Mauritania: Risk Assessment
Country Risk Rating
Business Climate Rating
- Lower terrorist risk than its Sahelian neighbors
- Support from donors and international organizations
- Macroeconomic stability, to some degree, even in challenging circumstances
- Mineral (iron ore, gold, copper) and fishery resources
- Energy potential (gas, oil, renewables)
- Relatively significant domestic budgetary resources
- Poor governance including high levels of corruption, non-existent insolvency treatment
- Under-diversified economy is vulnerable to fluctuations in commodity prices
- Growth not very inclusive, weak education system and high unemployment
- Limited formal economy
- Very little arable land, as more than 2/3 of country surface is dessert
- Exposure to volatile weather patterns
- Persistent community tensions: discrimination against the Haratines, or black Moors, who make up 30% of the population and are descended from slaves of the Beydanes, also known as white Moors
A gradual improvement in economic activity
In 2022, growth will keep recovering from the recession in 2020 as exports and domestic demand gradually improve. Gold exports are notably expected to increase alongside production. After a fire disrupted operations at the Tasiast gold mine (operated by Kinross Gold) in June 2021, the output will rebound and be further boosted by the planned expansion. However, the environment will be less favorable for iron ore exports, as prices are expected to moderate due to a slowdown in Chinese demand. On the other hand, copper exports could increase and benefit from international prices and the global market. Non-extractive exports, driven by fishery products, are expected to increase in 2022. Household consumption will gradually rebound in 2022 as the vaccine rollout progresses (around 14% of the total population was fully vaccinated in November 2021). Agricultural activities are expected to recover in 2022, supporting household income (50 % of the population depends on agriculture, livestock, and fishery). As the Priority Plan (ProPEP 2020/22) – notably aiming at supporting economic diversification and developing food security - continues to be implemented, government consumption is expected to be supportive. This will be reflected in the growth in the services and industrial sectors. Investment (31.6% of GDP) is expected to remain moderate in 2022, as the authorities’ ambition to increase infrastructure investment could be tempered by limited fiscal space. The gross fixed capital formation will nonetheless be supported by investment tapping into the country’s hydrocarbon potential. Revenues from this sector are not expected to benefit the country in 2022, as production at the offshore gas field Grand Tortue Ahmeyim (GTA, shared with Senegal), discovered in 2014, is scheduled for 2023.
Debt restructuring and twin deficit
The fiscal balance will remain in deficit but narrow in 2022. Revenues from mining and fiscal receipts will continue to benefit from the economic recovery. Pending the boost from gas revenues, they will be supported by measures outlined in the 2022 budget to improve revenue mobilization. In 2022, authorities will continue prioritizing social and infrastructure spending by containing the growth of recurrent expenditures. The end of the Debt Service Suspension Initiative (DSSI) will also translate into higher debt servicing costs. With the country maintaining a primary fiscal surplus (which excludes interest on debt), public debt is expected to decrease slightly in 2022. Authorities are also expected to continue their debt restructuring strategy (ongoing talks with China and India, pending decision on the G20 framework) after they found an agreement with Saudi Arabia (which suspended USD 8.2 million of debt payments) and Kuwait (restructuring of USD 82.7 million) in 2021. The country could also receive further support from the IMF following the conclusion of the previous ECF arrangement in March 2021. Although it is expected to shrink, the current account deficit will remain prominent in 2022.
Capital goods imports will continue to fuel a large trade deficit despite rising exports. The services and primary revenue accounts are also expected to remain in debt. Current international cooperation could increase, supporting inflows in the secondary income account and reducing the current account deficit. The latter will continue to be financed by FDI related to developing the LNG project and concessional loans. Favorable terms of trade in 2021 supported an increase in gross international reserves, which cover more than five months of non-extractive imports.
The president is working with the opposition
Mohamed Ould Ghazouani was sworn in as President in August 2019 after he won the election with 52% of the vote, despite challenges from the opposition. His party, Union for the Republic (UPR), has held the majority in the National Assembly since 2018 (97 of 157 seats). The next legislative and presidential elections are scheduled for 2023 and 2024. The administration is expected to continue its anti-corruption drive, most notably illustrated by the arrest of former president Mohamed Ould Abdel Aziz (2009-2019) in June 2021 on corruption charges. Furthermore, the president has worked to ease tensions with the opposition, calling on them to tackle poverty, unemployment, and inequality and to improve the education and health systems. Mauritania will continue to consolidate relations with African countries, as suggested by its participation in the African Continental Free-Trade Area (AfCFTA) to strengthen regional economic ties. In addition, historically close links with Gulf countries helped in the recent restructuring negotiations with Saudi Arabia and Kuwait. Cut in 2017, diplomatic relations with Qatar were re-established in March 2021.