Press Release No. 17/82

IMF Staff concludes 2017 Article IV Mission to Mauritania and Launches Discussions on an IMF Supported Program

March 14, 2017

• The IMF team and the authorities held constructive discussions on a Mauritanian economic and financial program for 2017-20 that could be supported by an arrangement under the IMF’s Extended Credit Facility.
• The authorities have consistently adapted their economic policies to take account of the difficult conditions they’ve faced over the past two years following the fall in metal prices.

An International Monetary Fund (IMF) team led by Mr. Eric Mottu, visited Nouakchott from February 28 to March 13, 2017 to hold discussions on the 2017 Article IV consultations with the Mauritanian authorities and to discuss an economic program that could be supported by an arrangement under the Fund’s Extended Credit Facility (ECF). At the conclusion of the mission, Mr. Mottu made the following statement:

“The mission and the Mauritanian authorities held constructive discussions on a Mauritanian economic and financial program for the period 2017-20 that could be supported by an arrangement under the IMF’s Extended Credit Facility (ECF). Discussions will continue in the weeks ahead and the parties agreed on the importance of moving forward quickly.

“The Mauritanian authorities have taken determined steps to adapt their economic policies to take account of the difficult conditions of the past two years following the fall in metal prices. They significantly reduced the fiscal deficit by more than three percent of GDP in 2016, drew on external loans and grants, and used the exchange rate to regain competitiveness. They also undertook a significant series of economic reforms and public investments, particularly in infrastructure. these actions helped reduce macroeconomic imbalances: inflation remained low at 1.5 percent on average, the external current account deficit fell to 16 percent of GDP (12 percent excluding extractive sector imports financed by foreign investments) and foreign exchange reserves remained at five and a half months of non-extractive sector imports. However, as in the case of other commodity exporters, growth remained weak at a provisionally estimated rate between 1.5 and 2.1 percent and external debt increased, albeit at a slower pace, to 72 percent of GDP (excluding passive debt owed to Kuwait).

“Prospects for recovery in the short term are good, buoyed by higher metal prices— although the uptick may prove to be only temporary—and by strong public investment. Development of the gas sector in the coming years could also boost future growth.

“The country faces numerous challenges, in particular as regards supporting inclusive economic growth and diversification; creating jobs; reducing poverty, which is an ongoing challenge despite the progress made; and safeguarding macroeconomic stability while seeking to keep external debt levels within sustainable limits over the medium term.

“The authorities are preparing an economic and financial program to achieve these goals, which should rest on several pillars:

• Consolidate the fiscal efforts achieved by modernizing fiscal policy and enhancing the efficiency of the tax and customs administrations, prioritizing public expenditure and investment, and controlling government debt.

• Increase social spending, particularly on education and healthcare, and strengthen poverty reduction measures.

• Adopt more proactive monetary and liquidity management policies, and improve the functioning of the foreign exchange market to offer greater flexibility.

• Continue to strengthen banking supervision and adapt the regulatory framework to protect the stability of the financial system, and increase private sector credit.

• Continue with structural reforms to improve the business climate and economic governance in order to enhance competitiveness and promote diversification.

“While implementing this economic program, new non-concessional borrowing should be kept to a minimum to avoid a debt overhang that would jeopardize the sustainability of external debt and public finances. In addition, support from development partners should be sought in the form of grants and concessional loans that can be used to finance the much-needed investments and foster inclusive growth while maintaining debt sustainability.

“The mission met with the Prime Minister, Mr. Yahya Ould Hademine; the Central Bank Governor, Mr. Abdel Aziz Ould Dahi; the Minister of Economy and Finance, Mr. El Moctar Ould Djay; the Minister of Petroleum, Energy and Mining, Mr. Mohamed Abdel Vettah; the Minister for Fisheries and Marine Resources, Mr. Nani Ould Chrougha; the Deputy Budget Minister, Mr. Mohamed Ould Kembou; and other senior officials. The team also held discussions with representatives of civil society, the private sector, and development partners. The team would like to thank the authorities for their warm welcome and excellent cooperation.”