Morocco: IMF Commends Sound Economic Policies, Recommends structural reform efforts

The executive board of the International Monetary Fund (IMF) commended Morocco for its “sound” macroeconomic policies and reforms while stressing the need for structural reform efforts.

“Executive Directors commended the authorities for the sound macroeconomic policies and reform implementation that have helped improve the resilience of the Moroccan economy, upgrade the fiscal and financial policy frameworks, and increase economic diversification,” the IMF said in a statement at the end of the 2017 Article IV Consultation with Morocco.

“To consolidate the gains achieved and promote higher and more inclusive growth, Directors underscored the need to maintain sound fiscal and monetary policies and to step up structural reform efforts, supported by measures to strengthen the social safety net,” the statement said.

The directors also welcomed the resumption of fiscal consolidation to ensure debt sustainability, supported efforts to control spending on wages and goods and services and agreed that continued fiscal consolidation should benefit from a comprehensive approach to tax reforms, aiming to broaden the tax base and promote greater equity and simplicity.

They also highlighted that Morocco’s banking sector remains sound and well capitalized, but stressed the need to remain vigilant.

The IMF directors commended Bank Al Maghreb’s continued efforts to increase supervisory capacity in line with 2015 Financial Sector Assessment Program recommendations, including more risk based and forward looking supervision and tighter provisioning requirements.

The Fund noted that economic growth has picked up in 2017 and is expected to reach 4.4 percent, mostly driven by a significant rebound in agricultural activity while non-agricultural activity remains subdued, adding that Morocco’s medium-term prospects remain favorable, with growth expected to reach 4.5 percent by 2021.

The IMF also highlighted Morocco’s continued efforts to improve the business environment, strengthen good governance, and increase women’s participation in the labor force, the statement concluded.

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