The IMF made the decision after it completed the first review of Morocco’s performance under the economic program supported by the two-year PLL arrangement and after concluding the 2012 Article IV Consultation with the North African Country.
The IMF said in a release that the PLL arrangement will continue to support the authorities’ home-grown reform agenda aimed at achieving higher and more inclusive economic growth by providing a useful insurance against external shocks.
The IMF’s Executive Board welcomed Moroccan authorities’ intention to continue treating the arrangement as precautionary and hailed as “sound” the country’s overall macroeconomic policies.
Over the past decade these policies “helped deliver solid growth, low inflation, and poverty reduction, despite continued high youth unemployment,” the IMF said in a statement.
“The authorities’ economic strategy is built appropriately on fiscal consolidation, structural reforms and prudent monetary and financial policies,” the statement underlined, adding that “the authorities’ fiscal strategy, including the 2013 budget, is in line with their commitment to maintain fiscal sustainability and support external adjustment.”
The IMF welcomed the steps being taken toward reforming the subsidy system, and called on the authorities to move ahead resolutely in this area to aid medium-term fiscal adjustment and better assist the most vulnerable groups of the population.
It also stressed the importance of moving ahead with pension reform to ensure the system’s viability. Likewise, it encouraged a careful approach to fiscal decentralization so as not to increase fiscal risks and welcomed plans to lower the ratio of the government wage bill to GDP and accelerate tax reforms.
Clear communications and high-quality social dialogue will be key to successful implementation of the fiscal reform agenda, the international financial institution underlined
Although “substantial progress” has been made in improving social indicators, “further efforts are still needed to increase growth and make it more inclusive, notably by boosting employment, in particular of the youth, reducing income inequalities, and increasing access to health care and education,” the IMF said.
The PLL approved for Morocco in August 2012 amounted to SDR 4,117.4 million (about US$6.3 billion, 700 percent of quota). Under the arrangement, access in the first year is equivalent to SDR 2.4 billion (about US$3.6 billion, or 400 percent of quota), and rises in the second year to cumulatively SDR 4.1 billion (about US$6.3 billion).
The PLL was introduced by the IMF to meet more flexibly the liquidity needs of member countries with sound economic fundamentals and strong record of policy implementation but with some remaining vulnerabilities.