The government budget law for 2011 accounted for expenditure of UM269bn (US$984m), rather than the UM500bn reported in the local media. However, the total budget is estimated to reach UM400bn, UM130bn of which is not included in the budget law and will be financed by external grants and loans that were agreed in June 2010 during a donor-government roundtable in Brussels. Efforts to restrict the recurrent spending are likely to be frustrated in the face of popular expressions of discontent with the regime and several populist policy announcements. Military spending will also increase as the president seeks to maintain the loyalty of the armed forces and as the country's fight against terrorism continues. The capital budget will be expanded heavily, although absorptive capacity constraints will limit its execution and will result in an under-execution of the overall capital and recurrent budget, by roughly 5%, which still represents a 30% increase in spending from 2010.

Mauritania's revenue will be boosted by the aid bonanza, a large share of which the government has already received. In addition, a mining conference held in mid-November led to a spate of new mining permits being purchased, which will boost revenue. Moreover, economic activity is forecast to improve further in 2011 and 2012, which will support the tax base. In view of these trends, we expect the fiscal deficits to fall, from an estimated 4.1% of GDP in 2010 to 1.3% of GDP in 2011. The deficit will then return almost to balance in 2012, recording a deficit of 0.6% of GDP as donor inflows remain strong and commodity prices buoyant.