The COVID-19 pandemic has severely affected the Mauritanian economy and reversed years of poverty reduction. Around 48,000 people have been pushed into poverty.
The government can take several measures to maintain fiscal sustainability in the future while improving service delivery in key social sectors.
Reforming the current management system across all social sectors and increasing efforts to collect more revenue can help generate savings.
There’s an old orthodoxy that suggests that a country needs a crisis to induce macroeconomic policy reform. Given the country’s over-reliance on extractive resources, the 2015 commodity price shock was that crisis for Mauritania.
Since then, the government took decisive reforms that helped turn the fiscal deficit of 2.7% of GDP in 2014-2015 to a surplus of 1% of GDP in 2016-2019, one of the best fiscal positions in Sub-Saharan Africa. However, despite restoring macroeconomic stability, economic growth was modest. GDP per capita only grew by 0.4% over the 2016-2019 period, highlighting the need to adopt a pro-growth fiscal policy.
Turning a crisis into an opportunity
The COVID-19 crisis has severely affected the Mauritanian economy and reversed years of poverty reduction. As a result, the economy contracted by 1.5% in 2020. This led to employment and income losses, pushing an estimated 48,000 people into extreme poverty. Like during the commodity crisis of 2015 , the COVID-19 shock presents the government with an opportunity for further policy reform and steers the economy in a new direction, which may put it in a stronger position to weather future shocks.
Our latest Public Expenditure Review shows that the government can take several measures to maintain fiscal sustainability in the future while improving service delivery in key social sectors. Here are the main recommendations of the report:
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