IMF | CCAMTAC

On-line workshop on Bayesian Vector Autoregressions (October 30, 2024). CCAMTAC hosted a one-day online workshop focused on Bayesian Vector Autoregressions (BVAR) and their applications in forecasting and economic analysis. The workshop provided an introduction to the theory of Bayesian estimation, emphasizing the significance of priors and discussing the most commonly used priors in BVAR. Participants also engaged in hands-on practical exercises using econometric software and Mongolian data. This workshop was specifically designed for junior staff members of the Monetary Policy Department at the Bank of Mongolia.

Enhancing Macroeconomic Frameworks (September 26–October 4, 2024). The ICD-CCAMTAC mission supported the Ministry of Finance in customizing the Excel-based Comprehensive Adaptive Expectations Model. The mission finalized the customization of the fiscal block by incorporating national definitions and reporting standards, and closing the macroeconomic framework to produce the first consistent macroeconomic outlook.

Mongolia: Nowcasting and Near-Term Forecasting System (September 13–27, 2024). The CCAMTAC mission team visited the Bank of Mongolia to continue integrating a new nowcasting and near-term forecasting system. The authorities gained a scalable system for real and external sector monitoring, delivering optimized forecast precision over a six-month horizon. The project included upgrading existing system infrastructure, performance, documentation, and technical staff training. Moving forward, the focus will be on enhancing communication and analytical skills enabled by the new system.

National Workshop on Macroeconomic Analysis / Financial Programming and Policies (September 11–18, 2024). CCAMTAC delivered a national workshop on Macroeconomic Analysis / Financial Programming and Policies in Ulaanbaatar. The activity was hosted by the Ministry of Economy and Development of Mongolia. The workshop brought together 32 officials from the Bank of Mongolia, Financial Regulatory Commission, Fiscal Stability Council, Ministry of Economy and Development, Ministry of Finance, and National Statistics Office. Participants were actively engaged in group work using actual Mongolian data and the IMF Institute for Capacity Development’s Comprehensive Adaptive Expectations Model. Officials analyzed recent economic developments and challenges, developed baseline forecasts, assessed the impact of economic policy changes and external shocks, and formulated policy recommendations. As part of Train-the-Trainee program, the delivery of the workshop was facilitated by selected officials from the Bank of Mongolia, the Ministry of Economy, and the Ministry of Finance that brought valuable knowledge about the Mongolian economy to the discussion with participants. As a good practice, the last day of the workshop included a panel discussion with senior representatives of key policymaking institutions and group presentations with baseline scenarios from the participants.

Macroeconomic Frameworks (May 27–June 7, 2024). This mission focused on building a customized macro–framework using the ICD’s Comprehensive Adaptive Expectations Model (CAEM). As the second in–person mission of a multi-year program, it reviewed and customized various sectors using in-house data and tailored the CAEM template. Initial forecasts for the external and monetary sectors were drafted, and fiscal data collection began for future customization.

Enhancing Nowcasting and Near-Term Forecasting Capabilities (April 15–26, 2024). A technical collaboration with the Bank of Mongolia targeted improvements in the accuracy of their nowcasting and near-term forecasting system. This effort, part of a two-year program, aimed to enhance the system's ability to inform monetary policy decisions. By refining forecast weighting mechanisms and incorporating climate-related data, the collaboration yielded notable enhancements in forecast accuracy, especially regarding trends in consumer prices and economic activity predictions over short to medium-term periods. Furthermore, the mission included training sessions to enhance staff expertise in time series modeling and forecasting strategies.

Macroeconomic Frameworks (April 5–16, 2024). The mission aimed to refine the Bank of Mongolia’s nowcasting and near-–term forecasting (NNTF) system, marking the second phase of a two-year program. The improved NNTF system has enhanced the system’s forecasting accuracy for near-term inflation and economic activity, crucial for informed monetary policy. Achieving a 7-–15% improvement over 0-–4 quarter horizons (on top of the previous 20%), the bank systematically tracks and leverages forecast errors for continuous accuracy enhancements.

Macroeconomic Framework (October 30 – November 3, 2023).
The mission worked with the Financial and Fiscal Research Department of the Ministry of Finance on building a new core projection tool  that will support the annual budget compilation process at the Ministry.  TA also focused on assessing the quality of input data, improving data architecture, and calibrating key equations of the projection tool.

Near-Term Forecasting System Development (October 16-27, 2023).
The mission has helped introduce a systematic approach to monitor forecast errors within the existing nowcasting and near-term forecasting system at the Bank of Mongolia. The mission significantly gained from the synergies created through the July 2023 Singapore Training Institute (STI) course on Nowcasting. In collaboration with the authorities, the mission team consolidated all available historical data records of staff and model forecast errors within the Economic Analysis and Policy Division; assessed the sources of these errors; and developed summary metrics for forecast errors, which will be utilized to enhance the performance of the nowcasting and near-term forecasting system in the project's next phase. Preliminary results demonstrated a promising 20-30% improvement in nowcasting and forecasting accuracy for horizons spanning 1 to 4 quarters.

Macroeconomic frameworks (May 24 – June 2, 2023).

An ICD-led scoping mission was conducted to the Ministry of Finance of Mongolia. The mission proposed a multiyear CD program focusing at developing a macroeconomic forecasting and policy analysis system supporting annual budget processes.

Scoping mission (March 6 – 10, 2023).

CCAMTAC’s regional advisor conducted a stock-taking mission to the Bank of Mongolia. The mission reviewed the existing nowcasting and near-term forecasting (NNTF) processes, tools, data, human and IT resources with the aim to identify opportunities for improving the system’s accuracy in forecasting GDP growth and CPI inflation. The Bank owns a well-functioning NNTF practice. In cooperation with the authorities, the mission proposed ways for further strengthening the system’s accuracy by introducing new algorithms and expanding the use of real-time data.

Value Added Tax Compliance (August 24 – September 6, 2022).

This in-country assignment assisted the Mongolian Tax Administration to improve its capability to address VAT compliance issues associated with cross border supply of services and low-value goods. Recommendations were made for areas of research and probable sources of research information to improve tax administration’s understanding of the actual value of underpaid VAT, and to identify most common points of origin, distribution mechanisms and types of supply. Information was provided onhow a vender collection model could operate if Mongolia chose to make the relevant policy and legislation changes. The Mongolian Tax Administration has agreed to implement assignment recommendations and to discuss them with their colleagues in the Ministry of Finance.

Risk Based Supervision Workshop (February 20–27, 2024). This in-person mission in Ulaanbaatar included a workshop in Risk-Based Supervision (RBS) followed by discussions with Bank of Mongolia (BOM) regarding its RBS enhancements that is aimed for roll-out in the next twelve months. The workshop outlined the key elements of RBS including Basel Core Principles, various supervisory approaches and tools, and the application of RBS principles including risk identification, assessment, and rating methodologies. Specific topics discussed during the workshop included the principles of Internal Capital Adequacy Assessment Process (ICAAP) conducted by banks as one of the inputs into the supervisory review and proportionality and absorption of the supervisory review into the overall supervision flows were also discussed. The workshop was attended by close to 50 staff from supervision, risk management, and other divisions of BOM.

Risk Based Supervision (January 25 – 27, 2023).

A three-day engagement took place with Bank of Mongolia to discuss the planned engagements and lay the groundwork for the upcoming missions covering Risk Based Supervision. Participants discussed various modes of RBS applications, integration of various risks to the assessment model and peripheral issues surrounding RBS. A simultaneous translation was provided in Mongolian with some 25 participants joining from the central bank.

Licensing Process Development (September 27 – October 11, 2022).

The overarching goal of the mission was to support Bank of Mongolia in its efforts to enhance its licensing framework and ensure that the licensing practices are aligned with international standards. This mission was conducted in-person and represents the second such engagement leading into planned engagements covering risk-based supervision in 2023.

Corporate Governance Follow-up (August 8 – 12, 2022).

A follow-up was conducted to provide continued support to the Bank of Mongolia to enhance its Corporate Governance framework and ensure that the new corporate governance regulations are aligned with Basel Corporate Governance Principles (BCGP) for banks (2015). During this brief engagement draft corporate governance regulations were the primary topic for discussion and review which included several recommendations and proposals provided to the Bank of Mongolia.

Corporate Governance New Regulations and Risk-Based Supervision Scoping (June 6 – 17, 2022)

This in-person mission focused on the enhancements to the Corporate Governance (CG) framework and aimed to scope the Risk-Based Supervision Framework (RBS) to determine the level and depth of possible future TA missions covering RBS, including licensing. Follow-up missions for the CG as well as the licensing function and RBS in the short to medium-long term are planned for execution going forward. The focus in these areas will be on the enhancements to further align them with the international guidelines and practices.

Central Bank Balance Sheet Assessment (Virtual, October 7-11, 2024). CCAMTAC provided a TA to the Bank of Mongolia (BoM) to support their efforts in strengthening the operational independence and financial autonomy. The first (virtual) part of the mission (i) reviewed the BoM balance sheet and (ii) investigated the detailed data to stress test the BoM’s balance sheet against its main financial risks. The results of the stress-testing will help authorities in developing the recapitalization strategies to strengthen BoM’s ability to conduct its operations. The second onsite part of the mission is scheduled for first quarter of 2025.

Monetary Policy Communication (August 9 – 19, 2022).

A HQ TA mission, accompanied by the CCAMTAC resident advisor, visited Ulan-Bator, Mongolia, to assist the Bank of Mongolia in enhancing its central banking policy communication framework. The mission assessed the existing communication products of the central bank in terms of content, timeliness, and impact. The mission team also evaluated the internal organization of the bank’s communication function in terms of structure, resources, and procedures. Overall, the experts identified several areas where effectiveness of communications and its outcomes could be further enhanced.

Monetary and Foreign Exchange Operations (January 15 - April 30, 2021)

The missions reviewed past TA, assessed TA needs and will provide the future CCAMTAC resident advisor on central banking with a preliminary work plan tailored to each country’s needs. At the same time, several cross-cutting themes emerged. Most countries are transitioning to or plan to transition to inflation targeting. Common monetary policy and operations issues relate to high dollarization, foreign exchange intervention policy, the impact of remittances and their volatility on monetary policy, the role of the ruble exchange rate, and the state of correspondent banking. The assessments were shared with the respective country authorities to help inform their capacity development plans.

GFS& PSDS mission (July 17 – 28, 2023).

The mission held several technical meetings with the Government Finance Statistics (GFS) working group recently established at the Treasury Department of the Ministry of Finance (MoF) and the Public Sector Debt Statistics compilers at the MoF’s Debt Management Division (DMD). Training sessions tailored to suit the needs and interest of the Mongolian authorities were delivered for officials of the MoF, the Bank of Mongolia, and the Mongolia National Statistics Office. The mission reviewed annual GFS for 2021 (revised) and 2022 (preliminary) and provided technical advice to address compilation issues and identify areas for improvements. The mission also reviewed PSDS for end-2022 covering general government and public corporations and discussed the need to ensure consistency of general government data between GFS and PSDS. The authorities indicated an intention to establish a PSDS sub-group (within the GFS working group) involving DMD staff. This mission was delivered as a joint activity funded by CCAMTAC and the D4D fund. 

GFS Compilation (August 29 -September 2, 2022).

This virtual mission assisted the authorities in improving and further developing a GFSM 2014-based presentation of consolidated general government financial stocks and flows. To this end, the mission worked with compilers on improving the existing data series for 2016 – 2021 and finalizing the 2021 GFS annual data for their transmission to the IMF Statistics Department. Besides, the mission i) continued the work on the compilation of debt of state-owned enterprises (SOEs) initiated in December 2021; ii) developed a cross-classification of social spending by producing a matrix of economic and functional classifications, and iii) developed a template for a disaggregated presentation of stock positions in currency and deposits.

Enhancing GFS/PSDS (January 10 – 21, 2022)

The mission followed the work of previous IMF technical assistance missions assisting the authorities in sustainable compilation of GFS for non-market SOEs, which will be consolidated with general government GFS. The mission discussed the progress made with respect to establishing the appropriate institutional arrangements necessary for obtaining sound source data for such compilation. The mission also assisted the authorities with establishing a medium-term work plan for further improvements in GFS and PSDS, which should be transmitted to CCAMTAC in the coming weeks. 

GDP mission (September 30–October 11, 2024). The mission reviewed existing data sources and compilation methods and developed recommendations for compiling chain-linked time series of GDP by production (GDP-P) and expenditure (GDP-E). The results were compared with currently published data. Differences can be explained by changes in the structure of the economy in recent years. Currently, quarterly GDP-P is compiled by nine types of economic activity. The mission noted that the chain-linked time series of GDP-P should be compiled according to the structure of the supply and use tables and should include as many types of economic activity as possible. A follow up TA mission will be conducted in June 2025.

Quarterly GDP Estimates (September 19 – 30, 2022).

The mission, which took place in the field, assisted the National Statistics Office of Mongolia in developing chain-linked time series of quarterly national accounts. The CCAMTAC advisor also provided training on the methodology of converting cumulative data to discrete time series. The National Statistics Office faced challenges in valuation of residential buildings, so the expert instructed the officials on implementing the methods that are in line with international best practice. The mission also evaluated progress in the development of high frequency indicators.

Developing a fiscal risk statement (September 9–20, 2024). The mission supported the MoF with an annotated structure to develop its first Fiscal Risk Statement (FRS). To support this process and drawing on the in-mission contributions of the authorities, the mission prepared an extensive working outline that can be used as a drafting guide, along with a template to highlight key messages for senior management attention. A third output delivered by the mission was an outline of a fiscal risk register (FRR) to support the enhanced quantification of fiscal risks in the FRS.