Islamic Republic of Mauritania: Selected Issues Paper
IMF Staff Country Reports, February 12, 2015
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- Islamic Republic of Mauritania: Selected Issues Paper
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Bibliographic details
- Published: February 12, 2015
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498354226.002
Major findings
- Mauritania needs to avoid pro-cyclical fiscal policies and adopt rules that guide medium-term fiscal sustainability.
- Fiscal policy has been responsible and focused on fiscal consolidation, but important challenges lie ahead linked to price volatility, exhaustibility of resources, and effective use of resources.
- Mauritania has important natural resource wealth, and its fiscal policy is shaped by considerations resulting from its reliance on resource revenues.
- Prospects for price shocks in the short term and significant mining expansion in the long term could pose significant challenges to fiscal policy management.
Fiscal framework analysis and rule options
- Analysis indicates a fiscal rule targeting a nonresource primary balance would be appropriate for long-term sustainability under the assumption of a finite resource horizon.
- This rule should be designed to allow some frontloading of public spending on productive investment.
- A fiscal rule targeting a structural resource balance would be appropriate in the scenario of long-lasting resources, possible under the assumption of favorable developments in the global commodity markets.
Policy implications and recommendations
- Adopt fiscal rules that explicitly account for resource revenue dynamics to protect against volatility and resource exhaustibility.
- Design rules to permit frontloading of productive public investment while preserving long-term sustainability when resources are finite.
- Consider an alternative rule focused on structural resource balance if assumptions about long-lasting resource revenues and favorable commodity market developments hold.
Contextual risks and scenarios
- Short-term risk: price shocks that affect resource revenues and fiscal outcomes.
- Long-term risk/opportunity: significant mining expansion that could alter revenue prospects and fiscal policy needs.
- Policy choice depends critically on the assumed resource horizon (finite vs. long-lasting) and global commodity market developments.
Source: Islamic Republic of Mauritania: Selected Issues Paper, IMF Staff Country Reports (February 12, 2015).