IMF Executive Board Completes Third Review Under the PRGF Arrangement with the Islamic Republic of Mauritania and Approves US$ 3.1 Million DisbursementPress Release No. 08/117
May 19, 2008
The Executive Board of the International Monetary Fund (IMF) today completed the third review of the Islamic Republic of Mauritania's economic performance under a three-year Poverty Reduction and Growth Facility (PRGF) arrangement. The completion of the review enables the release of an amount equivalent to SDR 1.93 million (about US$3.1 million), bringing total disbursements under the arrangement to SDR 10.31 million (about US$16.6 million).
The three-year PRGF arrangement for Mauritania was approved on December 18, 2006 (see Press Release No. 06/288) in an amount equivalent to SDR 16.1 million (about US$26 million).
Following the Executive Board discussion on Mauritania, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated:
"Mauritania's economic performance under its PRGF-supported program remained satisfactory despite a steeper-than-expected decline in oil production and a difficult external environment. All quantitative targets and structural benchmarks under the PRGF arrangement were observed, and fiscal and monetary developments were in line with program projections. Sound macroeconomic policies helped control inflation, contain the fiscal deficit, and strengthen foreign exchange reserves.
"Significant progress was achieved in the governance and structural reform areas, including the submission to parliament of a new mining code, the publication of oil production sharing contracts and the introduction of a centralized taxpayer database covering the main cities.
"The authorities have engaged in a comprehensive reform agenda to stimulate non-oil growth and reduce poverty, while remaining committed to macroeconomic stability. They intend to improve infrastructure, enhance competitiveness, promote private sector development, improve fiscal management, fight corruption, and increase the government's efficiency in delivering public services.
"The authorities' response to the potential food access crisis is timely and adequate, and their commitment to continue to monitor closely the situation and the impact of the emergency measures is reassuring. In light of the downward revision of the oil revenue outlook and the high increases in food and fuel prices, it will be important to maintain a cautious fiscal stance, based on the mobilization of additional tax revenue, and the acceleration of public sector reforms. The restructuring of the state-owned enterprises will contribute to improving their services, ensuring their financial viability, and avoiding any further drain on the budget.
"Monetary policy will continue to be geared towards controlling inflation in the context of a flexible exchange rate regime. The authorities' ambitious multi-pronged financial sector reform strategy, in line with Financial Sector Aassessment Program recommendations, will help create the conditions for higher private-sector led growth. Improving the commercial banks' financial situation, facilitating access to banking services, and increasing competition in the sector, particularly through the presence of foreign banks, should strengthen the financial sector.
"To ensure Mauritania's debt sustainability, the authorities will rely on concessional external financing and seek agreements with the creditors that have not yet provided debt relief under the enhanced Heavily Indebted Poor Countries Initiative," Mr. Portugal said.