Economic performance and outlook: The decline in iron ore prices resulted in weak growth of 0.8% in 2014 and 1.7% in 2015, but 2017 brought recovery, with growth estimated at 3.6% and projected to be 3% in 2018 and 4.6% in 2019, due to a revival in the public investment program, structural reforms, recovery in metal prices, and exploitation of recently discovered offshore gas deposits. In 2017, growth was driven by construction, agriculture, fishing, and land use, as well as gold and copper mining.
Macroeconomic evolution: The decline in iron ore prices continued to weigh on the country’s macroeconomic indicators; the budget deficit increased from 0.3% of GDP in 2016 to an estimated 0.6% in 2017, and foreign exchange reserves decreased from $100 million in 2016 (equivalent to 5.5 months of nonextractive imports) to $724.9 million in 2017 (equivalent to 4.2 months of nonextractive imports). However, the adjustment policy protected macroeconomic stability and reduced external imbalances. In 2017, inflation was contained at an estimated 2.7%, and the current account deficit as a share of GDP decreased an estimated 0.7 percentage point. The adjustment policy included fiscal consolidation, stronger banking supervision, gradual depreciation of the currency against the U.S. dollar, cessation of foreign exchange sales on the parallel market, and mobilization of external resources.
Tailwinds: For the third year in a row, Mauritania made progress in the World Bank’s Doing Business ranking due to its structural reforms aimed at cleaning up the business environment to promote business creation and investment. In the 2018 report, the country jumped 10 places to rank 150 out of 190 countries. Mauritania intends to continue efforts to remove constraints to business development—namely, limited access to finance, infrastructure deficit, and corruption. In January 2017, the country adopted a public-private partnership law. In February 2017, the country began talks with the International Monetary Fund (IMF) over a new three-year economic program, and finalization of an agreement under the Extended Credit Facility is expected soon.
Headwinds: Low export diversification makes economic growth fragile and vulnerable. The economic outlook remains dependent on external factors, such as commodity prices and foreign direct investment in extractive industries. Measures to diversify the economy are required as part of the 2016–2030 National Strategic Framework for Accelerated Growth and Shared Prosperity. Despite resurgent growth, the risk of financial instability remains high. In 2015–16, the slowdown in economic activity led to deterioration in the quality of bank assets, limiting the capacity for financial intermediation. External public debt also remains problematic. A combination of high indebtedness (68.4% of GDP in 2017, apart from the passive debt contracted with Kuwait), possible deterioration of raw material prices, amortization of the Saudi loan and other multilateral loans in 2018–22, and weak debt management capacity continues to raise the risk of over indebtedness. Youth unemployment stands at 14.6%, higher than the national rate of 10.1% and the adult rate of 5.9%. Young people, who constitute about 60% of the population, are the most exposed to underemployment, thereby offering recruitment targets for the Sahel’s terrorist groups, a situation that threatens the security of the country and the subregion.
Guide to Buying Bonds
Procedures for market participation
Issuances are conducted following the Dutch auction system. Auctions are held every Tuesday and if the auction falls on a public holiday, the auction is carried out the next working day.
A bidder can submit multiple bids for the same maturity and can make several proposals on several dates. Tenders are sent to the BCM. The auction adjudication committee first process the bids with the lowest rates, then the highest rates up to the maximum amount awards.
The committee may award higher amounts, up to 30% of the amount issued, if it finds that the situation provides preferential rates and, or, if the state has need for resources from the higher bid amounts. If the auction is beyond the 30% threshold, a decision to award the subscribed amount should be submitted in writing to the Ministry of Economy and Finance.
The treasury securities on the secondary market are traded over the counter (OTC).
The BCM plays the following role in the secondary market:
- It facilitates trading operations by providing daily information it receives from market participants on the supply and demand of securities (amount, rate, maturity). The Treasury operations must be settled at the BCM under the principle of settlement / delivery. Settlement / delivery means that the payment and delivery of the securities take place simultaneously.
- The BCM stores all data and information on all the Treasury securities issued by the Ministry of Finance. The BCM publish regularly information on securities issued (maximum rate, minimum rate, weighted average rate, offers not satisfied).
For secondary market transactions, market participants are required to send a notification to the BCM by mail or fax which details the terms of the transaction: the type of transaction (buy / sell), the date of the transaction, the counterparty category title (maturity date, nominal amount of the transaction, net to settle).
The settlement process is completed through computer software at the BCM, capturing the price of the security and the nominal values to be allotted to the corresponding accounts.
The settlement cycle for treasury securities is T+2.
There is no special tax applied to Treasury securities. Interest income is taxed under the 25% income tax for banks and businesses.
|Rating Agency||Current Rating||Outlook|
|Moody's||No rating||No outlook|
|Fitch||No rating||No outlook|
|Standard and Poor's||No rating||No outlook|
There are no intermediaries between Mauritania Treasury and the investors. Physical and legal persons of Mauritanian nationality may submit bids on auctions. However, they are required to hold a bank account in a resident bank in Mauritania or the BCM, and a treasury securities account at the BCM.
Openness to international investors
The government bond market is open to foreign investors. Despite the Mauritanian government’s programmes to attract investment in the debt market such as the removal of possible discriminatory policies against foreign investors, foreign investor participation remains subdued as a result of complex bureaucratic procedures.
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.