March 12, 2007 / 7:41 PM / 12 years ago

INTERVIEW-Mauritania sets hopes on non-oil growth in 2007

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By Pascal Fletcher

NOUAKCHOTT, March 12 (Reuters) - Mauritania’s economy will grow around two percent in 2007 compared with 11.6 percent last year, as a result of a fall in early oil production in Africa’s newest crude producer, Central Bank Governor Ousmane Kane said on Monday.

But in an interview with Reuters, he forecast that non-oil growth in 2007 would rise to 5.6 percent from 4.4 percent in 2006, as iron ore output and new gold and copper mining ventures helped to compensate for the reduced oil production.

“We think that with these other sectors we can compensate for the fall-off in the oil sector,” said Kane, who has a five-year mandate at the head of the Mauritanian Central Bank which gained new autonomous status under a law passed in January.

Mauritania’s first oil production from its foreign-operated offshore Chinguetti field started at 75,000 barrels per day (bpd), but quickly plummeted to 30,000 bpd and ended the year at around 22,000 bpd.

New production is coming onstream from Chinguetti but is not expected to bring total output this year much beyond 30,000 bpd, forcing the largely desert Saharan country to rein in its energy growth expectations for the time being.

“We are not going to be the new Angola and even if we were, we’re going to be prudent about it,” Kane said, adding that the start of oil production in early 2006 had distorted the country’s macro-economic indicators.

The economy had grown by about 5 percent in the three years before the oil-fuelled surge last year.

Kane said the outgoing government, which had ruled for 19 months under a military junta which is now handing over power to civilian rule, was looking for a more diversified basis of growth from non-oil sectors.

“We’re looking for a good year from iron ore and also from new gold and copper mines being started,” Kane said.

“In fisheries, the quantities are falling, but the prices are favourable so income is slightly higher,” he added.

A presidential election on Sunday in the former French colony has failed to produce an outright winner and a second deciding round will be held on March 25 between the two frontrunner candidates, both of them economists.

FALLING INFLATION

Kane said the transition government had taken steps to guarantee transparency in the handling of oil revenue — such as the setting up of a national oil income fund in an overseas account — and had also applied a more rigorous monetary policy.

“We are not taking easy measures, we are taking the necessary measures,” he said.

Year-on-year inflation had finished 2006 at 8.9 percent, below a 9.8 percent target agreed with the International Monetary Fund.

The target agreed for 2007 was 7 percent. “I am confident we can achieve it,” Kane said, adding: “In 2008 we want to be under 5 percent.”

In December, the Fund approved a three-year Poverty Reduction and Growth Facility (PRGF) arrangement for Mauritania in an amount equivalent to $24.2 million.

The IMF in February praised the Mauritanian government’s efforts to keep the budget deficit, money supply growth and inflation within targets.

Kane said Mauritania needed to do more to develop its manufacturing and services sectors, such as tourism and finance.

“We count on the IMF and the other donors to recognise the efforts made by Mauritania and to support them,” he added.

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