Morocco’s central bank increases three-fold banks refinancing capacity

The Central bank said it will intervene to ensure there is enough cash for banks through increasing three-fold their refinancing capacity in dirham and hard currency.

The move comes as a lifeline for Moroccan banks to offset the financial repercussions of coronavirus and help them offer loans for enterprises and households, the central bank said in a statement.

The move will also help the banks support small businesses after a panoply of measures.

Earlier in March, 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% in 2019, according to the central bank, which said it will intervene in the financial market if necessary before its board meeting in June.

The bank also 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, according to the bank’s initial forecasts.

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 fund was created to help offset the consequences of coronavirus on the economy and jobs and upgrade health equipments and infrastructure. So far, $3.2 billion has been donated to the fund including a state contribution of 1 billion dollars.