INTERNATIONAL MONETARY FUND JANUARY 2014 The Mauritanian Economy: Performance and Outlook

Achieving Macroeconomic Stability

1. Achieving Macroeconomic Stability Successful completion of the 3-year Extended Credit Facility program with the Fund ( ). In a difficult external environment:  Global financial crisis, European crisis, food price hikes. And challenging regional and domestic conditions.  Political uncertainty related to the Arab Spring  Mali crisis  2012 Drought

1. Achieving Macroeconomic Stability Restored macroeconomic stability  Strong growth dynamics combined with contained inflation  Buildup of external and fiscal buffers  Progress with restoring the health of the financial sector Substantive progress with the structural reform agenda  Fiscal: Public financial management, revenue mobilization, tax and custom administration  Progress on financial sector reforms and foreign exchange markets  Elimination of the diesel subsidy

Growth has been above peers,..and across sectors 1 1. Achieving Macroeconomic Stability

..with significant growth in cereal production…..and mining production. 1. Achieving Macroeconomic Stability

Inflation has remained under control… …in line with declining local and imported inflation 1. Achieving Macroeconomic Stability

Fiscal outcomes have been stronger than in peers… …driven by improved revenue mobilization 1. Achieving Macroeconomic Stability

..which has supported a hike in public investment …financed mostly by domestic resources 1. Achieving Macroeconomic Stability

Concessional external financing dominates. Public debt remains elevated, but debt service has improved. 1. Achieving Macroeconomic Stability

Widening of the current account mostly driven by extractive industries And has been mostly financed with FDI and official loans 1. Achieving Macroeconomic Stability

Current account relies on traditional exports… …and benefits from benign price dynamics 1. Achieving Macroeconomic Stability

External buffers are at an historically record level… …in the context of a relatively stable currency 1. Achieving Macroeconomic Stability

Private sector credit growth has remained subdued..banks remain well capitalized but have low profitability 1. Achieving Macroeconomic Stability

Economic Outlook

2. Economic Outlook Initial Conditions Macroeconomic stability Higher resilience to external shocks Context Prudent macroeconomic policies Still elevated commodity prices A strong mining potential Outlook Positive, with an opportunity to support stronger and more inclusive economic growth dynamics.

2. Economic Outlook Positive economic outlook: Annual average real GDP growth above 7 percent over the medium term. …fueled by mining, agriculture and fishing, construction and services, …and with positive effects on potential growth. ….and challenges remain.

2. Economic Outlook: Challenges Resilience to external shocks Private sector development and economic diversification More inclusive growth dynamics

Economic Diversification Private Sector Development Increasing resilience of the economy to external shocks Enhance domestic sources of growth dynamics Economic transformation to increase higher value- added output Improve business environment Financial deepening and access to finance Improve labor markets dynamics Reduce informality 2. Economic Outlook: Challenges

More inclusive growth dynamics Access to drinking water and electricity Improve education and access to health Better targeted social transfers to reach the most vulnerable

3. Conclusions Mauritania’s economic potential is large, with opportunities to capitalize in the coming decade. Private sector development will drive economic diversification and job creation. Promoting more inclusive economic growth is crucial to improve living standards for the population overall. Good management of the economic juncture will provide Mauritania with a historic opportunity to transform this country.

Thank you!