Mauritania

major macro economic indicators

(e): Estimate (f): Forecast *Grants included **Including debts to the Central Bank and Kuwait

RISK ASSESSMENT

A gradual improvement in economic activity

In 2022, growth will keep recovering from the recession in 2020, as exports and domestic demand continue to gradually improve. Gold exports are notably expected to increase alongside production. After a fire disrupted operations at the Tasiast gold mine (operated by Kinross Gold) in June 2021, output will rebound and will be further boosted by the planned expansion of the mine. However, the environment will be less favorable for iron ore exports, as prices are expected to moderate due to a slowdown in Chinese demand. On the other hand, copper exports could increase and will benefit from international prices and global demand. Non-extractive exports, driven by fishery products, are expected to increase in 2022. Household consumption will gradually rebound in 2022, as the vaccine rollout continues to progress (around 14% of total population were fully vaccinated in November 2021). Agricultural activities are expected to keep recovering in 2022, supporting household income (50 % of the population depends on agriculture, livestock and fishery). As the Priority Plan (ProPEP 2020/22) – notably aiming at supporting economic diversification and develop food security - continues to be implemented, government consumption is expected to be supportive. This will be reflected in growth in the services and industrial sectors. Investment (31.6% of GDP) is expected to remain moderate in 2022, as the authorities’ ambition to increase infrastructure investment could be tempered by limited fiscal space. Gross fixed capital formation will nonetheless be supported by investment aimed at tapping into the country’s hydrocarbon potential. Revenues from this sector are not expected to benefit the country in 2022, as production at the offshore gas field Grand Tortue Ahmeyim (GTA, shared with Senegal), discovered in 2014, is scheduled for 2023.

Debt restructuring and twin deficit

The fiscal balance will still be in deficit, but will narrow in 2022. Revenues from mining and fiscal receipts will continue to benefit from the economic recovery . Pending the boost from gas revenues, they will be supported by measures outlined in the 2022 budget to improve revenue mobilization. In 2022, authorities will continue to prioritize social and infrastructure spending by containing growth of recurrent expenditures. The end of the Debt Service Suspension Initiative (DSSI) will also translate into higher debt servicing costs. With the country maintaining a primary fiscal surplus (which excludes interest on debt), public debt is expected decrease slightly in 2022. Authorities are also expected to continue their debt restructuring strategy (ongoing talks with China and India, pending decision on the G20 framework) after they found an agreement with Saudi Arabia (which suspended USD 8.2 million of debt payments) and Kuwait (restructuring of USD 82.7 million) in 2021. The country could also receive further support from the IMF, following the conclusion of the previous ECF arrangement in March 2021. Although it is expected to shrink, the current account deficit will  remain large in 2022. Capital goods imports, notably for the development of gas projects, will continue to fuel a large trade deficit despite rising exports. Both the services and primary revenue accounts are also expected to remain deep in deficit. Current international cooperation could increase, supporting inflows in the secondary income account, and a reduction of the current account deficit. The latter will continue to be financed by FDI related to the development of the LNG project and concessional loans. Favourable terms of trade in 2021 supported an increase in gross international reserves, which cover more than 5 months of non-extractive imports.

The president is working with the opposition

Mohamed Ould Ghazouani was sworn in as President in August 2019 after he won the election with 52% of the vote, despite challenges from the opposition. His party, Union for the Republic (UPR) has been holding the majority in the National Assembly since 2018 (97 of 157 seats).  The next legislative and presidential elections are scheduled in 2023 and 2024, respectively. The administration is expected to continue his anti-corruption drive , most notably illustrated by the arrest of the former president Mohamed Ould Abdel Aziz (2009-2019) in June 2021 on corruption charges. Furthermore, the president has worked to ease tensions with the opposition, calling on them to tackle poverty, unemployment and inequality, and to improve the education and health systems. Mauritania will continue to consolidate relations with African countries, as suggested by its participation in the African Continental Free-Trade Area (AfCFTA) to strengthen economic ties in the region.  In addition, historically close links with Gulf countries helped in the recent restructuring negotiations with Saudi Arabia and Kuwait. Cut in 2017, diplomatic ties with Qatar were re-established in March 2021.

Last updated: February 2022