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.
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.
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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.