IMF upbeat on Mauritania's 'newfound financial comfort'

WASHINGTON, Sept 24 Mon Sep 24, 2012 7:18pm EDT

WASHINGTON, Sept 24 (Reuters) - Growth in Mauritania is likely to reach 6.2 percent this year despite a drop in mining production and slowing demand from Europe, the International Monetary Fund said on Monday.

For the first time in six years, the IMF said Mauritania's overall budget balance would be positive and reserves will reach record levels of around $750 million by the end of the equivalent to 5.3 months of imports.

It was important that the "newfound financial comfort" would lead to inclusive growth, lower unemployment and poverty rates, the IMF said.

"This better-than-expected performance is attributable to intensified revenue collection efforts, substantial mining revenues, and a considerable increase in (aid), including in the form of grants," it said in a statement at the end of talks with the government.

Straddling black and Arab Africa on the continent's west coast, Mauritania is a country of 3.2 million people. It has been hit by two coups since 2005 and is an iron ore, copper and gold producer. It is one of the West's strongest allies against rising Islamist militancy in the region.

The Fund urged the government to proceed with reforms to improve the business climate and implement a new instrument for monetary policy management. It also needs to speed up reform measures in the financial sector and improve public enterprises.

The IMF said policies for 2013 were targeted at economic growth of more than 6 percent, keeping inflation stable and fiscal policy geared at developing industries outside mining.