Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 16595

MEMORANDUM OF THE PRESIDENT OF

THE INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE EXECUTIVE DIRECTORS

ON A COUNTRY ASSISTANCE STRATEGY

OF THE WORLD BANK GROUP

FOR

THE ISLAMIC REPUBLIC OF MAURITANIA

MAY 21, 1997

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit = Mauritanian Ouguiyas (UTM)US$1 142.2 UM (4/7/97)SDR 1 US$1.38338 (4/8/97)

WEIGHTS AND MEASURESMetric system

ABBREVIATIONS AND ACRONYMS

AfDB African Development BankAPDF African Projects Development FacilityBCM Banque Centrale de la MauritanieBMCI Banque Mauritanienne pour le Commerce et I 'IndustrieCESP Country Environmental Strategy PaperCG Consultative GroupCPF Centres de Promotion FeminineECOWAS Economic Community of West African StatesEDI Economic Development InstitutionESAF Enhanced Structural Adjustment FacilityEU European UnionFDI Foreign Direct InvestmentFHH Female Headed HouseholdsGBM Generale des Banques de MauritanieGDP Gross Domestic ProductGIRM Govemment of the rslamic Republic of MauritaniaGNFS Goods and non-factor servicesGNP Gross National ProductHIPC Highly Indebted Poor CountriesIBRD Intemational Bank for Reconstruction and Development (World Bank)IDA Intemational Development AssociationIFAD Intemational Fund for Agricultural DevelopmentIFC Intemational Finance CorporationIMF Intemational Monetary FundMDRE Ministere du Developpement Rural et de I 'EnvironnementMIGA Multilateral Investment Guarantee AgencyNGO Nongovenmmental OrganizationOHADA Organisation pour I 'harmonisation des droits des affairesOMVS Organisation de Mise en Valeur dufleuve SenegalONS Office Nationale de la StatistiqueOPEC Organization of Petroleum Exporting CountriesPDIAIM Programme de Developpement Integre de I 'Agriculture Irniguee en MauritaniePE Public EnterprisesPER Public Expenditure ReviewPFP Policy Framework PaperPGRNM Projet de Gestion des Ressources Naturelles en MauritaniePIP Public Investment ProgramPLMCD Programme de Lutte Multi-sectorielle contre la DesertificationRPTES Review of Policies, Strategies and Programs of the Traditional Energy SectorSAGA Social and Gender AnalysisSECAL Sector Adjustment LoanSEF Small Enterprises FundSEPF Secretariat d'Etat a la Promotion de la FemmeSNIM Societe Nationale Industrielle et MiniereSOE Statement of ExpendituresSONELEC Societe Nationale d 'ElectriciteSSA Sub-Saharan AfricaUN United NationsUNI)P United Nations Development Prograrnme

Vice-President Jean-Louis SarbibCountry Director Hasan TuluyTechnical Manager Peter HarroldTask Team Leader Miguel Saponara

FOR OFFICIAL USE ONLY

ISLAMIC REPUBLIC OF MAURITANIACOUNTRY ASSISTANCE STRATEGY

TABLE OF CONTENTSPage No.

I. INTRODUCTION .......................................................... 1lII. THE ECONOMY ........................................................... 2

Recent Economic and Social Perfoirmance ........................................................... 2Regional Integration ........................................................... 5Environmental Issues ........................................................... 6

III. EXTERNAL ENVIRONMENT ........................................................... 6IV. MAUR1TANIA'S DEVELOPMENT CHALLENGES AND APPROACHES ............................. 7

Key Elements of the Government's Strategy ........................................................... 8V. ECONOMC OUTLOOK ...................... . 10VI. MAURITANIA-BANK GROUP PARTNERSHIP . . .11............................. 1

Lessons Learned ...................................... 12Areas of Intervention ....................................... 13Proposed lending program ...................................... . 17IFC and MIGA Activities ...................................... . 18Aid Coordination ....................................... 18Collaboration with the EMF ......................................................................................................... 19

VII. PORTFOLIO PERFORMANCE AND MANAGEMENT ............................................ 19VIII. AGE:NDA FOR BOARD CONSIDERATION . . ............................... 20

TEXT BOXES

BOX 1 Mauritania - A Country ProfileBOX 2 Summary Economic IndicatorsBOX 3 Mauritania Policy FrontierBOX 4 Major Structural ReformsBOX 5 Social Indicators: Mauritania and SSABOX 6 A Profile of Poverty in MauritaniaBOX 7 Modernization of the State and Capacity BuildingBOX 8 External Financing Requirements and Sources, 1996-99 - Base Case ScenarioBOX 9 Strategic Partnership with MauritaniaBOX 10 Working TogetherBOX I I Proposed ESW ProgramBOX 12 Triggers for Bank Assistance ProgramBOX 13 Portfolio Performance

ANNEXES AND ANNEX TABLES

ANNEX I Country Assistance Strategy Matrix, 1997-2000ANNEX Al Selected Indicators of Bank Portfolio Performance and ManagementANNEX A2 Bank Group Fact Sheet - IBRD/IDA Lending Program

IFC and MIGA Program, FY94-97ANNEX A3 Summary of Economic and Sector WorkANNEX A4 Poverty and Social Development IndicatorsANNEX A5 Key Economic IndicatorsANNEX A6 Key Exposure IndicatorsA,NNEX A7 Status of Bank Group Operations in Mauritania

IBRD Loans and IDA Credits in the Operations PortfolioStatement of IF C's Committed and Disbursed Portfolio

This document hag a restricted distiibution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

,.

MEMORANDUM OF THE PRESIDENT OF THEINTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE EXECUTIVE DIRECTORS ON A COUNTRY ASSISTANCE STRATEGYOF THE WORLD BANK GROUP FOR THE ISLAMIC REPUBLIC OF MAURITANIA

L INTRODUCTION

1. This report outlines a set of reforms and development actions that the Government of the IslamicRepublic of Mauritania (GIRv) will implement with the assistance of the World Bank, in order toconsolidate the socio-economic reform program it began at the time of the previous CAS, presented to theBoard in March 1994. The present CAS emphasizes poverty-reduction policies and programs throughbroad-based economic growth led by the private sector. It draws extensively on the findings of the 1994Poverty Assessment and the results of the 1995 Integrated Household Survey. The content of the CASwas discussed with Government and representatives of Mauritanian civil society in March 1997, andagreement was reached on the Bank Group's strategy as detailed below.

2. A common image of -

Mauritania is one of a sparsely ... 1. iMaurit..... .-.. ACimtyPrordepopulated country, with a nomadic oion.Ao2mion, whmiinvgiunareas(9).Rapid grWth rat (2.6 pecet.a. aidpo.atons.et ..atopopulation, limited resources, and and urbanization:(6.090 percent) . ...... ..poor social and economic -A -Nanow EconomicBase. Anii indusiial: sector dominatd bylminiinga.n.performance indicators, and this was fisheries actiitie s,whichJtgetherprovideall export earninsgs,and a rrlindeed the case less than a decade .....setor -Swhich enplo an-estimated6 Sper.centftheaorf . ReentTT

:investments inm te Senegal River Valley offer the dpotetial: for moderago. Less well known is the fact that . agricutue and the diversific n r ion.to ck holds potntiasince 1992, Mauritania has as well, butneedstob i better integated'int the moder.oinomy.. lsuccessfully managed a major vTheEnironment.- More than90 percent of th eland: sufcisdesert.0 Thersimultaneous transition to economic iaf mtal need to#proecarmble land.(...percent f*te.total. suae)and political liberalization. From further degradati on, and frencrachment of sand dunes.f)EN evelopment ofirgation in the Senegal Rivet Valley, on the otherhand, 1992, a technically competent and m40000Enust:balance 4:economic, 00ecological and: soal concerns:: and guarantee ithe:committed economic team designed lngI-te .ovsion of a atif.ii flood for taial flood rssionand implemented a far reaching set of agriculture.- Imrved resourcem g mcludig bsurveillne-is -macroeconomic (Boxes 2 and 3) and crtical for gu rts.LAn urban areas Ithe M mot imortat issesR o: qai,y andstructural reforms (Box 4), aimed at pndin aces twaer:supplyand wvaste magentliberalizing the economy, providing MiIstooanRelatons. oThefirst Banioper.ti n iaws anfor fast growti of incomes and IDA credit. of US$8 millionfo r a:: Roads ectjin 1964. Since then,thereimprovements in social indicators. FGhave.been.48.n Groupeaions: .43 Ards, 3 ) oas d 2.. lICivstmens, totalng UJS$616 5.million Twev I prton rAs a result of these policies, public W...dyuneipeFY96 .orginal coiniitets sfinances have been stabilized, aits S$603 million ban dsursements at US$483 miionU with ansstructural reforms have been largely undisbs bane of.US$ 130 mil ion... ......completed and Mauritania's GDP has Poit6ical Oulo i992, oppositmon political opartieswere leg e ad a

about 4.6 percent per nrew.;Consituin 0was- 0ratified 0iin 00a 0 national reeedm f_- llowed. by. grown by bout 4.6 percent per -presidial eleios: Mauritaniatusba hefrstannum over the past 5 years. i0emberofpfth Arab League toaholddirect presidetial electons.Legislative1Moreover, as a result of a conscious hbwelections wIereagain held in Octer 1996ad taions are at:effort to reorient public resources to hoIld presidntial elections in Januy99. uiM 9tania sheld l

the social sectors, education and el-ections f s ye_and ha b ap rai Iin thhealth indicators have significantly conry hsedveomnt uurwIlo oltca tbiiy

Mauritania CAS 2

improved (Box 5). Overall, the Government's program contributed to a measurable decline in theincidence of poverty in Mauritania, from an estimated 57 percent in 1990 to about 50 percent in 1996(Box 6). In the Bank's annual internal performance exercise, Mauritania was considered the second-bestand the best performing IDA country in the Africa Region, in FY95 and FY96 respectively.

3. Mauritania's traditional cultural ties with the Maghreb countries to the North and with Senegaland Mali in the South and East reflect a complex dual culture that is undergoing rapid social and economictransformation. At independence in 1960, Mauritania was essentially a nomadic society and only 5percent of the population lived in urban conglomerations. Due to heavy rural-urban migration, particularlyover the last decade, more than half the population now lives in urban centers. Nouakchott, the capitalcity, represents one third of the total population. The working population is estimated at 680,000 people,of which the modem sector, including the civil service, employs only about 60,000. Urbanunemployment, a result of rapid rural-urban migration and the inability to absorb the unskilled labor force,is estimated at 26 percent. Social indicators (nutritional levels, food security, income, access to water,housing) confirm that 50 percent of Mauritania's people continue to face difficult living standards.

4. Status of the Policy Dialogue. In the course of several years of policy dialogue preceding thisCAS, the Govemment has become convinced that the role of the State must change as the economybecomes more liberalized. The Government has acknowledged that sound economic management,conducted by dynamic and competent institutions, is crucial to its ability to act efficiently as promoter ofeconomic development and regulator of economic activities. In line with its new role, the Government iscommitted to taking the necessary steps to strengthen its macro-economic and sectoral managementcapacity, rationalize and modernize its public sector apparatus, and promote the role and development ofthe private sector so that it can effectively become the basis of Mauritania's development. TheGovernment's readiness to implement the needed second-generation reforms and to claim ownership ofthe process was confirmed at the highest levels during joint Government-Bank discussions onMauritania's economic and social development prospects held in Nouakchott from July 10 to 13, 1995(Journ&es soles la Khaima), and again in April 1997, during the negotiations of the Eighth-Year PolicyFramework Paper (PFP) and the preparation of this CAS.

II. THE ECONOMY Box 2: Summary Economic Indicators1992 1996

Real Growth RatesRecent Economic and Social Performance GDP 1.7 4,7

Exports (GNFS) -6.5 7.0

5. Although Mauritania's economy has become Gross domesticinvestment 20.5 22.0substantially liberalized since the early 1980s, the Gross national savings 3.9 12.3

economic structure still presents a sharp contrast Domesticosavings 7.2 13.8

between a relatively small modern sector and Consolidated Gov. Operations (% of GDP)

traditional subsistence sectors. The modern sector, Overall surplus or deficit (excl. grants) -5.4 5.3represented by mining (10 percent of GDP), Primary balance (excl. grants) -2.4 8.6

industrial fisheries (5.4 percent of GDP), irrigated Current Account Balance: (% of GDP)Excluding official transfers -16.5 -9.7agriculture (2.5 percent of GDP) and a small but Including official transfers -8.8 -3.8

growing manufacturing sector, consisting mainly of Debt Service : Exports (DRS Data) 16.7 18.2

light industries (4.3 percent of GDP), provides direct ( a vr ).Inflation (CPL annual average %/) 10.1 4.7and indirect employment for about 60,000 people Gross intl. reserves/imports (mos.) 1.1 2.9only (8 percent of the working population). The rural Debt outstanding/GDP (DRS data) 176.3 214.8

sector represents 23 percent of GDP; livestock, Source: Mauritania - Macroeconomic Update 1994; PFPs,IMrnBank Stad fReview Reports

rainfed and flood recession agriculture, and to a

Mauritania CAS 3

lesser extent, artisanal fisheries and forestry, constitute the main components of the rural economy.Traditional livestock is a significant but unrecorded contributor to exports. Artisanal fishing has grownrapidly since the early 1990s; today it contributes 10 percent of total fishing exports and employs anestimated 5 percent of the working populati[on.

6. Restructuring the Economy (1.985-92).In 1985, the GIRM embarked on an Economic and Box 3: Mauritania Policy Frontier

Financial Recovery Program designed to redress 1991 1996imbalances and restructure the economy to rt Overall Macroeconomic Policy Stance Poor Adequate

imbalances and restructure the economy to operate Fiscal Policy Stance Very Poor Adequateunder free market principles. This was followed, in Monetary Policy Stance Very Poor Adequate

1989, by a Consolidation Program (1989-92) Exchange Rate Policy Stance Very Poor AdequateTrade Policy Stance Hundreds of Liberalized

designed to deepen macroeconomic reforms and the NTB & QR

adjustment process. Its implementation was Marketing Control on Major Exports Full None

delayed by internal and external political conditions Gov. Monopolies Several NonePrice iControls Full Noneand social unrest which slowed down the Gov. Intervention in Productive Sectors Heavy Limited

adjustment effort and caused a significant decline in Gov. Intervention in Financial Markets Heavy Lin'ited

GDP growth. By late 1992, however, conditions Source: Adjushent in Africa, PFPs and IMFIBank Staff Reports

improved sufficiently for the GIRM to relaunch the adjustment program which formed the basis of theFourth-Year PFP (1992-94). Under this program, the Ouguiya (UM) was devalued and key structuralreforms in trade, pricing, taxation, public expenditure, civil service and the social sectors wereimplemented. Renewed emphasis on market forces and restrained demand management policiescontained inflation and safeguarded earlier gains in competitiveness.

7. On the Road to Recovery (1993-1996). During 1993-96, the reforms set forth in the PFP werepursued and macroeconomic targets were ]largely achieved. As shown in Boxes 2 and 3, continuous goodprogress has been made towards macro-economic stabilization in the areas of external, fiscal andmonetary policies and liberalization of the economy. Major structural reforns were implemented asplanned and are summarized in Box 4.

Box 41: Major Structural Reforms

Agriculture. Pricing and marketing have been fully liberalized; rice-mills have been privatized; land-tenure reform has beenimplemented in the Trarza region; a cooperative credit system has been established and rural services have been decentralized;agricultural and extension services are being provided to farmers; community-based rangeland management is beingimplemented.Fisheries. The marketing board and public enterprises have been privatized; a license system for industrial fishing has beenimplemented; and the Oceanographic Research Center and the Surveillance Unit have been strengthened with Germanassistance. Fishing activities have been opened to foreign operators.Mining. The SNIM has been successfully restructured and the mining sector has been opened to private investment.Transport. Port services have been privatized.Education and Health. Services have been decentralized to the regions; cost-sharing and cost-recovery policies have beenimplemented and access to basic social services in underserved areas has been improved.Banking. The Development Bank has been abolished; four of the five commercial banks have been privatized;0 a new bankinglaw has been enacted and the foundations for a stronger financial sector have been established.Public Enterprises. All but 17 of 57 public enterprises have been liquidated orprivatized; subsidies and cross-debts have been:eliminated; contract-plans have been. signed with the: remaining eleven strategic enterprises. A monitoring system has beenmestablished and the PE sector is now a net contributor to the budget. Air Mauritania. will be restructured wi increasetd private shareholders' participation in its capital and gmt.irinsurance. The Government-owned insurance con has been priva ized.Private Sector. Measures to promote pivate sector development have been implemented in bank,ng,foreign ech tariff,pricing,: and marketing. The] GIRM has stopped: intervening ::Ein commercial: and.: industral activities,. abolished statemonopolies, re-invigorated the Chamber of Cofmmerce,and has improved telecmmunications services to6the Of heworld..lPublic Administration.i Recommendations of the auditbof the civil serviceI ha-ve been impleneted Ministries o RUIralDevelopment and Educationiireorganied; oriatioia. and operao udi f the Ministriesof .Plannin, F.Inne,l;.Fisheries and Commerce completed; Education and Health Services :decentralized; M iipal tra onlstated.

Mauritania CAS 4

8. Progress in the Social Areas. Over the past decade, the GIRM has significantly increased publicspending for education and health services. Education spending was increased from 4 percent of GDP in1987 to 7 percent in 1996. Sector reforms were started in 1987 and were designed to expand access toprimary education, improve the quality of primary and secondary education, reduce illiteracy, andstrengthen job-oriented vocational training. These changes have resulted in a rapid increase in primaryschool enrollments, from 49 percent of the 7-12 year age group in 1986/87 to 82 percent in 1996/97andwith a completion rate of about 62 percent in 1996 -- an important achievement.

9. With regard to health, expenditures doubled from a low of 1 percent of GDP in 1987 to 2 percentin 1996. The sector focus has been on preventive health care and access to primary care services.Primary health care received about 40 percent of

~ :Box 5: Social Indicators: Mauritania and SSAbudgetary resources in 1996, significantly higher (1994)than the SSA average of 25 percent. As a result, Mauritania SSAaccess to primary health care increased from 30 GNP per capita (USS) 480 460

percent i 1980 to about 75 percent in 1995-96. In Ppult ilgrwtratc(%) - 2.5- addition, the Government has increasingly provided Primary enrollment, boys and girls(%) 69 71

funding for safety nets to protect the most Prmary enrollment,girls(%) 62- 64Life expectancy at birth (yrs) 5 1 52

vulnerable groups of society. Thus, social Infant mortality rate (per 000) 98 92indicators in Mauritania in 1994 are comparable to Population per physician 9000those in other Sub-Saharan countries (Box 5). Source: WDR 1996, SodalIndicators ofDevelopment

10. Poverty. The results of the 1996 Integrated Household Survey indicate that, on average, povertyis decreasing in Mauritania (Box 6). Between 1990 and 1996, the proportion of individuals estimated tobe living on income below the poverty line declined from 57 percent to 50 percent. This decrease was notuniform, however, and differed among regions and geographical locations. Poverty has decreased inmajor urban areas, including the capital city of Nouakchott. Poverty also appears to have declined amongthe rural populations of the Senegal river valley, a decline attributed to the existence of irrigatedagriculture and the high yields in flood recession agriculture in 1995. Much of the decline in poverty isattributed to the period of sustained growth since 1992 and the shift in public spending towards socialsectors and poverty reduction programs such as micro-financing, labor-intensive public works, and foodaid. On the other hand, poverty in the rural rainfed and sylvopastorial areas increased from 69 percent in1990 to 72 percent in 1996.

11. The Role of Women. Rapid population urbanization and sedentarization has had significantimpact on the role of women. In rural areas, heavy male out-migration has led women to become activefarmers and responsible for crops, previously the domain of men. In the cities, former nomadic womenshifted from managing camp life to informal sector trading which they now dominate in the capital,Nouakchott. These occupational changes were not accompanied by skills training, however, and this haslimited the productivity of these women. Male migration also led to a high number of female-headedhouseholds (FHH); in 1996, 32 percent of rural households nation-wide were headed by women.

12. To respond to women's issues, the GIRM has created a formal government structure, the"Secretariat d'Etat a la Promotion de la Femme" (SEPF), responsible for planning and monitoringimprovements of the socio-economic situation of women and coordination with line ministries on specificprojects. The GIRM has established twenty "Centres de Promotion Feminine " (CPF) to provide womenwith non-formal education, skills training and assistance in the formation of cooperative productiongroups. These actions are contributing to increase the literacy rate and the level of income among women.

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Mauritania CAS 6

Environmental Issues

14. Increasingly aware of the negative impact of a degrading environment on economic development,the Government has identified a range of issues which require urgent attention. These include improvingthe management of renewable and non-renewable resources, reducing the relatively high populationgrowth rate, and addressing desertification and deforestation issues. The Bank assisted the Government inpreparing a Country Environmental Strategy Paper (CESP) in June 1994, to contribute to theGovernment's environmental policy-making process and stimulate the ongoing debate on environmentalissues and action programs between the GIRM and its donor partners. The CESP identified three majorenvironmental challenges: (i) sustainable natural resource development, particularly in the Senegal Rivervalley; (ii) coastal zone and fisheries management; and (iii) urban environmental issues. Given theimportance of fisheries to the economy, the GIRM is actively pursuing resource management andreinforcing surveillance in line with the recommendations of the 1992 Fisheries Sector Review.

15. The Government is engaged in a series of planning exercises designed to improve targeting of itsactions to address its environmental problems. The Multi-Sectoral Program to Combat Desertification(PLMCD) covers environmental issues other than those solely related to land degradation and naturalresources management. The GIRM is also preparing a National Action Program to address key landdegradation issues in a more formal way. Among the key elements of this ongoing work are:(i) establishment of a legal and institutional framework for environmental management; (ii) preparation ofan environmental code; and (iii) a focus on emerging urban environmental issues. These efforts togetherconstitute the GIRM's National Environmental Action Plan. Mauritania has undertaken to implement,with IDA support under the Rainfed Natural Resources Management project, community-based naturalresources management operations in the rainfed area. In addition, Mauritania has joined the regionalRPTES (Review of Policies, Strategies and Programs of the Traditional Energy Sector) program thatbuilds local capacity through a mix of policy and operational support, to review policies, strategies andprograms in the traditional energy sector. Finally, the Manantali hydropower operation opens thepossibility of competitive and sustainable energy along the river valley and the westem corridor toNouakchott with the attendant reduction in pressure on traditional sources of energy.

III. EXTERNAL ENVIRONMENT

16. The variability of Mauritania's economic performance in the last twelve years demonstrates thedegree to which the economy remains vulnerable to exogenous factors. Of these, the most significant are:(i) fluctuations in the world prices for its principal exports: iron-ore, and fisheries products; (ii) climaticfluctuations (rainfall) and related plagues (desert locusts); (iii) international aid, given Mauritania's highdependency on aid for investments; and (iv) Mauritania's significant debt burden.

17. World prices and trade. Mauritanian economy is highly vulnerable to both price fluctuationsand changes in demand in world markets. Exports of goods and non-factor services were equivalent toabout 54 percent of GDP in 1996. Iron ore and fisheries products accounted for about 97 percent of totalmerchandise exports. Gold which is a non-traditional export, represented only 3 percent of total exports,but this was a limited joint-venture which has now ended. Mauritania is heavily dependent on fuel andfood imports which accounted for some 39 percent of total imports in 1996; their price fluctuations have amajor impact on the country's external terms of trade. Over the past decade, Mauritania's terms of tradedeclined by some 12 percent, equivalent to an annual loss of about 0.6 percent of GDP.

Mauritania CAS 7

18. Climatic fluctuations. Cereals and livestock production remain heavily dependent on rainfall.Over the past decade, the country experienced two years of serious drought (1984/85 and 1991/92) withrainfall 35 to 70 percent below mean level. As a result, cereal production declined to 48,000 tons in1984/85 and 80,000 tons in 1991/92, compared to an annual average production of 130,000 tons. Theseshortfalls in production were translated into increased levels of food imports and food aid.

19. International Aid/Foreign Savings. For the foreseeable future, Mauritania will remaindependent on inflows of concessional ex:ernal assistance for its public investments. To use this assistancemost effectively, the Government, donors and principal creditors will need to improve further theircoordination efforts to ensure that the public investment program is sound, that it supports the policyreform program, and that appropriate levels of financing are available for investment in basicinfrastructure (transport), and urban and rural development.

20. External Debt and Debt Maniagement. Mauritania ranks arnong the Highly Indebted PoorCountries (HIPC) and as mentioned in para. 16, it is very vulnerable to external shocks. Mauritania's totaloutstanding and disbursed external debt was estimated, at the end of 1996, at US$2.35 billion, equivalentto 215 percent of GDP. Multilateral debt, including use of IMF credit, accounted for 44 percent (and IDAalone for 15 percent), bilateral debt for 48 percent, and private and short-term debt for 8 percent.Mauritania has benefited from Paris Club rescheduling under the Naples terms. Mauritania is potentiallyeligible to benefit from the HIPC initiative. A detailed Debt Sustainability Analysis (DSA) is beingprepared jointly with the GIRM and the IMF to address the question of Mauritania's eligibility and will becompleted in the next few months.

IV. MAURITANIA'S DEVELOPMENT CHALLENGES AND APPROACHES

21. As shown in Section II (Boxes 2 and 3), the stabilization and liberalization processes implementedsince .1985 have reversed the decline that the Mauritanian economy experienced in the 1970s and 1980s,yielding a broad budget balance, a reasonable external position, export growth, encouraging results withrespect to sectoral reforms, and a reduction in the incidence of poverty. The GIRM expects to complete itsstabilization program by December 1997. However, even if the improved economic performance since1992 were to be maintained, with real growth averaging at 4.8 percent and the average per-capita incomerising at 2.2 percent, the average poor person would cross the poverty line by the year 2016, and theextreme poor only by the year 2046.

22. The central objective of the next phase of the GIRM's reform program, as stated in its report onthe "Journees sous la Khaima" and in its "Priorites du Developpement pour 1997-99" document(January 1997), is to reduce poverty thlrough accelerated private sector-led growth. Specifically, theGIRM has set a baseline target of 5-6 percent annual growth of GDP for the period 1997-2000. Thestrategy to attain this goal consists of: (i) encouraging a stronger response from the rural sector;(ii) developing basic urban infrastructure; (iii) promoting private-sector development; (iv) improving theenvironment for employment creation and poverty reduction; and (v) restructuring and modernizing thepublic sector.

23. Sustainability. The GIRM's consistent track record on economic reforms makes it unlikely thatreforms already undertaken would be reversed. However, the next phase of the reform program is morecomplex, politically more sensitive and therefore more difficult to adopt and implement, as it would haveto take into account the social segmenitation that still exists. Reforms include: (i) implementing acomprehensive rural sector strategy which integrates the livestock sector into the economy; (ii) deepening

Mauritania CAS 8

private sector development; (iii) opening basic infrastructure investment to private sector participation; (iv)completing reform of the legal framework and the judiciary system; (v) strengthening public resourcemanagement; and (vi) reducing the role of the state and consequently downsizing the Government. Theseneed to be dealt with in a strengthened democratic environment, which in turn requires a decision-makingprocess based on consensus-building, potentially a time-consumning process.

Key Elements of the Government's Strategy

24. Creating a Dynamic Rural Sector. Despite substantial public investment, averaging aboutUS$20 million per year during 1985-96, the agricultural sector's contribution to GDP (5 percent) remainsdisappointingly low. Irrigated agriculture which is the beneficiary of 75 to 80 percent of publicly fundedinvestments in agriculture has not performed as expected. Development has been very costly, yields havebeen low, though improving, and the economic rate of return for irrigation investments continues to bebelow acceptable levels. Several problems facing the agriculture subsector have been jointly identified bythe GIRM, stakeholders, the Bank and donors, including: (i) inadequate support of the poor anduneducated rural population by extension and research services; (ii) lack of access roads; (iii) inefficientcredit mechanisms; (iv) inadequate market structures and pricing policies; (v) unsecure land tenuresystems; (vi) lack of inter- and intra-sectoral linkages; and (vii) a relatively weak private sector focus onirrigated agriculture. Due to low and erratic rainfall and to recurrent drought conditions, rainfedagriculture continues to produce low yields (0.3-0.6 mt/ha), while attempts to increase oasis production bypumping more water has led to severe depletion of ground water. The country, therefore, remainsdependent on commercial imports and food aid to satisfy demand.

25. The livestock sector, contributing an estimated 15 to 20 percent of GDP, is undergoing significantchanges, although it continues to operate outside the formal channels of the economy. With increasedsettlement density in the southern areas, livestock is increasingly competing with agriculture for limitedland and water resources, needed both for good pasture and for cropland. There is, therefore, a widely feltneed for broader application of irrigation and water harvesting and management techniques, maintenanceof water points, pasture improvement technologies, and marketing practices. These issues, as well as theneed to satisfy increasing urban demand for meat and milk are being considered in the developmentstrategy for the rural sector.

26. It is clear that, if the rural sector is to become a major source of employment creation and incomegeneration, the issues defined in the preceding paragraphs must be addressed. The GIRM, with Bank anddonor assistance and with active participation of stakeholders and NGOs, is developing a comprehensiverural development strategy and program with two key objectives: (i) to diversify and acceleratecompetitive agricultural growth; and (ii) to integrate the livestock sector into the economy.

27. Developing Infrastructure. Rapid urbanization has not been accompanied by sufficientinvestments in urban and rural infrastructure, hence the emergence of slums around the major cities andthe isolation of most rural areas. A large part of the urban population suffers from low living standardswith very poor access to basic services such as roads, water, sanitation, electricity, and waste disposalservices. SONELEC, the water and electricity company, is responsible for the provision of these twoutilities throughout the country. Despite significant tariff increases, SONELEC's performance remainsweak, with significant technical and non-technical losses, low billing rates, and high production costs.Service delivery for water is inadequate, and the poor who are not connected on the water network pay upto ten times more per liter of water. Moreover, in order to supply electricity to the 13 regional capitals andsecondary cities, SONELEC has been cross-subsidizing electricity prices. Opening public utilities

Mauritania CAS 9

(telecommunications, water and electricity) to private sector investment is clearly indicated in order toimprove coverage and quality of services to an increasing population, at affordable prices.

28. A new urban development policy has recently been adopted. The main objectives of this policyare to strengthen the technical, managerial and financial capacities of local government in order to halt thedeterioration of existing urban infrastructure, to improve and expand basic urban infrastructure to includespecific programs which promote private sector investment in this area, and to better clarify the interfacebetween public and private sector investments.

29. Promoting Private Sector Development. The supply response to the reform measures (Box 4)has been slow and disappointing. In the 1992-96 period, private investment, including the PE sector,averaged about US$151 million per annum (15 percent of GDP), of which foreign investment amountedto about US$6 million per year. These weak results are mainly due to the inconsistent application of astrong and clear private-sector regulatory framework, a judiciary which is neither independent nor reliable,a lack of dynamism of the banking sector who finances mainly short-term commercial operations andcharges high transaction fees, and the inexistence of a sound financial intermediation system that couldmobilize private savings. In the absence of a strong and consistent regulatory environment, someoligopolistic commercial blocks were created. Moreover, the lack of a well developed and maintainedtransport infrastructure across the couniry, with roads being constantly obstructed by sand encroachment,the inadequate supply of skilled labor, high freight costs and one of the highest public utilities tariffs in theregion are serious constraints to both agricultural growth and development of the private sector. Equally,a complex and distortive tax system, highly dependent on trade and production, does not make Mauritaniaa competitive environment for long-tenm private investment. Recognizing that these obstacles must beremoved if the private sector is to become the engine of growth and employment creation, the GIRM isimproving the regulatory and fiscal frameworks and plans to reduce factor costs, expand access tovocational skills development, and make the public administration more responsive to private sector needs.

30. Improving the Environment for Employment Creation and Poverty Reduction. Since 1987,the GIRM has made significant efforts to promote human resource development and has implementedtargeted programs designed to alleviate poverty. This strategy has resulted in the creation ofapproximately 4,700 permanent new jobs per year between 1992 and 1996. The GLRM's strategy for thedevelopment of artisanal fisheries, aiming to create jobs and increase fish consumption, has resulted in asignificant gain in employment, from about 10,000 in 1991 to about 60,000 in 1996. However, the highlevel of urban unemployment remains a critical poverty-related issue that demands further determinedaction. As shown in Box 6, there is evidence that the incidence and depth of poverty is much greater inrural than in urban areas; this explains in part the high levels of rural-urban migration and the growth ofslums around the major cities. The strategy adopted to increase employment and reduce poverty centersaround five axes: (i) accelerating economic growth and improving targeting of the extreme poor withspecific interventions; (ii) encouraging private sector development as the primary source of employmentcreation; (iii) restructuring public expenditures and shifting resources toward education, training, healthand nutrition services so as to enable the poor to increase their productivity; (iv) providing the poor withaccess to productive employment through labor-intensive public works; and (v) developing basic physicalinfrastructure to help raise living standards.

31. Restructuring and Modernizing the Public Sector. Despite encouraging results from structuralreforms, downsizing of the para-public sector, and decentralization of some Government services andfunctions to municipalities , the GIRM's institutional apparatus has not yet adapted to its new role of

Mauritania CAS 10

regulating economic activities andpromoting poverty reduction in a Box 7. Modernization of the State and Capacity Building

market-oriented economy. The GIRM With the first-generation reforms, GIRM concentrated its efforts onis aware that an inappropriate stabilization:and structural adjustment. Since 1991, GIRM has also been.institutional framework,. weak working towards modernizing- the State and developing local capacity to

Sstltutlonal rrmeworK, weaK 1sustain the reformiprocess:-' ladministrative capacity, and a civil sAin tccourntable State. Open municipal and legislative electioris haveservice that is reluctant to adopt up-to- been held periodically as mandated by the country's constitution :Thedate work practices and lacks civil '-society is organized in several political parties actively

accountabili.y, have contributed to participating in the political arena. This has increasingly subjectedstate officials to public scrutiny.

inefficiencies and mismanagement of | - . -State and Private Sector environment. Their relationship is evolvingpublic resources. This has also from one of control to a partnership.contributed to restraining the i Regulato.y framework. The GIRM has ratified the New Yorkdevelopment of a dynamic private | - convention on international business arbitration, and is in the process of

ratifying the Vienna and the Hague conventions on sales and .contractsector and has led to an expansion of l --- dispute settlement It is also revising the commercial code, comnercialthe informal sector which currently and civil procedures, contract code, bankruptcy rules and arbitration,employs about 200,000 individuals. law. -.The judiciary system is being reformed and judges are beingThe GIRM is convinced that its central trained in modem business laws.

objectie to r c p A Central Bank, which is independent and has fall authority in theobjective, to reduce poverty through g - conduct of monetary, credit and foreign exchange policies as well asaccelerated growth, needs to be banking supervision.accompanied by institutional and | Civi7 service.: Reforms. covering operations,- career streams andadministrative reforrns that refocus the inprovement in the legal status of civil servants have already been:role of the State, remove inefficient and introduced. . Payroll control and management has been strengthened.

-Traiing programs in economic management are being implemented forIarbitrary regulatory checks and the civil service.

balances, further decentralize planning | Adapting the state apparatus to the needs of a market econom -and management of public services, Operational and organizational audits of core economic institutions

and build a strong partnership betwen .have been conducted and as a result, restructuring of the Ministries of:Planning, Finance,- Fisheries,':Comnerce 'and Mining are planned

the State and the civil society at large. during 1997-98.For this reason, the GIRM is pursuing * Administrative deconcentration. The services of the Ministries of.an ongoing program of reform and Rural development, Education and Health have been decentralized inrestructuring of the public |-.-order to bring them closer to the population.

administration in close coordinatIon * Decentralization to local govenment and communities, wbich isadninistrafion in close coordnafitons creang new opportunities for riore competitive and efficient provision:with both the civil society and its of public services, and for managing local infirastructure.development partners (Box 7).

V. ECONOMIC OUTLOOK

32. As stated in the Eighth-Year PFP (1 997-99), the Government's strategy for the medium-term is toimprove living standards and reduce poverty through the creation of an environment conducive to privatesector development, and through broad-based, sustainable economic growth. Further progress inovercoming Mauritania's economic problems over the medium-term will critically depend on sustainedimplementation of sound macro-economic policies, deepening of structural reforms, and a build-up ofinstitutional capacity in key Government services.

33. Baseline Scenario. A conservative forecast shows that in the short and medium-term, growthwill continue to stem mainly from the mining, fisheries and construction sectors while the services sectorwill modestly increase its contribution in the early years. In line with this, the macro-economic objectivesfor 1997-99 comprise: (i) attaining an average GDP growth rate of 5.2 percent; (ii) stabilizing inflation at

Mauritania CAS 11

about 4 percent; (iii) narrowing the Box 8: Ete inancng Requements

external current account deficit, excluding and So s, 1996-99- BaseHiCase Scenarioofficial transfers, from 9.7 percent of G.DP s ilo)

in 1996 to 4.6 percent in 19i99; 196- 1997 M9 199W

(iv) increasing the Central Bank's Es. Po.Prj rjinterational reserves to cover 6.1 monts Tohts -eWrenen 3327,7 320.2 2 2

of imports by 1999; and (v) consolidating ..(exc.all officaltrafers); lthe fiscal position by reaching a budgetary -te debtamorization due (PFP data) 83.5 89.7 90.2 93.7

surplus, excluding grants, equivalent to M r rasesIncrease in gross official: reserves:: ~ 60.5 890 56.4~ 63.,6::3.8 percent of GDP. During this period, Arasedcin65.8 67. 0.0 0D0

the GERM will continue to pursue fOffcial ttansfers payni1.7, 2.9 2.8 2.9appropriate macroeconomic policies and Totl Resources :327.7 .320.2 230. 228 .7

start undertaking the next phase of its O4ficialtransferreeipts-66.8 81.8 83.1 54.0

reform programs. Core actions will also Net diret foreign investment 04 -30 ... 0 .0 0 .0

focus on further strengthening of IMF. pcs 2 20.5 19 19.economic management and modermization .ase in gross of.cil.... r 0 .0 00 0.000Other cptal (net) vi 73.5 28.0 75 3.of the public sector apparatus. Acumulationa of ars 0,0 0.0 0.0 0.0

Debt reie obtained 99.9 33.4~ 0.0f :0.0:

34. High Case scenario. This F g 2 0. 104.5 55.2 84.9gS /ncludes net short-term capital (net trade credit +,net ifabiitiesof anking

indicative scenario shows the outcome system anderrors an sions

from consistent implementation of good 2/Assumd &o b efille th debtreletndyofcialblatoeralcrtors ndd

development strategies and econornic borowing on highlycanes/anal tespolicies in the rural, financial and prnivate sectors, as well as continuous and strong public resourcemanagement which will be much needed given the increased availability of financial resources arisingfrom the fishing agreement with the Elr as well as counterpart funds from adjustment operations. Privatesavings and investment should significantly improve in response to, inter alia, deregulation of the miningand public utilities sectors. In this scenario, it is also expected that private investment will significantlyincrease in public utilities, rural and manufacturing sectors. The fisheries sector is also expected to attracthigher levels of private investment, although it is recommended to closely monitor this activity to avoidover-exploitation that could deprive the country of an important source of revenue. In contrast to historicaltrends, growth will almost certainly involve substantial structural change. In line with the above, it isexpected that GDP growth rate would r each about 7 percent as a result of: (i) the above mentioned sectorstrategies; (ii) higher public and private investment; (iii) higher productivity of investment as measured bythe incremental capital output ratio (ICOR); and (iv) lower Government consumption.

VI. MAURITANIA-BANK GROUP PARTNERSHIP

35. The 1994 CAS for Mauritania had the following core objectives: (i) to develop human resourcesand reduce poverty; (ii) to promote private sector and support agriculture and infrastructure development;(iii) to strengthen economic management capacity building to consolidate adjustment, deepen policyreform, and achieve stabilization; and (iv) to ensure development is environmentally sustainable. Anumber of these objectives, such as the coverage of basic education, internal and external deficit, inflation,and reserve targets were quantified. As previously described, substantive objectives of the 1994 CASwere largely met and in some cases, performance targets exceeded: the economy sustained an averageannual growth rate of 4.8 percent, deficits were dramatically reduced, inflation was lowered and reserveswere built up (see Box 2). Significant progress was made in the areas of human resource development,

Mauritania CAS 12

poverty reduction, public expendituremanagement, civil service reformn and Box 9. Strategic Partnership with Mauritaniaregulatory framework as mentioned in Mauritania's relationship with IDA over the past 5 years has maturedSection II (see Boxes 5 and 6). l into a true partnership characterized by a frank, wide ranging and

l constructive dialogue of the development agenda.l . Critical to building the foundations to'this relationship has been the

Lessons Learned | - joint analytical work of two Public Expenditure Reviews, keyeconomic sector work in the areas of fisheries, banking and public

36. Notwithstanding the sound enterprises policy reform programs, and the consensus building formacroeconoric fundamentals, private civil service, education and health sector reforms.sector and agricultural supply responses § . Equally important-has been the intensive, tri-partite dialogue withI .: the Bank and the IE in the context of the last five PFPs that havehave been lower than expected. been negotiated and implemented since 1992.Nevertheless, reforms supported by the l The successful 1994 Consultative Group meeting and morePublic Enterprise and Private Sector importantly, the joint preparatory work of the Bank-MauritanianDevelopment SECALs, and the Public § - .team have deepened this partnership and extended it to a number of

other critical development partners, i.e. the EU, the UNDP, France,Resource Management Credit (Box 4), Germany, Japan and Arab donors.have laid the foundation for stronger . IDA fmnanced credits have increased the involvement ofprivate supply response. For instance, the beneficianres in tlhe: preparation, design and implementation ofrevision of the Mining legislation | -projects. This has been particularly notable in the water sector,

I social services and rural development projects. For instance, the.supported by the Pnrvate Sector l Rainfed Natural Resources Management Project (FY97) has been.Adjustment Credit, has already led to prepared with local community and beneficiary participation in thesigned agreements of US$20 million in process leading to the negotiations that were held in Nouakchott.purchases of mining permits by private | . -The Resident Mission's outreach program has been enhanced; links

to the active NGO community have been strengthened with theinvestors. Similarly, efforts in support of | recruitment of an NGO Liaison Officer; contacts with the press haverural development have drawn on the been increased to provide accurate information about the Bankachievements and lessons of the program; and a Public Infonnation Center has been established.Agricultural Sector Adjustment Credit { - - The Mission is also publishing, as agreed in the 1994 CG, a

quarterly "tableau de bord- and is planning a periodic informationand Agricultural Services Project, as well l bulletin, and holding an annual open house.as efforts by other donors. Our support to T The culmination of this partnership have been the discussionsthis sector is now better targeted at the regarding the strategic agenda with key decision-makers and the.poorest rural populations, and builds on | civil society of Mauritania. In July 1995, the Bank team held the

"Joumnes sous la Khauma", a high-level retreat to discusscommunity empowerment. In the River Mauritania's economic and social:development challenges. This

Valley development, our strategy supports 'was followed-up in 1996 and early: 1997, during the CASrehabilitation and intensification over preparation.extension of irrigated land. Building on The Mauritanian authorities and the Bank have agreed to conduct in-

pastexperie ,we are increasing support country reviews of this CAS for 1 997-2000 on an annual basis in orderpast expenence, we are increasing supportIto validate the strategy, measure progress made in achieving the goalsand services to the rural populations set at the beginiing of this CAS (sunmnarized in Annex I) and, ifthrough land tenure, credit, farmers' necessary, fine-tune the CAS to better respond to changes in priorities.

organizations, extension and research, andrural infrastructure. These efforts will lay the foundation for more focused, sustained and rapid supplyresponse from the rural sector. Whereas human resources development has been successful in extendingcoverage of basic education and health, such that Mauritania can aspire to full basic education by the endof the century, the effort over the next phase must shift to quality and relevance. In particular, thevocational, technical, and professional education sectors will take a more integrated, sectoral approachover the present inter-agency fragmentation. Poverty monitoring and the most successful targeted povertyreduction programs will be pursued.

37. The Bank's assistance has been highly relevant in supporting Mauritania's efforts towardsstabilization and structural adjustmnent. The effectiveness of the Bank's support has varied among sectors.

Mauritania CAS 13

It has been high in the case of adjustment operationsand highly technical sectors, i.e. fisheries, banking, Boxl10.Workig together-public enterprises, while in the case of less technical The main lessons learned fothe implnionoareas subject to policy changes, i.e. civil service the 1994 CAS indicate that to achieve our goas,it is

necessr o h akta oreform, a stronger and more continuous Bank presence - dtem effort touild understndingmay have led to better performance. Overall, the ofd rcfons and icomm itmetothese, :atboth theMauritanian authorities consider that the efficiency of political and adinisivetlevels;the Bank's direct assistance and its active participation assessbetterthesequencing andtiming of refos;. . . i ESi :~~~~~~~*work with our3 Martan ounerats ias a -teama;gE-l-in the mobilization of other donors to support ensure a good icoorintion ;Mwith theIWFan donors.lMauritania has been highly satisfactory. from the begmnin., and

l ounertakeclosew supervision ...in...pa ip with38. For the period 1997-99, the GIRM has asked lclatoiisthe Bank Group to support its elforts towards ...These....lessons. have..defined our soerni.in

M auritania. .. .... .......achieving poverty reduction through accelerated ......._____________________________private sector-led growth. The Bank's strategy is shifting from stabilization and adjustment to one thatwill assist Mauritania in moving beyond the anticipated baseline growth scenario so that it may achieve ahigher, sustainable and equitable growth, create employment and thus reduce, in absolute terms, thenumber of Mauritanians living in poverty. The Bank is fully in accord with the GIRM's strategy whichemphasizes private sector development, more dynamic growth in the rural sector, and improvement ofemployment opportunities in order to reduce poverty. All actions in the areas stated below would involvesystematic client/beneficiary consultations as well as close donor coordination, which is crucial for thesuccess of the second-generation reform program. A detailed matrix linking Bank Group objectives andinstruments is provided in Annex I.

39. During the post-stabilization period, Economic and Sector Work (ESW) and non-lending productswill become increasingly important in assisting the .B...x .. .Proposed .ESW ograGIRM to identify new sources of growth, accelerate CORE SCENO . G SCENRIOgrowth in sectors with high growth potential, ..Rual.ecor.traeg Cor.sc.aro.pus

enhance overall economic management, improve .Livestock.Sector . Export Marketsmobilization and allocation of resources and reduce iiAtisan Fisheries * Te Education andpoverty (Box 11). We will continue to be selective in :iEDevelopment' Lb or: Maktsour focus and provide investment resources to PER : - ties on R -ionalFianil etoin ....t...overcome cntical bottlenecks as descnbed below. In ......Development Manufactrn Sectothis endeavor, we will work closely with the GIRM, 4.:Prfivate secior ICpation StifudySdonors, NGOs, the private sector and the civil society inSees Delive .... .at large. We will also endeavor to disseminate our (telcom., elctricity,ESW/non-lending products and -to improve -. i and Regulatoicommunication with the populationri regarding Refot rmeconomic policy reforms.DfetTxRor

Ali: H ealthf Secto iPolic y ..... . ..Areas of Intervention

40. Macroeconomic Stability. During 1997-99, the Bank Group will continue to assist the GIRM inmaintaining and consolidating macroeconomic stability. The key features of the Bank Group interventionwill be: (i) continued macroeconomic monitoring and frequent high-level consultations with the GIRMthrough the PFP, mid-term reviews and supervision missions; and (ii) continued support, together with theEMF and the EU, for improving public expenditure, external debt and foreign exchange management.

Mauritania CAS 14

41. ESW Together with the EMF, we will assist the GIRM in its implementation of its direct andindirect tax and tariff reforms and in revising the macroeconomic model to simulate the sources andeffects of different growth scenarios as input into our macroeconornic dialogue. We will support theGIRM in the preparation of its FY98 PER and its FY2000 Poverty Profile.

42. Lending. Based on the assessment of the tariff and the direct tax reforms, we would consider anadjustment operation to offset the GIRM's revenue losses incurred from implementation of these reforms.

43. The Rural Sector. The rural sector is the largest and potentially the most critical area for privatesector intervention, and is the main source of employment. If accelerated growth is to occur in theMauritanian economy, rural sector activities must necessarily play a major part. The principal elements ofour strategy would therefore be to assist the GIRM through ESW and lending, and in cooperation withFrance, Germany and the European Union, in order to remove the bottlenecks identified in paras. 25-26.

44. ESW The centerpiece of our support for accelerated, diversified and sustained rural developmentis the ongoing preparation of a Rural Sector Development Strategy. In FY98, we plan to build on thisstrategy and establish an analytical framework that effectively links all rural development activities andintegrates the livestock sector to the rest of the economy. Our program for the agricultural sub-sector willinclude ESW on: (i) non-farm linkages and opportunities for growth; (ii) rice and rainfed sub-sectors;(iii) marketing channels; (iv) market-oriented crop diversification and technological transformation; and(v) the delivery of rural services. As for integrating the livestock into the economy, ESW will assist inidentifying the inter- and intra-sectoral linkages of this subsector as well as more appropriate roles for thepublic and private sectors in veterinary research, extension and technological innovation to improveproduction, processing and marketing of livestock products. As for the environment, we will supportbiodiversity conservation and sustainable management of the natural resource base. Given the growingimportance of artisanal fishing as a source of employment and economic growth, we will assist the GIRMin preparing a comprehensive development strategy for this subsector.

45. Lending. The above analytical framework will form the basis of a sectoral investment program forFY99-2000 and will support the objectives of private sector development, poverty reduction andenvironmental protection. In later years, depending on the above ESW and lessons learned from theongoing Agriculture Services Project (FY94), we plan a follow-up operation in rural services. We willsupport the multi-donor investment prograrn for the rehabilitation of irrigated agriculture and the provisionof basic rural infrastructure in the Senegal River Valley through the PDIAJM, a project we could presentto the Board in FY98. In the livestock sub-sector, we will support the reform of pasture and rangelandmanagement through the PGRNM project which is being presented together with this CAS. Based on theresults of the artisanal fisheries' development strategy, we would consider supporting a project in FY99 toprovide the infrastructure and services to this sub-sector.

46. Infrastructure and Urban Development. Given the importance of basic infrastructure toimprove living standards and the competitiveness of the Mauritanian economy, we plan to help the GIRMto maintain and expand its infrastructure services through enhanced public sector management and therefocusing of public investment in the infrastructure sector. An important focus of the strategy will be theprovision of basic infrastructure for the urban poor. We will continue to work with the GIRM and donorsin the preparation of sound investment programs for water, sanitation, electricity, telecomrunications androads, and promote the adequate allocation and efficient use of resources for basic infrastructure.

47. An urban development strategy has been agreed upon with (central and local) government. TheUrban Development and Decentralization Project, currently under supervision, is a first milestone in this

Mauritania CAS 15

strategy. The main objectives are to help municipalities: (a) improve management of their expenditures byproviding them with simple tools to identify priority needs in terms of municipal services andinfrastructure; (b) improve their technical and financial management while capitalizing on ongoinginitiatives by other donors; and (c) provide a line of credit to the central government with mandatory localcounterpart funding to finance some priority services and infrastructure. In parallel, reforms on inter-governmental transfers and local taxation are sought through an operational study and a subsequent actionplan to be implemented in the second phase of the project. The other benefit of the project is thestimulation of small-scale public works contractors and employment generation through contracts financedunder the project and managed by AMEXTIPE. It is hoped that the impact of the project will be furtherstrengthened by the participation of other donors attracted by a coherent framework for municipalinvestments.

48. ESW. In public utilities, we will continue to work with the GIRM to resolve the remainingcontracting issues affecting public utilities, and private participation in the production and delivery of theseutilities. We will organize workshops in Mauritania to openly discuss, with the authorities and the privatesector, the county's needs in public services and the private sector's role in their producton and delivery.We plan to prepare a new energy sector development policy and strategy (power, petroleum products,renewable energy, household energy) based on opening up the sector to private sector involvement ininvestment, ownership and management.

49. Lending. Based on ESW, we plan to prepare a second urban sector development operation inFY99, which will support further decentralization, strengthen municipal resource mobilization andmanagement, and upgrade the urban environment (water, waste, housing, electricity), especially in poorperipheral neighborhoods. Efforts will be made to promote private sector involvement in the expansion ofthese services. An OMVS multi-donor regional power project, designed to provide Mauritania with areliable source of low-cost power will be ]presented to the Board in FY98. We are also preparing, with anumber of key donors, a second water project which will identify the most cost-effective andenvironmentally sustainable solution to Nouakchott's current and projected demand for water. Thetransport sector is adequately supported by the EU and Arab Development Funds and we do not foresee afinancing role for IDA, except for policy advice or where critical rural bottlenecks (feeder roads, accessbridges) remain to be removed. We would consider preparing a rural infrastructure project in FY2000.

50. Supply Response from the Private Sector. Recognizing that private sector activity is critical topoverty reduction, income generation and employment opportunities, our strategy is to promote a strongsupply response. To implement this strategy, we intend to use a combination of ESW and technicalassistance, supplemented by IFC services and lending and by MIGA advisory services. Our actions willaim at removing barriers to competition and factor mobility, by improving the legal and regulatoryenvironment, streamlining tax regulations, facilitating access to services and credit, exploiting new marketopportunities, developing financial intermediation, lowering production costs, and increasing private sectorparticipation in the delivery of public services. We will also assist the GIRM to attract foreign directinvestment (FDI) to upgrade, diversify and raise the technological base in the rural, fisheries, mining andpublic utilities sectors.

51. ESW. The findings of a recent study on financial intermediation will be used to address concernsregarding access to credit by small and medium entrepreneurs and the poor, and in linking interrelatedissues between the regulatory/institutional framework, the financial sector and private sector development.Complementing an ongoing study on commodity transport costs, we plan to. undertake a major PrivateSector Profile to identify the remaining; disincentives that prevent a vigorous supply response and

Mauritania CAS 16

economic diversification. We will assist the GIRM in defining a regulatory framework that opens up andencourages private sector participation in the provision of telecommunications, electricity, water andinfrastructure. We intend to continue to coordinate with MIGA, IFC and the African Project DevelopmentFacility (APDF) to identify investment opportunities, promote small and medium enterprise development,and provide technical assistance and advisory services to the private sector. In this respect, Mauritania hasbecome eligible for the IFC Small Enterprise Fund (SEF).

52. Lending. The ongoing Private Sector Development TA Project supports this strategy. No newBank lending is foreseen. The IFC is expanding its operations to the fisheries and banking sectors andintends to intensify its activities in Mauritania.

53. Restructuring and Modernizing the Public Sector. Our strategy in this area is to assist theGIRM, together with France, Germany, the IMF, the EU and the UNDP, to build an efficient, market-onented public sector apparatus, practice sound economic management, and efficiently deliver essentialsocial services and basic infrastructure. The ongoing Public Resource Management Credit (FY96) andassociated capacity-building programs support this strategy. No new lending is foreseen.

54. ESW. Together with France, Germany, the IMF, the EU and the UNDP, we will continue toconduct ESW and provide technical assistance on two important fronts. First, we will work towardsimproving economic management, including tax and tariff reforms, public expenditure management, andfiscal decentralization. In addition, the two PERs carried out by the Bank have highlighted the need toimprove resource mobilization, refocus public investment and target the delivery of social and publicservices more effectively. We have agreed, therefore, to provide guidance to the GIRM in carrying out itsown PERs, and assist in making these an integral part of the budget process. In addition, to modernize theadministration, we will support the ongoing restructuring of the Ministries of Planning, Finance, Fisheries,Commerce, Mining and Industry, and Rural Development, and assist the GIRM in its efforts to implementadministrative decentralization at both central and municipal levels. Annual portfolio reviews will becarried out to help identify bottlenecks in the Public Investment Program (PIP) implementation which willbe an important instrument for increasing Mauritania's absorptive capacity even beyond the Bank Groupfinanced operations.

55. Employment Creation and Poverty Reduction. In the area of employment creation, we willsupport the GlRM's labor-intensive public works and micro-enterprise programs and will continue towork with the Chamber of Commerce, the Federation of Employers, the ONS and the NGO community toincrease the relevance of training in accordance with the signals of the labor market. We will supportprograms to raise the skills of the labor force, in particular for the rural and artisanal fishing population, inparticular for women. Our strategy in the education sector is to achieve full primary enrollment by theyear 2000, improve the quality and relevance of secondary and higher education, strengthen job-orientedvocational training, encourage private sector participation in the financing and delivery of training services,and promote efficiency in the allocation and use of resources. In the health sector, we will supportexpansion and quality improvements in the delivery of primary health care services, including familyplanning, maternal and child care, infectious disease surveillance and nutrition. Together with sustainedgrowth, these actions should contribute to a significant reduction in poverty.

56. ESW We will strengthen the GIRM's capacity for poverty monitoring and analysis byconcentrating on vulnerable groups that have not benefited from Mauritania's recent growth.

57. Lending. We are preparing a health sector investment program for presentation to the Board inFY98. This project will pay particular attention to the strengthening of health sector capacity and the

Mauritania CAS 17

ongoing process of reform, aining aLt the provision of a cost-effective package of health services,improvement of service quality and efficiency. Depending on the results of the ongoing ESW in educationand training, a program to restructure higher education, to improve access and quality of secondaryeducation, and to strengthen technical and vocational training would be considered in FY99.

58. Gender Focus. We will ensure that the situation of women is fully taken into account andreflected in our ESW and in the design and implementation of investment operations. In our projectedlending program, we will pursue opportunities to include gender-specific activities, particularly in theeducation, health, agriculture and rural, development and urban sectors. In the rural sector, the ongoingAgricultural Services project is providing women farmers with extension services and information forgarden production through recruitment of specialized agents. The lessons learned have been built into theRainfed Natural Resources Management project where investment decisions are explicit about consideringbenefits to women who participate in the Community Development Associations. Also, the future ValleyDevelopment project will safeguard women's access to land and credit. In the water sector, a UNICEF-designed, innovative and highly successful program of management of public standpipes by women (citedas best-practice at the Istanbul Habitat Conference) has been incorporated into the IDA supported ongoingWater Supply project. The Social amd Gender Analysis (SAGA) initiative will be implemented incooperation with EDI, with the aim to increase the participation of women in the farming and livestocksectors, the provision of adequate extension services, and improved access to land, credit and other inputs.

Proposed lending program

59. The base case assistance scenario corresponding to a lending program of about US$90-110million is described in the preceding Section (VI) and summarized in the matrix (Annex I).

60. Triggers. A high and low case assistance package, differing in content and projected resourcetransfers has also been discussed in Mauritania. Movement away from the base case will be triggered bya combination of all or some of the four sets of events below (summarized in Box 13).

61. A high case assistance scenario assumes that the remaining but ongoing agenda items such as theattainment of universal primary education are completed. Under such a scenario, it is projected that theeconomy will generate new requirements which will need to be met at an earlier date. In addition to thebase case assistance, IDA would support the country in secondary and higher education sector reformsthat will improve quality and efficiency and create an effective bridge to the labor market. The main goalwould be to reduce poverty by 12 percent over three years, compared to the base case scenario of only 8.5percent. We would further support irnprovernents in urban infrastructure, especially in secondary cities.Significantly more ESW and non-lending dialogue would be conducted to support the new lendingoperations. Under this scenario, we will promote more active participation of IFC and MIGA in order toincrease the level of Bank-Group lending to about $ 110-160 million. We have assessed at 50 percent theprobability of reaching this scenario over the next 3 years.

62. A low case assistance scenario, triggered by slippages in the trigger points below has also beendeveloped. It would result in a drastically reduced assistance program focused essentially on humancapital development and targeted poverty reduction. It is proposed that we would focus primary educationwith a special emphasis on girls, nutrition issues and labor-intensive public works programs in secondarycities. IDA's contribution to the government's on program would be in the $35-45 million range. GivenMauritania's track record over the past 5 years, and the authorities' commitment to reforms, such ascenario is given a probability of less than 25 percent.

Mauritania CAS 18

Box 13: Triggers for Bank Assistance Program

HIGH BASE LOWMacroeconomic . Efficient and diversified revenue base Compliance with macroeconomic . Narrowing and concentrated revenuefundamentals Efficient and effective management and targets set out in the PFP base

allocation of public resources B Iroad-based efficient and diversified . Decline in the quality of public resourcerevenue base management and allocationEfficient and effective allocation ofpublic expenditures

Social indicators . Primary enrollment ratio > 90% or Primary enrollment ratio >82% . Decline in primary enrollment ratiohigher Vaccination rate 65-70% <80%

. Vaccination of children <1 year >75% * Vaccination rate <65%Private sector response . Implementation of tariff and direct tax . Percentage increase of private . Percentage increase of private

reform investment to GDP ratio 5% investment to GDP ratio 1I%/: Opening of telecomm., water and N Number of files entered in credit risk . Number of files entered in credit risk

electricity to private investment and arrears information system: 200 per and arrears information system: 150 per* Full implementation of agreed judicial year year

and regulatory reform . Implementation of TVA reform. Eliminate obstacles for entry and factormobilization in transport activities

Portfolio performance . Problem projects = 1 or none . Problem projects = 2 * Problem projects > 3and absorption . Disbursement ratio for projects <15% * Disbursement ratio for projects 15-20% . Disbursement ratio for projects <20%

IFC and MIGA Activities

63. IFC has ongoing operations in agribusiness and fisheries. It has approved an equity participationin one bank (GBM), the extension of credit lines to two banks (GBM, BMCI) and is also consideringpossible investments in other commercial ventures (e.g. fish processing, furniture, leasing company).Although MIGA has not issued any guarantees in Mauritania, there is one preliminary application forcoverage in the manufacturing sector. Mauritania has participated in all Annual African Mining,Investment and Business Opportunities Symposium organized by MIGA, and has indicated that it willparticipate in the next Annual Symposium to be held in June 1997.

Aid Coordination

64. The Govemrnent's structural adjustment program has been supported by the Bank through a 1987Structural Adjustment Loan (SAL), the 1990 Public Enterprise and Agriculture SECALs, the 1995Private Sector Development SECAL and a 1996 Public Resource Management Credit, as well as throughIDA-financed sector investment operations. Reforms were also supported by two IMF EnhancedStructural Adjustment Facilities (ESAFs) approved in 1992 and 1995, respectively, and under programssupported by the European Union, France, Germany and Japan. Mauritania's investment programs havealso benefited extensively from external assistance provided by the Bank, the EU, the AflB and theUNDP, as well as France, Germany, Japan, Italy, a number of Arab Development Funds and the OPECFund. A Consultative Group (CG) meeting took place in May 1994. Donors and the GIRM agreed tostrengthen aid coordination in light of the large role external financing plays in the PIP. The Group agreedto hold CG meetings every three years and to adopt new coordination measures for systematic informationsharing and periodic reviews of the PIP. The next CG will be held in March 1998, after the presidentialelections.

65. While interaction on a project-by-project basis with NGOs has been part of the Bank's practice,we are now increasingly coordinating our programs with national and international NGOs and arepursuing more detailed sector-specific initiatives to enhance this collaboration.

66. Collaboration with key bilateral donors, in particular, France, Germany and Japan and a number ofArab Development Funds is excellent, particularly with respect to issues pertaining to management of the

Mauritania CAS 19

overall assistance program and support for specific sectors and operations. IDA also closely coordinateswith the EU, AfDB, IFAD and other key UN agencies in the context of specific programs. We willcontinue to coordinate closely with Mauritania's development partners through regular consultations toensure the timely implementation of policy reforms and the availability of funding for investmentoperations. The Resident Mission plays an active role in ensuring donor coordination in the field.

Collaboration with the IMF

67. Since 1987, staff of the Bank and the IMF have worked effectively as "a team". This has led tocommon agreement about the course of the macroeconomic and sectoral reform programs in Mauritania.There are no outstanding issues between the Bank and the EMF regarding the scope and emphasis of thesecond-generation reforms and the macroeconomic policies that Mauritania should pursue during themedium-term.

VII. PORTFOLIO PERFORMANCE AND MANAGEMENT

68. Portfolio Description. The relativelyproblem-free Mauritania IDA portfolio Bo 12. portfolio Pance

of 1 active one of which ~~~~~~~FY94: FY95 FTY96consists o12 acieoperafions, Numbr ooProect 11 4 h

has closed but is still disbursing. These Commitminent value (U miIlo 190 262 229

include two adjustment operations (Private Q%:of IP-and or DO prblem prct.ject 9 7 8

Sector Development Credit, the third and last Disburements (US milion) 31 17 40Disbuirsements as %lof undisbursed balances: 15 16.1 :16.5-tranche of which was released in March 1_97, i

and the Public Resource Management Credit, approved in June 1996). There are nine investmentoperations in the social, agriculture, and infrastructure sectors, and a TA project for private sectordevelopment. Current IDA commitments amount to US$185.1 million with an undisbursed balance ofUS$94.0 million as of end-April 1997.

69. The performance of the portfolio remains basically sound. The percentage of problem projects(combined Implementation Progress (IP)/Development Objectives (DO) rating) declined from 9.1 percentin FY94 to 7.7 in FY96. However, preliminary indications for FY97 point to a slight decline inperformance rating with 2 projects rated unsatisfactory on DO and 3 rated unsatisfactory on IP as of end-March 1997. This decline in performance is attributable in part to a stepped-up effort towards morerealistic performance rating and timely identification and resolution of implementation issues, combinedwith increasing disbursement and financial. management problems experienced by the Water Supply, andTechnical and Vocational Training projects as a result of slow implementation of key project features.Discussions held in the context of the CAS highlighted the fact that implementation difficulties were oftenalso a result of insufficient consideration of cross-sectoral issues in project design. Particular attention hastherefore been given to the establishment of multi-sectoral project teams to design and implement IDAprojects. In all cases, remedial action plans agreed with Government and project authorities are being putin place. Mauritania's now well established willingness and ability to tum things around, as well as amore proactive Bank supervision of these projects and management of the entire portfolio should helpbring performance back on track and lead to a significant improvement in IDA's Mauritania portfolio.

70. Disbursements have improved steadily. The disbursement ratio increased from 15.5 percent inFY94 to 16.5 in FY96 and is estimated to have reached 18 percent by mid-FY97. Actual disbursementsincreased from US$17 million in FY95 to US$40 million in FY96. The average number of staffweeks(including local staff time) spent on supervision increased to 17 in FY96, compared to 10 staffweeks inFY95. This increase in supervision is mainly attributable to intensive start-up efforts required for the new

Mauritania CAS 20

operations in the portfolio and for supervision of the Population and Health, and Education projects. Thereis a strong consensus between Mauritania and the Bank on the continuing priority attention that needs tobe given to streamlining and to improve the management of the portfolio and maximizing its developmentimpact. Our main goal would be to attain and maintain a problem-free portfolio by mid-1998. This is afeasible goal given the track record and prevailing positive macroeconomic environment.

71. Specific targets and mechanisms for periodic reviews of the portfolio with the Government arebeing established. We will undertake a review of Statements of Expenditures (SOE) and assist theauthorities in conducting a follow-up, participatory Country Procurement Assessment with a view toidentifying changes in procedures and training needs to increase absorption. These initiatives will serve asinput into a CPPR, to be held in the Fall of 1997, that will provide a framework for a stepped-up efforttowards resolution of existing project implementation issues. The resident rnission in Nouakchott will playa lead role in the preparation and follow up to this CPPR: the staffing and authority of the resident missionwill be upgraded to allow it to discharge adequately these increased portfolio management responsibilities.Consideration is being given to hiring additional higher level local specialists in procurement and financialmanagement. We will aim at reducing processing time of procurement actions (from bid publicationthrough signing of contract), about 18 months at present, to 6-9 months by end-1998. Increased trainingin procurement and assistance from the resident mission will also be provided. A similar effort will belaunched for improving financial management and accountability. Finally, we will continue our effortsgeared to strengthening the capacities of Mauritanian institutions responsible for project and portfoliomanagement. We will identify, in the course of the coming CPPR, additional measures and inputsrequired to that end.

VIII. AGENDA FOR BOARD CONSIDERATION

72. The main risk of implementing the proposed strategy would be the ability of the Government ofMauritania to undertake politically demanding decisions in the key areas of direct private sectorinvestment, deregulation of public utilities, and promotion of competition. Current indications promiseearly action by the Government. Our proposed base case lending program is consistent with this scenarioand our non-lending services program will be adjusted on the basis of the Govemment's willingness toseek assistance in developing options and implementing the chosen course of action in any or all of thoseareas. In the event of diminished receptivity to Bank advice on the above areas, the lending program andthe level of non-lending services will be reviewed accordingly.

73. The following issues are suggested for Board discussion:

* Does the Board agree with the overall focus and sectoral priorities of the CAS?

* Are the efforts to reduce poverty and improve social indicators adequate?

* Does the Board agree with the overall size and scenarios for IDA lending andnon-lending activities?

James D. WolfensohnPresident

by Gautam S. Kaji

Washington, D.C.May21, 1997

ANNEX IPage 1 of 2

Mauritania: Country Assistance Strategy Matrix, 1997-2000

.. ........ AN AS ITANCE

POVERTYl Rove}l: STRATEGIC. ELEMENTS ACTIONS AND PROGRESS n ling RSW

Rapid, broad- . Macro-economic stability . Fiscal policy, exchange rate: Public Resource Management .CG Meetingbased growth and (i) diversity and simplify taxation; Credit (SPN) . Macro-modelingincome generation (ii) maintain focus of expenditure on . PER III

priority areas (basic education, health . Fiscal refornand maintenance).

. Rapid, competitive, broad- . Inprove rural services (research and . Agriculture Services Project .Audit of the Ministry of Ruraibased growth in the Rural extension) and the public delivery of (SPN) Development andSector such services (MDRE) . Priority Rural Infrastructure restructuring

. Improve access to the poor (land tenure) project (FY00) . Rural Sector Strategy. Itprove rural infrastructure (roads, water . Rainfed Natural Resources . Livestock Sector Study

supply) Management Project (FY97) . Artisanal Fisheries. Improve natural resource management . Integrated Valley Development. Increase functional literacy in rural areas Development Project (FY98). Rainfed zones reduce number of poor in . Livestock Geofund

rural sector and in particular rainfed area. Integrate livestock into the rural economy. Irrigated area: increase efficiency of

investments

. Rapid, competitive growth in . Improve overall business environment to . Private Sector Development . Study of Private Sector Profilethe urban private sector encourage competition and investmnent Technical Assistance Credit .Assessment of Privatization of

. Policy reforms in the public (One-stop-shop, more effective Chamber (SPN) Public Enterprisesutilities sector of Commerce; legal and regulatory . Financial & Private Sector . Study of commodity transport

reform) (SPN) costsImnprove financial intermediation . Water Supply Project (SPN) . Assessment of informal sector

. Reduce cost of doing business (water, . Water Sector Project (FY99) . Private Sector Participation inelectricity, telecomm.) . OMVS Regional Power Service Delivery

. Improve the urban environment (FY98)

. Complete reform of PE (Air Mauritania, . Urban sector project (FY99)SONELEC, OPT) . PE Sector Instit. Devt (SPN)

ANNEX IPage 2 of 2

Mauritania: Country Assistance Strategy Matrix, 1997-2000

-........ ':: .:::":::- : .....'-.: :::::: ::. ''':':,''B NKASSISTANCPOVERTY STRATEGIC ELEMNTS ACTIONS AND PROGRESS : - ndin: ESW

REDUCTION .B.NC .;..... IM..... ....._.., . ...... .. .. ....

Increase in human . Raise efficiency and . Access to, quality and relevance of . General Education Project . Study of Effectiveness ofcapital effectiveness of educational education (SPN) Secondary and Higher

achievements to increase * Increase adult literacy . Higher Education Education (ongoing)productivity . Develop basic and referral health . Vocational and Training . Health sector strategy (as

. Improve access and quality of services (with emphasis on remote areas) Project (SPN) preparation of Health SIP)health services . Make available adequate reproductive . Health SIP (FY98)

. Population growth rate health care and increase practice of . Population and Health projectconsistent with GDP growth family planning (SPN)

Interventions . Generate productive . Incentive environment for employmnent . Construction Capacity . Socio-economic data base andtargeted to the employment creation Building Project poverty profile (FY00)vulnerable . Improve living standards of: . Public works and food-for-work (AMEXTIPE) (SPN)

(i) rural poor programs . Urban project /Slum(ii) urban poor . Land tenure, services and rural Rehabilitation (FY99)

infrastructure. empowerment (farmers'organization)

.Slum rehabilitationStrengthen . Reform and Decentralize . Implementation of results of audits of . Urban Development and Pilot . Study of Municipal Financescapacity to design Public Administration key Ministries (Plan, Finance, Fisheries, Decentralization projectand deliver pro- . Systematically monitor living Mines and Industry, Commerce) (SPN)poor, pro-growth standards' indicators . Decentralization of authority to local . Public Resource managementpolicies governnents Credit (TA cofinanced by

. Deconcentration of public services donors -FY96)

. Increased dialogue with civil society

ANNEX AlPage 1 of 1

Mauritania: Selected Indicators ofBank Portfolio Performance and Management

Indicator 1994 1995 1996 1997

Portfolio PerformanceNumber of Projects under implementation 11 14 13 12Average implementation period (years)8 3.70 3.72 3.19 3.79Percent of problem projects rated U or HUb

(for past years, rated 3 or 4)Development Objectives' 9.09 7.14 0.00 16.67Implementation Progress (or overall 0.00 0.00 7.69 33.33

status for past years)dCancelled dunng FY in US$m 1.93 .04 4.11 0.00Disbursement ratio (%)e 15.46 16.15 16.48 18.14Disbursement lag (%)f 10.36 17.65 10.19 13.17Memorandum item: % completed projects 42.86 50.00 40.00 40.00

rated unsatisfactory by OED

Portfolio ManagementSupervision resources (total US$ thousands) 515.26 459.20 692.50 762.10Average Supervision (UJS$ thousands/project) 46.84 30.57 48.28 63.50Supervision resources by location (in %)5

Percent headquarters 0.00 0.00 68.09 55.31Percent resident nission 0.00 0.00 31.91 44.69

Supervison resources by rating category(`US$ thousands/project)

Projects rated HS or S 46.84 30.57 45.43 597.70Projects rated U or HU 0.00 0.00 82.49 164.40

Memorandum item: date of last/next CPPR

a Average age of projects in the Bank's country portfolio.b. Rating scale: "HS" denotes "Highly Satisfactory", "S" denotes "Satisfactory", "U" denotes "Unsatisfactory", and

"HU" denotes "Highly Unsatisfactory".c Extent to which the project will meet its development objective (see OD 13.05, Annex D2, Preparation of

Implementation Summary [Form 590J).d. Assessment of overall performance of the project based on the ratings given to individual aspects of project

implementation (e.g., management, availability of funds, compliance with legal covenants) and to developmentobjectives (see OD 13.05, Annex D2, Preparation of Implementation Summary [Form 5901). The overall statusis not given a better rating than that given to project development objectives.

e Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of theyear: investment projects only.For all projects comprising the Bank's country portfolio, the percentage difference between actual cumulativedisbursements and the cumulative disbursement estimates as given in the "Original SAR)PR Forecast" or, if theloan amounts have been modified, in the "Revised Forecast." The country portfolio disbursement lag iseffectively the weighted average of disbursement lags for projects comprising the Bank's country portfolio, wherethe weights used are the respective project shares in the total cumulative disbursement estimates.

& Supervision resources data, by location, is only available starting in fiscal year 1996.

Note:Disbursement data is updated at the end of the first week of the month.Supervision resources include Salaries, Benefits, and Travel but excludes FAO staff and PCR task costs.

ANNEX A2Page 1 of 2

Mauritania: Bank Group Fact SheetIBRD/I)A Lending Program

Past Current Planned'Category 1994 1995 1996 1997 1998 1999 2000

Commitments (US$m) 19.5 72.2 34.8 14.6 36.8 25.0 25.0

Sector (W)b

Agriculture 93.3 0.0 0.0 95.9 48.9 0.0 0.0Fisheries 0.0 0.0 0.0 0.0 0.0 0.0 12.0Education 0.0 48.5 0.0 0.0 0.0 0.0 0.0Electric Pwr & Engy. 0.0 0.0 0.0 0.0 13.0 0.0 0.0Finance 0.0 10.0 0.0 0.0 0.0 0.0 0.0Multisector 0.0 0.0 0.0 4.1 0.0 0.0 0.0Popultn, Hlth & Nutn 0.0 0.0 0.0 0.0 38.0 0.0 0.0Public Sector Mgmt. 6.7 41.6 59.8 0.0 0.0 0.0 0.0Urban Development 0.0 0.0 40.2 0.0 0.0 0.0 13.0Water Supply & Santn 0.0 0.0 0.0 0.0 0.0 100.0 0.0

TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Lending instrument (%/)Adjustment loans0 6.7 41.6 59.8 4.1 0.0 0.0 0.0Specific investment loans and others 93.3 58.4 40.2 95.9 100.0 100.0 0.0

TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Disbursements (USSm)Adjustment loansc 6.0 12.91 17.17 10.70 5.0 0.0 0.0Specific investment loans and others 10.9 12.5 18.7 17.5 26.6 17.8 13.0Repayments (US$m) 14.1 3.7 4.2 2.5 0.0 0.0 0.0Interest (US$m) 3.6 3.2 3.3 2.0 0.0 0.0 0.0

Ranges that reflect the base-case (i.e., most likely) Scenario. for IDA countries, planned commitments are not presented by FY but as athree-year-total range; the figures are shown in brackets. A footnote indicates if the pattern of IDA lending has unusual characteristics(e.g., a high degree of frontloading, backloading, or lumpiness). For blend countries, planned IBRD and IDA conunitments are presentedfor each year as a combined total.

b For future lending, rounded to the nearest 0 or 5%. To convey the thrust of country strategy more clearly, staff may aggregate sectors.t Structural adjustment loans, sector adjustment loans, and debt service reduction loans.

Note:Disbursement data is updated at the end of the first week of the month.

ANNEX A2Page 2 of 2

Mauritania: lIFC and MIGA Program, FY94-97

PastCategory 1994 1995 1996 1997

IFC approvals (US$m)a 0.00 0.00 4.18 0.00

Sector (%/6) 0.00 0.00 0.00 0.00Financial Services 0.00 0.00 100.00 0.00

TOTAL 100.00 100.00 100.00 100.00

Investment instrument (%)Loans 0.00 0.00 96.00 0.00Equity 0.00 0.00 4.00 0.00Quasi-Equity b 0.00 0.00 0.00 0.00

Other 0.00 0.00 0.00 0.00

TOTAL 100.00 100.00 100.00 100.00

MIGA guarantees (US$m) 0.00 0.00 0.00 0.00M1GA commitments (US$m) 0.00 0.00 0.00 0.00

aExcludes AEF projects.'bIncludes quasi-equity types of both loan and equity instruments.

ANNEX A3Page I of I

Mauritania: Summary of Economic and Sector Work

(US$ Thousands)

Actual PlannedCategory 1996 1997 1998 1999

Agriculture .0.0 19.7 0.0 0.0Environment 5.2 0.0 0.0 0.0Multisector 143.4 49.8 0.0 0.0Unidentified 71.0 1.8 0.0 0.0

TOTAL 219.6 71.3 0.0 0.0

ANNEX A4Page 1 of 2

Mauritania: Poverty and Social Development Indicators

Most Same region4nome grop NextLatestsingleyear recent Sub- higher

Unit of estfimae Sakaran Lon. incIndicator measure 1970-75 1980-85 1989-94 Afiia income group

Priority Poverty Indicators

POVERTYUpper poverty line local curr. .. .. ..

Headcount index % of pop. .. .. ..Lower poverty line local curr. .. .. ..

Headcount index % of pop. .. .. ..

GNP per capita US$ 330 380 480 500 390 1,670

SHORT TERM INCOME INDICATORSUnskilled urban wages local curr. .. .. ..Unskilled rural wagesRural terms of trade

Consumerprice index 1987=100 .. 86 155Lower incomeFood

UrbanRural

SOCIAL INDICATORSPublic expenditure on basic social services % of GDP .. .. 4.0Gross enrollment rationsPrimary a/ % school age pop. 19 48 69 71 105 104

Male 24 58 76 77 112 105Female 13 39 62 64 9S 101

MortalityInfantmortality perthou.livebirths 142 117 98 92 58 36Under 5 mortality -. ,, 159 161 101 47

InmunizationMeasles %agegroup .. 55.0 33.0 51.4 86.2 77.4DPT -. 21.0 28.0 53.5 89.1 82.0

Child malnutrition (under-5) n. 31.0 - *- 38.2Life expectancy

Total years 43 47 51 52 63 67F'emale advantage 3.2 3.2 2.9 3.5 2.4 6.4

Totalfertility rate births perwoman 6.5 6.1 5.2 5.9 3.3 2.7Matemal mortality rate per 100,000 live births .. .. 800

Supplementary Poverty Indicators

Expenditures on social security % of total gov't exp. .. .. ..Social security coverage % econ. active pop. .. .. ..Accessto safe water: total % ofpop. 17.0 36.2 65.8

Urban 98.0 73.0 66.6Rural 10.0 16.0 65.2

Access to health care n, 30.0 ,.

Population growth rate GNP per capita growth rate Development diamondb6+ (average annual, percent) l0+ (avenge nnual, percent) Life expectancy

4- 5 .-

2 - - 1 - H s ° ~ GNP Gross2 0 - i 'e-J." \\~~~~~~~~~~~0

capita enrolhnemA

21 -10 ._ ._.1970-75 1980-45 1989-94 1970-75 199805 1989-94 Access to safe water

7 Mu-t Mauritania- Low-income - Low-income

b. The development diamond, based on four key indicators, shows the average level of development in the country compared with its incomegroup.

ANNEX A4Page 2 of 2

Mauritania: Poverty and Social Development Indicators

Most Sameregion/incomegroup Next

Latestsinglyw recent SUb higherUnit of estimate Saharan Lo- income

Indicator measure 1970-75 1980-85 1989-94 Africa income group

Resources and Expenditures

HUMAN RESOURCESPopulation (mre=1994) thousands. 1,371 1,766 2,215 571,902 3,182,221 1,096,881Age dependency ratio ratio 0.86 0.93 0.87 0.94 0.66 0.63Urban %ofpop. 20.3 38.2 52.4 30.6 28.3 55.9Population growth rate annual %. 2.4 2.6 2.5 2.8 1.7 1.3

Urban " 9.1 7.5 5.2 4.9 3.2 2.7

Labor force thousands 678 823 1,015 254,250 1,590,533 488,647Agriculture % of labor force 78 63 55 6565 67 36Industry " 5 8 10 9 14 26Female " 46 45 44 41 39 40Labor participation rates

Total % ofpop. 49 47 46 44 50 45Fenale 23 21 20 37 41 36

NATURAL RESOURCESArea thou. sq. km 1,025.52 1,025.52 1,025.52 24,273.83 40,391.42 40,594.43Density pop. per sq. km 1.34 1.72 2.11 22.90 77.44 26.66Agricultural land % land area 38.48 38.48 38.49 50.61 52.42 41.05Change in agricultural land annual % 0.07 0.02 0.00 0.01 0.16 -1.38Agricultural landunderirngation % 0.08 0.12 0.12 0.86 17.84 11.40Forests and woodland thou. sq.hk .. 5.54 5.54 5,323.14 7.632.00 5,969.25Deforestation (net) % change, 1980-90 .. .. 0.00

INCOMEHousehold incomne

Share oftop 20% of households % of income .. .. ..Share of bottom 40% of households " .. .. ..Share of bottom 20% of households .. .. ..

EXPENDITUREFood % ofGDP .. .. ..

StaplesMeat, fish, milk, cheese, eggs

Cereal imports thou. metric tonnes 113 304 286 14,051 36,922 68,936Food aid in cereals " 48 135 42 5,079 8,516 5,771Foodproductionpercapita 1987= 100 101 103 92 102 115 102Fertilizer consumption kg/ha 0.0 0.1 0.1 5.3 58.5 46.3Share of agriculture in GDP % of GDP 26.7 20.0 23.7 19.5 27.6 14.0Housing % of GDP .. .. ..Average household size persons per household .. .. 5.3

Urban .. .. 5.4Fixed investment: housing % of GDP .. .. ..Fuel and power %ofGDP .. .. ..Energy consumption per capita kg ofoil equiv. 120 122 103 251 373 1,602Households with electricity

Urban % of households .. .. 14.0Rural " .. 6.0

Transport and communication % of GDP .. ..Fixed investment: transport equipment ".Total road length thou. km 7 7 7

INVESTMENT IN HUMAN CAPITALHealthPopulation per physician persons 18,126 8,830 .. .. .. 3,064Population per nurse 3,748 1,204 ..

Population per hospital bed 2,904 1,302 1,316 1,034 592Oral rehydration therapy (under-5) % ofcases .. .. 54 37 38EducationGross enrollment ratiosSecondary %ofschoolagepop. 4 15 15 24 48 63

Ferale " 0 8 11 23 42 62Pupil-teacher ratio: primary pupils per teacher 35 51 53 40 39Pupil-teacher ratio: secondary " 24 24 20 .. 20Pupils reaching grade 4 % of cohort 97 92 86Repeater rate: primary % oftotal enroll. 15 18 ..Illiteracy % ofpop. (age 15+) .. 73 66 53 35

Female %offem. (age 15+) .. 84 74 54 46Newspaper circulation per thou. pop. 2 .. 0 12 .. 236

World Bank Intemnational Econornics Department, April 1996

ANNEX A5Page 1 of 2

Mauritania: Key Economic Indicators

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2006ESt Proj. Proj. Proj. Proj. Proj.

NATIONAL ACCOUNTS ( % of GDP at current market pnces)

GDP at mLp. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0Primarysectorat fc. 25.9 23.8 23.8 22.7 23.1 23.1 .. ..Secondary sector at fc. 25.6 24.8 26.7 28.0 28.5 28.6 .. ..Tertiary sector at fc. 38.2 41.4 38.5 38.3 39.1 39.1 .. ..Net indirect taxes 10.3 10.0 10.9 11.0 9.3 9.1 9.1 9.0 8.8 8.7 8.6

Consumption 90.0 92.8 90.3 92.8 92.9 86.2 89.1 88.9 87.3 84.1 80.6

Gross domestic investment 17.9 20.5 23.5 14.5 18.1 22.0 16.1 17.7 18.1 20.5 25.0Publicfixedinvestment 5.1 4.5 5.7 5.8 5.1 5.5 5.5 5.5 5.5 5.5 5.5Private fixed investinent 12.8 15.9 17.7 8.7 13.0 16.5 10.6 12.2 12.6 15.0 19.5

Resowce balance -7.9 -13.2 -13.8 -7.3 -11.0 -8.2 -5.2 -6.6 -5.4 -4.7 -5.6Exports GNFS 44.4 38.8 45.9 42.1 50.5 53.6 49.9 47.3 45.7 45.1 42.1mports GNFS 52.3 52.1 59.7 49.3 61.4 61.8 55.1 53.9 51.1 49.7 47.8

Gross domestic savings 10.0 7.2 9.7 7.2 7.1 13.8 10.9 11.1 12.7 15.9 19.4Grossnationalsavings 3.2 3.9 2.3 3.4 5.0 12.3 10.6 11.7 13.6 17.1 21.8

Memorandum Items:

GDP atmip. (curent USS million) 1130.2 1190.6 943.7 1026.8 1068.2 1094.2 1169.4 1235.4 1310.1 1393.2 2120.4GNP per capita (Atlas method) (current USS) 510.0 530.0 500.0 490.0 460.0 470.0 480.0 500.0 520.0 550.0 730.0Official average exchange rate (UMIUSS) 81.9 87.0 120.8 123.6 129.8 137.2 142.1 148.6 153.7 157.6 170.3

PUBLIC FINANCE (as % of GDP at current market ncari

Current revenue and special accounts (excl. grants) 21.8 19.2 25.1 22.3 23.1 28.9 26.5 25.8 25.3 26.1 29.1Current expenditures and special accounts 22.4 18.8 21.6 18.6 18.0 17.7 16.7 15.7 14.6 13.9 11.7Current account balance (excl. grants) -0.7 0.4 3.5 3.7 5.1 11.2 9.8 10.1 10.7 12.2 17.4Government revenue + special accounts (exel. grants) 22.2 19.4 25.7 23.2 24.0 29.8 27.4 26.7 26.2 27.0 30.0Total expenditurs and net lending (inel. spec. aects) 28.9 24.8 36.8 27.7 24.8 24.5 23.3 23.0 22.4 23.0 24.0Overall surplus (+)ordeficit(-), exel. grants -6.7 -5.4 -11.0 -4.5 -0.8 5.3 4.1 3.7 3.8 4.0 6.0Capital expenditure 5.1 4.5 5.7 5.8 5.1 5.5 5.5 5.5 5.5 5.5 5.5

REAL ANNUAL GROWTH RATES (1985 prices) (%/t

RealGDPatm.p. 2.6 1.7 5.5 4.6 4.6 4.7 4.9 5.1 5.3 5.3 5.5Real gross domestic income 5.7 -0.2 -1.9 12.9 1.9 5.2 7.8 5.9 5.5 6.0 5.5

REAL ANNUAL PER CAPITA GROWTH RATES (1985 pnces) (t/%)

RealGDPpercapita 0.1 -0.8 2.8 2.0 2.0 2.2 2.4 2.7 2.8 2.8 3.1Realtotalconsunptionpercapita -0.9 0.8 -11.7 16.4 -3.0 -4.6 11.0 2.7 1.5 0.0 1.8Realprivateconsumptionpercapita -1.3 1.7 -12.5 17.9 -2.8 -5.3 11.7 3.2 2.0 -0.1 1.6

MONETARY INDICATORS

Velocity(GDP/M2) 3.6 3.8 4.1 4.6 5.3 6.1 .. .. ..

Growth rate of M2 (0%) 9.3 7.2 0.7 -0.6 -5.1 -5.0 .. ..

(Continued)

ANNEX A5Page 2 of 2

Mauritania: Key Economic Indicators (cont'd)

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2006Est. Proj. Proj. Proj. Proj. Proj.

BALANCE OF PAYMENTS (current US$ million)

Expotts GNFS 501.5 462.4 433.3 431.9 539.2 586.5 583.8 584.5 598.5 627.8 893.7ofwhich: Merchandise £o.b. 437.9 414.3 399.9 394.1 493.1 485.1 494.9 496.8 510.7 541.5 767.1

Imports GNFS 591.1 619.8 563.3 506.6 656.2 675.9 644.7 665.6 668.9 692.6 1012.9ofwhich: Merchandise fo.b. 384.7 424.2 374.9 339.7 416.9 435.4 411.6 434.6 432.8 449.5 668.7

Resourc balance -89.6 -157.5 -130.0 -74.7 -117.1 -89.4 -60.8 -81.0 -70.5 -64.8 -119.1Net factor income -61.2 -66.7 -68.7 -45.4 -52.9 -56.3 -47.1 -36.6 -34.1 -30.5 -13.6of which: Total interest due (PFP data) 63.3 68.1 65.2 46.0 50.3 50.2 48.7 43.6 42.7 40.9 28.6

Net current transfer (private) -15.5 27.2 -1.1 6.3 30.2 39.5 43.3 43.3 45.2 47.2 65.7Curr. aect, balance, excl. all official transfers -166.3 -197.0 -199.8 -113.7 -139.8 -106.3 -64.6 -74.4 -59.3 -48.1 -67.0Net official transfers (current + capital) 83.0 92.7 106.3 82.5 72.8 65.1 78.9 80.3 51.2 44.1 61.6

Curr. acot. balance, incl. all o£ficial transfers -83.2 -104.3 -93.6 -31.2 -66.9 -41.2 14.3 5.9 -8.1 -4.0 -5.4

Net foreign direct investment 4.9 7.2 16.1 2.9 6.8 -0.4 -3.0 0.0 0.0 0.0 0.0Net LT loans -25.3 11.7 17.3 36.9 -2.1 -16.4 -34.7 -34.8 -55.9 -47.1 0.8Disbursement (PFP data) 73.1 119.9 122.5 102.8 78.7 67.1 55.1 55.4 37.7 40.1 60.8Amortization due (PFP data) 98.4 108.2 105.1 65.9 80.9 83.5 89.7 90.2 93.7 87.2 60.0

Other capital & errrs & omissions 1/ -21.5 -9.5 5.3 -60.5 43.9 73.5 28.0 17.5 32.5 35.6 57.8

Overall balance -125.1 -94.9 -54.8 -51.9 -18.3 15.5 4.6 -11.4 -31.6 -15.5 53.2

Total financing 125.1 94.9 54.8 51.9 18.3 -15.5 -4.6 11.4 31.6 15.5 -53.2Total change in reerves (incl.IMF) -27.2 3.1 21.8 26.6 -33.2 -49.7 -75.1 -43.8 -53.3 -47.2 -53.2

Net credits from tMF -13.2 3.5 5.7 18.3 12.7 10.9 13.9 12.6 10.3 8.2 0.0Purchases 0.0 11.9 11.9 24.3 21.7 20.8 20.5 19.6 19.6 19.6 0.0Repurchases 13.2 8.4 6.1 6.0 9.0 9.9 6.6 7.0 9.3 11.4 0.0

Change in gross official reserves (- increase) -14.0 -0.4 16.1 8.3 -46.0 -60.5 -89.0 -56.4 -63.6 -55.3 -53.2

Financing items, excl. reserves (net), ofwhich: 152.3 91.9 33.1 25.2 51.5 34.2 70.5 55.2 84.9 62.6 0.0Change in arrears (+ increase) 147.4 86.8 -237.1 -33.2 -16.2 -65.8 -67.3 0.0 0.0 0.0 0.0Debtreliefobtained 4.9 5.1 270.2 58.4 67.8 99.9 33.4 0.0 0.0 0.0 0.0Financing gap 2/ 0.0 0.0 0.0 0.0 0.0 0.0 104.5 55.2 84.9 62.6 0.0

Memorandum Items:

Gross reserves, Year-end (USS million) 71.7 65.0 49.1 39.7 89.9 150.4 239.5 295.9 359.5 414.9 584.7Grossresves as monthsofimportsgoods&serv. 1.3 1.1 0.9 0.9 1.5 2.5 4.1 5.0 6.1 6.8 6.7ExportsofGNFSas%ofGDP 44.4 38.8 45.9 42.1 50.5 53.6 49.9 47.3 45.7 45.1 42.1ImportsofGNFSas % ofGDP 52.3 52.1 59.7 49.3 61.4 61.8 55.1 53.9 51.1 49.7 47.8Resource balance as % ofGDP -7.9 -13.2 -13.8 -7.3 -11.0 -8.2 -5.2 -6.6 -5.4 -4.7 -5.6Curr. acct bal. as % of GDP (exel. offic. transfers) -14.7 -16.5 -21.2 -11.1 -13.1 -9.7 -5.5 -6.0 -4.5 -3.4 -3.2

REAL ANNUAL GROWTH RATES (1985 vrices) (%)

Real exports ofGNFS -0.1 -6.5 11.8 -14.1 14.1 7.0 -4.5 -3.6 0.5 1.1 5.0Real imports of GNFS -4.6 1.6 -7.5 -9.7 11.9 3.0 -3.0 0.7 -1.2 1.6 4.9

PRICE INDICES (1985=100)

Expowtpriceindex,goods(USSter-s) 127.8 131.4 112.0 132.4 129.6 130.0 136.7 142.4 145.1 150.8 167.0lmport price index, goods (USS terms) 125.6 130.1 126.4 125.3 146.5 148.6 143.5 148.0 149.6 152.0 173.9Merchandise tensoftrade 101.8 101.0 88.6 105.6 88.5 87.5 95.3 96.3 97.0 99.2 96.1Real effective exchange rate index (IMF data) 77.0 77.6 70.9 65.2 59.6 60.2 .. ..

Consumerprices(anuall%change) 5.6 10.1 9.3 4.1 6.5 4.7 5.0 4.6 4.0 3.0 3.0GDPdeflator(anuall%change) 9.8 10.0 4.3 6.4 4.4 3.4 5.5 5.1 4.1 3.6 3.0Nominal discountrate, Year-end ([FSX%p.a.) 7.0 7.0 11.0 11.0 11.0 11.0 .. ..

1/ Include net short-term debt (trade credit + net liabilities of banking system), and errors & omissions.2/ Ass2umed to be filled with debt relief extended by official bilateral creditors and borrowing on highly concessional terms

ANNEX A6Page 1 of 1

Mauritania: Key Exposure Indicators

1991 1992 1993 19 19 1995 1996 1997 1993 1999 2000 2006EIL Proj. Proj. Proj. P. P.

In USS million at curreMnt rices fDRS data):

Toal debt diab. & outstanding (TDO) 1/ 2198.7 209S.3 2138.0 2137.7 2320.0 2350.0 2397.9 2397.8 2392.0 2370.3 2218.5

Net disburements (net LT loans + net IMF) 9.7 34.2 87.2 99.8 55.3 80.8 25.0 -17.7 -33.2 -57.3 46.0(ss disbuent mnusi principal repaid)Total debt sevice paid (LT+ST+IMF) (DRS data) 1/ 98.0 36.7 123.0 104.8 109.5 116.3 141.1 163.9 162.6 166.1 99.6

Debt and Debt Service Indikdtws tDRS data) (/6) 1I

Total debt outstanding/GDP 194.5 176.3 226.6 213.1 217.2 214.8 205.1 194.1 182.6 170.1 104.6Total dbtExporsofGS&WR 2/ 428.8 403.8 469.3 483.4 397.6 367.0 372.9 370.9 360.1 339.7 224.5ToaldebtservieepaidtExpocsofGS&WR 19.1 16.7 28.1 23.2 18.3 13.2 21.9 25.4 24.5 23.3 10.1Concesional LT debt/Total debt outtanding 63.5 67.0 74.2 75.3 75.1 75.6 75.0 74.6 73.6 72.6 65.0

World Bank Exocsnre Indicators (IBRD+IDAA) (0/%)

World Bank debt service/Trotal det srvice paid 18.1 20.3 13.9 11.6 6.7 6.2 5.7 5.4 5.7 6.2 14.5Preferred creditor debt servicTotal debt service paid 66.5 76.3 72.4 67.8 54.6 74.1 53.1 44.2 48.0 51.4 43.5WorldBankdebtservicee/ExorofGS&WR 3.5 3.4 3.9 2.7 1.3 1.1 1.3 1.4 1.4 1.5 1.5

IFC Gress Commitments (USS milion)

Loans 3.4 0.0 0.0 0.0 0.0 4.0 0.0 0.0 0.0 0.0 0.0Equity and quasi-equity 0.3 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0

MIGA (USS miUlion)

MIGA Guarantees 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Sources: DebtorRepoting System (DRS data as of 12/31/96); Statement of IFC Investents as of December 31, 1996.1/ Icludes public and publicly guaranteed debt, private non-guaranteed debt, use of IME credits, and short-tenn deoL

Prefenred creditors are all mnltilateral lenders, including IME.2/ Exports of GS&WR means exports of goods, services and workers remittances.

ANNEX A7Page 1 of 2

Status of Bank Group Operations in MauritaniaIBRD Loans and IDA Credits in the Operations Portfolio

(As of 4/22/97)

Difference Last ARPP

Original Amount in USS millions between expected Supervision Rating b/

Project Loan or Fiscal and actual Development Implementation

ID Credit No. Year Borrower Purpose IBRD IDA Cancellations Undisbursed disbursements al Objectives Progress

Number of Closed Loans/credits: 36

Active Loans

MR-PE-1839 C21670 1990 GOVT OF MAURITANIA P.E. SECTOR INST DEV 0.00 10.00 0.00 .18 -1.69 HS SMR-PE-1867 C23890 1992 GOVT OF MAURITANIA WATER SUPPLY 0.00 10.50 0.00 5.25 4.69 U UMR-PE-1855 C23110 1992 GOVTOFMAURITANIA POPHEALTH 0.00 15.70 0.00 4.59 2.28 S SMR-PE-1872 C25210 1993 GOVT OF MAURITANIA TECHNICAUVOCATIONAL 0.00 12.50 0.00 8.28 5.55 U UMR-PE-1870 C24550 1993 GOVT OF MAURITANIA CONSTRUCTION CAPACIT 0.00 12.00 0.00 1.79 .23 HS HSMR-PE-1864 C25750 1994 GOVT OF MAURITANIA AGRIC SERVICES 0.00 18.20 0.00 9.99 1.77 S SMR-PE-38661 C27300 1995 GOVT OF MAURITANIA FIN/PRIV.SCTR.CAPACITY 0.00 7.20 0.00 4.69 2.52 U SMR-PE-1866 C27260 1995 GOVT OF MAURITANIA FINANCIAL & PRIVATE 0.00 30.00 0.00 0.00 0.00 HS HSMR-PE-1857 C27060 1995 GOVT OF MAURITANIA GENERAL EDUCATION PR 0.00 35.00 0.00 28.37 5.20 S SMR-PE-1874 C28870 1996 GOVT OF MAURITANIA PUBLIC RESOURCE MGMT 0.00 20.00 0.00 11.00 -3.76 HS HSMR-PE-34106 C28350 1996 GOVT OF MAURITANIA INFRAST & PILOT DEC. 0.00 14.00 0.00 12.69 3.34 HS HS

TOTAL 0.00 185.10 0.00 86.83 20.57

Active Loans Closed Loans Total

Total disbursed (IBRD and IDA) 89.05 421.90 510.95

Of which has been repaid 0.00 153.54 153.54Total now held by IBRD and IDA 185.10 253.68 438.78

Amount sold 0.00 63.35 63.35

Of which repaid 0.00 63.35 63.35Total Undisbursed 94.02 0.22 94.24

a. hitended disbursements to date minus actual disbursements to date as projected at appraisal.b. Rating of 1-4: see OD 13.05. Annex D2. Preparation of Implementation Sumnmary (Form 590). Following the FY94 Annual Review of Portfolio Performance (ARPP), a letter-based system was

introduced (HS=highly satisfactory, S=satisfactory, U=unstatisfactory, HU=highly unsatisfactory); see Proposed hnprovements in Project and Portfolio Perfornance RatingMethodology(SecM94-901), August 23, 1994.

Note:Disbursement data is updated at the end of the first week of the month.

ANNEX A7Page 2 of 2

Mauritania: Statement of IFC InvestmentsCommitted and Disbursed Portfolio

As of 2/28/97(In US$ Millions)

Committed Disbursed

IFC IFC

FY Company Loan Equity Quasi Partic. Loan Equity Quasi ParticApproval

1991 MORAK 0.00 0.00 0.26 0.00 0.00 0.00 0.00 0.00

1996 AEF Mayo Fish 0.00 0.00 0.26 0.00 0.00 0.00 0.00 0.00

1997 AEF CODIPAL 0.00 0.00 0.47 0.00

Total Portfolio 0.00 0.00 0.73 0.00 0.00 0.00 0.00 0.00

Pending Commitments

1996 GBM 4.00 0.18 0.00 0.00

1997 BMCI 14.00 - -- --

Total Pending Commitments 18.00 0.18 0.00 0.00