IMF Executive Board Approves US$ 163.9 Million Arrangement Under the Extended Credit Facility for the Islamic Republic of Mauritania

Stocks and Financial Services Press Releases Thursday December 7, 2017 08:24
IMF--7 Dec--International Monetary Fund
  • Board decision enables immediate disbursement of US$ 23.4 million to Mauritania.
  • Mauritania's ECF-supported program aims to address the challenges of economic growth, stability, sustainability, and poverty.
  • Reforms will seek to create fiscal space for social spending and infrastructure through revenue mobilization and expenditure prioritization, as well as to modernize the monetary policy framework and maintain financial stability.

On December 6, 2017, the Executive Board of the International Monetary Fund (IMF) approved a three-year arrangement under the Extended Credit Facility (ECF) with Mauritania for SDR 115.92 million (about US$ 163.9 million, or 90 percent of Mauritania's quota) to support the country's economic and financial reform program.

The ECF-supported program is expected to help Mauritania economy foster inclusive and diversified growth to improve the population's living standards, maintain macroeconomic stability, strengthen debt sustainability, and reduce poverty.

An amount of SDR 16.56 million (about US$ 23.4 million) will be made available immediately to Mauritania. The remaining amount will be phased in over the duration of the program, subject to semi-annual reviews.
Following the Executive Board discussion on Mauritania, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, said:

"Mauritania is addressing decisively the aftermath of a terms-of-trade shock that slowed growth and widened imbalances. The authorities' policy adjustment efforts succeeded in restoring macroeconomic stability and stabilizing debt levels, while growth rebounded. The authorities also prepared a long-term inclusive growth strategy, including structural reforms and infrastructure investment, to support diversification, job creation, and poverty reduction.

"The authorities' program appropriately addresses Mauritania's macroeconomic and structural challenges. The program aims to support the nascent recovery, diversify the economy, and meet infrastructure needs while maintaining macroeconomic stability, increasing resilience to shocks, and strengthening debt sustainability. It also seeks to reduce poverty, inequality and unemployment. Strong political commitment, ownership and steadfast implementation of the Fund-supported program will be needed for success.

"Building on the significant adjustment achieved, the authorities will continue with fiscal consolidation to restore debt sustainability while creating fiscal space for social and infrastructure spending through revenue mobilization, expenditure prioritization, and public investment management reforms. The authorities will advance implementation of planned tax policy and administration reforms and control current spending. Given the high public debt ratio, they will limit non-concessional borrowing and strengthen debt management to set the debt-to-GDP ratio on a clear downward trajectory.

"As part of the program, the monetary policy framework will be modernized and the central bank operational autonomy will be strengthened. A competitive foreign exchange market will be introduced to ensure regular access to foreign exchange, increase exchange rate flexibility and support growth.

"To address financial stability risks and support credit, the authorities will improve banking sector regulations and strengthen supervision. They will continue to improve the business climate and governance, and seek to expand the social safety net."

Annex
Recent Economic Developments

Mauritania, a commodity exporter, continues to face the challenge of low and volatile metal prices which slowed growth and widened imbalances. Following the sharp drop in iron ore prices in 2014–15 which halved export revenues, widened imbalances, and exposed financial vulnerabilities, the authorities cut the budget deficit significantly, allowed the exchange rate to depreciate, and mobilized foreign grants and loans. These efforts succeeded in restoring macroeconomic stability and levelling off debt to 69 percent of GDP, while growth rebounded to an estimated 1.6 percent in 2016 and 3.1 percent in 2017, and inflation remained subdued at 0.8 percent in October. In parallel, the authorities prepared an inclusive growth strategy covering 2017–30, including structural reforms and sizable foreign-financed infrastructure investment to support growth and diversification. Poverty, however, remains widespread at about 31 percent of the population, and sizeable macroeconomic imbalances and risks remain.

Program Summary

The authorities' program aims to address the challenges of growth, stability and sustainability; support the reform momentum; and catalyze external financing. To support inclusive and diversified growth while addressing remaining external imbalances and reducing vulnerabilities, the program will:

  • Modernize monetary policy and reform the foreign exchange market to improve access to foreign exchange and increase exchange rate flexibility, with a view to absorbing shocks and enhancing competitiveness, accompanied if needed by countercyclical monetary policy to address tight liquidity and support growth.
  • Create space for infrastructure investment and social spending (to support inclusive growth and diversification) while maintaining a path of gradual fiscal consolidation to strengthen the external position and debt sustainability. This will require strengthening domestic revenue mobilization and public investment and debt management to ensure prioritization.
  • Strengthen bank supervision, upgrade the regulatory framework and reinforce contingency plans to buttress financial stability.
  • Support expanded social policies and improvements in the business environment critical for inclusive growth and diversification and to reduce poverty.
Background
Mauritania became a member of the IMF on September 10, 1963; its quota in the IMF is SDR 128.8 million.
For additional information on the IMF and Mauritania, see:
http://www.imf.org/external/country/MRT/index.htm

Latest Press Release

Photo Release: Krungsri wins Best Brand Performance (Finalist) for second consecutive year

Krungsri (Bank of Ayudhya PCL) received Best Brand Performance (Finalist) in the banking category for the second consecutive year at Thailand Zocial Awards 2018+ in recognition of its outstanding brand effectively using social media marketing. The...

Fitch Maintains Rating Watch Negative on Thailand#s CGS-CIMB

Fitch Ratings (Thailand) has maintained the Rating Watch Negative on CGS-CIMB Securities (Thailand) Co., Ltd.'s (CGS-CIMB TH) National Long-Term Rating of 'AA-(tha)' and National Short-Term Rating at 'F1+(tha)'. Fitch placed CGS-CIMB TH's ratings on...

Fitch Affirms Finansa at #BBB-(tha)#; Outlook Stable

Fitch Ratings (Thailand) has affirmed Finansa Public Company Limited's (FNS) National Long-Term Rating at 'BBB-(tha)' with a Stable Outlook. It also affirmed the company's National Short-Term Rating at 'F3(tha)'. KEY RATING DRIVERS The ratings reflect...

Fitch Upgrades Asia Plus Group Holdings to #A(tha)#; Outlook Stable

Fitch has today upgraded the National Long-Term Rating on Asia Plus Group Holdings Public Company Limited (ASP) to 'A(tha)' from 'A-(tha)'. The Outlook is Stable. At the same time, the agency has upgraded ASP's National Short-Term Rating to 'F1(tha)'...

Fitch Affirms Thailand#s TOP at #AA-(tha)#; Outlook Stable

Fitch Ratings (Thailand) has affirmed refining and petrochemical company Thai Oil Public Company Limited's (TOP) National Long-Term Rating at 'AA-(tha)' with a Stable Outlook after the company announced its final investment decision on its clean-fuel...

Related Topics