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David M. Sassoon

The World Bank Group may now be expected to increase its lending to the mining sector. The pressure to find and develop new mineral resources is increasing the risk of mining ventures at every stage. The author, a Bank attorney, discusses previous lending for mining in the context of guarantees both to mining companies and to the developing countries where the mines are located.

International Monetary Fund. Fiscal Affairs Dept.
This paper discusses Malian mining taxation. Mali’s industrial mining sector is predominantly gold mining, with six industrial mines currently active. Most of the mines are old, but some have substantial reserves; extensions are planned for the Syama, Morila, Kalama, Tabakoto-Segela, and Loulo-Gounkoto mines. The Fiscal Analysis for Resource Industries model was completed for five new projects with recent feasibility studies. The government revenue contributed by the five new projects is on the order of US$1.7 billion (constant dollars) over the next 10 years. The application of the 1999 or 2012 Mining Code increases the government’s share of income in comparison with the 1991 code.
International Monetary Fund. Middle East and Central Asia Dept.
KEY ISSUES Context. Mauritania’s economy has benefited from macroeconomic stability and high growth in the context of contained inflation, responsible macro-policies, high iron ore prices and scaled-up public investment. However, economic growth has not translated into broadly improved living standards and is being hit by a sharp decline in iron ore prices. Outlook and Risks. Although the outlook remains favorable, it hinges heavily on stabilizing iron ore prices and expanding mining capacity. Downside risks to the outlook dominate because iron ore prices may decline further in response to excess supply in the global market. Key Policy Recommendations. With high risk of debt distress and deteriorating terms of trade, Mauritania’s fiscal policy needs to remain focused on consolidation to support fiscal sustainability. Over the medium term, a fiscal framework with a full-fledged fiscal rule will help prevent the boom–bust cycles that ensue from volatility in natural resource revenue, and with strengthened governance in managing mining wealth. The central bank should take advantage of the low-inflation environment to strengthen monetary policy formulation, gradually liberalize the foreign exchange market, and introduce liquidity support and banking resolution frameworks. The implementation of the recent FSAP recommendations should be pursued to enhance the stability of the financial sector stability. Economic diversification and inclusive growth are the foremost medium-term challenges. The authorities should accelerate structural reforms needed to raise Mauritania’s potential growth, create jobs, and improve living standards for all Mauritanians. Article VIII. A comprehensive analysis of the foreign exchange market identified exchange restrictions and multiple currency practices (MCPs) subject to Fund approval under Article VIII. Effective November 20, 2013, the exchange rate regime is classified as “stabilized” arrangement.
International Monetary Fund. Middle East and Central Asia Dept.
This paper discusses the Islamic Republic of Mauritania’s Sixth Review under the Three-Year Extended Credit Facility Arrangement and Request of Nonobservance of Performance Criterion. Mauritania’s current account deficit has been significantly widened due to higher infrastructure and mining-related imports. Planned projects are concentrated in agriculture, energy, and infrastructure—all three sectors with large investment needs and in line with Poverty Reduction Strategy Paper priorities. Nonrenewable resources are playing an important role in the economy, but the fiscal policy formulation does not incorporate the challenges associated with resource revenue exhaustibility and volatility and, therefore, does not prevent pro-cyclical fiscal policy.
International Monetary Fund. Middle East and Central Asia Dept.

KEY ISSUESContext. Mauritania’s economy has benefited from macroeconomic stability and highgrowth in the context of contained inflation, responsible macro-policies, high iron oreprices and scaled-up public investment. However, economic growth has not translatedinto broadly improved living standards and is being hit by a sharp decline in iron oreprices.Outlook and Risks. Although the outlook remains favorable, it hinges heavily onstabilizing iron ore prices and expanding mining capacity. Downside risks to the outlookdominate because iron ore prices may decline further in response to excess supply in theglobal market.Key Policy Recommendations. With high risk of debt distress and deteriorating termsof trade, Mauritania’s fiscal policy needs to remain focused on consolidation to supportfiscal sustainability. Over the medium term, a fiscal framework with a full-fledged fiscalrule will help prevent the boom–bust cycles that ensue from volatility in natural resourcerevenue, and with strengthened governance in managing mining wealth. The centralbank should take advantage of the low-inflation environment to strengthen monetarypolicy formulation, gradually liberalize the foreign exchange market, and introduceliquidity support and banking resolution frameworks. The implementation of the recentFSAP recommendations should be pursued to enhance the stability of the financialsector stability.Economic diversification and inclusive growth are the foremost medium-termchallenges. The authorities should accelerate structural reforms needed to raiseMauritania’s potential growth, create jobs, and improve living standards for allMauritanians.Article VIII. A comprehensive analysis of the foreign exchange market identifiedexchange restrictions and multiple currency practices (MCPs) subject to Fund approvalunder Article VIII. Effective November 20, 2013, the exchange rate regime is classified as“stabilized” arrangement.

International Monetary Fund. Middle East and Central Asia Dept.

This paper discusses the Islamic Republic of Mauritania’s Sixth Review under the Three-Year Extended Credit Facility Arrangement and Request of Nonobservance of Performance Criterion. Mauritania’s current account deficit has been significantly widened due to higher infrastructure and mining-related imports. Planned projects are concentrated in agriculture, energy, and infrastructure—all three sectors with large investment needs and in line with Poverty Reduction Strategy Paper priorities. Nonrenewable resources are playing an important role in the economy, but the fiscal policy formulation does not incorporate the challenges associated with resource revenue exhaustibility and volatility and, therefore, does not prevent pro-cyclical fiscal policy.