Fitch Maintains BBB Rate for Morocco with Stable Outlook

Credit rating agency, Fitch, affirmed Morocco’s long-term foreign and local currency issuer default ratings (IDRs) at ‘BBB’ with a Stable Outlook.

Fitch explained that Morocco’s BBB rating was driven by its economic performance, public finance and external finance metrics.

“Economic policy focuses on maintaining macroeconomic stability and is unlikely to change much as a result of the parliamentary election in October 2016,” added Fitch.

The same source noted that the main parties in the government after October 7 elections remain the same with the addition of one smaller party with little impact on policy direction. Yet, noted Fitch, the prolonged negotiation “meant little progress was made on reform projects under the caretaking government and it is likely that the reform momentum will take some time to return.”

As for GDP growth, Fitch recalled that it fell to 1.6% in 2016 due to drought, while non-agricultural economy fell to 3.1% from 3.5% in 2015 in light of the slow growth in the Euro area, the largest trading partner for Morocco.

“Rainfall for the 2017 agricultural season has been favorable, suggesting that there will be a significant rebound in the agricultural sector and this should help lift growth to 4.3% in 2017,” said Fitch.

Concerning the trade balance, Fitch added that the deficit decreased to 4.1% in 2016, from 4.3% in 2015, although it stayed well above the budget target of 3.5%.