Press Release No. 08/63

Press Release No. 08/63

An International Monetary Fund (IMF) mission led by Mr. Dominique Guillaume visited Nouakchott on March 8-21, 2008 to carry out the Article IV consultations for 2008 and conduct the third review under the three-year program supported by an arrangement under the Poverty Reduction and Growth Facility (PRGF):

At the conclusion of the visit, the mission issued the following statement:

"In the context of the Article IV consultations, the mission reviewed recent economic developments and discussed the government's strategy to accelerate economic growth so as to reduce the unemployment rate and raise living standards. In particular, the mission reviewed with the government measures to make the tax framework more favorable to investment, improve access to credit, develop basic infrastructures, strengthen good governance, and enhance the effectiveness of the judicial and financial systems.

"The mission also discussed with the authorities the government's program to ensure food security and tackle the food access crisis that could potentially result from high international food prices and tighter import trade channels.

"The mission also reviewed the implementation of the program, which remains satisfactory. All performance criteria and benchmarks for end-December 2007 were met. Macroeconomic developments in the fourth quarter of 2007 were generally in line with program targets, in spite of difficult economic conditions. Non-oil GDP growth in 2007 benefited from the rebound in agricultural production and the development of new mining projects to reach almost 6 percent. Foreign exchange reserves were slightly above the target for end-2007. The budget deficit was kept within the limits set in the program. In spite of inflationary pressures, due especially to higher imported food prices, year-on-year inflation (measured in Nouakchott) fell from 8.9 percent at end-2006 to 7.4 percent at end-2007. The current account deficit of the balance of payments widened to around 11 percent of GDP in 2007, mainly due to lower oil exports combined with the adverse effects of higher import prices.

"The Mauritanian authorities continue to make progress with structural reforms. In particular they have strengthened tax administration by creating a central taxpayer database. The authorities also continued implementing meaures to strengthen governance and transparency, in particular by publishing the audit of accounts at end-2006 for Société Mauritanienne des Hydrocarbures (SMH). There has also been progress in rehabilitating the financial system, in spite of the volume of bad debts."