Moroccan economy shakes off Covid impact, IMF says

Morocco’s economic activity has recovered most of the ground lost during the severe global recession of 2020 with a growth rate of 6.3% last year and medium-term growth prospects of 3.5%, as the country continues its fiscal and monetary stimulus, the IMF said.

Morocco has posted the highest growth rate in the MENA region in 2021 after its economy contracted by 6.3% in 2020, the IMF said in its Article IV statement, confirming its own conclusions in December.

“This performance owes to continued fiscal and monetary stimulus, the rebound of exports, buoyant remittances, and the exceptional harvest following two years of drought,” it said.

“While public debt remains sustainable, a faster fiscal consolidation process that brings the debt-to-GDP ratio closer to pre-pandemic levels over the medium term would make Morocco less vulnerable to further negative shocks and free more resources for private sector investment,” the IMF said.

It also recommended a containment of the fiscal deficit through a comprehensive reform of the tax system and systematic review of government spending, supplemented by a civil service reform to contain wage bill increase.

“Lower fiscal deficits would allow monetary policy to remain accommodative for longer, assuming inflationary pressures will remain manageable,” it said.

The IMF also welcomed Morocco’s efforts to improve the social safety net for its citizens, citing in particular the plan to generalize the social protection system.

The international financial institution also hailed Morocco’s successful vaccination rollout against coronavirus, saying this helped the economy to rebound.