Press Release No. 11/379

Press Release No. 11/379
October 24, 2011

A mission from the International Monetary Fund (IMF), headed by Mr. Amine Mati, visited Nouakchott during October 11-24, 2011 in connection with the third review of the 2010-2012 three-year arrangement under the Extended Credit Facility.¹ During its time in Mauritania, the mission traveled to Zouèrate and Nouadhibou where it visited mining, port, and fishery facilities. At the end of its visit, the mission issued the following statement:

“The macroeconomic results recorded during the first half of 2011 have been satisfactory. The data available point to favorable economic performance, particularly in construction and public works, and in manufacturing. Accordingly, the rate of growth in real gross domestic product (GDP) is expected to turn out at around 4.8 percent in 2011 despite the unfavorable performance of the agriculture sector. Inflation was held below 6 percent at end-June 2011 despite rising petroleum product prices. The favorable performance of mining exports helped improve the current account balance and achieve a level of reserves of US$522 million at end-September 2011, or 3.8 months of imports. However, growth is not yet sufficiently anchored in job-creating activities capable of achieving significant reductions in the high rates of unemployment and poverty.

“The mission congratulated the authorities on the efforts made to achieve all the quantitative targets under the program for end-June 2011. The significant improvement in government revenue was reflected in a better-than-anticipated fiscal balance and a record level of Treasury assets. The mission welcomes the progress made in exceeding the target for pro-poor spending, and encourages the authorities to avoid any arrears to public or private enterprises.

“Furthermore, the mission reached consensus with the government on the need to continue fiscal consolidation efforts, initiate structural reforms in the civil service and public enterprises, and deepen ongoing reforms in public financial management and the financial sector. The mission agrees with the government on the need for an effective policy of well-targeted social safety nets, and on the need to instill a climate conducive to private sector development. Satisfactory implementation of all these reforms should help achieve strong, inclusive, and income-generating growth for all of the Mauritanian people.

“The mission and the authorities believe that 2012 will be a year of challenges linked to the effects of an acute drought and to the uncertainties surrounding mining product prices. The mission supports the government’s efforts to implement a temporary emergency program to mitigate the impact of the drought. The mission encourages the authorities to ensure, with assistance from the country’s development partners, that these programs are properly targeted and efficient, based in particular on assessments of similar past experiences.

“Furthermore, the objectives agreed with the authorities for 2012 remain in line with the program, which will allow for sustainable fiscal policy and strengthened macroeconomic stability. These objectives consist in achieving a rate of growth of 5.5 percent in real GDP, maintaining the inflation rate at 7 percent, improving the fiscal balance, and raising international exchange reserves to 4 months of imports.

“The IMF staff will recommend that management request the completion of the third review under the ECF, to be taken up by the Executive Board in December 2011.

“The mission was received by the President of the Republic, and met with economic and financial policymakers as well as members of parliament, members of the diplomatic corps, and representatives of the banking and business sectors, the donor community, and civil society. The mission would like to take this opportunity to thank the authorities for their warm welcome and hospitality, as well as for the highly satisfactory conditions under which the work took place.”

---

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 currently carries a zero interest rate, with a grace period of 5½ years, and a final maturity of 10 years. The Fund reviews the level of interest rates for all concessional facilities every two years.