Mauritania Gets Help To Strengthen Economic Stability

Nouakchott, Mauritania

December 13, 2017//-Mauritania has obtained a three-year loan from the IMF to support the government program aimed at strengthening its recovery.

The North African country is a traditional fish and metal exporter of iron ore, gold, and copper. Mauritania had to adjust in the wake of a 2014–15 plunge in metal prices, but the necessary budget cuts, currency depreciation, and borrowing resulted in low growth, higher external debt, and higher risks to financial stability.

The government program supported by the Extended Credit Facility (ECF), worth $163.9 million, follows the recommendations of the recently completed economic health check to strengthen the economy’s stability while also supporting the recovery. Here are the main issues the government will strive to achieve in collaboration with the IMF and other donors.

  • Improve living standards through more diversified and inclusive growth. With low and volatile metal prices, the country needs to develop industries beyond traditional mining, agriculture, and fishing. It should also move beyond the export of raw materials towards the selling of processed goods. As part of its program for inclusive and diversified growth, the government also intends to further develop the private sector and improve the business environment to foster private sector-led job creation. The government also plans to keep supporting the most vulnerable. In partnership with the World Bank, it is piloting a cash transfer program which is about to be extended to the whole country. Such an expansion of social policies is instrumental to reduce endemic poverty and the measure should be accompanied by better education and health care.
  • Collect more taxes: although public revenues are relatively high as compared to peers, tax collection and tax administration needs improvement to cover a larger share of corporations.
  • Reduce public debt, which rose to 72 percent of GDP due to sizable borrowing, and concentrate on concessional borrowing (zero interest rate).
  • At the same time, devote resources for infrastructure investment such as the extension of the electricity grid or water projects. These projects help extend growth to larger groups of the population.
  • Keep the financial system stableby strengthening bank supervision and lowering banks’ high stock of nonperforming loans, which can threaten the banking system if the banks are faced with a sudden need for liquidity.

 African Eye Report/IMF

 

 

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