Announcement of Mauritania Donors Meeting held on March 12-13, 1985

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington , D.C. 20433 , U.S.A. BANK NEWS RELEASE Contact: Pamela Brennan March 18, 1985 (202) 477-3293 MAURITANIA DONORS' MEETING Paris, Tuesday and Wednesday, March 12-13, 1985 At the request of the Mauritanian Government a group of Mauritania's major donors met in Paris on March 12-13 to review Mauritania's program of economic and financial adjustment and its needs for external assistance in view of its sizeable debt obligations. The group comprising eight bilateral donors and eight multilateral instituations met under the chairmanship of Mr. Pierre Landell Mills of the World Bank. The Mauritanian delegation was led by His Excellency Anne Arnadou Babaly, Minister of Finance, and included His Excellency Taki Ould Sidi, Minister of Planning, Mr. Boubou Farba Dieng, Governor of the Central Bank, Mr. Moustapha Ould Cheikh Mohamedou, Counsellor of the President, His Excellency Ely Ould Allof, Ambassador to France, as well as several senior officials in the Government. At the outset, the World Bank and the IMF representatives indicated that Mauritania faced a serious financial crisis, partly as a result of rapidly rising debt service obligations, conpounded by a devastating and prolonged drought and depressed international iron ore prices. They added that the government had initiated a well conceived economic and financial adjustment and recovery program including courageous measures to adjust to current conditions. They further stated their conviction that despite the ravages of the drought and the inherent weaknesses of Mauritania's economy, with continuted adjustment efforts and external financial support the country could overcome over the medium-term its present financial problems and exploit existing opportunities to increase incomes from fishing, irrigation, livestock, and small scale industry. They also indicated that Mauritania has completed negotiations with the IMF for a Stand-by Arrangement and signed a Letter of Intent. Given the relatively large financing gap faced by Mauritania, the Stand-by Arrangement could be considered by the IMF's Executive Board only after appropriate arrangements for filling the gap have been made. Since the Paris Club would meet only if Mauritania had a program with the IMF and since Mauritanian debt is mostly owed to countries which do not ususally participate in the Paris Club, the Government has decided to call a meeting of its main donors and creditors and asked the World Bank to chair this meeting.  -2- The Mauritanian delegation reported on the progress of the current adjustment program, which includes a substantial adjustment of the exchange rate, a tightening of the fiscal policy, the raising of public utilities tariffs and prices, the revision of the investment program and a major rehabilitation of the parapublic sector. The delegation also emphasized the determination of the Government to continue with appropriate adjustment and recovery measures over the medium-term to restructure the economy and attain a sustained rate of economic growth under conditions of financial stability. Delegates were particularly impressed by the Government of Mauritania's evident commitment to austerity and to sound economic management and planning. While expressing their strong support for the Government's policies, they recognized that Mauritania's commendable efforts to rehabilitate the economy would be quickly compromised without adequate and rapid donors' support both in terms of major debt rescheduling and new contributions in the form of balance of payments support. In that respect, while noting the decision of the Mauritanian .Government to seek further external debt rescheduling through the Paris Club, most participants stated they were willing to consider various debt relief measures for Mauritania on the most favorable terms possible. Substantial new contributions were also announced during the meeting, including a grant in the amount of US$30.0 million from the Kingdom of Saudi Arabia, which has already been made available to Mauritania. In closing, the participants stressed that close coordination would be required in the period ahead to insure an effective use of external assistance in support of Mauritania's adjustment program and welcomed the prospects of a consultative group before the end of 1985. The meeting was attended by representatives of the Governments of France, Germany, Italy, Japan, Kuwait, Netherlands, Saudi Arabia, and the United States, and representatives of the Abu Dhabi Fund, the African Development Bank, the Arab Fund for Economic and Social Development, the Arab Monetary Fund, the European Fund for Development, the International Monetary Fund, the Islamic Development Bank and the Kuwait Fund. The Governments of Algeria, Brazil and Spain were represented as observers. -0-