Morocco’s ‘Sound Economic Fundamentals’ Led to Solid Macroeconomic Performance- IMF

The Executive Board of the International Monetary Fund (IMF) completed on August 1 the second review under the Precautionary and Liquidity Line (PLL) Arrangement and reaffirmed Morocco’s continued qualification for the PLL and its sound economic fundamentals.

In a statement on its website, the IMF underscores Morocco’s eligibility to PLL and praises the country for its “sound economic fundamentals and overall strong track record of policy implementation”, which have contributed to a solid macroeconomic performance in recent years.

In this regards, the IMF notes that external imbalances are projected to narrow in 2017 and international reserves are expected to remain at comfortable levels.

“Fiscal developments are positive, with the budget deficit projected to narrow further in 2017 due to strong revenue performance and contained spending,” said the IMF, adding that growth is expected to rebound in 2017 and accelerate gradually over the medium term, subject to improved external conditions and steadfast reform implementation.

This outlook remains subject to domestic and external downside risks, the IMF noted. In this respect, the PLL will serve as a “useful insurance against external risks and supports the authorities’ economic policies.”

“The authorities are committed to sustaining sound policies. The new government’s economic program is in line with key reforms agreed under the PLL arrangement, such as reducing fiscal and external vulnerabilities while strengthening the foundations for higher and more inclusive growth,” highlighted the international financial institution.

The IMF has also advised the adoption of a central bank law and continuing to implement the 2015 Financial Sector Assessment Program recommendations in order to help strengthen the financial sector policy framework.

In the same vein, the IMF deems that “moving toward a more flexible exchange rate regime, underpinned by a well communicated strategy, will help preserve external competitiveness and enhance the economy’s capacity to absorb shocks.”

In July 2016, the IMF approved a two-year arrangement for Morocco under the PLL for an amount of SDR 2.504 billion (about US$3.42 billion) and the first review of the arrangement was completed on May 15, 2017.