Middle East and Central Asia > Mauritania, Islamic Republic of

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International Monetary Fund. Statistics Dept.
With the support of the IMF’s Middle East and Central Asia Department (MCD), and at the request of the Central Bank of Mauritania (BCM), the IMF’s Statistics Department (STA) mission visited Nouakchott from March 19–30, 2018, to provide technical assistance (TA) in the area of external sector statistics (ESS). This mission is part of an initiative financed by the Financial Sector Stability Fund (FSSF): Balance Sheet Approach (BSA) Sub-Module. This intersectoral effort will enable the production of more reliable BSA matrices to support macroprudential policies, the country’s financial stability analysis, and the IMF’s surveillance missions. The mission’s key objectives were to work closely with the BCM in order to (i) improve the compilation of the balance of payments (BOP), and (ii) propose a framework for compiling the international investment position (IIP). Based on the findings and recommendations of the last TA mission on external sector statistics (ESS) carried out at the BCM in October 2016, this mission notes the need to improve the quality of most items in the BOP, particularly the financial account, which could also aid IIP compilation efforts in the near future.
International Monetary Fund. Middle East and Central Asia Dept.
Program implementation has been satisfactory. Macroeconomic stability has been maintained, external debt has been stabilized, and several reforms have been launched to modernize economic institutions and the policy framework. Growth is expected to accelerate this year to 3½ percent, supported by FDI and public investment. While the outlook is positive owing to sustained growth in non-extractive sectors, the international environment is less favorable than during the first review. Higher oil import prices and lower commodity export prices weigh on the external and fiscal positions; the economy remains dependent on commodity exports; and debt vulnerabilities and poverty remain high. Downside risks related to global economic developments and regional security are elevated. On the upside, development of the offshore gas field could generate large revenues from 2022 despite short-term costs.
International Monetary Fund. Middle East and Central Asia Dept.
This paper discusses the impact of the global economic slump on the Mauritanian economy, which faces a significant negative terms-of-trade shock that is more persistent than initially envisaged. The impact of the international shock is compounded by a narrow production base, structural weaknesses, and limited policy space related to elevated public debt and pressures on external buffers. The outlook sees a recovery in economic activity to 4.1 percent in 2016, but risks to the outlook are tilted to the downside. The present economic uncertainty has prompted Mauritania to call for an ambitious policy adjustment to diversify the economy and promote inclusive growth for a determined reform agenda.
International Monetary Fund. Middle East and Central Asia Dept.
KEY ISSUES Context. Mauritania’s economy has benefited from macroeconomic stability and high growth in the context of contained inflation, responsible macro-policies, high iron ore prices and scaled-up public investment. However, economic growth has not translated into broadly improved living standards and is being hit by a sharp decline in iron ore prices. Outlook and Risks. Although the outlook remains favorable, it hinges heavily on stabilizing iron ore prices and expanding mining capacity. Downside risks to the outlook dominate because iron ore prices may decline further in response to excess supply in the global market. Key Policy Recommendations. With high risk of debt distress and deteriorating terms of trade, Mauritania’s fiscal policy needs to remain focused on consolidation to support fiscal sustainability. Over the medium term, a fiscal framework with a full-fledged fiscal rule will help prevent the boom–bust cycles that ensue from volatility in natural resource revenue, and with strengthened governance in managing mining wealth. The central bank should take advantage of the low-inflation environment to strengthen monetary policy formulation, gradually liberalize the foreign exchange market, and introduce liquidity support and banking resolution frameworks. The implementation of the recent FSAP recommendations should be pursued to enhance the stability of the financial sector stability. Economic diversification and inclusive growth are the foremost medium-term challenges. The authorities should accelerate structural reforms needed to raise Mauritania’s potential growth, create jobs, and improve living standards for all Mauritanians. Article VIII. A comprehensive analysis of the foreign exchange market identified exchange restrictions and multiple currency practices (MCPs) subject to Fund approval under Article VIII. Effective November 20, 2013, the exchange rate regime is classified as “stabilized” arrangement.
International Monetary Fund
The Mauritanian transition authorities embarked on a path toward democracy, rule of law, and good governance. The transition authorities initiated a wide range of structural reforms based on the priorities that emerged from consultations with civil society and political parties, and emphasizing the need to improve transparency and governance. The discussions on fiscal and monetary policies and on structural reforms aimed at consolidating recent progress toward macroeconomic stabilization, good governance, and transparency. Mauritania will benefit from considerable technical assistance (TA) from the IMF.
International Monetary Fund
Mauritania was one of the countries to reach the completion point under the enhanced Initiative for Heavily Indebted Poor Countries. The revised fiscal, balance of payments, and monetary data, including data on commercial banks, revealed that the main program parameters were missed by large margins. In 2003–04, progress in structural reforms was slower than planned, and major weaknesses surfaced in fiscal, monetary, and exchange rate management. Executive Directors welcomed the authorities’ intention to gear medium-term spending plans toward poverty reduction.