Mauritania

Country Summary

Macroeconomic performance and outlook

Real GDP growth in 2019 is estimated at 6.7%, up from 3.6% in 2018, thanks to increased production in extractive industries (12.2% in the first quarter of 2019) and a rise in exports in the fishing sector (5% in the first quarter).

Despite a year-on-year rise of 0.5 percentage point driven by higher prices for food products, inflation remains within the price stability objective (4%) and is estimated at 3.0% for 2019. The budget deficit, after a surplus of 1.6% of GDP in 2018, is estimated at 0.1% of GDP in 2019. Debt fell from 102.3% of GDP in 2018 to 97.8% in 2019. The current account deficit improved from 18.6% of GDP in 2018 to 13% in 2019 as a result of rebounding exports of gold (up 26.6%) and copper (up 2%).

Mauritania continues its efforts toward sounder public finances and debt management. Progress has also been recorded in improving the business envi- ronment, boosting its Doing Business rank from 176 in 2015 to 150 in 2018 and 148 in 2019.

Tailwinds and headwinds

Growth is projected at 5.7% in 2020 and 5.9% in 2021. Following reforms initiated by the government since 2016, medium and long-term growth prospects are

positive, with public and private investments expected in the nonextractive sector. These reforms are part of the program supported by the IMF’s Extended Credit Facility and the national strategy for accelerated growth and shared prosperity 2016–30. Over 2016–19, the government focused on improving the business climate.

But weaknesses persist, and the government recognizes that implementing the reform program should be accelerated to make the business climate even more attractive to investors. A high council for improving the business climate—created in February 2019, chaired by the Prime Minister, and including private sector representatives—is coordinating the implementation of reforms and putting forward an annual action plan. For 2019, the action plan took into account the weaknesses highlighted in the latest Doing Business report, specifi- cally those for access to electricity and the courts.

Economic growth is volatile and dependent on mineral prices (iron, gold, and copper represented 50% of total exports in 2017). Foreign direct investment is mainly in the extractive industry.

According to the 2019 Human Development Report, Mauritania remains in the category of countries with low human development, ranking 161 of 188 countries. And according to the latest World Bank Enterprise Survey, 46.5% of companies in the industrial sector identify a poorly educated workforce as a major constraint.

Source: African Economic Outlook 2020

Fixed Income

Issuance strategy

The objective of medium-term debt management is as follows:
Public administration debt as a percentage of GDP is expected to reach 73.68% (3.7% for domestic debt and 96.3% for external debt) by 2020/21 and reach 71.22% (3.5% for domestic debt and 96.5% for external debt) by 2021/22.
Debt management consisted in meeting the State's financing needs while ensuring that debt sustainability was maintained. However, no prior analysis of costs and risks was carried out. Indeed, the chosen strategy focuses on giving priority to the mobilisation of concessional external loans from multilateral and bilateral creditors, supported in certain circumstances by non-concessional loans in order to finance structural investment projects, since the domestic financial market is unable to dispose of such loans due to a lack of liquidity and savings in the medium and long term on the local money markets. As a result, the domestic financial market is only used as a residual source of financing to bridge the gap between the government's financing needs and external financing in the short term. 


Moreover, the objective of debt management is not explicitly defined in a law. Only the decree establishing the organisation chart of the Ministry of Finance very briefly lists the powers and mission of the External Debt Directorate. Domestic debt, on the other hand, is generally in the form of weekly issues of Treasury Bills, which have replaced BCM advances to the Treasury and have been the Treasury's main source of domestic financing since 2005. Treasury bill auctions are organised every week with maturities ranging from 4 to 52 weeks (short maturities).

Benchmark

Mauritania has opted for a limited number of reference maturities, in this case 4-13-26 and 52 weeks.

Yield curve

Mauritania does not yet have a yield curve.

Challenges in building an efficient yield curve

  • Illiquid and fragmented money market   
  • Secondary market does not exist    
  • Very narrow investor base

Guide to Buying Bonds

Procedures for market participation

Banks and economic agents participating in the Treasury Bill auction must fill in bidding forms according to the pre-established subscription form template. Bidders must specify for the desired maturity, the nominal value in maximum tranches of MRU 20 Million and the proposed rate per tranche differentiated by at least 2 basis points (0.02%). A participant may submit several bids for the same maturity and may make proposals on several maturity bands. Bids must be sent to the BCM in a sealed envelope, bearing the subscriber's address and contact details, no later than the deadline mentioned in the invitation to bid.

Settlement cycle

Treasury bill auctions take place on Tuesdays and the date of settlement on Thursdays. Treasury bills are settled for their net value after deducting the face value of the interest amounts. Subscribers shall be responsible for the settlement on the date indicated in the bid invitation notice of any accepted bid that they have submitted on their own behalf or on behalf of a client and shall be held liable in the event of non-payment.  

Taxation

Interest on Treasury bills is taxed under the IRCM at the rate of 10% according to the recent Finance Law in force . 

Rating

Rating Agency Current Rating Outlook
Moody's No rating No outlook
Fitch No rating No outlook
Standard and Poor's No rating No outlook

Primary Dealers

There are no intermediaries between Mauritania Treasury and the investors. Natural and legal persons of Mauritanian nationality may bid for the auction. However, they are required to have a bank account with a bank domiciled in Mauritania or a bank account with BCM and a treasury securities account with BCM.

Market restrictions

Openness to international investors

Foreign investors, legal or natural persons, regardless of their place of residence, may also subscribe to Treasury securities on the primary market through a bank with a settlement account at the Central Bank of Mauritania.    

Capital controls

There are no restrictions on foreign ownership or control, except in sectors where public companies hold monopolies.

Restrictions on FX and profit repatriation

There are no restrictions on the transfer, repatriation and conversion of funds linked to an investment.  However, it is mandatory for investors to open foreign exchange bank accounts in Mauritania to transfer funds. There is no limit on the amount that can be transferred, especially for remittances of profits, debt service, capital, and capital gains. 

Documents & Resources

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