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WEEKLY NEWSLETTER
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Mauritania
Index
Since independence in 1960, the government has played the
central role in development planning and economic management. In
1963 the government inaugurated the first of a series of fourand five-year development plans. Covering the period 1963-67, the
first plan had two primary goals: reducing Mauritania's
dependence on external finances (principally French) and foreign
personnel and laying the foundation for economic development
through a series of basic studies of the country's resources. The
plan gave investment priority to processing facilities in the
mining industry (30 percent of total programmed financing), urban
development (15 percent), and transportation and communications
(12 percent). The plan neglected the rural sector, however; only
9 percent of programmed financing was earmarked for agriculture
and livestock, nearly all of which went for construction and
maintenance of small dams and wells and for meat packing and
storage plants. Virtually no money was allocated for improving
agriculture and livestock production techniques. In 1963, in
pursuit of the plan's first objective, the government requested a
halt to French subsidies to the current operating budget.
Nevertheless, French development assistance continued and was
critical to investment plans that favored the partly French-owned
iron mines that opened in 1963.
In the second (1970-74) and third (1976-80) development
plans, Mauritania asserted an independent national economic
identity and established the framework of the public sector. In
1973 Mauritania withdrew from the French-backed West African
Monetary Union (Union Monétaire Ouest Africaine--UMOA) and
created an independent central bank and national currency, the
ouguiya. In 1974 the government nationalized the mining sector,
and enterprises engaged in basic public services and
"mauritanized" staff positions throughout the newly expanded
public sector. Planners continued to focus on investment in
mining and infrastructure (roads in particular). Between 1970 and
1975, mining received 39 percent of a planned total expenditure
of UM8.9 billion (for value of the
ouguiya--see Glossary),
and
roads received 20 percent. The rural sector continued to lag, as
the government allocated to it only 7 percent of total
development spending.
The government that came to power in 1978 adopted a fourth
five-year development plan (1981-85) and a stabilization program
that had International Monetary Fund
(IMF--see Glossary)
support.
The stabilization program called for tighter controls on
government spending, more stringent tax collection, and major
debt rescheduling. The five-year plan had three objectives: the
development of irrigated agriculture, the rehabilitation of the
iron mining sector, and the construction of a national fishing
industry.
Public enterprises emerged rapidly during the 1970s and by
1985 totaled more than 100 entities. Through these parastatal
enterprises, the government brought under national control the
exploitation of the country's natural resources and the provision
of basic public services--functions that were still largely in
foreign hands as late as the mid-1970s. By the mid-1980s, public
enterprises generated about 20 percent of GDP and employed some
14,000 people, thus providing about 25 percent of recorded
employment in the modern sector. By 1986 the parastatal companies
included twenty-five largely government-owned industrial and
commercial enterprises, twenty-seven joint ventures with the
private sector, and fifty-six decentralized services in
administration, research, and education. The largest public
enterprise was the National Mining and Industrial Company
(Société Nationale Industrielle et Minière--SNIM).
The majority of the larger, wholly government-owned
enterprises operated in principle on a commercial basis.
Nevertheless, since the late 1970s they have operated at a loss,
and many have failed to provide the services for which they were
responsible. Direct government operating subsidies to these
public enterprises were modest, totaling only 3 percent of
government expenditures in 1983. Their losses (in addition to
undelivered services) reverted to the government, however,
because they failed to pay tax liabilities and the government
assumed their debts. In 1986 public enterprises owed 25 percent
of Mauritania's total public external debt.
The poor performance of public enterprises had a variety of
causes, including a paucity of technical and professional skills
among increasingly "mauritanized" staffs, a poor definition of
roles and responsibilities, inadequate pricing policies, weak
accounting practices, and overstaffing. In 1983 the government
launched a program to reform and rehabilitate the public sector,
and this program continued under the 1985-88 Economic Recovery
Program and the 1987 Structural Adjustment Program agreements
with the
World Bank
(see Glossary). Under the original 1983
program, no new public enterprises were to be established unless
they could be economically justified; public enterprises were to
be reviewed and nominated for liquidation, privatization, or
rehabilitation; subsidies were to be phased out; and pricing
policies were to be revised to reflect economic costs. In
addition, interlocking relationships between the central
government and individual enterprises were to be more clearly
defined and enterprise debt arrears settled; excess staff was to
be trimmed, hiring of new unskilled staff was to be frozen, and a
new salary scale was to be established. Finally, substantial
improvements in budgeting, accounting, and auditing procedures
were to be introduced.
By 1987 progress in achieving these goals was impressive. The
government had implemented selective rehabilitation of five large
public enterprises. It also had privatized three others and begun
liquidating five more.
The government's plan included privatizing three of the
country's eight public financial institutions. In 1984 it settled
interlocking debts of fifteen important enterprises through
compensation, cancellation, and refinancing. In 1985, under new
pricing policies, regulated producer prices paid to farmers by
the Commission for Food Security (Commissariat à la Sécurité
Alimentaire--CSA) rose by 40 percent. At the same time, the CSA
raised the price of subsidized food aid on sale by 50 percent.
The National Import-Export Company (Société Nationale
d'Importation et d'Exportation--SONIMEX) raised consumer prices
for food and basic commodity goods by approximately 30 percent to
reflect real costs and to achieve full import parity on grain
prices at the Senegalese border. Water and electricity prices
rose by 10 percent, and port services fees rose by 25 percent, in
part to compensate for the 1985 currency devaluation
(see Government Finances
, this ch.). The government reduced labor
costs at SNIM, where it cut the work force by 25 percent. By the
end of 1987, public sector management, wage policies, training,
accounting procedures, and policies governing relations between
the public enterprises and the central government all were under
intensive review by the World Bank and the international donor
community.
Data as of June 1988
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