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Washington DC, Sep 6 (Canadian-Media): The Executive Board of the International Monetary Fund (IMF) completed Sep 2 the fifth review under the three-year Extended Credit Facility (ECF) arrangement for the Islamic Republic of Mauritania, IMF reports said.
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The arrangement was approved on December 6, 2017 with total access of SDR 115.92 million (about US$164 million at current exchange rates),
In the review, the Board also approved the authorities’ request for an augmentation of access of SDR 20.24 million (about US$28.7 million or 15.7 percent of quota) to address higher-than-anticipated financing needs stemming from the COVID-19 pandemic. The augmentation brings total access under the ECF arrangement to SDR 136.16 million (about US$193 million or 105.7 percent of quota). The completion of this review allows Mauritania to draw SDR 36.80 million (about US$52.2 million or 28.6 percent of quota).
Earlier this year, the authorities had requested emergency support under the IMF’s Rapid Credit Facility (RCF) to help address Mauritania’s urgent balance of payments need due to the COVID-19 pandemic. On April 23, 2020, the IMF’s Executive Board approved the disbursement of SDR 95.680 million (about US$130 million at the time or 74.3 percent of quota), thereby providing space to increase spending on health services and social protection programs and helping to catalyze additional donor support (Press Release No. 20/186).
Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, made the following statement:
“The COVID-19 pandemic continues to impose severe human, economic, and social hardships in Mauritania. Economic activity has slowed down sharply and the outlook has weakened. The overall budget deficit could widen significantly, giving rise to large balance of payments and fiscal financing needs. Risks are tilted to the downside given risks of a more protracted global and domestic COVID-19 outbreak.
“Despite the difficult environment, performance under the ECF-supported program has been strong. The authorities are implementing prudent economic policies and advancing with reforms, albeit with some delays, to ensure macroeconomic stability, foster an inclusive recovery, and reduce inequalities and poverty. Their swift response to contain and mitigate the effects of the pandemic is welcome. Prioritizing health spending and targeted support to the most vulnerable households and sectors of the economy should continue. The temporary loosening of the policy stance is justified and implementation of the national COVID-19 response plan should proceed expeditiously within the 2020 supplementary budget. The central bank has eased monetary conditions and should continue to monitor banking sector soundness. The authorities are committed to full transparency and reporting of resources deployed for the emergency response and to publishing procurement contracts, auditing crisis-mitigation spending as soon as possible, and publishing those results.
“The authorities’ continued commitment to the medium-term objectives of the economic reform program supported by the ECF arrangement is welcome. The program aims at creating fiscal space by mobilizing domestic revenues and strengthening public financial management with a view to increasing priority spending on education, health, social protection, and infrastructure while maintaining prudent borrowing policies. The authorities should return to primary budget surpluses as soon as conditions normalize to ensure debt sustainability, given the high risk of debt distress.
“The IMF’s continued financial assistance, along with other financing from the international community, will help Mauritania respond effectively to the COVID-19 crisis by providing space to increase spending on health services and social protection programs. Further external support will be needed to close prospective financing needs next year.”