(Ecofin Agency) - Thanks to the government's response to Covid-19 and international financial support, Mauritania's economy is now recovering. But, some factors are still threatening that recovery. With IMF support, the country wants to strengthen its economic stability to avert those risks.
The IMF announced, Wednesday (January 25), an about US$86.9 million Extended Credit Facility and Extended Fund Facility for Mauritania.
According to the institution, the country's growth (5.3% in 2022, up from 2.4% in 2021) was driven mainly by the mining, agriculture, and fisheries sectors. Inflation is expected to stagnate at around 11% (5.7% in 2021), thanks to the Central Bank of Mauritania's tight monetary policy.
However, several shocks associated with regional tensions threaten to undermine this progress at a time when the country has to face imported inflationary pressures, food insecurity and address human and infrastructure development needs.
The 42-month program aims to help the country preserve macroeconomic stability thanks to the implementation of a comprehensive set of measures that will strengthen fiscal and monetary policy frameworks and improve governance. The objective is to "consolidate the foundations for sustainable, inclusive growth, and reduce poverty."
The measures will mainly focus on three pillars. The first is to "improve medium-term budgeting to maintain fiscal sustainability, to gradually reduce debt, and to smoothen the volatility of extractive revenues and protect social spending." The second pillar aims at " strengthening the monetary and foreign exchange policy frameworks and development of the money and foreign exchange markets to gain better control of inflation and to ensure that Mauritania’s economy is more resilient against exogenous shocks." The last pillar concerns "structural reforms designed to strengthen governance, transparency, and the private sector through an improved business climate and financial inclusion."
The approval of the program entitles Mauritania to an immediate disbursement of a first tranche of US$21.7 million. "The remaining amount will be phased in throughout the program, subject to semi-annual review," the IMF stresses.