Country Report Mauritania April 2011

Economic policy: The government intervenes to control prices

Clearly mindful of the wave of social unrest sweeping across North Africa, the government has announced various populist measures over the past several months. The largest programme, a food subsidy scheme dubbed Opération solidarité, was announced by the president on January 20th-three days after Yacoub Ould Dahoud set himself on fire in the capital, Nouakchott, in protest against the regime. Under the scheme, 600 government-established shops, 250 of which are in the capital, will sell a one-day family ration of imported rice or wheat, sugar and oil at prices roughly 30% below market rates until June 2011-control of such prices was a key demand in Mr Dahoud's suicide note. The scheme was reportedly well received at first. However, stocks per shop are sufficient for only 200 families, and the distance that some rural families in need of assistance would need to travel makes the journey prohibitive. Moreover, as a US government humanitarian agency, the Famine Early Warning Systems Network (Fewsnet), points out in a recent report, the impact of the programme on livelihoods will be limited by the fact that it is due to end prior to the lean, pre-harvest months of August and September.

In addition to subsidising consumer prices for staple foodstuffs, Opération solidarité will target improvements in agricultural production. The programme includes a new government scheme for buying local cereal produce, supplying farmers with good quality inputs and improving irrigation infrastructure. In late March the government announced that the total cost of the programme would be UM26.6bn (US$97m; over 2% of GDP), of which some UM1.7bn has been pledged by the Japanese government. At least 80% of the programme will be funded by additional domestic revenue sources identified by the government: taxes, land sales and a levy on the national oil fund, and probably also through under-execution of the capital budget.

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