Mauritania - Recent economic developments and external capital requirements

Report No. 2479a-MAU Islamic Republic of Mauritania: Recent Economic Developments and External Capital Requirements June 4, 1979 FILE COPY West Africa Region FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENT Current Unit Ouguiya (UM) US$1.00 : UM 45 UM 1 : US$0.22 WEIGHTS AND MEASURES EQUIVALENTS 1 meter (m) : 3.28 feet (ft) 1 kilometer (km) : 0.62 mile (mi) 1 square kilometer (km ) 0.386 square mile (sq mi) 1 kilogram (kg) : 2.2 pounds (lb) 1 metric ton (mt) 2,204 pounds (lb) 1 liter (1) . 0.22 US gallon (gal) 0.26 British gallon (imp, gal.) FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY ABBREVIATIONS AND ACRONYMS ADB African Development Bank AFSED Arab Fund for Social and Economic Development BCEAO Banque Centrale des Etats de 1 Afrique de l'Ouest BCM Banque Centrale de Mauritanie CCCE Caisse Centrale de Cooperation Economique CEAO Communaute'Economique de l'Afrique de l'Ouest COMAPIC Compagnie Mauritanienne pour l'Armement, l'Industrie et le Commerce COMINOR Complexe Minier du Nord DCPP Departement de Commercialisation des Produits Petroliers EIB European Investment Bank FAC Fonds d'Aide et de Cooperation FED Fonds Europeen de Developpement IMAPEC Industries Mauritaniennes de Peche IDB Islamic Development Bank KFTCIC Kuwait Foreign Trading, Contracting amd Investment Company KFAED Kuwait Fund for Arab Economic Development KfW Kreditanstalt fuer Wiederaufbau MIFERMA Mines de Fer de Mauritanie OECF Overseas Economic Cooperation Fund of Japan OMVS Organisation pour la Mise en Valeur du fleuve Senegal OPEC Organization of Oil Producing Exporting Countries SAMIA Societe Arabe de l'Industrie Metallurgique SNIM Societe Nationale Industrielle et Miniere SNIMEX SNIM Explosif SOCOGIM Societe de Construction et de Gestion Immobiliere SOMINA Societe Miniere de Mauritanie SOMINEX Societe Nationale d'Importation et d'Exportation SONADER Societe Nationale pour le Developpement Rural This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOREWORD This special report ls an assessment of the current economic and financial situation of Mauritania and the program envisaged by the Govern- ment to overcome pressing public finance and balance of payments problems. The report is based on the findings of an economic mission composed of Messrs. Bachmann and Phung, which visited Mauritania in June 1978 to assist the Planning Ministry in preparing an economic and financial rehabilitation plan, and of several IBRD and IMF missions sent since that time to help monitor the Plan and provide further advice on its implementation. The report basically deals with the current situation and medium term outlook in the context of providing a basis for a sound program of national economic development. A key element in this program is the Guelbs project which is designed to sustain the economy as it develops a renewable base for economic development in other productive sectors. Accordingly the report summarizes what is known of the potential for development in other sectors but does not attempt to analyze the detailed economic, technical and institutional requirements of a long term economic development program. Mr. Phung is the principal author of this report. The last grey cover report distributed to the Board was entitled "The Current Economic Situation and Prospects of Mauritania" (Report No. 273MAU dated May 6, 1974).  MAURITANIA RECENT ECONOMIC DEVELOPMENTS TABLE OF CONTENTS Page No. ABBREVIATIONS AND ACRONYMS COUNTRY DATA MAP SUMMARY AND CONCLUSIONS ..................................... i - vii CHAPTER I: RECENT ECONOMIC DEVELOPMENTS . ................... A. Growth, Investment and Savings ....................1 1. Overall Developments, 1973-77 .................1 2. Sector Developments ..... .............. 3 - The rural sector .. .......................... 3 - The mining sector .......................... 5 - The industrial sector ...................... 8 - The transport sector ........................ 9 B. Public Finance, 1973-77 .10 C. Balance of Payments, 1973-77 .13 D. External Public Debt, ..................... 15 E. Situation in mid-1978 ............................. 17 CHAPTER II: REHABILITATION PLAN ..... ....................... 20 A. Presentation of the Rehabilitation Plan .... ....... 20 1. Debt Rescheduling and Consolidation ........... 21 2. Balance of payments support ................ ... 23 3. Budget assistance .... ......................... 24 4. Project aid ... ................................ 25 5. Summary of External Capital Requirements ...... 26 6. Stabilization Measures .............. * ......... 27 (a) Credit Policy and Restrictions of International Transactions ............. 27 (b) Public Finance ........................... 28 (c) Public Investments ........... .. .......... 29  TABLE OF CONTENTS (Continued) Page No. B. Special Projects .................................. 29 1. Copper Sulfide Project .......... .. ............ 29 2. Pellet Project ................................ 30 C. Initial Results and Short-term Prospects ... ....... 31 1. Balance of Payments and Budget Performance in 1978 ..................................... 32 2. Short-term Prospects ..... ..................... 35 D. Medium and Long-Term Prospects ................ .... 37 STATISTICAL APPENDIX 41-61  Page 1 of 2 pages COUNTRY DATA MAURITANIA AREA 2 POPULATION DENSITY 1.1 Mln 1Q1 1.5 million (1977) 14 pr km Rate of Growth: 2.2 (froml960to 1975) 3.75 per km2 of arable land POPULATION CHARACTERISTICS HEALTH8(1976) Crude Birth Rate (per 1,000) 44.8 Population per physician 16,840.0 j Crude Death Rate (per 1,000) 24.9 Population per hospital bed 2,580.0 Infant Mortality (per 1,000 live births) INCOME DISTRIBUTION DISTRIBUTION OF LAND OWNERSHIP . of national income, hikhgst quintile % owned by top 10% of owners lowest quintile 7. owned by smallest 10% of owners ACCESS TO PIPED WATER ACCESS TO ELECTRICITY Occupied dwellings without piped water(%) 7 of population - urban - rural NUTRITION EDUCATION Calorie intake as 7 of requirements 72 Adult literacy rate % (1970) 10.0 Per capita protein intake 63.2 Primary school enrollment % (1976) 17.0 GNP PER CAPITA in 1977- US $ 270 GROSS NATIONAL PRODUCT IN 1977 ANNUAL RATE OF GROWTH (. constant prices) V US $ Mln. % 1973-77 1977 GNP at Market Prices 409.4 100.0 2.9 -4.3 Gross Domestic In-vestment 230.1 56.2 28.8 -9.5 Gross National Saving 0.5 0.1 -64.o -90.0 Current Account Balance -127.2 -31.1 Exports of Goods, NFS 181.7 44.4 -3.5 -4.9 Imports of Goods, NFS 376.5 92.0 15.5 -4.5 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1977 Value Added Labor Force V. A. Per Worker US $ Mln. b Th. h us $ h Agriculture 14029 26.1 315 75.0 326.7 34.8 Industry 14*45 36.7 * - * - Services 146.6 37.2 ** Unallocated . - Total/Average 394.0 100.0 420 100.0 938.1 100.0 GOVERNMENT FINANCE ( UM Mln.) % of GDP 1977 1977 1973 Current Receipts 4,132 20.4 20.9 Current Expenditure 865 42.7 22.5 Current Surplus -4,523 -22.3 -1.6 Capital Expenditures 7,800 38.0 5.4 4/ External Assistance (net) 1/ Government hospital establishments. 2/ The per capita GNP estimate calculated by the same conversion technique as the World Bank Atlas. 3/ Estimates 4/ Excluding mining sector which was private in 1973 (including mining inveatment rate would be 18.8). not available not applicalbe  Page 2 of 2 pages COUNTRY DATA - MAURITANIA MONEY. CREDIT and PRICES 1973 1974 2975 2976 1977 1978 UM illion - Money and quasi Money 1,882 2,958 3,694 4,507 4,798 4,884 Claims on Government -278 -710 -718 -242 1,393 1,051 Claims on the Economy 2,858 3,1T9 4,8441 5,773 7,304 5,089 (Percentage or Index Numbers) Money and Quasi Money as % of GDP 16.1 19.4 22.4 22.g 23.6 General Price Index (1977 = 100) 63.4 71.7 79.1 90 100.0 107.3 Annual percentage changes in:87 131 03 145 03 General Pric'- Index 8.7 13.1 10.3 14.5 10.3 Claims on Government 15.1 -255.4 -1.1 296.7 675.6 -24.8 Claims on the Economy 54.2 11.2 81.3 13.9 23.0 9.7 BALANCE OF PAYMENTS ERCNANDISE UXPORTS (AVERAG1E 973-78) 1973 1974 1975 1976 1977 1978 US Mln % (Millions US $)11 Iron Ore 125.3 79.0 Exports of Goods, NFS 144.6 203.6 185.5 202.0 178.9 161.4 Copper Concentrate 127. 0 17 Imports of Goods, NFS 154.7 246.8 307.1 401.9 386.5 i2.s Other Products 3.4 2.2 Resource GaP (deficit _) -10.1 -43.2 -122.6 -199.9 -207.6 -191.3 t Interest Payments (net) -2.0 -4.3 -5.8 -7.9 -14.6 -13.4 Direct Investment Income -3.4 -6.0 -0.2 -0.5 -0.8 Worker's Remittances -14.5 -16.2 -24.4 -28.4 -27.6 -31.3 Other Factor Service EXTERNAL DEBT. DECEMBER 31. 1977 Income (Net) -1.6 6.6 ',.0 2.9 4.3 3.1 Current Transfers 33.0 66.2 71.6 136.9 _115 3 146.1 US $ Mn Balance on Current Account 1.3 3.1 -75. -96.9 -131.0 -.U Public Debt, incl. guaranteed 457 Direct Investment 10.3 35.6 -12.7.W-49. 1Y 4.4 -6.8 Non-Guaranteed Private Debt Official Capital Grants 8.3 9.1 10.9 12.0 13.6 15.1 Total outstanding & Disbursed Net MLT Borroving 2/ Disbursements 11.0 43.2 46.9 184.7 77.1 109.7 DEBT SERVICE RATIO for 1977 7/ Amortization -2.4 -2 4/ 24.0 -19.4 -2. 17.5 Subtotal 4 22.9 165.3 54.5 92.2 _ Other M and LT Loans -14.1 -3.1 -2.3 -3.3 -1.9 2.2 Public Debt, incl. guaranteed 22,6 Short Term Capital -11.7 -43.6 -0.5 -2.0 12.5 .. Non-Guaranteed Private Debt Other (incl. errors and Total outstanding & Disbursed 22.b Omissions) -3.1 2.7 4.2 -11.3 2.7 3.3 Chan e in Official Reserves g%=Increase) 6/ - 0.5 44.5 52.'8 -18.0 45.2 -19.2 Gross Reserves (end year) 43.5 99.7 50.1 81.3 55.1 87.3 RATE OF EXCHANGE Annual Averagas End Period IBRD IDA US$1.00 = 197.0 1977 1978 Outstanding & Disbursed . 2L.3 US$1.00 = UM 45.0 45.7 46.1 lUndiabursed . 15.5 Outstanding incl. Undiabursed 39.8 l/ Converted into US dollars using prevailing exchange rates. a/ Excluding loans for balance of payments support- 3.! Excluding MIFERMA AND SOMIMA. 4! Including a payment of UM 920 million for the acquisition of SOMIMA. 5_/ Inclading UM 2,281 million repayment to MIFERMA shareholders. A/ Figures may not sum due to rounding. ii Debt service net of interest earned on foreign exchange reserves as a percentage of Exports of Goods and non-factor services. not available not applicable  IBRD 14311 MAY 1979 ISLAMIC REPUBLIC OF MAURITANIA _ Paved Roeds Paved Roads under construction Gravel Roads Trecks ,, Railroads Airlields I o - 00- Annual Rainfall in Mllimnten/ - Intemational Boundaries - - - - - - lndicatesthetenritoryof thefomerSpanlahSahera (WesternSaher ------------ - Copper0 2F Iran i \ 4 ~Date Palms A L G E R I A Fishing J, A& Wharf AGRICULTURAL ZONES : | Saharer Desefrt (| * 9 Saharan Sub - ODeert ) lf-MO5flr W ISahelSan he lia 0 S0 150 270 /- 24 KILOMETERS N.M * KZQu~ro MAL I Nouadhibo 20~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~~~~~~~~~~~~~~~~~~0 -16a St.LuI ' .'*Koed 300 /~ ~~~~~~0 J. 6