from want and fear.

(II) ‘Initial Phase of NPM/GRP-I’ 1997-2002 Public Sector reform strategies Comprehensive Program of Governance Reform (GRP) [1999-2009] Public Sector Management & Finance Law (PSML) [Final draft 1998, adopted June 2002] GRP-I Implementation Formulation of Strategic Business Plans (SBPs) & Financial Statements Preparation of output-based budget estimates Formulation of adherence to Performance Contracts Merit-based recruitment & promotion procedures Specification of outputs of each agency, incl. description, quantity, quality & cost The political transition passed without violence. But the economic transition has been more painful. In 1992, inflation was 326% and the economy shrank by 10%. By 1995, the economy had started to grow again, but inflation was still more than 50%. Currently, inflation seems to be under control -- less than 10% in 1999 -- and the economy is growing, although modestly.

(II) ‘Donors/UNDP Support to Initial Phase’ Capacity Building of Governing Institutions [MON/97/123-US500,000] Decentralization & Local Governance Support Support to Transparency & Accountability ADB & Others: ADB Loan [US$ 25 million] and TA [US$ 1,1 million] for GRP-I SIDA/SIPU-Civil Service Training & Consultancy Phase II First, in terms of good governance: We have put a good legal foundation in place. The constitution is respected, elections have been regularly held. But, we need to do better in: implementing the laws that exist; ensuring that our government is transparent in its affairs and accountable to the people; responding quickly and appropriately to the needs of the people; and promoting greater participation of people in decision making and broad-based development. Second, growing fiscal deficits are constraining our ability to act. In the graph I show you that our budget deficit has grown from almost nothing in 1995 to85 billion tugrug in 1999. This was about 25% of our expenditures. This will in turn effect economic growth...

(III) “Second Phase of NPM/GRP-II’ 2003-present PSML coverage & framework: Clearly delineate Strategic priorities through SBPs; Formulate, adopt & execute Budget based on accrual-accounting principles; Adopt Output-based budgeting, management, & overall reporting and delegation to chief-executives; Integrate recurrent & capital budgetary needs in medium-term framework, formulate proper appropriation estimates in each year; Prepare annual & forecast financial statements on accrual basis; Adopt transparent merit-based employment policies and performance-based career progression. Economic growth faces a number of challenges mostly related to the fact that the market economy is still underdeveloped. The banking and financial systems are weak and the amount of capital available for investment is limited, especially in rural areas. A narrow economic base -- focused mainly on pastures and mining -- makes Mongolia highly susceptible to natural disasters and volatile world commodity prices. Many of our products remain low quality and thus not competitive on the world market.

(III) ‘Donors/UNDP Support to Second Phase’ Good Governance for Human Security [MON/00/103-US500,000] Parliament Strengthening for Democratic Governance [MON/01/102- US$ 700,000] National Integrity System Enhancement [MON/03/101 – US$ 750,000] ADB & Others: ADB Loan [US$ 13,5 million] and TAs [US$ 2 million] for GRP-Phase II SIDA/SIPU-Civil Service Training & Consultancy Phase II The third challenge faced by Mongolia is that the social safety net has weakened. In the chart, I show that government expenditures on health, education and social security have fell 12 percentage points between 1992 and 1998. However, this is only part of the story. The reality is that most of these expenditures are for salaries and heating. There is very little money left over for school books, medicines or even maintenance of our social service buildings. Health clinics, hospitals and schools have all deteriorated during the past decade. The result is that social inequalities have grown.

Preliminary Lessons Learned from PAR Experiences Some lessons globally: It took the UK and New Zealand many decades to reach the stage of the NPM NPM approach can reinforce social exclusion, regardless of its rhetoric of… Some lessons from Mongolia: One who pays the piper calls the tune Cultural, ethics & human aspects of NPM needs to be attended Overall lesson: It is better to do right things badly than wrong things well

Implications for UNDP-Mongolia Country Office? UNDP’s PAR/Governance Portfolio: Still in transition to find its niche among key donors, particularly with ADB & WB Needs consolidation through projects on institution- building & policy frameworks Seeking further collaboration with national & international partners on PAR In conclusion, I hope that my presentation has helped you understand that: First, Mongolia is a country undergoing a rapid and challenging transition from a formally centrally-planned and highly-subsidized economy to a market economy in a global world. Second, in spite of these challenges, and perhaps because of them, the Government of Mongolia is committed to ensuring human security for our people, that is, freedom from want and freedom from fear. Third, we welcome collaboration in this effort from all of our international partners. On this final point, we will look forward during this symposium to sharing our ideas and exploring ways in which we might collaborate further in the future.