S&P upgrades Morocco’s rating to stable

S&P Global Ratings agency maintained Morocco’s ratings at BBB-/A-3 while upgrading its outlook from negative to stable.

The stable outlook reflects expectation that fiscal consolidation will continue over the next few years, which will help stabilize debt.

“We could raise the rating if budgetary consolidation prospects materially improve or the ongoing transition toward a more flexible exchange rate that targets inflation significantly bolsters Morocco’s external competitiveness and ability to withstand macroeconomic external shocks,” said S&P in a note.

The agency expected GDP growth in Morocco to stand at 2.8% in 2019, reflecting a slowdown in Europe, as well as decelerating growth in the country’s agricultural output.

S&P also expects a gradual improvement in the Kingdom’s fiscal position with a budget deficit at 3.3% of GDP in 2019 as the state has privatized 8% of Maroc Telecom and plans further sales of public assets.

The upgrade of Morocco’s outlook will help it benefit from low rates as it plans to issue a sovereign bond this year estimated by the central bank at 1 billion dollars.