Press Release No. 19/373

IMF Team Concludes Article IV Consultation and Reaches Staff-Level Agreement on the Fourth Review of Mauritania’s Extended Credit Facility

October 11, 2019

• Implementation of the authorities’ economic program has been strong, and the program continues to be on track.
• Economic growth has accelerated and should reach 6.9 percent this year, driven by both extractive and non-extractive sectors.
• Disciplined policies should continue while better addressing social needs.

An International Monetary Fund (IMF) team led by Mr. Eric Mottu visited Nouakchott during September 25-October 9, 2019 to discuss the fourth 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 (Press Release No. 17/468) for a total amount of SDR 115.92 million (about US$158.4 million at current exchange rates). The mission also held Article IV Consultation discussions. At the end of the visit, Mr. Mottu made the following statement:

“The IMF team and Mauritanian authorities had constructive discussions on economic policies and reforms to ensure macroeconomic stability, foster inclusive growth and reduce social inequalities and poverty.

“The IMF team and the Mauritanian authorities have reached a staff-level agreement on the fourth review of the country’s economic reform program supported by the IMF’s ECF. Completion of the review is subject to the approval of the IMF’s management and Executive Board. Mauritania will benefit from a fifth disbursement of SDR 16.56 million (about US$22.6 million) following the Executive Board’s review scheduled for December 2019.

“Implementation of the authorities’ economic program has been strong, and it continues to be on track. Economic growth has accelerated and should reach 6.9 percent in 2019, driven by both extractive and non-extractive sectors, while macroeconomic stability has been maintained and debt sustainability has been strengthened. Inflation remained low at 2.3 percent on an annual average in August. International reserves of the central bank reached $1,042 million in August (over 5 months of non-extractive imports), up from $918 million at end-2018. The budget yielded a sizable surplus up to August and as a result external public debt is projected to fall to 66 percent of GDP at end-2019, down from 69 percent last year.

“The outlook, underpinned by macroeconomic stability, is broadly positive but remains subject to considerable external risks owing to commodity price volatility and the slowdown in global growth. While economic growth in Mauritania could exceed 6 percent next year, continued prudent policies are needed to build reserves in case of unexpected shocks.

“The authorities’ fiscal prudence has created space that should be used to raise much-needed social spending on education, health, and social protection in an efficient way to foster high and inclusive growth and to reduce poverty and inequality. At the same time, prudent fiscal and monetary policies should continue, with a view to maintaining macroeconomic stability. Potential new borrowing for selected infrastructure projects should take place on concessional terms to ensure debt sustainability. In this regard, the authorities envisage a broadly balanced 2020 budget that prioritizes social spending.

“The authorities’ reform program seeks to create and expand fiscal space through revenue mobilization and expenditure prioritization. This entails strengthening tax and customs administration to broaden the tax base for greater equity; and improving budget preparation and execution processes for greater efficiency and transparency. The program also seeks to modernize monetary and exchange rate policies and to strengthen banks’ prudential requirements and supervision, resulting in a stronger banking system to support economic growth. The authorities will press ahead with reforms aimed at improving the business environment, strengthening economic governance, and fighting corruption.

“The future offshore gas revenues provide an opportunity for Mauritania; at the same time, efficient and transparent management of those revenues will be key and will require establishing robust institutions and a prudent macro-fiscal framework.

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