IMF Board Concludes Mauritania 2024 Article IV Review

• The Executive Board of the International Monetary Fund (IMF) concluded the 2024 Article IV Consultation with Mauritania. The Board also completed the Third Reviews of Mauritania's Extended Credit Facility and the Extended Fund Facility arrangements, and the Second Review under the Resilience and Sustainability Facility Arrangement. The decision allows for an immediate disbursement of SDR 36.16 million (about US$ 47.4 million).
• The Mauritanian economy has remained resilient, with economic growth projected to slow to 4.6 percent in 2024. Growth is expected to remain favorable in the medium term. Enhancing revenue mobilization, strengthening banking supervision, and sustaining the implementation of the national governance action plan would support private sector-led inclusive growth.
• Program performance has been strong. Mauritania's reform drive and sound macroeconomic management have helped strengthen debt sustainability and resilience to shocks, while creating policy space for pressing infrastructure and social spending.

Washington, DC: The IMF Executive Board concluded today the 2024 Article IV consultation [1] with Mauritania and also completed the Third Reviews under the 42‑month blended Extended Credit Facility arrangement (ECF) and the Extended Fund Facility arrangement (EFF), and the Second Review under the Resilience and Sustainability Facility arrangement (RSF). The ECF/EFF were approved by the IMF Executive Board in January 2023 (see PR 23/15 ) and the RSF was approved in December 2023 (see PR23/465 ).

The completion of the reviews allows for the immediate disbursement of SDR 6.44 million (about US$ 8.4 million) under the ECF/EFF and of SDR 29.72 million (about US$ 39.0 million) under the RSF, bringing the cumulative disbursements to SDR 89.7 million (about $ 117.7 million). The Executive Board also approved the modification of the quantitative performance criterion on new debt contracted or guaranteed by the government for 2024, with public debt remaining at moderate risk of debt distress.

The Mauritanian economy has remained resilient, leveraging the government's continued reform efforts, with economic activity projected to slow to 4.6 percent in 2024 driven by a contraction in the extractive activities. Following further deceleration in 2025-26, growth is expected to remain favorable in the medium term. Risks are tilted to the downside and include the escalation of regional instability and extreme climate events.

Continuing with prudent rule-based fiscal policy supported through revenue mobilization, particularly by streamlining tax exemptions would help create policy space for infrastructure and social spending while preserving debt sustainability. The ongoing reforms in the financial sector, including enhancing banking supervision and enforcing prudential norms, will help broaden access to finance and strengthen the banking system as an engine of growth. Acceleration of structural reforms, including through continued efforts to bolster governance, the business environment, and the regulatory landscape, are critical for the diversification of the economy and to achieve job-rich inclusive growth.

Program performance has been strong along its three pillars of fiscal sustainability, flexibilization of the exchange rate and governance reforms. All end-June 2024 quantitative targets were met, and most of the structural benchmarks (under the ECF/EFF) and all reform measures (under the RSF) were implemented.

Following the Executive Board discussion, Kenji Okamura, Deputy Managing Director and Acting Chair, made the following statement:

Backed by sound policies, Mauritania's economy continued to grow in 2024, inflation remains contained, and the fiscal performance remained in line with the medium-term goal of declining external debt. Strong program performance has been supported by prudent monetary and fiscal policies. The authorities are focused on enhancing policy frameworks, strengthening resilience, accelerating inclusive growth, and mitigating the challenges posed by climate change.

Implementation and institutionalization of a fiscal anchor would help shield public expenditure from volatile commodity prices and reduce external public debt. Disciplined fiscal policy accompanied by fiscal and customs administration reforms could create the fiscal space needed to address the significant infrastructure and social development needs, while preserving the credibility of the medium-term budgetary framework. Key measures aim to broaden the tax base, improve tax administration, and eliminate excessive exemptions. It will also be important to enhance the efficiency of public investment.

As inflation remained contained, the Central Bank of Mauritania has appropriately narrowed the interest rate corridor and reduced the policy rate. The authorities are focused on enhancing the monetary policy framework and minimizing excess liquidity to help keep inflation anchored and develop interbank markets. Continued efforts to strengthen the central bank's supervisory functions and independence are important. Careful monitoring of financial sector developments and continued enforcement of prudential regulation would strengthen the banking sector's resilience to shocks. Further steps to enhance the AML/CFT framework and improve the functioning of the foreign exchange market and enhance exchange rate flexibility are important.

Decisive implementation of structural reforms is key to support higher, more inclusive and diversified, private-sector-led growth. Priorities include strengthening governance and transparency, promoting financial sector development and inclusion, and implementing the governance action plan to improve the business environment.

Continued implementation of the ambitious climate change adaptation and mitigation reform measures, supported by the Resilience and Sustainability Facility, will help address Mauritania's medium- and long-term term challenges and catalyze additional financing.

Executive Board Assessment

Executive Directors welcomed the authorities' commitment and strong program performance, supported by prudent monetary and fiscal policies. Directors, highlighted that, while positive, the outlook is subject to significant downside risks, including the security risks in the Sahel region and climate shocks. Directors underscored the need for continued commitment to maintaining macroeconomic stability, strengthening policy frameworks, and advancing reforms to promote sustainable and inclusive growth.

Directors encouraged continued fiscal discipline to support fiscal and debt sustainability, and the institutionalization of the fiscal anchor to help manage volatility in the extractive sector. Noting the considerable development needs, Directors called for more ambitious domestic revenue mobilization, while ensuring sufficient public investment and social spending to support the vulnerable. They recommended measures to broaden the tax base, improve tax administration, and eliminate excessive exemptions.

Directors emphasized the need to further enhance the monetary policy framework and continue efforts to reduce excess liquidity in the banking sector. Noting the importance of strengthening the central bank's supervisory functions and independence, Directors welcomed the recent amendments to the central bank law. They encouraged the authorities to complete the remaining recommendations from the 2023 Safeguards Assessment. Directors recognized the importance of ongoing measures to further improve the functioning of the foreign exchange market and enhance exchange rate flexibility. In addition, Directors stressed the need to carefully monitor banking sector developments and to strengthen bank resilience to shocks. Further steps to enhance the AML/CFT framework are important.

Directors underscored the importance of accelerating structural reforms to engender higher, more inclusive, private-sector-led growth. They highlighted the need to strengthen governance and transparency and welcomed the action plan for economic governance and anti-corruption reforms. Directors also emphasized the need to improve the business environment, diversify the economy, and enhance financial inclusion. Noting the need to mitigate the challenges posed by climate change, Directors welcomed the progress on implementing the RSF-supported climate reform agenda. Important measures include integrating climate action into public investment and financial management, increasing renewable energy generation, and enhancing water resource management. Directors encouraged continued efforts to enhance data provision.

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.