Mauritania - Joint Bank-Fund Debt Sustainability Analysis : 2018 Update (English)

Mauritania’s risk of external debt distress remains high owing to a substantial increase in external debt during 2015–17 to finance infrastructure and external deficits, a contraction in nominal GDP due to the 2014–15 terms-of-trade shock, and the depreciation... See More + Mauritania’s risk of external debt distress remains high owing to a substantial increase in external debt during 2015–17 to finance infrastructure and external deficits, a contraction in nominal GDP due to the 2014–15 terms-of-trade shock, and the depreciation of the exchange rate in 2016.The PV of PPG external debt-to-GDP persistently breaches the relevant threshold. However, with a projected downward trend in this ratio, prospects are still for external debt sustainability, although falling below the threshold is delayed by two years under current baseline projections compared to the November 2017 DSA owing to the rescheduling of repayments on an existing debt, and a weaker outlook for the current account balance. The stress tests reveal breaches of the relevant thresholds by all the debt indicators for multiple stress tests. The overall risk of debt distress is also high, reflecting the dominant role of external debt in the public debt dynamics; under the baseline and multiple stress tests, the PV of public debt-to-GDP remains above the benchmark value for several years. Projected export and growth performance as well as fiscal and debt trajectories continue to be vulnerable to lower metal prices, adverse weather, policy implementation risks, and regional security developments. The DSA highlights the need to follow sound economic policies, including a prudent borrowing strategy that avoids non-concessional borrowing and relies instead on grants and concessional financing taken up at a pace consistent with absorptive capacity. Efforts to resolve the external debt in arrears with Kuwait should be continued.  See Less -