IMF Executive Board Completes Third Review Under Mauritania’s Extended Credit Facility Arrangement and Approves US$17.1 Million DisbursementPress Release No. 11/459
December 12, 2011
The Executive Board of the International Monetary Fund (IMF) completed today the third review of Mauritania’s economic performance under the program supported by an Extended Credit Facility arrangement (ECF). 1 The Board’s decision, which was taken on a lapse of time basis,2 enables the immediate disbursement of an amount equivalent to SDR 11.04 million (US$17.1 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 44.16 million (US$68.4 million).
The Executive Board approved a three-year arrangement for Mauritania in March 2010 for an amount equivalent to SDR 77.28 million (about 120 percent of the country’s quota in the IMF, see Press Release No. 10/89).
Mauritania’s macroeconomic performance continues to be strong, despite high international fuel and food prices and a severe drought. Economic activity has been resilient, inflation has been contained, and the fiscal and external positions have improved, creating space for a surge in reserves and a record decline in government borrowing.
However, significant challenges remain. The outlook for 2012 is highly vulnerable to a sharp fall in external demand or a more severe than expected drought impact, which may require additional external assistance. Moreover, growth is still not sufficiently broad-based to reduce unemployment and poverty, especially in rural areas, where both remain high.
Continued fiscal consolidation is necessary to limit vulnerabilities and maintain macroeconomic stability. The draft 2012 budget appropriately preserves fiscal discipline while allowing for drought relief expenditures and protecting much needed investment spending. Decisive actions on subsidy and civil service reform as well as greater revenue mobilization are essential for creating much needed fiscal space and reducing fiscal policy’s reliance on volatile mining revenues. Reaching agreement on outstanding debt relief is critical for preserving debt sustainability.
Continued satisfactory program implementation—including through the introduction of well-targeted social safety nets, effective implementation of the new investment and procurement codes, and reinvigorating labor market and public enterprise reforms—will help secure broad-based inclusive growth, improve employment, and reduce poverty.
1 The Extended Credit Facility (ECF) has replaced the Poverty Reduction and Growth Facility (PRGF) as the Fund’s main tool for medium-term financial support to low-income countries by providing a higher level of access to financing, more concessional terms, enhanced flexibility in program design features, and more focused streamlined conditionality. Financing under the ECF carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years (http://www.imf.org/external/np/exr/facts/ecf.htm). The Fund reviews the level of interest rates for all concessional facilities every two years.
2 The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.