News Brief: IMF Completes Sixth Review Under Mauritania's PRGF Arrangement and Approves US$8 Million Disbursement
December 4, 2002
The Executive Board of the International Monetary Fund (IMF) today completed the sixth and final review of Mauritania's performance under an economic program supported by the Poverty Reduction and Growth Facility (PRGF). As a result, Mauritania will be able to draw up to SDR 6.07 million (about US$8 million).
The Board also waived Mauritania's non-observance of the structural performance criterion on the publication of the 2001 Banque Centrale de Mauritanie (Mauritanian Central Bank) audited financial statements and related audit opinion.
Mauritania's three-year arrangement was originally approved on July 21, 1999 (see Press Release 99/32) under the former Enhanced Structural Adjustment Facility. So far, Mauritania has drawn SDR 36.42 million (about US$48 million).
The PRGF is the IMF's concessional facility for low income countries. It is intended that PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated in a Poverty Reduction Strategy Paper (PRSP). This is intended to ensure that PRGF-supported programs are consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5 ½-year grace period on principal payments.
After the Executive Board's discussion on Mauritania, Eduardo Aninat, Deputy Managing Director and Acting Chair, stated:
"The Mauritanian authorities have successfully concluded the current PRGF arrangement, contributing importantly to strong growth, low inflation, and a comfortable level of international reserves—despite a difficult external environment. The authorities have shown strong ownership of the program, and have indicated their intention to maintain a close relationship with the Fund, with a successor program. Mauritania reached its completion point under the enhanced HIPC Initiative in June 2002. Based on the debt relief provided by this Initiative, Mauritania's external debt situation has become more sustainable.
"The key challenges for the future are to reduce external vulnerability by diversifying the economy, and make significant progress in the fight against poverty, as about half of the population continues to live below the poverty line. The authorities are determined to further improve social indicators by strengthening their implementation capacity, and committing the resources freed by debt reduction provided under the HIPC Initiative to essential social spending programs. The success of the child vaccination program and improvements in school enrollment indicators give early evidence of the progress being made in these areas.
"The current monetary policy stance is appropriate to keep inflation low. A move toward a more fully market-based credit allocation mechanism would be an important step to enhance transparency and increase intermediation. Efforts by the authorities to improve the functioning of the foreign exchange market would strengthen the framework for private investment and growth and reduce market uncertainty.
"The authorities' overall fiscal policy stance as outlined in the 2003 budget is appropriate. The authorities aim to maintain a sound tax base and be mindful of revenue slippages. To this end, they are prepared to take contingency measures in case of shortfalls in the 2003 budgetary revenues.
"The authorities' efforts to improve fiscal transparency and accountability will also help to better track poverty-related expenditures financed by HIPC resources. Improvements in the treasury accounting system and the production of monthly economic and financial fiscal accounts beginning next year would reinforce the efforts already made," Mr. Aninat said.