|
I. Introduction 1. Since the mid-1980s, Mauritania has implemented several Fund/IDA-supported programs1 under which it has made considerable progress in restoring positive rates of growth, reducing macroeconomic imbalances and inflation, and moving toward a market-oriented economy. This economic adjustment has been accompanied by an improvement in social indicators and poverty reduction (Table 1). In addition, since late 1991 the country has embarked on a democratization process, with parliamentary, presidential and local elections regularly held. II. Economic Performance in 1997-98 2. In 1997, Mauritania achieved both its growth and inflation objectives, the overall fiscal balance continued to register a large surplus (4.2 percent of GDP), the external current account deficit (excluding official transfers) was narrowed by about 4.2 percentage points of GDP, and international reserve coverage increased to 4.6 months of imports (from 2.8 months in 1996) (Table 2). Further progress was also made on the structural front, in particular in the trade and fiscal areas. Some delays were nevertheless encountered in preparing a restructuring plan for the national airline company and a reform strategy for the fisheries sector. 3. In the first half of 1998, macroeconomic performance deteriorated somewhat, partly owing to the weak performance of the fisheries sector. The policy response, adopted by the authorities in consultation with Fund/Bank staff, consisted of a set of corrective measures including: (i) an 11.6 percent step-depreciation of the exchange rate in July 1998, (ii) a tightening of the fiscal policy stance, and (iii) an increase in interest rates. As a result, the average inflation rate for the year was contained at 8 percent, the deterioration in the external current account (excluding official transfers) was held to 2.4 percentage points of GDP, and the overall fiscal balance maintained a surplus of 2.1 percent of GDP. Despite the negative impact of the fisheries shock, the real GDP growth rate declined only marginally to 3.5 percent, reflecting strong performance in the agriculture, transportation, and communication sectors. 4. In 1998, significant progress was achieved in improving the functioning of the foreign exchange market through further liberalization of the foreign exchange system and the introduction of a new intervention policy of the central bank under which it stands ready to buy and sell unlimited amounts of foreign exchange at its weekly announced bid/offer rates. 5. Mauritania remained mostly current on its external debt-service obligations vis-à-vis multilateral creditors in 1998. Delays continued to be met in reaching agreement with non-Paris Club creditors on terms at least comparable to those granted by the Paris Club. Since the expiration at end-July 1998 of the consolidation period under the 1995 Paris Club rescheduling, Mauritania has accumulated arrears on its pre-cutoff-date Paris Club debt, but has largely succeeded in clearing its short-term commercial debt arrears. 6. On the structural front,2 adjustment efforts were intensified in the second half of 1998, in particular through: (i) the implementation of measures to restructure the national airline company, (ii) the adoption of a new fisheries strategy endorsed by the World Bank and other donors; and (iii) the achievement of a political consensus on an ambitious medium-term structural reform agenda. III. Economic and Financial Objectives for 1999-2002 7. Over the medium term, Mauritania's key objectives are: (i) to place the economy on a higher sustainable growth path, thus increasing employment and reducing poverty; and (ii) to achieve external viability. To these ends, its strategy will focus essentially on: (i) consolidating macroeconomic stability; (ii) increasing the volume of investment as well as total factor productivity in the non-iron ore sectors; (iii) deepening and accelerating structural reforms to stimulate private sector investment; and (iv) implementing a social development agenda, especially in the education and health sectors. 8. The macroeconomic objectives of the program for 1999-2002 are to: (i) achieve an average annual rate of real growth close to 4.5 percent; (ii) narrow the external current account deficit (excluding official transfers) from 11.4 percent of GDP in 1998 to 10.1 percent in 2002; (iii) increase international reserves to the equivalent of 5-6 months of imports by the same year; and (iv) reduce inflation to 2.5 percent by 2002. 9. To achieve the growth objective,3 investment in the non-iron ore sector is projected to increase from 16.3 percent of GDP in 1998 to 18.0 percent of GDP in 2002. This will result from an increase in government investment from 4.3 percent of GDP in 1998 to 5.3 percent of GDP over the same period, and from an increase in private investment of 1.6 percentage points of GDP (to 11.1 percent of GDP). In addition, total factor productivity is expected to increase moderately following implementation of the structural reforms described below. Gross domestic savings are projected to rise from 8.0 percent of GDP in 1998 to 8.7 percent in 2002, as the decline in government savings is expected to be more than offset by higher private savings. 10. Within the medium-term objectives outlined above, and given the uncertainty concerning the performance of the two main exports, iron ore and fish, the program sets a less ambitious real GDP growth objective of 4.1 percent for 1999 and aims at limiting average inflation to 4 percent and reducing the external current account deficit (excluding official transfers) to 11.2 percent of GDP. IV. Macroeconomic Policies A. External Sector 11. The objectives set for the external current account (excluding official transfers) are based on the projection of an increase of about 10.1 percent in export earnings over the program period. The imports of goods (c.i.f.) are expected to increase by 11.4 percent from 1998 to 2002. Over the same period, international reserve coverage is programmed to increase to 5.5 months of imports of goods and nonfactor services. The average annual financing gap is estimated at US$79 million over the period 1999-2002 , and at US$87 million for 1999. The latter amount is expected to be fully covered, as explained in Section VII. 12. Attainment of the above-mentioned objectives will depend to a crucial degree on fostering the competitiveness and diversification of exports through sound demand management policies and appropriate management of the exchange rate. Concerning the latter, in 1999 the authorities will continue to set the weekly official exchange rate at which they stand ready to buy/sell any quantity required to clear the market. If necessary, the authorities will adjust the rate to avoid any significant real exchange rate appreciation, particularly in response to any adverse supply shocks. Over the medium term, however, the government is committed to reducing the role of the central bank in the foreign exchange market and to moving toward a more market-oriented exchange rate policy. This objective will be achieved in part through the structural measures discussed below, and in part through the measures taken by the central bank to deepen the interbank market. 13. Over the program period, the government's external debt policy will focus primarily on three objectives: (i) normalizing relations with its creditors; (ii) remaining current on its outstanding obligations and preventing the emergence of new arrears; and (iii) avoiding the contracting or guaranteeing of new external borrowing on nonconcessional terms, apart from normal short-term import-related credits. While past debt reschedulings have contributed to a marked improvement in the medium-term outlook, further assistance will be necessary to ensure long-run sustainability of the country's external debt. To this end, the authorities intend to request assistance under the Initiative for Heavily Indebted Poor Countries (HIPC). For the program period, the authorities will seek a new rescheduling of debt service on eligible debt to Paris Club creditors, and will intensify efforts to obtain debt rescheduling from non-Paris Club bilateral creditors on terms at least comparable to those of the Paris Club. In addition, further steps will be taken to improve debt management, notably through improvements in the coordination between the Ministry of Finance and the central bank and the utilization of new debt management software. B. Fiscal Policy 14. The medium-term program envisages a gradual reduction of the budget surplus from 2.2 percent of GDP in 1999 to 0.4 percent of GDP in 2002. Given the amount of external assistance expected during the program period, this moderate relaxation of the fiscal policy stance should be possible without crowding out private sector investment, and while maintaining a sustainable level of public debt. 15. Total revenue as a proportion of GDP is projected to decline by about 3.5 percentage points during 1999-2002 owing to lower trade tariffs, no more exceptional dividends paid by the national mining company Société Nationale Industrielle et Miniere (SNIM) after 1999, and the expiration of the current fisheries agreement with the European Union (EU) in 20004. At the same time, revenue policy will aim at increasing domestic tax revenues, in particular through: (i) elimination of the remaining tax exemptions for public enterprises, except on SNIM iron ore related activities; (ii) elimination of the reduced VAT rate; and (iii) stream-lining of tax administration. At the same time, the government proposes to lighten the direct taxation of businesses by reforming the minimum flat-rate tax and gradually eliminating the general income tax on business profits. 16. Expenditures are projected to decline by about 2 percentage points of GDP over the program period. However, expenditure policies will be designed, with World Bank assistance, to: (i) increase the efficiency of social expenditures; (ii) redirect government expenditure toward priority areas such as basic infrastructure and social outlays; and (iii) ensure a balanced allocation of resources between maintenance expenses and investment in new infrastructure. This, together with a projected decline in interest payments on external debt, will allow an increase of about 1 percentage point of GDP in the resources allocated to the social sectors. 17. To achieve its economic growth and lower unemployment objectives, Mauritania will continue to require the support of donors and lenders for the financing of investment projects on highly concessional terms. A rolling three-year public investment program (PIP) covering 1999-2001, adopted within the framework of the 1999 budget, gives priority to projects to improve living conditions for the poorest population groups, expand agricultural services, and rehabilitate existing infrastructure. The government is also committed to increasing the share of domestic counterpart resources devoted to public investment. The institutional framework for the implementation of the PIP will be further strengthened, particularly in the areas of project identification and coordination among executing agencies. The procurement code and its procedures are being reviewed, with World Bank assistance, so that both absorptive capacity and investment efficiency can be gradually increased. 18. The budgetary process will also be improved over the medium term through the consolidation of counterpart funds and externally financed capital expenditures in the budget presented to the legislature. C. Monetary Policy 19. The medium-term objectives of the Central Bank of Mauritania (BCM) will be to develop further its capacity to formulate and implement monetary policy in order to achieve its exchange rate and inflation objectives. Consistent with these objectives is a projected increase in broad money of about 3.5 percent in 1999 and a projected increase in credit to the private sector of about 16 percent. 20. While the authorities will continue to rely on treasury bill auctions to control liquidity, they will take measures to increase the number of indirect instruments available for monetary purposes and to improve coordination between their foreign exchange and monetary interventions. In particular, the authorities will introduce a repo (and reverse repo) facility, which will allow the BCM to react quickly to changes in liquidity conditions. This will facilitate the goal of maintaining several financial variables (liquidity, interest rates, and exchange rates) within desired ranges. In addition, with the objective of promoting longer term savings and increasing competition in the treasury bill market, the authorities will introduce longer maturity treasury bills and will cautiously reduce the cut-off rate. V. Structural Reforms A. Exchange and Trade Systems 21. A crucial element of the government's medium- and long-term foreign exchange policy is its commitment to liberalize the foreign exchange market further by increasing the supply of foreign currency available to the commercial banks, and by taking steps to increase activity on the interbank market. The key structural measures that will be introduced to achieve these objectives are: (i) eliminating the surrender requirement on repatriated export proceeds of SNIM; (ii) removing all remaining restrictions on the amount and period of time for which non-mineral export proceeds may be retained by exporters; (iii) adjusting prudential limits on the net open foreign exchange positions of commercial banks; and (iv) revising interbank market regulations according to the recommendations of a recent MAE technical assistance mission. In addition, the government is committed to removing all remaining restrictions inconsistent with the acceptance of the obligations referred to under Article VIII. 22. The government will continue its strategy of liberalizing the trade system through further streamlining the tariff structure in the year 2000. Measures to support this strategy include reducing the number of rates to four, unifying the statistical tax rates, and limiting the maximum combined import tax rate to 20 percent. B. Public Sector Reform 23. Central to the government's strategy for public enterprise sector reform is the policy to privatize a wide range of public enterprises and utilities. Over the program period, four public enterprises will be privatized. Private sector participation in the capital and management of an additional six public enterprises will be opened up for the first time, and existing private sector participation in a seventh public enterprise will be increased (Matrix, Section E.2 and Annex 3). As part of this process, and as a means of promoting substantial participation by small entrepreneurs, the government proposes to introduce measures to combat any economic concentration and attract foreign investors. Monitoring of key enterprises remaining in the public sector will be strengthened. 24. A major component of the reform program is a restructuring of the whole apparatus of government in light of the role it is called upon to play in a market economy system. This will mean reducing its size, improving its organizational structure, and streamlining its administrative procedures. The goal will be to ensure that government's activities foster economic growth either through direct promotion, or by using regulation to facilitate improved performance by the private sector-with all other activities becoming the province of the private sector. To this end, in addition to privatization, the government will implement an ambitious set of reforms focused on: (i) improving governance; (ii) redefining the functions and organization of key public sector institutions; and (iii) continuing with reform of the civil service (paragraph 25). To improve governance, the government is committed to revising the public procurement code in order to streamline the procedures for the award, supervision, and payment of contracts and at the same time make them more transparent. It will also restructure the Food Security Committee (CSA), mainly to increase the transparency of its financial operations. As part of its program to redefine the functions and structure of key institutions, the government will continue to implement the plan agreed with the World Bank for the reorganization of five key economic ministries, and will undertake a review of the administrative organization of the central bank. Civil service reform 25. In parallel with the restructuring of the public sector apparatus, the government will strengthen its administrative capacity and raise the quality of its decision-making by reorganizing the civil service. To this end, it will establish Civil Service Staff Regulations no later than December 2000, commence performance-based evaluations, and introduce public competitive recruitment. Judicial system reform 26. The government will continue to improve the effectiveness and transparency of the legal system so as to reinforce the rule of law. To improve effectiveness, steps will be taken to enhance the training of judges and members of the other branches of the legal profession, and to reduce the number of cases awaiting hearing in courts of first instance. The draft legislation governing organization of the judicial system, which is currently the focus of a review process, will be adopted before the end of June 1999. In addition, judges and members of the other branches of the legal profession will have the benefit of a continuous training program. C. Private Sector Development, Regulatory Framework, and Divestiture Program 27. The government's strategy for accelerating economic growth is founded mainly on a series of measures designed to support development of the private sector. In addition to the extensive privatization program discussed above, the following measures, which affect three key areas, are planned: (i) improvement of the legislative and regulatory framework supporting economic commercial activity; (ii) reform of direct taxation and elimination of tax distortions; and (iii) reform of the financial sector to enhance its efficiency, reinforce its soundness, and deepen financial intermediation. Legislative and regulatory framework 28. Over the PFP period, the government will adopt and implement an action plan for removing the administrative and regulatory barriers to private sector development identified in a recent report it requested from the Foreign Investment Advisory Service (FIAS). Priority will be given to simplifying the operations of the one-stop window, and reducing both the number of licenses required (in particular for the establishment of businesses and private associations) and the paperwork involved in obtaining them. Implementation of these measures will be monitored through user surveys and management audits of key institutions. The government will also encourage private initiative, at the same time promoting the competitiveness of the private sector by simplifying the formalities associated with the creation of both businesses and entrepreneurial associations. In an additional move to strengthen this competitiveness, the government, with World Bank assistance, will undertake a study on regulatory reform. Reform of the regulatory framework will be carried out in the following sectors: (i) telecommunications (June 1999); (ii) postal services (December 1999); (iii) water and power (November 1999); and (iv) air-transportation (December 1999). Direct taxation 29. With World Bank and IMF assistance, the government will reform the business profits tax and the personal income tax, with a view to reducing the relative tax burden affecting domestic production, while at the same time rationalizing investment incentives. The authorities will also take new administrative steps to enlarge the tax base and thereby keep fiscal revenues at an adequate level (Matrix, Section D1). In addition, the government will commence a study on ways to simplify the VAT system. However, should these reforms cause a temporary drop in revenue during transition from the present to the new fiscal system, the government wishes the World Bank to assist it with the mobilization of other resources to offset this loss. Financial sector 30. To increase private sector confidence in the banking system and to deepen financial intermediation, the strict enforcement of prudential regulations will continue to be essential. To this end, the BCM's supervisory capacity will be strengthened. In addition, banking supervision procedures will be improved and additional regulations aimed at enhancing both information disclosure and transparency will be issued. The authorities will come to an agreement with the Islamic Bank (BAMIS) on a new restructuring plan, which will include the repayment of the BCM advances by June 2000. The BCM will withdraw as a shareholder of the Housing Bank, but will supervise it closely to ensure that it takes the measures required to maintain financial viability in the long term. Petroleum prices 31. Petroleum product prices will be adjusted monthly to reflect movements in inter-national prices. In addition, by the end of 1999 the government will undertake a study in preparation for revising trading margins so as to foster greater competitiveness in the sale of these products. D. Natural Resources and Environment Rural sector 32. The government's strategy for rural sector development is to promote efficiency and diversification in agricultural production. Key measures to support this strategy have been introduced: (i) liberalization of the rice sub-sector (Annex 4); (ii) implementation of the Integrated Development Program for Irrigated Agriculture (PDIAM), which is supported by the World Bank and provides for the rehabilitation of irrigated areas; (iii) and expansion of access to credit for small producers, mainly by strengthening the specialized financial institution concerned. Environment 33. Addressing environmental concerns such as desertification, increased population pressures, and emerging urban environmental problems forms an integral part of the government's development strategy. Key measures that will be implemented over the program period include the preparation and implementation of a national strategy for the environment, the design of a multi-sectoral program to combat desertification, and the formulation of a legal and institutional framework for environmental management. Senegal River Valley environmental issues will be dealt with in conjunction with the neighboring countries. Fisheries sector 34. The government is committed to introducing measures to improve management of the country's fishery resources, in accordance with the strategy agreed with donors in June 1998. Key measures will include: (i) strengthening surveillance; (ii) evaluating the existing fishing rights and licensing system; (iii) issuing prohibitions and restrictions on fishing of specific species, in line with the recommendations of the National Center for Oceanographic and Fisheries Research (CNROP); and (iv) ensuring that fishing licenses are granted on the basis of CNROP recommendations for sound fisheries management, with information on the number of current fishing licenses to be published regularly. Mining sector 35. The government intends to promote the development of the mining sector and its contribution to national growth. A sector capacity building project, supported by the World Bank, will consist of a number of measures, including specifically: (i) reorganization of the Ministry of Mines; (ii) amendment of the legislation governing the sector, with promulgation of a new Mining Code in June 1999 and its implementing regulations the following September; and (iii) regulation and monitoring of development of the sector. The authorities also intend to formulate procedures for assessment of the environmental impact of mining activities, and to bring the registry of mines and mining activities into full operation. E. Infrastructure and Urban Development 36. The government recognizes the importance of providing effective electric power, water, and telecommunications services in response to steadily growing demand created by urban development, and of doing so within a market-based system. To this end, the government has decided to undertake the reform of the water, power, and telecommunications sectors. The objectives of reforms in the water and power sectors are to: (i) improve the performance of both sectors and provide access to these services to a larger number of consumers at affordable prices; (ii) reduce their production and distribution costs; and (iii) mobilize private capital to ensure an adequate level of investment, while reducing the burden on public sector finances. A feasibility study on technical and financial separation of the two sectors is to be completed by June 1999. A new legislative and regulatory framework will be put in place to enable the private sector to participate in both sectors, although SONELEC's "water assets" will continue to be government-owned. Water 37. The main features of water sector reform, scheduled for completion by October 2001 at the latest, will be: (i) the setting of tariffs on an economic-cost basis; (ii) the division of the sector into an urban subsector and a rural and semi-urban subsector; and (iii) the establishment of a partnership between the public and private sectors founded on the new sector's regulatory framework, and on the separation of the production, distribution, and marketing functions. Electricity 38. The main features of electric power sector reform will be: (i) the elimination of the public sector monopoly, more competition, and greater transparency; (ii) the privatization of SONELEC's assets; and (iii) the setting of tariffs on an economic-cost basis. The restructuring program will be carried out, with the assistance of an investment bank, in three stages, as per the details given in Annex 3. Telecommunications 39. Adoption by the government in May 1999 of a new telecommunications law has paved the way for a sector reform program in which the key components are privatization and increased competition. The government will adopt a new regulatory framework based upon the new legislation, and by the end of 1999 will issue an international call for tenders for the first cellular license to be granted to a private operator. The successful bidder will be selected by the end of March 2000. Implementation of the government's privatization strategy will take the form of the sale of the principal operating enterprise to a strategic partner (who will purchase a portion of enterprise capital) by the end of the year 2000 (Annex 3). Another component of the reform program will be promotion of the development of communications and information services in rural areas. Land and air transport 40. With support from the EU, the government has drawn up a ten-year transport development plan focused on a significant reduction in sector bottlenecks and on lowering transport costs by abolishing current price controls. At the same time, however, the government will assess the feasibility of granting transport budget subsidies to isolated rural regions, relying for this purpose on the findings of a planned study. In the interests of expanding the road system and upgrading road maintenance, the government, with assistance from donors, will commit the necessary resources, on a priority basis, for road construction and maintenance in agricultural production districts and isolated regions. In the air transport subsector, the government is already setting up an action plan for the privatization of Air Mauritanie which should be completed by the end of February 2000 at the latest (Annex 3). Urban development and decentralization 41. Given the rapid pace of urbanization, the government has opted for a strategy of gradually transferring responsibility for urban infrastructure to the municipalities, while assisting them to build up their management and resource mobilization capacities. It has also launched a long-term study on taxation by local authorities, which is scheduled for completion in June 1999. VI. Development of Human Resources and Poverty Alleviation Education 42. In April 1999, the government committed itself to an ambitions reform of the country's education system so that it would be in a position to meet the challenges of training for all in an increasingly open world. This reform program focuses mainly on: (i) elimination of the system of streams based on languages of instruction, and changeover to a single system; (ii) improvement of the quality of instruction through strengthening of the scientific disciplines; and (iii) education for all children of school age and strengthening of literacy programs. In order to fund this reform, the government is committed to raising its social expenditure to the levels agreed with the World Bank. In the case of primary education, the government's strategy is to achieve a 99 percent primary school gross enrollment rate by the end of the program period, and to reduce disparities between regions and between boys and girls. In addition, the government has decided to emphasize vocational education. As part of this process, particular attention will be paid to labor market needs, so that the mobilization, management, and effectiveness of resources in the sector can be improved. Health 43. On the health front, the government is committed to: (i) improving primary health services (maternal and child health and family planning programs in particular); (ii) extending the coverage of primary health care services in rural areas; (iii) expanding access to safe drinking water and sanitation in rural areas; and (iv) promoting a more decentralized and efficient health services delivery system, as well as greater community involvement. The government is also committed to increasing current expenditure in the health sector from 7 percent of total noninterest current expenditure in 1999 to 8.5 percent in 2002. Execution of the government's population policy action plan continues, and in 1999-2000 a population census and a demographic health survey will be conducted. 44. Monitoring of the measures introduced in the education and health sectors will be based on a range of quantifiable indicators such as specific expenditure targets, outputs such as enrollment rates and vaccination coverage, and social indicators such as infant mortality and malnutrition rates (Annex 5). Poverty reduction 45. The government's policies for the promotion of economic growth will support long-run poverty alleviation. The government remains strongly committed to taking immediate steps to reduce poverty by redirecting public expenditure toward priority social sectors. To this end, the program of labor-intensive public works, as well as credit arrangements for micro-enterprise promotion and for financing artisanal fisheries activities, will be further strengthened. Other elements of the government program include: (i) ensuring access to water and electric power in rural areas; (ii) allowing local authorities to allocate a larger share of their resources to the delivery of public services; (iii) strengthening the poverty-monitoring system as well as data collection through household surveys; and (iv) promoting savings and loan cooperative schemes, particularly in rural areas. In addition, the government is committed over the medium term to increasing its funding of social spending so as to enable the country to achieve the social objectives set as part of the HIPC Initiative. Women in development 46. To promote women in the development process, the government is implementing a plan of action which includes the provision of nonformal education, skills training, and assistance in the formation of cooperative production groups with a view to increasing women's participation in farming, livestock, and artisanal fishery activities. VII. External Financing Requirements and External Debt 47. Implementation of the reform program described above will contribute significantly to strengthening the balance of payments. The current account deficit (excluding official transfers) is expected to improve from 11.2 percent of GDP in 1999 to 10.1 percent of GDP in 2002. Exports are projected to grow at an average of 2.4 percent over the 1999-2002 period, driven by a recovery in export volumes of fish. In 1999, however, export growth is projected at only 1.4 percent on account of a projected 12 percent decline in international prices for iron which, along with lower prices for higher value fish (cephalopods), largely accounts for the terms of trade decline in 1999. Import volume growth is also expected to be fairly modest with a large decline in SNIM's investment-related imports offset by higher private sector imports driven by the growth in domestic demand. The net services position is projected to decline by 9 percent over the program period due to lower fishing royalties and higher business related service payments which are projected to rise broadly in line with nominal GDP. Official transfers increase until the year 2000 but decline thereafter mainly due to the assumption of a lower fisheries licence fee payment from the European Union following the expiry of the current agreement in that year. 48. Taking into account the current account deficit, scheduled external debt-service payments, the programmed reduction in arrears, and the target accumulation of external reserves, the gross external financing requirement would average about SDR 170 million per year in 1999?2002 (Table 3). Official disbursements (transfers and project loans) are expected to average SDR 112 million over the projection period, with a decreasing share accounted for by SNIM as its external financed investment projects wind down after 1999. In 1999, the financing gap of SDR 64 million is expected to be covered by: (i) highly concessional program disbursements from official sources (including SDR 2.7 million from IDA and SDR 14.3 million from the EU); (ii) use of Fund resources under the Enhanced Structural Adjustment Facility (ESAF) arrangement amounting to SDR 6.1 million; (iii) debt relief through a new Paris Club flow rescheduling (covering arrears and current maturities) on terms similar to those of the 1995 Naples terms rescheduling, and comparable treatment from non-Paris Club creditors. For 2000 and 2001, the financing gaps are projected at SDR 52.9 million and SDR 54.3 million, respectively, excluding purchases from the Fund, balance of payments support from other donors, or any rescheduling or forgiveness that might be obtained in those years. In order to cover those gaps, the government intends to request financial support from the Fund, the World Bank, and other multilateral and bilateral institutions, and will seek a rescheduling on debt due to official bilateral creditors on highly concessional terms. 49. External debt outstanding before debt relief is expected to decline from 215 percent of GDP at end-1998 to 169 percent at end-2002. Debt service before debt relief would decrease from about 34 percent of exports of goods and nonfactor services in 1998 to 27 percent in 2002 and from 51 percent of central government revenue in 1998 to 40 percent in 2002. Assuming a new flow rescheduling from the Paris Club, and terms at least as comparable granted by non-Paris Club bilateral creditors, the debt-service ratio is expected to decline to 22 percent in 2002. VIII. Regional Cooperation and Technical Assistance Requirements Regional cooperation 50. The government will continue to seek ways to improve cooperation and coordination of efforts at the regional level in order to ensure successful implementation of its reforms. To this end, Mauritania will proceed with implementation of a fisheries resource management program in an attempt to extend this framework at the sub-regional level. Actions undertaken by Mauritania in cooperation with its neighboring countries as part of the campaign against epidemics of water-borne diseases are already beginning to show results. Technical assistance needs 51. Multilateral and bilateral agencies will continue to provide technical assistance in support of the government's structural reform program, in accordance with the details given in the Matrix and Annexes. The government will ensure that requirements are properly prioritized, that adequate Mauritanian personnel and local resources are allocated to counterpart work, and that the recommendations set forth in the programs are implemented in a timely manner. 1 Mauritania has also benefited from considerable external financial assistance, mainly from Paris Club and other bilateral creditors. 2 The second stage of the trade reform was implemented, as scheduled, at the beginning of 1998. 3 A modest diversification of the economy is expected as a result of structural reforms detailed below. Sectors projected to grow faster than GDP include: nontraditional agriculture and services (in particular tourism). A gradual recovery of the fisheries sector is also projected. 4 Projections are based on conservative assumptions concerning a new agreement with the E.U.
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
