Mongolia has made great strides in fostering a market economy and promoting macroeconomic stability under the Poverty Reduction and Growth Facility (PRGF) Arrangement. Executive Directors welcomed this step, and stressed the need to improve economic governance, fiscal and monetary policies, and accelerate structural reforms. They appreciated the fiscal transparency and accountability, realistic budgeting, better treasury management, and the privatization and energy sector reform. They agreed that the government's reform program merits the support of the international community, and approved the request for a three-year arrangement under the PRGF.

The sustainable development of ger areas in Ulaanbaatar, the capital of Mongolia, is one of the critical development issues facing the country. The ger areas host 60% of the population of Ulaanbaatar, and they have expanded 35 times larger than the original center of the city. Provision of basic services (e.g. heating and water supply) is very limited or non-existent in ger areas. The lack of basic public services resulted in air and water pollution as well as serious health risks to residents. The government tries to control expansion of the city, particularly ger areas, but its policy practices have been inconsistent. These inconsistent actions are, in part, a result of limited awareness and understanding by the general public, as well as by the policy makers, of the public costs of their actions. There is high susceptibility to ad-hoc behaviors that place premiums on short-term private gains over long-term value-creation in public goods. Many supporting mechanisms, including land valuation and taxation, have not yet been developed to create incentives for long-term value creation. Mongolia: Enhancing Policies and Practices for Ger Area Development in Ulaanbaatar aims at helping policy makers and citizens of Ulaanbaatar to improve their understanding of the consequences of their choices of policies and practices. Specifically, it intends to provide clear cost and benefit implications of three different development paths (central, mid-tier, and fringe gers) for seven sectors (land and housing, water supply, roads and public transport, heating, electricity, solid waste, and social services). The report is a best practice in urban planning exercise which provides useful information that can apply for other big cities.