[Federal Register: October 30, 2007 (Volume 72, Number 209)]
[Notices]
[Page 61381-61405]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30oc07-66]
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MILLENNIUM CHALLENGE CORPORATION
[MCC FR 07-12]
Notice of Entering Into a Compact With the Government of Mongolia
AGENCY: Millennium Challenge Corporation.
ACTION: Notice.
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SUMMARY: In accordance with section 610(b)(2) of the Millennium
Challenge Act of 2003 (Pub. L. 108-199, Division D), the Millennium
Challenge Corporation (MCC) is publishing a summary and the complete
text of the Millennium Challenge Compact between the United States of
America, acting through the Millennium Challenge Corporation, and the
Government of Mongolia. The President of the United States of America
and the President of Mongolia executed the Compact documents on October
22, 2007.
Dated: October 24, 2007.
William G. Anderson Jr.,
Vice President & General Counsel, Millennium Challenge Corporation.
Summary of Millennium Challenge Compact With the Government of Mongolia
A. Introduction
Mongolia is a landlocked country with a population of approximately
2.6 million, located between Russia and China. Nearly half of the
population is concentrated in Ulaanbaatar, its capital, about 60% lives
along the rail corridor between Russia and China, and the remainder is
largely dispersed throughout the country. Mongolia's aging transport
infrastructure and weak institutions are a significant constraint to
economic growth and development, particularly given the pressures of
the country's abrupt transition to a market economy, the collapse of
financial support from Russia, and the rapid urbanization of what
traditionally has been a highly dispersed rural herding society. The
Government of Mongolia (``GoM'') has proposed a $285 million, five-year
MCA program (``Program'') comprising the Rail Project, the Property
Rights Project, the Vocational Education Project, and the Health
Project, as further described below (each, a ``Project''). The proposed
Program is intended to release the potential of certain critical
interlocking human, institutional, and physical resources that factor
centrally in Mongolia's efforts to broaden and deepen economic
development. The Program is expected to have a significant direct
impact on individuals living in poverty, and significant indirect and
ancillary benefits by creating new economic opportunities and
increasing the capacity of individuals and groups to participate fully
in and benefit from economic growth.
B. Program Overview and Budget
----------------------------------------------------------------------------------------------------------------
Timeline
------------------------------------------------------------------------ Total ($US
Description CIF ($US CY1 ($US CY2 ($US CY3 ($US CY4 ($US CY5 ($US Mil)
Mil) Mil) Mil) Mil) Mil) Mil)
----------------------------------------------------------------------------------------------------------------
Rail Project................ 0 26.06 44.50 52.68 61.94 3.20 188.38
Property Rights Project..... 0.17 2.99 8.18 7.08 3.51 1.13 23.06
Vocational Education Project 0.23 2.09 8.29 8.40 5.41 1.10 25.51
Health Project.............. 0.19 2.24 4.40 4.56 2.92 2.72 17.03
Program Administration & 4.40 5.17 4.61 4.32 3.85 3.89 26.23
Audits.....................
Monitoring & Evaluation..... 0.04 0.56 0.47 0.47 0.39 2.77 4.70
-----------------------------------------------------------------------------------
Total................... 5.02 39.12 70.44 77.50 78.01 14.82 284.91
----------------------------------------------------------------------------------------------------------------
The Program's goal is to reduce poverty through economic growth.
Specifically, by 2028, the Program is expected to benefit directly
approximately 3.1 million Mongolians, roughly 95% of the country's
projected population in that year. As a result of the Program, we
expect per capita incomes for all Mongolians to be 3.5% higher five
years after the start of the Program, and to increase by a total of
4.5% within 20 years after the start of
[[Page 61382]]
the Program. These increases correspond to increments of $158 million
to annual GDP after five years, and $404 million after 20 years.
1. Rail Project
Mongolia's rail system is the transportation backbone of the
economy, contributing more to GDP than in any other country.\1\ The
rail system moves 97% of the ton-kilometers of freight transport in
Mongolia. The existing railway company (``MTZ''), in which the GoM and
Government of the Russian Federation each own a 50% interest, operates
Mongolia's railway system. This system, with its antiquated
infrastructure, equipment and practices, cannot meet current demand for
rail services and poses a serious economic bottleneck by limiting
growth in domestic and foreign trade and associated investment, and
contributing to inflation. The proposed Rail Project addresses this
bottleneck through improvements in the efficiency and capacity of the
rail system, thereby creating new jobs in industries and businesses
related to or served by the rail system. To ensure these improvements
are sustainable, the Project promotes international-standard rail
operations and management practices, transparency of rail finances, and
commercialization of the rail system--all part of the foundation for
greater private sector involvement and competition in rail transport.
The Rail Project includes (a) the acquisition of certain key rail
assets (e.g., locomotives, wagons, signaling equipment and track
maintenance equipment) needed to improve efficiency and capacity on the
country's single track rail line, (b) the establishment of a new,
initially government-owned, contractor-operated leasing company
(``LeaseCo'') to lease rail assets on commercial terms to MTZ and
independent shippers, (c) substantial operational training and
financial management technical assistance to MTZ, and (d) technical
assistance to the Mongolia Railway Authority (``MRA''), the recently
established regulator of the rail sector. The use of LeaseCo allows the
Program to avoid the risks inherent in making equipment available
directly to MTZ prior to its achieving commercialization and an
acceptable level of transparency. Success will be measured by the
increase in Mongolian traffic on the rail system, enhanced revenues for
both shippers and the rail system, positive changes in the efficiency
of MTZ's operations, and increased economic growth associated with rail
traffic capacity and efficiency improvements.
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\1\ With 4.93 traffic units (TUs) per $ of GDP, compared to the
world average of 0.42 TUs/$ of GDP, Mongolia ranks first among world
railways (http://www.adb.org/documents/reports/consultant/best-practices-railways/study-report.pdf
).
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2. Property Rights Project
The inability of Mongolians to easily register and obtain clear
title to their land poses a serious obstacle to the GoM's promotion,
through policy and legal reforms, of private real property ownership.
Implementation problems have limited access to credit for small
landholders and small business people, discouraged investment, and
slowed the deepening of local financial markets. The proposed Property
Rights Project will help Mongolian citizens obtain secure, long-term
rights to the suburban and peri-urban land they occupy, and promote
investments in home improvement, business activities, and agricultural
productivity. In a banking sector marked by high interest spreads, the
Project will encourage financial institutions to reduce the risk
premium on credit by providing their customers with a more secure
source of collateral and encourage the emergence of new mortgage-
related and other asset-dependent financial products.
This Project will improve the accuracy, accessibility and
efficiency of the formal system for recognizing and transferring land
rights and will facilitate issuance of up to 75,000 privatized and
registered land titles to suburban landholders. The Project also will
introduce a long-term leasing system on peri-urban rangeland and other
incentives (e.g., technical assistance, wells, animal shelters and
fences) that will enable leaseholders to significantly increase income
from this land by improving range and livestock management. For the
urban component, success will be measured by increases in the number of
registered property owners, greater access to credit among project
beneficiaries, and higher land values in project areas. For the peri-
urban component, success will be measured by improved herd
productivity, and a significant rise in leaseholder household incomes.
3. Vocational Education Project
Mongolia's vocational education system has not evolved to serve the
demands of a modern, private-sector led economy. The capacity of this
system to teach core technical skills and provide critical labor
information is weak, training equipment is limited and outdated, and
instructors ill-prepared to teach. Essential public-private
partnerships to ensure that students receive high quality, demand-
driven training are largely absent, and credentialing systems are
substandard. As a result, Mongolia imports skilled labor from other
markets, leaving high rates of unemployment among unskilled Mongolians,
especially youth. The Vocational Education Project will address these
problems by building on and significantly extending the work of other
donors, especially the Asian Development Bank (``ADB'') and
Gesellschaft f[uuml]r Technische Zusammenarbeit (``GTZ''), and by
supporting the newly adopted Mongolian National Vocational Education
Program.
Specifically, the Project will (a) strengthen the institutional
framework needed to support a demand-driven vocational education
system, (b) define industry-led skills training standards for
occupations and translate these standards into a modern vocational
education curricula supported by new instructional materials and
equipment, (c) develop 30 new career preparation tracks, and (d)
improve teacher training and professional development. To complete the
linkage between the public training and private sector employers, the
Project also will develop a career guidance and labor market
information system.
Success will be measured by (a) increased numbers of trainees
passing rigorous skills evaluations, (b) adoption of effective public-
private partnerships demonstrated by increased private funding of
vocational education institutions, (c) significant increases in the
rate of employment in the target population, and (d) more rapid
movement from training to employment.
4. Health Project
Mongolia has rapidly increasing rates of non-communicable diseases
and injuries (``NCDIs''), including cardiovascular disease (``CVD''),
diabetes, cancers and injury-induced trauma. Mongolia's mortality and
morbidity rates from CVD and cancers greatly exceed those of Western
countries and now represent the major cause of death and disability,
particularly in younger age groups (i.e., 35 to 55 years of age).
Trauma response and emergency medicine are under-developed. At the same
time, current NCDI programs in Mongolia are treatment based, with
inadequate attention to cost-effective NCDI prevention, early
detection, where relevant, and disease management. This has a negative
impact on the productivity of the labor force, which is
disproportionately affected by NCDIs, and is a significant drain on
scarce public health investments. The
[[Page 61383]]
Mongolian medical system is undertaking a slow and difficult transition
from expensive specialist and tertiary services to a system with equal
emphasis on public health, client information, and prevention efforts.
To date, donor funded programs to reorient the medical system have
largely focused on communicable diseases and child health. The evolving
epidemiological profile calls for extension of these public health and
medical practice changes to emphasize NCDI prevention and adult health
maintenance. The Health Project focuses on extending the productive
years and productivity of the labor force by reducing the incidence and
severity of NCDIs such as cancer, CVD, diabetes and preventable
accidents and trauma, and reducing and refocusing total health
expenditure.
Specifically, the Health Project will support (a) research on NCDI
related behaviors and practices in Mongolia, (b) site visits to
successful NCDI programs in other countries, (c) communications and
education interventions to promote risk behavior changes, (d) new
treatment and disease management protocols, (e) a limited amount of
equipment and intensive in-service training for early detection of
cervical and breast cancers, and (f) training of physicians and general
medical personnel in NCDI disease management. The Project funds NCDI
outreach, screening, and disease management for a significant
proportion of the Mongolian population (up to 60%, as estimated by
population linked to the proposed intervention sites) over the five
year term of the Compact, with extensive monitoring, evaluation and
feedback to ensure successful interventions and the transmission of
best practices to all participants.
Success will be measured by the Project's impact on (a) risk
behavior knowledge and practices, (b) medical services provider
attitudes and practices, (c) early detection of targeted cancers, (d)
the number of clients screened for hypertension and diabetes and
management of these conditions, and (e) reduction in the incidence of
targeted accidents and trauma. Ultimately, the economic impact of the
Project will occur through reductions both in (a) the productivity
costs to individual Mongolians and the Mongolian economy and (b) health
system expenditures for management and treatment of NCDIs.
C. Program Management
The GoM will establish MCA-Mongolia with a Board of Directors to
oversee overall Program management and a Technical Secretariat to
oversee implementation. Four project implementation units (each, a
``PIU'') embedded in related GoM agencies will provide day-to-day
project management for all Projects, except the Rail Project, which
will utilize the services of an external firm. MCA-Mongolia will hire
an environmental and social oversight consultant to support the
environmental and social aspects of Program implementation.
The GoM is in the process of selecting, through competitive
processes, third party, non-government entities to provide procurement
and fiscal agent services to MCA-Mongolia, which selection is expected
to be made in October 2007.
D. Assessment
1. Economic Analysis
The economic rate of return (``ERR'') for the overall Program over
a 20-year time horizon is estimated to be 28.6% in the base case. The
table below summarizes the ERR and estimated numbers of beneficiaries
for each project.
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ERR Summary
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Expected range of ERR
Project MCC investment Base case ERR -----------------------------------
cost (hurdle = 15%) Low (percent) High (percent)
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Rail Project............................ $188,380,000 30 19 41
Property Rights Project: Registration... 16,250,000 38 13 64
Property Rights Project: Peri-Urban..... 6,810,000 27 16 33
Vocational education Project............ 25,510,000 20 8 26
Health Project.......................... 17,030,000 21 2 37
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------------------------------------------------------------------------
------------------------------------------------------------------------
Estimated Beneficiaries (Year 2028)
------------------------------------------------------------------------
Rail Project............................................... 2,395,000
Property Rights Project: Registration...................... 470,000
Property Rights Project: Peri-Urban........................ 4,000
Vocational education Project............................... 822,000
Health Project: Patients and their dependents.............. 219,000
Health Project: System beneficiaries....................... 3,371,000
Estimated Total Unique Beneficiaries (minus System 3,131,000
Beneficiaries from Health Project)........................
------------------------------------------------------------------------
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Estimated Number of Beneficiaries by Income Group (Year 2028)
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USD per person per day (PPP)
Project -------------------------------------------- Total
<$1 $1-$2 $2-$4 >$4
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Rail Project............................................. 345,000 682,000 787,000 581,000 2,395,000
Property Rights Project: Registration.................... 70,000 137,000 153,000 110,000 470,000
Property Rights Project: Peri-Urban...................... 500 800 1,000 1,800 4,100
Vocational education Project............................. 102,000 156,000 202,000 361,000 821,000
Health Project: Patients and their dependents............ 21,000 36,000 48,000 113,000 218,000
Health Project: System beneficiaries..................... 640,000 809,000 775,000 1,146,000 3,370,000
[[Page 61384]]
Estimated Unique Beneficiaries by Income Group (minus 431,000 810,000 954,000 934,000 3,129,000
System Beneficiaries from Health Project)...............
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(Minor differences in total beneficiary numbers between above tables due to rounding.)
2. Consultative Process
To develop a proposal for MCC funding, the GoM conducted extensive
consultations with the private sector and civil society involving broad
public participation across the country. Members of the public,
including women's and environmental groups, were asked to identify the
primary constraints to economic growth in Mongolia, as well as
potential uses of MCC funding to remove such constraints. Thereafter,
Mongolia's MCA-National Council, formed by the GoM with broad
stakeholder representation, incorporated the results of these
consultations into a proposal for MCC funding. The proposed Program
consists of Projects identified by Mongolians to address some of the
primary constraints to economic growth in Mongolia and to reflect their
expressed view that poverty reduction can follow only from a systematic
effort to broaden the economic base and to increase the productive
capacity of Mongolians, both individuals and enterprises, to
participate effectively in opportunities for growth in the domestic and
regional economies.
During implementation of the Program, MCA-Mongolia will continue
public consultations with a range of stakeholders, including women and
other vulnerable groups, to ensure participation during development and
implementation of all the Projects.
3. GoM Commitment and Effectiveness
The GoM has demonstrated commitment to the Compact development
process by (a) assembling a 23-member MCA-National Council, (b)
conducting extensive public consultations on various proposals over a
two-year period throughout the country, (c) forming a technical working
group for each project composed of highly talented volunteers from the
public and private sector, and (d) hiring a number of highly competent
experts to work with each technical working group to develop the
Projects. Senior GoM officials, including the President, have expressed
publicly strong support for the Compact and made themselves available
to meet with MCC staff and advisers. President Enkhbayar has written to
President Bush to express his personal commitment to and belief in the
importance of the Program. The GoM is committed to assembling a capable
team to staff MCA-Mongolia. The Prime Minister will be the Chairman of
MCA-Mongolia's Board of Directors, and relevant line ministries will be
represented on the Board at the minister level.
With respect to policy reform and related matters, the following
describes Mongolia's proposed measures to ensure the effectiveness of
MCC's proposed investments.
(a) Rail Project. The GoM is undertaking legal reforms to
reorganize the rail sector, including separating infrastructure from
railway operations and increasing the competitiveness of the railway in
the regional rail transport market. In 2004, the GoM created MRA, an
independent government entity, to oversee and regulate railway safety
and implement railway policy relating to both safety and economic
issues. Additionally, the GoM has committed to improving MTZ's
operations, maintenance, financial management and capital asset
development.
(b) Property Rights Project. The GoM already has adopted key
legislation to enable private ownership of urban real property and the
development of a market for such property. In a 2003 land law, the GoM
committed to the sustainable use of rangeland, which by encouraging
efficient land use and range recovery, should give farmers and herders
a better land base for profitable economic activity.
(c) Vocational Education Project. The GoM has committed to
modernizing the vocational education system and involving the private
sector in its management and operation. The GoM has ratified the Master
Plan to Develop Education, 2006-2015. In 2006, the GoM modified the
Employment Promotion Fund to support private sector development and
employment. Finally, amendments to the Vocational Education and
Training Law and Employment Promotion Fund that would help students
cover tuition fees and help cover key administration costs of the
vocational education system have been proposed.
(d) Health Project. In 2001, the GoM adopted a State Public Health
Plan that declared public health a health sector priority and
encouraged inter-sectoral (i.e., GoM, NGO, family and community)
support for health promoting behavior, as well as equal focus on health
promotion, disease prevention and curative care. The GoM approved a
Health Sector Strategic Master Plan in 2005 that (i) emphasizes
behavioral change and information, education and communication
activities to promote healthy lifestyles and (ii) focuses on preventing
the most common communicable and non-communicable diseases. Also in
2005, the GoM adopted a national program on the prevention and control
of NCDIs based on WHO recommendations and worldwide experience, and
many related policy changes (e.g., anti-smoking legislation) have been
effected.
4. Sustainability
(a) Rail Project. The Rail Project has been designed specifically
to address issues of institutional and financial sustainability
through: (i) The provision of extensive training and technical
assistance to all critical parties--MTZ, LeaseCo and MRA--in
management, finance, and operations to ensure that they can function
effectively as key components of a modern, commercialized rail system
in a market economy, (ii) the organization of institutional relations
among the parties to reinforce the commercialization and efficiency of
rail operations, (iii) the inclusion of planning for operational
sustainability as the heart of the work programs for MTZ and LeaseCo,
and (iv) the focus on commercial terms for LeaseCo's operations, to
attaining a level of revenue that will sustain its operations beyond
the term of the Compact.
(b) Property Rights Project. The Property Rights Project will
provide technical assistance in the development and implementation of a
Registry sustainability plan, including pricing of services to ensure
sufficient revenue to improve operations and attract more registrants.
Management, operations, and financial training will be provided to
registry personnel to institutionalize
[[Page 61385]]
``best practices'' for public entities. With respect to the peri-urban
land leasing component, leaseholders will make payments for
infrastructure and land leasing to district-level governments, which in
turn will use these remittances for land management, extension
services, well testing, and other services needed by the herder groups.
In addition, better rangeland management will increase land
productivity capable of supporting increased economic activity in
perpetuity.
(c) Vocational Education Project. The fundamental objective of the
Vocational Education Project is to put Mongolian vocational education
and training on a sound and sustainable footing, based on an active
partnership between the public and private sectors. This means changing
the legal and regulatory environment in the first instance to enable
vocational education institutions to operate more efficiently and in
better synchronization with the needs of both public and private sector
employers. To ensure sustainability, the Project will focus on
establishing linkages between and among institutions in the educational
sector to ensure that better practices are grounded in working
relationships. Finally, it also emphasizes retraining educators and
providing revised and re-focused educational and training materials so
that the changes become institutionalized. One of the most important
elements of the Vocational Education Project is targeted improvement in
the income-generating capacity of the Technical and Vocational
Education and Training institutes, since enhanced revenues will be
critical to sustainability beyond the term of the Compact.
(d) Health Project. To enhance sustainability, the Health Project
includes capacity building from its start-up phase. A major element of
capacity building activities is changing the attitudes and practices of
health providers and clients toward cost-effective but ``low-tech''
interventions for prevention and treatment of NCDIs. In addition, as
physical health is of particular economic importance to lower income,
remote, and vulnerable groups, the GoM will be required to maintain
core programs beyond the term of the Compact to ensure access of these
groups to prevention, early detection, and health management services
on an on-going basis.
5. Environment and Social Impact
MCC will require that all Projects comply with national laws and
regulations, MCC's environmental guidelines and gender policy, and
World Bank's Operational Policy 4.12 on Involuntary Resettlement. None
of the Projects is likely to generate significant adverse
environmental, health, or safety impacts, and all expected impacts can
be mitigated. However, the Rail Project (``Category A'' according to
MCC's environmental guidelines) has the potential to encourage an
increase in mineral extraction, which might put unsustainable pressure
on the environmental control system, transit trade of timber extracted
illegally in Siberia, and trafficking in persons. Potential impacts of
the Property Rights Project (``Category B'') include health and safety
risks associated with installation of equipment and building
rehabilitation in the urban component as well as the potential for
depletion of the water table and degradation of pasture land associated
with the peri-urban land leasing component due to poor planning.
Similarly, potential negative environmental and social impacts of the
Vocational Education Project (``Category C'') and the Health Project
(``Category C'') include health and safety risks. For the Health
Project, these will specifically encompass medical waste management as
well as health and safety risks associated with diagnostic equipment.
The full scope of the impacts of each of the Projects will be further
examined through various environmental and social assessments that the
GoM will conduct during the first year of the implementation of the
Program. Negative impacts and risks identified through these
assessments would be mitigated or managed.
In addition, requirements to ensure Project compliance with MCC's
environmental and social standards will include:
(a) Rail Project. In light of possible negative direct, induced,
trans-boundary and cumulative impacts, a Category A Environmental
Impact Assessment and an Environmental Management Plan (EMP) will be
completed for the complete rail system, identifying necessary
mitigation measures. Funding is included for mitigation and enhancement
of the capacity of the Mongolian Customs General Administration to
enforce and implement environmental laws and regulations applicable to
the transport of natural resources.
(b) Property Rights Project. The completion of a framework
environmental and social assessment and EMPs for all components of the
Project will be required.
(c) Vocational Education Project. MCA-Mongolia will develop EMPs,
including health and safety guidelines for use in the technical and
vocational education training institutes in the Project.
(d) Health Project. A plan for the safe and proper use of
diagnostic equipment will be developed and used, as well as EMPs to
address health and safety issues and compliance with existing waste
management regulations for all project related services and facilities.
The EMP will also include procedures and funding for support of
remedial actions to ensure compliance with MCC's environmental
guidelines, Mongolian regulations, and access needs for potential
beneficiaries.
Positive environmental and social impacts stemming from compact
activities include: (i) Increases in fuel efficiency, a reduction in
air emissions and improved air quality, increases in employment for
disadvantaged groups, and a reduction in the inflationary pressures on
such items as fuel (which impact disproportionately on the poor) caused
by bottlenecks in the transportation system from the Rail Project, (ii)
increases in income from ability to capitalize land assets, reductions
in peri-urban land degradation and increases in income for vulnerable
groups from livestock productivity gains from the Property Rights
Project, (iii) increases in educational and employment opportunities
for women, the poor, and other disadvantaged groups from the Vocational
Education Project, and (iv) improved health for vulnerable groups
(including women), as well as associated improvements in labor
productivity from the Health Project.
6. Donor Coordination
MCC has consulted extensively on each of the proposed projects with
the major donors in Mongolia, including the World Bank, Asian
Development Bank (``ADB''), Gesellschaft f[uuml]r Technische
Zusammenarbeit (``GTZ'') and U.S.-Agency for International Development
(``USAID''). In the case of the rail project, both the World Bank and
ADB have been providing the GoM with support for developing a
comprehensive transport strategy, including the promotion of greater
financial transparency, regulatory reform, and private sector
involvement. The International Finance Corporation recently completed a
two-year project to strengthen the regulatory structure for leasing in
Mongolia, culminating in the adoption in June 2006 of a new Law on
Financial Leasing. These donors, as well as the European Bank for
Reconstruction and Development, have expressed an interest in
supporting the
[[Page 61386]]
proposed project and areas of potential synergies are being explored.
Similarly, with the Property Rights Project, MCC's support will
interact with and build upon a variety of efforts made by other donors.
Most notably, the ADB's ``Cadastral Survey and Land Registration
Project'' has mapped many land parcels slated for privatization and
currently is developing a land information system that will serve as an
integrated one-stop resource for government and the private sector. The
design of the privatization component has drawn heavily from the
experience of USAID's ``Ger Initiative,'' which is implementing a
variety of economic development efforts in the ger-areas of Mongolia's
cities. The design of the peri-urban land leasing component stems from
experience gained in several prior foreign donor efforts, namely those
by the UNDP, the World Bank, a joint project among the GoM, Japan
International Cooperation Agency and Food and Agriculture Organization
focused on improving efficiencies of the dairy system, and USAID's
``Gobi Initiative.''
For the health and vocational education projects, MCC-funded
efforts will complement other donor work supporting Mongolia's social
sectors. The proposed Vocational Education Project builds on, and will
support the implementation of, the ADB-funded Third Education
Development Project, the ADB/Volunteer Service Organization program on
non-formal construction worker skills training for vunerable youth and
poor adults, the GTZ project for Urban Development, Construction Sector
and TVET Promotion Program, and the ADB/Nordic Development Fund's
Social Security Sector Development Project (2002-2005). The Health
Project will build upon and co-finance well-designed and on-going
activities like World Health Organization's laboratory specimen
transport system, ADB's physician training in five districts, and the
University of Toronto's research on cervical cancer diagnosis. It will
also link up with Luxembourg's successful telemedicine project, which
is working at the tertiary and secondary level with cardiologists, to
see that patients identified with heart problems at the primary care
level are referred and treated. With the exception of Luxembourg, none
of the other donors are directly targeting the major NCDIs for
screening and control or investing in behavior change.
Millennium Challenge Compact Between The United States of America
Acting Through the Millennium Challenge Corporation and the Government
of Mongolia
Table of Contents
Article 1. Goal and Objectives
Section 1.1 Compact Goal
Section 1.2 Project Objectives
Article 2. Funding and Resources
Section 2.1 MCC Funding
Section 2.2 Compact Implementation Funding
Section 2.3 Disbursement
Section 2.4 Interest
Section 2.5 Government Resources; Budget
Section 2.6 Limitations on the Use of MCC Funding
Section 2.7 Taxes
Article 3. Implementation
Section 3.1 Program Implementation Agreement
Section 3.2 Government Responsibilities
Section 3.3 Policy Performance
Section 3.4 Government Assurances
Section 3.5 Implementation Letters
Section 3.6 Procurement
Section 3.7 Records; Accounting; Covered Providers; Access
Section 3.8 Audits; Reviews
Article 4. Communications
Section 4.1 Communications
Section 4.2 Representatives
Section 4.3 Signatures
Article 5. Termination; Suspension; Refunds
Section 5.1 Termination; Suspension
Section 5.2 Refunds; Violation
Section 5.3 Survival
Article 6. Compact Annexes; Amendments; Governing Law
Section 6.1 Annexes
Section 6.2 Inconsistencies
Section 6.3 Amendments
Section 6.5 Additional Instruments
Section 6.6 References to MCC Website
Section 6.7 Indemnification
Article 7. Entry Into Force
Section 7.1 Domestic Requirements
Section 7.2 Conditions Precedent to Entry into Force
Section 7.3 Date of Entry into Force
Section 7.4 Compact Term
Annex I: Summary of Program
Annex II: Summary of Multi-Year Financial Plan
Annex III: Summary of Monitoring and Evaluation Plan
Annex IV: Definitions
Millennium Challenge Compact
Preamble
This Millennium Challenge Compact (this ``Compact'') is between the
United States of America, acting through the Millennium Challenge
Corporation, a United States government corporation (``MCC''), and the
Government of Mongolia (the ``Government'').
Recalling that the Government consulted with the private sector and
civil society of Mongolia to determine the priorities for the use of
Millennium Challenge Account assistance and developed and submitted to
MCC a proposal for such assistance; and
Recognizing that MCC wishes to help Mongolia implement a program to
achieve the Compact Goal and Project Objectives described herein (the
``Program'');
The Government and MCC (the ``Parties'') hereby agree as follows:
Article 1. Goal and Objectives
Section 1.1 Compact Goal
The goal of this Compact is to reduce poverty in Mongolia through
economic growth (the ``Compact Goal'').
Section 1.2 Project Objectives
The objectives of the Projects (each, a ``Project Objective'') are:
(a) To increase rail traffic and shipping efficiency through the
Rail Project;
(b) To increase the security and capitalization of land assets held
by lower-income Mongolians, and to increase peri-urban herder
productivity and incomes, through the Property Rights Project;
(c) To increase employment and income among unemployed and
marginally employed Mongolians through the Vocational Education
Project; and
(d) To increase the adoption of behaviors that reduce non-
communicable diseases and injuries that have the greatest impact on
mortality (``NCDIs'') among target populations and improve medical
treatment and control of NCDIs through the Health Project.
The Government shall take all necessary steps to achieve the
Compact Goal and Project Objectives during the Compact Term.
Article 2. Funding and Resources
Section 2.1 MCC Funding
MCC hereby grants to the Government, under the terms of this
Compact, an amount not to exceed Two Hundred Eighty-Four Million Nine
Hundred Eleven Thousand Three Hundred and Sixty-Three United States
Dollars (US$284,911,363) (the ``MCC Funding'') for use by the
Government in the implementation of the Program as more specifically
described in Annex II of this Compact.
Section 2.2 Compact Implementation Funding
(a) Of the total amount of MCC Funding, MCC shall make up to (i)
Four Million One Hundred Eighty-Nine Thousand Three Hundred and Fifty
United States Dollars (US$4,189,350),
[[Page 61387]]
and (ii) an additional Eight Hundred Thirty Three Thousand Three
Hundred and Thirty Three United States Dollars (US$833,333) subject to
availability of funds and notification to the Government by MCC
(together, the ``Compact Implementation Funding'') available to the
Government under section 609(g) of the Millennium Challenge Act of
2003, as amended, for:
(i) Administrative activities (including start-up costs for MCA-
Mongolia such as Technical Secretariat salaries, rent, cost of
purchasing computers and other information technology or capital
equipment and other similar expenses);
(ii) Procurement and start-up activities for key contractors,
including but not limited to (1) the outside project management firm
for the Rail Project, (2) consultants for each of the Health, Property
Rights and Vocational Education Projects, and (3) hiring certain staff
for the implementing entities;
(iii) Procurement and initial performance of Fiscal Agent,
Procurement Agent and Bank services;
(iv) Procurement and initial performance of financial management
services necessary to perform an assessment of UBTZ's books and
records;
(v) Training to be provided by the monitoring and evaluation
officer of MCA-Mongolia's Technical Secretariat, with input from MCC's
expert(s), for the implementing entities and Rail Project outside
project management firm to prepare them for their monitoring and
evaluation responsibilities; and
(vi) Any other activities relating to the implementation of the
Compact, approved by MCC.
(b) Compact Implementation Funding shall be subject to such
limitations as MCC may require from time to time.
(c) This section 2.2, and sections 2.6 and 2.7 below, shall be in
effect from the date of execution of this Compact by the Parties
without regard to the requirements for entry into force provided in
section 7.3.
Section 2.3 Disbursement
In accordance with this Compact and the Program Implementation
Agreement, MCC shall disburse MCC Funding for expenditures incurred in
connection with the implementation of the Program (each, a
``Disbursement''). The proceeds of such Disbursements shall be made
available to the Government, at MCC's sole election, (a) by deposit to
a bank account established by the Government and acceptable to MCC (a
``Permitted Account'') or (b) through direct payment to the relevant
provider of goods, works or services in furtherance of this Compact.
MCC Funding shall be expended solely to cover expenditures in
connection with the implementation of the Program as provided in this
Compact and the Program Implementation Agreement.
Section 2.4 Interest
The Government shall pay to MCC any bank interest or other earnings
that accrue on MCC Funding in accordance with the Program
Implementation Agreement (whether by directing such payments to a bank
account outside Mongolia designated by MCC or otherwise).
Section 2.5 Government Resources; Budget
(a) The Government shall provide all funds and other resources, and
shall take all actions, that are necessary to carry out the
Government's responsibilities and obligations under this Compact.
(b) The Government shall use its best efforts to ensure that all
MCC Funding it receives, or is projected to receive, in each of its
fiscal years is fully accounted for in its annual budget on a multi-
year basis.
(c) The Government shall not reduce the normal and expected
resources that it would otherwise receive, or budget, from sources
other than MCC for the activities contemplated under this Compact and
the Program.
Section 2.6 Limitations on the Use of MCC Funding
The Government shall ensure that MCC Funding shall not be used for
any purpose that would violate United States law or policy, as
specified in this Compact or as further notified to the Government in
writing by MCC, or by posting on http://www.mcc.gov (the ``MCC Web
site''), including but not limited to the following purposes:
(a) For assistance to, or training of, the military, police,
militia, national guard or other quasi-military organization or unit;
(b) For any activity that is likely to cause a substantial loss of
United States jobs or a substantial displacement of United States
production;
(c) To undertake, fund or otherwise support any activity that is
likely to cause a significant environmental, health, or safety hazard
as further described in MCC's Environmental Guidelines posted on MCC
Web site (as they may be amended from time to time, the ``MCC
Environmental Guidelines''); or
(d) To pay for the performance of abortions as a method of family
planning or to motivate or coerce any person to practice abortions, to
pay for the performance of involuntary sterilizations as a method of
family planning or to coerce or provide any financial incentive to any
person to undergo sterilizations or to pay for any biomedical research
which relates, in whole or in part, to methods of, or the performance
of, abortions or involuntary sterilization as a means of family
planning.
Section 2.7 Taxes
(a) The Government shall ensure that the assistance provided by MCC
to the Government under this Compact is exempt from any existing or
future taxes, duties, levies, contributions or other similar charges
(``Taxes'') by the Government (including any such Taxes of a national,
regional, local or other governmental or taxing authority) in
accordance with the terms of the ``Agreement Between the Government of
the United States of America and the Government of Mongolia Concerning
Economic, Technical, and Related Assistance,'' which entered into force
on September 8, 1992.
(b) If any Tax has been levied and paid to the Government contrary
to the requirements of section 2.7(a) above, the Government shall
refund promptly to MCC the amount of such Tax out of its national
funds. No MCC Funding, proceeds thereof, nor any Program asset may be
applied by the Government in satisfaction of its obligations under this
section 2.7.
Article 3. Implementation
Section 3.1 Program Implementation Agreement
The Government shall implement the Program in accordance with this
Compact and as further specified in an agreement to be entered into by
MCC and the Government and dealing with, among other matters,
implementation arrangements, fiscal accountability, disbursement and
use of MCC Funding, procurement and applicable tax exemptions (the
``Program Implementation Agreement'').
Section 3.2 Government Responsibilities
(a) The Government shall have principal responsibility for
overseeing and managing the implementation of the Program.
(b) The Government shall ensure that no law or regulation in
Mongolia now or hereinafter in effect makes, or will make, unlawful, or
otherwise prevents, hinders or jeopardizes, the performance of any of
the Government's obligations
[[Page 61388]]
under this Compact, the Program Implementation Agreement or any other
agreement related thereto or any transaction contemplated thereunder.
(c) The Government shall ensure that any assets or services funded
in whole or in part (directly or indirectly) by MCC Funding will be
used solely in furtherance of this Compact and the Program.
Section 3.3 Policy Performance
In addition to the specific policy, legal and regulatory reform
commitments identified in Annex I to this Compact, the Government shall
commit to maintain and improve its level of performance under the
policy criteria identified in section 607 of the Millennium Challenge
Act of 2003, as amended, and the selection criteria and methodology
used by MCC.
Section 3.4 Government Assurances
The Government assures MCC that:
(a) As of the date this Compact is signed by the Government, the
information provided to MCC by or on behalf of the Government in the
course of reaching agreement with MCC on this Compact is true, correct
and complete in all material respects;
(b) This Compact does not, and will not, conflict with any other
international agreement or obligation of the Government or any of the
laws of Mongolia; and
(c) The Government shall not invoke any of the provisions of its
internal law to justify or excuse a failure to perform its duties or
responsibilities under this Compact.
Section 3.5 Implementation Letters
From time to time, MCC may provide guidance to the Government in
writing on any matters relating to MCC Funding, this Compact or
implementation of the Program (each, an ``Implementation Letter''). The
Government shall apply such guidance in implementing the Program.
Section 3.6 Procurement
The Government shall ensure that the procurement of all goods,
works and services by the Government or any Provider in furtherance of
this Compact will be consistent with MCC's Program Procurement
Guidelines posted on the MCC Web site (as they may be amended from time
to time, the ``MCC Program Procurement Guidelines''). The MCC Program
Procurement Guidelines include, among others, the following
requirements:
(a) Open, fair, and competitive procedures must be used in a
transparent manner to solicit, award and administer contracts and to
procure goods, works and services;
(b) Solicitations for goods, works, and services must be based upon
a clear and accurate description of the goods, works and services to be
acquired;
(c) Contracts must be awarded only to qualified contractors that
have the capability and willingness to perform the contracts in
accordance with their terms on a cost effective and timely basis; and
(d) No more than a commercially reasonable price, as determined,
for example, by a comparison of price quotations and market prices,
will be paid to procure goods, works and services.
Section 3.7 Records; Accounting; Covered Providers; Access
(a) Government Books and Records. The Government shall maintain,
and shall use its best efforts to ensure that all Covered Providers
maintain, accounting books, records, documents and other evidence
relating to this Compact (``Compact Records'') adequate to show, to
MCC's satisfaction, the use of all MCC Funding. In addition, the
Government shall furnish or cause to be furnished all Compact Records
to MCC and its auditors when MCC so requests.
(b) Accounting. The Government shall maintain, and shall use its
best efforts to ensure that all Covered Providers maintain, Compact
Records in a manner generally consistent with the standards for the
private and public sector issued by the International Federation of
Accountants (as well as its boards and committees). Compact Records
must be maintained for at least five (5) years after the end of the
Compact Term or for such longer period, if any, required to resolve any
litigation, claims or audit findings or any statutory requirements.
(c) Provider; Covered Provider. Unless the Parties agree otherwise
in writing, a ``Provider'' is (i) any entity of the Government that
receives or uses MCC Funding or any other Program asset in carrying out
activities in furtherance of this Compact or (ii) any third party that
receives at least US$50,000 in the aggregate of MCC Funding (other than
as salary or compensation as an employee of an entity of the
Government) during the Compact Term. A ``Covered Provider'' is (i) a
non-United States Provider that receives (other than pursuant to a
direct contract or agreement with MCC) US$300,000 or more of MCC
Funding in any Government fiscal year or any other non-United States
person or entity that receives, directly or indirectly, US$300,000 or
more of MCC Funding from any Provider in such fiscal year, or (ii) any
United States Provider that receives (other than pursuant to a direct
contract or agreement with MCC) US$500,000 or more of MCC Funding in
any Government fiscal year or any other United States person or entity
that receives, directly or indirectly, US$500,000 or more of MCC
Funding from any Provider in such fiscal year.
(d) Access. Upon MCC's request, the Government, at all reasonable
times, shall permit, or cause to be permitted, authorized
representatives of MCC, an authorized United States inspector general,
the United States Government Accountability Office, any auditor
responsible for an audit contemplated herein or otherwise conducted in
furtherance of this Compact, and any agents or representatives engaged
by MCC or the Government to conduct any assessment, review or
evaluation of the Program, the opportunity to audit, review, evaluate
or inspect facilities and activities funded in whole or in part by MCC
Funding.
Section 3.8 Audits; Reviews
(a) Government Audits. Except as the Parties may otherwise agree in
writing, the Government shall, on at least a semi-annual basis,
conduct, or cause to be conducted, financial audits of all
disbursements of MCC Funding covering the period from signing of this
Compact until the earlier of the following December 31 or June 30 and
covering each six-month period thereafter ending December 31 and June
30, through the end of the Compact Term, in accordance with the terms
of the Program Implementation Agreement. In addition, upon MCC's
request, the Government shall use, or cause to be used, to conduct such
audits an independent auditor approved by MCC and named on the list of
local auditors approved by the Inspector General of the Millennium
Challenge Corporation (the ``Inspector General'') or a United States-
based certified public accounting firm selected in accordance with the
``Guidelines for Financial Audits Contracted by MCA'' (the ``Audit
Guidelines'') issued and revised from time to time by the Inspector
General. Audits shall be performed in accordance with the Audit
Guidelines and be subject to quality assurance oversight by the
Inspector General. Each audit shall be completed and the audit report
delivered to MCC no later than 90 days after the first period to be
audited and no later than 90 days after each June 30 and December 31
thereafter, unless the Parties agree otherwise in writing.
(b) Audits of United States Entities. The Government shall ensure
that agreements between the Government or
[[Page 61389]]
any Provider, on the one hand, and a United States non-profit
organization, on the other hand, that are financed with MCC Funding
state that the United States non-profit organization is subject to the
applicable audit requirements contained in OMB Circular A-133 issued by
the United States Government Office of Management and Budget. The
Government shall ensure that agreements between the Government or any
Provider, on the one hand, and a United States for-profit Covered
Provider, on the other hand, that are financed with MCC Funding state
that the United States organization is subject to audit by the
applicable United States Government agency, unless the Government and
MCC agree otherwise in writing.
(c) Corrective Actions. The Government shall use its best efforts
to ensure that Covered Providers take, where necessary, appropriate and
timely corrective actions in response to audits, consider whether a
Covered Provider's audit necessitates adjustment of the Government's
records, and require each such Covered Provider to permit independent
auditors to have access to its records and financial statements as
necessary.
(d) Audit by MCC. MCC shall have the right to arrange for audits of
the Government's use of MCC Funding.
(e) Cost of Audits, Reviews or Evaluations. MCC Funding may be used
to fund the costs of any audits, reviews or evaluations required under
this Compact, including as reflected in Annex II.
Article 4. Communications
Section 4.1 Communications
Any document or communication required or submitted by either Party
to the other under this Compact shall be in writing and, except as
otherwise agreed between the Parties, in English. Notice is deemed duly
given: (a) Upon personal delivery to the Party notified, (b) when sent
by confirmed fax or email, if sent during normal business hours of the
recipient Party, if not, then on the next business day, or (c) two
business days after deposit with an internationally recognized
overnight courier, specifying next day delivery. For this purpose, the
address of each Party is set forth below.
To MCC:
Millennium Challenge Corporation, Attention: Vice President for
Operations (with a copy to the Vice President and General Counsel), 875
Fifteenth Street, NW., Washington, DC 20005, United States of America,
Facsimile: (202) 521-3700, Telephone: (202) 521-3600, E-mail:
VPOperations@mcc.gov (Vice President for Operations),
VPGeneralCounsel@mcc.gov (Vice President and General Counsel).
To the Government:
Ministry of Finance, Attention: Hon. Nadmid Bayartsaikhan, Minister
of Finance, Government Building 2, United Nation's Street 5/1,
Chingeltei District, Ulaanbaatar-210646, Mongolia, Facsimile: 976-11-
322866, Telephone: 976-51-262155, E-mail:
bayartsaikhan@mof.pmis.gov.mn.
With a copy to MCA-Mongolia:
At an address, and to the attention of the person, to be designated
in writing to MCC by the Government.
Section 4.2 Representatives
For all purposes of this Compact, the Government shall be
represented by the individual holding the position of, or acting as,
the Minister of Finance of Mongolia, and MCC shall be represented by
the individual holding the position of, or acting as, Vice President
for Operations (each, a ``Principal Representative''), each of whom, by
written notice to the other Party, may designate one or more additional
representatives for all purposes other than signing amendments to this
Compact. A Party may change its Principal Representative to a new
representative that holds a position of equal or higher rank upon
written notice to the other Party.
Section 4.3 Signatures
With respect to all documents other than this Compact or an
amendment to this Compact, a signature delivered by facsimile or
electronic mail shall be binding on the Party delivering such signature
to the same extent as an original signature would be.
Article 5. Termination; Suspension; Refunds
Section 5.1 Termination; Suspension
(a) Either Party may terminate this Compact in its entirety by
giving the other Party thirty (30) days' written notice.
(b) MCC may, immediately, upon written notice to the Government,
suspend or terminate this Compact or MCC Funding under this Compact, in
whole or in part, if MCC determines that any circumstance identified by
MCC as a basis for suspension or termination has occurred, which
circumstances include but are not limited to the following:
(i) The Government fails to comply with its obligations under this
Compact, the Program Implementation Agreement or any other agreement or
arrangement entered into by the Government or MCA-Mongolia in
connection with this Compact or the Program;
(ii) An event has occurred that, in MCC's determination, makes it
probable that one or more of the Project Objectives will not be
achieved during the term of this Compact or that the Government will
not be able to perform its obligations under this Compact;
(iii) A use of MCC Funding or continued implementation of this
Compact has or would violate applicable law or United States Government
policy, whether now or hereafter in effect;
(iv) The Government or any other person or entity receiving MCC
Funding or using assets acquired in whole or in part with MCC Funding
is engaged in activities that are contrary to the national security
interests of the United States;
(v) An act has been committed or an omission or an event has
occurred that would render Mongolia ineligible to receive United States
economic assistance under Part I of the Foreign Assistance Act of 1961,
as amended (22 U.S.C. 2151 et seq.), by reason of the application of
any provision of the Foreign Assistance Act of 1961 or any other
provision of law;
(vi) The Government has engaged in a pattern of actions
inconsistent with the criteria used to determine the eligibility of
Mongolia for assistance under the Millennium Challenge Act of 2003, as
amended; and
(vii) The Government or another person or entity receiving MCC
Funding or using assets acquired in whole or in part with MCC Funding
is found to have been convicted of a narcotics offense or to have been
engaged in drug trafficking.
(c) All Disbursements shall cease upon the expiration, suspension,
or termination of this Compact; provided, however, that MCC Funding may
be used, in compliance with this Compact and the Program Implementation
Agreement, to pay for (i) reasonable expenditures for goods, works or
services that are properly incurred under or in furtherance of this
Compact before such expiration, suspension or termination of this
Compact, and (ii) reasonable expenditures (including administrative
expenses) properly incurred in connection with the winding up of the
Program within one hundred and twenty (120) days after the expiration,
suspension or termination of this Compact, so long as the request for
such expenditures is submitted within ninety (90) days after such
expiration, suspension or termination.
(d) Subject to subsection (c) of this section 5.1, upon the
expiration, suspension or termination of this
[[Page 61390]]
Compact, (i) any amounts of MCC Funding not disbursed by MCC to the
Government shall be released from any obligation in connection with
this Compact without any action from the Government or MCC, and (ii)
any amounts of MCC Funding disbursed by MCC but not expended under
section 2.3 before such expiration, suspension or termination, plus
accrued interest thereon, shall be returned to MCC within thirty (30)
days after the Government receives MCC's request for such return.
(e) MCC may reinstate any suspended or terminated MCC Funding under
this Compact if MCC determines that the Government or other relevant
person or entity has committed to correct each condition for which MCC
Funding was suspended or terminated.
Section 5.2 Refunds; Violation
(a) If any MCC Funding, any interest or earnings thereon, or any
asset acquired in whole or in part with MCC Funding is used for any
purpose in violation of the terms of this Compact, MCC shall have the
right to require that the Government repay to MCC, in United States
Dollars, the value of such misused MCC Funding, interest, earnings, or
asset, plus interest, within thirty (30) days after the Government's
receipt of MCC's request for repayment. The Government shall use
national funds (and no MCC Funding or Program assets) to make such
payment.
(b) Notwithstanding any other provision in this Compact or any
other agreement to the contrary, MCC's right under this Section 5.2 for
a refund shall continue during the term of this Compact and for a
period of (i) five years thereafter or (ii) one year after MCC receives
actual knowledge of such violation, whichever is later.
Section 5.3 Survival
The Government's responsibilities under sections 2.4, 2.6, 2.7,
3.7, 3.8, 5.1(c), 5.1(d), 5.2, 5.3, 6.4 and 6.7 of this Compact shall
survive the expiration, suspension or termination of this Compact.
Article 6. Compact Annexes; Amendments; Governing Law
Section 6.1 Annexes
Each annex attached hereto constitutes an integral part of this
Compact.
Section 6.2 Inconsistencies
In the event of any conflict or inconsistency between:
(a) Any annex to this Compact and any of Articles 1 through 7, such
Articles 1 through 7 shall prevail; or
(b) This Compact and any other agreement between the Parties
regarding the Program, this Compact shall prevail.
Section 6.3 Amendments
The Parties may amend this Compact only by a written agreement
signed by the Principal Representatives of both Parties and subject to
the respective domestic approval requirements to which this Compact was
subject.
Section 6.4 Governing Law; Status
This Compact is an international agreement and as such will be
governed by the principles of international law and shall prevail over
the laws of Mongolia. In the event of any conflict between the Compact
and another international agreement to which the Government is or
becomes a party, the Compact shall prevail.
Section 6.5 Additional Instruments
Any reference to activities, obligations or rights undertaken or
existing under or in furtherance of this Compact or similar language
shall include activities, obligations and rights undertaken by,
existing under or in furtherance of any agreement, document or
instrument related to this Compact and the Program.
Section 6.6 References to MCC Website
Any reference in this Compact, the Program Implementation Agreement
or any other agreement entered into in connection with this Compact to
a document or information available on, or notified by posting on, the
MCC Website shall be deemed a reference to such document or information
as updated or substituted on the MCC Website from time to time.
Section 6.7 Indemnification
The Government shall indemnify and hold MCC and any MCC officer,
director, employee, affiliate, contractor agent or representative (each
of MCC and any such persons, an ``MCC Indemnified Party'') harmless
from and against, and shall compensate, reimburse and pay such MCC
Indemnified Party for, any liability or other damage that both:
(a) Is (directly or indirectly) suffered or incurred by such MCC
Indemnified Party, or to which any MCC Indemnified Party may otherwise
become subject, regardless of whether or not such damages relate to any
third-party claims; and
(b) Arises from or as a result of the negligence or willful
misconduct of the Government or any Government affiliate (including
MCA-Mongolia) (directly or indirectly) connected with, any activities
(including acts and omissions) undertaken in the furtherance of this
Compact; provided, however, that the Government shall apply national
funds to satisfy its obligations under this section 6.7, and no MCC
Funding or Program assets may be applied by the Government in
satisfaction of its obligations under this section 6.7.
Article 7. Entry Into Force
Section 7.1 Domestic Requirements
The Government shall take all steps necessary to ensure that (a)
this Compact and the Program Implementation Agreement and all of the
provisions of this Compact and the Program Implementation Agreement are
valid and binding and are in full force and effect in Mongolia, (b)
this Compact, the Program Implementation Agreement and any other
agreement entered into in connection with this Compact to which the
Government and MCC are parties will be given the status of an
international agreement if so stipulated therein, and (c) no laws of
Mongolia (other than the constitution of Mongolia), whether now or
hereafter in effect, will take precedence or prevail over the terms of
this Compact or the Program Implementation Agreement.
Section 7.2 Conditions Precedent to Entry Into Force
Before this Compact enters into force:
(a) The Government and MCC shall execute the Program Implementation
Agreement;
(b) This Compact shall be ratified by the State Great Khural
(Parliament) of Mongolia after it is signed;
(c) The Government shall deliver to MCC:
(i) A certificate signed and dated by the Principal Representative
of the Government (or such other duly authorized representative of the
Government acceptable to MCC) certifying that the Government has taken
all steps required under section 7.1;
(ii) A legal opinion from the Minister of Justice and Internal
Affairs in form and substance satisfactory to MCC; and
(iii) Complete, certified copies of all decrees, legislation,
regulations or other governmental documents relating to its domestic
requirements for this Compact to enter into force and the satisfaction
of Section 7.1, which MCC may post on its website or otherwise make
publicly available; and
(d) MCC must determine that, after signature of this Compact, the
Government has not engaged in any action or omission that is
inconsistent with the eligibility criteria for MCC Funding.
[[Page 61391]]
Section 7.3 Date of Entry Into Force
This Compact shall enter into force on the later of (a) the date of
the last letter in an exchange of letters between the Principal
Representatives confirming that each Party has completed its domestic
requirements for entry into force of this Compact and (b) the date that
all conditions set forth in Section 7.2 have been satisfied.
Section 7.4 Compact Term
This Compact shall remain in force for five years after its entry
into force, unless terminated earlier under section 5.1 (the ``Compact
Term'').
In Witness Whereof, the undersigned, duly authorized by their
respective governments, have signed, in duplicate, this Compact this
22nd day of October, 2007.
Done at Washington, D.C.
For Millennium Challenge Corporation, on behalf of the United
States of America, Name: George W. Bush, Title: President of the United
States of America.
For the Government of Mongolia, Name: Nambaryn Enkhbayar, Title:
President of Mongolia.
Annex I Summary of Program
A. Program Overview
This Annex I to the Compact summarizes the Program that MCC Funding
will support in Mongolia during the Compact Term.
1. Background
Mongolia is landlocked between Russia and China, with approximately
2.6 million inhabitants in a territory of 1.56 million square
kilometers. Nearly half of the population is concentrated in
Ulaanbaatar, its capital, approximately 60 percent is located along the
rail corridor between Russia and China, and the remainder is largely
dispersed throughout the country. Mongolia's aging transport
infrastructure and weak institutions are a significant constraint to
economic growth and development, particularly given the pressures of
the country's abrupt transition to a market economy, the collapse of
financial support from Russia, and the rapid urbanization of what
traditionally has been a highly dispersed rural herding society. The
Program is intended to release the potential of certain critical
interlocking human, institutional, and physical resources that factor
centrally in Mongolia's efforts to broaden and deepen economic
development. The Program is expected to have a significant direct
impact on individuals living in poverty, and significant indirect and
ancillary benefits by creating new economic opportunities and
increasing the capacity of individuals and groups to participate fully
in and benefit from economic growth.
2. Program
The Program consists of the Rail Project, the Property Rights
Project, the Vocational Education Project, and the Health Project, as
further described below (each, a ``Project'').
The Parties may agree to modify or eliminate any Project, or to
create a new project, in writing signed by the Principal Representative
of each Party without amending this Compact; provided, however, that
any such modification or elimination of a Project, or creation of a new
project, shall not cause the amount of MCC Funding to exceed the
aggregate amount specified in Section 2.1 of this Compact, cause the
Government's responsibilities or contribution of resources to be less
than specified in this Compact, or extend the Compact Term.
3. Consultative Process
In order to develop a proposal for MCC Funding, the Government
conducted a consultative process with the private sector and civil
society that involved broad participation of the general public. The
public was asked to identify the primary constraints to economic growth
in Mongolia, as well as potential uses of MCC Funding to remove such
constraints. Thereafter, Mongolia's National Council consulted
Mongolia's national development plan and poverty reduction strategy
papers and conducted additional targeted consultations with sector
experts and stakeholders in order to shape the results of the public
consultation into a proposal for MCC Funding. The Program consists of
Projects designed to address the primary constraints to economic growth
in Mongolia identified in these consultations.
4. Proposals
MCA-Mongolia will arrange procurement of goods, works and services,
as appropriate, to implement all Projects under the Compact. MCA-
Mongolia will engage a Procurement Agent who will act on its behalf to
manage the acquisition of such goods, works and services. All
procurements shall be conducted in accordance with the MCC Program
Procurement Guidelines.
5. Environmental and Social Oversight, Monitoring and Capacity Building
To ensure that environmental and social safeguards and mitigation
measures are implemented for the Program by MCA-Mongolia, MCC Funding
will be used to engage an environmental and social oversight consultant
to enhance the capacity of MCA-Mongolia. This consultant will also work
to enhance the capacity of the Ministry of Nature and Environment to
enforce and implement the Government's environmental laws and
regulations, to train staff, and identify whether additional staff are
needed, to carry out effective environmental oversight and monitoring
of the implementation of the Program.
B. Rail Project
1. Background
Mongolia's rail system is the transportation backbone of the
economy, contributing more to GDP than in any other country. The rail
system moves 97 percent of the ton-kilometers of freight transport in
Mongolia. The Ulaanbaatar Railway Joint Stock Company, in which the
Government and the Government of the Russian Federation each own a 50
percent interest (``UBTZ'') \2\, operates Mongolia's railway system.
This system, with its antiquated infrastructure, equipment, and
practices, cannot meet current demand for rail services and poses a
serious economic bottleneck by limiting growth in domestic and foreign
trade and associated investment, and contributing to inflation. The
Rail Project addresses this bottleneck through improvements in the
efficiency and capacity of the rail system, thereby creating new jobs
in industries and businesses related to or served by the rail system.
---------------------------------------------------------------------------
\2\ UBTZ is commonly referred to as ``MTZ.'' For the avoidance
of doubt, the terms ``UBTZ'' and ``MTZ'' refer to the same legal
entity.
---------------------------------------------------------------------------
2. Project
The Rail Project consists of the following activities (each, a
``Project Activity''):
(a) Rail Sector Technical Assistance Activity.
MCC Funding will be used to provide training and other technical
assistance to UBTZ, the Mongolian Railway Authority (``MRA''), which is
Mongolia's principal regulator of the rail sector, and certain other
agencies, to improve their operational, management, maintenance, and
regulatory practices. Specifically, MCC Funding will support:
(i) Training of personnel at UBTZ as well as those from the private
and public sectors involved in the rail sector of Mongolia in the
technology, operation, management and maintenance of locomotives,
wagons,
[[Page 61392]]
signaling and communication equipment and track, as well as in various
aspects of railroad operations (including wagon fleet management,
intermodal activities, sales and marketing, and financial management
and accounting practices);
(ii) Technical assistance to MRA to upgrade its capacity to
regulate the rail sector and to strengthen its technical capacities in
relevant areas such as rail safety, pricing, and track access
licensing;
(iii) Technical assistance to UBTZ in sustainability planning and
remediation of accounting practices to adhere to IAS;
(iv) Technical assistance to the Customs General Administration to
strengthen its capacity to enforce and implement laws and regulations
relevant to the rail sector and to transport of natural resources; and
(v) Identification and management by MCA-Mongolia of environmental,
social, health and safety impacts associated with the implementation of
the Rail Project, consistent with section 2.6(c) of the Compact and the
World Bank's Operational Policy on Involuntary Resettlement (OP 4.12).
(b) LeaseCo Establishment Activity.
MCC Funding will be used to assist in the formation of a company
owned by the Government to own and lease various railway assets under
the Rail Project (``LeaseCo''). Specifically, MCC Funding will support:
(i) A regulatory review to determine the optimal method for the
development, establishment, management and operation of LeaseCo;
(ii) Assistance in establishing LeaseCo, including forming its
board of directors, staffing its management unit, and funding certain
other start-up costs;
(iii) An outside project management firm who will work with MCA-
Mongolia and relevant ministries and agencies of the Government to
prepare the scope of work and bidding documents for contracting a
private sector firm to manage and operate LeaseCo (``OpCo''); and
(iv) The oversight of OpCo by an outside project management firm
together with MCA-Mongolia and relevant agencies and ministries of the
Government to ensure effective management of LeaseCo for purposes of
obtaining rail assets through MCC Funding for lease to UBTZ and other
rail shippers and operators in Mongolia.
(c) LeaseCo Operation Activity.
MCC Funding will be used to assist LeaseCo in acquiring various
railway-related assets to lease to UBTZ and to other rail shippers and
operators in Mongolia. Specifically, MCC Funding will support:
(i) The acquisition by LeaseCo of (1) up to approximately 30
freight locomotives, (2) up to approximately 75 new open top freight
wagons, (3) up to approximately 75 new specialized freight wagons, (4)
track maintenance equipment, and (5) a modernized signaling and
communications system for installation on the mainline track
(collectively, the ``LeaseCo Assets''); and
(ii) The services of OpCo in effectively arranging leases of the
LeaseCo Assets to UBTZ and to other rail shippers and operators in
Mongolia.
3. Beneficiaries
The upgrading of the railway under the Rail Project is expected to
facilitate development in both the project impact area and the nation
at large. Potential clients of the upgraded railway include shippers of
goods into and out of the area who benefit from lower transport costs
(compared, for example, to the transport costs for trucks), businesses
seeking new markets in, or goods from, the area, potential investors
assessing opportunities in the area, and shippers from other regions
and countries whose goods are transiting through the area. In addition,
the Rail Project will increase the rail system's capacity to haul
minerals to markets, thus leading to more jobs in mining and cargo-
handling. The overall direct effect on employment is expected to be
approximately 21,000 additional jobs created over 20 years. Of these,
5,300 jobs are expected to be at the low-or unskilled level, and over
2,600 are targeted for the poor. More broadly, over 20 years,
approximately 2,395,000 people are expected to benefit from increased
economic activity attributable to the railway investment.
4. Donor Coordination
The Rail Project builds upon the work of other donors to Mongolia.
For instance, both the World Bank and the ADB have supported the
Government in developing a comprehensive transport strategy. In
addition, the International Finance Corporation recently completed a
project to strengthen the regulatory structure for leasing in Mongolia
while the European Bank for Reconstruction and Development assisted the
Government with planning various developments in the transport sector.
While no donor is currently working directly in the rail sector, during
the implementation of the Rail Project, further collaboration with
other donors is expected.
5. USAID
USAID currently does not focus specifically on the rail sector in
Mongolia. However, the Government expects to work with USAID, as
appropriate, to identify potential opportunities for coordination with
respect to the Rail Project.
6. Sustainability
In order for the Rail Project to be sustainable, the Government
will undertake certain policy, legal and regulatory reforms affecting
the rail sector as further outlined in paragraph 7 below. In addition,
to ensure the environmental and social sustainability of the Rail
Project, the Government will cause MCA-Mongolia to engage in on-going
public consultations in which various stakeholders in the Rail Project,
including women and other vulnerable groups, are given the opportunity
to participate during the development and implementation of the Rail
Project. Finally, in light of the possible negative direct, induced,
and transboundary impacts of the Rail Project (including: anticipated
increases in extractive industries; illegal timber extraction
originating from northern Mongolia and eastern Russia; and illegal
trafficking in persons), the completion of an environmental and social
impact assessment (that includes an EMP) will be a condition precedent
to certain Disbursements for the acquisition by LeaseCo of certain
equipment described in paragraph 2(c) of Part B of this Annex I of the
Compact.
7. Policy, Legal, Regulatory and Other Reforms; Covenants
(a) The implementation by the Government of the following policy,
legal, regulatory and other reforms described below, satisfactory to
MCC, shall be conditions precedent to certain Disbursements:
(i) UBTZ shall commit to undertake continued track, bridge and
culvert maintenance as well as annual track upgrades to R65 rails for
approximately 35 km of track for each of 2007 and 2008 and
approximately 50 km of track annually thereafter during the Compact
Term, and UBTZ shall deliver to MCA-Mongolia annual reports on such
maintenance and upgrades;
(ii) UBTZ shall commit to making progress towards bringing its
financial systems, books and records in line with IAS and to having its
financial statements audited at certain intervals as agreed by the
Parties during the Compact Term by a qualified international auditing
firm in accordance with IAS; and
(iii) UBTZ shall commit to lease newly acquired rail equipment from
LeaseCo, to allow LeaseCo to lease such equipment to both UBTZ and
other shippers at fair market rates, and to
[[Page 61393]]
allow such equipment to operate on UBTZ's tracks.
(b) The Government shall ensure that all revenues received by
LeaseCo (above a threshold amount agreed by the Parties) which are
generated through use of the LeaseCo Assets shall, during the period of
the Compact, be used solely for (i) maintenance and repair of the
LeaseCo Assets, (ii) acquisition, maintenance and repair of additional
rail-related assets from time to time, based on a sustainable LeaseCo
business plan approved by MCC and (iii) other uses for which MCC has
provided prior written approval.
(c) The Government shall ensure that neither the LeaseCo Assets nor
revenues generated thereby or assets purchased therewith are provided
directly or indirectly to UBTZ or any other Government entity other
than on arms-length, commercial terms approved by MCC.
(d) The Government shall ensure that LeaseCo is not privatized and
does not dispose of the LeaseCo Assets nor revenues generated thereby
or assets purchased therewith during the Compact period, either in
whole or in part, without MCC's prior written approval of the terms and
conditions of such privatization or disposal.
(e) The parties agree that LeaseCo is being created in order to
contribute to the emergence of a commercially operated, competitive,
and efficient rail system in Mongolia, and MCC relies on the
Government's assurances that it intends to continue LeaseCo's
operations beyond the Compact term, in accordance with the objectives
and operating principles applicable to LeaseCo during the Compact term.
C. Property Rights Project
1. Background
A steady stream of poor rural Mongolians are abandoning traditional
nomadic herding practices and migrating to the cities in search of
better lives. The bulk of these migrants are moving to Mongolia's three
biggest cities--Ulaanbaatar, Erdenet and Darkhan--where they either
settle in suburban ``ger areas'' or peri-urban rangeland areas.
Mongolian law gives ger area residents the right to obtain ownership to
the land upon which they live. However, the complexity and expense of
the ownership process make it difficult for these people to become
owners in fact and thus capture the full benefits of ownership. In
peri-urban rangelands, Mongolia's tradition of open access pasture use,
combined with the influx of migrants' herds, has led to overgrazing and
triggered interest in new land-use regimes that will encourage
investment, improved land use, and higher agricultural productivity.
The Property Rights Project is expected to improve the accuracy and
accessibility of the formal system for recognizing and transferring
land rights and for issuing fully marketable private land titles to ger
area residents. In addition, the Property Rights Project will introduce
a system of leasing peri-urban rangelands to herder groups in lieu of
open access, and provide key infrastructure and training so that they
can improve livestock management, productivity and, ultimately, farm
income.
2. Project
The Property Rights Project consists of the following activities
(each, a ``Project Activity''):
(a) Improvement of the Land Privatization and Registration System
Activity.
MCC Funding will be used to improve the formal system of
privatizing and registering land rights. Specifically, MCC Funding will
support:
(i) A commission of stakeholders and technical experts to study the
obstacles that affect the ability of Mongolian citizens to privatize
and register land efficiently and cost-effectively, to make
recommendations on how to reduce such obstacles, and to work with
Government agencies, the State Great Khural (Parliament), and non-
government specialists and interest groups to substantially implement
the recommendations;
(ii) Upgrade of the geospatial infrastructure necessary for
accurate land parcel mapping, including provision of Continually
Operating Reference Stations (CORS), supply of Global Positioning
System (GPS) equipment to regional land offices, and training on the
use of each;
(iii) Capacity building for land offices, including creation and
support of land market specialist positions to help citizens resolve
issues related to land privatization and registration, and training of
land office staff in land law, land mapping, use of satellite imagery,
and processing of applications for privatization of ger area land
plots;
(iv) Upgrade of the State Registry's central office space,
information technology platform and business processes, establishment
of offices in at least four districts of Ulaanbaatar, and similar
upgrades of State Registry offices in eight regional centers around the
country; and
(v) Identification and management of environmental, social, health
and safety impacts associated with implementation of this Project
Activity, consistent with section 2.6(c) of the Compact and the World
Bank's Operational Policy on Involuntary Resettlement (OP 4.12).
(b) Privatization & Registration of Ger Area Land Plots Activity.
MCC Funding will be used to privatize and register approximately
75,000 land plots in the ger areas of Ulaanbaatar and eight regional
centers. Specifically, MCC Funding will support:
(i) Provision of fully privatized and registered ownership rights
to the land plots of low and middle income households;
(ii) Identification of main utility corridors;
(iii) Mapping of public land areas (parks, schools, public
buildings, etc.) within the ger areas; and
(iv) Identification and management of environmental, social, health
and safety impacts associated with implementation of this Project
Activity, consistent with Section 2.6(c) of the Compact and the World
Bank's Operational Policy on Involuntary Resettlement (OP 4.12).
(c) Peri-Urban Land Leasing Activity.
MCC Funding will be used to identify and lease approximately 300
serviced tracts of rangeland to herder groups in the peri-urban areas
of Darkhan, Erdenet, and Ulaanbaatar. Specifically MCC Funding will
support:
(i) Production of maps for each peri-urban area showing the
location of herders, the lands they use, and identifying suitable
leasing sites;
(ii) Installation of wells and supplying of materials for
construction of fences and animal shelters on the suitable leasing
sites;
(iii) Selection of herder groups to receive leases to the tracts of
rangeland (including wells, fences and animal shelters) through a
public, transparent and fair process. These herder groups will sign
lease contracts that include a requirement to make land use payments
covering the private good component of the well, fence and animal
shelter investment;
(iv) Training of herder groups to improve their skills in range
management, herd productivity, and business and marketing, including
stock density management, monitoring rangeland carrying capacity, well
operation and maintenance, capturing precipitation run-off, fodder/feed
storage techniques, and business and marketing plans. Also, local land
and agricultural officials will receive training on their related
responsibilities; and
(v) Identification and management of environmental, social, health
and safety impacts associated with the implementation of this Project
Activity,
[[Page 61394]]
consistent with section 2.6(c) of the Compact and the World Bank's
Operational Policy on Involuntary Resettlement (OP 4.12).
3. Beneficiaries
Approximately 75,000 households are expected to gain marketable
title to their land plots in ger areas as a result of the Property
Rights Project. People who are able to use a more accurate and user-
friendly registration system to document property purchases, sales and
other economic transactions will benefit as well. Similarly, since
banks will have better information about prospective borrowers,
commercial lending should increase and borrowing costs should decrease.
Some 300 herder groups (representing approximately 1,000 households)
are expected to lease peri-urban rangelands, engage in better livestock
production practices, and subsequently increase their incomes.
4. Donor Coordination
The Property Rights Project builds upon a variety of other donor's
efforts. Most notably, the Property Rights Project makes use of the
results of ADB's ``Cadastral Survey and Land Registration Project''
that has mapped many land parcels slated for privatization and
currently is developing a land information system to which the State
Registry will supply information on legal rights to land. Moreover, the
design of the Peri-Urban Land Leasing Activity is informed by, among
others, past efforts of the United Nations Development Programme and
the World Bank, and complements an ongoing project being implemented by
the Government, the Japan International Cooperation Agency and the Food
and Agriculture Organization to improve efficiencies in the dairy
system.
5. USAID
The Property Rights Project has drawn heavily from the experience
of USAID's ``GER Initiative'' that is implementing a variety of
economic development efforts in the ger areas of Mongolia's cities. In
addition, lessons learned from USAID's ``Gobi Initiative,'' focused on
enterprise development and improved incomes of families in and around
the Gobi region, will inform the final design of the Peri-Urban Land
Leasing Activity. Furthermore, the Government expects to work with
USAID as appropriate to identify potential opportunities for
coordination with respect to the Property Rights Project.
6. Sustainability
As conditions precedent to certain Disbursements, the Government
will be required to provide additional office space, and additional
office sites, to the State Registry. The upgraded State Registry is
expected to generate increased revenues to be used to support itself. A
plan to ensure the sustainability of the State Registry will be
produced and implemented so that Mongolia will have a secure system for
recognizing and protecting real property rights over the long term. In
addition, the various institutional reforms that the Property Rights
Project should facilitate will make future privatizations easier.
Regarding the Peri-Urban Land Leasing Activity, annual land lease
payments to the Government are expected to support improved land
management, extension and other services needed by the herder groups,
and plans will be developed for management and maintenance of wells and
other rangeland infrastructure supplied by the Property Rights Project.
Related Disbursements will depend upon the prior development, with
relevant stakeholder input, of selection criteria for herder groups
that are eligible for leases under the Peri-Urban Land Leasing
Activity.
In order to ensure the environmental and social sustainability of
the Property Rights Project as a whole, MCA-Mongolia will engage in
regular public consultations through which various stakeholders
(including women and other vulnerable groups) will have the opportunity
to participate in the development and implementation of the Property
Rights Project. In addition, a framework environmental assessment (that
includes a social assessment) and an EMP will be completed prior to the
commencement of (a) any upgrade of the various offices under the
Improvement of the Land Privatization and Registration System Activity
and (b) any construction activity under the Peri-Urban Land Leasing
Activity.
D. Vocational Education Project
1. Background
Mongolia's vocational education system has not evolved to serve the
demands of a modern, private-sector led economy. The capacity of this
system to teach core technical skills and provide critical labor
information is weak, training equipment is limited and outdated, and
instructors ill-prepared to teach. Essential public-private
partnerships to ensure that students receive high quality, demand-
driven training are largely absent, and credentialing systems are
substandard. As a result, Mongolia imports skilled labor from other
markets, leaving high rates of unemployment among unskilled Mongolians,
especially youth. The Vocational Education Project is designed to
address this problem, specifically seeking to increase the wages of
poor Mongolians by improving their technical skills and productivity to
meet labor market demand in key industries (including, among others,
construction, mining, electronics, mechanics, and transport). This will
be done by (a) strengthening the institutional framework needed to
support a demand-driven vocational education system, (b) defining
industry-led skills training standards for occupations and translate
these standards into a modern vocational education curricula supported
by new instructional materials and equipment, (c) developing 30 new
career preparation tracks, and (d) improving teacher training and
professional development.
2. Activities
The Vocational Education Project consists of the following
activities (each, a ``Project Activity''):
(a) Reforms to TVET Policy and Operational Framework Activity.
MCC Funding will be used to strengthen the policy and operational
framework, to create an efficient governance and standard-setting
mechanism, and to secure private sector participation for technical and
vocational education and training (``TVET''). Specifically, MCC Funding
will support:
(i) Legal and regulatory reforms that will create and allow the
implementation of demand-driven TVET; and
(ii) Establishment and support of the National Advisory Board for
Vocational Education and Training (``NABVET'') to enable it to respond
to labor market needs, to rationalize public funding, to set standards,
and to coordinate quality assurance processes and formal course
accreditation.
(b) Creation of Skills Standards and Competencies System Activity.
MCC Funding will be used to establish skills standards and a
competency-based qualification training system based on nationally
approved units of competency, modules and courses, and to install these
innovations in training institutes. Specifically, MCC Funding will
support:
(i) Establishment of national TVET standards for short-term and
long-term career training fields;
(ii) Development of new, modern, curricula, courses, and
instructional materials for short-term and long-term career training
fields;
(iii) Development of an assessment and credentialing system to
support the
[[Page 61395]]
new standards and modernized TVET system;
(iv) Improvement of the capacity of regional and national
methodology centers to create and distribute materials and training
resources to instructors in all types of TVET institutes; and
(v) Strengthening the linkage between in-service and pre-service
vocational-technical teacher training programs and improving the
sustainability of the TVET teacher training system.
(c) Competency-Based Training System Activity.
MCC Funding will be used to implement the new competency-based
training system in TVET schools. Specifically, MCC Funding will
support:
(i) Extension of training to approximately 1,500 vocational
teachers and administrators in Mongolia's approximately 75 training
centers (consisting of approximately 35 Vocational Training and
Production Centers under the Ministry of Education, Culture and Science
and approximately 40 work development centers under the Ministry of
Social Welfare and Labour);
(ii) Provision of equipment and materials needed to deliver the new
curriculum being developed for short-term and long-term career training
fields as part of the Creation of Skills Standards and Competencies
System Activity; and
(iii) Identification and management of environmental, social,
health and safety impacts associated with the implementation of this
activity, consistent with Section 2.6(c) of the Compact and the World
Bank's Operational Policy on Involuntary Resettlement (OP 4.12).
(d) Career Guidance System Activity.
MCC Funding will be used to provide career guidance and employment
information services to Mongolians. Specifically, MCC Funding will
support:
(i) Installation of employment information services in eight
regional methodological centers; and
(ii) Establishment of a career guidance service and web-based
career information system.
3. Beneficiaries
The TVET Project is expected to almost double the enrollment of
long-term students in approximately 35 training centers from the
current enrollment of approximately 24,700 students to more than 40,000
students. Enrollment in short-term training courses is also expected to
significantly increase. The Vocational Education Project is expected to
improve the quality of, and to expand access to, TVET. Over the next 20
years, the TVET Project is expected to improve the wage and employment
prospects of approximately 170,000 TVET graduates. For these graduates,
improved training is anticipated to lead to a starting wage on average
5 percent greater than current starting wages.
4. Donor Coordination; Role of Private Sector and Civil Society
The project will be implemented in coordination with several on-
going projects by other donors, including ADB's ``Third Education
Development Project'' that seeks, among others, to reform the TVET
system, a project funded by the Japan Fund for Poverty Reduction for
the promotion of non-formal construction worker skills training for
vunerable youth and poor adults, Gesellschaft f[uuml]r Technische
Zusammenarbeit's ``Urban Development, Construction Sector and VET
Promotion Program,'' as well as its projects on small and medium
enterprises promotion.
5. USAID
Currently USAID does not fund projects addressed at reforming the
vocational education system. However, the Government will seek future
opportunities to collaborate with USAID on vocational education system
issues if such funding is made available.
6. Sustainability
To ensure the sustainability of the Vocational Education Project,
the Parties have agreed to the policy, legal and regulatory reforms
outlined in paragraph 7 below, which are expected to improve TVET
institutes' income-generating capacity which, in turn, is expected to
lead to increased funding support for TVET institutes. To ensure the
environmental and social sustainability of the Vocational Education
Project as a whole, the Government shall cause MCA-Mongolia to engage
in on-going public consultations with various stakeholders (including
women and other vulnerable groups) to participate in the development
and implementation of the Vocational Education Project. In addition,
MCA-Mongolia will be required to develop a framework EMP, including
health and safety guidelines for use in the TVET institutes in the
program.
7. Policy, Legal and Regulatory Reforms
(a) Prior to Disbursements for any activity other than the four (4)
sub-activities listed below, MCA-Mongolia has developed, satisfactory
to MCC, a legal and policy framework to support a modern, labor market
driven TVET system, including:
(i) Establishment of NABVET, with half of the members representing,
and selected by, the private and non-governmental sectors, and with the
other half of the members representing the public sector, as appointed
by applicable law;
(ii) Fostering revenue generation and entrepreneurial capacities
through, for example, the sale of products and services provided by
vocational education institutes;
(iii) Harmonizing all public funding for the TVET sector; and
(iv) Passage of legislation to maintain or increase the level of
funding for the TVET sector as of the date the Compact is signed each
year during the Compact period.
(b) The Government shall ensure that no TVET institution benefiting
from MCC Funding is privatized during the Compact term, either in whole
or in part, without MCC's prior written approval of the terms and
conditions of such privatization.
E. Health Project
1. Background
Mongolia has rapidly increasing rates of NCDIs, including
cardiovascular disease, diabetes, cancers and injury-induced trauma.
Mongolia's mortality and morbidity rates from cardiovascular disease
and cancers greatly exceed those of Western countries and now represent
the major cause of death and disability, particularly in younger age
groups (i.e., 35 to 55 years of age). Trauma response and emergency
medicine are under-developed. At the same time, current NCDI programs
in Mongolia are treatment based, with inadequate attention to cost-
effective NCDI prevention, early detection, where relevant, and disease
management. This has a negative impact on the productivity of the labor
force, which is disproportionately affected by NCDIs, and is a
significant drain on scarce public health investments. The Health
Project focuses on extending the productive years and productivity of
the labor force by reducing the incidence and severity of NCDIs such as
cancer, cardiovascular disease, diabetes and preventable accidents and
trauma, and reducing and refocusing total health expenditure.
2. Project
The Health Project consists of the following activities (each, a
``Project Activity''):
(a) NCDI Capacity Building Activity.
MCC Funding will be used to ensure that the program is built on
best
[[Page 61396]]
international experience with NCDI. Specifically, MCC Funding will
support:
(i) Establishment of senior NCDI advisory boards and expert panels;
(ii) Assessment of current NCDI practices, personnel, equipment and
supplies, and review of relevant protocols, guidelines, and job
descriptions for NCDI detection, management and treatment;
(iii) Competitive selection of the aimags and districts where the
Health Project will be initially implemented;
(iv) Provision of two mammography machines, vehicles and other NCDI
equipment and supplies;
(v) Testing the impact of the Health Project using total quality
assurance practices; and
(vi) Finalization of baseline data and indicators for monitoring
and evaluation of the Health Project.
(b) NCDI Prevention Activity.
MCC Funding will be used to reduce factors for NCDIs through such
behavior change communications as public awareness campaigns and
education outreach. Specifically, MCC Funding will support:
(i) Development of national and regional NCDI communications
campaigns, such as mass media, health fairs, work sites and mobile
units promoting healthy lifestyles; and
(ii) Development and implementation of interventions to promote
behavior change among youth and high risk individuals to prevent NCDIs.
(c) NCDI Early Detection Activity.
MCC Funding will be used to mobilize client demand for screening,
introduce modern cost-effective procedures, and provide key equipment.
Specifically, MCC Funding will support:
(i) Implementation of new NCDI screening procedures in selected
sites;
(ii) Improvement of cervical cancer screening methodologies;
(iii) Operations research on feasibility of cervical cancer
immunization;
(iv) Improvement of breast cancer detection methodologies; and
(v) Identification and management of environmental, social, health,
and safety impacts associated with the implementation of this activity,
consistent with section 2.6(c) of the Compact and the World Bank's
Operational Policy on Involuntary Resettlement (OP 4.12).
(d) NCDI Management Activity.
MCC Funding will be used to improve the protocols and update
training for medical professionals. Specifically, MCC Funding will
support:
(i) Development of community-based disease management program and
systems; and
(ii) Implementation of new NCDI management services in selected
sites.
3. Beneficiaries
The Health Project targets approximately 60 percent of the
Mongolian adult population for community-level communications for
behavioral change, early detection and disease management activities.
This will lead to extended productive years and productivity of the
labor force and decreased health expenditures by households on NCDIs in
the target population. In addition, the entire population is expected
to benefit from changes in school curriculum and mass education
campaigns. Specifically, the beneficiaries are expected to include
approximately 43 to 45 percent of the adult population nationwide who
will have increased access to early detection of hypertension, elevated
cardiovascular disease risks, and diabetes risks. Other beneficiaries
include the approximately 60 percent of adult women who will have
access to early detection of breast and cervical cancer, healthcare
professionals in selected counties and districts who will receive
specially-designed NCDI training, and secondary school students who
will be made aware of health-promoting choices early in life.
4. Donor Coordination; Role of Private Sector and Civil Society
The Health Project will complement the activities of other donors
in the health sector, including ADB, Japanese International Corps of
Welfare Services and the World Health Organization (``WHO'') that, once
having focused on child health and communicable diseases in the past,
are increasingly including general support for NCDIs in their programs.
Specifically, the Health Project will build upon WHO's laboratory
specimen transport system and ADB's physician training, as well as the
University of Toronto's research on cervical cancer diagnosis.
While the majority of care within Mongolia for chronic NCDIs
(including cancers and cardiovascular diseases) takes place in the
public sector, the nascent private sector for health care is growing.
For this reason, consultations have taken place with a private hospital
association and various physician groups in the design of the Health
Project. Civil society's role is expected to be vital as community-
level mobilization and motivation for behavioral changes are explored
and implemented under the Health Project.
5. USAID
Currently USAID does not fund any health-related projects in
Mongolia. However, the Government will seek future opportunities to
collaborate with USAID on NCDI issues if health funding is made
available.
6. Sustainability
In order to enhance sustainability, the Health Project includes the
NCDI Capacity Building Activity from its start-up phase. Since changing
attitudes and practices of health providers and managers is a critical
component to the Health Project's success, the NCDI Capacity Building
Activity is expected to build conviction among the Mongolian medical
practitioners and clients of the effectiveness of the new interventions
under the Health Project. The Health Project initiates preventive and
promotive health services requiring additional funding and recurrent
costs (including funding for client medications and procedures for the
very poor). The Government will commit to financing these additional
costs as further described in paragraph 7 below.
In order to ensure the environmental and social sustainability of
the Health Project as a whole, the Government will cause MCA-Mongolia
to engage in on-going public consultations in which various
stakeholders in the Health Project (including women and other
vulnerable groups) are given the opportunity to participate during the
implementation of the Health Project. In addition, during the
development and implementation of the Health Project, a plan for safe
and proper use of diagnostic equipment will be developed and used. A
framework EMP will be developed for addressing health and safety issues
and for assessing compliance with existing waste management regulations
in all project related services and facilities. The EMP will include
procedures for support of remedial actions to insure compliance with
the MCC Environmental Guidelines, environmental regulations and access
needs for all potential beneficiaries.
7. Policy, Legal and Regulatory Reforms
The implementation by the Government of the policy, legal and
regulatory reforms described below, satisfactory to MCC, shall be
conditions precedent to certain Disbursements.
(a) The Government shall have committed to funding the recurrent
costs of the NCDI program following the expiration of the Compact Term.
(b) The Government shall have committed to taking necessary steps
to ensure that the recurrent costs for screening and disease management
activities for low-income people are covered by the Government
following the expiration of the Compact Term.
[[Page 61397]]
F. Implementation
The implementation framework and the plan for ensuring adequate
governance, oversight, management, monitoring and evaluation and fiscal
accountability for the use of MCC Funding is summarized below. MCC and
the Government shall enter into the Program Implementation Agreement,
and any other agreements in furtherance of this Compact, all of which,
together with this Compact, shall set out certain rights,
responsibilities, duties and other terms relating to the implementation
of the Program.
1. MCC
MCC shall take all appropriate actions to carry out each of its
responsibilities in connection with this Compact and the Program
Implementation Agreement, including the exercise of its approval rights
in connection with the implementation of this Compact and the Program.
2. Governance
(a) Establishment of MCA-Mongolia. Under this Compact, the
Government hereby establishes an independent legal entity empowered to
carry out the Government's obligations and to implement the Program
under this Compact and the Program Implementation Agreement (``MCA-
Mongolia''). The Government shall ensure that MCA-Mongolia take all
appropriate actions to implement the Program, including the performance
of the rights and responsibilities designated to it by the Government
pursuant to this Compact and the Program Implementation Agreement. In
addition, operations of MCA-Mongolia shall be subject to any other
limitations MCC may require from time to time.
(i) Board of Directors. MCA-Mongolia shall be governed by a board
of directors (the ``Board'') that will have final decision making
authority over the implementation of the Program. The Board shall
consist of:
(1) Nine voting members:
(A) Prime Minister, as chairman of the Board;
(B) Minister of Finance;
(C) Minister of Roads, Transportation and Tourism;
(D) Minister of Education, Culture and Science;
(E) Minister of Health;
(F) Minister of Construction and Urban Development;
(G) One representative selected by the private sector;
(H) Two representatives selected by civil society; and
(2) Nine non-voting members:
(A) MCC observer;
(B) MCA-Mongolia chief executive officer;
(C) MCA-Mongolia general counsel;
(D) State Secretary from Ministry of Social Welfare and Labour;
(E) State Secretary from Ministry of Food and Agriculture;
(F) One representative selected from the private sector who will
be, after his/her term as non-voting member, the voting member from the
private sector; and
(G) Three representatives selected from civil society, of which,
one will be an environmental observer and two will become, after their
terms as non-voting members, voting members.
(ii) Technical Secretariat. A technical secretariat (the
``Technical Secretariat'') shall support the Board in the
implementation of the Program. A chief executive officer will manage
the day-to-day activities of MCA-Mongolia and will be supported by: (1)
A chief operating officer, (2) a chief financial officer, (3) a general
counsel, (4) a procurement officer, (5) an environmental and social
assessment officer, (6) a monitoring and evaluation officer, (7) a rail
project director, (8) a peri-urban rangeland director, (9) an urban
property rights director, (10) a vocational education project director,
and (11) a health director, and such other officers as may be agreed
upon by the Government and MCC. The officers shall be supported by
appropriate administrative personnel.
(iii) Ethics Disclosures. All voting members of the Board and the
officers of the Technical Secretariat set forth in clause (ii) above
shall be required to provide, in advance of assuming their respective
positions and annually at such times as are required by Mongolia's
Anti-Corruption Law, the financial and other disclosures required by
such law. This obligation shall apply whether or not such law would,
absent this provision, require such disclosure.
(b) Designation of MCA-Mongolia. The Government hereby designates
MCA-Mongolia to implement all of the Government's obligations and to
exercise all of the rights of the Government under this Compact and the
Program Implementation Agreement. The Government acknowledges that such
a designation does not relieve the Government of any of its obligations
and rights under this Compact and the Program Implementation Agreement,
for which the Government retains full responsibility.
(c) MCA-Mongolia Operations. The day-to-day operations of MCA-
Mongolia shall be governed by MCA-Mongolia's bylaws, certificate of
registration and internal regulations, which shall address, among other
things, terms and conditions of employment at MCA-Mongolia.
(d) Nature of MCA-Mongolia. The Government acknowledges that:
(i) MCA-Mongolia is neither a Mongolian ``government entity'' nor a
Mongolian ``non-governmental entity'' under the laws of Mongolia, and,
as such, the laws of Mongolia regulating Mongolian government and non-
governmental entities do not apply to MCA-Mongolia; and
(ii) as an independent legal entity established by the Government,
any and all obligations of MCA-Mongolia in connection with this Compact
are binding on the Government and may be carried out by the Government
in the furtherance of the Compact.
(e) Stakeholders' Committee. The Government shall ensure a
stakeholders committee (the ``Stakeholders' Committee'') is formed and
approved by MCC, to continue the consultative process throughout the
implementation of the Program by having the Stakeholders' Committee
provide recommendations to the Board and the Technical Secretariat
regarding issues, concerns and inputs arising from the implementation
of the Program. Private sector members of the Stakeholders' Committee
will be selected initially by private sector members of the National
Council, and civil society members will be selected initially by the
civil society members of the National Council.
(f) Effectiveness. This paragraph 2 of Part F of Annex I of the
Compact shall be in effect from the date of execution of this Compact
by the Parties without regard to the requirements for entry into force
provided in Section 7.3 of the Compact.
3. Banking Services, Fiscal Management and Procurement
(a) The Government shall ensure that a bank (the ``Bank'') is
appointed, and the Permitted Accounts are established and banking
services provided, in accordance with the terms of this Compact and the
Program Implementation Agreement. The Bank will provide a broad range
of banking services required by MCA-Mongolia to implement the Program.
The Government shall take all appropriate actions to ensure that the
Bank performs these services in accordance with the terms of this
Compact, the Program Implementation Agreement and any other agreements
to which the Bank is a party. The Government shall set out the roles
and responsibilities of the Bank in one or more agreements to be
[[Page 61398]]
entered into between MCA-Mongolia and the Bank.
(b) The Government shall ensure that a fiscal agent (the ``Fiscal
Agent'') is appointed in accordance with the terms of this Compact and
the Program Implementation Agreement. The Fiscal Agent will provide a
broad range of financial management services required by MCA-Mongolia
to implement the Program. The Government shall take all appropriate
actions to ensure that the Fiscal Agent performs these services in
accordance with the terms of this Compact, the Program Implementation
Agreement and any other agreements to which the Fiscal Agent is a party
and that all accounting in connection with the Program is in accordance
with IAS. The Government shall set out the roles and responsibilities
of the Fiscal Agent in one or more agreements to be entered into
between MCA-Mongolia and the Fiscal Agent.
(c) The Government shall ensure that a procurement agent (the
``Procurement Agent'') is appointed in accordance with the terms of
this Compact and the Program Implementation Agreement. The Procurement
Agent will provide specified procurement activities required by MCA-
Mongolia to implement the Program. The Government shall take all
appropriate actions to ensure that the Procurement Agent performs these
services in accordance with the terms of this Compact, the Program
Implementation Agreement and any other agreements to which the
Procurement Agent is a party and in accordance with the MCC Program
Procurement Guidelines. The Government shall set out the roles and
responsibilities of the Procurement Agent in one or more agreements to
be entered into between MCA-Mongolia and the Procurement Agent.
4. Project Implementation
Except as otherwise agreed between the Parties, the Program will be
implemented as follows:
(a) Rail Project implementation will be overseen by an outside
project management firm.
(b) For the Property Rights Project, the Improvement of the Land
Privatization and Registration System Activity and the Privatization &
Registration of Ger Area Land Plots Activity will be implemented by a
project implementation unit housed within the Ministry of Construction
and Urban Development. The Peri-Urban Land Leasing Activity will be
implemented by a project implementation unit housed within the Ministry
of Food and Agriculture.
(c) The Vocational Education Project will be implemented by a
program implementation unit housed within the Ministry of Education,
Culture and Science.
(d) The Health Project will be implemented by a program
implementation unit housed within the Ministry of Health.
(e) Each relevant project implementation unit housed within a
ministry of the Government will function in accordance with the
applicable terms of the Program Implementation Agreement. The terms and
conditions of employment, including remuneration and grounds for
renewal or dismissal, shall be according to the terms of the applicable
employment agreements and the labor policies specific to such project
implementation unit. The staff of each such project implementation unit
will be selected competitively without discrimination based on
nationality or gender.
Annex II Summary of Multi-Year Financial Plan
This Annex II to the Compact summarizes the multi-year financial
plan for the Program.
1. General
The multi-year financial plan summary below sets forth the
estimated annual contribution of MCC Funding for administration,
monitoring and evaluation, and implementation of the Program. The
Government's contribution of resources will consist of ``in-kind'' and
other contributions or amounts required to satisfy effectively the
requirements of section 2.5(a) of this Compact. In accordance with the
Program Implementation Agreement, the Government shall develop and
adopt, on a quarterly basis, a detailed financial plan, approved by
MCC, setting forth annual and quarterly funding requirements for the
Program, projected both on a commitment and cash requirement basis.
2. Modifications
To preserve flexibility, the Parties may by written agreement (or
as otherwise provided in the Program Implementation Agreement), without
amending this Compact, change the designations and allocations of funds
among the Projects, the Project Activities, or any component under
Program administration or monitoring and evaluation, or between a
Project identified as of entry into force of the Compact and a new
project; provided, however, that any such change (a) is consistent with
the Compact Goal, and Project Objectives, and the Program
Implementation Agreement, (b) does not materially adversely affect the
applicable Project or any component under Program administration or
monitoring and evaluation, (c) does not cause the amount of MCC Funding
to exceed the aggregate amount specified in Section 2.1 of this
Compact, and (d) does not cause the Government's obligations or
responsibilities or overall contribution of resources to be less than
specified in section 2.5(a) of this Compact.
[[Page 61399]]
Multi-Year Financial Plan Summary
--------------------------------------------------------------------------------------------------------------------------------------------------------
Project CIF Year 1 Year 2 Year 3 Year 4 Year 5 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Rail Project:
(a) Rail Sector Technical Assistance Activity............ 0 7,913,500 4,444,500 2,920,000 2,770,000 1,970,000 20,018,000
(b) LeaseCo Establishment Activity....................... 0 1,010,000 280,000 280,000 290,000 0 1,860,000
(c) LeaseCo Operation Activity........................... 0 16,500,000 38,720,000 48,420,000 57,820,000 810,000 162,270,000
(d) Project Administration Costs (RPM)................... 0 634,500 1,057,500 1,057,500 1,057,500 423,000 4,230,000
------------------------------------------------------------------------------------------
Subtotal................................................. 0 26,058,000 44,502,000 52,677,500 61,937,500 3,203,000 188,378,000
2. Property Rights Project:
(a) Land Registration System Activity.................... 0 1,325,375 4,746,458 3,812,250 2,592,430 223,100 12,699,613
(b) Privatization of Ger Area Land Plots Activity........ 0 201,250 682,813 625,313 510,314 510,314 2,530,004
(c) Peri-Urban Land Leasing Activity..................... 0 1,092,500 2,406,375 2,285,625 43,125 43,125 5,870,750
(d) Project Administration Costs......................... 172,200 374,100 341,436 352,651 364,259 357,273 1,961,919
------------------------------------------------------------------------------------------
Subtotal................................................. 172,200 2,993,225 8,177,082 7,075,839 3,510,128 1,133,812 23,062,286
3. Vocational Education Project:
(a) TVET National Framework Activity..................... 100,000 200,000 200,000 0 0 0 500,000
(b) Industry-Led Skills Standards System Activity........ 0 500,000 2,500,000 3,000,000 2,000,000 200,000 8,200,000
(c) Competency-Based Training System Activity............ 0 800,000 5,000,000 5,000,000 3,000,000 500,000 14,300,000
(d) Career Guidance System Activity...................... 0 250,000 300,000 100,000 100,000 100,000 850,000
(e) Project Administration Costs......................... 126,600 343,800 286,998 296,518 306,371 302,569 1,662,856
------------------------------------------------------------------------------------------
Subtotal................................................. 226,600 2,093,800 8,286,998 8,396,518 5,406,371 1,102,569 25,512,856
4. Health Project:
(a) NCDI Capacity Building Activity...................... 75,000 325,000 1,900,000 2,300,000 1,000,000 997,000 6,597,000
(b) NCDI Prevention Activity............................. 0 400,000 800,000 1,100,000 1,200,000 1,090,000 4,590,000
(c) NCDI Early Detection Activity........................ 0 500,000 600,000 700,375 258,000 250,000 2,308,375
(d) NCDI Management Activity............................. 0 800,000 900,000 250,000 250,000 173,000 2,373,000
(e) Project Administration Costs......................... 111,500 216,000 201,300 207,821 214,569 207,554 1,158,744
------------------------------------------------------------------------------------------
Subtotal................................................. 186,500 2,241,000 4,401,300 4,558,196 2,922,569 2,717,554 17,027,119
5. Monitoring and Evaluation:
Monitoring and Evaluation................................ 40,250 562,350 471,500 469,200 385,250 2,768,050 4,696,600
------------------------------------------------------------------------------------------
Subtotal................................................. 40,250 562,350 471,500 469,200 385,250 2,768,050 4,696,600
6. Program Administration and Audits:
(a) Program Administration (MCA-M)....................... 741,133 1,677,533 1,265,720 1,185,579 1,056,132 1,063,405 6,989,502
(b) Fiscal Agent......................................... 1,800,000 1,340,000 1,340,000 1,340,000 1,340,000 1,340,000 8,500,000
(c) Procurement Agent.................................... 1,700,000 1,300,000 1,300,000 1,200,000 1,000,000 1,000,000 7,500,000
(d) Audit................................................ 156,000 234,000 350,000 350,000 350,000 390,000 1,830,000
(e) Environment & Social Oversight Consultant............ 0 620,000 350,000 245,000 100,000 100,000 1,415,000
------------------------------------------------------------------------------------------
Subtotal............................................. 4,397,133 5,171,533 4,605,720 4,320,579 3,846,132 3,893,405 26,234,502
==========================================================================================
Total Estimated MCC Contribution................. 5,022,683 39,119,908 70,444,600 77,497,832 78,007,950 14,818,390 284,911,363
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 61400]]
Annex III Summary of Monitoring and Evaluation Plan
This Annex III to the Compact summarizes the components of the plan
to measure and evaluate progress toward achievement of the Compact Goal
and the Project Objectives (``M&E Plan'').
1. Overview
MCC and the Government shall formulate and agree to, and the
Government shall implement or cause to be implemented, the M&E Plan
that specifies (a) how progress toward the Compact Goal, Project
Objectives and the intermediate results of each Project and Project
Activity set forth in this Annex III ( ``Outcomes'') will be monitored
(``Monitoring Component''), (b) a methodology, process and timeline for
the evaluation of planned, ongoing, or completed Projects and Project
Activities to determine their efficiency, effectiveness, impact and
sustainability (``Evaluation Component'') and (c) other components of
the M&E Plan described below.
Information regarding the Program's performance, including the M&E
Plan, and any amendments or modifications thereto, as well as
periodically generated reports, shall be made publicly available on
MCA-Mongolia's Web site and elsewhere. The Compact Goal, Project
Objectives and Outcomes can be summarized as follows:
[GRAPHIC] [TIFF OMITTED] TN30OC07.000
2. Monitoring Component
To monitor the progress toward the achievement of the Compact Goal,
Project Objectives and Outcomes, the Monitoring Component of the M&E
Plan shall identify (a) the Indicators, (b) the persons responsible,
the timeline, and the instrument for collecting data and reporting on
each Indicator to MCA-Mongolia, and (c) the method by which the
reported data will be validated.
(a) Indicators. The M&E Plan shall measure the impacts of the
Program using objective and reliable information (``Indicators''). Each
Indicator shall have one or more expected values that specify the
expected results and time for the impacts to be achieved (``Target'').
The M&E Plan shall measure and report on Indicators at four levels.
First, the Indicators at the Compact Goal level (``Goal Indicator'')
shall measure the impact of the overall Program and each Project.
Second, the Indicators at the Project Objectives level (``Objective
Indicator'') shall measure the final results of each of the Projects,
including impacts on the intended beneficiaries identified in Annex I
(collectively, the ``Beneficiaries''). Third, Indicators at the
intermediate level (``Outcome Indicator'') shall measure the results
achieved under each of the Project Activities and will provide an early
measure of the likely impact under each of the Projects. A fourth level
of Indicators (``Output Indicator'') shall be included in the M&E Plan
to measure the direct outputs of Project Activities. Indicators shall
be disaggregated by sex, income level and age, to the extent
practicable. Subject to prior written approval from MCC, MCA-Mongolia
may add Indicators or modify the Targets of existing Indicators.
Goal Indicators
----------------------------------------------------------------------------------------------------------------
Indicator Baseline Year 5 target Year 10 target
----------------------------------------------------------------------------------------------------------------
Increase in GDP due to US$3.19 billion........... US$4.63 billion........... US$5.97 billion.
Program \3\.
[[Page 61401]]
Poverty Headcount \4\....... 19.1%..................... 18.4%..................... 17.5%.
----------------------------------------------------------------------------------------------------------------
Indicators.--Rail Project
----------------------------------------------------------------------------------------------------------------
Definition of
Objective-level result Objective indicator indicator Baseline Year 5 target
----------------------------------------------------------------------------------------------------------------
Creation of new jobs and increased Increase in GDP due Incremental level of 0 62
firm profitability. to rail GDP due to
improvements. transport cost
savings (2007 US$
millions) \5\.
----------------------------------------------------------------------------------------------------------------
Increased economic activity via Freight turnover Freight mass 9,219 22,301
rail network. (million ton-km). multiplied by
distance
transported,
includes shipping
by all rail
operators in
Mongolia \6\.
Mine traffic Domestic plus export 6,684 16,156
(thousand metric traffic of coal and
tons). other minerals.
----------------------------------------------------------------------------------------------------------------
Outcome-level result Outcome indicator Definition of Baseline Year 5 target
indicator
----------------------------------------------------------------------------------------------------------------
Private sector involvement in the Percent of wagons Percent of MCC 0 10%
rail sector. leased by private financed wagons
firms. leased by private
firms.
Increased shipping efficiency..... Railway operating Operating Expense / 95 87
ratio. Operating Revenue.
Customer Customer TBD TBD
satisfaction. satisfaction as
determined by
survey of rail
customers \7\.
Wagon time to Number of days from 5.2 5.0
destination (days). the time a wagon
starts loading
until the time it
starts loading
again. This is a
monthly average of
all operating and
operable wagons in
the fleet.
----------------------------------------------------------------------------------------------------------------
Increased capacity................ Average locomotive Numerator: 50 76
availability (%). Locomotives at rail
operator's disposal
minus locomotives
in repair
Denominator:
Locomotives at rail
operator's disposal.
----------------------------------------------------------------------------------------------------------------
Indicators.--Property Rights Project
[Improvement of Land Privatization and Registration System Activity & Privatization & Registration of Ger Area
Land Plots Activity]
----------------------------------------------------------------------------------------------------------------
Definition of
Objective-level result Objective indicator indicator Baseline Year 5 target
----------------------------------------------------------------------------------------------------------------
Increased capitalization of land Immovable property Average sales price 7.28 8.23
assets. value of hashaa of hashaa plot per 2.44 2.62
plots (2007 US$/sq. square meter in
meter). Ulaanbaatar.
Average sales price
of hashaa plot per
square meter in
target communities
outside Ulaanbaatar
\8\.
Households accessing Number of hashaa 6,400 23,400
bank credit. plot owners in
Ulaanbaatar who are
using their hashaa
plots as
collateral\9\.
----------------------------------------------------------------------------------------------------------------
Output-level result Output indicator.... Definition of Baseline Year 5 target
indicator.
----------------------------------------------------------------------------------------------------------------
Increased land right formalization Hashaa plots Cumulative number of 0 75,000
directly registered hashaa plots
by the Property registered by
Rights Project. contractors of MCA-
Mongolia.
----------------------------------------------------------------------------------------------------------------
[[Page 61402]]
Indicators.--Property Rights Project
[Peri-Urban Land Leasing Activity]
----------------------------------------------------------------------------------------------------------------
Definition of
Objective-level result Objective indicator indicator Baseline Year 5 target
----------------------------------------------------------------------------------------------------------------
Increased herder household income. Income of herder Net income of herder US$4,650 US$5,330
households on long- households on long-
term lease land. term lease land
measured by total
consumption (2007
US$) \10\.
Increased peri-urban herder Herd mortality rate. Annual mortality 5.6 4.5
productivity. rate of cattle.
Liters of milk per Annual average 260 1,050
cow. liters of milk per
cow on semi-
intensive project
farms.
Annual average 260 1,950
liters of milk per
cow on intensive
project farms.
----------------------------------------------------------------------------------------------------------------
Outcome-level result Outcome indicator Definition of Baseline Year 5 target
indicator
----------------------------------------------------------------------------------------------------------------
Optimize peri-urban rangeland Number of herder Number of 0 40
carry capacity and range groups adopting settlements meeting
management. intensive farm the following
management criteria: (i) sheep
techniques. units per 100 ha of
pasture is +/-20%
of recommended
carrying capacity
for intensive farm,
(ii) livestock is
predominately
(75%+) cows, and
(iii) hay stored at
beginning of winter
season is at least
180 days of dairy
herd requirement.
Number of herder Number of 0 260
groups adopting settlements meeting
semi-intensive farm the following
management criteria: (i) sheep
techniques. units per 100 ha of
pasture is +/-20%
of recommended
carrying capacity
for semi-intensive
farm, and (ii) hay
stored at beginning
of winter season is
at least 30 days of
dairy herd
requirement.
----------------------------------------------------------------------------------------------------------------
Indicators.--Vocational Education Project
----------------------------------------------------------------------------------------------------------------
Definition of
Objective-level result Objective indicator indicator Baseline Year 5 target
----------------------------------------------------------------------------------------------------------------
Increased Income.................. Annual salary (2007 Average annual 1,237 +5%
US$). salary of employed
graduates who
completed new
curriculum one year
after graduation
(targets are
percent increase
over Year 3 level
when a new baseline
will be taken) \11\.
Increased Employment.............. Rate of employment.. Employment rate of 71% +2%
graduates who
completed new
curriculum one year
after graduation
(targets are
percent increase
over Year 3 level
when a new baseline
will be taken) \12\.
----------------------------------------------------------------------------------------------------------------
Outcome-level result Outcome indicator Definition of Baseline Year 5 target
indicator
----------------------------------------------------------------------------------------------------------------
Improved quality and relevancy of Non-governmental Percentage of non- 1% 12%
TVET system. funding of governmental
vocational funding out of all
education. funding for the
Ministry of
Education, Culture
and Science and the
Ministry of Social
Welfare and Labour
vocational
education
institutions.
Students completing Number of students 0 10,600
newly designed long- who successfully
term programs. receive
certification from
newly designed long-
term programs
(annual).
Certified vocational Percent of total 0% 80%
education teachers. teaching staff
which has
successfully
completed the
certification exam.
----------------------------------------------------------------------------------------------------------------
[[Page 61403]]
Outcome-level result Outcome indicator Definition of Baseline Year 5 target
indicator
----------------------------------------------------------------------------------------------------------------
Improved quality and relevance of Percent of active Percent of active 0% 100%
TVET system. teachers receiving teachers receiving
certification certification
training. training regardless
of pass/fail status.
----------------------------------------------------------------------------------------------------------------
Indicators.--Health Project \13\
----------------------------------------------------------------------------------------------------------------
Definition of
Objective-level result Objective indicator indicator Baseline Year 5 target
----------------------------------------------------------------------------------------------------------------
Increased control and prevention Diabetes and Percentage of people 24.4% 44.4%
of NCDIs. hypertension who, through a
controlled. combination of
diet, exercise and
medication,
successfully
control disease out
of population with
disease.
Cervical cancer Percent of women 0% 80%
prevention. diagnosed with pre-
cancerous legions
who are
appropriately
treated \14\.
----------------------------------------------------------------------------------------------------------------
Outcome-level result Outcome indicator Definition of Baseline Year 5 target
indicator
----------------------------------------------------------------------------------------------------------------
Early detection................... Percentage of cancer Percentage of 28% 48%
cases diagnosed in cervical and breast
early stages. cancer cases
diagnosed in first
or second stage.
Percent of those Numerator: Number of 43% 59%
with known those previously
diagnosis of diagnosed with
hypertension/ disease.
diabetes out of all Denominator: Number
actual cases in with disease as
adult population. determined by
biometric/
biochemical portion
of STEP Survey.
Increased access to efficient Screened for breast Number of women 35 TBD 39,000
interventions. and cervical cancer. to 40 who have ever
received a
comprehensive
preventative health
check-up including
a clinical breast
exam and visual
cervical exam \15\.
Counseling for Percent of patients 63% 95%
diabetes and diagnosed with
hypertension. elevated blood
pressure and/or
blood sugar who
receive proper
counseling \16\.
----------------------------------------------------------------------------------------------------------------
The M&E Plan will also include specific indicators demonstrating
knowledge, attitudes, and practice regarding NCDI risk factor reduction
among target demographics. These indicators will capture the Outcome of
``Increased Awareness of NCDIs.'' These indicators will be determined
before Year 2 as studies on the best intervention strategies are
concluded.
---------------------------------------------------------------------------
\3\ Measured by total annual GDP. Units are 2007 USD converted
at market rate.
\4\ Baseline is computed a 1 US$ per day poverty line assuming
total income from the 2003/03 HIES-LSMS as the welfare aggregate.
The baseline and targets may be recalibrated in consultation with
MCA-Mongolia using consumption as the welfare aggregate.
\5\ For reporting, total GDP will suffice to monitor this
indicator. Incremental GDP requires establishing a counterfactual
which would require numerous assumptions and detailed modeling; this
task may be included in the final evaluation.
\6\ As of 2007, the only rail operator was UBTZ; however, it is
possible for other rail operators to emerge in the future.
\7\ A customer satisfaction survey will be carried out under the
Compact.
\8\ Average figure of 2.44 US$/sq meter represents 4 out of 8
non-Ulaanbaatar communities; the baseline will be completed under
the Compact.
\9\ Baseline of 6,400 owners currently using their plots as
collateral will be substantiated and possibly revised during Year 1
of the Compact. If the baseline is revised, the target will be
modified proportionally.
\10\ Net of livestock-related expenses, land leasing payments,
and debt service. Baseline of US$4,650 will be substantiated and
revised if necessary during the Compact. If the baseline is revised,
the target will be modified proportionally.
\11\ Target is a weighted average for all students. Wages are
expected to increase by 9% and 3% for employed graduates of regional
methodological centers and other VTE schools respectively.
\12\ Target is a weighted average for all students. Employment
is expected to increase by 5% and 1% for graduates of regional
methodological centers and other VTE schools respectively.
\13\ All figures refer to the population within the areas
targeted by the project, 60% of the country. The M&E Plan will
disaggregate figures by breast cancer, cervical cancer,
hypertension, and diabetes for the respective indicators. The
figures presented here are the average of the two diseases (breast
with cervical cancer and hypertension with diabetes).
\14\ In 2006, there were 17 women treated for breast cancer and
113 treated for cervical cancer (113 treated). These are national
figures; the M&E Plan may choose to track figures specific to the
target regions.
\15\ The baseline for screening for breast and cervical cancer
will be determined during Year 1 of the Compact.
\16\ The figures presented here are based on successfully
controlled cases according to the STEP survey 2006. The M&E Plan may
use facility based data instead of the STEP survey in which case the
baseline will be modified to reflect the change in data source.
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(b) Data Collection and Reporting. The M&E Plan shall establish
guidelines for data collection and a reporting framework, including a
schedule of Program reporting and responsible persons. The Technical
Secretariat of
[[Page 61404]]
MCA-Mongolia shall conduct regular assessments of Program performance
to inform the Board of MCA-Mongolia and MCC of progress under the
Program and to alert them of any problems. These assessments shall
report the actual results compared to the Targets on the Indicators
referenced in the Monitoring Component, explain deviations between
these actual results and Targets, and in general, serve as a management
tool for implementation of the Program. MCA-Mongolia shall deliver any
data or reports received by MCA-Mongolia promptly to MCC along with any
other related documents, as specified in the M&E Plan or as may be
requested from time to time by MCC.
(c) Data Quality Reviews. As determined in the M&E Plan or as
otherwise requested by MCC, the quality of the data gathered through
the M&E Plan shall be reviewed to ensure that data reported are as
reliable, timely and valid as resources allow. The objective of any
data quality review shall be to verify the quality and the consistency
of performance data, across different implementation units and
reporting institutions. Such data quality reviews shall also serve to
identify where consistent levels of quality are not possible, given in-
country capacity or other constraints. MCA-Mongolia shall enter into an
agreement, in a form acceptable to MCC, with the reviewer to fulfill
the provisions set forth in paragraph 1 of this Annex III and this
clause (c).
3. Evaluation Component
The Program shall be evaluated on the extent to which the
interventions contribute to the Compact Goal. The Evaluation Component
of the M&E Plan shall contain a methodology, process and timeline for
collecting and analyzing data in order to assess planned, ongoing, or
completed Project activities to determine their efficiency,
effectiveness, impact and sustainability. The evaluations should use
state-of-the-art methods for addressing selection bias. The Government
shall implement, or cause to be implemented, surveys to collect
longitudinal data on both Beneficiary and non-Beneficiary households.
The Evaluation Component shall contain plans for Final Evaluations and
Ad Hoc Evaluations, and shall be finalized before any Disbursement for
specific Project activities or the Program.
(a) Final Evaluation. MCA-Mongolia shall engage an independent
evaluator to conduct an evaluation of the Program at the expiration or
termination of the Program (``Final Evaluation''). The evaluation
methodology, timeline, data collection, and analysis requirements shall
be finalized and detailed in the M&E Plan. The Final Evaluations shall
at a minimum (i) estimate quantitatively and in a statistically valid
way, the causal relationship between the Compact Goals (to the extent
possible), the Project Objectives and Outcomes; (ii) determine if and
analyze the reasons why the Compact Goals, Project Objectives and
Outcomes were or were not achieved; and (iii) assess the overlapping
benefits of the Projects.
(b) Ad Hoc Evaluations or Special Studies. Either MCC or MCA-
Mongolia may request ad hoc or interim evaluations or special studies
of Projects, Project Activities, or the Program as a whole prior to the
expiration of the Compact Term (each, an ``Ad Hoc Evaluation''). If
MCA-Mongolia engages an evaluator for an Ad Hoc Evaluation, the
evaluator shall be an externally contracted independent source selected
by MCA-Mongolia, subject to the prior written approval of MCC,
following a tender in accordance with the MCC Program Procurement
Guidelines, and otherwise in accordance with any relevant
Implementation Letter, the Program Implementation Agreement or any
other related agreement or arrangement. If MCA-Mongolia requires an ad
hoc independent evaluation or special study at the request of the
Government for any reason, including for the purpose of contesting an
MCC determination with respect to a Project or Project Activity or
seeking funding from other donors, no MCC Funding or MCA-Mongolia
resources may be applied to such evaluation or special study without
MCC's prior written approval.
4. Other Components of the M&E Plan
In addition to the Monitoring Components and the Evaluation
Components, the M&E Plan shall include the following components for the
Program, Projects and Project Activities, including, where appropriate,
roles and responsibilities of the relevant parties and Providers:
(a) Costs. A detailed annual budget estimate for all components of
the M&E Plan.
(b) Assumptions and Risks. Any assumptions and risks external to
the Program that underlie the accomplishment of the Project Objectives
and Outcomes; provided that such assumptions and risks will not excuse
performance of the Parties, unless otherwise expressly agreed to in
writing by the Parties.
5. Implementation of the M&E Plan
(a) Approval and Implementation. The approval and implementation of
the M&E Plan, as amended from time to time, will be in accordance with
the Annex I, this Annex III, the Program Implementation Agreement and
any other related agreement or arrangement.
(b) Stakeholders' Committee. The completed portions of the M&E Plan
shall be presented to the Stakeholders' Committee at its initial
meeting, and any amendments or modifications to and any additional
components of the M&E Plan shall be presented to the Stakeholders'
Committee at its appropriate subsequent meetings. The Stakeholders'
Committee shall have the opportunity to present its suggestions to the
M&E Plan, which the Board of MCA-Mongolia will take into consideration
in its review of any amendments to the M&E Plan during the Compact
Term.
(c) Disbursement Conditions. A condition to each Disbursement shall
be satisfactory progress on the M&E Plan for the relevant Project or
Project Activity, and substantial compliance with the M&E Plan,
including any reporting requirements. In addition, for certain
activities, collection of baseline data may be a condition precedent
for specified Disbursements.
(d) Modifications. Notwithstanding anything to the contrary
contained in this Compact, including the requirements of this Annex
III, the Parties may modify or amend the M&E Plan or any component
thereof, including those elements described herein, without amending
this Compact; provided, however, that any such modification or
amendment of the M&E Plan shall be reviewed by the Stakeholders'
Committee and has been approved by MCC in writing and is otherwise
consistent with the requirements of this Compact, the Project
Objectives, the Program Implementation Agreement and any other related
agreement or arrangement.
Annex IV Definitions
Ad Hoc Evaluation has the meaning provided in paragraph 3(b) of
Annex III.
ADB means the Asian Development Bank.
Audit Guidelines has the meaning provided in section 3.8(a).
Bank has the meaning provided in paragraph 3(a) of Part F of Annex
I.
Beneficiaries has the meaning provided in paragraph 2(a) of Annex
I.
Board has the meaning provided in paragraph 2(a)(i) of Part F of
Annex I.
Compact has the meaning provided in the Preamble.
Compact Goal has the meaning provided in section 1.1.
[[Page 61405]]
Compact Implementation Funding has the meaning provided in section
2.2(a).
Compact Records has the meaning provided in section 3.7(a).
Compact Term has the meaning provided in section 7.4.
Covered Provider has the meaning provided in section 3.7(c).
Disbursement has the meaning provided in section 2.3.
EMP means an environmental management plan.
Evaluation Component has the meaning provided in paragraph 1 of
Annex III.
Final Evaluation has the meaning provided in paragraph 3(a) of
Annex III.
Fiscal Agent has the meaning provided in paragraph 3(b) of Part F
of Annex I.
Goal Indicator has the meaning provided in paragraph 2(a) of Annex
III.
Government has the meaning provided in the Preamble.
Health Project mean the Project described in Part E of Annex I.
IAS means the standards issued by the International Accounting
Standards Board and include International Accounting Standards,
International Financial Reporting Standards and interpretations of
each.
Implementation Letter has the meaning provided in section 3.5.
Indicators has the meaning provided in paragraph 2(a) of Annex III.
Inspector General has the meaning provided in section 3.8(a).
LeaseCo has the meaning provided in paragraph 2(b) of Part B of
Annex I.
LeaseCo Assets has the meaning provided in paragraph 2(c)(i) of
Part B of Annex I.
M&E Plan has the meaning provided in Annex III.
MCA-Mongolia has the meaning provided in paragraph 2(a) of Part F
of Annex I.
MCC has the meaning provided in the Preamble.
MCC Environmental Guidelines has the meaning provided in section
2.6(c).
MCC Funding has the meaning provided in section 2.1.
MCC Indemnified Party has the meaning provided in section 6.7.
MCC Program Procurement Guidelines has the meaning provided in
section 3.6.
MCC Website has the meaning provided in section 2.6.
Monitoring Component has the meaning provided in paragraph 1 of
Annex III.
MRA has the meaning provided in paragraph 2(a) of Part B of Annex
I.
NABVET has the meaning provided in paragraph 2(a)(ii) of Part D of
Annex I.
National Council means the MCA National Council that was
established by the Government, with high-level representation from the
Government, civil society and the private sector to develop a proposal
for MCC assistance to Mongolia.
NCDI has the meaning provided in section 1.2(d).
Objective Indicator has the meaning provided in paragraph 2(a) of
Annex III.
OpCo has the meaning provided in paragraph 2(b)(iii) of Part B
Annex I.
Outcome Indicator has the meaning provided in paragraph 2(a) of
Annex III.
Outcomes has the meaning provided in paragraph 1 of Annex III.
Output Indicator has the meaning provided in paragraph 2(a) of
Annex III.
Parties has the meaning provided in the Preamble.
Permitted Account has the meaning provided in section 2.3.
Principal Representative has the meaning provided in section 4.2.
Procurement Agent has the meaning provided in paragraph 3(c) of
Part F of Annex I.
Program has the meaning provided in the Preamble.
Program Implementation Agreement has the meaning provided in
section 3.1.
Project has the meaning provided in paragraph 2 of Part A of Annex
I.
Project Activity means the various activities to be undertaken in
the implementation of particular Projects, including:
With respect to the Rail Project, the:
[cir] Rail Sector Technical Assistance Activity,
[cir] LeaseCo Establishment Activity, and
[cir] LeaseCo Operation Activity;
With respect to the Property Rights Project, the:
[cir] Improvement of the Land Privatization and Registration
System Activity,
[cir] Privatization & Registration of Ger Area Land Plots
Activity, and
[cir] Peri-Urban Land Leasing Activity;
With respect to the Vocational Education Project, the:
[cir] Reforms to TVET Policy and Operational Framework Activity,
[cir] Creation of Skills Standards and Competencies System
Activity,
[cir] Competency-Based Training System Activity, and
[cir] Career Guidance System Activity; and
With respect to the Health Project, the:
[cir] NCDI Capacity Building Activity,
[cir] NCDI Prevention Activity,
[cir] NCDI Early Detection Activity, and
[cir] NCDI Management Activity.
Project Objective has the meaning provided in section 1.2.
Property Rights Project mean the Project described in Part C of
Annex I.
Provider has the meaning provided in section 3.7(c).
Rail Project mean the Project described in Part B of Annex I.
Stakeholders' Committee has the meaning provided in paragraph 2(e)
of Part F of Annex I.
Target has the meaning provided in paragraph 2(a) of Annex III.
Taxes has the meaning provided in Section 2.7(a).
Technical Secretariat has the meaning provided in paragraph
2(a)(ii) of Part F of Annex I.
TVET has the meaning provided in paragraph 2(a) of Part D of Annex
I.
UBTZ has the meaning provided in paragraph 1 of Part B of Annex I.
Vocational Education Project mean the Project described in Part D
of Annex I.
WHO has the meaning provided in paragraph 4 of Part E of Annex I.
[FR Doc. E7-21306 Filed 10-29-07; 8:45 am]
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