MAURITANIA A. Overall economic performance since 1980

The magnitude of the difficulties facing Mauritania raises serious doubts about its future unless it implements a vigorous recovery programme. The per capita gross domestic product has dropped, despite a very high rate of investment.

The persistent drought, the international economic crisis and the effects of hostilities contributed to the aggravation of the situation which has prevailed to date. Cereal production fell to a sixth of its average volume. Iron are exports also fell, and although they rose again in volume terms in 1984, their actual value has in fact fallen because of the deterioration in international iron ore

prices.

terms.

amounted

Between 1980 and 1984 GDP dropped by 0.6 per cent per annum in real External debt amounted to $1.7 billion in 1984 while the debt ratio

to 36.0 per cent of exports in that year.

B. Main areas of focus of the national recovery programme (1986-1990)

Within the framework of the 1985-1988 recovery programme, the Government is emphasizing the development of fisheries, which is considered as a renewable source of wealth, the revitalization of the production of millet, sorghum, maize and rice, the expansion of cultivable land area, reconstituting of herds, priority to drinkable water, opening-up of remote regions, the overall improvement of the environment and the promotion of the private sector activities particularly in the area of small- and medium-sized enterprises.

C. Highlights of policy reforms in support of the national recovery programme 0986-1990 )

The reforms that have been adopted or are planned include:

(a) Increases in producer prices by at least 20 per cent;

(b) Broadening of access to the facilities offered under the investment code;

(c) Establishment of agricultural credit;

(d) Financing of the recurrent expenditure of ce rtair. projects by 1endi""

agencies;

(e) Enactment of new legislation on land tenure;

(f) Enactment of a water code;

(g) Measures to render the fisheries sector more profitable;

(h) Redeployment of investment towards priority areas and the improvement of productivity;

(i) Selection of projects which will have a rapid impact on production or are absolutely vital to meet the essential needs of the population;

(j) Scaling down the investment programme;

(k) Monetary and fiscal resource management policies to increase government revenue and rationalize its expenditure;

0) Review of the tax exemptions, customs duty and export sector taxation regimes;

(m) Improvement of co-ordination between fiscal departments;

(n) Establishment of compulsory discharge of fish catches;

(0) Freezing of recruitment and reduction of the wage bill;

(p) Reduction of subsidies; and

(q) Rescheduling of debts and appointment of a committee to monitor the debt.

D. Estimates of resource requirements for the national recovery programme (1986-1990)

Millions of US dollars (i) Resources already mobilized

Domestically Externally

Subtotal

(ii) Resources planned to be mobilized Domestically

Externally Subtotal

(iii) Estimates of likely available resources (iv) Total estimated cost of programme

(v) Resource gap

49.0

809.0

49.0

809.0 1\58.0 1 221. 0 363.0

E. Estimates of debt-servicing requirements (1986-1990) (in millions of US dollars)

Type of debt

Interest Principal

'ror a1

Official creditors 132.8 527 .0 (,59.;'"

31. MAURITIUS

Private creditors 21.0 69.7 90.7

Total 153.8 596.7 750.5

A. Overall economic performance since 1980

After the very bad year of 1980, the Government introduced a structural adjustment programme to promote economic recovery. Over the period 1980-1984, GOP increased at an average annual rate of 4.1 per cent, and in 1984 it was higher

than in 1979. The most important feature of the period is the performance of the industrial sector, particularly of the Export Processing Zone (EPZ), and of the tourism sector, which grew by 16 per cent and 10 per cent respectively over the 1983 level. In terms of production, job creation and foreign currency earnings, these two sectors have become the engine of economic growth. The agricultural sector, too, has shown considerable advances in sugar and tea production, thanks to better climatic conditions and high export prices.

The balance of payments has improved considerably. The current account deficit fell from 13 per cent of GDP in 1981 to about 3.8 per cent of GDP in 1984. The budget deficit was only 6.5 per cent of GDP in 1984, as against 12.9 per cent in 1981. The annual inflation rate slowed to around 7 per cent after a period of very high inflation, with a peak rate of 42 per cent in 1980. The domestic savings rate, which was 12 per cent of GDP, increased over the period as a consequence of the improvement in the economic situation, and reached 18 per cent of GDP in 1984. It is still necessary, however, to seek foreign assistance to finance investment.

At the end of 1984, the outstanding public debt amounted to US$ 412.4 million.

Only 24 per cent of this amount consisted of soft loans, the balance being made up of short-term and long-term commercial loans contracted on the capital market (eurodollar loans). The debt-service burden is fairly critical, since it represented 28.3 per cent of the 1984 exports of goods and services. Net resource flows fell from $199.1 million in 1980 to $46.6 million in 1984.

B. Main areas of focus of the national recovery programme (1986-1990)

In 1985 the Government adopted the Public Sector Investment Programme for the fiscal period 1984/1985 1986/1987, with projects extending into fiscal year 1989/1990. The Government has assigned first priority to agriculture, comprising water resources development projects (irrigation), research, studies and training in agriculture, physical infrastructure (warehouses, soil management) and reforestation. Second in terms of priority come the agro-food industries, followed by human resources development (technical training projects).

C. Highlights of policy reforms in support of the national recovery programme (1986-1990)

The development strategy for the implementation of this programme of investments in the public sector is to channel resources towards productive sectors. Thus the Government will reduce its operating costs and keep the financial deficit low so as to allow the private sector to benefit still further from credit on the local capital market. Likewise, in order to give more support to investment and maintain foreign exchange reserves, the stringent monetary policy introduced in the context of the stabilization programme will be maintained.

D. Estimates of reSource requirements for the national recovery programme