Proposal for Expanding the ERA’s Financial Benchmarking System and Implementing Performance Agreements

The assessment aimed to improve Mongolia's credit standing by enhancing access to lower interest rates, allocating resources more efficiently, and increasing domestic and foreign investments. The draft bankruptcy law, also known as the Draft Law, was analyzed over a period of approximately three weeks in September 2011. The analysis involved interviews, review of international documents, and commentary on the existing bankruptcy law. The overall mission of BPI is to assist Mongolia in improving its credit standing by implementing strategic initiatives, including improving debt obligations, budget policy, public debt management, and reducing sensitivities to external economic shocks. The BPI Workplan outlines a set of strategic initiatives to achieve these objectives, including improving the ability to meet debt obligations, enhancing budget policy and budget formulation at the Ministry of Finance, and improving public debt management. Part of this effort involves assisting with the analysis and improvement of the commercial law framework, including Mongolia's bankruptcy law. The investigation and assessment covered by this report are part of BPI's initial contribution to bankruptcy reform. An annotated version of the Draft Law containing the comments of BPI's bankruptcy experts is available as a separate document. The draft bankruptcy law aims to address several key issues in Mongolian commercial law, including the role of bankruptcy in commerce, the history of bankruptcy law development in Mongolia, and the level of professional expertise in bankruptcy law and practice. The law also seeks to address bias toward liquidation rather than reorganization, priorities among claims, protection of estate assets, and efforts to reform the bankruptcy law. The analysis of the Draft Law revealed several areas for improvement, including the need to balance the interests of creditors and debtors, ensure the efficient administration of bankruptcy proceedings, and protect the rights of all stakeholders involved. The report provides recommendations for revising the Draft Law to address these issues and improve the overall effectiveness of the bankruptcy system in Mongolia. The BPI Project's assessment of the Draft Law is an important step in improving Mongolia's commercial law framework and enhancing its credit standing. The recommendations outlined in this report will help inform the development of a more effective and efficient bankruptcy system in Mongolia, ultimately contributing to the country's economic development and growth.