Mauritania - The economy

RESTRICTED FIlu Copy Report No. AF-28a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE ECONOMY OF MAURITANIA December 14, 1964 Department of Operations Africa CURRENCY EQUIVALENTS Unit: Franc de la Communaute Financière Africaine (CFA franc) 1 CFA franc = U..S. $0. 004 247 CFA francs = U. S. $ 1 1 million CFA francs = U. S. $4, 051 U.S. $1 million = 247 million CFA francs TABLE OF CONTENTS Page BASIC DATA MAPS SUMARY AND CONCLUSIONS ......................... . ........... I. INTRODUCTION ................ ................. 1 Physical Characteristics................................. 1 The Population Structure ................................ 1 Political Organizations....... ......................... 2 II. STRUCTURE OF THE ECONOMY................................ 3 Traditional Rer ........................... . 4 Stockraising...... . ....................... 4 Agricultural Production ................................. Fishing ....... ......................0...... 6 Gum Arabic. ~........................................ 7 M.ining Resource........................................ 7 Po................................... .............. . 9 Industry................................................ 9 Education........... 0... 000.0..0 0.0 0.0.0.00000 0 0..10 Employment, N,1ages and Prices......................11 III.FINANCIAL STRUCTURE............................... .12 Money and Credit........................... .......12 Public Finance........................... ....... Public Debt..........................................17 Foreign Trade................. ................... .18 Balance of Payments.. ................................18 Financing of Economic Development......................19 IV. ECONOMIC PROSPECTS AND CREDITWORTHINESS.................22 STATISTICAL APPENDIX LIST OF TABLES IN STATISTICAL APPENDIX Table No. Population 1 Agricultural Production and Livestock 2 Estimated Share of the Various Componen+.s of the Traditional Economy in the Gross Domestic Product (1959) 3 Controlled Slaughtering in Slaughter-Houses 1951-1952 h Number of Licensed Vehicles Output of the Production Sector in 1956 and 1959 6 Main Components of the Economy of the Republic of Mauritania 7 Banks Liabilities and Assets in Mauritania 8 Estinate of Production azd Sales of HIFERDA and Duties and Taxes paid by KIMB"2,L to the 'Hauritanian Government 9A & B Revenue of the Government of Mauritania 1959-1964 10 Revenue of the Current Budget of Mauritania by Category 11 Current Expenditures of the Government 12 Budget Subsidy Received from the Group of Territories of the Former AOF and France 13 French Technical Assistance P-"rsonnel in Mauritania 14 External Public Debt 15 External Trade of Mauritania 16 Estimates of the Actual External Trade of Mauritania 17 Balance of Payments with Non-Franc Area Countries 18 Investments Financed by FIDES from 1947 to 1959 19 Investments Financed by FAC from 1959 to 1963 20 Investments Financed by FED from 1960 to 1963 21 Invest.ents in the Public Sector under the Four Year Plan 1963-1966 22 Financing of Investments in the Public Sector under the Four Year Plan 1963-1966 23 BASIC DATA Area: 419,200 square miles; 1,085,000 square km. Arable area: Population: (as of end of 1962) 880,000 (est.) Rate of growth (1950-1960) 1.3% Density of Total Population per sq.km. 1 Total GDP as of 1962 (est.): (in local currency) CFA F.24.h billion (in $ equivalent) $98 million Per Capita GDP (as of 1962): at present exchange rate $111 % of GDP from mining and manufacturing 1/ % of GDP from agriculture 45% Rate of growth of GDP,1959-1962 19% yearly % of GDP (as of 1962) 2/ Gross investment 70% Savings 33% Exports 17% Taxation 9% Total Government Current expenditures 16% Currency: CFA Franc Total currency and coin in circulation (as of October 31,1962) CFA F 1,499 million Total money supply (including sight deposits) CFA F 4,129 million Public Finances: CFA Franc Latest budget as of 1963: Current Receipts 3,287 million Current Expenditures 4,669 million Current Surplus or Deficit -1,382 million Foreign Subsidy to Current Budget 1,700 million Total Public Investment Expenditure 3,331 million of which:Foreign Investment Expenditure 2,631 million 3/ Balance of Payments (as of 1962) Total Exports 3,615 million Total Imports 17,455 m,llion Balance of Trade -13, 8340 mi'llion 1/ Without building 2/ Distorted due to the impact of the MEIFERA mining operation '/ Compare private foreign investment expenditure in 1961 , CFA F16,055 million. -2- BASIC DATA (cont'd) External Assistance (for Public investment only) Since 1960, as of December 31,1963: Total made Total Source available disbursed France 3,500 million 2,700 million European Development Fund 3,400 million 1,100 million IBRD 16,300 million 16,300 million Foreign Exchange Reserves: not applicable as member of West African monetary union franc zone, External Public debt 1/ Total External Debt (as of March 1, 1963) 2,318 million Total Annual Debt Service 200 million Debt Service Ratio as % of Total Exports 5% 1/ Excluding IBRD loan to IUFERIVA US$66 million for which Government of Mauritania is a co-guarantor with France. NORTHWEST AFRICA .. . . . .. . . . .. . ..ALGIERS, I nternationo/ boundories • ---Adminitrotive bound~ry RA AT 00 S AGUI •EL H~AM 0V R 0 DE ORD Cisnero Fort ------ --I°Pi ø f ca ncer Port C) Gouraud NOUAKCHOTT SDýAIW SENEGAL PORT. BAAK NIAMEY uINEA BAAK B f 's;,Å OAGADOUGOU SIERRA FREETOWN LEONE / V 0 R Y N/G E R A GHANA oý C 0 A S T LAGOS MONR OVI A ABIDJAW- - ACCRA o 00 200 300 400 500 Miles 0 100 200 300 400 500M- JULY 1964 IBRD-647R12 ISLAMIC REPUBLIC OF MAURITANIA 0 100 200 300 Cm 0 '00 200 300 mi DURTION OF CRY SEASON Fukrle -oas IN MCNT5 PER YEAR NoionalO ad Dale Palms Local Rood- ------ 7 (Nov.-May) Ari ,elds e (cl - :May) R011w0Y F,sh,,ng 9 (CDt -June) CoQper Met Pack0 ( l -j y) ' (n Fi (Se,l -July) 12 AGRICULTURAI Z11 .o A L G E R i A Saharaen sub-desert Acceat Ranfal oi IF E Trtgi Mtil meters''" * Cisrierasi. PORT.ET.E..._..... . .. . . . - - - - - .- I r --- .-.---.-.----- POT IEfij\z~~ . - à - nerr cI tun, ci ST [)AKR S~ E fl E G 4 L JUJLY 19640AD641l () SUikRY AND CONCLTSIONS 1. The Islamic Republic of Vauritania, a former French overseas ter- ritory achieved independence in November 1960. The country became a member of the United Nations in October 1961, and of the IMF, IBRD and IDA in September 1963. 2. Er. Moktar Ould Daddah was elected President of the Republic for five years in August 1961 by an overwhelming majority. The Government now has to face the task of mustering the energies of populations of widely varying origins and ways of life in order to bring about the country's unity and to consolidate its political, economic and financial independence in the face of the many obstacles to be overcome. These are mainly the vastness of the territory -1,085,000 sq.km.,the harsh semi-desert climate, the low popu- lation density - 880,000 inhabitants and 0.8 inhabitants to the square kilo- meter - and the nomadic life led by 80% of the inhabitants which makes any action in the field of administration, health, education, economic and social activities oomplicated in the extreme. 3. The country's development is not only hindered by these physical and human handicaps but also by the fact that its scarce natural resources are quite poor, its principal activities being extensive and unproductive stock raising, rudimentary agriculture and a little river and sea fishing. Even with considerable investment to develop production and the infra- structure and with a sustained effort to train the technicians required to organize the population, all that could be hoped for, prior to the proving of the iron ore deposits, was a moderate and long term development of these non-mineral resources. 4. Mlauritania's future prospects were transformed by the discovery of a deposit of high-grade iron ore (63 to 67%) at Fort Gouraud which the MIFERMA Company began to work in 1963. The development of the Fort Gouraud deposit has broadened the base of Hauritania's economy and through the large investments that it has required, some $200 million, has had a con- siderable impact on its structure and development. Exports of iron ore began in June 1963 amounting to some 3.5 billion CFA francs. When they attain a normal rhythm in a few years, this figure should rise to some 12 billion CFA francs and make an important reduction in the present deficit on the balance of trade. Lastly, taxes on capital goods imports have provided, and taxes on ore exports will continue to provide an important and an increas- ing part of the country's budgetary resources. During the first three years of the construction period -1960/1962- the gross domestic product increased at an average of 19% a year. However, the rate of growth will diminish drastically as the pace of the large mining investments slows down. 5. Besides large private investment in the mining sector, Mauritania has had the benefit, since the end of the war and particularly since 1960, of substantial foreign assistance for financing investments in the public sector. The subsidies from the French Fonds d'Investissement et de D6veloppe- ment Economique et Social (FIDES) and Fonds d'Aide et de Coop6ration (FAC) were supplemented in 1959 by the subsidies of the first European Development Fund (FED) and recently by those of the second Fund. Under cooperation agree- ments France grants broad technical assistance to Mauritania. As a result (ii) of this assistance a minimum basic infrastructure has gradually been built up and measures to develop stock raising, agriculture and fisheries have multiplied. Host of the foreign aid has taken the form of subsidies. The external public debt has therefore remained small; in 1963 its service represented 5% of exports (1.4% of estimated exports for 1964). 6. Hauritania hoped that the large public and private investment program which accompanied the development of MIFERMA would enable it not only to develop its natural resources but also, by increasing its budgetary receipts, to put an end to the large balancing subsidies granted until then by France, and gradually to finance its own equipment budget in addition to the current budget. 7. The drop in the price of iron ore has reduced the expected revenue from exports, and this, together with an increase in operating costs and an increase in the cost of development of the deposit, has put off the time when the country will participate in the Company's profits. In the light of this unfavorable combination of circumstances, and in order to terminate the current budget subsidy from France, the Government of Mauritania has since 1963 been pursuing a policy of austerity by a severe restriction of State expenditure, and by re- quiring an additional fiscal effort on the part of the country. Efforts to restore balance in the current budget depend on a 15% cut in current expenditure including expenditure on the maintenance of existing capital, and an end to appropriation for its own capital equipment budget. The resources at the Govern- ment's disposal have thus been reduced at the very moment when they needed to be reorganized and adapted to the new requirements of an independent state, and when it had become necessary to make intensive efforts to train Mauritanian nationals to take over the work of the foreign technical assistants and con- tribute to the successful outcome of the development programs. 8. Mauritania therefore faces a significant short-fall in commodity export earnings and, more particularly, in tax revenue. Although the average increase in yield from export taxes on iron ore shipments for the next six years would represent some 16% per year or an average increase of 3% per year in total government revenue, this alone would not provide sufficient new revenue to meet the recent rate of increase in current expenditure. The Government will, there- fore, have to consider other methods of supplementing its revenue and further cuts in current expenditure in order to ensure that adequate resources are available to finance the domestic element in its development program. 9. The direct external debt of Mauritania at around $9 million equivalent is not large but the Government is a guarantor with France of the IBRD loan of $6 million to HIFERMA which is also underwritten in effect by principal shareholders. On the other hand, the adverse factors accompanying MIFERPA's development (in- crease in investment cost, decrease in iron ore price) have significantly re- duced and delayed the latter's contribution to the resources of the economy and of the Government. The short-fall in the Government's expected resources has necessitated the adoption by the Government of a severe austerity program in order to maintain a balanced budget and it is unlikely that the Government will be in a position to do more than meet its current expenditure for many years to come. In view of the country's extreme poverty, the absence of public savings, the limited volume of other domestic savings, reliance on foreign resources for the finance of investment, especially in the public sector, and the long term nature of the return of any foreseeable developments, it is desirable that external assistance should be made available on as soft terms as possible. THE LCONOKY OF MAURITANIA I. INTRODUCTION Physical Characteristics 1. The Islamic Republic of Mauritania is a vast country of approximately 1,085,000 sq. km. - nearly twice the area of France - it is, in fact, the western edge of the Sahara desert. 2. The country is generally flat. The low-lying coast is straight with only one natural harbor, the Bay of LIvrier, where Port-Etienne has been created. 3. The climate is that of a desert country, arid and very hot. The influence of the Atlantic ocean makes living conditions less severe at Port- Jitienne and the capital, iouakchott. Rainfall is practically zero in the north. It becomes Rreater and more regular towards the south and permits the gradual replacement of the rearing of camels and goats by cattle and sheep. The rain- fall reaches an average of 150 mm. at the latitude of Nouakchott, 200-300 mm. at the latitude of the river 6enegal and a maximunm of 500-600 mm. in the extreme south of the country, where the rainy season is 3 to 5 months. Between Nouakchott and the river Senegal the amount of the rainfall is just sufficient to permit gum-trees producing gum arabic to grow. 1lith the exception of the river Senegal and its modest Mauritanian tributaries, the seasonal floods of which enable the growing of flocd-plain crops (mainly millet), there are no rivers. Wells, whose depth varies from 4 to 80 meters, are infrequent and often yield brackish water. Water, or the lack of water, is the dominant influence over most of the country. The Population Structure . i1auritania appears to have been for a very long time a region of contact between nomadic pastoral tribes of white origin from the north and east and communities of sedentary farmers of negro origin from the south. Until the end of the 10th century the western Sahara was occupied by negro populations (west and north-east) and Saracoles (east), mostly devoted to agriculture. During the 11th century these tribes were driven southward by the Moors, an Arabo-Berber pastoral people, parent race of the Tuaregs of the Central Sahara and ancestors of the dynasty of the Almoravides, who extended their dominion as far as southern Spain. In the 14th centry, pastoral Arabs (Beni Hassan) from Egypt dominated the Berbers and introduced pure Arabic dialect, Hassanya, which has since been adopted as the national language. At present, the geographic distribution of peoples in Mauretania is as follows: - In the south, along the right bank of the river Senegal, negro populations of sedentary farmers are established in a multitude of small villages. - To the north of the valley of the Senegal live the Moors of Arabo-Berber origin, dispersed over vast areas. They are essentially nomadic and raise cattle and sheep and, in the very north of the country, camels. However, certain tribes have settled in the oases, where they cultivate the date-palm and vegetable crops or carry on commercial activities. - 2 - - In the extreme north lives a tribe of great nomade, the Reguibats, who travel thousands of kilometers along the Sahara-Algerian, 'i'oroccan and Mauritanian borders in search of pasture for their camels. Because of its almost desert character, Mauritania is very thinly populated. Although the available statistics are not entirely reliable, the population of Mauritania is estimated at 880,000 of which 5-6,000 are non- Mauritanians. Eighty per cent of the population lives south of the 17th parallel, i.e. in one-seventh of the area of the country. Within this region itself the density varies greatly, 20,' of the population occuping a narrow belt along the river Senegal and 300 the south-eastern part of the Hodh along the Mali frontier. The population density declines progressively towards the north. The ethnic distribution of the population is: Arabs or Berbers h%, Arab.-Berber negros 27.5%, Peuhls (Hamitic) 4.5;, and others (mostly of negro origin) 14%. The population is 80% nomadic and 201o sedentary. The urban population is low but is growing. The capital, Nouakchott, whose 1963 pop- ulation was estimated at 12,000, is the biggest town. The estimated annual rate of growth of the population is 1.3;p, which is moderate compared with that of the neighboring states. The rates of growth vary greatly for the various races: white ioors, 0.7%; black Moors, 1.5$3 and ethnic races of negro origin, 2.4%. About 12,000 Mauritanians live in Senegal, mainly in Dakar, where they engage in commerce, and about 60,000 in Mali. There exists a basic tendency of the Saharan peoples to move towards the more favored regions of the south and a tendency of the nomadic peoples to settle down, mainly around the new developed water sources in the southern part of the western Sahara. Political Organization 6. The gum arabic trade, which nowadays occupies a minor place in the countryts economy, was responsible for the first contacts between the iaurit- anians and western Europeans and led to the development of ports of call along the coast. During the 19th and the first half of the 20th century French influence spread gradually over the whole of the country from the valley of the river Senegal. 7. After the second world war, Mauritania became one of the eight ter- ritories of the Federation of French West Africa. Following the referendum of September 28, 1958 the territory became an autonomous member of the French Community. The Islamic Republic of Mauritania was created on November 28, 1958. Two years later, on November 28, 1960, M4auritania proclaimed its independence and on October 27, 1961 became a member of the United Nations. 8. The present Constitution, which was adopted on May 20, 1961, created a presidential system with a President of the Republic who is at the same time the chief Executive, elected for five years by universal and direct suffrage and eligible for re-election. The Constitution recognizes Islam as the official religion of the country. Hassaniya Arabic is the language in common use and French the official language. Er. Hoktar Ould Daddah, uho was head of the Council of Government when autonomy was obtained, was elected President of the Republic on AuLust 20, 1961 by an overhelming majority (373,962 votes out of a total voter registra- tion of 3,9,395). - 3 - One of the main objectives pursued by President Culd Daddah follow- ing his election was to bring about national unity in a country still deeply marked by the former tribal structures. This action led to the creation of a single party, the Mauritanian People's Party, with President Ould Daddah as its Secretary General. 9. At the present time, Morocco maintains territorial claims against Mauritania, with which it does not, for this reason, have diplomatic relations. Economic and cultural agreements have been concl-ded with other Arab countries, however, Algeria, Tunisia and the United Arab Republic, and in March 1963 an agreement was signed which defined Mauritania's eastern frontier with Mali and enabled diplomatic relations to be established with that country. Close and excellent relations continue to be maintained with Senegal. A trade agree- ment that opens up important prospects for the development of trade between Mauritania and the Canary Islands was concluded with Spain in the spring of 1964. Relations between Mauritania and France were defined in June 1961 by several technical, economic and financial agreements that provide for Mauritania the benefits of substantial technical and financial assistance. Mauritania is one of the six members of the Customs and Monetary Union of the West African States, belongs to the Franc Area and is one of the 18 African States associated with the European Economic Community. Finally, the recent appointment of the President of Mauritania as first President of the UA4CE (Economic Cooperation Union of Africa and Malagasy States), an org- anization of 13 French-speaking West and Central African countries and Malagasy within the Organization of African Unity (OAU) is proof of the influence of his country in a large part of the African continent. Mauritania thus seems to be making progress in the role of link between the Arab and negro worlds to which she aspires. II. STRUCTURE OF THE ECONOY 10. Until only a few years ago the economy of Mauritania consisted essentially of traditional subsistence agriculture and stock-raising, plus the fisheries of the Atlantic and the river Senegal and the export of a few thousand tons of gum arabic. The main flow of trade between the north and the river region and the neighbouring countries (Mali, Senegal, etc.) was of cattle in exchange for agricultural produce (particularly millet, rice and peanuts). The standard of living was low and precarious,and more than 90% of the population earned its living from agriculture, stock-raising and fishing. In 1959 the average per capita income was estimated at CFA F.16,500 (about $66), i.e. among the lowest in West Africa. 11. The discovery of a high-content iron ore deposit at Fort Gouraud and the commencement of mining operations in 1963 have resulted in a change in the structure of Mauritania's economy and have improved its future prospects. Other minerals (copper, ilmenite, beryllium, tungsten and gypsum)have been discovered and mining of some of them, particularly the copper of Akjoujt, could begin within the next few years. Prospecting is in progress for oil and for products needed for nuclear energy. The emergence and development of an important mining industry and the related construction, transportation and services'activities have helped to widen the basis of Mauritania's economy. -h 4 The gross domestic product rose from CFA F.14.5 billion in 1959to CO F24,,4 billion in 1962, i.e. from CFA fl6,00 (about $66) to CFA F27,500 (about $111) per capita. These increases are attributable in particular to the considerable investments made during this period in the mining sector (in particular, in the MIFERIIA project), in oil prospecting and in the building of the new capital of Nouakchott. The main beneficiaries of this expansion have been the second- ary and tertiary sectors. In that respect, expatriates working in particular in the mining industry use only part of the salaries and wages they receive from abroad on purchases in Mauritania, which reduces their contribution to the economy of the country. The development of the production of the primary sector (agriculture, stock-raising,fishing,and craft industries) has been much more modest, from CFA F10.3 billion in 1959 to CFA fll.18 billion in 1961, an average annual increase of about ho, slightly higher than the growth of the population. The share of the primary sector in gross domestic produc- tion hrs thus fallen from 71% in 1959 to 58% in 1961 and an estimated 52% in 1962. Traditional Resources 12. The most important of Mauritania's traditional resources is stock- raising. Next, though much less important, come agriculture, gathering of gum arabic and river and sea fishing. In the absence of precise statistics, and so far as can be judged by sampling, the development of these resources during recent years appears to have broadly kept pace with the growth of the population. Possibilities do, however, exist of achieving an expansion of these resources at a more rapid rate than the growth of the population, thereby opening up long-term prospects for an increase in per capita rural income. The realization of this potential development demands sustained efforts, especially in the field of basic and applied research; substantial investment, partic'larly in increasing the water resources available for agriculture and stock-I aising (the sinking of wells in the western Sahara, irrigation along the river Senegal and its tributaries, etc.); a persevering sanitation and plant health campaign to combat the epizootic cattle diseases and the crop- ravaging locusts and weaver birds; and, finally, a good extension service organization down to the lowest possible level. In the present and foreseeable position of its technical and financial resources, auritania cannot count on being able to carry out these various programs of action by its own means and will continue for a long time to need sustained foreign aid. Stock-raising 13. Three-quarters of the population of Mauritania are livestock herdera, In the absence of any precise statistics it is impossible to measure the rate of increase in the number of livestock, but it may be said that there certain- ly has been such an increase, following the sinking of wells in rural areas and improved sanitation. The following is the most recent estimate of the number of livestock (1963): 1,450,000 head of cattle,nearly all concentrated to the south of the 17th parallel, of which 75,000 a year are exported on the hoof to Senegal and Mali; 8,000,000 sheep and goats, concentrated mainly in the same area as the cattle,of which 1,150,000 a year are exported; 500,000 camels; 200,000 asses; 10,000 horses. - 5 - The average annual herd yield is supposed to be: cattle 10%, sheep and goats 30% and camels 8%. Because of a tendency to hold livestock .as a store of capital and because of the primitive marketing systems these livestock resounes are at present under-exploited, but were they utilized in a more rational fashion, they could have a considerable effect on the standard of living of a large part of the population. A movement to this end is now afoot, aided by the growth of domestic consumption of meat (26 kg. a head against 10 kg. in Mali and 8 kg. in Senegal). A further stimulus to domestic consumption should be provided by the development of the capital of Nouakchott, and the urban centers connected with the exploitation of IIF;2RM A (Port-i'tienne and Fort Gouraud), whose inhabitants have a relatively high standard of living. Host of the marketable production will however continue to be sold on the markets of Senegal and Mali, where there is no problem in regard to outlets. The by-products, milk and butter, constitute one of the basic means of sub- sistence for the nauritanians. Skins are only used for domestic consumption, supplying family needs and those of the craft industries. t4. Harketing in Mauritania is still ruled by a complex customary net- work and burdened by middlemen. 15. Amon,st the favourable factors on which the Nauritanian Government bases its policy for developing.stock raising are the natural suitability of the country for these activities, the ability of the i'oorish breeder to take care of his herd, improved sanitation, the provision of watering points (favorable to the movement of herds), and an increase in domestic consumption and foreign demand. On the other hand there are certain adverse factors that cannot be overlooked, such as hazard of climate, epizootic diseases, the poor use of grazing land resulting from inadequate handling of water resources, complex and old-fashioned marketing systems, and a tendency to hoard in the form of herds because of the prestige inherent in the posses- sion of a large number of animals. The government has defined its objectives accordingly: The provision of more watering points and improved sanitation; the construction of refriger- ated slaughter-houses at Ka6di and later at A2oun-el-Atrous to shorten the marketing channels by removing the middlemen. The latter will likewise im- prove the turnover of capital, as these slaughter houses will receive 5 and 6 year old animals, whereas no animals of under 10 years used to be able to make the journey on the hoof to the consumption centers in Senegal or Mali without perishing on the way. Also the refrigerated meat will be transported. by air to the new consumption centers of Nouakchoot, Port-Etienne, Fort Gouraud and the Canary Islands. Agricultural Production 16. Agricultural activities are principally carried out along the River Senegal within a 10 km. wide strip, where millet,wheat and rice are grown, ano in a few northern and central oases where the date-palm and vegetables are cultivated. Average annual production is estimated at 60,000 tons of millet and sorghum, 3,000 tons of maize, 5,000 tons of beans (haricots niebs), 15,0C0 tons of dates, and a small quantity of potatoes,wheat, rice, tobacco and cotton. Yields are low, and production seems to show little growth, with the exception of dates, but palm groves are restricted because of the high water require- ments of the date-palm. Millet is one of the basic products on which the local inhabitants live, and 5/6 of this production comes from the Senegal basin. Domestic production of millet accounts for barely 2/3 of the country's consumption and though a minimum quantity is marketed (approximately 6 to 10,000 tons, 30,000 tons have to be imported every year from Senegal and iali, in exchange for livestock from the breeders. 17. The little growth in agricultural production is explained by the low fertility of the soils, the low and poorly-distributed rainfall, the use of rudimentary cultivation techniques, the considerable losses caused by crop- ravaging insects and birds (estimated at 25-,), the badly-organized marketing syste"'s, the lack of organization and of technical training. illet and sorghum are cultivated at their ecological limits. It is however possible to improve production, not only by means of organization but also by making a rational utilization of land so far unexploited, by irrigation in the delta and on the middle course of the River Senegal, and along its tributaries, by constructing small earth dams on the watercourses in the interior, and by increasing water resources in the palm groves. A preliminary study of a long term development project for the development of the entire Seaegal Basin is to be made by the United Nations Special Fund at the request of the four riparian States (Guinea, V*ali, Senegal and Mauritania). This project looks toward the construction of a series of dams which should enable an intensified cultivation of millet and sorghum and a development of the more abundant irrigated crops, i.e., rice, cotton and sugar-cane. Considerable investment will be involved in such a project, and a final decision has not yet been reached, but research and agronomical studies are being carried out in the agricultural centers of Richard-Toll, Gued4 and Kaedi, the Senegal Development Mission investigating millet and rice and the French Company for the develop- ment of textile fibers (CFDT) investigating cotton. The results obtained by these two bodies will in any case be helpful for less ambitious developments all along the River Senegal. Such developments on the Mauritanian bank are all the more necessary now that Senegal has started to carry out a similar program on the left bank, which is acting as a strong magnet to the agricul- tural population of southern Mauritania. Fishing 18. Fishing is done by the negroes and the Arab-Berber negroes in the River Senegal and in Lake R'Kiz. Out of an estimated production of 15,000 tons 5,000 tons is exported principally to Senegal. -Fishing accounts for 1/6 of the income of the population of the basin, which is quite a consider- able portion. 19. Although the Arabs and Berbers are at home when wandering over vast deserts, they are not by nature a sea-faring people. This explains why the exceptionally abundant shoals around the continental shelf to the north-west of Mauritania, which extends for 120,000 sq. km. out to sea from Port-dtienne. have only been exploited so far by fleets of foreign trawlers (from Spain, Portugal, France, Japan ...) and have not really profited the Mauritanian economy. Out of the 250,000 tons of fish and 1,000 tons of lobster caught each year, a very small quantity, approximately 10,000 tons, is made available to the on-shore drying yards at Port-Etienne which exports an average of 3,500 tons a year of dried and salted fish to the Republic of Gabon and the Republic of Congo (Brazzaville). 20. One of the main concerns of the Mauritanian Authorities has for some time been how to turn this resource to the profit of the country's economy. A large public investment program is in progress at Port-Etienne (fishing jetty, fish market, 600 ton slipway, water supply systems, electri- city) and also a private investment program (refrigeration, canneries), in order to facilitate the production and exportation of frozen and canned fish. It is expected that 100,000 tons of fish will be treated there, of which an ever increasing part will be supplied by boats carrying Mauritanian fishermen, Following the association of Mauritania with EEC, which means that its canned fish may be imported duty-free to the markets of the Six, and the recent com- mercial agreement with Spain, the prospects of the development of a large fishing industry at Port-Etienne should be promising. This new industry and the exportation of iron ore from Fort Gouraud should combine to make Port- Etienne the main industrial and commercial center of the country. Gum Arabic 21. The trade in gum arabic has been carried out for centuries. The average rate of production is 3,000 to 3,500 tons a year. The whole of this production has so far been exported from the port of Dakar, but as soon as the wharf at Nouakchott is completed, it will be shipped from there. hining Resources 22. The high-content iron ore deposits at Fort Gouraud and the copper deposits at Akjoujt at present represent Mauritania's principal economic potential and ensure a certain measure of development for the country in the years to come. The existence of other minerals such as ilmenite, tungsten, beryllium and gypsum has been proved. Prospecting is in progress for oil and radio-active ores, but so far this has not yielded positive results, 23. After several years' effort in equipping the mine and in construct- ing a 675 km. normal-gauge railroad across the desert, and a mining port with workshops and ancillary services,etc,,the working of the hematite deposit with high iron content (63%-67r) at Kedia d'Idjil near Fort Gouraud by the company "Mines de Fer de Mauritanie" (IFERNA) finally began in June 1963 Y/. Out of a total investment of the equivalent of about $190 million, $177 million had been expended by April 30,1964. Following the start of operations in 1963, the Mauritanian Government bought 5% of the capital of the Company. MIFERMA's main shareholders -English, French, German and Italian. steel groups- take up an assured annual tonnage at an agreed price but the company has also found new customers in France, Germany, Belgium, the Nether- lands and the United States. 1/ In March 1960 the World Bank granted a loan of $66 million to MIFERMA for the development of the iron deposit at Fort Gouraud. Details of the Project are given in Report TO-225 of February 12, 1960, and of its reper- cussions on the Mauritanian economy are analysed in Report EA-107 of February 1, 1960. - 8 - 24. By the end of 1963 exports totalled approximately 1,500,000 tons of ore with an average iron content of 64%, at an average price of $9 (2,223 CFA francs) a ton f.o.b. Port Etienne. Taking account of contracts signed by April 30, the export prospects for 1964 range between 4.3 and 4.7 million tons. 25. The IMFERMA project forecast an initial production of 3 million tons of ore in 1964 and of 6 million tons during the second stage from 1969. Taking account of the 94 million tons in the known reserves, working of the mine was planned to continue for about 16 years at the maximum rate of produc- tion. Parts of the deposit are still being prospected, however, and work- able reserves are now expected to reach 135 million tons or more. Because the cost of the investment reached a higher figure than had been estimated and because of increased operating costs and a decrease in the selling price of ore below the $10 (2,507 CFA francs) per metric ton f.o.b. originally fore- cast, 1IFERMA has accelerated the rate of production during the initial stage and the rate at which the investments necessary to the second stage are made, t,IFERMA now expects to achieve an annual rate of production of 6 million tons by 1966 and has revised its production and sales program in earlier years in order to meet the change in costs and prices (see table 9A). The new produc- tion program should permit the company to meet most of its own future cash requirements and, from 1966 onwards, show a small profit before appropriations. 26. The greater part of the company's investment program is now complet- ed and there is likely to be a progressive decrease in indirect resources received by the Government budget through taxes imposed on enterprises work- ing for 4IFERMA, wage taxes, indirect taxes on w-ge earners' consumption, etc. It was originally anticipated that this decrease would be more than offset in the early years of actual operation by export taxes and taxes on the com- pany's profits. As a result of existing agreements for the payment of customs duties and taxes and export duties, the company does not expect under present market and production conditions to be liable for income tax within the pericd up to 1970,under review. The actual receipts from MIFERMA are, however, expected to show a continuous increase up to 1969 as a result of a progress- ive increase in export duties on larger sales, The estimates of fiscal reve- nue payable by MIFERMA in the period 1960-1970 is shown in table 9B together with the figures of actual receipts in 1960-1963 and a revised forecast for the years 1964-1970. While actual receipts for the years 1960-1963 are more or less in line with the original estimates, the yield for 1964 is expected to exceed the original estimates due to the stepping up of the production and sales program but thereafter the total yield is likely to be well under half and not much more than a third of the original forecast. Any change in this position is likely to be conditional on an improvement in MIFERMvIA's profit- ability which would itself depend not only on an improvement in world market prices for iron ore, which is at present unlikely, but also on a reduction on operating costs and improved efficiency in the operations of MIFERMA. :27. The limits of a copper deposit discovered at Akjoujt have been gradually established since 1949 and proven reserves now amount to 7 million tons of oxidized ore (copper content 2.85%), and 16 million tons of sulphide ore (1.7%). At the same time, an economic process of working these ores has not yet been found although work on this is now going on by a Canadian-American group who has an option on the deposits. 28. Prospecting for oil is still being carried out in the sedimentary basin of the Senegal along the Atlantic coast, in the south by the African Oil Company (SAP) and in the north by the Oil Participation Company (PETROPqR), but no positive results have as yet been obtained. 29. The French Bureau of Geological and itining Research (ERGM) and the Kuhlmann Company have set up an Ilmenite Union to study the possibility of working the ilmenite deposits along the coast to the north of Nouakchott. This union is considering exporting annually 2,500 tons of ore with a 52% ilmenite content from the Nouakchott wharf. 30. There is a high-quality gypsum reserve near Nouakchott, estimated at about 20 million tons. The limits of a zone for commercial exploitation are being fixed, and negotiations are in progress with the Rufisque cement works in Senegal to ensure a market. Small investment would be needed, and from 15,000 to 20,000 tons could be exported annually, thereby bringing further activity to the Nouakchott wharf. Power 31. A very small quantity of electric power is produced, apart from that generated by MIIFE2MA for the mine and port installations. There is a small thermal station at Nouakchott, which produced 1.2 million KWH in 1963, and there are two small stations at Atar and Port-Ltienne. Industry 32. At present there is hardly any industry in 1auritania. A fish- processing plant is soon to be installed at Port-Ltienne. It is proposed to construct a refrigerated slaughter-house at Kaedi, with a capacity of 2,500 tons and for which an investment of 140 million CFA francs will be required. A second slaughter-house is also proposed atAYoun-el-Atrous, but the studies for this project are not very far advanced. The Westinghouse Company is studying the possibility of the construction of a sea-water desalination plant to supply water to Nouakchott. Tnere is also another project whereby Nouakchott would be supplied from the ground water a few dozen kilometers away, where boring work is in progress. The principal obstacles in the way of the country's industrialization are the shortage of any raw materials that can be transformed, other than fish and livestock, the limited domestic market, the lack of cheap electricity, and the competition from the industrial center of Dakar. Communications 33. Transportation is especially important in so vast a country, and it has developed considerably during the last few years judging by the increase in the number of vehicles, which rose from 992 in December 1956 (including 8).3 trucks) to 3,820 in June 1963 (including 2,415 trucks). 34. Mauritania has about 6,300 km. of roads and tracks, comprising national roads (less than 1,400 km.), roads of general importance (1,300 km.), local roads (3,000 km.) and tracks (700 km.). None of the roads are tarred or asphalted. The main road is considered to be passable all the year round, - 10 - and it covers the whole country, running through Rosso, Nouakchott, Akjoujt and Atar, a distance of 1,382 km. The lesser roads are in poorer condition, and the principal of these links Boghe and Ka6di with Kiffa, A1oun-el-Atrous and Nema in the extreme east. 35. Since MIFERiA's railroad entered into operation the merchants in the north and in the Atar region have benefited by rail transportation. The most important transportation artery runs from Dakar through 3t. Louis and Rosso to Nouakchott, and this is used for most of the goods that are unship- ped at Dakar for the southern half of the country. The Government wishes to develop as many activities as possible on Mauritanian territory and intends gradually to make Nouakchott the commercial port for the southern and eastern parts of the country, as these are the areas with the largest and most active population and where the agriculture and stock raising potential is greatest. This is the purpose of the construction of the wharf at Nouakchott, which is being financed by the European Development Thnd and represents an investment of over 500 million CFA francs. The Mauritanian Government has also submitted a project to the World Bank for the reinforcement and tarring of the section of road between Nouakchott and Rosso. The cost of the project is estimated at approximately 2.5 billion CFA francs (approximately , 10 million). It is proposed to improve the Senegal River in order to permit shipping to move all the year round between Rosso, Boghe and Kaedi. It is also proposed to improve the road betl.,een Kaedi and Kiffa, and a project for this purpose, estimated at 375 million CFA francs (.i4.5 million) has been submitted to the Luropean Development Fund. The result of this project will be to link the southern part of Mauritania to the capital by a permanent and modern trans- portation artery. One of the principal expectations of the Mauritanian Government is that there will be a decrease in the cost of transportation, which will facilitate supplies to the region and stimulate its development. 36. Besides the equipment at Cansado for loading iron ore on vessels of up to 45,000 tons dead weight, Port-Etienne has an 80 m. wharf for the docking of large fishing trawlers. This wharf will be used for merchant shipping on completion of the jetty for the fishing fleet which has been under construction since 1963. Education 37. The number of children attending primary schools doubled between 1959 and 1963, rising from 9,000 to over 18,000. There are 269 primary schools, of which 179 consist of a single class. There are approximately 900 teachers, of which 300 teach Arabic. There are two secondary schools, at Nouakchott and Rosso, which provide a complete curriculum, and four colleges which provide four years of supplementary education after primary school. The number of children attending secondary schools and colleges is about 1,000, having doubled between 1957 and 1962. Half the teaching staff in the secondary schools is provided by French technical assistants. There is no higher education. One hundred and forty-three Mauritanian students are at universities abroad, 98 in France and the remainder at the University of Dakar or at other European or African Universities. Vocational instruc- tion is in its infant stage. MIFERKA set up a training center for its own specialized laborers, and at Port-Etienne there is a vocational training centor with intensive courses attended by about 100 persons. An agricultural - 11 - school is being set up at Ka6di and a trainin6 school for veterinary assist- ants has for a short time been in operation at Nouakchott. 38* In spite of this education effort, whion involves considerable budgetary expenditure, 149 in 1962 and over 16A in 1964, only a small pro- portion of the children of school age is being educated, merely 13,b. Nomadism and the dispersion of classes over a vast territory makes it dif- ficult for any control to be exercised over teaching. The quality of the teaching in the primary schools suffers from the rapid increase in the number of children attending the schools and the lack of a corresponding training of a sufficient number of qualified teachers. The problem of training teachers is further complicated by the necessity of teaching both in French and Arabic because of hauritaniats special links with the Arab world and with French culture. 39* In the light of this situation, the iauritanian Government intends during the next few years to stabilize the number of primary schoolchildren and to direct all its efforts towards raising the professional qualifications of the teachers,and towards a better adaptation of its programs to the true requirements of the rural populace. A National Teachers Training Institute is being constructed at Vouakchott, financed by the French Fund for Aid and Cooperation. There is also to be a development of secondary education and technical and professional training, for which purpose 8 secondary schools will be built and a technical section added to the Nouakchott Lycee, and a school for miners, a school for nurses and a national center for business management will also be set up. In order to better adapt general secondary education to the requirements of the Mauritanian economy the program perhaps should include compulsory manual work, for which purpose work-rooms will have to be built and equipped in all the colleges. ho. The need to train for medium and higher level posts both in the public and in the private sector is urgent. The bulk of the higher paying jobs in mining are held by non-Mauritanians (Europeans and Senegalese). Moverover, the Governments recently adopted policy of "Mauritanization", which coincided with the transfer of all the Mauritanian administrative services from the old capital of Saint Louis in Senegal to the new capital of Nouakchott, resulted in the rapid departure of the Senegalese staff occupied at minor and medium levels, who have only been gradually replaced by Mauritanians, generally lesser-qualified. Although the administrative posts in the interior of the country are now occupied by hauritanians, the services of 232 French technical experts were still available to the country at January 1, 1964, for the work of planning and directing operations. The hauritanian Government is aware that technical assistance of this size cannot be maintained indefinitely, and that it must gradually be channeled into specific development operations, while the duties of administration and management must be entrusted to Mauritanians, who still have to be trained. Employment, wages and prices 4i. The estimated adult oopulation of working age, both male and female, is 460,000. The actual working population however only totals 3h0,000 persons, of whom 125,000 are employed in stock raising, 180,000 in agriculture and 35,000 in rural crafts. The discrepancy between the theoretical and a,ctual - 12 - working population is explained by the structure of Moorish society. Among the Arabs and Berbers the women devote themselves exclusively to bringing up their children. 42. A radical change has taken place over the last few years in the structure of employment as a result of mining developments. In 1953 the public services accounted for the employment of about 4/5 of the 9,500 wage- earners. At the end of 1962 there were 18,500 wage-earners, 2/3 of which worked for the private sector. In this sector however, 40% of the wage earners are foreign (27% Africans, mainly from Senegal, and 13> suropeans) and the percentage of vocationally qualified persons is indicative of the effort still to be made with regard to vocational training: 97/3 are laborers, and only 35 are specialists in any field. Thirty per cent of the employees or qualified workers are Mauritanians. Total wages paid in 1962 were 7,500 million CFA francs, of which 4,000 million was paid to the private sector, representing an annual gross income per wage-earner of 380,000 CFA francs (in comparison with the per capita gross national product of 26,000 CFA franc). Seventy-five per cent of the total wages paid go to foreign workers, which brings the average wage of the Mauritanian wage-earner down to approximately 150,000 CFA francs ($600). The 18,500 wage-earners employed in iMauritania only represents 5% of the actual working population; their share in the gross domestic product is 28k. 43. MIFERMA has gradually been tapering off its investment program, and by the beginning of 1964 this had brought about an estimated decrease of 5,000 in the number of wage-earners in the private sector, Mauritanian laborers for the most part. No major problem seems to have arisen from the fact that these laborers have had to leave their employment and become reabsorbed in the traditional economy of the country. h4. The national minimum wage guaranteed increased twice in 1961, but it has since remained stable, at between 30 to 35 CFA francs for a non- specialized worker. According to official statistics, which have only recently been showing fluctuations in prices, a considerable rise in retail prices was recorded during 1963. On the basis of January 1, 1961 = 100, the price index for family consumption based on the turopean model reached 10 in January 1962, 109 in January 1963 and 121 in December 1963. This increase in prices is mainly due to an increase in the tax on import turnover and to the other fiscal measures adopted by the iauritanian Government to balance the budget. III. FINANCIAL STRUCTURE Money and Credit 6. It is difficult to say much about money and credit because Mauritania forms part of larger monetary areas. Up to July 1, 1962 lauritania'Z monetary statistics were included in the Senegal-Mauritania monetary group. The monetary sector is small; net money income per capita was only 3,400 CPA francs as of October 31, 1962. The banking system is closely linked to the French banking system. Mauritania is a member of the Franc Zone, and with Senegal, Ivory Coast, Upper Volta, Niger and Dahomey, a member of the Uest - 13 - African 14onetary Union, which was established on hay 12, 1962 by agreement between France and these six countries. Under this agreement, the six member countries of the Union have a common currency, the CFA franc and a common bank, "The Central Bank of the West African States". The CPA franc is freely convertible to French francs at a fixed exchange rate, at present 50 CFa francs to 1 French franc. This rate may be changed only by mutual agreement between the member countries. To ensure free and complete convertibility between the two currencies, an "operations account" in French francs was opened on the books of the French Treasury in favor of the Central Bank. The latter therefore has a constant source of French francs that can be used to make all transfers from the Franc Zone to foreign countries. Should the Bank show a debit, France may request it to raise its rediscount rate and to lower its rediscount ceiling. The agreement of iay 12, 1962 allows the member countries a degree of autonomy in establishing their credit policy. Within the limits of overall quotas for the entire monetary zone, credit committees organized in each country set the rediscount ceilings of local banks at the Central Bank. The Government itself may, within certain limits, resort to short term advances from the Central Bank. 116. The Mauritanian banking system is still simple; it is composed of: The Central Bank The iauritanian Development Bank A couple of agencies of the Banque de l'Afrique Occidentale (BAO) and of the Banque Pationale pour le Cormerce et 1'Industrie (BNCI), two large French banks. The Caisse Centrale de la Coop4ration Economique (CCC), a French government institution. The Mauritanian Development Bank established by law on January 26, 1961, started operations on January 1, 1962. It is a domestic joint stock company with a capital of 150 million CFA francs; the stockholders are the PMauritanian Government, the OCCC and the Central Bank. This institution has been accorded the broadest competence in the field of banking. Its activity is, however, limited by the lack of projects. A city planning and real estate development company (SUCIM) was founded to build the capital city. A Mauritanian public institution, the Mauritanian Equipment Company, succeeded it on March 1, 1964. 47. The credit operations of the Aauritanian banking sector are linked chiefly to MIFEFVA?s activities and those of its affiliates, or to those of public works companies or transport companies working for them. Between December 31, 1962 and December 31, 1963 medium and long term credits to the Mauritanian economy increased by 62%, rising from 5,577 million CFA francs to 9,044 million CFA francs. The greater part of the increase is due to an operation of the CCCE in MEIRA's favor. The Aauritanian Development Bank began to take part in the financing of the economy dUring that period by granting long term loans amountin7 to 204 million CFA francs; one of these was a loan of 150 million for a fish processing plant at Port-Ltienne; another was a loan of 4O million for an electricity generating and distribut- ing company. - 14 - 48. Short term banking credits showed a decline of 30% during the same period, falling from 1,138 million to 743 mIllion CFA francs. This decline may be attributed mainly to the slowing down of the activities of public works enterprises which are not so interested in the investment programs now being carried out (wharf and hospital in Nouakchott, improve- ment of Port-Etienne) as they were in those that MIFERIA carried out in recent years and practically completed in 1963. Also, MIFEMRA has not as yet approached local banking agencies for its short term financing needs, 49. The great variations in banking resources recorded in 1963 were essentially the result of a series of events: in February and March 1963, Mauritanian Treasury funds formerly kept in Saint Louis, Senegal, were trans- ferred into Mauritanian banks; this was followed by the transfer of the Mauritanian Treasury's current account with the BAO to the books of the Central Bank, when the latter's Nouakchott agency opened on October 14, 1963. Bank deposits of private individuals and enterprises are small - between 700 and 800 million CFJA francs. Generally speaking, to the extent that MIFERMA does not seek short term financing from them, the banks have more funds than the economy requires. They therefore have little recourse to rediscounting of their medium and short term credits, and use their surplus funds for investments abroad. Public Finance 50. The structure of the Hauritanian budget underwent profound changes from 1959 to 1964, with the establishment of new national organizations to replace former Federal bodies. The development of public receipts and expen- ditures during that period is shown in the table on the following page. 51. From 1959-1963 current budget grew very rapidly increasing nearly 210%. Mauritania's own resources increased 3.5 times during the same period. This increase was made possible by the contribution to revenue resulting from duties on investment imports, especially on those of IFERIA; by the rise in the rates of duties and fees collected at importation, and by the increase at the end of 1962, in Mauritania's quota of the proceeds of these from 5% to 8.66% on the total of imports entering Dakar and distributed throughout Senegal and Mauritania, and, lastly, by an increase in Mauritanian taxes. 52. Despite this increase, Mauritania's own resources were insufficient to cover the rapidly growing operating expenses, especially those arising out of independence (General Administration, Foreign Affairs, Security, Services), and the financing of the equipment budget. During this period it was not poo- sible to balance the current budget, except by an important annual subsidy from the French Government. This subsidy increased, in aosolute terms until 1962; however, its share in the total operating budget was gradually reduced from 57% in 1959 to 34% in 1963 (original budget). At the same time, the Nauri- tanian Government was making transfers to a growing equipment budget financ- ed by applying funds saved from short-falls in current expenditure. - 15 - Government Revenue and Expenditure (Million CFA francs) 19591I 19601/ 1961?J 19621/ 19632/ 19642/ Current budget Revenue: - Receipts 31 1,326 2,398 2,860 3,287 3,834 - Foreign subsidy 1,240 1,483 1,848 1,872 1,00 - Total 2,171 2,809 4,246 4,732 4,987 3,834 Expenditure 2,171 2,809 h,220 4 ,524 4 3,974 - Surplus/Deficit - - +26 +208 +318 -140 Equipment budget financed from domestic sources - Appropriation from operating budget sur- plus n.a. n.a. 26 208 318 - - Extraordinary funds (Special funds and Reserve) n.a. n.a, n.a. 414 382 - - Foreign subsidy - - - - - 1P000 * - Total (a) n.a. n.a. 316 622 700 1,000 * Public investment finan- ced by foreign aid - FAC 225.5 1,365.5 691.1 611.0 60.0 n.a. - FED - 571.9 1,840.0 631.0 369.5 n.a. - Total (b) 225.5 1,937.5 2,531.1 1,242.0 973.5 - Total investment in public sector (a + b) 225.5 1,937.5 2,847.1 1,864.0 1,673.5 - 1 Final figures. 2/ Budget estimates after additional credits were requested. 3/ Original budget. * France has agreed to finance this CFA Fl,000 million in addition to the FAC program for 1964 and as a compensation for the elimination of the French subsidy to the current budget. Note: The foreign aid for investment in the public sector does not go through the Mauritanian budget. - 16 - 53. In MaY 1963, the Government decided to give up the French subsidy of the operating budget after July :, 1963 and obtained France 's consent to apply the unutilized remainder (1,200 million out of 1,700 iillion) towards equipment expenditures (of which 500 million have been set aside to help in financing Mauritanian participation in the Akjoujt copper project). The 500 million that remained in the operating budget amounted to only 13% of that budget in 1963. 54. In the current budget for 1964 France's subsidy was eliminated entirely. It was necessary, however, to obtain 1,000 million CFA francs from France to finance the expenditures of the equipment budget. The Hauri- tanian Government had, in fact, to refrain this year from participating in financing it, in order to concentrate all of its efforts on balancing the current budget. The government pursued a strict policy of austerity to enable the current budget to cope with the reduction of the subsidy in 1963 and elimination of the subsidy in 1964. During 1963 the number of ministers was reduced from 11 to 8, the benefits in kind granted to officials were abolished; it was decided to reduce expenditures by 15% and to increase taxes on imports and products widely consumed. Promotion of officials was blocked and further recruitment was forbidden. The 1964 budget provides for receipts of 3,834 million (600 million more than in 1963) and expenditures of 3,974 million (about 1,000 million less than the previous year). The government has also submitted to the Assembly proposed corrective measures to restore budgetary equilibrium by a re-evaluation of receipts and by a further reduction in expenditures made possible by the introduction in April 1.964 of Parliamentary service without remuneration. This substantial reduc- tion in expenditures was made possible only at the price of reducing expendi- tures on materials, affecting the operation of the services and the mainte- nance of the existing capital, and stabilizing staff expenditures,though these nevertheless rose from 59.1%o of total expenditures in 1963 to 60.6% in 1964. $5. Analysis of the execution of the budget over recent years shows that the total receipts entered were generally higher than the initial esti- mates of receipts and that actual expenditures were lower than the amount approved. Receipts collected amounted to an average of 85% of the assess- ments issued, which is a satisfactory percentage considering the shallow administrative infrastructure. There has generally been a surplus of funds at the end of the year, which has been deposited in the Reserve Fund. These deposits were especially large in 1961 and 1962 and were used in the follow- ing year to complete the financing of the current and equipment budgets. Thus the Reserve Fund supplied about one-third of the funds of the equipment budget in 1962 and 1963. The origin of this inaccuracy in estimates of receipts is to be found partly in the uncertainty as to the actual effect on the public finances of MIFERMIA's investments and those of the public sector. The budget estimates are more accurate now that the Fort Gouraud mine is in operation. No substantial year-end budget surpluses can therefore be expected in future and the Reserve Fund will no longer play as important a part as in the past as a compensating factor from one year to the next. $6. The proportion of indirect taxes in the funds of the operating budget itself rose from 56.5vi in 1962 to 65% in 1964, whereas that of direct taxes fell from 27% to 20%. This development reflects the taxes imposed on imports and consumption to cope with the new budgetary situation. The - 17 - receipts expected from indirect taxes in 1964 - 2,500 million CFA francs - represent 9% of the estimated gross domestic product in 1963 and 16% if the traditional sector of the economy is deducted from GDP. Reduction of the direct taxes portion is largely attributable to the transfer of certain direct taxes (tax on livestock) to the recently created rural communes, as a counterpart for expenditures they are made to bear (commun- al administration, maintenance of tracks,etc). Income tax progression rate has been greatly increased, and it is expected from that measure a sizeable increase of receipts from direct taxation will result. 57. Twenty-five per cent of the operating credits is allotted to expenditures for security services (8.9% in 1961), 22.9% to social serv- ices; education and health (17% in 1961), 10.5% to general administration (16.5% in 1961), 9.75% to economic and financial services (7.7% in 1961). The size of the credits alloted to security reflects the Mauritanian govern- ment's difficult task of controlling nomadic people but nevertheless represents an excessively high proportion of total expenditures. 58. The Mauritanian government has made exceptional efforts to improve its budgetary position both by increasing taxation and sources of revenue and by attempting to curtail the growth of expenditure. On the other hand, the current budget does not yet reflect the entire cost of govern- ment services in Mauritania. Most of the cost of technical assistance personnel is still borne by France which also provides some military assist- ance and contributes to the cost of certain services such as air traffic control, meteorology,etc. The total of this expenditure, excluded from the budget, is estimated at about 1 billion francs CFA or about 20% of current expeiiditure. Furthermore,the government must expect a short fall in export proceeds and in tax revenues as a result of the less favorable prospects for iron ore exports and MIFERMA's profits. However, the planned increase in annual shipments of iron ore over the next 6 years should, with present price prospects, result in an average increase in yields from export tax of some 16% per year, or an average increase of about 3% per year in total government revenue. This increase does not appear to be sufficient to meet the probable rate of current expenditure in future years if this continues to grow at recent rates, and the government would have to find other methods of supplementing revenue and of substantially reducing expenditure. The main emphasis should be, however, on reducing current expenditure; if the proposals for a cut of 15% in current expenditure can be realized and maintained in later years, this would go a long way toward contributing to a balanced budget. Public debt 59. Mauritania's internal public debt is small. The amount outstand- ing on the external public debt is 2,320 million CFA francs (about US$9.2 million). Most of this debt consists of long term loans and advances granted at low interest rates by the CCCE, a French government institution, to the Mauritanian Government to enable the latter to finance its share in the capita*l of the Soci6t6 Africaine d'Electricit6 (African Electricity Company),SAFELEC, and of MIFERNA and the advances it, as a shareholder, must make to MIFERNA, The service of these loans and advances amounted at the beginning of 1964 to approximately 88 million CFA francs a year. To this must be added henceforth an annual reimbursement of nearly 100 million representing Mauritania's - 18 - assumption, as from March 1, 1964, of the loan contracted by the bUCIM for housing construction in Nouakchott. In 1964 the annual burden of the external public debt will amount to 185 million CFA francs (about P754,000), or 4.8b of the budgetary resources and 1.4% of export forecasts for the year. The payments will diminish to 175 million CFA francs in 1970 and will fall to less than 75 million CFA francs in 1975. Foreign Trade 60. Until January 1, 1961, the customs statistics covered both Senegal and Mauritania and the latter's share of foreign trade could not be determined from them. Separate statistics have since been established which provide information on the goods taken out of customs by auritanian customs offices. These statistics concern only those goods that originate in, or are intended for, countries outside the Customs Union and they therefore reflect only a small part of the commercial transactions. The ,oode taken out 0.. cus>o1s at Dakar and shipped to iauritania, goods acquired by stockraisers on the local Senegalese and Malian markets, products of Senegalese industry sold in Mauritania are not recorded on any accounts. The figures given below are cited only because there is nothing better available. According to the statistics, M1auritanian exports, consisting chiefly of gum arabic and dried fish, amounted to 687 million in 1962, or less than 8o of the imports (8,806 million CFA francs). The Central Bank of the West African States (BCLAO) made an attempt (re: Table No. 18) to analyze Mauritaniats overall foreign trade by adding to the foreign trade proper the Mauritanian trade with the other members of the i4est African Customs Union, that is to say, within the Union. This study revealed a much larger volume of exports (4,000 million CFA francs exports in 1962) and imports (18,500 million CFA francs) as well as a much higher percentage of coverage of imports by exports than the figures shown in the statistics. Through the large investments of MERMA and the public sector, imports in fact multiplied by 2.5 from 1959 to 1962, while exports increased by only 125. This situation should begin to reverse itself in 1964 when, it is estimated, exports of iron ore alone may amount to 9 or 10 billion CFA francs (i.e. 2 to 2.5 times the traditional exports). This trend toward restoring the balance of trade should be all the more evident as all of the sales of iron ore exported outside the Customs Union will appear in the official statistics, whereas, for the reasons given above, the statistics included only part of the imports in 1962 and will continue to include only parZ of them in future. Balance of Payments 61. The information given in Mauritania's balance of payments refers only to the transactions with countries outside the Franc Zone and is therefore of very limited value. Because of the complete freedom of transfers within the zone no attempt is made at having accurate information on the balance of pay.. ments with the other member countries of the zone. The balance of payments with countries outside the Franc Zone showed a large surplus in 1962 (+,611L million CFA francs) in spite of a huge deficit (-4,339 million CFA francs) ou operations in goods. This deficit actually was more than compensated by a surplus on capital operations, 947 of which was from MlFiiRNMs investments (mobilization of the World Bank loan and contributions of MIFjRMA stockholders outside the Franc Zond), and 61% from the assistance of foreign governments - 19 - (chiefly operations of the European Development Fund). There is every reason to believe that in the years to come the value of exports of iron ore to places outside the Franc Zone will e)ceed both the imports from countries outside the zone,which are required by Mv1IFPM,A and the repatriation of foreign exchange other than the French fran, which are required for amortization of the advances and loans and for remuneration of the capital invested. 62. Under the cooperation agreements with France, the Mauritanian Go%ernment has an unlimited "drawing right" on the exchange reserves of the Franc Zone which enables it to cover its foreign exchange expenditures with- out difficulty. On the other hand, a program establishing a ceiling for imports from countries outside the Franc Zone is drawn up each year in agree- ment with France. This program is expanded from year to year to take into account the obligation to gradually free trade with the members of the Common Market as a result of i1auritaniA's association with the E.E1.C. It amounted to 1,650 million CFA francs in 1963 and only about 801 of this has been utilized. The import program for 1964 has been set at 2,000 million CFA francs. Financing of Economic Development 63. Since 1946, in the nearly total absence of any resources of its own that could be used for economic development, such financing was assured by foreign public investment, complemented after 1960 by large private investment in the mining sector and recently, to a smaller degree, in the fishing industry. Until 1959, France was the sole source of' public investment, through the Economic and Social Investment Fund (FIDES). That agency was replaced in 1959 by the Assistance and Cooperation Fund (FAC) which in addition to fin- ancing investments is responsible for providing technical assistance in the form of staff. Lastly, Mauritania's association with the EEC nas enabled it to benefit since 1960 from the financial assistance of the European Develop- ment Fund (FED). The assistance provided by FIDES, FAC and FED are non- repayable subsidies. FIDES subsidies to Mauritania from 1946 to 1959 amounted to 3,766 million CFA francs, 1,9 million(50.5$ of which went to the agri- cultural sector, 1,122 million 09.5)to infrastructure and 652 million (17.4%) to social equipment. In the same period, 1,000 million of general studies financed by FIDLES indirectly benefited Aauritania. From July 1, 1959 to the end of 1963 FAC grants for investments amounted to 3,512 million CA francs, showing a considerable increase in French assistance over the FIDES period. One reason for this is that some investments financed by FIDES for operations involving all of the French IWJest African Federation have not been accounted for as aid to Mauritania. Of that aid 371 million CFA francs 10.5%)has been devoted to general surveys, 571 million 16.3%)to production, 2,233 million 59.65Q to infrastructure, town planning and housing, and 261 million to social equipment. Since its establishment until June 30, 1963, the first.European Development Fund has financed operations in the amount of 3,412 million CFA francs, divided equally among production, infrastructure, industry and social services. The surplus left over from the current budget at the end of 1961 and 1962 enabled Mauritania to draw up an investment program out of its own funds. This has not been possible since that time, as the elimination of the subsidy for balancing the budget has required a priority effort. It does not appear that Mauritania will be in a position to finance any large equipment budget in the near future. - 20 - 64. Mauritania tried at a very early date to fix the investments fin- anced. by foreign assistance into a coherent program in order to ensure maximun efficiency. A 3-year plan for 1960-62 adopted in July 1960 was only a tem- porary plan to permit taking stock of the primary needs and classifying the most urgent transactions in terms of the financing available and the state of preparation of the projects. Four national development areas of concentration were established: The industrial and mining sector of Port-Etienne and Fort Gouroud. The stockraising area of southern Mauritania. The agricultural area along the Senegal river. The zone surrounding Nouakchott, the commercial center for foreign trade of the two areas mentioned above. 65. A total investment of 7,766 million was provided for, 3,460 million of which was expected from the FAC, 3,643 million from the FED and 262 million from the local resources. Owing in particular to the slowness in starting up FED and in perfecting its procedures, the Plan has been implemented at a much slower pace than was planned and the majority of the operations scheduled for 1962 have been incorporated into the 1963-66 Four-Year Development Plan. 6$. The 1963-66 Four-Year Development Plan was finally adopted in July 1963 and has now been in course of execution for a year and a half. It provides for the investment over 4 years of CFA F27,754 million, of which private invest- ment accounts for 14,188 million (51;/) and public investment for 13,566 million (49%). A' the scheduled private investment, 67.5/ relates to the mining sector (mainly the investments by hIFERMA and those necessary for the exploit- ation of the Akjoujt copper reserves) and 7%2 to the fishing industries. Of the public investment, 17.5% relates to the development of rural production an_d 64 to that of mining production, 7% to fishing, 23.5; to infrastructure, 6.7% to education and professional training, 5.7% to public health and sanitation and 22.5% to town planning and housing. Four-fifths of the total investment under the Plan is directed to the production infrastructure and about 6% to general studies for the long term increasing of production and improvement of the standard of living. on the whole the Plan appears to be fairly realistic. Probably too high a proportion is devoted to town planning and housing, but otherwise the sector allocations appear quite reasonable. 67. On the basis of an analysis of needs and potential resources, priority has been assigned under the Plan to two objectives: (a) the reduction of Mauritania's dependence on foreign financial and professional assistance, by elimination in four years of the ordinary budget deficit, through develop- ment of the country's own resources and a severe curtailing of current expend- itures, and by acceleration of the training of the professional staff destined progressively to replace foreign technical assistance; and (b) the preparation of the bases (studies, infrastructure, organization of enterprises and of credit, etc.) for a general economic and social development within the framework of subsequent plans. To attain these objectives, there have been maintained under the Plan only those operations that have the greatest chance of being effectively carried out within the available time and that offer reasonable financing prospects. The Plan expected in fact that the public sector invest- ments would be financed to the extent of 48.2o by the Luropean Development Fund - 21 - (first and second FED), 25.1% by the Aid and Cooperation Fund (FAC), 8.6% by other sources of bilateral or multilateral aid (the UN4, the United States, Germany) and 18.1% by Mauritania's capital budget. 68. A year after the Four-Year Plan began it appears that the financing expected from FED will probably be secured, thanks to the entry into force on June 1 last of the agreement of association with the European zconcmic Communty FAC is an annual program and the Plan provides for decreasing grants. It appears that in 1963 Mauritania received slightly more fron FAG than was provided for under the Plan and it does not seem that the prospects for 196h-66 will deviate from the projections under the Plan (subject to preparation in time of the projects). The other sources of bilateral and rultilateral aid are materializing more slowly, but they account for less than 10% of the total financing. The uncertainty is much greater in the case of the projected fin- ancing out of Mauritania's capital budget, amounting to 2,460 million or 18% of the total public investment. We have seen that the policy of budgetary austerity led the Mauritanian Government to abandon its capital budget as such with effect from 1963. However, France has agreed to take over this fin- ancing to the extent of about 700 million in 1963 and perhaps 1 billion in 1964 by an additional effort to that being made by FAC. Financing would therefore remain to be found in 1965 and 1966 for 750 million, i.e. about 6% of the investment provided for in the Plan. The net result is that the fin- ancing of the public sector investments scheduled for the years 1963 and 1966 appears to be assured up to a minimum of 80 to 85. However, the delay in the implementation of the second F.D program and in the preparation of the projects, ot.ing to the inadequate number of experts, suggests that, all other things being equal, the execution of t;le Plan will be retarded uy about a year, so that it will have been 75> implemented by the end of 1966. 69. The private investment projections are a little optimistic to the extent that they forecast the carrying out of substantial investments, mainly in 1964 and 1965, for the starting-up of mining of the Akjoujt copper reserves. It will not be possible to take a final decision concerning the mining of the copper reserves until some tine in 1965 at the earliest and the investments would not therefore reach really substantial figures until 1966 onwards. Any delay in the execution of the public investment program will certainly delay the appearance of the recurrent charges on the ordinary budget (estimated in the Plan at 500 million in 1965 and 930 million in 1967); however, there is a danger that this advantage will be more than offset by the loss of fiscal receipts resulting from the delay in the carrying out of the investments them- selves and by any postponement of the decision to comnence mining of the Akjoujt copper reserves. The achievement of budgetary equilibrium and of the other objectives of the government will consequently become more and more difficult for the Mauritanian authorities in the years ahead, until the investments in the rural sector begin to bear fruit, until the increased production of Fort Gouraud iron ore at least compensates for the effects of the fall in the price of the ore, and until mining of Mauritania's other mineral resources begins. - 22 - IV. ECONOMIC PROSPECTS AND CREDITWORTHINESS 70. Investment in MIFERNA and the associated infrastructure has been the direct cause of the very rapid growth of the gross domestic product between 1959 and 1962. The final effects of this investment program and the new mining industry established are not likely to be fully reflected in the structure of the G.D.P. for some years yet; however, even in the investment period there has been a substantial increase in the fiscal resources of the Mauritanian Government, considerable employment has been given by construction firms, and a large volume of secondary expenditure and employment has been generated. 71. Despite the fall in the price of iron ore, export earnings are likely to increase from 3.5 billion CFA francs in 1963 to a level of 12.6 billion CFA francs in 1966 (assuming no improvement in iron ore prices), a level which under present conditions is expected to be maintained with very little change until 1970 or later. This net addition to export earnings would have a considerable impact on the balance of visible trade. However, the rise in operating costs and in the cost of the original investment, and the fall in the price of iron ore has reduced the profitability of NIFERMA and is likely to reduce the volume of revenue due to accrue to the Government from MIFERNMA's operations in the future. This is due to the fact that profits are unlikely to rise soon to a level at which income tax becomes payable. There are also substantial obstacles in the way of any early exploitation of the copper reserves. Despite this, however, direct revenue from mining operations is expected to yield some 720 million CFA francs in 1964, or 20% of government revenue from taxation and other domestic sources, and is expected to rise to some 1.2 billion CFA francs by 1969. This represents an annual increase in this item alone of some 13% per year. 72. But parallel to the substantial contribution to government revenue by MIFERMA, government expenditures following independence have increased at a rate which has made it difficult to balance the budget. In the middle of 1963, the Government therefore introduced austerity measures involving a cut of over 15% in budget expenditures in 1963 and 1964 and an increase in taxation rates. As a result, it has been possible not only to balance the 1963 budget but also to dispense with the French budget subsidy. It is not yet clear whether the budget for 1964 will be strictly balanced and whether the austerity measures can be sustained in subsequent years. It is likely that the Government will have to find other methods of supple- menting its revenue and of further reducing expenditure. The Government, recognizing its financial limitations, has also abandoned the capital investment program which was to be financed out of its own resources. 73. The Government, in its general investment program, is attempting to stimulate growth in the pastoral and agricultural sectors of the economy and to train Mauritanians to take over the skilled medium and high level jobs in mining, fisheries and government. To accomplish this it is counting on external or public aid and the development of further mineral resources which would make a contribution to the government revenue. It is, however, - 23 - doubtful whether either source can be increased significantly beyond the levels already forecast and the Government will probably need to rely to a greater extent on an increase in and a more efficient use of resources within its immediate control. 7. If the years ahead will be difficult, particularly from the budgetary point of view, the long term prospects, assuming the continuation of foreign aid, provide more reason for hope. The exploitation of the iron ore deposits and the growing Mauritanization of the labor force will increase the gross national product and the net foreign exchange earnings. Other mineral possibilities may also result in benefits to the economy although this is far from certain. Some growth of output from livestock, agriculture and fisheries can also be expected. While the prospects of rapidly increasing per capita income do not appear bright, continuing improvement could reason- ably be expected. The fiscal resources that the mining sector is expected to yield will help the Government to ease budgetary difficulties and possibly provide some surplus to pursue its rural development program, the effects of which will only make themselves felt at longer term. The present disparity between the rates of progress of the various sectors of the economy will therefore necessarily diminish only slowly and it will be some years before the majority of the population will benefit from the recent economic expansion. 75. The direct external debt of Mauritania at around $9 million equivalent is not large but the Government is a guarantor with France of the IBRD loan of $66 million to MIFERMA which is also underwritten in effect by the principal shareholders. On the other hand, the adverse factors accompanying MIFERMA's development (increase in investment cost, decrease in iron ore price) have significantly reduced and delayed the latter's contribution to the resources of the economy and of the Government. The short-fall in the Government's expected resources has necessitated the adoption by the Government of a severe austerity program in order to main- tain a balanced budget and it is unlikely that the Government will be in a position to do more than meet its current expenditure for many years to come. In view of the country's extreme poverty, the absence of public savings, the limited volume of other domestic saving, reliance on foreign resources for the finance of investment, especially in the public sector, and the long term nature of the return on any foreseeable developments, it is desirable that external assistance should be made available on as soft terms as possible. STATISTICAL APENDIX TABLE 1 POPULATION A: Total population (estimated at the end of 1962): 880,000 of which: White Moors : 475,000 Black Moors : 240,000 Peuls : 40,000 Others (Toucouleurs, Sarakoles, Ouolufs, etc...) 125,000 B: Population of the main urban centers (1962) Africans Non Africans Total Atar 7,894 1,634 9,528 Kaedi 8,281 916 9,197 Boghe 5,38 519 5,867 Nouakchott 4,325 1,482 5,807 Port-Etienne 3,493 1,790 5,283 Aioun el Atrouss 4,661 216 4,877 Rosso 3,376 1,435 4,811 Fort-Gouraud 3,898 761 4,650 Kiffa 4,241 118 4059 Tidjukja 3,628 33 3,661 TABLE 2 A. AGRICULTURAL PRODUCTION 1962-1963 (tons) Millet, sorghum 60,000 Niaize 3,000 Yams 2,000 Niebe beans 5,000 Dates 15,00o Watermelons 1,200 B. LIVESTOCK (head. ) 1963 Cattle 1,4h7,000 Sheep and goats 8,042,000 Camels 505,000 Donkeys 185,000 Horses 11,000 Sources: Bulletin de Statistique de la Mauritanie No. 1. TABLE 3 ESTIMATED SHARE OF THE VARIOUS COMPONENTS OF THE TRADITIONAL ECONOIY IN THE GROSS DOMESTIC PRODUCT (1959) GROSS DOIJESTIC PRODUCT (in million CFA francs) Value % Total 14,500 100.0 of which: Primary sector 10,301 71.0 of which: - livestock 7,283 50.0 - agriculture 1,902 13.0 - gathering natural uncultivated crops 496 3.5 - fishing 413 3.5 TABLE 4 CONTROLLED SLAUGHTERING IN SLAUGHTER-HOUSES 1951-1962 (Head) Year Cattle Sheep Camels 1951 3,000 48,ooo 700 1953 5,500 45,500 1,060 1955 5,900 46,000 1,540 1957 8,000 51,000 2,900 1959 10,400 50,000 5,400 1961 16,933 60,000 9,700 1962 16,697 52,800 8,667 Source: Service de 1'1evage TABLE 5 NUIMBER OF LICENSED VEHICLES (Units) Dec. 31 1956 1959 June 30 1963 Total 992 1,908 3,821 of which - Private cars 85 225 1,114 - Trucks and delivery vans 813 1,545 2,415 Sources: SEDES and Bulletin de Itatistique de Mauritanie TAE:LE 6 GROSo.gUTP.T OF GiTva S1 CTO-RS la 1996 iND 1959 (in million CFA francs) 1956 1999 Commercial- % of Non Commer- % of Coriamercial- % of Non Comnier- % of Production Sector ized Total cialized Total Total izCd Total cialized Total Total Agriculture, livestock, food products 4,468 59 2,790 68 7,258 8,759 8 6,190 1/ 99.4 14,940 Energy 30 - 500 12 530 55 3 200 0.3 755 Riaw materials and semi- finished products 100 1 80 2 180 16 2.5 - - 4l6 Engineering and electrical products 40 1 - - 40 790 4. - - 790 Textiles and hides 325 4 300 8 625 1,366 7.5 - - 1,366 Ifiscellaneous industrial products 200 3 80 2 280 608 3.5 - 608 Construction, public works 680 9 300 8 980 1,277 7 - - 1,277 Services 400 5 - - 400 1,153 6.5 240 0.3 1,393 Salaries and wages 1,400 18 - - 1,400 3,200 17.5 - - 3,200 Total 7,643 100 4,020 100 11,660 18,124 100 6)630 100 24,754 1 Including increase of livestock Source: Coriptes Econondques de 1'A.0.F. 1956 SEDES: Analyse de 1'Econor,ie de la R6'publique de nauritanie (June 1961) TABLE 7 MAIN COMPONENTS OF THE ECONOMY OF THE REPUBLIC OF MAURITANIA (in billion CFA francs) Year: 1959 1962 1964 1966 (estimates) (estimates) 1) Resources Gross domestic product 14.5 2h.h 30.3 34.6 Imports 7.1 18.5 17.4 18.1 Total 21.6 42.9 47.7 52.7 2) Use of resources Consumption 17.0 22.4 24.6 26.7 Investment 1.3 16.5 8.0 6.0 Exports 3.3 4.0 15.1 20.0 Total 21.6 42.9 47.7 52.7 3) Income Wages and salaries 3.2 7.3 8.4 9.6 Gross operating results 11.3 17.1 22.0 25.1 Total 14.5 24.4 30.4 34.7 4) Transfers from abroad - in favor of enterprises 0.2 13.5 2.4 0.5 - in favor of the Government 5.0 6.0 5.7 5.0 Total 5.2 19.5 8.1 5.5 5) Gross savings - personal 1/ 1.1 2.5 3.0 3.5 - enterprises 2/ 0.3 3.4 5.3 6.6 - Administration 3/ 1.1 2.1 3.1 2.8 Total 2.5 8.0 11.4 12.9 1/ Before transfer abroad of personal rerittances. 2/ After receipt of capital transfers from abroad. 3/ After receipt of current and capital transfers from abroad. Source: Plan Quadriennal de la Mauritanie. T-9LE 8 BANKS' LIABILITIES AND kSSETS IN MkURITANIA (million CFA francs) LIAB ILITIES ASS 7 TS Demand Deposits own Capital Other Last Day and Fixed Treasury / Individual & S nrt Term Other Total Short Term Balance with Total of Month Deposits With BAO!' With BMD: Enterprises Tiabilities Creditors Liabilities Credits Banks Abroad Assets 1962 December 11A 296 692 465 25 1,597 1,162 235 1,397 16 January 100 44 737 515 25 1,420 1,257 68 1,325 February 96 165 600 780 510 27 2,177 1,161 1,039 1,200 March 99 74 600 739 480 27 2,019 1,126 890 2,016 April 82 1,797 600 803 185 20 3,486 1,036 2,315 1,351 Kay 67 843 1,200 1,049 0 19 3.178 983 1,844 2,827 June 49 1,058 1,200 1,069 0 27 3,403 1,100 1,993 1,092 July 68 1,093 1,200 684 0 23 1,067 1,059 1,766 2,825 Aunst 53 1,248 1,200 816 0 17 1,335 1,034 1,963 2,997 September 81 526 600 836 0 12 2,054 890 956 1,86 Octob er 65 30 300 770 0 47 1,213 792 317 1,109 November 79 71 300 774 0 17 1,240 786 255 1,042 December 50 199 600 690 0 0 1,538 826 576 1,402 1' an,.ue de I'!frique Occidentale. Sour:-: 3'c" 2"+ -~ccitasI 'Af ique d-'uct TAELE 9A ESTIMATE OF PRODUCTIO; AND SALE OF MFERIMA 1963 1964 1965 1966 1967 1968 1969 1970 1960 estimates 1/ 2/ 2/ - Production ) 2.0 2.5 4.2 h.8 5.4 5.9 6.0 6.0 - Shipments to Port ) million .. 3.0 4.6 5.3 5.9 6.0 6.0 6.0 ) tons - Sales )0 2.8 4.5 5.3 5.9 6.0 6.0 6.0 - Price f.o.ba ) CFA F.per ton .0 2,400 2,400 2,400 2,400 2,400 2,400 2,4oo - Gross Sales Proceeds f.o.b. ) .. 6,669 10,905 12,911 1h,h1 14,666 14,666 1)4,666 ) million - Export Tax ) CFA F. .. 400 665 1,033 1,297 1,320 1,320 1,320 1964 estimates 3/ - Sales ) million tons 1.5 4.8 5.5 6.0 6.0 6.0 6.0 6.0 - Price f.o.b. ) CFA F.per ton 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 - Gross Sales Proceeds f.o.b. ) 3,200 10,100 11,500 12,600 12,600 12,600 12,600 12,600 / ) million - Export duty ) FA F. 212 707 920 1,134 1,134 1,134 1,134 1,134 1/ Bank reports, February 1960. 7/ Estimate of re stocks at mine on April 1, 1964. The 1960 estimates assumed that the date of beginning of operations of the project would be April 1, 1964; figures for production and sales in 1964 therefore applied only to the last nine months of the year. 3/ Estimates based on data supplied by MIFERMA, July 1964. E/ Before rebate for any credits allowed, TABLE 9B ESTI4ATE OF DUTIES AND TAXES PAID BY MIFElMA TO THE MAURITANIAN GOVERNMENT (Million CFA F) 1960-1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1960 estimates 1/ - Custom duties and taxes 325 481 304 146 89 17 8 - - - - Export tax and income tax - - - 400 1175 2162 2521 2703 2787 2849 Total 325 481 304 546 1919 2179 2529 2703 2787 2849 Estimates of the Four-Year Plan 1963/66 - Custom duties and taxes 170 75 75 - - .. .. .. - Export tax and income tax 270 700 800 1000 1200 .. Total 440 775 875 1000 1200 .. .0 Actual receipts by the Mauritanian Govern- ment,1960-1963 and forecasts 196-1970 - Custom duties and taxes (187) 2/ 331 3/ 262 3/ 120 4/) ) 830 4/ 890 4/ 1100 4/ 1140 4/ 1190 4/ 1190 4/ - Export tax and income tax - - 238 600 ) --- Total (187) 331 500 720 830 890 1100 1140 1190 1190 1/ Bank reports, February 1960 7/ Actual figures for the sole year 1961. T/ Actual figures I/ Estimates based on data supplied by KIFERMA, July 1964. TADLE 10 REVENUE OF THE GOVERNMENT OF MAURITANIA 1959-1964 (million CFA francs) 1RBG1/ % 19601/ % 19611/ % 196211 % 1963Y % 1964-3/ % CURRENT BUDGET - Fiscal receipts 860 39.5 1,031 36.5 2,196 9.5 2,188 46.3 2,908 58.3 3,390 88.4 - Property income and fees ) 240 5.5 79 1.7 84 1.7 161 4.2 - Transfer from the Reserve Fund 71 3.5 295 10.5 187 4.0 593 12.5 295 5.9 283 7.4 Internal receipts 931 43.0 1,326 47.0 2,623 59.0 2,860 60.5 3,287 65.9 3,834 100.0 Subsidy from France 1 240 57.0 1.83 53.0 1,822 41.0 1,872 39.5 1o700 34.1 - - Total 2,171 100.0 2,809 Ic.o0 4,445 1Co.0 4,732 100.0 14,987 100.0 3,834 100.0 CAPITAL BUDGET - Transfer from Current Budget n.a. n.a. n.a. 208 33.4 318 45.3 n.a. - Transfer from Special Funds n.a. n.a. n.a. 233 37.5 150 214. n.a. - Drawing on Reserve Fund n.a. n.a. n.a. 181 29.1 232 33.3 n.a. Total n.a. n.a. 316 100.0 622 100.0 700 100.0 1,000 100.0 1/ Actual receipts. Revised estimates. 3/ First estimates. _/ Of which CFA francs 907 million from France and CFA francs 333 million from the group of the former AOF. TABLE 11 REVENUE OF THE CURRENT BUDGET OF MAURITANIA BY CATEGORY (million CFA francs) 1959 1/ 1960 1/ 1961 1/ 1962 1/ 1963 2/ 1963 3/ 1964 h/ Direct taxes ( ( 568.3 908.1 748.4 868.3 779.7 Indirect taxes ( 819.3 ( 959.3 1,576.2 1,842.7 2,083.4 2,315.5 2,511.5 Other taxes ( ( 51.6 90.7 74.5 74.5 99.0 Property income 10.0 29.4 14.6 15.5 37.h 45.4 31.2 Industrial opera- tiois 30.5 43.0 129.6 13.2 14.0 14.0 14.6 Services n.a. n.a. 1.1 19.2 23.7 23.7 50.5 Miscellaneous 0.1 O1 94.9 31.0 8.6 8.6 64,5 Total 853.3 1,031.8 2,436.3 2,920.4 2,992.0 3,35o.0 3,551.0 Subsidies from abroad 1,240.4 1,483.3 1,821.6 1,852.4 1,700.0 500.0 - Total current revenues 2,100.3 2,515.1 4,257.3 4,772.8 4,692.0 3,850.0 3,551.0 Reserve Fund 71.0 294.8 187.0 - 155.0 615.0 283,0 Special accounts - - - 361.8 140.0 84.0 - Total receipts 2,171.3 2,809.9 4,44.9 5,134.6 4,987.0 4,549.0 3,834,0 1/ Actual receipts 2 1963 first estimates 3/ 1963 revised estimates T/ 1964 first estimates Source: Gouvernement mauritanien TABLE 12 CURRENT EXPENDITURES OF THE GOVERNMENT (budgetary estimates) (million CFA francs) 1961 1/ 1962 1963 1964/ % Total current expenditures 4,220 100 4,095 100 4,669 100 3,974 100 of which: -Public debt 615 14.5 244 6.0 199 4.3 44 1.1 -National Assembly 153 3.6 184 4.5 192 4.1 172 4.3 -General Admini- stration 495 11.7 571 14.0 526 11.4 448 11.3 -Foreign affairs 247 5.8 210 5.1 238 5.1 192 4.8 -Security services 374 8.9 935 22.7 989 21.5 1,055 26.7 -Financial services 121 2.8 159 4.9 181 3.9 180 4.5 -Economic services 211 5.0 231 5.6 244 5.3 211 5.3 -Public Works 131 3.1 120 2.9 145 3.1 128 3.2 -Education 446 10.6 560 13.7 663 14.3 636 16.0 -health and labor 299 7.1 327 8.0 338 7.3 288 7.2 -Common services 372 8.8 202 4.9 168 4.6 182 4.6 -Public transfers 561 13.3 782 19.0 786 18.6 418 10.5 Investment financed by appropriation from current budget 26 208 318 - 7Revised estimates First estimates Source: Gouvernement mauritanien TABLE 13 BUDGET SUBSIDY RECEIVED FROA THE GROUP OF TERRITORIES OF THE FORMER AOF AND FRANCE (million CFA francs) Percentage of the Subsidy from Subsidy subsidy in relation Year AOF from Total to total current group France receipts 1959 333 907 1,240 57% 1960 - 1,483 1,483 53% 1961 1,821 1,821 44% 1962 1/ - 1,872 1,872 39.5% 1963 2/ 1,700 1,700 34.1% 1964 J/ 1,000 1,000 0% 1 1962 revised estimates 2/ 1963 first estimates. During the year the current budget subsidy was reduced to CFA francs 500 million; CFA francs 700 million were allocated to the capital budget and CFA francs 500 million were set aside to finance 1"auritania's share in the MICUNA water supply scheme. Following these revisions the budget subsidy accounted for 13% of the total current receipts. 3/ Estimates. The total amount of CFA francs 1000 million is to be utilized for financing the capital budget. TABLE 14 FRENCH TECHNICAL ASSISTANCE PERSONNEL IN IAURITANIA As of As of As of January 1st January lst January 1st 1962 1963 1964 Total 207 237 232 of which: Education 34 57 62 Health 30 33 27 Public LWorks 15 17 19 Agriculture 5 4 9 Agricultural engineering 2 2 1,ining 3 6 4 Postal services and 26 24 18 telecommunications TABLE 15 EXTERNAL PUBLIC DEBT Outstanding debt Interest estimated on Direct Debt rate Term March 1st, 1964 million CFA francs Advances of Caisse Centrale de Coop6- ration Economique (CCCE) to the Republic of Mauritania: - For construction of houses for civil servants 2.50 20 years 47.6 - For Mauritania's share of the.loans not included in the Plan to the former AOF territories 2.50 9-1/2 yrs. 9.0 - For Mauritania's share of the "FIDES" loans to the former AOF territories 1.00 40 years 559.5 - For the purchase of shares of Soci6t6 Africaine d'Electricite (SAFELEC) 0 3 years 12.0 - For participating in the capital of MIFERTA and shareholder's advance to IFERMA 2.50 15 years 770.0 - For the assumption by Mauritania as of March 1st, 1964 of the loan made to SUCIM for the construction of houses in Nouakchott 4.50 l4 years 920.1 2,318.2 Guaranteed Debt 1/ - I.B.R.D. Loan to MIFERiA 6.25 10 years 16,302.0 1/ S5oift6 Anonyme des Mines de Fer de Mauritanie. TABLE 16 EXTERNAL TRADE OF MAURITANIA 1 (official statistics) Percentage Exports Imports Deficit of coverage Volume Value Volume Value (Exports of imports Year (Tons) (million (Tons) (million Imports) by exports CFA francs) CFA francs) 1961 5,753 432 147,839 7,683 - 7,251 5.6% 1962 7,935 687 174,578 8,806 - 8,119 8% 1963 1,687(3 mo.) 277 52,815(6 mo.)h,h75 1/ Customs statistics of Mauritania have been segregated from the statitics of Senegal only since January 1st, 1961. Sources: Ministere de la Cooperation: Paris Bulletin de Statistique de iauritanie N. B. These statistics only concern products cleared through the customs of Miauritania originating from countries outside the Customs Union. Consequently they do not include a large share of the export-import trade of Mauritania consisting of products cleared through the customs of Senegal and merchandise originating from Senegal, Mali, etc. TABLE 17 ESTIMATES OF THE ACTUAL EXTERNAL TRADE OF MAURITANIA IN 1959, 1960, 1961 AND 1962 (in million CFA francs) 1959 1960 1961 19621/ L Ports Agricultural products, livestock and foodstuff 3,303 3,377 3,600 n.a. Raw material and energy 12 14 15 n.a. Industrial products - - - n.a. Total 3,315 3,391 3,615 4,000 Imports Agricultural products, livestock and foodstuff 3,852 4,150 4,220 n.a. Raw material and energy 860 2,400 3,230 n.a. Industrial products 2,230 4,431 10,005 n.a. 6,942 10,981 17,455 18,500 Balance - 3,627 - 7,590 -13,840 -14,500 Percentage of coverage of imports by exports 48% 31% 21% 21,5% 1T7Preliminary estimates. Source: Banque Centrale des Etats de 1'Afrique de l'Ouest. TABLE 18 BALANCE OF PAYMENTS WITH 4ON-FRANC AREA COUNTRIES (in million CFA francs) 1962 1963 (nine months) Receipts Expenditures Receipts Expenditures - Merchandise 25.2 4,364.2 187.2 1,965.5 - Transportation, Insurance 4.6 145.5 10.5 97.2 Travel 1.5 2.5 3.1 33.7 - Income from investment - - - - Income from labor 4.6 305.9 0.8 165.9 - Other services - 2.0 2.2 28.6 - Government receipts and expenditures - 151.5 - 315.6 - Receipts and expendi- tures of foreign governements 3.1 - 6.5 - - Donations of the public sector 537.1 265.7 0.2 - Donations of the pri- vate sector 0.8 - - Long term loans and investments 9,004.0 - 3,771.9 - Short term assets 1.7 - 9,582.6 4,971.6 4,247.9 2,606.7 Balance of payment Surplus (+) or Deficit (-) + 4,611 + 1,641.2 Source: Office des Changes TABLE 19 INVESTPENTS FINANCED BY FIDES FROM 1947 TO 1959 1 (in million CFA francs) First Plan Second Plan 1247-1953 1954-1959 Total in % General expenditures, studies research - 98 98 2.6 Production 270 1,624 1,894 So.5 Infrastructure 62 1,060 1,122 29.6 Social services 215 437 652 17.4 547 3,219 3,766 100 1/ Excluding investment financed by FIDES under the General AOF Section Source: M,inistere de la Cooperation - Paris. TAELE 20 INVESTMENTS FINANCED BY FAC FROM 1959 TO 1963 (million CFA francs) Payments ffected 1959 1960 1961 1962 1963 Total on December 31, 1963 Studies 61.0 29.2 89.0 59.5 132.5 371.2 10.5 204.5 Social investments 78.0 122.3 - 2.5 58.7 261.5 7.4 185.5 Transportation investments 86.5 157.0 112.5 72.0 30.9 458.9 13.1 407.5 igricultural investments - 172.2 83.6 110.0 205.2 571.0 16.3 338.5 Urbanization and housing - 821.9 369.0 367.0 109.0 1666.9 47.5 1,481.0 Telecommunication - 73 42.0 - 67.7 182.7 5.2 97.5 Total 225.5 1,375.6 696.1 611.0 604.0 3,512.2 100 2,714.5 Source: Gouvernement Mauritanien. TABLE 21 INVESTMENTS FINANCED BY FED FROM 1960 TO 1963 (million CFA francs) Payments effected 1960 1961 1962 1963 Total on December 31, 1963 Studies 1/ Social investments 530.6 449.8 - - 980.4 28.7 670.0 Transportation investments - 500.0 - 369.5 869.5 25.5 164.7 Agricultural investments 41.3 180.2 631.0 - 852.5 25.0 248.0 Industrial investments - 710.0 - - 710.0 20.8 16.3 Total 571.9 1,840.0 631.0 369.5 3.412.4 100 1,099.0 1/ The studies carried out by FED refer to specific project and their amount is included in the execution of the project. Source: Gouvernement mauritanien. TABLE 22 INVESTIENTS IN THE PUBLIC SECTOR UDER THE FOUR YEAR PLAN 1963-1966 (million CFA francs) Amount % - General studies 580,8 4.3 - Transportation and communications infrastructure 3,191.0 23.5 - Agricultural production 2,352.0 17.4 - Mining production 800.0 5.9 - Fishing 960.0 7.1 - Education and management training 922.5 6.7 - Health and hygiene 770.4 5.7 - Urbanization and housing 3,043.0 22.4 - Administrative investments 947.0 7.0 Total 13,566.7 100.0 Source: Plan Quadriennal 1963-1966 TABLE 23 FINANCING OF INVESTMENTS IN THE PUBLIC SECTOR UNDER THE FOUR-YEAR PLAN 1963-1966 (million CFA francs) Other Loans from bilateral or Capital French Year First FED 1/ Second FED 2/ FAC multilateral budget of public Total assistance 3/ Miauritania institutions 1963 1,392 - 1,305 110 421 60 3,288 1964 950 700 945 390 680 136 3,801 1965 - 2,400 585 163 680 108 3,936 1966 - 1,100 575 140 679 48 2,542 Total 2,342 )j,200 3,410 803 2,460 352 13,567 % of total 48.2% 25.1% 6.0% 18.1% 2.6% 100% 1/ Financing has already been obtained. 2/ Including resources from the fund for the diversification of production. / Assistance from the UN, the Special Fund, the USA, Germany, etc. Source: Plan Quadriennal 1963-1966.