World Bank Document

REp Oa R * T R.port No. AW-2Z7a

r~~~~7LILi ~LIL4L ~\L.VILnn'. )A Public Disclosure Authorized This report Is for official use only by die Bank Group and specificafy authorized orgnizations Ior penos. l; ruy not 'w piuu-1ish, quoted or c.wIu withuft B;rJ 5ft- a . Bank Group does not accept responsibility for the accuracy or completeness of the report.

UNiTfRUNAMLNIAL BANK FOR RECONSTRU N AND DJEVILOOPM0u1

'iNTjERN'A-1~ONAL 1 i:.V ML. PrINUMNI A8aSOCIATION IA L ...b .. AL Ll.LA jji.~ i. .i'' Public Disclosure Authorized

TIHE CURRENT ECONOMIC SITUATION

AND PROSPECTS

MAURITANIA

(in four volumes) Public Disclosure Authorized

VOLUME I

THE MAIN REPORT

August 5, 1971 Public Disclosure Authorized

Western Africa Deparl:ment rTTPPVENry POTITVAT.FNTS

Cur rency Uni tel- CFA Frenc (CFAF)

Before August 11, 1969%

US $ loOO CFAF 2460 85 CFAF 19000 TTS $ I nOt

Afere Aug.ust 119 19690:

TS T 1of nnAF 277071 CFAF 1000- US $ 3 6o

WEIGHTS AND MEASURES

1 Me*t-ric Ton (t) _ 2 2 On l bs 1 Kilogram (kg) 2.2 lbs i Kilo.meter (k'l"' U.U r.ie 1 Meter (m) 3.28 feet COMPOSITION OF MISSION

+ -44A This report is based on the iinduilg-- L~~'--J'-.-R- of-4 a--- so whi viaited Mauritania in March-April 1970. The mission comprised the following members:

Heinz B. Bachmann Chief of Mission Carlos Merayo General EcoromiLs'st Mohamed Moghazi Agricultural Economist Dr. M. Tacrouts (consultant) Livestock xApert Dr. R. Moal (consultant) Fisheries Expert Remi van Waeyenberghe (consultant-UNESCO) Education Expert

M A U R I T A N I A

Table of Contents

Page No.

BASIC DATA

ABBREVIATIONS USE:D

SUMARY AND CONCLUSIONS ...... i

I. INTRODUCTION.. 1

A. The Country and the People ...... 1 B. Political Situation and Recent Developments .... 3

II. STRUCTURE AND RECENT DEVELOPMENT OF THE ECONOMY ..... 5

A. Overall Economic Situation and Past Growth (National Accounts)..... 5

1. Structure of the economy. . . . 5 2. Past growth of production. 6 3. Consumption, investments, and savings 7

B. Foreign, Economic Relations...... 9

1. Foreign trade ...... 9 2. Ba,lance of payments ...... 11

C. Money aLnd Credit .13 D. Prices, Wages, and Employment .15 E. Budget and Public Sector...... 16

1. Structure of public sector. 16 2. Ce!ntral government's current budget 17 3. Public investments and foreign aid 21 4. Public enterprises ...... 24 5. Overall situation, tresor, and public debt.- 25

III. PAST DEVELOP'MENT AND PROSPECTS FOR THE PRINCIPAL SECTORS...... 28

A. Rural Sector ... .28

1. Aigriculture . . .. 28 2. LIivestock. . . 30 3. Forestry... .. 32 4. F:Lshing ...... 32 Table of Contents (Conc'd)

rage No.

B. industries and Services ...... 33

1. Mining ...... 33 2. Manufacturing ...... 35 3. Transport and trade ...... 36 4. Public utilities ...... 38

C. Education ...... 40

IV. PROSPECTS AND CREDITWORTHINESS ...... 42

A. Overall Economic Developments ...... 42

1. Growth of production ...... 42 2. Growth of expenditures and savings ...... 45 3. Balance of payments ...... 46

B. Planning and Public Investments ...... 47

C. Terms of Foreign Financing and Creditwortlhiness 52

STATISTICAL APPENDIX BASIC DATA

Area: 400,000 square m:Lles (1,037,730 km2)

Population: (1969 estimate)

Total 1,146,000 Density 3 per square mile (1 per km") Rate of' growth 2.0% per year School attendance 15% of school-age population

Political statue: Independent since November 1960

Gross domestic product (market prices):

1959 1964 1967 1968 1969 prelim. GDP at current market prinps (billion CFA francs) 16.7 33.6 43.0 45.6 47.0

Rate of growth t er. annum) 15.0% /l 7.0% 10.9% p.a.

GDP per capita (CFA francs) 18Q),0n 320200 38;800 40;500 41,0140 Rate of growth (% per a1rLuIt /I 12*3%// 5. 0% A

/ ~~~~~8.,§tpea.J

'IDri.ce rise (% per annum) 1.5% p.a.

'JUT a current pz iceU (million US$) 60 121 155 164 1691/ GDP per capita ( 'JS$) 65 116 llo 1ii6 ____

J At the new exchange rate of CFAF 277.71= US% 1.00 prevailing after Augustl 1969. iI converted at the previouas xchange rate the 1969 GDP would be $ 191 A,llion and per capita GDP $ 166. -2-

Structure of GDP at factor cost (1963)

Origin % Uies %

Agriculture 6.0 Public consumption 14.3 Livestock 27.0 Private consumption 57.0 Other traditional .3.0 71.3 36.0 Gross dnmeAtic investment 27.L Net balance of foreign ) .Minin,g 31.0 trade and non-factor ) Manufacturing (incl.fish procesa)Ll.0 services and E&0 j 1.3 Services 12.0 Public Administration 10.0 100.0 100.0

Financing of grosa domestic investments ( in b illion Ar franco G) 195-9 1964 1968

Gross fixed capital formation 1.9 6.1 12.5 Gross national savings 0.3 1.6 .0 Net capital inflow 1.6 4.1 6.5 Decrease in foreign asset - )/n.4(1

Central Government Bud&et (in billion CrFA francs) elf,' 16

Total current revenues 0.97. Total current expenditures 3.0 4h1 5.3

Net current budget -2.1 -0.3 t°.4 Development expenditure 0.8 2 0 3.4 Total deficit (-_Y23 (-_ (-)3.0 financed from: (foreign sources excl. techn.assist.) (2.0) (2.0) (3.0) (local sources) (0.9) (0.3)

Money and credit Relations to large monetary area: Member of th; West African Monetary Union (UMOA) and of the Franc area.

(billion CFA francs end of period) 1962 1964 1968 1969 Total money supply 2.7 2.5 4.0 4;1 Credit to private sector 1.2 1.3 4L0 5.1 Deposits of the public sector 1.7 1.1 -0.9 O0;5 -3-

Balance of payments (:Ln billion CFA francs) 1959 1964 18

Imports 6.9 13.7 ij.8 21.0 EKport 3.3 13.8 Trade Balance - 376 t 0.1 Net services 243 - 0.6 -2. Net factor income and private remittances abroad - 0,7 - 5.3 -8.1 Net errors and omission 0.4 Current account balance

Estimated gross disbursements of foreign aid (in billion CFA francs) 1959 1964 1968

France 2.3 1.9 1.6 EEC (FED) -0.6 1.3 Cthers 001 o.8 Total YX .3.7 of which technical atssistance (0.3) (o.6) (0.7)

]nternational reserves ('as of December 3l0 (Mr-tArnal assets imputed within the UMOA) 1964 1968 1969

Total value (US$ million) 10.7 6.3 0.7 Month's inports ofr goods 2.3 1.2

IMF Position 1964 1968 1969 {Us$ million) 7 5 9 °O 11M L7U.9'Jv Quota nrawings rone nore none

World Bank Group Operations

A. Past operations (US$ million, as of December 31, 1969) Amounts committed Amount disburoi ed IBRDon66o0 I/ 66.0 IDA 9.7 3.8

/ IBRD loan to MIFERUN , a private company, guaranteed jointly by the Governments OI- Maurittnia an,d France. - 4 -

B. Terms of IBRD/IDA lending to public sector (weighted average)

Rate of interest. Grace period Repayment p.a.. (years.j period

December 1964 - December. 1969 0.75 (service 10 50 charge)

External Public Debt, end of year, (in million US dollar)

1967 196& 1969(est.)

Total debt outstanding; including undisbursed 33.7 04"O8 46.0 disbursed only 21.6 24I.l4 30.0

Debt. service ratio (% of total exports earninga) 1.0% 1. 5 2.3% ABBREVIATIONS USED

BCEAO: Banque Central des Etats de lTAfrique de l'Ouest the central bank of the West African Monetary Union (UMOA)

BIAG: Banque Internationale pour l'Afrique Occidentale a French commercial bank with subsidies all over West Africa

BM): Banque Mauritanienne de Developpement the semi-public development bank

CCCE: Caiase Central de Coop6ration Economique a French Public Institution Drovidinp loans at concessional terms to developing countries

CFALFranc: Communaut6 Financiere Africaine Franc the cnrrencv of' the West African Monetarv Union (TTMOA)

E. (in tables): Est±mates

FAC: Fondn d'A:!de et de Coopnration a French public institution providing grant and soft loan aidC to de'r.lopring rrinntr4nn

*;T! Fonda EuronAonn de flAumci ppem.ent an institution of the European Communities providing grant and sot+ lon3-ad to developing countries4 ass oCiatedwith4th +he European Communities

MAURELEC: Soci4ete hiuritanienne d'Electricit4 a - -1,s4b co'Cplny responsible PorC l.-- 4-odu.-i4n4- CVll±jUILJA. .1- ISJflJF J I. CjLfI AU.CN V±C7U VIUL%.LtJ UJ jJJLU%.LUk;U .L%JI and distribution in some parts of the country

MIFERMA: Soci4t6 des Mines de Fer de Mauritanie 4 a private corrpany (ii-, a small fGovernmwent n,-rticipa-tion) mining iron-ore since 1962 in the F'Derik region, to which the World Dfr,lr r-+- a AA m-n,414cn loan 4,, inOt waw~~~~~1 wwvV|~ 'P 'S'x-'-&s-*FJ-- cvv .±SS5 UaI vLU vc;a.7z

4 OERS: Orfanisata4 ds Et.at r..w.A.. Eta-rd1

S^m,: ~~~SoCi6t.6 -MI--4 taJ.+--nienA.e des Bar.qute a private commercial bank, owned by the Government and a

grou-Jp of EuA ope arUOUDanko uIder thLeILAeaduerSi11)p oVf Credit I, VL1Ii.

CAV2TLA.: AA4t uw-4.1aA.. de. vj....j.. .J~J1 i Usa UU.LC; j r.J.L CKn ULC r u ±IJJ a private company (with a 22% Government participation) flning copper ance 1970, near Akjoujt, inj which LrC has a 15% participation - 2 -

SONIDEX: Societe Nationale d'Importation et d'Exportation a semi-public trading enterprise, which, since 1964, has a manopoly for the import of most basic foodstuffs and other consumer goods

UMOA: Union Mon6taire Ouest Africaine The West African Monetary Union, composed of seven francophone countries in West Africa I|* A ^ %^ ^I *~., I- -%rL A_ AI I*I tt_ A L II A OROCO; 'TNSAIA IZLAMM1. KtPUbLIQUr MAUKII M/AIN I JA 'I p.~~~~AL GER IA JsesAwsIHAi £ J LtIBYA tt $AMARA; r

| Paved roads Paved roads under construction .MAURITANIA) ; - Gravel roods - 1 MALI 1 NIGER Tr acks / - CHAD Rnilrondn .UNqJPE v0LAo , * Aiffields IRA -,IV Y * /' C~~~~) Coppe-RI- f'A 0 R CL)C C C) ILEO~~~~~~~~~~~~~~JE "A S NiIGERIA~ 28 \1G Copper )NE- / 'C J28, . l 11\- LEWeA, l'' C .AFRI GDat'ePalms II e. DAHT&E& CMANIRO0NNV.4'j Fishing 1e * Wharf , /S 100-- Annual rainfall, millimeters Aaiun Interncitional boundaries A IC, F R I A AGRICULTURAL ZONES J( Saharan desert i73Solharetn sub-desert \ Srthetien i ,

I o so lo. iso 1I! j ft .- Seu." I | t ~~MILESso~ Mi~~~~~~~~ES~ )~drNotfg ~ ~ ~ ----- ~~~~~~rirI mocrve,r. s

10 150 200 250 PA IR H

KILOMETERS ,- i . -24' H R 24°-

I -,,-. r I I fr. LI I b F"' r' ".- EY~~~~----1- ….

Ib~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

201 | > --'R" .aal , I-

'Sr J.,;sI-TT9{* V-H~~~~~~~~~~~~~~~-p.' ,,t iodler;o -< .

I-s -_X~,+ ' j*- - - chj ~ ' 1 1Ta

St Lou is ----- ' I/,/ '''-' - ) 60n ' SOO10 \200 1 1OO DAKAH J Boake M A L I

| .\ ~~~~~~~~SE N\ E G A Li

DECEMABER 1970 IBRD-3172

| ISLAMIC REPUBLIC OF MAURITANIA 1K' ,1MOR•cco IA POPULATION DENSITY BY REGIONS SPANISHj' Al GERIA SAHARA! A- ER LIBYA

-.- n international boundaries - \ -`-- - ...... Regional boundaries J.MAURITANIA- Deportmentt boaundarIeti SEE \.NIGER / AD R-S Region number GAMBASE I, _i_ , | J1,6J Approximate density |GUEArAM Ni)!R R

® Notional capitol 1 SIERR to A NIGERIA Regional capital MOROCCO LINE t NIGERI OC OBERIJALI'O ' co I 28, RairoadurRM% cen.er |. -j INHABITANTS PER SQUARE KILOMETER F| 2Less than 0.5 h A LEI +~~~~~t13-1.7_,,,Q >/ I N/.v\.\

More than 5 I. -. -_- N

I o ~~~50ioo oI'i IMILES' ~~N B { oos^ !o 200 2 I ir-Moghrein KILOMETERS I

If. P AS N I 5 H TIRIS-ZEMMOUR

24' v5 A ASAHARA 24.1 ____,,_I El MReiti

7' (J| ZouErate M A L I / EDerik ~~~~~~~~~~~~R-7 I0 i-j-----…0-,2 of . I! . I

Nouadh b,,.,j I C P El M'Reyerj LJI'~~~~~~~~~~~~~~~~io

2071 F20' A u IJCHYi's 1 r.;4.zJaTT,/..

| s ; ~~~~~~-i (.C A T 12R. @.._r.|_.li ''~ I J~ts 1[t',HOUVH X C,i

- '; [e |I.CnI z . a f I qPrAt&l ~Ai l n . 1 : . |- -i . BASA? 4 etR ,.. ,*| 8 I r I- M

I Bc,uliIr.,It . flPfflF i~ . t 0., 6 | ^ o. . 1 y .u2' ORIE9NTrAL /mXo0skuo EN TAISL 6'~~~~~~~. L ..... N~oI- CWE OT7P/ !2.' 7Z- A',rj ... ;;j )'~~~~~~~~~t65SJe

CCNI L~~~~ S MALI

19Y ei A I r 7 R""_. A ,''~~~~~~~~~~~~~~~~~~~~~~~~BD- DECEhiBER~~'~I '- '97 ERD0-3si174o

SUMMARY AND CONCLUSIONS i. Mauritania covers an area of 400,000 square miles on the west coast of Africa. More than half of the land is desert and less than one third is usable for livestock and some precarious agriculture. Out of a total population of 1.1 million, over two thirds of the people, predominantly Moors; with an Arab--Berber background, are engaged in nomadic livestock herding; and close to a quarter are sedentary farmers of negro origin livinig along the Senegal River. About 10% of the population lives in towns and is engaged in the modern sector of the economy, which consists primarily of two mining enterprises and public administration'. ii. Mauritania gained independence in 1960. Despite serious problem3 with Morocco and internal tensions between the two segments of the population, the country has shown remarkable political stability. President Ould Daddah, who is secretary-general of the only political party, has successfully achievecl a certain national unity and has been able to settle the dispute with Morocco. Unforttnately, vital political goals have at times come into conflict with economic priorities, and, as a result, political considerations have outweighed econornic reasoning. This is shown, for example, by the high percentage of police and security outlays in the current budget, the expensive bilingual educat:Lon system, and the uneconomic orientation of transport. iii. As a member of the West African Monetary Union, Mauritania shares a common currency and a common Central Bank with six other francophone countries. Although a member of the Organization of Senegal River States and the West African Customs Union, its general policy has been to foster economic independence rather than to integrate its economy with its neighbors. Relations with France are good and French financial and technical assistance play an important role. As an associate member of the European Communities. Mauritanlia receives substantial aid from the European Development Fund. Eager to maintain its independent position, the country has established good relations with Communist countries and receives considerable aid from Mainland China. Adhering to a liberal economic policy, the Government has encoura2ed private investment, both foreign and local. iv. Mauritania represents an extreme case of a dual economy in which there is little economic interaction between the modern and traditional sectors. Thus, the rapid growth rate of the modern sector has had only slight lmpact on the traditional sector. The accelerated expansion of iron ore production after 1963 led to a growth rate in the modern sector which averaged more than 14% p.a. at constant prices between 1960 and 1970. In contrast, the traditiDnal sector expanded by less than 3% p.a., mainly as a result of increased livestock production after a successful eradication of rinderpest. In 1969 the modern sector produced two thirds of GDP, but, since 15-20% of GDP leaves the country in the form of investment inrome and other transfers and remittances abroad, it accounted for only 55% of GNP. The mining companies, however, do provide about 25% of nubhli revenues Total GDP has increased at an average of 9.2% p.a. during the past decade; but during the nast five vears; at an average of 6%= Thin average may be compared with an average increase of population of 1.8-2.0% p.a. Per capita - ii -

CNP In the modern sector is approximately ten times 2reater than that received by the traditional sector. Total GDP reached an average of $148 per canita in 1969, while ner canita income in the traditional sector was only $50. v. The expenditure pattern of GNP is greatly influenced by the mining sector. Ouer t-wn t-hircd of total investments were for directly nroductive purposes, the bulk of it in the private sector, which provided the base for fast economir growth. Tn 1968 when investmentts in connper minin! were high. total fixed capital formation reached 33% of GNP - an extremely high rate a verv c2rowth of national fnr ___~~~~this r-'lontrv Howeveor des.cnite- - I_ - - - _- _ - -- I satisfactorv------I - - - - savings (2% to 13% of GNP between the years 1960 and 1969) and including a substantial amou"int- of savings I-n the traditional sector in the form of increased livestock herds, a resource gap resulted. This gap, amounting to 20% of GNP, was covered bya lgh inflow of private capnital,

vi. Foreign trades. ,.Fo greot importance - iml-trt sn DenortS too-nPt-hpr exceed 80% of GDP. Over three fourths of exports consists of iron ore; and al. ,ost 15%,-of livestock- on the lioof. In 1968, over 40% of Mauritania'sim ports consisted of investment goods. Imports of foodstuff have declined in absolute te-rms over the last decade. The balance of paymentsa showed a iih- stantial deficit in 1968; an increasing surplus on the balance of goods and services Ws Offset iy a high outfilow of factor paym.ents and private rem-t- tances not entirely covered by public and private capital inflow. The sharp growtil hAL Uanbal. creduLts to LtLhe pri.vatLe sectLor, stlrimulated by the 4-lt-s 4n direct imports after the opening of the wharf at Nouakchott and a fall of trans.it tradUe thro-ugh Senegal, has contributed to LtLLe deficit. W.4i the completion of investments in copper mining and the start of copper exports, tLe buaLance of payr.ets over tlle rLext Lw years can lue expected to lmprove again and will probably be about in equilibrium. vii. Mauritania has three major economic potentials: mining, livestock and lisning. Ine mining sector is entirely LLL LLnth hiLLU V .LoWf forelgr. lL the MIFERMA iron ore company which started production in 1963, and the SOMIMA copper company wnich will start production in the autumn of 1970. The start of copper production and some expansion of iron ore output will make this sector expand at about 10% per year up to 1975, or soUmewhat s'LUwer than over the past five years. Although this is still a satisfactory rate of growth, mining's overall impact on economic developmentL Wll remaUin 5UIdX Z .LL&Lr nearly half of its value added is transferred abroad and since the mining companies employ a limited number of Mauritanians. viii. Livestock production has expanded at about 55%per year over tne last decade mainly as a result of the rinderpest eradication program which was carried out with FED financing. Future growth, however, is seriously hampered by the lack of current budgetary allocation for livestock development. This creates the danger that past improvements in sanitary conditions will be lost again, as has happened to many investments in wells and firebreaks which have become unusable due to lack of maintenance. Expansion of - iii -

animal nealth programs to include eradLcatioin oF othier Uiseases and recon- struction of wells and firebreaks is a precondition for maintaining a satisfactory level of growth in this sector.

ix. Fishing is the oniy major known economic potenciai stiii largely unutilized. Although fishing grounds along Mauritania's coast are among the richest in the world, little has been done to exploit them. Tne only sericus attempt to create a national fislhing fleet failed in 1968 due to poor management and insufficient financing. Since then, the Government has encourageci foreign fishing in territorial waters to supply local processing plants which have been reorganized and expanded. As a result, tish processing in Nouad- hibou (Mauritania's only natural port) increased at such a rate that by 1970 the fishing port had become too small and now forms a serious bottleneck tco further expansion in this sector. The Bank is presently studying the possibility of improving and enlarging port facilities in Nouadhibou, one of the high priority projects in the country. x. Due to insufficient rainfall, agricultural potential is very limited, although some possibilities exist for irrigated crops along the Senegal River. The Gorgol plain seems to offer the best chance for irrigation, and, after the UNDP-financed study is completed, an economically justi- fiable project might emerge. Construction of small and simple irrigation works along the river for rice cultivation, financed by FED, seems marginal. and requires additional experience. Expansion of upland cultivation of millet and groundnuts is possible in the most southern region of the country, but is limited by marketing difficulties.

xi. Transport is a major problem in such a vast and sparsely populated country. Political considerations often weigh more heavily in this field than economic reasoning. This is demonstrated by the policy of concentrating imports through the wharf in Nouakchott, despite higher cost, which led to the decision to build a direct road through the middle of the desert from the capital to the eastern part of the country. Meanwhile, the road situation in the densely populated Senegal Valley remains unsatisfactory. Public utilities and urban development demand a substantial share of future investments. ltowever, care should be taken to improve living conditions in secondary centers and not to concentrate all resources in the capital and Nouadhibou. A shift in emphasis may slow down migration towards the latter two centers - a movement which might otherwise lead to serious social and economic problems. Regionalization of secondary education whiclh will increase the attractiveness of secondary centers is a step in the right direction. The extremely high costs of the present education system, however, are a serious handicap for the much needed expansion of modern-type education. Moreover, ways and means ought to be found to create a meaningful education system for the bulk of rural children who will not go on to higher education. This will require a good planning unit for education. xii. Future economic growth will be greatly determined by what action the Government will take in the fishing and livestock sector. Without determined action in these two fields, it is estimated that the growth of GDP will average 6% p.a. up to 1975. On the other hand, it could reach 9% - iv -

p.a. if growth potential in tishing and livestock is better exploited. While under the low assumption, growth would fall slightly below the level of tlle past five years, it could exceed this level under the highier assumption. Growth would be high in fisheries, mining and fish processing industries, while in livestock, it would not exceed 5%' per year under the higher assumption, since the impact of a livestock project on output would necessarily remain small during the first few years. Since private investment is expected to fall by almost 50% below its exceptional 1968 level, while national savings continue to grow, the national savings gap is expected to narrow to 1-3% of GNP~-by 1975 with private savings exceeding private investments by a small margin.

xiii. After several very difficult years following independence, the public finance situation had substantially improved by 19,65 and some current budgetary savings were achieved in 1965-68. The start of iron ore exportation and rapidly growing imports, together with four years of strict budgetary austerity, caused this improvement of public savings. Unfortunately, the austerity policy severely reduced outlays for rural development and public works, and within these sectors for materials, supplies and general maintenance. Thus, in this period, there was a sharp deterioration of public services in the rural sectors and insufficient maintenance of public infrastructure, while current expenditures for security and defense, as well as for social services, continued to grow. A change in prior-ities in current budget outlays is thus urgently needed; rudimentary public services and lack of maintenance in the rural sector represent not only a major handicap for economic growth, but make it impossible for foreign aid donors to intervene in these sectors since there is no administrative structure on which to build projects and there is serious danger that projects will not continue once foreign aid has come to an end.

xiv. Sharp increases in current expenditures in 1967 and again in 1969 led to a sudden deterioration of the public finance situation. In 1969, a substantial current budget deficit occurred and the 1970 budget makes another serious deficit very likely. This deterioration is even more serious, since (without a change in tax structure and tax collection) revenues w.ill 1ikelv inrrease more slowly than GDP over the next few years. llTis is anticipated because copper production will yield little revenue during the first few yearsQ whilp an expected decline in imnorts (associated with lower investments) will reduce growth of customs receipts. On the other hand, curre-t budget ou,tia-s for m,aoterials and maintenancp as wpll sq for ruiral services should increase. Without determined action in the tax field, little public savings can be expected until 1975; this would make it diffiui1t for the Government to service even the existing foreign debt, not to speak of m-ak-ing a contributior. towards new publie4 investments.

x-v. r-vern£ICI a4 roug..LUsL assessmlen-t o.u± actual4 U4; tax@ efforts" 8sh,W*s**o ... atF it wil-l41 be possible to increase government revenues by at least 10% (CFAF 1 billion) in 197J, above the level to be reached by normal growth, without creating an unduly high tax burden, if tax structure and collection of taxes are improved. For this purpose Mauritania imay require technical assistance from bilateral or international aid agencies like the UNDP or DiF. Under the high assumption of GDP growth, public savings (net of debt amortization) Could average rGFVAF V blinnh-06 ner var upn to 1975. while under the lower growth assumption net savings would average about zero. xvi. To counterbalance the expected fall in private investments and to ni' 4 anvn sat4if#atnrn econni-cr ornwth the Tnmininn psrtimater that a nublic investment program of about CFAF 4 billion ($14 million) per year, will be necessary beT-reen.n 1071 c"d 1Q75. Th4E f4Oiurn- greas rungihlv wit-h the n Pw Development Plan, covering the years 1970-73, with which the mission is gen.erally 4in agreem,.ent. External aid (lvnorecr ton incrran alicht1lv) mi gF t average CFAF 3 billion (of which CFAF 1.7 billion grants), thus leaving a gap of£ rrAVA t bi41 40n per .ea-r, t- be f4nanced by domest4ic sourcen or sup- gap lm~ U.~L ULL.LL F~A ,Y . t .1- *J plier credits. Under the low GDP projection, it will not be possible to cover this gap without soon caWinng u,nmasmnageble A Aht problehmT Consequenrt- ly, in this program of CFAF 4 billion could not be under- case an investment 4 talken. UJ.nder the ri,GI'P -rat,h -r oe-t4a, vAhr4 nprmits- mnotn nf t-ha CrAF *, ULLC -LAI Lt .*L W.*- 5 -' . e -J - - t- -~------.. 6 1 billion gap to be financed by public savings, a CFAF 4 billion program can .9SC .-.1 Carar. 4A-4-ia a 1m4A-avA anin.nIt-o ^f ajnnJnlor U earri …4crrLe.AoUUL t LL .L LoreAgn aid - Lt.L 0Lm.. 1 ted aorher of suplie credits - is on concessional terms. However, even then, public debt service 4 wou-l r.se to 108% of current budet revenues and over 80Z% of p-blic savins in 1975, a proportion which would seem very high. xvii. To allow implementation of a public development program close to the size judged necessary, without creating serious budgetary probleirs, ex= ternal aid ought to continue to be on very concessional terms except for projects wnich will create no demand on Government resources. If Mauritania carries out an austerity policy including improvement of tax revenues and cut-backs on supplier credits, it will be creditworthy for concessicnal lending up to an aveTage of CFAF 1.2 billion ($4.3 million) per year over the 1970-W975 period, not including projects independent of tne budget. In view of its poverty, and the strong need for external aid - financial and other - to exploit its main sources of wealth, Mauritania deserves this type of assistance despite some serious shortcomings in fiscal performance over the past two years. xviii. The balance of payments outlook also requires tnat tne Dulk of external aid be on conicessional terms and that the use of supplier credits be reduced. IJnder thiLs assumption the mission projection shows an overall balance close to equi;Librium in 1975 and an external aid inflow of CFAF 2.3 - 2.8 billion. Increasing exports of copper and fish and depressed imports of investment goods due to falling local investments will likely lead to a substantial increase In the foreign trade surplus. The improvement in the trade surplus will be only partially offset by increasing factor payments and private remittances abroad and by the expected increase in debt amortization by the mining comipanies. Service of external public debt will not exceed 3-4% of gross exports or about 5% of exports net ot transfers and remittanices by the mining companies. Substantial hardening of average terms of external public aidl, however, would likely result in some balance of payments deficits, but more seriously would exert a strain on the Government budget. - vi - xix. Even if foreign lending is entirely on concessional terms, public savings net of debt amortization will remain limited, and will not exceed 4-15% of the total investment program, depending on GDP growth. As grant aid and supplier credits demand little if any local contribution, Mauritania could contribute at most 30% towards the costs of projects financed by external credits, which may on the average be well below the total local cost of such projects. lhus, external credits will need to cover a part of local expenditures particularly for proiects in the rural sector, which generally have a high local cost content. I. INTRODUCTION

A. The Country and the People

1. Mauritania is an extreme case of a dual economy. Two-thirds of its population is engaged in nomadic livestock herding which has changed very little over the past centuries, and another quarter are sedentary farmers deriving their meager livelihood from archaic methods of cultivation and fishing. Only about 10 percent of the population lives in towns and is engaged in the modern sector of the economy which consists primarily of two ultra-modern mining enterprises (iron and copper) plus some fish-processinig plants and public administration. Little, if any, interrelationship exisits between the traditional and the modern sectors of the economy which are not only separated by the usual psychological barrier, but are also geographic- ally distant. A rough approximation shows that average per capita GNP is ten times higher in the modern sector ($510) than in the traditional econoTmy ($52).

2. The sharp separation between traditional and modern world is due in part to geographical factors. The northern half of Mauritania's total surface of 1.08 million km2 is composed of pure saharian desert. In the center there is a belt of sub-desert (17 percent), while the south (30 pe:c- cent) consists of sahalian-type open forest and grassland. Except in a few scattered oases. there is hardly any traditional economic life in the saharian north and in the sub-desert, and even the most northern parts of the sahelian zone are marginal and only sparsely populated. Close to 80 percent of Mauritania's total population, and almost all of its traditional nonulation are concerLtrated on a belt of land (50 to 150 miles wide) alonp the country's southern border which accounts for less than 15 percent of Hai,ritnnia'q total Atirface. In this region. average annual rainfall of 200- 600 nm provides good opportunities for livestock and allows some crop cullii- vation, in pnart utilizing the nerrindir floods of the Senegal River which forms th-e country's southern border. While traditional economic life is t-hll heavilv ronnentrated in the south; all the renters of the modern economy are located in the north. Nouakchott, the capital, which is the most southern of thDea rPnt-Prq_-is alrreadv a hiundred miles north of the livestock zone, and the mining and fishing centers of Akjoujt (copper), Nouadhibou (fishlng) and 'Derlik. (iron ore) are located mitch farther north in the midi- dle of the desert.

3. Thle nature of Mauritania's modern economy is an additional factor that hamnavrz frui,ttfuil exchnnge hetween the two aertors, that is, mining operations have tended to keep a strong enclave character and to have lit-- tle impact on the rest of the economy- This nrohlem i9 fuirther aagravatedi by the country's very narrow resource base, human and natural, which make; 4tF A4 ff4eiv1tv f.vr t-he tiraAIt-fonAl aprtnr tn resnnnnd epun tn rho fow ctim,,lI1 originating in the modern sector. Limited rainfall, even in the most southern regions of M:auritania, severely limits the nur bher of crops that can be grown, while irrigation along the river is made difficult and expen- 4 Bive by hiAl&h fluct1ua-tions of 4t, water level.. Tfn nly a 0r c-ropI49 i-- -2 -

let, whic.h 's of llttle der.ar.d in the m.odern sector. Wi"th regardu to dates WLIl I.L1 £L UL L.ALLLJ U~cu LU £ 11 l LuU~1 ~ L L N.LI. L ~ 1U LU UL~ and meat, problems of quality have hampered sales in the modern sector whiiAchl' reLLn restr'LcteLU to sou,e vegetaules grown unduer irrigation, some meat, and limited quantities of fish. The few Mauritanians who have re- ce'ved a good, moudern-type euucation are almiiost all active in the modern sector, leaving the traditional sectors of the economy without any modern "caures.

4. Total population was estimated at 1.15 million in 1969, inciuaing some 10-15,000 foreigners, mostly French and Senegalese. Overall population density is iow, averaging 2.9 persons per square mile. In the saharian and sub-saharian zones it falls to 0.8; and, even in the most southern and most populated region of the country, population density does not exceed 18 persons per square mile. About 80 percent of total population is of Moorish (Arab-Berber) background and 20 percent of Negro origin. The Moors form the bulk of the nomadic population, while most of the sedentary farm population in the Senegal Valley is composed of Negroes who are also strongly repre- sented among the urban population.

5. Based on an urban census in 1962 and a sample survey of the rural population in 1965, an overall population growth rate of 1.8o o 2 percent has been estimated. Natural growth was calculated at 1.5 percent for the nomadic population, 1.9 percent for the sedentary tarmers, and about 3 percent for the urban population. The low rate for the non-urban population is the result of high child mortality in rural areas. Increasing migration from rural areas to the few urban centers has resulted in an 8 percent growth of urban population, while the rural population has increased by only about 1.5% a year. Although all urban centers are still small (the capital, Nouakchott, has a population of 25-40,000, Nouadhibou 20,0001 while all other towns have around 10,000 or less) continuous, substantial growth will soon create serious problems of employment, housing and infrastructure, and measures to reduce rural emigration ought to be taken soon before the problem becomes unmanageable. Providing better economic opportunities in rural areas, increasing the attractiveness of life in small towns, and regionalization of the education system are three important factors in this respect.

6. Population growth and the process of fast urbanization are not considered a serious problem by the Government. On the contrary, because of its low population density and the small market for locally produced products, an increase in population and urbanization has been considered a stimulus to economic growth and sedentarization is actively encouraged. For this reason, no family planning projects exist or are under consideration, while government is improving public health facilities, which account presently for 7-8 percent of total current budgetary expenditures, and is receiving substantial foreign technical assistance in this area. As the different growth rates of the two main segments of population are already a political problem, any attempt to artifically change natural growth would be politically highly sensitive. B. Political Situation and Recent Developments

7. When Mauritania achieved independence in November 1960, it was faced with three difficult political problems:

- Morocco's c]Laim on most of Mauritania's territory, sustained by an armed irredentist movement in the northern part of the country;

- tensions becween the minority and majority groups of the population;

- the tribal and feudal structure of Moorish society, which - reinforced by the vast distances and isolated conditions of the nomadic population - tended to preserve a good deal of tribal control and tribal separatism in rural areas.

8. Mauritania'Es start as an independent nation was therefore difficult, and it is a substantial achievement by Mauritania's political leaders - first of all P'resident: Moktar Ould Daddah - that national unity has been forged and serious divisions hampering development have been avoided during the past: yearEi. Although some of these problems have not yet been entirely overcome, substantial progress has been made in finding adequate solutions, including the recent reconciliation with Morocco.

9. However, successful efforts to strengthen national unity and to preserve the country's; independence have been very costly to Mauritania. As pointed out later, heavy public expenditures for the army, police and the bilingual education system are to be explained mostly by the political situation prevailing at the time of independence. Substantial improvements in this situation will hopefully make it possible in the future to give increased priority to economic considerations. The Spring 1970 Party Con- gress, which devoted considerable time to a discussion of the draft Four- Year Plan, seems to indicate a step in this direction. The difficult struggle for unity and independence has also led to a rather rigid power structure, with all important decision-making concentrated in the Party. This has caused increasing frustration in the younger generation technicians who, having returned from studying abroad with plans to gradually assume top civil service positions now held by the French, have little say in the Party. This is: a generation problem that is common to most African countries.

10. Since its retconciliation with Morocco, relations with all its neighbors are now satisfactory. liowever, in its aim to achieve increased economic independence, and despite its membership in the Organization of -4-

Senegal River'States (together with Senegal, Mali and Guinea), Mauritania has gradually loosened its economic cooperation with Senegal, first in the field of transport and very recently through the abrogation of the former customs union. Generally, the country has pursued an independent foreign policy, based on its geographic and cultural position as a bridge between the Arabic and Negro world, and on its aim to establish good relations with both the West and the Communist World. Although France still commands an exceptional position, and, together with the Common Market, provides the bulk of foreign technical and financial aid, relations with Communist countries are cordial and there is a substantial Red Chinese aid program. Relations with Spain are good and substantial semi-private Spanish investments were made in the Mauritanian fish processing industry. However, the question of the Spanish Sahara, that has been the object of extended dis- cussions among Morocco, Algeria and Mauritania during 1970, might lead to some tension between Mauritania and Spain.

11. Economic policies have generally been liberal, encouraging foreign and local investments. The only malor public intervention in the private sector concerns import trade, where a semi-public company enjoys a monopoly over a number of essential consumer goods. As a member of the West African Monetary Union, there are no transfer restrictions with France and other members of the Franc Zone, while restrictions with other countries are liberal.

12. Effective January 1969, Mauritania's administrative organization has been decentralized through creation of eight regions (plus the capital), which have enlarged decision-making power and each having its own budget. The aim to stimulate regional initiative in economic development was demonstrated also during preparation of the new plan which was discussed exten- sively on the local level throughout the country. -5-

II. STRUCTURE AND RECENT DEVELOPMENT OF THE ECONOMY

A. Overall Economic Situation and Past Growth (National Accounts)

1. Structure of the Economy

13. Mauritania's national account data is very sketchy because the underlying statistical 'nformaation is incomplete and partiaily or douDtful value. This is particularly true with regard to rural production and charLges in price levels, while the ausence of a nousenoia consumption study makes it difficult to estimate the use of resources. Therefore, all national accotnt data r,,ust be interpreted with great caution; it is generally based on the 1968 national accounts, although it has been changed considerably by the mission on the basis of other available information.

RqtSisntcri lmnynnnirinn of anP( antinf r.NP At fntotnvi r^t 4n GDP GNP

Total (in billion CFA francs) 47.0 38.6 Traditional sector

Agriculture 6% 7% iivestocrk 27% 34% Other traditional 3% 4% Total 36% 45%

Modern sector Mining (iron ore) 31% 19% Manuf./constructlon/m.od. f1shing 11%v 19 Services 12% 13% Public administration 10% 11% Total 64% 55%

/1 The traditional sector in Mauritania cdoes not necessarily mean the autoconsumption or non-monetary sector. For many years, a significant number of livestock producers, for example, have been receiving cash in payment for their output.

14. The economy of Mauritania is based primarily on two sectors, iron ore mining (wnich started in 1963) and livestock raising, which together account for over half of total domestic and national product. Except for traditional agriculture and fishing (accounting together for less than 10%, of GDP/GNP), all other economic activity in the country is closely related to and dependent on the two leading sectors, for which they tulfiil auxiiiary functions. Over 70% of Mauritania's total working force is active in the two leading sectors which produce close to 90% of total exports. Goncentra- tion of economic activity in only two sectors reflects the country's limited resource base which consists almost exclusively of minerals and livestock, except for the considerable fishing potential which has not yet been adequately utilized. - 6 -

15. Since mining - which is entirely in the hands of foreign companies (in fact, the MIFERMA iron ore mine alone has produced almost one third of Mauritania's total GDP sinre 1965) - generates a high outflow of factor payments and private transfers, its contribution to GNP is substantially lower than that to GDP-; and, for the countru as a whole, GNP is about 20 percent smaller than GDP. Accordingly, national per capita revenues ($120) are smaller than domAestic per capita revenues (1A8).

16. Thuc, Maurit-ar.a's economy can be characterized as having (1) a foreign-owned, ultramodern and dynamic mining sector, which provides only limrited employment opportunities and transfers half of its value added abroad; (2) an archaic livestock sector, where the bulk of the population is engaged; and, (3) a 4.4or econo.ic potential, I.e., ocean fishing, wliich is not being exploited.

2. Past Growth of Production

17. During the past ten years, Mauritania's overall economic growth has boeen very satisfactory. GDPJ at r.arket priaces has 4ncresed from - estimated CFAF 16.7 billion in 1959 to CFAF 47.0 billion in 1969, or, at an average rate o 11% p.a. at current prices and 9.wo2 at co.stant prices. Despite substantial growthi of factor payments and private transfers, GNP grew at an a of 7I. at constanLt prlces and national per capita incomes at constant prices have increased by over 5.5% per year.

Average annual growth at constant prices GDP GNP Rural Mouerni ural Mode.,. sector sector Total sector sector Total

1959 - 64 3.8% 20.9% 12.5% 3.8% 15.7% 9.6%

1964 - 69 1.4% 8.4% 6.1% 1.4% 8.2% 5.4%

1959 - 69 2.6% 14.4% 9.2% 2.6% 11.9% 7.5%

18. However, these averages hide substantial differences in economic growth during the first and second halves of the 1960's, as well as differences between the modern and traditional sectors. The average annual growth rate of GDP fell by more than 50% between the first and second halves of the last decade, as was also the case of GNP growth. This decline reflects a slower growth in mining output after 1965, when MIFERNA reached its normal production level; and, to a smaller extent, it reflects a period of exceptionally bad rainfall during the last two years ot the decade which led to a fall in rural production. Equally significant is the marked difference in growth between the rural and modern sectors. The impressive development in the modern sector has benefited only a small minority, while the much slower growth rate in the traditional sector has affected 80-90% of total population. However, even in the rural sector, growth was not negligible. Excluding the two drought years, 1968 and 1969, rural output increased at an average of 4.3% p.a. (1959-1967) which is no -7-

small achievement for a rural population estimated to have grown by 1.5% p.a. net of migration. This increase reflects, to a large extent, the use of foreign aid to improve the health of livestock during the past decade. Considering the entire decade, growth of per capita national income was much lcwer in the rural sector (1.1% p.a.) than in the modern sector of the economy (3.6% p.a.), although it might well have been equal or slightly higher during the last five years, taking into account the different population growth rates. In all events, rural incomes seem to have increased faster in Mauritania than in neighboring Senegal, although the absolute level still remains much lower (approximately $50 in Mauritania, compared to $80-100 in Senegal). reflecting mainly the better agricultural potential. in Senegal.

19. Development in the modern sector was very fast during the 1959- 64 period when the MIFERMA iron ore mine started production, but during the last five years it has hardly kept up with the estimated growth of urban population. Although the situation in Mauritania is not as serious as in Senegal (where average urban incomes are expected to fall over the next 5-10 years, as the population in towns increases faster than economic growth), the rate of economic growth in the modern sector over the past 5 years has fallen so dangerously close to the estimated rate of growth of urban population that future developments ought to be watched very carefully by the Government.

20. Public admninistration exnenditures increased ranldlv until 1964, but has stagnated since then due to the phasing out of French military exnenditures in Mauritania and to a smaller ettent s a reaiult of t-he fall iT! public maintenance outlays. This decline was not entirely compensated by the steady increase in Government salarv navxent-s

3= ronsnmntin;n TnuPvQtment-s and Rau-finaa

Expenditure Accounts of GtNP

1959 19Q6 1968 At current market prices Total GNP 100% 100% 100% balance of trade and services 5.6% -2.8% -1.6% ( - = surplus) Total available national resources 105.6% 97.2% 98.4% Consumption (private aLnd public) 98.1% 94.4% 86.7%

InvestmentS 11.9% 21.6% 333/ National savings 1.9% 5.6% 13.3%

Savings gap 10% 16% 20% 21. High investments in. modern industries, the SOMIMA copper mine (starting production in 1970) has raised investments

it, a lve l no-raalyW**v.U L a , aat ta.t,,t.i.*i *.ed ti,.. VC VZ U y LU ... a small economy like Mauritania, one or two big investment projects can in

La.c. the expeniditure Fpatteln of GNP for a certain period. More important than this temporarily high investment rate is the continuous iLncrease lin nation.al savings as a result ol growthin per capilta inco.ein the traditional and modern sector; national savings have been estimated

at a highL 13- .3% o1-l GNP in-nf 196 publi,ULA_L.4 ±±L 3.1%II /. L.Lrdtoa CZUA.L..LJU&iAj. _ I pA..L~vaLprivate44 - L d.LL ±_ LL a.. J/ UL I. 3IX LJI I 7UiJ iL '-' .11 .- 1 .J. 6 sector, 7.8% modern private sector). As a result of increasing iron ore exports, thle bua'Lance of Ltradue andU serv.Lces hias shown. a surp.Lus since 1964, which is balanced to a great extent by the increasing outflow of factor payments and private trarns fers ma'nly originating in,the mnlng sector. Con- sumption has not increased as fast as GNP and its relative share has somewhat declined. Nevertheless, per capital consumption 'n-the private sector increased by 10% per year during the first half of the 1960's and by 3% afterwards. Public consumption stagnated between 1964 ana 1968 with an increase in Government consumption compensated by a fall in foreign public consumption in Mauritania.

Average Sectoral Distribution of Gross Fixed Capitai Formation (1963-67)

Total billion Agric/ Fish- Mmn- Transport in- social Serv- CFAF Livestock ing ing frastructure ices,Housing % Average per year

Public In- vestments 14.9% 12.3% 3.3% 30.1% 39.4% 100% 2.0

Modern Pri- vate Invest- ments 0.6% 17.0% 62.0% - 20.4% 100% 4.6

Traditional /1 Investments - 85.3% - - - 14.7% 100% 1.5

Total 20.4% 12.6% 35.7% 7.4% 23.9% 100% 8.1

/1 Savings in the traditional sector, as estimated by the mission, comprise increases in livestock populations and traditional home construction. They are by definition equal to investments in these sectors. -9-

22. The sharm growth of Droduction during the last ten years resulted not only from the high volume of total investments, but also from its very nroduction-oriented nature. This was not so murh the result of a deliberntte government policy (in fact, few public investments were directly productive, and where they were planned to beh like in the fisheriea sector, produced little tangible results), but was primarily due to the fact that the bulk of investments (over 75%) was carried out yh the private sector, most of it by MIFERMA, but substantial amounts also by the traditional sector, where impruoed san ita ) cnditlonn entaaied an incree of cattle p

23. Financing has generally not been a limiting factor. In the pub].ic sector, commitments of foreign aid donors have exceeded actual disbursements while a.ll major projects in the private sector were fina.ced b'y fLoreiLgn private capital or by traditional savings. Over the last five years, about .wo th.irds of total investu,ents were financed buy fLoreiLgn sources (o-ver 90L/ in the public sector, under 60% in the private sector), sligntly less than one tiJrJLb by nailonal savings, aid uy a fall ilforeign exchange reserves. In the public sector, investments were limited mainly by absorptive capacity Ln planning aniu executiLon; iLn the prLvate sector the main bottleneck was the limited resource base of the country which curtails opportunities for profit- able investments, but also by t'ne absence of qualified entrepreneurs. The latter factor is the main reason for the unsatisfactory development of Wishing, the country's third major resource base, and. for the fact that a substantial part of past investments in this sector has been lost.

24. During the 1963-67 Development Plan, public investments reached only 61% of total planned investments of CFAF 13.6 billion, despite foreign aid commitments of almost 105%. On the other hand, private (modern) investments exceeded Plan estimates by 30%, so that on balance, the planned investment volume of CFAF 27.8 billion was almost exactly reached, although with a quite different composition than originally planned. The most serious deficiency in public investments occurred in agriculture and livestock (50%), - areas in which the Government will have to play a more important role.

B. Foreign Economic Relations

1. Foreign Trade

25. Foreign trade has always been important for Mauritania's econonr7. Even in 1959, when the economy was still overwhelmingly traditional, imports and exports combined accounted for 60% of GDP, and this proportion has exceeded 80% since 1964. The relative importance of imports and exports has changed with the beginning of iron ore exports in 1963 and a corresponding fall of imports of investment goods, leading to a change in the balance of trade from a substantial deficit in 1959 to a near balance in 1964 and a considerable surplus in 1968. - 10 -

Relative Share of Foreign Trade in GNP

1959 1964 1968

Exports 19.8% 41.1% 46.1% Imports 41.3% 40.8% 34.6%

Total 61.1% 81.9% 80.7%

26. Prior to the end of January 1970, Mauritania had formed a customs union wi S enegal an;l trade between tl:e two countries (or. trnanitin through one of them) was neither taxed nor recorded. Except for Mauritania's exports of iron ore andu sea fs.h that are shpped through the port of Nouad- hibou, foreign trade was only very partially recorded so that all statistics n been comlprise a sub stantLa'L ar,iount of g u ess work. ThIe custom. unior hwas replaced by a trade agreement that foresees duty-free exchange between the two countries for most of t'he traditionally Lralued goos, but allows Mauri- tania to tax all goods of third country origin imported through Senegal. This change - undertaken itt Maurtania's request and for fiscal reasons - will somewhat reduce Mauritania's purchases of miscellaneous consumer goods in Senegal. Maurtanila is also a mem.Lber of the West African Customs Union (UDEAO.) which provides for a 50% preference on all import levies for intra-union trade. This membershlp has a limited impact on Mauritania's foreign trade, as has the country's status of an associated member of the European Communities, since its exports consist prlmarily of non-taxed or low-taxed raw materials and livestock on the hoof. Future expansion of fishing, however, may profit from Mauritania's associatlon with the EC.

27. Traditionally, Mauritania's exports were composed maInly of livestock exported on the hoof to Senegal and Mali and to a small extent to Ivory Coast and Ghana. Secondary export crops were gum arabic, dried and salted fish, and some hides and skins. Since MIFERMA started production, iron ore has become the most important export product, accourting for over three quar- ters of total exports in 1969, while the share of livestock has fallen to an estimated 15%; the remaining 10% consists primarily or fish and gum arabic. About 80% of total exports go to Europe, where most of the iron ore is sold; 17% to African countries, primarily livestock and dried fish, and 3% to the rest of the world, mainly iron ore to Japan. In 1969, the United Kingdom was the most important purchaser of Mauritanian goods (21%), before France (18%). The August 1969 devaluation of the CFA franc (12.5%) is not expected to have much influence on Mauritania's exports in the short term, but increasing prices for iron ore (expressed in local currency) might have an influence on MIFERMA's long-term plans to expand production and export of lower-grade ore.

28. Imports have fluctuated widely over the past ten years, depending on the big mining investment projects. After an increase from CFAP 7 billion in 1959 to CFAF 18.5 billion in 1962 at the peak of MIFERMA's investment period, they dropped to under CFAF 14 billion in 1964. Investments in the SOMINA copper mines brought imports in 1969 back to the peak level of 1962. - 11 -

Ld.9 29. W±LWiWih oveUVM& 4()9tlJ ercer,t ofJ tCotalLS O i.prs,recorded,Ij.L O Il-ALtA ~ import-.UJJ-ALCU U compos-JLUFJO tion and countries of origin are difficult to estimate. In 1968, a year

UJo sUUb Lstantdl 1IdILLiL[g LLIVe^stments, iLmportsL LO UP cp LAt- 1..Lp-1-L-L --- C0-1 struction material exceeded 40 percent of total imports; foodstuffs reached almost 30 percent; petroleumn products, 10 peLrcen; and finisLLed consulmer goods, :20 percent. Despite increasing industrialization, the total value or food imports stagnated at constant prices over the past tein years, aid has decreased on a per capita basis. Increasing local production of livestock, fish and millet, as well as the departure of the French army, may explain this. France remains the most important supplier of recorded imports but its share has declined from 54 percent in 1964 to 42 percent in 1969, while imports from other EC countries, the United Kingdom, the United States and Japan have increased. Imports trom EC countries are liberalized while imports from other countries are subject to import licerns- ing, which, however, has become tairly liberal. France's position as the most important supplier is based primarily on long-established trade rela- ions and the importance of French import-export companies in Mauritania. However, the virtual monopoly which French companies enjoyed in the import: trade for a long time has been reduced by the creation of SOMINEX, a semi- public import company which started operations in late 1966. Over the years, it has been granted a monopoly for imports of various essentials like sugar and tea.

2. Balance of Payments

30. Official balance of payments data cover only transactions with countries outside the franc area. Based primarily on the national account: data for 1959, 1964 and 1968, the mission has compiled rough balance of payments estimates for these three years which provide a fairly accurate picture of the changes that have taken place in the Mauritanian economy over the past ten years. Considering that foreign trade data can only be approximated, whereaEs capital movements are fairly well known, errors and omissions are considered a current item. - 12 -

Balance of Payments Estimates (in billlJon of CF,A Francs)

Exports3. 138 20 L~ I1) -)1-7 Ir,.ports 6 13.7 15.8

Dalance of: services +23 -. 6 =.

Factor paym,lents an' private remL,ittances -0.7rl '7r0 -,.3 -8.1I

Net errors andu OmLi[ssiLons[.4 1.3

Total current account -1.6 -4.5 -7.5

Net public capital (incl. transfers) 2.3 2.4 3.5

Net private capital -0.7 1.7 3.0

Total capital account 1.6 4.1 6.5

Change in reserves n.a. -0.4 -1.0

31. The balance of payments is characterized by an increasing current account deficit, not entirely covered by the inflow of foreign capital. While the balance of trade and services has substantially improved with the beginning of iron ore exports, the corresponding sharn increase in factor payments and private remittances has more than offset this improvement. Part of this outflow. however, is coming back into the countrv in the form of reinvestments of MIFERMA's profits. These funds, together with capital imnorts by SOMIMA. resulted in an excentionallv high nrivate capital inflow in 1968. Public capital inflow (including technical assistance) has steadily increasped

32. AR reQilt nf thp -ipfflrit in the ornll bhalnee nf navments in 1964 and 1968 (the three years in between did not show a deficit), Maur- itania's net foreign exchange reserves have declined by over 50 p four years. In 1969, they fell by another 80 percent and stood at only CFAF 0.3 billion at the end of that year, covering less than a quarter of one month's imports. However, Mauritania's membership in the West African LMAlonetary Union I TU'O AN -ubstntia..y softens the* conseuence no..lyL follow the running down of foreign exchange reserves to virtually zero.

I U UscusseLu beluw inthZe cuoLLexL uo uverall monLetLaLry UeveLopmiientLs, tLhe two years with considerable balance of payments deficits might have been exceptional; foreign exchaiange holdings have in Lfact substantially 'ncreased again during the first half of 1970. - 13 -

C. Money and Credit

33. As a member of the West African Monetary Union (UMOA) Mauritania shares a conmion central bank (BCEAO) and a co--non currency (CFA Franc) W-iL' 8ix other francophone countries. Convertibility of the CFA franc into French fLrancs is guaranteed uy automiiatiLc overdraLt facilities with the French Tresor at a fixed rate of CFAF 1.00 = FF 0.20. Monetary relations between Ielmlb'ters of the Union and the outsidLue world depend on the overall reserve position of the Union (which has always been excellent) and not on each memlber's individual foreign exchange position; this means that even member countries with negative foreign exchange holdings have access to all foreign exchange they reasonably need and are not rorced (in fact, they are not allowed) to impose foreign exchange restrictions. All monetary transactions between members of the Monetary Union and with the rest ot the Franc zone are free, while transactions with countries outside the Franc zone are subject to the same limitations as applied in France.

34. Main policy tools of the Central Bank, which has a branch oftice in each member country, are changes in rediscount ceilings which are fixed semi-annually for each country based on recommendations by the local mone-- tary committees taking into account the overall reserve position of the Union, the position of the respective member country and what is considered its reasonable need for credit. Credit is further limited in the public sector by restricting advances to the Government to 10 percent of last year's tax revenues (a facility whichi Mauritania has never used), and, in the private sector, by rather severe qualitative requirements to become eligible for rediscount. Different from other member countries however, the qualitative requirements have not excluded Mauritanian businessmen from access to rediscount, and many traditional traders make substantial use oE short-term bank credit. The rediscount rate is not used as a policy inst:ru- ment and has been kept at 3.5 percent since establishment of the Union. This low rate, which is instrumental for the low level of interest rates throughout the Monetary Union, has recently created a danger of speculative outflow of capital into the higher interest markets in France. This problem is watched carefully by the Central Bank.

35. In addition to a local branch of the Central Bank, the banking sector comprises two branch offices of the French BIAO, a local commercial bank with predominantly French shareholders (SMB), and the semi-public development bank (BMD). While the two commercial banks make no long-term and little medium-term credit, BMD was established in late 1961 to provide the economy with long-term capital.

36. During the past eight years BMD has unfortunately not lived up to expectations and has had little impact on economic development as it was unable to find sufficient well-conceived projects. This produced three negative results: a) total lending remained very small (CFAF 1.3 billion in almost eight years); b) over one third of it was short-term, including a substantial amount of consumer credit, which is in contradiction to BMD's established goals; c) several credits were for doubtful projects, resulting - 14 -

in heavy losses, that had eaten up an estimated three-fourths of the bank's total capital by the end of FY 1968/69. Losses occurred in agriculture where credits had been extended in connection with an animal ploughing scheme in the Nema region, in fishing and in manufacturing. While BIND cannot be blamed for all of these losses, the insufficient volume of busi- ness of the kind for whlich the bank was established is difficult to overcome and raises seriotu doubt whether it would not be better to incorDorate BKD into one of the existing conmercial banks.

Development of Main Monetary Factors (in billion of CFA francs)

End of year situation 1962 1964 1966 1968 1969 1970 (June)

Net foreian assets 3.2 2.7 2.7 1.6 0.3 n-.

Lending to private sector 1.2 1.3 1.4 4.0 5.1 5.9

Private deposits at banks 0.7 0.9 1.9 2-8 2.9 3.3

Piublic deposRitsq at banks 1.7 1.2 0.8 0.9 0.5 0.7

Currency outside banks 2.0 1.7 1.2 1.6 1.8 10

.,, . Mor.eta developments d gL.LI pLaU L deceUte hvLA I Lign UUrLo iw very distinct phases. Until 1966 the overall situation was generally in balance and static except for a sharp increase in private deposits, cornpen- sated by a similar fall in public deposits. As deposits exceeded lendings, the banks iLnvetedU a s Lubstantialpart oLi thei r fi unds abroad. aILLiS situation changed markedly after 1967. Total lending to the private sector quadrupled within 3- 1/12 years and despite a continuous substantial increase in private deposits, the,relationship between lending and deposits deteriorated considerably. Wnile in 1966 deposits had still covered 190 percent of lendings, the ratio fell to ^2 percent in 1968 and 67 percent in 1969, which forced the banks first to reduce their holdings abroad and then to make increasing use of Central Bank rediscounts. At the end of 1969 almost 27 percent of lending to the private sector had been rediscounted, compared to 8 percent in 1968 and virtually zero before. As a consequence of the widening gap between lending and deposits, foreign assets declined to almost zero at the end of 1969. However, by June 1970, foreign reserves had slightly increased again (despite further sharp growth in lending to the private sector) as a result of increases in private and public deposits and the receipt of half a billion CFAF of special drawing rights.

38. The continuous growth of private deposits is in line with the increase in economic activity in the modern sector and the growth of national savings and thus can be expected to continue, although the sharp increase - 15 -

in bank lending to the private sector between 1966 and 1970 might slow down somewhat in the near future. It can be explained in part by the changing pattern of import trade after opening of the wharf at Nouakchott (June 1966) and the start of SSONI MEX operations (October 1966). These -wo events have. resulted in an increasing amount of imports carried out directly by trading complanies located in Mkaur4tania, while b~efore I ~ 2~& la .1 L LIA. .LE UL UL~ I1967,1 7 v theLiA LUL&bul'- of0. `auritanila.'sWU1 L4L1LiX_ . imports (except for MIFERMA) transited through trading companies in Dakar. Under th.e old system, the Mauritanian importer, who purchased hnis goods in. Dakar financed his purchases through Senegalese banks or his Senegalese supplier, so that these credits were not recorded in the Mauritanian monetary statistics. Direct imports are now financed through banks in Mauri- tanla. The fall in foreign exchange reserves is thus more apparent than real, as it results mainly from a shift in foreign indebtedness from a o-L., excluded from i0onLetary statLstLcs to one included in tnese statistics. In 1969 and 1970 increasing activities in the fishing industry contributed to the expans'ion of short-teru credit since several of the fast expanding fish processing companies are not in a strong financial position.

D. Prices, Wages and Employment

39. High child mortality and a relatively low rate of growth account: for the high share of active population (52 percent of total population) which numbers about 600,000 people. Of this total, an estimated 400,000 are engaged in nomadic livestock herding, 150,000 in agriculture and less than 50,000 in other sectors. Only about 20,000 persons (3 percent of the active population) are salaried employees, of which about half are employed in public administration, one fourth in mining, 15 percent in construction and less than 10 percent in all other sectors of the economy,

40. The proportion of non-Mauritanians in the hired labor force declined in 1968 to slightly under 30 percent in the private sector and 10 percent in public administration. However, foreigners still held about 8S percent of all managerial and supervisory positions, and despite increasing pressure by the government, Mauritanization lhas been necessarily slow, due to the limited number of adequately trained and experienced nationals. This has led to some contradictions in the government's position; on the one hand, government tries to speed up Mauritanization in the private sector but, on the other hand, complains when the private sector hires away highly quali-- fied Mauritanians, which are desperately needed in public administration. As pointed out clearly in the Education Annex to this report, there is little chance to increase Mauritanization of management positions over the next decade, since the output of qualified nationals will hardly suffice in satisfying the increasing needs in the public sector. With regard to both skilled and unskilled labor however, increasing efforts by the private sector to train its own labor force will hopefully reduce foreign employment.

4i. Total wage and salary payments will reach CFAF 8-9 billion in 1970 (15-20 percent of GDP) of which about half will be absorbed by public administration, including technical assistance. Approximately 35 percent go to the expatriate labor force, which is estimated to transfer 30-40 percent of their salaries abroad. - 16-

42. Wages in the private sector are based on the guaranteed mLnimuu hourly wage (SMIG), which has not increased significantly over the past decade. It was kept unchanged from October 1961 until the end of 1968 and raised by 15 percent effective January 1969. However, after those of Senegal and the Ivory Coast, the Mauritanian SMLG (CFAF 41.30) is the third highest of the francophone countries in Africa. Civil servants' salaries have not been raised since independence except for a 5 percent cost-of- living allowance in 1965. Despite unchanged basic salary rates, real earnings, especially of lower income groups, have increased through up- grading and advancement. In the private sector, average monthly earnings rose by 25 percent between 1963 and 1967 and in the public administration a rough comparison between the number of employees and total salary outlays leads to the conclusion that salaries almost doubled between 1959 and 1969, reaching an average of CFAF 45-50,000 per month ($160-200) in 1969, or approximately the same as in the private sector.

43. The only available price index - the consumer price index for European type families in Nouakchott - has shown an average annual increase of 4 percent over the last decade which is not representative for Mauritania. With prices for livestock and iron ore stagnating, price increases in the entire economy have been substantially smaller, estimated at around 1.5 percent per annum between 1959 and 1969.

44. Government has discontinued its policy to sell essential consumer goods in all regions of the country at the same price by subsidizing transport to remote areas out of a special levy on road transport except for sugar, but, even with this good, substantial difficulties arise because Mauritania is a wide open economy where every price distortion leads at once to considerable uncontrolled trade across the border. 1/ General price control, imposed before independence, has been enlarged in recent years, and covers by now almost all goods. Although the mission does not consider these controls to serve any useful purpose, they have not done much harm, partially because prices are reasonably well fixed, but primarily because price control is largely ineffective. Prices of local foodstuffs still vary widely according to region and season (a problem that cannot be tackled by price control) and excluding a few major centers prices of imported goods are also virtually free.

E. Budget and Public Sector

1. Structure of Public Sector

45. The public sector comprises the central government (current budget- capita1 budgeti and over twenty special funds), eight regional ad- ministrations with limited budget autonomy (accounting together for roughly 10% of central government current budget) and a number of nublic and semi- public agencies of which the Post Office (OPT), the Social Security Fund (Ca4sse .,at-onale de Securite Sociale) and the ROMTNIRY impnrt oomnanv are 1/ In December 1970 (after the draft of this report had long been completed) the price equalization policy was partially reestablished through introduction of TIC and FIC (Taxe d'Intervention Conjoncturelle and Fonds d'Iintervention Conjoncturelle). the most important. The Government is also a majority shareholder in the Development Bank (BMD), the electricity company (MAURELEC) and in two fisheries companies (SOMAIP and SOMIP) of which the former is presently under liquidation while the latter has rented its fish meal factory to a private company and does not pursue any direct economic activity. The debts of these two companies, guaranteed by the Government, represent a substantial charge f'or the Government. While SOMIP ought to be able to service its debt out. of its own rental revenues, the SOMAP debt is being financed by selling fishing rights to foreign companies.

46. Including a].l special accounts, foreign technical assistance and foreign project aid (wrhich do not pass through the budget) as well as the SOMAP operation, almost half of the central government's total expenditures, current and capital, clo not pass through the budgets. 1/ Although 60% of these unbudgeted flows concern foreign aid, which is kept outside the budget in most francophone countries, there has been a strong tendency over the past years to create rnew special funds and to have an increasing portion of public spending takingt place outside the budget. This trend is very un- sound. It makes it difficult to keep an overall view of the situation and to have reliable budgetary control. As is shown by the increasing amount of unpaid bills (estimated at CFAF 500 million in early 1970), which were accumulated largely through extra-budgetary expenditures, budgetary control is not as effective as; it should be.

2. Central Gove!rnment's Current Budget

Central Goverrnment's current revenues and expenditures

(in billion CFA francs) 1960 1962 1964 1966 1968 1969

Revenues MIFERMA - 0.2 0.6 1.6 1.4 1.4 others 1.0 3.1 3.2 3.1 4.3 4.4

tota]. 1 A8; 4 -7 57-. 5.8- /1 CGirrpnt Exnpnndit,,rp - 3./ 4.3 4.1 4.4 5 3 6.5 Current Balance -2.0 -1.0 -0.3 +0.3 +0.4 -0.7

/1 Inc.l. unpaid bills.

47. During the f'irst eight years after independence the Government successfully improved the public finance situation, although it never achieved. its goal of using the MIFERMA revenues entirely for development purposes. By taking advantage of continuous substantial growth in the modern sector to incretase its revenues, and by applying very strict austerity measures on expenditures, the almost hopeless situation at the time of independence was turned around within four years, and between 1965 and

1/ Not taking into account the autonomous and semi-autonomous public enterprises. - 18 -

1968 the current budget nroduced a small surplts each year, averaging 6-7 percent of current revenues. This made it possible to renounce French current budget subsidies after 1963, although France continues to subsidize the Development Budget. However, most of this improvement was lost again in 1969 as a consenuence of two substantial increases in current expenditures in 1967 (+ 12 percent) and 1969 (+ 20 percent), exceeding by far the growth in revenues which had slowed down since 1966 beca-use of stagnating payments from MIFERMA. As a result, the 1969 current budget was again in heay. deficit and prospects for 1970 are not encouraging, despite very optimistic revenue projections, since the budget, as approved by Parliament, could be balanced only by shifting part of foreign debt servicing from the current to the development budget (which has no certain revenues).

48. The sudden deterioration of the current budget is especially regrettable since it is not due to iLncreasng expenuitures in sectors of high economic priority and has not led to a better composition of current expenditures. TrI fact, as successful as tne Government was in compressing current outlays for several years, it had little success in restructuring these expenditures in a more growth-oriented way.

Structure of Central Governmient current expenditures

In % 1960 1962 1964 1966 1968 by function:

GerneraL aul±inistLration and miscellaneous 48 44 34 33 30 AKrmLy and police 10 20 26 22 23 Education and health 22 19 23 24 26 Rural sector and planning 8 6 5 5 5 Public works and maintenance 10 6 6 7 7 Public debt 2 5 5 9 9

By types of expenditure

Salaries 49 48 57 57 56 Maintenance 6 2 2 2 2 Materials and Supplies 32 31 26 22 23 Transfers 12 13 10 10 10

49. Although Mauritania hias not excessively increased its general administrative expenditures, current outlays for internal and external security, as well as for education and health, are very high; they have increased from under one third to almost half of total current outlays. As mentioned before, the higlh expenditures on army and police were in part justified by the internal and external political situation which has pre- vailed over the past ten years, but, since this situation has now improved substantially; it ought to be possible to reduce them since they constitute a serious handicap for a more development-oriented current budget. 1W1ile increased expenditures for education can be regarded as strongly development- - 19 - oriented, the detailed analysis of Mauritania's education systefm, given irL. the Education Annex to this report, raises doubts as to whether these large amounts of scarce public funds are spent in the best way; that is, althouyh education outlays account for a high 19% of current budget expenditure, only 15% of school age children can be educated. Wnile the relative share of education outlays is one of the highest in francophone Africa, the percentage of children attending school is one of the lowest.

50. Since general administration, security, social services, and debt service together absorb nearly 90 percent of total current expenditure, little is left to stimulate economic development in the rural sector and to maintain public infrastructure. Rural sector credits, given by the Ministry of Rural Development and Planning, increased at an average of only 1.7% per year, or well below the price increases in the public sector, so that it is not surprising that these services have sharply deteriorated since indeperi- dence and are no longer in a position to fulfill their task, as pointed out in the 1970-73 Development Plan. This situation cannot continue without serious consequence in a country where almost 90% of the population derive their livelihood from the rural sector. Although thiis situation was temporarily hidden by the substantial efforts of foreign aid donors, primarily in the field of livestock, it has become more and more apparent during thE last few years. Equally disturbing are the insufficient budgetary funds for maintenance of roads, wells, firebrakes, and other infrastructure. As pointed out in the Plan documents, many of these investments have become unusablie or - in the case of firebrakes - have completely disappeared. Again, the rural sector has suffered most from these shortcomings.

51. Unsatisfactory sectoral distribution of current expenditures was accompanied by a preponderance of salary outlays and by insufficient allocations for materials and supplies. While this is similar in all francco- phone countries in Africa (but is very much different in other African countries) and can be explained in part by relatively high civil servant salaries, Mauritania is one of the more extreme cases. To keep total budget expenditures stable despite a continuous increase in salary payments, the Governm,ent substantially reduced outlays for materials, supplies, and maintenance between 1959 and 1966 and since then has increased them only slightly. As a result, total expenditures for these two purposes at current prices were not hicher in 1968 than in 1961 and have fallen considerably in real terms. One of the most affected departments was Rural Development, which had its exnenditures for materials and supplies cut by 47% between 1960 and 1968 (while salaries have increased), so that the relation between salaries and sunnlies1 which was 1 : 0.9 in 1960, decreased to 1 : 0.3 in 1968. Similarly the relation between geneIal expenditures of the Depart- mnnt of Public Wnrks and maintenance outlays fell from 1 : 1.3 to 1 : 0.4.. In both departments, insufficient supply of materials and supplies makes useful1 'work almost imnossible. In addition, insufficient credits have limited contact between services in the capital and in the hinterland and between local services and the nonulation. Agritultural officers without adequate transportation tend to become paper shufflers, thus wasting even - 20 - the few credits put at their disposition, and liealth officers without transportation and medLcine are unlilkely to visit repularly the dispensa- ries in the hinterland.

52. While it shoul(d not be too difficult to reestablish a balanced current budget and to achlieve some current surpluses, restructuring of current budgetary expenditures will not be easy, but must nevertheless be given highest priority. It will dei'iand difficult priority decisions by the Government and the Party but is an lndispensable precondition for satisfactory future economic growth. Altlhough substantial overall economic growth was achieved in the past without much government intervention, thanks to massive foreign private investments in mining, and (to a lower extent) foreign aid in livestock, future growth will increasingly depend on the rural sector - first of all livestock - where economic development can only be achieved through determined government action, assisted by - but not replaced by - foreign aid.

53. The necessary process of setting new priorities will not be facilitated by the falling growth rate of government revenues. Despite incor- poration of most of the sugar tax in current revenues (originally established to feed a price equalization fund), growth of revenues fell from an annual average of 38% between 1960 and 1964 to 9% between 1964 and 1969 in accordance with growth of modern sector GDP that fell from an average of almost 30% p.a. between 1959 and 1964 to 9.6% between 1964 and 1969. Al- though revenues have increased faster than total GDP, the tax burden is still low, averaging 12.9% of GDP at factor costs over the last four years, or less than in Upper Volta (14%) and Miali (15%), not to mention the more wealthy countries like Senegal and Ivory Coast (20%). Revenues from direct taxes have declined from 4% of CDP in 1962 to around 2.4% since 1966, compared to 4 and 6% in Upper Volta and Mali, and revenues from indirect taxes are also not very high, considering the high proportion of foreign trade relatlve to GDP. Although the mission has not had the necessary specialized competence to analyze tax structure and tax enforcement in detail, the low tax burden sugaests. that there is considerable room for increased taxation, despite the fact that the tax agreements concluded with all important private enterprises seriously reduce the countries flexibility. A thorough analysis of the whole tax system as proposed already in the 1963- 66 Development Plan could thus yield very tanzible results. Assistance in this field could possibly be obtained from bilateral or international sources like ITNDP or the International Monetary Fund.

54. Fast improvement of the current budget and its satisfactory overall situation until 1968 was facilitated by the high amount of foreign tech- n4cal ass4stance (mostly from France), whli-h averages oveir 10 nercent of current expenditures. Close to two thirds of this assistance is for educa- LtLon andU healthL,L a.almostn all experts fulfill regular Aaministrative functions. If the Government of Mauritania were to pay for these functions itself, it would have serious difficulties in achieving a balanced current budget. - 21 -

3. Public Investments and Foreign Aid

Public investments and their financing (in billion CFA Francs)

1960 1962 1964 1966 1968 1969E Investments:

Development budget / 0.3 0.7 0.4 0.8 0.5 0.7 Non-budgeted foreign aid 1.0 1.5 1.6 1.2 2.8 2.9

Supplier credits - - - - 0.1 1.1

Toltal 1.3 2.2 2.0 2.0 3.4 4.7

Financii:

Foreign aid 1.0 2.7/ 2.0 1.7 3.0 2.9

Supplier credits - - - - 0.1 1.1

Local sources- - - - 0.4 0.5 -

Total 1.0 2.7 2.0 2.1 3.6 4.0

Surplus/Deficit -0.3 +0.5 0 +0.1 +0.2 -0.7

~/J Including some small amounts of investments included in the current budget. /2 including subsidies towards the current budget in excess of current budget deficit. /3 Surplus of the current budget plus unpaid bills.

55. Public investments increased rapidly between 1960 and 1963, the period when the capital of Nouakchott was built ex nihilo, stagnated until 1966, but have increased substantially since then. Before 1969, financing had not been a problem, as total disbursements of foreign aid and current budget surpluses together exceeded investments by an average of CFAF 150 million a year, and more than 30 percent of commited foreign project aid, amounting to over CFAF 7 billion, had not been used at the end of 1968.

56. The major bottlenecks limiting public investments have been (a) lack of absorptive capacity in planning and project preparations, (b) limited capacity to finance recurrent costs of new projects and to provide the necessary administrative framework, within which new investments can - 22 - be carried out, andl (c) last but not least, the country's very limited resource base which mal

57. Public investments were carried out in the framework of two con- secutive development plans, covering the years 1960-1962 and 1962/63 - 1966/67, 1/ while the period from July 1967 through the middle of 1970 was not covered by a plan. Little is known about implementation of this plan; it envisaged public investments of CFAF 7.8 billion, but real disbursements reached only about CFAF 5.1 billion, or CFAF 1.7 billion per year. The following plan foresaw total investments of CFAF 27.8 billion in four years, with CFAF 13.6 billion in the public sector (CFAF 3.4 billion per year), or an increase of 100% over past real public investments on a yearly basis. Major plan goals were achievement of a balanced current budget, increasing Mauritanization of the labor force, and preparation of future economic and social development through completion of several basic studies and investments in transport infrastructure, health and education. The first point was successfully accomplished, although not through the stipulated improvement of the fiscal system and reduction in non-essential expenditures, but rather, through higher taxes paid by MIFERMA (originally planned to be used exclusively for investment outlays) and reduction in very essential expenditures. tlauritanization of the labor force made some progress limited by the insufficient output of the education system due to the prohibitive costs of education.

58. During the 1962/63-66/67 plan period public investments reached 61 nercent of Plan estimates. Thev have imnrnved to a certain extent the tranR- port and social infrastructure of the country and thius contribute to increased econnmin grcrwth. Howepver, linecnnnm.ir.- 1iniiee nf nrfr4rties and unsatisfactory execution of a few high priority projects considerably reduced this cnntr1h,,ti,- Tnvestmits in transpnort- and -nmTmulnii2tfi infrastructure accounted for a high 29 percent of the total, mostly for road, airports, and the wharf at Nouakcl1ott, but, for reasons explained in the transport chapter, their impact on economic growth will remain limited. Education and health received close to 17 percent of total i- vestments, but the high recurrent costs of education hlave sharply linmited the increase in school ,opulation. Urban in frastructure, housing and administrative buildings received over 23 percent. Few directly productive

LII V; CO LuRICh O W~LWC UC *11LJ. ULWLCISt t A .L&1 LIC*A *X. .aq f1AlLtl _ u 24._LCWCA. £ WCL C LL1I?L) .LOIC&l LK&CUI. .AiTA *C than 24 percent of public developmnent outlays were for projects in the rural. sector, most of whIcLI were not very successful: the OULW L.Lfsheries project had to be liquidated; and the slaughterhouse in Kaedi works at a Iraction of total capacity d1ue to unisolveu coflalne[rcial problelITU. Te stimulating effects of new well construction on livestock production was reduced by insufficient maintenance of existing welis, wnile investments in the agricultural sector concentrated on irrigation projects that have not proven very successful. ine major acnievement in the rurai sector was the fishing port in Nouadhibou whlich - after a slow start - now works at almost full capacity.

1/ As the 1960-62 Plan was not regarded as a national plan, the 1962/63-66/67 Plan is officially called the First Plan. - 23 -

59. After the First Plan had come to .,m end in 19.67, pubhlic inveatmeint decisionLs were made on an ad hoc basis for almost two years. In 1968 totall invest-ments only- s4lghly exeeAeA the !967 'evel, but they in.reased by nearly 40 percent in 1969. Approximately one-fourth of this increase was 4r: thLe fmo-f.I. of suipplier creudits IfOr projects of dotLt)-ful economUic vallu which Mauritania could not have financed through its traditional foreign aid sour-ces.

U6. UntiLL 19U6, LiLnancing ofL dUeve'Lopmi:Lnt outLlays dULdU not put any stress on treasury reserves, as France financed a substantial part of I _ _ I ~. _._t_..____.1. , c.t s, ^ ^. -. _ riaur'Ld t anUieve±opmentt buuget l/1, anu SuLfLcienC current Dudget surpluses were available to cover the rest. This situation changed markedly in 1969, when French sulbsidies towards the development budget were reduced, and no current budget surpluses were available, so that the sharply increasing development budget haci to be financed by running down treasury balances. In addition, Mauritania made use for the first time of substantial amounts of supplier-credits. Tnus, in 1969 rne Tresor nad to face at tne same time a substantial current account deficit and a considerable amount of unfinanced development: outlays which together resulted in a heavy drain on its reserves.

61. During the years 1960-1964 foreign development aid (excluding technical assistance, but including subsidies toward the Equipment Budget) financecl over 88 percent of total public development outlays, and over 104 percent if French current budget subsidies in excess of current budget deficits are included. During the four years from 1965 through 1968, foreign aid still reached a high 92 percent, with the remainder financed by current budget surpluses; it fell to only 64 percent in 1969, with two thirds of the rest financed by supplier-credits. Thus foreign aid has always been of great importance for Mauritania. Over the last decade, the country has received an average CFAF 2.3 billion ($8.3 million) of project aid per year, or between $8-9 per capita, excluding current budget subsidies. France was by far the most important source of aid, although its disbursements were reduced considerably during the second half of the 1960's. It is followed in importance by FED which has substantially increased disbursement:s, while all other aid donors started significant disbursements only after 1964. Besides IDA, Mainland China became an important aid giver during the last few years.

1/ The development budget includes all public development outlays other than those financed directly by foreign project aid; these latter are not budgeted. - 24 -

Foreign de-velopment aid (excluding technical assi stance) learly averages 1960Dv64 - 1 - 69 TotaL reLiUU

Billion CFAr Bliion CFAF % B1±iion CFAF % rrance 1.6 83Ze04 1.06 44% 1.41 62%

FED 0.36 17% 0.88 36% 0.62 287' WU.... A ll U.5 U.OL L,Ob !DA - - 0.19 8% 0.09 4%

Others - - 0.29 12% 0.15 6%

Total 2.12 100% 2.42 100%7 2.27 100%

/L Excluding technical assistance. If it were included, France's share would amnlint to 69 nprcent; while FED and TDA would dron to 22 and 3 percent respectively.

62. During the last decade, more than three-fourths of foreign aid was in the form of grants. Over the last five years, however, there has been a clear trend towards a higher share of loans and credits. In 1969, disburse- m.ents of loans and credits exceeded grwante, *fh lin 4i 1QS6 the relat-4ion had still been 63 to 37 percent. This unfavorable trend reflects in part the changing importance of different -(id donors, since do-n-rs -ther tha-n Frn ce and FED give few grants. In fact even FAC and FED are giving an increasing part. of th-eir aid i3-nlo an fro foreign aid are slowly b-e- pa t LL.&& L A.Lu L L .L)L ALUr.,.. ThLJA1 us6,terms L.L& of .L6 -AJL coming less advantageous for Mauritania.

4. Public Enterprises

63. Mauritania has established relatively few public enterprises and has generally avoided enterprises that create a burden for the Tresor. The most important of them, like the Social Security Fund, the Postal Services and SONIMnzr are fairly well managed and prouuce sou-ue surpluses. however, different from most other francophone countries, public enterprises are not oDliged to keep all their funds at the Tresor, so tnat tneir favoraDle situation does not necessarily help to ease treasury difficulties created by government budget deficits. Their profits, however, contribute to public savings and can be used in part to finance public investments in some sectors like telecommunications.

64. The major exception is Air Mauritanie which always operated at a loss, covered mostly by special French subsidies. Since acquisition of an Illyouchine airplane, however, the substantial deficit caused by this plane falls on the Government, which paid over CFAF 100 million to Air Mauritanie in 1968. Until commercialization is better organized, the slaughterhouse at Kaedi will also continue to operate at a deficit, while unsatisfactory - 25 -

runctioning oIf te transport oiiice nas led to its abandonment. ine operating losl3es of the sea desalinization and power plant at Nouakchott are covered jointly by France and Mauritania.

5. Overall Situation. Tresor and Public Debt

Central Government Expenditures and their Financing (in billion CFA Francs)

Government Budgets Financing Annual Current Cur- Cur- In- Total For- Sup- Un- Total Impact Aver- Reve- rent rent vest- Defi- eign nlier nalti Finmn- nn t:he ages nues Expend. Budget ments cit Aid Credits Bills cing Tresor

1960-64 2.8 3.8 -1.0 2.0 -3.0 2.9 - - 2.9 -0.1

1965-68 5.1 4.7 +0.4 2.5 -2.1 2.2 - 0.1 2.3 +0,.2

1969 E 5.8 6.4 -0.6 4.7 -5.3 3.0 1.1 0.2 4.3 -1.0

65. As mentioned before, the Central Government's financial situation char.aged cor.siderably b-e-een th1e f-irst andA the secondI h-alf of the 1960's aind ~~ ~ ~ L~~U .1. Uv ~ . L- L u u LLL.~I U £LL I. J.L LLI~ I DI UU tI again in 1969. During the first half of the decade the situation was dif--

FilcuLt but i4MprOvin6g, with a" high current budget deficit arnd ai hIgLhL LULH. deficit not entirely covered by foreign aid so that treasury reserves slightly declined. Between. 1965 and 1968 the current budget sh'owed a small sur-- plus for four years, and total available financing exceeded the overall deficit thus leading to a srall increase in treasury reserves. i nTis Satis;- factory situation changed abruptly in 1969. Sharp increases in current expenditures and 'in nv-estmenLts far beyond th e available financial resources resulted in a drain of treasury holdings in one year exceeding the accumu-- lated surplus of the past four years. Tnis sudden deterioration - the reasons for which are not yet entirely clear - is even more disturbing since the budCget estimates Lor 19710 dUo rwt indicate any improvement, and a further drain on treasury reserve must be expected. - 26 -

Situation of the Tresor-

(in billion CFA Francs, end of period)

1966 1967 1968 1969

Assets: Liquid assets 0.7 1.1 0.9 0.4

Advances to regional tresor offices 0.6 n07 0-7 0-9

Total 1. 1.R 1.6 1

Cre A4 v- r - 4+ s. - th k v - l checking system 0.3 0.3 0.4 0.2

Deposits of public funds n---_ ,_ . .J. _ n 1 n '7 1 9

0i11 b LU UG IJdLU V-

Reserves u.6 0.9 0.4/ 0.2

Total 1.3 1 1.6 1.3

/1 Treasury data are not fully comparable with budget data, as the former relatto alendr yers _1ile -he latter include t-he romnlr.ntanrny no- Lt±dCLULCJCtUtOt.Y=at I.Lcu.c.t.~ - ~-r_ r- riod from January to March of the following year. 66. The danger of another substantial uncovered deficit in 1970 which will have to be financed by treasury resources is even more serious since the liquid assets of the Tresor have decreased by almost two thirds since 1967 and were not sufficient at the end of 1969 to cover another deficit of the same size as experienced during that year. The Tresor has been saved until nnw by the ronnidprahl inc-rease in deposits of special funds and other public institutions without which it would have become illiquid before t1he en of 1969.- 'liiq situnt-ionA creates twn serious problems: first, it is not at all certain that these deposits will continue to increase, and, second, the use of thlese depostc to finance budgePt defi-rits means that the funds accumulated in these special accounts are no longer available to fi- 4Le special prs fr hih they wr.… orignal 1 n1.… v to. Fnr nance nar~~~~~~~~~~~~~~7-> -C-PC -UPVW -r '-- - *-- - L O-_F instance, using the deposits of the sugar equalization fund (CFAF 0.2 billion), iLn case of increasing sugar prices, would createa veyserious problem for the Tresor and has become practically impossible. The tight treasury situation is one ritore uLgeuLt -reason why the budgetary situatior. has to be improved. - 27 -

Development of Public Foreian Debt

(Debt outstandiLng, end of year, in billion of CFA Francs)

1967 1'168 1969 lncl. lncl. incl. d:Ls- undis- dis- undis- dis- undisbursed bursed bursed bursed bursed bursed

Loans from governments 2.6 4.2 3.0 5.8 3.4 6.0

IDA credlts 0.2 1.6 0.4 1.6 i.1 2.7

Supplier credits 2.4 2.4 2.4 2.4 3.0 3.8

Others 0.1 0.1 0.2 0.2 0.2 0.2

Total 5.3 8.3 6.0 10.0 7.7 12.7

67. The increasing number of foreign loans and supplier credits resulted in a sharp increase of foreign public debt between 1967 and 1969 which creates a substantial burden on future budgets. Within three years, total outstanding debt increased by 45 percent (disbursed) and 53 percent (including undisbursed), of which suppller credits alone increased by 58 percent. Annual foreign debt service obligations have almost tripled from CFAF 250-300 million in 1967-68 to CFAF 700-800 million in 1969-70. Al- though close to one third of these charges (SOMAP/SOMIP debt) can hopefully be financed from outside the budget, their impact on the budget will be considerable. In addition to depleting treasury reserves, recent financial policy of the government has seriously encumbered the future budget situation. - 28 -

III. PAST DEVFLOPMTELT AND PROSPECTS FOR THE PRINCTPAL SECTORS

A_ Rural Sertor

1. Agri riil tiire

68. Because of low rainfall. distributed over a short Deriod of time. Mauritania is primarily a livestock country, with agricultural activity limited to a small strip of land along the country's southern border and some oases in the north. An estimated 25% of total population is primarily encazed in aericulture. these being Neeroes while the Moorish nomads only occasionally cultivate some millet. The share of agriculture in total GDP (at factor costs) declined from about 147 in 1959 to slightlv over 6% in 1969 since growth of production in agriculture (under 1.5% p.a. over the past 10 vearq) was much slower t-han in t-hp rest- of the eronomyv partially because of a substantial fall in date production. Excluding dates, agricultural outnut at constan-t prices has increaserd t- an aUerage anniai ratp of about 2.8%, which is more than the estimated increase in rural population.

69. The bulk of agricultural production is composed of millet (60-65%) and dates (around 20%). Without costly irrigation, there are few possibilities to grow other crops. Cultivation of rice and niebes, grown on the narrow flood banks along the Senegal River, seems to have increased relatively fast over the last years, reflecting the gradual shift in local consumption from millet to rice, although total output remains small. While Mauritania is, on the average, self-sufficient in millet - together with milk and meat, the basic staple food of the country - increasing consumption of rice, mainly in urban centers, has led to increasing imports which now average 12 - 15,000 tons of rice per year. There has been some progress in secondary crops such as vegetables, cultivated under irrigation, for which growing markets exist in urban centers.

70. The basic factor limiting expansion of agricultural production in Mauritania is the climatic conditions, which reduce the number of dry crops to little more than millet and dates for which local demand is virtually satisfied and exports are practically impossible. Moreover, production of irrigated crops (such as rice and sugar), for which there is a growing local demand, is seriously hampered by the irregular floods of the Senegal River, which make irrigatioi. very expensive. Thus, on one hand, there are substantial possibilities to increase the production of crops (such as millet) for whicIh there are no markets while, on the other hand, there is a ready local market for crops (such as rice and sugar) that are difficult to be produced locally on a big scale. The limited absorbtive capacity of the local market for millet - worsened by thie great distances between consumption centers tIiAt make internal trade exnensive - was demonstrated in 1967 by the ox- ploughing scheme in the Nemna region which resulted in a substantial increase in output, cserinou over-nrnclllrtion .a sharn fall in nroducer nrices. and the incapability of the participating farmers to honor their debts. Except if one or several multipurposr am. are buthiiiacrors the Seneea1 River - as discussed in the context of OERS and the general Senegal River development plans - w1ich m..ight l-low irri-ation on a sibstantial scale- there i8 lif- tle scope for rapid expansion of agriculture in Mauritania. - 29 -

71. There are, however, a few exceptions to this general statement tIlat are wortflwhile to pursue. The Gorgol project (a U*ur-financed study which ought to be ready by 1972) is probably the most promising. If preliminary estimates are confirmed, over 40,000 acres could be irrigated to grow crops like sugar, rice and millet, and about 40,000 acres could be improved for cattle grazing; so that nearly halt the local rice consumption and the entire local demand for sugar could be covered by this one project. Based on present knowledge and experience, however, there seems to be no other irrigation projects that are economically sound, and all projects under discussion are much smaller than Gorgol. Several of them (such as Boghe) are only viable if two rice crops could be grown per year, a production level which has not yet been achieved in Mauritania. The Red Chinese rice project of about 9,000 acres seems to be a teclinical success, but cannot be justified economically as long as it is not possible to grow two crops a year. After the disappointinlg results obtained with some large-scale irrigation projects, experiments with small village irrigation works along the river banks were started in 1967 (project Vinding), but after some initial success, the project ran into serious management difficulties. Nevertheless, FED is pursuing it and might eventually come forward with a solution that could be multiplied along the Senegal River.

72. Until now, agricultural development in Mauritania has not bene- fitted from the Senegal River Basin Studies financed by UNDP. A major irrigation project, however, that depends in part on the OFRS decision concerning the Senegal River, is the Aftout-es-Saheli project, which aims at filling the immense coastal depression - which extends north from tlhe Senegal River for over 100 miles to about Nouakchott - with fresh water from the river. Since 1957, various preliminary schemes tor carrying this out have been drawn up. Such projects would permit expansion of livestock production and ot rice and vegetable growing on a surface estimated at over 100,000 acres (50,000 ha) and might also improve the capital's water supply. Project costs and economic viability depend strongly on whether a dam will be built above St. Louis as proposed in the context of the overall Senegal River regulation project, since existence of such a dam would greatly reduce necessary investments for Aftout-es-Saheli. UNDP and the Government are discussing the possibLlity of a comprehensive study of the project which would no doubt serve a useful purpose.

73. With regard to dry crops, there is substantial potential for expansion simply througyh better cu[ltULvatiLcpi techniques corUineU wLith thLe use of some fertilizer. The only product, however, that might possibly be ex-- ported, andu woulU thiu not be IhariJIperedi uy .Lack of Locail UerI,iandU, Ls groundnuts cultivated in the Guidimaka area, the most southern region of Mauritania that has rainfall conditions simLlar to t hose iLn the- Stenegal groundu;L basi;I there, groundinuts are already grown for local consumption. Although Guidi- rm,aka is not very wei.l LocateU transportwLse, it seems worthwnile to study possibilities to improve and stimulate groundnut production in this area.

74. Production of dates is hampered by four main factors - low quality, eprionuc nhuytonitnru nrn mdhlamalnd wnanrahin nrhlnema and hiah tr#anQnnrt costs - which impede any sizable exports, and for which no satisfactory solutions are in sight. The first two problemns have been studied for several years with substantial French aid. The problems of absent landlords, - 30 - most]v nomadis, with 1ittle interest in their palm trees is related to the low value of the low-quiality crops, while the transport situation will olnly slightly improve witlh the pavement of the Nouakchott-Akjoult road. hllere- fore, Little chance exists to imnprove date production in thie near ftutture.

75. In general, development of agricultural production is severely handicapped by the lack of an efficient agricultural extension service as a resul.t of notabvy linsufficteilt budgetary allocations, especially for materials and supplies, and an insf ff[icient number of adequiately trained stuper- visory staff. As a result: the ext:ension services have become almost in- operative because there is virtually no transport equiipment in the field and there are nio contacts between headquarters and( local agricultural officers due to lack of travel credits. This unsatisfactory situation is in part responsible for the management difficulties experienced in several irrigation projects. DifferIng From many other francophone countries in Africa whichi experienced similar difficulties, the breakdown of the public extension service was not compensated by the use of specialized foreign agencies, since hardlv any of these companies have carried out extension service and management futnctions in Mauritania over the past 10 years. The. lack of structures created by this situation is a severe handicap to suiccessful implementation of any agricultural project, for irrigation as we-L as rainfed agriculture, and1 little progress can be expected in this fiel.d without substantial improvements of the extension service.

Actual current budget expenditulres for agriculture and l.ivestock (In million CFA Francs) 1960 1962 1964 1966 1968 Salaries 95 107 112 116 140 Materials and Supplies 89 61o 5J _4 3 Total 184 168 167 161 177 in 7.;of total. current buidget outlays 6% 4% 4% 4% 3% 76. Problems of land ownerslhip not only hamper date production, but discourage improvem,ent in all fields of agriculture. A substantial part of g,ood .aricultural land along the river is owned by Moors but cultivated by Negroes under complicated land tenure arrangemenits, while collective owner- sh-Ip is less widespread. Irriont ion nroiects. which necessarily demand some land regroupings, are hampered by the rigidity and complexity of the system, Jhi:!e high tributes to landom,ners discourage farmers to improve and expand productiorn. 2. Livestock

(frO Aetails see Volume II of thls renort) 77. Before the start of mining operations in 1963, livestock was by far the most important sector of Mauritania's economy, but the sharp increase in mining output over the past ten years has constantly reduced its relative share from abouit 45% of GDP in 1959 to 27% in 1968. However, if factor pay- mnents and remittances abroad are deducted (which are negligible for livestock but very important for mining), livestock remains still by far the most important economIic sector, a c c ount'nLig Lor 34of GM cor,paredlo only for mining. It provides the basis of living for about two thirds of the country's population.

78. Tne relative importance or ailrrerent animals within tne livestock sector has changed little over the past years: cattle accounts for slightly less than half of total value added, sheep and goats for about one third, and camels for one sixth. About 55% of total output is made up of animals (either for slaughtering or reproduction) and 45%, of milk. While a substantial portion of animals are sold and exported, milk production is almost entirely for autoconsumption, since the main urban centers are too tar north to be supplied by locally produced fresh milk. Cattle marketing, for local consumption as well as for export, is carried out along traditional lines, mostly by Mauritania's traders. The animals are walking on the hoof to the centers of consumption (Nouakchott, Dakar, etc.) where they are slaughtered. To supply the mining centers in the north and Nouadhibou, which cannot be reached this way, and to export to the Canary Islands, FAC has financed a slaughterhouse in Kaedi, on the Senegal River, which however has not been very successful until now. Lack of an aggressive supply and sales organization has hampered its operations, which led to serious under- utilization of the existing capacity and to high costs, which in turn ham-- pered sales to the mining towns in the north.

79. Growth of livestock production has increased from a rate of about 3% p.a. up to 1963 to 6-7% over the past 5 years, except in 1969 when an unusual drought period caused a sharp reduction in the cattle population. The increasing growth rate was the result of a successful rinderpest erad-- ication program, financed and carried out by French and US aid, that reduced outbreaks of the endemic disease to virtually zero by 1968.

80. While the number of animals has thus continuously increased, grazing possibilities have stagnated or even decreased since independence. Because of reduced budgetary allocations, firebreaks have not been maintained for several years and have virtually disappeared and well maintenance was so insufficient that an increasing number of wells are no longer in use. As a result, large grazing areas have been either destroyed by fire or have become unusable due to lack of water - a situation which re- duces the number of atnimals that can be raised in a given area. In addition, veterinary and extension services (other than those that were provided on a short: term basis by the rinderpest eradication program) have deteriorated sharply due to lack of credits and trained personnel, creating serious dangers for future animal health.

81. If Government does not assign much higher priority to the hitherto neglected livestock sector, future growth is expected to fall again to the pre-rinderpest campaign level of about 3% per year, or even less if grazing possibilities are further reduced. However, this growth rate could be increased to about 5% p.a. if the rate of gross production of cattle is raised from thie present 14% p.a. to about 16% over the next nine years and for goats and sheep from 27% to 30%. As described in more detail in Volume II of ttlis report, a comprehensive program comprising firebreaks, wells, animal health, and extension service could well achieve such results. This is of greatest - 32 - tmportance to the bulk of Mauritani.a's populationi, since it could double the growth of per capita incomes of two thirds of the population from 2 to 4% per year. Lack of structures and of currenit budgetary allocations are serious obscacles for implementation of such a prolect (which figures prom- lnen.ly in the new Plan), even if foreign aid finances a high share of local expenditures. However, witlh sufficient determination, the government can overcome these problems, through reallocation within the current budget and an increase in current revenues.

3. Forestrv

A2. Collection anLd export of gum arabic froni wild growing trees is the only important activity in this sector; it provides about 1% of GDP. Tncreasing world market nrices have resulted in a substantial increase in production from 2 - 2,500 tonls at the time of independence to about 5,000 .ons in s968 ind !969( This has increased the danger of destructive cutting to permit early harvesting which is bound to result in diminished yields and a fall in production.- (h-reance of forestry re-ul1at1Anrin however, 1 badly controlled because of lack of credits for forestry services.

83. Traditionally, all gum arabic has been exported to Senegal for fu.rthler procesSing and export to Europe. Recently, the Governmernt has studied the possibility of processing gum locally and exporting it out of 4luakc,c.ott.; ',;cever, t1r,1c laclc of a competent marketing organization and of the neces3ary experience in processing are problenms that miust not be over- LOC)MelA. T-n ad-itIlon, exsporLs out of Nouak hott would no doubzt be miore expensive thar those thtrouglh Dakar, which would mean lower producer prices andI)a fa"'. 4.1 revenues i;1 rural areas.

IrJ..- d-i_4_LnJU see Wv'oLuirae 11J UL tlis report)

GQ!t@. Fl.hi grudsaog h oato Maur-'tan4a and the adjo-n-Ing A.N11I 61.UUUIU, flkIUil5, LIC ~.VC. L Ut ~1L'L Lxtnia an U Spanish Sah!ara are amiong the richest in the world and thus represent a 6uDbtantiala poteatiai for econoiiiUic groLwtLI ThAese rrOuinds hiave bueen LfsheIU by fleets from tht Cauiary Islands for man-y decades, but with little profit i c irauritania, altlhough a e-ial' French fish processing company has been operatlng since the 1920's in Noutld!hibou, the only natural port in the c.o5Jatry which is located on th-e completely desert coast near the frorntier witlh Spanish Sahara, without road connection with the rest of Mauritania.

85. In 1965, the Government embarked on an ambitious fi.shing sclheme, *:onsisting of three Ymair projects: construction of a fishing port, creation of a national fishing fleet, and establishment of the necessary processing lenat;s. A port a'ti treezing plant, fi,,1 nced by FED, were to become public rt'p>rt>¢ .nd for the fishiing fleet and the fish meal factory, two semi- ,pb I i rtollitpniles were crVated, with a French fishing entrepreneur as the i,overniiwc,,tCs -minorlty partner and managing agent. The two companies were flnanced to 63% t,ith suppller credits, and to 18QC with aid from FAC and CCCE, - 33 - while nrivate enterprise put up less than 6% of investment costs, total- ing over CFAF 3 billion, including working capital. Extremely poor management and insiufficient financial resources led to the failure of the whole scheme before it had become fully operative. Although a port and fish meal factory were built as planned, they were hardly used in the absence of t1e corresponding fishing fleet, which had to be liquidated before it was com- plete.

Q6. These events, whirh delave(d develonment- of fishling in Mauritania for several years, led to a marked change in Government policy, which now aims at attracting foreign fishing boats to fish along the Mauritanian coast and to sell their catch at Nouadhibotu to supply the local processing plants. At the same time, the fish processinge industry was reorganized and substantially expanded through an agreement with the Spanish Government which built a big multipurpose processing plant, including freezing, fish meal produc-- tion and drying facilities. The new policy has resulted in a sharp increase in local fish processing, with 11 processing- plants now under production, and a corresponding growth in fish deliveries at Nouadhibou. This in turnx -as caused increasing problems, 4n the respect th,it the expansion of processing, plants has far exceeded port capacity and the fishing port has become a serLious Uott'LenecLki for furtLIher expansion of Ithe fisllng sector.

I. AUs explaiLned inI detaill In Volum.e UTT of th4.s report, imiprovemtent and expansion of the fishing port are of high priority so as not to hiamper ueve'lopmentiLn a sector whichLis UoI vitalL importance to M.lOauritania in vie-or of its otherwise very limited resource base. Although fishing and fish processing are still aLLi,Uost entireLy in thle hL'ands ofLforeign comlpaniLes, is a sector where increasing participation of Mauritanian enterprises is ieasi'oie in t'ne medLium andu Long terrii and oughit to bie the goa'l ofk Lithe Governr.= ment a possibility that is difficult to envisage in the mining sector. The port project is included in the new Prlan andii Ihas bUeen submLttedu to the BDanik for consideration.

88. Modern fishing and fish processing (excluding fishing in the Senegal River- and traditional fishing along the coast) are expected to doible their value added from CFAF 1.1 billion in 1969 to CFAF 2.2 billion in 1970 due to the above-mentioned clianges in Government policy and improvements .en local processing facilities. Ilowever, without expansion of port facilities, total value a(ide(i will not increase by more than 5.5% p.a. afte-rwards, reaclhing CFAF 2.9 billion in 1975; while favorable worldl market conditions, fish resources andi processing facilities at Nouadhibou wouldU make it possible to achieve a valuie added of about CFAF 9.4 billion (+33% p.a.) in 197'. Tne difference of CFAF 6.5 billion, whichi will amount to about 10% of totll estimated GDT' at that. date, shows the Importance of the port expansion pro)- ect to future economi.c growth in Mauritania. B. Industries an(l Services 1. Mining 89. Mining has been the fastest growing sector of Mauritania's economy over the past 10 years, increasing, it an average rate of over 100% np from virtually nil in 1960 to over CFAF 14 billion (31% of GDP at factor costs) - 34 - in 1969. While relative growth was particularly fast in the early years, it hias slowe(d down to under 14/ p.a. since 1964. Development of mlinin1g hias been the main factor behind thte high growth of total G)I' (9.2"! p.a.) over the past 10 years (whlichI without LLmining woul(] have grown less than half as fast) andc of government revenues (23% p.a.).

90. Until 1970 the mining sector consisted of only one major enterprise, the MIFERNA iron ore mine, which started operations in 1962 and since 1965 has produce(d by Itself close to one third of Mauritania's total GDP andi 75% of its exports. Ilowever, as mentioned before, the impact of -MIFERMA on the economy and on the standard of living of the local popula- tion1, although1 statistically very impressive inideed, has not been very widespread. The enterprise has remained an enclave project, so that its rapid growth has had virtually 110 stimulating effects on the rest of the econolmiy, except on public administration, whiclh profited fromti the substantial resources received from MIFFRMIA to expand its activities, but in directions not necessarily conducive to faster economlic growth. Since 1965, revenues f'rom MIFE1MA have accounted for about 25% of total government revenues, t.hich is no doubt an imlpressive share, but is substantially less than the contribution of mining to GD)P. I)ue to the very capital-intensive character of mnodern mining, employment of Mauritanians has remained small (3 - 4,000), while capital charges and otlher transfers abroad are very high, amounting to over half of total value added.

'31. In the medium term, MIFERMtA plans to expand exports from the present level of 9 million tons to 11.4 rnillion tons by 1973, through sales of minerals with poor iron ore content (55%, as compared to 63-67% for the regular mineral), that are produlced as a by-product of high-grade ore min- lng. This will allow a slight reduction in production of high-grade ore and will thus postpone closing the mine until about 1985, when all presently known deposits will. be exhausted.

92. In the long term, MIFERMA (or a new company to be established for this purpose) plans to start mining the 1-2 billion ton underground deposits of iagnetite (40-45% iron content) which were discovere1d in the zone of its- concession, 30 km northi of the present mlining site. Development of this nrniectr which will tL;ei-id umnon nrniortinn of world m2rket- nrire-s and resources of high grade iron ore, would ensure mining in Mauritania for many d1'a'?ps. Necesqrv investmpntsq includiin concPntrnt-ion nlant for t-hcI low- grade but high-quality mineral, are estimated at $100-200 million depending on w.heithpr a simnle concentration nrocess c-an hb develonpd that does not demand high quantities of water, which is lacking in the Mauritanian desert.

93. In the autumn of 1970, the SOMDIA copper mines were scheduled to str'-n production at Ak4^u.4l- t-hs beomin- tae seondA mining entepris in the country. This private company (with a Government participation of 22% a-nd AliUkItn. TIFnLi ' JCI-- rticipatio.L L..Lt -LpI,IL. W L~ ofV~Ji~j 15;',)I ough)JLUr.1 L C' PCproduc JIUktt_C CLLJUabou L-VW,~J.rto5500 tosfoptU.'IIP UL up per concentrate (55%) per year over the next seven years, to be increased thereafter as mining of suph'ide ores begins. Its entire lifspian is calculated to be 18 years. lWith a value added of about CFAF 6.5 billion per year, - 35 -

SOMThIA i,rill contribu,te nearlv 13% to GDP, but will only employ about 400 rlauritanians. Over the next five years, its impact on government revenues will he insignificant, but will increase substantia11v thereafter.

94. Except for some salt production which might be stimulated by SOMIMA's demand of 10,000 tons per year, there are no other known mineral resources that can be exploited profitably in the near future; yttriurm mining, started In 1967, was abandoned two years later, because of high costs. r.t asharp lncrease in 1971, when copper mining ought to reach its normal level, mining is not expected to expand much, and over the entire 1970-75 per'oud ainnual growth wi] r about 10 or considerabl- less than over the past five years. IWhile increasing Mauritanization might somewhat strengthen the impact of mining on other economic sectors, it will basically remain an enclave indlustry with little stimulating, efFect on other branches oL the economty. IL L.3 Ui L L L tUoL see what te Government could do t change this situation.

2. Manufacturing

95. Manufacturing is of little importance in Mauritania due to a limited local demand and the ausence of local raw materials suitable for easy transformation. This judgment excludes fish processing, which in fact accounts for three fourtris or total value added in r,manufacturing and is expected to increase considerably from 1970 on, in line with increased fishing operations. Contribution or manufacturing to CUDP as 'ncreasedr froni arounrl 1% in 1959-60 to 1.6% in 1969 as fish processing expanded at over 14, p.a. over the past 10 years.

96. As explained in more detail under fishing, fish process'ng has a potential for rapid expansion over the next 5-10 years that might lead to a 3 to 3-fold increase in value added between 1969 and 1975 depenuing on whether the fishing port is improved and expanded in time. Although - even under the most optimistic assumption - value added in this sector will re-- main 25% below that to be achieved by SOMITA in 1975, four to five times as many Mauritanians can find employment in fish processing as in copper mining, not taking into account the additional employment opportunities provided by fishing itself. 1/ Fishing and fish processing can thus play an important role in Mauritania's economic development.

97. The only other major project under discussion concerns a textile factory to be established in Rosso, but the absence of raw materials and limited local demand makes chances of successful implementation very doubtful, so that - if Government participation or guarantees are requested - a very careful study ought to precede any commitments. In the planning stage are also a small match factory and a sawmill to be built in Nouakchott. Here, the problem arises as to whether the capital is the best location for these companies, which are dependent on imported raw materials and thus

1/ For details see Volume III, paras. 76-80. - 36 -

on a cheap and well-functioning port. In toto, manufacturing can be ex- npctpd to increase subhsta-nt-ia11v oVer the next 5-10 vpars; mainly based on fish processing. Depending on what is going to happen with the port at Nouah ibou, average annual growth of value added might varv hpbtwppn 16 and 43%, or substantially more than total GDP, so that its relative shlare miglht 4nrease to between 2.4 and 8.41 Of GDP at factor costs b- 1975.

3 Transport and Trade

98. Transport is a difficult problem in such a sparsely populated country, where transport demand - even potential - is too low in many re- ons o Ju s L.L y LIe necessart investments and to pe-.tit l- im mnents. Basically, Mauritania's transport network consists of a road run- nLng soutlinorthI allong the countr's wesern borter from the frontier with Senegal at Rosso, tlhrough Nouakchott (with its wharf) and the mining towns Lo £IJoUJL andu F'Derik, towardLs tle border with Algeria. While this road is paved between Rosso and Nouakchott and is being paved up to Akjoujt (to allow evacuation ofL thLle copper con.entrate LIhrough the wharf at Nouakchott), it becomes a simple track further north. This concurs with the sharp fall in tranSsporL vol-ume nortiL oL nkrJU since F 'Der'ikLIr and tILIIe few oases in the north are supplied primarily from the port of Nouadhibou by MIFERMA railway, WILII fulfills an im,.portant general transport function. This main line of transport, which runs primarily through sparsely populated areas, is com,lplemented in the south uy an unsatisfactory system of alternating river and road transport, that runs east-west along the southern border through Mauritania's mOSt deusely populated regioLis. 'Le first 3v kIm east ol Rosso are served by river transport during half of the year (when the road is flooded) and roaa tranisportLduring the other Ihal, ('whIien the water level of the Senegal River is low); the next 260 km from Kaedi to Kiffa were up- graded by FED through construction of a number of bridges and similar works along the road. However, since many of the bridges were badly damaged by floods because of poor design and lack of maintenance, the track i8 still only useable during the dry season. East of Kiffa, tracks are generally in bad shape and Nema, the center of the south-east cattie region (5i20 km), can only be reached by four-wheel drive vehicles or medium-sized trucks during the dry season, while it is not accessible for the rest of the year. A few feeder and other secondary roads branch off from these two main axes, mainly in the south, connecting the southern regions with neighboring Senegal and Mali, to which :most of Mauritania's cattle are exported and from which come substantial imports of mIllet and other consumer goods, partially uncontrolled.

99. In 1968, 7-8,000 motor vehicles were operating in the country, of which almost 60% were buses, trucks and other heavy vehicles. In the absence of any recent traffic counts, traffic volume is difficult to estimate, a fact that seriously hampers rational transport planning. For road transport alone, a figure of 70,000 tons was estimated for 1970, but with little indication about source and destination, while river transport fluctuates around 20,000 tons, mostly sugar and ce,uient.

100. Air transport supplements the rudimentary road network and plays an important administrative and political role, but its economic importance is limited. Twelve airports are capable of handling 4-engined aircraft 37 -

(including Nouadhibou, the only airport capable of receiving interconti- nental jets) and anothier ten fields can handle DC 3-type equipment. About 50-60,000 passengers are transported annually between the 20 local airports regularly serviced. The wharf at Nouakchott, in operation since 1966, handles about 40,000 tons of imports (mostly rice and sugar), but handled virtually no exports before copper mining started. Imports through the wharf are made expensive through the high surtaxes on maritime freight to Nouakchott and the difficult lighterage operations. The commercial port at Nouadhib-ou handles around 50,000 tons of imports, mainly for MIFERMA, and 15,000 tons of- exports (mostly fish) excluding a substantial amount of fish exports from private wharfs. MIFERMA's mineral port at Nouadhibou exports 8-9 million tons of iron ore and imports 60-70,000 tons of petroleum products- Nouadh-ibou hasF no road connection with the rest of the country.

101. Mauritania's transport policy is determined by its policy of internal and external trade, which is based on two main considerations, that are sonmehat contradictorv:

(a) Mainly for poilitiral reasons Government discourages direct trade relatiLons between the southeastern regions and Mali and Senegalj which traditionally used to be very close;

(b) At the same time Government tries to curtail imports through the port of Dakar and to channel all import trade through the wharf of Noiiakchott desplte higher CostS and a corresponding increase in consumer prices, primarily in the south, that cou:d be supplied at lower costs from Dakar, SONIMEX; the para-public import company, was created after the opening of the wharf in 1966 in order to centralize imports at Nouakchott, and to make the capital the comnercial center ofP th1e countlry. JL ~LLLC~~,~ 102. The.se two Goevernmen es le to . e nst i of the wharf al Nouaklchott and the paving of the Nouakchott-Rosso road and are also behInd t:he plans for a direct road connection from Nouakchott through the desert to Kiffa and to the east and for the construction of a full-sized port at Nouakchott, for which the necessary studies are included in the new Plan. The mission agrees that there are good political reasons to better integrate tie souttileaitern regiLon wilth te rest of the coutnt and therefore to improve its road connections with the west; however it feels that pursuance of th'e second objective - to make Nouakchott the center of Maur- itania's commerce - is not in the best interest of the country, as it would put an unnecessary an,l heavy; burden on its econo, without creating any sizable advantages. 13ecause of its geographical situation in the middle oi the desert belt, far away from the maJor economic centers in the north and in the south, withi no natural advantages for construction of a suitable port and with nO econo.iic hi-.;terlandU, Nouakchott dloes not seem to be qual:- fied to serve as the commercial center of Mauritania. Every attempt to artificiaily make it that will be extremeely costly and in addition is un- likely to succeed since the margin of flexibility within which the Govern- - 38 - ment can impose its will is narrowly limited by the long borders wIth Senegal and Mali. Since these are virtually uncontrollable, any signif- i.cantly hilghLer consm..er prices in Mauritania - -4iL.ari 4-kin thoth - will lead to considerable smuggling, and stimulate exactly the kind of co iur, er.ar elata.-. io_ns across the bordler t-hat the Governument "Ls trying to stop for political reasons. This situation is illustrated by the difficul-

LIv Ut NI~ L7T A v .1k x _ v LvL .. Vw .LL LIv__J_A~ J1 L* L _ A. .5U I V A. 1 V.L . tL es u-L 0VLNL'L._U CLI.)-o rr-Ai LU I CalV-1 uI p Re 'L i t 've L t I'J eastern ureg'LonsU v'Ls-a-v ' s unl- controlled imports from the south which have forced the company to explore less expensive ways to supply these provinces thilan tlLrougil tiie wharf at Nouakchott.

103. It would seem to be in Mauritania's best interest to organize its internal and external trade along the most economic lines, which means inter alia that it accepts the consequences of the geographical distribution of economic potential in the country which is concentrated in the north (mining, fisheries) and the south (livestock) with virtually nothing in the center around the capital. Therefore tne capitai ought co De regarded primarily as an administrative center, well-located in the center of the country, but having no major industrial or commercial aspirations. This change of view could open the road for better solutions in future transport planning, like making the port of Nouadhibou - which is an ideal site for a good port - the distribution point for the whole country. From here the south of Mauritania could be supplied either by a new road, or more economically by coastal ship- ping to Nouakchott and via the Senegal River directly to Rosso and part of the year to Boghe and Kaedi.

104. Independent of any such plans, there ought to be no doubts that improvement of road connections in the livestock/millet belt along the Senegal River is the transport project that deserves hignest priority since it is important for future development in the rural sector. Reliable road connections will become increasingly important as more crops (rice, groundnuts) are produced for the market. The direct road from Nouakchott through the desert to Kiffa, however, and even more so the port at Nouakchott have little justification (once the idea of malcing Nouakchott the commercial center of the country is abandoned), and the expensive studies of these two projects included in the Plan should not be undertaken.

4. Public Utilities

105. Electricity is produced by eight power stations in seven towns, which are the only centers supplied with electricity in Mauritania. More than 87% of the total installed capacity of 32,400 kw belongs to the two mining companies which supply also the mining towns of Zouerate/F'Derik and Akjoujt as well as Nouadhibou. Public installations comprise a power station and the desalinization plant (which also produces electricity) in Nouakchott with a combined capacity of close to 3,000 kw, and three small plants at Rosso, Atar and Kaedi; the Kaedi plant was originally designed to serve exclusively the slaughterhouse, but is now used also to supply the towIn. They are managed by MAURELEC, a public company having 90% government participation which also handles water distribution. - 39 -

106. In Nouakchott, an unexpectedly large growth of population and the unsatisfactory performance of the desalinization plant have produced an acute shortage of electricity. As an immediate solution, the capacity of the Dower station is rplanned to be increased by ?,400 k-, financed by a longer term credit from the Federal Republic of Germany of about CFAF 120 million. whi le for the long term, construction of a new 3-4,000 kw diesel or steam plant is envisioned. The necessary expansion of the distribution network has been submitted to CCCE for possible financIng. In Nouadhibou, improvement of the distribution network is planned, while the Kaedi plant needs to be slightly expanded, if the slaughterhouse 'L to work at LuLL capacity. No other investments in electricity are considered in the Plan.

107. Water is a major problem particularly for the capital and the industrial centers in the north. Nouakchott is supplied from a well located at Idini, 60 km east of the capital (900 m3/day), and the desalinization plant that stLarted production at the beginning of 1969 (tneoretical capacity 3,000 m3 , real output 1,750 m3 / day) 1/; Nouadhibou receives its water fro. a distance of 80lm through a pipeline recently finished by FED and a distribution network being completed with CCCE financing in 1970 (3,000 m3 / day). Mcjoujt and F'Derik/Zouerate are supplied by the mining companies, while most other large towns have some limited public water distribution syste,uss.

108. For the same reasons mentioned in the case of electricity, Nouak- chott suffers from a serious shortage of water that results in frequent in- terruptions and rationing. As a first step, it is planned to increase delivery from Idini to 6,000 m3 /day through construction of an additional pipeline, which, due to its urgency, will be financed by aid from Mainland China. However, if pogulation growth continues unabated, a second expansion to about 20,000 mJ/day will have to follow within the next 5-10 years, which can only be achieved through pumping and construction of several additional wells at Idini or a pipeline from the Senegal River (210 km). In addition to the major supply lines, the local distribution network demands urgent expansion to cope with increasing population. In Nouadhibou, some additional investments seem to be needed above the CCCE-financed project and small sums are included in thie Plan for expansion of water supply at Atar and Rosso. Ilowever, urgent projects in at least four other secondary centers were not included in the Plan for lack of financial resources.

109. There is no doubt that the situation in Nouakchott is difficult, and that a large population increase, unsatisfactory operation of the desalinization plant, and slow government planning have created a situation that forces the administration to take emergency measures, that will cope quickly with the short-term difficulties but can not solve the longer-tenn problems in a satisfactory way. The limited investments planned for Nouad- hibou are justified by the sharp upturn in economic activities in that ciry after the liquidation of the old fishing scheme, and, moreover, if fishinp is going to develop as fast as planned, additional installations might well become necessary. 1cnyever, the mission feels somewhat uneasy about the

1/ Total annual production reaclhed 571,000 m3 in 1969 and 656,000 m3 in 1970. - 40 - limited amount of pro iepI for sconndarv centers; whiclh are far less well equipped than the capital and Nouadhibou. Altlhough both these cities still have smail popu1lati ns (20-40n O-00) -i inrnicrntlon- whichI has increased fast and is continuing to grow, has already created serious problems of unemploy- .,,ent, ,,mainly in Nouakchott w1-ere potential for emn1 nvyment is virtuallv limited to public administration and construction of public buildings. Therefore, Government ought to discourage Immig,ration to the capinal as muchl as possible, before it becomes such an unmanageable problem as in the case of Dakar. Dev- elop-rient of livestock and agriculture, to speed up economic or-t-1. in thi interior, is an important step in this direction, but it has to be supplemented biy qua'litatiLve 'Lmprovement's ofl 14ife ir.seconda-., twns, whlcih aqt- presend t- lacrk almost all amenities of modern life, including electricity, reliable water supply and good schools. 13hile in t-he case of Nouakchott and Nouadhibou, investments for water and electricity will tend to further increase population inflow, simuilar investments in secondary centers will tend to slw it down. Although the mission is perfectly aware that implementation of this proposal will be difficult, it feels that the problems involved ought to be studied seriously and that actions should be taken. Even if short term profits would be small or nonexistant as today, it is still possible to prevent population pressure in Nouakchott from getting out of hand, which might no longer be the case ten years from now.

C. EUucatior.

(For details see Volufie IV of this report) iiO. Ten years after independence, tLie iiouern educatiLon syste. covers only 32,000 pupils, or less than 15% of school age children, and despite its very modest scale, is already absorDing 2U 01 LIIh CULrre;LL UUUdg. The hig cost of education, whiclh makes it financially impossible to increase school enrollments rapidly, is the result of the conjunction of several particularly unfavorable factors: the nomadic life style of 70% of the population, widely scattered settlement patterns among the farmers, aud the absence of large towns, to which must be added the effects of the present system of bilingual instruction in primary schools.

111. As long as over two-thirds of the population of school age are living a nomadic life, the modern system of education can contribute very little to the development of human resources; on the other hand, if the number of students v -ceiving secondary education (3,000) is not increased rapidly, the country will not have the trained manpower needed for its development. The problems of education should therefore be attacked along two parallel paths: while means should be found to expand the classical system of education through a reduction of the high costs so that it will produce the trained manpower the country urgently requires, new educational methods must be elaborated to develop the human resources of nomadic and farming populations.

112. In order to expand classical education, the 1970-1973 Plan envi- sions regionalization of secondary education to ensure a better geographic spread of the education effort and to reduce costs by eliminating most of the verv exDensive boarding schools. In this regard, an investment program for construction and equipment of seven "colleges" outside the capital - 41 - has been submitted to the Bank. Technical Assistance programs, both bilateral and international, will for the time being continue to provide "substi- tute personnel" in the secondary schools, but future action should be directed more to train local instructors and specialists, as is envisionec. in the FAC project for a secondary teacher-training college. Tne major users of manpower, such as mining and fish processing enteprises, should assume responsibility for the specialized training of the technicians they require, while middle-level public servants and all high-level staff should continue to be trained in regional institutes localLed in neighbouring countries or in Europe.

113. The Plan does not touch on the education needs of the rural masEes, both nomadic and sedentary, which is the crucial problem for Mauritania. The reform of the education system will be successful only insofar as future primary schools are a reflection of the society, which implies a parallel education effort at the family level. Different from the situation you find in modern education, the paths to be followed in the education of the nomad and peasant masses and the structures to be set up for this purpose have not yet been defined and remain to be worked out. Consequently, before carrying out any projects, detailed research is required to find solutions adapted to the life styles of these two types of rural population, which necessitates the setting up of services for applied research and studies in education. Unless it has a better knowledge of the situation, including the various cost factors, demand for education in various regions, and manpower needs by level and sector, the Government cannot select realistic solutions in this field.

114- It is evident that this research should be undertaken primarily by Mauritanian experts with the help of some foreign technical assistants. Consequentivy trainine of local specialists in education planning and pro-- gram implementation has to be given high priority. This need has not been clearly recognized to date, either in the Plan or in other studies deal-- ing with education in Mauritania. It is, however, evident that the country cannot reorganize its educational system without a competent "general stai-f" of inspectors, counsellors, planners and researchers, who will adapt exist- inrg techniques to national needs.

115. The problems of orovidina education for the nomadic population and the scattered farmers are not peculiar to Mauritania; they are, however, found here wlsth textbook clarity and on a very small scale, making them much easier to comprehend. If solutions can be found, these will be appliLc- able inr num.eroiia couintries where at least part of the population lives under similar conditions, both in the Saharan cotntries from the Atlantic Coast to the Persian Gulf, and in countries where agriculture is organized on a small- holder basis. Therefore, what are involvecd here are fundamental problems -w1hch would warrant basic research carried out with all the necessarv scien- tific safeguards. - 42 -

TV. PROSPECTS AND CREDTTWORTHINESS

A. Overall Economic Developments

1. Growth of Production

116. Growth in a small economy such as Mauritania's is difficult to project, 1necause a single 4mportnt project can- change the thole situati,on. The projections in this chapter are thus given in a range that is quite sub-

tantial.l LLL1 hi g orEopiUL' i s tic p L jecio iLs b D Vth assumptions that

(a) a comprehensive livestock program will be carried out that will ra'se the reproduction rate of cattle, goats, and sheep by-2.5 percentage points by 1975;

(b) expansion and improvement of the fishing port in Nouadhibou will be completed before 1975;

(c) a textile Ifactory of thle size presently conteiplated will start production by 1975, and fish processing plants will increase output in line with fishing dUeve'lopment, while aLl l other industrial sectors (including power) will be stimulated by developments in livestock, textiles and fish process'ng industries.

By contrast, the low or pessimistic projection assumes that none of these developments will take place before 1975. The two assumptions have impli- cations not only for the projected growth of production, but also for savings and investments, government revenues, and the balance of payments. - 43 -

Lis.LioLVL ProJL of.ec-iorU Uconom,Lic 'roJwtlh 4n An )

I n LiL L1 o i urttC LFFLC5 a L 199 prlIces)

A-veraLge Growth uiur WAr I19J Average Growthn 19yo-i 1964-1969 1969 low high low high

Rural sector:

Agriculture Forestry 3.3% 3.2 3.9 3.9 3.3% 3.3%0

Livestock .7/- 10.6 12.8 14.2 3.3%. 5.0

Fisheries i5.8% 1.0 2.0 5.1 12.3% 32%

Totai 5.9% 14.8 18.7 23.2 4.0% 7.8%

Mining 13.9% 14.2 25.6 25.6 10.3% 10.3%

Industry, Power 15.47% 1.0 2.1 6.7 13.9% 38% Construction, Services 7.3% 9.3 11.8 13.6 4.1% 6.6%

Administration -2.9% 4.5 5.2 5.2 2.6% 2.6%

Indirect taxes 11.7% 3.3 4.0 4.8 3.3% 6.3%

GDP at market prices 7.0% 47.1 67.4 79.1 6.2% 9.0%

/a 1964-68 only, to exclude the effects of the exceptional 1969 drought year.

117. The two projections make it clear that without special efforts, economic growth over the next five years will most likely fall below the level achieved during the last five years, thus continuing the past fall in the growth rate. Although average growth of over 6 percent under the low assumption is no mean achievement, it would create serious problems in the modern sector, where GDP is projected to increase by only 7.3% per annum or less than the estimated population growth, while under the higher projection, modern sector growth would average 10.8 percent. For the bulk of Mauritania's population, growth in the traditional sector, primarily livestock, is the only relevant factor: an increase in average annual growth in livestock production from 3.3 to 5 percent means that the per capita income of two thirds of the country's population will increase by 3.5 percent instead of 1.8 percent or nearly twice as fast. In toto. the low and high assumptions result in a growth of average per capita income of - 44 -

4.3 nprcent and 7.2 npreent resnpctlvelyv leadina to total per capita income of $190-224 in 1975.

118. Slow growth in agriculture and forestry despite a projected substantial increase in rice production reflects the limited notential In this sector. Livestock growth will fall substantially below recent levels without a determined development effort becaueq the stimulating effect of naRt programs to improve animal health will slowly vanish. The only means to raise the standard of living of the majority nf M>uritania's nonulatlon is a program to ameliorate the livestock sector. In addition to substantial foreign aid, this will require a considerable increase in current budget expenditures for livestock, which will only become possible if priorities in the current budget are changed and government revenues are increased. Since the impact of a livestock development program will necessarily be slow, it cannot achieve spectacular results by 1975; but its long-term impact will be very substantial. The biggest difference between low and high projections is in flsheries and fish processing. Exanrsi0n and improvem ent of the port installations in Nouadhibou could result in additional GDP of up to CFAF 6.JbULilolo by 17y or nearly ir percent of total rDP. Although during the early years a substantial part of this increase would leave the country in tile Lorm of factor paymlents and private tranfers, as long as most qualified jobs are held by foreigners, the impact of such an increase on the local economury and on public revenues would nevertheless be considerable. in mining, the high growth rate of the last five years will not continue despite the opening or the SOMiIHA copper mine and expansion of iron ore production through export of low-grade ore. Nevertheless, mining output will increase slightly faster than total GDP. Th'lere 's little the government can do to further stimulate production in this sector. Growth in industry and power will be influenced by developments in the fishing sector as mentioned above; in addition, construction of a textile factory could increase the value added in this sector by over CFAF 1 billion in 19175. Construction reached a high level in 1969 thanks to high investments in the SOMIMA copper mine. Since no major investment projects are planned for 1975, construction activities will fall again so that growth of construction and services together will be slow. Public administration is optimistically projected to increase by not more than 2.6 percent per year, Mauritanian administration by 2.8 percent (as compared to 1.1 percent in the past), and foreign adrainistration, including technical assistance, by 1.6 percent. These assumptions are discussed in more detail below. - 45 -

2. Growth of Expenditures and Sagvin.,i

Mi8SiO: P-4-44-^i: of 117 eniA4r-- .an CSavlngs 1969-1975 T n b'Jflion. ofL CrOVA F?rancs at 1969p

I Q7 C 1715 1968 low high -LotJL. %0 totl tota1 % rXl ("at .,arklet prl ces' 375C: 10 2 1 0 2.0 ~LLI41LN~ \~L ~JI.LL~0I JIJ I%JU J IC I I VU 04..0 IIJ

t...... -J.... 1.A.1... c 4 7 ICl£ I- (0t r

Pri-vate 2.0U 69 .4 34.7 66.6 42.0 67.1

Ln ves tLents; Public 3.4 9.0 3.0 5.7 4.0 6.4

Private 9.1 24.3 6.5 12.5 7.8 12.4

Nat. Savings: Public 0.9 2.4 0.7 1.4 2.0 3.2

Private 4.1 10.9 7.1 13.6 9.0 14.4

Savings Gap 7.5 20.0 1.7 3.2 0.8 1.2

ii9. The most noticeable change in the projected pattern of resource use is the absolute fall of private investments. As mining investments (accounting for two-thirds of total private investments in 1968) fall sharply after 1970 when SOMIMA investments come to an end, total private investments will decline, despite a projected 50 percent absolute increase in other private investments, such as fishing, housing and livestock. However, they ar,e still projected to reach over 12 percent of GNP which is a satisfactory level for a country like Mauritania. To counterbalance, as much ens possible, the negative impact of falling private investments, public investments ought to increase over the next years primarily in directly productive sectors. However, as explained below (para. 127), this will hardly be possible; even under the most optimistic assumptions, they cannot be expected to exceed an average of CFAF 4 billion per year, or little more than in 1968, while under the low assumption, they might well fall below the 1968 level, depending on the amount of public savings, since foreign aid is not: expected to increase much above the high 1968 level. Achievement of sufficient public savings to allow higher public investments is thus of primary importance for Mauritania's future economic growth.

120. While total investments are thus likely to decline relatively arid absolutely from their high 1968 level, but will still account for 18-19 percent of GNP, national savings can be expected to continue their upward trend in line with general growth in per capita revenues so that the savings gap will probably narrow. Tinder both the low and the high assumptions. private savings will slightly exceed private investments, while in the pub- - 46 - lic sector, a substantial gap will continue. This raises the question of whe- thler andu hw part of excess savings i. thne privatle sector could be .moblized to finance public investment outlays. In the Mauritanian context, this will be di f4i C .cult anA the problem z furlther compllcateL b-y t--he absence of any clear knowledge as to how and where private savings are accumulated and used. Nevertheless, the possib"ilty sh-ould be eonsid ereA seriously.

121I. Publi o3upir oughiti not to -increase b-y m.ore than 55.7 percent 5.L I- I *r uu .1.1,. c Ro it LULLL UUII I UA.L -tS. L lLLC OC 17 *1A LlL per annum which corresponds to the expected increase in revenues under the .Luw ass-umption. riLvate per capiLtla consumption 8 project5ed to grow by 2.4 percent and 5.2 percent, respectively, as compared to 3 percent between 1965 1.L W UU ULC5U 11J LLL IL LLfULC O an'a d17 ICLULLUO* LInbr,0.I absolute 1 L terms,C 13 iLt wou'ld benefitL mos frL U.& 11ghe5 inres of GDP under the high assumption, but relatively speaking, national savings (private anu pub"Jic) woulUd profLit c,ostL fLroi. Alaster economrJlc growth.

3. Balance of Payments

Balance of Payment Prolections (In billions of CFA Francs) 1975 1968 low high Current: Exports 21.0 39.7 48.5 Imports 1.8 2 .7 Net services - 2.1 - 2.5 - 3.0 Balance of goods and servires 3.1 15.6 18.8 Factory payments and remittances - 8.1 -15.2 -16.6

Net errors and omissions - 2.5 - 2.0 - 3.0 Current account balance - 7.5 - 1.6 - 0.8

Capital: Public: iechnncal assLstanLce 0.7 0.8 0.8 Gross financial aid 2.8 3.0 3.0

Repayments - 0.2 - 1.0 - 1.5 Total public 3.3 2.8 2.3 Private: Gross capital inflow 5.5 2.9 3.1

Repayments - 2.3 - 4.4 4.4

Total private 3.2 - 1.5 - 1.3 Net r.zin tal balance 6.5 1.3 1.0

Change in Foreign Reserves - 1.0 - 0.3 + 0.2 - 47 -

122L. me mission projectLor oo' tCe baiICe i paylneyts siuw- a l able improvement in the trade and current account balances, despite a substantial growth of factor payments and private remittances. Tne expected low volume of investments in 1975 will result in relatively low imports, while exports will increase through export of copper and fish products, starting on a substantial scale in 1971. Improvement of the current balance, however, is almost entirely offset by a deterioration in the flow of private capital as high debt amortization and low reinvestments of the two mining companies will result in a net outflow of private capital in 1975. Since gross foreign aid is not expected to increase much above the 1968 level, and public debt: amortization will grow, net capital inflow into the public sector might also fall slightly, despite the assumed very concessional terms of foreign public aid. Substantial hardening of average terms of this aid, would probably result in some balance of payments deficitsi over the next: years.

123. The balance of payments projectionl for 1975 reflects well the situation in the modern sector of the economy at that date, dominated by two big mining companies, which had previously invested high amounts in Mauritania to build up an export industry and are now using a substantial part of their export earnings to amortize their foreign debt and to pay out dividends to their shareholders. Despite exports exceeding imports by nearly 50 percent, the overall balance of payments can reach equilibrilum only if the bulk of external aid continues to be on concessional terms and if the use of supplier credits is reduced. Under these assumptions, service of external public debt will reach 3-4% of gross exports or about 5% of exports net of transfers and remittances by the mining companies.

B. Planning and Public Investments

124. At the end of March 1970 a new Four-Year Development Plan (IIe Plan Quadriennal de Developpement Economique et Social) covering the years 1970- 1973 was approved by ithe Party congress. This plan is basically a "Plan cadre" which spells out the major goals to be achieved in each sector, thus forming the framework within which the Ministry of Planning and Rural Develop- ment is preparing the annual investment program. This approach provides much flexibility and allows decisions by foreign aid donors to be taken into account, which is especially appropriate in the case of Mauritania where the bulk of development outlays will have to be financed by foreign aid. Although the Plan is kept very flexible on purpose, it includes a list of high priority projectis, which the Government would like to have financed. It does not provide, however, a macro-economic framework and leaves the problems of financing open.

125. The new Plan has accepted many of the conclusions reached by the 1967 IBRD Technical Assistance Mission, which had worked out a series of general guidelines for Plan preparation. Among the mission's major recommendations, included partiallv or fully in the new Plan are:

a) to give highest priority to directly productive projects in the rural sector, including livestock and the Gorgol irrigation project; - 48 -

b) to improve project preparation capacity by creation of a specialized service (cellule d'etude) within the Planning Ministry;

c) to be aware of the shortage of trained personnel capable to imple- ment development projects and of the limited government resources available for operation and maintenance of new investments, particularly in the social sectors.

126. The Plan does not include cost estimates for all projects, and does not propose a total volume of public investments. However, based on the information given in the Plan completed by additional studies, the mission has tried to estimate total size and sectoral breakdown of a public investment program that would correspond to the goals stated in the Plan. Although these figures can be no more than rough approximations they give a fair idea of Government priorities and the possible size of an investment program over the 1970-73 period. - 49 -

Approximate composition of a public development program

1970 - 73

(In billions cf CFA Francs for the entire plan period)

1963-67 real 1970-73 estimates

total total %

Rural sectors: agriculture - - 1.1 7

livestock 1.0 12 3.0 19

fisheries 1.0 12 2.7 17

total 2.0 24 6.8 43

Transport and communication

infras tructure 2.3 29 4.2L- 26

Education/Health 1.4 16 1.7 11

Urbanization (incl. utilities) 1.1 13 3.2 20

Administration buildings 0.5 6 -

Miscellaneous 1.0 12 -

Total 8.3 100 15.9 100

/1 Includine road maintenance for CFAF 1.8 billion. partially IDA financed.

Compared to past public investments (CFAF 3.4 billion in 1968), a development program of nearly CFAF 4 billion per year is not unrealistic. On the contrary. as mentioned before, public investments over the next four years ouglht to come close to that level, to counterbalance the negative impact oF the exnected fall in private investments and to prevent a serious slowdown in the growth of CDP. Public development outlays of this magnitude can be achieved, if nroiect T)renaration is improved; which gives the UNDP program of strengthening the staff of the office of project preparation and planniing (relltile d'etude) high imnortance and hich nrioritv. However, since most of the important projects included in the Plan are not yet sufficiently prepared, it wnould hb imnnnQosile to carrv nut t-hp entire Plan hefore the end of 1973 even if the UNDP program were to start very soon. Shortfall in new projects however, will be compensated by completion of ongoning pronects (which were generally not included in the Plan), so that it ought to be physically possible to achieve public investments of close to CFAF 4 billion per year, if sufficient public sav:Lngs can be mobilized to complement foreign aid. - 50 -

127. tne rough sectoral 'rea'd wi shows a concentration on a rew nign priority projects. In fact, three projects, namely livestock, fishing port, and road maintenance together account for over nai or tne entire program. On the whole, directly productive investments in the rural sector received higih priority and it is hoped that Government wiil stick to this priority during implementation. The bulk of transport investments is for high priority road maintenance in part financed Dy an IDA credit; nowever tne mission does not fully agree with the other priorities in the transport sector. As pointed out before, it believes improvement of the vital road connection along Mauritania's southern border to be more urgent than expansion of airports and studies of projects with doubtful economic justification like the Nouakchott-Nema road and the Port of Nouakchott. The shares of education and health are reasonable; outlays for water and electricity tor Nouakchott and Nouadhibou are high but necessary, although it is regrettable that little is foreseen for secondary centers. This will further increase the relative attractiveness of the two major towns and tends to stimulate migration, which is already very high and ought to be discouraged.

128. While the mission agrees that a program of this size is physically possible if the planned improvement in planning and project preparation are carried out and strongly feels that public investments of close to CFAF 4 billion per year are essential to prevent a serious slowdown of economic growth, it is far from certain whether the necessary funds can be mobilized to finance such a program, because of insufficient public savings. Assuming that growth of salary payments can be kept at an average of 2% per year (in constant prices) but taking into account that outlays for maintenance, materials, and supplies have to be increased urgently and that interest on public debt will grow, current budgetary expenditures of the Central Government will increase by about 4% per year between 1969 and 1975. This growth rate is not excessive compared to estimated growth of GDP of 6.2 - 9% per year. Ilowever, it can only be adhered to if Government reinstalls strict austerity measures, but this time applied to salaries rather than to vital expenditures for maintenance and supplies and to security outlays and social services rather than to rural services. On the other hand, a line by line projection of government revenues shows that natural growth of revenues (excluding improvements in tax structure and tax collection) will average between 5.4% - 7.2% per year for the low and high GDP estimate or somewhat less than growth of total GDE, because copper mining will yield very little over the next few years and imports will be depressed by the expected fall in investments. On this basis, gross Central Government savings would reach CFAF 0.1 and CFAF 1.2 billion respectively in 1975 and total gross public savings between CFAF 0.5 and 1.7 billion. Assuming a slight increase in foreign aid on a pattern similar to the present (it is a high amount of grant aid com- plemented by concessional loans and some supplier credits) and a public development program of the size outlined above, public debt amortization would reach CFAF 1.6 - 1.7 billion in 1975, which means that even under the most optimistic assumptions gross public savings would hardly be sufficient to cover all amortization payments, while under the lower GDP assumption, Govern- ment would be unable to honor even its foreign debt. This means that under both assnptions the public investment nrogram would have to be reduced substantially. - 51 -

n__ ec-ion ofc Gross Publi Savings-

r L LAI.J %3.~L'~~ L AULJ.LLL .JV__ L,

(Ir, 1billons ofr CA Francs)

~LLIU±±±LULL~ IJL ~.~rtt £Ld QL C

I 7 I J 1969 low high real / /2 /1 /2

Government revenues 5.83 8.3 9.3 9.4 10.3 Current expenditures 6.54/i 8.2 8.2 8.2 8.2 Government savings -0.71 0.1 1.1 1.2 2.1 Other public savings 0.27 0.4 0.4 0.5 0.5 Total public savings -0.44 0.5 1.5 1.7 2.6

/1 Natural growth of revenues, without improved tax structure. /2 Improved tax structure and tax collection. /3 Including unpaid bills.

129. Since the unsatisfactory prospects for public savings will seriously hamper future public development efforts, improvements in tax structure and tax collection should be given high priority. Rough estimates suggest that revenues could be raised by at least CFAF 1 billion per year by 1975 without excessively taxing the economy, since total Central Government revenues would still not exceed a low 14% of GDP. Assuming optimistically that: increased revenues will not stimulate an increase in current expenditures, total gross public savings could be expected to reach CFAF 1.5 - 2.6 billion per year in 1975. Under the high GDP assumption this would permit a Maurita- nian contribution towards new investments, net of debt amortization, of about CFAF 1 billion in 1975, while under the low assumption it would hardly be sufficient to cover debt amortization. An increase of CFAF 1 billion in currant revenues abnve the levrel to be reached more or less automatically by 1975 Ls thus a minimum. As pointed out below, it will still not allow financing of a CFAF 4 billion ner year development program under the low GDP assumption, but would permit such a program under the high assumption.

130. Concerning the current budget, three points are thus of great im- nortainrce and renuiire tiroesnt nrtion hv thp rnuprnment and hv thp tnn dpriqi,nn- making bodies: (a) austerity in current budget outlays, primarily in salary payments, (b) restruct:uring of the current hbidgiet to make it more developm,ent- oriented, (c) increase in government revenues through tax reform and improved t-iq onl]ect-tion. Wit-htthouit siirreaRfiil imnlementation of theRe three measures, Mauritania wlll not be in a position to carry out a satisfactory development program because it wi:ll not have the nereesarv nubhlic savingq to finance its share in foreign aid projects and to service the increasing debt. Moreover, it will nnt hp ahle to rrente the nerepqnry administrntive Infrastrucrtiire within which foreign aid proJects can operate. As the Government has proven once be!-fore its deterrination annd ahilit-ty to Impnoe severe aus terity ieauirerQ there is a good chance that the reforms will be carried out quickly. If de- sired and necessary, !-orei,n assistance could no doubt be mobilized for this purpose, either from bilateral or international sources, like UNDP or IMF. - 52 -

131. Assuming that public savings are increased by CFAF 1 billion by 1975, as a result of the above mentioned measures, financing of a development program of close to CFAF 4 billion per year would be possible over the years 1970-75 under the more optimistic CDP projection. During this period, local public contribution (net of debt amortization) could average about CFAF 0.6 billion per year, including a current budget contribution towards the IDA financed road maintenance project, while foreign aid can be expected to contribute an average of CFAF 3 billion. Supplier credits and possibly some local borrowing could close the remaining gap. Under this assumption, over 85% of new investments would be financed from abroad, while the gross investment program, including amortization, would be financed to almost 60% by foreign sources. The lower GDP projection does aot permit a development program of the above size; with public savings just sufficient to cover amortization, there would be a gap of CFAF 1 billion between foreign aid and total investments. If this were covered primarily by supplier credits, or conventional borrowing it would lead shortly to an unmanageable debt burden. Thus, a program of little more than CFAF 3 billion per year is the maximum that could safely be envisioned under the pessimistic assumption, with a government contribution of about 5%, consisting of the current budget contribution towards road maintenance and 95% of foreign aid. Achieve- ment of economic growth well above the mission's minimum projection is therefore of great importance to Mauritania, and strengthens the priority to be given to directly productive investments, especially livestock development and the fishing port of Nouadhibou.

132. Total foreign financial aid is expected to increase to about CFAF 3 billion per year from the past average of CFAF 2.4 billion a year. This expectation is based on what is known of the intentions of major aid givers and on the possibility that Bank Group financing may assume somewhat increased importance over the next five years. Net of debt amorrtiZ- tion, foreign aid might slightly fall over the next few years, which makes it especially urgent to increase local Dublic savings. Crant aid is projected to fall from 75 to 60 percent of total aid disbursements over the next few years while loan aid is exnected to Increase correspondingly. - 53 -

C. Terms of Foreign Financing and CreditworthIness

133. Mauritania's heavy dependence on foreign resources to finance its economic development gives special importance to average terms and conditions of foreign aid over the coming years. Because of large -ining exports, the balance of payments situation is not expected to give rise to concern, and Mauritania's membership in the West African Monetary IUnlion will inL any evernt provide automatic overdrafts to avoid liquidity problems. On the other hand, the public finance situation calls for great caution in increasing foreign indebtedness. If between 1971 and 1980, MaLtritania were to borrow CFAF 4 billion annually on conventional terms, (7%, 20 years) total public debt service in 1980 would most likely exceed 40% of government current revenues, even though it would amount to less than 12% of gross exports and 18% of total exports net of trtnsfers by the two mining companies.

134. Mauritania can count on considerable grant aid estimated at near:Ly 40% of what the mission considers a satisfactory level of public developmenet outlays during the next five years. Nevertheless - even under the most op-- timistic assumption about GDP growth and public savings - a satisfactory level ol public investments can only be maintained if the bulk of non-grani: aid will become available on very concessional terms. Under the high GDP projection, a development program averaging CFAF 4 billion per year could realistically be financed by about CFAF 1.7 billion grant aid, CFAF 1.2 billion loan aid, CFAF 0,.4 billion supplier credits and CFAF 0.6 billion public savings net of debt arnortization. Even if all external loan aid were on concessional terms (3'%, 20 years and 3/4%, 50 years), total external debt service would amount 1o 18% of the most optimistic current revenue estimate in 1975. Under the lower GDP projection, a development program of only CFAF 3 billion per year could be financed, mostly by foreign grants and loan aid with hardly any supplier credits, since even with all loans at concessional terms, total foreign debt service would reach 14% of current revenues by 1975. In both cases debt servicing would absorb the bulk of public savings (72 and 86% respectively) leaving very little for the financing of new investments.

135. If MauritanLa carries out a successful austerity policy, including improvement of tax revenues, and cut-backs on the use of supplier credits to a level not exceeding that suggested above, concessional lending up to an average of CFAF 1.2 billion ($4.3 million) per year over the 1970-75 period would appear to be justified.

136. Even if foreign lending is entirely on concessional terms (except for limited amounts of supplier credits), the contribution by public savings to the financing of government investments will remain limited. Under the high GDP growth assumption it may reach about 15% of total investments but fall to 4% under the low assumption. Since grant aid and supplier credits generally require no local counterpart contribution, Mauritania would be able to contribute at most between 8 and 30% of the cost of projects financed by foreign loans and credits, assuming that it does not finance any proiects entirely out of its own resources. A substantial part of its - 54 - contributions is already earmarked as counterpart funds towards the IDA- financed road maintenance project. Accordingly, Mauritania's contribution towards foreign aid projects will be modest and on the average well below the local cost components. In these circumstances, external aid would need to cover a part of local expenditures, particularly for rural projects with a low foreign exchange content. STATISTICAL APPENIDIX

LIST OF TABLES,

1. External liediun and Long Term Public Debt

2. Estimated Future '3ervice Pa,2ments on External Public Debt

3. PopuLlationi 1959-1'369

4. Employment 1963 -1970

5. lNational Account Estimates: GDP at current prices, 1959-1969

6. National Account .stimates: GDP at constant 1969 prices

7. National Account: Gromth rates

8. Per capita National Account Data

9. GDP and GAP: Estimated Use of Resources

10. 3ectoral Distribution of Gross Capital Formation, JuLy- 1, 1963 - June3 30, 1L967

11. Esti-mates of total Foreign Trade (adjusted)

12. Breakdown -by commodity, groups of total estimated imports

13. Breakdown of recorded foreicn trade with selected countries

14. Balance of Pa-mentOs, 1959?, 1964 and 1963

15. flone.tary survey, 1962-1969

16. Assets and LiabiliLties of 3CSAO,, 1963j-1969 17. Assets and LiabiLities of Deposit rione' Banks, 1963-1968

18. Analysis of Outstandcing Short Term Credit, 1964-l969

19. Ana:Lysis of Outstanding Medium and Long Term Credit, 1965-1969

20. Total Loans Granted by the Development Bmnk (ErN)

21. Estimated Total Budgetary and Non-budgetar-. Expenditures of Central Government and Tlhseir Financing, 1960-1969

22. Government Current Budget Revenues, 1960-1969

23. Government Current B1udget Ixpendituress, 1960-1969 - 2 -

2h. zummary of Current Budget Expenditures

25. International Camparison of Current BudLetar,; Expenditures

26. Public Development Z)Menditures and Their Financing, 1960-1969

27. Actual Disbursements of Foreign Public Aid, 1959-1969

28. Foreirn Public ProJect Aid: Commritments a-d Disbursements, 1960-1968

29. Breakdown of Foreian Public Aid by Sectors (Commitments), 1960-1968

30. TmnA^t of Budgetar-y ODerations on Treasur-, Accounts, 1966-1969

31. Treasurn. Balance Sheets. 1966-1969

32-. Zstimates of Auricultural Production. 1959-1969

33. Livestock Sector `tatistics. 1959-1968

34. Forestrn7 Marketed production of Gum Arabic, 196o-1969

3r: - Pi h nrnucrti on. 1960-1969

36- Minimng: 24TFXR AA Tron Production. Rw*vrirts,Personnel

37. Produr-tion and Consimntir,n of Enervv and 'later, 1965-1969

38. Road Tansport

I. n T,Anf4- 4., VAiir'n+.e L42 r ro'AL.LeAI*t± U n St J ..ucatio… Table J1: TERiA"L PUDBLIC DEBD OUUSTANDING L' OF DV':ATAWwI 31, l7% 1

LJbO Tnepayab.l in F oreiLgn uurr1uiy EJ

(In thousands of U.S. do'llars)

Debt uutstanding Source December 31. 1268

Disbursed Including only undisbursed

TOTAL BDrERNAL PUBLIC DEBT 24.408LO 40,844 Privately held debt V 10,582 10,582 Publicly issued bonds it 10 10 Suppliers - France 4/ 738 738 Others 4/ 9,841 9,841

Loans from international organizations - IDA 1,622 6,700

Loans .fram governments 1/ ,1,197 2 5 China Mlainland J - 33,09 France v 12,197 18,499 USSR - 1,447

1| Debt with an original or extended maturity of over one year. / Defined to include the CFA franc which is freely convertible into the Fronch franlc. 31 Excludes an IBRD Loan of .53,490,000 to -1IFEMIKA, a private company. W Includes debts payable in French francs and in CFA francs wdhich are converted at the exchange rate as devalued in August, 1969.

Source: IBRD - Statistical Services Division, Economics Department Table 2 : ESTIAATED. FUTUrE SERVICE PAYE.{NTS ONG EXTERAL PUBLIC DEBT OUTSTANDING INCLUDING U14DISBUfLSKD AS OF DECMMlER 31, 1968

Debt Repayable in Foreign Currency

(In thousands of U.S. dollars)

Debt Outstanding (Begin.of Period) Payments during period Including Year Undisbursed Alnortization Interest Total

1969 36,335 1,853 1,055 2,908 1970 34.482 1,854 1,059 2,913 1971 32,628 1,878 1,033 2,911 1972 30.751 2,406 1,004 3,410 1973 28,344 2,390 907 3,297 197h 25,954 2,552 812 3,364 1975 23,402 2,'558 711 3,269 1976 20.8!44 1,971 602 2,573 1977 18,874 2,015 514 2,529 1978 16.858 1,998 417 2,415 1979 14,860 1,339 319 1,658 1960 13.522 266 255 521 1981 13,256 269 248 517 1982 12,986 215 243 456 1983 12,771 219 238 457

HTott: Tncludes service on all debt listed in Table 1 prepared September 3, 1969, with the exception of the follvwing, for wThi eh rRnavment terms are not available:

Lo-n.s -from. China iainland $;3,609,000 F:tSincpe - 900-000

Source: IBDUD - ,tatistical Services Djivision., Econcanics Department 'Pftl-l1 * DrVITT A'TI T,.T

A. Total Po)lation 000)

.i-|d oeurrt.ary UZUdZ1 Niationals population at ion

Ld4 f year -o 19 1960 9kS4t5 77 l35% H 1962 991 1963-L7V_1 ~ J.V.LU1,016 1964 1,043 19u:_> Xs07 14; 5, 1966 1,089 * t 1. i J7U( .Lo.L'J 1968 1,126

1970 1,165 72.: 14; 1i 1971i 1,o6 1972 1,207 1973 1,220 1974 1,273 680 1L8

E/Extrapolated by applying increases of 1-5-1 and l.s; in the nomad and sedentaryr population, respectively, on the ba,b of the 1964-65 non-urban population survey, andc.C) in urban population according to projectiorLs by the Directorate of Statistics. The-natural rate of grouth of the urtban population has been estimated at 3.O. The remaining 5% increase is a consequence of imigration from rural areas.

2J There are some 10-15,000 foreign residents of iAi*eh about 5,000 are Senegalese. Frenchmen represent the largest part of the non-African population.

B. Regional Totals (196l) Densit3 Region Population Area(IOn') (Persons/ioju' i llodh Oriental 192,000 166,000 1.1 II Hodh Occidental 104,000 57,000 1.8 II Guidimaka, Assaba Lo4, wo 4 7PU0 3.9 IV Gorgol 92,000 1h,000 6.5 V Brakna, Tagant 207,000 131,000 1.6 VI Trarza, Tnchiri 210,000 U2J00 l;9 VII Adrar, l'iri-Zemmour 111,000 471,000 0.2 VIII Baie du Levrier 26,000 31,000 0.9 District of Noualcchott 20 000 1 000 20.0 1o,146ru000 1A30.ir Sta ti.11-19 Table 4: nMIPLO'i I'A-

A. Number of Salaried Einployees ( private sector)

1263 1965 1967 1970 (est.)

Agriculture, fishing 326 470 5`3 1, l00j llining 3,265 3,831 4,107 4,7002 Aanufacturing 191 138 107 200

Construction & Public .Wiorks 2,503 1,435 2,042 2,000

Public Util-ities 124 119 306 300

Banking, insurance, commerce 435 324 394 400

Transport 841 655 638 700

Other services 405 696 567 600

Total 8,o90 7,718 8,884 0l,ooo (sic.) (sic.)

1/ Increase in the fishing and mining sectors are mostly due to the start of operations of LnAPEC and SC&4IA by mid-1970. B. Avera:e monthl2 income (CFA francs) 1963 1965 1967 l2Y0 (est.)

Agriculture, fishing 18,000 22,000 22,000 25,000

Mining 46,000 55,000 55,000 63,000

Manufacturing 18,000 27,000 25,000 29,000

Construction & Public 'Jorks 20,000 26,000 25,000 29,000

Public Utilities 28,000 27,000 36,000 41,000

Bank, insurance, c amnerce 35,O00 37,000 42,000 48,000

Transport 27,000 27,000 28,000 32,000

Other services 19,000 21,000 15,000 19,000

Monthly average 32,000 40,000 40,000 46,000

Source: Annuaire Statistique, R.I.M. 1968 Table 5: NATIONAL, ACCOUNT ESTIMATES: GDP AT CURRE]NT PRICES 1959-1969 (billion CFA Francs)

l1Q;cQ 1960 196S1 19s62 1963 :1964 1965 1966 1967 1968 1969 (prelim.)

Rural Sector Agriculture 2.2 2.2 2.3 2.3 2.3 2:.3 2.5 2.4 2.7 1.8 2.8 Livestock 8.2 8.3 8.6 8.9 9.2 10.2 .1.0 11.6 11.9 12.8 10.6 Forestry 0.1 0.1 0.1 0.1 0.1 0.2 0.1 0.2 0.3 0.3 o.4 Fisheries 0.4 0.5 0.5 0., 0.5 0.6 0.6 o.6 0. 7 1.2 1.0 T'otal . 10.9 11.1 11.5 11.7 12.1 13.3,

MiLni-nf, .0 O0 .7 1.3 2.1.7.9 11.8 13.0 11.9 13.2 14.2 Industry, Power .3 .3 .3 .,3 .4 .5 .6 .7 .8 .9 1.0 Tradit.HandicrafTs .3 .3 .4 .,4 .4 .4 .4 .5 . t5 .6 .7 Construction .5 3.6 5.6 4.,l 2.1 1.2 1.2 1.2 2.6 2.9 3.4 Transport Commnerce, Services 1/ 1.0 1.2 1.1 1,3 1.7 4.4 4.8 4.9 5.2 5.1 5.2 Administration 3.0 3.1 2.9 3..7 4.0 ,4.0 3.8 3.8 4.-1 4.0 4.5

8 GDP at Factor Cost3 16.0 19.6 22.5 22,8 23.1 31.7- 36.8 38.9 4o0. s L2. h3.8

Indirect taxes 0,7 0.7 1.5 2.0 1.9 1.9 2.2 1.9 2.h 2.8 3.3

GIDP al. Market Prices 16.7 20.3 24.0 21l.8 25,0 33.6 39.0 40.8 43 D h5.. o 16.0.1

1/ Including public enterprises, excluding indirect taxes

Source: Missi.on estimates based on production stat:sti(% and national accounts for 1959. 196L and 1w&3. g96T pu'e 'rr(jl') '6~T,6 aoJ; Sq.TXn(zOe Tcuo7qt'U p)U'U SQTl.STq-dqS UDLTnZM-.,,O,wCL UO i,jxa''@ 4Fss .[S, D ';

s;3xN W ,pE:-p 'TXls -a t>=TzrdaaauG 3TI4ll'(i -'u-i--E.L>- T

.' DT S-~87~* - ~~~~~~~~T~7&I zg OZ T Z' - - ).D

Tg [.[. 6cDc-S' Q £ 5' t7,. 5 1o b5 61 Le L- 't7 8 7 4,*1E*T£ al- v

*t. .. i -J Ku °T L L 9 9 S 5 5 i7 r~~~~~~~L17t7* 0-1~ ~ ~~~~~~~~ 8- L- 6-' t 'T o-a e7a:, - WlSn?u U*- Mianil-,U Z ~~ ~ ~ I1~ ~~~' -1 T It,7T 7 .* 6-tl9 ()O

jllo%oas or @is- 0 9' 9 'o 9o 700

9, 01 L¢ZlT TI6-1 0 I 11"ozlc^s 9 G 6T 9 - T

O'T~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~r9 F, IDst IF

0lgl 8 9 .o 1-. 0 77:___

~~'o L 0 J ~~~~~~ D EI !1 IIT4aq)Oe,o0 D 9-OTL'(-,T 6,~~~~~~~SEl:isTT6 9I.lOTTi O'TT 6e :~O6-,1ITf '- 2tlDn;lv19 T - al( g& 8'' P' 4.~~"r:

At curtn. rrlc 4w

"lural see'.or . i.,a _____

4d,mi~~~~e .in_ n s . p s.. ______

ToL:.;l aDt. narket priees ,-'~~~44 -r''"- p,a ' / -, -p- pri~~ ce 1t -

At~~ C_,tal_ ____ 'tC~_ _ __.___ At, c ons f.ani, n t,i c h S

Tradi tior.ea rura I sector 1' ,/ :.: _'_ _ - , ,,

______T...6______._____

. od'E'r' .ii p. - j-. _CDpa

iotal mrua' scetor / ,<'r,,'_1 -- _

.: .. e. ______

Indus. r___owf____

fr.dus.rcr, !-owber .~-_i<.:'; '.a. ,'_ __i _ 1:.,2

dons'-ucFetCor ' i. _r,,a_ ', 'p.

'o;.al rmoder7 grj(: cr ' - p, . _ _ : P a,

Z _ 1/,* S :.U a ... ._

r. Indirecri taxes _zi> ,,d_ pa

-'otsa DF at rqrlket prices _T..: r.a. . . ,

~~~~~~24 ______2...... i&__ _ _ _

4t.ccnsIL_t. nriLces

'rradi 'innlaI rural

_ _ _ _ _. _ .____ .. _ _

XodemT. secLor i.. p,a,P.a__ / ' 5.2 p.a.-

______1'. p~.a. ______

loot-l t;il! at. markctl P rlCt2:2 5i.* p.o. __ _a . . ___.

L/tgrieillure, livesr.eck, forestry, LradtLAcnoal fishir.g

,,crJiCei ._,jLUAII bItJC.JJ1 Table 8: PER CAPITA NATIONAL ACCOUNT DATA (in CFA Francs)

1 959 1960 1 961 1 5962 1963 196b 1965 1966 1 967 1 968 1969

GDP at market prices At current prices 18, OLO 21,500 24,800 25,0DO 2IL,600 3:2,200 36,400 37,400 :38,800 40,500 L1 ,o040

Growth rates / 12.3% p.a. / / __ 5_==_= p.a./

At constant 1969 prices 21,030 25,100 28,LOO 28,000 26,750 33,530 36,800 37,600 39,L4:0 L3I,l1c 1,h,CLO

Growth rates /_9.8% p.a. / / ___ 4-_1_!.1%, p.a. __=/

GNF' at mark prices At current Frrices 17,,320 27,130) 33,710

Growth rates / 9.h% p.a. / / 14.1% p.a.

At constant 1969 prices 20,270 28,45( 33,710

Growth rates // 7.0% p.a. / / _ 3.51w p.a. 7_ _ _ __a. p

Population (in '000) 92) 9115 968 99 1 1Q16 1043 1070 1C89 1108 1126 114hE

1/ 'EnClLuding foreignerS Source: mission elaboration Table 91: GDP AND GNP: 3STIMATED USE OF RESOURCES (billion CFA Francs)

1959 196I, 1 968 I. GDP GM (at current market prices) 16.7 100. C% 33.6 1 'DO.C% 45.6 100.0% Balance of trade and services J 0. 5.b,% 0.8e - 2.4%_ - o.6 - 1.3% Tota-L available domestic resources 17.6 105.I.4% 32.8 97.6% h5.O 98.7% Consumption 15.1 9L .t0% 26.7 79.5% 32.5 71.3% Investments 1.9 .4% 6.1 18.1% 12.5 27.4% Domestic savinlgs 1 .0 6.09t 6.9' ,20.59% 1 3.1 28-.7%

II GIGNP iT ('at current market prices) 16.7 1 00.O% 33.6 10.0oh, 45.6 100.0,% Net factor na2nments and remrittances - 0.7 - 4.2% 5.3 i-15.8% - 8.1 -1'7.8% LaN '-= 3' '713 7 -77 M-2T

1,N?/ 16.C) iDO. o% 28.3 100.o0%, 37.5 100.0% Balarnce of trade and services - 0.9 _ 0.8 - 2.8% - 0.6 - 11.6% Total availabl]e natiornal resources 1 5. 72 - 3 7

Cons-cumtion: 5 98.1% 26.7 9.44h% 32.5 86.7% Public -76 7 2 3. 17 I oirivate 11.1 69.4% 20.2 ii.4% 26.0 659.3%

Investments: 1 F . l .91' 6.1 2i.61, 12.5 33.1% poubli z ,, + 1 private '_/ 1 .1 6.9; 4.i i'.5% 9.1 2h.3%

National savings: 0.3 1,.9% 1.6 5.6%. 5.0 1-3.3% public n n. a.7 -0.9 - . private n.a. n.a. 2.5 8.8% 4.1 10O.9%

1/ Includling net errors and ommisions 2/ linclucLing stocks Source: Mission elaboration based on national accounts for 1959, 196h and 15'68 Table 110: SECTORAL DISTRIBITION OF GROS CAPITAL FORPIATION, JUILY 1, 1'963 -- JUME 30, 1967 (million CFA Frarics)

Public sector Private siector Total investments

General studies 366 4.4% 214 1 .1% 580 2.1%

Agriculture and livestoc:k 1 ,1'76 14.2% 107 o.6% 1 ,283 4- 8%

Mining 2652 3.2% 11,293 61.3% 11, 555 43.3%

Fishing 970 11.7% 3,110 16.9% 4,()80 i5.3%

Transport and communication infrastructure 2,376 28.7% - - 2,376 8.9%

Education and training 393 4.7% - - 393 1.5%

Urban infrastructure and housing 1,0'72 12.9Z 1 ,290 7.0% 2,362 8.8%

Healtfh Bo4 9.8% - - 804 3.0%

Adn.inistrat:ive buildLings 525 6.4% 650 3.5% 1,1175 4.4%

Services 334 4.0% 1_765 9.6% 2 099 7.9% 1r 2910 1,,2-100 T 2 ,'707 1T00

Source: "B:ilan d'execution du Plan Quadriennal, 1963-1966". R.I.M.. Table 11: ESTIM TES OF TOTAL FIREIGN TRUAI (ADJUSTED), 1 559-1969 (million of CFA Francs)

1959 1960 1961 1962 1 963 1964 1965 1966 1567 1968 1969

EXportS, tDtal, 3 ,320 3,350 3,620 4,0o0 6,606 13,800 16,390 19,010 19,610C 20,95( 22,800

Recorded: n.a n.a. 430 695o 3,980 11,320 14,260 17,140 18,23C0 18,200 20,020 Iron ore - - (2,710) (10,650) (13,310) (15,830) (15,820) (15,820) (17,420) Fish (270) (220) ( 320) ( 360) ( 590) ( 660) ( 99C0) ( 980) ( 1,250) Livestock, gum arabic and other oroducts (160) (470) ( 950) ( 310) ( 360) ( 650) ( 1,200) ( 1,400) ( 1,350)

Unrecorled: - n.a. n.a. :3,190 3,310 2,1620 2,480 2,130 1,870 11,380 2,750 2,78.0

]hports, total 6,940 10,980 17,460 18,5500 16,950 13,70) 14,850 14,480 15,67C1 15,77( 18,50

Recorded: n.a. n.a. 7,680 8,800 7,1410 3,880 6,140 5,680 8,410 9,340 10,370 MIFBUJ4A (7,000) (8,1 00) (6,700) (3s,00) (5,050) (4,000) (04,91c) (4,330) (n.a.) other, incl.SOMfMA ( 680) ( 70)0) 7110) ( 880) (1,090) (1,680) (3,500) (5,010) (n.a.)

Unrecorded: nn.a. n.a. 9,780, 9,700 .9,540 9,820 8,710 8,800 7,260 6,430 n.a.

Balance of TraLde -3,620 - 7,590 - 13,840- 14,5500 -10,350 + 100 1,540 +4,530 + 3,940 + 5,180 n.a. 7(coverage of imports ty exports) (48%) (31%) 1(21%) (22%) (39%) (101%) (110%) (131%) (1125%) (133%) ( _

1/ inainly cattle on the hoof and decreasing amounts of arabic gun L// mjiinlyu,ak!7 iso±-s-i-elruedut; .Iv:t5gi'upototuSijJui uuitisi aiid i i .1:l la-xit n a -iai 3czrcco azJd Span-,

Source: Mission elaboration on the base! of National Account, Foreign trade Statistics aLnd various other data. Table 12: BREMKDOW1N BY COMMODITY GROUPS OF TOTAL ESTDMTED IMPORTS (million of CFA Frarkes)

1959 I 6h 1 968

Foodstuffs, beverage and tobacco 3,850 55% 4,51( 33% 4,390 28%

Energy (petroleum products) ) 570t 4% 930 8% ) 860 1 3% Rtaw m,aterials and semi-finished ) products ) 1,250 9% 1,430 9%

Capital equiprment, incl. transport ) material ) 4,o60 30% 5,300 33% ) 2,230 32% Finished products for consumption ) 3,310 214% 3,720 22%

Total 0( 1 3, 100% 70%70

1/ The nzumber of Europecrn populaticn has bc"n do"rcasing aftor the depart:urejof most of FrenchtrooPs stationed in Mauritania.

Source: National accounts 1959, 1 964 and 1968 Table 13: BREAIDOWN OF RECORDED FOREIGN TRA1E W[TH SELECTED COUNTLIES (miLllion of CFA Francs)

EXPOFLTS IMPORTS

19,54 1967 1969 1964hX59 1967

France 2,310 20% 3,480 19%t 3,935 19,7% 2,100 54% 4,140 h49% 4,()31 39%

EEC (excl. France) 1075 45% 7.85 0 43%. 8..466 42% t495 13% 1.C20 12% 1.1±59 114% Gemnany,Fed.Rep. (2,665) (2,970) (2,829) (450) ( 360) f 893\ Belgium-Luxemb. ( 350) (2,l5O) (2,4242 (201 (180 (369) Ital-y (1,700) (2,,,560) (2,654) 5) (290) (11109) Netherla:nd (360) (170) 5591 (2 0 1 (190) (88

Other Europe 3,100 27% 4,380 24% 5,,545 28% 150 14% 330 4% 1 ,231 12% U.K. (2,980) (31,55o.) (4,720) (70) (190) (1,002)

Africa 335 3% 48o 3% 1,248 6% 35 1% 195 2% :364 4% UMOA countries (n.a.) (6) 1k470) (n.a.) (73) (95)

The Americas 350 3% 140 1i 70 0.3% 890 23% 1 ,565 19% 1 ,747 17% USA (338) (11o) (34) (720) (1,200) (1,1h30)

Other coumtries 150 2% 1,900 lO% 756 14% 210 5;% 1,160 114% 1,538 14% Japan (120) (470) (495) _ China, Main1cd. ~-~ -- .) (600) ('768)

Total 11,320 100% 18,230 100% 20,020 100% 3,880 1C)0% 8,110 100% 10,370 100%

Source: BCEAO, "Notes d'inforiation statistique. Indicateurs 6conomiques mauritaniens" No. 169, 1970 "Bulletin mensuel statistique", R.I.M. Table 14: i3ALANC) 0Q PAYIKU 1959,I, 19&L, 14 & (billion C`-A Francs)

1959 1964 J.-

1. Current accouwt

Exports .3 13.8 1:.6 Tmports (6.9 13.7

Balance of trade - 3.- 0.] 5.2

Balance of service 2.3 -0.6 - 2.2

Balance of goods and services - 1.3 - 0.5 3.1

Interest on public debt n.a. - O1 _O1

Private investment income n.a. - (41 - o 9

Other private remittances n.a. - 1.. - 1.1

Jet factor payments and private remittances _ 0 77- 5.

!let errors and omissions O. 1.3 - 2.5

Current account balance -. 5 - 7.5

2. Capital acco-unt Public: transfers O,°0.59.

grants 0.1 1.

loans (gross) 0.7 O.] 1.0

amortization - - C.2 - 0.2

total 2.3 2.4 3.5

Private: lonR term capital (grF,r n. . H.

amortization n.a. - 1.5 - 2.5

sncrt term capital (net) n.a. 0.6 - 0.6

total - 0.7 1.? 3.0

Capital account balance l.s 4.1 ( *5

3. Changes in foreign reserves

(- fall in reservesj 0_L -.

Source: mission estimates, based on national accounrt data and various other sources T'able 15: MO)NETARY SURVEY 1'962-11969 (million of CFA Francs, end of period)

1 962 1963 1 964 1 965 1 966 1967 1 968 1969

Net Foreign Assets 3,200 3,275 2,653 2,472 2,7147 2,556 1,551 321

Domestic CredLit: 4-54 - 573 130 16 635 ',484 3,092 4,623

(Claims on Government) (-- 1,713) (- 1,535) (- 1,136) (- 1,524) (- 797) (- 1,125) (- 942) (- 460) (Bank: claims on privaLte sector) (1 , 2 5 0 )E ( 948) (1,262) (1,524) (1,389) (2,593) (3,998) (5,052) (Treasury claims on private sector) ( 9) (14) ( 4) (116) (43) (15) (36) (31)

Assets = Liabilities 2 ,i14 6 E 2,7(02 2,783 2,488 :3,352 14,040 4,643 4,944

Money 1/ 2,672 2,689 2,5115 2,1 45 2,91'1 3,464 3,996 4,119

(Currency outside banks) (1 978% (i ,611) (1,7(01) ((1,2'30) (1,246.) (1,425) (1,561) (1,784) (Deposits with bariks) ( 592.' ( 906) ( 691 ) ( 769) (1,50.5) (1,755) (2,217) (2,06,0) (Postal checking deposits) ( 102) ( 1'72) ( 123) ( 146) ( 15D) ( 284) ( 218) ( 275)

Quasi-morkey 68 50 50 1 60 200 386 397 623

Other items (net) 6 - 37 21 8 1133 241 190 250 202

1/ Money (seasonally adjusted) n.a. 2,594 2,344 2,1 44 3,126S 3,330 3,993 n.a.

Source: International Financial Statistics, IMF. Table 16: ASSETS AND LIA13ILITIES OF BCEAO 1/ , 1963-1969 (million CFAL FraLncs, end of period)

1 963 1 9614 1 9655 1 966 1967 1 968 1569 1, 01 0 Foreign Assets 2,504 2,571 2,L411 1,922 2,174 1 ,837

Claims on the Gc,vernment 2 1 1 1 1 1

Claims on blanking-rediscounts 914 24 _ - _334- 10,348 (short termi) - -- (175) 1(571 ) (mediun and long term) (914) (24) - - - (159) (777)

2,358 Ass;ets = LiabiliLties 2,600 2,596 2,412 1,923 2,17'5 2,172 1,9949 Reserve Money 1,687 1,769 1,331 1,317 1 ,493 1 , 702 1463 226 Goverrment Deposits 907 754 1,012 484 667 (217) 45) (Treasury Deposits) (62B) (469) (747) (92) (3c05) ( (181 (Currency held by Government) (279) (285) (265) (392) (362) (246)

7 183 Foreign Liabilities 6 73 69 122 15

1/ Mauritanian branch office Source: International Financial Statistic, IMF. Tabl,e 17: ASSETS AND LIABILITIES OF DEPOSIT MONEY BANKS, 1963-1969 (million of CFA Francs, end of Deriod)

1963 1 964 1 965 1966 1967 19568 1969

Reserves 75 69 101 76 125 25;2 149

Foreign Assets 936 486 694 1,340 949 3508 1126

Claims on Private sector 948 1,26:2 1,524 1,389 2,593 3,9598 5,052 financeBd by: c'wn resources,, incl. dnebosits abroad (854) (1,238) (1,524) (1,389) (2,593) (3,664) (3,704) rediscount BCEAO (94) ( 214) ( - ) ( - ) ( - ) ( 334) (1i,348)

Assets = LiabiLities 1,959 1,817 2,319 2,805 3,667 4,648 5,327

Demand Deposits 906 691 769 1, 5C5 11,755; 2,217 2,060

Time and Savings Deposits 50 50 160 200 386 397 623

Governrant Deposits 798 520 657 450 734 668 478

Foreign Liabilities 159 331 5:64 423 552 677 631

Credit from BC]EAO 94 24 - - - 3:34 1,348

Other items (et) - 48 201 169 227 240 355 187

Source: International Financial Statistics, IMF. Table 18: ANALLYSIS OF OUTSTANDING SHORT-TERM CREIIT, t964-1969 (million of CYA Francs, end of period)

1 964 1965 1 9663 1967 1 96B 1 969

- - - 12 Agriculture, Livestock - - 100 117 113 Mining 70 326 - 589 798 631 Fisheries and other industrial activities 128 i48 388 280 7416 427 Construction ancd Public Works 77 1 36 99 274 307' 648 Transport 83 92 179 621 831 1,225 Cormierce 342 298 291 1/ 236 667' __06 Other sectors or unclassified -perations 166 _136 67 3,466 4h,125 Total credit fronn Banckinig System 866 1,136 1,024 2,100

/ Loans of less than CF.A 10 million are reported tc) the "Centrale des 1Yisques" on a voluntary base only; therefore they mostly escape sectoral recording.

Source: International Financial Statistic, IMF Table 19: ANALYSIS OF OUTSTANDING MEDIUM AMD LOwNG-TFRM CREDIT, 1965-1969 (million of CFA Francs, end of period)

1965 1966 1967 1 968 15P69

AgricuLture, Livestock -- - -4

Miniing n.a. - 250 120 375

Fisheries and other Industrial activities n.a. 150 110 190 1930

Construction and Public Works nsa. 21 1 9 65 137

Transport n.a. - - 55 1i18

Commerce n.a. - 75 96 74

Ot]ner sectors and unclassified operatiL ons 388 193 _38 6 h49

Total credit from Banking System 1/ 388 364 h92 532 9'27

1/ Total medium- and long-terxm credit amrountcd to CFALF 243 million and CFA :396 mill:ion in 1963 and resP ttivel;nvGL IiIQ, v…-A._akdn b- sectors i_ia

Source: International Financial 'Statistics, ]M . Table 20: TOTAL LOANS GBANTEI) BY THLE ]DEVELDPMENT BANK (BMD) (rnilliDn of CFA Francs, as of Sept.30, 1969)

Lo nlg -tesrm _ Mediuin-term Short-tenr Total Number Amount Nibie Arnount Number Ainount Number Amount (%)

Agriculture 1 14.4 c; 18.5 19 '12.0 25 4l.9 3.5%

Manufacturing, incl.fishirng industries 3 203.7 8 11 0.0 5 2B5.5 16 599.2 46.3%

HousirAo 97 100.5 219 30h4.4 2 3.4 318 408.3 31 .5%

Consumer Credit - 3,0118 146.3 3,018 1416.3 11.3%

Government entities 3 96.0 3 96.o 7.4%

Total 104 414.6 2 32 432.9 3,044 1447.2 3,380 1,294.7 100.0,.

(%) 32.0% 33.4% 34,6Z. 1 00%

SDurce: Data provided by the Mauritanian authorities Table 21: ESTIMATED TOTAL BUiLGETARY' AND NON-BUDGETARY EXPENDITURES OF CENTRAL GOVERNNENT AND TJEER FINANCING (million of CFA Francs)

(estimates) Avqerage Average 1960 1961 1962 i963 19614 1965 1966 1967 1 968 1969 1960-64 1965-68

Expnditu-es

1. Current Expendiltures incLuded in the current budget 3,038 3,412 4,335 4,287 4,117 L,,1554 4,390 4,916 5,1 37 6,372 3,838 4,662 technical assistance (net of locakl contribution) 350 424 476 545 539 530 579 630 61 570 467 587 uripid bi:Lls 1 5 7 20 10 17 61 83 130 166 8 73 total 3,39 3 T E7 4fM 4;7 ;0'700 ?,629 77 7,106 4,3 5,322

2. Current Revenues Me3uded Ln the current budget 1,041 2,341 3,282 3,413 3,766 b.,573 4,7146 5,1°91 5,701 5,829 2,769 5,053 paiti di rectly. ir.to t-.e Calissc de Reserve 72 - - included Ln the equipmnent budget 120 _ _ 2 50 _ 24 13 total 1 ,To4 2,46 3,2 3T,1 3 3,767 4.,573 7,7E ,193 T75 ,9 01 ,793 M-

3. Deficit of Current OperatiOns 2,348 1,380 1,536 1,439 9so00 128 2814 436 177 1,204 1,520 256

4. Equipment Expenmitures included in the current and equi.pment budgets 304 442 709 565 4.8 295 772 689 538 663 493 574 non--budgeted foreign aid projects 1,030 1,100 1 ,505 2,511 1,561 1,1415 1,196 2,215 2,796 2,895 1,5.42 1,905 investmen1is financed with supplier credits _ 6S6 :35 1 086 - 2_ b,33C T,572 r, 3277 2,097 17710 1 , 9 ' 3,369 1644 2,0

i. Overall deficit 3.682 2,922 3.750 4,515 2,s909 1,838 2,252 3,1405 3.5146 Sj699 3J55 2.760

FinaLncing of the Overall Deficit

6. Foreign grant aid French budget subsidies 1,803 1,821 2,2514 901 428 291 465 632 177 54 1,441 391 Technical assistance 350 424 476 545 539 530 579 630 611 570 467 588 Non.-budgeted foreign grant aid 930 250 1,369 1,127 1,433 1,367 911 1,651 1,7614 1,1451 1,022 1,423 total 77 Y 7,553T,5r; r7 ; 7755 :7t 7,ZW277705

7. Foreign loans at aoncessioniar 100 B50 136 1,384 1 2'8 48 285 5614 1,032 ',444 520 482 tenas 8. Short tens indebtednesss35 65 '1, _ 25 SUTIr c-redits 6 5 106 -2 Unpaid biLls 1 5 7 20 10 17 61 8 1 166 8 7 total 1 7 7 20 10 17 b 1148 1S 1,252 r

'i. Changes of freau rReserves498 - 428 - 1492 538 371 415 - 149 - 220 - 203 928 97 - 222

2 2 5 2 10. Total Finhancing Items s,f92 2,922 3.750 4.515 2.909 1,838 L 1 3,140= LJ,46 5, 699 3,555 2,760

Source: "Comptes Defintifs", Direction des Finances Table 22: GoIr i22 C 3IERT EThDGzr rLVLiPJL2 (million of cr, Francs)

j'9k',O 1961 1962 1963 1'6j{ 1965 1966 126 7 1928 lf9

3irect 2axes Rievenie tLxco 143 391 66L 585 821 963 823 8)'l 95L 1,102 Other direct taxes 11 2711 47 230 6L, _ 6, 9 8- 146 Total 261I. 568 908 815 885 1,026 917 921 1,C141 1,24W

T=iTAU'L' Taxation 127 200 538 630 1,084 1,601, 1, 455 1,L39 1,432

Indirect PaxeS Import duties 5KL2 l,O6L 1,124 1,076 1,102 1,078 932 1,031 920 8146 Turnover tax 63 235 593 664 586 527 622 '710 7It9 825 Consu-ner taxes (tea, tobacco, suanpr) 1)4 1.5 i7.31 15 6 245_'/ 15 29121 6733/ 3643I' Petroleum tax 2 5;8 8)a 95 152 177 180 209 265 35;8 Other interna:l taxes 6 861/ 21 28 L6 129 105 109 1.26 59 xport t'xes (other then iron ore) L 5 8 8 8 _90 Total 657 1. L63 2,005 18B86 1,900 2,190 1,903 2,398 2,786 2 2PI

3AEistration and ',tamp Taxes 23 31 52 70 52 8). 85 102 97 1L9

!levenue from Property, Ports anri ''erriceo 80 L9 L.5 49 45 41 80 152 1.83 175

Central 3Bank -rofits - - - - 97 68 68 90 10l6 ' 3.33 Niscellaneous Revernues _-i_ 55 _ 157 80 7-3

Total Current :tevenues 1,011 2,341 3,282 3,)1' _3,766 4,573 5-'°5,1%21 5 5,829

French Current 'Cudget .ubsidies 34v3 1.81 1,85 _50° - - -

Total Zevenues of tne ',urrent 3udget 2,524 4,162 5,134 3,913 3,766 4,573 4,746 5,191 5,701 5,829

Total current revenues in ' of WP al, f9ctor costs .37 140)'')It 1)4 8j 11. .i 1214',;; 12.2, 12 8'' 13 3 13.3%

1/ including miscellaneous cuxstoms revenues 2/ including contributicon from tihe suimr price stabilization f'und / mainly on sugar Source: Comptes D6finitifs, Direction des Finances Tab'le 23: GOVERN!ENT CURRENT BUDGET EXPENDITURES (mil.lion of C:FA Francs )

1960 19601 19?62 1963 19&4 1965 1966, 1967 11968 1969

Par:liament and Presidency 171 214 307 285 188 168 168 1 77 185 186 Jus tice 77 E13 98 99 102 98 94. 97 95 117 Interior 254 29)5 241 248 222 222 21 4 222 178 199 Police 31 2 316 577 582 526 474 481 537 594 6314 Arm;y - 22 300 409 51414 522 502 5141 583 62t Foreign AffaiLrs - 1251' 1148 232 188 170 180 220 159 279 Information and radio 17 254 61 68 67 70 69 82 95 95 Finance 52 62 148 152 160 164 1659 185 187 216 General education 417 387 562 650 6148 717 715 852 914 1,119 Teclhnical educati on 18 2'3 21 22 27 23 20 32 57 13'i Public health, lalbor, social affairs 223 225 :262 247 257 256 310C 358 365 421 Civil service administration 12 13 15 21 5 12 6 11 15 1( Rural development 1 96 1 57 i 82 179 206 1 93 195 232 224 238 Economic affairs and planning 34 18 23 19 18 29 30 33 43 72 Public works 133 179 171 185 1 76 162 1 95 237 256 1914 Maintenance 168 53 '102 107 81 109 106 1.34 93 68 Miscellaneous current expeniditures 459'/ 204 '158 179 15'2 200 187 239 197 Contribution and subsidies 290 225 197 172 1142 198 179' 2,43 258 Contribution towards technical assistance 30 26 26 41 81 83 91 81 99 Public debt service 71 576 :238 106 220 214 398 301 457 Purchases (cars, furniture, naterial.) 70 59 302 73 314 30 31 50 69 Refunds 34 146 '196 211 73 40 46 52 64 Total current expenditures 3 ; 3,41 22 __37 It78,7 4,11 7 ,5;=390 71,9f Loans to public enterprises and par ticipation - 1o8 39 10 20 4 - 3 - n. a. Contribution towards construction 3/ of Nouakchott 23 1 88 17 31 Transfer to the Development Budget 80 27 _ 208 - 20 52 195 Total expenditures of the current budget 3,141 3,735 4,599 1L,328 4,137 4,158 4,410 14,971 5,,382 6,220r

1/ excluding CFAF 130 mio for new embassy buildings 2/ including CFAF' 300 mio cost of independence celebration 3/ including CFAF 130 mio for new embassy buildings Source: Comptes fl6finitifs, Direction des Finances. T 2\ ^* 7 P1, I1717 T BU3,GET E1PEN.DITURES (million of CFA Francs) 1960 I 962 1964 1966 1968 -e a.SolutFe%O absolute S -tabsolte T

au teb s o~ l ~ - ______1 a b s '__I

I._ny tAmon

General administration 583 19.2 1,018 23.5 932 22.7 900 20.5 914 17.6 Army and Police 312 10.3 877 20.3 1,070 26-0 983 22.4 1,177 22.7 Education 435 14.3 583 13.4 675 16.4 739 16.8 971 18.7 Health 223 7.3 262 6.o 257 6.2 310 7.1 365 7.1 RuraL development 196 6.5 182 4.2 206 5.0 195 4.4 224 4.3 Economic affairs and p:Lanning :s4 1.1 23 0.5 18 0.14 30 0.7 43 0.8 Public works and miaintenance 301 9.0 273 6.3 257 6.2 301 6.8 349 6.8 Contribution towards technical assistance s0 1.0 26 0.6 81 2.0 91 2.1 99 1.9 Public debt 71 2.3 238 5.5 220 5.14 398 9.1 457 8.8 Purchases i70 2.3 302 7.0 34 0.8 31 0.7 69 1.3 Miscellaneous, contribiutions, 1/ subsidies, refunds 783- 25.8 551 12.7 367 8.9 412 914 519 10.0 Tota:L s,Od 1050. 0 4 ,73 1Ct. I,-17- 100.0 4,-390 100. by 100.0

II. By time of exiendi ture

Salaries 1 79 148.6 2,086 48.2 2,355 57.2 2,498 56.9 2.882 55.7 Maintenance 169 5.6 102 2.4 82 2.0 1C6 2.4 93 1.8 Materials and supplies 967 :31.8 1,359 31 .4 1,0o48 25.5 944 21.5 1,191 23.0 Transfers 357 11.7 540 12.5 411 10.0 445 10.1 555 10.7 Public debt 71 2.3 238 5.5 220 5.3 397 9.0 457 8.8

Tota:L 3,0o43 100.0 4,325 100.0 14,116 100.0 4,390 100.0 5,178 100.0

1/ incl. independence celebrat:ions

Source: Comptes Dzfinitifs,Directi.on des F-inances Table 25 : INTERIATIONAL COMM?ARI SON OF CURRENT BUDGETAE' ENDITURES

(three-year averages)

Mas-uri.tania ;enegl Mali| per-1Vrolth :Ivorv -coast IDaho[,mey The Gamabi

*,al:iriess c,6 `7 61 38

Maintenance, Mat,eriaLls and. Supplie3s 27 22 26 13 28 2- 49

Transfers 1O 2, 3 17 20 12

Public Debt 7 3 7 8 :12 2 13

Total 1(O) 10() ' (l0O, 1O0O0 lOOto 1OO 1.O0 Table 26: F'UBLIC DEVELPMENT EXPENDITURES AND THEIR FINANCING (million of CFA Francs),

Average Average 1960 1961 19962 1963 1964 15,6S 1966 1967 1968 1969 1960-64 1965-68

Expenditures 1. Budgeted expenditures provided in the current E budget 23 296 S6 41 20 4 - 3 - 0 87 2 equipment budget 281 146 653 524 428 291 77;2 686 538 663 406 572 total 30 709 5448 772 9 4

2. Non-budgeted foreign aid projects grants 930 250 1,369 1,127 1,433 1 ,367 911 1,651 1,764 1,451 1,022 1,423 2 loans and cre(ii ts 100 85o 136 1 384 128 48 285 64 03 14144 520 482 totaL1 1 ,100 TT T T Y,1 Icii6 1 , 2,215 77& 8,290

3. Investments Financed with Sppl.ier Credits 65 35 1 ,06 - 25

4. Total. Devel]opmen t Exoendi- 4 2 1 0 tures 1, 334 Lj5 2,214 3,076 2,009 1 ;7 1, 9613 2,969 3.369 4, 614 ?2,035 2,504

Financirg of Developmeit Exp-sndi- tures

5. Foreign Aid French subsidLes towards the current budget in excess of current bhlget deficits - 870 799 ------334 - French subsidies towards th.e equi,pment budget 20 - 4102 401 428 '291 465 632 177 14 250 391 French project aid outside the two budgets 1,030 1,100 779 2,059 918 'i90 486 1,120 777 7:27 1,177 743 FED - - 715 435' 628 '756 563 842 1,269 983 356 858 IBRD/IDA ------47 174 179 548 - 100 Other ai.d donors - - 11 13 15 69 - 100 79 571 6.32 8 205 total 1 1,970 2,77 i 92 ,912 I177 ir t 1,70i2 2,973 2,7949 2,125 2,297

6. Suppl.ier Credits 65 35 1,0136 - 25

7. Local. Sources Current budget surpluses - - - - - 419 356 277 564 0t E - 404 Miscellaneous contributions - I 1 - 24 6 - - - - 1 total - -- 1 224 12 35 277W - -S 5 -.

8. Total. Financial Resources 1 .050 L 297 2.7D7 2.912 2.013 2;131 2,017 3,189 572 4, 5E 2.130 2,727

9. Impact on Treasuiry Reser- ves increase) 284 - 429 - .i93 164 4 - 421 - 49 - 220 - 203 6D9E - 95 -- 223

Source: Mission elaboration Table 27: ACTUAL DISBURS]EENTS OF' PUBLIC ]FORE]:GN AID, 1959-1969 (million of CFA 'Francs)

1 9159 1960 1!961 1962 1963 1964 1 965 1 966 1967 1 968 1 969

PUBLI:C TANSFERS

FRANCE: E Budget and other 1,200 1,780 1 ,821 2,254 901 428 291 465 632 1747 5 Te!chnical assist. 250 380 45o 500 550 584 583 620 641 660 6,22 Other technical assist. - - 2 36 38 30 50 6o0 s 40 (incl.UN) 17 2,r 2,271 2177 T T 1,7 0 5 1,1-3 1T,333 B 7 7'16

PUBLIC GRANTS

FRANCE, F.A.C. 73 930 250 643 675 790 542 24t8 730 2832 231 E.E.C., - - - 715 439 628 756 563 842 1, 269 988 U.S. AID 11 13 13 30 2:2 17 - -- UlN _ _ 2 33 65 5;0 33 32 Other, mainly Germany (F.R.) - - - 6 13 12 1 80 200 73 930 T2 T139 1,172 sr 73 T 737 911 1 1,7,W;7

PUBL:[C LOANS

FRANCE, F.A.C. ------390 50 56 C.C.C.E. 742 100 85( 136 1,384 128 48 238 - 41b6 486 I13RD/IDA ------_ 1L7 1 74 179 548 Other, mainly China (P.R.) ------358 364 -772- 1 70-0 7)(y -1 3'7T I =,3 1 27 -7r -2 '7 -7 1 ,033 1,,454

TotaL 2,265 3,190 3,371 b.,261 .3,998 2,611 2,319 2,331 3,'548 3,684 3,621

Source: Various publications issued by donor countries and financiaL institutions BCEAO, "Notes d'information statistique. Indicateurs economiques mauritaniens", No. 149 and t61. DataL provided by the CCCE representative in Nouakchott. This refers to years 1965 through 19693. Table 28 FOREIGN PUBLUC PRDJECT AID : OMMITMENTS AND DISEURSEMENTS, 1960-1968 (billion of CFA Francs)

1960 1961 1962 1963 1964 1965 1966 1967 15968 Total 1960r-1968___ I. Commitments Total Grants Loans

Fra-nce FAC: to non-government Institutions 0.9 2.2 0.2 0.1 0.7 0.1 0.1 0.3 0.2 4.8 n.a. n.a. (Government, project aid 1.3 o.8 0.5 0.7 0.7 1.0 0.9 0.3 0.5 6.7 6.2 0.5

CC:CE,- - 0.7 1.0 0.9 - 0.2 1.0 3.8 - 3.8

European Economic Communities o.6 1.8 0.6 - 0.2 2.7 0.2 (.5 0.9 7.5 6.7 0.8

Others . - 0.1 0.1 2.0 - - 2.0 0.2 4.4 1.1 3.3

TotaLl commnitments 2.8 14.8 2.1 1.9 4.5 3.8 1.4 3.1 2.8 27.2 n.a. n.a.

Cormlritmnrts excl. non-government institutions'1 .9 2.6 1.9 1.8 3.8 3.7 1.3 2.8 2.6 22.4 14.0 8.14 (100%) (100%) (100%)

1i .Dbursen excl. non-govetrnmn.nt ins ti tutions 1.0 1.1 1.5 2.5 1.6 1.4 1.2 2.2 2.8 15 10.8 4.5

Unuised balance (cunmulative) 0.9 2.14 2.8 2.1 4.3 6.6 6.7 7.3 7.,1 7.1 3.2 3.9 (32%) (23%) (146%)

Source: -ee previous9 table Tabl,e 29: BREAKDOWN OY FOREIGN PUBLIC AID BY SECTORS (coMmrrMEmTs), 1960-i 968 (million of C]FA Francs)

Grant,-aid Loan-aid Total % FAG EEC Others FAC CCCE EEC E 57 Othtsrs

General studies 254 215 - - - - 4469 2%

Rural sector 1,443 956 - - - _ _ 2,399 11%

Industry (incL.mining and fishing) 1,1144 980 ° 80 2,196 - - 4,400 20%

Inf-.astrUcture 2,836 3,206 - 421 59 765 1,654 8,241 40%

Social 35t 1,378 - _ 901 - - 2,,637 12%

Miscellaneous (incl.'Unclassif.) 226 1 1,039 - 632 - 651L 3 1 5

Conniitmaeits 6,261 6,736 1,039 501 3,788 765 3,308 22,398 100%

Disbursements 5,090 5,212 5XO 440i 3,330 - 758 15,330 (0) 81% 771% 48% 88%t 88% 0% 23% 68%

Source: see previous table Talble 30: ]:MPACT OF BUDGETAFfY OPERATIONS ON TREASU]lY ACCOUNTS (million CFA Francs)

December 31, 1966 December 31, 1967 December 31, 196$ December 31,, 1969

Budgetary Accounts Credit Debit Ealance Credit, Debit Balance Credit Debit Balance Credit Debitl Balance

1. BLdget

Cur-rent yearl s lbudget '4,o59 4,568 - 509 3,923 5,007 - 1,084 15,206 5,023 + 183 5,662 5,251 + 411 Unclassified operations 1,375 467 4 908 1,915 458 + 1,457 556 687 - 131 5162 1,292 - 730 Reserve account 1/ 189 - + 189 516 - + 516 393 + 393 201 - + 201 Total accumulated w 11, surpluses ; + EF +

2. Special Funds 93 156 -. 63 15CI 140 + 10 170 138 + 32 46o 138 + 322

3. Treasury advuces - - - - 63 63 108 -108

4. Earmarked foreign aid - 23 23 - - _ 100 - + 100 102 2 + 100

Total + 502 + E899 + 51h + 196

F:inancing Accounts

5. Liquid assets Cash +28 + 25 +10c + 5 Deposits with BCEAO - 39 + 234 + 154i + 28 Deposits with other Banks + 84 +640

6. 2osits with the Tresor Postal checking systenm (net) -- 306 - 20 - 396 - 249 Municipalities 84 - 92 - 1411 - 184 Public enterprises 327 - :366 - 43C) - 560

Privateh -8 - 31 .75 -1 i) -1,031 7. Advances to local treasury offices 612 + 670 + 692 + 879 8. Customs bills + 43 + 16 + 37r + 31 9. Pay ordlers to be

settled -. 69 - 97 - 142 - 129 10. Deoits at foreign treasuries +19 +7)+

Total + 899 D+ 51 4D12I

.1/ reflecting accumulated budgetary surpluses of former years

Source: Data provided by the Mauritanian authorities Table 31: TElEASl:RY BALANCE SEHEETS (million CPA Francs)

1 966 1 967 1968 1969 ( as of December 31 r

Assets

Liquid asset,s 666 1,106 858 4442 A4--i 4t -t Iws -. 1.... +tW

Total 1,731 1- j1,7

Liabilit ie s

DeDosits with the TIesoI 755 815 1 ,001 1 031 Postal checkirig system T 320 39Z t72 Municipalities 84 92 1i1 1 84 Public: enterprises 327 366 430 560 Pr ivat,e 38 37 34 38

Pay orders to be settled 69 97 142 129

Bala,nce of budgar operatons '502 .899 514 1 96 Budget *-91 - Special funds - 63 10 32 322 Tr easuLry advances - - - 63 108 EaLmLarked foreign aid - 23 - 1CKo 100

Total 1,372 , riT 1 7f 1773

Source: Data provided by the Mauritanian authorities Table 32: ESTIMATES OF AGRICULTURAL PRODUCTION: 1959-1969 (iLn '100 metric tonas)

1959 1'960 1 561 1962 1963 1964 1965 1966 1967 1968 19659

Mll.et 80 34 87 89 90 90 100 90 100 50 100

Niebes 365 3.9 4.4 5.0 5.8 6.6 7.3 8.0 8.7 9.4 10.0

Corn 3.0 3.0 3.2 3.4 3,.7 4.0 4.0 4.0 4.0 3.0 4.0

Wheat and barley 0.2 0.2 0.2 0.2 0,2 0.2 0.3 0.3 0.3 0.3 0.4

Rice 0.4 0.4 0. 0 0,.6 0.7 0.7 0.7 0.7 0.7 0.7

Groundnuts 0.7 0.7 0.7 0.7 o0,8 o.8 o.8 0.8 0.8 0.7 o.8

Potatoes 1.8 1.8 1.8 1.9 1,,9 2.0 :2.0 2.0 2.1 2.0 2.1

Yam,s 1.8 1.8 1.8 1.9 1,.9 2.0 42.0 2.0 2.1 2.0 2.1 Vegetables 0.3 0.3 0.3i 0_4 0.4 C.5 0.6 0.7 0.8 0.7 0.8 Fruits 1.8 1.9 1.9 2.0 2,0 2.0 ,2.1 2.1 2.2 2.0 2.,2 Dates 15 14 13 12 11 10 10 110 12 12.5 12

Source: Data provided by the Mauritanian authorities, Table 33: LIVESTOCK SECTCR STATISTICS, 1 959-1 968 (Thousands of heads)

1959 1960 1 961 1 962 1963 1964 1 965 1 966 1 967 1968 1969 Popula tion

Cattle 1 ,800 1, 840 1., 880 1 ,920 1 ,'60 2,000 2, 05DE 2 , 10 0 E 2 ,, 275E 22,500 2, ODO

Jlhepezand goaU 4,1 4I,v14 0 ,UV0 4,CJ 4,&vUo 4,600 5,200 7y900 O,7U 6,5t) >

Camelsl 665E' 67&' 6t5 680 685 690 69 5 700 710 720 7:20

Offtake

Cattle 144 147 160 163 1176 190 205 220 250 300 2140

Sheep and goats 1,025 1,025 1,038 1,062 1,1100 1,150 1,300 1,475 1,,637 1,675 1,625

Camels 60 60 61 61 62 62 63 63 64 6'5 65

cattle sheep and goats camels

Total slaughtered in 1969 (i.n 'COO of heads) 67 973 58 of which: (recorded slaughtered) (19) (31) (2)

Total exports in 1 969 (in 000 of heads) 173 652 7 of which: (recorded exports) ( 28) ( 335) (-)

Source: Date provided by the Mauritanian authorities. Table 34: FORESTRY: MARKETED PRODUCTION OF GUM ARAI3IC, 1960-19693

1960 1961 1 C62 1 963 1961h 1965 1966 1 967 1 968 1 969

Tonnage: (irk '000 tons)

Marketed production 2.16 3.98 3.49 3.02 3.61 2.54 3.33 40 44 4.96 5.32

Price (CFA Francs per kg)

Producer 535 3 45 5 50 5 6 0 E 68 85 2/ E Wholesale - 63 4643 56 60 60 POE 80 95 135

Value (million CFA Francs)

Marketed production 108 139 122 136 180 127 183 266 337 452 3/ Exoorts n.a. n.a. n.a. n.a. 158 220 230 310 390 n.a.

1/ "Comptes EconomiLques 1 968" 2/ "Annuaire Statistique " 1 963/64 and 1968, R.I.M. 3/ Adjusted to inc-Lude the difference between total recorded production, alL of which is expcorted, and exports as recorded by customs.

Source: "Bulletin mensuel statistique", R.I.M. Ta ble5: FISH PRODUCTION, 1 960-1 969

1960 1961 1962 1963 1964 1965 1 966 1967 19,68 1969

Modern sea-fishing (tons)

Dried salted fish 8,200 11,400 6,10C) 9,900 11,600 12,900 14,,600 13.200 36.'500 17,500

Frozen fish. - - - 2,100 1,400 3,330 5,500 5,260 13,400

Lobster 10 13 16 20 25 31 39 51 69 9C0

Traditional sea-fishing (tore)

Imrapien 1,100 1,110 1,13C) 1 , 1 6 0 E 1,200 1,260 1,350E 1,50) 1,650E 1,800

Nouadhibou - - - - - 3O E 100E; 221) Itoo 550 5 Nouakchott n.a. 20 5c)E 0E 100E 1 20E 50 1 E 240 300

Freshwater fishing (tone) 1:2,000 12,100 12,350 12,650 13,000 13,400 13,800 14,200 14,600 15,°00

(Value of exports in million CFA Francs) n.a. (270) (220), (320) (360) (590) (660) (990) (9130) (1,250)

Source: "Bulletin mensuel statistique", R.I.M. TabLe 36: MINING: MIERMA IRON PRODUCTION, EXPORTS,, PERSONNEL

1961 1962 1563 1 96 1965 19656 1967' 1968 1969

Produiction ('000 tons)

8,680 High grade ores 380 785 1,398 4,605 6,283 7,198 7,045 0~~~~~~8,o45 Low grade ores 16, 164 560 546 761 2,130 3,027 3,115 2,120 Total 319F 9 i9, §;F ;7i 27 io,o7'2 i173, i

Exports (high grade ores)

Volume ('000 tons) - - 1 ,293 4,983 5,961 7,135 7,451 7,703 8,576

VELLue (million CFA Francs) 2,,710 10,650 13,310 15,830 15,820 15,820 17,1420

Unit-price in CFA Francs - - (2,096) (2,137) (2,233) (2,219) (2,122) (2,054) (2,031)

Personnel (in. Mauritania)

Management n.a. n.a. 80 E 80 E 9C) E 81 81 80 84 Foremen and skilled E :Laborers 900 E 880 E 960 938 8838 956, 1,032 Other employees 2,212 E 2,415 E 2,688 E 2,932 2,9839 3,061 3,036 Total 1,120 1,407 3,192 3,375 3,738 3,951 3,958 4,097 4,152 of which: Mauritanians (5(9) (709) (1,980) (2,062) (2,543) (2,624) (2,795) (2,954) (3,058)

Source: MIFERMA "Comptes Rendus dlActivit4" Annuaire et Bulletin statistique, R.I.M. Table 37: PRODUCTION AN]D CONSUMPTION OF ENERG'Y AND W1LTER, 1965-1969

1 965; 1966 1967 1 968 1969 prelim.

Electr-Lc power

Total installed capacity, entire country 21 ,390 21,390 21 ,390 26,370 26,370 (in Kilowatts) ProductiLon (,in thousands of Kwh.) 1/ 293,562 35,229 377,888I 43,883 50,00C) Consumption (in thousands of Kwh.,fi/ 28,76C) 3h,20h 37,075 42,825 heSoo of whlich: MIF9MA - (23,,726) (27,39B) (28,497) (33,780) (31,o000)

Consumer price at Nouakchott: (in CFA Francs per Kwh . ) High voLtage powrer 35 29 29 29 29 Low voltage powetr 35 3h 3h 3k 314 Consumer priLce ELt Kae-di: Low voltage power n.a. n.a. n.a. 55 55

Petroleum products (in cubic meters)

Co:nsumq)tion 52,842 63,0o9 81 ,139 10Ci,583 11 2,655 of which: MIFERMA (37,963) (46,379) (48,91 5) ( 54,915) ( 59,206i)

Water (in thousands of cubic meters)

Produc tion 1/ 'I 042 1 ,141 'I,237 1,342 1,524 Consnption71/ n.a. 1,070 1',162 1,254 1,310 Consumoer price: (in CFA Francs per cubic meter) at Nouakchott 120 120 120 120' 120 at Nouadhibou 650 650 650 170 170 at Kaedii n.a. n.a. n.a. 81 81

1/ Nouakchott, Nouadhibou, and Zcuerate only Source: Data provided by the Mauritanian authorities Table 3§8: ROAI) TRANSPORT

Road network - ; 7CTIS 195;9 1 964 1967 1968 1969

Paved roads 96 96 280 Laterite roads 98) 1,105 1,105 1 181 Total all-weath.er roads n.a. ) 97 ~1,201 ~ ~~~~11,011,i61,221 1.LM1 Other national roads n.aL. 2,205 2,065 2,065 2,o65 TraCkS n.a. 2,81'5 2,860 2,860 2,860

Number of licensed. motorvehicles ras of December 31T 1959 19614 1967 1968 19659

Automobiles 2;25 1 ,390 2,996 3,563 4, 161 Buses 25 :38 39 44 54 Trucks and vans 1 ,5h5 2,377 3,858 4,299' 4,962 Special vehicles 91 4814 201 209 2142 Road tractors :22 1,21 127 1 3C 157 T1,957 g;I;o T72vrl an2751

Consurpticn of' some petrol prroducts `- !~Fooo -00m- 19159 19614 1967 196E8 1969#

Gasoline 3.5 9.3 12.4 12.5; 12.9 Gas-oil 2/ 10.8 32.5 38.3 39.2 43..3

1/ Excl]uding urbans streets 2/ Of which it was estimatied t]hat some 20% is used for road transport purposes

Source: "Bulletin Statistique et Ecoriomic ue"' yearly publ'Lcat-ion and moiht;hly issues. 1/' Table 39: PORI' TRAFFI:C l Nouadhibou. 1959 1964 1967 1963 l 5169 MiTrLber of sips (urits) (arrivals and departures) 39 412 482 6913 671 Net to:nnage (tons): - arrivals 9,350 30,650 33,70O 52,700 57,000

- departures 11,700 16,970 11,700 14,000 16,100

2. Nouakchott, wharf I/

Number of ships (units) 71 82 81

Net tonnage (tons): - arrivals 34,000D 43,000 55,000 of which imports by SON ]X (29,0OD) (32,000) (41,000)

1/ In 1969 sone 300 passengers used Mauritania's ports 2/ Excluding mining., MIFERMA s3 operates own port facilities at Point-Central near Nouadhibou 3/ The wrharf' was completed cluriig 15966.

Source: Official statistical publications. Table 40: AIR TRAFFIC

1 . Nouakchott 1961 1964 1 967 1968 1 969

Number of coummercial planes (units) (arrivrals and departures) 632 2,203 2,168 2,2:32 2, 2994

Passengers (a + d) 9,780 28,198 30,336 39,882 42,794

Freight (tons): 196 390 70)2 809 1 048 - arrivals n.a. 237 77 5v2 731 - departures n.a. 153 226 2157 317

2 e Nouadhibou

Number of commercial planes (units) 994 1,596 1,550 1,91 2 1,694 (arrivals and departures)

Passengers (a + d) 17,0C95 17,961 :31,379 :36,5150 33,738

Freight (tons) 571 570 776 1 ,238 982 - arrivals n.a. 3 531 710 X departures n.a. 195 2)45 528 292

Source: "Bulletin Statistique et Economique, No. 611' for Data through 1964 and monthly issues for all other years. n,%-I- 1.1 . I%fltflC -~*lff rt - -- 1iiM LriirnrLiARZ EjDjuuCATI0N

1 st Grade 2nd Grade :3rd Grade 4th l'rade 5th Grade 6th Grade 7th GradLe Total

A) Enrol.lmenLtS 1 QR1-';2 2, 620 1 956-57 5,45?o 1960I-61 3,95r'2 2,68f8 11,6711 1,28:3 88,0 805 - 11,279 1961-62 5 ,545 3, 374 2.,3011 1,539 '1,207 949 - 14,915 1962-63 5,,791 4,635' :3,031h 2,023 1 ,394 1,321 - 18,198 1964-65 4,74o 3,935 :3,639 2, 936 2,12B 1,703 - 19,081 1967-68 ';,21 5,039 It,'i i :3,21 8 2,761 3,291 - 23,635 1968-69 6,690o 4,3220 1 103 3, 975 3,44.8 3,069 3,586 26,191

B) Forecast for enrollmnt 1969-70 d6,250 6,450 3,950 11,40t) 3,500 3,2910 3,700 28,54|0 1 970-71 6>,78C) 6>,14C) 6;,16c) '3,490 ' ,65o 3,380 3,900 31 ,5o 1971 -72 7,60C) 6,65C) 6,10( '5,600o :2,900) '2, 050) 4,1o 35,0CO 1972-73 8,850 7,1 OC) 6, 550 5, 800 4, 700 :2,7010 3,200 38,900 1 973-74 El,90C) 81,580 6,98o 6,20() 5,070 14,1503 3,320 43,200 1974-75 8,90C) 8,700 8,350) 6,61 o '5,430 14,76c .4,45o 47,200

Source: Data provided by the Mauritanian authorities Table 42: ENROLIUENT IN SECO)NDARY EDJtATION

Lower secondary Uigher secondary eduication edication of which tennirjal year Total

A) Enrollments

1 960-61 500 28 - 528 1 961 -62 737 46 9 7,83 1 962-63 844 75 13 9 19

1 964-65 1, 260 120 22 1, 380

1 967-68 2, 0'24 204 24 2, 228 1 968-69 2,3150 328 46 2,6578

B) Forecast for enrollm,nts

1 969-70C 2,568 444 82 3,012 1970-71 2,637 633 134 3,270 1 971 -72 2, 707 796 134 3,503 1 972-73 2,862 896 202 3,758 1 973-74 3,089 941 239 4,030 1 974-75 3,2130 962 244 4,242

Source: I)ata provided by the MauritaniarL authorities