IMF Supports Morocco to Achieve Gradual Dirham Float

The IMF expressed its support for the Moroccan authorities’ plan to gradually transition to a more flexible exchange rate regime, which should support the economy’s ability to absorb external shocks, and preserve competitiveness.

The statement was made by Nicolas Blancher, head of the IMF consultation mission, in a press release that conveyed the preliminary findings after a visit to Morocco from October 25 to November 7, 2017 to conduct discussions with the Moroccan authorities on the 2017 Article IV consultation, as well as on the third review under the Precautionary and Liquidity Line (PLL) arrangement approved in July 2016.

Besides the propitious outlook for a dirham float, Blancher said that with current conditions that continue to offer a window of opportunity to implement the transition in a gradual and orderly manner, starting the liberalization process as soon as possible would be appropriate.

“In recent years, the Moroccan economy has benefited from the continuation of prudent macroeconomic policies and structural reforms. Improved fiscal management and diversification of the economy have strengthened its resilience. Much remains to be done,” Blancher said.

He said that Morocco still faces the challenge of curbing unemployment, noting that to achieve this goal reforms should focus on key priorities including “improving the quality of the education system, the functioning of the labor market, increasing female labor force participation, and strengthening efforts to further improve the business environment.”

Blancher noted that growth is projected to reach 4.5% over the medium term with the implementation of structural reforms.

The IMF official also lauded Moroccan authorities goal to reduce the fiscal deficit to 3.5% of GDP in 2017 and to 3% in 2018, through revenue enhance measures and expenditure containment as indicated in the budget law submitted to Parliament.