Press Release No. 20/87

IMF Staff Completes Review Mission to Mauritania

March 12, 2020

• Performance under the program continues to be strong; the authorities are implementing prudent policies and advancing with institutional reforms.
• The outlook is clouded by global developments related to the coronavirus; as a result, growth in Mauritania is expected to slow this year.
• Considerable challenges remain to achieve more inclusive growth, respond to social needs, and significantly reduce poverty and inequality while entrenching macroeconomic stability and debt sustainability.

An International Monetary Fund (IMF) team led by Mr. Eric Mottu visited Nouakchott during February 27-March 11, 2020 to discuss the fifth 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$161.4 million at current exchange rates). At the end of the visit, Mr. Mottu made the following statement:

“The IMF team and the Mauritanian authorities had constructive discussions on economic policies and reforms to ensure macroeconomic stability, foster inclusive growth and reduce social inequalities and poverty. We reached a staff-level agreement on the fifth review of the economic 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 sixth disbursement of SDR 16.56 million (about US$23.1 million) following the Executive Board’s review scheduled for June 2020.

“Mauritania’s performance under the program continues to be strong. The authorities are implementing prudent policies and advancing with reforms. Economic growth accelerated last year to close to 6 percent, driven by buoyant activity in both extractive and non-extractive sectors and favorable terms of trade. Macroeconomic stability was maintained and debt sustainability was strengthened. Inflation remained low at 2.3 percent on an annual average in 2019. International reserves of the central bank reached $1,136 million at end-December (about 5.3 months of non-extractive imports), up from $918 million a year earlier. The budget yielded a sizable surplus and as a result the external public debt-to-GDP ratio declined.

“However, the current international environment marked by the coronavirus outbreak is expected to weigh on Mauritania owing to commodity price volatility and a slowdown in global growth. As a result, growth is expected to slow in 2020. Moreover, further downside risks related to these global developments and security threats in the Sahel are elevated. The IMF encourages Mauritanian authorities to continue to prepare for a possible outbreak of the coronavirus in the country. The IMF stands ready to help Mauritania respond to the economic impact of the coronavirus, through its rapid-disbursing emergency financing facilities, in case such risks materialize.

“In this very uncertain context, continued prudent policies, implementation of structural reforms, and increases in priority social and infrastructure spending will be important for achieving more inclusive growth and reducing poverty and inequality, entrenching macroeconomic stability and debt sustainability, and building reserves to respond to possible shocks.

“The program continues to support the use of the available fiscal space to increase priority social (education, health, and social protection) and infrastructure spending while maintaining prudent fiscal and borrowing policies to preserve debt sustainability. It accommodates potential additional spending related to preventing and responding to a possible outbreak of coronavirus in the country.

“The program supports institutional reforms aimed at improving budget preparation and execution to efficiently expand social spending and public investment. It also supports continued improvements in tax and customs compliance and broadening of the tax base.

“Under the program, the central bank is progressing in setting up its new monetary and exchange rate policy framework to support economic activity, address external shocks, and preserve official reserves. New prudential requirements and stronger supervision seek to improve banks’ financial soundness, with a view to increasing their ability to finance economic growth and SMEs.

“The authorities will press ahead with reforms aimed at improving the business environment, strengthening economic governance, and fighting corruption. Establishing robust macro-fiscal and institutional frameworks will be important to manage future gas revenues efficiently.

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