Central Bank cuts interest rate to boost economic activity amid drought, coronavirus fears

The Central Bank cut its benchmark interest rate to 2% to boost economic activity, which, like elsewhere in the world, is expected to reel under the impact of the coronavirus outbreak.

Drought has complicated the outlook for Morocco, which expected a contraction of agricultural output plunging growth to 2.3%, according to the central bank.

The bank’s governor Abdellatif Jouahri said that the forecasts may be reconsidered depending on the developments relating to the impact of the coronavirus at home and in the world.

The drop in oil prices would slow the pace of imports bringing the current account deficit to 4.4% in 2020, he said.

Foreign exchange reserves would still cover five months of imports in 2020 standing at 246 billion dirhams as Morocco plans an international bond this year, Jouahri said.

But he said the bank’s board would meet before its due meeting in June to take other measures if needed.

Morocco’s tourism sector and travel receipts are expected to be the most to bear the brunt of the coronavirus outbreak as Morocco seals its borders.

A 10 billion dirham fund was created to help offset the consequences of coronavirus on the economy and jobs and upgrade health equipment and infrastructure.