IMF Executive Board Concludes 2022 Article IV Consultation and approves $ 86.9 Million Extended Credit Facility and Extended Fund Facility for the Islamic Republic of Mauritania

IMF News, January 25, 2023

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IMF Executive Board Concludes 2022 Article IV Consultation and approves $ 86.9 Million Extended Credit Facility and Extended Fund Facility for the Islamic Republic of Mauritania

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Bibliographic details

• Published: January 25, 2023

Board decision and financing

• Approved 42-month arrangements of SDR 64.40 million (about US$ 86.9 million) under the Extended Credit Facility and Extended Fund Facility for the Islamic Republic of Mauritania.
• Immediate disbursement: SDR 16.10 million (US$ 21.7 million).
• Remaining amount to be phased in over program duration, subject to semi-annual reviews.

Program objectives and policy pillars

• Overall aims:
  • Preserve macroeconomic stability.
  • Strengthen fiscal and monetary policy frameworks.
  • Improve governance and promote private sector development.
  • Consolidate foundations for sustainable, inclusive growth and reduce poverty.
• Three program pillars:

1. Improving medium-term budgeting to maintain fiscal sustainability, gradually reduce debt, smooth volatility of extractive revenues, and protect social spending. 2. Strengthening monetary and foreign exchange policy frameworks and developing money and foreign exchange markets to better control inflation and increase resilience to exogenous shocks. 3. Structural reforms to strengthen governance, transparency, and the private sector through an improved business climate and financial inclusion.

Economic outlook and recent developments

• Growth and inflation:
  • Economic growth accelerated and is expected to reach 5.3 percent in 2022, driven primarily by the mining sector, agriculture, and fisheries.
  • Inflation is expected to stabilize at approximately 11 percent as a result of the tight monetary policy conducted recently by the Banque Centrale de Mauritanie (BCM).
• External and fiscal context:
  • A confluence of shocks including Russia’s war in Ukraine and regional tensions reverted the trend accumulation of foreign exchange reserves in 2022 and narrowed space for policy intervention.
  • Surging international commodity prices have led to inflationary pressures and food insecurity.
  • The authorities’ strategy preserves infrastructure investment and social spending while emphasizing disciplined fiscal policy to contain debt.
• Monetary and financial sector stance:
  • The Central Bank of Mauritania has tightened monetary policy in 2022 to contain rising inflation.
  • Continued tight monetary policy, closely coordinated with budget execution, is recommended to manage banking system liquidity and reduce inflation.
  • Careful monitoring of financial sector developments is needed to strengthen banking sector resilience.
• Structural reform priorities:
  • Improve governance, transparency, business environment, and financial inclusion.
  • Enhance public investment efficiency through better prioritization, implementation, and maintenance.
  • Mitigate challenges posed by climate change.

Selected economic indicators, 2021–23 (as presented)

• Poverty rate: 28 percent (2019)
• Quota: SDR 128.8 million
• Population: 4.4 million (2018)
• Main exports: iron ore, fish, gold

• National accounts and prices (Annual change in percent; unless otherwise indicated)
  • Real GDP: 2021: 2.4; 2022 Est.: 5.3; 2023 Proj.: 4.3
  • Real extractive GDP: 2021: -12.6; 2022 Est.: 17.0; 2023 Proj.: 8.3
  • Real non-extractive GDP: 2021: 6.3; 2022 Est.: 2.1; 2023 Proj.: 3.3
  • GDP deflator: 2021: 12.6; 2022 Est.: 0.2; 2023 Proj.: 2.5
  • Consumer prices (end of period): 2021: 5.7; 2022 Est.: 11.0; 2023 Proj.: 9.0

• Central government operations (In percent of nonextractive GDP; unless otherwise indicated)
  • Revenues and grants: 2021: 27.3; 2022 Est.: 29.7; 2023 Proj.: 27.1
  • Nonextractive: 2021: 19.9; 2022 Est.: 20.7; 2023 Proj.: 21.9
  • Taxes: 2021: 13.8; 2022 Est.: 15.5; 2023 Proj.: 16.6
  • Extractive: 2021: 4.6; 2022 Est.: 7.1; 2023 Proj.: 3.5
  • Grants: 2021: 2.7; 2022 Est.: 1.8; 2023 Proj.: 1.7
  • Expenditure and net lending: 2021: 24.5; 2022 Est.: 31.4; 2023 Proj.: 30.3
  • Current: 2021: 15.4; 2022 Est.: 21.0; 2023 Proj.: 18.7
  • Capital: 2021: 9.2; 2022 Est.: 10.5; 2023 Proj.: 11.5
  • Primary balance (excl. grants): 2021: 1.1; 2022 Est.: -2.5; 2023 Proj.: -3.9
  • Overall balance (in percent of GDP): 2021: 2.2; 2022 Est.: -1.4; 2023 Proj.: -2.6
  • Public sector debt (in percent of GDP) 1/ 2/: 2021: 49.1; 2022 Est.: 48.4; 2023 Proj.: 50.3

• Money and Credit
  • Broad money: 2021: 20.4; 2022 Est.: 5.0; 2023 Proj.: 8.1
  • Credit to the private sector: 2021: 8.4; 2022 Est.: 16.4; 2023 Proj.: 12.1

• Balance of Payments
  • Current account balance (in percent of GDP): 2021: -7.9; 2022 Est.: -17.3; 2023 Proj.: -11.4
  • Excl. externally financed extractive capital imports: 2021: 0.9; 2022 Est.: -7.5; 2023 Proj.: -5.5
  • Gross official reserves (in millions of US$, eop) 3/: 2021: 2,347.5; 2022 Est.: 1,501.3; 2023 Proj.: 1,568.3
  • In months of prospective non-extractive imports: 2021: 7.3; 2022 Est.: 5.1; 2023 Proj.: 5.2
  • External public debt (in millions of US$) 2/: 2021: 4,285.0; 2022 Est.: 4,312.8; 2023 Proj.: 4,560.2
  • External public debt (In percent of GDP): 2021: 43.3; 2022 Est.: 41.8; 2023 Proj.: 43.4

• Memorandum items:
  • Nominal GDP (in millions of US$): 2021: 9,891.6; 2022 Est.: 10,314.1; 2023 Proj.: 10,507.2
  • Price of iron ore (US$/Ton): 2021: 158.2; 2022 Est.: 121.0; 2023 Proj.: 101.5

Key messages from IMF statement (Mr. Kenji Okamura, Deputy Managing Director and Acting Chair)

• Recovery placed on track by determined COVID-19 response and sizable international financial support; international reserves accumulated and fiscal balance ended in a surplus in 2021.
• 2022 shocks reversed reserves accumulation and narrowed policy space; significant human and infrastructure development needs remain.
• Tightened monetary stance in 2022 was appropriate; continued tight policy coordinated with budget execution is needed.
• Fiscal discipline required while preserving infrastructure and social spending; rebalancing away from untargeted current spending and improving public investment efficiency are needed.
• Decisive structural reforms are essential to limit COVID-19 scarring and enable higher, more inclusive, private sector-led growth.
• The 42-month arrangements provide a credible policy package to maintain reserves above adequacy threshold, prepare for greater exchange rate flexibility, strengthen policy frameworks, and promote sustainable and inclusive growth, including human capital development and poverty reduction.

IMF Press Release No. 23/15, January 25, 2023 — IMF Communications Department

References

• PRESS CENTER
• https://www.imf.org/en/home