Figure 10. Current Account Balance, 1973-85
The economic stagnation that had begun by the mid-1970s led to deficits in the country's current account balance (see fig. 10). These deficits were largely the result of a slump in the international iron industry and a rise in the price of oil. They were exacerbated, however, by drought and by Mauritania's involvement in the Western Sahara conflict. Between 1975 and 1982, the current account deficit more than quadrupled, rising from US$62 million to US$277 million. This trend slowed after 1982 as the trade deficit improved, principally because of increased fish exports and because of IMF- and World Banksupported stabilization programs. By 1985 the current account deficit had been reduced by more than half from its 1982 high.
By 1985 Mauritania had one of the worst international debt situations in the world. In that year, total accumulated mediumand long-term external public debt stood at US$1.8 billion, which amounted to nearly 250 percent of GDP. By 1987 arrears on scheduled payments amounted to around US$200 million. The bulk of the loans falling due were contracted in the mid-1970s to finance the nationalization of the iron mining industry and to pay for the country's involvement in the Western Sahara war.
Mauritania's clear inability to meet its debt service obligations resulted in international intervention. In 1985 the World Bank held a special donor conference, and in 1985 and 1986 the Paris Club (see Glossary) held several meetings on the issue. During this series of meetings, Mauritania presented a new economic and financial recovery program to the donors. This group endorsed the recovery program and rescheduled external debt service due in 1985 and 1986. As a result, all arrears on debt services were eliminated, and Mauritania's external current account deficit was reduced. In 1987 Mauritania signed a comprehensive Structural Adjustment Program with the World Bank that was further to ease its debt burden.
Foreign assistance was vital to Mauritania to satisfy the country's need for food, equipment, technical assistance, and public investment. Some forty nations and multilateral institutions extended aid averaging about US$270 million a year between 1980 and 1985--equivalent to US$170 per capita. Particularly important has been aid from oil-rich Arab nations who look favorably on Mauritania because of its largely Muslim population. Typically, foreign assistance funded humanitarian efforts or investment projects. Much of this assistance was in the form of outright grants or loans carrying low interest rates, long maturity terms, and grace periods.
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Economic data on Mauritania are scarce. The most comprehensive information was gleaned from publications of international development organizations, such as the World Bank, International Monetary Fund, and assorted agencies of the United Nations. Several United States government offices also have produced studies on certain aspects of the economy, such as mining, trade, and agriculture. The annual Africa South of the Sahara provided up-to-date information, as did the periodicals Africa Economic Digest, the Economist Intelligence Unit's Country Report, and Marchés tropicaux et Méditerranéens. (For further information and complete citations, see Bibliography.)
Data as of June 1988