IMF Executive Board Completes Second Review of the Extended Credit Facility with the Islamic Republic of Mauritania

Stocks and Financial Services Press Releases Friday December 7, 2018 09:22
Bangkok--7 Dec--International Monetary Fund
Policy implementation has been satisfactory and the program is on track.
The economy is recovering, and the outlook is favorable despite significant socio-economic challenges.

Reforms seek to create fiscal space for social spending and infrastructure through revenue mobilization and expenditure prioritization, as well as to modernize monetary and exchange rate policies and strengthen financial sector stability.

On December 6, 2018, the Executive Board of the International Monetary Fund (IMF) completed the second review of the three-year arrangement with Mauritania under the Extended Credit Facility (ECF). The arrangement, with total access of SDR 115.92 million (about US$ 160.38 million), or 90 percent of Mauritania's quota, was approved on December 6, 2017 (see Press Release No. 17/468). The completion of the review allows the authorities to draw SDR 16.56 million (about US$22.91 million) bringing total purchases to SDR 49.68 million (about US$ 68.74 million).

Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, made the following statement:

"Mauritania's performance under the Fund-supported program has been satisfactory. The economy is recovering, macroeconomic stability has been maintained, external debt stabilized, and reforms launched to modernize economic institutions and the policy framework. The parliament approved a new organic budget law, as well as banking and central bank laws, and the central bank introduced new monetary policy instruments to improve liquidity management. Nonetheless, despite a positive outlook, considerable vulnerabilities and risks remain, particularly given the increasingly less favorable international environment, and lower commodity export prices weighing on the external and fiscal positions. It is important that the authorities, therefore, continue with prudent macroeconomic policies while pressing forward with structural reforms supportive of inclusive growth, poverty reduction, and good governance.

"The authorities are committed to continuing with fiscal consolidation to manage exogenous shocks and improve debt sustainability, while creating fiscal space for infrastructure and social spending. They are also continuing with the implementation of priority fiscal reforms, including strengthening tax policy, revenue administration, budget processes, and debt management. Ensuring debt sustainability will require continued prudent borrowing, notably by seeking grants and concessional loans.

"The potential development of offshore gas presents opportunities as well as risks, and high upfront costs. The authorities should choose the most economical option to finance the government's share in the project, while preserving international reserves, given the uncertain global environment. Developing a robust fiscal framework will be key to managing future gas windfall revenues.

"The authorities plan to modernize the monetary policy framework and ensure regular, market-based access to foreign exchange. Introducing greater exchange rate flexibility will help absorb exogenous shocks and preserve official reserves. The authorities are taking action to further strengthen bank supervision to address financial sector vulnerabilities while supporting credit and financial inclusion.

"Going forward, it will be important to step up efforts to diversify the economy, improve the business environment, strengthen economic governance, and fight corruption. In that connection, implementation of existing plans and strengthening of audit institutions will be key."

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