The executive board of the International Monetary Fund (IMF) has completed the first review of the three-year arrangement with Mauritania under the Extended Credit Facility (ECF) for US$164.4mn
The board’s decision, which was taken on a lapse-of-time basis, makes available US$23.5mn immediately to Mauritania.
Macroeconomic conditions are improving, as expected, along with sizable policy adjustment and favourable commodity price developments. The economy is recovering, with growth estimated at 3.5 per cent in 2017 and projected at about three per cent in 2018, with the slight slowdown due to the delayed impact of last year’s drought.
Inflation is projected to remain moderate at 2.7 per cent on average this year. International reserves rose to US$849mn by the end of 2017 (5.1 months of non-extractive sector imports) and should continue to do so in 2018.
The primary budget balance excluding grants turned positive in 2017 at 0.3 per cent of non-extractive GDP and is expected to remain in positive territory this year. The current account deficit contracted as mining and fishing exports rebounded. Borrowing slowed, with external debt levelling at 72 per cent of GDP.
Policy implementation has been satisfactory and the programme is on track. All end-December 2017 performance criteria and eight of the ten structural benchmarks for December 2017-March 2018 were met, the remaining two were implemented with a one-month delay.
An end-April structural benchmark on repayment of the government’s liabilities to the central bank was delayed to end-June due to coordination issues. Quantitative targets for 2018 are within reach, and the authorities are committed to taking corrective actions to achieve them as needed. They will continue with sound fiscal policy and a prudent borrowing strategy, notably by avoiding non-concessional loans to ensure debt sustainability and will press ahead with monetary, foreign exchange, and financial sector reforms.
The outlook is positive and the authorities are maintaining the course on policy and reform implementation, although considerable challenges remain to achieve high and inclusive growth. Vulnerabilities remain elevated and sustained reforms are needed to entrench macroeconomic stability; achieve inclusive growth that creates employment and reduces poverty and improves the business climate and governance.
