At independence, Mauritania became a member of the West African Monetary Union (Union Monétaire Ouest Africaine--UMOA) but withdrew in 1973 to demonstrate its independent economic identity. When it withdrew, the government also relinquished membership in the African Financial Community (Communauté Financière Africaine--CFA), whose currency--the CFA franc--was freely convertible to French francs. Mauritania then created its own currency, the ouguiya, and an independent central bank.

Banking

In the mid-1980s, Mauritania's monetary and banking structure consisted of the Central Bank of Mauritania (Banque Centrale de Mauritanie--BCM) and six commercial banks established with the participation of the government or of the BCM. Other major shareholders included various Arab interests, which included Saudi and Libyan participation.

By the early 1980s, Mauritania's banking sector was deteriorating, chiefly because of an accumulation of nonperforming loans that constituted some 50 percent of commercial bank assets. Between 1981 and 1983, government borrowing from the BCM and commercial banks rose to statutory limits. The private sector and public enterprises were thus forced to borrow increasingly from foreign banks to cover their severe liquidity problems.

As a result of this spiral of debt, in 1985 the government, with IMF and World Bank support, undertook measures to restructure the banking system. Measures taken under the 1985-88 Economic Recovery Program instituted a monetary and credit policy favoring the private sector and an austerity program for the public sector. Furthermore, in 1987 the government, in cooperation with the World Bank, adopted a reform program that focused on three areas: reforming credit policies and banking regulations, strengthening the BCM, and restructuring four of the six commercial banks, including the International Bank of Mauritania (Banque Internationale pour la Mauritanie--BIMA), of which the BCM held 91 percent.

Data as of June 1988