City Finances of Ulaanbaatar, Mongolia

Abstract

Ulaanbaatar's (UB) population has
 swollen from half a million in 2001 to approximately 1.2
 million in 2011, accounting for over 40 percent of the
 country's population. This trend is likely to continue
 as economic growth is increasingly concentrated in UB. With
 its growing population and concerns in rising inequality,
 the city is facing increasing pressure to maintain and
 expand service provision (especially infrastructure). The
 local tax on wages is expected to continue to provide
 substantial revenues to the UB government, which will assist
 the growing demand for services. Additionally, a new
 'capital city tax' is expected to come into effect
 in 2013. The decision of the central government (CG) to
 pursue further decentralization gives greater leadership to
 the UB government and its districts. It also provides local
 broader decision-making authority as well as opportunity for
 citizen's participation and for the improvement of
 governance and transparency. Therefore, a key challenge for
 UB and its districts is ensuring that the local fiscal
 system is sound and ready to handle a greater volume of
 revenues to achieve sustainable and inclusive growth. The
 city also needs to develop a robust and transparent fiscal
 management system if it is to make an effective use of new
 revenue sources. The main objective of this study is to
 understand the inner workings of the municipal finance
 system in Ulaanbaatar and its districts.