Islamic Republic of Mauritania: Request for Disbursement under the Rapid Credit Facility—Debt Sustainability Analysis
Author:
International Monetary Fund. Middle East and Central Asia Dept.
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Publication Date:
29 Apr 2020
eISBN:
9781513542485
Language:
English
Keywords:
ISCR; CR; financing; center; RCF fund; financing gap; grant financing; commodity export; emergency support; Credit; Fiscal stance; COVID-19; Global; iron ore price; debt coverage; public debt-to-GDP ratio; dynamics equation; creating flow; Debt sustainability analysis; Stress testing; Contingent liabilities; debt-carrying capacity
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Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for the Islamic Republic of Mauritania

Abstract

Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for the Islamic Republic of Mauritania

article image
Debt coverage is the same as in previous DSA: central government and public agencies, central bank, and SOE debt guaranteed by the government (including state-owned oil and gas company, excluding national mining company). The Composite Indicator score is 2.84 and the debt-carrying capacity is assessed to be medium.

The risk of external debt distress and the overall risk of public debt distress remain high, as the NPV of public external debt to GDP continues to breach its threshold in 2020–22 under baseline projections, and the debt service-to-revenue ratio breaches its threshold in 2020–25. However, external and public debt are assessed to be sustainable as both indicators are projected to be on a steady downward trend and to fall below their respective thresholds by 2026. The risk rating remains high despite the rebasing of national accounts completed by the authorities, which estimated nominal GDP to be 35 percent higher than previously in 2018 due to upgrading to SNA 2008 and expanding the coverage of informal activities. The macroeconomic outlook is significantly less favorable than the previous Debt Sustainability Analysis (DSA) in November 2019 due to the external shock caused by the COVID-19 pandemic and a delay in the Grand Tortue/Ahmeyim gas project. Projected export, growth, fiscal and debt trajectories are highly uncertain and are vulnerable to a stronger impact of the pandemic, reversals in metal and oil prices, regional security developments, and climatic hazards. Prudent policies are needed, including avoiding non-concessional borrowing and relying instead on grants and concessional financing taken up at a moderate pace consistent with absorptive capacity.

Table 1.

Mauritania: External Debt Sustainability Framework, Baseline Scenario 2017–40

(in percent of GDP, unless otherwise indicated)

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Sources: Country authorities; and staff estimates and projections 1/ Includes both public and private sector external debt. 2/ Derived as [r – g – ρ(1+g) + Ɛα (1+r)]/(1+g+ρ+gρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, ρ = growth rate of GDP deflator in U.S. dollar terms, Ɛ=nominal appreciation of the local currency, and α = share of local currency-denominated external debt in total external debt. 3/ Includes exceptional financing (ie., changes in arrears and debt relief) such as the projected resolution in 2020 of the debt owed to the Kuwait Investment Authority changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. 4/ Current-year interest payments divided by previous period debt stock. 5/ Defined as grants, concessional loans, and debt relief. 6/ Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt). 7/ Assumes that PV of private sector debt is equivalent to its face value. 8/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years.
Figure 1.
Figure 1.

Mauritania: Indicators of Public and Publicly Guaranteed External Debt Under Alternative Scenarios, 2020–30

Citation: IMF Staff Country Reports 2020, 140; 10.5089/9781513542485.002.A002

Sources: Country authorities; and staff estimates and projections.1/ Does not include passive debt to the Kuwait Investment Authority.2/ The most extreme stress test is the test that yields the highest ratio in or before 2030. The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most exterme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented.3/ The magnitude of the shock used for the combined contingent liability shock has been increased to factor in the full value of the Nouakchott harbor PPP.
Table 2.

Mauritania: Sensitivity Analysis for Key Indicators of Public and Publicly External Debt, 2020–30

(in percent)

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Sources: Country authorities; and staff estimates and projections.

A bold value indicates a breach of the threshold.

Variables include real GDP growth, GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows.

Includes official and private transfers and FDI.

Table 3.

Mauritania: Public Sector Debt Sustainability Framework, Baseline Scenario, 2017–40

(in percent of GDP, unless otherwise indicated)

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Sources: Country authorities; and staff estimates and projections. 1/ Coverage of debt: The central government, central bank, government-guaranteed debt, non-guaranteed SOE debt . Definition of external debt is Residency-based. 2/ Includes exceptional financing (i.e., changes in arrears and debt relief) such as the projected resolution in 2020 of the debt owed to the Kuwait Investment Authority; changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. 3/ The underlying PV of external debt-to-GDP ratio under the public DSA differs from the external DSA with the size of differences depending on exchange rates projections. 4/ Debt service is defined as the sum of interest and amortization of medium and long-term, and short-term debt. 5/ Gross financing need is defined as the primary deficit plus debt service plus the stock of short-term debt at the end of the last period and other debt creating/reducing flows. 6/ Defined as a primary deficit minus a change in the public debt-to-GDP ratio ((-): a primary surplus), which would stabilizes the debt ratio only in the year in question. 7/ Historical averages are generally derived over the past 10 years, subject to data availability, whereas projections averages are over the first year of projection and the next 10 years.
Figure 2.
Figure 2.

Mauritania: Indicators of Public Debt Under Alternative Scenarios, 2020–30

Citation: IMF Staff Country Reports 2020, 140; 10.5089/9781513542485.002.A002

Sources: Country authorities; and staff estimates and projections.1/ Does not include passive debt to the Kuwait Investment Authority.2/ The most extreme stress test is the test that yields the highest ratio in or before 2030. The stress test with a one-off breach is also presented (if any), while the one-off breach is deemed away for mechanical signals. When a stress test with a one-off breach happens to be the most exterme shock even after disregarding the one-off breach, only that stress test (with a one-off breach) would be presented.
Table 4.

Mauritania: Sensitivity Analysis for Key Indicators of Public Debt, 2020–30

article image
Sources: Country authorities; and staff estimates and projections.

A bold value indicates a breach of the benchmark.

Variables include real GDP growth, GDP deflator and primary deficit in percent of GDP.

Includes official and private transfers and FDI.

Figure 3.
Figure 3.

Mauritania: Drivers of Debt Dynamics – Baseline Scenario

Citation: IMF Staff Country Reports 2020, 140; 10.5089/9781513542485.002.A002

1/ Difference betw een anticipated and actual contributions on debt ratios.2/ Distribution across LICs for which LIC DSAs were produced.3/ Given the relatively low private external debt for average low-income countries, a ppt change in PPG external debt should be largely explained by the drivers of the external debt dynamics equation.
Figure 4.
Figure 4.

Mauritania: Realism Tools

Citation: IMF Staff Country Reports 2020, 140; 10.5089/9781513542485.002.A002

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Cover IMF Staff Country Reports
Islamic Republic of Mauritania: Request for Disbursement Under the Rapid Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for the Islamic Republic of Mauritania
Author:
International Monetary Fund. Middle East and Central Asia Dept.
Volume/Issue:
Volume 2020: Issue 140
Publisher:
International Monetary Fund
ISBN:
9781513542485
ISSN:
1934-7685
Pages:
40
DOI:
https://doi.org/10.5089/9781513542485.002
  • Figure 1.
    View in gallery
    Figure 1.

    Mauritania: Indicators of Public and Publicly Guaranteed External Debt Under Alternative Scenarios, 2020–30

  • Figure 2.
    View in gallery
    Figure 2.

    Mauritania: Indicators of Public Debt Under Alternative Scenarios, 2020–30

  • Figure 3.
    View in gallery
    Figure 3.

    Mauritania: Drivers of Debt Dynamics – Baseline Scenario

  • Figure 4.
    View in gallery
    Figure 4.

    Mauritania: Realism Tools

Figure 1.

Mauritania: Indicators of Public and Publicly Guaranteed External Debt Under Alternative Scenarios, 2020–30
Figure 2.

Mauritania: Indicators of Public Debt Under Alternative Scenarios, 2020–30
Figure 3.

Mauritania: Drivers of Debt Dynamics – Baseline Scenario
Figure 4.

Mauritania: Realism Tools