Country Report Mauritania January 2009

Outlook for 2009-10

The political deadlock between supporters of the military junta, which took power in a coup in August 2008, and those demanding the return of the deposed president, Sidi Mohamed Ould Cheikh Abdallahi, will continue to dominate the country's political life, even if a fresh presidential electionscheduled for May 2009is held, as Mr Abdallahi and several major political parties will boycott it. The drop in donor inflows will slow economic activity, especially in the construction sector, until democracy is restored. Real GDP growth will slow to 2.5% in 2009, before accelerating to 3% in 2010 as foreign demand picks up. Inflation is forecast to slow from an average of 7.8% in 2008 to 5% in 2009, in line with the drop in global fuel and food prices, before accelerating to 5.6% in 2010. The current-account deficit will widen from 11.3% of GDP in 2008 to 13.4% of GDP in 2009. It will narrow in 2010 to 12.9% of GDP.

The political scene

The junta's leader has pursued a campaign to attack the competence and probity of Mr Abdallahi's administration, alleging that corruption was rampant among senior figures. At consultations between the junta and civil society groups it was agreed to hold a fresh presidential election in May 2009. Plans to amend the constitution to give more power to the legislature were also approved. Following pressure from foreign governments, MrAbdallahi was released from house arrest in mid-December.

Economic policy

The government has announced price controls on food and fuel. In the 2009 draft budget spending is to be cut from UM270bn (US$1.1bn) in 2008 to UM233bn. In November Ousmane Kane was replaced as governor of the central bank by a former vice-governor who had been working most recently at the National Audit Office, Sidaty Benheida.

The domestic economy

The sharp fall in oil and iron prices in international markets has significantly reduced fiscal revenue. However, the fall in food prices in international markets has had a beneficial impact on local purchasing power. Production at the Chinguetti oilfield rose to an average of around 17,000 barrels/day (b/d) in November, compared with 10,000 b/d in the first half of 2008.

Foreign trade and payments

The lack of progress in restoring democracy in the country is expected to lead to a fall in concessional loans from donors, and the credit squeeze has made it even more difficult for the country to access international capital markets to cover the financing requirement.

This report covers the following industry codes:
SIC Code: 60;10;70
NAICS Code: 52;212;72

This report covers the following industry codes:
SIC Code: 60;10;70
NAICS Code: 52;212;72