Mauritania’s Growth Prospects Dependent on Reforms – IMF Says

MAURITANIA (Capital Markets in Africa) – The International Monetary Fund indicated that Mauritania’s economy has been recovering, as real GDP growth accelerated from 1.8% in 2016 to 3.5% in 2017 due to improved terms of trade and strong activity in the agriculture, manufacturing, transport and telecommunications sectors. But it projected growth to slow down slightly to 3% in 2018, as a result of the delayed impact of last year’s drought on the agriculture industry.

The IMF, also considered  the  country’s  growth  prospects  to  be  promising,  but encouraged authorities to implement further reforms to maintain macroeconomic stability, achieve inclusive growth and to improve governance and the business climate. Also, the Fund projected the annual average inflation rate at 2.7% in 2018 due to a relatively stable exchange rate.

In parallel, it said that the primary budget balance, excluding grants, shifted from a deficit of 1.5% of non-extractive GDP in 2016 to a surplus of 0.3% of non-extractive GDP in 2017, supported by current and capital spending cuts and higher non-extractive tax revenues, and projected the surplus to widen to 1.1% of GDP this year. In addition, it expected the current account deficit to narrow from 14.4% of GDP in 2017 to 11.6% of GDP in 2018, due to an expected rebound in mining and fishing exports.

The Fund encouraged the government to continue to implement monetary, exchange rate, and financial sector reforms to improve the effectiveness of the official foreign exchange market and ensure banking sector soundness. It also called on authorities to avoid non-concessional borrowing to ensure debt sustainability and to strengthen debt management.