Monday 19 March 2018

IMF approves a $ 163.9 million 3-year agreement under the Extended Credit Facility (ECF) with Mauritania

IMF approves a $ 163.9 million 3-year agreement under the Extended Credit Facility (ECF) with Mauritania
(Agence Ecofin 12/15/17)

On Monday, December 6, the IMF’s executive board approved a 3-year arrangement under the Extended Credit Facility for Mauritania. The arrangement is for 115.92 million Special Drawing Rights (SDRs); this equals to $163.9 million. It will support the economic and financial reforms program in the country.

The board’s decision enables an immediate disbursement of 16.56 million SDRs (about $23.4 million) for Mauritania. The remaining amount will be paid in various instalments over the program’s period, subject to semi-annual reviews.

According to a statement of the Bretton Woods Institution, The ECF-supported program is expected to help Mauritania economy foster inclusive and diversified growth to improve the population’s living standards, maintain macroeconomic stability, strengthen debt sustainability, and reduce poverty.

Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, said: “Mauritania is addressing decisively the aftermath of a terms-of-trade shock that slowed growth and widened imbalances. The authorities’ policy adjustment efforts succeeded in restoring macroeconomic stability and stabilizing debt levels, while growth rebounded”.

Mauritania, which mainly exports basic products, is still lowness and volatility of metals’ prices which slowed the economy’s growth and increased imbalances.

The hard slump in iron ore’s price between 2014 and 2015 which halved the export revenues and increased imbalances has exposed the country’s financial weaknesses. In this situation, Mauritanian authorities focused on reducing the budget deficit while allowing the depreciation in exchange rate. They mobilized as well external loans and donations.

All these efforts succeeded in restoring macroeconomic stability and keeping the debt in check at 69% of the GDP, while the growth soared at 1.6 % in 2016 and 3.1% in 2017 with a controlled inflation of 0.8% in October, according to IMF estimates.

At the same time, the authorities established an inclusive growth strategy over 2017-2030, including structural reforms and important infrastructure investments to support the economy’s growth and diversification. These will be financed with external funding.

Let’s note that 31% of the Mauritanian population is still facing poverty while the country still records persistent major macroeconomic risks and imbalances.

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