The Mauritanian Economy: Performance and Outlook I N T E R N A T I O N A L M O N E T A R Y F U N D J A N U A R Y 2 1 4
Achieving Macroeconomic Stability
Successful completion of the 3-year Extended Credit Facility program with the Fund (21-13). In a difficult external environment: Global financial crisis, European crisis, food price hikes. And challenging regional and domestic conditions. Political uncertainty related to the Arab Spring Mali crisis 212 Drought
Restored macroeconomic stability Strong growth dynamics combined with contained inflation Buildup of external and fiscal buffers Progress with restoring the health of the financial sector Substantive progress with the structural reform agenda Fiscal: Public financial management, revenue mobilization, tax and custom administration Progress on financial sector reforms and foreign exchange markets Elimination of the diesel subsidy
Growth has been above peers,..and across sectors 2 16 12 8 Real GDP Growth Sub-Saharan Africa MENAP oil importers Mauritania 16 14 12 1 8 6 Gross Domestic Product (Percent) Real non-oil GDP growth Real non-extractive GDP growth Real GDP growth 4 4 2-4 28 29 21 211 212 213-2 28 29 21 211 212 213 214
..with significant growth in cereal production..and mining production. 4 35 Cereal Production (in tons) 5 4 Mining (Tons) 35 3 3 25 2 3 2 Irone ore (thousands of tons, LHS) Copper ( thousands of tons, LHS) Gold (thousands of ounces, RHS) 25 2 15 1 15 1 5 1 28 29 21 211 212 213 214 28 29 21 211 212 213 214
Inflation has remained under control 18 16 14 12 1 8 6 4 2 Inflation (Period average) Sub-Saharan Africa MENAP oil importers Mauritania in line with declining local and imported inflation 16 14 12 1 8 6 4 2-2 Inflation (Percent) Overall Local Imported 28 29 21 211 212 213-4 Feb-9 Apr-1 Jun-11 Aug-12 Oct-13
Fiscal outcomes have been stronger than in peers driven by improved revenue mobilization 12 8 4 Overall Fiscal Balance (including grants, percent of GDP) MENAP oil importers Sub-Saharan Africa Mauritania 8 6 Revenues Grants Non-extractive non-tax revenues Non-extractive tax revenues Extractive revenues 4-4 2-8 -12 28 29 21 211 212 213 28 29 21 211 212 213
..which has supported a hike in public investment financed mostly by domestic resources 75 6 45 Expenditures Interest Subsidies and transfers Goods and services Wage bill 25 2 15 Investment Foreign-financed investment Domestically financed investment 3 1 15 5 28 29 21 211 212 213 214 28 29 21 211 212 213 214
Concessional external financing dominates. Public debt remains elevated, but debt service has improved. 15 1 Sources of Financing (percent of GDP) 14 12 Debt Profile Interest Payments (Percent of GDP) Principal Amortization (Percent of GDP) 25 25 5 1 Debt to GDP (Percent, RHS) 16 8 115 6-5 -1 External financing Domestic Use of oil revenues 4 2 7 25-15 28 29 21 211 212 213 28 29 21 211 212 213 214-2
Widening of the current account mostly driven by extractive industries And has been mostly financed with FDI and official loans 12 Current Account (In percent of GDP) 5 Financial Account (in percent of GDP) 8 Current Account Balance 35 Current account balance excluding imports of extractive industries 2 4 5-1 Other Financial Flows -25 Official MLT Loans FDI (Net) -4 27 28 29 21 211 212 213-4 28 29 21 211 212 213 214
Current account relies on traditional exports and benefits from benign price dynamics 15 13 11 9 Goods Export Revenue (Percent of total exports) Iron ore exports Fish exports Others Gold 88 78 68 58 Commodity Price Indices (25=1) Food Iron ore Copper Oil 7 48 5 38 3 28 1 18-1 27Q1 28Q3 21Q1 211Q3 213Q1 8 28 29 21 211 212 213 214
External buffers are at an historically record level in the context of a relatively stable currency 3 2 Foreign Exchange Reserves Gross official reserves (percent of GDP) Reserves (in months of nonextractive imports; RHS) 8 7 6 5 4 16 14 12 1 8 Exchange Rates (Index, 25=1) 35 3 25 2 1 3 2 6 4 Real effective exchange rate Nominal effective exchange rate 15 1 1 2 UM/USD (right scale) 5 28 29 21 211 212 213 28 29 21 211 212 213
Private sector credit growth has remained subdued..banks remain well capitalized but have low profitability 4 35 35 3 Private-sector Credit Growth (y-o-y; percent) Policy rate Credit growth 3 25 Banking Indicators (End-212; percent) 25 T-bill rate 2 2 15 15 1 1 5 5 Jun-8 Oct-9 Feb-11 Jun-12 Oct-13 Return on assets Return on equity Capital to assets ratio Regulatory capital ratio
Economic Outlook
2. Economic Outlook Initial Conditions Macroeconomic stability Higher resilience to external shocks Context Prudent macroeconomic policies Still elevated commodity prices A strong mining potential Outlook Positive, with an opportunity to support stronger and more inclusive economic growth dynamics.
2. Economic Outlook Positive economic outlook: Annual average real GDP growth above 7 percent over the medium term. fueled by mining, agriculture and fishing, construction and services, and with positive effects on potential growth..and challenges remain.
2. Economic Outlook: Challenges Resilience to external shocks Private sector development and economic diversification More inclusive growth dynamics
2. Economic Outlook: Challenges Economic Diversification Increasing resilience of the economy to external shocks Enhance domestic sources of growth dynamics Economic transformation to increase higher valueadded output Private Sector Development Improve business environment Financial deepening and access to finance Improve labor markets dynamics Reduce informality
2. Economic Outlook: Challenges More inclusive growth dynamics Access to drinking water and electricity Improve education and access to health Better targeted social transfers to reach the most vulnerable
3. Conclusions Mauritania s economic potential is large, with opportunities to capitalize in the coming decade. Private sector development will drive economic diversification and job creation. Promoting more inclusive economic growth is crucial to improve living standards for the population overall. Good management of the economic juncture will provide Mauritania with a historic opportunity to transform this country.
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