IMF Executive Board Concludes 2019 Article IV Consultation with the Islamic Republic of Mauritania
IMF News, December 12, 2019
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- Published: December 12, 2019
Context and program background
- The Executive Board concluded the 2019 Article IV consultation with the Islamic Republic of Mauritania on December 11, 2019.
- The Board also completed the fourth review of the three-year arrangement with Mauritania under the Extended Credit Facility covering 2017–20; a press release on the review was issued separately.
- Mauritania is characterized as a low-income country with sizable development needs and dependence on commodity exports. The economy was hit by the 2014–15 drop in commodity export prices.
- Since late 2017, the authorities’ economic program has been supported by a three-year Extended Credit Facility arrangement.
Recent macroeconomic performance and outlook
- Growth:
- Growth accelerated to 6.9 percent in 2019, up from 3.4 percent in 2018.
- Growth is projected at 6.3 percent in 2020.
- Drivers include buoyant activity in both extractive and non-extractive sectors and favorable terms of trade; continued expansion of mining production and upcoming development of a large offshore gas field are expected to support growth.
- Inflation and prices:
- GDP deflator: -4.2 (2015), 2.7 (2016), 4.7 (2017), 2.9 (2018), (no 2019 value shown in table).
- Consumer prices (period average): 0.5 (2015), 1.5 (2016), 2.3 (2017), 3.0 (2018).
- External position and reserves:
- Gross official reserves (in millions of US$, eop): 822.8 (2015), 824.4 (2016), 849.0 (2017), 918.3 (2018), 1,105.0 (2019), 1,180.8 (2020).
- Current account balance (in percent of GDP): -19.8 (2015), -15.1 (2016), -13.8 (2017), -18.7 (2018), -11.4 (2019), -20.7 (2020).
- External public debt (in millions of US$): 3,208.6 (2015), 3,354.9 (2016), 3,573.0 (2017), 3,616.3 (2018), 3,698.7 (2019), 3,912.7 (2020).
- External public debt (in percent of GDP): 66.4 (2015), 71.6 (2016), 72.5 (2017), 69.2 (2018), 65.6 (2019), 66.2 (2020).
- Fiscal:
- Revenues and grants (in percent of nonextractive GDP): 32.6 (2015), 31.7 (2016), 31.8 (2017), 33.7 (2018), 31.5 (2019), 29.9 (2020).
- Taxes (in percent of nonextractive GDP): 16.9 (2015), 18.7 (2016), 19.7 (2017), 20.9 (2018), 20.7 (2019), 20.8 (2020).
- Expenditure and net lending (in percent of nonextractive GDP): 37.2 (2015), 32.3 (2016), 31.9 (2017), 30.0 (2018), 28.9 (2019), 29.5 (2020).
- Current expenditure: 20.6 (2015), 19.0 (2016), 19.6 (2017), 19.2 (2018), 18.9 (2019), 18.9 (2020).
- Capital expenditure: 15.8 (2015), 13.3 (2016), 12.3 (2017), 10.8 (2018), 10.3 (2019), 10.6 (2020).
- Primary balance (excl. grants): -4.5 (2015), -1.5 (2016), 0.3 (2017), 4.8 (2018).
- Overall balance (in percent of GDP): -3.4 (2015), -0.5 (2016), 0.0 (2017), 3.3 (2018), 2.1 (2019).
- Sectoral growth (annual change in percent):
- Real extractive GDP: -5.6 (2015), 0.7 (2016), -7.1 (2017), -18.6 (2018), 27.7 (2019), 10.2 (2020).
- Real non-extractive GDP: 1.4 (2015), 2.0 (2016), 4.5 (2017), 6.1 (2018), 5.0 (2019), 5.8 (2020).
- Financial indicators:
- Broad money: 7.1 (2015), 13.7 (2016), 13.8 (2017), 14.0 (2018), 11.4 (2019).
- Credit to the private sector: 9.7 (2015), 8.1 (2016), 7.5 (2017), 19.4 (2018), 11.0 (2019).
- Commodity price:
- Price of iron ore (US$/Ton): 56.1 (2015), 58.6 (2016), 71.1 (2017), 70.1 (2018), 93.9 (2019), 76.4 (2020).
- Memoranda:
- Nominal GDP (in millions of US$): 4,830.5 (2015), 4,685.6 (2016), 4,925.1 (2017), 5,227.0 (2018), 5,641.1 (2019), 5,912.2 (2020).
- Per capita GDP: US$ 1,335 (2014).
- Poverty rate: 31 percent (2014).
- Population: 4 million (2014).
- Quota: SDR 128.8 million.
Executive Board assessment and key messages
- Directors welcomed Mauritania’s strong macroeconomic performance under the ECF-supported program and the authorities’ continued commitment to program objectives.
- Directors noted the positive economic outlook but emphasized that external downside risks remain elevated, including the global slowdown, commodity price volatility, and security threats in the Sahel.
- Key priorities highlighted by Directors:
- Continue implementation of sound policies and structural reforms and make efficient use of fiscal space to entrench macroeconomic stability and debt sustainability and to achieve sustainable and more inclusive growth to reduce persistent poverty and inequalities.
- Pursue prudent fiscal policies while using available fiscal space to increase social and infrastructure spending to help achieve the SDGs.
- Maintain primary budget surpluses in the medium term and rely mainly on concessional borrowing.
- Strengthen revenue mobilization and rationalize current expenditures; priority actions include strengthening tax and customs administration and broadening the tax base.
- Improve budget preparation and execution frameworks, including strengthening public investment management.
- Establish robust macro-fiscal and institutional frameworks for managing future gas revenues.
- Operationalize the monetary policy framework and complete reform of the official foreign exchange market to ease liquidity conditions and support growth and competitiveness.
- Strengthen prudential requirements and bank supervision to improve financial sector soundness and increase banks’ ability to finance economic growth and SMEs.
- Further strengthen the AML/CFT framework.
- Implement structural reforms to enhance the business environment, improve transparency in the extractive sectors, and fight corruption; strengthen public financial management and push forward with the national anti-corruption strategy.
- Better fund the court system and audit institutions.
Risks and challenges
- Persistent development challenges: high poverty, poor social outcomes, and limited infrastructure.
- Elevated downside risks stemming from:
- Global slowdown.
- Commodity prices volatility.
- Security threats in the Sahel.
- Fiscal execution challenge noted: fiscal space was created by solid non-extractive tax revenue performance, albeit also by under-execution of public investment.
- Debt considerations: external public debt levels and need to rely mainly on concessional borrowing to maintain sustainability.
IMF Press Release No. 19/454, December 12, 2019.
