Macroeconomic performance: 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.
Tailwinds and headwinds: 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 govern- ment 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 main- tain 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, Maurita- nia 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 Decem- ber 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 pro- mote private investment. Since the sharp drop in iron ore prices in 2014–15, which deepened the fiscal defi- cit, 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 accom- panied 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 devel- opment 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.
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.