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Real GDP growth was an estimated 3.5% in 2018, the same as in 2017 and up from 1.8% in 2016, driven mainly by irrigated agriculture, fisheries, construction, stronger metal prices, and manufacturing. The upswing is projected to continue in 2019. Inflation stayed within price stability targets, at an estimated 2.9% in 2018. The fiscal position remains viable, with an estimated surplus of 0.1% of GDP, up slightly from being balanced in 2017. The current account deficit deepened to 16.0% of GDP in 2018, from 14.4% in 2017, due mainly to rising oil prices.
In general, Mauritania is well placed economically thanks to its ongoing reforms. The country is among the top 10 global reformers, climbing 26 places in just three years in the World Bank’s Doing Business rankings, from 176 in 2015 to 150 in 2018. But the foreign trade imbalance persists and remains vulnerable to external shocks.
Speeding up structural economic transformation is a key challenge facing Mauritania. Despite government efforts, the economy is failing to diversify. In the second quarter of 2018, exports of iron, gold, and copper accounted for 47% of total exports, making the country vulnerable to fluctuations in the prices of these products. A structural reform program to boost nonmining private development is needed to stimulate exports and growth. It should include reforms to maintain macroeconomic stability, stimulate the formation of human capital and a skilled workforce, and improve the business environment and economic infrastructure to meet private sector requirements. Nominal and real exchange rates have depreciated in recent years. The foreign exchange ratio has deteriorated from 24.2 in 2016 to –11.2 in 2017 and –12.4 in 2018.
Debt is also a challenge for Mauritania. With an external debt–to-GDP ratio of 103.7% in 2018, Mauritania is classified by the International Monetary Fund (IMF) as being at risk of debt overhang. Furthermore, under the IMF’s Extended Credit Facility, approved in December 2017, the country is committed to only undertake nonconcessional borrowing on a capped basis and to finance economic infrastructure.
Since 2015, Mauritania has been engaged in a vast economic reform program. Authorities have put a great deal of effort into improving the business climate to promote private investment. Since the sharp drop in iron ore prices in 2014–15, which deepened the fiscal deficit, they have worked to improve the efficiency of public finance management and in May 2018 passed the new organic finance law, regarded as the most important structural reform undertaken as part of the Guidelines for the Reform of the Public Finance Management System in 2012–16. These reforms have been accompanied by major investment in economic infrastructure. Over 2015–17, for the first time in the country’s history, domestic investment in sectors such as rural development and industrial development matched foreign investment. This momentum reflects the government’s commitment and will to accelerate the attainment of the country’s development objectives.