Increasing Budget Transparency (MN0053)

Statement of public problem In Mongolia, the increasing poverty rates and diminishing economic freedoms are the adverse effects of the Covid-19 pandemic. Fiscal policy is an important poverty reduction tool. With regard to budget planning, approval, implementation and reporting, there is a need to strengthen the application of the principles of “comprehensiveness and accuracy of the budget; efficient financial and fiscal management; fiscal transparency and accountability” as prescribed by the Budget Law of Mongolia. This need for a better implementation of the law is confirmed by the delays in public investment projects which entail yearly project cost overruns and diminished public spending efficiency. In this context, the requirements to the content of budget planning documents must be strengthened. The Government template for public investment projects has been drawn only to show the nominal budget planned for the given financial year, which does not give indication of its percentage in the project’s total budget. This form of presentation interferes with the ability of law makers to verify the comformity of a project budget planning with the law. Furthermore, the initial budgets of multi-year projects are not indicated in the proposal to be approved by parliament. Meanwhile some projects experience significant cost overruns during their life cycles. Such limited information on new and existing public investment projects weakens the ability of parliament members to make informed budget decisions and prevents the public from getting accurate budget information. International Budget Partnership’s Open Budget Survey report highlighted Mongolia’s weakness in budget description. For content comprehensiveness the country scored 30 out of 100 points. Compared to international best practices, Mongolia budget allocation is not classified by economic activity, goals, programs and income sources. Article 22 of the Budget Law dictates that budgets be planned, accordingly executed, recorded and reported in line with the prescribed classification categories. A way to address the issue is the adoption of a well-formulated methodology for the publicly available budget allocation information. It is necessary to complete the work on upgrading the Glass Account Information System and its web platform in conformity with international open data standards and provide the public with systems enabling easy access, downloading and analysis of budget information. Furthermore, a cyber space should be created on the basis of the existing platforms to enable yearround discussions and comments by tax payers and the public at large.

Commitment definition The following commitments will aim at improving the transparency and accessibility of the state budget and public investment information, and increasing citizen participation in and oversight of the budget process and execution: 1. Amend the legislation towards enhancing the transparency, timeliness and comprehensiveness of the budget process information Provisions supporting the generation and dissemination of transparent, timely and comprehensive information on state budget, public investment, special funds, internatonal assistance finance and all stages of project and program implementation from their inception to closure will be introduced to the budget legislation in the course of this 4th OGP NAP. To do this, analysis of the current legal and regulatory frameworks will be undertaken and proposals developed using multi-stakeholder consultative mechanisms specially set up for the purpose. 2. Glass Account Information System update Strengthen the Glass Account information system with open data standards. The process of improving the shilendans.gov.mn website will involve evaluation and participatory consultations on its design to ensure the data systems operational coherence and orchestration for budget execution transparency. 3. Create a cyber platform where taxpayers and the public freely discuss fiscal policy topics, including state budgeting, public investment and spending, special funds and the use of the international assistance finance A discussion platform will be established on the Glass Account website for the public and taxpayers to discuss and exchange ideas on matters concerning state budget planning and spending throughout the year. Update the publicinvestment.gov.mn website by installing a project “start date” search option.

Contribution to addressing public problem The commitment will improve the transparency of public budget- and investment project-related information, and the efficiency of public spending by increasing citizen participation in and oversight of the budget process. Thus, it will have a positive impact on stregnthening overall fiscal management, and improving Mongolia’s performance and ranking measured by the Open Budget Index (the IBP) and Corruption Index.

Relevance to OGP values - Transparency and openness - Accountability - Public participation

Additional information 1.Vision -2050 Long-Term Development Policy (Part 5: Goal 5.1.20) 2. Government Action Plan 2020-2024 (Prov. 3.1.12; 4.1.8) 3. Strategic Plan and Vision for the Parliament 2019- 2024 (Strategic goal 2.2, Article 2.2.5 & 2.2.7; Strategic goal 3.1, Article 3.1.12; Strategic goal 3.2, Article 3.2.1; Strategic goal 6.1, Article 6.1.3) 4.National Anti-Corruption Program (Part 3, Articles 4.1.3.1- 4.1.3.4)

Target definition 1. Legislation amended to enforce budget cycle transparency, responsive and comprehensive information dissemination practice. 2. Glass Account Information System upgraded to comply with open data norms and standards 3. Cyber platform created as a forum for the public and taxpayers to learn and discuss state budgeting processes, public investment and spending, special funds, international development finance.

Follow-up actions 1. Amendment of the legislation, reinforcing the transparency, comprehensiveness and timeliness of public budget information. In the course of Mongolia OGP NAP-4, strengthen the legislation with provisions on the transparency, timeliness and conrephensiveness of information on the state budget, public investment and spending, special funds, international development finance, projects and programs’ entire life cycle from inception to closure; develop these legislative amendments on the basis of legislative reviews and proposal drafting done by multi-stakeholder consultative mechanisms set up specially for the purpose. Add following provisions to public investment planning guidelines: i) The financial year budget template shall include a description of the allocated budget as a “percentage of the total project budget” for new projects, and an “initial approved budget” indicator for roll-over projects; ii) Special templates for listed public investment projects shall be used in the budget revision process. 2. A plan for Glass Account Information System update prepared and launched. 3. A plan on the design and operationalization of a digital public budget discussion forum prepared through consultative processes.

Milestones Start date: End date: Strengthen transparency, comprehensiveness and timely delivery of information on the entire public budget and public investment project cycles (public investment and spending, special funds, international assistance finance, projects and programs) through legislative reviews and amendments prepared by multistakeholder mechanisms. 2022.03.01 2022.12.31 Insert a rule on detailed budget information in the Content and Standards Guidelines approved by Govenrment Resolution 29 of 2016 for the Glass Account website. 2022.06.30 2022.12.31 Reconstruct the shilendans.gov.mn website based on evaluations and proposals developed through consultative processes to ensure proper data orchestration and systems coherence for open data operations. 2022.06.01 2023.02.30 Set up and operationalize a cyber platform for public comment on state budget and spending. 2022.08.01 2023.03.31 Online systems upgraded to provide feedback to the public on their proposals/suggestions 2022.10.01 2023.03.31 Update publicinvestment.gov.mn website by installing project “start date” search option. 2022.06.01 2023.03.31

Action Plan Review

Commitment 6. Public Participation in State Budget and Public Investment

Results Report

Commitment 6. Public participation in state budget and public investment

A bulk of this commitment’s milestones to improve public participation in government budget and investments were delivered by ongoing Ministry of Finance projects. In terms of Mongolia’s glass account portal, [53] the 2022 legislative agenda included a proposed amendment to the Law on Glass Accounts, which was never submitted to the parliament. [54] The commitment improved the portal quality in January 2023, but all prior budget data disappeared. [55] The International Budget Partnership noted that inconsistency in reporting across budget documents made it difficult for citizens to monitor government programs. This was exacerbated by the absence of a participation channel on the portal. [56] Additionally, the 2022 Budget Law [57] and budget planning for the 2023 fiscal year [58] were amended to add requirements for information on the investment project budget, which did not cover the entire public budget. Despite the amendment’s provisions on public participation, these were not concretely implemented in the budget calendar, as of October 2023. [59] Under two milestones on the citizens’ budget portal, [60] the ministry introduced a Citizen Participation menu and Poll and Discussion submenu, [61] but this was not coupled with a mechanism for feedback on how public inputs are considered in budget decision-making. [62] Finally, the ministry developed the publicinvestment.gov.mn portal to provide public information on government investment. However, the portal only contained information on projects started in 2023, which limited access to relevant information from previous years. [63] In budgeting for the 2024 fiscal year, the ministry created opportunities for citizens to vote for public investment project proposals that would receive government funding at subdistrict, district, and provincial levels. [64] The IRM does not have evidence on how voting impacted the projects selected.

Overall, this commitment did not produce notable results in opening government. Public participation mechanisms were not clearly linked to informing decision-making—with a lack of reasoned response from the government to citizen feedback on the budget and a lack of opportunities to provide input beyond the budget planning stage. [65] There were some improvements in access to fiscal information, but these were undermined as previous years’ information became inaccessible. Moving forward, the government could provide greater clarity on the role of the public consultation mechanisms, including specifying how these inputs are taken into account in decision-making. It is also important to prioritize efforts to update relevant legislation to mandate greater transparency during budget implementation and evaluation stages. It may also be useful to consider integrating the different portals into a single platform where citizens can follow the flow of public funds throughout planning, execution, reporting, and audit. To do so, the government must improve the comprehensiveness of the citizens’ budget and ensure consistency in data reporting across the full-year budgeting cycle from planning to audit. [66]