Press Release No. 05/308

Press Release: IMF Statement on Mauritania's Participation in the Multilateral Debt Relief Initiative

December 28, 2005

On December 21, 2005, the Executive Board of the International Monetary Fund (IMF) conducted a preliminary assessment of the first group of countries eligible for relief under the Multilateral Debt Relief Initiative (MDRI) (see Press Release No 05/286). Mauritania is eligible for debt relief under the MDRI but is not in a position to qualify immediately for debt relief because its macroeconomic performance and the management of public finances have substantially deteriorated since an assessment made in June 2002, when the country reached its completion point under the Heavily Indebted Poor Countries Initiative (see Press Release No 02/29).

The Fund will work closely with the authorities in the coming months to help Mauritania qualify for MDRI debt relief, including through a six-month program that would be monitored by IMF staff in order to determine that Mauritania could qualify for MDRI relief after certain remedial actions are taken. In addition to sound macroeconomic policies over a period of six months, these would include actions in the areas of budget formulation, execution, and reporting, and the resolution of data issues with the Fund.

The purpose of the MDRI is to accelerate eligible countries' progress towards the Millennium Development Goals by cancelling their debt to the IMF, the World Bank's International Development Association, and the African Development Fund of the African Development Bank, and by ensuring that the corresponding resources are allocated to poverty reduction. To qualify for debt relief under the MDRI, eligible countries must have demonstrated satisfactory performance regarding three criteria: macroeconomic stability, public expenditure management, and implementation of its poverty reduction strategy.