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IMF Country Report No. 23/74

ISLAMIC REPUBLIC OF MAURITANIA

SELECTED ISSUES

February 2023

This Selected Issues paper on Islamic Republic of Mauritania was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on December 20, 2022.

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Title Page

ISLAMIC REPUBLIC OF MAURITANIA

SELECTED ISSUES

December 20, 2022

Approved By

The Middle East and Central Asia Department

Contents

• MAURITANIA: GRADUAL TRANSITION TO GREATER EXCHANGE RATE FLEXIBILITY

• A. Introduction

• B. Motivations for Greater Exchange Rate Flexibility

• C. Exchange Rate Passthrough and Monetary Transmission

• D. Supporting Macrofinancial Conditions

• E. Sequencing the Move to Greater Exchange Rate Flexibility

• F. Conclusion

• BOXES

• 1. Definitions of Monetary Policy Frameworks

• 2. Principles for Evolving Monetary Policy Frameworks

• FIGURES

• 1. Flexible Exchange Rate—Cost/Benefit Analysis

• 2. Real GDP Growth—Comparison to Peers

• 3. Exchange Rate Arrangement and Economic Volatility—Maghreb Countries

• 4. Exchange Rate Regime and Economic Volatility—Selected AFR and MCD Countries.

• 5. Current Account and Fiscal Balances (2010–21)

• 6. Official and Parallel Market Daily Exchange Rates Against the US Dollar

• 7. VAR Impulse Responses

• 8. Variance Decomposition of Inflation

• 9. Variance Decomposition of Economic Activity

• 10. Money Multiplier

• 11. Monetary Survey and BCM Analytical Balance Sheet

• 12. Stylized Transitional Exchange Rate Arrangements

• 13. Gradual Move to Further Exchange Rate Flexibility

• TABLES

• 1. Passthrough from the Policy Rate to Bank Deposit Rate—Regression Results

• 2. Passthrough from the Policy Rate to Bank Lending Rate—Regression Results

• References

• MAURITANIA: ECONOMIC IMPACT OF CLIMATE CHANGE

• A. Introduction

• B. Climate Change Challenges

• C. Macroeconomic Impact of Climate Change in Mauritania

• D. Mauritania’s Climate Commitments and Policies

• E. Climate Adaptation Financing

• F. Concluding Comments and Policy Recommendations

• BOXES

• 1. Gender and Climate Change in Mauritania

• 2. Mauritania’s climate policy commitments in the NDCs

• FIGURES

• 1. Map of Mauritania’s drylands, 1981–2010

• 2. Climate trends and Climate Hazards in Mauritania

• 3. Water Stress Factors and Food Insecurity

• 4. Climate Change Readiness and Vulnerability, 2019

• 5. Projected temperatures increase (2020–2099)

• 6. Predicted Median Intensification of Weather Anomalies

• 7. Reduction in impact of disasters on Mauritania’s medium-term growth if structural factors improve

• 8. International commitments for adaptation received, 2010–2020

• 9. Climate Adaptation Costs and subsidies, 2020

• References

• ANNEX

• Growth Regression and Impact of Structural Reforms on Climate Resilience