São Paulo – The economy of the African Arab country Mauritania is expected to grow by 6.3% in 2020, just below 2019 projection of 6.9% as per report made public this Wednesday (11) by the International Monetary Fund (IMF). The figures are part of a document on the fourth review of the credit agreement the Fund has with Mauritania, which approved more USD 22.8 million for the country.
The financial institution signed on 2017 an arrangement with total access to USD 159.6 million to the Arab country within three years, requiring that the government implemented economic reforms to improve local conditions. The completion of this IMF Executive Board review brings a total disbursement of USD 114 million.
According to the document, the performance under the reform program remains strong and authorities are implementing prudent policies and advancing with reforms, albeit with some delays. If confirmed, Mauritania’s 2019 growth will mean an increase from 2018, when its Gross Domestic Product (GDP) grew by 3.4%. In 2017, Mauritanian economic growth was 3.1%, while in 2016 it reached 1.8%.
Economic growth is expected to accelerate this year, driven by both extractive – including oil and gas exploration – and non-extractive sectors as well as favorable terms of trade. Operationalizing the new monetary policy framework and increasing exchange rate flexibility should help address external shocks, preserve official reserves, and support growth and competitiveness.
The IMF report reads that, while the economic outlook is positive for Mauritania, downside risks remain high, due to the global economic slowdown, commodity prices volatility, and other factors. The Fund believes that continued policy discipline, implementation of structural reforms, and increases in priority social and infrastructure spending will be important for achieving more inclusive growth and reducing poverty and inequality, while entrenching economic stability.
The body recommends that the government uses the fiscal space to increase spending with education, health, and social protection as well as infrastructure. The country should take measures to increase domestic revenue, contain non-priority spending, and establish robust frameworks to manage future gas and oil revenues efficiently. The IMF recommends steps to improve banks’ soundness and resilience in order to increase their ability to finance economic growth and small- and medium-sized enterprises.
Translated by Guilherme Miranda