IMF Executive Board Completes Sixth Review Under Extended Credit Facility Arrangement with Islamic Republic of Mauritania

  • The COVID-19 pandemic continues to impose severe human and social hardships on Mauritania, and the economy contracted by about 2 percent in 2020.
  • The authorities have responded swiftly to mitigate the impact of the pandemic while international partners have provided sizable financing and debt service suspension. This, together with high commodity exports, has placed Mauritania in a stronger position to support the recovery.
  • Performance has been strong despite delays and the program has helped to support growth, improve fiscal balances and stabilize debt, increase foreign exchange reserves, and implement institutional reforms in the fiscal, monetary, and financial sector policy areas.
  • Washington, DC: Today, the Executive Board of the International Monetary Fund (IMF) completed the sixth and final review of the arrangement with the Islamic Republic of Mauritania under the Extended Credit Facility (ECF) covering 2017-21, allowing the disbursement of SDR 16.56 million (12.9 percent of quota, about US$23.8 million). The arrangement was approved on December 6, 2017 with total access of SDR 115.92 million (about US$167 million at current exchange rates), or 90 percent of Mauritania’s quota, to help the authorities meet social and infrastructure needs while maintaining macroeconomic stability and increasing resilience to shocks. It was augmented by SDR 20.24 million (15.7 percent of quota) on September 2, 2020 to address higher-than-anticipated financing needs due to the COVID-19 pandemic and was extended by three months on December 1, 2020.

    Earlier last year, the Executive Board also approved on April 23, 2020 a disbursement of SDR 95.68 million (74.3 percent of quota) under the Rapid Credit Facility (RCF), which provided space to increase spending on health services and social protection programs in response to the pandemic and helped catalyze donor financing. Altogether, total access reached SDR 132.48 million (102.9 percent of quota) in 2020.

    In completing the review, the Executive Board also approved the authorities’ request for a waiver for the non-observance of the June 2020 performance criterion on net domestic assets of the central bank.

    Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, made the following statement:

    “The COVID-19 pandemic continues to impose severe human, economic, and social hardships in Mauritania. The economy contracted in 2020 and the crisis generated additional financing needs. The authorities responded swiftly to mitigate the impact of the pandemic while international partners provided sizable financing and debt service suspension. This, together with high commodity exports, has placed Mauritania in a stronger position to address upcoming challenges and support the recovery. The outlook remains highly uncertain and dependent on volatile commodity markets, with sizable downside risks in case new waves of the pandemic spill over.

    “The authorities’ response to the pandemic is appropriate. The expansionary 2021 budget is justified to boost the recovery and longer-term inclusive growth, and could be supported by the external financing saved from last year. Prioritizing health and education spending and targeted support to the most vulnerable households, as well as stepping up infrastructure spending, should support livelihoods and limit post-pandemic scarring. Continued prudent monetary policy and careful monitoring of banking sector developments are needed. The authorities are appropriately channeling crisis-related spending through the budget, reporting transparently on the use of emergency resources, and publishing the names and legal owners of companies awarded emergency contracts. They are committed to auditing emergency spending and strengthening disclosure requirements on beneficial ownership.

    “The authorities remain committed to the objectives of the economic reform program supported by the 2017-21 ECF arrangement concluded now. Despite delays, performance has been strong and the program has helped to support growth, improve fiscal balances and stabilize debt, increase foreign exchange reserves, and implement important institutional reforms in the fiscal, monetary, and financial sector policy areas. However, considerable challenges remain, and the authorities have requested a successor arrangement.

    “In the context of massive developmental needs-including to achieve the Sustainable Development Goals-the authorities should continue to create fiscal space to increase priority spending on education, health, social protection, and infrastructure by mobilizing domestic revenues and strengthening public financial management. Given the high risk of debt distress, the authorities are encouraged to seek further grants and concessional resources to finance their development plans, maintain buffers, and safeguard debt sustainability.”

    Mauritania: Selected Economic indicators, 2017-21

    Poverty rate: 31 percent (2014)

    Quota: SDR 128.8 million

    Population: 4.4 million (2018)

    Main exports: iron ore, fish, gold

    2017

    2018

    2019

    2020

    2021

    Est.

    Proj.

    (Annual change in percent; unless otherwise indicated)

    National accounts and prices

    Real GDP

    3.5

    2.1

    5.6

    -2.2

    3.1

    Real extractive GDP

    -6.2

    -9.5

    27.2

    0.9

    5.0

    Real non-extractive GDP

    4.7

    3.5

    3.2

    -2.9

    2.5

    GDP deflator

    3.7

    1.8

    9.6

    7.8

    12.1

    Consumer prices (period average)

    2.3

    3.1

    2.3

    2.3

    2.4

    (In percent of non-extractive GDP; unless otherwise indicated)

    Central government operations

    Revenues and grants

    22.8

    25.0

    24.4

    27.2

    24.5

    Nonextractive

    20.0

    21.0

    20.5

    21.6

    20.7

    Taxes

    14.1

    15.5

    15.0

    14.3

    15.1

    Extractive

    2.0

    3.5

    1.9

    2.8

    3.2

    Grants

    0.8

    0.5

    1.9

    2.7

    0.6

    Expenditure and net lending

    22.9

    22.3

    21.9

    24.4

    28.2

    Current

    14.0

    14.3

    13.7

    15.8

    18.2

    Capital

    8.7

    8.0

    8.3

    8.7

    10.0

    Primary balance (excl. grants)

    0.2

    3.5

    1.7

    1.3

    -3.0

    Overall balance (in percent of GDP)

    0.0

    2.5

    2.0

    2.1

    -2.5

    Public sector debt (in percent of GDP) 1/ 2/

    55.1

    61.4

    56.5

    59.5

    56.3

    (Annual change in percent; unless otherwise indicated)

    Money and Credit

    Broad money

    13.7

    13.8

    11.8

    21.0

    14.9

    Credit to the private sector

    7.5

    19.4

    12.9

    6.8

    9.4

    Balance of Payments

    Current account balance (in percent of GDP)

    -10.0

    -13.8

    -10.5

    -11.6

    -11.8

    Excl. externally financed extractive capital imports

    -5.0

    -8.6

    -3.8

    -3.3

    -7.0

    Gross official reserves (in millions of US$, eop) 3/

    849

    918

    1,135

    1,542

    1,654

    In months of prospective non-extractive imports

    4.6

    4.5

    5.7

    5.9

    6.7

    External public debt (in millions of US$) 2/

    3,573

    3,614

    3,776

    4,184

    4,457

    In percent of GDP

    52.7

    51.3

    47.6

    51.2

    48.2

    Real effective exchange rate

    -1.7

    -0.3

    1.3

    Memorandum items:

    Nominal GDP (in millions of US$)

    6,784

    7,048

    7,930

    8,176

    9,239

    Price of iron ore (US$/Ton)

    71.1

    70.1

    93.6

    108.1

    152.6

    Sources: Mauritanian authorities; and IMF staff estimates and projections.

    1/ Including government debt to the central bank recognized in 2018.

    2/ Excluding passive debt to Kuwait under negotiation.

    3/ Excluding hydrocarbon revenue fund.

    /Public Release. This material comes from the originating organization and may be of a point-in-time nature, edited for clarity, style and length. View in full here.