Press Release No. 19/77

IMF Staff Reaches Staff Level Agreement on the third review for Mauritania’s Extended Credit Facility

March 13, 2019

• IMF team and the Mauritanian authorities have reached a preliminary agreement to complete the third review of the program supported by the Extended Credit Facility.
• The budget yielded a sizable surplus owing to strong tax revenue performance, large revenue from exploration licenses, and slower than expected execution of externally financed capital spending.
• The authorities will establish a robust fiscal framework, which will help savings to gradually expand targeted social safety nets throughout the country and will press ahead with reforms aimed at improving the business environment, strengthening economic governance, and fighting corruption.

A staff team from the International Monetary Fund (IMF) led by Mr. Eric Mottu visited Nouakchott from February 27-March 13, 2019, to discuss the third review of the economic and financial program supported by a three-year arrangement under the IMF’s Extended Credit Facility (ECF) approved by the IMF Executive Board on December 6, 2017 (see Press Release No. 17/468) for a total amount of SDR 115.920 million (approximately US$161.2 million at current exchange rates). At the end of the visit, Mr. Mottu issued the following statement:

“The IMF team and the Mauritanian authorities have reached a staff-level agreement on the third review of the country’s economic reform program supported by the IMF’s ECF. Completion if the review is subject to the approval by the IMF’s Executive Board. Mauritania will benefit from a fourth disbursement of SDR 16.56 million (around US$ 23.0 million) following the Executive Board’s review scheduled for May 2019.

“Economic growth accelerated in 2018 to around 3.6 percent on the back of a strong performance of non-extractive sectors which grew over 6 percent, reflecting the gradual diversification of the Mauritanian economy and a rise in bank credit. Meanwhile inflation remained under control at 3.1 percent on average. International reserves of the central bank reached US$919 million at end-2018 (5 months of non-extractive imports). The budget yielded a sizable surplus owing to strong tax revenue performance, large revenue from exploration licenses, and slower-than-expected execution of externally financed capital spending. Debt accumulation therefore slowed significantly, and external public debt fell to 69 percent of GDP at end-2018. The banking sector also strengthened. However, stronger economic activity caused imports to rise, resulting in a widening of the external current account deficit (excluding extractive sector capital imports) to around 11 percent of GDP.

“Against this background, implementation of the authorities’ economic and financial program was satisfactory. All performance criteria for end-December 2018 were met, and all structural benchmarks planned between December 2018 and March 2019 were or are in the process of being met. These reforms pertained to tax administration, monetary policy instruments, the foreign exchange market, and the financial sector, among others.

“The economic outlook is favorable owing to sustained commodity prices, the launch of the offshore gas project, and implementation of economic policies aimed at maintaining macroeconomic stability and promoting inclusive job creating growth and diversification. Hence, economic growth could exceed 6 percent in 2019 on the back of the expected recovery of extractive sectors and continued robust performance of non-extractive sectors, despite exogenous risks owing to commodity price volatility and uncertainties weighing on global growth.

“The authorities’ program envisages disciplined implementation of the budget in 2019, prudent borrowing (avoiding non-concessional borrowing), and an increase in international reserves with a view to improving debt sustainability and building buffers against exogenous shocks, while creating fiscal space for social spending and infrastructure investment. The authorities will establish a robust fiscal framework for prudent management of future gas revenues. They will gradually expand targeted social safety nets throughout the country and will press ahead with reforms aimed at improving the business environment, strengthening economic governance, and fighting corruption.

“The team wishes to thank the Mauritanian authorities and other interlocutors for their warm welcome, productive discussions, and excellent cooperation.”