Press Release No. 13/216

Press Release: IMF Executive Board Completes Sixth Review Under the ECF Arrangement for Mauritania and Approves US$16.9 Million Disbursement

June 17, 2013

The Executive Board of the International Monetary Fund (IMF) completed today its sixth and final review of Mauritania’s economic performance under the program supported by an Extended Credit Facility arrangement (ECF)¹. The decision enables Mauritania to draw a final amount equivalent to SDR 11.04 million (US$16.9 million).

The Executive Board approved an arrangement for Mauritania in March 2010 for an amount equivalent to SDR 77.28 million (about 120 percent of the country’s quota in the IMF), see Press release No. 10/89.

Following the Executive Board discussion, Ms. Nemat Shafik, Deputy Managing Director and Acting Chair, issued the following statement:

“Mauritania’s performance under the ECF-supported program during 2012-13 has remained strong, built on vigorous economic activity, contained inflation and further fiscal consolidation. Sound macroeconomic policies allowed for a further buildup of fiscal and external buffers in 2012. While the outlook is favorable, the economy remains vulnerable to terms-of-trade shocks and high levels of poverty and unemployment persist.

“Continued fiscal consolidation is crucial to preserve sustainability. Efforts to contain the wage bill, progress on removing fuel subsidies, and improvements in targeted food subsidies are welcome. Higher revenue mobilization, including from the mining sector, provides additional room for maneuver. Efforts to further boost capital expenditure primarily through domestic or external concessional resources will also help preserve fiscal sustainability.

“The authorities’ commitment to use short-term T-bills for liquidity management will help guard against inflationary risk and promote monetary policy effectiveness. Enhanced supervision and regulation will help to address financial sector risks, and removing legacy NPLs from banks’ balance sheet will help the banking system serve as an engine of growth. Greater transparency and flexibility in the foreign exchange market will facilitate the role of the exchange rate as a shock absorber.

“Looking ahead, sustaining high growth rates and promoting more inclusive growth are Mauritania’s main challenges. Efforts are needed to better diversify the sources of growth by improving the business climate to allow for private sector development. The new procurement and investment codes will help promote private sector investment. Ensuring an adequate treatment of nonrenewable resources will enhance fiscal policy formulation while safeguarding fiscal buffers. Reforming the electricity sector and public sector enterprises will also help limit fiscal risks.

“The authorities are commended for their successful completion of the three-year ECF-supported program and their commitment to preserving macroeconomic stability and maintaining efforts to implement their comprehensive structural reform agenda.”

¹ The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality. Financing under the ECF currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years (http://www.imf.org/external/np/exr/facts/ecf.htm). The Fund reviews the level of interest rates for all concessional facilities every two years.