Press Release No. 09/468

Press Release: Statement by the IMF Mission on the 2009 Article IV Consultations for the Islamic Republic of Mauritania and Discussions on a PRGF-Supported Program

December 17, 2009

An IMF mission headed by Mr. Boileau Loko visited Nouakchott from December 2 to 17, 2009 to carry out the 2009 Article IV consultations and to discuss a new three-year arrangement supported by the Poverty Reduction and Growth Facility (PRGF). The mission held talks with the Prime Minister, Dr. Moulaye Ould Mohamed Laghdhaf, the Minister of Finance, Mr. Ousmane Kane; the Minister of Economic Affairs and Development, Mr. Sidi Ould Tah; the Governor of the Central Bank, Mr. Sid’Áhmed Ould Raiss, as well as with other members of government. In addition, the mission met with other senior economic and financial policymakers, members of parliament, and representatives of the diplomatic, banking, and business communities.

At the end of the mission, Mr. Loko, IMF Mission Chief for Mauritania, issued the following statement:

“In the context of the Article IV consultations, the mission reviewed recent economic and financial developments, and the challenges facing the Mauritanian economy. Non-oil gross domestic product (GDP) contracted in 2009 on the back of the international crisis and the decline in the prices of iron, Mauritania’s main export commodity. These trends, coupled with a slowdown in oil production, have caused a decline in revenues and a relatively high budget deficit.

“Falling international food prices and prudent monetary policy allowed inflation to decrease from 7.3 percent in 2008 to 2 percent in 2009. At end-November 2009, the foreign exchange reserves of the Central Bank of Mauritania (BCM) have reached 2.5 months of imports of goods and services.

“Discussions focused on policies to strengthen the economy’s resiliency to exogenous shocks and to create the conditions for higher economic growth in order to overcome unemployment and reduce poverty. The mission and the authorities share the view that these challenges should be addressed through fiscal consolidation efforts, continued prudent monetary policy, and accelerated structural reforms, particularly in public financial management (PFM) and in the financial sector. Improving the business climate and strengthening social policies are also crucial for achieving strong and sustained growth and thereby reducing poverty.

“The second objective of the mission addressed the content and the implementation of the reform program. Discussions focused on the path of fiscal consolidation, the PFM reform program, modernizing monetary policy instruments, developing the financial system, and improving the business climate.

“The Mauritanian government and the IMF mission reached an agreement, ad referendum, on a macroeconomic and structural program covering the period 2010-12, which could be supported by the PRGF. The program’s medium-term objectives include raising the non-oil GDP growth to an average of 5 percent; maintaining inflation below 5 percent; bringing down the non-oil basic deficit from 6.8 percent to 1.3 percent of non-oil GDP; and accumulating foreign exchange reserves to the equivalent of 3 months of imports by the end of the program. For 2010, the program aims to achieve non-oil growth of 5.2 percent, decrease the non-oil basic deficit to 3.9 percent of non-oil GDP, and keep inflation around 4 percent.

“The government’s request for a new program will be submitted to the IMF Executive Board in early 2010.”

The mission wishes to thank the authorities for their warm hospitality and cooperation.