Islamic Republic of Mauritania and the IMF
Press Release: IMF Approves a Three-Year, US$8.8 Million PRGF Arrangement for the Islamic Republic of Mauritania
July 18, 2003
Country's Policy Intentions Documents
Free Email Notification
Islamic Republic of Mauritania—Letter
of Intent, Memorandum of Economic and Financial Policies, and Technical
Memorandum of Understanding
Mr. Horst Köhler
The International Monetary Fund Executive Board approved, on July 7, 1999, a program supported by the Poverty Reduction and Growth Facility (PRGF). This program, which helped support the government's economic reform, expired on December 20, 2002.
In order to consolidate progress made so far, the government has prepared a new economic reform program, based on the policies set out in the Poverty Reduction Strategy Paper (PRSP), covering a three-year period starting in April 2003. The government plans to maintain macroeconomic stability and deepen the structural reforms, notably by increasing the country's implementation and institutional capacity, improving the functioning of the banking system and financial intermediation, and enhancing fiscal transparency. Details of the program objectives and measures that will be undertaken during the first year are set out in the attached memorandum of economic and financial policies (MEFP).
To support this program, the government is thereby requesting a three-year arrangement under the PRGF in the amount of SDR 6.44 million.
The government believes that the policies set forth in the attached MEFP will enable it to meet the objectives established in the PRGF-supported program, but will take any further measures that might be necessary for this purpose. The government will continue to provide the Fund with all the information required for better monitoring of the implementation of established economic policies.
It is understood that the government will remain in contact with Fund staff and will consult the IMF from time to time, on its own initiative or whenever the Managing Director so requests, regarding Mauritania's economic and financial policies.
1. Over the last three years, Mauritania has resolutely focused its development efforts on achieving the goals of macroeconomic stability and poverty reduction. Accordingly, the government has implemented an economic program supported by the Poverty Reduction and Growth Facility (PRGF) and prepared a poverty reduction strategy framework (PRSP) for 2001-15, with the aim of achieving a significant reduction in poverty.
2. The government of Mauritania requests the Fund's assistance, in the context of a new PRGF arrangement, to strengthen its capacity in designing and implementing appropriate macroeconomic policies and structural reforms that are necessary to ensure macroeconomic stability and accelerate growth. The new PRGF arrangement would build upon the results achieved so far and contribute to the successful implementation of the poverty reduction strategy framework. The government also hopes to have the support of other development partners—notably a poverty reduction support credit (PRSC), currently being prepared by the World Bank.
3. Considerable progress has been made in consolidating macroeconomic stability, achieving high rates of growth, strengthening public expenditure management, and improving social indicators. Nonetheless, much work remains to strengthen further the banking system and deepen financial intermediation, enhance the functioning of the exchange market, diversify the production and export base, increase social spending, and improve its efficiency (PRSP Progress report, paras. 9 and 11).
4. This memorandum confirms the main outline of the documents prepared by the government and forwarded to IMF staff, and revises a number of details in light of discussions with Fund staff. In addition, it evaluates the progress achieved under the previous arrangement, presents the medium-term strategy, and describes the measures and actions envisaged in the program for the first year (April 2003-March 2004).
II. Recent Economic Developments
5. In 2002, in spite of an unfavorable domestic and external economic environment, Mauritania obtained good results in the conduct of its macroeconomic policy. Cold rains early in the year, the insufficient rains, and the contraction of fish exports and iron ore production affected economic activity. Thus, economic growth—initially projected at 5 percent—was 3.3 percent. The contribution of services to growth has continued to increase, primarily reflecting the favorable results achieved in construction, commerce, transport, and telecommunications. The 12-month inflation rate at end-2002 reached 8.4 percent compared with the program target of 5.6 percent, on account of: (a) the higher food prices due to the drought, (b) the adjustment of oil and gas prices in September, and (c) the delayed effect of the sustained depreciation of the ouguiya, in particular with respect to the euro. The average inflation rate, nonetheless, remained slightly below the target of 4 percent (PRSP, para. 27).
6. The external current account balance recorded a substantial surplus partly reflecting the receipt of two payments (for 2001 and 2002) under the fisheries agreement with the EU. Gross official reserves rose to US$400 million by end-December 2002 (i.e., approximately 9 months of imports, excluding imports of goods and nonfactor services related to crude oil exploration). The real effective exchange rate depreciated by 7 percent in 2002, with the ouguiya slipping by 1.2 percent vis-à-vis the dollar and 20 percent relative to the euro. The spread between the parallel market rate and the official rate has narrowed to less than 6 percent in recent months, thanks in particular to the fact that the central bank engaged in substantial intervention operations on the exchange market beginning in the last quarter of 2002.
7. Cautious monetary and fiscal policies were followed during 2002. While credit to the private sector increased at about 20 percent in spite of the high lending rates, the growth in the money supply was only 9 percent. To some extent this reflected the large budget surplus (here again attributable to the two payments under the fisheries agreement with the EU). The fiscal surplus (excluding grants) reached 6.2 percent of GDP. The tax revenue to GDP ratio was slightly lower than anticipated—14.2 percent—reflecting a shortfall in the operating profit tax (TCA) on the SNIM mining company. Capital expenditure increased significantly following the marked improvement in the project execution rate in comparison with previous years.
8. In the wake of the agreement reached with Paris Club member countries, the government has redoubled its efforts to have non-Paris Club creditors grant debt relief on terms at least comparable to the terms obtained from the Paris Club. Accordingly, since the completion point under the enhanced HIPC Initiative, agreements have been reached with all participating countries and international financial institutions with the exception of Brazil, the United Kingdom (among members of Paris Club), and Algeria, Libya, Iraq, and the Organization of Arab Petroleum Exporting Countries (OAPEC).
III. Policy Framework and Objectives in the Medium-Term
9. In accordance with the guidelines of the PRSP, the fundamental goal of the Mauritanian government is to reduce poverty and to improve the living conditions of the population. Accordingly, the chosen strategy is based on 4 complementary and self-reinforcing components: (a) achieving more rapid economic growth; (b) anchoring economic growth in poor areas; (c) pursuing human resource development and expansion of basic social services; and (d) promoting institutional capacity-building and governance (PRSP, Box 1).
10. The new program will be based on the PRSP strategy, and in that context, the macroeconomic framework has been revised in accordance with the second progress report on the implementation of the PRSP (PRSP progress report, Appendix 1). The new program envisages real growth of GDP in the range of 5-6 percent a year, end of period inflation rate of less than 4 percent over the period 2003-05, and a comfortable level of gross reserves equivalent to about 6 months of imports in order to safeguard the economy—specifically, priority expenditures—against any unfavorable external shocks.
11. Economic growth is projected to be driven by the following sectors: commerce, transport and telecommunications, irrigated agriculture, as well as the anticipated increase in iron ore output following the expansion in SNIM's production capacity. Beginning in 2006, oil production is expected to make a significant contribution toward growth, even on the basis of conservative assumptions, with a growth rate reaching 9 percent by 2006. The increase in public investment (with a view to achieve more rapid poverty reduction), as well as the sizable level of private investment—notably in development phase of the petroleum sector (2004-05)—will also help to achieve higher growth. Finally, with a view to broaden the production and export base, the government—with the support of its development partners—will implement the recommendations of the studies on the competitiveness of the economy and its commercial integration, economic regulations, stockbreeding, livestock, industry, tourism, and artisanal fishing.
12. Higher economic growth requires maintaining macroeconomic stability, boosting private investment, building infrastructure in support of investment, and implementing appropriate sectoral strategies. Reforms designed to improve financial intermediation and the performance of the exchange market, simplify business taxation, improve governance—specifically reform of the judiciary—and achieve capacity building can be expected to stimulate private investment and growth. The government will focus its efforts on strengthening the capacities of the administration and on improving governance. In this respect, a capacity-building strategy is currently being prepared and will be implemented in 2004 (PRSP, Sections 1 and 4).
13. In the medium term (2003-07), fiscal policy will aim at supporting pro-poor expenditure, monetary policy will be geared toward maintaining price stability, while exchange rate policy will aim at safeguarding the economy from exogenous shocks. The slight increase in the budget deficit in 2003-05 (an average of 2.6 percent of GDP) will be accompanied by a broadening of the tax base and financed by grants and concessional loans, in order to ensure the sustainability of the external debt following the recent attainment of the completion point under the enhanced HIPC Initiative. The downtrend in tax revenues will continue in 2003, reflecting the reduction in income taxes, although this trend will reverse and pick up over the period 2004-07. The fact that social spending is to rise from 10.5 percent of GDP in 2002 to 12.7 percent of GDP in 2007, at a time when overall expenditure relative to GDP remains around 31 percent, clearly demonstrates the shift in expenditure in favor of poor people.
IV. The 2003-04 Program
14. The first year of the program extends from April 2003 to March 2004. The objectives for 2003 are as follows: a growth rate of 5 percent, an end-of-period inflation rate of 3.5 percent (i.e., an average rate of 6.4 percent), a current external deficit—excluding oil exploration related payments and official transfers—of 9.5 percent of GDP, and a reserves level of US$360 million (i.e., the equivalent of 7.3 months of imports). The 12-month inflation rate at end 2003 is expected to fall, reflecting the impact of the stability of food prices due to the anticipated improvement in the agriculture sector, the delayed impact of the modest exchange rate appreciation with respect to the U.S. dollar upon consumer prices, and the decrease in international oil and gas prices.
A. Budget Policy and Reform
15. Budget policy in 2003 is intended to achieve the tax revenue target and to accelerate the execution and enhance the efficiency of social and poverty-reducing expenditures. Budget policy parameters have already been set in the context of the 2003 budget law. The compensatory measures adopted since the decline in the BIC rate and the rate reduction for the tax on wages and salaries (impôt sur les traitements et salaires, ITS) are sufficient to ensure attainment of the revenue objective. However, supplementary measures may need to be considered—specifically, the institution of an investment income (IRCM) tax on treasury bond interest and the extension of the airport tax to include secondary airports. At the same time, concerted efforts will be made to ensure that social and poverty-reducing expenditures can meet their target of 11.3 percent of GDP (PRSP, para. 28).
16. In 2004, budget policy will focus on reforming direct taxation. The government has requested Fund staff assistance in performing an overall assessment of direct taxation, correcting any distortions introduced by the reforms recently adopted in this area (ITS and BIC), and broadening the tax base. A FAD mission will visit Nouakchott shortly to address these issues. This mission will also make recommendations on the tax measures envisaged for 2004, particularly the introduction of a presumptive minimum tax (IMF) increased for occasional importers, and the establishment of a single levy assessed on foreign firms performing short-term contracts.
17. The enhancement of tax administration and tax compliance will be reflected in major efforts undertaken by the Finance Department during the first year of the program. VAT supervision will be established on a more systematic footing, making it possible to cancel unutilized credits after 3 months. New measures will be adopted to control and broaden the tax base while strengthening the capacities of the tax administration. In particular, these measures will include the regular and systematic assessment of taxpayers through cross-checking with the agencies concerned (Customs, National Social Security Fund (Caisse Nationale de Sécurité Sociale-CNSS)), and making increased use of tax payments.
18. Concerning the improvement of fiscal management, the government intends to implement the measures recommended by Fund staff, particularly the missions working on the ROSC and the tracking of poverty-reducing expenditures:
B. Monetary Policy and Financial Sector
19. In order to achieve the inflation target set forth in the program, monetary policy will remain prudent. The growth in the money supply is projected at 12 percent, a figure slightly higher than the growth in nominal GDP, consistent with a rise in prices of 3.5 percent in 2003, a 15 percent increase in credit to the private sector, and a modest decline in velocity. If inflationary pressures emerge in the coming months, the BCM will tighten monetary policy by raising the rate applicable to repos. The differential between the repo rate and the rate applicable to treasury bonds will be kept at a level sufficiently high to encourage interbank activities. The recently instituted assets classification mechanism will henceforth make it possible to broaden the basis of private instruments available for trading in interbank transactions in addition to treasury bonds.
20. The conduct of monetary policy will be improved by strengthening the capacity of the monetary policy committee. The committee's reports will henceforth explain the rationale underlying the measures adopted, and the committee will develop its capacity to analyze trends in the real sector, the external sector, and the consumer price index.
21. Banking activity continues to be characterized by strong credit concentration. To remedy this situation and strengthen financial intermediation, the BCM will take the following measures:
22. The BCM has prepared a detailed plan, on a bank-by-bank basis, for the gradual transfer to the BCM of the central government's deposits held with commercial banks. In accordance with the agreed-upon multi-year timetable, the actual transfer of these deposits began on June 30, 2003. At the same time, a credit allocation mechanism has been established that allows for these resources to be mobilized at the BCM, as a means of offsetting the anticipated decline in the commercial banks liquidity. This resource mobilization will be achieved through treasury bonds and reverse repurchase operations involving private instruments bearing signatures eligible for inclusion into the BCM portfolio.
23. With regard to the particular case of Chinguitty bank, the BCM will prepare a new restructuring plan and have the endorsement of the bank's shareholders. Such a plan will be communicated to IMF staff by end-December 2003.
24. The government will seek IMF assistance in implementing a system to combat money laundering and the financing of terrorism.
C. Exchange Market
25. The BCM will pursue a flexible exchange rate policy (in both directions) and will limit its intervention in the exchange market to the smoothing of sharp temporary fluctuations, while maintaining a comfortable level of reserves. In the past, the policy of adjusting the ouguiya vis-à-vis the U.S. dollar was adopted as a benchmark for measuring competitiveness. As Mauritania's competitiveness is not currently an issue, a sustained depreciation policy might reinforce the one-way bets [Paris à sens unique] by market participants.
26. To enhance the functioning of the exchange market and to enable the BCM to ensure that commercial banks meet all customer requests for foreign exchange, the BCM intends to implement the following measures:
D. External Debt
27. The government's main objective is to ensure the sustainability of its external debt that was achieved following the completion point under the enhanced HIPC Initiative. In this regard, the authorities' debt strategy will rely solely on grants or highly concessional loans to finance its deficits. Nevertheless, the government will examine the possibility of replacing external financing with domestic resources, including through drawings on government deposits in the banking sector. The government will share with IMF staff any information on the amount of new loans, and will keep them abreast of the status of discussions with creditors.
28. The government will also ensure that external debt management is strengthened. Debt monitoring will be computerized by June 2004 and capacities to analyze debt sustainability will be strengthened with the acquisition of the appropriate software, training, fresh impetus for the interministerial committee on debt monitoring, and unification of the debt databases by end-2003.
E. Capacity Building and Governance
29. Institutional development is vitally important in the context of the new program. In this regard, the West African regional technical assistance center (AFRITAC West), can be expected to play an important role transferring its expertise, based on the needs assessment identified by the government. The government will also make every effort to build capacities in the areas of planning, programming, and projects preparation. Similarly, procurement procedures will be streamlined to accelerate the rate of public expenditure execution, and particularly, expenditures related to poverty reduction.
30. Modernization of the civil service is a key element of the government's strategy. The planned actions will involve increased remuneration for civil servants, adaptation of staffing to reflect requirements, enhanced human resources management through competence-based recruitment and merit-based promotion. General status of the civil service, accompanied by a professional code of ethics for all government officials, will be updated by december 2004 in order to take these measures into account. This approach will enable the civil service to attract and retain in the administration the talent pool essential for the discharge of the government's tasks. The government has requested technical assistance from the World Bank in connection with the capacity building program, and from the African Development Bank and UNDP in connection with implementation of the national good governance program (PRSP, Para. 87).
31. The government will reinforce all internal and external controls on public expenditures. The audit office and the general finance inspectorate will be provided with the human and material resources required for proper execution of their respective duties, to ensure that public resources are properly used, in particular through systematic audits and controls of any institution that uses public funds.
32. The government will regularly provide IMF staff with all information relative to the oil sector useful in assessing the economy and government finance, as such information becomes available. The legal and regulatory framework, and particularly the tax system, will be updated to take account of this newl sector.
33. In the context of private sector development, the government intends to accelerate the reform of the judiciary, which has an essential role in enforcing property rights and contractual obligations, and specifically the provisions of the banking law and the commercial code, which are necessary to attract foreign private investment and capital. The World Bank will assist Mauritania in implementing the recommendations of the study on economic regulation. Further, the competitive environment will be enhanced, primarily through the promulgation of the implementing texts for the law on competition by end-2003.
F. Implementation, Monitoring, and Assessment of
34. The government has adopted a regional approach for the PRSP. The PRSP guidelines will be implemented through regional poverty reduction programs (RPRP) (PRSP, Box 7). These programs will be prepared and implemented with a participatory approach similar to the approach used for the PRSP. The poverty reduction strategies for four regions will be completed in December 2003, and the authorities plan to replicate this process in all regions in the country by end-2005. A methodological guide and "toolboxes" have now been developed.
35. In addition, major efforts will be made to strengthen the system for poverty monitoring and analysis, in order to better assess the impact of policies and programs on the living conditions of the population, and to make appropriate recommendations to increase the chances of success for the PRSP. These efforts will focus, in particular, on the following areas: (a) preparation of a poverty map; (b) revision of monitoring indicators in a participatory context when the PRSP is revised in 2004; (c) performance, at regular intervals, of spot surveys to compensate for the lack of poverty data; (d) conduct of participatory studies to better understand poverty from the viewpoint of the people; (e) strengthening of administrative statistics; and (vi) enhancement of the poverty analysis function through training, modeling, and impact analysis.
G. Other Measures
36. CNSS has prepared a restructuring plan that includes a detailed timetable of measures to be taken during the year and beyond. The aim is to ensure the long-term financial viability and sustainability of the CNSS through improved collections and registrations, while rationalizing all expenditure. Accordingly, administrative expenditures, and particularly personnel outlays, will over time be brought in line with the recommendations of the actuarial study carried out by the ILO. A program of assisted voluntary departures was adopted and its implementation began in June 2003. The work force of the CNSS will be cut in half by end-June 2004. In 2003, departures may entail one-fourth of the targeted staff. Further, the ceiling on the contribution base will be raised to UM 70,000 in January 2004, and the contribution rate will be revised upward after coordination with the social partners in 2005.
37. The BCM has submitted all documents requested by the IMF Finance Department in connection with the safeguards assessment. To meet the four high priority recommendations of the prior safeguards assessment, the BCM will implement a formal mechanism for recruiting auditors and will take the necessary steps to address the problems identified in connection with the audit (end-September 2003). The BCM will inform IMF staff by end-June 2003 of the status regarding the application of the other recommendations, which will be implemented by the end of the year.
38. The government intends to pursue the quarterly adjustment of hydrocarbon prices and liberalization of imports and distribution of petroleum products. Against this backdrop, the rules for setting prices will be reviewed to give distributors greater latitude.
39. The privatization of the electricity company, SOMELEC, which was postponed as a result of problems in the world energy sector, will be resumed in 2004. In this connection, a study on the privatization plan for SOMELEC will be carried out in 2003 and a timetable for implementing its recommendations will be discussed with World Bank staff.
40. The customary economic and financial statistics will now be transmitted within the agreed-upon time frames so that the macroeconomic situation can be properly monitored. Mauritania has also taken steps to achieve full participation in the GDDS of the Fund. To that end, with technical assistance from the IMF, the authorities have improved the country's balance of payments, monetary, and financial statistics. Mauritania is also benefiting from its participation in AFRISTAT in the area of price statistics (with the publication of a new index in May), while strengthening the preparation of its national accounts with the conversion to the System of National Accounts, 1993, as well as its poverty indicators.
V. Program Monitoring
41. The attached technical memorandum of understanding specifies the program monitoring conditions. The government will provide IMF staff with the required information, in a timely manner, in accordance with the timetable specified in the technical memorandum of understanding.
42. Prior actions. The government will implement the measures indicated in Table A.1, to ensure effective implementation of the strategy described in this memorandum, before the IMF Executive Board meets to examine the request for a new arrangement under the PRGF.
43. Performance criteria and benchmarks. Quantitative performance criteria for the program for end-September 2003 and indicative targets for December 2003 and March and June 2004 are provided in Table A.2. Further, the government will not introduce any payment restrictions in connection with international current account transactions or transfers that would violate its obligations under Article VIII of the IMF Articles of Agreement. Performance criteria and structural benchmarks are provided in Table A.1.
44. The first program review will be completed by January 31, 2004. The second review will be completed by July 1, 2004.
VI. Actions Prior to Approval of the PRGF Arrangement
VII. Structural Performance Criteria
VIII. Structural Benchmarks
Table A.2 Mauritania: Quantitative
Performance Criteria and Benchmarks
1. This memorandum sets out the definitions of the quantitative performance criteria and benchmarks for the new program supported by the Poverty Reduction and Growth Facility (PRGF) reported in Table 1 of the associated Memorandum of Economic and Financial Policies (MEFP). It also establishes the content and frequency of the data to be provided for monitoring the program. The government is defined to include only the central government and excludes the social security scheme.
2. The quantitative performance criteria (ceilings and floors) and indicative targets listed in Table A.2 of the MEFP are defined as cumulative changes from beginning of calendar year until the end of the month indicated. Some floors and ceilings are adjusted by cumulative deviations of external financing (grants and loans) flows from projections, converted at the respective projected exchange rates.
3. Quantitative targets for 2003 and 2004 are presented in Table A.1. Benchmarks are set for end June 2003, end December 2003, and end March 2004, while performance criteria for end-September 2003.
4. Net official international reserves (NIR) of the Central Bank of Mauritania (BCM): The program targets a minimum level of NIR of the BCM, defined as the unencumbered (i.e., readily available) gross official reserves of the BCM less foreign liabilities of the BCM. For purposes of monitoring performance against the program target for NIR, valuation effects on the stock of gold holdings will be excluded, and gold holdings will be evaluated at the gold price in effect on December 31, 2002. Similarly, the U.S. dollar value of gross international reserves and foreign liabilities will be converted into ouguiya (UM) at the exchange rate of December 31, 2002. Thus defined, NIR was US$202.4 million on December 31, 2002. The exchange rates of the SDR and non-dollar currencies will be kept at their end-December 2002 levels as published in the IFS. All required adjustments will be calculated at these program exchange rates.
5. Net domestic assets (NDA) of the BCM are defined as reserve money minus net foreign assets of the BCM, adjusted for valuation changes arising from the difference between the program and the actual exchange rates.
6. Net domestic financing of the budget (NDF) is defined as the sum of net bank and nonbank financing of the government. Net bank financing is the net credit to the government from the banking system (NCG), defined as claims on the government less deposits of the government with the banking system.
7. The contracting or guaranteeing of nonconcessional external debt by the government and the Central Bank of Mauritania includes foreign currency debt contracted or guaranteed by the government or the Central Bank of Mauritania with a grant element (NPV discount relative to face value) of less than 35 percent, based on the currency- and maturity-specific discount rates reported by the OECD (commercial interest reference rates). This performance criterion applies not only to debt as defined in point No. 9 of the Guidelines on Performance Criteria with Respect to Foreign Debt (Decision No. 12274-(00/85) August 24, 2000) (See Annex) but also to commitments contracted or guaranteed for which value has not been received. Although this definition excludes borrowing by public enterprises (without government guarantee), such borrowing should be avoided except in exceptional circumstances (like in the case of SNIM), and after consultations with the Fund staff.
8. External payments arrears are defined as the stock of external arrears on debt contracted or guaranteed by the government or the central bank, excluding debts subject to rescheduling or debt forgiveness. This performance criterion applies on a continuous basis.
9. Reserve money is defined as the sum of: (a) currency in circulation (currency outside banks and commercial banks' cash in vaults); and (b) deposits of commercial banks at the central bank. Bank foreign currency deposits at the central bank will be evaluated at the program exchange rates.
10. Tax revenue is defined as the sum of all taxes on goods and services, on income, and on international trade.
11. Social expenditure is defined as the sum of government spending on education, health, and poverty reduction expenditures (CDHLCPI, agency for human rights fight against poverty and integration, and the CSA, Commissariat de Sécurité Alimentaire).
12. The NIR, NDA, and NDF targets are defined based on the assumption of projected cumulative amounts of external cash debt service payments, program related financing (loans and grants), the amount of the fish license payment from the European Union (EU), and privatization proceeds to the budget, as determined in the attached table.
13. In cases where total external debt service payments (due basis) exceed (fall short of) the target, the floor for NIR will be adjusted downward (upward) and the ceiling on NDA will be adjusted upward (downward) by the amount of any excess over (shortfall from) the target.
14. In cases where program related financing or the fixed part of the fishing royalties from the EU exceeds (falls short of) their targets, the floor for NIR will be adjusted upward (downward) and the ceiling on NDA will be adjusted downward (upward) by the amount of any excess over (shortfall from) the targets. Any downward adjustment to NIR resulting from the shortfall in program-related financing will be limited to US$10 million, and from the shortfall in fish license payments to the U.S. dollar equivalent of 5 million euros. Any upward adjustment to NDA resulting from the shortfall in program related financing will be limited to ouguiya equivalent of US$10 million, and from the shortfall in fishing royalties to ouguiya equivalent of 5 million euros.
15. In cases where government external cash debt service payments exceed (fall short of) the target, the ceiling on NDF will be adjusted upward (downward) by the amount of excess over (shortfall from) the target. NDF will also be adjusted downward (upward) by the amount of any excess (shortfall) of either program related financing or the fixed part of fishing royalties from the EU over (from) their respective targets. Any upward adjustment to NDF resulting from the shortfall in program-related financing will be limited to the UM equivalent of US$10 million, and from the shortfall in fishing royalties to US dollar equivalent of e5 million. In addition NDF will be adjusted downward (upward) by the amount of any excess (shortfall) of privatization proceeds over (from) the program target.
16. The government, the BCM, and the National Statistical Office (ONS) will provide the IMF with all necessary economic and financial statistical data to monitor economic developments and program performance including, but not necessarily limited to, the following specific information.
Definition of Debt Set Forth in No. 9 of the Guidelines
The definition of debt set forth in No. 9 of the Guidelines on Performance Criteria with Respect to Foreign Debt reads as follows: (a) for the purpose of this guideline, the term "debt" will be understood to mean a current, i.e., not contingent, liability, created under a contractual arrangement through the provision of value in the form of assets (including currency) or services, and which requires the obligor to make one or more payments in the form of assets (including currency) or services, at some future point(s) in time; these payments will discharge the principal and/or interest liabilities incurred under the contract. Debt can take a number of forms, the primary ones being as follows: (i) loans, i.e., advances on money to the obligor by the lender made on the basis of an undertaking that the obligor will repay the funds in the future (including deposits, bonds, debentures, commercial loans, and buyers' creditors) and temporary exchanges of assets that are equivalent to fully collateralized loans under which the obligor is required to repay the funds, and usually pay interest, by repurchasing the collateral from the buyer in the future (such as repurchase agreements and official swap arrangements); (ii) suppliers' credits, i.e., contracts where the supplier permits the obligor to defer payments until some time after the date on which the goods are delivered or services are provided; and (iii) leases, i.e., arrangements under which property is provided which the lessee has the right to use for one or more specified period(s) of time that are usually shorter than the total expected service life of the property, while the lessor retains the title top the property. For the purpose of the guideline, the debt is the present value (at the inception of the lease) of all lease payments expected to be made during the period of the agreement excluding those payments that cover the operation, repair or maintenance of the property. (b) Under the definition of debt set out in point 9(a) above, arrears, penalties, and judicially awarded damages arising from the failure to make payment under a contractual obligation that constitutes debt. Failure to make payments on an obligation that is not considered debt under this definition (e.g., payment on delivery) will not give rise to debt.