IMF staff and the Mauritanian authorities reached a preliminary agreement to complete the first review of the program supported by the Extended Credit Facility and the Extended Fund Facility, and a preliminary staff level agreement for a program under the IMF Resilience and Sustainability Facility (RSF) for a total amount of SDR 193.2 million (approximately US$ 253.1 million); The RSF arrangement will support Mauritania’s efforts to strengthen its resilience to climate shocks, to enhance its disaster risk management capacities, and to expedite the transition toward cleaner energy sources; In 2023, economic growth is expected to slow to 4.8 percent compared to 6.4 percent in 2022, while inflation should continue its downward trend, reaching 4.5 percent at end-2023 compared to 11 percent in 2022. However, the economic outlook remains uncertain.

An IMF mission led by Mr. Felix Fischer held discussions on the first review of the program supported by the Extended Fund Facility and the Extended Credit Facility arrangements, approved by the IMF Executive Board on January 25, 2023 for a total amount of SDR 64.40 million, approximately US$ 86.9 million over 42 months and a new program supported by the Resilience and Sustainability Facility (RSF).

Upon the completion of the mission, Mr. Fischer made the following statement:

“IMF staff and the Mauritanian authorities reached a preliminary agreement on the completion of the first review of the economic program supported by the Extended Fund Facility and the Extended Credit Facility. Subject to approval by IMF Management and the Executive Board, Mauritania will benefit from a second disbursement of SDR 16.10 million (approximately US$ 21.1 million) under the Extended Fund Facility and the Extended Credit Facility.

“IMF staff and the Mauritanian authorities also reached agreement on reforms to be supported by the Resilience and Sustainability Facility, for a total amount of SDR 193.2 million (or US$ 253.1 million), representing a maximum access of 150 percent of quota. The RSF arrangement will support Mauritania’s efforts to strengthen its resilience to climate shocks, to enhance its disaster risk management capacities, and to accelerate the transition toward cleaner energy sources. This agreement is subject to the approval of IMF Management and the Executive Board, currently envisaged in mid-December 2023.

“The new program under the RSF will support reforms in the following four areas: (i) incorporating climate issues into public financial management (PFM) and public investment management (PIM); (ii) social protection against climate shocks; (iii) decarbonization; (iv) the strengthening of the institutional framework for water management, providing disbursements in line with the pace at which reforms are implemented. The reforms supported by the RSF will also help Mauritania to meet its Nationally Determined Contributions (NDCs) commitments, which were updated in 2021.

“In 2023, economic growth is expected to slow to 4.8 percent compared to 6.4 percent in 2022, reflecting a return to normal of extractive sector activity and the lagged effect of tighter monetary policy in 2022. Inflation is continuing its downward trend and is expected to slow to 4.5 percent at end-2023 compared to 11 percent at end-2022 reflecting lower food and energy prices, fiscal consolidation, and the lagged impact of tighter monetary policy in 2022. The non-extractive primary balance, including grants, is expected to decrease to -3.8 percent of GDP against -7.5 percent in 2022. The current account deficit is anticipated to decline to 12.1 percent of GDP (compared to 16.6 percent at end-2022), while international reserves are expected to stabilize at around US$ 1.9 billion (equivalent to 6.4 months of non-extractive imports) in 2023.

“The economic outlook remains uncertain. An escalation of geopolitical tensions could affect Mauritania through new terms of trade shocks. More frequent climate disasters, especially flooding, could deteriorate infrastructure, arable lands and agriculture production, maintaining food insecurity relatively high. Delays in the start of the Greater Tortue Ahmeyim (GTA) gas project and adverse price fluctuations in commodity markets could lower fiscal revenue, increase external financing needs, and worsen the medium-term debt profile. On the upside, the implementation of future GTA gas project phases would improve the economic growth and the balance of payments.

“In this context, the authorities’ economic and financial program is on track and its implementation has been satisfactory. All the performance criteria for end-June 2023 have been met, and most of the structural benchmarks for March 2023 to September 2023 have been observed. In particular, a tax policy unit has been set up and an action plan based on the governance diagnostic was published on time. The submission to Parliament of the medium-term fiscal framework and the revised law on the Nouadhibou Free Trade Zone, along with the operationalization of the interbank foreign exchange platform, have been carried out with a delay.

“The team would like to thank the Mauritanian authorities and all other interlocutors for their warm welcome, productive discussions, and excellent cooperation.”