São Paulo – The Mauritanian macroeconomic scenario has improved in the first half this year, but the country still needs to work on reducing unemployment rates and poverty in its territory. The country’s Gross Domestic Product (GDP) is expected to post actual growth of 6.2% in 2012 and the inflation rate should be 6%. A committee of the International Monetary Fund (IMF) was in Mauritania from September 10th to 24th to assess the country, and released a report last Monday (24th).
The report claims that the country’s improved foreign and fiscal policies have made Mauritania more resistant to external shocks. According to the IMF, this is the first time since 2006 in which the country’s general budget is expected to run a surplus. “This better-than-expected performance is attributable to intensified revenue collection efforts, substantial mining revenues, and a considerable increase in external assistance (including in the form of grants),” according to the report.
The document also claims that even though the country’s balance of payments has worsened due to high levels of mining industry imports funded by foreign direct investment, the country’s foreign exchange reserves will be made stronger. According to projections, by the end of the year Mauritania is expected to have a record high US$ 750 million in foreign currency.
The IMF mission lauds the government’s efforts to eliminate subsidies on energy products. The mission “encouraged the authorities to continue phasing these out, along with the emergency programs, and replace them by a social welfare system that is better targeted to the most vulnerable segments of the population. The introduction of a cash transfer program in the capital and some rural areas constitutes a first step in that direction.”
According to the report, the IMF mission signed an agreement with Mauritanian authorities for better allocation of a share of tax revenues targeting the diversification of the productive base of the economy, especially by increasing agricultural investment with high job-creation potential.
The IMF warned the local government of the need to improve the business climate by establishing an organization to make business procedures swifter. “The mission reaffirmed the importance of putting in place, in the very short run, a new instrument for monetary policy management and of quickening the pace of implementation of structural reforms in the financial sector, public enterprises, and public financial management.”
According to the document, the goals set for 2013 are designed to consolidate macroeconomic stability in a global environment that will remain challenging. “They are targeted towards achieving a real GDP growth rate of more than 6%, keeping the inflation rate stable, ongoing implementation of fiscal policy geared towards the development of non-extractive industries, and maintaining adequate levels of foreign reserves. Going forward, discussions on the creation of a transparent mining fund and on the devising of a medium-term debt strategy will also contribute to anchoring these achievements.”
*Translated by Gabriel Pomerancblum
