ULAN BATOR, March 27 (Xinhua) -- The Asian Development Bank's (ADB) Board of Directors has approved a loan of 130 million U.S. dollars to help Mongolia improve public health and reduce air pollution in its capital city, local media reported Tuesday.

The loan was approved on March 23, according to the news website ikon.mn.

Ulan Bator, home to nearly half of the country's children population, suffers one of the world's worst air pollution in winter months.

Without concrete and urgent actions, financial cost for treating children's diseases due to air smog will increase by 33 percent by 2025, costing about two million U.S. dollars every year to the country's public health system from 2025, a joint report by the Mongolian National Center for Public Health and the UN Children's Fund.

Children living in a highly polluted district of central Ulan Bator are found to have 40 percent lower lung function than those from rural areas.

More than 800,000 residents, over half of Ulan Bator's population, live in slums, also known as ger districts. They have to rely on burning raw coal and other flammable materials such as plastics, old tires to stay warm and cook meals during the six-month-long winter season.

It is estimated that 80 percent of air pollution in Ulan Bator is caused by ger stoves. The rest is caused by transportation, thermal power plants, and solid wastes.

Over the past 25 years, the ADB has implemented in Mongolia about 280 projects and programs in such areas as health, social protection, infrastructure and urban planning for a total of 1.9 billion dollars.