Front Matter Page
IMF Country Report No. 16/115
ISLAMIC REPUBLIC OF MAURITANIA
2016 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR THE ISLAMIC REPUBLIC OF MAURITANIA
May 2016
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2016 Article IV consultation with the Islamic Republic of Mauritania, the following documents have been released and are included in this package:
A Press Release summarizing the views of the Executive Board as expressed during its April 25, 2016 consideration of the staff report that concluded the Article IV consultation with the Islamic Republic of Mauritania.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on April 25, 2016, following discussions that ended on February 22, 2016, with the officials of the Islamic Republic of Mauritania on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on April 11, 2016.
An Informational Annex prepared by the IMF staff.
A Debt Sustainability Analysis prepared by the staffs of the IMF and the International Development Association (IDA).
A Statement by the Executive Director for the Islamic Republic of Mauritania.
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
International Monetary Fund • Publication Services
PO Box 92780 • Washington, D.C. 20090
Telephone: (202) 623-7430 • Fax: (202) 623-7201
E-mail: publications@imf.org Web: http://www.imf.org
Price: $18.00 per printed copy
International Monetary Fund
Washington, D.C.
© 2016 International Monetary Fund
Front Matter Page
ISLAMIC REPUBLIC OF MAURITANIA
STAFF REPORT FOR THE 2016 ARTICLE IV CONSULTATION
April 11, 2016
Key Issues
Context. The Mauritanian economy is facing a significant negative terms-of-trade shock that is more persistent than initially envisaged. Low iron ore prices have reduced economic growth, export receipts, and net international reserves; widened the fiscal deficit; and increased risks to financial stability. Lower oil prices have, on the contrary, provided some support to the external and fiscal positions. The exchange rate continued appreciating in real term in 2015, moving counter to the terms-of-trade shock. The impact of the shock is compounded by a narrow production base, structural weaknesses and limited policy space in the context of elevated public debt and pressures on external buffers.
Outlook and Risks. The economic outlook envisages a recovery in economic activity to 4.1 percent in 2016, but risks to the outlook are tilted to the downside and the economy remains vulnerable to external shocks. Over the medium term, current policies will result in sustained pressures on reserves and elevated debt driven by public investment plans. Subdued economic activity could hinder the capacity of the financial sector to channel credit toward private sector activity hampering efforts to achieve more diversified and robust economic growth. In the short term, the economy is most vulnerable to higher oil prices, lower-than-envisaged iron ore prices, and a stronger US dollar under the current exchange rate policy.
Key Policy Recommendations: The deteriorated outlook and heightened global uncertainty call for an ambitious policy adjustment, while the urgent need to diversify the economy and promote inclusive growth calls for a determined reform agenda. Achieving these objectives will require advancing on three pillars: policies to support external stability through greater exchange rate flexibility, supported by foreign exchange market reform; policies to support medium-term debt sustainability through fiscal adjustment and fiscal reforms; and a renewed structural reform effort to support private sector development and job creation. Policies to strengthen financial stability are needed to complement these efforts.
Approved By
Daniela Gressani and Peter Allum
Discussions were held in Nouakchott during February 8-22 with the Prime Minister, Mr. Yahya Ould Hademine; the Central Bank Governor, Mr. Abdel Aziz Ould Dahi; the Minister of Economy and Finance Mr. El Moctar Ould Djay; the Minister of Petroleum, Energy and Mining, Mr. Mohamed Salem Ould Bechir; the Minister of Fisheries and Maritime Economy, Mr. Nani Ould Chrougha; and other senior officials. The team also held discussions with representatives of the civil society and the private sector, and development partners.
The staff team comprised M. Vera Martin (head), M. Garad, T. Jardak, A. Toure (all MCD) and R. Moussa (SPR). The resident representative N. Rebei and M. Maaloum (local economist) participated in the mission. D. Gressani (Deputy Director, MCD) also participated during February 18-22. Mr. Selim and Mr. Auclair provided research assistance and Ms. Cruz and Ms. Kebet (all MCD) helped prepare the report.
Contents
CONTEXT
RECENT MACRO-FINANCIAL DEVELOPMENTS
OUTLOOK AND RISKS
POLICY DISCUSSIONS
A. Addressing Risks to External Stability
B. Fiscal Consolidation Needed, with Stronger Fiscal Framework and Governance
C. Staying Vigilant on Risks to Financial Stability
D. Accelerating Structural Reforms to Promote a More Diversified and Inclusive Growth
E. Article VIII and Safeguard Issues
STAFF APPRAISAL
BOXES
1. Mauritania’s Foreign Exchange Market and Some Proposals for Reform
2. Anchoring Mauritania’s Fiscal Policies to Reduce Public Debt over the Medium Term
3. Growth Diagnostic and Constraints to Growth
FIGURES
1. Real Sector Developments, 2008–15
2. External Sector Developments, 2008–16
3. Fiscal Sector Developments, 2008–16
4. Monetary and Financial Sector Indicators, 2008–16
TABLES
1. Selected Economic and Financial Indicators, 2013–21
2. Balance of Payments, 2013–21
3. Central Government Operations, 2013–21 (In billions of UM)
4. Central Government Operations, 2013–21 (In percent of nonextractive GDP)
5. Monetary Situation, 2013–18
6. Banking Soundness Indicators, 2008–15
7. Selected Economic Indicators for the Medium Term, 2012–21
8. Mauritania’s FSAP (2014): Main Recommendations and Achievements
ANNEXES
I. Implementation Status of the Main 2014 Article IV Consultations
II. Debt Dynamics and Fiscal Risks
III. Effects of Worsened Terms of Trade on the Financial System—Exploring Macro-Financial Linkages
IV. Risk Assessment Matrix
V. External Sector Assessment
Front Matter Page
ISLAMIC REPUBLIC OF MAURITANIA
STAFF REPORT FOR THE 2016 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
April 11, 2016
Prepared By
Middle East and Central Asia Department
(In consultation with other departments)
Contents
FUND RELATIONS
JOINT MANAGEMENT ACTION PLAN OF THE WORLD BANK AND IMF
STATISTICAL ISSUES
Front Matter Page
ISLAMIC REPUBLIC OF MAURITANIA
STAFF REPORT FOR THE 2016 ARTICLE IV CONSULTATION—DEBT SUSTAINABILITY ANALYSIS
April 11, 2016
Approved By
Daniela Gressani and Peter Allum (IMF) and John Panzer (IDA)
Prepared by the staffs of the International Monetary Fund and the International Development Association.
Mauritania’s risk of debt distress is rated high due to substantial and persistent breaches of all but one threshold under the baseline scenario. The outlook has worsened compared to the debt sustainability analysis prepared at the time of the 2014 Article IV Consultation owing to a worse-than-anticipated terms-of-trade deterioration that has decreased growth and export prospects. Further pressure results from debt disbursements which have been revised upwards over the medium term in line with the public investment plan. Although the PV of debt-to-GDP ratio declines in the long run due to a recovery in growth rates, the ratio remains high because of disbursements linked to public infrastructure projects.
Front Matter Page
Press Release No. 16/213
FOR IMMEDIATE RELEASE
May 11, 2016
International Monetary Fund
700 19th Street, NW
Washington, D. C. 20431 USA
Telephone 202-623-7100
Fax 202-623-6772
